Arch Capital Group Ltd.NASDAQ
Another Potential Masterstroke For Arch Capital
Stephen Simpson, CFA
Stephen Simpson, CFA
Arch Capital's Superior Model Continuing To Pay Off
Stephen Simpson, CFA
Stephen Simpson, CFA
Wed, Oct. 26, 4:19 PM
Tue, Oct. 25, 5:35 PM
- ABX, ACGL, AEM, AHL, ALDW, ALGT, AMSF, ANIK, AR, ARI, ARRS, AXS, AXTI, BGG, BWLD, CAA, CACI, CAKE, CDE, CHE, CMO, CMPR, CRY, CSGP, CSII, CW, DDR, DLB, DRE, ECHO, EFX, EGHT, EPE, EQY, ESND, ESV, EXR, FBHS, FFIV, FISV, FORR, GG, GRPN, GTY, HUBG, IBKC, INFN, JBT, KEX, KMT, KNX, KRA, KRC, KWR, LLNW, LMAT, MB, MC, MEOH, MKSI, MMLP, MMSI, MN, MUR, NEM, NEU, NOW, NTGR, NTRI, NXPI, O, OCN, ORLY, PLNT, PLXS, PPC, PRXL, PSA, PTC, QDEL, QEP, QTM, RCII, RGA, RHI, RJF, SCI, SFLY, SGMO, SHLM, SIGI, SU, TER, TILE, TIS, TRN, TSLA, TTMI, TXN, TYL, UCTT, UHS, UNM, VAR, VMW, WCN, WDC, WIRE, WLL, XL
Thu, Oct. 20, 11:32 AM
- Reinsurers sell coverage to other insurance companies for natural disasters and such. While they wait for loss-triggering events to happen, the reinsurers collect premiums which they can then invest. Warren Buffett (BRK.A, BRK.B) credits this "float" as a big factor behind his great fortune.
- But business isn't what it used to be, write Sonali Basak and Noah Buhayar in Bloomberg, and Buffett sold stakes in Swiss Re and Munich Re last year, saying prospects over the next decade don't look great. He also put new leadership in charge of Berkshire's General Re to try and reverse more than a decade of shrinking float.
- Among the issues are what's turned into years of barely visible interest rates. “It is no fun,” says The Oracle, to “find out that a great many of the things that you were buying a few years ago now have negative yields.” It's also become a more crowded field with the entrants first of David Einhorn (NASDAQ:GLRE) and more recently Dan Loeb (NYSE:TPRE) helping to create a price war, with premiums down 40% over the past decade.
- Insurers can also now turn to investment banks to lay off risk by issuing catastrophe bonds - a market that's grown from $9.2B to $25B over the last ten years.
- A shakeout is already underway as there have been a number of sector mergers. What might further shake things up would be a catastrophe big enough to cause significant industry losses.
- Interested parties: CB, RNR, AHL, ENH, AXS, ACGL, RGA, UNM
Fri, Sep. 23, 8:12 AM
- Global catastrophe reinsurance prices fell again this year, and they're now below levels last seen in 2001 before the 9/11 attacks, according to research firm Guy Carpenter.
- Source: WSJ's Paul Davies
- At issue are barely visible interest rates which have led to a wider range of investors looking to earn some sort of return by underwriting reinsurance risks. There's also been a lack of costly disasters in recent years, leading to a buildup of capital in search of work. Even as some insist reinsurance prices may soon find a floor, there's another issue - ordinary property insurance is suffering low demand, meaning demand from ordinary insurers for reinsurance is slowing.
- Options to improve returns, then, are narrowed to taking on more insurance risk or boosting balance sheet leverage, and there are signs the industry is doing both. Moody's notes reinsurers writing policies with higher probable maximum losses, especially those linked to U.S. hurricanes.
- There's also worry insurers will put less money aside today to cover futures claims as a way to boost underwriting profits.
- Finally, reinsurers looking for new business are attempting to move more structured policies.
- Interested parties: Chubb (NYSE:CB), PartnerRe (NYSE:PRE), Everest Re (NYSE:RE), RenaissanceRe (NYSE:RNR), Aspen (NYSE:AHL), Endurance Specialty (NYSE:ENH), Axis (NYSE:AXS), Arch Capital (NASDAQ:ACGL), Reinsurance Group of America (NYSE:RGA), Unum Group (NYSE:UNM).
Thu, Sep. 15, 10:15 AM| Thu, Sep. 15, 10:15 AM
Wed, Sep. 14, 11:53 AM
- While real estate was broken out of the S&P financials into its own sector this month, those were just equity REITs, with mortgage REITs still residing in financials.
- While much of the talk has been around how equity REITs might gain from the switch, the team at KBW believes mREITs could be a big beneficiary, and Annaly Capital (NYSE:NLY) - by far the largest of the group - could be added to the S&P 500.
- Other financials up for possible inclusion, according to KBW: First Republic Bank (NYSE:FRC), New York Community Bancorp (NYSE:NYCB), Ally Financial (NYSE:ALLY), MSCI (NYSE:MSCI), Arch Capital (NASDAQ:ACGL), Alleghany (NYSE:Y).
Wed, Sep. 7, 9:48 AM
- Its Sell rating on Arch Capital (NASDAQ:ACGL) not exactly working out, Goldman upgrades to Neutral and lifts the price target to $79 from $66 (current $83.25). Arch is up nearly 30% from a low hit in mid-January, including an 18% run over the past six weeks (which includes its deal to buy AIG's United Guaranty).
- Yesterday, UBS upgraded ACGL to Buy from Neutral.
- The stock's higher by 0.6% today.
Tue, Aug. 16, 8:20 AM
- The $3.4B Arch Capital Group (NASDAQ:ACGL) agreed to pay for AIG's United Guaranty represented 9.5x 2015 EPS, says BTIG's Mark Palmer. Applying that multiple to his FY18 EPS estimates for Radian (NYSE:RDN), MGIC Investment (NYSE:MTG), Essent Group (NYSE:ESNT), and NMI Holdings (NASDAQ:NMIH) implies upsides of 37%, 38%, 5%, and 62%, respectively, versus their closes yesterday.
- Essent and NMI Holdings could merit higher multiples than their slower-growing peers, he adds.
- For more diversified Genworth (NYSE:GNW), it's hoping to break off its mortgage insurance units from its life and long-term care operations, and the sale of United Guaranty likely helped this cause.
- Don't forget, Arch Capital likely got a good deal on its purchase as AIG was a motivated seller given the sluggish IPO market and AIG's capital return promises.
- Previously: WSJ: AIG nears deal to sell mortgage insurance unit for $3.4B (Aug. 15)
Wed, Jul. 27, 4:10 PM
Tue, Jul. 26, 5:35 PM
- ABCO, ABX, ACGL, AEM, AF, AGNC, AHL, ALEX, ALSN, AMCC, AMGN, ANIK, ARRS, ASGN, AXTI, BKCC, CA, CAKE, CBI, CBT, CDE, CMO, CMPR, CMRE, CNMD, COHR, CRUS, CSGP, CVTI, CW, CYS, DLB, DRE, ECHO, EFX, ELY, EQY, ESRT, ESV, EXR, FB, FBHS, FOE, FORR, GG, GPRO, GRPN, HOLX, HT, IAC, IBKC, INFN, INT, ISBC, KEX, KGC, KIM, KNL, KNX, KONA, KRA, KS, LLNW, LM, LOGI, LPSN, LRCX, MAA, MANT, MAR, MCK, MEOH, MKSI, MMLP, MMSI, MN, MOH, MUR, NATI, NE, NEU, NGD, NOW, NTGR, NTRI, NVDQ, NXPI, O, OCN, OI, ORLY, OTEX, PEIX, PPC, PSA, PXD, QDEL, QEP, QTM, RCII, ROIC, RRTS, SCI, SFLY, SIGI, SPRT, SPSC, SSNC, SU, TER, TILE, TIS, TMK, TMST, TTEK, TTMI, TYL, UNM, VAR, VNDA, VNR, VRTX, WFM, WFT, WIRE, WLL, WRE, WSR, XL, XLNX
Sun, Jul. 24, 12:18 PM
- MGIC Investment (NYSE:MTG) just closed out a big week after its Q2 earnings impressed, and more gains are in store for it, along with peers like Radian Group (NYSE:RDN), NMI Holdings (NASDAQ:NMIH), and Essent Group (NYSE:ESNT), writes Leslie Norton.
- Stringent post-crisis underwriting standards mean new business is nearly pristine: The default rate on private mortgage insurance written since 2010 is only about 50 basis points vs. 20% in 2007.
- So what's holding the stocks back? Private mortgage insurers are in competition with an entity that doesn't care about profits, and the FHA last year cut the premiums on mortgages it insures. Upstart NMI Holdings slashed prices to gain market share, and Fannie Mae and Freddie Mac issued new capital requirements for insurers.
- But pricing has stabilized, if you ask MGIC CEO Patrick Sinks, as well as bullish Oppenheimer fund manager Michael Levine.
- Industry consolidation could be at hand as well. In addition to the four above, AIG's United Guaranty is in the business with about 20% of the market, Genworth Financial (NYSE:GNW) has 16%, and Arch Capital's (NASDAQ:ACGL) MI operation has 6% (for comparison, MGIC and Radian each have about 18% of the market). Old hands will remember MGIC and Radian considered a merger prior to the financial crisis.
- Barclays' Mark DeVries and Zelman Associates' Ivy Zelman figure MGIC has more than 50% upside from the current price, and Zelamn thinks Radian could be a double. Essent, on the other hand, at 9.4x earnings and 1.4x book, looks fully valued. NMI, says Zelman, could be worth $8 vs. the current $6.
Wed, Apr. 27, 4:09 PM
- Arch Capital (NASDAQ:ACGL): Q1 EPS of $1.20 beats by $0.10.
- Net premiums written of $977M (+3.7% Y/Y)
Tue, Apr. 26, 5:35 PM
- ACGL, AEL, AF, ALGT, AMKR, AMP, ANIK, AR, ASGN, AVB, AVG, BCR, BGC, BKCC, BLKB, CACI, CAKE, CAVM, CBL, CDE, CGI, CLI, CMO, CMPR, CNMD, CNO, CRY, CSGP, CVTI, DGI, DLB, DMRC, DRE, DTLK, DWRE, DXCM, ECHO, EFX, ELY, EQY, ESRT, ESV, EXTR, FB, FIX, FNF, FORM, FORR, FR, FSLR, GG, HOLX, HTCH, HY, IBKC, INFN, IPHS, KEX, KIM, KRA, KRC, KS, LLNW, LOCK, LOGI, LQ, MANT, MAR, MC, MEOH, MMLP, MN, MSTR, MTGE, NE, NEU, NGD, NTGR, NVDQ, OIS, ORLY, OTEX, PEB, PPC, PRXL, PYPL, QDEL, QEP, QGEN, RCII, RGLD, RNG, ROIC, SCI, SFLY, SGI, SIMO, SNDK, SPRT, SSS, STR, TAL, TER, TILE, TS, TTEK, TTMI, TXN, TYL, UHS, UNM, VAR, VRTX, WCN, WIRE, WLL, WRE, WSR, XL, XLNX
Tue, Feb. 9, 4:08 PM
- Arch Capital (NASDAQ:ACGL): Q4 EPS of $1.15 beats by $0.09.
- Net premium written of $739.79M (-8.1% Y/Y) misses by $168.08M.
Mon, Feb. 8, 5:35 PM
Dec. 9, 2015, 8:01 AM
- Her hedge fund closed after failing to generate much in the way of profits, Meredith Whitney has resurfaced as manager of an $800M equity investment portfolio for Arch Capital Group (NASDAQ:ACGL). She won't be picking stocks, but is instead charged with overseeing allocations of the portfolio to external managers.
- "You like to have good athletes," Arch Capital CIO Preston Hutchings tells the FT. "Even if they are not in the same position they have occupied in the past. They can take the full back position or they can take the wing."