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W.R. Berkley Corp Earnings Beat on Higher Premiums in Q3

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W.R. Berkley Corp.WRB reported third-quarter 2015 operating income of 91 cents per share, which surpassed the Zacks Consensus Estimate by 8.3%. Earnings, however, declined 14% year over year.

The quarter experienced higher premiums, though investment income continued to witness a decline. Underwriting profits improved in the quarter. Loss and expense ratios were in line with the company's projections.

WR Berkley Corporation - Earnings Surprise | FindTheBest

Including after-tax net investment gains, W.R. Berkley recorded net income of $1.18 per share, down 16.9% year over year.

Total revenues came in at $1.8 billion, up 1.1% year over year. The increase was attributable to higher premiums earned, increase in Insurance service fees and revenues from wholly owned investees.

W.R. Berkley's net written premiums for the quarter was $1.5 billion, which reflects an increase of 3% year over year. This increase came on the back of higher premiums written by the company's Domestic segment. The improvement, however, was partially offset by lower premiums written in the International and Reinsurance Segments.

W.R. Berkley's total expense also increased 4.5% year over year to $1.6 billion. This was primarily due to a rise in loss and loss expenses, other operating costs and expenses and expenses from wholly owned investees.

Consolidated combined ratio (a measure of underwriting profitability) deteriorated by 20 basis points (bps) year over year to 93.7%.

Segment Details

Net premiums written in W.R. Berkley's Domestic Insurance segment increased 5.7% year over year to $1.2 billion. Major lines of business, such as Workers Compensation and Professional Liability, contributed to the rise. Combined ratio deteriorated 110 bps to 92% in the quarter. The segment incurred catastrophe loss of $4.6 million, narrower than $7.4 million in the year-ago quarter.

Net premiums written in the International Insurance segment decreased 4.7% year over year to $163.6 million. The decline was due to modifications in foreign exchange rates. Combined ratio improved 300 bps year over year to 100.4%. The segment incurred catastrophe loss of $1.9 million, narrower than $7.2 million in the year-ago quarter.

In the Global Reinsurance segment, a competitive reinsurance market led to a 7.3% decline in net premiums written to $158.7 million in the quarter attributable to soft market conditions in both the U.S. and overseas. Combined ratio improved 60 bps year over year to 98.1%. Catastrophe loss in the segment was $1 million compared with $0.3 million in the year-earlier quarter.

Financial Update

W.R. Berkley's return on equity decreased 410 bps year over year to 13.3%.

The company exited the quarter with total assets worth $21.7 billion, up 0.1% from the 2014-end level.

Book value per share increased 2.7% from year-end 2014 to $37.18 as of Sep 30, 2015.

Cash flow from operations decreased 26.5% year over year to $287.5 million.

Share Repurchase Update

During the reported quarter, the company returned $5.5 million via share buybacks, taking the year-to-date tally to $223.7 million.

Zacks Rank and Performance of Other P&C Insurers

W.R. Berkley carries a Zacks Rank #4 (Sell).

The bottom line at each of RLI Corporation RLI , The Travelers Companies Inc. TRV and Progressive Corp. PGR has outperformed their respective Zacks Consensus Estimate in the third quarter.

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RLI CORP (RLI): Free Stock Analysis Report

TRAVELERS COS (TRV): Free Stock Analysis Report

BERKLEY (WR) CP (WRB): Free Stock Analysis Report

PROGRESSIVE COR (PGR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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