W.R. Berkley has an upgraded rating outlook from Fitch Ratings due to its continued financial upswing, moved to Positive from Stable.

Additionally, the credit rating firm affirmed Financial Strength Ratings of ‘A+ (Strong) for Berkley’s P/C operating subsidiaries.

The affirmation and rating outlook upgrade stem from Berkley’s well-received business practices, Fitch said.

“The outlook revision to Positive reflects business profile improvement to Favorable from Moderate and improving capitalization with a downward trend in financial leverage, improving debt service and consistently strong financial performance with limited long-term volatility relative to peers,” Fitch said.

Still, there is a caveat.

“These positive factors are partially offset by financial leverage that remains higher than peers and reserve risk stemming from long-tail casualty lines,” Fitch noted.

Specifically, Fitch pointed out that Berkley’s operating scale has improved to “favorable,” with $7.3 billion in net premiums written as of 2020, and shareholder equity that surpassed $6.6 billion as of Sept. 30. Both numbers have been trending higher for a while.

“This growth reflects consistent relevance in its target markets and ability to capitalize on attractive opportunities in the hardening P/C [insurance/reinsurance] market, demonstrating the company’s flexibility to emphasize various products when market conditions are favorable,” Fitch said.

Berkley reported a 90.1 combined ratio through the 2021 third quarter, versus a five-year average of 95 (2016-2020). Fitch said Berkley’s numbers continue benefiting from a commercial lines market that is hardening and also favorable adjustments to terms and conditions in parts of the insurer’s business.

As well, it notes Berkley has made 2021 the “20th consecutive calendar year” in which it has reported underwriting profitability.

Berkley reported a nearly 24 percent increase in net premiums written during Q3 2021 and produced nearly $261.3 million in net income through the quarter. That compares to almost $151.7 million the previous year.

Source: Fitch Ratings