WR Berkley profits surge in Q2
WR Berkley has posted a strong set of results for the second quarter as price increases for its domestic insurance business hit 4 percent and outstripped loss costs for the twelfth quarter in a row.
Its net income for the second quarter surged 55.1 percent to $180 million, compared with $116 million in the second quarter of 2013. Over the six month period ended June 30, 2014 profits hit $349.6 million, compared with $233.6 million for the same period in the previous year.
The company also posted a rise in gross premiums written which rose to $1.77 billion for the quarter, compared with $1.62 billion in the same quarter of 2013.
Its combined ratio was 94.4 percent, a small improvement from 96.6 percent in the second quarter of 2013.
William Berkley, chairman and chief executive officer, said: "We were very pleased with our second quarter results. Weather-related losses are typically higher in the second quarter than in other quarters for our company, and this year such losses were about average. We were able to grow our top line by about 11 percent.
“Price increases for our domestic insurance businesses were approximately 4 percent; thus, for the twelfth quarter in a row, prices increased at a rate in excess of loss costs. We believe that in such an environment our goal should be to grow selectively where the margins are most attractive. We continue to focus on reducing our expense ratio, which declined by six tenths of a point in the quarter.
"We have maintained the quality of our fixed-income portfolio, while at the same time investing an increasing portion of new funds into alternative investments with the goal of generating capital gains. As a result, we have sacrificed some ordinary investment income to achieve the level of capital gains currently flowing into our income statement.
“Our investment returns from our fixed-income portfolio declined slightly, reflecting both the current interest rate environment and the shortening of our portfolio duration, while other parts of our investment activities have generated attractive returns over the recent period. The sale of a property from our real-estate portfolio resulted in a substantial gain this quarter. We also continue to achieve gains from our common stock and private equity investments.
"We are optimistic that the combination of our operating results and investment gains will allow us to achieve our targeted returns.”
