W.R. Berkley Corporation (NYSE:WRB) has offered $290 million of 5.75% Subordinated Debentures that are scheduled to mature in 2056.
The company plans to use the proceeds from the debentures for general corporate purposes.
The insurer displays its prudence by issuing debentures in the current low rates environment to procure funds that will effectively lower its interest burden. By capitalizing on the low interest rate environment, the company is consciously making efforts to reduce its interest burden, thereby facilitating margin expansion. In fact, most companies are choosing to issue debt before the interest rates increase.
Also, the company’s operational strength will enable it service debt uninterruptedly and hence, maintain its creditworthiness. Notably, W.R. Berkley enjoys the strongest ratings from most credit rating firms.
As of Mar 31, 2016, long-term debt of the company was $2.3 billion compared with $2.2 billion at the end of 2015. This reflects a 4.5% increase. The debt-to-equity ratio was 0.48x at the end of Mar 31, 2016 as against 0.47x at year-end 2015. Following the issuance of these debentures, debt to equity ratio will increase to 0.54x, which represents a 600 basis points increase.
Zacks Rank and Stocks to Consider
Currently, W.R. Berkley carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same sector include Alleghany Corp. (NYSE:Y) , National General Holdings Corp. (NASDAQ:NGHC) and OneBeacon Insurance Group (NYSE:OB) . While Alleghany sports a Zacks Rank #1 (Strong Buy), both National General Holdings and OneBeacon Insurance hold a Zacks Rank #2 (Buy).
BERKLEY (WR) CP (WRB): Free Stock Analysis Report
ONEBEACON INSUR (OB): Free Stock Analysis Report
ALLEGHANY CORP (Y): Free Stock Analysis Report
NATIONAL GNL HL (NGHC): Free Stock Analysis Report
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