On Jun 6, 2014, property and casualty insurer W. R. Berkley Corp. ( WRB ) surged to a 52-week high of $45.58. The rally in the stock was driven by the recent dividend increase and strong first-quarter earnings.
Year-to-date from the stock came in at 17.6%, which was way ahead of the S&P's return of 6.4%.
With respect to earnings performance, this Zacks Rank #1 (Strong Buy) property and casualty insurer delivered a positive surprise in three out of the last four quarters, with an average beat of 10.7% and with the highest surprise coming at 28.2% in the last reported quarter.
W.R. Berkley Corp. is niche market player in the property and casualty insurance industry. The company has positioned itself well to take advantage of hardening in the insurance market by forming several new units over the past few years. The expected long-term earnings growth rate for the stock is 9%.
Premiums written for its core business have increased and the new units are accretive to earnings. Average renewal rates are on the rise and so is the price trend.
Also commendabe is W.R. Berkley Corp.'s positive net reserve development with first quarter of 2014 representing the 29 quarter in a row of net positive reserve development. This signifies the company's robust underwriting discipline.
W.R. Berkley Corp.'s balance sheet, which is adequately capitalized, is also a major company strength. The company has maintained its practice of increasing yearly dividends.
In May, W.R. Berkley Corp. made a 10% dividend hike representing new annualized rate of 44 cents per share and represented ninth consecutive increase from 12 cents paid in 2005. The company's 5 year dividend growth rate stands at 10.6% compared with 9.3% for the industry.
In our view, the stock is well poised to return value to its shareholders over the long term.
Other stocks from the same industry, Allied World Assurance Company Holdings, AG ( AWH ), AmTrust Financial Services, Inc. ( AFSI ) and Aspen Insurance Holdings Ltd . ( AHL ) with the same rank as W.R. Berkley Corp. are also worth considering.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.