W. R. Berkley (WRB)

Property casualty insurer W. R. Berkley (NYSE:WRB) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 10.8% year on year to $3.77 billion. Its non-GAAP profit of $1.10 per share was in line with analysts’ consensus estimates.

Company Overview

Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE:WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

W. R. Berkley competes with other property and casualty insurers including Chubb (NYSE:CB), Travelers (NYSE:TRV), The Hartford (NYSE:HIG), and American International Group (NYSE:AIG). In the reinsurance market, it faces competition from major players such as Swiss Re, Munich Re, and Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).

Insurance companies earn revenue from three primary sources: 1) The core insurance business itself, often called underwriting and represented in the income statement as premiums 2) Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities 3) Fees from various sources such as policy administration, annuities, or other value-added services. Over the last five years, W. R. Berkley grew its revenue at an exceptional 13.6% compounded annual growth rate. Its growth surpassed the average insurance company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. W. R. Berkley’s annualized revenue growth of 10.8% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, W. R. Berkley reported year-on-year revenue growth of 10.8%, and its $3.77 billion of revenue exceeded Wall Street’s estimates by 1.7%.

Net premiums earned made up 84.9% of the company’s total revenue during the last five years, meaning W. R. Berkley barely relies on non-insurance activities to drive its overall growth.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

W. R. Berkley’s net premiums earned has grown at a 12.6% annualized rate over the last five years, better than the broader insurance industry and in line with its total revenue.

When analyzing W. R. Berkley’s net premiums earned over the last two years, we can see that growth decelerated to 9.7% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. While these supplementary streams affect the bottom line, their contribution can fluctuate. Some firms have been more successful and consistent in investing their float over the long term, but sharp movements in the fixed income and equity markets can play a substantial role in short-term performance.

W. R. Berkley’s net premiums earned came in at $3.16 billion this quarter, up 7.8% year on year and in line with Wall Street Consensus estimates.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

Combined ratio sums operating costs (salaries, commissions, overhead) with what is paid out in claims (losses) and divides this by net premiums earned. Combined ratios under 100% means profits while ones over 100% mean losses on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last five years, W. R. Berkley’s combined ratio has swelled by 5.3 percentage points, going from 90.1% to 91.1%. However, fixed cost leverage was muted more recently as the company’s combined ratio was flat on a two-year basis.

In Q3, W. R. Berkley’s combined ratio was 90.9%, close to analysts’ expectations. This result was in line with the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

W. R. Berkley’s EPS grew at an astounding 35.5% compounded annual growth rate over the last five years, higher than its 13.6% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its combined ratio didn’t improve.

We can take a deeper look into W. R. Berkley’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, W. R. Berkley’s combined ratio was flat this quarter but improved by 5.3 percentage points over the last five years. On top of that, its share count shrank by 5.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For W. R. Berkley, its two-year annual EPS growth of 17.6% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.

In Q3, W. R. Berkley reported adjusted EPS of $1.10, up from $0.93 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects W. R. Berkley’s full-year EPS of $4.29 to grow 7.6%.

Insurance companies are balance sheet businesses, collecting premiums upfront and paying out claims over time. The float–premiums collected but not yet paid out–are invested, creating an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

W. R. Berkley’s BVPS grew at an impressive 11.5% annual clip over the last five years. BVPS growth has also accelerated recently, growing by 20.1% annually over the last two years from $17.87 to $25.79 per share.

Over the next 12 months, Consensus estimates call for W. R. Berkley’s BVPS to grow by 20.7% to $27.00, elite growth rate.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

W. R. Berkley currently has $2.84 billion of debt and $9.80 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.3×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on Equity, or ROE, ties everything together and is a vital metric. It tells us how much profit the insurer generates for each dollar of shareholder equity entrusted to management. Over a long period, insurers with higher ROEs tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, W. R. Berkley has averaged an ROE of 19.5%, exceptional for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows W. R. Berkley has a strong competitive moat.

It was encouraging to see W. R. Berkley beat analysts’ revenue expectations this quarter, although EPS just met Wall Street's projections. On the other hand, its combined ratio and book value per share both. Overall, this was a mixed quarter. The stock remained flat at $73.02 immediately following the results.

Updated: December 4, 2025 at 11:20 PM EST

When considering an investment in W. R. Berkley, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

W. R. Berkley is a high-quality business worth owning. For starters, its revenue growth was exceptional over the last five years. And while its projected EPS for the next year is lacking, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders. Additionally, W. R. Berkley’s estimated BVPS growth for the next 12 months is great.

W. R. Berkley’s P/B ratio based on the next 12 months is 2.7x. There’s no doubt it’s a bit of a market darling given the lofty multiple, but we don’t mind owning a high-quality business, even if it’s expensive. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with high valuations.

Wall Street analysts have a consensus one-year price target of $74.20 on the company (compared to the current share price of $70.88).