Zacks Investment Research downgraded
Infinity Property and Casualty Corp.
) to a Zacks Rank #5 (Strong Sell) on Dec 5, 2013.
Why the Downgrade?
Infinity Property and Casualty witnessed downward estimate
revisions after reporting mixed third-quarter 2013 results.
Additionally, Infinity Property and Casualty delivered negative
earnings surprise in all of the last four quarters with a
negative average surprise of 28.05%. Over the last 30 days, one
out of two estimates was nudged down, leading to a 3.8% decline
in the 2013 Zacks Consensus Estimate to $2.53 per share.
On Nov 7, Infinity Property and Casualty reported
third-quarter earnings per share of 63 cents, which though above
the year-ago earnings, missed the Zacks Consensus Estimate by 7
cents. The top line also improved from the prior-year quarter but
missed the Zacks Consensus Estimate.
The quarter witnessed a nearly 6% increase in total expenses,
mainly owing to high loss and loss adjustment expenses,
commissions and other underwriting expenses, and corporate
general and administrative expenses. Investment income also
declined during the quarter and a consistent rise in interest
rates pose the risk of further decline. Moreover, although
combined ratio of Infinity Property and Casualty improved in the
reported quarter, the improvement was less than expected due to
an increase in the loss cost stemming from property damage.
For 2013, Infinity Property and Casualty reduced the range of
premium growth from 5%-8% to 6%-7%. An expected increase in the
loss cost stemming from property damage should further affect the
combined ratio of the company going forward. Thus, Infinity
Property and Casualty increased its 2013 combined ratio guidance.
Based on all of these, management also reduced its operating
earnings guidance from $2.90-$3.40 per share to $2.40-$2.90.
Other Stocks to Consider
ALLIED WORLD AS (AWH): Free Stock Analysis
INFINITY PPTY (IPCC): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
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Some better-ranked stocks in the property and casualty insurance
Montpelier Re Holdings Ltd.
Allied World Assurance Company Holdings, AG
). While Montpelier and RLI Corp. carry a Zacks Rank #1 (Strong
Buy), Allied World carries a Zacks Rank #2 (Buy).