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W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2020 operating income of 92 cents per share beat the Zacks Consensus Estimate by about 18%. The bottom line increased 27.8% year over year due to improved current accident year combined ratio excluding catastrophe losses and higher net investment income. Higher catastrophes and economic slowdown due to the global pandemic were partial drags.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.8 billion, up 8.2% year over year, primarily due to higher premiums written at the Insurance and Reinsurance & Monoline Excess segment.
Operating revenues came in at $2.2 billion, up 14.4% year over year, on the back of higher net premiums written. Moreover, the top line beat the consensus estimate by 2.3%.
Investment income increased 11.8% year over year to about $181 million.
Total expenses increased 4.6% to $1.9 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, expenses from non-insurance businesses and interest expense.
Catastrophe losses of $42.4 million in the quarter widened from $20.5 million incurred in the year-ago quarter. Consolidated combined ratio (a measure of underwriting profitability) was 90.9%, up 240 basis points (bps) year over year and the lowest in 13 years. Underwriting income increased 44.2% to $165.4 million.
Segment Details
Net premiums written at the Insurance segment increased 7.2% year over year to $1.6 billion in the quarter, primarily due to higher short-tail lines, commercial automobile, professional liability and other liability. Combined ratio improved 20 bps to 92.8%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 16.8% year over year to $205.1 million on higher casualty reinsurance, monoline excess, and property reinsurance. Combined ratio improved 1770 bps to 77.8%.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) and Brown & Brown (BRO - Free Report) beat the Zacks Consensus Estimate for earnings.
Upcoming Release
RLI Corp (RLI - Free Report) is set to release fourth-quarter 2020 earnings on Jan 27. The Zacks Consensus Estimate for the same stands at 56 cents per share.
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W.R. Berkley (WRB) Q4 Earnings & Revenues Top, Increase Y/Y
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2020 operating income of 92 cents per share beat the Zacks Consensus Estimate by about 18%. The bottom line increased 27.8% year over year due to improved current accident year combined ratio excluding catastrophe losses and higher net investment income. Higher catastrophes and economic slowdown due to the global pandemic were partial drags.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.8 billion, up 8.2% year over year, primarily due to higher premiums written at the Insurance and Reinsurance & Monoline Excess segment.
Operating revenues came in at $2.2 billion, up 14.4% year over year, on the back of higher net premiums written. Moreover, the top line beat the consensus estimate by 2.3%.
Investment income increased 11.8% year over year to about $181 million.
Total expenses increased 4.6% to $1.9 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, expenses from non-insurance businesses and interest expense.
Catastrophe losses of $42.4 million in the quarter widened from $20.5 million incurred in the year-ago quarter. Consolidated combined ratio (a measure of underwriting profitability) was 90.9%, up 240 basis points (bps) year over year and the lowest in 13 years. Underwriting income increased 44.2% to $165.4 million.
Segment Details
Net premiums written at the Insurance segment increased 7.2% year over year to $1.6 billion in the quarter, primarily due to higher short-tail lines, commercial automobile, professional liability and other liability. Combined ratio improved 20 bps to 92.8%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 16.8% year over year to $205.1 million on higher casualty reinsurance, monoline excess, and property reinsurance. Combined ratio improved 1770 bps to 77.8%.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley Corporation price-consensus-eps-surprise-chart | W.R. Berkley Corporation Quote
Full-Year Update
Full-year 2020 adjusted income of $2.32 per share beat the Zacks Consensus Estimate of $2.18. The bottom line decreased 32.9% year over year.
Total revenues increased 2.8% from the year-ago quarter to about $8 billion and beat the Zacks Consensus Estimate of $7.9 billion.
Financial Update
W.R. Berkley exited 2020 with total assets worth $28.6 billion, up 7.3% from year-end 2020.
Tangible book value per share increased 7.4% from 2019 end to $34.22 as of Dec 31, 2020.
Cash flow from operations was $1.6 billion in 2020, up 41.3% year over year.
The company’s return on equity contracted 380 bps to 8.7%.
The company repurchased shares for $346 million.
Zacks Rank
W.R. Berkley currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Some Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) and Brown & Brown (BRO - Free Report) beat the Zacks Consensus Estimate for earnings.
Upcoming Release
RLI Corp (RLI - Free Report) is set to release fourth-quarter 2020 earnings on Jan 27. The Zacks Consensus Estimate for the same stands at 56 cents per share.
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