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W.R. Berkley Corp. experienced its first growth in overall premiums in 15 quarters due to growth in companies Berkley has started since 2006.
Most of the 5.8 percent growth in consolidated net written premiums quarter-to-quarter was derived from international business from start-ups like the corporation’s Lloyd’s syndicate and units in Brazil, China, Australia and Norway, said W. Robert Berkley, president and chief operating officer, during a conference call.
W.R. Berkley Corp. reported 2010 second-quarter net income of $110 million compared to $97 million during the same time last year.
The start-ups experienced an 81 percent increase in premium growth during the 2010 second quarter to $162 million. The new operations now account for 17 percent of Berkley’s premium volume.
Chairman and Chief Executive Officer William R. Berkley said during the call that growth in the new units since they began has been “slower than expected” and more pronounced because “historic business is down so much.”
Asked whether the insurer and reinsurer was undercutting existing players in the international markets, Mr. Berkley flatly said no.
The executive has been critical of other insurers doing exactly that, contributing to the soft market cycle. The growth in new business is from about 20 subsidiaries started within the last several years—“Not much business when you look at it from a per-operating unit basis,” he said.
The trend of international growth may change as domestic business picks up due to a turnaround in the soft cycle, Mr. Berkley said.
April and May pricing was flat and June was slightly down—an indication of “aggressive competition to achieve volume gain,” he said. Pricing could improve by the end of the year as more competitors realize that investments cannot be counted on to generate profit.
“Given the current investment environment, adequate industry returns can only be achieved by improved underwriting results,” Mr. Berkley said.
“I think there are a lot of people who are thinking about that now,” he added during the call. Companies who continue to aggressively price will not change the swing. “Thankfully there are a lot of reinsurers who are saying, ‘Hey, this is silly,’ who aren’t supporting this,” Mr. Berkley said.
The company continues to be “more cautious than warranted” in reserving in order to feel “comfortable if inflation returns,” the chief executive said during the call.