National General (NGHC) Tops Q3 EPS by 15c

National General (NASDAQ: NGHC) reported Q3 EPS of $0.24, $0.15 better than the analyst estimate of $0.09.

• Gross written premium grew $249.3 million or 29.3% to $1,100.7 million, driven by added premiums from the acquisitions of Direct General and Standard Property and Casualty Insurance Company, and organic growth within our P&C business of 19.3%, or 26.4% excluding the decline in lender-placed premiums, and continued growth of our A&H segment.
• The overall combined ratio(10,14) was 98.2% compared to 94.6% in the prior year’s quarter, excluding non-cash amortization of intangible assets. The P&C segment reported an increase in combined ratio to 98.1% from 94.5% in the prior year’s quarter, due to $52.4 million of losses, or 7.6 P&C loss ratio points, from Hurricanes Harvey, Irma and Maria. Excluding the aforementioned hurricane-related losses, the P&C segment combined ratio(17) was 90.5% and NGHC overall combined ratio(17) was 91.8%. The A&H segment reported a combined ratio of 98.6% compared to 95.4% in the prior year’s quarter, with the increase driven by the EuroAccident business.
• Total revenue grew by $200.1 million or 23.3% to $1.1 billion, primarily driven by the aforementioned premium growth, service and fee income growth of $27.4 million or 26.0%, and an increase in ceding commission income of $28.8 million, primarily related to the new quota share agreements announced in the quarter.
• Shareholders’ equity was $1.96 billion and fully diluted book value per share was $14.16 at September 30, 2017, growth of 3.4% and 4.7%, respectively, from December 31, 2016. Our trailing twelve month operating return on average equity (ROE)(16) was 7.7% as of September 30, 2017.
• Third quarter 2017 operating earnings exclude the following material items, net of tax: $31.0 million or $0.29 per share of net gain on investments, $6.0 million or $0.06 per share of non-cash amortization of intangible assets and losses of $2.8 million or $0.03 per share from earnings of equity method investments.
• We expect to recognize between $40-45 million in pre-tax losses, net of reinsurance, in the fourth quarter of 2017 from the fires that impacted Northern California in October 2017. This amount excludes reinstatement premiums.

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

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