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Coronavirus, Civil Riot, Investment Losses Take Bite Out of W.R. Berkley Q2 Profit

Larger investment losses and COVID-19 took a substantial bite out of W.R. Berkley’s 2019 second-quarter net income, but the specialty insurer and reinsurer still stayed in the black overall.

Net income for the quarter reached $72.3 million The same period a year ago, net income surpassed $216.7 million

Net investment income dropped in a big way, to $85.4 million for the quarter, compared to more than $188.3 million in the 2019 second quarter. Berkley blamed that result, in part, on a $58 million loss from investment funds, which are reported on a one-quarter lag. But the COVID-19-related economic shutdown earlier in the spring and the resulting financial market downturn also hurt.

As previously disclosed, Berkley’s 2020 Q2 catastrophe losses surpassed an estimated $145 million, including $85 million in net COVID-19 related losses. That number also covered $20 million in catastrophe losses relating to civil unrest, and $40 million from severe weather events in the U.S.

Berkley’s consolidated combined ratio spiked to 98.7 for the quarter, up from 93.9 in the 2019 second quarter. Catastrophes added 8.7 loss ratio points to the combined ratio, including 5.1 loss ratio points for COVID-19-related losses. Broken down further, Berkley’s reinsurance combined ratio was 105.1, compared to 95.2 over the same period a year ago. Its insurance combined ratio was 97.7, versus 93.8 in the 2020 second quarter.

Other Q2 results:

• Net premiums written surpassed $1.7 billion, about the same compared to the year before. Workers compensation net premiums written saw a big drop, though lines including commercial automobile, professional liability, and property reinsurance all saw substantial gains thanks to rate hikes.
• Gross written premiums grew above $2.1 billion for Q2 2020, up from $2 billion over the same period in 2019.
• Net earned premiums stayed static year-over-year, around the $1.6 billion range.

Source: W.R. Berkley Corp.