W.R. Berkley Q1 Income Up 17%, Sees Price Hikes ‘Accelerating’

April 24, 2012

W.R. Berkley Corporation reported $135.32 million for its 2012 first-quarter net income, a 17 percent increase compared to $115.59 million income reported one year ago.

CEO William R. Berkley noted that price increases are accelerating this year and that he sees “definitive signs” of improving market conditions.

Net premiums written for the quarter were $1.204 billion, up 11 percent from $1.083 billion one year ago. Underwriting operations stayed profitable. The GAAP combined ratio remained at 96.5 percent, same as it was in the prior-year period.

Net investment income also rose to $157.619 million, up 7.8 percent from $146.126 million one year ago. Total revenues for the quarter rose to $1.379 billion, an 11.7 percent rise from $1.234 billion during the prior-year quarter.

The company said average rates on renewed policies rose 6.5 percent in the first quarter.

The return on equity for the quarter was 13.7 percent, improving from 12.7 percent one year ago.

“We are very pleased with our first-quarter results. All of the business segments achieved underwriting profits, our newer ventures continued to gain traction, and price increases are accelerating,” said CEO William R. Berkley.

“On an accident year basis, our loss ratio is declining, and we anticipate that it will continue to improve throughout the year.”

He also said the company continues to invest in people and expand its footprint in attractive markets, which has meant the company is not yet seeing the full benefit of a declining expense ratio. He said, “We believe we will be rewarded, in time, for the development of these operations.”

Berkley also explained that the company’s investment results benefited from improved returns in its investment funds, as well as various opportunistic investments in equities, real estate, and mortgages. The company continues to hold the majority of its investments in highly rated fixed-income securities. “As we have suggested recently, the current structure of our portfolio is likely to provide us with more frequent capital gains over the next several years,” he said.

“While the property/casualty business inherently has significant short-term volatility, we see definitive signs of improving market conditions and expect better overall returns on equity.”

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