UBS’ Top Quant Stocks In AI, IT, Healthcare & Other Sectors: Top 33 Stocks In All Sectors

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

Number of Hedge Fund Investors In Q2 2024: 31

Sector: Financials

W. R. Berkley Corporation (NYSE:WRB) is one of the biggest insurance underwriters in America. It is a well-diversified insurance company that benefits from sizable premium contributions from casualty, short tail, and auto premiums. As of H1 2024, these three segments accounted for 41%, 20%, and 14.6% of W. R. Berkley Corporation (NYSE:WRB)’s net premiums, respectively. This makes it clear that the firm depends to a large extent on the property and casualty market for its financial well-being. Consequently, W. R. Berkley Corporation (NYSE:WRB)’s future depends on the firm’s ability to navigate the current climate change-driven disruptions that the casualty insurance market is facing. The firm took a sizable $98 million hit from Hurricane Helene in its Q3, and after it released the results, W. R. Berkley Corporation (NYSE:WRB)’s shares dropped by 4%. On the auto insurance front, the firm focuses exclusively on the commercial market which makes it vulnerable to economic slowdowns and social inflation but also carries the promise of sizable premiums through insuring large fleets.

During the Q3 2024 earnings call, W. R. Berkley Corporation (NYSE:WRB)’s management shared details of climate catastrophes on its business:

“During the quarter there were four hurricanes that made landfall, with Helene being the most destructive across several states and continuing SCS activity that contributed modestly to the total amount of CAT losses. Our net premiums written grew above $3 billion for the second consecutive quarter and continues to benefit our record net premiums earned, which increased 10.8% over the prior year. Current accident year underwriting income, excluding CATs, increased 13.4% to $362 million pre-tax, adjusted for CAT losses of $98 million and prior year favorable development of $1 million. Our current accident year loss ratio, ex-CAT, improved quarter-over-quarter by [1.5] (ph) to 59.1% driven by business mix. We continue to invest in the business to drive efficiencies and better experience for our customers combined with new startup operating units that we’ve announced before.

The combination of these items along with the changes in business mix and reinsurance structures have contributed to the increase in our expense ratio by 20 basis points to 28.5%. As previously communicated, we continue to believe that our expense ratio should remain comfortably below 30%.”