On Jun 15, Zacks Investment Research upgraded Markel Corp. (MKL) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Markel has witnessed rising earnings estimates on the back of strong first-quarter 2013 results. Moreover, this property and casualty insurer delivered positive earnings surprises in the past 4 quarters with an average beat of 119%. The long-term expected earnings growth rate for this stock is 11.8%.
Markel reported first-quarter results on Apr 30. Non-GAAP earnings per share came in at $7.65 per share, surpassing the Zacks Consensus Estimate of $5.46 by 40.1% and year-ago earnings of $4.02 by 35.8%. Solid underwriting results, driven by lower expense ratio, more favorable development of prior-year loss reserves and lower attritional losses, aided the upside.
Operating revenues improved 12% year over year to $820 million fueled by a 6% increase in revenues from insurance operations and a 67% surge in revenues from Markel Ventures.
Premiums benefited both organically as well as inorganically.
Additionally, the company closed the purchase of Alterra Capital Holdings Limited in May 1. The acquisition is expected to strengthen its present specialty insurance business, on the back of Alterra's reinsurance and large account insurance portfolios.
Moreover, to consolidate its underwriting platform, the company added two new businesses — Markel Global Insurance (large commercial accounts) and Markel Global Reinsurance — which will be combined with Markel Specialty, Markel Wholesale and Markel International units.
The Zacks Consensus Estimate for 2013 jumped 22% to $24.17 per share as all 4 estimates were revised higher over the last 60 days. For 2014, half of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 7.6% to $25.7 per share.
Other Stocks to Consider
Apart from Markel, property and casualty insurers HCI Group, Inc. (HCI), Montpelier Re Holdings Ltd. (MRH) and Platinum Underwriters Holdings Ltd. (PTP) among others, carry a Zacks Rank #1 (Strong Buy) and appear impressive.
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