In an attempt to cover the litigation risk of consultants, on Tuesday, Hartford Financial Services Group Inc. (HIG) introduced miscellaneous professional liability insurance in order to address the needs of the growing self-employed professionals.
While the global economic downturn has given a bad shape to the employment index, many people are now trying to be self-employed, particularly in the service industry. However, these new professional service-providers often run the risk of being sued for imparting wrong information or advice that could translate into a subsequent loss to their clients.
Hence, HIG’s insurance policy covering all the miscellaneous issues is significant for the smooth operation of a service-provider, which ranges from marketing or management consultants, executive coaches, career counselors, travel agents to event planners.
Estimate Trend Revision
Over the last 30 days, 6 of 16 analysts covering HIG have raised their estimates for the second quarter of 2010, while four downward revisions were seen. Currently, the Zacks Consensus Estimate for the second quarter is operating earnings of 91 cents per share, which would be down by 52.1% from the year-ago quarter.
The fewer number of downward estimate revisions for the second quarter indicates a likelihood of upward pressure on the performance of the stock in the near term.
With respect to earnings surprises, the stock has been steady over the last four quarters, with all four positive surprises. The average remained positive at 36.2%. This implies that HIG has surpassed the Zacks Consensus Estimate by 36.2% over that period.
The downside potential for the estimate in the second quarter, essentially a proxy for future earnings surprises, currently stands at 0.8%.
Overall, by introducing such a policy, the company has hit the iron when it’s hot, as it is the right time to penetrate deeper in the market since HIG’s professional liability policy is designed for small firms that provide advice or services requiring specialized knowledge. For this reason, the company has also kept its premiums beginning at less than $1,000 in order to tap this small and specialized services market. We believe this can prove to be revenue generating for HIG, while providing significant risk coverage to its service clients.
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