Car Insurance Rates Skyrocketing: 10 Best Stocks to Buy

6. W. R. Berkley Corporation (NYSE:WRB)

Number of Hedge Fund Investors  in Q1 2024: 36

W. R. Berkley Corporation (NYSE:WRB) is one of the biggest commercial insurance underwriters in America. Its scale also allows it to target the commercial auto insurance industry through a diverse package that even provides medical coverage to drivers regardless of fault. W. R. Berkley Corporation (NYSE:WRB)’s shares are up by an impressive 14% year to date as it benefits from the fall through effects of rising premiums. During its second quarter, W. R. Berkley Corporation (NYSE:WRB)’s revenue jumped by 15% annually, with the firm benefiting from rising bond yields that contributed to its investment income jumping by 52%. W. R. Berkley Corporation (NYSE:WRB)’s pure play focus on commercial auto insurance means that it can benefit from stable revenues. At the same time, this also leaves it quite vulnerable to economic downturns as businesses slow their fleet growth during these times which can lead to lower new additions or upgrades to existing plans. Additionally, commercial auto is quite vulnerable to social inflation due to the large payouts from truck and other large vehicle accidents.

W. R. Berkley Corporation (NYSE:WRB)’s management provided a rather simple explanation for the riskiness of commercial auto during its Q2 2024 earnings call where it shared:

“There’s no evidence that we see at this time of the issues that we’re seeing in umbrella, if you will, spilling over to the other product lines or the issues that we’re seeing specifically in auto, I should say, spreading to the other product lines. So that differently, we feel quite comfortable at the moment with the GL. As far as the auto goes, it’s a challenging movement. I mean, you drive down I-95 or whatever highway you go down and every other billboard is plaintiff’s attorney with their phone number in case a truck cuts you off. And from our perspective, the trend is meaningful, and we need to make sure that we keep up with it. And we want to make sure that the old years are in a reasonable place. And that obviously, as mentioned a few moments ago, has implications, still relatively modest implications, for umbrella.”