WR Berkley’s Q4 UW gain dips 6% to $295mn as cat losses more than double to $80mn

By James Thaler

Jan 27 - (The Insurer) - WR Berkley’s fourth quarter underwriting gain fell by 6 percent to $295mn, driven by cat losses that more than doubled $79.6mn from $32.0mn, while net premiums written at the firm grew by 8 percent to $2.94bn from $2.72bn from the prior-year quarter.

The Connecticut-based company reported $1.13 in operating income per share after markets closed on Monday, a 17.7 percent improvement from the $0.96 it earned in Q4 2023, and easily ahead of analysts’ $0.96 per share consensus estimate.

The (re)insurer’s fourth quarter consolidated combined ratio rose to 90.2 percent from 88.4 percent, driven by weaker underwriting margins in both its insurance and reinsurance/monoline excess divisions.

The insurance combined ratio rose to 90.5 percent from 89.4 percent, while the same figure in reinsurance/monoline excess grew to 88.4 percent from 81.5 percent.

WR Berkley’s overall loss ratio rose to 61.8 percent from 60.0 percent, while in insurance it grew to 62.2 percent from 61.0 percent and in reinsurance/monoline excess to 58.9 percent from 53.0 percent.

Consolidated gross premiums written (GPW) grew by 8.2 percent in the quarter to $3.50bn from $3.23bn, driven by 10 percent growth in insurance GPW to $3.16bn from $2.87bn, while GWP within the reinsurance/monoline excess segment fell by 6.0 percent to $336mn from $358mn.

In insurance, GPW growth was driven by a 14.9 percent uptick in short-tail lines to $581.3mn from $506.0mn, while auto GPW grew by 10.3 percent to $384.3mn from $348.3mn, and in professional liability by 6.2 percent to $286.4mn from $268.5mn.

Other liability insurance GPW increased by 9.6 percent to $1.06bn from $970.7mn, and in workers’ comp by 4.9 percent to $304.4mn from $290.2mn.

Casualty reinsurance GPW dropped by 15.3 percent to $170.7mn from $201.7mn, while monoline excess GPW increased by 13.9 percent to $40.2mn from $35.3mn. Property reinsurance GPW grew by 7.8 percent to $105.7mn from $98.1mn.

The company grew fourth quarter net income by 45.0 percent to $576mn and operating income by 15.5 percent to a record $453mn, while posting a 30.9 percent return on equity and 24.3 percent operating return on equity for the period.

The (re)insurer said that average rate increases excluding workers' compensation were approximately 7.7 percent in the fourth quarter. This was a sequential deceleration from 8.4 percent in Q3 2024.

WR Berkley returned $287.8mn in total capital to shareholders in the fourth quarter, made up of $190mn in special dividends, $67.4mn in share repurchases and $30.4mn in regular dividends.

For the full year in 2024, the insurer posted record annual pre-tax underwriting income of $1.1bn and net income of $1.8bn while generating a 23.6 percent return on equity and a 22.4 percent operating return on equity.

Book value per share grew in 2024 by 23.5 percent, before dividends and share repurchases, while gross and net premiums written grew 9.6 percent and 9.3 percent to records of $14.2bn and $12.0bn, respectively.

For the year, average rate increases excluding workers' compensation were approximately 7.9 percent.

Total capital returned to shareholders in 2024 totalled $835.6mn, consisting of $412.3mn of special dividends, $303.7mn of share repurchases and $119.6mn of regular dividends.

Record-setting 2024 financial performance

In a statement, WR Berkley highlighted the fact that it “set new financial records in 2024”, including for net income, while calling its underwriting performance and net investment income result for the year “outstanding”.

“Our thoughtful growth strategy remains focused on achieving superior long-term risk-adjusted returns,” the firm said in a statement.

“Our decentralized structure remains a key competitive advantage, enabling us to effectively manage risks and capitalize on opportunities in a market where business lines increasingly operate independently,” it added.

“Our calendar year combined ratio of 90.2 percent once again demonstrated our focus on managing volatility,” the company continued.

WR Berkley said it positioned its investment portfolio well for changes in the environment, which resulted in robust growth in net investment income from its fixed-maturity portfolio and a strong contribution to total return from net unrealised gains on its equity portfolio.

It also said that current reinvestment rates continue to exceed annual book yield, and its invested assets have increased from record operating cash flow, positioning it for further investment income growth in 2025.

“The company excelled by most business measures in 2024, and we anticipate ongoing success for our shareholders in 2025,” WR Berkley said Monday.

“The current property and casualty (re)insurance and investment environments remain favorable to our business model. We are confident in our ability to deliver superior long-term risk-adjusted returns and enhanced shareholder value in 2025 and beyond,” it concluded.