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Why Is W.R. Berkley (WRB) Down 2.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is W.R. Berkley due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

W.R. Berkley Q1 Earnings Beat, Revenues Increase Y/Y

W.R. Berkley Corporation’s first-quarter 2021 operating income of $1.08 per share beat the Zacks Consensus Estimate by 21.3%. The bottom line also increased 56.5% year over year.

The company benefited from high premiums, lower catastrophe loss and improving combined ratio, partially offset by lower investment income.

Behind the Headlines

Operating revenues of nearly $2.1 billion were up 6.7% year over year due to higher net premiums earned.

W.R. Berkley’s net premiums written were $2 billion, up nearly 11.1% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.

Net investment income declined 9.3% year over year to $158.6 million.

Total expenses moved up 2.4% to $1.9 billion, primarily on higher losses and loss expenses and other operating costs and expenses.

Catastrophe loss totaled $35.8 million in the quarter, which reflects a decline of 54.5% year over year.

Consolidated combined ratio (a measure of underwriting profitability) was 90.1%, improving 680 basis points (bps) year over year.

Segmental Details

Net premiums written at the Insurance segment grew 9.9% year over year to $1.7 billion in the quarter. Combined ratio improved 580 bps year over year to 90.6%.

Net premiums written in the Reinsurance & Monoline Excess segment increased 18.2% year over year to $310.2 million. Combined ratio improved 1320 bps year over year to 87.4%.

Financial Update

W.R. Berkley exited the first quarter with total assets worth $29.8 billion, up 4.3% from the 2020-end figure.

Book value per share increased 1.9% from the level at 2020 end to $36.16 as of Mar 31, 2021.

Cash flow from operations totaled $310.9 million in the quarter, which surged 103.8% year over year.

In the quarter under review, the company’s return on equity (ROE) of 14.5% compared favorably with the prior-year quarter’s negative ROE of 0.3%.

Share Repurchase and Dividend Update

In the first quarter, W.R. Berkley bought back shares worth $30 million and paid $21 million in dividends to its shareholders.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, W.R. Berkley has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise W.R. Berkley has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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