Allied World Assurance Company Holdings
(
AWH
) reported fourth quarter operating loss of $1.58 per share,
narrower than the Zacks Consensus Estimate loss of $1.91. In the
fourth quarter of 2011, the company reported operating earnings
of $2.40 per share.
Including net realized investment gains of 43 cents and foreign
exchange loss of 2 cents, Allied World reported a net loss of
$1.17 per share in the fourth quarter, compared to a net income
of $4.63 per share in the year-ago period.
Quarterly Operational Update
Total revenues declined 1.9% year over year to $529 million in
the fourth quarter. The decline came on back of waning net
investment income (down 15.7% year over year) and net realized
investment gains (down 54.5% year over year). It surpassed the
Zacks Consensus Estimate of $493 million.
Net written premiums in the quarter increased 18.2% year over
year to $362.6 million.
Total expenses of $570.4 million in the quarter showed an
increase of 65.7% year over year due to increased net loss and
loss expenses (up 94.3% year over year), acquisition costs (up
20.1% y ear over year), general and administrative expenses (up
19.7% year over year) and foreign exchange loss ($0.9 million,
compared to a profit of $0.5 million in the fourth quarter of
2011).
In the fourth quarter, underwriting loss for Allied World was
$78.8 million compared to an underwriting profit of $65.1 million
in the year-ago period.
The combined ratio deteriorated 3300 basis points year over year
to 116.5%.
Segment Update
The U.S. Insurance reported underwriting loss of $35.1 million
compared to an underwriting profit of $7.7 million in the
prior-year period. Net premiums written in the segment were
$192.1 million, up 13.6% year over year. Combined ratio
deteriorated 2430 basis points to 119.3%.
The International Insurance reported underwriting loss of $24.5
million, compared to an underwriting profit of $39.4 million in
the year-ago period. Net premiums written in the segment were
$91.2 million, up 14.3% year over year. Combined ratio
deteriorated 7650 basis points to 127.6%.
The Reinsurance segment reported underwriting loss of $19.2
million compared to an underwriting profit of $18 million in the
year-ago period. Net premiums written in the quarter increased
36.9% year over year to $79.3 million. Combined ratio
deteriorated 2050 basis points to 109.4%.
Full Year Highlights
Operating earnings of $5.47 per share improved 18.1% year over
year.
Including net realized investment gains of $8.07 and foreign
exchange losses of 2 cents, Allied World reported net income of
$13.30 per share in 2012, up 92.2% year over year.
Total revenue for full year 2012 increased 25.9% year over year
to $2.2 billion.
Underwriting profit in 2012 was $96.6 million, up 64% year over
year.
Combined ratio improved 140 basis points to 94.5% in 2012.
Share Repurchase Update
In the fourth quarter, Allied World spent $56.9 million to buy
back 713,874 shares at an average price of $79.70. In 2012, it
spent $263.9 million to repurchase 3.7 million shares at an
average price of $72.20 per share.
Financial Position
Allied World exited 2012 with cash and cash equivalents of $865.4
million, up 20.8% year over year.
Cash from operating activities stood at $629.4 million in 2012,
up 14.8% year over year.
As of Dec 31, 2012, total assets of the company were $12 billion,
up 8.2% year over year.
Shareholders' equity increased 5.6% year over year to $3.3
billion at 2012 end. The debt to capital ratio of the company
improved 80 basis points year over year to 19.4% in 2012.
Business Update
In the reported quarter, the company partnered with four
companies-
Cunningham Lindsey
, a leading loss adjusting and claim management company. Another,
Aeolus Capital Management
, a Bermuda-based asset management company that manages capital
for investors interested in property catastrophe reinsurance and
retrocession market, while
MatlinPatterson
, a private equity firm focused on distressed investments across
a range of industries. A fourth partner,
Crescent Capital Group
, a privately held asset management firm that specializes in
public and private below investment grade assets spanning the
entire credit capital.
Performance of few other Property and Casualty
Insurers
Cincinnati Financial Corp.
(
CINF
) reported fourth quarter 2012 operating earnings of $1.11 per
share, substantially beating the Zacks Consensus Estimate of 50
cents. Earnings were also up substantially 32% year over year.
The earnings beat came on the back of increased property casualty
underwriting profits.
American Financial Group Inc.
's (
AFG
) fourth quarter adjusted earnings of 67 cents breezed past the
Zacks Consensus Estimate by 3.1%. However, results were down
36.2% year over year from $1.05 earned in the year-ago quarter.
XL Group Plc
's (
XL
) fourth-quarter 2012 operating income of 13 cents per share
outpaced the Zacks Consensus Estimate of a loss of 35 cents.
Earnings rebounded from a loss of 25 cents incurred in the
year-ago quarter.
Zacks Rank
Allied World currently carries a Zacks Rank #3 (Hold).
AMER FINL GROUP (AFG): Free Stock Analysis
Report
ALLIED WORLD AS (AWH): Free Stock Analysis
Report
CINCINNATI FINL (CINF): Free Stock Analysis
Report
XL GROUP PLC (XL): Free Stock Analysis Report
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