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Navigators Group (NAVG) Q2 Earnings Surpass, Revenues Miss

Zacks

The Navigators Group, Inc. NAVG reported second-quarter 2017 net operating earnings per share of 66 cents, which beat the Zacks Consensus Estimate of 58 cents by 13.8%. However, shares of the company slipped 0.2% in the last trading session. Nonetheless, earnings soared about 61% year over year.

The company witnessed another quarter of profitable underwriting results and strong premium growth, driven by solid performance by the U.S. Insurance and Global Reinsurance segments. The International Insurance segment also displayed a considerable improvement in its results.

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


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

Navigators Group’s operating revenues rose 8% year over year to about $315.7 million in the reported quarter. However, revenues missed the Zacks Consensus Estimate by 2.2%. Net earned premiums increased 9.6% to $293.8 million buoyed by growth in both the U.S. Insurance, International Insurance as well as Global Re. The net investment income climbed about 12% to $22.3 million.

Total expense rose 7.0% to $289.9 million, primarily due to high net losses and loss adjustment expenses as well as commission, other operating and interest expenses.

Underwriting profit skyrocketed 642.6% to $7.8 million. Surge in underwriting profit at the Global Re segment fueled this upside. Combined ratio improved 230 basis points (bps) to 97.3% from the year-ago quarter.

Segment Update

U.S. Insurance: Net earned premiums grew about 9.6% year over year to $167.1 million. The segment reported underwriting profit of $8.3 million, down 23.2% from the year-ago quarter. Combined ratio deteriorated 210 bps to 95.0% in the reported quarter.

International Insurance: Net earned premiums rose 5.5% year over year to $82.1 million. The segment’s underwriting loss of $3.5 million was significantly narrower than the year-ago loss of $10.1 million. Also, combined ratio improved 870 bps to 104.3% in the quarter.

Global Re: The segment’s net earned premiums improved 18.2% year over year to $44.6 million. Underwriting profit skyrocketed 852.7% year over year to about $3 million in the reported quarter. Combined ratio improved 590 bps to 93.3% in the quarter.

Financial Update

Navigators Group exited the second quarter with book value per share of $42.21, up 3.1% from $40.94 as of Mar 31, 2017.

As of Jun 30, 2017, Navigators Group’s total investment and cash amounted to $3.3 billion, up 3.4% from $3.2 billion at year-end 2016. Total shareholders’ equity was $1.24 billion as of Jun 30, 2017, up 5.6% from $1.18 billion at the end of 2016.

Dividend Update

In the second quarter, the company approved of and paid a dividend of 6 cents per share.

On Aug 3, 2017, the board of directors announced a quarterly cash dividend of 6 cents per share, to be paid on Sep 14 to shareholders of record as of Aug 24, 2017.

Zacks Rank

Currently, Navigators Group sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other P&C Insurers

Among other players from the same space that have reported their second-quarter earnings so far, the bottom line at The Progressive Corporation PGR and The Travelers Companies, Inc. TRV missed their respective Zacks Consensus Estimate, while RLI Corp. RLI beat the same.

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