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Even The Smartest Investors Don’t Understand P&C Insurance
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I’ve been writing about and recommending the shares of W.R. Berkley (NYSE: WRB) since 2012.
There are lots of reasons to love this property & casualty (P&C) business, but to me what’s so special about W.R. Berkley is that it’s a family business. It was founded by Bill Berkley in the late 1960s while he was still a student at Harvard. Today his son William Jr. is the CEO.
Like Warren Buffett, Bill was an investor and has deliberately created one of capitalism’s most consistent compounding machines. Here, I’m going to explain the secret to these P&C insurance businesses: because they are money machines.
Last year, W.R. Berkley produced extraordinary results. Net income grew 45% to a record $576 million after taxes. The business produced earnings equal to 30% of its starting 2024 equity. And it returned almost $300 million to investors via dividends, special dividends, and share buybacks.
W.R. Berkley has two core sources of income.