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W.R. Berkley (WRB) Q4 Earnings Miss Estimates, Down Y/Y
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W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2016 operating income of 82 cents per share missed the Zacks Consensus Estimate of 83 cents by 1.2%. Moreover, the bottom line deteriorated 7.9% year over year.
Increase in revenues was offset by the rise in expenses, which led to the underperformance. Nonetheless, the company witnessed improved investment results in the quarter. The underlying loss ratio remained stable.
Including net investment gains, net income came in at $1.20 per share, up 41.2% year over year.
Full-Year Highlights
W.R. Berkley’s 2016 operating income of $3.40 per share missed the Zacks Consensus Estimate of $3.42. Earnings declined 0.9% year over year. Net income of $4.68 climbed 20.9% year over year.
Revenues of $6.9 billion improved 4.6% year over year.
Behind Q4 Headlines
W.R. Berkley’s net written premiums for the quarter were $1.5 billion, up 0.7% year over year. Higher premiums written at the Insurance segment resulted in the improvement.
Operating revenues came in at $1.78 billion, up 6.5% year over year. The top line also beat the Zacks Consensus Estimate of 1.75 billion.
Investment income jumped 24.8% year over year.
Total expenses increased 5.1% to $1.7 billion, primarily due to higher losses and loss expenses, interest expenses as well as other operating costs and expenses.
Consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 basis points (bps) year over year to 94.9%.
Segment Details
Net premiums written in the Insurance segment inched up 0.9% year over year to $1.4 billion in the quarter. The increase was mainly driven by higher premiums written under other liability, worker’ compensation, short-tail lines, and professional liability. Combined ratio in this segment deteriorated 120 bps year over year to 93.9%.
Net premiums written in the Reinsurance segment dipped 1.2% year over year to $144.6 million due to lower premiums written under casualty reinsurance. Combined ratio deteriorated 690 bps to 103.4%.
Financial Update
W.R. Berkley exited the fourth quarter with total assets worth $23.4 billion, up 7.5% from year-end 2015.
Book value per share increased 11.6% from year-end 2015 to $41.65 as of Dec 31, 2016.
Cash flow from operations plunged 53.3% year over year to $121.9 million.
The company’s return on equity improved 370 bps to 13.3%.
Capital Deployment
In 2016, W.R. Berkley deployed $316 million via share repurchases of $132 million as well as special and ordinary dividends of $184 million.
Business Update
During the fourth quarter, the property and casualty (P&C) insurer established two businesses – Berkley Cyber Risk Solutions and Berkley Transactional.
In addition, the sale of a portion of the company’s investment in HealthEquity, Inc. (HQY - Free Report) resulted in realized pre-tax gain of $68 million and pre-tax unrealized gain, recognized in equity, of $351 million on its remaining shares.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate.
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W.R. Berkley (WRB) Q4 Earnings Miss Estimates, Down Y/Y
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2016 operating income of 82 cents per share missed the Zacks Consensus Estimate of 83 cents by 1.2%. Moreover, the bottom line deteriorated 7.9% year over year.
Increase in revenues was offset by the rise in expenses, which led to the underperformance. Nonetheless, the company witnessed improved investment results in the quarter. The underlying loss ratio remained stable.
Including net investment gains, net income came in at $1.20 per share, up 41.2% year over year.
Full-Year Highlights
W.R. Berkley’s 2016 operating income of $3.40 per share missed the Zacks Consensus Estimate of $3.42. Earnings declined 0.9% year over year. Net income of $4.68 climbed 20.9% year over year.
Revenues of $6.9 billion improved 4.6% year over year.
Behind Q4 Headlines
W.R. Berkley’s net written premiums for the quarter were $1.5 billion, up 0.7% year over year. Higher premiums written at the Insurance segment resulted in the improvement.
Operating revenues came in at $1.78 billion, up 6.5% year over year. The top line also beat the Zacks Consensus Estimate of 1.75 billion.
Investment income jumped 24.8% year over year.
Total expenses increased 5.1% to $1.7 billion, primarily due to higher losses and loss expenses, interest expenses as well as other operating costs and expenses.
Consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 basis points (bps) year over year to 94.9%.
Segment Details
Net premiums written in the Insurance segment inched up 0.9% year over year to $1.4 billion in the quarter. The increase was mainly driven by higher premiums written under other liability, worker’ compensation, short-tail lines, and professional liability. Combined ratio in this segment deteriorated 120 bps year over year to 93.9%.
Net premiums written in the Reinsurance segment dipped 1.2% year over year to $144.6 million due to lower premiums written under casualty reinsurance. Combined ratio deteriorated 690 bps to 103.4%.
Financial Update
W.R. Berkley exited the fourth quarter with total assets worth $23.4 billion, up 7.5% from year-end 2015.
Book value per share increased 11.6% from year-end 2015 to $41.65 as of Dec 31, 2016.
Cash flow from operations plunged 53.3% year over year to $121.9 million.
The company’s return on equity improved 370 bps to 13.3%.
Capital Deployment
In 2016, W.R. Berkley deployed $316 million via share repurchases of $132 million as well as special and ordinary dividends of $184 million.
Business Update
During the fourth quarter, the property and casualty (P&C) insurer established two businesses – Berkley Cyber Risk Solutions and Berkley Transactional.
In addition, the sale of a portion of the company’s investment in HealthEquity, Inc. (HQY - Free Report) resulted in realized pre-tax gain of $68 million and pre-tax unrealized gain, recognized in equity, of $351 million on its remaining shares.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley Corporation Price, Consensus and EPS Surprise | W.R. Berkley Corporation Quote
Zacks Rank
Currently, W.R. Berkley holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among the other players from the insurance industry that have reported their fourth-quarter earnings so far, the bottom line at MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat their respective Zacks Consensus Estimate.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank.Be among the very first to see it>>