Arch Capital Group Limited
) reported first quarter 2013 net operating earnings of $1.17 per
share, surpassing the Zacks Consensus Estimate of 97 cents per
share. Results also outpaced the year-ago earnings of 82 cents
ARCH CAP GP LTD (ACGL): Free Stock Analysis
AXIS CAP HLDGS (AXS): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
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Including net realized gains of 41 cents, net impairment losses
recognized in earnings of 2 cents, equity in net income of
investment funds accounted for using the equity method of 10
cents and net foreign exchange gains of 19 cents, Arch Capital
reported net income of $1.85 per share in the first quarter, up
62.3% year over year.
Quarterly Operational Update
Total revenues of Arch Capital for the reported quarter increased
9.2% year over year to $890.1 million primarily due to higher
premiums earned (up 10.7% year over year) and net realized gains
(up 32.2% year over year). Results also surpassed the Zacks
Consensus Estimate of $852 million.
Net premiums written were $952.8 million, up 10.3% year over
Net investment income declined 11.6% year over year to $65.7
million mainly due to lower income from fixed maturities (down
15.6% year over year) and higher investment expenses (up 29.7%
year over year)
Total expenses of Arch Capital during the quarter were $628.8
million, down 3.1% year over year. Lower interest expense (down
21.6% year over year) and foreign exchange gains of $24.3 million
that rebounded from a year-ago loss of $20.7 million led to the
Underwriting income increased 73.2% year over year to $116.4
million during the reported quarter.
Combined ratio was 84.6% showing an improvement of 550 basis
points from 90.1% in the year-ago quarter.
Quarterly Segment Update
Net premiums earned increased 0.7% year over year to $445
Underwriting income during the quarter was $14.95 million,
rebounding from a loss of $8.1 million in the year-ago quarter.
Combined ratio improved 510 basis points year over year to 96.7%.
Net premiums earned increased 29% year over year to $307.8
Underwriting income increased 34.7% year over year to $101.4
million during the reported quarter.
Combined ratio improved 130 basis points year over year to 67.1%.
Share Repurchase Update
During the quarter Arch Capital repurchased 0.9 million shares
for approximately $41 million at an average share price of $44.01
per share. The company is currently left with $728.9 million
under its authorization.
Total investments of Arch Capital increased 2.2% from 2012 end
level to $12.97 billion. As of Mar 31, 2013, total assets of the
company were $18.8 billion, up 5.3% from $17.8 billion from year
Cash flow from operations increased 42.1% year over year to
$205.7 million in the first quarter.
As of Mar 31, 2013, shareholders' equity increased 3.2% from $5.2
billion at year end 2012 to $5.3 billion. The debt-to-capital
ratio of Arch Capital as of Mar 31, 2013 was 5.3% compared to
5.5% as of Dec 31, 2012.
Book value per share was $37.66 at Mar 31, 2013 representing a
4.1% increase over $36.19 at Dec 31, 2012.
Return on equity (ROE) for the first quarter of 2013 was 12.9%,
up 250 basis points from 10.4% in the year-ago quarter.
Arch Capital's investment portfolio consists of high quality
fixed income securities with an average credit quality of
The average effective duration of Arch Capital's investment
portfolio as of Mar 31, 2013 was 2.94 years as compared to 3.06
years at year-end 2012.
During the reported quarter, total return on Arch Capital's
investment portfolio, excluding the effects of foreign exchange
was 1.01%, down 59 basis points from 1.60% at year end 2012.
Performance of Other Insurers
) earnings per share for the first quarter of 2013 were 51 cents,
surging nearly 21% from 42 cents in the year-ago quarter. Results
outpaced the Zacks Consensus Estimate of 44 cents. Net income
shot up 20% from the first quarter of 2012 to $308.6 million in
AXIS Capital Holdings Limited
) reported first-quarter 2013 net operating income of $1.92 per
share, which breezed past the Zacks Consensus Estimate of $1.19.
Earnings surged 79% year over year. Net operating income of $227
million improved nearly 70% year over year.
Montpelier Re Holdings Ltd.
) reported first-quarter 2013 operating income of $1.18 per
share, better than the Zacks Consensus Estimate of 89 cents.
However, earnings were 4.1% lower than $1.23 per share in the
Arch Capital currently carries Zacks Rank #2 (Buy).