W.R. Berkley WRB is well-poised for growth, given its sturdy insurance business, growing international business, sound capital position and prudent capital deployment.
Estimates for W.R. Berkley have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2019 earnings per share has moved 1.4% north while that for 2020 has moved up 0.7% in the said time frame. The company also has a solid track record of delivering positive earnings surprise in the last eight quarters, reflecting operational excellence.
Shares of W.R. Berkley have rallied 47.5% year to date, outperforming the industry’s increase of 6%.
This Zacks Rank #2 (Buy) property and casualty insurer’s return on equity was 10.6% in the trailing 12-month period, higher than the industry average of 6.8%. Return on equity is a profitability measure that identifies the company’s efficiency in utilizing its shareholders’ funds.
W.R. Berkley continues to expect growth from its insurance business, which contributed almost 89% of net premium written in the first half of 2019. Growth in insurance business has been driven by several new start-up units in varied business lines, supporting diversification benefits. Also, better pricing leads to premium growth.
Premium growth is also supported by its growing international business spread across United Kingdom, continental Europe, South America, Canada, Asia, Australia and Scandinavia.
The company’s investment income has been witnessing improvement driven by better-than-average performance of investment fund. It should continue to improve given the company’s investment in private equity fund and direct real estate opportunities.
W.R. Berkley’s solid balance sheet and steady cash flow aid it in efficient capital deployment. The company hikes dividend each year apart from paying out special dividend and buying back shares. In June 2019, the company approved a special dividend 50 cents (10th straight special dividend) and 10% hike in regular dividend, marking the 14th consecutive dividend hike. W.R. Berkley’s dividend yield of 0.6% betters the industry average of 0.4%, making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2019 and 2020 earnings per share is pegged at $2.86 and $2.92, indicating increase of nearly 7.1% and 2.1%, respectively from the year-ago reported figure. The expected long-term earnings growth rate is 9%. It has a favorable Growth Score of B. This style score identifies growth prospects of a company. Back-tested results show that stocks with Growth Score of A or B, combined with Zacks Rank #1 (Strong Buy) or 2, offer best growth opportunity.
Other Stocks to Consider
Some top-ranked stocks from the property and casualty insurance industry include Hallmark Financial Services HALL, Palomar Holdings PLMR, and RenaissanceRe Holdings RNR each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hallmark Financial underwrites markets, distributes and services property and casualty insurance products in the United States. The company came up with average four-quarter positive surprise of 97.50%.
Palomar Holdings provides personal and commercial specialty property insurance products. The company delivered average four-quarter positive surprise of 25.00%.
RenaissanceRe Holdings provides insurance and reinsurance products in the United States and internationally. The company pulled off an average four-quarter positive surprise of 141.77%.
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