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W.R. Berkley Boosts Shareholder Value With Dividend Hike

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The board of directors of W.R. Berkley Corporation (WRB - Free Report) recently approved a 9% hike in its quarterly dividend in a concerted effort to boost shareholders’ value. The company will now reward investors with a dividend of 12 cents per share.

The recent increase takes the annual dividend to 48 cents per share. Based on the closing share price of $57.02 as of Jun 12, the increased payout translates to a dividend yield of 0.8%, better than the industry average of 0.5%.

Backed by its operating strength, the property and casualty insurer has a solid track record of increasing dividend each year. The latest dividend hike is the 15th consecutive increase since 2005. Shareholders of record on Jun 23 will receive the increased dividend on Jun 30.

Also, its return on equity, a profitability measure of how efficiently the company is utilizing its shareholders money, is nearly 10%, higher than the industry average 6.5%. Apart from regular dividend raises, the company also pays special dividend and engages in share buybacks. The company has 9.5 million shares remaining under its share buyback authorization.

W.R. Berkley has a solid balance sheet with sufficient liquidity and robust cash flows that support growth initiatives and effective capital deployment. The company had $1.3 billion in cash and liquid investments at the end of first-quarter 2020. One of the largest commercial lines writers in the United States, it has been enhancing investors’ value through prudent capital deployment in the form of share buybacks and dividend hikes. Such initiatives not only reflect the operational and financial strength of the company but also make the stock attractive to yield-seeking investors.

Shares of W.R. Berkley have lost 17.5% year to date compared with the industry’s decrease of 19.9%. Steady net premium growth, improving combined ratio owing to additional rate and effective management of volatility and expenses, scope for margin improvement and focus on underwriting profitability as well as on areas of the business that offer better margins should help the stock bounce back. The stock carries a Zacks Rank #4 (Sell).

Backed by their sturdy capital position and operational strength, a few insurers hiked their dividend rates even amid the pandemic.  Last month, the board of directors of Chubb Limited (CB - Free Report) hiked dividend by 4% while that of RLI Corp. (RLI - Free Report) raised dividend by 4.3%.

A Stock to Consider

A better-ranked stock from the same space is National General Holdings Corp , sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

National General, a specialty personal lines insurance holding company, provides various insurance products and services in the United States, Bermuda, Luxembourg and Sweden. Its earnings beat estimates in two of the last four quarters, the average positive surprise being 5.68%.

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