Will W.R. Berkley's (WRB) Beat Streak Continue in Q2 Earnings?
W.R. Berkley Corporation WRB is slated to report second-quarter 2023 earnings on Jul 20, after market close. The insurer delivered an earnings surprise in three of the last four quarters and missed in one, the average being 12.24%.
Factors to Consider
Gross premiums written in the second quarter of 2023 are expected to have benefited from strong performing other liability, short-tail lines, commercial auto and workers' compensation in the Insurance segment as well as an increase in monoline excess, property reinsurance and casualty reinsurance in the Reinsurance & Monoline Excess segment.
The Zacks Consensus Estimate for second-quarter 2023 premiums earned is pegged at $2.5 billion, up 7.4% from the year-ago reported quarter. We expect the metric to increase 2.6% to $2.4 billion.
Higher income from fixed maturity securities, rising interest rates, increase from the arbitrage trading account and equity securities are likely to have aided improvement in net investment income. The upside is likely to have been partially offset by decrease in income from investment funds, decline in real estate and increase in investment expenses.
The Zacks Consensus Estimate for second-quarter 2023 net investment income is pegged at $233 million, indicating an upside of 35.5% from the year-ago reported figure. We estimate a net investment income of $209.2 million in the to-be-reported quarter.
The expense ratio is likely to have deteriorated due to lower ceding commissions, increased compensation costs and new start-up operating unit expenses. Growth in net premiums earned is expected to improve the ratio.
The Zacks Consensus Estimate for second-quarter 2023 expense ratio is pegged at 28.63, indicating a deterioration of 93 basis points from the year-ago reported figure.
Expenses are likely to have increased owing to higher losses and loss expenses, other operating costs and expenses, expenses from non-insurance businesses. We expect the metric to increase 6.5% to $2.4 billion.
Improved pricing and increased exposure are likely to have aided underwriting profitability. The Zacks Consensus Estimate for the combined ratio is pegged at 91.
The Zacks Consensus Estimate for earnings is pegged at $1.10, indicating a decline of 1.8% from the year-ago quarter’s reported number.
What the Zacks Model Says
Our proven model predicts an earnings beat for W.R. Berkley this time around. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP: W.R. Berkley has an Earnings ESP of +0.09%. This is because the Most Accurate Estimate is pegged at $1.11, which is higher than the Zacks Consensus Estimate of $1.10. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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 #3.
Other Stocks to Consider
Here are three P&C insurance stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Kinsale Capital Group KNSL has an Earnings ESP of +2.70% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $2.55, indicating an increase of 32.8% from the year-ago reported figure.
KNSL’s earnings beat estimates in each of the last four reported quarters.
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.57% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $1.65, indicating a year-over-year increase of 23.1%.
ACGL’s earnings beat estimates in each of the last four reported quarters.
RLI Corporation RLI has an Earnings ESP of +8.33% and currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $1.20, implying a decline of 19.5% from the year-ago reported figure.
RLI’s earnings beat estimates in each of the last four reported quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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RLI Corp. (RLI) : Free Stock Analysis Report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
