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W.R. Berkley (WRB) Q4 Earnings Meet Estimates, Improve Y/Y

Zacks Equity Research
·3 mins read

W.R. Berkley Corporation’s WRB fourth-quarter 2019 operating income of 72 cents per share came in line with the Zacks Consensus Estimate. The bottom line improved 18% year over year on higher premiums written.

Behind the Headlines

W.R. Berkley’s net premiums written were $1.6 billion, up 9.3% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.

Operating revenues of $1.8 billion were up 3.8% year over year, mainly owing to higher net premiums earned. However, the same missed the consensus estimate by 5.8%.

Investment income decreased 14.1% year over year to $137.3 million due to weak performance of investment funds compared with strong returns in the year-ago quarter.

Total expenses inched up 2.3% to $1.8 billion, primarily on higher losses and loss expenses.

Catastrophe loss totaled $20.4 million in the quarter, reflecting a 55% plunge year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.3%, contracting 260 basis points 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 and EPS Surprise

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

Segmental Details

Net premiums written at the Insurance segment grew 8.2% year over year to $1.5 billion in the quarter. Combined ratio contracted 290 bps year over year to 93%.

Net premiums written in the Reinsurance & Monoline Excess segment increased 18.9% year over year to $175.6 million. Combined ratio contracted 50 bps year over year to 95.5%.

Financial Update

W.R. Berkley exited the fourth quarter with total assets worth $26.6 billion, up 7% from the 2018-end figure.

Book value per share improved 11.4% from the level at 2018 end to $33.12 as of Dec 31, 2019.

Cash flow from operations totaled $348.7 million in the quarter, up 25.6% year over year.

The company’s return on equity contracted 100 bps year over year to 8.8%.

Share Repurchase Update

In the quarter under review, the company returned $158 million of ordinary and special dividends to its shareholders and bought back shares worth $18 million.

Full-Year Update

For 2019, return on equity was 12.5%.

The company’s total shareholder value addition came in at $326 million in the form of share buybacks and ordinary and special dividends.  

Net premiums written for the year increased 6.7% year over year to $6.8 billion.

Total revenues for 2019 summed $7.9 billion, up 2.7% year over year.

Zacks Rank and Performance of Other Players

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

Among other players from the insurance industry having reported fourth-quarter earnings so far, the bottom-line results of Brown & Brown, Inc. BRO and RLI Corp. RLI beat estimates while that of Principal Financial PFG matched the Zacks Consensus Estimate.

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