Headquartered in Hamilton, Bermuda, White Mountains Insurance Group (WTM) is a Property and Casualty insurer and reinsurer. The Company conducts its principal businesses through OneBeacon (Specialty insurance), Sirius Group (Global reinsurance), HG Global (U.S. municipal bond reinsurance) and White Mountains Advisors (Investment management).
WTM currently has a market capitalization of $3.63 billion. Rising estimates sent the stock back to Zacks Rank # 1 (Strong Buy) earlier this month. It is the ‘Bull of the Day’.
Solid Third Quarter Results
White Mountains reported its Q3 2013 results on Oct 28. Operating net income came in at $9.20 per share, significantly ahead of the Zacks Consensus Estimate of $5.06 per share. The results increased 14% from $8.07 per share reported in the prior-year quarter.
The increase was mainly due to decrease in total expenses during the reported quarter. Total expenses declined 7.7% year over year due to lower loss and loss adjustment expenses as also lower general and administrative expenses.
Healthy returns from investments led to the increase in adjusted book value per share by 2.8% from the year-ago level.
Positive Earnings Estimates Revisions
After impressive earnings, current quarter estimates have risen from $4.45 per share to $7.04 per share, while current year estimates have increased from $27.90 per share to $30.50 per share.
Rising estimates helped WTM earn a Zacks Rank #1 (Strong Buy), on Jan 14, 2013.
Earlier this month, White Mountains completed the purchase of a significant minority ownership stake in the car insurance comparison website--comparenow.com.
In December, White Mountains announced an agreement with Star & Shield Holdings LLC to acquire some of its assets and liabilities.
In Apr 2013, White Mountains’ wholly-owned subsidiary, White Mountains Solutions Holding Company Inc. acquired American Fuji Fire and Marine insurance Company – a runoff subsidiary of American International Group (AIG).
Solid Industry Outlook
Improving economic picture is positive for all insurers as their business volume is highly correlated to the health of the economy. Property & Casualty insurers in particular have seen a strong top-line growth this year—a trend that continues to gain momentum.
Per Zacks Industry Outlook “Market hardening has been the key to improvement for property-casualty insurers in the recent quarters. Along with continually improving pricing power, stronger preparation to withstand catastrophe-related losses should help insurers perform better in the upcoming quarters”.
The Bottom Line
WTM is a Zacks Rank#1 (Strong Buy) stock. Further Zacks Industry rank of 32 out of 265 (top 12%) greatly increases the likelihood of short-to-mid- term outperformance.
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