Quake-Related Claims Rattle US Facilities’ Quarterly Profits
US Facilities Corp. said Tuesday that insurance claims from the January earthquake in Northridge will reduce the company’s first-quarter earnings by about $1.4 million, or 23 cents a share.
In last year’s first quarter, the company posted a profit of $1.9 million, or 31 cents a share, on revenue of $26 million.
The holding company for reinsurance and other insurance-related firms does not expect the quake-related claims to have a significant effect on its financial health. The company did not disclose how much it faced in claims payouts from the Jan. 17 temblor.
“We were expecting earnings of $1.20 a share for the year, so this takes a good bit out,” said Ellen S. Barzilai, an industry analyst at the New York office of the brokerage Alex. Brown & Sons in Baltimore.
“But we’re expecting a lot of insurance companies in the first quarter to break even because of the quake in California and the winter freeze” on the East Coast, she said.
The announcement didn’t dampen investor interest. US Facilities’ stock rose 25 cents a share to close at $9 a share in Tuesday’s Nasdaq trading.
The company’s property and casualty business, which covered a number of commercial buildings damaged by the quake, represents about 20% of its premium income.
Its primary business, accounting for 72% of its premiums, is medical stop-loss reinsurance, which covers a certain amount of medical benefits for companies that assume a sizable amount of the initial benefit claims themselves.
