Evercore ISI Downgrades W.R. Berkley (WRB) to In Line

Evercore ISI analyst David Motemaden downgraded W.R. Berkley (NYSE: WRB) from Outperform to In Line with a price target of $79.00 (from $69.00).

The analyst comments "We downgrade WRB to In Line from Outperform as we now have slight downside to consensus estimates in ’24 and are 5% below in ’25 as we believe upward pressure on ’24 loss ratios from increased conservatism we expect mgmt to embed in loss picks will lead to underwriting income misses. WRB also has more exposure to workers comp at ~15% of total premiums that is an added headwind to ULRs. While WRB was the worst performing commercial lines stock in our coverage in ’23 (-3% vs +2% average), it has been the best over the last 6mo (+25% vs +19%) and has outperformed over the last 9 mo (+18% vs +15%). This recovery combined with lower new money yields (-70bps since 3Q) and our continued concerns with social inflation to which WRB has the most exposure (Fig 2) makes us believe the risk reward is more balanced. We acknowledge that a reacceleration in casualty insurance rates would be a positive for WRB, but we believe it is too early to get constructive given uncertainty around loss cost trends. The P/E has de-rated over the last several years as earnings power has normalized following a period of 8-11% ROEs from 2010-2020 so at current return levels (~19% ROE) we think the current ~13x P/E multiple is justified."

For an analyst ratings summary and ratings history on W.R. Berkley click here. For more ratings news on W.R. Berkley click here.

Shares of W.R. Berkley closed at $72.61 yesterday.

You May Also Be Interested In

• Wolfe Research Downgrades T-Mobile (TMUS) to Peerperform
• New Street Research Upgrades Micron Technology (MU) to Buy
• Freedom Broker Upgrades Lifeway Foods (LWAY) to Buy