NEW YORK (Bloomberg) — An increase in tornadoes across the US Midwest may cut into insurers' second-quarter profit, an analyst with KeyBanc Capital Markets Inc. said.

"The number of tornadoes this year, relative to last year, has gone up exponentially," said analyst Elizabeth Malone. "A lot of people focus on hurricanes, but the frequency and severity of tornadoes really drive the majority of losses."

Cincinnati Financial Corp. and State Auto Financial Corp. may face losses because they cover property in vulnerable regions, she said in a research note yesterday. More than 1,000 tornadoes have been reported in the US since the end of March, a 71 percent increase over the entire second quarter last year, according to the National Weather Service.

State Farm Mutual Automobile Insurance Co., the largest US home and auto insurer, said claims from severe weather increased threefold to more than 90,000 through April. Subsequent storms in Indiana, Wisconsin, Illinois and Iowa since May 26 have resulted in 12,700 claims, with floodwaters still rising in parts of the Midwest today, said spokesman Phil Supple.

"That number will surely go higher," Supple said. "A lot of people won't even be able to assess what they've lost until they can see the floor of their homes again when the floodwaters recede."

United Fire & Casualty Co. and EMC Insurance Group Inc., Iowa-based property insurers, have already said that the increase in twisters will lower earnings.

EMC last week said it may lower its full-year forecast because of the "unprecedented number of severe storms." EMC, based in Des Moines, said the tornadoes could trim earnings by as much as 78 cents a share. Its stock has fallen about seven percent since May 29 after announcing it had insured two schools destroyed that month. United Fire estimated $4 million to $6 million in catastrophe losses due to Midwest storms, including a tornado last month with wind gusts exceeding 200 miles an hour that struck Parkersburg, Iowa. The Cedar Rapids-based insurer has slipped 18 percent since June 5, before it announced the storm costs and a loss in a court ruling.

Cincinnati Financial fell 67 cents, or 2.1 percent, to $31.60 at 4 p.m. New York time in Nasdaq Stock Market trading. State Auto, based in Columbus, Ohio, rose 25 cents to $27.43. Malone ranks both companies a "hold".

Shares of insurers may decline if the companies report lower profit because of the storms, possibly presenting an opportunity to buy the stocks, she said.

"After the initial shock, the market absorbs the reality that the storms are all part of doing business in the Midwest," Malone said. "The companies should be able to adjust."

The Parkersburg twister cost American Family Insurance Group $3.8 million to date, said Steve Witmer, a spokesman for the Madison, Wisconsin-based insurer, which ranks third in Iowa's home insurance market.