W. R. Berkley Corporation (WRB) 2024 Q2 Earnings Call Summary
July 22, 2024 
W. R. Berkley Corporation (WRB)
| Market Cap | 0.38T |
|---|---|
| Beta | |
| P/E | 43.94571752178209 |
| EPS | 20.282294846095283 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Strong Financial Performance: The company reported a second quarter annualized return on beginning of year equity of 20% on a net income basis and 22.4% on an operating earnings basis.
- Record Net Premiums: Growth of 11.2% in net premiums written to a record $3.1 billion, marking the first time above $3 billion for a quarter.
- Underwriting Income: Pre-tax underwriting income was $254 million, including $90 million of catastrophe losses, showcasing effective management of cat risks.
- Investment Income Growth: Record pre-tax net investment income increased almost 52% to $372 million, driven by strong performance in fixed maturity securities and investment funds.
- Capital Management: The company returned total capital of $381 million, including share repurchases and dividends, while book value per share grew 5.4%.
Pessimistic Highlights
- Catastrophe Losses: The quarter experienced heightened catastrophe events, leading to an increase in cat losses of 1.1 loss ratio points over the prior-year quarter.
- Expense Ratio Increase: The expense ratio increased 40 basis points to 28.5%, primarily due to higher commissions from business mix.
Company Outlook
- Growth and Return Expectations: The company expects to continue growing at 10% to 15% with the ability to generate returns in the high teens to low 20%s consistently.
- Investment Strategy: With a strong AA- credit quality and a domestic book yield of 4.5%, the company plans to leverage the rising interest rate environment for future growth in net investment income.
Q & A Highlights
Q: Can you provide more color on the $1 million reserve release this quarter? (Elyse Greenspan, Wells Fargo)
A: Insurance segment developed favorably by $2.5 million, and Reinsurance & Monoline Excess segment developed unfavorably by $1.5 million, netting to the $1 million. (Rich Baio)
Q: What was the impact of Argentinian inflation-linked securities this quarter? (Elyse Greenspan, Wells Fargo)
A: Reported $63 million from inflation linkers, with a net income impact pre-tax of about $13 million after accounting for foreign currency losses. (Rich Baio)
Q: What drove the 50 basis points increase in rate ex workers' comp in the quarter? (Elyse Greenspan, Wells Fargo)
A: Primarily driven by auto liability. (Rob Berkley)
Q: Any further color on reserve movements by product line? (Rob Cox, Goldman Sachs)
A: No specific commentary on reserves by product line was provided. (Rob Berkley)
Q: Is there another "pig that the python has swallowed" for the industry in '22 and '23 regarding claims? (Josh Shanker, Bank of America)
A: No noteworthy pattern of an elongation of the property claims tail observed. (Rob Berkley)
Additional questions focused on investment strategy, capital return preferences, cyber exposure, commercial auto book confidence, and the dynamics within the workers' comp market.