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W.R. Berkley (WRB) Q1 Earnings Beat, Revenues Miss Estimates
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W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2022 operating income of $1.10 per share beat the Zacks Consensus Estimate of 92 cents by 19.6%. The bottom line improved 27.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business and exposure growth and a reduction in the expense ratio.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley’s net premiums written were a record $2.4 billion, up 18% year over year, primarily driven by strong rate increases in nearly all lines of business and exposure growth.
Operating revenues came in at $2.6 billion, up 23.8% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line however missed the consensus estimate by 1.3%
Investment income increased 9% year over year to $173.5 million as investment funds continued to outperform and fixed-maturity income benefited from higher yields.
Total expenses increased 17.3% to $2.2 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, interest expenses and expenses from non-insurance businesses.
The loss ratio improved 110 basis points (bps) to 59.5 while the expense ratio improved 120 bps to 28.3.
Catastrophe losses of $28.8 million in the quarter narrowed from $35.8 million incurred in the year-ago quarter.
Underwriting income was a record $274 million. The consolidated combined ratio (a measure of underwriting profitability) was 87.8, improving 230 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 19.2% year over year to $2.1 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines, workers' compensation, commercial automobile, and professional liability. The combined ratio improved 300 bps to 87.6.
Net premiums written in the Reinsurance & Monoline Excess segment increased 9.6% year over year to $339 million on higher premiums at casualty reinsurance and monoline excess. The combined ratio deteriorated 200 bps to 89.4.
Financial Update
W.R. Berkley exited the first quarter with total assets worth $32.2 billion, up 0.6% from year-end 2021. Debt decreased 13% from 2021 end to $2.8 billion.
Book value per share increased 3.2% from 2021 end to $25.89 as of Mar 31, 2022.
Cash flow from operations was $477.7 million in the first quarter of 2022, up 53.6% year over year.
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while that of The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI Corp.’s first-quarter 2022 operating earnings of $1.43 per share, beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. Gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 basis points (bps) year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.
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W.R. Berkley (WRB) Q1 Earnings Beat, Revenues Miss Estimates
W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2022 operating income of $1.10 per share beat the Zacks Consensus Estimate of 92 cents by 19.6%. The bottom line improved 27.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business and exposure growth and a reduction in the expense ratio.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley Corporation price-consensus-eps-surprise-chart | W.R. Berkley Corporation Quote
Behind the Headlines
W.R. Berkley’s net premiums written were a record $2.4 billion, up 18% year over year, primarily driven by strong rate increases in nearly all lines of business and exposure growth.
Operating revenues came in at $2.6 billion, up 23.8% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line however missed the consensus estimate by 1.3%
Investment income increased 9% year over year to $173.5 million as investment funds continued to outperform and fixed-maturity income benefited from higher yields.
Total expenses increased 17.3% to $2.2 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, interest expenses and expenses from non-insurance businesses.
The loss ratio improved 110 basis points (bps) to 59.5 while the expense ratio improved 120 bps to 28.3.
Catastrophe losses of $28.8 million in the quarter narrowed from $35.8 million incurred in the year-ago quarter.
Underwriting income was a record $274 million. The consolidated combined ratio (a measure of underwriting profitability) was 87.8, improving 230 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 19.2% year over year to $2.1 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines, workers' compensation, commercial automobile, and professional liability. The combined ratio improved 300 bps to 87.6.
Net premiums written in the Reinsurance & Monoline Excess segment increased 9.6% year over year to $339 million on higher premiums at casualty reinsurance and monoline excess. The combined ratio deteriorated 200 bps to 89.4.
Financial Update
W.R. Berkley exited the first quarter with total assets worth $32.2 billion, up 0.6% from year-end 2021. Debt decreased 13% from 2021 end to $2.8 billion.
Book value per share increased 3.2% from 2021 end to $25.89 as of Mar 31, 2022.
Cash flow from operations was $477.7 million in the first quarter of 2022, up 53.6% year over year.
Return on equity expanded 2100 bps to 35.5%.
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 Some Other P&C Insurers
Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies (TRV - Free Report) and RLI Corporation (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings, while that of The Progressive Corporation (PGR - Free Report) missed the mark.
Travelers reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14% and increased 54.6% year over year. Total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income but missed the consensus estimate. Travelers’ combined ratio deteriorated 530 bps year over year to 91.3.
RLI Corp.’s first-quarter 2022 operating earnings of $1.43 per share, beat the Zacks Consensus Estimate by 40.2% and improved 64.4% from the prior-year quarter. Operating revenues were $287 million, up 17.1% year over year and beat the Zacks Consensus Estimate by 0.8%. Gross premiums written increased 22% year over year to $359.2 million. The combined ratio improved 900 basis points (bps) year over year to 77.9.
Progressive’s first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24 and declined 34.9% from the year-ago quarter. Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. Progressive’s combined ratio deteriorated 520 bps from the prior-year quarter to 94.7.