WR Berkley posts positive 2018 results but shrinks reinsurance unit

WR Berkley posted positive results for 2018 despite what it called a period of elevated worldwide catastrophes, but it shrank its reinsurance unit stressing that it will “grow where it can achieve its targeted return, while de-emphasizing less attractive opportunities”.

The re/insurer posted gross premiums written of $7.7 billion in 2018 compared with $7.5 billion in 2017. In the fourth quarter, its gross premiums written reached $1.85 billion compared with $1.78 billion in the same period the year before.

The growth in premiums was driven by the insurance side of the business; on the reinsurance side, they declined to $545 million compared with $607 million a year earlier.

For the whole of 2018, it made a net profit of $640 million, an increase on the $549 million it made a year earlier. Its return on equity was 11.8 percent, up from 10.9 percent the year before. In the fourth quarter, it made a profit of $132 million a decrease on the $154 million in the same period a year earlier.

Its insurance arm posted a combined ratio of 94.3 percent for the period, a slight improvement on the year before. Its reinsurance unit posted a combined ratio of 106.4 percent, a vast improvement on the 117.6 percent ratio it posted a year earlier. This was a reflection of lower catastrophe losses which were $105 million in 2018 versus $184 million in 2017.

The company issued a statement on the results: “Our results for the fourth quarter of 2018 once again demonstrated our strategy for managing volatility. We delivered strong underwriting and investment results during a period of elevated worldwide catastrophes and turbulent securities markets.

“The company continues to grow where it can achieve its targeted return, while de-emphasizing less attractive opportunities. Rate improvement for most lines of business is likely to continue for the foreseeable future, and we expect further gradual progress in reducing our expense ratio during 2019.

“We are also seeing higher yields in our fixed-maturity investment portfolio. Our strategic decision to maintain its short duration provides a meaningful opportunity to reinvest at higher yields when interest rates rise, and the flexibility to redeploy funds at the appropriate time.

“Managing risk and volatility in all aspects of our business has been a critical component of our strategy for more than 50 years. We remain focused on long-term value creation for our shareholders, only accepting volatility where we believe we can achieve an appropriate risk-adjusted return. Accordingly, we are confident that we will continue to deliver strong returns in 2019 and beyond.”

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