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1. Company Snapshot

1.a. Company Description

W.R.Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally.


It operates in two segments, Insurance and Reinsurance & Monoline Excess.The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and general and professional liability lines.It also provides workers' compensation insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; specialty environmental products for contractors, consultants, and property owners and facilities operators; specialized insurance coverages for fine arts and jewelry exposures; umbrella and excess liability coverage products; and liquor liability and inland marine coverage for small to medium-sized insureds.


In addition, this segment offers directors and officers, and surety risk products, as well as products for technology, and life sciences and travel industries; cyber risk solutions; casualty, group life, and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services.The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance.W.


R.Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.

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1.b. Last Insights on WRB

The recent 3-month performance of W. R. Berkley Corporation was negatively impacted by escalating competition in the commercial property and casualty insurance market, leading to slower premium growth. Despite strong underwriting and investment gains, the company's operating earnings were affected by elevated catastrophe losses. Additionally, the company's premium growth is slowing due to increased competition and weaker pricing, which may impact its future earnings.

1.c. Company Highlights

2. W.R. Berkley Shines with Robust Q3 Earnings

W.R. Berkley Corporation reported excellent third-quarter results, with net income of $511 million or $1.28 per share, and operating income of $440 million or $1.10 per share, which beat analyst estimates of $1.07. The company's combined ratio was 90.9%, and the current accident year combined ratio ex cat was 88.4%. Net premiums earned reached a record $3.2 billion, with gross and net premiums written of $3.8 billion and $3.2 billion, respectively.

Publication Date: Oct -21

📋 Highlights
  • Return on Equity Surge:: 24.3% ROE, up 40% YoY, with $1.28 EPS from $511M net income.
  • Operating Income Growth:: 12% increase to $440M ($1.10 EPS), driven by 21% ROE.
  • Strong Premium Performance:: Record $3.2B net premiums earned; $3.8B gross written, $3.2B net written.
  • Capital Strength:: $9.8B stockholders' equity, 16.7% YoY growth, with 22.5% historic low leverage.
  • Reinsurance Market Position:: 88.4% accident year combined ratio ex cat; 52.6% loss ratio in Reinsurance/Monoline segments.

Segment Performance

The Insurance segment's quarterly accident year loss ratio ex cat was 60.9%, bringing the accident year combined ratio before cat to 89.3%. Reinsurance and monoline access segments had an accident year loss ratio ex cat of 52.6% and a strong accident year combined ratio before cats of 82.4%. The company's pretax quarterly net investment income grew to $351 million, driven by a 9.4% increase in its core portfolio.

Capital Position and Shareholder Returns

Stockholders' equity reached a record $9.8 billion, up 16.7% from the beginning of the year. The company's financial leverage has improved to historic low levels of 22.5%. Management highlighted that the company's capital position provides significant flexibility, with headroom to the tune of 10 digits according to rating agency models. They are generating capital more quickly than they can consume it and are open to returning excess capital to shareholders through dividends and share repurchases.

Growth Prospects and Market Conditions

W. Berkley discussed the current hard market and its effect on pricing, stating that it will be challenging for companies to reduce their pricing given the current supply-demand equation. The company took 7.6 points of rate in the quarter and feels good about its ability to keep getting rate and keeping up with trend. Analysts estimate next year's revenue growth at 6.6%.

Valuation

With a Price-to-Book Ratio of not available but a ROE of 28.66%, the company's valuation appears reasonable. The Dividend Yield is 1.79%, indicating a relatively stable return for shareholders. Given the company's strong financial performance and growth prospects, its valuation metrics appear to be in line with expectations.

3. NewsRoom

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AXQ Capital LP Has $298,000 Stake in W.R. Berkley Corporation $WRB

Nov -25

Source: defenseworld.net

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Ameritas Investment Partners Inc. Has $3.51 Million Holdings in W.R. Berkley Corporation $WRB

Nov -25

Source: defenseworld.net

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W.R. Berkley Corporation $WRB Stock Holdings Cut by America First Investment Advisors LLC

Nov -19

Source: defenseworld.net

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W. R. Berkley Corporation Names Hale Johnston President of Berkley Net

Nov -17

Source: businesswire.com

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Bruce Berkowitz's Strategic Moves: A Closer Look at The St. Joe Co's -2.43% Impact

Nov -14

Source: gurufocus.com

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Jefferies Group's Strategic Move: Vanguard Information Technology ETF Takes Center Stage

Nov -13

Source: gurufocus.com

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PGR vs. WRB: Which P&C Insurance Stock is a Smarter Investment?

Nov -07

Source: zacks.com

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TRV vs. WRB: Which Stock Is the Better Value Option?

Nov -04

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.81%)

6. Segments

Insurance

Expected Growth: 4.78%

W.R. Berkley Corporation's 4.78% growth in insurance is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on underwriting discipline, risk management, and investment income also contribute to its growth. Furthermore, a strong capital position and effective cost management enable the company to invest in digital capabilities, enhancing its competitiveness.

Reinsurance & Monoline Excess

Expected Growth: 5.0%

W. R. Berkley Corporation's Reinsurance & Monoline Excess segment growth of 5.0% is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic underwriting initiatives. Additionally, the company's strong capital position and disciplined risk management practices enable it to capitalize on profitable growth opportunities.

Corporate, Other and Eliminations

Expected Growth: 4.78%

Corporate segment growth driven by effective capital allocation and investment returns. Other segment growth fueled by expansion of fee-based services and strategic acquisitions. Eliminations growth attributed to increased intersegment transactions and reinsurance agreements, contributing to W. R. Berkley Corporation's overall 4.78% growth.

Reconciling Items

Expected Growth: 4.78%

W.R. Berkley's 4.78% growth is driven by a combination of factors, including a strong underwriting discipline, favorable reserve development, and a diversified portfolio of specialty insurance products. Additionally, the company's strategic investments in technology and data analytics have improved operational efficiency, enabling it to capitalize on emerging market opportunities.

7. Detailed Products

Commercial Insurance

W. R. Berkley Corporation offers a range of commercial insurance products, including property, casualty, and specialty insurance, to businesses of all sizes.

Professional Liability Insurance

The company provides professional liability insurance to professionals, such as doctors, lawyers, and accountants, to protect them from malpractice claims.

Workers' Compensation Insurance

W. R. Berkley Corporation offers workers' compensation insurance to employers to provide wage replacement and medical benefits to employees injured on the job.

Reinsurance

The company provides reinsurance to other insurance companies, helping them to manage their risk and increase their capacity to write new business.

Specialty Insurance

W. R. Berkley Corporation offers specialty insurance products, such as aviation, marine, and energy insurance, to businesses and individuals with unique risk exposures.

Personal Insurance

The company offers personal insurance products, including homeowners, auto, and umbrella insurance, to individuals and families.

8. W. R. Berkley Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for W. R. Berkley Corporation is moderate due to the presence of alternative insurance providers and financial institutions that offer similar products and services.

Bargaining Power Of Customers

The bargaining power of customers is low for W. R. Berkley Corporation as the company operates in a niche market with limited customer concentration, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for W. R. Berkley Corporation as the company relies on a diverse range of suppliers for its operations, but has some flexibility to negotiate prices and terms.

Threat Of New Entrants

The threat of new entrants is low for W. R. Berkley Corporation due to the high barriers to entry in the insurance industry, including regulatory hurdles and capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high for W. R. Berkley Corporation due to the competitive nature of the insurance industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 27.92%
Debt Cost 5.29%
Equity Weight 72.08%
Equity Cost 6.92%
WACC 6.47%
Leverage 38.73%

11. Quality Control: W. R. Berkley Corporation passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
WR Berkley

A-Score: 7.0/10

Value: 5.3

Growth: 7.9

Quality: 6.5

Yield: 4.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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Mercury General

A-Score: 6.8/10

Value: 7.3

Growth: 6.9

Quality: 6.6

Yield: 6.0

Momentum: 8.0

Volatility: 6.3

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Stock-Card
CNA Financial

A-Score: 6.8/10

Value: 6.9

Growth: 4.6

Quality: 6.1

Yield: 10.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
RLI

A-Score: 6.5/10

Value: 6.0

Growth: 6.9

Quality: 8.2

Yield: 7.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Markel

A-Score: 6.4/10

Value: 7.0

Growth: 7.2

Quality: 7.1

Yield: 0.0

Momentum: 8.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Loews

A-Score: 6.1/10

Value: 6.2

Growth: 6.8

Quality: 5.3

Yield: 0.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

66.93$

Current Price

66.94$

Potential

-0.00%

Expected Cash-Flows