United Insurance (UIHC) Up to Strong Buy, Core Growth Solid
On Sep 30, 2014, Zacks Investment Research upgraded United Insurance Holdings Corp. (UIHC) by two notches to a Zacks Rank #1 (Strong Buy) from Zacks Rank #3 (Hold).
Why the Upgrade?
United Insurancehas been experiencing upward estimate revisions on the back of improved financials and core growth from enhanced premiums and regionally-diversified portfolio.
Additionally, United Insurance maintained its earnings streak in the last four quarters with an average beat of 56.9%. This property-casualty insurer also outperformed the one-year Nasdaq index, which posed growth of 19.1% against a return of 65.5% clocked by the company.
On Jul 29, AmTrust reported second-quarter 2014 operating earnings per share of 46 cents, which outpaced the Zacks Consensus Estimate by about 7% and the year-ago quarter figure by 64.3%.
The year-over-year top-line growth of 39% stemmed from net earned premiums that increased 39.6% along with 94.6% growth in investment income. Net realized gain of $31 million against loss of $149 million in the year-ago quarter also boosted results. Despite higher underwriting, operating and policy acquisition expenses, expense ratio and margins witnessed improvement. Notably, combined ratio improved 860 basis points year over year to 81.2%.
United Insurance has also witnessed robust expansion in markets outside Florida. These markets also accounted for about 60% of new business generated by the company in the first half of 2014. An improved book value and prudent capital management also augur optimism, while steady shareholder return enlists a positive investor sentiment in the stock.
Accordingly, the Zacks Consensus Estimate for 2014 and 2015 moved north by 7.1% and 1.2% to $1.82 and $1.65 per share, respectively, in the last 60 days. Notably, no downward estimate revision was witnessed for these years.
Moreover, the Most Accurate Estimate for United Insurance’s 2014 and 2015 earnings stands at $1.85 and $1.70 a share, resulting in an Earnings ESP of +1.7% and +3.0%, respectively. This indicates likely earnings beat for both the years.
Other Insurance Stock Picks
Investors interested in the insurance sector could also consider stocks like AmTrust Financial Services Inc. (AFSI), XL Group Plc (XL) and Navigators Group Inc. (NAVG). All these stocks carry the same Zacks Rank as United Insurance.
Read the Full Research Report on XL
Read the Full Research Report on AFSI
Read the Full Research Report on NAVG
Read the Full Research Report on UIHC
Zacks Investment Research
