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

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

W.R. Berkley Q1 Earnings Beat, Revenues Miss Estimates

W.R. Berkley Corporation’s 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.

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%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, W.R. Berkley has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, W.R. Berkley has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.