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Summary

  • Specialized local property and casualty insurer in Louisiana.
  • Major insurers are withdrawing from hurricane coverage in Louisiana.
  • PIH expects to fill the gap.
  • As a new property and casualty insurance company PIH has no legacy liabilities.

Based in Baton Rouge, LA, 1347 Property Insurance Holdings (NASDAQ:PIH) scheduled a $25 million IPO on the Nasdaq with a market capitalization of $390 million at a price range midpoint of $11 for Wednesday, March 26, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Aegis Capital Corp.
Co-Managers: EarlyBird Capital, Inc.

End of lockup (180 days): Monday, September 22, 2014

End of 25-day quiet period: Monday, April 21, 2014

Summary
PIH is a specialized local property and casualty insurer in Louisiana. Major insurers are withdrawing from hurricane coverage in Louisiana and PIH expects to fill the gap.

As a new property and casualty insurance company PIH has no legacy liabilities.

Valuation
Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

1347 Property Insurance Holdings

$40

2.0

-56.6

1.10

1.40

63%

Conclusion
The rating on PIH is neutral.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business
PIH is a property and casualty insurance holding company incorporated in Delaware on October 2, 2012.

In December 2012, PIH began providing property and casualty insurance to individuals in Louisiana through its wholly-owned subsidiary, Maison Insurance Company.

PIH's insurance offerings currently include homeowners insurance, manufactured home insurance and dwelling fire insurance.

Focused on Louisiana
PIH believes the Louisiana property and casualty insurance market has historically been underserved due to the unique weather-related risks in the region. PIH provides its policyholders with a selection of insurance products at competitive rates, while pursuing profitability using its selective underwriting criteria.

PIH currently derives all of its business from insuring properties located in Louisiana. PIH's focus on the Louisiana market is due, in part, to its management's expertise and specialized knowledge of Louisiana's homeowner insurance industry trends and demographics.

PIH believes that its local market knowledge provides it with a competitive advantage in terms of marketing, underwriting, claims servicing and policyholder service.

PIH also believes that there currently is a unique growth opportunity for smaller insurance companies like it in Louisiana.

National insurers reducing exposures
National insurers have been reducing and continue to reduce their exposures to personal property insurance in Louisiana, creating an opportunity for PIH to increase its market share in the full peril protection market and with respect to wind/hail-only exposures.

PIH expects to write more 'wind/hail' policies
Specifically, in recent years, some insurers in Louisiana have begun to write policies excluding the coverage of wind/hail, creating an opportunity for PIH to fill the gap for customers who need that coverage.

Historically, Louisiana Citizens Property Insurance Company, or Citizens, which was created by the state of Louisiana has been the only option for wind/hail policies.

In addition, Citizens itself has been affording state-approved insurance companies, like Maison Insurance, the opportunity to assume full peril protection and wind/hail-only policies written by Citizens.

Dividend Policy
No dividends are planned.

Competition
PIH operates in a highly competitive market and faces competition from national and regional insurance companies, many of whom are larger and have greater financial and other resources and offer more diversified insurance coverage.

PIH's competitors include companies which market their products through independent agents, as well as companies with captive agents.

National and regional companies which compete with PIH in the homeowners' market include Lighthouse Property Insurance Corporation, ASI Lloyds, Louisiana Farm Bureau Insurance, Centauri Specialty Insurance Company, Allstate Insurance Company and State Farm Insurance Company.

PIH also competes with other Louisiana domestic property and casualty companies such as Americas Insurance Company, Imperial F&C Insurance Company, and Access Home Insurance Company.

5% stockholders
KFSI (the parent) 100%

Use of proceeds
PIH expects to net $22.3 million from its IPO. Proceeds are allocated as follows:

$5 million to provide further capital to PIH's existing insurance underwriting subsidiary Maison Insurance, $2 million for other general corporate purposes, including settlement of payables, spending for business development, sales and marketing, and working capital, and the remainder used for the formation of a new subsidiary, which will allow for the expansion of PIH's insurance products in new markets.

Disclaimer: This PIH IPO report is based on a reading and analysis of PIH's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: 1347 Property Insurance Holdings