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W.R. Berkley's (WRB) Prospects Look Bright: Should You Hold?

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Shares of W.R. Berkley Corporation (WRB - Free Report) gained 35.49% in the last one year, significantly outperforming the Zacks categorized Property and Casualty industry’s growth of 25.18%. We expect the stock to retain its momentum on the back of a number of positives.



W.R. Berkley has displayed sustained premium growth over a considerable period of time, primarily backed by its startup units. Furthermore, the company has substantially boosted its organic portfolio through the addition of new units that focus on the important parts of the U.S. economy. This apart, the company has a retention rate of about 80% for ten successive quarters. We expect the company to continue displaying growth supported by such positives.

In addition, consistent expansion enables the company to benefit from improving market conditions. During fourth-quarter 2016, the company formed two businesses – Berkley Cyber Risk Solutions and Berkley Transactional – that were added to its insurance segment. The company expects these new units to develop further in the near term and start contributing to its underwriting profit.

This apart, the Zacks Rank #3 (Hold) property and casualty insurer’s international business has seen consistent premium growth over many years, mainly in emerging markets like United Kingdom, Continental Europe and Asia, to name a few. Given its solid track record, we expect the company’s international segment to report higher premiums in the future.

W.R. Berkley’s healthy capital position and increasing international presence help it to continuously enhance shareholder value and drive long-term growth. The expected long-term earnings growth is pegged at 9%.

However, exposure to catastrophe losses will continue pose risks for the company, which in turn, may result in earnings volatility. In addition, a highly competitive global reinsurance market will put pressure on rates for the near term, restricting growth.

Nonetheless, W.R. Berkley has a trailing 12-month return on equity (ROE) of 8.8%, which is higher than the industry average of 6.6%.

Stocks to Consider

Some better-ranked stocks from the same space include American Financial Group, Inc. (AFG - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) .

American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%. The company holds a Zacks Rank #2 (Buy).
 
Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%. The company holds a Zacks Rank #2.

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