Critical Review: W. R. Berkley (WRB) and United Insurance (UIHC)

W. R. Berkley (NYSE: WRB) and United Insurance (NASDAQ:UIHC) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Institutional & Insider Ownership

71.0% of W. R. Berkley shares are held by institutional investors. Comparatively, 31.5% of United Insurance shares are held by institutional investors. 22.1% of W. R. Berkley shares are held by company insiders. Comparatively, 22.6% of United Insurance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

W. R. Berkley has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, United Insurance has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for W. R. Berkley and United Insurance, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W. R. Berkley 0 8 0 0 2.00
United Insurance 0 1 2 1 3.00

W. R. Berkley presently has a consensus price target of $69.67, indicating a potential downside of 1.50%. United Insurance has a consensus price target of $19.00, indicating a potential downside of 4.19%. Given W. R. Berkley’s higher possible upside, analysts plainly believe W. R. Berkley is more favorable than United Insurance.

Profitability

This table compares W. R. Berkley and United Insurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
W. R. Berkley 7.09% 6.14% 1.36%
United Insurance -4.54% -2.29% -0.58%

Dividends

W. R. Berkley pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. United Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. W. R. Berkley pays out 13.1% of its earnings in the form of a dividend. United Insurance pays out -30.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. W. R. Berkley has increased its dividend for 8 consecutive years. United Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares W. R. Berkley and United Insurance’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
W. R. Berkley $7.65 billion 1.13 $601.91 million $4.27 16.56
United Insurance $487.12 million 1.74 $5.69 million ($0.80) -24.79

W. R. Berkley has higher revenue and earnings than United Insurance. United Insurance is trading at a lower price-to-earnings ratio than W. R. Berkley, indicating that it is currently the more affordable of the two stocks.

Summary

W. R. Berkley beats United Insurance on 10 of the 18 factors compared between the two stocks.

About W. R. Berkley

W. R. Berkley Corporation is an insurance holding company. It operates through two segments: Insurance and Reinsurance-Global. The Insurance segment consists of its commercial insurance business operations, comprising excess and surplus lines, and admitted lines, throughout the United States, as well as its insurance business operations in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia. Its Insurance segment comprises business units, such as Acadia Insurance, American Mining Insurance Group, Berkley Accident and Health, Berkley Agribusiness Risk Specialists, Berkley Aviation and Berkley Canada. Reinsurance consists of its reinsurance business on a facultative and treaty basis, in the United States, the United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa. Its Reinsurance segment comprises business units, such as Berkley Re America, Berkley Re Asia Pacific, Berkley Re Direct and Berkley Re UK.

About United Insurance

United Insurance Holdings Corp. is a property and casualty insurance holding company that sources, writes and services residential property and casualty insurance policies using a network of agents and a group of insurance subsidiaries. The Company’s insurance subsidiary is United Property & Casualty Insurance Company. Its other subsidiaries include United Insurance Management, L.C., the managing general agent that manages substantially all aspects of United Property & Casualty Insurance Company’s business; Skyway Claims Services, LLC, which provides services to its insurance affiliate; UPC Re, which provides a portion of the reinsurance protection purchased by its insurance affiliate. The Company’s principal product is homeowners’ insurance, which it offers in Connecticut, Florida, Georgia, Hawaii, Louisiana, Massachusetts, New Jersey, North Carolina, Rhode Island, South Carolina and Texas.

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