Zacks Investment Research downgraded shares of Montpelier Re Holdings Ltd. (MRH) from OUTPERFORM to NEUTRAL on July 20, 2012, with a target price of $22.00.
We are downgrading Montpelier to Neutral from Outperform given the company's exposure to cat losses and incurring higher expenses. However, with second quarter earnings release scheduled on July 26, after the bell, we expect the company to deliver earnings of $0.71 per share, way ahead of the year ago earnings of $0.08 per share. We believe that vending MUSIC, acquisition of a property catastrophe reinsurance portfolio, expansion of capital partnership relationships and acquisition of renewal rights will help the company remain focused on underwriting operations, augment capital flexibility, and strengthen its competitive position going forward. The company benefits from tax exemptions in Bermuda as no income taxes are levied there. Also, Bermuda Minister of Finance have assured exemption of Bermuda-imposed income, withholding and capital gains taxes until 2035 on all Bermuda-based subsidiaries.
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