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Arch Capital (ACGL) Q1 Earnings Beat Estimates, Improve Y/Y
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Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2018 operating income per share of $1.69, which outperformed the Zacks Consensus Estimate by 7.6%. Moreover, the bottom line improved 19% from the prior-year quarter.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
The first quarter benefited from a sturdy performance at the Insurance and Reinsurance segments. Higher net investment income as well as favorable underwriting results added to this upside.
Including net realized loss of 80 cents, equity in net income loss of investment funds accounting for using the equity method of 20 cents, net foreign exchange loss of 11 cents, UGC transaction costs of 1 cent, loss on redemption of preferred shares of 2 cents and an income tax benefit of 4 cents, net income came in at 99 cents per share, down 43.1% year over year.
Behind the Headlines
Gross premiums written increased 10.9% year over year to $1.8 billion, largely fueled by higher premiums written in the Insurance and Reinsurance segments.
Net investment income grew 4.6% to $100.2 million, supported by higher level of investable assets.
Arch Capital’s underwriting income was $236.9 million, having improved 11.8% from the year-ago quarter. Combined ratio improved slightly by 10 basis points (bps) to 81.3%.
Segment Results
Insurance: Gross premiums written increased 5.3% year over year to $823.4 million.
Underwriting income of $7.9 million declined 21.4% from the year-ago quarter. Combined ratio deteriorated 60 bps to 98.6%.
Reinsurance: Gross premiums written in the quarter under review improved 21.4% year over year to $577.5 million.
Underwriting income of $54.8 million slipped 1% from the prior-year quarter. Combined ratio deteriorated 350 bps year over year to 80.7%.
Mortgage: Gross premiums written in the quarter fell 7.9% year over year to $321.2 million, primarily reflecting a lower level of Australian mortgage reinsurance business as well as that of U.S. single premium business. Underwriting income rose 17.4% to $174.9 million. Combined ratio improved 200 bps year over year to 38.8%.
Financial Update
Arch Capital exited the first quarter with total capital of $11.26 billion compared with $10.84 billion as of Mar 31, 2017.
As of Mar 31, 2018, book value per share was $61.24, up 6.2% year over year.
Operating return on equity was 11.3% in the reported quarter compared with 10.3% in the year-ago period.
Among other players from the insurance industry having already reported first-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
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Arch Capital (ACGL) Q1 Earnings Beat Estimates, Improve Y/Y
Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2018 operating income per share of $1.69, which outperformed the Zacks Consensus Estimate by 7.6%. Moreover, the bottom line improved 19% from the prior-year quarter.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. Price, Consensus and EPS Surprise | Arch Capital Group Ltd. Quote
The first quarter benefited from a sturdy performance at the Insurance and Reinsurance segments. Higher net investment income as well as favorable underwriting results added to this upside.
Including net realized loss of 80 cents, equity in net income loss of investment funds accounting for using the equity method of 20 cents, net foreign exchange loss of 11 cents, UGC transaction costs of 1 cent, loss on redemption of preferred shares of 2 cents and an income tax benefit of 4 cents, net income came in at 99 cents per share, down 43.1% year over year.
Behind the Headlines
Gross premiums written increased 10.9% year over year to $1.8 billion, largely fueled by higher premiums written in the Insurance and Reinsurance segments.
Net investment income grew 4.6% to $100.2 million, supported by higher level of investable assets.
Arch Capital’s underwriting income was $236.9 million, having improved 11.8% from the year-ago quarter. Combined ratio improved slightly by 10 basis points (bps) to 81.3%.
Segment Results
Insurance: Gross premiums written increased 5.3% year over year to $823.4 million.
Underwriting income of $7.9 million declined 21.4% from the year-ago quarter. Combined ratio deteriorated 60 bps to 98.6%.
Reinsurance: Gross premiums written in the quarter under review improved 21.4% year over year to $577.5 million.
Underwriting income of $54.8 million slipped 1% from the prior-year quarter. Combined ratio deteriorated 350 bps year over year to 80.7%.
Mortgage: Gross premiums written in the quarter fell 7.9% year over year to $321.2 million, primarily reflecting a lower level of Australian mortgage reinsurance business as well as that of U.S. single premium business. Underwriting income rose 17.4% to $174.9 million. Combined ratio improved 200 bps year over year to 38.8%.
Financial Update
Arch Capital exited the first quarter with total capital of $11.26 billion compared with $10.84 billion as of Mar 31, 2017.
As of Mar 31, 2018, book value per share was $61.24, up 6.2% year over year.
Operating return on equity was 11.3% in the reported quarter compared with 10.3% in the year-ago period.
Zacks Rank
Arch Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry having already reported first-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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