Arch Capital Group Posts 4Q Beat, Sterne Agee Maintains Neutral Rating

Sterne Agee has published a research report on Arch Capital Group ACGL after the company reported a 4Q EPS beat driven by lower tax rates. In the report, Sterne Agee writes "Operating EPS came in at $2.58. This compared to our estimate of $2.32 and the Street consensus at $2.34. The beat versus our estimate was driven largely by a lower tax rate ($0.23 benefit). Underwriting income in the quarter was about $0.19 lower than our estimate (mostly due to higher expense ratio and catastrophe losses) while NII was $0.06 above our estimate and corporate expenses came in about $0.16 below our forecast. Adjusting for unusual expenses and normalizing the tax rate (guidance of 1%-3% going forward), we would put the core EPS at about $2.55. Diluted tangible book value was $84.89 vs. $84.36 in 3Q and our estimate at $81.64." Sterne Agee maintains its Neutral rating and $92 price target. Arch Capital Group closed yesterday at $91.14.