Allied World Assurance Company Holdings
) reported first quarter operating income of $2.38 per share,
higher than the Zacks Consensus Estimate by 11.7%. Results were
0.4% lower than the year-ago earnings of $2.39.
Including net realized investment gains of $2.18 and foreign
exchange loss of 7 cents, Allied World reported net income of
$4.49 per share in the first quarter, down 21.2% from $5.70 per
share in the year-ago period.
Quarterly Operational update
Total revenues declined 1.1% year over year to $576.3 million in
the first quarter. The decline came on the back of waning net
investment income (down 29.3% year over year) and net realized
investment gains (down 40.4% year over year). However, it
surpassed the Zacks Consensus Estimate of $509 million.
Net written premiums in the quarter increased 18% year over year
to $695.1 million.
Total expenses of $411.8 million in the quarter showed an
increase of 15.4% year over year due to increased net loss and
loss expenses (up 13.3% year over year), acquisition costs (up
20.3% y ear over year), general and administrative expenses (up
17.5% year over year), interest expense (up 2.7% year over year)
and foreign exchange loss ($2.5 million, compared to a profit of
$0.1 million in the first quarter of 2012).
In the first quarter underwriting income for Allied World was
$68.7 million, up 16.1% year over year.
The combined ratio improved 10 basis points year-over-year to
segment reported underwriting loss of $7.6 million compared to an
underwriting profit of $4.6 million in the prior-year period. Net
premiums written in the segment were $192.3 million, up 25% year
over year. Combined ratio deteriorated 720 basis points to
segment reported underwriting income of $31.3 million in the
first quarter, up 57.5% year over year. Net premiums written in
the segment were $77.7 million, up 7.1% year over year. Combined
ratio improved 1220 basis points to 62.8%.
segment reported underwriting income of $45 million in the
reported quarter, up 29.7% year over year. Net premiums written
in the quarter increased 17.3% year over year to $425.1 million.
Combined ratio improved 290 basis points to 76.5%.
Share Repurchase Update
In the first quarter, Allied World spent $36.2 million to buy
back 0.4 million shares at an average price of $83.88.
On Mar 8, 2013, the board of directors proposed a 33.3% hike in
its quarterly dividend to 50 cents per share. This increase in
quarterly dividend is pending approval from the shareholders of
Allied World exited the quarter with cash and cash equivalents of
$729.3 million, down 15.7% from $865.4 million at year end 2012.
As of Mar 31, 2013, total assets of Allied were $11.9 billion,
down 0.9% from $12 billion at year end 2012.
Shareholders' equity increased 3.2% from $3.3 billion at year end
2012 to $3.4 billion at Mar 31, 2013. The debt to capital ratio
of Allied improved 50 basis points from 19.4% at year end 2012 to
18.9% as of Mar 31, 2013.
Return on equity (ROE) was 10% in the first quarter, down 150
basis points from 11.5% in the prior-year quarter.
As of Mar 31, 2013, book value per share of Allied was $96.50, up
4.2% from $92.59 as of Dec 31, 2012.
On Feb 27, 2013, Allied World U.S. launched a new surety line of
business for clients in the country. The U.S. surety line will
provide contract and commercial surety bonds, and environmental
surety bonds. The environmental surety bonds will be offered
either separately or along with Allied World U.S.'s environmental
insurance. The surety line will focus on middle market accounts
with $20 million capacity per contract and $50 million per
Performance of Few Other Property and casualty
Everest Re Group Ltd.
) reported first quarter 2013 operating earnings of $5.88 per
share, substantially beating the Zacks Consensus Estimate of
$4.32 per share. Earnings were also up 31.3% year over year.
Montpelier Re Holdings Limited
) reported first quarter 2013 operating earnings of $1.18 per
share, exceeding the Zacks Consensus Estimate of 89 cents per
share. However, results were down 4.1% year over year.
Allied World currently carries a Zacks Rank #1 (Strong Buy).
Among others in the industry
HCC Insurance Holdings Inc.
) with the same Zacks Rank is expected to report its first
quarter 2013 results on Apr 30. Everest and Montpelier also share
the same Zacks Rank as AWH.
ALLIED WORLD AS (AWH): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
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