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W.R. Berkley (WRB) Q3 Earnings Miss, Revenues Beat Estimates

W.R. Berkley Corporation’s WRB third-quarter 2017 operating income of 24 cents per share missed the Zacks Consensus Estimate of 32 cents by 25%. The bottom line also plunged 73% year over year.

W.R. Berkley Corporation Price, Consensus and EPS Surprise

The company witnessed improved revenues largely owing to higher revenues from non-insurance business. Both Insurance as well as Reinsurance remained affected in the quarter. Expenses increased.    

Including net realized gains of $1.02 per share, net income slumped 26.7% from the year-ago quarter to $1.26 per share.

Behind the Headlines

W.R. Berkley’s net premiums written for the quarter were $1.6 billion, down 2.2% year over year. Lower premiums written at both the Insurance and Reinsurance segments resulted in the downside.

Operating revenues came in at $1.8 billion, up 6.6% year over year, driven by higher revenues from non-insurance business. The top line surpassed the Zacks Consensus Estimate of $1.7 billion.

Investment income declined 2.2% year over year to $142.5 million.

Total expenses increased 6.9% to $1.8 billion, primarily due to higher loss and loss expenses plus rise in expenses from non-insurance businesses.

Catastrophe losses totaled $119 million in the quarter. Consolidated combined ratio (a measure of underwriting profitability) deteriorated 710 basis points (bps) year over year to 101.1%.

Segment Details

Net premiums written in the Insurance segment slipped 0.8% year over year to $1.4 billion in the quarter. This decrease was attributable to lower premiums written under other liability, short-tail lines and professional liability. Combined ratio in this segment deteriorated 240 bps year over year to 95.6%.

Net premiums written in the Reinsurance segment declined 15% year over year to $138.8 million due to substantially lower premiums written under property reinsurance. Combined ratio deteriorated 5340 bps to 104.4%.

Financial Update

W.R. Berkley exited the third quarter with total assets worth $24.3 billion, up 3.8% from the year-end 2016.

Book value per share rose 7.1% from the year-end 2016 to $44.60 as of Sep 30, 2017.

Cash flow from operations plunged 24.7% year over year to $279 million.

The company’s return on equity deteriorated 640 bps to 12.8%.

Share Repurchase Update

The company bought back 0.4 million shares in the quarter for $23.4 million.

Zacks Rank

Currently, W.R. Berkley has a Zacks Rank #5 (Strong Sell).

You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom line at The Progressive Corporation PGR, The Travelers Companies, Inc. TRV and RLI Corp. RLI beat their respective Zacks Consensus Estimate.

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RLI Corp. (RLI): Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
W.R. Berkley Corporation (WRB): Free Stock Analysis Report
 
Progressive Corporation (The) (PGR): Free Stock Analysis Report
 
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