W.R. Berkley Corporation’s (NYSE:WRB) first-quarter 2019 operating income of 94 cents per share beat the Zacks Consensus Estimate of 61 cents by 54.1%. Also, the bottom line improved 40.3% year over year.
The company witnessed steady net premium growth on the back of rate improvement. It noted that rate increases outpaced loss cost trend in many lines of business.
Behind the Headlines
W.R. Berkley’s net premiums written for the quarter under review were $1.7 billion, up 2.7% 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. Also, the top line beat the consensus estimate by 3.7%.
Investment income declined 9.2% year over year to $158.3 million.
Total expenses escalated 1.6% to $1.7 billion, primarily on higher losses and loss expenses, costs from non-insurance businesses plus interest expenses.
Catastrophe loss totaled $12.7 million in the quarter, wider than $7.4 million loss incurred in year-ago quarter. Consolidated combined ratio (a measure of underwriting profitability) was 94.3%, improving 30 basis points (bps) year over year.
W.R. Berkley Corporation Price, Consensus and EPS Surprise
Segment Details
Net premiums written at the Insurance segment grew 1.6% year over year to $1.5 billion in the quarter, driven by higher premiums at workers' compensation and other liability. Combined ratio deteriorated 20 bps to 94%.
Net premiums written in the Reinsurance & Monoline Excess segment increased 10.5% year over year to $212.2 million on higher casualty reinsurance premium. Combined ratio improved 450 bps to 96.8%.
Financial Update
W.R. Berkley exited the first quarter with total assets worth $25.6 billion, up 2.8% from year-end 2018.
Book value per share improved 5.9% to $31.47 on Mar 31, 2019, from prior-quarter end.
Cash flow from operations totaled $78.3 million in the quarter against cash outflow of $20 million a year ago.
The company’s return on equity expanded 100 bps to 13.3%.
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 first-quarter results so far, The Travelers Companies, Inc. (NYSE:TRV) , The Progressive Corporation (NYSE:PGR) and RLI Corp. (NYSE:RLI) beat the respective Zacks Consensus Estimate for earnings.
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The Progressive Corporation (PGR): Free Stock Analysis Report
W.R. Berkley Corporation (WRB): Free Stock Analysis Report
RLI Corp. (RLI): Free Stock Analysis Report
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
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Zacks Investment Research