Montpelier Re Hits 52-Week High - Analyst Blog

On Mar 17, 2014, shares of Montpelier Re Holdings Ltd. MRH touched a 52-week high of $29.88. The momentum was driven by solid fourth-quarter and full-year 2013 earnings results at the company. The year-to-date return for the stock came in at 1.7%, way ahead of the S&P's return of 0.6%.

The fourth-quarter earnings figure at Montpelier Re clocked a positive surprise beat of 87%, making it the highest among the four quarters of 2013. This helped the property and casualty insurer deliver positive earnings surprises in all of the last 4 quarters, thus registering an average beat of 53.2%. Full-year 2013 earnings also exceeded the Zacks Consensus Estimate by 17.5% and more than doubled year over year.

Solid underwriting results contributed to the outperformance. Underwriting income rebounded from the year-ago loss largely due to benign cat occurrences. Loss ratio was 1.6% in the fourth quarter, improving significantly from 81.7%. Combined ratio also improved remarkably to 39.4% from 116.0% in the year-ago quarter.

With regard to returning value to shareholders, Montpelier Re spent $22.8 million to buy back 0.83 million common shares in the fourth quarter and another $35 million to repurchase 1.25 million shares in first-quarter 2014 till date. Montpelier Re also paid 12.5 cents per share in quarterly dividend, representing a 9% increase from the prior payout.

These positives were also reflected in earnings estimate revisions. The Zacks Consensus Estimate for 2014 and 2015 witnessed most of the estimates moving north over the last 60 days. The Zacks Consensus Estimate for 2014 is currently pegged at $3.02, up 5% while the same for 2015 increased by 2.3% to $3.12.

Montpelier Re presently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the property and casualty industry include Alleghany Corp. Y, AmTrust Financial Services, Inc. AFSI and Atlas Financial Holdings, Inc. AFH. All these stocks sport a Zacks Rank #1 (Strong Buy).