W.R. Berkley Corporation Navigates Volatility with Strong Q1 Performance
In its latest earnings conference call, W.R. Berkley Corporation highlighted the resilience of its business model amidst a backdrop of volatility. The company reported net income of $418 million or $1.04 per share for the first quarter of 2025, with an annualized return on beginning-of-year equity of 19.9%.
Executive Chairman Rob Berkley emphasized that the world is currently experiencing significant volatility across various fronts, including political, social, economic, and natural catastrophes. However, he noted that this presents a moment where the realities of risk-adjusted return come into sharp focus, particularly for business activities like underwriting and investing.
Rob Berkley highlighted the importance of not losing sight of the goal of value creation in these challenging times. He emphasized that it's not just about taking steps forward but also avoiding steps backwards that can have a significant impact on performance.
Principal Financial Officer Rich Baio took over to run through some highlights from the quarter, noting that the company demonstrated stability in underwriting earnings and continued growth in net investment income despite industry-wide catastrophic activity led by the California wildfires. The calendar year combined ratio was 90.9%, with a current accident year combined ratio excluding cat losses at 87.2%. Cat losses of 3.7 loss ratio points or $111 million represented an above-average cat quarter, primarily attributable to the California wildfires.
The expense ratio continued to benefit from the growth in net premiums earned, reaching a record $3 billion, with an 80 basis point improvement over the prior year quarter that included a nonrecurring compensation-related benefit. Prior year development was favorable by approximately $1 million, while business mix led to a 30-basis-point increase in the current accident year loss ratio excluding cats.
The company's resilience in navigating these challenges underscores its ability to create value through careful management and strategic decision-making. As Rob Berkley noted, avoiding steps backwards is very consequential when it comes to value creation and the power of compounding.
