Montpelier Re: A Strong Buy

Zacks

On Mar 21, 2013, Zacks Investment Research upgraded Montpelier Re Holdings Ltd. (:MRH) 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), XL Group Plc (:XL) and Progressive Corp. (:PGR). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on MRH

Read the Full Research Report on XL

Read the Full Research Report on CNO

Read the Full Research Report on PGR

Zacks Investment Research



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