We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Arch Capital (ACGL) Q1 Earnings Beat, Premiums Rise Y/Y
Read MoreHide Full Article
Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2019 operating income per share of 67 cents, which outperformed the Zacks Consensus Estimate by 8.1%. Moreover, the bottom line improved 19.6%.
The quarter benefited from improving premiums and net investment income.
Behind the Headlines
Gross premiums written increased 13% year over year to $2.1 billion, largely fueled by higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income increased more than threefold to $121.3 million, supported by reinvestment of fixed income securities at higher available yields and the shift from municipal bonds to corporates.
Operating revenues of $1.5 billion improved 12.1% year over year and beat the Zacks Consensus Estimate by nearly 15%.
Interest expense was $23.5 million, down 9.3% year over year, reflecting the paydown of revolving credit agreement borrowings in the second half of 2018.
Total expense of $1.2 billion increased 7.8% year over year on higher losses and loss adjustment expenses, acquisition expenses, other operating expenses and corporate expenses.
Arch Capital’s underwriting income came in at $260.1 million, up 9.8% year over year. Combined ratio improved 180 basis points (bps) to 81.4%.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Insurance: Gross premiums written increased 14.4% year over year to $942 million driven by acquisition of a U.K. commercial lines book of business and growth in most lines of business.
Underwriting profit dropped 92.9% year over year to $0.6 million. Combined ratio deteriorated 130 bps to 99.9%.
Reinsurance: Gross premiums written rose 18.2% year over year to $682.9 million on growth from selected new business opportunities in casualty and property excluding property catastrophe.
Underwriting income dropped 61.9% year over year to $4.3 million. Combined ratio deteriorated 1450 bps year over year to 95.2%.
Mortgage: Gross premiums written increased 10.9% year over year to $356.1 million. Underwriting income increased 39.6% to $244.1 million. Combined ratio improved 1320 bps year over year to 25.6%. Arch MI U.S. generated $11.2 billion of new insurance written.
Financial Update
Arch Capital exited the quarter with cash of $633.1 million, down 7% year over year. Debt was $1.7 billion, up 0.4% year over year.
As of Mar 31, 2019, book value per share was $23.12, up 7.4% year over year.
Operating return on equity was 12.3% in the first quarter, up 100 basis points.
Net cash provided by operating activities was $165.4 million, down 55.3% year over year.
Among other players from the insurance industry, which have already reported first-quarter results, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) and The Progressive Corp. (PGR - Free Report) outpaced 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 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Arch Capital (ACGL) Q1 Earnings Beat, Premiums Rise Y/Y
Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2019 operating income per share of 67 cents, which outperformed the Zacks Consensus Estimate by 8.1%. Moreover, the bottom line improved 19.6%.
The quarter benefited from improving premiums and net investment income.
Behind the Headlines
Gross premiums written increased 13% year over year to $2.1 billion, largely fueled by higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income increased more than threefold to $121.3 million, supported by reinvestment of fixed income securities at higher available yields and the shift from municipal bonds to corporates.
Operating revenues of $1.5 billion improved 12.1% year over year and beat the Zacks Consensus Estimate by nearly 15%.
Interest expense was $23.5 million, down 9.3% year over year, reflecting the paydown of revolving credit agreement borrowings in the second half of 2018.
Total expense of $1.2 billion increased 7.8% year over year on higher losses and loss adjustment expenses, acquisition expenses, other operating expenses and corporate expenses.
Arch Capital’s underwriting income came in at $260.1 million, up 9.8% year over year. Combined ratio improved 180 basis points (bps) to 81.4%.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. Price, Consensus and EPS Surprise | Arch Capital Group Ltd. Quote
Segment Results
Insurance: Gross premiums written increased 14.4% year over year to $942 million driven by acquisition of a U.K. commercial lines book of business and growth in most lines of business.
Underwriting profit dropped 92.9% year over year to $0.6 million. Combined ratio deteriorated 130 bps to 99.9%.
Reinsurance: Gross premiums written rose 18.2% year over year to $682.9 million on growth from selected new business opportunities in casualty and property excluding property catastrophe.
Underwriting income dropped 61.9% year over year to $4.3 million. Combined ratio deteriorated 1450 bps year over year to 95.2%.
Mortgage: Gross premiums written increased 10.9% year over year to $356.1 million. Underwriting income increased 39.6% to $244.1 million. Combined ratio improved 1320 bps year over year to 25.6%. Arch MI U.S. generated $11.2 billion of new insurance written.
Financial Update
Arch Capital exited the quarter with cash of $633.1 million, down 7% year over year. Debt was $1.7 billion, up 0.4% year over year.
As of Mar 31, 2019, book value per share was $23.12, up 7.4% year over year.
Operating return on equity was 12.3% in the first quarter, up 100 basis points.
Net cash provided by operating activities was $165.4 million, down 55.3% year over year.
Zacks Rank
Arch Capital currently has 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
Among other players from the insurance industry, which have already reported first-quarter results, The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) and The Progressive Corp. (PGR - Free Report) outpaced 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 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>