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W.R. Berkley Earnings: As Expected, Firing on All Cylinders
W.R. Berkley produced strong overall results in the first quarter as it continues to benefit from a hard underwriting market and higher investment income. The annualized return in the quarter for the narrow-moat company was a very impressive 24%, which was a solid sequential improvement. While we appreciate W.R. Berkley’s current strength, we think insurance markets are inherently mean-reverting over time, and the outsize returns that the company is enjoying now will dissipate. We think the market is overly focused on W.R. Berkley's near-term prospects and the shares are a bit overvalued as a result.