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W.R. Berkley (WRB) Down 5.2% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is W.R. Berkley due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
W.R. Berkley Q2 Earnings and Revenues Miss Estimates
W.R. Berkley Corporation’s second-quarter 2020 operating income of 6 cents per share missed the Zacks Consensus Estimate of 23 cents by 73.9%. Also, the bottom line plunged 92.7% year over year due to higher catastrophe losses. The COVID-19 pandemic had an adverse impact on the company’s results.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, down 0.2% year over year, primarily due to lower premiums written at the Insurance segment.
Operating revenues came in at $1.8 billion, down 4.2% year over year, due to lower net premiums written and investment income. Moreover, the top line missed the consensus estimate by 6.6%.
Investment income decreased 54.6% year over year to $84.4 million, primarily due to loss of $58 million from investment funds, which are reported on a one-quarter lag. The loss was due to the first-quarter downturn in the financial markets, which resulted from the COVID-19 related economic shutdown.
Total expenses increased 4.6% to $1.8 billion, primarily due to higher losses and loss expenses.
Catastrophe losses of $145.9 million in the quarter widened from $25.5 million incurred in the year-ago quarter. The catastrophe losses included $20 million for losses related to civil unrest and $40 million attributable to severe weather-related events in the United States. Consolidated combined ratio (a measure of underwriting profitability) was 98.7%, down 480 basis points (bps) year over year.
Segment Details
Net premiums written at the Insurance segment decreased 2% year over year to $1.5 billion in the quarter, primarily due to lower short-tail lines and workers' compensation. Combined ratio deteriorated 390 bps to 97.7%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 16.4% year over year to $196.7 million on higher casualty reinsurance and property reinsurance premium. Combined ratio deteriorated 990 bps to 105.1%.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $27.3 billion, up 2.6% from year-end 2019.
Book value per share decreased 1.7% from 2019 end to $31.33 as of Jun 30, 2020.
Cash flow from operations was $427.3 million in the second quarter of 2020, up 31.7% year over year.
The company’s return on equity contracted 1120 bps to 4.7%.
The company returned $117 million to shareholders in the reported quarter, including $96 million in share repurchases and $21 million in dividend payouts.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 11.11% due to these changes.
VGM Scores
Currently, W.R. Berkley has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, W.R. Berkley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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W.R. Berkley (WRB) Down 5.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is W.R. Berkley due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
W.R. Berkley Q2 Earnings and Revenues Miss Estimates
W.R. Berkley Corporation’s second-quarter 2020 operating income of 6 cents per share missed the Zacks Consensus Estimate of 23 cents by 73.9%. Also, the bottom line plunged 92.7% year over year due to higher catastrophe losses. The COVID-19 pandemic had an adverse impact on the company’s results.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, down 0.2% year over year, primarily due to lower premiums written at the Insurance segment.
Operating revenues came in at $1.8 billion, down 4.2% year over year, due to lower net premiums written and investment income. Moreover, the top line missed the consensus estimate by 6.6%.
Investment income decreased 54.6% year over year to $84.4 million, primarily due to loss of $58 million from investment funds, which are reported on a one-quarter lag. The loss was due to the first-quarter downturn in the financial markets, which resulted from the COVID-19 related economic shutdown.
Total expenses increased 4.6% to $1.8 billion, primarily due to higher losses and loss expenses.
Catastrophe losses of $145.9 million in the quarter widened from $25.5 million incurred in the year-ago quarter. The catastrophe losses included $20 million for losses related to civil unrest and $40 million attributable to severe weather-related events in the United States. Consolidated combined ratio (a measure of underwriting profitability) was 98.7%, down 480 basis points (bps) year over year.
Segment Details
Net premiums written at the Insurance segment decreased 2% year over year to $1.5 billion in the quarter, primarily due to lower short-tail lines and workers' compensation. Combined ratio deteriorated 390 bps to 97.7%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 16.4% year over year to $196.7 million on higher casualty reinsurance and property reinsurance premium. Combined ratio deteriorated 990 bps to 105.1%.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $27.3 billion, up 2.6% from year-end 2019.
Book value per share decreased 1.7% from 2019 end to $31.33 as of Jun 30, 2020.
Cash flow from operations was $427.3 million in the second quarter of 2020, up 31.7% year over year.
The company’s return on equity contracted 1120 bps to 4.7%.
The company returned $117 million to shareholders in the reported quarter, including $96 million in share repurchases and $21 million in dividend payouts.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 11.11% due to these changes.
VGM Scores
Currently, W.R. Berkley has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, W.R. Berkley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.