8 Insurers Report Q3 Earnings

Insurance Networking News, November 5, 2012

Chris McMahon

“The company continues to generate strong returns and good cash flow giving us the ability to return significant capital to shareholders,” said Jim Cracchiolo, chairman and CEO. “Today, we declared another increase in our quarterly dividend, up 29 percent. It’s our fifth increase since early 2010, bringing our dividend yield to approximately 3 percent. We also authorized a new $2 billion share repurchase program as we accelerated our buybacks over the past two years.”

Berkshire Hathaway Inc.

Berkshire Hathaway reported Q3 2012 Operating earnings of $3,399 million, compared with $3,812 million for the same quarter last year. Investment and derivative gains (losses) were $597 million, compared with $58 million for the same quarter last year. Net earnings attributable to Berkshire shareholders were $3,920 million, compared with $2,278 for the same quarter last year. Earnings from insurance-underwriting declined to $392 million compared with $1,089 for the same quarter last year. Insurance-investment income declined to $733 million from $783 million for the same quarter last year. Operating earnings for Q 3 2012 were $3,399 million, down from $3,812 million from the same quarter last year.

HCC Insurance Holdings Inc.

HCC Insurance Holdings Inc. reported Q3 2012 net earnings of $107.1 million, compared to $60.4 million for the same quarter last year. Net earnings per diluted share were $1.05, compared with $0.56 for the same quarter last year. For the first nine months of 2012, net earnings were $283.1 million, or $2.76 per diluted share, compared to $176.9 million, or $1.57 per diluted share, for the same period in 2011.

"The third quarter was a record quarter and continued our excellent operating performance and strong cash flow across all of our segments," said John Molbeck, CEO of HCC.

The 2012 results include pretax net catastrophe losses of $8.0 million for the third quarter and $20.3 million for the first nine months of 2012. The 2011 results include pretax net catastrophe losses of $34.6 million for Q3, and $107.9 million for the first nine months of 2011. Catastrophe losses added 1.4 percentage points to the Company's net loss ratio for Q3 2012 and 1.3 percentage points for the first nine months of 2012. HCC’s combined ratio was 79.1 percent for Q3 2012, compared to 93.1 percent for Q3 2011.

PartnerRe Ltd.

PartnerRe reported net income of $486.7 million, or $7.53 per share for the third quarter of 2012, which includes net after-tax realized and unrealized gains on investments of $221.8 million, or $3.55 per share, compared with Q3 2011 net income of $180.1 million, or $2.43 per share, including net after-tax realized and unrealized gains on investments of $6.2 million, or $0.09 per share. Operating earnings for the quarter were $244.4 million, or $3.90 per share, compared to $164.5 million, or $2.41 per share, for Q3 2011.

“We had an excellent third quarter, generating an operating return on equity of 18 percent, driven by strong underwriting results and below average large loss experience,” said Costas Miranthis, president and CEO. “All in for the first nine months of 2012, our solid underwriting performance resulted in a non-life combined ratio of 85.1 percent and an operating return on equity of 14 percent. While net investment income reflects the continued difficult investment environment, we recorded significant gains in our investment portfolio due to tightening credit spreads, improved equity markets and lower risk free rates. As a result we grew our book value per share over 8 percent in the quarter and 17 percent year-to-date.”

Principal Financial Group Inc.

Principal Financial Group Inc. announced Q3 2012 operating earnings of $134.8 million, compared to $193.2 million for the same quarter last year; operating earnings were negatively impacted by $90.7 million, or $0.30 per diluted share, as a result of a previously-announced third-quarter actuarial assumption review.

Operating earnings per diluted share (EPS) were $0.45 for the quarter, compared to $0.61 for Q3 2011. Operating revenue for Q2 2012 was $2,638.6 million, compared to $2,031.7 million for the same period last year.

U.S. Insurance Solutions lost $21.6 million in Q3 2012, compared with earnings of $49.1 million in the same quarter last year. Individual Life losses were $37.9 million for the quarter, compared to earnings of $28.2 million for the same quarter last year, reflecting a $62.9 million charge attributable to long-term interest rate assumptions and model enhancements. Specialty Benefits earnings were $16.3 million for the quarter, down from $20.9 million for the same period last year, due to higher disability claims and a $1.9 million charge resulting from a 75 basis point reduction in the disability claims discount rate from the same quarter last year. Segment operating revenues for Q3 2012 were $766.5 million, compared to $739.3 million for the same quarter last year.

“Business momentum continued to accelerate in the third quarter. With strong sales, net cash flows and record assets under management, we feel well positioned going into 2013,” said Larry Zimpleman, chairman, president and CEO. “However, we continue to see macroeconomic headwinds, including foreign exchange and low interest rates, that will pressure financial performance in the near term.”

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