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W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2022 operating income of $1.01 per share beat the Zacks Consensus Estimate of 82 cents by 23.2%. The bottom line improved 14.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, 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 10.8% year over year, as market conditions remained favorable for most lines of business.
Operating revenues came in at $2.8 billion, up 16.7% 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 2.7%
Core net investment income increased 51% year over year, benefiting from higher yields.
Total expenses increased 16.5% to $2.4 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, and expenses from non-insurance businesses.
The loss ratio deteriorated 170 basis points (bps) to 64.1 while the expense ratio remained flat year over year at 28.
Catastrophe losses of $57.9 million in the quarter widened from about $44 million incurred in the year-ago quarter.
Pre-tax underwriting income was $192.1 million. The consolidated combined ratio (a measure of underwriting profitability) was 92.1, down 170 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 11.5% year over year to $2.2 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 deteriorated 190 bps to 91.2.
Net premiums written in the Reinsurance & Monoline Excess segment increased 6.8% year over year to $339.7 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The combined ratio deteriorated 20 bps to 98.6.
Financial Update
W.R. Berkley exited the third quarter with total assets worth $33.1 billion, up 3.2% from year-end 2021. Debt decreased 13% from 2021 end to $2.8 billion.
Book value per share decreased 4.8% from 2021 end to $23.88 as of Sep 30, 2022.
Cash flow from operations was $767.6 million in the third quarter of 2022, down 7.4% year over year.
Operating return on equity expanded 130 bps to 16.9%.
WRB repurchased shares worth $6.6 million in the quarter.
Of the insurance industry players that have reported third-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) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.
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W.R. Berkley (WRB) Q3 Earnings, Revenues Beat, Rise Y/Y
W.R. Berkley Corporation’s (WRB - Free Report) third-quarter 2022 operating income of $1.01 per share beat the Zacks Consensus Estimate of 82 cents by 23.2%. The bottom line improved 14.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, 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 10.8% year over year, as market conditions remained favorable for most lines of business.
Operating revenues came in at $2.8 billion, up 16.7% 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 2.7%
Core net investment income increased 51% year over year, benefiting from higher yields.
Total expenses increased 16.5% to $2.4 billion, primarily due to higher losses and loss expenses, other operating costs and expenses, and expenses from non-insurance businesses.
The loss ratio deteriorated 170 basis points (bps) to 64.1 while the expense ratio remained flat year over year at 28.
Catastrophe losses of $57.9 million in the quarter widened from about $44 million incurred in the year-ago quarter.
Pre-tax underwriting income was $192.1 million. The consolidated combined ratio (a measure of underwriting profitability) was 92.1, down 170 bps year over year.
Segment Details
Net premiums written at the Insurance segment increased 11.5% year over year to $2.2 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 deteriorated 190 bps to 91.2.
Net premiums written in the Reinsurance & Monoline Excess segment increased 6.8% year over year to $339.7 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The combined ratio deteriorated 20 bps to 98.6.
Financial Update
W.R. Berkley exited the third quarter with total assets worth $33.1 billion, up 3.2% from year-end 2021. Debt decreased 13% from 2021 end to $2.8 billion.
Book value per share decreased 4.8% from 2021 end to $23.88 as of Sep 30, 2022.
Cash flow from operations was $767.6 million in the third quarter of 2022, down 7.4% year over year.
Operating return on equity expanded 130 bps to 16.9%.
WRB repurchased shares worth $6.6 million in the quarter.
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 third-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) missed the mark.
Travelers’ third-quarter 2022 core income of $2.20 per share beat the Zacks Consensus Estimate by 24.3% but decreased 15.4% year over year. Total revenues increased 6.8% from the year-ago quarter to $9.4 billion and beat the Zacks Consensus Estimate by 2.5%.
Net written premiums increased 110% year over year to $9.2 billion. Underwriting gain of $115 million increased 53.3% year over year in the reported quarter. The combined ratio improved 40 bps year over year to 98.2.
RLI’s third-quarter 2022 operating earnings of 50 cents per share beat the Zacks Consensus Estimate by 51.5% but declined 23.1% from the prior-year quarter. Operating revenues were $312.7 million, up 15.3% year over year but missed the Zacks Consensus Estimate by 1.3%.
Gross premiums written increased 13.3% year over year to $403.8 million. Underwriting income of $8.8 million decreased 35.8% while the combined ratio deteriorated 240 bps year over year to 97.
Progressive’s earnings per share of 49 cents missed the Zacks Consensus Estimate of $1.24 as well as our estimate of $1.38. The bottom line, however, improved more than threefold from 14 cents earned in the year-ago quarter.
Net premiums written were $13 billion in the quarter, up 5% from $11.7 billion a year ago but missed our estimate of $14.2 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 120 bps from the prior-year quarter’s level to 99.2.