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What's in the Cards for W. R. Berkley (WRB) in Q3 Earnings?

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W. R. Berkley Corporation (WRB - Free Report) is slated to report third-quarter 2021 results on Oct 21, after market close. The company delivered an earnings surprise of 21.88% in the last reported quarter.

Factors at Play 

Gross premiums written in the to-be-reported quarter are likely to have benefited from solid performance across professional liability, commercial auto, other liability and short-tail lines in the Insurance segment as well as an increase in property reinsurance, monoline excess and casualty reinsurance in the Reinsurance & Monoline Excess segments.

The Zacks Consensus Estimate for third-quarter 2021 premiums earned is pegged at $2.1 billion, indicating an increase of 18.2% from the year-ago quarter’s reported figure.

Net investment income in the to-be-reported quarter is likely to have benefited from higher income from investment funds, primarily from financial services and energy funds, higher equity securities, and lower investment expense. The upside is likely to have been offset by a decrease in income from fixed maturity securities due to lower investment yields, decline in the arbitrage trading account and a decrease in real estate.

The Zacks Consensus Estimate for third-quarter 2021 net investment income is pegged at $135 million, indicating a decrease of 5.6% from the year-ago quarter’s reported figure.

Loss cost trends are likely to have been impacted by COVID-related claims in certain lines of business as well as other effects of COVID-19 associated with economic conditions, inflation, and social-distancing and work-from-home rules.

W.R. Berkley expects COVID-19 to affect contingency and event cancellation, workers’ compensation, and other lines of business.

The expense ratio is likely to have improved on continued growth in net premiums earned and reduced cost associated with travel and entertainment due to the global pandemic.

The Zacks Consensus Estimate for third-quarter 2021 expense ratio is pegged at 29.1, indicating an improvement of 90 basis points from the year-ago quarter’s reported figure.

An accelerated share buyback is anticipated to have provided an additional boost to the bottom line.

Exposure to catastrophe events stemming from Hurricane Ida is likely to have weighed on underwriting profitability.

Expenses are expected to have risen on higher losses and loss expenses and other operating costs and expenses and expenses from non-insurance businesses.

The Zacks Consensus Estimate for third-quarter 2021 earnings per share is pegged at 99 cents, indicating an increase of 52.3% from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model does not 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. This is not the case as you can see below.

Earnings ESP: W. R. Berkley has an Earnings ESP of +1.52%. This is because the Most Accurate Estimate is pegged at $1.00, higher than the Zacks Consensus Estimate of 99 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

W.R. Berkley Corporation Price and EPS Surprise

W.R. Berkley Corporation price-eps-surprise | W.R. Berkley Corporation Quote

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:

ProAssurance Corporation (PRA - Free Report) currently has an Earnings ESP of +4.92% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cigna Corporation (CI - Free Report) presently has an Earnings ESP of +2.19% and a Zacks Rank #3.

MetLife, Inc. (MET - Free Report) currently has an Earnings ESP of +1.20% and is a Zacks #3 Ranked stock.

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