W.R. Berkley Corp.’s (NYSE:WRB) third-quarter 2016 operating income of 88 cents per share missed the Zacks Consensus Estimate by a penny. Earnings declined 4.3% year over year.
The increase in revenues was offset the rise in expenses, which in turn, lead to the underperformance.
Nonetheless, the company witnessed improved investment results in the quarter. Loss ratio and the expense ratio were in line with the company’s expectations.
Including net investment gains, net income came in at $1.72 per share, up 45.8% year over year.
Operational Update
W.R. Berkley’s net written premiums for the quarter were $1.6 billion, up 2.3% year over year. Higher premiums written at the Insurance segment led to the improvement.
Operating revenues came in at $1.8 billion, up 2% year over year. The top line beat the Zacks Consensus Estimate of $1.7 million.
Investment income grew 9.3% year over year.
Total expenses increased 3.4%, 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 20 basis points (bps) year over year to 93.3%.
Segment Details
Net premiums written in the Insurance segment inched up 2.6% year over year to $1.4 billion in the quarter. The increase was mainly driven by higher premiums written under other liability, commercial automobile and professional liability. Combined ratio in this segment deteriorated 10 bps year over year to 93.3%.
Net premiums written in the Reinsurance segment dipped 0.7% year over year to $157.6 million due to lower premiums written under casualty reinsurance. Combined ratio deteriorated by 150 bps to 99.6%.
Financial Update
W.R. Berkley exited the third quarter with total assets worth $23.3 billion, up 7.4% from year-end 2015.
Book value per share increased 8.5% from year-end 2015 to $40.48 as of Sep 30, 2016.
Cash flow from operations increased 37% year over year to $394.2 million.
The company’s return on equity increased 590 bps to 19.2%.
Capital Deployment
W.R. Berkley deployed $139 million in the quarter via share repurchases of $62 million and special and ordinary dividends of $77 million.
BERKLEY (WR) CP Price, Consensus and EPS Surprise
BERKLEY (WR) CP Price, Consensus and EPS Surprise | BERKLEY (WR) CP Quote
Zacks Rank and Performance of Other Insurers
W.R. Berkley carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players in the insurance industry that have reported their third-quarter earnings so far, earnings at Progressive Corp. (NYSE:PGR) and MGIC Investment Corp. (NYSE:MTG) beat their respective Zacks Consensus Estimate, while RLI Corp. (NYSE:RLI) missed the same.
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MGIC INVSTMT CP (MTG): Free Stock Analysis Report
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