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W.R. Berkley (WRB) Q2 Earnings Beat Estimates, Revenues Miss
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W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2019 operating income of 82 cents per share beat the Zacks Consensus Estimate of 64 cents by 28.1%. Also, the bottom line improved 26.2% year over year on higher pre-tax underwriting profits and net investment income.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, up 7.3% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.
Operating revenues came in at $1.9 billion, up 5.4% year over year, mainly owing to higher net premiums earned and investment income. However, the top line missed the consensus estimate by 3%.
Investment income increased 22.5% year over year to $188.3 million, driven by better-than-average investment fund performance.
Total expenses increased 4% to $1.7 billion, primarily on higher losses and loss expenses, costs from non-insurance businesses plus interest expenses.
Catastrophe loss totaled $25.5 million in the quarter, reflecting an increase of 88.1% year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.9%, up 100 basis points (bps) year over year.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
Net premiums written at the Insurance segment grew 5.6% year over year to $1.6 billion in the quarter, driven by higher premiums at commercial automobile, professional liability, other liability and short-tail lines. Combined ratio improved 150 bps to 93.8%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 27.3% year over year to $168.9 million on higher casualty reinsurance, monoline excess and property reinsurance premium. Combined ratio deteriorated 380 bps to 95.2%.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $26.5 billion, up 6.4% from year-end 2018.
Book value per share improved 10.3% from 2018 end to $31.36 as of Jun 30, 2019.
Cash flow from operations totaled $324.3 million in the first half of 2019, up 132.7% year over year.
The company’s return on equity expanded 260 bps to 15.9%.
The company returned $112 million to shareholders in the reported quarter, including $92 million of special dividends.
Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies, Inc. (TRV - Free Report) missed the same.
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W.R. Berkley (WRB) Q2 Earnings Beat Estimates, Revenues Miss
W.R. Berkley Corporation’s (WRB - Free Report) second-quarter 2019 operating income of 82 cents per share beat the Zacks Consensus Estimate of 64 cents by 28.1%. Also, the bottom line improved 26.2% year over year on higher pre-tax underwriting profits and net investment income.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, up 7.3% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.
Operating revenues came in at $1.9 billion, up 5.4% year over year, mainly owing to higher net premiums earned and investment income. However, the top line missed the consensus estimate by 3%.
Investment income increased 22.5% year over year to $188.3 million, driven by better-than-average investment fund performance.
Total expenses increased 4% to $1.7 billion, primarily on higher losses and loss expenses, costs from non-insurance businesses plus interest expenses.
Catastrophe loss totaled $25.5 million in the quarter, reflecting an increase of 88.1% year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.9%, up 100 basis points (bps) year over year.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
W.R. Berkley Corporation price-consensus-eps-surprise-chart | W.R. Berkley Corporation Quote
Segment Details
Net premiums written at the Insurance segment grew 5.6% year over year to $1.6 billion in the quarter, driven by higher premiums at commercial automobile, professional liability, other liability and short-tail lines. Combined ratio improved 150 bps to 93.8%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 27.3% year over year to $168.9 million on higher casualty reinsurance, monoline excess and property reinsurance premium. Combined ratio deteriorated 380 bps to 95.2%.
Financial Update
W.R. Berkley exited the second quarter with total assets worth $26.5 billion, up 6.4% from year-end 2018.
Book value per share improved 10.3% from 2018 end to $31.36 as of Jun 30, 2019.
Cash flow from operations totaled $324.3 million in the first half of 2019, up 132.7% year over year.
The company’s return on equity expanded 260 bps to 15.9%.
The company returned $112 million to shareholders in the reported quarter, including $92 million of special dividends.
Zacks Rank
W.R. Berkley currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings. However, The Travelers Companies, Inc. (TRV - Free Report) missed the same.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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