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Why You Should Pay Attention to Maiden Holdings

MHLD Y FNF AWH

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On Jan 7, 2013, Zacks Investment Research upgraded Maiden Holdings, Ltd. (MHLD - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Maiden Holdings has witnessed rising earnings estimates on the back of solid results and a strong effort to increase shareholders’ value. This property and casualty insurer delivered positive earnings surprises in three of its last four quarters, with an average beat of 5.4%. The expected long-term growth from the stock came is 12%.

In its last reported quarter, net operating earnings for Maiden Holdings stood at 31 cents per share, which surpassed the Zacks Consensus Estimate by 6.9% and year-ago quarter result by 14.8%. The outperformance was primarily due to better underwriting performances, lesser expense relativities and an expanded client base.

Maiden Holdings also enjoyed top-line growth in the last reported quarter on the back of higher net earned premiums, which in turn was a result of strong performance in the AmTrust Quota Share Reinsurance segment.

The company also stands strong with its improved cash balance. As of Sep 30, Maiden Holdings had cash and cash equivalents of $131.3 million that surged 61% from the 2012-end level.

Maiden Holdings is also garnering investors’ confidence by distributing more profits among its shareholders. Recently, the company increased its quarterly cash dividend by 22%, offering dividend of 11 cents a share. This quarterly dividend of the company yields at 4%, well above the industry yield of 3.02%.

Maiden Holdings is well positioned to reap the benefits of broader industry trends. This is important because many a time a rising tide will lift all boats in an industry. This is what is taking place in the multi line insurance space, which currently has a Zacks Industry Rank of 29 out of more than 250 industries – thus ranking among the top third of all the industries in our coverage.

Meanwhile, Maiden Holdings is looking reasonably good on its own. The firm has seen solid earnings estimate revision activity over the past month, suggesting analysts are becoming a bit more bullish on the firm’s prospects in both the short and the long term.
 
In fact, over the past month, current year estimates have risen 1.8% to $1.16 a share, while 2014 estimates have risen 2.8% to $1.45 per share. This has helped Maiden Holdings to earn a Zacks Rank #1, further underscoring the company’s solid position.

Other Stocks to Consider

Other top-ranked property and casualty insurers worth considering include Alleghany Corp. (Y - Snapshot Report), Allied World Assurance, AG (AWH - Snapshot Report) and Fidelity National Financial, Inc. (FNF - Snapshot Report). All these stocks sport the same Zacks Rank as Maiden Holdings.

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