National General (NGHC) Tops Q4 EPS by 12c

Note: EPS may not be comparable

National General (NASDAQ: NGHC) reported Q4 EPS of $0.28, $0.12 better than the analyst estimate of $0.16.

Fourth Quarter 2017 Highlights Versus Fourth Quarter 2016*

• Gross written premium grew $246.9 million or 30.1% to $1,067.2 million, driven by added premiums from organic growth and the acquisition of Direct General and within our P&C business of 30.9% and continued growth of our A&H segment of 26.3%.
• The overall combined ratio(10,14) was 96.9% compared to 96.4% 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 98.2% from 97.9% in the prior year’s quarter, due to $52.9 million of losses, or 7.5 P&C loss ratio points, from California fires in the fourth quarter 2017. Excluding the aforementioned fire-related losses, the P&C segment combined ratio(16) was 90.7% and NGHC overall combined ratio(16) was 90.6%. The A&H segment reported a combined ratio of 89.9% compared to 86.7% in the prior year’s quarter.
• Total revenue grew by $50.2 million or 5.1% to $1.0 billion, primarily driven by the aforementioned premium growth, service and fee income growth of $37.5 million or 34.6%, and an increase in ceding commission income of $14.2 million, primarily related to the new quota share agreements announced in the third quarter.
• Shareholders’ equity was $1.93 billion and fully diluted book value per share was $13.86 at December 31, 2017, growth of 2.3% and 3.0%, respectively, from December 31, 2016. Our trailing twelve month operating return on average equity (ROE)(15) was 7.9% as of December 31, 2017.
• Fourth quarter 2017 operating earnings exclude the following material items, net of tax: $1.8 million or $0.02 per share of net gain on investments, $6.1 million or $0.06 per share of non-cash amortization of intangible assets, $4.9 million or $0.05 per share of impairment of goodwill related to our Luxembourg subsidiary, and losses of $4.9 million or $0.05 per share from earnings of equity method investments. Operating earnings also excluded a charge of $25.8 million or $0.24 per share from the deferred tax asset impairment.
• Prior period results referred to in this release are reported on an “as adjusted” basis. For details on the adjustments, please refer to page 3 of this release and Note 3 to our Annual Report on Form 10-K for the year ended December 31, 2017.

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

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