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Why You Must Retain W.R. Berkley (WRB) in Your Portfolio

Shares of W.R. Berkley Corporation WRB gained 21.80% in last one year, outperforming the Zacks categorized Property and Casualty Insurance industry’s increase of 17.16%. We expect the stock to retain its momentum on the back of a number of positives.



W.R. Berkley has displayed sustained premium growth over a considerable period of time, primarily backed by its startup units. Furthermore, the company has substantially boosted its organic portfolio through addition of new units which focus on important parts of the U.S. economy. This apart, the company has a retention rate of about 80% for ten successive quarters. We expect the company to continue displaying growth supported by such positives.

Consistent expansion enables the company to benefit from the improving market conditions. Besides, addition of new businesses to the portfolio will help the company meet the ever changing demands of its clients and serve them better. We expect such acquisitions to not only accelerate the company’s growth but also have a positive impact on its operational performance.

The property and casualty insurer’s international business has also seen steady premium growth over many years, mainly in the emerging markets like United Kingdom, Continental Europe and Asia to name a few. Given its solid track record, we expect the company’s international segment to report higher premiums in future.

W.R. Berkley’s healthy capital position and an increasing international presence help it to continuously enhance shareholder value and drive long-term growth. The expected long-term earnings growth is pegged at 9%.

Exposure to catastrophe losses will however continue to pose risks for the company which may result in earnings volatility. In addition, a highly competitive global reinsurance market will put pressure on rates for the near term, thereby restricting growth.

Nonetheless, W.R. Berkley has a trailing 12-month return on equity (ROE) of 8.2%, higher than the industry average of 6.5%.

Zacks Rank

Currently, W.R. Berkley carries a Zacks Rank #3 (Hold). You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Stocks to Consider

Some better-ranked stocks from the same space include CNA Financial Corporation CNA, American Financial Group, Inc. AFG and First American Financial Corporation FAF. Each stock holds a Zacks Rank #2 (Buy).

CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.

American Financial provides property and casualty insurance products in the United States. The company delivered positive surprises in three of last four quarters with average beat of 11.47%.

First American Financial offers financial services. The company delivered positive surprises in all last four quarters with average beat of 14.12%.

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W.R. Berkley Corporation (WRB): Free Stock Analysis Report
 
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