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W.R. Berkley Seeks Growth Through Expansion, Risks Remain
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On Aug 18, 2016, we issued an updated research report on W.R. Berkley Corporation (WRB - Free Report) .
W.R. Berkley reported second-quarter 2016 operating income of 82 cents per share that beat the Zacks Consensus Estimate by 3.8%. Earnings also inched up 1.2% year over year. The increase in revenues offset the rise in expenses and led to the outperformance. Also, the quarter witnessed improved investment results.
However, catastrophe losses have always remained a matter of concern for the company. In the second quarter, the catastrophe loss incurred by the company increased drastically by 65.3%. The company’s exposure to catastrophe events is likely to remain a threat to its bottom line.
A competitive reinsurance market and a low interest rate environment are the other headwinds faced by the company. Its investment income has remained under pressure over the past several quarters owing to a low interest rate environment. This creates pressure as funds get reinvested at lower yields. Furthermore, W.R. Berkley faces increasing competition in its global reinsurance segment. The segment’s gross premiums have been declining over the last few years. Though the company witnessed an improvement in the first quarter, the segment’s earnings are expected to remain under pressure.
However, counting on the positives, the company remained firmly positioned banking on growing contribution from new startup units. W.R. Berkley is also extending its footprint in the untapped markets of North Asia and Southeast Asia through offices in Hong Kong and Singapore, respectively. Such expansions will help the company to capitalize on improving market conditions and ramp up growth profile.
Riding on the strength of a healthy capital position and increasing international presence, W.R. Berkley is expected to continuously enhance shareholder value and drive long-term growth. The expected long-term earnings growth is pegged at 9%.
Zacks Rank and Stocks to Consider
Currently, W.R. Berkley carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the property and casualty sector are Allied World Assurance Company Holdings, AG (AWH - Free Report) , Argo Group International Holdings, Ltd. and National Interstate Corporation (NATL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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W.R. Berkley Seeks Growth Through Expansion, Risks Remain
On Aug 18, 2016, we issued an updated research report on W.R. Berkley Corporation (WRB - Free Report) .
W.R. Berkley reported second-quarter 2016 operating income of 82 cents per share that beat the Zacks Consensus Estimate by 3.8%. Earnings also inched up 1.2% year over year. The increase in revenues offset the rise in expenses and led to the outperformance. Also, the quarter witnessed improved investment results.
However, catastrophe losses have always remained a matter of concern for the company. In the second quarter, the catastrophe loss incurred by the company increased drastically by 65.3%. The company’s exposure to catastrophe events is likely to remain a threat to its bottom line.
A competitive reinsurance market and a low interest rate environment are the other headwinds faced by the company. Its investment income has remained under pressure over the past several quarters owing to a low interest rate environment. This creates pressure as funds get reinvested at lower yields. Furthermore, W.R. Berkley faces increasing competition in its global reinsurance segment. The segment’s gross premiums have been declining over the last few years. Though the company witnessed an improvement in the first quarter, the segment’s earnings are expected to remain under pressure.
However, counting on the positives, the company remained firmly positioned banking on growing contribution from new startup units. W.R. Berkley is also extending its footprint in the untapped markets of North Asia and Southeast Asia through offices in Hong Kong and Singapore, respectively. Such expansions will help the company to capitalize on improving market conditions and ramp up growth profile.
Riding on the strength of a healthy capital position and increasing international presence, W.R. Berkley is expected to continuously enhance shareholder value and drive long-term growth. The expected long-term earnings growth is pegged at 9%.
Zacks Rank and Stocks to Consider
Currently, W.R. Berkley carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the property and casualty sector are Allied World Assurance Company Holdings, AG (AWH - Free Report) , Argo Group International Holdings, Ltd. and National Interstate Corporation (NATL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7Best Stocks for the Next 30 Days. Click to get this free report >>