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W.R. Berkley (WRB) Q4 Earnings Beat Estimates, Revenues Lag
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W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2018 operating income of 91 cents per share beat the Zacks Consensus Estimate of 76 cents by 19.7%. Also, the bottom line improved 19.7% year over year.
The company witnessed improved revenues, attributable to higher premiums, a favorable underwriting performance and an increase in net investment income.
Including net realized and unrealized pre-tax gains, net income declined 14.9% from the year-ago quarter to $1.03 per share.
Full-Year Highlights
For 2018, W.R. Berkley delivered operating income of $4 per share, which outpaced the Zacks Consensus Estimate of $3.84 per share and also soared nearly 70% year over year.
Moreover, total operating revenues of $7.2 billion missed the consensus mark of $7.5 billion but grew 2% year over year.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley’s net premiums written for the quarter under review were $1.5 billion, up 2.8% year over year. Higher premiums written at both the Insurance and Reinsurance segments contributed to this upside.
Operating revenues came in at $1.81 billion, up 1.8% year over year, mainly owing to higher net premiums earned and better net investment income. However, the top line missed the Zacks Consensus Estimate by 1.3%.
Investment income rose 7.1% year over year to $159.8 million.
Total expenses escalated 3.2% to $1.8 billion, primarily on higher losses plus loss expenses, expenses from non-insurance businesses plus interest expense.
Catastrophe loss totaled $45.5 million in the reported period. Consolidated combined ratio (a measure of underwriting profitability) came in at 95.9%, deteriorating 100 basis points (bps) from the prior-year period.
Segment Details
Net premiums written at the Insurance segment grew 2.9% year over year to $1.4 billion in the quarter under consideration. This increase was attributable to higher premiums written under other liability, short-tail lines, commercial automobile as well as professional liability. Combined ratio in this segment deteriorated 30 bps year over year to 94.7%.
Net premiums written in the Reinsurance segment inched up 0.8% year over year to $128.1 million owing to substantially higher premiums written under casualty reinsurance. Combined ratio improved 910 bps to 109.3%.
Financial Update
W.R. Berkley exited the fourth quarter with total assets worth $24.9 billion, up 2.5% from the year-end 2017.
Book value per share inched up 0.1% to $44.57 as of Dec 31, 2018 from the level as of Dec 31, 2017.
Cash flow from operations for the quarter under discussion totaled $202 million, up 6.9% from the prior-year period.
The company’s return on equity deteriorated 250 bps to 9.8%.
Share Repurchase Update
In the reported quarter, the company bought back 0.3 million shares of its common stock worth $17.9 million.
In the quarter under review, the company returned capital worth $97 million to shareholders, which comprised $79 million as ordinary and special dividends and $18 million of share buyback.
Among other players from the insurance industry having reported fourth-quarter earnings so far, the bottom line of MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat the respective Zacks Consensus Estimate while that of The Progressive Corporation (PGR - Free Report) missed the same.
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W.R. Berkley (WRB) Q4 Earnings Beat Estimates, Revenues Lag
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2018 operating income of 91 cents per share beat the Zacks Consensus Estimate of 76 cents by 19.7%. Also, the bottom line improved 19.7% year over year.
The company witnessed improved revenues, attributable to higher premiums, a favorable underwriting performance and an increase in net investment income.
Including net realized and unrealized pre-tax gains, net income declined 14.9% from the year-ago quarter to $1.03 per share.
Full-Year Highlights
For 2018, W.R. Berkley delivered operating income of $4 per share, which outpaced the Zacks Consensus Estimate of $3.84 per share and also soared nearly 70% year over year.
Moreover, total operating revenues of $7.2 billion missed the consensus mark of $7.5 billion but grew 2% year over year.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley Corporation Price, Consensus and EPS Surprise | W.R. Berkley Corporation Quote
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.5 billion, up 2.8% year over year. Higher premiums written at both the Insurance and Reinsurance segments contributed to this upside.
Operating revenues came in at $1.81 billion, up 1.8% year over year, mainly owing to higher net premiums earned and better net investment income. However, the top line missed the Zacks Consensus Estimate by 1.3%.
Investment income rose 7.1% year over year to $159.8 million.
Total expenses escalated 3.2% to $1.8 billion, primarily on higher losses plus loss expenses, expenses from non-insurance businesses plus interest expense.
Catastrophe loss totaled $45.5 million in the reported period. Consolidated combined ratio (a measure of underwriting profitability) came in at 95.9%, deteriorating 100 basis points (bps) from the prior-year period.
Segment Details
Net premiums written at the Insurance segment grew 2.9% year over year to $1.4 billion in the quarter under consideration. This increase was attributable to higher premiums written under other liability, short-tail lines, commercial automobile as well as professional liability. Combined ratio in this segment deteriorated 30 bps year over year to 94.7%.
Net premiums written in the Reinsurance segment inched up 0.8% year over year to $128.1 million owing to substantially higher premiums written under casualty reinsurance. Combined ratio improved 910 bps to 109.3%.
Financial Update
W.R. Berkley exited the fourth quarter with total assets worth $24.9 billion, up 2.5% from the year-end 2017.
Book value per share inched up 0.1% to $44.57 as of Dec 31, 2018 from the level as of Dec 31, 2017.
Cash flow from operations for the quarter under discussion totaled $202 million, up 6.9% from the prior-year period.
The company’s return on equity deteriorated 250 bps to 9.8%.
Share Repurchase Update
In the reported quarter, the company bought back 0.3 million shares of its common stock worth $17.9 million.
In the quarter under review, the company returned capital worth $97 million to shareholders, which comprised $79 million as ordinary and special dividends and $18 million of share buyback.
Zacks Rank
W.R. Berkley carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry having reported fourth-quarter earnings so far, the bottom line of MGIC Investment Corporation (MTG - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) beat the respective Zacks Consensus Estimate while that of The Progressive Corporation (PGR - Free Report) missed the same.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>