Homeowner’s Insurance Rates Skyrocketing: 10 Best Stocks To Buy

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

Number of Hedge Fund Investors  in Q1 2024: 36

W. R. Berkley Corporation (NYSE:WRB) is a property and casualty insurance company that focuses primarily on insuring high value and luxury homes. A Fortune 500 firm, it is one of the biggest commercial underwriters in the industry. Rising insurance premiums have served W. R. Berkley Corporation (NYSE:WRB) well, as its second quarter revenue jumped by 15% and was led by a 52% growth in its investment income which benefits from a high rate environment that has pushed bond yields higher. This also creates a double edge sword for W. R. Berkley Corporation (NYSE:WRB). While any potential fall in interest rates will lead to stock tailwinds, their impact on the income statement will be delayed. However, lower rates and potentially lower yields can cause near immediate impact on the investment income.

W. R. Berkley Corporation (NYSE:WRB)’s management shared its thoughts during the Q1 2024 earnings call on how it managed to deliver a profitable combined ratio despite higher payouts in the property market:

“Before I hand it to Rich, I guess perhaps stating the obvious, clearly an active quarter of frequency of what I would define as severity, but perhaps relatively modest severity on the property front.

From our perspective, it was an opportunity for this organization to differentiate itself as it does when there is severity on the property market front. And in spite of all the challenges, we were still able to deliver a 91% combined. I guess for those that subscribe to the [but for] (ph) club, it would be an 88%. But when we look at the goal of the exercise being to generate good risk-adjusted returns to build the book value, we are of the view that cats do count and so does net development. In our opinion, it’s not just about the steps forward that you take, it’s also about the steps backwards that you will avoid. And that is very much woven into how we approach the business on all fronts.”