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Why Is W.R. Berkley (WRB) Up 2.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have added about 2.9% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
W.R. Berkley's Q4 Earnings Beat on Higher Premiums
W.R. Berkley Corporation’s fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year.
The insurer benefited from higher premiums, a rise in the core portfolio, increased underwriting income and an improvement in the loss ratio.
Behind the Headlines
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion.
Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%.
Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. The figure was higher than our estimate of $276 million.
Total expenses increased 7.3% to $2.7 billion, primarily due to higher losses and loss expenses and other operating costs and expenses. The figure matched our estimate.
The loss ratio improved 60 basis points (bps) to 60, while the expense ratio deteriorated 60 bps year over year to 28.4.
Catastrophe losses of $32 million in the quarter were wider than the $30.8 million incurred in the year-ago quarter.
Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio (a measure of underwriting profitability) remained flat year over year to 88.4.
Segment Details
Net premiums written at the Insurance segment increased 12.2% year over year to $2.4 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines, workers' compensation and auto. The figure was lower than our estimate of $2.5 billion.
The combined ratio deteriorated 20 bps to 89.4.
Net premiums written in the Reinsurance & Monoline Excess segment increased 10.2% year over year to $309.3 million on higher premiums at property reinsurance and monoline excess. The figure was higher than our estimate of $307.4 million.
The combined ratio improved 160 bps to 81.2.
Full-Year Highlights
Operating income of $4.92 per share beat the Zacks Consensus Estimate by 1.8%. The bottom line improved 12.3% year over year.
Operating revenues came in at $12 billion, up 10.3% year over year, on the back of higher net premiums earned as well as improved net investment income and increased revenues from non-insurance businesses. The top line came in line with the consensus estimate.
W.R. Berkley’s net premiums written were $10.9 billion, up 9.5% year over year. The figure was lower than our estimate of $11.1 billion.
Pre-tax underwriting income was $1.1 billion. The consolidated combined ratio was 89.7, which deteriorated 40 bps year over year. Financial Update
W.R. Berkley exited 2023 with total assets worth $37.2 billion, up 9.8% from year-end 2022. Senior notes and other debt decreased 0.04% from 2022 end levels to $1.8 billion.
Book value per share increased 14% from 2022 end levels to $29.06 as of Dec 31, 2023.
Cash flow from operations was $2.9 million in 2023, up 14% year over year. Operating return on equity expanded 380 bps to 23.2%.
Capital Deployment
WRB returned $1 billion, consisting of $537.2 million of share repurchases, $390 million of special dividends and $111.4 million of regular dividends.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, W.R. Berkley has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise W.R. Berkley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is W.R. Berkley (WRB) Up 2.9% Since Last Earnings Report?
It has been about a month since the last earnings report for W.R. Berkley (WRB - Free Report) . Shares have added about 2.9% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
W.R. Berkley's Q4 Earnings Beat on Higher Premiums
W.R. Berkley Corporation’s fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year.
The insurer benefited from higher premiums, a rise in the core portfolio, increased underwriting income and an improvement in the loss ratio.
Behind the Headlines
W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion.
Operating revenues came in at $3.2 billion, up 9.3% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 1.3%.
Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. The figure was higher than our estimate of $276 million.
Total expenses increased 7.3% to $2.7 billion, primarily due to higher losses and loss expenses and other operating costs and expenses. The figure matched our estimate.
The loss ratio improved 60 basis points (bps) to 60, while the expense ratio deteriorated 60 bps year over year to 28.4.
Catastrophe losses of $32 million in the quarter were wider than the $30.8 million incurred in the year-ago quarter.
Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio (a measure of underwriting profitability) remained flat year over year to 88.4.
Segment Details
Net premiums written at the Insurance segment increased 12.2% year over year to $2.4 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines, workers' compensation and auto. The figure was lower than our estimate of $2.5 billion.
The combined ratio deteriorated 20 bps to 89.4.
Net premiums written in the Reinsurance & Monoline Excess segment increased 10.2% year over year to $309.3 million on higher premiums at property reinsurance and monoline excess. The figure was higher than our estimate of $307.4 million.
The combined ratio improved 160 bps to 81.2.
Full-Year Highlights
Operating income of $4.92 per share beat the Zacks Consensus Estimate by 1.8%. The bottom line improved 12.3% year over year.
Operating revenues came in at $12 billion, up 10.3% year over year, on the back of higher net premiums earned as well as improved net investment income and increased revenues from non-insurance businesses. The top line came in line with the consensus estimate.
W.R. Berkley’s net premiums written were $10.9 billion, up 9.5% year over year. The figure was lower than our estimate of $11.1 billion.
Pre-tax underwriting income was $1.1 billion. The consolidated combined ratio was 89.7, which deteriorated 40 bps year over year.
Financial Update
W.R. Berkley exited 2023 with total assets worth $37.2 billion, up 9.8% from year-end 2022. Senior notes and other debt decreased 0.04% from 2022 end levels to $1.8 billion.
Book value per share increased 14% from 2022 end levels to $29.06 as of Dec 31, 2023.
Cash flow from operations was $2.9 million in 2023, up 14% year over year.
Operating return on equity expanded 380 bps to 23.2%.
Capital Deployment
WRB returned $1 billion, consisting of $537.2 million of share repurchases, $390 million of special dividends and $111.4 million of regular dividends.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, W.R. Berkley has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise W.R. Berkley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.