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Alleghany (Y) Q2 Earnings Top Estimates, Revenues Up Y/Y

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Alleghany Corporation reported second-quarter 2021 adjusted income of $17.39 per share, which beat the Zacks Consensus Estimate by 9.4%. The bottom line also increased more than 20-fold year over year.

The company witnessed growth in premiums and net investment income, partially offset by higher expenses.

Alleghany Corporation Price, Consensus and EPS Surprise Alleghany Corporation Price, Consensus and EPS Surprise

Alleghany Corporation price-consensus-eps-surprise-chart | Alleghany Corporation Quote

Operational Update

Revenues improved 31.5% year over year to $2.9 billion on higher net premiums earned and net investment income.

Net premiums written rose 27.1% year over year to $1.9 billion on higher premiums in the Reinsurance and Insurance segments.

Net investment income came in at $127 million, up 6.9% year over year, driven by higher dividend income, partially offset by lower interest income and partnership income.

Combined ratio improved 1260 basis points (bps) year over year to 90.2.

Underwriting profit was $173.7 million against the year-ago quarter’s loss of $39.5 million.

Total costs and expenses increased 20.5% to $2.4 billion due to higher net loss and loss adjustment expenses, commissions, brokerage and other underwriting expenses, other operating expenses, corporate administration, amortization of intangible assets, and interest expense.

Segment Update

Reinsurance: Net premiums written rose 29.7% to $1.4 billion owing to an overall improving rate, with growth in the U.S. professional liability, casualty, agriculture and U.S. automobile lines of business, partially offset by an increase in ceded premiums.

Underwriting profit was $124.2 million against the year-ago quarter’s loss of $30.3 million. Combined ratio improved 1180 basis points to 91.1, reflecting lower catastrophe and pandemic losses.

Insurance: Net premiums written increased 19.8% to $49.1 million, driven by growth at both RSUI and CapSpecialty.

Underwriting income came in at $49.2 million against the year-ago quarter’s loss of $9.2 million. The combined ratio improved 1550 basis points to 87.3.

Alleghany Capital: Revenues soared 63.3% year over year to $789.2 million.

Pre-tax earnings of $61.4 million in the second quarter increased more than 11-fold year over year. This significant jump was owing to higher earnings in both the non-industrial and industrial sub-segments.

Financial Update

Cash balance was $871.5 billion, up 10.1% from the 2020-end level.

Debt balance of $2.1 billion decreased 3.4% from the 2020-end level.

Allegheny’s shareholder equity at the end of the second quarter increased 4.4% to $9.1 billion from 2020 end.

Book value per share was $636.40 as of Jun 30, 2021, up 7.6% from Dec 31, 2020.

Cash from operating activities was $939.2 million in the first half of 2021, up more than three-fold year over year.

Share Repurchase Update

Allegheny bought back shares worth $35.9 million in the quarter. As of Mar 31, 2021, the company had $333.3 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.

Other Insurance Releases

Of the insurance industry players that have reported second-quarter results so far, The Travelers Companies (TRV - Free Report) , The Progressive Corporation (PGR - Free Report) and RLI Corporation’s (RLI - Free Report) earnings beat the Zacks Consensus Estimate.


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