W.R. Berkley Corporation (WRB Quick QuoteWRB – Free Report) has been favored by investors on the back of higher premiums, lower claims frequency in certain lines of business and sufficient liquidity.
Growth Projections
The Zacks Consensus Estimate for W.R. Berkley’s 2023 earnings is pegged at $4.70 per share, indicating a 7.3% increase from the year-ago reported figure on 9.9% higher revenues of $12.05 billion. The consensus estimate for 2024 earnings is pegged at $5.74 per share, indicating a 22.1% increase from the year-ago reported figure on 7% higher revenues of $12.91 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 3.7% and 3.4% north, respectively, in the past 30 days. This should instill investors’ confidence in the stock.
Earnings Surprise History
WRB has a decent earnings surprise history. It surpassed earnings estimates in three of the last four quarters and missed in one, the average being 4.35%.
Zacks Rank & Price Performance
W.R. Berkley currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 4.7% against the industry’s rise of 12.1%.
Style Score
The company has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Business Tailwinds
The Insurance business of W.R. Berkley is well-poised to grow, given higher premiums from other liability, short-tail lines, workers’ compensation, commercial automobile and professional liability.
Higher premiums at casualty reinsurance, property reinsurance and monoline excess are likely to drive the performance of the Reinsurance & Monoline Excess segment. Underwriting income should gain from the compounding rate improvement above loss cost trends along with growth in exposure and lower claims frequency in certain lines of business.
WRB is one of the largest commercial lines property and casualty insurance providers. It has a solid balance sheet with sufficient liquidity and robust cash flows that support growth initiatives and effective capital deployment.
Net investment income witnessed a CAGR of 5.4% in the past eight years (2015-2022). The combination of high-quality fixed maturity portfolio, along with solid operating cash flow, enabled the insurer to invest at higher interest rates in the first nine months of 2023. The metric should continue to improve as WRB also invests in alternative assets, such as private equity fund and direct real estate opportunities.
WRB has an impressive Value Score of A, reflecting an attractive valuation of the stock.
W.R. Berkley maintains a solid balance sheet with sufficient liquidity and strong cash flows. The company has more than 58 straight quarters of favorable reserve development.
A strong capital position helps WRB deploy capital via share repurchases, special dividends and dividend hikes that enhance shareholders’ value. In September 2023, the board approved a special cash dividend of 50 cents per share. Its dividend yield of 0.6% is higher than the industry average of 0.3%. In addition, the board has increased the share repurchase authorization to 15 million shares.
W.R. Berkley has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.