Arch Capital (ACGL) Consistently Rides On Robust Premiums
Zacks Investment Research | Jan 06, 2019 09:58PM ET
Arch Capital Group Ltd. (NASDAQ:ACGL) has been exhibiting an excellent track record of premium growth on the back of sustained improvement in the metric across its segments. Moreover, the company’s wide and diverse suite of product and service has been contributing to this upside.
The property and casualty (P&C) insurer has been effectively meeting its clients’ demands and needs with the help of its tailor-made products and services. Further, this will drive the company’s long-term growth, thereby enabling it to reach greater heights in the future.
Interestingly, the company’s focus on expanding its mortgage insurance business has been beneficial to its success. Further, this growth complements the P&C insurer’s strengths in the specialty insurance and reinsurance businesses.
The company’s robust inorganic portfolio through strategic acquisitions has in turn, not only helped the company widen its footprint internationally but has also added capabilities and boosted its operations. To that end, Arch Capital completed the buyout of McNeil & Co. in December 2018 wherein the insurer stands to gain from the latter’s reputation in the program space as well as its underwriting expertise and experience.
Given an improving interest rate environment, the company has been experiencing better investment results over the last several quarters. We expect this momentum to continue owing to a probable reinvestment of fixed income securities at higher available yields as well as an increase in investable assets.
Banking on better investment results and solid premiums, the company’s top line is estimated to improve in the near term. In fact, the Zacks Consensus Estimate for 2019 revenues is pegged at $5.7 billion, reflecting a 5.6% year-over-year rise.
With respect to enhancement of shareholder value, the company has been indulging in a few good shareholder-friendly moves like share buybacks and dividend payments. Such measures underscore the company’s strong liquidity position and in turn, not only retain the existing investors’ faith in the stock but also attract new ones.
Additionally, a solid capital position aids the company to protect itself from market volatility while retaining the financial strength and flexibility required to pursue new opportunities.
Shares of the Zacks Rank #2 (Buy) insurer have lost 10.4% in a year’s time, slightly wider than the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.