Why the Upgrade?
Montpelier remains well positioned to deliver solid numbers going forward, given its increased exposure in the property catastrophe lines of business. In addition, the company's efforts to focus on underwriting operations, augment capital flexibility and strengthen competitive position bode well going forward.
Additionally, Montpelier's launch of Blue Capital marks its efforts to expand the underwriting partnership business. Blue Capital is an asset management platform offering an array of catastrophe reinsurance-linked investment products to institutional and retail investors.
Montpelier also expects a 1% to 5% increase in net written premiums, excluding the impact of reinstatements, for the first quarter of 2013.
With respect to earnings trend, Montpelier delivered positive earnings surprises in all of the last 4 quarters with an average beat of 44.7%. The Zacks Consensus Estimate for the first quarter of 2013 currently stands at 79 cents.
A steady improvement in operating performance is also reflected by Montpelier's escalated book value per share. Moreover, the company has been retaining shareholders' confidence by returning wealth via share repurchases and dividend hikes. It has already bought back 8 million shares in January this year.
Based on Montpelier's fundamental strength and focus on its underwriting operations, the Zacks Consensus Estimate for 2013 rose 2.1% to $2.47 per share in the last 60 days, with one upward revision in estimates. The estimate for 2014 is pegged at $2.60, rising 3.6% in the last 60 days, with one upward revision in estimate.
Other Stocks to Consider
Apart from Montpelier, other stocks that are outperforming in the insurance sector include AXIS Capital Holdings Ltd . ( AXS ), XL Group Plc ( XL ) and Arch Capital Group Ltd. ( ACGL ). All these stocks carry a Zacks Rank #1 (Strong Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.