WR Berkley Corp (WRB) Q1 2025 Earnings Call Highlights: Strong Growth Amidst Challenges

Yahoo

22-04-2025

Net Income: $418 million or $1.04 per share.
Annualized Return on Equity: 19.9%.
Operating Earnings: $405 million or $1.01 per share.
Calendar Year Combined Ratio: 90.9%.
Current Accident Year Combined Ratio (excluding cat losses): 87.2%.
Catastrophe Losses: 3.7 loss ratio points or $111 million.
Net Premiums Earned: $3 billion.
Net Premiums Written: Over $3.1 billion.
Insurance Segment Growth: 10.2% to $2.7 billion.
Reinsurance & Monoline Excess Segment Growth: 8.2% to $439 million.
Net Investment Income: Increased 12.6% to $360 million.
Net Invested Assets: $30.7 billion.
Operating Cash Flows: $744 million.
Foreign Currency Losses: $19 million.
Effective Tax Rate: 22.5%.
Stockholders' Equity: Increased by more than $500 million to $8.9 billion.
Book Value Per Share Growth: 7.1% in the quarter.
Cash and Cash Equivalents: More than $1.9 billion.
Financial Leverage: 24.2%.
Warning! GuruFocus has detected 8 Warning Sign with GNTY.
Release Date: April 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
WR Berkley Corp (NYSE:WRB) reported a strong first quarter with net income of $418 million, or $1.04 per share, and an annualized return on beginning of year equity of 19.9%.
The company achieved record net premiums written of more than $3.1 billion, with the insurance segment growing by 10.2% and the Reinsurance & Monoline Excess segment by 8.2%.
Net investment income increased by 12.6% to $360 million, driven by record net invested assets and higher new money rates.
The company's balance sheet remains robust, with stockholders' equity increasing by more than $500 million to a record $8.9 billion.
WR Berkley Corp (NYSE:WRB) maintained a strong credit quality with a portfolio rated AA minus and a low financial leverage of 24.2%.
The company faced significant industry-wide catastrophic activity, particularly from the California wildfires, resulting in cat losses of $111 million.
The current accident year loss ratio, excluding cats, increased by 30 basis points over the prior year due to business mix.
Foreign currency losses amounted to $19 million due to the weakening US dollar.
Professional liability and cyber insurance markets have become particularly competitive, impacting growth opportunities.
The company is closely monitoring the impact of tariffs on loss costs, which could affect future pricing and profitability.
Q: Can you elaborate on the growth in short-tail lines, particularly property and A&H? A: We continue to see opportunities in property lines and the A&H space. In property, we are pushing rates at a healthy pace, especially in risk and cat fronts, despite competition from Lloyds. Berkley One, our high net worth personal lines business, is also growing while taking healthy rates.
Q: How should we view the reinsurance segment's performance, given the strong combined ratio despite cat losses? A: We are pleased with the reinsurance segment's performance and how it is positioned. While we can't predict the future with certainty, the portfolio is on firm ground, and we remain encouraged by its current and future potential.
Q: Could you provide details on the reserve development in the insurance and reinsurance segments? A: In the insurance segment, there was an $11 million unfavorable prior year development, while the reinsurance and monoline access segment saw a $12 million favorable development.
Q: How are tariffs impacting your business, particularly in property and high net worth homeowners? A: We are focused on the shorter tail lines like auto and property, but tariffs could also impact other lines like workers' compensation due to pharma costs. We are actively analyzing the situation to understand its implications on loss costs and rate needs.
Q: What are your thoughts on the impact of social inflation and pricing adequacy in liability lines? A: We have been keeping up with social inflation, particularly in auto liability and umbrella lines. While we are encouraged by recent market discipline, we remain focused on rate adequacy and will adjust our growth strategy based on market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.