W. R. Berkley Corporation has reported net income of $229.5 million and a quarterly underwriting gain of $182.6 million for the first-quarter of 2021.
The company’s net income improved significantly from the $4.4 million loss reported a year earlier, while underwriting income reached a quarterly high.
Both gross and net premiums written also increased year-on-year, hitting $2.48 billion and $2.05 billion in Q1 2021, respectively. Additionally, net premiums earned increased to $1.84 billion in the opening quarter of the year.
Current accident year catastrophe losses, including losses related to the COVID-19 pandemic, fell to $35.8 million in Q1 2021 against $78.8 million in Q1 2020, and mostly impacted the company’s insurance business segment.
W. R. Berkley has subsequently reported a combined ratio of 90.1% for the first-quarter of 2021, which is comprised of a loss ratio of 60.6% and an expense ratio of 29.5%.
In comparison, the firm recorded a combined ratio of 96.9% in the first-quarter of 2020, comprised of a 65.5% loss ratio and a 31.4% expense ratio.
Net investment income declined slightly, year-on-year, to $158.6 million for Q1 2021 compared with $174.7 million for the prior year period.
However, net realised and unrealised gains on investments of $51.8 million is a notable improvement on the net realised and unrealised losses on investments of $143.3 million, reported in Q1 2020.
The insurance holding company notes that rate increases continued into 2021 and given persistent social inflation and above-average catastrophe losses in this and recent quarters, are expected to continue.
“Our combined ratio improved, and we expect it will further improve as compounding rate increases in excess of loss cost trends are fully reflected in underwriting profits.
“Our alternative investment portfolio delivered strong performance, driven by our investment funds, arbitrage trading account, and approximately $76 million of realized gains on investments. We began reinvesting a modest portion of our cash as interest rates rose, yet maintain a defensive position in our fixed-maturity securities, with a higher allocation to short-term assets. We remain committed to a total return investment strategy and anticipate that it will continue to generate attractive returns for shareholders.
“Our Company’s decentralized model is built to excel in transitioning markets such as this one. Our agility and product focus allow us to quickly emphasize market sectors that offer the best risk-adjusted returns. This competitive advantage uniquely positions us to outperform in the current environment and as the economy expands. We expect to greatly benefit from this opportunity, which should lead to exceptional results,” said the company.