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Alleghany (Y) Q2 Earnings Beat Estimates, Revenues Fall Y/Y
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Alleghany Corporation reported second-quarter 2020 adjusted income of 86 cents per share against the Zacks Consensus Estimate of a loss of $1.46 per share. The bottom line plunged 93.1% year over year attributable to soft performance at both its Insurance and Reinsurance segment.
Operational Update
Revenues declined 1.4% year over year to $2.2 billion on lower net investment income and noninsurance revenues.
Net premiums written rose 2.2% year over year to $1.5 billion.
Net investment income came in at $118.7 million, down 16.8% year over year, primarily attributable to reflect decreases in interest income due to low reinvestment yields on debt securities and lower yields on short-term investments and floating-rate debt securities.
Underwriting loss was $39.5 million against the year-ago quarter’s profit of $114.9 million.
Total costs and expenses increased 6.1% to $2 billion.
Alleghany Capital’s pretax earnings were $5.3 million, down 87.3% from the year-ago quarter.
Alleghany Corporation Price, Consensus and EPS Surprise
Reinsurance Segment: Net premiums written declined 2.4% to $1.1 billion owing to an automobile-related premium rebates, decreases in the guaranty lines of business and the impact of changes in foreign currency exchange rates.
Underwriting loss was $30.3 million against the year-ago quarter’s income of $75.9 million. Combined ratio deteriorated 1000 basis points to 102.9%, reflecting catastrophe losses, largely related to the pandemic.
Insurance Segment: Net premiums written increased 17.4% to $391.5 million, driven by growth at RSUI.
Underwriting loss was $9.2 million against the year-ago quarter’s income of $39 million. The combined ratio of the reported segment deteriorated 2210 basis points to 102.9%.
Financial Update
Cash balance was $1.6 billion, up 40.2% from 2019 end level.
Debt balance of $2 billion increased 15.2% from 2019-end level.
Allegheny’s shareholder equity at the end of the second quarter was $8.5 billion, down 3.7% from 2019 end level.
Book value per share was $590.85 as of Jun 30, 2020, down 0.8% from the level as of Dec 31, 2019.
As of Jun 30, 2020, the company had $583 million remaining under its share repurchase authorization.
Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) , Cincinnati Financial (CINF - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.
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Alleghany (Y) Q2 Earnings Beat Estimates, Revenues Fall Y/Y
Alleghany Corporation reported second-quarter 2020 adjusted income of 86 cents per share against the Zacks Consensus Estimate of a loss of $1.46 per share. The bottom line plunged 93.1% year over year attributable to soft performance at both its Insurance and Reinsurance segment.
Operational Update
Revenues declined 1.4% year over year to $2.2 billion on lower net investment income and noninsurance revenues.
Net premiums written rose 2.2% year over year to $1.5 billion.
Net investment income came in at $118.7 million, down 16.8% year over year, primarily attributable to reflect decreases in interest income due to low reinvestment yields on debt securities and lower yields on short-term investments and floating-rate debt securities.
Underwriting loss was $39.5 million against the year-ago quarter’s profit of $114.9 million.
Total costs and expenses increased 6.1% to $2 billion.
Alleghany Capital’s pretax earnings were $5.3 million, down 87.3% from the year-ago quarter.
Alleghany Corporation Price, Consensus and EPS Surprise
Alleghany Corporation price-consensus-eps-surprise-chart | Alleghany Corporation Quote
Segment Update
Reinsurance Segment: Net premiums written declined 2.4% to $1.1 billion owing to an automobile-related premium rebates, decreases in the guaranty lines of business and the impact of changes in foreign currency exchange rates.
Underwriting loss was $30.3 million against the year-ago quarter’s income of $75.9 million. Combined ratio deteriorated 1000 basis points to 102.9%, reflecting catastrophe losses, largely related to the pandemic.
Insurance Segment: Net premiums written increased 17.4% to $391.5 million, driven by growth at RSUI.
Underwriting loss was $9.2 million against the year-ago quarter’s income of $39 million. The combined ratio of the reported segment deteriorated 2210 basis points to 102.9%.
Financial Update
Cash balance was $1.6 billion, up 40.2% from 2019 end level.
Debt balance of $2 billion increased 15.2% from 2019-end level.
Allegheny’s shareholder equity at the end of the second quarter was $8.5 billion, down 3.7% from 2019 end level.
Book value per share was $590.85 as of Jun 30, 2020, down 0.8% from the level as of Dec 31, 2019.
As of Jun 30, 2020, the company had $583 million remaining under its share repurchase authorization.
Zacks Rank
Alleghany currently 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 P&C Insurers
Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) , Cincinnati Financial (CINF - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>