The Bermuda-based Arch Capital Group Ltd. reported net income available to common shareholders for the 2012 fourth quarter of $13.7 million, or $0.10 per share, compared to $138.9 million, or $1.01 per share in Q4 2011.
The Company also reported an after-tax operating loss to common shareholders of $24.7 million, or $0.18 per share, for the 2012 fourth quarter, compared to after-tax operating income of $128.9 million, or $0.94 per share, for Q4 2011.
For 2012, net income available to common shareholders was $568.3 million, or $4.11 per share, compared to $410.3 million, or $2.97 per share, for 2011. For 2012, after-tax operating income available to common shareholders was $350.6 million, or $2.54 per share, compared to $303.4 million, or $2.19 per share, for 2011.
The Company’s book value per common share was $36.19 at December 31, 2012, a 1.6 percent decrease from $36.79 per share at September 30, 2012 and a 13.9 percent increase from $31.76 per share at December 31, 2011.
Arch Capital’s after-tax operating income or loss available to common shareholders represented an annualized return on average common equity of (2.0 percent) for the 2012 fourth quarter, compared to 12.3 percent for 2011 fourth quarter. For 2012, the Company’s return on common equity was 7.7 percent, compared to 7.2 percent for 2011.
The report said the “Company’s 2012 fourth quarter results included losses for Superstorm Sandy of $203.5 million, net of reinsurance and the effects of reinstatement premiums. Due to the unusual nature of the event, including its broad scope, the number of insureds affected, the complexity of issues contributing to the losses and the preliminary nature of available information, there is substantial uncertainty regarding the assumptions underlying the Company’s losses relating to the event. The Company’s ultimate losses from the storm may vary materially from the current estimates due to these and other factors. In addition, ultimate losses may increase if the Company’s reinsurers fail to meet their obligations to the Company or the reinsurance protections purchased by the Company are exhausted or are otherwise unavailable.”
The earnings report also summarized Arch Capital’s underwriting results as follows:
————————————-4th Quarter 2012—4th Quarter 2011
Gross premiums written ———— $813.928 mn — $699.662 mn
Net premiums written ————— $613.142 mn — $511.124 mn
Net premiums earned —————– $779.481 mn — $673.192 mn
Underwriting Income (loss) ———- ($91.334 mn) —- $96.624 mn –
—————————————-FY 2012 ——– FY2011
Gross premiums written ————- $3.8691 bn —- $3.4364 bn
Net premiums written —————– $3.0522 bn —- $2.6733 bn
Net premiums earned ————- $2.9351 bn —- $2.6318 bn
Underwriting income ——————- $143.034 mn — $44.012 mn
4th quarter combined ratio – 112.4 percent (89.7 percent in Q4 2011);
FY combined ratio – 95.4 percent (98.3 percent for FY 2011)
Source: Arch Capital