Montpelier Re (MRH) vs. United Fire Group (UFCS) Financial Survey

Montpelier Re (NYSE: MRH) and United Fire Group (NASDAQ:UFCS) are both small-cap property & casualty insurance – nec companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Profitability

This table compares Montpelier Re and United Fire Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Montpelier Re 35.71% 13.24% 6.70%
United Fire Group 1.49% 1.32% 0.30%

Analyst Recommendations

This is a summary of current recommendations for Montpelier Re and United Fire Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Montpelier Re 0 0 0 0 N/A
United Fire Group 0 2 1 0 2.33

United Fire Group has a consensus price target of $46.33, indicating a potential upside of 1.65%. Given United Fire Group’s higher probable upside, analysts clearly believe United Fire Group is more favorable than Montpelier Re.

Dividends

United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. Montpelier Re does not pay a dividend. United Fire Group pays out 254.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. United Fire Group has raised its dividend for 7 consecutive years.

Institutional and Insider Ownership

58.4% of United Fire Group shares are held by institutional investors. 5.8% of United Fire Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Montpelier Re and United Fire Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Montpelier Re N/A N/A N/A $3.84 11.09
United Fire Group $1.14 billion 1.00 $49.90 million $0.44 103.59

United Fire Group has higher revenue and earnings than Montpelier Re. Montpelier Re is trading at a lower price-to-earnings ratio than United Fire Group, indicating that it is currently the more affordable of the two stocks.

Summary

United Fire Group beats Montpelier Re on 8 of the 13 factors compared between the two stocks.

About Montpelier Re

Montpelier RE Holdings Ltd. is a holding company. The Company provides customized insurance and reinsurance solutions to the global market. Through its affiliates in Bermuda, it provides institutional and retail investors with direct access to the global property reinsurance market. It operates in three segments: Montpelier Bermuda, which consists of the assets and operations of Montpelier Reinsurance Ltd., which is its wholly owned operating subsidiary based in Pembroke, Bermuda and is registered as a Bermuda Class four insurer; Montpelier at Lloyd’s, which consists of the assets and operations of Montpelier Syndicate 5151, Montpelier Capital Limited, Montpelier at Lloyd’s Limited, Montpelier Underwriting Services Limited and Montpelier Underwriting Inc., and Collateralized Reinsurance, which is marketed under the name Blue Capital. Blue Capital is an asset management platform offering property catastrophe reinsurance-linked investment products to institutional and retail investors.

About United Fire Group

United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).

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