Enstar Group Limited (NASDAQ:ESGR) reported second-quarter 2016 earnings per share of $2.09, missing the Zacks Consensus Estimate by 2.3%. However, earnings more than doubled from 75 cents earned in the year-ago quarter on higher revenues.
Shares lost about 0.07% in yesterday’s trading session reflecting the underperformance.
Operational Update
Operating revenues of about $929 million improved 9% year over year. The improvement was fueled by an increase in net premiums earned and net investment income.
Net investment income increased 56.2% year over year to $54.2 million. The improvement was driven by a higher yield on invested assets and an increase in interest on funds held relating to the portfolio assumed from Allianz (DE:ALVG).
Total expense in the quarter increased 17% year over year to $272 million.
Segment Result
Non-life Run-off: Operating revenues were $45 million, up 10% year over year. Net premiums earned decreased to $4.5 million from $17.3 million in the year-ago quarter.
Expenses increased 137% year over year to $39.6 million.
Net earnings increased 29% to $25.6 million driven by improved investment results. However, lower reduction in estimates of net ultimate incurred losses and higher general and administrative expenses were partial dampeners.
Atrium: Operating revenues were $38 million, down 9.5% year over year. Net premiums earned decreased 6.5% year over year to $31.8 million.
Expenses decreased 11% year over year to $32.3 million.
Net earnings improved slightly to $1.8 million.
Combined ratio deteriorated 1100 basis points to 100.1%.
StarStone: Operating revenues were $178 million, up 25% year over year. Net premiums earned increased 24% year over year to $171 million.
Expenses came in at $169 million, 16% higher year over year.
Net earnings of $7.9 million rebounded from loss of $3 million incurred in the year ago quarter on better investment results.
Combined ratio deteriorated 10 basis points to 98.2%.
Life and Annuities: Operating revenues were $31 million, up 11% year over year. Net premiums earned decreased 15% year over year to $19.6 million.
Expenses decreased 21% year over year to $29.3 million.
Net earnings of $5 million reversed the year-ago loss of $3.6 million attributable to improved investment results.
Financial Update
Enstar Group exited the quarter with cash and cash equivalents of $800.8 million, down from $821.9 million at 2015 end. Loans payable increased to $614 million from $600.3 million at yearend 2015.
Shareholders equity improved to $2.6 billion from $2.5 billion at the end of 2015.
Cash used in operations was $216 million in the first half of 2016 compared with $478 million used in the year-ago quarter.
As of Jun 30, 2016, book value per share was $134.68.
Zacks Rank
Enstar Group presently carries a Zacks Rank #3 (Hold).
Performance by Other P&C Insurers
The bottom line at The Travelers Companies, Inc. (NYSE:TRV) and First American Financial Corporation (NYSE:FAF) beat their respective Zacks Consensus Estimate, while earnings of RLI Corp. (NYSE:RLI) missed the same.
ENSTAR GROUP LT (ESGR): Free Stock Analysis Report
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis Report
FIRST AMER FINL (FAF): Free Stock Analysis Report
Original post
Zacks Investment Research