Arch Capital Group Ltd (AGCL) is a Bermuda based insurance company working in the line of providing insurance, reinsurance, and mortgage insurance, and corporations globally. Separated into two segments, one being the product and casualty line of insurance and the other being a mortgage. With a large capital base, high credit ratings, and years of expertise, it turned to be a big player in the stock market. They had a growth that sustained for years.
But the recent pandemic phase rather hit the company a massive loss of $205million to $225 million, termed to be the catastrophic low losing 33.4% value on shares within a short span of 3 months. COVID-19 and the internal disturbances in the U.S among citizens can be the major causes of the loss. 41% losses in insurance and 59% losses were faced in reinsurance segments making a total of $87 million loss solely due to COVID-19 in Q1 that increased to $180 million in Q2 of 2020.
According to PEMBROKE, the net income shareholders pre-tax dropped to $ 0.32 per share in Q1 of 2020 which was previously $1.07 per share in 2019 Q1.
Relying on NASDAQ: ACGL at https://www.webull.com/quote/nasdaq-acgl reports,
- For the year 2020, the EPS for AGCL shares is estimated to remain between ranges of -0.26 in the second quarter to 0.28 in the fourth quarter. The 2021 first-quarter EPS seems to be more promising with an estimated 0.67.
- Surprise earning percentage for March 2020 was stooping low with -14.8%, compared to the previous year’s 11.9% in June 2019 indicating a rapid decline.
With share prices falling rapidly and a negative return on investment, Arch shareholders are in a dilemma whether to hold the stocks or sell-off with a loss.
Arch Capital Not Loosing on Potential Growth
Here are a few reasons why you must hold on:
- Once the pandemic fades away, the previously consistent premium growth will get back on track given the reputation it holds.
- Given the 2019 acquisitions of Arch Group on several top companies like Barbican Group Holdings Ltd and Barbican Managing Holdings Ltd and other similar associates, it will create a boost in their revenue.
- The company has an impressive financial strength with financial flexibility due to its long term investments as well as a strong liquidity position to recover from the losses easily and venture into new opportunities.
- Despite the losses, AGCL holds a growth score of B and ranks third in Zack rank.
Currently Arch will have to deal with the loss-adjustment expenses, interest expenses, and other corporate expenses before it can decide for marginal expansion. Pandemic is only a temporary phase that will not affect the growth in the long run. You can check more stock news online in real time stock market before trading stocks. Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.