1347 Property Insurance Holdings, Inc. :PIH-US: Earnings Analysis: Q2, 2017 By the Numbers : September 5, 2017

1347 Property Insurance Holdings, Inc. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of 1347 Property Insurance Holdings, Inc. – Conifer Holdings Inc, Third Point Reinsurance Ltd., Federated National Holding Company and Safety Insurance Group, Inc. (CNFR-US, TPRE-US, FNHC-US and SAFT-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 8.92 million, Net Earnings of USD 0.92 million.
  • Year-on-year change in operating cash flow of 49.31% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from operating margin decreases as well as from unusual items

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 8.92 8.72 8.13 7.63 7.89
Revenue Growth (%YOY) 13.05 1.37 7.62 14.1 21.71
Earnings (mil) 0.92 0.25 1.59 -1.81 1.34
Earnings Growth (%YOY) -31.27 122.06 174.96 -1653.4 1172
Net Margin (%) 10.32 2.82 19.58 -23.66 16.98
EPS 0.15 0.04 0.27 -0.3 0.22
Return on Equity (%) 1.95 0.53 3.48 -3.89 2.85
Return on Assets (%) 3.7 1.05 6.8 -7.67 5.98

Access our Ratings and Scores for 1347 Property Insurance Holdings, Inc.

Market Share Versus Profits

Revenues History
Earnings History

PIH-US‘s change in revenue this period compared to the same period last year of 13.05% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that PIH-US is holding onto its market share. Also, for comparison purposes, revenues changed by 2.36% and earnings by 274.39% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

Insurance companies sometimes tradeoff for improvements in premiums earned by relaxing standards in underwriting policies. A quick way to check against such activity is to compare the changes in loan loss provisions as well any chnages in the level of policy claims. If either of these checks point to a decline in the underwriting standards, it is quite possible that the company’s performance is a result of underwriting policy changes that could have a longer term impact compared to the shorter term pop in premiums earned.

Premiums Earned Percent History
Loss Ratio History

The company’s year-on-year decline in earnings has been influenced by the following factors: (1) Decline in premiums earned as a percent of total revenues from 95.17% to 92.21% and (2) issues with underwriting policies. As a result, loss ratio went from 24.47% to 28.96% in this period. For comparison, premiums earned as a percent of revenues were 93.75% and the loss ratio 44.43% in the immediate last period.

Premiums Earned Percent Versus Loss Ratio

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

PIH-US‘s change in operating cash flow of 49.31% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s fall in earnings have been influenced by the following factors: (1) Contraction in operating margins after interest from 28.46% to 18.50% and (2) One-time items that contributed to a weakening of pretax margins from 27.37% to 17.48%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for 1347 Property Insurance Holdings, Inc.

Company Profile

1347 Property Insurance Holdings, Inc. engages in the provision of property and casualty insurance services. It offers homeowners, manufactured home, and dwelling fire insurance through its subsidiary Maison Insurance Company. The company was founded on October 2, 2012 and is headquartered in Tampa, FL.

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