U.S. Markets open in 9 hrs 11 mins

W.R. Berkley (WRB) Q2 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

W.R. Berkley Corporation’s WRB second-quarter 2019 operating income of 82 cents per share beat the Zacks Consensus Estimate of 64 cents by 28.1%. Also, the bottom line improved 26.2% year over year on higher pre-tax underwriting profits and net investment income.

Behind the Headlines

W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, up 7.3% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.

Operating revenues came in at $1.9 billion, up 5.4% year over year, mainly owing to higher net premiums earned and investment income. However, the top line missed the consensus estimate by 3%.

Investment income increased 22.5% year over year to $188.3 million, driven by better-than-average investment fund performance.

Total expenses increased 4% to $1.7 billion, primarily on higher losses and loss expenses, costs from non-insurance businesses plus interest expenses.

Catastrophe loss totaled $25.5 million in the quarter, reflecting an increase of 88.1% year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.9%, up 100 basis points (bps) year over year.

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

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

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

Segment Details

Net premiums written at the Insurance segment grew 5.6% year over year to $1.6 billion in the quarter, driven by higher premiums at commercial automobile, professional liability, other liability and short-tail lines. Combined ratio improved 150 bps to 93.8%.

Net premiums written in the Reinsurance & Monoline Excess segment increased 27.3% year over year to $168.9 million on higher casualty reinsurance, monoline excess and property reinsurance premium. Combined ratio deteriorated 380 bps to 95.2%.

Financial Update

W.R. Berkley exited the second quarter with total assets worth $26.5 billion, up 6.4% from year-end 2018.

Book value per share improved 10.3% from 2018 end to $31.36 as of Jun 30, 2019.

Cash flow from operations totaled $324.3 million in the first half of 2019, up 132.7% year over year.

The company’s return on equity expanded 260 bps to 15.9%.

The company returned $112 million to shareholders in the reported quarter, including $92 million of special dividends.

Zacks Rank

W.R. Berkley currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation PGR and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies, Inc. TRV missed the same.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
RLI Corp. (RLI) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research