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W. R. Berkley (WRB) Prices 3.150% $350 Million Senior Notes

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W. R. Berkley Corporation WRB announced the pricing of $350 million aggregate principal amount of senior notes. The notes carry an interest rate of 3.150% and are scheduled to mature in 2061.

The company plans to deploy the net proceeds from the sale of senior notes for general corporate purposes.

It displayed prudence by issuing senior notes amid a low interest rate environment to procure funds and enhance financial flexibility without affecting liquidity. Despite the impacts of the COVID-19 outbreak, W. R. Berkley’s financial position and liquidity improved for the six months ended Jun 30, 2021. Also, cash from operating activities increased 20% year over year in the first half of 2021.

So far this year, the company has issued senior notes twice. In March 2021, the insurer issued $400 million worth of 3.550% senior notes due 2050.

By capitalizing on the low interest rate environment, the company is attempting to reduce its interest burden, thus, facilitating margin expansion. Interest expenses dropped 0.5% in the first half of 2021. Also, W. R. Berkley’s operational strength should enable it to service debt uninterruptedly, thereby, maintaining the stock’s creditworthiness.

However, as of Jun 30, 2021, the company’s debt was $2.9 billion, which increased 0.1% from the 2020-end level. The debt-to-capital ratio at the end of the second quarter was 30.7, deteriorating 60 basis points from the fourth-quarter end and comparing unfavorably with the industry average of 19.5. The latest offering will deteriorate the debt-to-capital ratio by 250 basis points.

Nonetheless, W. R. Berkley maintains a solid balance sheet, with sufficient liquidity and strong cash flows. Also, times interest earned of 9 at the second-quarter end was good when compared with the fourth-quarter end figure of 5.7. The firm’s times interest earned ratio has been improving over the years. The improvement in the ratio indicates that the firm will be able to meet current obligations in the near future without any difficulties.

Recently, Alleghany Corporation Y announced the pricing of $500 million aggregate principal amount of senior notes. The notes carry an interest rate of 3.250% and are scheduled to mature in 2051. The senior notes were priced at 98.639% of par.

Shares of this Zacks Rank #2 (Strong Buy) insurer have rallied 16.2% in the past year compared with the industry’s increase of 19.9%. Increasing contribution from the insurance business, rate increases, reserving discipline, the growing international business, solid balance sheet and prudent capital management policy should drive shares.

Zacks Investment Research
Zacks Investment Research


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Other Stocks That Warrant a Look

Some other top-ranked stocks from the property and casualty insurance industry are American Financial Group, Inc. AFG and Cincinnati Financial Corporation CINF, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial surpassed estimates in each of the last four quarters, the average surprise being 52.82%.

Cincinnati Financial surpassed estimates in three of the last four quarters and missed in one, the average surprise being 36.01%.


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

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

Alleghany Corporation (Y) : Free Stock Analysis Report

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