American Financial Group Inc.
) disclosed its preliminary estimation of the projected loss from
Hurricane Sandy. The company expects total pre-tax loss, net of
reinsurance, between $25 million and $35 million.
Consequently, American Financial has tightened its guidance
range for core net operating earnings in 2012 to $3.10-$3.30 per
share from $3.10-$3.50 projected during the third-quarter
earnings release on October 29, 2012. The previous guidance only
included a regular catastrophe loss projection and did not
comprise the expected loss from Hurricane Sandy. The revised as
well as previous guidance excludes the impact of non-core
The revised core earnings guidance lies below the Zacks
Consensus Estimate of $3.35 for 2012. However, the Zacks
Consensus Estimate is expected to decline in the near term, once
analysts start adjusting their estimates to include the impact of
the revised guidance.
Moreover, American Financial's outlook for property and
casualty combined ratio has been narrowed to 94%-96% from 93%-96%
guided during the third quarter earnings conference call.
Further, the combined ratio guidance for the Property and
Transportation Group was tightened to 97%-99% from 96%-99%
The Specialty Financial Group combined ratio has also been
revised to 89%-91% from 88%-91% anticipated earlier. However, the
company did not comment on the expected combined ratio of the
Specialty Casualty Group, which was projected to lie in the range
of 92%-95% during the third quarter earnings conference call.
American Financial also disclosed that almost all of the
claims being filed are from businesses affected by the hurricane.
Further, the company assured that the claims are being processed
While most property-casualty insurers were benefiting from
comparatively lower catastrophe levels this year, Hurricane Sandy
changed the scene. The devastation caused by this superstorm is
expected to substantially increase the fourth-quarter catastrophe
loss of property-casualty insurers such as
The Travelers Companies Inc.
American Financial currently carries a Zacks #2 Rank, which
implies a short-term Buy rating. We maintain a long-term Neutral
recommendation on the stock.
AMER FINL GROUP (AFG): Free Stock Analysis
ALLSTATE CORP (ALL): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis
To read this article on Zacks.com click here.