Navigators Group Misses Q4 Earnings Estimate, Shares Sink - Analyst Blog
Navigators Group Inc. (NAVG) reported fourth-quarter 2014 operating earnings per share of $1.25, which missed the Zacks Consensus Estimate of $1.30 but comfortably outpaced the prior-year quarter figure of $1.13. Modest underwriting results boosted the year-over-year upside.
With this result, the company’s average four-quarter beat stands at 28.8%. However, following the earnings announcement, shares fell 4.1% in the last trading sessions, closing at $74.13 on Friday.
Operating net income escalated 14.3% year over year to $18.4 million. Including extraordinary items, reported net income increased $19.3 million or $1.31 a share from $14.3 million or $1.00 per share in the year-ago quarter.
Navigators Group’s total revenue inched up 1.2% year over year to $251.6 millionin the quarter. Gross premiums written were $333.3 million, up 0.1%. Notably, net earned premiums climbed 6.5% to $234.2 million, reflecting growth in both insurance companies and Lloyd’s operations. Additionally, net investment income jumped 12.7% to $16.1 million. These were partially offset by net realized gained that tanked 95% to $0.8 million.
Meanwhile, insurance loss and loss adjusted expense (LAE) edged up 2.5% year over year to $134.7 million. However, total expenses fell 2.1% to $223.5 million, primarily reflecting low interest expense partially offset by higher LAE, commissions and operating costs.
Subsequently, underwriting profit rose 10.6% to $14.6 million from $13.2 million in the year-ago quarter. Even net combined ratio improved to 93.8% from 94% in the prior-year quarter.
Highlights of 2014
Operating net income of $80.5 million or $5.49 a share in 2014 outperformed the 2013 equivalent of $61.7 million or $4.30 per share. Total revenue rose 11.5% year over year to $1.02 billion.
Financial Update
Navigators Group exited 2014 with book value per share of $71.93, up 3% from the year-ago period. Operating cash flow escalated to $222.5 million at 2014-end from $136.9 million at 2013-end.
At 2014-end, Navigators Group’s total investment and cash stood at $2.82 billion, higher than $2.57 billion at 2013-end. Total shareholders’ equity was $1.03 billion at 2014-end, up from $902.2 million at 2013-end.
Zacks Rank
Currently, Navigators Group sports a Zacks Rank #1 (Strong Buy).
Promising Stock Picks
Investors interested in the insurance space can also consider other promising insurance players like HCI Group Inc. (HCI), Endurance Specialty Holdings Ltd. (ENH) and HCC Insurance Holdings Inc. (HCC). All these carry the same Zacks Rank as Navigators Group.
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