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Platinum Underwriters: A Strong Buy

Zacks Equity Research

On Dec 24, Zacks Investment Research upgraded Platinum Underwriters Holdings Ltd. (PTP) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Platinum Underwriters has been experiencing modest corrections in earnings estimates on the back of improved outlook for 2014. Moreover, the company’s secure core fundamentals and capital position have been impressive.

Additionally, this property-casualty and risk reinsurer delivered positive earnings surprises in all the last 4 quarters with an average beat of 42%. Platinum Underwriters also outperformed the year-to-date S&P 500, which posted an increase of 28.2% against the modest return of 31.2% clocked by the company.

On Oct 16, Platinum Underwriters reported third-quarter operating earnings per share of $1.32, which remarkably surpassed the Zacks Consensus Estimate of $1.00.

However, the results declined 48% from the year-ago quarter number of $2.54 per share. Most of the downfall was caused by declining investment income given the persistent low interest rate environment.

Nonetheless, gross premiums improved, while expense growth was controlled. Progress in core operating growth was also reflected in increased book value per share and active capital management.

Platinum Underwriters diversified business mix, adequate liquidity, strong enterprise risk management and new business writing in 2014 validate the optimism. Moreover, the company’s consistent capital deployment activities continue to boost investors’ confidence in the stock.

The Zacks Consensus Estimate for 2013 remained intact at $6.18 per share in the last 60 days. However, the estimate for 2014 moved north by 1.4% to $4.34 over the same period.

Meanwhile, the Most Accurate Estimate for Platinum Underwriters’ 2014 earnings stands at $4.65 a share, resulting in an Earnings ESP of +7.1%. No downward revision in estimates was witnessed for both the years.

Other Insurers Worth a Look

Investors interested in the insurance industry may also consider stocks like HCI Group Inc. (HCI), Endurance Specialty Holdings Ltd. (ENH) and CNA Financial Corp. (CNA). All these stocks sport the same Zacks Rank as Platinum Underwriters.

Read the Full Research Report on CNA
Read the Full Research Report on ENH
Read the Full Research Report on HCI
Read the Full Research Report on PTP

Zacks Investment Research