Alleghany (Y) Q1 Earnings Miss Estimates, Revenues Rise Y/Y
Alleghany Corporation Y reported first-quarter 2020 adjusted income of $4.99 per share, which missed the Zacks Consensus Estimate by nearly 5%. The bottom line plunged 48.3% year over year.
The company witnessed better results at Insurance segment but the performance of the Reinsurance segment was soft.
Operational Update
Operating revenues improved 4.6% year over year to $2 billion on higher net premiums earned.
Net premiums written rose 10.7% year over year to $1.5 billion.
Net investment income came in at $112 million, down 8.9% year over year, attributable to losses on credit-related partnership investments.
Underwriting loss was $24 million against the year-ago quarter’s profit of $85 million. Losses include $153 million of catastrophe losses at TransRe related to the COVID-19 pandemic.
Total costs and expenses increased 10.4% to $1.9 billion.
Alleghany Capital’s pretax earnings were $0.3 million, down from $30.2 million in the year-ago quarter.
Alleghany Corporation Price, Consensus and EPS Surprise
Alleghany Corporation price-consensus-eps-surprise-chart | Alleghany Corporation Quote
Segment Update
Reinsurance Segment: Net premiums written improved 9.3% to $1.2 billion owing to an increase in various domestic casualty lines of business written, including general liability, professional liability and umbrella lines of business, partially offset by a slight decrease in property lines of business written globally and the impact of changes in foreign currency exchange rates.
Underwriting loss was $1678.9 million against year-ago quarter’s income of $40 million. Combined ratio deteriorated 1090 basis points to 107%, reflecting catastrophe losses, largely related to the Pandemic.
Insurance Segment: Net premiums written increased 16% to $322.7 million, driven by growth at RSUI.
Underwriting income of $54.5 million improved 21.9% year over year. The combined ratio of the reported segment improved 90 basis points to 82.5%.
Financial Update
Cash balance was $1.6 billion, up 31.9% from 2019 end level.
Debt balance of $1.5 billion decreased 13.5% from 2019-end level.
Allegheny’s shareholder equity at the end of the first quarter increased 14.1% to $7.9 billion down 10.5% from 2019 end level.
Book value per share was $549.07 as of Mar 31, 2020, down 7.7% from the level as of Dec 31, 2019.
Cash outflow from operating activities was $7.3 billion, lower than $66.4 billion outflow in year ago quarter.
Share Repurchase Update
Allegheny bought back shares worth $44 million in the quarter.
As of Mar 31, 2020, the company had $583 million remaining under its share repurchase authorization.
Zacks Rank
Alleghany currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Insurance Releases
Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. BRO beat the Zacks Consensus Estimate while that of RLI Corp. RLI and Travelers Companies TRV missed the same.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Travelers Companies Inc (TRV) : Free Stock Analysis Report
RLI Corp (RLI) : Free Stock Analysis Report
Brown Brown Inc (BRO) : Free Stock Analysis Report
Alleghany Corporation (Y) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
