W.R. Berkley (WRB) Tops Q1 EPS by 28c, Revenues Beat

W.R. Berkley (NYSE: WRB) reported Q1 EPS of $0.94, $0.28 better than the analyst estimate of $0.66. Revenue for the quarter came in at $1.93 billion versus the consensus estimate of $1.9 billion.

First quarter highlights included:

• Annualized return on equity of 13.3%.
• Average rate increases excluding workers\' compensation were more than 6%.
• For the quarter, book value per share grew 6.2%, before dividends.
• The accident year combined ratio excluding catastrophe losses was 93.9%. The reported combined ratio was 94.3%, inclusive of 0.8 loss ratio points from catastrophes and an additional 0.9 loss ratio points from non-catastrophe weather.
• Investment income attributable to the core investment portfolio increased 5.6%(1).
• Net realized pre-tax gains and net unrealized pre-tax gains on equity securities of $66 million, net of performance-based compensation costs(2).

The Company commented:

We are pleased with the performance of the business in the first quarter of 2019, with solid performance in both underwriting and investments and an annualized return on equity of 13.3%.

Further rate improvement contributed to steady net premium growth. We believe our rate increases are currently outpacing loss cost trend in many lines of business. Given the potential for claims inflation, we believe this is appropriate and that for several lines of business it will persist for the foreseeable future. We continue to focus on improving our combined ratio by seeking additional rate and managing both volatility and expenses. As we see the potential for additional margin improvement, we expect this will lead to greater opportunities for further growth. We remain focused on underwriting profitability and will continue to emphasize areas of the business that offer better margins.

Growth in income from the core portfolio partially offset a reduction in investment fund income. Our $27 million of realized gains on sales of investments and $42 million of change in unrealized gains on equity securities reflect our focus on total return.

Our first quarter results are a solid start to the year. The industry appears to be grappling with the reality that rate adequacy is of paramount importance. Signs of rate movement and returning discipline may be early indicators that the moment the industry has been waiting for is coming to many parts of the business. We anticipate that these trends, and consequently our results, will further improve during the balance of the year.

For earnings history and earnings-related data on W.R. Berkley (WRB) click here.

You May Also Be Interested In

• Are we witnessing a fundamental or speculative rally in the S&P 500?
• SpaceX files for 555.56M share IPO at $135/sh
• Delta Air Lines: demand remains strong despite global uncertainty