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Navigators Group (NAVG) Beats on Q2 Earnings and Revenues

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The Navigators Group, Inc. reported second-quarter 2018 net operating earnings per share of 92 cents, surpassing the Zacks Consensus Estimate of 69 cents by 33.3%. Moreover, the bottom line surged 39.4% year over year.

The Navigators Group, Inc. Price, Consensus and EPS Surprise

The quarter under review benefited from double digit premium growth as well as underwriting profits in U.S. Insurance and Global Re segments.

Behind the Headlines

Navigators Group’s operating revenues rose 13.3% from the year-ago quarter to about $358 million in the quarter under consideration. The top line beat the Zacks Consensus Estimate by 0.6%. Net earned premiums increased 12.7% to $331 million while net investment income grew 10.5% to $24.6 million.

Total expense increased 10.9% to nearly $321.6 million, primarily due to higher net loss and loss adjustment expenses, commission expenses, other operating as well as interest expenses.

Underwriting profit skyrocketed nearly 70% to $13.3 million. Improvement in underwriting profit at the U.S. Insurance and Global Re segments fueled this upside. Combined ratio improved 130 basis points (bps) year over year to 96% from the prior-year period’s level.

Segment Update

U.S. Insurance: Net earned premiums increased about 7.6% year over year to $179.7 million. The segment reported underwriting profit of $9.1 million, 9.4% lower than the year-ago quarter’s tally. Combined ratio improved 10 bps to 94.9% in the second quarter.

International Insurance: Net earned premiums rose 12.1% year over year to $92.6 million. The segment’s underwriting loss came in at $3.4 million, narrower than the prior-year quarter’s $3.5 million loss. Combined ratio improved 60 bps to 103.7% in the reported quarter.

Global Re: The segment’s net earned premiums surged 32.6% year over year to $59.2 million. Underwriting profit jumped 155% year over year to about $7.7 million in the concerned quarter. Moreover, combined ratio improved 610 bps to 87.2%.

Financial Update

Navigators Group exited the second quarter with book value per share of $41.49, down 0.1% from $41.55 as of Dec 31, 2017.

As of Jun 30, 2018, Navigators Group’s total investment and cash amounted to nearly $3.6 billion, up nearly 2% from the level on Dec 31, 2017. Total shareholders’ equity was $1.2 billion as of Jun 30, 2018, up 0.7% from 2017-end level.

Dividend Update

In the second quarter, the company paid a dividend of 7 cents per share.

Acquisition

Navigators Group closed the buyout of Belgium-based ASCO and BDM during the second quarter of 2018. The transaction will expand the company’s presence in the European Union’s single market.

Zacks Rank

Navigators Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the insurance industry, which have already reported second-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate while The Travelers Companies, Inc.’s (TRV - Free Report) earnings missed the mark.

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