Compass Point Sees All Eyes On Deal Completion For Meadowbrook Insurance

In a report published Wednesday, Compass Point analyst Ken Billingsley reiterated a Neutral rating and $8.65 price target on Meadowbrook Insurance Group, Inc. MIG. In the report, Compass Point noted, "We maintain our Neutral rating and $8.65 price target. Our price target represents the cash offer price by Fosun International Limited, which is a slight premium to TBVPS. While the closing of the deal may take longer than traditional P&C mergers due to Fosun not having an existing insurance operation in the U.S., we do not expect a higher offer to enter the fray. Operationally, MIG grew premiums more than expected during the quarter, and with a lower tax rate for the quarter, beat estimates. However, the combined ratio was slightly higher than estimated and fee and commission income was lower. Statutory underwriting leverage held steady despite the higher than expected NPW growth as statutory surplus increased to $511mm in 4Q14 from $494.8mm in 3Q14. Despite the growing TBVPS and the possibility that TBVPS may exceed the current deal price prior to the closing of the deal with Fosun. We do not believe a more attractive or competing offer will present itself and believe the current deal represents the best near-term opportunity for investors." Meadowbrook Insurance Group closed on Tuesday at $8.44.