Navigators Ends 2012 on a High Note

Zacks

Navigators Group Inc.’s (NAVG) fourth-quarter adjusted earnings of 59 cents breezed past the Zacks Consensus Estimate of a loss of 25 cents Results were up 43.9% year over year from 41 cents earned in the year-ago quarter.

Including net realized gain net of tax worth $30.3 million and net other than temporary impairment losses of $0.2 million, Navigators reported net income of $1.96 in the fourth quarter, up 180% year over year.

Quarterly Operational update

Total revenues increased 15.8% year over year to $244.6 million in the fourth quarter. This was driven by strong improvement in net investment income (up 9.6% year over year) and net earned premiums (up 501% year over year). It surpassed the Zacks Consensus Estimate of $222 million.

Net written premiums in the quarter increased 5.1% year over year to $212.3 million.

Net investment income increased 9.6% year over year to $13.6 million

Total expenses of $203.3 million in the quarter showed an increase of 2.1% year over year due to increases in commission expenses (up 3.3% year over year), other operating expenses (up 39.6% year over year) and a marginal increase in interest expense by 0.1% year over year.

In the fourth quarter, underwriting loss for Navigators was $0.3 million compared with $4.7 million in the prior-year period.

The combined ratio improved 230 basis points year over year to 100.2%.

Segment Update

The Insurance Companies reported underwriting loss of $13.4 million compared to a loss of $13.7 million in the prior-year period. Net written premiums in the segment were $165.5 million, up 8.1% year over year. Combined ratio improved 80 basis points to 109.0%.

The Lloyd’s Operations reported underwriting profit of $13.1 million, up 47.2% year over year. Net written premiums in the segment were $46.8 million, down 4.2% year over year. Combined ratio improved 800 basis points to 74.9%.

Full Year Highlights

Adjusted earnings of $2.63 per share improved 108.7% year over year.

Including net realized gain net of tax worth $41.1 million and net other than temporary impairment losses of $0.9 million, Navigators reported net income of $1.96 in 2012, up 180% year over year.

Total revenues for full year 2012 increased 14.6% year over year to $877.9 million.

Underwriting profit in 2012 was $5.5 million compared with an underwriting loss of $32.6 million in 2011.

Combined ratio improved 540 basis points to 99.3% in 2012.

Financial Position

Navigators exited 2012 with cash and investments of $2.4 billion, up 8.5% year over year.

Net cash from operating activities stood at $96.7 million in 2012, down 18.3% year over year.

As of Dec 31, 2012, total assets of the company were $4 billion, up 9.1% year over year.

Shareholders’ equity increased 9.5% year over year to $879.5 billion at 2012 end. The debt to capital ratio of the company was in line with that of the prior year.

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.

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.

Allstate Corporation’s (ALL) fourth-quarter 2012 operating earnings per share of 59 cents significantly exceeded the Zacks Consensus Estimate of a loss of 7 cents but lagged the year-ago quarter’s earnings of $1.45 a share.


Zacks Rank

Navigators currently carries a Zacks Rank #3 (Hold). Cincinnati Financial and XL carry a Zacks Rank #1 (Strong Buy), while Allstate carries a Zacks Rank 2 (Buy) and are worth noting

 

Read the Full Research Report on XL

Read the Full Research Report on CINF

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