On Apr 10, 2013, Zacks Investment Research upgraded
White Mountains Insurance Group Ltd.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
White Mountains have been experiencing rising earnings
estimates on the back of improved fourth-quarter 2012 results and
enterprise growth through acquisitions. As a result, the company
reported strong fourth-quarter results with a positive earnings
surprise of 724.1%. Additionally, this property-casualty insurer
and reinsurer delivered positive earnings surprises in 3 out of
the last 4 quarters with an average beat of 245.2%.
On Feb 5, White Mountains reported fourth-quarter 2012
operating earnings of $10.36 per share, which exceeded the Zacks
Consensus Estimate of a loss of $1.66, although it lagged the
operating earnings of $20.03 per share in the year-ago quarter.
The results were supported by 5.6% growth in earned premiums
along with lower-than-expected operating and acquisition
While higher underwriting expenses and lower investment income
were the dampeners, White Mountains remains adequately liquid,
also reflected by over 8% growth in its book value per share at
2012-end. This also paves the way for investing in its inorganic
The recent acquisition of Fuji Fire and Marine Insurance Co. -
a small runoff subsidiary of the
American International Group Inc.
) and the proposed acquisition of Empire Insurance Co., slated to
close by the mid-2013, are projected to enhance the company's
existing portfolio and generate incremental earnings.
Based on White Mountain's fundamental strength and claims
management, the Zacks Consensus Estimate for 2013 escalated 6.9%
to $20.40 per share in the last 60 days. The estimate for 2014 is
pegged at $24.25, up 12.8% in the last 60 days. Meanwhile, no
downward revision in estimates was witnessed for both the
Other Stocks to Consider
Apart from White Mountains, other stocks that are
outperforming in the insurance sector include
Hilltop Holdings Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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