W.R. Berkley Earnings: Better Pricing and Higher Interest Rates Continue to Drive Strong Returns

Coming into the year, we thought W.R. Berkley was one of the best-positioned insurers, and the company’s third-quarter results further reinforce that opinion. On the underwriting side, W.R. Berkley is encountering ongoing benefits from a harder pricing market. On the investment side, management’s previous decision to lower fixed income duration has paid off this year. Finally, the company’s relatively low catastrophe exposure reduces a drag that some other insurers are seeing right now. The net result was an annualized return on equity of 19.8% for the third quarter. We think the narrow-moat company is built to exploit attractive market conditions, and W.R. Berkley seems to be seizing on the current opportunity. We will maintain our $65 per share fair value estimate and view the shares as roughly fairly valued right now.