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Endurance Specialty: A Strong Buy

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On Nov 6, Zacks Investment Research upgraded Endurance Specialty Holdings Ltd. by a notch to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Endurance Specialty has been experiencing rising earnings estimates on the back of improved market trends following its robust third-quarter 2013 results. Moreover, strong expense management and incremental return of capital are deemed impressive.

Additionally, this property and casualty (P&C) insurer and reinsurer delivered positive earnings surprises in all the last 4 quarters with an average beat of 50.3%. Endurance Specialty also outperformed the year-to-date S&P 500, which posted an increase of 24.1% against the robust return of 40.1% clocked by the company.

On Nov 4, Endurance Specialty reported third-quarter 2013 operating earnings per share of $1.70, which outpaced both the Zacks Consensus Estimate of $1.11 and the year-ago quarter number of 74 cents.

A healthy year-over-year growth in underwriting revenues and lower expenses improved the combined ratio to 87.7% from 99.5% in the year-ago period. A decline in loss and loss adjusted expenses and catastrophe losses also boosted the bottom line, annualized operating return on equity (ROE) and book value per share. These positives were however, partially offset by lower investment income.

Endurance Specialty’s focus on enhancing its operating leverage by streamlining its product portfolio and improving underwriting efficiencies is showing results. Moreover, the company’s creditworthiness, prudent risk management and effective capital deployment score well with the ratings agencies and investors.

Based on Endurance Specialty’s fundamental strength and prudent capital management, the Zacks Consensus Estimate for 2013 edged up 1.6% to $5.75 per share in the last 7 days. Moreover, the estimate for 2014 rose 1.5% to $4.86 over the same period. Furthermore, no downward revision in estimates was witnessed for both the years.

Other Stocks to Consider

Apart from Endurance Specialty, other outperforming insurers in the industry include PartnerRe Ltd. , Eastern Insurance Holdings Inc. and White Mountains Insurance Group (WTM - Free Report) . All these stocks carry a Zacks Rank #1 (Strong Buy).

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