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W. R. Berkley Corporation (WRB)
NYSE:WRB
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W. R. Berkley Corporation
(NYSE:WRB)
76Outperform
Positive Factors
Growth Prospects
WRB is estimated to grow its top line by double-digits over the next 12-18 months.
Profitability
Insurance combined ratio of 90.5% was better than expectation of 91.4%, driven by improving expenses and better than expected CAT losses.
Strategic Investment
Japanese insurer Mitsui Sumitomo entered into an agreement with WR Berkley to acquire a 15% stake in the company, which indicates interest and confidence in WRB's business.
Negative Factors
Competitive Environment
Casualty reinsurance NWP declined 15.4% in the quarter due to a competitive pricing environment.
Margin Pressure
The likelihood of continued small reserve additions to older vintages keeps the forecast for WRB’s margins from improving as much as certain peers.
Valuation Concerns
Lower our rating on WRB to EW from OW; our rating change also reflects valuation as shares have expanded post MSI stake.
W. R. Berkley Corporation (WRB) vs. S&P 500 (SPY)
Market Cap
$25.38B
Dividend Yield0.48%
Average Volume (3M)2.17M
Price to Earnings (P/E)15.4
Beta (1Y)0.38
Revenue Growth12.32%
EPS Growth29.21%
CountryUS
Employees8,606
SectorFinancial
Sector Strength86
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)4.36
Shares Outstanding379,226,040
10 Day Avg. Volume3,335,403
30 Day Avg. Volume2,166,162
Financial Highlights & Ratios
PEG Ratio0.53
Price to Book (P/B)N/A
Price to Sales (P/S)1.76
Price to Cash Flow (P/CF)7.40
P/FCF Ratio7.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$67.67Price Target Upside-1.14% Downside
Rating ConsensusHold
Number of Analyst Covering12
W. R. Berkley Corporation Business Overview & Revenue Model
Company DescriptionW. R. Berkley Corporation (WRB) is a prominent commercial lines property and casualty insurance provider based in the United States. Founded in 1967, the company operates through a decentralized structure with a wide range of specialized subsidiaries, each focusing on particular niches of the insurance market. These subsidiaries offer a comprehensive portfolio of insurance products, including general liability, workers' compensation, commercial automobile, professional liability, and reinsurance. W. R. Berkley Corporation is known for its expertise in addressing complex risks and delivering tailored insurance solutions to businesses across various sectors.
How the Company Makes MoneyW. R. Berkley Corporation generates revenue primarily through the underwriting of insurance policies and the management of investment income. The company's key revenue streams include premiums collected from policyholders for providing insurance coverage, which is the core of its underwriting business. In addition to underwriting income, the company invests premiums and capital in a diversified portfolio of financial instruments, generating investment income that contributes significantly to its earnings. W. R. Berkley Corporation's decentralized operating model allows its subsidiaries to focus on niche markets, enabling them to better assess risks and price policies competitively. The company's financial performance is also influenced by its ability to effectively manage claims expenses, maintain strong underwriting discipline, and leverage its market expertise to underwrite profitable business segments.
W. R. Berkley Corporation Financial Statement Overview
Summary
W.R. Berkley Corporation shows strong financial performance with impressive revenue growth, solid profitability, a stable balance sheet with minimal debt, and robust cash flow generation. The company demonstrates effective cost management and utilization of shareholders' funds. However, there's a minor concern regarding the decrease in total assets, which could impact future growth.Income Statement
W.R. Berkley Corporation's income statement reflects strong growth and profitability. The company has shown a consistent increase in total revenue, with a notable revenue growth rate of 12.3% from 2023 to 2024. The gross profit margin has improved significantly, indicating efficient cost management. Despite the absence of EBIT and EBITDA in 2024, the net profit margin remains strong at 12.9%, showcasing solid profitability. Overall, the income statement reveals a positive growth trajectory and robust financial health.85
Very Positive
Balance Sheet
The balance sheet of W.R. Berkley Corporation demonstrates stability and a solid equity position. The company has a strong equity ratio of 72.6% in 2024, indicating a low reliance on debt financing. The absence of total debt in 2024 further strengthens the company's financial position. Return on equity (ROE) is healthy at 20.9%, reflecting effective utilization of shareholders' funds. However, the decrease in total assets from 2023 to 2024 warrants attention, as asset management could impact future growth.78
Positive
Cash Flow
W.R. Berkley Corporation's cash flow statement shows strong cash generation and efficient cash management. The operating cash flow to net income ratio is impressive at 2.1, indicating robust cash conversion from earnings. The free cash flow has grown by 24.2% from 2023 to 2024, underscoring effective capital expenditure management and strong cash flow generation. The positive free cash flow to net income ratio further highlights the company's ability to generate cash relative to its profitability.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.64B | 12.14B | 11.22B | 9.48B | 8.10B | Gross Profit |
| 13.64B | 8.78B | 8.26B | 6.88B | 5.71B | EBIT |
| 0.00 | 1.75B | 1.85B | 781.05M | 310.00M | EBITDA |
| 2.22B | 1.86B | 1.91B | 1.56B | 990.40M | Net Income Common Stockholders |
| 1.76B | 1.38B | 1.38B | 1.02B | 530.67M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 364.73M | 317.62M | 2.64B | 2.51B | 3.00B | Total Assets |
| 11.57B | 32.91B | 33.88B | 32.10B | 34.93B | Total Debt |
| 2.84B | 2.84B | 2.84B | 3.27B | 2.73B | Net Debt |
| -112.93M | 1.47B | 1.39B | 1.70B | 352.97M | Total Liabilities |
| 32.16B | 25.44B | 27.11B | 25.43B | 28.61B | Stockholders Equity |
| 8.40B | 7.46B | 6.75B | 6.65B | 6.31B |
| Cash Flow | Free Cash Flow | |||
| 3.57B | 2.88B | 2.52B | 2.12B | 1.58B | Operating Cash Flow |
| 3.68B | 2.93B | 2.57B | 2.18B | 1.62B | Investing Cash Flow |
| -2.18B | -1.96B | -1.89B | -2.99B | 119.70M | Financing Cash Flow |
| -852.49M | -1.06B | -771.99M | 5.83M | -397.84M |
W. R. Berkley Corporation Technical Analysis
Positive
68.45
Price Trends
63.46
Positive
61.60
Positive
58.86
Positive
Market Momentum
2.09
Negative
74.37
Negative
58.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WRB, the sentiment is Positive. The current price of 68.45 is above the 20-day moving average (MA) of 66.41, above the 50-day MA of 63.46, and above the 200-day MA of 58.86, indicating a bullish trend. The MACD of 2.09 indicates Negative momentum. The RSI at 74.37 is Negative, neither overbought nor oversold. The STOCH value of 58.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WRB.
W. R. Berkley Corporation Risk Analysis
W. R. Berkley Corporation disclosed 29 risk factors in its most recent earnings report. W. R. Berkley Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
W. R. Berkley Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $21.08B | 9.27 | 17.61% | 2.45% | 13.22% | 24.83% | |
78 Outperform | $12.98B | 13.66 | 9.40% | 3.73% | 7.30% | -20.49% | |
77 Outperform | $22.41B | 8.90 | 16.52% | ― | 5.17% | 35.36% | |
76 Outperform | $25.38B | 15.37 | 22.16% | 0.48% | 12.32% | 29.21% | |
75 Outperform | $10.45B | 11.82 | 20.33% | 2.42% | 6.91% | 4.97% | |
64 Neutral | $13.21B | 9.26 | 9.39% | 4.87% | 16.14% | -8.87% | |
60 Neutral | $18.16B | 13.46 | 8.63% | 0.30% | 10.44% | 1.63% |
* Financial Sector Average
Performance Comparison
WRB
W. R. Berkley Corporation
68.45
15.00
28.06%
AFG
American Financial Group
125.72
6.07
5.07%
CINF
Cincinnati Financial
131.09
15.37
13.28%
CNA
CNA Financial
47.49
7.45
18.61%
L
Loews
84.68
11.01
14.95%
MKL
Markel
1,771.42
338.88
23.66%
W. R. Berkley Corporation Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: 15.78% | Next Earnings Date: Apr 21, 2025
Earnings Call Sentiment Neutral
The earnings call highlights significant achievements such as record revenue and growth in equity, but there are notable concerns regarding increased catastrophe losses and challenges in the casualty reinsurance market due to competitive pricing and social inflation. The sentiment is mixed with strong financial performance tempered by market challenges.Highlights
Record Top-Line and Bottom-Line Results
The 2024 full year closed with record top-line and bottom-line results, yielding a return on equity of 23.6% and operating return on equity of 22.4%.
Significant Growth in Net Income
Net income for the fourth quarter increased 45% to $576 million or $1.44 per share, with a return on equity of 30.9%.
Strong Underwriting Income
The calendar year combined ratio was 90.2%, resulting in $294 million of underwriting income, bringing the full year 2024 to 90.3% and a record underwriting income of more than $1.1 billion.
Growth in Investment Portfolio
The core portfolio increased 9.4% to $313 million, with record operating cash flow from 2024 of almost $3.7 billion, following the previous year's record of $2.9 billion.
Increase in Stockholders' Equity
Stockholders' equity increased 12.6% to $8.4 billion, primarily due to record net income of $1.8 billion.
Effective Tax Rate Improvements
The effective tax rate of 21% in the quarter benefited from the utilization of some foreign valuation allowances and true-up adjustments for prior periods.
Lowlights
Increase in Catastrophe Losses
Catastrophe losses increased over the prior year, primarily due to Hurricane Milton, driving an increase quarter-over-quarter of 1.4 loss ratio points.
Competitive Pricing Environment in Reinsurance
A decrease in casualty due to the competitive pricing environment, with the Reinsurance & Monoline Excess segment showing a reduction.
Concerns Over Social Inflation
The liability market continues to be plagued by social inflation, particularly affecting lines with physical injury claims such as auto liability.
Challenges in Casualty Reinsurance
Casualty reinsurance premium was down more than 15% due to concerns over market discipline and appropriate risk-adjusted returns.
Company Guidance
During the W. R. Berkley Corporation's fourth quarter and full year 2024 earnings call, the company reported record financial results with a return on equity of 23.6% and operating return on equity of 22.4% for the year. In the fourth quarter alone, operating earnings rose by 15.5% to $453 million, or $1.13 per share, while net income increased by 45% to $576 million, or $1.44 per share. The fourth quarter also saw an operating return on equity of 24.3% and a return on equity of 30.9%. The company achieved a combined ratio of 90.2% for the quarter, driven by strong underwriting results and continued growth in the core investment portfolio. Additionally, gross and net premiums written expanded by 9.6% and 9.3% respectively for the full year, with the insurance segment's net premiums growing 9.9% in the fourth quarter. Despite challenges in the reinsurance market, particularly in casualty lines, the company remains optimistic about growth opportunities, supported by robust investment income and disciplined underwriting. As a result, W. R. Berkley looks forward to leveraging its strong financial position to capitalize on favorable market conditions in 2025 and beyond.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.