Kemper (KMPR) Estimates $32M To $38M In Q2 Catastrophe Loss

Kemper Corporation (NYSE:KMPR) has estimated a pre-tax catastrophe loss between $32 million and $38 million for second-quarter 2017. The losses stemmed from 15 storm events affecting underwriting results.

The Zacks Consensus Estimate for the second quarter is currently pegged at 14 cents, which translates into year-over-year growth of 51.85%. However, we expect this estimate to move down as analysts incorporate the impact of expected catastrophe loss in their estimates.

Kemper noted that the homeowners and auto lines of business were mainly affected by these catastrophe events. The insurer is not hopeful of recovering any of these losses from its catastrophe reinsurance program.

Insurers The Allstate Corp (NYSE:ALL) and Horace Mann Educators Corp (NYSE:HMN) have also estimated catastrophe loss for the second quarter. While Allstate projects $638 million in catastrophe loss, Horace Mann Educators estimates pre-tax catastrophe loss between $31 million and $34 million. Moreover, Donegal Group Inc, (NASDAQ:DGICA) (NASDAQ:DGICB) announced that weather-related losses may account for $20.1 million second-quarter loss.

Coming back to Kemper, since this is a property and casualty insurer, it is exposed to the vagaries of catastrophe events and prone to volatility in its underwriting results. The company also suffered due to higher catastrophe losses in the first quarter. In fact, catastrophe losses had dragged the quarter’s net income by $17.3 million. The same weighed on book value per share too. Combined ratio deteriorated 620 basis points year over year to 115%.

Shares of Kemper have lost 13.88% year to date, underperforming the Property and Casualty Insurance industry’s gain of 5.71%. The company has also witnessed estimates moving south over the last 60 days.

Kemper currently carries Zacks Rank #5 (Strong Sell). The company is scheduled to report second-quarter results on Aug 1. Our proven model does not conclusively show that the company is likely to beat on earnings this time. This is because a Zacks Rank #5, which lowers the predictive power of ESP, combined with an Earnings ESP of -64.29% makes prediction difficult. The company delivered positive surprises in three of the last four quarters, with an average beat of 26.44%.

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