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W.R. Berkley (WRB) Up 2.9% Since Last Earnings Report: Can It Continue?
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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 Corporation’s first-quarter 2024 operating income of $1.56 per share beat the Zacks Consensus Estimate of $1.46 by 6.9%. The bottom line improved 56% 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 a record $2.9 billion, up 10.7% year over year. The figure was higher than our estimate of $2.8 billion. Operating revenues came in at $3.2 billion, up 11.6% 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 0.2%.
Net investment income surged 43.2% to a record $319.8 million, driven by a 63.2% increase in the core portfolio. The figure was higher than our estimate of $302 million.
Total expenses increased 6.5% 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 160 basis points (bps) to 6.2, while the expense ratio improved 20 bps year over year to 28.6.
Catastrophe losses of $30.5 million in the quarter were narrower than $47.9 million incurred in the year-ago quarter.
Pre-tax underwriting income increased 31.8% to $309 million. The consolidated combined ratio (a measure of underwriting profitability) improved 180 basis points year over year to 88.8.
Segment Details Net premiums written at the Insurance segment increased 11.9% 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 improved 100 bps to 90.2.
Net premiums written in the Reinsurance & Monoline Excess segment increased 4.2% year over year to $405.6 million on higher premiums at property reinsurance and monoline excess. The figure was higher than our estimate of $400.8 million.
The combined ratio improved 700 bps to 79.6.
Financial Update W.R. Berkley exited the first quarter of 2023 with total assets worth $37.9 billion, up 2% from year-end 2023. Senior notes and other debt remained almost flat at $1.8 billion. Book value per share increased 2.5% from 2023 end levels to $30.34 as of Mar 31, 2024.
Cash flow from operations was $746.2 million in the first quarter of 2023, up 67.6% year over year.
Operating return on equity expanded 630 bps to 22.7%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, W.R. Berkley has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, W.R. Berkley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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W.R. Berkley (WRB) Up 2.9% Since Last Earnings Report: Can It Continue?
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 Q1 Earnings, Revenues Top, Premiums Rise Y/Y
W.R. Berkley Corporation’s first-quarter 2024 operating income of $1.56 per share beat the Zacks Consensus Estimate of $1.46 by 6.9%. The bottom line improved 56% 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 a record $2.9 billion, up 10.7% year over year. The figure was higher than our estimate of $2.8 billion.
Operating revenues came in at $3.2 billion, up 11.6% 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 0.2%.
Net investment income surged 43.2% to a record $319.8 million, driven by a 63.2% increase in the core portfolio. The figure was higher than our estimate of $302 million.
Total expenses increased 6.5% 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 160 basis points (bps) to 6.2, while the expense ratio improved 20 bps year over year to 28.6.
Catastrophe losses of $30.5 million in the quarter were narrower than $47.9 million incurred in the year-ago quarter.
Pre-tax underwriting income increased 31.8% to $309 million. The consolidated combined ratio (a measure of underwriting profitability) improved 180 basis points year over year to 88.8.
Segment Details
Net premiums written at the Insurance segment increased 11.9% 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 improved 100 bps to 90.2.
Net premiums written in the Reinsurance & Monoline Excess segment increased 4.2% year over year to $405.6 million on higher premiums at property reinsurance and monoline excess. The figure was higher than our estimate of $400.8 million.
The combined ratio improved 700 bps to 79.6.
Financial Update
W.R. Berkley exited the first quarter of 2023 with total assets worth $37.9 billion, up 2% from year-end 2023. Senior notes and other debt remained almost flat at $1.8 billion.
Book value per share increased 2.5% from 2023 end levels to $30.34 as of Mar 31, 2024.
Cash flow from operations was $746.2 million in the first quarter of 2023, up 67.6% year over year.
Operating return on equity expanded 630 bps to 22.7%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, W.R. Berkley has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, W.R. Berkley has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.