W. R. Berkley Corporation (NYSE: WRB) today reported its first quarter 2025 results.
Summary Financial Data | |||||||
(Amounts in thousands, except per share data) | |||||||
First Quarter | |||||||
2025 | 2024 | ||||||
Gross premiums written | $ | 3,683,939 | $ | 3,362,755 | |||
Net premiums written | 3,133,302 | 2,851,291 | |||||
Net income to common stockholders | 417,571 | 442,471 | |||||
Net income per diluted share (1) | 1.04 | 1.09 | |||||
Operating income (2) | 404,744 | 423,324 | |||||
Operating income per diluted share (1) | 1.01 | 1.04 | |||||
Return on equity (3) | 19.9 | % | 23.7 | % | |||
Operating return on equity (2) (3) | 19.3 | % | 22.7 | % | |||
| (1) | The 2024 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on July 10, 2024. | |
| (2) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses) and related expenses. | |
| (3) | Return on equity and operating return on equity represent net income and operating income, respectively, expressed on an annualized basis as a percentage of beginning of year common stockholders’ equity. |
First quarter highlights included:
- Return on equity and operating return on equity of 19.9% and 19.3%, respectively.
- Record net premiums written grew to $3.1 billion.
- The current accident year combined ratio before catastrophe losses of 3.7 loss ratio points was 87.2%.
- The reported combined ratio was 90.9%, including current accident year catastrophe losses of $111.1 million.
- Average rate increases excluding workers' compensation were approximately 8.3%.
- Net investment income grew 12.6% to $360.3 million.
- Record net invested assets of $30.7 billion.
- Book value per share grew 7.1% in the quarter, before dividends and share repurchases.
The Company commented:
We achieved strong results in the first quarter of 2025 with a 19.9% annualized return on beginning-of-year common stockholders' equity, despite significant first-quarter industry-wide catastrophe losses. These results once again demonstrate our ability to successfully manage underwriting volatility.
Net premiums written grew 10% as market conditions remained favorable in many lines of business, particularly in our Insurance segment. Our 90.9% combined ratio includes 3.7 points of catastrophe losses in a quarter with significant industry catastrophe losses, reflecting our approach to managing volatility as a component of risk-adjusted return.
Net investment income increased significantly compared to the first quarter of 2024, and sequentially from the fourth quarter of 2024, reflecting the impact of higher new money rates on our growing fixed-maturity portfolio and improvement in our investment fund income. The strength of our operating cash flow continues to drive growth in net investable assets, positioning us well for further investment income growth.
Our ability to expand or contract each of our distinct businesses based on specific market conditions remains a significant competitive advantage. This agility enables us to execute our strategy to grow profitably and optimize risk-adjusted returns, while successfully navigating risks and embracing opportunities. We are confident that we will continue to deliver outstanding value to shareholders over the remainder of 2025 and beyond.
Webcast Conference Call
The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on April 21, 2025, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/events-and-presentations/default.aspx. Please log on early to register. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call. Additional financial information can be found on the Company's website at https://ir.berkley.com/investor-relations/financial-information/quarterly-results/default.aspx.
About W. R. Berkley Corporation
Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty business: Insurance and Reinsurance & Monoline Excess.
Forward Looking Information
This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2025 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts, including claims for cyber security-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing effects of the COVID-19 pandemic, or other epidemics and pandemics; the impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, interest rates, the impact of tariffs and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response to such conditions, on our results and financial condition; foreign currency and political risks relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; cyber security breaches of our information technology systems and the information technology systems of our vendors and other third parties, or related processes and systems; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties could cause our actual results for the year 2025 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Consolidated Financial Summary | |||||||
(Amounts in thousands, except per share data) | |||||||
First Quarter | |||||||
2025 | 2024 | ||||||
Revenues: | |||||||
Net premiums written | $ | 3,133,302 | $ | 2,851,291 | |||
Change in unearned premiums | (120,921 | ) | (86,944 | ) | |||
Net premiums earned | 3,012,381 | 2,764,347 | |||||
Net investment income | 360,292 | 319,839 | |||||
Net investment gains: | |||||||
Net realized and unrealized gains on investments | 15,711 | 11,503 | |||||
Change in allowance for credit losses on investments | 644 | 14,277 | |||||
Net investment gains | 16,355 | 25,780 | |||||
Revenues from non-insurance businesses | 128,909 | 120,992 | |||||
Insurance service fees | 28,929 | 25,319 | |||||
Other Income | 533 | 496 | |||||
Total Revenues | 3,547,399 | 3,256,773 | |||||
Expenses: | |||||||
Loss and loss expenses | 1,900,792 | 1,663,778 | |||||
Other operating costs and expenses | 949,910 | 868,589 | |||||
Expenses from non-insurance businesses | 126,364 | 118,607 | |||||
Interest expense | 31,727 | 31,728 | |||||
Total expenses | 3,008,793 | 2,682,702 | |||||
Income before income tax | 538,606 | 574,071 | |||||
Income tax expense | (121,257 | ) | (132,036 | ) | |||
Net Income before noncontrolling interests | 417,349 | 442,035 | |||||
Noncontrolling interest | 222 | 436 | |||||
Net income to common stockholders | $ | 417,571 | $ | 442,471 | |||
Net income per share (1): | |||||||
Basic | $ | 1.05 | $ | 1.10 | |||
Diluted | $ | 1.04 | $ | 1.09 | |||
Average shares outstanding (1) (2): | |||||||
Basic | 396,929 | 402,317 | |||||
Diluted | 399,825 | 405,757 | |||||
| (1) | The 2024 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on July 10, 2024. | |
| (2) | Basic shares outstanding consist of the weighted average number of common shares outstanding during the period (including shares held in a grantor trust). Diluted shares outstanding consist of the weighted average number of basic and common equivalent shares outstanding during the period. |
Business Segment Operating Results | |||||||
(Amounts in thousands, except ratios) (1) | |||||||
First Quarter | |||||||
2025 | 2024 | ||||||
Insurance: | |||||||
Gross premiums written | $ | 3,216,952 | $ | 2,921,050 | |||
Net premiums written | 2,694,455 | 2,445,715 | |||||
Net premiums earned | 2,642,507 | 2,398,768 | |||||
Pre-tax income | 509,505 | 478,149 | |||||
Loss ratio | 63.9 | % | 61.8 | % | |||
Expense ratio | 27.8 | % | 28.4 | % | |||
GAAP Combined ratio | 91.7 | % | 90.2 | % | |||
Reinsurance & Monoline Excess: | |||||||
Gross premiums written | $ | 466,987 | $ | 441,705 | |||
Net premiums written | 438,847 | 405,576 | |||||
Net premiums earned | 369,874 | 365,579 | |||||
Pre-tax income | 120,380 | 127,624 | |||||
Loss ratio | 57.7 | % | 49.8 | % | |||
Expense ratio | 27.7 | % | 29.8 | % | |||
GAAP Combined ratio | 85.4 | % | 79.6 | % | |||
Corporate and Eliminations: | |||||||
Net investment gains | $ | 16,355 | $ | 25,780 | |||
Interest expense | (31,727 | ) | (31,728 | ) | |||
Other expenses | (75,907 | ) | (25,754 | ) | |||
Pre-tax loss | (91,279 | ) | (31,702 | ) | |||
Consolidated: | |||||||
Gross premiums written | $ | 3,683,939 | $ | 3,362,755 | |||
Net premiums written | 3,133,302 | $ | 2,851,291 | ||||
Net premiums earned | 3,012,381 | $ | 2,764,347 | ||||
Pre-tax income | 538,606 | 574,071 | |||||
Loss ratio | 63.1 | % | 60.2 | % | |||
Expense ratio | 27.8 | % | 28.6 | % | |||
GAAP Combined ratio | 90.9 | % | 88.8 | % | |||
(1) | Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. GAAP combined ratio is the sum of the loss ratio and the expense ratio. |
Supplemental Information | |||||||
(Amounts in thousands) | |||||||
First Quarter | |||||||
2025 | 2024 | ||||||
Net premiums written: | |||||||
Other liability | $ | 1,108,264 | $ | 1,015,614 | |||
Short-tail lines (1) | 600,192 | 532,341 | |||||
Auto | 389,154 | 348,582 | |||||
Workers' compensation | 340,607 | 304,632 | |||||
Professional liability | 256,238 | 244,546 | |||||
Total Insurance | 2,694,455 | 2,445,715 | |||||
Casualty (2) | 186,790 | 190,019 | |||||
Property (2) | 132,157 | 98,662 | |||||
Monoline excess | 119,900 | 116,895 | |||||
Total Reinsurance & Monoline Excess | 438,847 | 405,576 | |||||
Total | $ | 3,133,302 | $ | 2,851,291 | |||
Current accident year losses from catastrophes: | |||||||
Insurance | $ | 70,617 | $ | 27,451 | |||
Reinsurance & Monoline Excess | 40,491 | 3,055 | |||||
Total | $ | 111,108 | $ | 30,506 | |||
Net Investment income: | |||||||
Core portfolio (3) | $ | 316,940 | $ | 331,177 | |||
Investment funds | 27,023 | (29,349 | ) | ||||
Arbitrage trading account | 16,329 | 18,011 | |||||
Total | $ | 360,292 | $ | 319,839 | |||
Net realized and unrealized gains (losses) on investments: | |||||||
Net realized losses on investments | $ | (4,235 | ) | $ | (14,308 | ) | |
Change in unrealized gains on equity securities | 19,946 | 25,811 | |||||
Total | $ | 15,711 | $ | 11,503 | |||
Other operating costs and expenses: | |||||||
Policy acquisition and insurance operating expenses | $ | 838,246 | $ | 791,532 | |||
Insurance service expenses | 23,246 | 21,439 | |||||
Net foreign currency losses (gains) | 19,378 | (13,177 | ) | ||||
Other costs and expenses | 69,040 | 68,795 | |||||
Total | $ | 949,910 | $ | 868,589 | |||
Cash flow from operations | $ | 743,817 | $ | 746,235 | |||
Reconciliation of net income to operating income: | |||||||
Net income | $ | 417,571 | $ | 442,471 | |||
Pre-tax investment gains, net of related expenses | (16,355 | ) | (25,780 | ) | |||
Income tax expense | 3,528 | 6,633 | |||||
Operating income after-tax (4) | $ | 404,744 | $ | 423,324 | |||
| (1) | Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery, high net worth homeowners and other lines. | |
| (2) | Includes reinsurance casualty and property and certain program management business. | |
| (3) | Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable. | |
| (4) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses). Net investment gains (losses) are computed net of related expenses, including performance-based compensatory costs associated with realized investment gains. Management believes this measurement provides a useful indicator of trends in the Company’s underlying operations. |
Selected Balance Sheet Information | |||||
(Amounts in thousands, except per share data) | |||||
March 31, 2025 | December 31, 2024 | ||||
Net invested assets (1) | $ | 30,728,601 | $ | 29,780,638 | |
Total assets | 41,345,792 | 40,448,635 | |||
Reserves for losses and loss expenses | 20,921,987 | 20,368,030 | |||
Senior notes and other debt | 1,832,822 | 1,831,158 | |||
Subordinated debentures | 1,009,988 | 1,009,808 | |||
Common stockholders' equity (2) | 8,914,039 | 8,395,111 | |||
Common stock outstanding (3) | 379,313 | 380,066 | |||
Book value per share (4) | 23.50 | 22.09 | |||
Tangible book value per share (4) | 22.88 | 21.46 | |||
| (1) | Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. | |
| (2) | As of March 31, 2025, reflected in common stockholders' equity are after-tax unrealized investment losses of $369 million and unrealized currency translation losses of $393 million. As of December 31, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $517 million and unrealized currency translation losses of $417 million. | |
| (3) | During the three months ended March 31, 2025, the Company repurchased 850,000 shares of its common stock for $49.2 million. The number of shares of common stock outstanding excludes shares held in a grantor trust. | |
| (4) | Book value per share is total common stockholders’ equity divided by the number of common shares outstanding. Tangible book value per share is total common stockholders’ equity excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. |
Investment Portfolio | ||||
March 31, 2025 | ||||
(Amounts in thousands, except percentages) | ||||
Carrying Value | Percent of Total | |||
Fixed maturity securities: | ||||
United States government and government agencies | $ | 2,926,978 | 9.5% | |
State and municipal: | ||||
Special revenue | 1,436,639 | 4.7% | ||
State general obligation | 298,606 | 1.0% | ||
Local general obligation | 270,901 | 0.9% | ||
Corporate backed | 154,712 | 0.5% | ||
Pre-refunded | 77,893 | 0.3% | ||
Total state and municipal | 2,238,751 | 7.4% | ||
Mortgage-backed securities: | ||||
Agency | 3,478,021 | 11.3% | ||
Commercial | 430,838 | 1.4% | ||
Residential - Prime | 186,605 | 0.6% | ||
Residential - Alt A | 1,950 | 0.0% | ||
Total mortgage-backed securities | 4,097,414 | 13.3% | ||
Asset-backed securities | 3,971,671 | 12.9% | ||
Corporate: | ||||
Industrial | 3,711,128 | 12.1% | ||
Financial | 3,412,170 | 11.1% | ||
Utilities | 939,354 | 3.1% | ||
Other | 497,706 | 1.6% | ||
Total corporate | 8,560,358 | 27.9% | ||
Foreign government | 1,825,632 | 5.9% | ||
Total fixed maturity securities (1) | 23,620,804 | 76.9% | ||
Equity securities available for sale: | ||||
Common stocks | 682,677 | 2.2% | ||
Preferred stocks | 462,363 | 1.5% | ||
Total equity securities available for sale | 1,145,040 | 3.7% | ||
Cash and cash equivalents (2) | 1,926,407 | 6.3% | ||
Investment funds | 1,480,322 | 4.8% | ||
Real estate | 1,304,443 | 4.2% | ||
Arbitrage trading account | 831,705 | 2.7% | ||
Loans receivable | 419,880 | 1.4% | ||
Net invested assets | $ | 30,728,601 | 100.0% | |
| (1) | Total fixed maturity securities had an average rating of AA- and an average duration of 2.7 years, including cash and cash equivalents. | |
| (2) | Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. |
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