Alleghany Corporation reported first-quarter 2017 operating earnings of $7.29 per share missed the Zacks Consensus Estimate of $8.29 by 12.1%. The bottom line declined 22% from the prior-year quarter.
The company witnessed strong investment performance and solid underwriting discipline in the quarter.
Including one-time items, the company reported net income of $9.67 per share, down 3% year over year.
Operational Update
Operating revenues of $1.5 billion inched up 1% year over year. Revenues surpassed the Zacks Consensus Estimate of $1.4 billion.
Net premiums written declined 6.7% year over year to $1.2 billion.
Net investment income came in at $106.1 million in the quarter, up 10% year over year. The improvement was driven by higher returns from equity investment in Ares and investment returns in Ares managed funds.
Interest expenses were $20.9 million, up 3% year over year.
Underwriting profit declined 32.5% to $101.4 million.
Alleghany Corporation Price, Consensus and EPS Surprise
Segment Update
Reinsurance Segment: Net premiums written decreased 10.1% to $949.4 million owing to lower premiums related to a large whole account quota share treaty. Underwriting profit decreased 44.1% to $53.4 million.
Insurance Segment: Net premiums written increased 0.6% to $283.7 million driven by growth at PacificComp and CapSpecialty as well as an increase at RSUI. Underwriting profit decreased 12.2% to $48 million.
Financial Update
Alleghany exited the quarter with cash of $624.1 million as against $594.1 million at the end of 2016.
Debt balance of $1.5 billion was flat with Dec 2016-end level.
Alleghany’s shareholder equity at the end of the quarter was $8.2 billion compared with $7.9 billion at the 2016-end level.
Book value per share increased 3% from year-end 2016 to $530.86 as of Mar 31, 2017.
Share Repurchase Update
Alleghany did not repurchase any shares in the quarter. The company has $379.2 million shares available for repurchase.
Zacks Rank
Alleghany presently 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 the other players that have reported first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
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Alleghany Corporation reported first-quarter 2017 operating earnings of $7.29 per share missed the Zacks Consensus Estimate of $8.29 by 12.1%. The bottom line declined 22% from the prior-year quarter.
The company witnessed strong investment performance and solid underwriting discipline in the quarter.
Including one-time items, the company reported net income of $9.67 per share, down 3% year over year.
Operational Update
Operating revenues of $1.5 billion inched up 1% year over year. Revenues surpassed the Zacks Consensus Estimate of $1.4 billion.
Net premiums written declined 6.7% year over year to $1.2 billion.
Net investment income came in at $106.1 million in the quarter, up 10% year over year. The improvement was driven by higher returns from equity investment in Ares and investment returns in Ares managed funds.
Interest expenses were $20.9 million, up 3% year over year.
Underwriting profit declined 32.5% to $101.4 million.
Alleghany Corporation Price, Consensus and EPS Surprise
Segment Update
Reinsurance Segment: Net premiums written decreased 10.1% to $949.4 million owing to lower premiums related to a large whole account quota share treaty. Underwriting profit decreased 44.1% to $53.4 million.
Insurance Segment: Net premiums written increased 0.6% to $283.7 million driven by growth at PacificComp and CapSpecialty as well as an increase at RSUI. Underwriting profit decreased 12.2% to $48 million.
Financial Update
Alleghany exited the quarter with cash of $624.1 million as against $594.1 million at the end of 2016.
Debt balance of $1.5 billion was flat with Dec 2016-end level.
Alleghany’s shareholder equity at the end of the quarter was $8.2 billion compared with $7.9 billion at the 2016-end level.
Book value per share increased 3% from year-end 2016 to $530.86 as of Mar 31, 2017.
Share Repurchase Update
Alleghany did not repurchase any shares in the quarter. The company has $379.2 million shares available for repurchase.
Zacks Rank
Alleghany presently 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 the other players that have reported first-quarter earnings so far, Chubb Limited (CB - Free Report) beat the Zacks Consensus Estimate but RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) missed expectations.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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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