On Dec 30, 2014, shares of Infinity Property and Casualty Corp. (IPCC) scaled a 52-week high of $78.07 on the back of rating affirmation and solid third-quarter earnings beat. With roughly 0.02 million shares traded in the last session, the stock finally closed at $77.66 per share, gaining 1.60%.
According to Nasdaq, the year-to-date return of Infinity Property and Casualty comes in at 8.24%, ahead of year-to-date return of other stocks in the property and casualty industry like AXIS Capital Holdings Limited (AXS), RenaissanceRe Holdings Ltd. (RNR) and Aspen Insurance Holdings Ltd. (AHL).
Rating affirmations from credit rating agencies are essential in retaining investor confidence in the stock and maintaining its creditworthiness in the market. Recently, A. M. Best affirmed the Infinity Insurance Company (Infinity) along with its 10 insurance subsidiaries and one affiliate, the financial strength rating (“FSR”) of A (Excellent) and the issuer credit ratings (“ICR”) of “a” with a stable outlook. These rating affirmations reflect the company’s solid risk-adjusted capitalization, favorable five-year operating performance and strong non-standard automobile market presence.
With respect to earnings performance, Infinity Property and Casualty delivered positive surprises in two out of the last four quarters with an average beat of 14.39%. In the third quarter, the company reported operating earnings of $1.23 outperforming the Zacks Consensus Estimate by 53.8% and significantly improving year over year. The improvement was primarily driven by higher revenues. The combined ratio also improved in the reported quarter reflecting low catastrophe losses.
Based on solid third quarter results and return on equity, the company raised its guidance. For 2014, the company expects its operating earnings to increase to $4.00–$4.35, up from $3.55–$4.35. For 2015 the company guided operating earnings in the range of $4.00–$4.50.
Currently, Infinity Property and Casualty carries a Zacks Rank #3 (Hold). It’s rating affirmation and solid third quarter beat will likely lead to a rise in estimates, resulting in a rank upgrade.
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