United Fire Group to Incur $20-23M Q2 Cat Loss - Analyst Blog

By Zacks Equity Research,

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United Fire Group, Inc. ( UFCS ) estimates second quarter pre-tax catastrophe loss, net of reinsurance, stemming from spring storms between $20 million to $23 million. The storms blew across Montana to Texas to New Jersey.

The losses are estimated to drag down second-quarter earnings by 51-59 cents per share. The Zacks Consensus Estimate for the second quarter is currently pegged at 62 cents. We expect the number to move south as analysts incorporate the adverse impact in their estimates.

United Fire Group noted that second-quarter catastrophe losses had an average impact of 880 basis points on the combined ratio over the past one decade. However, the ongoing quarter will exceed the average with more than 1,500 claims from these catastrophic events. Pre-tax catastrophe losses totaled $4.5 million in second quarter of 2013. The ongoing quarter will experience an almost fourfold increase year over year.

United Fire, in the first quarter, witnessed losses from a single large claim (a large explosion in a suburban townhome community) and lower favorable reserve development. It missed the Zacks Consensus Estimate by 27% and slumped 44% year over year. The Zacks Consensus Estimate for 2014 fell 2.7% over the last 60 days and is currently pegged at $2.16, representing a year-over-year decline of 21.7%.

Recently, Kemper Corp. ( KMPR ) estimated pre-tax catastrophe losses between $40 million to $50 million for the second quarter stemming from severe storms in April and May. In addition, Allstate Corp. ( ALL ) estimated total pre-tax CAT loss of about $720 million ($468 million post-tax) so far in the quarter.

United Fire Group currently carries a Zacks Rank #3 (Hold). A better-ranked property and casualty insurer is AmTrust Financial Services, Inc. ( AFSI ). The stock sports sporting a Zacks Rank #1 (Strong Buy).

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ALLSTATE CORP (ALL): Free Stock Analysis Report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

UNITED FIRE GRP (UFCS): Free Stock Analysis Report

KEMPER CORP (KMPR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: ALL , AFSI , UFCS , KMPR

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