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Endurance Estimates 2Q Cat Loss

Zacks Equity Research

Endurance Specialty Holdings Limited (ENH) has provided its initial loss estimate from natural catastrophes in the second quarter of 2013. These catastrophes include heavy flooding in Canada and Europe and a number of tornadoes that struck the United States. The aggregate pre-tax loss estimate provided by Endurance is $47.4 million, net of reinsurance and reinstatement premiums.

Of the entire loss estimate, approximately 50% or $23.7 million is attributable to the European floods alone that occurred during May and June 2013.

However, owing to the uncertainties and limitations involved in the event information, actual losses might vary from this estimate. Such estimate revision will be recorded by the company in the period of its occurrence.

Endurance is due to report is second quarter 2013 results on Aug 5. The Zacks Consensus Estimate for the second quarter stands at $1.13 per share representing a year-over-year decline of 3.81%. In the first quarter, the company showed impressive earnings performance. Favorable results came on the back of higher premiums written and higher underwriting income. In fact, Endurance has delivered positive earnings surprise in all of the last 4 quarters with an average beat of 44.4%.

However, the picture is expected to alter in the upcoming period owing to huge losses from the catastrophes. However, Endurance’s better operational performance for second half could offset the adverse impact of catastrophe losses in the second quarter, to lead to better results for full year 2013. The Zacks Consensus Estimate for 2013 is currently pegged at $5.15, representing a year-over-year improvement of 225.95%.

Last week, Bermuda based insurer, Validus Holdings Limited (VR) provided its second quarter 2013 pre-tax loss from heavy flooding in Central Europe to be $69.6 million. This loss is net of reinsurance, effects of reinstatement premiums, retrocessional and other recoveries.

Endurance currently holds a Zacks Rank #2 (Buy). Among other property and casualty insurers, AmTrust Financial Services Inc. (AFSI) and State Auto Financial Corp (STFC) carry a favorable Zacks Rank #1 (Strong Buy).

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