UPDATE: Deutsche Bank Initiates Coverage on Montpelier Re Holdings on Positive EPS Outlook

In a report published Monday, Deutsche Bank analyst Joshua Shanker initiated coverage on

with a Buy rating and $37.50 price target. In the report, Deutsche Bank noted, “We are initiating coverage of Montpelier Re with a Buy and installing EPS estimates for 2014 and 2015 of $3.30 and $3.70, respectively. We are the high on the Street in terms of EPS outlook. We view a price-to-book valuation of about 1.0x as appropriate for a 9% ROE on its equity base adjusted for the assumption of habitual 25% over-reserving, leading to a target price of $37.50. We recommend buying shares of Montpelier Re--whose core business is property-catastrophe reinsurance--fully aware of pricing pressures on the property-catastrophe marketplace, which, in our opinion remains the most profitable, albeit volatile, corner of the insurance marketplace.” Montpelier Re Holdings closed on Friday at $29.06.