7 Insurers Release Q2 Results
Aetna, Aflac and Travelers all announce positive earnings.
Insurance Networking News, July 28, 2010
A number of insurers have begun to release their financial results for Q2 2010. The following is a compilation of their announcements.
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Aetna announced Q2 2010 operating earnings of $450.2 million, or $1.05 per share, an increase of 54% over 2009. The health insurer says the increase was largely the result of a higher commercial underwriting margin from favorable prior-period reserve development and improved underlying performance, partially offset by lower commercial insured membership. Second-quarter results included favorable prior-period reserve development of $0.30 per share, primarily from Q1 2010 incurred health care costs. Excluding prior-period reserve development, second quarter 2010 operating earnings per share were $0.75, the company says.
For the first half of 2010, operating earnings per share were $2.03, including $0.22 per share of favorable prior-period reserve development from 2009 incurred health care costs.
"Our second-quarter results reflect the positive impact of disciplined, focused initiatives to improve our performance," says Ronald Williams, chairman and CEO. "Going forward, our focus on performance improvement will enable us to continue to make investments that help address the challenges our customers face with respect to affordability and quality in health care.”
"Our improved performance in the first half of 2010, along with a strong capital position, gives us confidence in our ability to execute on our goals," says Joseph Zubretsky, EVP and CFO. "We expect the remainder of 2010 will reflect the impact of business investments for future profitable growth, as well as the need to prepare for health care reform and regulatory changes. As a result, we now project full-year 2010 operating results per share to be in the range of $3.05 to $3.15."
Aflac Inc. reported in a release that its total revenues rose 15.5% to $5.0 billion in the Q2 2010, compared with $4.3 billion in Q2 2009. Net earnings were $581 million, or $1.23 per diluted share, compared with $314 million, or $.67 per share, a year ago. The insurer believes it benefited from a stronger yen/dollar exchange rate and lower realized investment losses.
Net earnings in Q2 2010 included after-tax realized investment losses of $58 million, or $.12 per diluted share, compared with realized investment losses of $249 million, or $.53 per share a year ago. Securities transactions produced realized investment gains of $8 million, or $.02 per diluted share, in the second quarter, which included a gain of $81 million from the exchange of two perpetual securities, a loss of $67 million from the company's sale of its Greek sovereign holdings and a loss of $6 million from various smaller securities transactions. In addition, the company realized a loss of $66 million, or $.14 per diluted share, from valuing foreign currency, interest rate and credit default swaps on certain variable interest entities that were required to be consolidated following adoption of Accounting Standards Codification (ASC) 810, effective Jan. 1, 2010.
Aflac reported that it believes an analysis of operating earnings, a non-GAAP financial measure, is vitally important to an understanding of the company's underlying profitability drivers.
Arch Capital Group Ltd. reports that net income available to common shareholders for Q2 2010 was $237.0 million, or $4.45 per share, compared to $152.1 million, or $2.43 per share, for Q2 2009. Arch Capital also reports an after-tax operating income available to common shareholders of $132.2 million, or $2.48 per share, for Q2 2010, compared to $163.0 million, or $2.60 per share, for Q2 2009. All earnings per share amounts reported are on a diluted basis.
Arch Capital 's book value per common share was $82.07 at June 30, 2010, a 6.7% increase from $76.91 per share at March 31, 2010, and a 12.4% increase from $73.01 per share at Dec. 31, 2009. The company's after-tax operating income available to common shareholders represented a 13.0% annualized return on average common equity for Q2 2010, compared to 18.6% for Q2 2009.
Montpelier Re Holdings Ltd., a provider of short-tail reinsurance and other specialty lines, reported its financial results in a release for Q2 2010.
Fully converted book value per share was $22.31 at June 30, 2010, an increase of 4.9% for the quarter and 6.4% for the year to date, including dividends, the company says.
Montpelier Re reported net income of $0.96 per share ($70 million) for Q2 2010, and operating income of $1.00 per share ($73 million), an increase of 28% on a per share basis from the second quarter of 2009. The net impact of realized and unrealized losses from investments and foreign exchange, which is included in net income, was $3 million for the quarter.
Net written premiums grew by 7% compared to Q2 2009 with growth in the Montpelier Re’s Lloyd's and U.S. operations more than offsetting a decrease in the Bermuda property catastrophe book.
The loss ratio for the quarter was 29%, which includes 13 points ($20 million) of loss resulting from the explosion and fire at the Deepwater Horizon oil rig. The quarter benefited from 26 points ($39 million) in favorable releases from prior years' loss reserves. There was no change in the first quarter estimated net loss for the Chilean earthquake.
The combined ratio was 60% for Q2 2010 versus 62% a year ago. General and administrative expenses include a $5 million (three points) benefit resulting from the settlement of a reinsurance dispute.
Net investment income for the quarter was unchanged from a year ago at $20 million. The total return on the investment portfolio for the quarter was 0.9%.
"We produced a strong quarter with solid underwriting results and steady investment performance resulting in 4.9% growth in book value per share,” says Christopher Harris, Montpelier Re’s president and CEO. “The mid-year renewal season was challenging, and we reduced some catastrophe exposures accordingly. However, we also identified some attractive growth opportunities in our U.S. and UK platforms, most notably within our Marine book."
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