BERKLEY W R CORP Q1 FY2025 earnings call

• Financial Results: Net income was $418 million or $1.04 per share, with an annualized return on beginning of year equity of 19.9%. Operating earnings were $405 million or $1.01 per share. Calendar year combined ratio was 90.9%, current accident year combined ratio excluding cat losses was 87.2%.
• Underwriting: Net premiums written reached a record $3.1 billion, with insurance segment at $2.7 billion (up 10.2%) and reinsurance at $439 million (up 8.2%). Expense ratio 27.8% benefited from growth in net premiums earned and a nonrecurring compensation-related benefit.
• Investments: Net investment income up 12.6% to $360 million, driven by record net invested assets and higher new money rates. Credit quality of portfolio is AA minus, duration of fixed maturity portfolio increased to 2.7 years.
• Market Conditions: Discussed competitive markets in professional liability, cyber, transactional liability; opportunity in property lines, A&H, and specialty workers' comp; reinsurance segment facing challenges in casualty, particularly professional liability.

The company had strong financial performance in Q1 2025. The Insurance segment grew 10.2% to $2.7 billion, representing the second-best quarter, with growth in all lines of business. The Reinsurance and Monoline Access segment grew 8.2% to a record $439 million, with growth in property and excess workers' compensation partially offset by a small decrease in casualty. Net premiums written reached a record of more than $3.1 billion. Net investment income increased 12.6% to $360 million, driven by record net invested assets of $30.7 billion and higher new money rates on the fixed maturity portfolio. Net invested assets were $30.7 billion. The insurance segment's net premiums earned grew to a record $3.3 billion, and the expense ratio was 27.8%.

• Expect the expense ratio to be comfortably below 30% for the full year as they invest in newer operating units and infrastructure.
• Anticipate investment fund income may be at the lower end of the quarterly range of $10 million to $20 million in the next quarter due to recent equity market volatility.
• Balance of 2025 is looking encouraging, with a solid foundation for 2026.

• Volatility in political, social, economic, and natural catastrophe areas impacting risk-adjusted return.
• Uncertainty around tariff impacts on loss costs and rate need.
• Market conditions in certain lines (e.g., casualty reinsurance, professional liability) with potential for changes in renewals and market discipline.

Q: Andrew Kligerman on short tail lines growth and property lines rate A: Rob Berkley discussed opportunity in property lines, A&H, and specific property sub-lines where they see rate push and growth.

Q: Elyse Greenspan on reserves development and reinsurance mix A: Rich Baio mentioned $11 million unfavorable prior year development in insurance segment and $12 million favorable in reinsurance; mix and reinsurance purchasing impact underlying loss ratio.

Q: Mike Zerminski on work comp profitability and social inflation A: Rob Berkley discussed wage inflation impact on work comp, both as a tailwind and potential headwind, and social inflation impact on liability lines.

Q: Josh Shanker on workers' comp growth and cat loss exposure A: Rob Berkley explained specialty workers' comp growth and clarified no sea change in property cat loss exposure despite recent activity.

Q: David Motemaden on reserve development and property reinsurance sustainability A: Rob Berkley offered to unpack reserve details; property reinsurance growth seen as dependent on future market conditions.

Q: Brian Meredith on property reinsurance and stagflation impact A: Rob Berkley noted property reinsurance growth not material; Bill Berkley discussed stagflation impact on commercial insurance industry.

Q: Wes Carmichael on underlying loss ratio mix and insurance segment growth A: Rich Baio and Rob Berkley discussed mix impact on loss ratio and growth in insurance segment across various lines.

Q: Meyer Shields on specialty workers' comp tools and Mitsubishi partnership A: Rob Berkley discussed specialized tools in workers' comp and openness to potential partnership with Mitsubishi