On Jun 5, 2013, Zacks Investment Research upgraded Enstar Group Limited (ESGR) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Enstar Group posted strong first quarter 2013 results on May 10. Non-GAAP earnings per share came in at 72 cents, surpassing the Zacks Consensus Estimate of 40 cents by 80% and the year-ago earnings of 24 cents by 24%.
Earnings were primarily aided by solid top-line growth that improved almost 70%.
Moreover, this multi-line insurer delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 17.3%.
Recently, Enstar inked a deal with Arden Holdings Limited to buy Atrium Underwriting Group Limited and Arden Reinsurance Company Limited for about $263 million. Atrium is an underwriting business at Lloyd's of London.
While Atrium provides insurance coverage for accident and health, aviation, marine property, professional liability, upstream energy, among others, Arden Reinsurance provides reinsurance to Atrium. Enstar will benefit from its experienced underwriting and management team to leverage its growth prospect.
Previously, the company also closed the acquisition of Household Life Insurance Company of Delaware and HSBC Insurance Company of Delaware from Household Insurance Group Holding Company, an affiliate of HSBC Holdings plc.
It had written various U.S. and Canadian life insurance, including credit insurance, term life insurance, assumed reinsurance, corporate owned life insurance, and annuities. This buyout of closed-life insurance business further leverages Enstar’s run-offs portfolio.
The Zacks Consensus Estimate for 2013 increased 9.4% to $10.94 per share in the last 60 days. For 2014, the Zacks Consensus Estimate rose by 4% to $13.00 per share in the same time frame.
Other Stocks to Consider
Multi-line insurers Assured Guaranty Ltd. (AGO), Eastern Insurance Holdings, Inc. (EIHI) and Kemper Corporation (KMPR), among others also carry a Zacks Rank #1 (Strong Buy) and are worth noting.
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