W. R. Berkley Corporation’s first-quarter 2017 financial results reveal a pre-tax net income decline in its reinsurance segment to roughly $4.6 million, with the firm reporting a reinsurance underwriting loss with a combined ratio of 112.9%, compared with 97.6% a year earlier.
Gross premiums written in the firm’s reinsurance unit declined by around 18% in Q1 2017 to $166.8 million, compared with $203.6 million a year earlier. While net premiums written declined to $152.7 million from $184.5 million in Q1 2016.
Premiums earned declined by 2.5% in Q1 2017 when compared with the previous year’s first-quarter, to $156.8 million.
W. R. Berkley’s reinsurance segment recorded pre-tax income of $4.5 million in Q1 2017, down 84% from the $28 million reported in the first-quarter of 2016, while the loss ratio for the segment totalled 75.9% in Q1 2017, compared with 59.2% a year earlier. The expense ratio remained relatively flat at 37%, compared with 38.4% in Q1 2016.
The firm’s combined ratio in the reinsurance division weakened significantly in the quarter when compared with the previous year, ending Q1 at 112.9%, representing a reinsurance sector underwriting loss for W. R. Berkley in the opening three months of the year.
The firm attributes, in part, the reinsurance segment underwriting loss to its previously announced increased loss reserves by $30 million, in response to the change in the UK Ogden Discount rate to -0.75%, announced earlier in 2017.
“The first quarter reflected the competitive climate in the (re)insurance industry. While market conditions remain challenging, particularly in the reinsurance segment,” said the firm.
Despite the challenging reinsurance market landscape the firm was “able to grow in select areas where margins remain attractive while gaining traction in some of our new ventures.”
Overall, the company reported first-quarter 2017 net income of $123.4 million, compared with $119.5 million in the first-quarter of 2016, and a combined ratio of 95.7%, compared with 93.5% a year earlier.
