A month has gone by since the last earnings report for W.R. Berkley (WRB). Shares have added about 9.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is W.R. Berkley due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
W.R. Berkley Q2 Earnings Top on Solid Underwriting
W.R. Berkley Corporation’s second-quarter 2024 operating income of $1.04 per share beat the Zacks Consensus Estimate of 91 cents by 13%. The bottom line improved 36.8% year over year.
The insurer benefited from continued strong underwriting and improved investment income.
Behind the Headlines
W.R. Berkley’s net premiums written were a record $3.1 billion, up 11.2% year over year. The figure was higher than our estimate of $2.8 billion.
Operating revenues came in at $3.4 billion, up 14.8% year over year, on the back of higher net premiums earned as well as improved net investment income. The top line beat the consensus estimate by 0.3%.
Net investment income surged 51.8% to a record $372.1 million, driven by an increase in fixed-maturity income from a growing portfolio with higher yields. The figure was higher than our estimate of $302 million. The Zacks Consensus Estimate was $331 million.
Total expenses increased 11.3% to $2.8 billion, primarily due to higher losses and loss expenses and other operating costs and expenses as well as expenses from non-insurance businesses. The figure matched our estimate.
The loss ratio deteriorated 110 basis points (bps) to 62.6, while the expense ratio deteriorated 40 bps year over year to 28.5.
Catastrophe losses of $89.7 million in the quarter were wider than $53.5 million incurred in the year-ago quarter.
The consolidated combined ratio (a measure of underwriting profitability) deteriorated 150 basis points year over year to 91.1. The Zacks Consensus Estimate was 91.
Segment Details
Net premiums written at the Insurance segment increased 12.2% year over year to $2.8 billion in the quarter, primarily due to higher premiums from other liability, short-tail lines, workers' compensation and auto. The figure was higher than our estimate of $2.7 billion.
The combined ratio deteriorated 150 bps to 92.4. Our estimate was 90.5. The Zacks Consensus Estimate was 91.
Net premiums written in the Reinsurance & Monoline Excess segment increased 3.5% year over year to $316.3 million on higher premiums at property reinsurance and monoline excess. The figure was lower than our estimate of $324 million.
The combined ratio deteriorated 50 bps to 81.8. Our estimate was 88.9. The Zacks Consensus Estimate was 89.
Financial Update
W.R. Berkley exited the second quarter of 2024 with total assets worth $38.9 billion, up 4.8% from year-end 2023. Senior notes and other debt remained almost flat at $1.8 billion.
Book value per share increased 5.4% from 2023 end levels to $20.42 as of Jun 30, 2024.
Cash flow from operations was $881.3 million in the second quarter of 2024, up 24.4% year over year.
Operating return on equity expanded 400 bps to 22.4%.
Total capital returned to shareholders was $381.3 million, consisting of $223.8 million of share repurchases, $127 million of special dividends and $30.5 million of regular dividends.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 6.02% due to these changes.
VGM Scores
At this time, W.R. Berkley has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise W.R. Berkley has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
W.R. Berkley belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Selective Insurance (SIGI), has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Selective Insurance reported revenues of $1.19 billion in the last reported quarter, representing a year-over-year change of +14.2%. EPS of -$1.10 for the same period compares with $0.99 a year ago.
For the current quarter, Selective Insurance is expected to post earnings of $1.68 per share, indicating a change of +11.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -5.5% over the last 30 days.
Selective Insurance has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpW.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
