A number of insurers have begun to release their financial results for Q2 2010. The following is a compilation of their announcements.
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."
Australian insurer QBE announced its preliminary premium growth and insurance profit for the half-year ended June 30, 2010, on its website. QBE also says that it will adopt a U.S. dollar presentation currency for 2010 and onwards, as it is more relevant for measuring performance given that around 75% of business is now written in 48 overseas countries and over 50% of annualized premium income is derived in U.S. dollars.
QBE announced the following results:
- • Gross written premium growth of 20% to US$6.9 billion
- • Net earned premium up 19% to US$5.2 billion
- • Combined operating ratio around 89.7%
- • Insurance profit up around 7% to US$820 million
- • Insurance profit margin of 15.7%
Preliminary gross investment income on shareholders’ funds when compared with the same period last year has been adversely affected by net realized and unrealized equity losses of US$228 million (2009: US$102 million loss) and the first half of 2009 had one-off gains on foreign exchange and repurchase of debt of US$174 million and US$46 million respectively. As a result, net profit after tax is expected to be down by around 40%.
The insurer added that the preliminary financial results are subject to completion of the half-year financial statements and independent audit review.
The Travelers Cos. Inc. reported a net income of $670 million, or $1.35 per diluted share, for the quarter ended June 30, 2010, compared to $740 million, or $1.27 per diluted share, for the quarter ended June 30, 2009. Operating income in the current quarter was $690 million, or $1.39 per diluted share, compared to $732 million, or $1.25 per diluted share, in the prior year quarter.
"In light of the record second quarter weather losses, we are pleased to report net income per diluted share of $1.35, a 6% increase from the prior year quarter, and return on equity of 10.1%," says Jay Fishman, Chairman CEO. "Book value per share increased 18% to $55.67 since June 30, 2009, after repurchasing 106 million common shares for $5.4 billion and paying $682 million in common stock dividends over the last 12 months. Our strategy of returning excess capital to shareholders continues to have a significant positive impact on both earnings per share as well as return on equity. Since the initial authorization in 2006, we have returned more than $15 billion in capital through common share repurchases and common dividends and we intend to continue this successful strategy.
"We are encouraged by the operating environment we experienced in our personal insurance segment in the second quarter,” he continues. “Renewal premium changes continued to be strong, and we were pleased with the improving rate of change of policies in force across both our auto and homeowners book of business. Across our diversified commercial insurance businesses, the operating environment was broadly similar to the first quarter. Retention remained strong and renewal rate changes, while still positive, were somewhat lower than in the first quarter. Finally, the negative impact of the economy on net written premiums has moderated somewhat from recent quarters.
"We continue to anticipate some accident year loss ratio deterioration on a consolidated basis for 2010, exclusive of catastrophes, as we expect loss cost increases to modestly outpace projected earned rate increases in our commercial businesses,” Fishman adds. “However, primarily as a result of commercial renewal premium increases in 2010 not meeting our original expectations, which we believe is attributable to the impact of the continuing difficult economic environment, we are modestly lowering the upper end of our full year 2010 fully diluted operating income per share guidance by ten cents, resulting in a range of $5.20 to $5.45."
WellPoint Inc. announced that Q2 2010 net income was $722.4 million, or $1.71 per share, including net investment gains of $19.6 million after-tax, or $0.04 per share. Net income in the second quarter of 2009 was $693.5 million, or $1.43 per share, and included net investment losses of $38.0 million after-tax, or $0.07 per share.
Excluding net investment gains and losses in each period, WellPoint’s adjusted net income was $1.67 per share in Q2 2010, an increase of 11.3% from adjusted net income of $1.50 per share in the prior year quarter.
"Our quarterly results exceeded our expectation primarily due to higher-than-anticipated favorable reserve development and continued strong performance in our capital management areas. We are also seeing positive results in our core operations from many of the strategic initiatives we put in place over the last two years," says Angela Braly, chair, president and CEO. "It is our goal to make health care reform work for our customers and the country. We will continue working collaboratively with our industry partners, the health care delivery system and governmental agencies as the regulations for health care reform are developed."
"We repurchased nearly 50 million shares of our common stock for $2.9 billion during the first two quarters of 2010, following the sale of our NextRx subsidiaries. We intend to utilize an additional $1.0 billion for share repurchases in the second half of this year, subject to market and industry conditions," says Wayne DeVeydt, EVP and CFO. "Based on our year-to-date results, we have raised full year 2010 guidance for EPS and operating cash flow, and we are optimistic about our future growth prospects.”
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