W. R. Berkley Q1 2025 Earnings Report

W. R. Berkley EPS Results

• Actual EPS: $1.01
• Consensus EPS: $1.08
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

W. R. Berkley Revenue Results

• Actual Revenue: $3.01 billion
• Expected Revenue: $3.01 billion
• Beat/Miss: Beat by +$4.38 million
• YoY Revenue Growth: N/A

W. R. Berkley Announcement Details

• Quarter: Q1 2025
• Date: 4/21/2025
• Time: After Market Closes
• Conference Call Date: Monday, April 21, 2025
• Conference Call Time: 5:00PM ET

W. R. Berkley (NYSE:WRB) was founded in 1967 by W.R. Berkley with the goal of creating sustainable, long-term value. As of November 2022, Mr. Berkley remained as executive chairman with his son W.R. Berkley Jr. in the CEO's office. The company is based in Greenwich, Connecticut, and operates as an insurance holding company in the U.S. and internationally. It is one of the largest commercial lines insurers in the US and has more than 190 offices worldwide.
 
The company’s operations have grown steadily since its founding, including several key acquisitions. The company now operates in two segments which are Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance businesses of all varieties. The Reinsurance & Monoline Excess segment provides reinsurance services to other insurance agencies and self-insured organizations. W. R. Berkley Corporation went public in 1973 and is now listed 397th on the Forbes Fortune 500 list.
 
There are more than 50 businesses operating under the Berkley umbrella. They each capitalize on niche markets that require specialized knowledge about industries, regions, or business structures. The company’s goal is to create peace of mind, both by simplifying the insurance buying process and by providing the insurance products its customers need.
 
W. R. Berkley was added to the S&P 500 in 2019. The company’s market cap grew more than 20% or over $1 billion in the first year alone. As of November 2022, the company is worth upwards of $19.5 billion or more than a 200% increase since its launch. The company’s underlying insurance businesses are all rated A+ by Standard & Poors and A.M. Best.
 
Some of the key businesses and industries served by W.R. Berkley include but are not limited to agribusiness, cannabis, energy, environmental, hospitality, manufacturing, public entity, retail, and transportation. Some of the products offered include but are not limited to workers' compensation, general liability, commercial auto & trucking, accident & health, cyber, and property. In 2021, the company brought in more than $9.5 billion in revenue and produced a 16.2% return on stockholders' equity.



W. R. Berkley Q1 2025 Earnings Call Transcript

Key Takeaways

• W. R. Berkley reported Q1 2025 results with net income of $418 million ($1.04/share) and an annualized ROE of 19.9%, delivering strong performance despite a 3.7-point cat loss impact from $111 million in California wildfire claims.
• The firm posted a combined ratio of 90.9% (87.2% ex-cats) with a 27.8% expense ratio, as net earned premiums reached a record $3 billion and net premiums written rose 10.2% to $3.1 billion.
• Net investment income climbed 12.6% to $360 million, driven by a record $30.7 billion portfolio, higher new-money yields (~5.2%), and a high-quality AA- credit rating with 2.7-year duration.
• Underwriting discipline fueled growth across all insurance lines—especially specialty property, accident & health, and higher-hazard workers’ compensation—and supported a record $439 million in Reinsurance & Monoline Excess premiums, with prudent professional liability reductions.
• Strong capital metrics included $8.9 billion in equity (up 6.2%), 24.2% financial leverage (lowest in decades), and no debt maturing until 2037, underscoring the company’s resilience and value-creation focus amid volatile markets.

Presentation

[Operator]

Good day, and welcome to W. R. Berkley Corporation's First Quarter twenty twenty five Earnings Conference Call. Today's conference call is being recorded. The speakers' remarks may contain forward looking statements.

[Operator]

Some of the forward looking statements can be identified by the use of forward looking words, including without limitation, believes, expects or estimates. We caution you that such forward looking statements should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be in fact be achieved. Please refer to our annual report on Form 10 ks for the year ended 12/31/2024, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W. R.

[Operator]

Berkley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to Mr. Rob Berkley. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Krista, thank you very much, and good afternoon, good evening all. Thanks for dialing in. And let me echo Krista's warm welcome to our Q1 call. So in addition to me on this end of the phone, you also have Executive Chairman, Bill Berkley, as well as Principal Financial Officer, Rich Baio. We're going to follow our typical agenda where momentarily I'll be handing it over to Rich.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

He's going to run you all through some of the highlights from the quarter. I will follow behind him with a couple of additional observations and then we'll be very pleased to open it up for Q and A. Before I hand it over to Rich, maybe just a sound bite or two from me, perhaps stating the obvious or not perhaps actually stating the obvious. I think the world is chockablock full of volatility these days, these weeks, these months and perhaps the this year and maybe beyond. Seems to be presenting itself in a variety of different ways, political, social, economic, and certainly natural catastrophes as well.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

But it is without a doubt, a moment where the realities of risk adjusted return come into very sharp focus. And from our perspective, it applies to both of the business activities that we participate in that being underwriting and investing. The resilience of our business model was once again demonstrated, over the first quarter and we feel as though it is another example of how this organization is not just built to perform well during, moments where there is a tailwind or smooth seas, but in fact it is built to continue to excel or succeed during more challenging environment circumstances. From our perspective, it's very important to not lose sight of the goal of the exercise. The goal is to create value.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

And in our opinion, it's not just about the steps forward you take, it's also about the steps backwards that you avoid. So as we talk about the quarter, there is going to be no but fors, there is going to be no lipstick on the pig or any other analogy. We're gonna talk about what the results were with cat activity and with a variety of other events and how we managed to navigate through it. It is the the reality, again, that when it comes to value creation and the power of compounding and what that means for value creation, avoiding steps backwards is very consequential. So with that, I will hand it over to Rich.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Rich, if you wanna run us through the highlights, please. And I apologize every now and then if you hear a cough or a sneeze here in the Northeast, it is very much peak allergy season. Richie, over to you.

[Richard Baio, EVP & CFO at W. R. Berkley]

Great. Thanks, Rob. Appreciate it, and good evening, everyone. As you saw, the company started 2025 with a strong first quarter reporting net income of $418,000,000 or $1.04 per share and an annualized return on beginning of year equity of 19.9 percent. Despite significant industry wide catastrophic activity led by the California wildfires, we continue to demonstrate stability in underwriting earnings and continued growth in net investment income.

[Richard Baio, EVP & CFO at W. R. Berkley]

Operating earnings were $4.00 $5,000,000 or $1.01 per share, yielding an annualized return on beginning of year equity of 19.3%. The calendar year combined ratio was 90.9% and the current accident year combined ratio excluding cat losses was 87.2%. The driver for this difference was cat losses of 3.7 loss ratio points or $111,000,000 representing an above average cat quarter primarily attributable to the California wildfires. Prior year development was favorable in the current quarter by approximately $1,000,000 with small offsets between segments. Accordingly, the current accident year loss ratio excluding cats was 59.4, representing a 30 basis point increase over the prior year, largely due to business mix.

[Richard Baio, EVP & CFO at W. R. Berkley]

The expense ratio of 27.8% continues to benefit from the growth in net premiums earned, which grew to a record $3,000,000,000 In addition, the 80 basis point improvement over the prior year quarter includes a nonrecurring compensation related benefit of approximately half of this amount. We believe the expense ratio should be comfortably below 30% for the full year as we continue to invest in our newer operating units and make investments in our infrastructure. As it relates to premium production, the company grew net premiums written to a record of more than $3,100,000,000 The Insurance segment grew 10.2% to our second best quarter of $2,700,000,000 with growth in all lines of business. The Reinsurance and Monoline Excess segment grew 8.2% to a record quarter of $439,000,000 with growth in property and excess workers' compensation, partially offset by a small decrease in casualty. Turning to investments.

[Richard Baio, EVP & CFO at W. R. Berkley]

Net investment income increased 12.6% to $360,000,000 The improvement is primarily attributable to two items. First, our record net invested assets of $30,700,000,000 and higher new money rates on our growing fixed maturity portfolio along with strong operating cash flows in the quarter of $744,000,000 And second, higher investment fund income arising from transportation and financial services related sectors. As a reminder, we report investment funds on a one quarter lag. And with the recent volatility seen in the equity markets, you may expect some correlation between public and private equity markets. Accordingly, we anticipate investment fund income may be at the lower end of our quarterly range of 10,000,000 to $20,000,000 in the next quarter.

[Richard Baio, EVP & CFO at W. R. Berkley]

The credit quality of our portfolio remains very strong at AA- with the duration on our fixed maturity portfolio including cash and cash equivalents increasing from the fourth quarter of two point six years to the current quarter of two point seven years. Foreign currency losses in the quarter of $19,000,000 related to the weakening U. S. Dollar relative to most other currencies. Offsetting this income statement loss is an improvement in the currency translation loss and stockholders' equity of $24,000,000 The effective tax rate was 22.5% in the quarter, and we continue to expect 2025 will be 23% plus or minus.

[Richard Baio, EVP & CFO at W. R. Berkley]

Stockholders' equity increased by more than $500,000,000 or 6.2 percent over the beginning of year to a record $8,900,000,000 Book value per share before dividends and share repurchases grew 7.1% in the quarter, and our balance sheet remains strong with cash and cash equivalents of more than $1,900,000,000 and financial leverage of 24.2%, the lowest level in decades with no debt maturities until 02/1937. Rob, with that, I'll turn it back to you.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Okay. Rich, thank you very much. That was great. Let me offer a couple of additional comments just to piggyback on what Rich just shared. As far as the the top line goes, came in where we were up about 10% or to be more specific if I were a CPA, would call it 9.9%.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

But we are pretty pleased with that. Obviously, rate contributed to that ex comp coming in at 8.3%. In addition to that, the renewal retention ratio continues to hang around 80%. I mean, it's like ballast to the ship. It just doesn't move around very much.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

But I think it's a relevant data point because it tells you as we continue to push for rate and making sure that we're getting paid what we need to get paid, we are not turning the book. Drilling down a little bit more on the insurance front, particularly as it relates to market conditions. And I would tell you that professional liability, has become particularly competitive. We've been talking to you all about the D and O market for some period of time. I would add cyber as well as far as competitive And at the risk of being a little bit, rude, which I apologize for in advance, I think transactional liability as far as the marketplace probably gets the stupid award.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

As far as, maybe one other data point, we've chatted with you all about some of our reservations around workers' compensation and medical trend. And you might look at our numbers in the release and some of the exhibits and say, how does that reconcile with the growth that they're seeing? And let me again, similar to last quarter, flag for you that the growth that we are seeing is really driven by specialty comp. And what do I mean by that? Typically, it's a little higher hazard in nature.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

There is less competition and you're not seeing both regional and in particular national carriers trying to play the game and leverage the multi line offering to get the comp. So that continues to be a good opportunity from our perspective. Switching over to the other segment that being reinsurance and excess, I would call out here, I don't think we break out all this detail, but it'll be in the Q. And that is professional liability as a component of casualty. So our professional liability book as it relates to reinsurance was down a little over 25%.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

That is really just a reflection of market conditions. And quite frankly, our colleagues have the discipline and the courage to do the right thing. So we'll have to see. I've commented in the past how it seems like the reinsurance market, just as it was some number of years ago, sluggish to respond to property particularly cat. It seems as though yet again we're seeing something similar just in the casualty lines and in particular professional.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So we will stay tuned and see how that unfolds. Rich covered the loss ratio earlier. As far as the ex cat accident year and how it ticked up about 30 basis points, as he mentioned, that's really due to mix. The only other comment I would make is we are paying close attention as you would expect to the tariffs and it is a very fluid situation as everyone has an appreciation. So trying to unpack that and figure out what it means for loss costs, that's something that we are working on actively.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

And again, as that comes into sharper focus, that may be instructive to us as to how we think about both loss ratio as well as rate need. At this time, as far as the expense piece goes, I would echo Rich's comment about comfortably under 30. The only other comment I would make, yes, he did flag that we had a bit of a benefit from an over accrual from last year. So maybe that skewed it a little bit in the quarter, but arguably it also meant that we overstated our expense ratio a little bit as it turns out last year. So it was actually a little bit better last year than we had reported.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Flipping over to the investment components. So really things are firing on all cylinders, not that there aren't challenges, but we're really pleased with the portfolio, how it's managed, how it's been positioned. Rich commented on the duration ticked out to two point seven years and continued to maintain that very strong quality at a strong AA-. I think one of the important punch lines here is the opportunity or the upside that we see both on the underwriting side and now specifically in the investment side. So we have a book yield on the domestic portfolio of approximately 4.7%.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

We got what's rolling off the portfolio is something below that. So we're going to see some lift from that. And in addition to that, we have a new money rate that's probably give or take around 5.2%. You got a 30,000,000,000 investment portfolio, call it $27,000,000,000 or so interest sensitivefixed income cash, etcetera. So if you take, call it 50 plus basis points and you apply that to $27,000,000,000 that gives you a sense of where the earnings power is going.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

It's certainly possible that at some point you could see the interest rates at the shorter end of the curve come down. But from our perspective, the intermediate and longer term end, we don't see that backing off. If anything, it could tick up from here. So long story short, business had a very good quarter to say the least. Flirting with a 20% return in an environment such as this where we saw exceptional cat activity, I think is a very strong outcome.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

What is, in my opinion, even more encouraging is the rate adequacy that we continue to maintain while growing the business and in addition to that, what we've been able to do with the investment portfolio. So as rosy as the picture is here, and it's not that there aren't headwinds and challenges, I think it's pretty evident that not only did we have a good quarter, but the balance of '25 is looking very encouraging, and the foundation that we're beginning to pour for '26 appears to be quite solid as well. So, why don't did you guys have anything else you want to add at this time? Okay. Then, Christa, why don't we, take a pause there?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

And we're very pleased to open it up to any Q and A that folks would like to have.

[Operator]

Thank you. We will now begin the question and answer session. Your first question comes from the line of Andrew Tigleman with TD Securities. Please go ahead.

[Andrew Kligerman, Managing Director at TD Securities]

Close enough. Hey, good evening. I was particularly interested in the short tail lines, up 13%, Rob. What areas did you get excited about? Because as I'm thinking about the the property subset and and you called out rates being up 8.3% ex property, meaning like

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So, Ed, I'm sorry. Excuse me, Andrew. I beg your pardon. It's 8.3 ex comp. I'm sorry if I missed that.

[Andrew Kligerman, Managing Director at TD Securities]

Oh, okay.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So it's 8.3x comp.

[Andrew Kligerman, Managing Director at TD Securities]

Thank you.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Sure. And as far as the growth goes, we're seeing we're continuing to see opportunity on the property lines. And in addition to that, we are seeing opportunity in the A and H space as well. And those are probably the big drivers as far as the short tail.

[Andrew Kligerman, Managing Director at TD Securities]

I see. A and H and property. And within the property component, I mean, I guess property pricing is there's so many sub lines, but I'm hearing kind of down mid single digit. Could you maybe elaborate a little bit on that? Like what property lines do you like?

[Andrew Kligerman, Managing Director at TD Securities]

And what are you seeing in rate in property?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So as far as the insurance market space with regards to property and obviously it's a pretty broad space. We continue to see opportunity to push rate at a pretty healthy pace on the risk front. On the cat front, certainly, there's a bit more competition, particularly coming out of the the likes of Lloyd's, both directly as well as through binding authorities that they seem to, for some reason, be empowering. In addition to that, BerkeleyOne, our private client high net worth personal lines business, continues to be able to, demonstrate their considerable value proposition to the marketplace and grow their footprint while simultaneously taking very healthy rate. Then lastly, our A and H business, which has a rich history of performing at a very high level, continues to be able to capitalize on market conditions.

[Andrew Kligerman, Managing Director at TD Securities]

Got it. And in the Reinsurance segment, I mean, again, you put up another fabulous combined ratio. I guess you did an 85 or and that's even with 10.9 points of cats. Should we be thinking about that as a stable kind of run rate for reinsurance? Mean

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Well, I don't I think that we are very pleased with performance of the business and how our colleagues, very effectively positioned it. I don't think any of us know what tomorrow will will bring, with certainty. That having been said, I think the portfolio and how it has been created and put together has put us on very firm ground, both where we are today and how we're positioned to capitalize tomorrow. So, I think that we, again, remain very encouraged with that business and how it's positioned.

[Andrew Kligerman, Managing Director at TD Securities]

Awesome. Thank you.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thanks for the questions. Have a good afternoon.

[Operator]

Your next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hi Elyse. Good afternoon.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Hi, thanks. My first question, I know I think in the prepared remarks you guys said pointed out the $1,000,000 of development in the quarter and I think said, it seems like nothing to call out in the segments. Would you be willing to give us just if it's immaterial numbers, just how much reserves in the quarter moved in both insurance and reinsurance? Yes.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Richie, do you I don't have them. Rich, do you have each segment? Because it was again, I think people look at the combined and they kinda scratch their head, but we got a lot of moving pieces that come out to this in the wash. So what what were the pieces?

[Richard Baio, EVP & CFO at W. R. Berkley]

So for the insurance segment, it was $11,000,000 unfavorable prior year development. And in the reinsurance and monoline access, it was favorable by $12,000,000

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Thanks. And then my second question was on the underlying loss ratio. I think you guys said mix, right, in the prior question, right, Hin, on reinsurance, which had a strong improvement in the quarter. We did see some year over year deterioration in insurance in the Q1. Can you just I'm assuming maybe mix was also attributed to that segment.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Can you just walk us through what was going on within the underlying loss ratio in insurance in the Q1?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Go ahead, Rishi.

[Richard Baio, EVP & CFO at W. R. Berkley]

Sure.

[Richard Baio, EVP & CFO at W. R. Berkley]

So as you pointed out, Elyse, yes, it is business mix. Obviously, one of the elements that plays into that is also our outward reinsurance purchasing that we do. And you might recall, we purchase reinsurance both at the group level, but we also purchase it at the, operating unit level, and we've got 58 plus operating units across the group. So theoretically, if some businesses are growing, others are shrinking, perhaps the level of reinsurance plays into that because of the impact on the ceding commissions on the quota share arrangements, etcetera. So that's really in large part what drives that 30 basis point swing from the prior quarter.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Thanks. And then my last one, obviously, you guys recently announced that Misumi Sumitomo is going to take right the 15% stake in the company. I know in the presentation that was put out, it pointed to them starting in May. I'm not sure if this is a question for you or them, is there an update on the regulatory process? And is that May timeframe still intact?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So they are going through the process that that need they need to go through, and we try to be helpful as we would with any, shareholder. But I think as you pointed out, at least it's more of a question for them than for for us. We are not in the, all of the details and won't be in the details because we are not gonna be precluded from being able to repurchase stock in the ordinary course as we have in the past.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Got it. Thank you.

[Richard Baio, EVP & CFO at W. R. Berkley]

Thank you.

[Operator]

Your next question comes from the line of Rob Cox with Goldman Sachs. Please go ahead.

[Richard Baio, EVP & CFO at W. R. Berkley]

Hi, Rob. Good afternoon.

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

Hi, good afternoon. Hey, I wanted to zone back in on the tariffs impact. I know you guys are still assessing, but maybe specifically on the property lines of business and the high net worth homeowners, how are you thinking about what the impact of tariffs might be?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Well, as you'd expect, Rob, we're particularly focused on the shorter tail lines both auto, particularly around the physical damage as well as property. But I think it would be a mistake for one to discount other lines as well. So for example, workers' compensation and what the impact could be around pharma. A lot of drugs are manufactured outside of The United States. So it's something that we're very focused on.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

The whole tariff situation again, as mentioned earlier, and I know you and others appreciate, is very fluid. We are doing our best to try and read the tea leaves, and we are actively doing, a variety of different analyses to try and figure out what this means for loss picks and how that would instruct rate need. So, yes, does it have an impact on property? Yeah. Potentially, it would.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Would that include personal lines and homeowners? Without a doubt. And certainly another obvious one is auto physical damage. But while those may be the two more significant spots, I would encourage folks not to underestimate or completely ignore other product lines as well.

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

Got it. Thank you. That's very helpful. And then maybe just as a follow-up on the pricing. Sounds like it accelerated 60 basis points or so in the quarter.

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

What are you seeing in terms of outliers by line of business? Is that any different from recent quarters? What kind

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I think it's pretty consistent with what we've seen in the past and there are some product lines that we've talked about in the past like auto liability as an example, where we are very focused on, lost cost trends, social inflation, and doing what we need to do to keep up with that and other liability lines as well. But I as we've called out in the past, liability, and particularly umbrella and how the auto liability feeds the the umbrella exposure are areas that we continue to push pretty hard on. But I also would suggest that I wouldn't get overly preoccupied with 60 basis points one way or the other. I would suggest, in my mind, the takeaway is that the company remains very focused on rate adequacy and keeping up with trend. And I think that is evidence both in what we've delivered this quarter as well as what we've delivered for the past many quarters.

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

Thanks a lot.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thank you.

[Operator]

Your next question comes from the line of Mike Zermanski with BMO. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hey, Mike. Good afternoon.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Hey, good afternoon. I guess going back to the macro and appreciating that with the tariffs, there's lots of uncertainty. But maybe curious if you can kind of talk high level about your view on work comp profitability under a recession scenario. I know you just kind of specifically said keeping an eye on tariffs impact on, pharma costs. But I'm, you know, I guess curious more specifically, has higher than historical wage inflation levels, has that been a material tailwind, in recent years that we should be thinking about too under a recession scenario?

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Or just any kind of high level thoughts given that this line of business continues to be just highly profitable and, we're getting a lot of recession questions? Thanks.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So I think the answer is yes. I think coming out of COVID when we saw significant wage inflation that comfortably outpaced much of the medical inflation equation that created a bit more tailwind or wiggle room for the industry. Obviously, that can cut both ways. And you know, medical costs are a little bit of more than 50% of every claims dollar. So one should not, in our opinion, underestimate the significance around that.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So long story short, to your point, Mike, I think it does cut both ways and one will need to see how it unfolds. But again, as far as the growth that we're seeing in comp, it partly has been due to wage inflation, but even more so as we flagged earlier today as well as I think in the prior call, we see opportunity in some of the comp market that is less commoditized and is more specialty in nature. So, yeah, I think to get to your specific question, I think wage inflation, was a plus, but that can cut both ways. And to your point, I think people need to be very conscious of that.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Okay. That that's that's very helpful. Maybe switching gears a bit to to lawsuitsocial inflation. If, thinking kind of, looking at Berkeley's debt disclosure and just the industry as well, other liability occurrence continues to be, I know you said no analogies, but right, kind of take through the Python. Do you feel pricing levels for other liability occurrence?

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

I know that it works its way through different lines. But do you feel that pricing is at kind of a level where directionally, Berkeley can start playing offense? Or do we really need to see a continue to see a material increase in pricing there to really feel like the coast is clear?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I think that we've done a pretty good job keeping up with it. And the question really is how the balance of the market will behave. And we are encouraged by what we saw quite frankly, more recently with additional discipline coming into the the market in certain product lines. That having been said, we don't know necessarily what tomorrow will bring. So will there be an opportunity for us to accelerate the growth?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

We'll we'll have to see with with time, like but, again, you know, one of one of the things, and I think you're in some ways flagging it right now is how different the market is and how product lines have decoupled. And one of the benefits that we as an organization are enjoying is the breadth of our offering. So there are parts of the marketplace that we participate in where we are maintaining very much of a defensive posture, and there are other parts of the marketplace where we're finding opportunity to lean in. Other liability occurrence, we'll have to see how it unfolds. Clearly, are many folks that have taken some bumps and bruises particularly on the excess and umbrella and historically that would suggest that will lead to opportunity and if that is the case, look forward to participating.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Okay. Got it. I'll sneak in just a follow-up question to Rob Cox's question and your answer about tariffs impacting more than just the auto line. I probably just need to do more homework myself, but is there have you been willing to quantify just directionally commercial property? Would tariffs under their current form potentially impact loss ratio by like just I don't know if you have a corridor like very low single digit?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So Mike, the answer is that the tariff discussion coming Washington, particularly led by the administration, I think, is still a bit of a moving target. So for us to put, a number down right now, that's I'm hoping that that's something we can do, give or take, 90 days from now for you and others. But right now, I think it would be premature. My message to you is that we are very focused on it and making sure that we will take the appropriate action from a loss, ratio as well as what that input what those implications are from a pricing perspective as well. The short answer is, is it if it comes to be as it's been advertised, yeah, it's gonna drive up lost cost.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Do I have a number for you? No. Not that, would be particularly valuable to you or valuable to us sharing with anyone at this moment.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Understood. Thank you.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thank you.

[Operator]

Your next question comes from the line of Josh Shanker with Bank of America. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hi, Josh.

[Joshua Shanker, Analyst at Bank of America]

Good evening, everyone. How are you all doing?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

We're doing great. How are you?

[Joshua Shanker, Analyst at Bank of America]

Good. Good. Thank you. I wanted to dig into some of the comments. You mentioned in your prepared remarks that you have to concentrate on specialty workers' comp to understand why Berkeley grew in the quarter in an otherwise tepid comp environment.

[Joshua Shanker, Analyst at Bank of America]

But you always have a specialty as what you're writing. Is it were there a few unique opportunities that you saw in 01/2025? And should we expect that workers' comp is going to be a unique area that Berkeley is able to grow for the next few quarters while the industry struggles?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So I think the maybe thanks for flagging that, Josh. And let me try and do a a better job articulating the the thought than I did. You're absolutely right that, by and large, all we do is specialty in nature. But some of what we do that is specialty in nature oftentimes by the standard market is mistakenly not recognized as specialty, and that tends to be smaller and mid sized accounts. So as they are mistakenly coming into that marketplace, you know, that creates more competition and we are have no qualms letting that part of the portfolio shrink.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

That having been said, what I was attempting to flag was there is a part of the comp market, which is perhaps even more specialized. And what I mean by that, it's even higher hazard in nature, where the standard market has a greater recognition for the complexity and is less inclined to try and come into that marketplace and cut rates and try and leverage their multiline offering. So, apologies if I muddied the waters, but hopefully that adds a bit of clarity.

[Joshua Shanker, Analyst at Bank of America]

And is there anything we can use by looking at this number to think about the remainder of the year?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Well, you know, Josh, both you and I, along with others, know that nobody knows exactly what tomorrow will bring. If market conditions in that part of the comp market continue as they have been more recently, then we will look forward to continuing to lean into that opportunity. If that opportunity or window of opportunity were to close, then, you know, you will see us do what you would expect us to do, and we will have no qualms letting the business move in a different direction or away from us.

[Joshua Shanker, Analyst at Bank of America]

So if I could ask the same question but about a different market, about, commercial auto liability. It's been a tough market for a while, but this is the first time that I've really seen Berkeley's premium volume really fade compared to the prior quarters. Has something changed in the last three months?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I think what it is is just our commitment to rate adequacy and the rest of the marketplace has been a bit, sluggish, particularly earlier in q one. I would tell you more recently, perhaps there's early signs of a green shoot coming through. Hard to know whether that is green grass or a weed, but we remain hopeful.

[Joshua Shanker, Analyst at Bank of America]

Okay. And if I can sneak one other in. You know, Andrew mentioned about the cats. Notably, Berkeley has no exposure to California homeowners, which they avoided the the didn't avoid completely, obviously, being avoided the line of business that was most exposed to the biggest cat in the quarter. Yet this was quite a big quarter for catastrophe losses for Berkeley.

[Joshua Shanker, Analyst at Bank of America]

Has the premium footprint changed as you've moved into short tail line and expose yourself more to property such that we should revise our priors and how we think Berkeley's cat loss exposure evolves relative to the market more broadly?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Josh, so the way I would answer that is no, really. First off, as far as the homeowners piece, I want to make sure there's no misunderstanding. It wasn't that Berkeley One didn't get to expanding to California. A conscious and deliberate decision was made not to enter California. As far as the balance of the loss as it relates to that, it has to do with our commercial lines book.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

And we have felt as though the property market as we've talked about in the past is reasonably well priced and that's why we were prepared to take on a bit more exposure. I think that view was validated because if you look at the result we delivered even with having opportunistically modestly expanded our footprint or participation in the property space, we still delivered a 19% plus return. So long story short, do I think you should come away from this feeling like there's been a sea change in our approach to property and cat exposed property? No. I think that would be a mistake.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Do I what do I hope that you'll continue to recognize that we are an organization that is opportunistic and when we see things that are well priced, we're willing to take on a bit more exposure? Yes, I would hope that that would be the takeaway. But no, there is not a sea change in our appetite for, cat, if you will. And that's why arguably a 40,000,000,000 to $50,000,000,000 event relative to our size. I think by any measure we are underweighted as far as our cat loss.

[Joshua Shanker, Analyst at Bank of America]

Well, thank you for all the answers. Appreciate it.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thanks for calling in.

[Operator]

Your next question comes from the line of David Motemaden with Evercore ISI. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hi, David. Good afternoon.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Hey, good afternoon, Rob. I had just a follow-up question on the reserve development within the insurance segment, $11,000,000 I was hoping to get a little bit more detail in terms of some of the moving pieces there.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I don't have that in in front of me. If you'd like, maybe you could give Karen or Richard a call, tomorrow and we can unpack it. I think we have about $17,000,000,000 of reserves, So I didn't view $11,000,000 as the be all and end all, but we're happy to do our best to unpack that for you.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Great. Thanks. And then, you know, I was, I know not a big line for you guys either, but the property reinsurance growth was a pretty nice tailwind this quarter ticked up quite a bit. Guess how should we think about how sustainable growth is in that market within the property cat market?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I think it depends on what tomorrow holds. When the day is all done, the property market, particularly as it relates to reinsurance, was not as rosy at this oneone as it was a year earlier, but we still think that it's well priced. But as we've demonstrated in the past, whether it's property or any product line, if that opportunity shifts and is less attractive, we're very happy to let it go. So what will tomorrow bring? I don't know.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

But right now, we think that there's still a reasonable risk adjusted return to be had. That having been said, you know, we all saw a fair amount of erosion at oneone. So I don't know if there's another year or not in the tank.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Got it. Thanks. And then maybe just lastly, so there's been some efforts at tort reform in Georgia. I know you guys are a decent sized player in Georgia within GL and commercial auto. I guess, just curious on your thoughts in terms of what that does to sort of address some of the social inflation issues, that have been problematic there.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I guess the short answer is we're pleased that it's getting the attention. Not sure if it's enough, but it's a step in the right direction.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Great. Thank you.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Thank you.

[Operator]

Your next question comes from the line of Mark Hughes with Truist Securities. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hello, Mark. Good afternoon.

[Mark Hughes, Analyst at Truist Securities]

Yes. Thank you. Hey, Rob.

[Mark Hughes, Analyst at Truist Securities]

How are you?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Doing fine. Thanks. Hope you're well.

[Mark Hughes, Analyst at Truist Securities]

Anything to say on admitted versus E and F and the mix shift? It seems like it's continued in E and F. How did you see that play out this quarter? And any commentary on submission growth would be great.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So using a pretty broad brush, we are pretty pleased with the continued flow in the E and S market ever increasing particularly around some of the liability lines, casualty in particular, and for that matter excess and umbrella. As far as the property piece goes, there's still opportunity there, but probably a bit less than there was yesterday. January was a little bit more challenging, but we were very pleased to see how the balance of the quarter unfolded and found it to be quite encouraging. Thank you for that.

[Mark Hughes, Analyst at Truist Securities]

And then, Rich, on the reinsurance purchasing that you talked about influencing the mix, which influenced the current accident year, is that an ongoing phenomenon do you think? Or is that there's some timing about the purchasing of that reinsurance that might have influenced q one more than others?

[Richard Baio, EVP & CFO at W. R. Berkley]

I don't think it has to do with the timing of the purchasing. It really is just driven by each of those operations, whether they're growing or shrinking or moving in or out of particular businesses and what the contribution is to the overall. So if you have a business as an example that we quota share some of that out to third party reinsurers, and you don't have as much net premiums written, contributing to the overall total net premiums written, it will obviously have an impact one way or the other. So no. I think if you look at our session rate, we kinda hover in that high 14 to low 15% rate.

[Richard Baio, EVP & CFO at W. R. Berkley]

So I think that our session rate is pretty consistent from period to period. It's really just the composition across the 58 plus operating units.

[Mark Hughes, Analyst at Truist Securities]

Very good. Thank you.

[Operator]

Your next question comes from the line of Andrew Anderson with Jefferies. Please go ahead.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Hi, Andrew. Good afternoon.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Hey, good afternoon. Just on casualty reinsurance, you had mentioned the professional liability component. I was just hoping you could touch on kind of the rate and discipline that you're seeing in the market and expectations or thoughts of that maybe improving as we we go through the year.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So the punch line is a lot of it has to do with, a fair amount of it has to do with DNO. A fair amount of it has to do with cyber and transactional as well. And to make a long story short, it's not that we're writing the same number of treaties and the rates just getting cut or the underlying is collecting less premium, it's our colleagues drawing a line in the sand and saying this treaty does not make any sense to us any longer. We are not going to do it given the economics, which we very much applaud. Thank you, Kevin.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Got it. So maybe still some non renewals as we go throughout the year on that line perhaps?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Obviously, oneone is a big date, but we'll we'll have to see how it unfolds. But again, of course, the stuff, it comes through throughout the year.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Okay. And then just on specialty workers' comp, is the rate there kind of similar to traditional workers' comp? Or what are you seeing in that market?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

It's a healthier market where we find the rates are higher and we think the rate accuracy is more appropriate.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Thank you.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thank you.

[Operator]

Your next question comes from the line of Brian Meredith with UBS. Please go ahead.

[Brian Meredith, Managing Director at UBS Securities LLC]

Hi, Brian. Yes, thanks. Hey, how are you? Two quick ones here for you. First one, just on the property reinsurance again, were there any color reinstatement premiums or anything in there that may have kind of elevated the growth on a year over year basis, just given the cat Nothing.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Not material.

[Brian Meredith, Managing Director at UBS Securities LLC]

Okay. Excellent. And actually, next one is for Bill. Just curious, Bill, during the 1970s, had stagflation. Maybe give us tell us what that kind of means for the commercial insurance industry and kind of what it was like back then with stagflationary environment?

[William Berkley, Executive Chairman at W. R. Berkley]

Well, first of all, that's age discrimination.

[William Berkley, Executive Chairman at W. R. Berkley]

I

[William Berkley, Executive Chairman at W. R. Berkley]

I think that that that stagflation was a problem, but the inflation was somewhat different. It was much more focused, and and you saw in it wasn't quite across the board in the stagnant economy. There were a lot of different moving parts. But I think that the industry, when that happened, went through a tough period of pricing pressures. But but it wasn't a disaster by any means.

[William Berkley, Executive Chairman at W. R. Berkley]

I think the the industry was able to move along raising prices and keep up with that. But there was less growth because the economy really wasn't growing. So less growth pricing was okay, and industry lifeblood of new companies and change was diminished. So flexible, modest size, and larger size companies did well. Not a lot of new companies getting started was really when we were just getting into the business.

[William Berkley, Executive Chairman at W. R. Berkley]

And you had had lots of issues including things we faced when we were just getting into the business. So in fact, just just looking back at what that was, it it opened the doors to really a much improving period of time, but margins were not what they were, although interest rates moved up. So we had improving interest rates. That was when interest rates started to move up where they had been settled at 3% to where they became settled at 6%. So it was an okay time for the industry if you paid attention to risk.

[William Berkley, Executive Chairman at W. R. Berkley]

But overall, bigger companies did better than smaller companies and opportunities exist themselves. Like everything, there's no broad brush that gives you an answer. Very, very differentiated.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Thank you.

[Operator]

Your next question comes from the line of Wes Carmichael with Autonomous Research. Please go ahead.

[Wes Carmichael, Senior Analyst at Autonomous Research]

Hey, good evening. Just wanted to come back quickly to the increasing underlying loss ratio that was driven by mix. And Rich, I heard your commentary on reinsurance and I don't think it sounds like it, but I just want to confirm, is there any mix standpoint on the expense ratio that you're seeing?

[Richard Baio, EVP & CFO at W. R. Berkley]

There could be as well because as I was alluding to earlier, depending on the contribution from quota shares with ceding commissions, that could also have an impact on the expense ratio. So yes.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

In this case, that was less the Correct. Case in the quarter.

[William Berkley, Executive Chairman at W. R. Berkley]

That's right.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Okay. Understood. Thank you. And then just in the insurance segment, I wondered if you could just unpack growth a bit more. And Rob, you talked a bit about workers' comp, for a while.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

So any more color on the other lines, including other liability that you might call out in the quarter or going forward?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

I think it's a combination of just making sure we're staying on top of it with the rate and market conditions where we are seeing opportunity to grow. And we are making the most of that where the opportunities are. So, you know, long story short, some of the product lines, it's rate, rate, rate all day like auto, as an example. There are other product lines where rate adequacy remains very important and market conditions are such that it's allowing us not just to grow through rate but to grow through exposure.

[Wes Carmichael, Senior Analyst at Autonomous Research]

Great. Thanks so much.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Thank you.

[Operator]

Your next question comes from the line of Meyer Shields with KBW. Please go ahead.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thanks. If I can go back to the specialty workers' compensation driving the growth, are the underwriting and claims handling tools different from the prior book of workers' compensation at Berkeley?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Sorry. What was the the last piece, Mary? I beg your pardon. Are they different from what?

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

So the legacy, in other words, the of compensation business that you've written over the last few years.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Well, I I think the the answer is that each one of the business is businesses are specialized in in nature, and some of the opportunity as we alluded to earlier with some of the higher hazard is creating a meaningful opportunity for us and we are leaning into that. And is it yes. It has teams of people, as you know, were set up a decentralized structure with different businesses with their own focus and expertise to support that area of focus or to go hand in hand with that area of focus. So the answer is yes.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. And then completely changing topic. So in the press release confirming Mitsubishi Bitomo, their president and CEO talked about deploying their network to grow the value of their investment, which I think means Berkeley. I was hoping you could flush out what that means in terms of growth potential for Berkeley.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

We'll have to see over time. Obviously, they are a large organization with a meaningful print footprint in different parts of the world. And if there's opportunity for us to partner with them and bring some of our expertise and and skills, then if that's something that makes sense for the business, that's something that we're very open to.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. But that's not something nothing 2025?

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

We'll have to see.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Fair enough. Thank you very much. Thank you.

[Operator]

And that concludes our question and answer session. And I will now turn the call over to Mr. Rob Berkley for closing comments.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Krista, thank you very much and thank you all for dialing in. As suggested earlier, I think by any measure, a very solid quarter, let alone when we had a cat of this size. Additionally, I think it was very encouraging, the top line that we were able to enjoy. And of course, that was nicely complemented by the continued benefit on the investment portfolio as well. Thank you all and we look forward to connecting with you in ninety days or so.

[W. Robert Berkley, Jr, President & CEO at W. R. Berkley]

Have a good night.

[Operator]

This concludes today's conference call. Thank you for your participation and you may now disconnect.

Participants

Executives

• W. Robert Berkley, Jr, President & CEO
• Richard Baio, EVP & CFO
• William Berkley, Executive Chairman

Analysts

• Andrew Kligerman, Managing Director at TD Securities
• Elyse Greenspan, Managing Director at Wells Fargo Securities
• Robert Cox, Vice President - Equity Research at Goldman Sachs
• Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets
• Joshua Shanker, Analyst at Bank of America
• David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI
• Andrew Andersen, Equity Research Vice President at Jefferies Financial Group
• Mark Hughes, Analyst at Truist Securities
• Brian Meredith, Managing Director at UBS Securities LLC
• Wes Carmichael, Senior Analyst at Autonomous Research
• Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)