Evercore ISI Downgrades W.R. Berkley on Margin and Growth Headwinds

Core Viewpoint - Evercore ISI downgraded W.R. Berkley from In Line to Underperform and reduced its price target to $69.00 from $70.00, resulting in a more than 1% decline in shares during pre-market trading [1] Group 1: Earnings Estimates and Growth - Evercore anticipates approximately 4% downside to consensus EPS estimates for 2026–2027 due to margin pressure and slowing top-line growth [2] - The firm highlighted rising loss ratios as Berkley adopts greater conservatism in loss picks, alongside slower growth in liability lines, particularly in E&S small liability and workers' compensation, where growth is expected to moderate following strong employment trends in 2025 [2] Group 2: Reserve Concerns - Analysts flagged reserve concerns, noting that Berkley recorded $485 million of adverse development on accident years 2022 and prior through Q3 2025, partially offset by favorable development in more recent years [3] - While no net adverse prior-year development is expected in 2026, ongoing conservative reserving is believed to pressure current-year loss ratios, potentially leading to EPS misses and negative estimate revisions [3] - Maintaining rate discipline amid pressures in certain casualty lines could result in volume sacrifices and top-line shortfalls [3]