WR Berkley pleased by results despite Q3 cat losses

Profits at WR Berkley dipped in the third quarter mainly because of catastrophe losses totalling $119 million including $107 million related to Hurricanes Harvey, Irma and Maria, and the earthquakes in Mexico. But the company remained profitable and said it was pleased with its results.

The company still made a profit of $162 million in the third quarter, a decrease on the $220 million it made a year earlier – because of the cat losses.

Its gross written premiums for the period reached $1.87 billion, a small increase on the same period a year earlier.

In a statement, the company said: “In light of significant catastrophe activity in the third quarter, we were pleased with our results. We believe that catastrophe losses, like capital gains, are an inherent part of our business that should not be disregarded. Over time, our focus on limiting underwriting volatility and investing for total return has proven to be a successful formula for generating value for our shareholders.

“Our underwriting results, before catastrophe losses, were relatively stable even as market conditions remained competitive. Premiums in the insurance segment were essentially unchanged, as we maintained our focus on the parts of the market where adequate pricing persists and continued to de-emphasize those sectors with less attractive margins. The capital destruction from the recent catastrophe events may drive price firming in affected markets and test the fortitude of capital providers. While the impact on broader pricing remains to be seen, opportunities are likely to increase in select areas, and we are well positioned to benefit from them.

“Net investment income from our core portfolio grew nearly 8 percent compared to the third quarter of 2016, although, as expected, income from the more variable parts of our portfolio declined. Our third quarter results were enhanced by $184 million of pre-tax realized investment gains. Our investment strategy has enabled us to mitigate the impact of low interest rates on investment income, while providing opportunities to grow book value through realized investment gains.

“The recent devastating catastrophic events should remind the industry that the property casualty insurance business is all about risk-adjusted returns. Over the long term, our adherence to this fundamental principle has enabled us to produce excellent returns, with lower volatility, and superior long-term value creation for our shareholders.”

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