NEW YORK (TheStreet) -- Shares of Meadowbrook Insurance Group (MIG) are advancing 0.94% to $8.62 on Monday on high trading volume after the California Department of Insurance approved Fosun International Limited's acquisition of Meadowbrook's California subsidiaries.
Meadowbrook's subsidiaries in California include Star Insurance, ProCentury Insurance, and Williamsburg National Insurance.
In December of 2014, Fosun agreed to buy Meadowbrook for about $433 million, The Wall Street Journal reported.
Under the new deal, Meadowbrook will maintain its Michigan headquarters and continue to operate under the Meadowbrook brand name, the Journal added.
About 1.9 million shares of Meadowbrook were traded by 2:50 pm on Monday, above the company's average trading volume of about 310,000 million shares a day.
Michigan-based Meadowbrook Insurance Group provides risk management solutions to businesses, groups, associations and individuals. Shanghai-based Fosun Int'l is a private-owned conglomerate that engages in pharmaceutical and healthcare, property development, iron and steel products, mining, asset management, and insurance businesses primarily in Mainland China and Hong Kong.
Separately, TheStreet Ratings team rates MEADOWBROOK INS GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MEADOWBROOK INS GROUP INC (MIG) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.49, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Insurance industry and the overall market, MEADOWBROOK INS GROUP INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for MEADOWBROOK INS GROUP INC is currently extremely low, coming in at 13.89%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.85% trails that of the industry average.
- Net operating cash flow has significantly decreased to $8.75 million or 59.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: MIG Ratings Report