Navigators Group, Inc
) expects its fourth quarter pre-tax loss from Sandy to be in the
range of $18-$25 million, net of reinsurance and effects of
reinstatement premiums. The estimate includes the expected claims
and claim expenses incurred, reinsurance recoveries and
The estimates of Navigators is based on claims information
reported to date, a review of its potential exposures,
information received from its insureds and catastrophe modeling
However, owing to the magnitude of Sandy, limited availability of
claims data, the dependent nature of business interruption
and other exposures, coverage complexity, legal issues relating
to Sandy and uncertainties prevalent to loss estimation,
the ambiguity regarding industry loss from hurricane Sandy
remains and hence the company's estimate may change based on
revised data. Thus the actual losses will vary from the estimate.
Such estimate revision will be recorded by the company in the
period in which it occurs.
Navigators posted better numbers in each of the first three
quarters of 2012 partly owing to lower catastrophe activities. It
outpaced the Zacks Consensus Estimate for the last three quarter
with an average earnings surprise of approximately 14.3%. Overall
combined ratio in the first and second quarters showed
improvement but in the third quarter remained flat with the
year-ago period. The first and second quarters reported
underwriting profit which rebounded from the year-ago losses,
while the third quarter experienced an 18.4% improvement y/y.
However, the picture is expected to change in the fourth quarter
owing to the huge losses from Super Storm Sandy. Nevertheless the
Zacks Consensus Estimate for the fourth quarter of 2012 is 63
cents representing a year-over-year growth of 52.6%. We also
expect the solid performance in each of the three quarters to
more than offset the headwinds in the fourth quarter, thereby
aiding the company to come up with better numbers. The Zack
Consensus Estimate is $2.68, reflecting a year over year increase
Other property and casualty insurers like
Cincinnati Financial Corp.
), which closely compete with Navigators, have also provided
their loss estimates from Hurricane Sandy for the fourth quarter
of 2012. Cincinnati estimates pretax net loss of approximately
$25-$35 million while ACE Limited's loss estimate stands at $380
million after tax, net of reinsurance and including reinstatement
Navigators Group currently holds a Zacks #3 Rank, which
translates into a short-term Hold rating. ACE Limited also shares
the same Zacks Rank while Cincinnati holds a Zacks #2 Rank which
translates into a short-term Buy rating.
ACE LIMITED (ACE): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
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