Back to top

Analyst Blog

On Aug 28, 2013, Zacks Investment Research downgraded White Mountains Insurance Group Ltd. (WTM - Snapshot Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Earnings estimates for White Mountains have been trending down owing to dismal second-quarter 2013 results and a reduced investment portfolio. The company reported second-quarter results with a negative earnings surprise of 19.9%. Additionally, this property-casualty insurer and reinsurer underperformed the year-to-date S&P 500 index, which posed a growth of 16.6% against White Mountains’ 9.3%.

On Jul 31, White Mountains reported second-quarter operating earnings per share of $3.62, which lagged both the Zacks Consensus Estimate and year-ago figure of $4.52 and $3.85, respectively.

The downside was due to 9.58% decline in top line, led by lower premiums, investment income and higher capital losses. Although total expenses dipped 3.8% from the prior-year quarter, loss and loss adjusted as well as underwriting expenses were still high. Consequently, book value depreciated 1.9% year over year to $597.29 per share.

White Mountains has been facing operating challenges thus far in 2013. Fluctuations in currencies and equity markets have taken a toll on the investment portfolio. Moreover, higher underwriting and loss adjusted expenses amid weak premiums and reserves are weakening the operating leverage. Depreciated asset base, cash and equity pose additional financial risks, which are also making the investors jittery.

While the Zacks Consensus Estimate for 2013 edged up 1.9% to $24.10 per share in the last 30 days, it is still 34.4% lower than 2012. Moreover, the estimate for 2014 is pegged at $23.55, down 9.4% in the last 30 days and 2.3% from 2013. Meanwhile, no upward revision in estimates was witnessed for 2014, although one firm raised estimate for 2013.

Other Stocks to Consider

While we prefer to avoid White Mountains at present, other stocks that are outperforming in the insurance sector include Everest Re (RE - Analyst Report), HCI Group Inc. (HCI - Snapshot Report) and EMC Insurance Group Inc. (EMCI - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%