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Severe winter will squeeze property/casualty insurer earnings: Analysis

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Severe winter weather will hurt property/casualty insurers' first quarter earnings, according to an analysis released Tuesday by Drexel Hamilton L.L.C.

“Statistics: April 2014: 1Q Preview” said this year's winter probably will go down as one of the five costliest in the United States since 1980, with insured losses of more than $1.5 billion.

The report noted that in addition to property losses from winter storms, some businesses also incurred business interruption and supply chain issues. Philadelphia-based Drexel Hamilton also noted that the disappearance of a Malaysian jet could add as much as $550 million to total insured losses with liability issues remaining to be resolved.

“Add recent mudslides, sinkholes and train derailments, and the picture that emerges is a first quarter with above-average losses,” said Drexel Hamilton, though the forecasters are currently predicting an Atlantic hurricane season that will be less active than normal.

The report also noted that property/casualty insurers' net investment income is likely to remain “challenged,” although the strong market for securities could help net income through realized gains. The report said, however, that a bigger boost to earnings per share “probably will come from more aggressive share buyback programs announced with year-end results.”