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Alleghany Corporation reported fourth-quarter 2017 operating earnings of $9.89 per share, which surpassed the Zacks Consensus Estimate of $7.58 by 30.5%. Moreover, the bottom line surged 40.9% from the year-ago quarter.
Alleghany Corporation Price, Consensus and EPS Surprise
Including one-time items, the company reported net earnings of $9.96 per share, which skyrocketed 123.8% from the year-ago quarter.
Full-Year Highlights
For 2017, Alleghany reported operating earnings per share of $2.04, which plummeted 92.9% year over year.
Total operating revenues of $6.3 billion improved 3.6% from the level in 2016 owing to higher net investment income as well as other revenues.
Total expenses increased 16.5% year over year to $6.4 billion, largely due to increase in net loss and loss adjustment expenses, other operating expenses, corporate administration as well as interest expenses.
Operational Update
Net premiums written inched up 1.6% year over year to $1.2 billion.
Net investment income came in at $129.2 million in the quarter under review, up 21.8% year over year. This improvement is attributable to higher interest income, higher yields on short-term investments and floating-rate debt securities.
Catastrophe loss of $6.6 million was substantially narrower than $43 million loss in the year-ago quarter.
Underwriting profit surged 34.4% year over year to $137.2 million. For 2017, combined ratio deteriorated 1450 bps to 106.4% compared with that of 2016.
Segment Update
Reinsurance Segment: Net premiums written declined 3.5% to $903.4 million due to cancellations, non-renewals and lower participations in certain treaties, impact of rate pressures and increased retentions by cedants.
Underwriting profit was $95.7 million, improving 21% from the year-ago quarter.
Insurance Segment: Net premiums written increased 5.1% to $276 million, driven by sustained growth at Alleghany’s all three insurance companies. Underwriting profit of $41.5 million soared 79.7% from the prior-year quarter.
Financial Update
Alleghany exited the reported quarter with cash of $838.4 million compared with $594 million at the end of 2016.
Debt balance of $1.5 billion inched up 0.6% from December 2016-end level.
Allegheny’s shareholders’ equity at the end of the quarter was $8.5 billion compared with $7.9 billion at 2016-end level.
Book value per share was $553.20 as of Dec 31, 2017, up 7.4% from the level on Dec 31, 2016. This upside was driven by a solid investment performance and risk management protocols.
Net cash from operations totaled $445.7 million for the year ended Dec 31, 2017, down 43.8% year over year.
Share Repurchase and Dividend Update
In the fourth quarter, Alleghany bought back shares worth 7.5 million. As of Dec 31, 2017, the company has $363.2 million remaining under its authorization.
The board of directors approved a special dividend of $10 per share, payable on Mar 15, 2018 to shareholders of record as of Mar 5, 2018.
Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
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Alleghany (Y) Q4 Earnings Surpass Estimates, Improve Y/Y
Alleghany Corporation reported fourth-quarter 2017 operating earnings of $9.89 per share, which surpassed the Zacks Consensus Estimate of $7.58 by 30.5%. Moreover, the bottom line surged 40.9% from the year-ago quarter.
Alleghany Corporation Price, Consensus and EPS Surprise
Alleghany Corporation Price, Consensus and EPS Surprise | Alleghany Corporation Quote
Including one-time items, the company reported net earnings of $9.96 per share, which skyrocketed 123.8% from the year-ago quarter.
Full-Year Highlights
For 2017, Alleghany reported operating earnings per share of $2.04, which plummeted 92.9% year over year.
Total operating revenues of $6.3 billion improved 3.6% from the level in 2016 owing to higher net investment income as well as other revenues.
Total expenses increased 16.5% year over year to $6.4 billion, largely due to increase in net loss and loss adjustment expenses, other operating expenses, corporate administration as well as interest expenses.
Operational Update
Net premiums written inched up 1.6% year over year to $1.2 billion.
Net investment income came in at $129.2 million in the quarter under review, up 21.8% year over year. This improvement is attributable to higher interest income, higher yields on short-term investments and floating-rate debt securities.
Catastrophe loss of $6.6 million was substantially narrower than $43 million loss in the year-ago quarter.
Underwriting profit surged 34.4% year over year to $137.2 million. For 2017, combined ratio deteriorated 1450 bps to 106.4% compared with that of 2016.
Segment Update
Reinsurance Segment: Net premiums written declined 3.5% to $903.4 million due to cancellations, non-renewals and lower participations in certain treaties, impact of rate pressures and increased retentions by cedants.
Underwriting profit was $95.7 million, improving 21% from the year-ago quarter.
Insurance Segment: Net premiums written increased 5.1% to $276 million, driven by sustained growth at Alleghany’s all three insurance companies. Underwriting profit of $41.5 million soared 79.7% from the prior-year quarter.
Financial Update
Alleghany exited the reported quarter with cash of $838.4 million compared with $594 million at the end of 2016.
Debt balance of $1.5 billion inched up 0.6% from December 2016-end level.
Allegheny’s shareholders’ equity at the end of the quarter was $8.5 billion compared with $7.9 billion at 2016-end level.
Book value per share was $553.20 as of Dec 31, 2017, up 7.4% from the level on Dec 31, 2016. This upside was driven by a solid investment performance and risk management protocols.
Net cash from operations totaled $445.7 million for the year ended Dec 31, 2017, down 43.8% year over year.
Share Repurchase and Dividend Update
In the fourth quarter, Alleghany bought back shares worth 7.5 million. As of Dec 31, 2017, the company has $363.2 million remaining under its authorization.
The board of directors approved a special dividend of $10 per share, payable on Mar 15, 2018 to shareholders of record as of Mar 5, 2018.
Zacks Rank
Alleghany sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
Among other players from the insurance industry having reported fourth-quarter earnings, the bottom line of Brown & Brown, Inc. (BRO - Free Report) , MGIC Investment Corporation (MTG - Free Report) and The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>