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Should You Retain W.R. Berkley (WRB) Stock in Your Portfolio?

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·4 min read
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W.R. Berkley Corporation WRB has been benefiting from international business expansion, higher income from fixed maturity securities, rate increase and prudent capital deployment.

Growth Projections

The Zacks Consensus Estimate for W.R. Berkley’s 2022 earnings per share is pegged at $5.06, indicating a year-over-year increase of 5.8%.

Estimate Revision

The Zacks Consensus Estimate for W.R. Berkley’s 2022 earnings has moved 0.2% north in the past seven days. This should instill investors' confidence in the stock.

Earnings Surprise History

W.R. Berkley has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 25.4%.

Zacks Rank & Price Performance

W.R. Berkley currently has a Zacks Rank #3 (Hold). In the past year, the stock has rallied 24% compared with the industry’s increase of 18.6%.

Zacks Investment Research
Zacks Investment Research

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Return on Equity (ROE)

W.R. Berkley’s trailing 12-month return on equity (ROE) of 12.9% reflects its growth potential. It compares favorably with the industry average of 5.6%. ROE reflects its efficiency in using its shareholders’ funds.

Style Score

W.R. Berkley has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

The Insurance business of W.R. Berkley is well poised to grow given higher premiums at other liability, professional liability, short-tail lines, commercial auto and workers' compensation, rate increase, international business expansion, benefits derived from market dislocations, and high retention.

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.

Riding on higher income from investment funds, primarily from financial services and transportation funds, as well as an increase in equity securities, arbitrage trading account, higher income from fixed maturity securities and increase in real estate, net investment income is expected to increase in the long run.

Continued growth in premium and expansion in underwriting profits are likely to boost the operations of the insurer. Riding on strong underwriting results, net investment income and foreign currency gains, operating income is expected to gain.

W.R. Berkley is one of the largest commercial lines 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. The insurer had more than $2 billion in cash and cash equivalents at the end of third-quarter 2021.

Backed by its operating strength, the property and casualty insurer has a solid track record of increasing dividends for 16 straight years. WRB approved special dividends twice in 2021. Besides the special cash dividend and regular dividend hike, W.R. Berkley remains committed to returning excess cash to shareholders through share repurchases. Such initiatives not only reflect the operational and financial strength of the insurer but also make the stock attractive to yield-seeking investors.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance market are Fidelity National Financial FNF, Hallmark Financial Services HALL and Arch Capital Group ACGL. While Fidelity National and Hallmark Financial sport a Zacks Rank #1 (Strong Buy), Arch Capital carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fidelity National’s earnings surpassed estimates in each of the last four quarters, the average beat being 38.1%. In the past year, FNF has gained 31.6%.

The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved 4.6% north in the past 60 days.

The bottom line of Hallmark Financial surpassed estimates in two of the last four quarters and missed the same in the other two, the average being 53.6%.

In the past year, Hallmark Financial has rallied 26.6%. The Zacks Consensus Estimate for 2022 earnings has moved 60% north in the past 60 days.

Arch Capital’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 32.7%. In the past year, ACGL has gained 33.6%.

The Zacks Consensus Estimate for Arch Capital’s 2022 earnings has moved 0.2% north in the past seven days.


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

Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report

Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

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