UPDATE: Alleghany (Y) Reports Q4 Revenues of $2.3B

Alleghany (NYSE: Y) reported Q4 EPS of ($6.09), $14.55 worse than the analyst estimate of $8.46. Revenue for the quarter came in at $2.3 billion versus the consensus estimate of $1.25 billion.

• Earnings per diluted share and adjusted losses per diluted share for the fourth quarter of 2019 were $1.98 and ($6.09), respectively, compared with losses per diluted share and adjusted losses per diluted share of ($48.30) and ($4.35), respectively, for the fourth quarter of 2018.
• Net earnings attributable to Alleghany stockholders were $858 million and $32 million for the year and three months ended December 31, 2019, respectively, compared with earnings of $40 million and losses of $712 million for the year and three months ended December 31, 2018, respectively.
• Net premiums written increased 13.9% and 17.6% for the year and three months ended December 31, 2019, respectively.
• Underwriting profit was $33 million for the year ended December 31, 2019, reflecting $400 million of catastrophe losses (most significantly from Typhoon Hagibis and Typhoon Faxai), compared with an underwriting loss of $162 million for the year ended December 31, 2018, reflecting $658 million of catastrophe losses (most significantly from Typhoon Jebi, California wildfires and Hurricane Michael).
• Underwriting loss was $199 million for the three months ended December 31, 2019, reflecting $284 million of catastrophe losses, compared with an underwriting loss of $249 million for the three months ended December 31, 2018, reflecting $402 million of catastrophe losses.
• Net investment income increased 9.9% to $550 million and 11.2% to $137 million for the year and three months ended December 31, 2019, respectively.
• Alleghany Capital revenue[2] increased 45.4% to $2,289 million and decreased 5.5% to $563 million for the year and for the three months ended December 31, 2019, respectively.
• Alleghany Capital earnings before income taxes and adjusted earnings before income taxes for the year ended December 31, 2019 were $111 million and $143 million, respectively, compared with earnings before income taxes and adjusted earnings before income taxes of $60 million and $83 million, respectively, for the year ended December 31, 2018.
• Alleghany Capital earnings before income taxes and adjusted earnings before income taxes for the three months ended December 31, 2019 were $10 million and $19 million, respectively, compared with earnings before income taxes and adjusted earnings before income taxes of $36 million and $43 million, respectively, for the three months ended December 31, 2018.
• Alleghany’s Board of Directors declared a special cash dividend of $15.00 per share for shareholders of record on March 5, 2020, payable on March 16, 2020.

Weston Hicks, President and chief executive officer, commented, “Alleghany’s book value per share grew 15.8% in 2019 due to outstanding investment performance, strong earnings at Alleghany Capital and solid underwriting results at RSUI.

“In the fourth quarter, Alleghany’s results were negatively impacted by significant catastrophe losses at both TransRe and RSUI, an increase in prior accident year reserves at CapSpecialty, and certain one-time items at Alleghany Capital’s largest businesses, all substantially offset by an increase in the value of our equity portfolio.

“All three of our (re)insurance businesses delivered double digit premium growth in 2019, which accelerated in the fourth quarter and reflected improving rates, terms and conditions. We believe these market conditions combined with our underwriting talent and strong balance sheet leave us poised for strong, profitable underwriting growth in 2020.

“Alleghany Capital produced excellent 2019 results, growing revenue by 45% and adjusted earnings before taxes by 71%. This performance reflects strong underlying results at all seven of its operating companies including organic growth and the addition of several strategic add-on acquisitions. Looking ahead, we expect continued increasing earnings from Alleghany Capital, although growth will be seasonally weighted towards the second half of the year in 2020.”

“Alleghany ended 2019 in a very strong capital and liquidity position and continues to benefit from capital generation at TransRe and RSUI including the receipt of an extraordinary dividend from RSUI in January 2020. Although we believe that maintaining a healthy liquidity position at the parent level is prudent, the cost of holding excess undeployed capital has increased given the current low investment return environment. With these factors in mind, Alleghany’s Board of Directors declared a special dividend of $15 per share to supplement the ongoing share repurchase program.”

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

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