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W. R. Berkley Corporation (WRB)
NYSE:WRB
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W. R. Berkley Corporation
(NYSE:WRB)77Outperform
Positive Factors
Earnings
Berkley’s 4Q24 result exceeded our forecast $0.94 and the Street consensus of $0.96.
Pricing Conditions
Pricing improved with WRB being positive on underlying conditions in the E&S market.
Negative Factors
Premium Growth
Premium growth in both Insurance and Reinsurance were below expectations due to commercial insurance pricing deceleration and concerns on social inflation related risks.
W. R. Berkley Corporation (WRB) vs. S&P 500 (SPY)
Market Cap
$23.92B
Dividend Yield0.49%
Average Volume (3M)1.98M
Price to Earnings (P/E)14.5
Beta (1Y)0.41
Revenue Growth12.32%
EPS Growth29.21%
CountryUS
Employees8,329
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)4.36
Shares Outstanding379,226,040
10 Day Avg. Volume1,616,361
30 Day Avg. Volume1,982,387
Financial Highlights & Ratios
PEG Ratio0.50
Price to Book (P/B)N/A
Price to Sales (P/S)1.75
Price to Cash Flow (P/CF)7.40
P/FCF Ratio7.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$64.80Price Target Upside4.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
W. R. Berkley Corporation Business Overview & Revenue Model
Company DescriptionW. R. Berkley Corporation (WRB) is a prominent commercial lines property and casualty insurance provider based in the United States. Founded in 1967, the company operates through a decentralized structure with a wide range of specialized subsidiaries, each focusing on particular niches of the insurance market. These subsidiaries offer a comprehensive portfolio of insurance products, including general liability, workers' compensation, commercial automobile, professional liability, and reinsurance. W. R. Berkley Corporation is known for its expertise in addressing complex risks and delivering tailored insurance solutions to businesses across various sectors.
How the Company Makes MoneyW. R. Berkley Corporation generates revenue primarily through the underwriting of insurance policies and the management of investment income. The company's key revenue streams include premiums collected from policyholders for providing insurance coverage, which is the core of its underwriting business. In addition to underwriting income, the company invests premiums and capital in a diversified portfolio of financial instruments, generating investment income that contributes significantly to its earnings. W. R. Berkley Corporation's decentralized operating model allows its subsidiaries to focus on niche markets, enabling them to better assess risks and price policies competitively. The company's financial performance is also influenced by its ability to effectively manage claims expenses, maintain strong underwriting discipline, and leverage its market expertise to underwrite profitable business segments.
W. R. Berkley Corporation Financial Statement Overview
Summary
W. R. Berkley Corporation presents a strong financial profile with solid revenue growth, profitability, and cash flow generation. The income statement shows strong growth and profitability metrics, the balance sheet is stable with a conservative approach to leverage, and cash flow generation is robust. The company should monitor its liabilities to ensure long-term financial health.Income Statement
W. R. Berkley Corporation has demonstrated strong revenue growth, with a 8.45% increase in total revenue from the previous year to TTM. The gross profit margin is robust at 72.45% for TTM, indicating efficient cost management. The net profit margin has improved to 11.98% in TTM, reflecting enhanced profitability. EBIT and EBITDA margins for TTM are 8.09% and 15.82%, respectively, showing healthy operational performance. Overall, the company exhibits strong growth and profitability metrics.85
Very Positive
Balance Sheet
The company's balance sheet remains stable with a debt-to-equity ratio of 0.34, indicating a conservative use of leverage. Return on equity is strong at 18.72% for TTM, showcasing effective equity utilization. The equity ratio stands at 20.88%, which is adequate for the industry. Despite a solid equity base, the company should monitor its liability growth to maintain its financial stability.78
Positive
Cash Flow
W. R. Berkley Corporation has shown significant improvement in cash flow generation. The free cash flow growth rate is 19.09% from the previous year to TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is 2.24, reflecting efficient cash conversion. Additionally, the free cash flow to net income ratio is 2.17, underscoring strong free cash flow relative to earnings. The company has a solid cash flow position, supporting operational and strategic flexibility.80
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 13.17B | 12.14B | 11.22B | 9.48B | 8.10B | 7.93B | Gross Profit |
| 9.54B | 8.78B | 8.26B | 6.88B | 5.71B | 5.57B | EBIT |
| 1.07B | 1.75B | 1.85B | 781.05M | 310.00M | 440.97M | EBITDA |
| 2.08B | 1.86B | 1.91B | 1.56B | 990.40M | 1.12B | Net Income Common Stockholders |
| 1.58B | 1.38B | 1.38B | 1.02B | 530.67M | 681.94M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 317.62M | 317.62M | 2.64B | 2.51B | 3.00B | 1.50B | Total Assets |
| 32.91B | 32.91B | 33.88B | 32.10B | 34.93B | 32.76B | Total Debt |
| 2.84B | 2.84B | 2.84B | 3.27B | 2.73B | 2.63B | Net Debt |
| 1.47B | 1.47B | 1.39B | 1.70B | 352.97M | 1.60B | Total Liabilities |
| 25.44B | 25.44B | 27.11B | 25.43B | 28.61B | 26.64B | Stockholders Equity |
| 7.46B | 7.46B | 6.75B | 6.65B | 6.31B | 6.07B |
| Cash Flow | Free Cash Flow | ||||
| 3.43B | 2.88B | 2.52B | 2.12B | 1.58B | 1.08B | Operating Cash Flow |
| 3.53B | 2.93B | 2.57B | 2.18B | 1.62B | 1.14B | Investing Cash Flow |
| -2.66B | -1.96B | -1.89B | -2.99B | 119.70M | -424.87M | Financing Cash Flow |
| -985.58M | -1.06B | -771.99M | 5.83M | -397.84M | -513.19M |
W. R. Berkley Corporation Technical Analysis
Positive
62.23
Price Trends
59.62
Positive
59.69
Positive
56.97
Positive
Market Momentum
0.84
Negative
56.03
Neutral
84.07
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WRB, the sentiment is Positive. The current price of 62.23 is above the 20-day moving average (MA) of 61.38, above the 50-day MA of 59.62, and above the 200-day MA of 56.97, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 56.03 is Neutral, neither overbought nor oversold. The STOCH value of 84.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WRB.
W. R. Berkley Corporation Risk Analysis
W. R. Berkley Corporation disclosed 29 risk factors in its most recent earnings report. W. R. Berkley Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
W. R. Berkley Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $33.38B | 11.30 | 18.92% | 1.61% | 8.19% | 29.77% | |
78 Outperform | $113.78B | 12.52 | 14.48% | 1.24% | 11.78% | 4.39% | |
78 Outperform | $22.42B | 9.86 | 16.45% | 2.20% | 13.22% | 24.83% | |
77 Outperform | $23.92B | 14.48 | 20.92% | 0.49% | 12.32% | 29.21% | |
75 Outperform | $57.97B | 11.91 | 17.94% | 1.59% | 12.23% | 68.50% | |
71 Outperform | $47.38B | 15.77 | -3.30% | 1.89% | -28.56% | 1.14% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
WRB
W. R. Berkley Corporation
62.23
7.10
12.88%
CB
Chubb
284.15
36.90
14.92%
AIG
American International Group
79.85
6.57
8.97%
CINF
Cincinnati Financial
143.26
28.44
24.77%
HIG
Hartford Financial
116.98
21.18
22.11%
TRV
Travelers Companies
255.70
39.02
18.01%
W. R. Berkley Corporation Earnings Call Summary
Earnings Call Date: Jan 27, 2025 | % Change Since: 5.26% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call highlights significant achievements such as record revenue and growth in equity, but there are notable concerns regarding increased catastrophe losses and challenges in the casualty reinsurance market due to competitive pricing and social inflation. The sentiment is mixed with strong financial performance tempered by market challenges.Highlights
Record Top-Line and Bottom-Line Results
The 2024 full year closed with record top-line and bottom-line results, yielding a return on equity of 23.6% and operating return on equity of 22.4%.
Significant Growth in Net Income
Net income for the fourth quarter increased 45% to $576 million or $1.44 per share, with a return on equity of 30.9%.
Strong Underwriting Income
The calendar year combined ratio was 90.2%, resulting in $294 million of underwriting income, bringing the full year 2024 to 90.3% and a record underwriting income of more than $1.1 billion.
Growth in Investment Portfolio
The core portfolio increased 9.4% to $313 million, with record operating cash flow from 2024 of almost $3.7 billion, following the previous year's record of $2.9 billion.
Increase in Stockholders' Equity
Stockholders' equity increased 12.6% to $8.4 billion, primarily due to record net income of $1.8 billion.
Effective Tax Rate Improvements
The effective tax rate of 21% in the quarter benefited from the utilization of some foreign valuation allowances and true-up adjustments for prior periods.
Lowlights
Increase in Catastrophe Losses
Catastrophe losses increased over the prior year, primarily due to Hurricane Milton, driving an increase quarter-over-quarter of 1.4 loss ratio points.
Competitive Pricing Environment in Reinsurance
A decrease in casualty due to the competitive pricing environment, with the Reinsurance & Monoline Excess segment showing a reduction.
Concerns Over Social Inflation
The liability market continues to be plagued by social inflation, particularly affecting lines with physical injury claims such as auto liability.
Challenges in Casualty Reinsurance
Casualty reinsurance premium was down more than 15% due to concerns over market discipline and appropriate risk-adjusted returns.
Company Guidance
During the W. R. Berkley Corporation's fourth quarter and full year 2024 earnings call, the company reported record financial results with a return on equity of 23.6% and operating return on equity of 22.4% for the year. In the fourth quarter alone, operating earnings rose by 15.5% to $453 million, or $1.13 per share, while net income increased by 45% to $576 million, or $1.44 per share. The fourth quarter also saw an operating return on equity of 24.3% and a return on equity of 30.9%. The company achieved a combined ratio of 90.2% for the quarter, driven by strong underwriting results and continued growth in the core investment portfolio. Additionally, gross and net premiums written expanded by 9.6% and 9.3% respectively for the full year, with the insurance segment's net premiums growing 9.9% in the fourth quarter. Despite challenges in the reinsurance market, particularly in casualty lines, the company remains optimistic about growth opportunities, supported by robust investment income and disciplined underwriting. As a result, W. R. Berkley looks forward to leveraging its strong financial position to capitalize on favorable market conditions in 2025 and beyond.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.