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Allied World (AWH) Misses Earnings, Beats Revenues in Q4
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Allied World Assurance Company Holdings, AG (AWH - Free Report) reported fourth-quarter 2016 operating net income of 48 cents per share that missed the Zacks Consensus Estimate of 63 cents by 24%. However, the bottom line increased by a penny on a year-over-year basis.
Including net realized investment losses of $1.15 per share, foreign exchange loss of 1 cent and income tax benefit of 22 cents, the company reported net income of 46 cents per share, higher than 2 cents earned in the year-ago quarter.
Operational Performance
Net premiums written decreased 4.2% year over year to $445.3 million in the reported quarter.
Net investment income increased 18.4% year over year to $58.1 million driven by contributions from the fixed income portfolio and higher returns from the hedge fund and private equity portfolios.
Total operating revenue decreased 4.9% year over year to $640 million. Revenues however outpaced the Zacks Consensus Estimate of $630 million.
Total expenses declined 5.7% to $592.2 million.
Underwriting income dropped to $1.1 million from $19.1 million in the year-ago quarter. Combined ratio deteriorated 280 basis points (bps) to 99.8%.
2016 Highlights
Operating earnings of $2.67 per share increased 18.7% over 2015. Operating revenues of $2.6 billion reflected a decrease of 7% year over year.
Segment Update
Gross premiums written at the North American Insurance segment increased 10% year over year to $502.2 million, driven by increases in casualty, professional lines and other specialty lines, partially offset by reduction in property lines. Underwriting loss of $0.4 million was narrower than loss of $15.3 million incurred in the year-ago quarter. Combined ratio deteriorated 460 bps year over year.
Gross premiums written at the Global Markets Insurance segment declined 8.4% to $135.7 million, owing to reductions in several lines of business across Europe and Asia. Underwriting loss of $19.7 million compared favorably with the year-ago loss of $26.4 million. Combined ratio improved 420 bps year over year.
Gross premiums written at the Reinsurance segment increased 22.5% to $33.8 million on an increase in estimated premium adjustments. Underwriting income declined 65% year over year. Combined ratio deteriorated 1980 bps year over year.
Financial Update
Allied World exited 2016 with cash and cash equivalents of $797.4 million, up from $668.6 million from end-2015.
Total assets were $13.2 billion, down 2.2% from Dec 31, 2015.
Shareholder’s equity was $3.55 billion, down from $3.62 billion at 2015-end.
Allied World’s book value per share increased 4.6% from the 2015-end level to $39.52 per share as of Dec 31, 2016.
Return on the company's investment portfolio increased to 2.5% as of Dec 31, 2016, from 0.6% recorded on Dec 31, 2015.
Capital Management
Allied World spent $166.3 million to repurchase 4.7 million shares in 2016.
Allied World Assurance Company Holdings, AG Price, Consensus and EPS Surprise
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the Zacks Consensus Estimate.
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Allied World (AWH) Misses Earnings, Beats Revenues in Q4
Allied World Assurance Company Holdings, AG (AWH - Free Report) reported fourth-quarter 2016 operating net income of 48 cents per share that missed the Zacks Consensus Estimate of 63 cents by 24%. However, the bottom line increased by a penny on a year-over-year basis.
Including net realized investment losses of $1.15 per share, foreign exchange loss of 1 cent and income tax benefit of 22 cents, the company reported net income of 46 cents per share, higher than 2 cents earned in the year-ago quarter.
Operational Performance
Net premiums written decreased 4.2% year over year to $445.3 million in the reported quarter.
Net investment income increased 18.4% year over year to $58.1 million driven by contributions from the fixed income portfolio and higher returns from the hedge fund and private equity portfolios.
Total operating revenue decreased 4.9% year over year to $640 million. Revenues however outpaced the Zacks Consensus Estimate of $630 million.
Total expenses declined 5.7% to $592.2 million.
Underwriting income dropped to $1.1 million from $19.1 million in the year-ago quarter. Combined ratio deteriorated 280 basis points (bps) to 99.8%.
2016 Highlights
Operating earnings of $2.67 per share increased 18.7% over 2015. Operating revenues of $2.6 billion reflected a decrease of 7% year over year.
Segment Update
Gross premiums written at the North American Insurance segment increased 10% year over year to $502.2 million, driven by increases in casualty, professional lines and other specialty lines, partially offset by reduction in property lines. Underwriting loss of $0.4 million was narrower than loss of $15.3 million incurred in the year-ago quarter. Combined ratio deteriorated 460 bps year over year.
Gross premiums written at the Global Markets Insurance segment declined 8.4% to $135.7 million, owing to reductions in several lines of business across Europe and Asia. Underwriting loss of $19.7 million compared favorably with the year-ago loss of $26.4 million. Combined ratio improved 420 bps year over year.
Gross premiums written at the Reinsurance segment increased 22.5% to $33.8 million on an increase in estimated premium adjustments. Underwriting income declined 65% year over year. Combined ratio deteriorated 1980 bps year over year.
Financial Update
Allied World exited 2016 with cash and cash equivalents of $797.4 million, up from $668.6 million from end-2015.
Total assets were $13.2 billion, down 2.2% from Dec 31, 2015.
Shareholder’s equity was $3.55 billion, down from $3.62 billion at 2015-end.
Allied World’s book value per share increased 4.6% from the 2015-end level to $39.52 per share as of Dec 31, 2016.
Return on the company's investment portfolio increased to 2.5% as of Dec 31, 2016, from 0.6% recorded on Dec 31, 2015.
Capital Management
Allied World spent $166.3 million to repurchase 4.7 million shares in 2016.
Allied World Assurance Company Holdings, AG Price, Consensus and EPS Surprise
Allied World Assurance Company Holdings, AG Price, Consensus and EPS Surprise | Allied World Assurance Company Holdings, AG Quote
Zacks Rank
Allied World presently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among the other players from the same space that have reported their fourth-quarter earnings so far, the bottom line at Progressive Corp. (PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the Zacks Consensus Estimate.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>