Weak investments, reinsurance prices limit Berkley profit
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W.R. Berkley Corp. grew its total revenue more than 2% in the first quarter of 2015, but saw its profit slip by nearly one-third due to weak investment performance.
The Greenwich, Connecticut-based insurer reported total revenue of $1.74 billion through March 31, an increase of 2.2% over first-quarter results from a year ago.
Despite the revenue growth, Berkley's first-quarter 2015 profit fell 30.3%, to $118.3 million.
During a Monday conference call with investment analysts, Berkley President and Chief Operating Officer Robert Berkley said the growth was driven mainly by strong performance in the company's domestic insurance segment — by far its largest operating unit — that was partially offset by ongoing challenges, such as soft reinsurance pricing.
Net premiums in the domestic insurance segment through the end of March grew 5.9% over first-quarter results from 2014, to $1.19 billion, while net premiums in the reinsurance segment fell 13.5% to $150.3 million.
Mr. Berkley said reinsurance segment revenue losses were in line with the company's expectations.
“The insurance and reinsurance market continues to march to the beat of a very different drum,” Mr. Berkley said. “The reinsurance marketplace remains notably competitive, though the pace of deterioration, at least for the moment, seems to be slowing. As we've all observed and discussed, the challenges started in the property cat reinsurance market and have spread globally to most product lines within the reinsurance marketplace.”
The overall decline in net income “was due to lower income from investment funds and from realized investment gains partially offset by modest improvement in the underwriting results,” Gene Ballard, Berkley senior vice president and chief financial officer, said during the conference call.
Berkley's combined ratio for the first quarter of 2015 remained flat at 93.9% compared with results from a year ago.
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