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W.R. Berkley (WRB) Q2 Earnings and Revenues Miss Estimates

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W.R. Berkley Corporation’s (WRB - Free Report) 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.

W.R. Berkley Corporation Price, Consensus and EPS Surprise

W.R. Berkley Corporation Price, Consensus and EPS Surprise

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.

Zacks Rank

W.R. Berkley currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Insurer

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.

Upcoming Releases

RLI Corporation (RLI - Free Report) will release second-quarter 2020 earnings on Jul 22 after market close. The Zacks Consensus Estimate for the same stands at 45 cents per share.

The Travelers Companies (TRV - Free Report) will release second-quarter 2020 earnings on Jul 23. The Zacks Consensus Estimate for the same stands at 25 cents per share.

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