Finance stock to watch: Arch Capital Group Ltd. (NASDAQ: ACGL)

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Arch Capital Group Ltd. (NASDAQ: ACGL) stock fell over 0.5% in the pre-market session of 12th Feb, 2020 (Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 19. The company has reported Net income available to Arch common shareholders of $316.0 million, which is a 12.0% annualized return on average common equity, compared to $126.1 million, for the 2018 fourth quarter. The 2019 fourth quarter loss ratio shows 0.9 points of current year catastrophic activity, compared to 6.0 points in the 2018 fourth quarter, which was affected due to Hurricane Michael and the California wildfires. The 2019 fourth quarter loss ratio also shows a higher level of large attritional losses than in the 2018 fourth quarter.

ACGL in the fourth quarter of FY 19 has reported the adjusted earnings per share of 76 cents, beating the analysts’ estimates for the adjusted earnings per share of 68 cents. The company had reported the adjusted revenue of $1.52 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $1.27 billion.

Moreover, the gross premiums written by the insurance segment in the 2019 fourth quarter were 24.9% more than in the 2018 fourth quarter while net premiums written were 28.7% more than in the 2018 fourth quarter. Approximately one quarter of the increase from the 2018 fourth quarter is due to the new businesses acquired during 2019 or new business initiatives or product lines. The remaining growth came from expansion in existing products and accounts, and rate increases across most lines of business. Net premiums earned in the 2019 fourth quarter were up 15.4% than in the 2018 fourth quarter, and reflect changes in net premiums written over the previous five quarters.

Furthermore, the gross premiums written by the reinsurance segment in the 2019 fourth quarter were up 5.6% than in the 2018 fourth quarter, while net premiums written were up 4.3% compared to 2018 fourth quarter. The growth in net premiums written is mainly on back of increases in property lines from new business and growth in existing accounts. Gross premiums written by the mortgage segment in the 2019 fourth quarter were up 3.5% than in the 2018 fourth quarter, while net premiums written were up 2.0%. The growth in net premiums written was driven by an increase in monthly premium business due to growth in insurance in force.

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