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W.R. Berkley (WRB) Q2 Earnings Top Estimates, Revenues Miss
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W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth that fueled continued strong underwriting performance as well as a surge in investment income.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley’s net premiums written were a record $2.8 billion, up 8.7% year over year as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion.
Operating revenues came in at $2.9 billion, up 9.4% 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 1.2%.
Net investment income surged 42.9% to a record $245.2 million, benefiting from higher yields. The Zacks Consensus Estimate for net investment income was $234 million while our estimate was $209 million.
Total expenses increased 10.8% to $2.5 billion, primarily due to higher losses and loss expenses, interest expense and other operating costs and expenses. Our estimate was $2.4 billion.
The loss ratio deteriorated 60 basis points (bps) to 61.5. Our estimate was pegged at 63.1. The expense ratio deteriorated 40 bps year over year to 28.1. The Zacks Consensus Estimate for expense ratio was 28.6 while our estimate was 28.2.
Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, in line with the Zacks Consensus Estimate. Our estimate for the combined ratio was 91.3.
Segment Details
Net premiums written at the Insurance segment increased 8.6% year over year to $2.5 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines and commercial automobile. Our estimate was $2.4 billion. The combined ratio deteriorated 240 bps to 91.1. Our estimate for the same was 91.7.
Net premiums written in the Reinsurance & Monoline Excess segment increased 9.6% year over year to $284.3 million on higher premiums at property reinsurance and monoline excess. Our estimate was $302.3 million. The combined ratio improved 910 bps to 78.7 versus our estimate of 88.
Financial Update
W.R. Berkley exited the quarter with total assets worth $35.3 billion, up 4.4% from year-end 2022.
Senior notes and other debt decreased 0.1% from 2022 end to $1.8 billion.
Book value per share increased 4.8% from 2022 end to $26.74 as of Jun 30, 2023.
Cash flow from operations was $708.7 million in the reported quarter, up 34.2% year over year.
Operating return on equity contracted 40 bps to 18.4%.
Capital Deployment
WRB returned $320.8 million to shareholders, consisting of $28.3 million of regular dividends and $292.5 million of share repurchases.
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
Travelers witnessed an underwriting gain of $781 million, up 38% year over year, driven by record net earned premiums of $9.2 billion and a consolidated underlying combined ratio, which improved 170 basis points. The combined ratio deteriorated 820 basis points (bps) year over year to 106.5 due to higher catastrophe losses and lower net favorable prior-year reserve development, partially offset by a lower underlying combined ratio.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
Policies in force were solid in the Personal Auto segment, increasing 17% from the year-ago month’s figure to 19.7 million. Special Lines improved 7% to 5.8 million.
Upcoming Release
RLI Corporation (RLI - Free Report) will report second-quarter 2023 results on Jul 24. The Zacks Consensus Estimate for the second quarter is pegged at $1.20, suggesting a decrease of 19.5% from the year-ago quarter’s reported figure.
RLI’s earnings beat estimates in the last four quarters.
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W.R. Berkley (WRB) Q2 Earnings Top Estimates, Revenues Miss
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2023 operating income of $1.14 per share beat the Zacks Consensus Estimate by 6.5%. The bottom line increased 1.8% year over year.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth that fueled continued strong underwriting performance as well as a surge in investment income.
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 $2.8 billion, up 8.7% year over year as market conditions remained favorable for most lines of business. Our estimate for the same was $2.7 billion.
Operating revenues came in at $2.9 billion, up 9.4% 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 1.2%.
Net investment income surged 42.9% to a record $245.2 million, benefiting from higher yields. The Zacks Consensus Estimate for net investment income was $234 million while our estimate was $209 million.
Total expenses increased 10.8% to $2.5 billion, primarily due to higher losses and loss expenses, interest expense and other operating costs and expenses. Our estimate was $2.4 billion.
The loss ratio deteriorated 60 basis points (bps) to 61.5. Our estimate was pegged at 63.1. The expense ratio deteriorated 40 bps year over year to 28.1. The Zacks Consensus Estimate for expense ratio was 28.6 while our estimate was 28.2.
Catastrophe losses totaled $53.5 million in the quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 100 basis points to 89.6, in line with the Zacks Consensus Estimate. Our estimate for the combined ratio was 91.3.
Segment Details
Net premiums written at the Insurance segment increased 8.6% year over year to $2.5 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines and commercial automobile. Our estimate was $2.4 billion. The combined ratio deteriorated 240 bps to 91.1. Our estimate for the same was 91.7.
Net premiums written in the Reinsurance & Monoline Excess segment increased 9.6% year over year to $284.3 million on higher premiums at property reinsurance and monoline excess. Our estimate was $302.3 million. The combined ratio improved 910 bps to 78.7 versus our estimate of 88.
Financial Update
W.R. Berkley exited the quarter with total assets worth $35.3 billion, up 4.4% from year-end 2022.
Senior notes and other debt decreased 0.1% from 2022 end to $1.8 billion.
Book value per share increased 4.8% from 2022 end to $26.74 as of Jun 30, 2023.
Cash flow from operations was $708.7 million in the reported quarter, up 34.2% year over year.
Operating return on equity contracted 40 bps to 18.4%.
Capital Deployment
WRB returned $320.8 million to shareholders, consisting of $28.3 million of regular dividends and $292.5 million of share repurchases.
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
The Travelers Companies (TRV - Free Report) reported second-quarter 2023 core income of 6 cents per share, which missed the Zacks Consensus Estimate of $2.27. The bottom line decreased 97.7% year over year, primarily attributable to higher-than-expected catastrophe loss.
Travelers’ total revenues increased 9.8% from the year-ago quarter to $10.1 billion, primarily driven by higher premiums. The top-line figure was almost in line with the Zacks Consensus Estimate.
Net written premiums increased 14% year over year to a record $10.3 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $9.1 billion.
Travelers witnessed an underwriting gain of $781 million, up 38% year over year, driven by record net earned premiums of $9.2 billion and a consolidated underlying combined ratio, which improved 170 basis points. The combined ratio deteriorated 820 basis points (bps) year over year to 106.5 due to higher catastrophe losses and lower net favorable prior-year reserve development, partially offset by a lower underlying combined ratio.
The Progressive Corporation’s (PGR - Free Report) second-quarter 2023 earnings per share of 50 cents missed the Zacks Consensus Estimate of 88 cents. The bottom line declined 47.4% year over year.
Net premiums earned grew 19% to $14.5 billion and beat our estimate of $12.9 billion as well as the Zacks Consensus Estimate of $14.3 billion. The combined ratio deteriorated 480 bps from the prior-year quarter’s level to 104.
Policies in force were solid in the Personal Auto segment, increasing 17% from the year-ago month’s figure to 19.7 million. Special Lines improved 7% to 5.8 million.
Upcoming Release
RLI Corporation (RLI - Free Report) will report second-quarter 2023 results on Jul 24. The Zacks Consensus Estimate for the second quarter is pegged at $1.20, suggesting a decrease of 19.5% from the year-ago quarter’s reported figure.
RLI’s earnings beat estimates in the last four quarters.