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United Insurance Holdings: Bullish Trends In Core Business

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  • Q4 numbers adversely hit by elevated levels of CAT activity.
  • Expense ratio and combined ratios improving when we exclude CAT.
  • Dividend remains sustainable. Shares looks attractive here as they are trading under book value.
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If we look at a long-term chart of United Insurance (NASDAQ:UIHC)(catastrophe exposed property insurance), we can see that the MACD indicator is very close to giving a buy signal and a very attractive one in that. We state this of how oversold the indicator is at present. The best buy signals are invariably when the crossover occurs some distance from the “zero line” (which is what we have at present). The MACD is a good read on both momentum and trend and the long-term chart gives the signal more significance in our opinion.

We state this because shares have been making higher highs for four months now (after bottoming late last year) and only now are we seeing the indicator register a change in trend and momentum. Shares have comfortably broken through their 10-month average and the monthly histogram has finally moved into positive territory for the first time in over two years. Suffice it to say, the technicals are attractive at present which has piqued our interest here.

What though of the fundamentals? At present, the company pays out a forward dividend of $0.24 which equates to a dividend of 3.35% based off the current share-price. The state of the dividend is a good place to start as the key financial metrics which make up the dividend are found across all three of the financial statements. First though, we will look to how earnings have been trending recently.

Although fourth quarter earnings missed consensus by quite a margin, the market seems to be pricing in more favourable conditions going forward. The bottom-line loss came in at -$1.35 per share due to the elevated level of CAT activity which was not seen for many years. Therefore, investors should be really zoning in on the core business because the fourth quarter (and 2020 also) is not likely to


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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in UIHC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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