United Fire Group, Inc.
) 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
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
) 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,
) 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.
). The stock sports sporting a Zacks Rank #1 (Strong Buy).
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