Market Overview

December CPI Data Suggests Insurance Companies Should Maintain Margins, Analysts Say

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Analysts at Keefe, Bruyette & Woods note trends in the December CPI data point to insurance companies’ ability to maintain margins with lower, positive rate trends, particularly in the auto and homeowners markets.

Year-over-year, auto insurance rates increased 4.7 percent in December, compared with a 4.8 percent increase year-over-year in the November reading. When accounting for losses, KBW notes that auto rates increased 1.9 percent in December versus 1.7 percent in November.

Homeowners’ insurance rose 5.6 percent versus 5.2 percent year-over-year in November, though accounting for losses, rates fell 0.1 percent. This is a sharp decline from November’s increase of 0.9 percent and was its lowest reading of 2014.

KBW sees risks that cheaper gas prices pressure auto margins, but the analysts see less of a risk that competition pressures margins. For Federated National Holding Co (NASDAQ: FNHC), Heritage Insurance Holdings Inc (NYSE: HRTG) and Horace Mann Educators Corporation (NYSE: HMN), this could be constructive to earnings.

Latest Ratings for FNHC

DateFirmActionFromTo
May 2018UpgradesOutperformStrong Buy
Nov 2016DowngradesBuyNeutral
Aug 2016MaintainsOutperform

View More Analyst Ratings for FNHC
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Posted-In: Keefe Bruyette & WoodsAnalyst Color Analyst Ratings

 

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