On Nov 21, Zacks Investment Research upgraded White Mountains Insurance Group Ltd. (WTM) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
White Mountains has witnessed rising earnings estimates on the back of a strong third-quarter 2013. Also, this property-casualty insurer and re-insurer delivered positive earnings surprises in 3 of the last 4 quarters with a substantial average beat of 241%.
White Mountains reported third-quarter 2013 results on Oct 28. Operating net income came in at $9.20 per share, significantly surpassing the Zacks Consensus Estimate by 81.8%. The results also soared 14% from $8.07 per share reported in the third quarter of 2012.
Earnings were primarily aided by the decrease in total expenses during the reported quarter. Total expenses declined 7.7% year over year due to lower loss and loss adjustment expenses as well as lower general and administrative expenses.
Total liabilities of White Mountains decreased 7.1% to $8.02 billion as of Sep 30 from the 2012-end level. The reduction came on the back of reduced debt and liabilities held for sale of the company.
Healthy returns from investments aided to the increase in adjusted book value per share of White Mountains. Book value per share of $622 million at the end of third quarter increased 2.8% from Sep 30, 2012 level.
White Mountains also scores strongly with rating agencies. Recently, A.M. Best Co. has reiterated the issuer credit ratings (ICR) of “bbb” of White Mountains with stable outlook..
The Zacks Consensus Estimate for 2013 increased 4.1% to $27.90 per share over the last 30 days. For 2014, the estimate was lifted by 0.4% to $23.60 per share over the same time frame.
Other Stocks to Consider
Other property and casualty insurers that look attractive at current levels include Alleghany Corp. (Y), Aspen Insurance Holdings Ltd. (AHL) and Hallmark Financial Services Inc. (HALL). All these stocks carry the same Zacks Rank as White Mountains.
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