National General (NGHC) Tops Q4 EPS by 7c

National General (NASDAQ: NGHC) reported Q4 EPS of $0.30, $0.07 better than the analyst estimate of $0.23.

Fourth Quarter 2016 Highlights Versus Fourth Quarter 2015*

• Net written premium grew $122.4 million or 19.8% to $740.5 million, driven by added premiums from the acquisitions of Direct General which closed on November 1, 2016, Standard Property and Casualty Insurance Company (f/k/a Standard Mutual) which closed on October 7, 2016, Century-National which closed on June 1, 2016, the addition of Assigned Risk Solutions (ARS) premium volume which is now written on National General paper, underlying organic growth within our P&C business of 16.6%, and continued growth of our A&H segment, partially offset by a decrease in our lender-placed auto premiums.
• The overall combined ratio(10, 14) was 96.3% compared to 94.2% in the prior year’s quarter, excluding non-cash amortization of intangible assets and impairment of goodwill. The P&C segment reported an increase in combined ratio to 98.0% from 92.3% in the prior year’s quarter, which was elevated by storm losses as described below and an increase in expenses, while the A&H segment reported a combined ratio of 85.2% compared to 104.2% in the prior year’s quarter, driven by strong results across the book.
• Total revenues grew by $233.0 million or 31.0% to $985.5 million, primarily driven by the aforementioned premium growth, service and fee income growth of $9.3 million or 9.4%, and net investment income growth of $2.0 million or 9.7%.
• Shareholders’ equity was $1.89 billion and fully diluted book value per share was $13.52 at December 31, 2016, growth of 25.1% and 13.0%, respectively, from December 31, 2015. Our trailing twelve month operating return on average equity (ROE)(15) was 12.0% as of December 31, 2016.
• Fourth quarter 2016 operating earnings exclude the following items, net of tax: $4.2 million or $0.04 per share of net realized and unrealized investment gains, $1.2 million or $0.01 per share of foreign exchange gain, $15.8 million or $0.14 bargain purchase gain, $0.2 million or less than $0.01 per share of equity in earnings of unconsolidated subsidiaries (other than our Life Settlement Contracts Entities and Real Estate investments), $6.6 million or $0.06 per share of non-cash impairment of goodwill and $16.5 million or $0.15 per share of non-cash amortization of intangible assets.
• Fourth quarter 2016 operating earnings include approximately $13.7 million or $0.08 per share of losses related to Hurricane Matthew that occurred in the Southeastern United States in early October 2016.

For earnings history and earnings-related data on National General (NGHC) click here.

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