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United Insurance (UIHC) Keeps a Count of Q3 Catastrophe Loss

Zacks Equity Research
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United Insurance Holdings Corp. UIHC recently announced an estimate of $83 million third-quarter catastrophe loss before income taxes or $54 million after tax net of expected reinsurance recoveries. Estimates include loss caused by hurricanes Harvey and Irma.

The company calculates loss of about $300-$600 million before reinsurance recoveries and income taxes stemming from the tropical storms.

United Insurance’s catastrophe excess of loss reinsurance restricted retained losses to $81 million with quota share reinsurance further lowered to $73 million.
    
Blueline Re, a wholly owned subsidiary of United Insurance, has a separate reinsurance program for its commercial excess and surplus lines property business. It expects $5 million retention for each hurricane, thereby taking the tally to $83 million in combined group pre-tax retained losses.

Banking on a strong capital structure and reinsurance program, United Insurance has at least $2.2 billion of reinsurance remaining to counter weather events.

Being a property and casualty insurer, United Insurance will not escape the economic slump caused by these catastrophe events. Last quarter, the company incurred $21.8 million in catastrophe loss, contracting the combined ratio by 1040 basis points.

The Zacks Consensus Estimate for the third quarter is currently pegged at 2 cents per share, reflecting a year-over-year plunge of 87.5%. We expect the estimates to move downward as analysts incorporate the catastrophic loss impact.

Recently, Assurant Inc. AIZ has estimated between $134 million and $140 million pre-tax of reportable catastrophe losses from Harvey and expects gross losses from Irma to exceed its retention of $125 million pre-tax. The Travelers Companies, Inc. TRV reckons pre-tax catastrophe loss from Harvey between $375 million and $750 million or the after-tax one between $245 million and $490 million. HCI Group, Inc. HCI has calculated possible losses between $100 million and $300 million due to Irma.

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