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W.R. Berkley (WRB) Gains 33% in a Year: What's Driving It?
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Shares of W.R. Berkley Corporation (WRB - Free Report) have gained 33% in a year compared with the industry's growth of 21.1%. The Finance sector and the Zacks S&P 500 index have risen 19.5% and 26.1%, respectively, in the said time frame. With a market capitalization of $20 billion, the average volume of shares traded in the last three months was 1.75 million.
Image Source: Zacks Investment Research
The rally was largely driven by higher premiums, lower claims frequency in certain lines of business, growth in exposure, effective capital deployment and sufficient liquidity.
This Zacks Rank #3 (Hold) insurer has a decent earnings surprise history. It surpassed earnings estimates in each of the last four quarters, the average being 9.81%.
W.R. Berkley has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for W.R. Berkley’s 2024 earnings per share indicates an increase of 18.2% from the year-ago reported number. The consensus estimate for revenues is pegged at $13.39 billion, implying a year-over-year improvement of 10.7%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 8.4% and 6.4%, respectively, from the corresponding 2024 estimates. Earnings have grown 24.3% in the past five years, better than the industry average of 10.5%.
The Zacks Consensus Estimate for 2025 earnings has moved 0.6% north, respectively, in the past 30 days, reflecting analysts’ optimism.
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 line 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 should continue to improve as WRB also invests in alternative assets, such as private equity funds and direct real estate opportunities. The combination of a high-quality fixed maturity portfolio, along with solid operating cash flow, enabled the insurer to invest at higher interest rates.
W.R. Berkley has a solid balance sheet with sufficient liquidity and strong cash flows, given its operational strength. A strong capital position enables the nation’s largest commercial line property casualty insurance provider to deploy capital via share repurchases, special dividends and dividend hikes that enhance shareholders' value.
In June 2024, the board approved a special cash dividend of 50 cents per share. The board also approved a 9.1% hike in annual cash dividend to 48 cents. The recent dividend hike is the 19th straight increase by the insurer. It also pays special dividends. Notably, WRB has continually paid dividends for nearly five decades.
In the first quarter of 2024, the operating return on equity expanded 630 basis points to 22.7. The company targets a return on equity of 15% over the long term.
WRB has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. The expected long-term earnings growth rate is 13.3%, outperforming the industry average of 10%.
However, catastrophe loss had a significant impact on the company’s results, inducing volatility in underwriting profitability. The losses stem from winter storms and wildfires. Exposure to catastrophe loss remains a concern as the unpredictability of a natural disaster and the occurrence of the same hampers results.
Root has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 34.09%. In the past year, ROOT has skyrocketed 491%.
The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
Skyward Specialty has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 30.45%. In the past year, SKWD has climbed 46.9%.
The Zacks Consensus Estimate for SKWD’s 2024 and 2025 earnings implies year-over-year growth of 31.7% and 9.8%, respectively.
RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%. In the past year, RLI has gained 4.4%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 18.4% and 3.8%, respectively.
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W.R. Berkley (WRB) Gains 33% in a Year: What's Driving It?
Shares of W.R. Berkley Corporation (WRB - Free Report) have gained 33% in a year compared with the industry's growth of 21.1%. The Finance sector and the Zacks S&P 500 index have risen 19.5% and 26.1%, respectively, in the said time frame. With a market capitalization of $20 billion, the average volume of shares traded in the last three months was 1.75 million.
Image Source: Zacks Investment Research
The rally was largely driven by higher premiums, lower claims frequency in certain lines of business, growth in exposure, effective capital deployment and sufficient liquidity.
This Zacks Rank #3 (Hold) insurer has a decent earnings surprise history. It surpassed earnings estimates in each of the last four quarters, the average being 9.81%.
W.R. Berkley has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Will the Bull Run Continue?
The Zacks Consensus Estimate for W.R. Berkley’s 2024 earnings per share indicates an increase of 18.2% from the year-ago reported number. The consensus estimate for revenues is pegged at $13.39 billion, implying a year-over-year improvement of 10.7%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 8.4% and 6.4%, respectively, from the corresponding 2024 estimates. Earnings have grown 24.3% in the past five years, better than the industry average of 10.5%.
The Zacks Consensus Estimate for 2025 earnings has moved 0.6% north, respectively, in the past 30 days, reflecting analysts’ optimism.
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 line 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 should continue to improve as WRB also invests in alternative assets, such as private equity funds and direct real estate opportunities. The combination of a high-quality fixed maturity portfolio, along with solid operating cash flow, enabled the insurer to invest at higher interest rates.
W.R. Berkley has a solid balance sheet with sufficient liquidity and strong cash flows, given its operational strength. A strong capital position enables the nation’s largest commercial line property casualty insurance provider to deploy capital via share repurchases, special dividends and dividend hikes that enhance shareholders' value.
In June 2024, the board approved a special cash dividend of 50 cents per share. The board also approved a 9.1% hike in annual cash dividend to 48 cents. The recent dividend hike is the 19th straight increase by the insurer. It also pays special dividends. Notably, WRB has continually paid dividends for nearly five decades.
In the first quarter of 2024, the operating return on equity expanded 630 basis points to 22.7. The company targets a return on equity of 15% over the long term.
WRB has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. The expected long-term earnings growth rate is 13.3%, outperforming the industry average of 10%.
However, catastrophe loss had a significant impact on the company’s results, inducing volatility in underwriting profitability. The losses stem from winter storms and wildfires. Exposure to catastrophe loss remains a concern as the unpredictability of a natural disaster and the occurrence of the same hampers results.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Root, Inc. (ROOT - Free Report) , Skyward Specialty Insurance Group, Inc. (SKWD - Free Report) and RLI Corp. (RLI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Root has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 34.09%. In the past year, ROOT has skyrocketed 491%.
The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
Skyward Specialty has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 30.45%. In the past year, SKWD has climbed 46.9%.
The Zacks Consensus Estimate for SKWD’s 2024 and 2025 earnings implies year-over-year growth of 31.7% and 9.8%, respectively.
RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%. In the past year, RLI has gained 4.4%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 18.4% and 3.8%, respectively.