All good things must eventually come to an end, including a P&C market that’s as hot as anything I’ve seen in my investment career. That, and a robust valuation, are really the only explanations I can come up with for W. R. Berkley’s (WRB) lackluster performance since my last update – the shares are up about 10%, narrowly underperforming the broader P&C market and underperforming the S&P 500 by a couple percentage points.
I don’t think the hard P&C markets are going to soften overnight, but pricing does seem to be trending down, and a combination of mediocre investment yields and rising inflation is not a good one for P&C insurers. I continue to believe that W. R. Berkley is one of the best-run insurance companies out there, and that the company will reap the benefits of business they’re writing today for a while, but it’s tough to call this an undervalued stock.
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