Riding on a steady growth momentum, the shares of PartnerRe Ltd. (PRE) scaled a new 52-week high at $111.11 on Jul 8. This multi-line insurer and reinsurer’s shares rose about 11% since the beginning of 2014.
Yesterday’s closing price represents a strong one-year return of about 24.0%, against 20.3% clocked by the S&P 500 index. Average volume of shares traded over the last three months stands at approximately 349.6K.
PartnerRe has delivered positive earnings surprises in all of the last four quarters with an impressive average beat of 47.1%. Moreover, the Zacks Consensus estimates for 2014 and 2015 have witnessed consistent upward revisions in the past three months.
Rationale
The improved momentum of this Zacks Rank #2 (Buy) stock stems from its prudent risk management, which is also reflected by the company’s resilient growth over the past quarters. Healthy renewals, improved pricing and disciplined underwriting are expected to be accretive in the upcoming quarters as well.
Despite the intermittent exposure to catastrophes, like the recent hurricane Arthur, these may not have any significant adverse impact on PartnerRe’s regional sales. Moreover, the company’s recent strategic business diversification is showing positive cues. Through this move, PartnerRe added new lines of businesses within health and mortgage, thereby mitigating market risks.
Ahead of the second-quarter 2014 earnings release, scheduled at the end of this month, we believe that the company’s strong clientele, robust capital position and zeal to seek new lucrative business will continue to accelerate margins and cash flows. These factors not only support efficient capital deployment but also score well with the ratings agencies.
Other Worthy Picks in the Sector
Some better-ranked insurersthat warrant a look include AmTrust Financial Services Inc. (AFSI), Hallmark Financial Services Inc. (HALL) and Montpelier Re Holdings Ltd. (MRH). All these stocks sport a Zacks Rank #1 (Strong Buy).
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