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U.S. property and casualty insurer W.R. Berkley Corp. ( WRB - Analyst Report ) has formed a division to write primary and excess casualty insurance and hired an industry veteran to head the new operations. The new unit is named Berkley Custom Insurance Managers, LLC with headquarters in Stamford, CT.
The division will provide excess casualty insurance coverage and act as an underwriting entity for 26 of the total 27 Berkley subsidiaries, which carry a rating of A+ assigned by A.M. Best.
Michael P. Fujii, erstwhile President and CEO of worldwide insurance operations at a major international insurer, will take over the responsibility of leading Berkley’s Stamford-based specialty unit.
The operations will further expand Berkley’s specialty focus. There are signs of rates firming in the primary and excess casualty insurance market after several years of low rates. Recently, renewal rates for the Excess Casualty coverage line saw a positive increase 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 premiums and constituted 36% of the total consolidated premiums. 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 is scheduled to release second quarter earnings results on July 24, 2012, after the market closes. The Zacks Consensus Estimate for second quarter earnings is poised at 63 cents per share, reflecting a year-over-year growth rate of 37%.
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. Its competitors Chubb Corp. ( CB - Analyst Report ) , Travelers Companies ( TRV - Analyst Report ) and Assurant Inc. ( AIZ - Analyst Report ) , all carry a Zacks # 3 Rank and a long-term Neutral rating.
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