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White Mountains: A Strong Buy

Zacks Equity Research

On Dec 17, Zacks Investment Research upgraded White Mountains Insurance Group, Ltd. (WTM) to a Zacks Rank #1 (Strong Buy).    

Why the Upgrade?

White Mountains has witnessed rising earnings estimates on the back of solid third-quarter 2013 results and has scored strongly with the rating agencies. Moreover, this property and casualty insurer delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 241%.

White Mountains reported third quarter non-GAAP earnings per share at $9.20, topping the Zacks Consensus Estimate of $5.06 by 81.8% and the year-ago earnings of $8.07 by 14%. A lower level of expense largely aided the outperformance.

Total expenses of White Mountains declined 7.7% year over year due to lower loss and loss adjustment expenses, as well as lower general and administrative expenses.

White Mountains has also strengthened its balance sheet. While lower debt and liabilities held for sale reduced total liabilities of White Mountains by 7.1% as at Sep 30, 2013, healthy returns from investments aided the increase in adjusted book value per share by 2.8% to $622 as on Sep 30, 2013.

White Mountains also scores strongly with credit rating agencies. A.M. Best Co. has reiterated the issuer credit ratings of “bbb” of White Mountains with stable outlook. A strong rating helps in retaining investor confidence in the stock, along with maintaining credit worthiness in the market

The Zacks Consensus Estimate for 2013 increased 4.1% to $27.90 per share over the last 60 days. For 2014, the estimate was lifted by 0.4% to $23.60 per share over the same time frame.

Other Stocks to Consider

Other property and casualty insurers that look attractive at current levels include Alleghany Corp. (Y), Allied World Assurance Company Holdings, AG  (AWH) and Cincinnati Financial Corp. (CINF).  All these stocks carry the same Zacks Rank as White Mountains.

Read the Full Research Report on WTM
Read the Full Research Report on CINF
Read the Full Research Report on Y
Read the Full Research Report on AWH

Zacks Investment Research