Greenlight Capital Downgraded on Lackluster Results in Q4 - Analyst Blog
On Mar 17, Zacks Investment Research downgraded Greenlight Capital Re, Ltd. GLRE to a Zacks Rank #4 (Sell).
Why the Upgrade?
Greenlight Capital has witnessed declining earnings estimates following weak fourth-quarter 2014 earnings, which delivered a negative surprise of 0.62%. With respect to the earnings trend, the company delivered negative surprises in three of the trailing four quarters, with an average beat of -21.61%.
The property and casualty insurer’s fourth-quarter earnings of $1.60 per share declined 28% year over year. Lower premiums and net investment income that resulted in lower revenues were largely responsible for the earnings decline.
The company did not renew certain businesses that were inadequately priced, and hence suffered lower revenues. Greenlight Capital operates in a challenging reinsurance market as intense competition in the overcapitalized market makes it more difficult for new businesses.
Greenlight Capital incurred underwriting loss of $4.6 million in the quarter that compared unfavorably with underwriting gain of $7.9 million in the year-ago quarter. The adverse developments in last year’s contracts and the deleveraging effect of flat costs on reduced premiums weighed on the combined ratio.
The Zacks Consensus Estimate moved south over the last 30 days as one out of two estimates was revised lower following the lackluster performance. The Zacks Consensus Estimate decreased 3.4% to $3.99 for 2015 and 8% to $4.60 for 2016.
Stocks to Consider
Some better-ranked property and casualty insurers are Allied World Assurance Company Holdings, AG AWH, AmTrust Financial Services, Inc. AFSI and Arch Capital Group Ltd. ACGL. All these stocks sport a Zacks Rank #1 (Strong Buy).
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GREENLIGHT CAP (GLRE): Free Stock Analysis Report
AMTRUST FIN SVC (AFSI): Free Stock Analysis Report
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
ALLIED WORLD AS (AWH): Free Stock Analysis Report
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