Enstar Group Limited (ESGR - Free Report) reported second-quarter 2016 earnings per share of $2.09, missing the Zacks Consensus Estimate by 2.3%. However, earnings more than doubled from 75 cents earned in the year-ago quarter on higher revenues.
Shares lost about 0.07% in yesterday’s trading session reflecting the underperformance.
Operational Update
Operating revenues of about $929 million improved 9% year over year. The improvement was fueled by an increase in net premiums earned and net investment income.
Net investment income increased 56.2% year over year to $54.2 million. The improvement was driven by a higher yield on invested assets and an increase in interest on funds held relating to the portfolio assumed from Allianz.
Total expense in the quarter increased 17% year over year to $272 million.
Segment Result
Non-life Run-off: Operating revenues were $45 million, up 10% year over year. Net premiums earned decreased to $4.5 million from $17.3 million in the year-ago quarter.
Expenses increased 137% year over year to $39.6 million.
Net earnings increased 29% to $25.6 million driven by improved investment results. However, lower reduction in estimates of net ultimate incurred losses and higher general and administrative expenses were partial dampeners.
Atrium: Operating revenues were $38 million, down 9.5% year over year. Net premiums earned decreased 6.5% year over year to $31.8 million.
Expenses decreased 11% year over year to $32.3 million.
Net earnings improved slightly to $1.8 million.
Combined ratio deteriorated 1100 basis points to 100.1%.
StarStone: Operating revenues were $178 million, up 25% year over year. Net premiums earned increased 24% year over year to $171 million.
Expenses came in at $169 million, 16% higher year over year.
Net earnings of $7.9 million rebounded from loss of $3 million incurred in the year ago quarter on better investment results.
Combined ratio deteriorated 10 basis points to 98.2%.
Life and Annuities: Operating revenues were $31 million, up 11% year over year. Net premiums earned decreased 15% year over year to $19.6 million.
Expenses decreased 21% year over year to $29.3 million.
Net earnings of $5 million reversed the year-ago loss of $3.6 million attributable to improved investment results.
Financial Update
Enstar Group exited the quarter with cash and cash equivalents of $800.8 million, down from $821.9 million at 2015 end. Loans payable increased to $614 million from $600.3 million at yearend 2015.
Shareholders equity improved to $2.6 billion from $2.5 billion at the end of 2015.
Cash used in operations was $216 million in the first half of 2016 compared with $478 million used in the year-ago quarter.
As of Jun 30, 2016, book value per share was $134.68.
Zacks Rank
Enstar Group presently carries a Zacks Rank #3 (Hold).
Performance by Other P&C Insurers
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
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Enstar Group Limited (ESGR - Free Report) reported second-quarter 2016 earnings per share of $2.09, missing the Zacks Consensus Estimate by 2.3%. However, earnings more than doubled from 75 cents earned in the year-ago quarter on higher revenues.
Shares lost about 0.07% in yesterday’s trading session reflecting the underperformance.
Operational Update
Operating revenues of about $929 million improved 9% year over year. The improvement was fueled by an increase in net premiums earned and net investment income.
Net investment income increased 56.2% year over year to $54.2 million. The improvement was driven by a higher yield on invested assets and an increase in interest on funds held relating to the portfolio assumed from Allianz.
Total expense in the quarter increased 17% year over year to $272 million.
Segment Result
Non-life Run-off: Operating revenues were $45 million, up 10% year over year. Net premiums earned decreased to $4.5 million from $17.3 million in the year-ago quarter.
Expenses increased 137% year over year to $39.6 million.
Net earnings increased 29% to $25.6 million driven by improved investment results. However, lower reduction in estimates of net ultimate incurred losses and higher general and administrative expenses were partial dampeners.
Atrium: Operating revenues were $38 million, down 9.5% year over year. Net premiums earned decreased 6.5% year over year to $31.8 million.
Expenses decreased 11% year over year to $32.3 million.
Net earnings improved slightly to $1.8 million.
Combined ratio deteriorated 1100 basis points to 100.1%.
StarStone: Operating revenues were $178 million, up 25% year over year. Net premiums earned increased 24% year over year to $171 million.
Expenses came in at $169 million, 16% higher year over year.
Net earnings of $7.9 million rebounded from loss of $3 million incurred in the year ago quarter on better investment results.
Combined ratio deteriorated 10 basis points to 98.2%.
Life and Annuities: Operating revenues were $31 million, up 11% year over year. Net premiums earned decreased 15% year over year to $19.6 million.
Expenses decreased 21% year over year to $29.3 million.
Net earnings of $5 million reversed the year-ago loss of $3.6 million attributable to improved investment results.
Financial Update
Enstar Group exited the quarter with cash and cash equivalents of $800.8 million, down from $821.9 million at 2015 end. Loans payable increased to $614 million from $600.3 million at yearend 2015.
Shareholders equity improved to $2.6 billion from $2.5 billion at the end of 2015.
Cash used in operations was $216 million in the first half of 2016 compared with $478 million used in the year-ago quarter.
As of Jun 30, 2016, book value per share was $134.68.
Zacks Rank
Enstar Group presently carries a Zacks Rank #3 (Hold).
Performance by Other P&C Insurers
The bottom line at The Travelers Companies, Inc. (TRV - Free Report) and First American Financial Corporation (FAF - Free Report) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (RLI - Free Report) missed the same.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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