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Allied World (AWH) Beats Q2 Earnings on Lower Expenses
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Allied World Assurance Company Holdings, AG (AWH - Free Report) reported second-quarter 2016 operating net income of 91 cents per share that crushed the Zacks Consensus Estimate by 106.8%. Also, earnings soared 237% year over year.
The stellar performance came on the back of solid results across both the underwriting and investment portfolios. Notably, the North American Insurance business displayed strength with a combined ratio of 92.3%.
Including net realized investment gains of 83 cents and foreign exchange gain of 3 cents, Allied World reported a net income of $1.70 per share. The quarterly figure was significantly higher than 10 cents earned in the year-ago quarter.
Operational Performance
Net premiums written decreased 4.2% year over year to $578.1 million in the reported quarter.
Net investment income increased 30.6% year over year to $55.8 million, owing to positive contributions from most of components, including fixed maturity investments, hedge funds and private equity and Allied World Financial Services.
Total revenue dipped 3.8% year over year to $664 million on lower premiums earned. However, the result surpassed the Zacks Consensus Estimate of $654 million by 1.5%.
Total expense declined 12.3% to $578.8 million. The decline in expenditures is attributable to lower net losses and loss expenses, acquisition costs, general and administrative expenses as well as amortization of intangible assets.
Underwriting income skyrocketed 672.8% year over year to $45.4 million. Combined ratio improved 670 basis points (bps) to 92.5%.
Segment Update
Gross premiums written at the North American Insurance segment dipped 1.8% year over year to $508.4 million due to decline in property and casualty. Growth in programs and other specialty lines, partially offset the downside.
Underwriting income came in at $25.4 million. The company had posted a loss of $1.6 million in the year-ago quarter. Combined ratio improved 820 bps year over year to 92.3%.
Gross premiums written at the Global Markets Insurance segment declined 7.1% year over year to $125.4 million. This primarily stemmed from reductions in multiple lines in the European business owing to the challenging conditions in that region. An increase in the Asia-Pacific business partially offset the downside.
Underwriting loss of $14.7 million was narrower than the year-ago loss of $18.2 million. Combined ratio stood at 115.7%, up 200 bps year over year.
Gross premiums written at the Reinsurance segment fell 4% to $166.5 million due to decline in property.
Underwriting income of $34.7 million jumped 35.5% year over year. Combined ratio came at 80.6%, up 760 bps year over year.
Financial Update
Allied World exited the second quarter with cash and cash equivalents of $662.7 million, down 0.9% from year-end 2015.
Total assets were $13.9 billion, up 2.6% from that as of Dec 31, 2015.
Shareholder’s equity was $3.6 billion, up 1.5% from the 2015-end level.
Allied World’s diluted book value per share increased 5.1% from the 2015-end level to $39.70 per share as of Jun 30, 2016.
Return on the company's investment portfolio was 1.4% as of Jun 30, 2016 as against 0.3% as of Jun 30, 2015.
Capital Management
Allied World spent $90 million to repurchase 2.5 million shares during the reported quarter. Thereafter, the company had $410 million remaining under its authorization as of Jul 19, 2016.
In Apr 2016, the company’s board of directors approved four quarterly dividends of 26 cents per share. The first of those four dividends was paid on Jun 30, 2016.
Currently, Allied World carries a Zacks Rank #4 (Sell). Among the other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at RLI Corp. (RLI - Free Report) and Progressive Corp. (PGR - Free Report) missed their respective Zacks Consensus Estimates, while Brown & Brown Inc.’s (BRO - Free Report) earnings beat the same.
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Allied World (AWH) Beats Q2 Earnings on Lower Expenses
Allied World Assurance Company Holdings, AG (AWH - Free Report) reported second-quarter 2016 operating net income of 91 cents per share that crushed the Zacks Consensus Estimate by 106.8%. Also, earnings soared 237% year over year.
The stellar performance came on the back of solid results across both the underwriting and investment portfolios. Notably, the North American Insurance business displayed strength with a combined ratio of 92.3%.
Including net realized investment gains of 83 cents and foreign exchange gain of 3 cents, Allied World reported a net income of $1.70 per share. The quarterly figure was significantly higher than 10 cents earned in the year-ago quarter.
Operational Performance
Net premiums written decreased 4.2% year over year to $578.1 million in the reported quarter.
Net investment income increased 30.6% year over year to $55.8 million, owing to positive contributions from most of components, including fixed maturity investments, hedge funds and private equity and Allied World Financial Services.
Total revenue dipped 3.8% year over year to $664 million on lower premiums earned. However, the result surpassed the Zacks Consensus Estimate of $654 million by 1.5%.
Total expense declined 12.3% to $578.8 million. The decline in expenditures is attributable to lower net losses and loss expenses, acquisition costs, general and administrative expenses as well as amortization of intangible assets.
Underwriting income skyrocketed 672.8% year over year to $45.4 million. Combined ratio improved 670 basis points (bps) to 92.5%.
Segment Update
Gross premiums written at the North American Insurance segment dipped 1.8% year over year to $508.4 million due to decline in property and casualty. Growth in programs and other specialty lines, partially offset the downside.
Underwriting income came in at $25.4 million. The company had posted a loss of $1.6 million in the year-ago quarter. Combined ratio improved 820 bps year over year to 92.3%.
Gross premiums written at the Global Markets Insurance segment declined 7.1% year over year to $125.4 million. This primarily stemmed from reductions in multiple lines in the European business owing to the challenging conditions in that region. An increase in the Asia-Pacific business partially offset the downside.
Underwriting loss of $14.7 million was narrower than the year-ago loss of $18.2 million. Combined ratio stood at 115.7%, up 200 bps year over year.
Gross premiums written at the Reinsurance segment fell 4% to $166.5 million due to decline in property.
Underwriting income of $34.7 million jumped 35.5% year over year. Combined ratio came at 80.6%, up 760 bps year over year.
Financial Update
Allied World exited the second quarter with cash and cash equivalents of $662.7 million, down 0.9% from year-end 2015.
Total assets were $13.9 billion, up 2.6% from that as of Dec 31, 2015.
Shareholder’s equity was $3.6 billion, up 1.5% from the 2015-end level.
Allied World’s diluted book value per share increased 5.1% from the 2015-end level to $39.70 per share as of Jun 30, 2016.
Return on the company's investment portfolio was 1.4% as of Jun 30, 2016 as against 0.3% as of Jun 30, 2015.
Capital Management
Allied World spent $90 million to repurchase 2.5 million shares during the reported quarter. Thereafter, the company had $410 million remaining under its authorization as of Jul 19, 2016.
In Apr 2016, the company’s board of directors approved four quarterly dividends of 26 cents per share. The first of those four dividends was paid on Jun 30, 2016.
ALLIED WORLD AS Price, Consensus and EPS Surprise
ALLIED WORLD AS Price, Consensus and EPS Surprise | ALLIED WORLD AS Quote
Zacks Rank and Performance of Other Stocks
Currently, Allied World carries a Zacks Rank #4 (Sell). Among the other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at RLI Corp. (RLI - Free Report) and Progressive Corp. (PGR - Free Report) missed their respective Zacks Consensus Estimates, while Brown & Brown Inc.’s (BRO - Free Report) earnings beat 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 >>