Eastern Insurance: A Strong Buy - Analyst Blog


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On Aug 15, 2013, Zacks Investment Research upgraded Eastern Insurance  Holdings Inc. ( EIHI ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Eastern Insurance has been experiencing rising earnings estimates on the back of improved second-quarter 2013 results. Moreover, strong underwriting performance, agency relationships and a healthy capital position have been impressive. Additionally, this multi-line insurer delivered positive earnings surprises in all of the last 4 quarters with an average beat of 22%.

On Aug 1, Eastern Insurance reported second-quarter 2013 operating earnings per share of 39 cents, which outpaced the Zacks Consensus Estimate of 30 cents and year-ago quarter number of 17 cents.

Total revenue grew 21.1% year over year, driven by a 17.6% upsurge in premiums along with higher investment income and realized gains. These were partially offset by 16% growth in total expenses. Other growth metrics such as combined ratio and book value per share witnessed improvement.

Eastern Insurance's strategic focus on organic growth and initiatives to expand in the emerging markets are showing results. Moreover, the company is gaining traction in both its workman's compensation insurance as well as reinsurance and other businesses, given the improvement in premium retention rates. Alongside, prudent expense and risk management as well as strong capitalization scores well with the ratings agencies, reflecting a strong long-term growth potential.

Based on Eastern Insurance's fundamental strength and capital management, the Zacks Consensus Estimate for 2013 rose 3.0% to $1.38 per share in the last 30 days. Moreover, the estimate for 2014 jumped 9.7% to $1.70 for the same period. Meanwhile, no downward revision in estimates was witnessed for both the years.

Moreover, the Most Accurate Estimate for Eastern Insurance's 2013 earnings stands at $1.50 a share, resulting in a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) of 8.7%.

Other Stocks to Consider

Apart from Eastern Insurance, other outperforming insurers in the industry include HCI Group Inc. ( HCI ), EMC Insurance Group Inc. ( EMCI ) and Everest Re Ltd. ( RE ). All the stocks carry a Zacks Rank #1 (Strong Buy).

EASTERN INSURNC (EIHI): Free Stock Analysis Report

EMC INSURANCE (EMCI): Free Stock Analysis Report

HCI GROUP INC (HCI): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: EIHI , EMCI , HCI , RE

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