1347 Property Insurance Holdings Sells a New Preferred

Newer, small property and casualty insurance company 1347 Property Insurance Holdings (NASDAQ:PIH) has sold a issue of preferred stock with a 8% coupon.

The new issue has a 5 year optional redemption period starting in 2023 and terms are the normal terms EXCEPT the issue is cumulative which is unusual for an insurance company as most insurance companies are issuing non cumulative shares so they can be counted as tier 1 capital.

1347 does business around the gulf coast and primarily in Louisiana, Texas and Florida. Obviously this is a lucrative market when there are few storms around–of course a great business can turn into a disaster pretty quickly and this little company specializes in homeowners insurance, wind/hail insurance and manufactured home insurance–all areas that can be dicey in the markets they serve. They have 50,000 policies in effect.

Make sure to do plenty of due diligence on this one prior to purchase.

Details of the issue are here.

Shares start trading on the OTC Grey market today under the temporary ticker PPNSP.

4 thoughts on “1347 Property Insurance Holdings Sells a New Preferred”

  1. Tim, this is a very interesting insurance preferred, although the company is very small. Considering some of the states they insure, there could be some major claims if a large storm hits – although they do have reinsurance. I may purchase a small amount of shares and then time an exit in mid-July, before the summer hurricane season starts.

    1. See how it is accepted in the marketplace–I haven’t even looked at the grey market trading–of course I am pretty conservative.

  2. They will have to scrape up $1.6 million to pay for the dividends. The #’s don’t look great to me, and couple that with a tiny company. If the #’s are right, they had $11,000 in net income last year. Revenue goes up, but expense as well and seems to wash out the net income. Now they have to pay dividends. Also, this issue is 1/2 their market cap. A lot of risk to me.

  3. Yep–plenty of monitoring goes with this issue–we’ll see how the marketplace prices it through price action.

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