On Aug 31, Zacks Investment Research upgraded Alleghany Corporation (Y) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Alleghany Corp. has witnessed rising earnings estimates on the back of solid second-quarter results. Moreover, this property and casualty insurer delivered positive earnings surprises in the past 4 quarters with an average beat of 62.2%.
Alleghany Corp. reported second-quarter 2013 results on Aug 5. Operating net earnings of $6.78 per share were approximately 60% higher than the Zacks Consensus Estimate of $4.25 per share.
Earnings were primarily aided by increase in net investment income and lower costs and expenses. Net investment income improved 10% year over year.
A decline in net loss and loss adjustment expenses, other operating expenses and corporate administration aided the improvement.
Cash from operations of Alleghany Corp. surged nearly 69% year over year to $245.1 million in the first six months of 2013.
The company spent $8.8 million in share buybacks in the quarter.
Alleghany Corp. also entered into a partnership with Ares Management LLC where it will acquire 6.25% stake of the Ares Management for $250 million with additional investment of $1 billion in future. This transaction would help it to capitalize on Ares’ solid business prospects and in turn augment the returns of its committed capital via Ares' alternative asset expertise.
The Zacks Consensus Estimate for 2014 increased 17% to $30.42 per share over the last 30 days. The estimate also translates to a year over year increase of approximately 62%.
Other Stocks to Consider
Among other property and casualty insurers, Everest Re Group Ltd. (RE), Global Indemnity plc (GBLI) and HCI Group, Inc. (HCI) also hold the same Zacks Rank #1 (Strong Buy) and look attractive.
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