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W. R. Berkley Witnesses Premium Growth, Rise in Competition

We issued an updated research report on W. R. Berkley Corporation WRB on Sep 24, 2015.

W.R. Berkley has witnessed continued premium growth over the past several quarters, mainly owing to its startup units. In 2006, when the soft market cycle began, the company started 24 new units (focused on important parts of the U.S. economy including health care, energy and agriculture as well as growing international markets like Scandinavia, Australia, the Asia-Pacific region and South America) to take advantage of the eventual market turn. With the new units continuing to grow and established businesses no longer losing volume, overall growth is visible.

In addition to the startup units, W.R. Berkley's International business segment has seen consistent premium growth over many years. Premium growth in the international unit comes mainly from the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

W.R. Berkley Corp. maintains a solid balance sheet with sufficient liquidity and strong cash flows. These, in turn, help the company to deploy capital via share repurchases and dividend hikes that enhance shareholders' value.

However, W.R. Berkley faces increasingly competitive conditions in its global reinsurance segment. Industry-wide factors such as lack of catastrophe activity and increasing supply of reinsurance capacity have put pressure on rates for the near term, thus restricting growth.

The company's investment income has been under pressure over the past several quarters. The low interest rate environment, which is expected to continue through 2015, will create further pressure on investment income as funds get reinvested for lower yields.

Zacks Rank

W. R. Berkley presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the property and casualty insurance space are The Travelers Companies, Inc. TRV , Hallmark Financial Services, Inc. HALL and NMI Holdings, Inc. NMIH . All three stocks sport a Zacks Rank #1 (Strong Buy).

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TRAVELERS COS (TRV): Free Stock Analysis Report

BERKLEY (WR) CP (WRB): Free Stock Analysis Report

HALLMARK FINL (HALL): Free Stock Analysis Report

NMI HOLDINGS-A (NMIH): Free Stock Analysis Report

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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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