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W.R. Berkley Corporation (WRB - Free Report) is a large-cap insurance giant that topped quarterly estimates on July 21.
Better yet, W.R. Berkley has climbed in 2022 to hit new highs not too long ago and WRB has outpaced the S&P 500 and its industry over the past decade. Plus, the insurance firm is benefitting from the rising interest rate environment.
WRB’s Insurance Segments
W.R. Berkley is an insurance holding company that’s one of the larger commercial lines writers in the U.S. The firm operates worldwide within two broader segments of the property casualty business: Insurance and Reinsurance & Monoline Excess. W.R. Berkley joined the Fortune 500 ranks back in 2004 and was added to the S&P 500 in 2019.
Part of the company’s core focus is insurance for businesses, as well as high-value homes, vehicles, and collectibles. W.R. Berkley boasts that it’s able to offer tailored solutions for an array of businesses. The firm services industries that range from architects and engineers to life sciences and technology, as well as bars, restaurants, and almost anything else you can imagine.
W.R. Berkley’s insurance products feature more common offerings like accident & health, alongside ocean marine, product recalls, and beyond. Overall, W. R. Berkley has built over 50 insurance businesses to help independent agents and brokers deliver commercial and high net worth personal lines insurance solutions via nearly 200 offices.
Image Source: Zacks Investment Research
Growth and Outlook
W.R. Berkley has steadily grown its revenue for the past 25 years, with its only two declines coming in 2008 and 2009. The company’s revenue surged 17% in 2021 and its outlook is strong after a great start to 2022.
WRB on July 21 topped Zacks' quarterly EPS projection by 33% to help improve its average bottom-line beat in the trailing four quarters to 30%. Plus, its adjusted earnings soared 44% YoY, with its net premiums written up 17% to a new record.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business. Its operating return on equity came in at 18.8%. And W.R. Berkley’s FY22 and FY23 consensus earnings outlooks have popped since its report to help it grab a Zacks Rank #1 (Strong Buy) right now.
Zacks estimates currently call for W.R. Berkley’s revenue to climb 17% in 2022 to come in at $10.8 billion and then jump another 11% in 2023, driven by rising rates and a thriving business model. "The earnings power of this economic model going forward in a raising or increasing rate environment should not be underestimated,” CEO Robert Berkley said on its recent earnings call.
“I think it's something that people have an understanding for when we have the discussion, but I'm not sure if it's fully appreciated what this means for our economic model and again, the earnings power of the business as you see interest rates continue to move up.”
W.R. Berkley’s adjusted earnings are projected to climb over 19% in 2022 and another 11% in 2023 to $4.50 a share.
Image Source: Zacks Investment Research
Price Performance and Valuation
As we touched on at the outset, W.R. Berkley shares are on a nice run, with it up 285% in the past decade vs. the benchmark index’s 185% and its industry’s 166%. WRB’s outperformance continues when you shrink the timetable.
The stock has charged 55% higher in the past two years compared to its Insurance-Property and Casualty’s 24% run. Best of all, the stock has climbed 16% in 2022 even as its industry dipped 4% and the S&P 500 dove 18%. W.R. Berkley closed regular trading Wednesday at $63.65 per share, which offers 14% upside to its current Zacks consensus price target.
W.R. Berkley’s valuation is stellar when considering its price performance. WRB trades at 15.3X forward 12-month earnings at the moment. This marks not too large of a premium compared to its own 20-year median and a 38% discount to WRB’s own highs.
W.R. Berkley also trades at over a 40% discount to its industry’s current 27X and offers value compared to the S&P 500’s 16.8X. In fact, it’s trading not too far off its own covid lows, which might have some value investors salivating.
Image Source: Zacks Investment Research
Wrapping Up
W.R. Berkley’s balance sheet is solid and it has a proven history of generating consistently strong profits. W.R. Berkley also pays a dividend and buys back its own shares.
Of course, it’s always great to outperform the market. But climbing 15% in 2022, as nearly everything outside of energy and oil tumbles might warrant putting W.R. Berkley on your radar.
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Bull of the Day: W.R. Berkley Corporation (WRB)
W.R. Berkley Corporation (WRB - Free Report) is a large-cap insurance giant that topped quarterly estimates on July 21.
Better yet, W.R. Berkley has climbed in 2022 to hit new highs not too long ago and WRB has outpaced the S&P 500 and its industry over the past decade. Plus, the insurance firm is benefitting from the rising interest rate environment.
WRB’s Insurance Segments
W.R. Berkley is an insurance holding company that’s one of the larger commercial lines writers in the U.S. The firm operates worldwide within two broader segments of the property casualty business: Insurance and Reinsurance & Monoline Excess. W.R. Berkley joined the Fortune 500 ranks back in 2004 and was added to the S&P 500 in 2019.
Part of the company’s core focus is insurance for businesses, as well as high-value homes, vehicles, and collectibles. W.R. Berkley boasts that it’s able to offer tailored solutions for an array of businesses. The firm services industries that range from architects and engineers to life sciences and technology, as well as bars, restaurants, and almost anything else you can imagine.
W.R. Berkley’s insurance products feature more common offerings like accident & health, alongside ocean marine, product recalls, and beyond. Overall, W. R. Berkley has built over 50 insurance businesses to help independent agents and brokers deliver commercial and high net worth personal lines insurance solutions via nearly 200 offices.
Image Source: Zacks Investment Research
Growth and Outlook
W.R. Berkley has steadily grown its revenue for the past 25 years, with its only two declines coming in 2008 and 2009. The company’s revenue surged 17% in 2021 and its outlook is strong after a great start to 2022.
WRB on July 21 topped Zacks' quarterly EPS projection by 33% to help improve its average bottom-line beat in the trailing four quarters to 30%. Plus, its adjusted earnings soared 44% YoY, with its net premiums written up 17% to a new record.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business. Its operating return on equity came in at 18.8%. And W.R. Berkley’s FY22 and FY23 consensus earnings outlooks have popped since its report to help it grab a Zacks Rank #1 (Strong Buy) right now.
Zacks estimates currently call for W.R. Berkley’s revenue to climb 17% in 2022 to come in at $10.8 billion and then jump another 11% in 2023, driven by rising rates and a thriving business model. "The earnings power of this economic model going forward in a raising or increasing rate environment should not be underestimated,” CEO Robert Berkley said on its recent earnings call.
“I think it's something that people have an understanding for when we have the discussion, but I'm not sure if it's fully appreciated what this means for our economic model and again, the earnings power of the business as you see interest rates continue to move up.”
W.R. Berkley’s adjusted earnings are projected to climb over 19% in 2022 and another 11% in 2023 to $4.50 a share.
Image Source: Zacks Investment Research
Price Performance and Valuation
As we touched on at the outset, W.R. Berkley shares are on a nice run, with it up 285% in the past decade vs. the benchmark index’s 185% and its industry’s 166%. WRB’s outperformance continues when you shrink the timetable.
The stock has charged 55% higher in the past two years compared to its Insurance-Property and Casualty’s 24% run. Best of all, the stock has climbed 16% in 2022 even as its industry dipped 4% and the S&P 500 dove 18%. W.R. Berkley closed regular trading Wednesday at $63.65 per share, which offers 14% upside to its current Zacks consensus price target.
W.R. Berkley’s valuation is stellar when considering its price performance. WRB trades at 15.3X forward 12-month earnings at the moment. This marks not too large of a premium compared to its own 20-year median and a 38% discount to WRB’s own highs.
W.R. Berkley also trades at over a 40% discount to its industry’s current 27X and offers value compared to the S&P 500’s 16.8X. In fact, it’s trading not too far off its own covid lows, which might have some value investors salivating.
Image Source: Zacks Investment Research
Wrapping Up
W.R. Berkley’s balance sheet is solid and it has a proven history of generating consistently strong profits. W.R. Berkley also pays a dividend and buys back its own shares.
Of course, it’s always great to outperform the market. But climbing 15% in 2022, as nearly everything outside of energy and oil tumbles might warrant putting W.R. Berkley on your radar.