Short term, FNHC has some headwinds. In the conference call they warned that the September quarter EPS would be hit by an abnormally high increase in their reinsurrance premium. While other Florida Carriers, even ones that are growing policies, have seen their rates go down a bit.
Now they did this because they decided to continue to grow their business and add additional policies during hurricane seasons...something they havent done in the past. So, they are forced to buy reinsurance for what they estimate their policy count will going forward. The premium increase will hit hardest in the September quarter....and as premiums grow throughout the year, eps should grow.
Also, as I recall, they decided to lower their 'deductible' for each catastrophic hurricane event...I think it went down to six million from seven million. Not sure why they did that...but they are a conservative group.
Smithed....I agree with ballen, that longterm this is an excellent company. Even better once it gets through peak hurricane season of Sept and October, if Florida gets by with no or little damage, as in the past 2 years. Just look at its 2 year chart. Fantastic. However, being fairly thinly traded, the short sellers and the short term buyers, seem to be profit taking on a regular basis. I am quite surprised, frankly, that it has now dropped below $10. I thought it had decisively broken through that barrier. But this morning the pps is up around 4.5% and you can easily expect 5-10% fluctuations a month at a time. But still trending up, overall. Just have to be patient. Very patient. Many of us are estimating that this will be a $12 stock by Jan 2014.
I feel it could be some profit taking going into the heart of hurricane season. What is important is looking at the big picture. Policy count/ Unearned premiums are skyrocketing so looking out over the next 12 months earnings potential is very strong. If they stay on a rate of 3.5 to 4 million of new business each week you come up with 91 to 104 million of new business in the second half of this year. Braun even said in the CC that he could even see that ticking up so who know they could maybe even get up to 5 mil a week. I wouldn't worry about this short term correction, this is a great buying opportunity when you look at how the management is making big steps to increase the size of the company.