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HCI Group (HCI) Calculates Possible Irma Catastrophe Loss

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HCI Group, Inc. (HCI - Free Report) recently estimated pre-tax catastrophe loss estimates in the aftermath of Hurricane Irma. Homeowners Choice Property & Casualty Insurance Company, Inc., a subsidiary providing homeowners’ insurance in Florida, projects loss between $100 million and $300 million.

HCI Group also anticipated the extent of loss to exceed its $16 million reinsurance retention level. Notably, the tropical storm of Irma has affected regions ranging from Caribbean to Florida.  This Florida-based HCI Group will surely then see its underwriting results being badly hurt. However, damages from Irma are hitherto estimated as lower than expected.

The Zacks Consensus Estimate for earnings in the third quarter is currently pegged at 60 cents per share, plummeting 45.5% year over year. We expect the estimates to move downward as analysts incorporate the impact of the catastrophe loss.

HCI Group has been bracing its operations with strategic initiatives. Last quarter, the insurer had completed the reinsurance program for 2017-2018 reinsurance year, improving coverage and lowering risks in the process. The company has also extended its flood insurance activities to nine additional states, which forms part of its strategy to diversify geographically as well as through product mix.  

Shares of HCI Group have lost 5.9% year to date, underperforming the industry’s increase of 9.5%. The Zacks Consensus Estimate for 2017 has moved south 5.6% while the same for 2018 has declined nearly 14% in the last 60 days. Catastrophes affecting underwriting results will possibly be a drag on share price. HCI Group carries Zacks Rank #5 (Strong Sell).



Recently, Assurant Inc. (AIZ - Free Report) has estimated between $134 million and $140 million pre-tax of reportable catastrophe losses from Hurricane Harvey and expects gross losses from Hurricane Irma to exceed its retention of $125 million pre-tax. The Travelers Companies, Inc. (TRV - Free Report) estimates pre-tax catastrophe loss from Hurricane Harvey between $375 million and $750 million or $245 million and $490 million after-tax.

Stock to Consider

A better-ranked stock from the insurance industry is Atlas Financial Holdings, Inc. (AFH - Free Report) , flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlas Financial Holdings engages in underwriting commercial automobile insurance policies in the United States. The company’s average four-quarter surprise is 57.94%

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