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W.R. Berkley (WRB) to Report Q3 Earnings: What's in Strore?

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W. R. Berkley Corporation (WRB - Free Report) is slated to report third-quarter 2020 results on Oct 20, after market close. The company witnessed a negative earnings surprise of 73.91% in the last reported quarter.

Factors at Play 

Gross premiums written in the to-be-reported quarter are likely to have benefited from a better renewal retention ratio and an overall rate improvement across the company’s Insurance and Reinsurance & Monoline Excess segments. However, this upside is likely to have been weighed on by reduced economic activity due to the COVID-19 pandemic, affecting demand for insurance products and services. The Zacks Consensus Estimate for third-quarter 2020 premiums earned is pegged at $1.7 billion, indicating an increase of 4.1% from the year-ago quarter reported figure.

Lower interest rate due to economic uncertainties resulting from COVID-19, losses from investment funds due to losses from energy funds, financial services funds and transportation funds and declined investment yields in fixed maturity securities are likely to have hurt the company’s net investment income in the to-be-reported quarter.

The Zacks Consensus Estimate for third-quarter 2020 revenues is pegged at $2 billion, suggesting an improvement of 3.1% from the prior-year quarter’s reported figure.

The ongoing COVID-19 pandemic is likely to have negatively impacted the loss cost trends.

The growing intensity of COVID-19 pandemic is likely to have affected workers’ compensation, contingency, event cancellation and other lines of business.

Sustained buybacks are likely to have provided an additional boost to the bottom line.

The expense ratio is likely to have deteriorated due to the impact of the coronavirus pandemic, which further might have contracted the premium volumes. Expenses are likely to have risen due to higher losses and loss expenses as well as increased policy acquisition and insurance operating expenses.

The Zacks Consensus Estimate for third-quarter 2020 earnings per share is pegged at 73 cents, indicating a decline of 13.1% from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for W. R. Berkley this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s is not the case here as you can see below.

Earnings ESP: W. R. Berkley has an Earnings ESP of -10.65%. This is because the Most Accurate Estimate of 65 cents is pegged lower than the Zacks Consensus Estimate of 73 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

W.R. Berkley Corporation Price and EPS Surprise

Zacks Rank: W. R. Berkley currently carries a Zacks Rank # 5 (Strong sell).

Stocks to Consider

Some insurance stocks with the right combination of elements to deliver an earnings beat this time around are:

Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +8.11% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Watford Holdings Ltd. (WTRE - Free Report) has an Earnings ESP of +70.13% and a Zacks Rank #3.

CNO Financial Group, Inc. (CNO - Free Report) has an Earnings ESP of +2.52% and is Zacks #3 Ranked.

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