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W.R. Berkley (WRB) Q2 Earnings and Revenues Top Estimates
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W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2022 operating income of $1.12 per share beat the Zacks Consensus Estimate of 84 cents by 33.3%. The bottom line improved 43.6% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business and exposure growth and an improvement in the expense ratio.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley’s net premiums written were a record $2.6 billion, up 16.9% year over year, as market conditions remained favorable for most lines of business with the majority of businesses witnessing growth, particularly in the E&S and specialty markets.
Operating revenues came in at $2.7 billion, up 24.1% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 4.8%
Core net investment income increased 29.7% year over year, benefiting from higher yields.
Total expenses increased 14.7% to $2.3 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 20 basis points (bps) to 60.9 while the expense ratio improved 300 bps to 27.4.
Catastrophe losses of $57.9 million in the quarter widened from about $44 million incurred in the year-ago quarter.
Underwriting income improved 32.6% year over year to $268.2 million. The consolidated combined ratio (a measure of underwriting profitability) was 88.6, improving 110 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 16.6% year over year to $2.3 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 120 bps to 88.7.
Net premiums written in the Reinsurance & Monoline Excess segment increased 19.1% year over year to $259.5 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The combined ratio improved 80 bps to 87.8.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $32.7 billion, up 2% from year-end 2021. Debt decreased 13.1% from 2021 end to $2.8 billion.
Book value per share decreased 2.1% from 2021 end to $24.56 as of Mar 31, 2022.
Cash flow from operations was $528 million in the second quarter of 2022, up 37.2% year over year.
Operating return on equity expanded 490 bps to 18.8%.
Of the insurance industry players that have reported second-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 The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter. The combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%. Underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago. Net premiums earned grew 13% to $12.1 billion. The combined ratio improved 90 bps from the prior-year quarter’s level to 95.6.
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W.R. Berkley (WRB) Q2 Earnings and Revenues Top Estimates
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2022 operating income of $1.12 per share beat the Zacks Consensus Estimate of 84 cents by 33.3%. The bottom line improved 43.6% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business and exposure growth and an improvement 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 $2.6 billion, up 16.9% year over year, as market conditions remained favorable for most lines of business with the majority of businesses witnessing growth, particularly in the E&S and specialty markets.
Operating revenues came in at $2.7 billion, up 24.1% year over year, on the back of higher net premiums earned as well as higher net investment income. The top line beat the consensus estimate by 4.8%
Core net investment income increased 29.7% year over year, benefiting from higher yields.
Total expenses increased 14.7% to $2.3 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 20 basis points (bps) to 60.9 while the expense ratio improved 300 bps to 27.4.
Catastrophe losses of $57.9 million in the quarter widened from about $44 million incurred in the year-ago quarter.
Underwriting income improved 32.6% year over year to $268.2 million. The consolidated combined ratio (a measure of underwriting profitability) was 88.6, improving 110 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 16.6% year over year to $2.3 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 120 bps to 88.7.
Net premiums written in the Reinsurance & Monoline Excess segment increased 19.1% year over year to $259.5 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The combined ratio improved 80 bps to 87.8.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $32.7 billion, up 2% from year-end 2021. Debt decreased 13.1% from 2021 end to $2.8 billion.
Book value per share decreased 2.1% from 2021 end to $24.56 as of Mar 31, 2022.
Cash flow from operations was $528 million in the second quarter of 2022, up 37.2% year over year.
Operating return on equity expanded 490 bps to 18.8%.
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 second-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 The Progressive Corporation (PGR - Free Report) met the mark.
Travelers’ core income of $2.57 per share beat the Zacks Consensus Estimate by 28.5% but decreased 26% year over year. Total revenues increased 7% year over year, primarily due to higher premiums and beat the consensus estimate by 1.8%. Net written premiums increased 11%, driven by strong retention rates and positive renewal premium changes across all the segments. Underwriting gain of $113 million decreased 65% year over year in the reported quarter. The combined ratio deteriorated 300 bps year over year to 98.3 due to higher catastrophe losses and a higher underlying combined ratio.
RLI’s operating earnings of $1.49 per share beat the Zacks Consensus Estimate by 6.1% and improved 36.7% from the prior-year quarter. Operating revenues were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%. Underwriting income of $56 million increased 53%, primarily due to the strong performance of the Property and Surety segments. The combined ratio improved 460 bps year over year to 80.2.
Progressive’s earnings per share of 95 cents came in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Net premiums written were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago. Net premiums earned grew 13% to $12.1 billion. The combined ratio improved 90 bps from the prior-year quarter’s level to 95.6.