Shares of White Mountains Insurance Group Ltd. (WTM) inched up nearly 0.4% to close at $601 on Dec 24. The gain came on the back of White Mountains’ announcement of entering into an agreement with Star & Shield Holdings LLC to acquire some of its assets and liabilities.
A wholly-owned subsidiary of White Mountains will take over Star & Shield Risk Management LLC. The financial details remain undisclosed. Nonetheless, the transaction is expected to see light in the first quarter of 2014.
Star & Shield Risk Management is the attorney-in-fact for the Star & Shield Insurance Exchange, which in turn is a reciprocal insurance exchange based in Florida. Star & Shield Insurance Exchange provides private passenger auto insurance to the public safety community’s members and their families.
With the addition of Star & Shield Risk Management, White Mountains will enhance its auto insurance business besides increasing its client base.
White Mountains, earlier, has also adopted the inorganic route to strengthen its portfolio. 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).
No momentum in the earnings estimate was observed in the last 30 days for White Mountains. With the news of the acquisition, we expect the estimates to be revised upwards. The Zacks Consensus Estimate for 2013 and 2014 is currently pegged at $27.90 and $23.60 respectively.
White Mountains presently sports a Zacks Rank #1 (Strong Buy). Other stocks in the property and casualty insurance space include Alleghany Corporation (Y) and Allied World Assurance Company holdings, AG (AWH). Both these stocks hold the same Zacks Rank as White Mountains.
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