W. R. Berkley Corporation (NYSE:WRB) Q2 2023 Earnings Call Transcript

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Yaron Kinar: Okay, fair enough. And then I’ll admit I’m intrigued by your comment and I think it’s not the first time you’ve made it about the kind of the but-for approach that the industry has with regards to cat losses. I am curious if we look at the underlying combined ratio that the company reported, the 87.6%, what would that be without the cat-exposed net premiums earned?

Robert Berkley: If we backed out? I’m not sure I understand the question, sorry. What would the 87 be without what?

Yaron Kinar: So I think in your opening comments, you said the industry uses but-for approach and removes catastrophes but doesn’t take out the catastrophe-related premiums.

Robert Berkley: Right.

Yaron Kinar: So what would that be — what would the 87.6% be for Berkley this quarter if we made that adjustment?

Robert Berkley: Well, we don’t really spend a lot of time doing that because we don’t fool ourselves that cat losses don’t count.

Operator: Your next question comes from Brian Meredith with UBS.

Brian Meredith: So Rob, just curious, property reinsurance, huge growth in the quarter. Is that you all leaning into the cat reinsurance market? Or is there something else going on there?

Robert Berkley: That is us seeing opportunity in the property reinsurance marketplace. Certainly, cat is a meaningful component of that. And while it’s not — having an overwhelming impact on the group overall, it’s certainly a window of opportunity that we’re going from a toe in the water to maybe a foot plus in the water. So the short answer is yes.

Brian Meredith: Good. That’s helpful. Second question, I’m just curious, Rob, you talked a little bit about pricing. You talked about D&O being challenging and some pressures you’re seeing in commercial auto. I wonder if you can kind of bifurcate a little bit in what you’re seeing kind of large commercial and then as you work your way down middle and small. Is it more competitive kind of in the excess liability for larger companies? And as you get down less, any differentiation?

Robert Berkley: As far as the liability lines, the larger the account, by and large, the more competitive it is at this stage and that — and there’s our benefit because by and large, we are a small and middle market player compared to many of our peers. But yes, clearly, there is growing competition — or is more visible with larger accounts.

Brian Meredith: Got you. And I’ll just throw one more in here. I’m wondering if maybe you can characterize your primary commercial property book. When you write commercial properties, is that cat-exposed stuff? Is that regular homeowners? What exactly are we looking at when you’re seeing that growth in your commercial property book?

Robert Berkley: So in the commercial property book, it’s a combination of a variety of different things. Certainly, there’s a piece of that in there that’s associated with Berkley One because probably we’ll be splitting that out as that grows. In addition to that, we certainly write a bit of property that is cat exposed on the commercial line side. And — but much of it is not a Tier 1, if you will, cat-exposed property.

Operator: Your next question comes from Meyer Shields with KBW.

Meyer Shields: A couple of really quick questions, I think. You talked about medical inflation but if I understood your comments correctly, that seemed to be mostly emerging in workers’ compensation. And I was wondering whether you’re seeing the same sort of pickup in medical costs in, I don’t know, commercial auto or medical malpractice?

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