W.R. Berkley Corp.
) reported third-quarter core operating earnings of 61 cents per
share, beating the Zacks Consensus Estimate by 7 cents. The
earnings beat came on the back of higher premium written, pricing
gains, higher investment income and a lower share count. Earnings
were also up 18% year over year.
On a GAAP basis, net income surged 32% year over year to 71
cents per share.
Revenue, in the quarter, came in at $1.42 billion, up 11% year
over year. The year-over-year increase was attributable to higher
premiums earned, investment income, insurance fee service and
Berkley's net written premium for the quarter was
approximately $1.28 billion, an increase of 13.3% year over year.
The company saw broad-based growth with each of its operating
segments reporting higher premium.
Net investment income was $116.0 million in the quarter, up
1.8% year over year.
Total expenses also increased 9.3% year over year to $1.29
billion due to an increase in loss and loss expenses, other
operating costs, and interest expenses.
Berkley recorded a combined ratio of 95.8%, better than 99 .3%
in the prior-year quarter.
The Specialty segment's net premium written escalated 18.2%
year over year to $452.0 million. Combined ratio improved 330
basis points to 94.5% in the quarter.
Net premiums written in the Regional segment climbed 6.5% year
over year to $295.0 million. Combined ratio improved
substantially to 93.1% from 110.1% in the year-ago period.
The Alternative Markets reported a 17% increase in net
premiums written to $205.2 million in the quarter. Combined ratio
remained unchanged compared with the prior year quarter's level
Net premiums written in the Reinsurance segment increased 8.3%
year over year to $123.1 million. Combined ratio improved 430
basis points year over year to 98.1%.
The International segment recorded net premiums written growth
of 12.5% year over year to $200.5 million. Combined ratio
remained in line with the year-ago period at 99.1%.
Book value per share, a measure of net worth, increased to
$31.81 from $28.75 per share, at the end of 2011. Return on
equity increased 180 basis points year over year to 10.2%,
signifying improved profitability.
Berkley repurchased 3.3 million shares of its common stock at
an average cost of $37.25 per share.
Berkley has maintained its trend of beating earnings estimates
in the reported quarter as well. The company has positioned
itself well by forming several new units over the past few years.
Premiums written for its core business have increased and the new
units are accruing to earnings. Average renewal rates are on the
rise and so is the price trend.
Berkley's balance sheet is one of its major strengths. The
company has maintained its practice of increasing yearly
dividends. In our view, Berkley is well poised to return value to
its shareholders over the long term.
Berkley currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
are also maintaining our long-term 'Neutral' recommendation on
Last week, Berkley's peer
The Travelers Companies
) reported operating earnings of $2.22 per share, outshining the
Zacks Consensus Estimate of $1.61 per share
TRAVELERS COS (TRV): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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