United Insurance Holdings Corp. UIHC estimates first-quarter pre-tax catastrophe loss of $17 million stemming from severe winter and freeze events between Jan 28 and Mar 31. These events in Massachusetts, New Jersey and Rhode Island totaled 1,300. The after-tax impact would be $10.6 million. Following the news release, shares lost about 1.5% in the after-market trading hours.
The losses are estimated to drag down first-quarter earnings by 50 cents per share. The Zacks Consensus Estimate for the first quarter is currently pegged at 47 cents. We expect the number to move south as analysts incorporate the adverse impact in their individual estimates.
A benign catastrophe environment has helped United Insurance witness an improvement in combined ratio in 2014. The same improved 630 basis points over 2013. The company even delivered positive earnings surprises in the last four quarters with an average of 35.12%, largely driven by the first-quarter 2014 outperformance.
In fact, our proven model shows that United Insurance is likely to beat earnings in the first quarter as it has the right combination of Zacks Rank #3 (Hold) and Earnings ESP of 6.38%. United Insurance is scheduled to report first-quarter earnings results on Apr 29.
Recently, Chubb Corp CB estimated pre-tax catastrophe losses around $250 million from nine severe winter and freeze events in the United States. These events would drag the first-quarter results by 69 cents per share.
United Insurance currently carries a Zacks Rank #3 (Hold). Some better-ranked property and casualty insurers are Cincinnati Financial Corp. CINF and Berkshire Hathaway Inc. BRK.B. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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