Back to top

Analyst Blog

Property and casualty insurer W.R. Berkley Corp. (WRB - Analyst Report) reported first-quarter core operating earnings of 74 cents per share, in line with the Zacks Consensus Estimate. The company reported higher premium written, pricing gains and a lower share count. Earnings inched up by 1.4% year over year.
 
On a GAAP basis, net income declined surged 12% year over year to 83 cents per share.
 
Revenue, in the quarter, came in at $1.50 billion, up 9.3% year over year. The year-over-year increase was attributable to higher premiums earned, insurance fee service, and higher income from wholly owned investees.
 
W.R. Berkley’s net written premium for the quarter was approximately $1.38 billion, an increase of 14. 4% year over year. The company saw broad-based growth with each of its operating segments reporting higher premium.
 
Net investment income was $135.9 million in the quarter, down 13.8% year over year.
 
Total expenses also increased 13.0% year over year due to an increase in loss and loss expenses, other operating costs, and interest expenses.
 
W.R. Berkley recorded a combined ratio of 94.7%, worse than 96.5% reported in the prior-year quarter.
 
Segment Details
 
Net premiums written in the Domestic Insurance segment increased 1.7% year over year to $986.2 million. Combined ratio improved 60 basis points to 95.5% in the quarter.
 
Net premiums written in the International Insurance segment climbed 22.0% year over year to $205.1 million. Combined ratio improved 380 basis points year-over-year to 93.8%.
 
The Global Reinsurance segment reported a 22% increase in net premiums written to $185.7 million in the quarter. Combined ratio improved 650 basis points year-over-year to 91.3%.
 
Other companies in the same industry The Travelers Companies Inc. (TRV - Analyst Report), ACE Limited (ACE - Analyst Report) also reported first quarter 2013 earnings ahead of the Zacks Consensus Estimate. However, RLI Corporation (RLI - Analyst Report) reported first-quarter below the Zacks Consensus Estimate.
 
Our Take
 
W.R. Berkley has been reporting ahead of the expectations for the past several quarters. The company has maintained its trend of beating earnings estimates in the reported quarter as well. We expect the trend to continue going forward. The company has positioned itself well to take advantage of hardening in the insurance market by forming several new units over the past few years. 
 
Premiums written for its core business have increased and the new units are accruing to earnings. Average renewal rates are on the rise and so is the price trend.
 
W.R. Berkley’s balance sheet, which is adequately capitalized, is another major company strength. The company has maintained its practice of increasing yearly dividends. In our view, the company is well poised to return value to its shareholders over the long term.
 
W.R. Berkley currently retains a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%