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W.R. Berkley (WRB) Q3 Earnings Beat Estimates, Improve Y/Y

Zacks Equity Research

W.R. Berkley Corporation’s WRB third-quarter 2019 operating income of 85 cents per share beat the Zacks Consensus Estimate by 26.5%. Also, the bottom line improved 6.3% year over year on higher, pre-tax underwriting profits and premiums written.

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

Behind the Headlines

W.R. Berkley’s net premiums written were $1.7 billion, up 7.7% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.

Operating revenues came in at $96 billion, up 1.4% year over year, mainly owing to higher net premiums earned, partly offset by decline in investment income. Revenues beat the consensus estimate by 5.8%.

Investment income decreased 13.1% year over year to $161.7 million due to average performance of investment fund compared to strong returns in the year-ago quarter.

Total expenses increased nearly 2% to $1.8 billion, primarily on higher losses and loss expenses, costs from non-insurance businesses plus other operating costs and expenses.

Catastrophe loss totaled $31.5 million in the quarter, reflecting decrease of 19.3% year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.6%, reflecting 230 basis points (bps) improvement year over year.

Segment Details

Net premiums written at the Insurance segment grew 5.1% year over year to $1.5 billion in the quarter, driven by higher premiums at commercial automobile, professional liability, other liability and short-tail lines. Combined ratio improved 260 bps to 93%.

Net premiums written in the Reinsurance & Monoline Excess segment increased 30.7% year over year to $220.7 million on higher casualty reinsurance, monoline excess and property reinsurance premium. Combined ratio remained unchanged year over year at  98.3%.

Financial Update

W.R. Berkley exited the third quarter with total assets worth $26.2 billion, up 5.3% from year-end 2018.

Book value per share improved 10.9% from 2018 end to $32.97 as of Sep 30, 2019.

Cash flow from operations totaled $392.4 million for the quarter, up 75.8% year over year.

The company’s return on equity expanded 20 bps to 12.2%.

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.

Other Insurance Releases

Of the insurance industry players that have reported third-quarter results so far, The Progressive Corporation PGR, MGIC Investment Corporation MTG and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.

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