WR Berkley CEO concerned about reinsurance, bullish on casualty
The casualty business is “the sweet spot today,” WR Berkley CEO Robert Berkley said during the re/insurer’s second quarter 2018 earnings call, while noting that the reinsurance business is dragging.
“Casualty from our perspective is the sweet spot today,” Berkley said. “We’ll see how long that lasts. Certainly, we have our fingers crossed,” he added.
While Berkley noted that professional liability remains an “area of great concern” and that directors and officers (D&O) has had its challenges, he said that trends in workers’ compensation “look very good”.
WR Berkley reported net income of $180.1 million for the second quarter of 2018, up from $109.0 million in the same period a year ago. Gross premiums written grew to $1.95 billion from $1.89 billion over the period, driven by the insurance business.
The insurance business grew gross premiums written to $1.82 billion in the second quarter from $1.75 billion a year ago. The insurance combined ratio deteriorated slightly to 94.4 percent from 94.1 percent. The pre-tax income in the segment grew to $198.1 million from $186.1 million over the period.
Growth in the insurance segment of 5.2 percent in net premiums written was partially offset by a decline in the reinsurance segment, where WR Berkley chose to reduce its business in light of the competitive environment, according to a company statement.
The reinsurance segment shrank gross premiums written to $126.8 million in the second quarter of 2018 from $141.4 million in the same period a year ago. Pre-tax income in the segment increased to $21.3 million from $14.8 million over the period. The combined ratio improved to 100.7 percent from 104.4 percent.
Berkley noted that the main pressure in reinsurance was coming from the domestic business. “Part of the issue is ceding commission that are just out of whack based on historical levels,” he said. “Any other piece due to our underwriting discipline,” he added.
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