Hilltop Holdings Inc.HTH

Morningstar Rating

Stock Research and Analysis

by Morningstar Analysts

Hilltop Holdings is essentially a startup, moving from owning mobile homes to insuring them after selling its real estate assets and buying a small insurance holding company, NLASCO, in 2007. This transaction left Hilltop with a hoard of cash, although Read more

Bulls Say

Because Hilltop has so much cash and a small amount of debt outstanding, its risk of default is low.

Hilltop's nearly $770 million cash hoard gives it solid financial backing for making significant acquisitions that could boost growth.

Although Hilltop is new to the insurance business, it brings experience in marketing to low-income groups; this knowledge could help it improve NLASCO's underwriting business, which concentrates on mobile-home owners.

Falling stock prices create opportunities for acquisitions on favorable terms. Read more

Bears Say

Hilltop has no economic moat, and its current insurance operations are thinly spread over a small geographic region, with limited potential for internal growth.

The credit storm has made large takeovers more expensive (and risky) for firms in need of exterior financing; Hilltop's cash reserves might not be enough for it to buy its way toward growth.

Hilltop's only company, NLASCO, is a small-scale, cyclical business with profit margins that have dropped, while Hilltop's only other revenue source, its investments, has been strongly hit by the market downturn. Read more

Strategy

After its asset sale in 2007, Hilltop found itself cash-rich but resource-poor. In response, management has searched arduously for an attractive acquisition candidate to grow beyond the sole business Read more

Management

Overall, we think stewardship at Hilltop has been good. We are particularly impressed that Hilltop has separated its chairman and CEO roles, which we think improves overall executive oversight. Hilltop also has done a good job of disclosing its past Read more

Profile

Hilltop Holdings operates a small insurance holding company, NLASCO, that sells fire and homeowners' insurance through two subsidiaries, National Lloyds Insurance and American Read more

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