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W.R. Berkley (WRB) Q4 Earnings Meet Estimates, Improve Y/Y

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W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2019 operating income of 72 cents per share came in line with the Zacks Consensus Estimate. The bottom line improved 18% year over year on higher premiums written.

Behind the Headlines

W.R. Berkley’s net premiums written were $1.6 billion, up 9.3% year over year. Higher premiums written at both the Insurance and Reinsurance & Monoline Excess segments contributed to this upside.

Operating revenues of $1.8 billion were up 3.8% year over year, mainly owing to higher net premiums earned. However, the same missed the consensus estimate by 5.8%.

Investment income decreased 14.1% year over year to $137.3 million due to weak performance of investment funds compared with strong returns in the year-ago quarter.

Total expenses inched up 2.3% to $1.8 billion, primarily on higher losses and loss expenses.

Catastrophe loss totaled $20.4 million in the quarter, reflecting a 55% plunge year over year. Consolidated combined ratio (a measure of underwriting profitability) was 93.3%, contracting 260 basis points 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 price-consensus-eps-surprise-chart | W.R. Berkley Corporation Quote

Segmental Details

Net premiums written at the Insurance segment grew 8.2% year over year to $1.5 billion in the quarter. Combined ratio contracted 290 bps year over year to 93%.

Net premiums written in the Reinsurance & Monoline Excess segment increased 18.9% year over year to $175.6 million. Combined ratio contracted 50 bps year over year to 95.5%.

Financial Update

W.R. Berkley exited the fourth quarter with total assets worth $26.6 billion, up 7% from the 2018-end figure.

Book value per share improved 11.4% from the level at 2018 end to $33.12 as of Dec 31, 2019.

Cash flow from operations totaled $348.7 million in the quarter, up 25.6% year over year.

The company’s return on equity contracted 100 bps year over year to 8.8%.

Share Repurchase Update

In the quarter under review, the company returned $158 million of ordinary and special dividends to its shareholders and bought back shares worth $18 million.

Full-Year Update

For 2019, return on equity was 12.5%.

The company’s total shareholder value addition came in at $326 million in the form of share buybacks and ordinary and special dividends.  

Net premiums written for the year increased 6.7% year over year to $6.8 billion.

Total revenues for 2019 summed $7.9 billion, up 2.7% year over year.

Zacks Rank and Performance of Other Players

W.R. Berkley sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Among other players from the insurance industry having reported fourth-quarter earnings so far, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) and RLI Corp. (RLI - Free Report) beat estimates while that of Principal Financial (PFG - Free Report) matched the Zacks Consensus Estimate.

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