W.R. Berkley (WRB) Misses Q3 EPS by 6c

W.R. Berkley (NYSE: WRB) reported Q3 EPS of $0.65, $0.06 worse than the analyst estimate of $0.71.

Third quarter highlights included:

• Average rate increases excluding workers' compensation were approximately 14.5%.
• The reported combined ratio was 93.7%. The accident year combined ratio before catastrophe losses was 89.8%.
• Catastrophes added 4.2 loss ratio points to the reported combined ratio, with no change in previously reported COVID-19 related losses.
• Gross and net premiums written increased 8.1% and 7.4%, respectively.
• Book value per share grew 3.7%, before dividends and share repurchases.
• Cash and liquid investments of more than $1.6 billion at the holding company.

The Company commented:

The Company reported strong third quarter 2020 results with a combined ratio of 93.7%, in spite of 4.2 points of catastrophe losses. Gross premiums written grew more than 8%, even with the economic disruption and extraordinary challenges COVID-19 presented. Rate increases continued to accelerate in response to rising loss costs and the extremely low interest rate environment. Growth and efficiency initiatives have helped drive our expense ratio to its lowest level in many years.

The Company continues to actively manage market exposure in its investment portfolio by increasing its allocation to high-quality short-term assets, including cash and cash equivalents, which has somewhat moderated fixed-maturity income. We will maintain this defensive position until the uncertainty in the financial markets and the economy begins to abate, and we find a more attractive entry point. Income from investment funds in the third quarter returned to a more normalized level.

The industry’s need for disciplined underwriting and additional rate has been reinforced by, among other factors, the global pandemic, the continued increase in the frequency of catastrophe losses, the ongoing impacts of social inflation and the low interest rate environment. We remain focused on profitable underwriting with low volatility, growth in attractive areas of the market, and total risk-adjusted returns in our investment portfolio.

Our Company is built to succeed in periods of uncertainty through a constant evaluation of risk and reward in all aspects of our business, and to excel in periods of market improvement. The momentum is building, and we are excited for the opportunity before us.

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

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