Berkley (WRB): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report
Summary:
W.R. Berkley Corporation missed the Zacks Consensus Estimate and also declined year-over-year in fourth quarter 2014. Although the fourth-quarter underwriting results improved significantly year over year, the gains were offset by lower earnings from investment funds and from the service businesses. We believe that the insurance pricing cycle has entered a safe zone and the magnitude of the price rise will increase going forward. The company's investments in a number of startups since 2006 will enable it to take advantage of the improved market scenario. Its international business also has prospects for long-term earnings growth. The company's reserving discipline and a strong capital position are other its positives. However, exposure to catastrophes and a low interest rate environment are some headwinds. We thus maintain our Neutral recommendation on the shares.
Overview:
Founded in 1967 and based in Greenwich, CT., W.R. Berkley Corp. is a Fortune 500 company. It is one of the nation's premier commercial lines property casualty insurance providers. It offers a variety of insurance services from reinsurance, to workers comp third party administrators (TPAs). The company used to reports its results via five operating segments Specialty, Regional and Alternative Markets, Reinsurance and International. During the first quarter of 2013, the company changed the aggregation of its business segments. All domestic insurance operating companies, previously included in the Specialty, Regional and Alternative Markets segments, were aggregated into the Insurance-Domestic segment all reinsurance operating companies were aggregated into the Reinsurance-Global segment and all international insurance companies were aggregated into the Insurance-International segment. Therefore, now the company's reporting segments are:
Insurance-Domestic (73% of net premium written in 2013) offers commercial insurance business, including excess and surplus lines and admitted lines, throughout the United States.
Insurance-International (14%) insurance business primarily in the United Kingdom, Continental Europe, South America, Canada, Scandinavia and Australia.
Reinsurance-Global (13%) reinsurance business on a facultative and treaty basis, primarily in the United States, United Kingdom, Europe, Australia, and the Asia-Pacific Region.
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