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Arch Capital Q3 Earnings, Revenues Top on Higher Premiums
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Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2024 operating income of $1.99 per share, which beat the Zacks Consensus Estimate by 2.6%. The bottom line decreased 13.6% year over year.
The quarterly results of ACGL were adversely impacted by lower underwriting income across all the segments attributable to higher cat losses stemming from Hurricane Helene. The downside was limited by positive contributions from new business opportunities, growth in all lines of business and higher invested assets.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Gross premiums written improved 20.2% year over year to $5.4 billion. Net premiums written climbed 20.6% year over year to $4 billion on higher premiums written across its Insurance and Reinsurance segments. Our estimate was $5 billion.
Pre-tax net investment income increased 48.3% year over year to $399 million and beat our estimate of $354.9 million. The growth reflected the effects of sustained higher interest rates available in the market, along with growth in invested assets due in part to strong operating cash flows and inflows related to the MCE Acquisition. The Zacks Consensus Estimate was pegged at $373 million.
Operating revenues of $4.4 billion rose 24.6% year over year, driven by higher net premiums earned, net investment income and other income. It beat the Zacks Consensus Estimate by 8.1%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $450 million, wider than a loss of $180 million incurred in the year-ago quarter.
Arch Capital’s underwriting income decreased 25.4% year over year to $538 million. Our estimate was $463.3 million. The combined ratio — the percentage of premiums paid out as claims and expenses — deteriorated 870 basis points (bps) to 86.6. Our estimate and the Zacks Consensus Estimate were both pegged at 87.
Arch Capital’s Segmental Results
Insurance: Gross premiums written increased 14.6% year over year to $2.3 billion. Our estimate was $2.2 billion. Net premiums written climbed 19.6% year over year to $1.8 billion, driven by the impact of the MCE acquisition and an increase in other liability—occurrences due, in part, to new business opportunities and rate changes. Our estimate was $1.6 billion.
Underwriting income of $120 million was 7% lower than the year-ago number. Our estimate was $84 million. The combined ratio deteriorated 220 bps to 93.1. Our estimate was 94.5 while the Zacks Consensus Estimate was pegged at 96.
Reinsurance: Gross premiums written improved 29.2% year over year to $2.8 billion. Our estimate was $2.4 billion. Net premiums written rose 24.5% year over year to $1.9 billion. The growth in net premiums written reflected increases in most lines of business due in part to rate increases, new business opportunities and growth in existing accounts. Our estimate was $1.7 billion
Underwriting income was $149 million, down 51.9% year over year. Our estimate was $176.9 million. The combined ratio deteriorated 1230 bps year over year to 92.3. Our estimate and the Zacks Consensus Estimate were both pegged at 90.
Mortgage: Gross premiums written dropped 2.3% year over year to $339 million. Our estimate was $336.9 million. Net premiums written increased 4.1% year over year to $282 million on account of a lower level of Bellemeade premiums ceded due in part to the termination of certain Bellemeade agreements in the fourth quarter of 2023. Our estimate was $255 million.
Underwriting income decreased 4.6% year over year to $269 million. Our estimate was $202.7 million. The combined ratio deteriorated 1010 bps to 14.8. Our estimate was 24.3. The Zacks Consensus Estimate was pegged at 25.4.
ACGL’s Financial Update
Arch Capital exited the quarter with cash of $1.03 billion, which increased 11.8% from 2023-end. Debt was $2.7 billion as of Sept. 30, 2024, which remained unchanged from the end of 2023. As of Sept. 30, 2024, the book value per share was $57, up 21.4% from the 2023-end level.
Annualized operating return on average common equity contracted 1000 bps year over year to 14.8%. Cash from operations of $2 billion improved 2.4% year over year.
The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.
RLI Corp. (RLI - Free Report) reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.
Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.
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Arch Capital Q3 Earnings, Revenues Top on Higher Premiums
Arch Capital Group Ltd. (ACGL - Free Report) reported third-quarter 2024 operating income of $1.99 per share, which beat the Zacks Consensus Estimate by 2.6%. The bottom line decreased 13.6% year over year.
The quarterly results of ACGL were adversely impacted by lower underwriting income across all the segments attributable to higher cat losses stemming from Hurricane Helene. The downside was limited by positive contributions from new business opportunities, growth in all lines of business and higher invested assets.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. price-consensus-eps-surprise-chart | Arch Capital Group Ltd. Quote
Behind ACGL's Headlines
Gross premiums written improved 20.2% year over year to $5.4 billion. Net premiums written climbed 20.6% year over year to $4 billion on higher premiums written across its Insurance and Reinsurance segments. Our estimate was $5 billion.
Pre-tax net investment income increased 48.3% year over year to $399 million and beat our estimate of $354.9 million. The growth reflected the effects of sustained higher interest rates available in the market, along with growth in invested assets due in part to strong operating cash flows and inflows related to the MCE Acquisition. The Zacks Consensus Estimate was pegged at $373 million.
Operating revenues of $4.4 billion rose 24.6% year over year, driven by higher net premiums earned, net investment income and other income. It beat the Zacks Consensus Estimate by 8.1%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $450 million, wider than a loss of $180 million incurred in the year-ago quarter.
Arch Capital’s underwriting income decreased 25.4% year over year to $538 million. Our estimate was $463.3 million. The combined ratio — the percentage of premiums paid out as claims and expenses — deteriorated 870 basis points (bps) to 86.6. Our estimate and the Zacks Consensus Estimate were both pegged at 87.
Arch Capital’s Segmental Results
Insurance: Gross premiums written increased 14.6% year over year to $2.3 billion. Our estimate was $2.2 billion. Net premiums written climbed 19.6% year over year to $1.8 billion, driven by the impact of the MCE acquisition and an increase in other liability—occurrences due, in part, to new business opportunities and rate changes. Our estimate was $1.6 billion.
Underwriting income of $120 million was 7% lower than the year-ago number. Our estimate was $84 million. The combined ratio deteriorated 220 bps to 93.1. Our estimate was 94.5 while the Zacks Consensus Estimate was pegged at 96.
Reinsurance: Gross premiums written improved 29.2% year over year to $2.8 billion. Our estimate was $2.4 billion. Net premiums written rose 24.5% year over year to $1.9 billion. The growth in net premiums written reflected increases in most lines of business due in part to rate increases, new business opportunities and growth in existing accounts. Our estimate was $1.7 billion
Underwriting income was $149 million, down 51.9% year over year. Our estimate was $176.9 million. The combined ratio deteriorated 1230 bps year over year to 92.3. Our estimate and the Zacks Consensus Estimate were both pegged at 90.
Mortgage: Gross premiums written dropped 2.3% year over year to $339 million. Our estimate was $336.9 million. Net premiums written increased 4.1% year over year to $282 million on account of a lower level of Bellemeade premiums ceded due in part to the termination of certain Bellemeade agreements in the fourth quarter of 2023. Our estimate was $255 million.
Underwriting income decreased 4.6% year over year to $269 million. Our estimate was $202.7 million. The combined ratio deteriorated 1010 bps to 14.8. Our estimate was 24.3. The Zacks Consensus Estimate was pegged at 25.4.
ACGL’s Financial Update
Arch Capital exited the quarter with cash of $1.03 billion, which increased 11.8% from 2023-end. Debt was $2.7 billion as of Sept. 30, 2024, which remained unchanged from the end of 2023. As of Sept. 30, 2024, the book value per share was $57, up 21.4% from the 2023-end level.
Annualized operating return on average common equity contracted 1000 bps year over year to 14.8%. Cash from operations of $2 billion improved 2.4% year over year.
Zacks Rank
ACGL 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 Insurers
The Travelers Companies (TRV - Free Report) reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.
Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development.
The Progressive Corporation’s (PGR - Free Report) third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.
Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.
RLI Corp. (RLI - Free Report) reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.
Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.