On Jun 12, we issued an updated research report on W.R. Berkley Corporation (WRB). The reinsurer/insurer reported first-quarter 2014 core operating earnings of $1.00 per share, handily beating the Zacks Consensus Estimate of 79 cents. Earnings also surged 35.1% year over year. Earnings beat came on the back of growth in premiums written, pricing increases, cost control and a lower share count.
W.R. Berkley Corp., one of nation’s premier commercial lines property and casualty insurance providers, has been sustaining premium growth over several quarters. The company has positioned itself well to take advantage of hardening in the insurance market by forming several new units over the past few years.
The reinsurer/insurer is witnessing an increase in premium rates in its core business. Also, new units are accretive to earnings. Average renewal rates are on the rise and so is the price trend. With new units continuing to grow and established businesses no longer losing volume (retention rate was 80% for past many quarters), overall growth is visible.
W.R. Berkley Corp.’s international business is also beefing up. Premium accrual in the international unit is mainly from the emerging markets of Asia, South America, and the Nordic region of Europe. We expect the company’s international segment to post increasing premium going forward
The company also maintains a solid balance sheet with sufficient liquidity. W.R. Berkley Corp.'s commendable dividend track makes it a favored stock among investors. In May, the company approved a 10% dividend hike, representing a new annualized rate of 44 cents per share.
However, low interest rates which lead to reduced investment yields are producing weaker returns on float, thereby hampering results.
W.R. Berkley Corp. currently retains a Zacks Rank #1 (Strong Buy).
Other Zacks Ranked #1 stocks such as Allied World Assurance Company Holdings, AG (AWH), AmTrust Financial Services, Inc. (AFSI) and Aspen Insurance Holdings Ltd. (AHL) are also worth considering.