Berkley W R Corp (NYSE: WRB)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0000011544
Market Cap 38.52 Bn
P/B 10.71
P/E 124.63
P/S 8.69
ROIC (Qtr) 16.30
Div Yield % 1.63
Rev 1y % (Qtr) 10.82
Total Debt (Qtr) 2.87 Bn
Debt/Equity (Qtr) 0.29
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About

W. R. Berkley Corporation (WRB) is a prominent insurance holding company that operates in the commercial lines insurance market. It is based in Greenwich, Connecticut, and was established in 1970. The company's stock is publicly traded on the New York Stock Exchange under the ticker symbol WRB. WRB operates through two main segments: Insurance and Reinsurance & Monoline Excess. The Insurance segment is further divided into several businesses, including Excess & Surplus Lines, Industry Specialty, Product Specialty, Regional, and Specialty. The Reinsurance...

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Investment thesis

Bull case

  • Strong operating cash flow of 3.40B provides robust 1.18x coverage of total debt 2.87B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 3.40B provides exceptional 26.75x coverage of interest expenses 127.02M, showing strong debt service capability.
  • Strong tangible asset base of 43.53B provides 15.14x coverage of total debt 2.87B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 3.40B provides strong 62.13x coverage of stock compensation 54.68M, indicating sustainable incentive practices.
  • Robust free cash flow of 3.33B exceeds capital expenditure of 67.69M by 49.19x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 3.40B barely covers its investment activities of (1.87B), with a coverage ratio of -1.81, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 3.40B provides thin coverage of dividend payments of (508.80M) with a -6.68 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 3.40B provides insufficient coverage of deferred revenue obligations of 6.91B, which is 0.49x, raising concerns about future service delivery capabilities.
  • Operating earnings of 2.56B show weak coverage of depreciation charges of (46.47M), with a -55.19 ratio indicating high capital intensity and potential reinvestment needs.
  • Retained earnings of 13.31B provide limited buffer against comprehensive income items of (506.16M), which is -26.29x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Insurance - Property & Casualty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PGR Progressive Corp/Oh/ 121.46 Bn 30.80 3.11 6.90 Bn
2 CB Chubb Ltd 109.27 Bn 36.88 5.64 21.01 Bn
3 ALL Allstate Corp 69.21 Bn 29.01 1.62 8.09 Bn
4 TRV Travelers Companies, Inc. 67.61 Bn 10.75 1.38 9.27 Bn
5 HIG Hartford Insurance Group, Inc. 61.19 Bn 37.09 3.27 4.37 Bn
6 WRB Berkley W R Corp 38.52 Bn 124.63 8.69 2.87 Bn
7 CINF Cincinnati Financial Corp 26.91 Bn 74.14 6.73 0.88 Bn
8 MKL Markel Group Inc. 26.46 Bn 13.00 1.68 4.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.90 0.50
EV to Cash from Ops. EV/CFO 124.94 -16.03
EV to Debt EV to Debt 13.74 11.42
EV to EBIT EV/EBIT 83.98 22.13
EV to EBITDA EV/EBITDA 71.91 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 138.26 68.07
EV to Market Cap EV to Market Cap 1.03 0.91
EV to Revenue EV/Rev 8.91 2.31
Price to Book Value [P/B] P/B 10.71 2.97
Price to Earnings [P/E] P/E 124.63 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.75 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 28.00 19.66
Dividend per Basic Share Div per Share (Qtr) 1.34 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 15.26 37.69
Interest Coverage Int. cover (Qtr) 20.19 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 34.04 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 52.81 30.27
Dividend Growth (1y) % Div 1y % (Qtr) 9.57 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 19.67 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 26.93 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 18.53 56.25
EBT Growth (1y) % EBT 1y % (Qtr) 19.69 52.70
EPS Growth (1y) % EPS 1y % (Qtr) 21.57 48.20
FCF Growth (1y) % FCF 1y % (Qtr) -3.87 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.69 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.34 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.45
Cash Ratio Cash Ratio 0.00 0.02
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.29 0.23
Interest Cover Ratio Int Coverage (Qtr) 20.19 -9.19
Times Interest Earned Times Interest Earned (Qtr) 20.19 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.20 14.01
EBIT Margin % EBIT Margin % (Qtr) 17.50 13.05
EBT Margin % EBT Margin % (Qtr) 16.63 12.25
Gross Margin % Gross Margin % (Qtr) 47.50 40.49
Net Profit Margin % Net Margin % (Qtr) 13.00 9.63