W. R. Berkley (WRB) Q2 2024 earnings summary

Executive summary

• Achieved Q2 2024 net income to common stockholders of $372 million, up from $356 million in Q2 2023, with annualized return on equity of 20% and operating ROE of 22.4%.

• Net premiums written reached a record $3.13 billion, growing 11.2% year-over-year, led by the insurance segment.

• Net investment income surged 52% to a record $372 million, driven by higher yields, fixed maturity securities, and Argentine inflation-linked securities.

• Combined ratio was 91.1%, including 3.2 points from $90 million in catastrophe losses, mainly from U.S. severe convective storms.

• Book value per share increased to $20.42 as of June 30, 2024, up 4.7% in the quarter and 5.4% year-to-date.

Financial highlights

• Operating income rose 35% to $418 million ($1.04 per share, adjusted for stock split); diluted EPS was $0.92, up from $0.87.

• Net premiums earned increased 12% to $2.85 billion; net realized and unrealized investment losses were $60 million.

• Expense ratio increased 40 bps to 28.5% due to higher commissions and business mix.

• Effective tax rate was 23.7%, up from 22.2% year-over-year, and expected to remain stable.

• Operating cash flow increased 24.4% to $881.3 million; cash flow from operations for H1 2024 was $1.63 billion.

Outlook and guidance

• Management expects continued growth in net investment income as maturing securities are reinvested at higher rates, though Argentine inflation-linked income is expected to normalize.

• Premium growth is anticipated to continue, supported by high renewal rates and ongoing rate increases, especially outside workers' compensation.

• Expense ratio guidance remains comfortably below 30%.

• Projected top-line growth in the 10%-15% range, with high teens to low 20s returns.

• Anticipates continued strong returns for shareholders for the remainder of 2024 and beyond.