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W.R. Berkley (WRB) Up 6.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W.R. Berkley due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
W.R. Berkley Q3 Earnings Top on Solid Underwriting
W.R. Berkley Corporation’s WRB third-quarter 2023 operating income of $1.35 per share beat the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.7% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth that fueled continued underwriting performance and a surge in investment income.
Behind the Headlines
W.R. Berkley’s net premiums written were a record $2.8 billion, up 10.5% year over year as market conditions remained favorable for most lines of business. The figure was in line with our estimate.
Operating revenues came in at $3.1 billion, up 3.4% year over year, on the back of higher net premiums earned and higher net investment income. The top line, however, beat the consensus estimate by 1.4%.
Net investment income surged 33.6% to a record $271 million, benefiting from higher yields. The Zacks Consensus Estimate for net investment income was $256 million, while our estimate was $257.9 million.
Total expenses increased 7.1% to $2.6 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, expenses from non-insurance businesses and interest expenses. Our estimate was $2.6 billion.
The loss ratio improved 220 basis points (bps) to 62.6. Our estimate was pegged at 65.5. The expense ratio deteriorated 30 bps year over year to 28.4. The Zacks Consensus Estimate for the expense ratio was 28.5, while our estimate was 28.
Catastrophe losses totaled $61.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) improved 190 basis points to 90.2. The Zacks Consensus Estimate was 92. Our estimate for the combined ratio was 93.5.
Segment Details
Net premiums written at the Insurance segment increased 12.1% year over year to $2.5 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines and commercial automobiles. Our estimate was $2.5 billion. The combined ratio improved by 20 bps to 91.1. Our estimate for the same was 92.
Net premiums written in the Reinsurance & Monoline Excess segment slightly increased year over year to $340 million on higher premiums at property reinsurance and monoline excess. Our estimate was $362.2 million. The combined ratio improved by 600 bps to 84.6 versus our estimate of 104.5.
Financial Update
W.R. Berkley exited the quarter with total assets worth $35.3 billion, up 6.8% from year-end 2022.
Senior notes and other debt dropped 0.04% from 2022 end levels to $1.8 billion.
Book value per share increased 5.1% from 2022 end levels to $26.80 as of Sep 30, 2023.
Cash flow from operations was $708.7 million in the reported quarter, up 40.3% year over year.
Operating return on equity expanded 480 bps to 21.7%.
Capital Deployment
WRB returned $160.3 million, consisting of $129 million in special dividends, $28.4 million in regular dividends and $2.9 million in share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, W.R. Berkley has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
W.R. Berkley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
W.R. Berkley is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Progressive (PGR - Free Report) , a stock from the same industry, has gained 3.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Progressive reported revenues of $15.71 billion in the last reported quarter, representing a year-over-year change of +20.9%. EPS of $2.09 for the same period compares with $0.49 a year ago.
For the current quarter, Progressive is expected to post earnings of $2.29 per share, indicating a change of +52.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +6.8% over the last 30 days.
Progressive has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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W.R. Berkley (WRB) Up 6.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W.R. Berkley due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
W.R. Berkley Q3 Earnings Top on Solid Underwriting
W.R. Berkley Corporation’s WRB third-quarter 2023 operating income of $1.35 per share beat the Zacks Consensus Estimate by 18.4%. The bottom line increased 33.7% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth that fueled continued underwriting performance and a surge in investment income.
Behind the Headlines
W.R. Berkley’s net premiums written were a record $2.8 billion, up 10.5% year over year as market conditions remained favorable for most lines of business. The figure was in line with our estimate.
Operating revenues came in at $3.1 billion, up 3.4% year over year, on the back of higher net premiums earned and higher net investment income. The top line, however, beat the consensus estimate by 1.4%.
Net investment income surged 33.6% to a record $271 million, benefiting from higher yields. The Zacks Consensus Estimate for net investment income was $256 million, while our estimate was $257.9 million.
Total expenses increased 7.1% to $2.6 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, expenses from non-insurance businesses and interest expenses. Our estimate was $2.6 billion.
The loss ratio improved 220 basis points (bps) to 62.6. Our estimate was pegged at 65.5. The expense ratio deteriorated 30 bps year over year to 28.4. The Zacks Consensus Estimate for the expense ratio was 28.5, while our estimate was 28.
Catastrophe losses totaled $61.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) improved 190 basis points to 90.2. The Zacks Consensus Estimate was 92. Our estimate for the combined ratio was 93.5.
Segment Details
Net premiums written at the Insurance segment increased 12.1% year over year to $2.5 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines and commercial automobiles. Our estimate was $2.5 billion. The combined ratio improved by 20 bps to 91.1. Our estimate for the same was 92.
Net premiums written in the Reinsurance & Monoline Excess segment slightly increased year over year to $340 million on higher premiums at property reinsurance and monoline excess. Our estimate was $362.2 million. The combined ratio improved by 600 bps to 84.6 versus our estimate of 104.5.
Financial Update
W.R. Berkley exited the quarter with total assets worth $35.3 billion, up 6.8% from year-end 2022.
Senior notes and other debt dropped 0.04% from 2022 end levels to $1.8 billion.
Book value per share increased 5.1% from 2022 end levels to $26.80 as of Sep 30, 2023.
Cash flow from operations was $708.7 million in the reported quarter, up 40.3% year over year.
Operating return on equity expanded 480 bps to 21.7%.
Capital Deployment
WRB returned $160.3 million, consisting of $129 million in special dividends, $28.4 million in regular dividends and $2.9 million in share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, W.R. Berkley has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
W.R. Berkley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
W.R. Berkley is part of the Zacks Insurance - Property and Casualty industry. Over the past month, Progressive (PGR - Free Report) , a stock from the same industry, has gained 3.6%. The company reported its results for the quarter ended September 2023 more than a month ago.
Progressive reported revenues of $15.71 billion in the last reported quarter, representing a year-over-year change of +20.9%. EPS of $2.09 for the same period compares with $0.49 a year ago.
For the current quarter, Progressive is expected to post earnings of $2.29 per share, indicating a change of +52.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +6.8% over the last 30 days.
Progressive has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.