Alleghany's (Y) Q3 Earnings Top Estimates, Revenues Fall Y/Y
Zacks Investment Research | Nov 05, 2019 10:33PM ET
Alleghany Corporation’s (NYSE:Y) third-quarter 2019 operating earnings of $7.61 per share beat the Zacks Consensus Estimate by 25.2% on the back of higher revenues. In the year-ago quarter, the company had incurred a loss of $1.07 per share.
Alleghany Corporation Price, Consensus and EPS Surprise
Operational Update
Revenues in the quarter declined 0.8% year over year to $2.2 billion.
Net premiums written rose 14.1% year over year to $1.4 billion, attributable to growth in gross premiums written in the recent quarters.
Net investment income came in at $148 million in the quarter, up 16.1% year over year. The upside was driven by higher interest income, partially offset by lower dividend income.
Total costs and expenses escalated 11.1% to $2 billion.
Segment Update
Reinsurance Segment: Net premiums written increased 12.8% to $1.1 billion owing to TransRe’s purchase of the renewal rights to a block of U.S. treaty reinsurance business, partially offset by a decrease in net premiums written related to a certain large whole account quota share treaty and the impact of changes in foreign currency exchange rates.
The segment's underwriting profit was $6 million against underwriting loss of $172.4 million reported in the year-ago quarter. Also, its third-quarter combined ratio contracted 1840 basis points (bps) to 99.5%, primarily due to significantly lower net catastrophe losses.
Insurance Segment: Net premiums written rose 19% year over year to $302.2 million driven by robust contribution from CapSpecialty and RSUI.
Underwriting profit of $26.8 million declined 17.3% year over year. The combined ratio of this reported segment increased 320 bps to 90.9% due to lower favorable prior accident year loss reserve development, partially offset by lower catastrophe losses.
Financial Update
Alleghany exited the third quarter with $897.5 million cash, down 13.6% from the figure at 2018 end.
Senior notes and other debt increased 1.6% from the level at 2018 end to $1.7 billion.
Alleghany’s shareholder equity at the end of the third quarter increased 14.8% from the level as of Dec 31, 2018 to $8.8 billion.
Book value per share was $612.87 as of Sep 30, 2019, up 16.1% from the level as of Dec 31, 2018.
Share Repurchase Update
As of Sep 30, 2019, the company had $659 million remaining under its share repurchase authorization.
Zacks Rank
Alleghany currently carries a Zacks Rank #4 (Sell).
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