A.M. Best Rates W.R. Berkley Corp. with a Stable Outlook - Analyst Blog

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The issuer credit rating (ICR) of W. R. Berkley Corporation ( WRB ) was affirmed by A.M. Best Co. at "a-." It also affirmed the debt rating of "a-" for the senior secured notes and 'bbb" for trust-preferred securities.

Additionally, A. M. Best affirmed the financial strength rating (FSR) and ICR of W. R. Berkley Insurance Group at "A+" and "aa-," respectively. W. R. Berkley Insurance Group consists of Berkley Insurance Company and 25 of its reinsured subsidiaries and affiliates.

All the above-mentioned ratings of W. R. Berkley Corp. carry a stable outlook.

The ratings for W. R. Berkley Insurance Group were affirmed on the basis of its long-term trend of favorable underwriting and operating results, strong brand name, well-diversified business and low exposure to catastrophic events.

Good planning and execution of business strategies and favorable prior-year loss reserve development, a strong capital position, and positive cash flows over the past few years also played their role.

The rating agency acknowledges, that each of the company's operating units specializes on specific niche markets focusing in their geography, product orientation and distribution channel, which helps to come up with optimum results.

However, falling investment yields and high competition in surplus lines of business and specialty commercial markets partially offset these positives. Moreover, the company carries a financial leverage higher than the acceptance level of A.M. Best.

These negatives are, however, not really burdensome since the rating agency noted that W.R. Berkley Corp. had been successful in improving its earnings over the first nine months of 2014. The agency also noted that the leverage ratio will moderate after the company redeems $200 million of senior debt that is about to mature in May 2015.

A stable outlook indicates the low possibility of a rating revision in the near term. If W. R. Berkley Insurance Group generates significant improvement in operating earnings, leading to stronger risk-adjusted capitalization and enhanced financial leverage, and continues to maintain a conservative approach to reserve creation, and manages to remain ahead of the competition then an upward revision in outlook is possible.

Alternatively, if W. R. Berkley Insurance Group witnesses considerable adverse reserve development, weakening risk-adjusted capitalization, deteriorated financial leverage and a significant decline in operating earnings or future earnings, then a downward revision is likely.

W. R. Berkley Corp. carries a Zacks Rank #4 (Sell). Better-ranked property & casualty insurers include The Allstate Corp. ( ALL ), Arch Capital Group Ltd. ( ACGL ) and The Chubb Corp. ( CB ). All these companies carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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