W.R. Berkley NYSE: WRB reported third-quarter 2026 operating earnings of $456 million, or $1.17 per share, as record underwriting profit and higher investment income supported an annualized operating return on equity of 18.8%. Year-to-date operating return on equity exceeded 20%, Chief Financial Officer Rich Baio said during the company’s earnings call.
Pre-tax underwriting profit reached a third-quarter record of $296 million. The current accident-year loss ratio, excluding catastrophe losses, improved 40 basis points from a year earlier to 59.5%, while the expense ratio was relatively flat at 28.6%. The resulting accident-year combined ratio excluding catastrophes was 88.1%.
Pre-tax catastrophe losses were $86 million, or 2.7 points on the loss ratio. Baio said catastrophe losses rose only $7 million despite nearly twice as many storm events named by PCS compared with the prior-year quarter. The calendar-year combined ratio was 90.8%.
Insurance Segment Sets Premium Records
The insurance segment posted a current accident-year combined ratio excluding catastrophes of 88.3%, an improvement of one percentage point year over year. Pre-tax underwriting income in the segment increased 10.6% to $238 million.
Gross premiums written in the insurance segment rose 4.9% to a third-quarter record of $3.6 billion, while net premiums written increased 3.2% to a record $2.9 billion. Chairman, CEO and President Rob Berkley said renewal retention remained at 80%, which he said indicated the book was not churning.
Berkley said pricing excluding workers’ compensation “popped back up” to about 4%. He also highlighted a deliberate shift toward smaller accounts in other liability, citing greater competition for larger accounts and the company’s ability to handle smaller business efficiently. He said exposure in auto was declining at a healthy pace while rate increases were several times higher than the reported 5% figure.
Within workers’ compensation, Berkley said the company was seeing bottoming and incremental firming in California, while other parts of the country were still lagging. He said directors and officers liability pricing was in the process of bottoming, though the company sees attractive opportunities in several areas of professional liability.
Management said the favorable insurance loss-ratio performance was driven largely by non-catastrophe property losses and changes in business mix. However, Berkley cautioned analysts not to assume the quarter’s underlying loss ratio should be treated as a run rate.
On reserve development, Berkley said commercial auto was the primary source of adverse development in the insurance operation, including both primary commercial auto and exposure that can extend into excess and umbrella coverage.
Reinsurance Premiums Decline as Discipline Continues
The reinsurance and monoline excess segment reported a current accident-year combined ratio excluding catastrophes of 86.9% and pre-tax underwriting income of $58 million. Net premiums written in the segment declined 11.6% to $369 million, led by casualty and, to a lesser extent, property.
Berkley said the company remained dissatisfied with conditions in casualty reinsurance, particularly ceding commissions, and was willing to let business decline rather than accept returns it viewed as inadequate. He said the company expects reinsurance premiums to continue shrinking at a rate of roughly 10% to 20% for the foreseeable future.
Management said it was watching Jan. 1 renewals closely, particularly in property reinsurance. Berkley said market commentary suggested property reinsurance rates could decline by 10% to 20%, though he added there was limited visibility. He noted that the company purchases more reinsurance than it sells, providing what he characterized as a meaningful hedge.
Looking ahead, Berkley said the insurance business could grow at a mid-single-digit rate or better, barring unforeseen events. He expects commercial property conditions to become more challenging, while liability-related lines could offer more durable opportunities.
Investment Income Rises; Company Sees Higher-Rate Tailwind
Pre-tax net investment income increased to $384 million, supported by 12% growth in the core investment portfolio. Fixed-maturity investment income rose 10.3% from the prior-year quarter because of higher domestic yields and a larger invested-asset base.
Income from investment funds was $2 million during the quarter. Baio said such income can vary quarter to quarter, though the company generally expects investment funds to generate $10 million to $20 million per quarter on average and remains above the high end of that range year to date.
The duration of invested assets increased to 3.3 years at quarter-end from 3.2 years, while the average credit quality remained AA-minus. Berkley said the company’s domestic fixed-income portfolio was just under $24 billion, carried a book yield of roughly 4.7%, and had a new-money rate between 80 and 100 basis points higher.
He said the average life of insurance reserves was just under four years, leaving room to extend duration thoughtfully and capture prevailing yields. Berkley described the rate environment as a significant source of leverage for the company’s earnings model as the portfolio and new cash flow are reinvested.
Stockholders’ equity exceeded $9.6 billion as of Sept. 30, roughly flat from year-end 2025. The company returned $729 million of capital to shareholders year to date, while rising interest rates increased unrealized investment losses by $800 million. Baio said the company generally holds fixed-maturity securities to maturity and expects those unrealized losses to reverse favorably into equity over time.
Technology, AI and Changing Risk Landscape
Berkley devoted much of his opening remarks to the changing risk environment associated with autonomous vehicles, artificial intelligence and robotics. He said autonomous vehicles could reshape risks in private-passenger and commercial auto and potentially shift exposures toward product liability and other liability lines.
He also said robotics powered in part by AI could eventually have implications for workers’ compensation as labor markets and workplace roles evolve, though he said the company was not yet seeing specific effects in its client base.
On AI-related liability, Berkley said the company views the exposure as real and is working to understand it, control it, apply appropriate policy wording and ensure it is paid adequately for risks assumed. He acknowledged that the company has used exclusionary language where it considers that appropriate.
The company said its long-running investments in data and technology are supporting underwriting and claims operations. Berkley said certain intake processes have become more than 20% more efficient, allowing the company to process and quote more submissions, particularly smaller accounts. He also said more than half of the company’s claims settle for $5,000 or less, presenting an opportunity to reduce human touch in certain claims processes.
While technology may help contain expenses as earned premium growth moderates, Berkley said it would not necessarily prevent the expense ratio from increasing if the company makes additional investments. Still, he said the company is better positioned to manage expenses than it was previously.
About W.R. Berkley (NYSE:WRB)
W.R. Berkley Corporation is an insurance holding company that operates through a group of specialized insurance businesses. The company primarily provides commercial property and casualty insurance, serving businesses, organizations and other commercial customers with coverage tailored to specific industries and risks.
Its products and services include workers' compensation, commercial automobile, property, general liability, professional liability, directors and officers liability, excess and surplus lines, and other specialty insurance products.
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