HCC Insurance Holdings Inc. (HCC) announced its third straight positive surprise in early May, as first quarter 2012 earnings beat the Zacks Consensus Estimate by 18%.
With a price-to-earnings (P/E) ratio of 10.5, this Zacks #1 Rank (Strong Buy) specialty insurance underwriter is a true value pick.
Strong First Quarter Performance
On May 1, HCC Insurance Holdings delivered first quarter 2012 earnings of 84 cents per share, increasing 20% from the year-ago quarter. It was also 18.3% higher than the Zacks Consensus Estimate of 71 cents. The outperformance came on the back of solid results across all segments along with pricing improvement.
Total revenue increased 8% year over year to $609.5 million. The improvement came on the back of higher premiums and investment income.
Net earned premium was $547.1 million, an increase of 8% from last year.
Investment income advanced 10.5% year over year to $57.0 million.
Lower level of catastrophe activities led to a 950 basis points improvement in the combined ratio over last year’s 82.5%.
HCC Insurance Holdings spent $66.9 million to buyback 2.2 million shares in the quarter.
On June 2, the company’s board approved a quarterly dividend of 15.5 cents, representing a year-over-year hike of 6.9%.
Positive Estimate Revision
Over the last 30 days, the Zacks Consensus Estimate for 2012 rose 0.3% to $3.00 as two of nine estimates were revised upward. Over the past three months, the guidance is up nearly 5%. Meanwhile, the Zacks Consensus Estimate for 2013 is $3.15 per share, suggesting year-over-year improvement of 5%. Continued...