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U.S. property and casualty insurer W. R. Berkley Corp. ( WRB - Analyst Report ) announced the formation of a new unit named Berkley Public Entity Managers, LLC. The company will offer insurance coverage to eliminate the uncertainties surrounding complex and emerging risks unique to self- insured public entities, both individuals and groups. The new unit will serve the self-insured groups by using Berkley’s experienced underwriting and claims operations.
Berkley Public Entity Managers, LLC will act as an underwriting entity for 26 of the total 27 Berkley subsidiaries, which carry a rating of A+ assigned by A.M.Best.
Richard B. Vincelette, an industry veteran with over 25 years of experience in the specialty lines public entity market, has been appointed President of the new company.
The formation of this new unit signals Berkley’s inclination to expand into the government insurance market as casualty insurance rates for public entities are likely to trend upward in 2012. Though public entity lines of business have faced tough market conditions in the past due to a weak economy and budget deficit, recent trends indicate stabilization of the business.
In the fourth quarter 2011, renewal rates for all coverage lines -- Primary Casualty, Excess Casualty as well as Excess Workers’ Compensation -- saw positive rate increases in the range of 5% to 30%.
Berkley has a strong presence in the U.S. specialty insurance market, which makes it possible for the company to charge premium pricing. For 2011, Berkley’s specialty segment saw a 23% surge in net premium and constituted 36% of the total consolidated premium. Currently, the company offers specialty insurance through 20 operating units on an admitted basis. It was one of the most profitable segments in 2011, with a combined ratio of 91.9%.
Berkley currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are also maintaining our long-term Neutral recommendation on the shares.
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