W.R. Berkley (WRB) was cut to In Line from Outperform, with a new price target of $79, up from $69 at Evercore ISI, as the firm now sees a slight downside to consensus estimates in 2024 and is 5% below in 2025.
Analysts at the firm explained that there is upward pressure on 2024 loss ratios from increased conservatism.
"WRB also has more exposure to workers comp at ~15% of total premiums that is an added headwind to ULRs," the analysts said. "While WRB was the worst-performing commercial lines stock in our coverage in '23 (-3% vs +2% average), it has been the best over the last 6mo (+25% vs +19%) and has outperformed over the last 9 mo (+18% vs +15%)."
The recovery, combined with lower new money yields and Evercore's continued concerns with social inflation, makes the firm believe the risk-reward is more balanced.
"We acknowledge that a reacceleration in casualty insurance rates would be a positive for WRB, but we believe it is too early to get constructive given uncertainty around loss cost trends," added the analysts.