On May 15, Zacks Investment Research upgraded Montpelier Re Holdings Ltd. MRH to a Zacks Rank #2 (Buy).
Why the Upgrade?
Montpelier Re has been witnessing rising earnings estimates on the back of strong first–quarter 2014 results. Moreover, this property and casualty insurer delivered positive earnings surprises the last 4 quarters with an average beat of 57.04%.
Montpelier Re reported first-quarter operating net earnings of $1.48 a share, outperforming the Zacks Consensus Estimate by 48% and improving 25% from the year-ago earnings. The outperformance was largely aided by solid underwriting results. A lower share count attributable to continued buybacks also boosted the bottom line.
Net premiums written in the quarter improved 5% year over year on the back of higher premiums written in Montpelier at Lloyd's and Collateralized Reinsurance segments.
Underwriting income of $77.8 million in the quarter was up 29% from the prior-year period. While loss ratio of 17.5% in the first quarter improved significantly from 31.7% in the year ago quarter, combined ratio improved remarkably by 1,200 basis points year over year to 50.4%.
With respect to returning value to shareholders, Montpelier Re spent $70.3 million to buy back 2.5 million common shares in the first quarter. In the second quarter, the company has already spent nearly $17 million to repurchase 0.571 million shares.
The Zacks Consensus Estimate for 2014 earnings increased 15% to $3.60 per share over the last 30 days as all the 6 estimates rallied north. For 2015 as well, the Zacks Consensus Estimate moved up by 1% to $3.15 per share as 3 of 6 estimates were raised over the same time frame.
Other Stocks to Consider
Investors interested in the property and casualty industry may also consider stocks like Aspen Insurance Holdings Ltd. AHL, AmTrust Financial Services, Inc. AFSI and Atlas Financial Holdings, Inc. AFH. All these stocks sport a Zacks Rank #1 (Strong Buy).
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MONTPELIER RE MRH: Free Stock Analysis Report
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