Arch Capital Group Limited
) expects to incur pre tax loss in the range of $170-$240
million, net of reinsurance and the effects of reinstatement
premiums, due to Superstorm Sandy. The estimate is based on the
forecasted industry insured losses of $20-$25 billion.
ARCH CAP GP LTD (ACGL): Free Stock Analysis
AXIS CAP HLDGS (AXS): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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Reinsurance segment will bear 60% of the loss, while the
remaining 40% will be borne by the Insurance segment.
Arch Capital Group posted better numbers in each of the first
three quarters of 2012 owing to lower catastrophe activities.
Underwriting results and combined ratio exhibited huge
improvement. The first two quarters reported underwriting profit,
which rebounded from the year-ago loss, while the third quarter
exhibited significant improvement. Conversely, the scenario in
the fourth quarter of 2012 is expected to be disrupted owing to
the huge losses from Superstorm Sandy.
The Zacks Consensus Estimate for the fourth quarter of 2012 is 7
cents representing a year-over-year decline of 92.5%. However,
for full year 2012, it is currently pegged at $2.82 reflecting
year-over-year growth of 27.8%. We expect the year-to-date
performance to dwarf the headwinds in the fourth quarter and aid
Arch Capital to come up with better numbers.
Among other insurers
Axis Capital Holdings Limited
), which closely compete with Arch Capital, have also provided
their loss estimates from Hurricane Sandy for the fourth quarter
of 2012. Axis Capital anticipates its pretax loss to be $300
million, net of tax and estimated recoveries from reinsurance and
including estimated reinstatement premiums whereas XL Group
expects pretax loss of approximately $350 million, net of
reinsurance and reinstatement premiums.
Arch Capital currently holds a Zacks #3 Rank, which translates
into a short-term hold rating. Axis Capital and XL Group also
share the same Zacks Rank.