On Jul 1, 2014, shares of Montpelier Re Holdings Ltd. (MRH) scaled a 52-week high of $32.57 on sustained operational performance and impressive credit ratings. The one-year return from the stock came in at 28.5%, which was ahead of the S&P’s return of 21.4%.
With respect to earnings performance, the property and casualty insurer delivered positive surprise in the last four quarters, with an average beat of 57.04%. A sustained solid underwriting result drove the upside.
Product and geographic diversification along with better pricing helped Montpelier write higher premiums. In addition, geographical diversity helps it to prudently manage risks.
Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor faith in the stock as well as in maintaining credit worthiness in the market. Montpelier scores strongly in that respect. A.M. Best Co. affirmed the issuer credit rating (ICR) of “bbb” of Montpelier with a stable outlook. It also affirmed the financial strength rating of A (Excellent) and ICR of “a” of its reinsurance subsidiary.
Montpelier has been increasing its dividend consecutively for five years with a CAGR of 11%. This, in a way, helps to retain investor confidence in the stock as well as attract new investors. It also engages in share buyback that lowers share count and enhances shareholders value. The company has already repurchased $17 million in the second quarter.
This Zacks Rank #1 (Strong Buy) property and casualty insurer has been witnessing upward revision in the Zacks Consensus Estimate. The same for 2014 moved north 2.8% to $3.63 per share in the last 60 days.
Other Stocks to Consider
Investors interested in the property and casualty insurance industry may consider W.R. Berkley Corporation (WRB), AmTrust Financial Services, Inc. (AFSI) and Endurance Specialty Holdings Ltd. (ENH). All these stocks share the same Zacks Rank as Montpelier.
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