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Arch Capital's (ACGL) Q1 Earnings Beat, Revenues Up Y/Y
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Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2021 operating income per share of 59 cents, which surpassed the Zacks Consensus Estimate by 18%. The bottom line also increased 28.3% year over year.
The company’s results benefited from improved premiums. However, higher costs and elevated catastrophic losses stemming from several weather-related events as well as the COVID-19 pandemic partly dampened the results.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Gross premiums written improved 19.9% year over year to $3.4 billion. Net premiums written also climbed 17.4% year over year to $2.5 billion on higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income plunged 31.9% year over year to $98.9 million.
Operating revenues of $2 billion, however, rose 7.8% year over year.
Total expenses of $1.8 billion increased 14.6% year over year due to higher losses and loss adjustment expenses, acquisition costs, other operating expenses, corporate costs as well as interest expense.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, of $188.3 million increased about 59% from the prior-year quarter. The surge in catastrophic losses — which includes $0.6 million of COVID-related losses — resulted from several weather-related events including winter storms Uri and Viola.
Arch Capital’s underwriting income increased 20.7% year over year to $185.9 million. Combined ratio improved 80 basis points (bps) to 90.7.
Segment Results
Insurance: Gross premiums written increased 17.2% year over year to $1.4 billion, while net premiums written climbed 20% to $994.8 million. This growth can primarily be attributed to rate increases, new business opportunities and growth in existing accounts, partially offset by deterioration in the travel business.
Underwriting income was $18.4 million, which rebounded from the year-ago loss of $28.2 million. Combined ratio improved 620 bps to 97.7
Reinsurance: Gross premiums written improved 31% year over year to $1.5 billion, while net premiums written increased 25.3% to $999.1 million. The growth was driven by rate increases and new business.
Underwriting loss was $19.8 million, which widened from the year-ago loss of 9.4 million. Combined ratio deteriorated 90 bps year over year to 102.9.
Mortgage: Gross premiums written improved 6% year over year to $391.2 million, while net premiums written increased 3.3% to $335.2 million. The improvement can be primarily attributed to growth in Australian single premium mortgage insurance, partially offset by a lower level of U.S. primary mortgage insurance in force on monthly premium policies.
Underwriting income increased 1.4% year over year to $200 million. Combined ratio improved 170 bps year over year to 45.8. The U.S. primary mortgage insurance business generated $27 billion of new insurance written, up 60.7% year over year, driven by a significant increase in mortgage originations in the market.
Financial Update
Arch Capital exited the first quarter with cash of $941.9 million, which climbed 3.9% from Dec 31, 2020. Debt was $2.9 billion as of Mar 31, 2021, which inched up 0.01% from Dec 31, 2020.
As of Mar 31, 2021, book value per share was $30.54, up 17% year over year.
Annualized operating return on average common equity was 7.8% for the first quarter, which expanded 70 bps year over year.
During 2020, net cash provided by operating activities was $762.8 billion, which increased 25% year over year.
The company bought back 5.3 million shares for $179.3 million in the reported quarter.
Performance of Other Property & Casualty (P&C) Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and RLI Corporation’s (RLI - Free Report) earnings beat the Zacks Consensus Estimate.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Arch Capital's (ACGL) Q1 Earnings Beat, Revenues Up Y/Y
Arch Capital Group Ltd. (ACGL - Free Report) reported first-quarter 2021 operating income per share of 59 cents, which surpassed the Zacks Consensus Estimate by 18%. The bottom line also increased 28.3% year over year.
The company’s results benefited from improved premiums. However, higher costs and elevated catastrophic losses stemming from several weather-related events as well as the COVID-19 pandemic partly dampened the results.
Arch Capital Group Ltd. Price, Consensus and EPS Surprise
Arch Capital Group Ltd. price-consensus-eps-surprise-chart | Arch Capital Group Ltd. Quote
Behind the Headlines
Gross premiums written improved 19.9% year over year to $3.4 billion. Net premiums written also climbed 17.4% year over year to $2.5 billion on higher premiums written across its Insurance, Reinsurance and Mortgage segments.
Net investment income plunged 31.9% year over year to $98.9 million.
Operating revenues of $2 billion, however, rose 7.8% year over year.
Total expenses of $1.8 billion increased 14.6% year over year due to higher losses and loss adjustment expenses, acquisition costs, other operating expenses, corporate costs as well as interest expense.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, of $188.3 million increased about 59% from the prior-year quarter. The surge in catastrophic losses — which includes $0.6 million of COVID-related losses — resulted from several weather-related events including winter storms Uri and Viola.
Arch Capital’s underwriting income increased 20.7% year over year to $185.9 million. Combined ratio improved 80 basis points (bps) to 90.7.
Segment Results
Insurance: Gross premiums written increased 17.2% year over year to $1.4 billion, while net premiums written climbed 20% to $994.8 million. This growth can primarily be attributed to rate increases, new business opportunities and growth in existing accounts, partially offset by deterioration in the travel business.
Underwriting income was $18.4 million, which rebounded from the year-ago loss of $28.2 million. Combined ratio improved 620 bps to 97.7
Reinsurance: Gross premiums written improved 31% year over year to $1.5 billion, while net premiums written increased 25.3% to $999.1 million. The growth was driven by rate increases and new business.
Underwriting loss was $19.8 million, which widened from the year-ago loss of 9.4 million. Combined ratio deteriorated 90 bps year over year to 102.9.
Mortgage: Gross premiums written improved 6% year over year to $391.2 million, while net premiums written increased 3.3% to $335.2 million. The improvement can be primarily attributed to growth in Australian single premium mortgage insurance, partially offset by a lower level of U.S. primary mortgage insurance in force on monthly premium policies.
Underwriting income increased 1.4% year over year to $200 million. Combined ratio improved 170 bps year over year to 45.8. The U.S. primary mortgage insurance business generated $27 billion of new insurance written, up 60.7% year over year, driven by a significant increase in mortgage originations in the market.
Financial Update
Arch Capital exited the first quarter with cash of $941.9 million, which climbed 3.9% from Dec 31, 2020. Debt was $2.9 billion as of Mar 31, 2021, which inched up 0.01% from Dec 31, 2020.
As of Mar 31, 2021, book value per share was $30.54, up 17% year over year.
Annualized operating return on average common equity was 7.8% for the first quarter, which expanded 70 bps year over year.
During 2020, net cash provided by operating activities was $762.8 billion, which increased 25% year over year.
The company bought back 5.3 million shares for $179.3 million in the reported quarter.
Zacks Rank
eArch Capital 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 Property & Casualty (P&C) Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and RLI Corporation’s (RLI - Free Report) earnings beat the Zacks Consensus Estimate.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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