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Arch Capital (ACGL) Q4 Earnings Beat, Premiums Increase Y/Y
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Arch Capital Group Limited (ACGL - Free Report) reported fourth-quarter 2016 earnings per share of $1.13 that beat the Zacks Consensus Estimate of $1.01 by about 12%. Earnings dipped 1.7% from the year-ago quarter.
Arch Capital’s net income declined 19% year over year to 50 cents per share.
Operating earnings for 2016 came in at $4.63 per share, up 3.3% year over year.
Behind the Headlines
Gross premiums written increased 8.3% year over year to $1.2 billion on higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income grew nearly 4.5% to $70 million. The increase was fueled by higher income distributions on term loan investments.
Arch Capital’s underwriting income decreased 3.4% year over year to $109.2 million. Combined ratio deteriorated 180 basis points (bps) to 90.7%.
Segment Result
Insurance Segment: Gross premiums written increased 4% year over year to $707.5 million owing to growth in the travel line from a mix of new business as well as construction and national accounts.
Underwriting income of $2.6 million plummeted 90.8% from the year-ago quarter. Combined ratio deteriorated 480 bps to 99.4%.
Reinsurance Segment: Gross premiums written in the quarter rose 5.4% year over year to $277 million.
Underwriting income decreased 4.8% year over year to $67.6 million. Combined ratio deteriorated 430 bps year over year to 78.6%.
Mortgage Segment: Gross premiums written in the quarter jumped 50.7% year over year to $138.3 million, largely driven by growth in U.S. primary business, Australian mortgage reinsurance and GSE credit risk-sharing transactions receiving insurance accounting treatment.
Underwriting income skyrocketed 139.7% year over year to $42.3 million. Combined ratio deteriorated 2150 bps year over year to 53.5%.
Financial Update
Arch Capital exited 2016 with total capital of $10.49 billion, up from $7.06 at year-end 2015.
As of Dec 31, 2016, diluted book value per share was $55.19, up 15.8% year over year.
Operating return on equity was 9.4% in 2016 compared with 9.7% in 2015.
Acquisition Update
Exiting 2016, Arch Capital closed the acquisition of United Guaranty Corporation for $3.3 billion. The buyout will enable the acquirer to expand its private mortgage insurance business.
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) and The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
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Arch Capital (ACGL) Q4 Earnings Beat, Premiums Increase Y/Y
Arch Capital Group Limited (ACGL - Free Report) reported fourth-quarter 2016 earnings per share of $1.13 that beat the Zacks Consensus Estimate of $1.01 by about 12%. Earnings dipped 1.7% from the year-ago quarter.
Arch Capital’s net income declined 19% year over year to 50 cents per share.
Operating earnings for 2016 came in at $4.63 per share, up 3.3% year over year.
Behind the Headlines
Gross premiums written increased 8.3% year over year to $1.2 billion on higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income grew nearly 4.5% to $70 million. The increase was fueled by higher income distributions on term loan investments.
Arch Capital’s underwriting income decreased 3.4% year over year to $109.2 million. Combined ratio deteriorated 180 basis points (bps) to 90.7%.
Segment Result
Insurance Segment: Gross premiums written increased 4% year over year to $707.5 million owing to growth in the travel line from a mix of new business as well as construction and national accounts.
Underwriting income of $2.6 million plummeted 90.8% from the year-ago quarter. Combined ratio deteriorated 480 bps to 99.4%.
Reinsurance Segment: Gross premiums written in the quarter rose 5.4% year over year to $277 million.
Underwriting income decreased 4.8% year over year to $67.6 million. Combined ratio deteriorated 430 bps year over year to 78.6%.
Mortgage Segment: Gross premiums written in the quarter jumped 50.7% year over year to $138.3 million, largely driven by growth in U.S. primary business, Australian mortgage reinsurance and GSE credit risk-sharing transactions receiving insurance accounting treatment.
Underwriting income skyrocketed 139.7% year over year to $42.3 million. Combined ratio deteriorated 2150 bps year over year to 53.5%.
Financial Update
Arch Capital exited 2016 with total capital of $10.49 billion, up from $7.06 at year-end 2015.
As of Dec 31, 2016, diluted book value per share was $55.19, up 15.8% year over year.
Operating return on equity was 9.4% in 2016 compared with 9.7% in 2015.
Acquisition Update
Exiting 2016, Arch Capital closed the acquisition of United Guaranty Corporation for $3.3 billion. The buyout will enable the acquirer to expand its private mortgage insurance business.
Zacks Rank
Arch Capital presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. Price, Consensus and EPS Surprise | Arch Capital Group Ltd. Quote
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) and The Travelers Companies Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.
The Best Place to Start Your Stock SearchToday, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>