Previous Statements by WRB
» W.R. Berkley Corporation Q1 2010 Earnings Call Transcript
» W.R. Berkley Corporation Q1 2009 Earnings Call Transcript
» W.R. Berkley Corporation Q4 2008 Earnings Call Transcript
I would now like to turn the call over to Mr. William R. Berkley. Please go ahead, sir.William Berkley Good morning, everyone. First, we got to all let you know that this is a celebratory day, because it’s Gene Ballard. And, therefore, after this call, we’ll be all out on a birthday party for Gene. Before I give you my views or whatever, we’re going to with Rob, talking about the operating units and Gene is going to talk about the finances and then I’m going to give you my overview of where we stand and then take questions. With that, I’ll start and turn this over to Rob Berkley. Rob Berkley Thank you, good morning, everyone. Overall, the market conditions during the quarter remained challenging due to the headwinds that continued to exist, coming from both the general economy as well as in overall competitive marketplace. Having said this, the good news is, that it appears as though pricing has generally bottomed out, payrolls and receipts are not eroding at the same rate they were in the past quarters, and consequently, the pace of written premiums is slowing. Additionally, there seems to be a glowing recognition amongst both carriers as well as the distribution system that the status quo is not sustainable. Our price monitoring indicated that are our rates were down a modest 0.8% for the quarter. Furthermore, it is worth mentioning there are growing number of areas where we are achieving rate increases. Finally, for the first six months of the year, our renewal retention was running at about 80%. Our net written premium for the quarter was $961 million, an increase of 5.8%, which was the first time that our net written premium has grown in almost four years. The growth came about predominantly from our startup. The international segment, led by our Lloyd’s operation in particular stands out, but also, our companies in Brazil, Argentina, Norway, Hong Kong, Australia, and Canada has performed well.
The alternative markets division also contributed handsomely to the Group’s growth over the three months. Our specialty and reinsurance business remains relatively flat with our regional business shrinking somewhat.It is worth noting that while the net results of a segment maybe flat or negative, one should not misinterpret that. There may in fact be companies in those segments that are growing. Obviously, seeing this type of growth in parts of our business, given the environment, raises our antenna. However, it is worth commenting that we have a high level of confidence in the people managing these businesses and we remain comfortable with their risk selection and pricing. Additionally, our rate monitoring and underwriting audits provide all interested parties with additional peace of mind. We strongly believe our growth has come about as a result of our customer focus team, their relationships and the financial strength and stability of the Group. Finally, I would remind you that we have started 19 businesses over the past few years. So this level of growth should not be surprising. And, for the combined ratio for the quarter, which was a 94.4, which was comprised at a 60.2 loss ratio and a 34.2 expense ratio. The loss ratio was adversely impacted by storms as well as our exposure to Transocean, which in the aggregate added 3.4 points. The expense ratio improved by almost a point compared with Q1 and we expect this trend to continue. Now, Gene, will take you through the details regarding the numbers. One additional comment from me on this topic is when he cuts through all of the moving pieces back and forth, it is our belief that we are currently running at a current accident year combined ratio of a 98. And if you add storms into that, it brings you to approximately at 101.
Having said this, it is certainly possible that we will outperform these numbers, given our ongoing philosophy of cautiously reserving the current year. As we observe the current market conditions, we can’t help but notice there are many parallels that are present between the existing environment and the market conditions the industry experienced in 2000. Obviously, one noticeable difference is available investment returns, which may very well apply additional pressure to the situations impact.The Group continued to remain focused on maintaining underwriting discipline while simultaneously positioning ourselves with the inevitable change in the market. Finally, I would suggest that the growth the Group experienced in the second quarter is a fraction of what we expect under improved market condition. Thank you. William Berkley Thanks Rob. Now, Gene, you want to take us through the numbers quickly. And, then, I’ll add probably two sentences. Read the rest of this transcript for free on seekingalpha.com