Highlights from Zacks analyst blog: Berkshire Hathaway, Brown & Brown and WR Berkley


For immediate release

Chicago, IL – December 10, 2021 – Zacks.com announces the list of stocks featured on the Analysts Blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Berkshire Hathaway Inc. (BRK.B), Brown & Brown, Inc. BRO and WR Berkley Corp. WRB.

Here are highlights from Thursday’s analyst blog:

3 insurance actions about to continue their momentum in 2022

The insurance industry had a mixed year 2021 after a difficult 2020 when the pandemic took its toll. Although the industry has experienced an above-average hurricane season this year, better pricing and reinsurance programs have helped absorb the losses. The heightened awareness in the wake of the pandemic continues to support the life insurance business.

However, concerns about the new variant of the virus persist. The sector has gained 10.4% year-to-date, compared to the financial sector’s 21.1% gain and the Zacks S&P 500 Composite Index’s rally of 25.8%.

Actions of Berkshire Hathaway, Brown & Brown and WR Berkley have outperformed the industry and gained over 20% to date this year. All are poised to continue the bull run over the next year, given their operational excellence.

The economy has grown at a steady pace, as evidenced by GDP which grew at an annualized rate of 2.1% in the third quarter. According to the Fed’s September economic projections, GDP in 2022 is expected to grow 3.8% while the unemployment rate is expected to be 3.8%. As the insurance industry is a major contributor to the country’s GDP, it is poised for growth given the economic expansion.

Growth drivers

The improvement in the pricing environment is expected to continue through 2022. Based on Willis Towers Watson’s 2022 insurance market realities, rates will continue to increase, but with a small margin. The third quarter of 2021 marked the 16th consecutive quarter of price increases by swamp.

Better pricing, improved underwriting standards and streamlined operations should continue to fuel the premium. Life insurance premiums are expected to increase 4%, while non-life insurance premiums are expected to increase 3.7% in 2022, according to Deloitte Insights.

The possibility of an interest rate hike in 2022 makes insurers well positioned to improve their investment income, as they are the direct beneficiaries of a rising rate environment. Insurers invest part of the premiums collected. Therefore, higher rates should help generate higher investment income.

Technologies such as blockchain, artificial intelligence, advanced analytics, telematics, cloud computing and robotic process automation facilitate underwriting and complaint handling, improving operational efficiency. According to Deloitte Insights, the technology budget is expected to increase by 13.7% in 2022.

Choices for 2022

Given their operational efficiency and with the help of the Zacks Stock Screener, we have selected three insurance stocks well placed to maintain the rally in 2022. These stocks carry a Zacks Rank # 1 (Strong Buy) or # 2 (Buy ) and saw the estimates move north for 2022.

You can see the full list of today’s Zacks # 1 Rank stocks here.

Omaha, NE Berkshire Hathaway holding company, has more than 90 subsidiaries in the fields of insurance, railways, utilities, manufacturing services, retail and residential construction. BRK.B has one of the largest P&C insurance companies in terms of premium volume.

The continued growth of the insurance business fuels an increase in free float, boosts earnings and generates maximum return on equity. With Warren Buffett at the helm, Berkshire has been creating tremendous shareholder value for more than five decades.

Berkshire is expected to continue to benefit from growth in its insurance business as well as the manufacturing, services and retail, and finance and financial products segments.

With a huge reserve of cash, Berkshire Hathaway will successfully continue its frenzy of acquisitions. While large acquisitions open up more business opportunities, targeted acquisitions improve the profits of the existing business.

Zacks’ consensus estimate for 2022 earnings shows 6.8% year-over-year growth. It has risen 0.8% over the past 30 days. The expected long-term earnings growth rate is set at 7%.

Berkshire shares have risen 22.3% year-to-date.

Daytona Beach, Florida, Brown & Brown markets and sells insurance products and services primarily in the United States, as well as in London, Bermuda and the Cayman Islands. This broker Zacks Rank # 2 has total shareholder returns of 205% over five years, well above its peer group and the S&P 500.

Improved new business and continued rate increases for most coverage lines are expected to help improve revenue, which recorded a 10-year CAGR of 10% and exceeded the peer average and S&P 500. Strategic investments to drive organic growth, improve efficiency and auspicious margin.

In its efforts to restore shareholder value, Brown and Brown has increased its dividends over the past 28 years. He has $ 323.6 million remaining under his share buyback authorization.

Zacks’ consensus estimate for 2022 earnings implies 4.7% year-over-year growth for 7.6% higher revenue. The consensus estimate has risen 1.8% in the past 30 days.

Improved commissions and fees, strong liquidity and efficient capital deployment continue to boost Brown and Brown.

Shares of Brown and Brown are up 42.7% year-to-date.

Greenwich, based on CT, WR Berkley Corp. is one of the largest providers of commercial property and casualty insurance in the country.

Several new start-up units in various industries, expansion of international activities offering diversification benefits, higher rates, benefits derived from market upheavals and high retention are expected to boost insurance business.

WR Berkley’s premium growth in the international unit is primarily driven by the emerging markets of UK, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

Relying on its stable cash flow, WR Berkley has increased its dividends 16 times since 2005 and paid 13 exceptional dividends since 2012. WRB is targeting a 15% ROE over the long term.

Zacks’ consensus estimate for 2022 earnings suggests 4.8% year-over-year growth on revenue 14.6% higher. The consensus estimate has risen 3.7% in the past 30 days. The expected long-term earnings growth rate is set at 7%.

Rate hikes, reserve discipline, balance sheet strength and prudent capital management policies should continue to motivate WR Berkley.

WR Berkley shares have risen 20.3% year-to-date.

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