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Why Is W.R. Berkley (WRB) Up 2.8% 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 2.8% in that time frame, outperforming 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 Q3 Earnings Surpass Estimates, Revenues Miss
W.R. Berkley Corporation’s third-quarter 2024 operating income of 93 cents per share beat the Zacks Consensus Estimate by 1.1%. The bottom line improved 3.3% year over year. The insurer benefited from continued strong underwriting and investment income.
Behind the Headlines
W.R. Berkley’s net premiums written were a record $3.1 billion, up 7.3% year over year. Our estimate was also $3.1 billion. Operating revenues came in at $3.4 billion, up 10.9% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line however missed the consensus estimate by 0.8%.
Net investment income surged 19.5% to a record $323.8 million, driven by an increase in fixed-maturity income. The figure was lower than our estimate of $382.1 million. The Zacks Consensus Estimate was pegged at $343 million. Total expenses increased 12.1% to $2.9 billion, primarily due to higher losses and loss expenses and other operating costs and expenses. The figure matched our estimate.
The loss ratio deteriorated 50 basis points (bps) to 62.4, while the expense ratio deteriorated 20 bps year over year to 28.5. Catastrophe losses of $978. million in the quarter were wider than $61.5 million incurred in the year-ago quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 70 basis points year over year to 90.9. The Zacks Consensus Estimate was 92.
WRB Segment Details
Net premiums written at the Insurance segment increased 7.6% year over year to $2.7 billion in the quarter, primarily due to higher premiums from other liability, professional liability and auto. The figure was in line with our estimate. The combined ratio deteriorated 50 bps to 91.5. Our estimate was 92.2. The Zacks Consensus Estimate was 92.
Net premiums written in the Reinsurance & Monoline Excess segment increased 5.5% year over year to $384 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The figure was higer than our estimate of $346 million.
The combined ratio deteriorated 140 bps to 81.8. Our estimate was 106.9. The Zacks Consensus Estimate was 107.
Financial Update
W.R. Berkley exited the third quarter of 2024 with total assets worth $40.4 billion, up 8.7% from year-end 2023. Senior notes and other debt remained almost flat at $1.8 billion. Book value per share increased 14.1% from 2023 end levels to $22.11 as of Sept. 30, 2024.
Cash flow from operations was $1.2 billion in the third quarter of 2024, up 15.2% year over year. Operating return on equity contracted 170 bps to 20%.
Total capital returned to shareholders was $138.3 million, consisting of $12.5 million of share repurchases, $95 million of special dividends and $30.5 million of regular dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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 an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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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Why Is W.R. Berkley (WRB) Up 2.8% 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 2.8% in that time frame, outperforming 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 Q3 Earnings Surpass Estimates, Revenues Miss
W.R. Berkley Corporation’s third-quarter 2024 operating income of 93 cents per share beat the Zacks Consensus Estimate by 1.1%. The bottom line improved 3.3% year over year. The insurer benefited from continued strong underwriting and investment income.
Behind the Headlines
W.R. Berkley’s net premiums written were a record $3.1 billion, up 7.3% year over year. Our estimate was also $3.1 billion. Operating revenues came in at $3.4 billion, up 10.9% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line however missed the consensus estimate by 0.8%.
Net investment income surged 19.5% to a record $323.8 million, driven by an increase in fixed-maturity income. The figure was lower than our estimate of $382.1 million. The Zacks Consensus Estimate was pegged at $343 million.
Total expenses increased 12.1% to $2.9 billion, primarily due to higher losses and loss expenses and other operating costs and expenses. The figure matched our estimate.
The loss ratio deteriorated 50 basis points (bps) to 62.4, while the expense ratio deteriorated 20 bps year over year to 28.5. Catastrophe losses of $978. million in the quarter were wider than $61.5 million incurred in the year-ago quarter. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 70 basis points year over year to 90.9. The Zacks Consensus Estimate was 92.
WRB Segment Details
Net premiums written at the Insurance segment increased 7.6% year over year to $2.7 billion in the quarter, primarily due to higher premiums from other liability, professional liability and auto. The figure was in line with our estimate.
The combined ratio deteriorated 50 bps to 91.5. Our estimate was 92.2. The Zacks Consensus Estimate was 92.
Net premiums written in the Reinsurance & Monoline Excess segment increased 5.5% year over year to $384 million on higher premiums at casualty reinsurance, property reinsurance and monoline excess. The figure was higer than our estimate of $346 million.
The combined ratio deteriorated 140 bps to 81.8. Our estimate was 106.9. The Zacks Consensus Estimate was 107.
Financial Update
W.R. Berkley exited the third quarter of 2024 with total assets worth $40.4 billion, up 8.7% from year-end 2023. Senior notes and other debt remained almost flat at $1.8 billion. Book value per share increased 14.1% from 2023 end levels to $22.11 as of Sept. 30, 2024.
Cash flow from operations was $1.2 billion in the third quarter of 2024, up 15.2% year over year. Operating return on equity contracted 170 bps to 20%.
Total capital returned to shareholders was $138.3 million, consisting of $12.5 million of share repurchases, $95 million of special dividends and $30.5 million of regular dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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 an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.