Alleghany (Y) Tops Q1 EPS by 238c

Alleghany (NYSE: Y) reported Q1 EPS of $9.96, $2.38 better than the analyst estimate of $7.58. Revenue for the quarter came in at $1.48 billion versus the consensus estimate of $1.15 billion.

Weston Hicks, President and chief executive officer of Alleghany stated, “Strong underwriting results at TransRe and in our insurance segment resulted in a consolidated combined ratio of 87.7% for the first quarter of 2016. Favorable prior year reserve development of $85.3 million, primarily at TransRe and RSUI, compared with favorable prior year reserve development of $40.6 million in the first quarter of last year, and light catastrophe losses were significant contributors to the current quarter results. PacificComp and CapSpecialty also delivered solid growth in net premiums written and improved operating performance in the current quarter. Net premiums written growth of 21.2% (22.2% on a constant currency basis) in the first quarter included increases in both our reinsurance and insurance segments and was primarily attributable to the large whole account quota share treaty written by TransRe in the fourth quarter of 2015.”

Mr. Hicks continued, “Our investment in Alleghany Capital was $505.9 million as of March 31, 2016. Alleghany Capital is becoming an increasingly meaningful contributor to our results as its businesses generated revenue growth and improved performance. This quarter represents the first full quarter of operations of IPSIntegrated Project Services, which we acquired in October 2015. Alleghany Capital’s manufacturing and services businesses, which comprises our ownership in Kentucky Trailer, IPS, Bourn & Koch and investment in Jazwares, generated $1.5 million of earnings before income taxes and $7.0 million of Adjusted EBITDA in the first quarter while Alleghany Capital’s oil and gas business, primarily SORC, continued to operate at a loss, with $7.5 million of losses before income taxes and negative Adjusted EBITDA of ($3.9) million in the current quarter. In April, Alleghany Capital completed a majority follow-on investment in Jazwares and continues to pursue additional investment opportunities which can benefit from Alleghany Capital’s unique strategy and focus on long-term value creation.”

“During the quarter we repurchased 113,100 Alleghany shares at an average price of $471.15 per share. At our current book value per share of $503.43, these purchases were immediately accretive to our stockholders.”

For earnings history and earnings-related data on Alleghany (Y) click here.

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