What happened
Shares of commercial property and casualty insurer W.R. Berkley Corporation (WRB -1.55%) traded nearly 10% lower as of 12:51 p.m. ET today after the company reported earnings results for the first quarter of 2023.
So what
W.R. Berkley reported diluted earnings per share of $1.06 on total revenue of close to $2.9 billion in the first quarter. Earnings missed estimates, while revenue beat.
The company wrote net premiums of $2.57 billion, which is up about 6.7% year over year. The company's combined ratio, which looks at an insurance firm's incurred expenses and losses divided by earned premiums, was 90.6%. That's up from 87.8% in the first quarter of 2022, implying that the insurer has seen more losses.
"The company is off to a strong start with the first quarter of 2023 despite the significant catastrophe losses facing the industry. Our scale, specialization and disciplined management approach positioned us well to report an annualized return on equity of 17.4%," W.R. Berkley's EVP and CFO, Richard Baio, said on the company's earnings call.
Now what
I think investors might be concerned about the rising combined ratio and the uncertain environment for commercial properties, with losses expected to rise across the industry.
But the company still generated a 17.4% return on equity, and a combined ratio of 90.6% isn't necessarily bad by any means. Excluding catastrophes, the ratio would have been 87.7%. Given management and the company's track record, I am not overly concerned here.
