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W.R. Berkley Corp. on Tuesday reported a 26.6% drop in net income to $162.1 million for the third quarter of 2017 following significant catastrophe activity.
The Greenwich, Connecticut-based insurer also reported net premiums written declined 2.3% from the year-ago quarter to $1.57 billion. The company reported a 101% combined ratio vs. 93.9% for last year’s third quarter.
Revenue was virtually flat at $2.03 billion vs. $2.02 billion for 2016’s third quarter.
“In light of significant catastrophe activity in the third quarter, we were pleased with our results,” said the company in its earnings statement. “We believe that catastrophe losses, like capital gains, are an inherent part of our business that should not be disregarded.”
President and CEO W. Robert Berkley Jr. issued warnings about professional and casualty lines during Tuesday’s earnings call. Pricing in professional lines is “eroding or moving in the wrong direction,” he said. Directors and officers liability “is probably the line that gives us greatest reasons to pause. We are concerned about that,” he said.
Elaborating later during the call, Mr. Berkley said pricing for both casualty and professional reinsurance lines “have been challenging, to say the least,” and those who have not been cautious over the past couple of years “are likely to be in for a rude awakening.”
He said unlike property catastrophe, where losses are quickly apparent, with casualty and professional lines “it takes time for that to come through. The problem with that is it allows people to make mistakes for a more extended period of time, which then compounds the problem.”
For the first nine months of 2017, net income decreased 12.2% from the prior-year period to $394.5 million. Net premiums written decreased 2.7% to $4.78 billion. The firm reported a combined ratio of 97.3% for the period vs. 94.1% for the comparable period a year ago.
Travelers Cos. Inc. reported sharply lower profits in the third quarter of 2017 amid significantly higher hurricane and other catastrophe losses, with the company expecting additional impacts this year from the California wildfires.