On May 29, 2014,
HCC Insurance Holdings Inc.
) reached a new 52-week high of $47.25. The rally was attributable
to the company's strong first-quarter 2014 earnings, business
strengthening capacities and efficient capital deployment
HCC Insurance's solid first-quarter 2014 results comprised an 8.05%
positive earnings surprise. Notably, this property and casualty
insurer beat earnings estimates in all the trailing four quarters
with an average surprise of 17.2%.
The last reported quarter also marked the best first quarter in HCC
Insurance's history. Following HCC Insurance's earnings
release on Apr 29, 2014, its shares gained 3.5% to close at $47.07
in the last trading session. The one-year return of the stock was
10.81%, much above that of other players in the industry like
Arch Capital Group Ltd.
) with returns of 9.05% and 6.76% respectively over the same
Additionally, increased premiums as well as improvement in combined
ratio and capital deployment bode well. The company deployed $31.4
million toward share repurchases in the first quarter. The
company's regular payment of dividends continued in the 73rd
quarterly dividend paid recently. In terms of financial position,
HCC Insurance's operating cash flow surged year over year in the
first quarter of 2014. This should enable it to engage in more such
Moreover, change in presentation of certain lines of businesses
within the company's existing segments and a change in management
to expand the insurance platform in Apr 2014 position HCC Insurance
for long-term growth. The launch of an employer benefits decision
tool in May 2014 should also strengthen the company's product
portfolio, thereby making way for revenue generation.
Such business strengthening initiatives and capital deployment keep
us optimistic about the stock's performance. The full-year 2014
Zacks Consensus Estimate increased 3% to $3.73 after the company
reported its first-quarter results, as most of the estimates moved
north. During the same period, the estimates also pulled up the
Zacks Consensus Estimate for full-year 2015 by 1.3% to $3.78 per
Currently, HCC Insurance caries a Zacks Rank #3 (Hold). Some
better-ranked players in the same sector, which look attractive at
current levels, include Arch Capital, Alleghany Corp and
Endurance Specialty Holdings Ltd.
). While Endurance Specialty sports a Zacks Rank #1
(Strong Buy), Arch Capital and Alleghany have a Zacks Rank #2
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