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Arch Capital (ACGL) Q2 Earnings Beat, Premiums Increase Y/Y
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Arch Capital Group Ltd. (ACGL - Free Report) reported second-quarter 2024 operating income of $2.57 per share, beating the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.8% year over year.
The quarterly results of ACGL were aided by improved underwriting income across all the segments, 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 11.1% year over year to $5.3 billion.
Net premiums written climbed 10.3% year over year to $3.7 billion on higher premiums written across its Insurance and Reinsurance segments.
Pre-tax net investment income increased 50.4% year over year to $364 million and beat our estimate of $316.8 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. The Zacks Consensus Estimate was pegged at $347.5 million.
Operating revenues of $3.9 billion rose 22.6% year over year, driven by higher net premiums earned, net investment income and other income. It beat the Zacks Consensus Estimate by 0.6%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $196 million, wider than the loss of $119 million incurred in the year-ago quarter.
Arch Capital’s underwriting income increased 25.7% year over year to $762 million.
The combined ratio — the percentage of premiums paid out as claims and expenses — improved 110 basis points (bps) to 78.7. The Zacks Consensus Estimate was pegged at 89.4.
Segmental Results
Insurance: Gross premiums written increased 7.5% year over year to $2.1 billion.
Net premiums written climbed 7.2% year over year to $1.5 billion, driven by increases in most lines of business, due in part to new business opportunities and rate changes in the reported quarter.
Underwriting income of $109 million was 0.9% higher than the year-ago number. The combined ratio deteriorated 70 bps to 92.6. The Zacks Consensus Estimate was pegged at 97.
Reinsurance: Gross premiums written improved 15.6% year over year to $2.9 billion.
Net premiums written rose 13.9% year over year to $1.9 billion. The growth in net premiums written reflected increases in all lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.
Underwriting income was $366 million, up 49.4% year over year.
The combined ratio improved 240 bps year over year to 79.5. The Zacks Consensus Estimate was pegged at 89.9.
Mortgage: Gross premiums written dropped 2% year over year to $340 million.
Net premiums written increased 4.2% year over year to $276 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.
Underwriting income increased 13.4% year over year to $287 million.
The combined ratio improved 760 bps to 7.4. The Zacks Consensus Estimate was pegged at 27.8.
Financial Update
Arch Capital exited the quarter with cash of $1.02 billion, which increased 11.2% from 2023-end.
Debt was $2.7 billion as of Jun 30, 2024, which remained unchanged from the end of 2023.
As of Jun 30, 2024, the book value per share was $52.75, up 12.3% from the 2023-end level.
Annualized operating return on average common equity contracted 100 bps year over year to 20.5%. Cash from operations of $1.5 billion improved 31.8% year over year.
Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2024 operating income of $1.29 per share, which surpassed the Zacks Consensus Estimate by 33%. The bottom line increased 7% year over year. Total operating revenues in the quarter under review were $2.4 billion, which improved 10.8% year over year. However, the top line missed the consensus mark by 1.5%.
Net written premiums climbed 14% year over year to $2.4 billion. Investment income, net of expenses, increased 10% year over year to $242 million and missed our estimate of $246.2 million. The Zacks Consensus Estimate was pegged at $252 million. Total benefits and expenses of Cincinnati Financial increased 11.2% year over year to $2.1 billion. Our estimate was $2.2 billion. In its P&C insurance business, CINF witnessed an underwriting income of $35 million, which decreased 26% from the year-ago period. Our estimate was pegged at an income of $1.5 million.
RLI Corp. (RLI - Free Report) reported second-quarter 2024 operating earnings of $1.72 per share, beating the Zacks Consensus Estimate by 27.4%. The bottom line improved 48.3% year over year. Operating revenues for the reported quarter were $413 million, up 17.6% year over year, driven by 17.6% higher net premiums earned and 18% higher net investment income. The top line beat the Zacks Consensus Estimate of $403 million. Gross premiums written increased 11% year over year to $563.4 million. Our estimate was $664 million.
Net investment income increased 18% year over year to $34 million. Our estimate was $39.1 million. The Zacks Consensus Estimate was pegged at $37.4 million. Total expenses increased 9.5% year over year to $314.8 million. Our estimate was $331.7 million. Underwriting income increased 70% year over year to $70 million. The combined ratio improved 570 bps year over year to 81.5. The Zacks Consensus Estimate for the metric was pegged at 95.3, while our estimate was 89.9.
CNA Financial Corporation (CNA - Free Report) reported second-quarter 2024 core earnings of $1.19 per share, which missed the Zacks Consensus Estimate by 1.6%. However, the bottom line increased 5.3% year over year. Total operating revenues of CNA Financial were $3.1 billion, up 6.7% year over year. The top line beat the Zacks Consensus Estimate by 1.3%. Net written premiums of Property & Casualty Operations increased 6% year over year to $2.6 billion.
Net investment income rose 7.4% year over year to $618 million. Our estimate for net investment was $601.1 million. The Zacks Consensus Estimate was pegged at $592.3 million. Total claims, benefits and expenses increased 7.3% to $2.6 billion. Our estimate was $2.5 billion. Catastrophe losses were $82 million, wider than a loss of $68 million in the year-ago quarter. Underwriting income declined 10.1% year over year to $124 million. Our estimate was $175.3 million.
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Arch Capital (ACGL) Q2 Earnings Beat, Premiums Increase Y/Y
Arch Capital Group Ltd. (ACGL - Free Report) reported second-quarter 2024 operating income of $2.57 per share, beating the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.8% year over year.
The quarterly results of ACGL were aided by improved underwriting income across all the segments, 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 the Headlines
Gross premiums written improved 11.1% year over year to $5.3 billion.
Net premiums written climbed 10.3% year over year to $3.7 billion on higher premiums written across its Insurance and Reinsurance segments.
Pre-tax net investment income increased 50.4% year over year to $364 million and beat our estimate of $316.8 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. The Zacks Consensus Estimate was pegged at $347.5 million.
Operating revenues of $3.9 billion rose 22.6% year over year, driven by higher net premiums earned, net investment income and other income. It beat the Zacks Consensus Estimate by 0.6%.
Pre-tax current accident year catastrophic losses, net of reinsurance and reinstatement premiums, were $196 million, wider than the loss of $119 million incurred in the year-ago quarter.
Arch Capital’s underwriting income increased 25.7% year over year to $762 million.
The combined ratio — the percentage of premiums paid out as claims and expenses — improved 110 basis points (bps) to 78.7. The Zacks Consensus Estimate was pegged at 89.4.
Segmental Results
Insurance: Gross premiums written increased 7.5% year over year to $2.1 billion.
Net premiums written climbed 7.2% year over year to $1.5 billion, driven by increases in most lines of business, due in part to new business opportunities and rate changes in the reported quarter.
Underwriting income of $109 million was 0.9% higher than the year-ago number. The combined ratio deteriorated 70 bps to 92.6. The Zacks Consensus Estimate was pegged at 97.
Reinsurance: Gross premiums written improved 15.6% year over year to $2.9 billion.
Net premiums written rose 13.9% year over year to $1.9 billion. The growth in net premiums written reflected increases in all lines of business, due in part to rate increases, new business opportunities and growth in existing accounts.
Underwriting income was $366 million, up 49.4% year over year.
The combined ratio improved 240 bps year over year to 79.5. The Zacks Consensus Estimate was pegged at 89.9.
Mortgage: Gross premiums written dropped 2% year over year to $340 million.
Net premiums written increased 4.2% year over year to $276 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.
Underwriting income increased 13.4% year over year to $287 million.
The combined ratio improved 760 bps to 7.4. The Zacks Consensus Estimate was pegged at 27.8.
Financial Update
Arch Capital exited the quarter with cash of $1.02 billion, which increased 11.2% from 2023-end.
Debt was $2.7 billion as of Jun 30, 2024, which remained unchanged from the end of 2023.
As of Jun 30, 2024, the book value per share was $52.75, up 12.3% from the 2023-end level.
Annualized operating return on average common equity contracted 100 bps year over year to 20.5%. Cash from operations of $1.5 billion improved 31.8% 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 P&C Insurers
Cincinnati Financial Corporation (CINF - Free Report) reported second-quarter 2024 operating income of $1.29 per share, which surpassed the Zacks Consensus Estimate by 33%. The bottom line increased 7% year over year. Total operating revenues in the quarter under review were $2.4 billion, which improved 10.8% year over year. However, the top line missed the consensus mark by 1.5%.
Net written premiums climbed 14% year over year to $2.4 billion. Investment income, net of expenses, increased 10% year over year to $242 million and missed our estimate of $246.2 million. The Zacks Consensus Estimate was pegged at $252 million. Total benefits and expenses of Cincinnati Financial increased 11.2% year over year to $2.1 billion. Our estimate was $2.2 billion. In its P&C insurance business, CINF witnessed an underwriting income of $35 million, which decreased 26% from the year-ago period. Our estimate was pegged at an income of $1.5 million.
RLI Corp. (RLI - Free Report) reported second-quarter 2024 operating earnings of $1.72 per share, beating the Zacks Consensus Estimate by 27.4%. The bottom line improved 48.3% year over year. Operating revenues for the reported quarter were $413 million, up 17.6% year over year, driven by 17.6% higher net premiums earned and 18% higher net investment income. The top line beat the Zacks Consensus Estimate of $403 million. Gross premiums written increased 11% year over year to $563.4 million. Our estimate was $664 million.
Net investment income increased 18% year over year to $34 million. Our estimate was $39.1 million. The Zacks Consensus Estimate was pegged at $37.4 million. Total expenses increased 9.5% year over year to $314.8 million. Our estimate was $331.7 million. Underwriting income increased 70% year over year to $70 million. The combined ratio improved 570 bps year over year to 81.5. The Zacks Consensus Estimate for the metric was pegged at 95.3, while our estimate was 89.9.
CNA Financial Corporation (CNA - Free Report) reported second-quarter 2024 core earnings of $1.19 per share, which missed the Zacks Consensus Estimate by 1.6%. However, the bottom line increased 5.3% year over year. Total operating revenues of CNA Financial were $3.1 billion, up 6.7% year over year. The top line beat the Zacks Consensus Estimate by 1.3%. Net written premiums of Property & Casualty Operations increased 6% year over year to $2.6 billion.
Net investment income rose 7.4% year over year to $618 million. Our estimate for net investment was $601.1 million. The Zacks Consensus Estimate was pegged at $592.3 million. Total claims, benefits and expenses increased 7.3% to $2.6 billion. Our estimate was $2.5 billion. Catastrophe losses were $82 million, wider than a loss of $68 million in the year-ago quarter. Underwriting income declined 10.1% year over year to $124 million. Our estimate was $175.3 million.