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Endurance Upped to Strong Buy - Analyst Blog
On Jul 2, 2013, Zacks Investment Research upgraded Endurance Specialty Holdings Ltd. ( ENH ) to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #3 (Hold).
Why the Upgrade?
Endurance has been witnessing rising estimates on the back of improved first quarter 2013 results. Moreover, the company's strong underwriting capabilities as well as improved expense ratios have been impressive. Additionally, this global specialty property-casualty insurer and reinsurer delivered positive earnings surprises in all of the last 4 quarters with an average beat of 44.4%.
On May 1, Endurance reported first-quarter 2013 operating earnings per share of $2.08, remarkably beating the Zacks Consensus Estimate of $1.19 and the year-ago quarter figure of $1.23.
Results were supported by a 7.8% increase in net premiums written and a 355% rise in underwriting income to $63.7 million. Meanwhile, lower loss expenses also improved the expense ratios and combined ratio, thereby generating 2.3% higher book value per share and annualized operating return on equity (ROE) of 15.6% against 9.6% in the year-ago period.
Lower operating cash flow and net investment income were the dampeners. Overall, Endurance is well positioned to capitalize on the changing market dynamics. The company's recent strategic restructuring within the global specialty team coupled with the global expansion, rate increases in major markets and healthy January business renewals are boosting both the insurance and reinsurance businesses.
Effective and consistent capital deployment via dividend payouts and share buybacks further instil confidence among investors. These factors also explain the surge in the Zacks Rank.
Based on Endurance's fundamental strength and underwriting profitability, the Zacks Consensus Estimate for 2013 rose 2.0% to $5.22 per share in the last 60 days. The estimate for 2014 is pegged at $4.80, up 1.1% in the last 60 days. Meanwhile, no downward revision in estimates was witnessed for both the years.
Other Insurers Worth a Look
Apart from Endurance, other stocks that are outperforming in the insurance sector include Hilltop Holdings Inc. ( HTH ), HCI Group Inc. ( HCI ) and American Safety Insurance Holdings Ltd. ( ASI ). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMER SAFETY INS (ASI): Free Stock Analysis Report
ENDURANCE SPLTY (ENH): Free Stock Analysis Report
HCI GROUP INC (HCI): Free Stock Analysis Report
HILLTOP HLDGS (HTH): Free Stock Analysis Report
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Zacks Investment Research