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Arch Capital (ACGL) Q3 Earnings Top Estimates, Premiums Up
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Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2018 operating income per share of 59 cents, which outperformed the Zacks Consensus Estimate by 13.5%. Moreover, the bottom line reversed the year-ago quarter’s operating loss per share of 26 cents.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
The quarter benefited from a sturdy performance at the Insurance, Reinsurance and Mortgage segments. Higher net investment income as well as favorable underwriting results added to this upside.
Including net realized gain of 12 cents, equity in net income of investment funds accounting for using the equity method of 4 cents and net foreign exchange gains of 2 cents, net income came in at 53 cents per share, rebounding from the year-ago quarter’s loss of 13 cents.
Behind the Headlines
Gross premiums written increased 5% year over year to $1.7 billion, largely fueled by higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income grew 23.7% to $144 million, supported by reinvestment of fixed income securities at higher available yields and a shift from municipal bonds to corporates.
Arch Capital’s underwriting income came in at $234.6 million versus the year-ago quarter’s loss of $142.2 million. Combined ratio improved 2950 basis points (bps) to 82.3%.
Segment Results
Insurance: Gross premiums written increased 6.3% year over year to $836.8 million.
Underwriting loss of $26.7 million was substantially narrower than the underwriting loss of $207.1 million in the year-ago quarter. Combined ratio improved 3390 bps to 104.8%.
Reinsurance: Gross premiums written in the quarter under review rose 3.2% year over year to $435.4 million.
Underwriting income of $30.9 million was against the year-ago quarter’s loss of $86.9 million. Combined ratio improved 3750 bps year over year to 89.9%.
Mortgage: Gross premiums written in the quarter under review inched up 0.7% year over year to $350.6 million, primarily reflecting an increase in U.S. monthly premium business and government sponsored enterprise (GSE) credit-risk sharing transactions. However, lower levels in U.S. single premium business and a decline in Australian mortgage reinsurance business partially offset the upside. Underwriting income increased 23.7% to $230.6 million. Combined ratio improved 880 bps year over year to 24.6%.
Financial Update
Arch Capital exited the third quarter with total capital of about $11.2 billion compared with $11 billion as of Sep 30, 2017.
As of Sep 30, 2018, book value per share was $21.15, up 2.3% year over year.
Operating return on equity was 11.4% in the reported quarter against (5.3%) in the year-ago period.
Share Repurchase Update
In the third quarter, the company bought back shares worth $11 million. As of Sep 30, 2018, Arch Capital had shares worth $261.9 million remaining under its authorized program.
Among other players from the insurance industry, which have already reported third-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc.’s (TRV - Free Report) outpaced the respective Zacks Consensus Estimate, while RLI Corp.’s (RLI - Free Report) earnings missed the same.
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The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
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Arch Capital (ACGL) Q3 Earnings Top Estimates, Premiums Up
Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2018 operating income per share of 59 cents, which outperformed the Zacks Consensus Estimate by 13.5%. Moreover, the bottom line reversed the year-ago quarter’s operating loss per share of 26 cents.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. Price, Consensus and EPS Surprise | Arch Capital Group Ltd. Quote
The quarter benefited from a sturdy performance at the Insurance, Reinsurance and Mortgage segments. Higher net investment income as well as favorable underwriting results added to this upside.
Including net realized gain of 12 cents, equity in net income of investment funds accounting for using the equity method of 4 cents and net foreign exchange gains of 2 cents, net income came in at 53 cents per share, rebounding from the year-ago quarter’s loss of 13 cents.
Behind the Headlines
Gross premiums written increased 5% year over year to $1.7 billion, largely fueled by higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income grew 23.7% to $144 million, supported by reinvestment of fixed income securities at higher available yields and a shift from municipal bonds to corporates.
Arch Capital’s underwriting income came in at $234.6 million versus the year-ago quarter’s loss of $142.2 million. Combined ratio improved 2950 basis points (bps) to 82.3%.
Segment Results
Insurance: Gross premiums written increased 6.3% year over year to $836.8 million.
Underwriting loss of $26.7 million was substantially narrower than the underwriting loss of $207.1 million in the year-ago quarter. Combined ratio improved 3390 bps to 104.8%.
Reinsurance: Gross premiums written in the quarter under review rose 3.2% year over year to $435.4 million.
Underwriting income of $30.9 million was against the year-ago quarter’s loss of $86.9 million. Combined ratio improved 3750 bps year over year to 89.9%.
Mortgage: Gross premiums written in the quarter under review inched up 0.7% year over year to $350.6 million, primarily reflecting an increase in U.S. monthly premium business and government sponsored enterprise (GSE) credit-risk sharing transactions. However, lower levels in U.S. single premium business and a decline in Australian mortgage reinsurance business partially offset the upside. Underwriting income increased 23.7% to $230.6 million. Combined ratio improved 880 bps year over year to 24.6%.
Financial Update
Arch Capital exited the third quarter with total capital of about $11.2 billion compared with $11 billion as of Sep 30, 2017.
As of Sep 30, 2018, book value per share was $21.15, up 2.3% year over year.
Operating return on equity was 11.4% in the reported quarter against (5.3%) in the year-ago period.
Share Repurchase Update
In the third quarter, the company bought back shares worth $11 million. As of Sep 30, 2018, Arch Capital had shares worth $261.9 million remaining under its authorized program.
Zacks Rank
Arch Capital has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other players from the insurance industry, which have already reported third-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and The Travelers Companies, Inc.’s (TRV - Free Report) outpaced the respective Zacks Consensus Estimate, while RLI Corp.’s (RLI - Free Report) earnings missed the same.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>