United Insurance Provides Q3 Catastrophe Loss Estimates

United Insurance Holdings Corp UIHC estimates third-quarter 2020 catastrophe loss of about $135 million before income taxes or $107 million after tax, net of expected reinsurance recoveries. The estimated loss can be attributed to six new named windstorms (Tropical Storm Fay, Hurricane Hanna, Hurricane Isaias, Hurricane Laura, Hurricane Marco, and Hurricane Sally) and other non-named windstorm catastrophe events.

The Zacks Consensus Estimate for United Insurance Holdings’ third-quarter earnings is currently pegged at a loss of 80 cents, indicating a decline of 17.7% from the year-ago quarter reported figure.  We expect estimates to move south once analysts start incorporating loss estimates into their numbers.

The third quarter of a year generally bears the brunt of catastrophes as the hurricane season typically starts in June and lasts through November during a year, gathering strength in August and September. In a report on Aug 5, 2020, Colorado State University stated that ‘hurricane activity will be about 190% of the average season’. There will be 24 named storms, including 12 hurricanes and six major hurricanes per CSU.

Being a property and casualty insurer, United Insurance Holdings has substantial exposure to loss from natural disasters, man-made catastrophes and other catastrophic events, which has been inducing volatility in its underwriting results. Catastrophe loss for the second quarter of 2020 was $29.8 million, wider than $15.8 million incurred in the year-ago quarter. However, combined ratio improved 880 basis points, riding on rate increases as well as improved risk selection.

Infact, the property and casualty insurer noted that rate increases are driving improvements in core earnings power. Also, the company has a reinsurance program in place, helping it to weather cat loss.

Shares of United Insurance Holdings have lost 44.1% year to date compared with the industry’s decrease of 9.6%.

The stock currently carries Zacks Rank #5 (Strong Sell).

Stocks to Consider

Some better-ranked companies in the insurance industry are Donegal Group DGICA, Markel Corporation MKL and Fidelity National Financial FNF, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group delivered an earnings surprise of 134.62% in the last-reported quarter.

Markel came up with an earnings surprise of 57.01% in the last-reported quarter.

Fidelity National delivered an earnings surprise of 53.52% in the last-reported quarter.

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Fidelity National Financial, Inc. (FNF): Free Stock Analysis Report
Markel Corporation (MKL): Free Stock Analysis Report
United Insurance Holdings Corp. (UIHC): Free Stock Analysis Report
Donegal Group, Inc. (DGICA): 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.

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