Allied World Posts Poor 4Q Results - Analyst Blog
19 2월 2013 - 7:20PM
Zacks
Allied World Assurance Company Holdings (AWH)
reported fourth quarter operating loss of $1.58 per share, narrower
than the Zacks Consensus Estimate loss of $1.91. In the fourth
quarter of 2011, the company reported operating earnings of $2.40
per share.
Including net realized investment gains of 43 cents and foreign
exchange loss of 2 cents, Allied World reported a net loss of $1.17
per share in the fourth quarter, compared to a net income of $4.63
per share in the year-ago period.
Quarterly Operational Update
Total revenues declined 1.9% year over year to $529 million in the
fourth quarter. The decline came on back of waning net investment
income (down 15.7% year over year) and net realized investment
gains (down 54.5% year over year). It surpassed the Zacks Consensus
Estimate of $493 million.
Net written premiums in the quarter increased 18.2% year over year
to $362.6 million.
Total expenses of $570.4 million in the quarter showed an increase
of 65.7% year over year due to increased net loss and loss expenses
(up 94.3% year over year), acquisition costs (up 20.1% y ear over
year), general and administrative expenses (up 19.7% year over
year) and foreign exchange loss ($0.9 million, compared to a profit
of $0.5 million in the fourth quarter of 2011).
In the fourth quarter, underwriting loss for Allied World was $78.8
million compared to an underwriting profit of $65.1 million in the
year-ago period.
The combined ratio deteriorated 3300 basis points year over year to
116.5%.
Segment Update
The U.S. Insurance reported underwriting loss of $35.1 million
compared to an underwriting profit of $7.7 million in the
prior-year period. Net premiums written in the segment were $192.1
million, up 13.6% year over year. Combined ratio deteriorated 2430
basis points to 119.3%.
The International Insurance reported underwriting loss of $24.5
million, compared to an underwriting profit of $39.4 million in the
year-ago period. Net premiums written in the segment were $91.2
million, up 14.3% year over year. Combined ratio deteriorated 7650
basis points to 127.6%.
The Reinsurance segment reported underwriting loss of $19.2 million
compared to an underwriting profit of $18 million in the year-ago
period. Net premiums written in the quarter increased 36.9% year
over year to $79.3 million. Combined ratio deteriorated 2050 basis
points to 109.4%.
Full Year Highlights
Operating earnings of $5.47 per share improved 18.1% year over
year.
Including net realized investment gains of $8.07 and foreign
exchange losses of 2 cents, Allied World reported net income of
$13.30 per share in 2012, up 92.2% year over year.
Total revenue for full year 2012 increased 25.9% year over year to
$2.2 billion.
Underwriting profit in 2012 was $96.6 million, up 64% year over
year.
Combined ratio improved 140 basis points to 94.5% in 2012.
Share Repurchase Update
In the fourth quarter, Allied World spent $56.9 million to buy back
713,874 shares at an average price of $79.70. In 2012, it spent
$263.9 million to repurchase 3.7 million shares at an average price
of $72.20 per share.
Financial Position
Allied World exited 2012 with cash and cash equivalents of $865.4
million, up 20.8% year over year.
Cash from operating activities stood at $629.4 million in 2012, up
14.8% year over year.
As of Dec 31, 2012, total assets of the company were $12 billion,
up 8.2% year over year.
Shareholders’ equity increased 5.6% year over year to $3.3 billion
at 2012 end. The debt to capital ratio of the company improved 80
basis points year over year to 19.4% in 2012.
Business Update
In the reported quarter, the company partnered with four
companies-Cunningham Lindsey, a leading loss adjusting and
claim management company. Another, Aeolus Capital
Management, a Bermuda-based asset management company that
manages capital for investors interested in property catastrophe
reinsurance and retrocession market, while
MatlinPatterson, a private equity firm focused on
distressed investments across a range of industries. A fourth
partner, Crescent Capital Group, a privately held asset
management firm that specializes in public and private below
investment grade assets spanning the entire credit capital.
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.
American Financial Group Inc.'s (AFG) fourth
quarter adjusted earnings of 67 cents breezed past the Zacks
Consensus Estimate by 3.1%. However, results were down 36.2% year
over year from $1.05 earned in the year-ago quarter.
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.
Zacks Rank
Allied World currently carries a Zacks Rank #3 (Hold).
AMER FINL GROUP (AFG): Free Stock Analysis Report
ALLIED WORLD AS (AWH): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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