W.R. Berkley Earnings: Another Strong Quarter Due to Favorable Market Conditions

We think W.R. Berkley’s underwriting discipline gives it greater leverage to hard markets like the one commercial insurers are currently enjoying, and recent investment decisions have paid off handsomely over the past year. As a result, the narrow-moat company has produced strong returns recently, which continued in the fourth quarter with W.R. Berkley generating a 31% annualized return on equity. Excluding realized investment gains, annualized ROE in the quarter would have been 24%, which is at the high end of the company’s range this year. We will maintain our $52 fair value estimate. We see shares as modestly overvalued as we believe the market is overly focused on near-term tailwinds.