On Mar 16, 2015, shares of Arch Capital Group Ltd. ACGL hit a 52-week high of $62.21 per share on solid fourth-quarter 2014 results. With about 0.31 million shares exchanging hands in the last trading session, the stock finally closed at $62.09 gaining 0.9%. The year-to-date return came in at 5.1% ahead of NASDAQ’s return of 4.1%.
Arch Capital delivered operating income of $1.15 per share in the fourth quarter that outperformed the Zacks Consensus Estimate by 8.5% and improved year over year by 2.7%. The outperformance came largely on the back of solid underwriting results in Insurance segment.
With respect to earnings performance, this property and casualty insurer has delivered positive surprises in all the trailing four quarters with an average beat of 12.86%.
The net premiums written grew by 7.5% driven by growth in the insurance and mortgage businesses that more than offset by a decline in reinsurance net writings.
Despite soft interest rate environment the company reported net investment income rose 8.2% year over year to $72.6 million.
With respect to capital deployment, the company bought back 3.6 million shares worth $202.2 million in the fourth quarter. Since the inception of the share repurchase program Arch Capital has repurchased 118.1 million common shares for $3.24 billion as of Dec 31, 2014. The company was left with $887.1 million under its authorization on Dec 31.
Arch Capital also strengthened its balance sheet as it exited 2014. Total assets increased 12.5% along with a 14.5% rise in book value to $45.58. The annualized return on equity improved to 14.6% as of Dec 31, 2014 compared with 13.5% at 2013 end.
Riding on the strength of solid fourth-quarter performance this Zacks Rank #1 (Strong Buy) stock has been witnessing a rise in the Zacks Consensus Estimate over the last 30 days. For 2015, the Zacks Consensus Estimate increased by 2.4% to $3.90 as 5 out of 11 estimates moved north. For 2016 it again rose 0.7% to $4.08 as 4 out of 11 estimates moved north. The long term growth is targeted at 6.20%.
Other property and casualty insurers that also scaled a 52-week high in the same period include American Financial Group Inc. AFG, RLI Corp. RLI and Allied World Assurance Company Holdings, AG AWH.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment