Arch Capital Group Ltd.
) reported its fourth-quarter 2013 operating net income of $1.12
per share, which surpassed the Zacks Consensus Estimate of 99
cents by 13.1% and also surged from an operating loss of 18 cents
reported in the prior-year quarter.
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A higher top line coupled with lower expense drove the
outperformance for Arch Capital.
Including the impact of net realized gains of 6 cents per share,
equity in net income of investment funds of 4 cents per share and
net foreign exchange losses of 8 cents per share, Arch Capital
reported fourth-quarter net income of $1.14 per share, up 3.6%
year over year.
Arch Capital's total revenues grossed $923.1 million, outpacing
the Zacks Consensus Estimate of $885 million by 4.3%. The results
also came a tad higher than the year-ago quarter's results. The
improvement primarily stemmed from higher premiums across both
the insurance and reinsurance segment.
Net investment income of Arch Capital fell 9% year over year to
$67.1 million in the reported quarter. The decline was
attributable to reduced investment income from fixed income
securities and escalating investment expenses.
Total expenses declined 18.3% from the prior-year quarter to
$746.1 million. The improvement was primarily attributable to
lower losses and loss adjustment expenses and also significantly
lower net foreign exchange losses. However, the upside was
partially offset by higher acquisition expenses, interest
expenses and other operating expenses.
Arch Capital's underwriting income of $128.3 million during the
reported quarter, rebounded from an underwriting loss of $91.3
million incurred in the previous-year quarter.
Combined ratio improved 2710 basis points (bps) year over year to
85.3% during the quarter. A benign cat environment,
favorable loss reserve development and better performance in
insurance group operations aided the combined ratio for the
Net premiums written of $40.7 million increased nearly 14% year
over year during the quarter. Higher premiums were driven by
increased number of programs, contract binding, construction
lines and national accounts casualty. However, reduced executive
assurance and professional liability lines and lenders products
business limited the upside.
Higher net premiums boosted underwriting income for the segment,
which rebounded to $18.7 million from underwriting loss of $84.4
million reported in the prior-year quarter.
Combined ratio also improved 2230 bps year over year to 96.2% in
Net written premiums rose 36.1% year over year to approximately
$308.2 million. The increase was mainly driven by growth in
casualty and other specialty lines and was partially offset by
reduced marine and property catastrophe business.
Underwriting income of $109.7 million compared favorably with
underwriting loss in the prior-year quarter.
Combined ratio improved 3390 bps year over year to 69.8%.
Arch Capital reported full-year 2013 operating net income of
$4.39 per share, surging 72.8% from the 2012 number. Growth was
boosted by higher revenues coupled with lower expenses.
Net income of Arch Capital came in at $5.07 a share, up 25.8%
year over year.
Total revenue of Arch Capital during the year totaled $3.53
billion, up 1.3% year over year.
Arch Capital exited 2013 with total assets of $19.57 billion,
increasing 9.8% from the 2012 year-end level.
As of Dec 31, Arch Capital had a cash balance of $434.1 million,
up 17% from 2012-end.
Arch Capital's long-term debt rose from $300 million as of Dec
31, 2012 to $800 million at the end of 2013 as a wholly-owned
subsidiary of the company made a public offering of $500 million
at the rate of 5.144% and is due on Nov 1, 2043.
Total shareholder's equity of $5.65 billion as of 2013-end
increased 9.3% from the 2012 end-level for.
Arch Capital's cash flow from operations was $850.9 million in
2013, down 7.7% year over year.
Book Value per share as of the end of 2013 was $39.82, up 10%
from 2012 end-level.
Performances by Other Property and Casualty
Allied World Assurance Company Holdings, AG
) reported fourth-quarter 2013 operating net income of $2.17 per
share, missing the Zacks Consensus Estimate of $2.40 by 10.4%.
However, the result surged from the year-ago quarter's operating
net loss of $1.58 a share.
) reported fourth-quarter operating net income of $5.92 per
share, missing the Zacks Consensus Estimate of $5.99 per share by
1.2%. However, the number improved 2.4% year over year.
) reported operating net earnings of $2.39 per share in the
fourth quarter, surpassing the Zacks Consensus Estimate by 19.5%.
Moreover, earnings surged nearly 67% on a year-over-year basis.
Arch Capital presently carries a Zacks Rank #3 (Hold).