The Navigators Group, Inc. NAVG reported first-quarter 2018 net operating earnings per share of $1.09, which surpassed the Zacks Consensus Estimate of 77 cents by 41.6%. Moreover, the bottom line soared 60.3% year over year.

The quarter benefited from double digit premium growth and underwriting profits across the three reporting segments.

The Navigators Group, Inc. Price, Consensus and EPS Surprise

The Navigators Group, Inc. Price, Consensus and EPS Surprise | The Navigators Group, Inc. Quote

 

Behind the Headlines

Navigators Group’s operating revenues rose 12.2% from the year-ago quarter to about $346.2 million in the reported quarter. Top line beat the Zacks Consensus Estimate by 0.5%. Net earned premiums increased 12.8% to $322.6 million. Net investment income grew 10.5% to $23.7 million.

Total expense increased 9.7% to nearly $307.1 million, primarily due to higher net losses and loss adjustment expenses, commission expenses, other operating as well as interest expenses.

Underwriting profit skyrocketed nearly 91% to $19.4 million. Improvement in underwriting profit at the International Insurance and Global Re segments fueled this upside. Combined ratio improved 240 basis points (bps) year over year to 94% from the year-ago quarter.

Segment Update

U.S. Insurance: Net earned premiums grew about 5.4% year over year to $172.9 million due to growth in the Marine and Professional Liability operating segments. The segment reported underwriting profit of $4.7 million, is 58.6% lower than the year-ago quarter’s tally. Combined ratio deteriorated 430 bps to 97.3% in the reported quarter.

International Insurance: Net earned premiums increased 10.8% year over year to $93.2 million. The segment’s underwriting profit came in at nearly $7.1 million rebounding from the prior-year quarter’s loss of $5.6 million. This was primarily due to concerted effort to re-position the portfolio by exiting non-performing product lines and reduced cost structure.

Global Re: The segment’s net earned premiums surged 48.5% year over year to $56.5 million driven by Accident & Health and Latin American business. Underwriting profit jumped 73% year over year to about $75.9 million in the quarter under review. Moreover, combined ratio improved 190 bps to 86.6%.

Financial Update

Navigators Group exited the first quarter with book value per share of $40.96, down 1.4% from $41.55 as of Mar 31, 2017.

As of Mar 31, 2018, Navigators Group’s total investment and cash amounted to nearly $3.4 billion, down 0.2% year over year. Total shareholders’ equity was $1.21 billion as of Mar 31, 2018, down 0.7% from $1.25 billion at the end of 2017.

Dividend Update

In the first quarter, the company paid a dividend of 7 cents per share.

Zacks Rank

Navigators Group carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other performers from the same industry, which have already reported first-quarter earnings so far, the bottom line of The Progressive Corporation PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate while that of The Travelers Companies, Inc. TRV missed the same.

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