AM Best Revises Issuer Credit Rating Outlook to Positive for Credit Ratings of W. R. Berkley Corporation and Its Subsidiaries
AM Best has revised the outlooks from stable to positive for the Long-Term Issuer Credit Rating (ICR) of W. R. Berkley (WRB) and its subsidiaries. The Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICR of 'aa-' (Superior) have been affirmed for Berkley Insurance Company and its affiliates. This positive outlook reflects Berkley Group's strong operating performance, double-digit returns, and consistent financial strength. The company has reported significant top- and bottom-line growth, with a GAAP return on equity of 23.7% in Q1 2024. Additionally, the group's debt leverage decreased to 20.8% by the end of 2023, indicating robust capitalization and effective enterprise risk management (ERM).
- Outlook revised to positive from stable for W. R. Berkley's Long-Term ICR.
- Affirmed FSR of A+ (Superior) for Berkley Insurance Company and affiliates.
- Strong operating performance with double-digit returns.
- Record top- and bottom-line growth over the past few years.
- GAAP return on equity of 23.7% in Q1 2024.
- Debt leverage decreased to 20.8% by year-end 2023.
- Consistent risk-adjusted capitalization at the strongest level as per BCAR.
- Strong liquidity and interest coverage metrics.
- Effective ERM practices and risk modeling capabilities.
- Highly competitive medical stop-loss market dominated by larger national carriers.
- Subordinated debentures rated 'bbb+' (Good), indicating lower credit quality compared to senior notes.
Insights
W. R. Berkley Corporation's recent ratings outlook revision to positive from stable by AM Best is a significant update for investors. This shift highlights the company's robust financial performance and prudent management practices. In the first quarter of 2024, their GAAP return on equity was
Additionally, a debt leverage ratio of
However, it is important to remain cautious of potential market fluctuations and the highly competitive nature of the insurance industry, which could impact future performance. Monitoring ongoing financial health and market positioning will be critical for future investment decisions.
The affirmation of W. R. Berkley's Financial Strength Rating (FSR) of A+ (Superior) underscores the company's strong underwriting practices and risk management. The decentralized business model allows Berkley to be agile and competitive in various markets, which is important for sustaining growth and profitability. The group's ability to maintain favorable market share and grow organically through new business opportunities is a testament to its effective strategy and operational execution.
Furthermore, the company's leading position in the group captive and medical stop-loss markets, despite the competitive landscape, indicates strong market acumen and product strategy. However, the medical stop-loss market's competitiveness means that maintaining this position will require continuous innovation and operational excellence.
Overall, the integration of Berkley Life and Health's operations into the parent company's strategic plans and risk management frameworks further solidifies the group's financial and operational resilience. These factors collectively enhance the investor's confidence in the company's long-term prospects.
The Credit Ratings (ratings) of Berkley Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR outlook revision to positive from stable reflects Berkley Group’s favorable operating performance metrics and its outperformance of industry trends over the most recent five-year period. Berkley Group continues to generate strong double-digit returns and has reported record top- and bottom-line growth in each of the past few years. In the first quarter of 2024, Berkley Group reported net premium growth across its core lines of business, with GAAP return on equity of
The group continues to maintain favorable market share in its core lines of business, as well as growth organically through new businesses and opportunities. Berkley Group’s core strength is its decentralized business model and its ability to compete effectively in various markets. The group maintains a recognized presence in multiple domestic and international markets and its diverse distribution and portfolio of products are drivers of favorable trends reported over the past five-year period. Berkley Group’s effective ERM practices and risk modeling capabilities are supportive of its current investment and operational risks, as demonstrated by the lack of volatility of financial results and overall robust capitalization of the enterprise.
Berkley Group’s balance sheet strength assessment is anchored by its consistent strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Debt leverage has trended downward in the past five-year period and was
The ratings of Berkley Life and Health reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also reflect the financial and operational support of the parent company.
Berkley Life and Health’s balance sheet strength assessment is supported by its risk-adjusted capitalization assessed at the strongest level, as measured by BCAR. The company has strengthened its risk-adjusted capitalization annually in each of the last five years, while also maintaining conservative, high-quality investments and favorable liquidity metrics.
Berkley Life and Health continues to grow premium, driven by new and renewal sales of its group captive and medical stop-loss products. The company has reported increasing pre-tax net operating gains in recent years, due mainly to favorable underwriting experience.
Berkley Life and Health is a market leader in the group captive market and maintains a market niche in the small group medical stop-loss space. However, the medical stop-loss market is highly competitive and is dominated by larger national carriers. The company receives explicit and implicit support from W. R. Berkley, and is fully integrated into the parent organization’s operations, strategic plans and ERM program.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with the outlooks of the Long-Term ICRs revised to positive from stable, while the outlook of the FSR is stable, for the following members of W. R. Berkley Insurance Group:
- Acadia Insurance Company
- Admiral Indemnity Company
- Admiral Insurance Company
- Berkley Casualty Company
- Berkley Assurance Company
- Berkley Insurance Company
- Berkley National Insurance Company
- Berkley Prestige Insurance Company
- Berkley Regional Insurance Company
- Berkley Specialty Insurance Company
- Carolina Casualty Insurance Company
- Clermont Insurance Company
- Continental Western Insurance Company
-
Firemen’s Insurance Company of
Washington, D.C. - Gemini Insurance Company
- Great Divide Insurance Company
- Intrepid Casualty Company
- Intrepid Insurance Company
- Intrepid Specialty Insurance Company
- Key Risk Insurance Company
- Midwest Employers Casualty Company
- Nautilus Insurance Company
- Preferred Employers Insurance Company
- Queen’s Island Insurance Company, Ltd.
- Riverport Insurance Company
- StarNet Insurance Company
-
Tri-State Insurance Company of
Minnesota - Union Insurance Company
- Union Standard Lloyds
- W. R. Berkley Europe AG
- Berkley International Seguros Mexico S.A.
- Berkley International Fianzas Mexico S.A.
The following Long-Term IRs have been affirmed with the outlooks revised to positive from stable:
W. R. Berkley Corporation—
-- “a-” (Excellent) on
-- “a-” (Excellent) on
-- “a-” (Excellent) on 470 million,
-- “a-” (Excellent) on
-- “a-” (Excellent) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
-- “bbb+” (Good) on
The following indicative Long-Term IRs under the shelf registration have been affirmed with the outlooks revised to positive from stable:
W. R. Berkley Corporation—
-- “a-” (Excellent) on senior unsecured debt
-- “bbb+” (Good) on subordinated debt
-- “bbb” (Good) on preferred stock
W. R. Berkley Capital Trust III—
-- “bbb” (Good) on preferred securities
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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Kate Steffanelli
Associate Director
+1 908 882 2337
kate.steffanelli@ambest.com
Brian Virostek
Financial Analyst
+1 908 882 2417
brian.virostek@ambest.com
Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com
Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com
Source: AM Best
FAQ
What is the new outlook for W. R. Berkley's Long-Term Issuer Credit Rating?
What Financial Strength Rating (FSR) has AM Best affirmed for Berkley Insurance Company?
How did W. R. Berkley perform financially in the first quarter of 2024?
What is the debt leverage of W. R. Berkley as of year-end 2023?
What rating did AM Best assign to W. R. Berkley's subordinated debentures?
