Back to top

Analyst Blog

On Mar 21, 2013, Zacks Investment Research upgraded Montpelier Re Holdings Ltd. (MRH - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Montpelier has been experiencing rising earnings estimates on the back of improved fourth-quarter 2012 results. Moreover, the company swung to profit in 2012, paving the way for a brighter outlook for 2013. Additionally, this property-casualty insurer delivered positive earnings surprises in all of the last 4 quarters with an average beat of 44.7%.

On Feb 7, Montpelier reported fourth-quarter 2012 loss of 31 cents per share, which stood far less than the Zacks Consensus Estimate loss of 80 cents. The results were supported by 2.9% growth in gross premiums written and 5.6% improvement in net insurance and reinsurance premiums earned.

Meanwhile, operating earnings came in at $2.58 per share in 2012, exceeding the Zacks Consensus Estimate of $2.12. Results rebounded from a loss of $2.50 incurred in 2011.

A steady improvement in operating performance is also reflected by Montpelier’s escalated book value per share. Moreover, the company has been retaining shareholders’ confidence by returning wealth via share repurchases worth $121 million in 2012 along with a 9.5% hike in common dividends. These factors also bode well with the ratings agencies and augur long-term growth.

Based on Montpelier’s fundamental strength and focus on its underwriting operations, the Zacks Consensus Estimate for 2013 rose 3.8% to $2.47 per share in the last 60 days, with one upward revision in estimates. The estimate for 2014 is pegged at $2.55, rising 1.6% in the last 60 days, with no estimate revisions.

Other Stocks to Consider

Apart from Montpelier, other stocks that are outperforming in the insurance sector include CNO Financial Group Inc. (CNO - Analyst Report), XL Group Plc (XL - Analyst Report) and Progressive Corp. (PGR - Analyst Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.