Alleghany Y is well-poised for growth based on strong underwriting performances, prudent buyouts and solid capital position.
Shares of Alleghany have rallied 25.3% year to date, outperforming the industry's growth of 5.6% and the Zacks S&P 500 composite’s rise of 17%. The company has seen its estimates for 2019 and 2020 move up 13.1% and 17.3%, respectively, in the past 60 days, indicating investor optimism on the stock.
Alleghany has been witnessing increase in gross premium written, which, in turn, has been driving the top line of the company. Sustained solid underwriting performances by TransRe and RSUI, CapSpecialty and PacificComp, responsible for insurance operations, along with improved pricing, should continue to boost its performance. It also makes strategic buyouts, which not only expand its geographical presence but also add capabilities to its portfolio.
Alleghany has been strengthening its balance sheet with high liquidity and low debt. A well-capitalized base helps the company support its subsidiaries in taking advantage of growth opportunities The company has also doubled its book value per share since the financial crisis of 2008. Alleghany aims to grow its book value in the range of 7-10% over the long term.
Given sustained strong performance, the company engages in effective capital deployment. Though the company does not pay out dividends, the board of directors offered a special payout of $10 per share in March 2019. The company also has $178.3 million under its share buyback authorization.
This Zacks Rank #1 (Strong Buy) provider of property and casualty reinsurance and insurance businesses has a decent history of delivering positive surprise in three of the last four quarters. The Zacks Consensus Estimate for 2019 and 2020 earnings indicates 161.9% and 10.7% growth, respectively, from the year-ago reported figure.
Shares are also underpriced at the current level, implying upside potential. Price to book of 1.3X is lower than the industry average of 1.4X.
Other Stocks to Consider
Some other top-ranked property and casualty insurers include Cincinnati Financial CINF, Hallmark Financial Services HALL and Donegal Group DGICA, each sporting Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial provides property casualty insurance products in the United States. The company delivered 32.81% positive surprise in the last reported quarter.
Hallmark Financial underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States. The company delivered 20.22% positive surprise in the last reported quarter.
Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company delivered 160.00% positive surprise in the last reported quarter.
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Alleghany Corporation (Y) : Free Stock Analysis Report
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