Trupanion drops amid California objection to rate increase

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Trupanion (NASDAQ:TRUP) fell 18% as California on Tuesday sent an objection letter on the pet insurance company's proposed rate increase.

California is cutting the pending rate increase to 12.6% from the 28% rate that Trupanion (TRUP) requested, according to Stifel analyst Jonathan D. Block.

"The balance sheet is clearly under pressure, and questions of potential financing needs are pressing for Trupanion; and with the loss ratio continuing to run hot, a (much) lower-than-expected California rate increase is a material blow to rightsizing the loss ratio, in our opinion," Block, who has a hold rating on TRUP, wrote in a note on Wednesday.

A New York proposed rate increase remains outstanding, according to Block, who has a $25 price target on Trupanion (TRUP).

"Altogether, we view this as a net-negative for Trupanion as balance sheet uncertainty increases following this outcome in California, all while veterinary inflation remains persistent," Stifel's Block wrote.

Trupanion's (TRUP) short interest is 35%.

Trupanion (TRUP) is expected to participate in meetings with investors at the Jefferies 2023 Consumer Conference in Nantucket, Massachusetts this Tuesday and Wednesday.

More on Trupanion

• Trupanion Continues To Scale And Lead The Medical Pet Insurance Industry
• BofA turns Neutral on Trupanion after Q1 loss ratio spike, stock drops
• Trupanion: Pet Insurer Facing Headwinds

Comments

[ccp4u]

If you are this dependent upon price increases into this discretionary spending cash crunch...you might not have a profitable business model.

[stanislowball]

@ccp4u that's right. anyway the fact they're applying for rate increases means there's no profits coming. regulators won't approve rate increases for profit purposes but just to catch up to claims inflation and retain solvency. that's the reason for the lowered rate amount

[jbfrombaxters475]

Problem for them