Montpelier's (MRH) Strategic Initiatives Boost Growth
On Oct 2, 2014, we issued an updated research report on Montpelier Re Holdings Ltd. (MRH).
Montpelier has delivered positive earnings surprises in the three of the last four quarters with an average beat of 37%. The property and casualty insurer’s second-quarter 2014 earnings per share missed the Zacks Consensus Estimate and were also lower than the year-ago quarter figure primarily due to reduced underwriting income. However, the quarter witnessed solid contribution from Lloyd’s and Collateralized Re segments.
Despite competitive insurance/reinsurance market conditions the company has been able to grow its business in the first half of 2014 after experiencing decline in gross insurance and reinsurance premiums written declined in 2013.
Montpelier has a track record of strong underwriting performance reflected by its combined ratio which has averaged 78% compared with 85% for peers from 2006-2013.
The company also declared the launch of Blue Capital, an asset management platform offering an array of catastrophe reinsurance-linked investment products, thereby expanding the underwriting partnership business. Blue Capital also had an initial public offering (IPO) in November last year. Proceeds from the IPO totaled $125 million.
Montpelier also remains committed to enhance shareholders’ value, as reflected in its continued dividend hikes and share repurchases. In Jul, 2014, the board of directors approved a 60% dividend hike, marking six straight years of increase. The company’s dividend has grown at a 6-year CAGR of 11% with its current dividend yield surpassing the industry dividend yield. Other property and casualty players that have recently increased dividend are W.R. Berkley Corporation (WRB), ACE Limited (ACE) and United Fire Group, Inc (UFCS).
Nevertheless, Montpelier’s substantial exposure to losses resulting from natural and man-made disasters and other catastrophic events, higher than industry average debt levels are some of the headwinds bracing the company.
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Read the Full Research Report on UFCS
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