Updated Research Report on W.R. Berkley Corp. - Analyst Blog

On Mar 20, 2014, we issued an updated research report on W.R. Berkley Corporation WRB.   

 

W.R. Berkley Corp. reported fourth-quarter 2013 core operating earnings of 85 cents per share, 8 cents ahead of the Zacks Consensus Estimate. Earnings were also up 33% year over year.

 

The earnings beat came on the back of higher premiums written, pricing increases outpacing loss cost trends and a lower share count.

 

W.R. Berkley Corp. has maintained a trend of premium growth for the past several quarters mainly owing to its start-up units. In 2006 (when the soft market cycle started), the company commenced several new units to take advantage of the eventual market turn.

 

With new units continuing to grow and established businesses no longer losing volume (retention rate was 80% for eight successive quarters), overall growth is visible. This consistent expansion positions the company well to benefit from the improving market conditions.

 

In addition to the start-up units, W.R. Berkley Corp.'s International business segment is also showing impressive growth, outperforming other segments.

 

The company is also experiencing rate increases for the past few quarters, which should drive top-line growth going forward.

 

W.R. Berkley Corp. maintains a solid balance sheet with sufficient liquidity and strong cash flow. Its shareholder-friendly capital management strategy has enabled the company to announce dividend increases and raise share buybacks from time to time.   

 

However, exposure to catastrophe and low interest rates remain as near-term headwinds for the company. 

 

W.R. Berkley Corp. currently retains a Zacks Rank #3 (Hold). Better-ranked stocks Alleghany Corp. Y, AmTrust Financial Services, Inc. AFSI and Atlas Financial Holdings, Inc. AFH, all with a Zacks Rank #1 (Strong Buy), are worth considering.