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SEC filingRevenue grew 5.7% to $1.4B, but net income fell 11.1% to $97.7M due to elevated catastrophe losses and higher loss cost trends.
Revenue for the first quarter of 2026 was $1.4 billion, a 5.7% increase from $1.3 billion in the same period last year. This growth was primarily driven by higher net premiums earned, which benefited from net premiums written growth in 2025. Additionally, after-tax net investment income contributed to the revenue increase, reflecting higher yields and portfolio growth.
Despite revenue growth, net income declined 11.1% to $97.7 million from $109.9 million in the prior year quarter. The decrease was driven by elevated catastrophe losses and higher current year casualty loss cost trends. These factors more than offset the benefit of higher earned premiums and investment income. The combined ratio worsened as a result, with catastrophe losses adding significant points to the ratio.
The decline in net income was primarily due to underwriting losses from catastrophe events and adverse loss cost development. While revenue grew, the increase in claims and loss adjustment expenses outpaced premium growth, leading to lower underwriting profitability. Diluted earnings per share fell to $1.58 from $1.76, a decrease of 10.2%.
Net cash provided by operating activities was $221.4 million in the first quarter of 2026, compared to $284.0 million in the prior year quarter. The decrease was primarily due to lower underwriting results. Capital expenditures were $10.9 million, down from $13.0 million in the prior year. Free cash flow, defined as operating cash flow less capital expenditures, was $210.5 million. The company expects to fund its commitments through normal operating and investing activities.
Book value per share was impacted by higher after-tax unrealized losses on fixed income securities, driven by an increase in benchmark U.S. interest rates. This resulted in a decline in book value per share compared to year-end 2025. The company's capital management strategy remains focused on protecting policyholder and stockholder interests while enhancing financial strength.
The company continues to focus on improving risk selection, individual policy pricing, and claims outcomes. System enhancements in the E&S Lines segment have created operational efficiencies, with premium production increasing significantly despite limited headcount growth. The company also added approximately thirty agency locations in the first quarter of 2026, expanding its distribution network.