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Is Beat in Store for W. R. Berkley (WRB) in Q4 Earnings?

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W. R. Berkley Corporation WRB is slated to report fourth-quarter 2020 results on Jan 26, after market close. The company delivered an earnings surprise of 4.84% in the last reported quarter.

Factors at Play 

Gross premiums written in the to-be-reported quarter are likely to have benefited from solid performance across professional liability, commercial auto, other liability in the Insurance segment as well as increase in property reinsurance, monoline excess and casualty reinsurance in the Reinsurance & Monoline Excess segments.

The Zacks Consensus Estimate for fourth-quarter 2020 premiums earned is pegged at $1.8 billion, indicating an increase of 5.5% from the year-ago quarter reported figure.

Lower income from investment funds, decrease in fixed maturity securities due to lower investment yields, repositioning of a larger portion of the investment portfolio to cash and cash equivalents, and higher tax expense are likely to have hurt the company’s net investment income in the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $2.1 billion, suggesting an improvement of 11.9% from the prior-year quarter’s reported figure.

The ongoing COVID-19 pandemic is likely to have affected claim frequency and severity.

Loss cost trends are likely to have been impacted by COVID-19-related claims in certain lines of business, as well as by other effects of COVID-19 such as economic conditions, inflation and social distancing.

The pandemic is likely to have affected workers’ compensation, contingency and event cancellation, and other lines of business in a number of ways.

However, the company’s share buyback activity is likely to have aided the bottom line.

Expense ratio is likely to have improved on the back of higher net premiums earned and lower travel and entertainment expenses as a result of the pandemic.

However, losses and loss expenses as well as other operating costs and interest expense are likely to have increased expenses in the fourth quarter.

The Zacks Consensus Estimate for fourth-quarter 2020 earnings per share is pegged at 78 cents, indicating an increase of 8.3% from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model predicts a likely earnings beat for W. R. Berkley this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: W. R. Berkley has an Earnings ESP of +6.75%. This is because the Most Accurate Estimate of 83 cents is pegged higher than the Zacks Consensus Estimate of 78 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

W.R. Berkley Corporation Price and EPS Surprise

W.R. Berkley Corporation Price and EPS Surprise
W.R. Berkley Corporation Price and EPS Surprise

W.R. Berkley Corporation price-eps-surprise | W.R. Berkley Corporation Quote

Zacks Rank: W. R. Berkley currently carries a Zacks Rank #2.

Other Stocks to Consider

Some other insurance stocks with the right combination of elements to deliver an earnings beat this time around are:

The Allstate Corporation ALL has an Earnings ESP of +10.05% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

MGIC Investment Corporation MTG has an Earnings ESP of +2.63% and a Zacks Rank #2.

Radian Group Inc. RDN has an Earnings ESP of +1.12% and is a Zacks #3 Ranked stock.

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W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
 
The Allstate Corporation (ALL) : Free Stock Analysis Report
 
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
Radian Group Inc. (RDN) : Free Stock Analysis Report
 
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