Alleghany (Y) Q4 Loss Widens Year Over Year, Revenues Rise

Alleghany Corporation (NYSE:Y) incurred fourth-quarter 2019 operating loss of $6.09 per share, against the Zacks Consensus Estimate of operating profit of $8.86. Also, the quarterly loss was wider than the year-ago quarter’s operating loss of $4.35 per share.

The company reported net income of $1.98 per share in the reported quarter against the year-ago quarter’s loss of $48.30.

The company witnessed higher investment income and growth in premiums, offset by rise in expenses.

Alleghany Corporation Price, Consensus and EPS Surprise

Full-Year Highlights

For 2019, Alleghany delivered operating income of $23.77 per share, missing the Zacks Consensus Estimate by 38.3%. However, operating income increased 47.4% from the previous year.

Revenues improved 9.1% year over year to $5.9 billion.

Operational Update

Revenues for the fourth quarter improved 9.5% year over year to $1.6 billion.

Net premiums written rose 17.6% year over year to $1.5 billion.
Net investment income came in at $136.6 million in the quarter under consideration, up nearly 11.2% year over year. The increase in net investment income was primarily due to higher interest income, partially offset by lower dividend income.

Fourth-quarter underwriting loss was $199 million, down 20% from the year-ago quarter’s loss of $249 million.

Total costs and expenses escalated 5.7% to $2.2 billion.

Segment Update

Reinsurance Segment: Net premiums written improved 15% to $1.2 billion owing to growth in TransRe’s domestic operations, which includes the impact of TransRe’s Aug 29, 2018 purchase of the renewal rights to a block of U.S. treaty reinsurance business.

Underwriting loss of $162.8 million was narrower than year-ago quarter’s loss of $208.9 million. Also, the segment’s fourth-quarter combined ratio improved 570 basis points to 114.4%.

Insurance Segment: Net premiums written increased 27% to $342.8 million.

Underwriting loss of $36.5 million was narrower than the year-ago quarter’s underwriting loss of $40.3 million. The combined ratio of the reported segment improved 310 basis points to 111.8%.

Financial Update

Debt balance of $1.8 billion increased 4.9% from 2018-end level.
Allegheny’s shareholder equity at the end of the fourth quarter increased 14.1% to $8.8 billion from $7.7 billion as of Dec 31, 2018.

Book value per share was $611 as of Dec 31, 2019, up 15.8% from the level as of Dec 31, 2018.

Share Repurchase Update

As of Dec 31, 2019, the company had $627 million remaining under its share repurchase authorization.

Zacks Rank

Alleghany currently carries a Zacks Rank #5 (Strong 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 fourth-quarter earnings so far, the bottom line of Brown & Brown, Inc. (NYSE:BRO) , First American Financial Corporation (NYSE:FAF) and RLI Corp. (NYSE:RLI) beat the respective Zacks Consensus Estimate.

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