NYSE$WRB

W R Berkley Corporation · Q4 2019 earnings

Q4 2019 earnings · · Investor relations

Briefing

W. R. Berkley reported growth in gross premiums and an improving market.

W. R. Berkley Corporation reported fourth quarter growth in gross premiums written of 10.1%. The company saw an improving market with rate increases accelerating to approximately 9% excluding workers’ compensation.

  • Gross and net premiums written increased 10.1% and 9.3%, respectively.
  • Average rate increases excluding workers' compensation were approximately 9%.
  • Underwriting income increased 71.1% to $114.7 million.
  • Total capital returned to shareholders was $176 million, including $158 million of ordinary and special dividends and $18 million of share repurchases.

Headline financials

Total Revenue

$1.98B

Previous: $1.95B+1.2%
EPS (adj)

$0.27

Previous: $0.31-12.9%
Gross premiums written

$2.03B

No prior period
Net premiums written

$1.66B

No prior period
GAAP Combined ratio

93.3%

No prior period
Accident year combined ratio excluding catastrophe losses

92.3%

No prior period
Current accident year losses from catastrophes

$20.5M

No prior period
Capital Expenditures

$58.7M

Previous: $14.3M+310.8%
Free Cash Flow

$290M

Previous: $263M+10.1%
Net Income

$119M

Previous: $132M-9.9%
Operating Income

$147M

No prior period
Gross Profit

-$384M

Previous: -$427M+9.9%
Cash & Equivalents

$1.38B

Previous: $818M+69.3%
Total Assets

$26.6B

Previous: $24.9B+7.0%
Stock-Based Comp

$10.8M

Previous: $8.06M+34.4%

Revenue & EPS history

W. R. Berkley · Revenue · Quarterly

$1.98B

Q4 2019+1.2%vs Q4 2018
Beat estimate in 12 of 16 quarters(75%)
ActualEstimate

Revenue by segment

W. R. Berkley · $1.72B total across 2 segments · Q4 2019

  • Insurance
    $1.52B
  • Reinsurance & Monoline Excess
    $193M

Forward guidance

W. R. Berkley is confident that the Company is well positioned to continue to deliver superior value to its shareholders in 2020.

Tailwinds

  • Rate increases accelerated, which is the natural progression in a hardening market, to approximately 9% excluding workers’ compensation.
  • Rate increases remain robust, we expect continued opportunities to grow the top line.
  • Focus on investment portfolio’s total return.
  • Belief that alternative investments will continue to produce above-average long-term returns and remain a core part of our investment strategy.
  • The market is at a point where those companies that have appropriately managed their businesses through the cycle will be able to grow meaningfully in this improving pricing environment.

Headwinds

  • Fourth quarter was challenging for alternative investments.
  • Cyclical nature of the property casualty industry.
  • Impact of significant competition, including new alternative entrants to the industry.
  • Long-tail and potentially volatile nature of the insurance and reinsurance business.
  • Investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments.

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q4 2019

Historical avgQ4 2019

+0.1%

Avg return

Earnings day

+0.6%

Avg return

5 days after

+2.8%

Avg return

30 days after

57%

39 / 69 earnings

Positive

+8.4%

Q4 2023

Best reaction

-8.5%

Q1 2023

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026-0.5%+1.2%+3.3%
Q4 2025+0.4%+2.5%+7.0%
Q3 2025+2.2%+2.1%+5.2%
Q2 2025-1.1%+1.5%+3.2%
Q1 2025+5.2%+4.7%+7.2%
Q4 2024+3.2%+2.3%+6.7%
Q3 2024-4.5%-5.1%-0.5%
Q2 2024+1.3%+4.9%+11.8%
Q1 2024-6.7%-8.1%-5.5%
Q4 2023+8.4%+5.7%+11.1%
Q3 2023+5.5%+3.2%+12.3%
Q2 2023+1.6%+0.2%+2.2%
Q1 2023-8.5%-8.3%-8.2%
Q4 2022-3.1%-1.8%-7.1%
Q3 2022-3.2%+2.7%+4.2%
Q2 2022-1.6%-0.2%+6.2%
Q1 2022-1.0%-2.2%+1.5%
Q4 2021+2.8%+4.2%+10.7%
Q3 2021+4.8%+4.3%+2.3%
Q2 2021-2.2%-2.9%-0.2%
Q1 2021-0.3%+0.7%-2.8%
Q4 2020-6.7%-5.9%+5.6%
Q3 2020+6.4%+7.4%+9.2%
Q2 2020+0.8%+0.9%-5.1%
Q1 2020-7.2%-9.1%+0.9%
Q4 2019+1.6%+2.7%-2.2%
Q3 2019+1.3%-2.1%-4.4%
Q2 2019+3.1%+5.7%+9.3%
Q1 2019+4.6%+5.1%+6.5%
Q4 2018+2.6%+3.5%+11.4%
Q3 2018-0.5%+0.8%+6.2%
Q2 2018-0.5%+1.0%+4.0%
Q1 2018+1.9%+1.5%+2.9%
Q4 2017+1.8%+2.3%-5.3%
Q3 2017+0.4%-0.7%-5.2%
Q2 2017-3.0%-3.2%-6.0%
Q1 2017+0.3%-0.0%-0.1%
Q4 2016-0.3%+0.8%+5.5%
Q3 2016+2.3%+1.4%+9.9%
Q2 2016-0.4%-1.3%-1.0%
Q1 2016+1.9%
Q4 2015+0.5%
Q3 2015+2.3%
Q2 2015-2.8%
Q1 2015+0.3%
Q4 2014-2.4%
Q3 2014+3.4%
Q2 2014+0.5%
Q1 2014+2.8%
Q4 2013+0.7%
Q3 2013-1.7%
Q2 2013-3.5%
Q1 2013-0.7%
Q4 2012-1.0%
Q3 2012+1.9%
Q2 2012-2.1%
Q1 2012+0.7%
Q4 2011-0.7%
Q3 2011+2.0%
Q2 2011-7.5%
Q1 2010+1.2%
Q1 2011+3.1%
Q4 2010-0.9%
Q3 2010-3.2%
Q3 2009-3.2%
Q4 2009+0.6%
Q2 2010+0.6%
Q4 2008+0.6%
Q2 2009+0.6%

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