However, we believe that NLASCO's disciplined underwriting philosophy and better competitive position will help to increase its direct premium written in the near future. We are pleased with NLASCO's combined ratio, which improved to 80.6% in 1Q08, compared to 89.5% in 1Q07. HTH's balance sheet remained strong, with total investments of $162.3 million, and cash and cash equivalents of $783.6 million as of March 31, 2008.

At the current price, the shares of HTH are trading at 0.80x its book value at the end of 1Q08, which is approximately 52.9% discount to the peer group median (versus 50.0% discount at the time of our last report). We think that the shares of HTH will continue to trade below its peers for the next several quarters, as the company continues to slowly win back the investor confidence and prove that it can realize the benefits of its NLASCO acquisition.

Based on the company's 1Q08 financial performance, we are adjusting our FY08 and FY09 earnings estimates to $0.50 per share and $0.65 per share respectively. Our target price of $10.75 per share (down $0.50) is based on the company's diversification planning and historical good performance of NLASCO, though current market conditions are not favorable. We have set a target P/E of approximately 21.5x our 2008 earnings estimate of $0.50 per share.

Delayed Launch Could Cost MBLX

While we are excited about the prospects of Metabolix Inc.'s (MBLX) first product Mirel, we were disappointed to hear about the delay in the company's commercialization plans. The company said construction at its Clinton facility was impacted by a harsh Midwest winter and commercial production is now expected to commence only in the second quarter of 2009.

The company has a key strategic alliance with Archer Daniels Midland (ADM) for Mirel. Metabolix is yet to receive the Food and Drug Administration's approval for the use of Mirel in food contact applications. This application accounts for a major part of Metabolix's estimated demand for biodegradable plastics in 2010.

Though Metabolix is working on other projects including a second technology platform which is being developed for the co-production of Natural Plastic and biomass feedstock, these programs are still in early stages of development. As such, investor focus is likely to remain on Mirel-related issues in the coming quarters and we recommend waiting on the sidelines until we gain more visibility.

It is difficult to value MBLX shares, given its little revenue and negative EPS. Based on our long-term earnings model, we do not see MBLX posting positive EPS over the next several years. The stock is currently trading at $10.42 suitable strategic partnerships for the oilseed and switchgrass programs and approval of Mirel for food contact applications could provide upside to the name. We rate the shares a Hold with a price target of $11.