Zinger Key Points
- WR Berkley’s margins are likely to expand, with pricing continuing to be higher than claim cost trend.
- Concerns around the company’s reserve development have eased.
Shares of WR Berkley Corp WRB have gained more than 7% over the past month after the company reported in late October upbeat third-quarter earnings.
The company is poised to benefit from continued strong casualty pricing increases well into 2025, according to Goldman Sachs.
Analyst Robert Cox upgraded the rating for WR Berkley from Neutral to Buy, while keeping the price target at $69.
The Thesis: The company is likely to continue earning insurance pricing higher than the claim cost trend, resulting in margin expansion, Cox said in the upgrade note.
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The Street estimates suggest a material deterioration in the insurance segment loss ratio, despite WR Berkley continuing to earn insurance pricing higher than claims, he added.
Strong pricing and improving paid-to-incurred loss ratios have eased the concerns around reserve development and above-average investment leverage "drive our net investment income estimates 5% above the street in 2026," the analyst stated.
"Lastly, our analysis on the E&S market cyclical and secular factors drive improved premium growth estimates, as we believe additional casualty insurance policies will enter the E&S market where WRB earns ~40% of its premiums," he further wrote.
Price Action: Shares of WR Berkley had risen by 1.17% to $63 at the time of publication on Monday.
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