On the surface, at least, W.R. Berkley Corp.’s 2014 second quarter reflects a stellar array of gains in everything from gross and net premiums written to net income, operating income and improved investment returns.
As in Q1, however, reinsurance is perhaps the sole Q2 trouble spot. Berkley’s global reinsurance arm, which represents less than 10 percent of the overall business for the group, saw big declines in premiums written and earned, though the combined ratio for the group became slightly better than in the same period a year ago.
Chairman and CEO William Berkley, in a prepared statement, focused on how the company’s broader financial plan, indicating it is still on track.
“We are optimistic that the combination of our operating results and investment gains will allow us to achieve our targeted returns,” Berkley said.
For the 2014 second quarter, Berkley said it generated more than $1.8 billion in gross premiums written, up nearly 10 percent over a total of $1.6 billion in the 2013 second quarter. Net premiums written came in at nearly $1.5 billion, up from $1.3 billion during the same period last year.
Net income for the quarter surpassed $179.9 mllion ($1.35 per diluted share), up 55 percent from $115.9 million a year ago ($.0.82 per diluted share).
Berkley said that lower-than-expected weather related losses, domestic insurance price increases in the moderate single digits and sale of property from the company’s real estate portfolio helped fuel the income gain.
Overall, Berkley’s combined ratio hit 94.4, an improvement over 96.6 during the 2013 second quarter. Berkley’s executives also have $109 million in net investment gains to celebrate. In the earnings statement, Berkley described the investment strategy going forward, noting that the company is focusing more funds on “alternative investments with the goal of generating capital gains.”
Reinsurance rates continue to soften, however, and Berkley’s global reinsurance arm felt some pain there. Gross premiums written surpassed $155.5 million during the quarter, but that’s down from $190 million in the 2013 second quarter.
Net premiums written for the division hit $143.3 million, a drop from more than $172.6 million over the same period a year ago. At the same time, the reinsurance combined ratio improved to 95.3, from 99 over the same period last year.
Berkley’s domestic and international insurance divisions all experienced robust gains in gross and net premiums written, premiums earned, and improved combined ratios.