NEW YORK ( TheStreet) -- OneBeacon Insurance Group (NYSE: OB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, disappointing return on equity and poor profit margins. Highlights from the ratings report include:
- Net operating cash flow has significantly decreased to -$61.70 million or 111.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, ONEBEACON INSURANCE GROUP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The revenue fell significantly faster than the industry average of 8.6%. Since the same quarter one year prior, revenues fell by 41.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels.
- The company has increased its net income during the last reported quarter when compared with the same quarter a year earlier. However, since the company had zero dollars in net income for the prior period, we are unable to calculate a percent change in order to compare its growth rate with that of its industry average.