In a report from AM Best, Berkley said that he anticipates that the approach taken by reinsurers towards casualty and liability may mirror recent strategies implemented in the property sector.
Berkley noted that although the property catastrophe (cat) insurance cycle seems to have moderated, “barring anything Mother Nature might do tomorrow, it would seem as though the property cat cycle has run a bit of its course,” with risk-adjusted reinsurance rates declining by 5% or more as of January 1.
The company witnessed an increase in its financial performance, with net income rising 50.4% to $442 million in the first quarter. Chief financial officer Rich Baio added that net premiums written increased by 10.7% to $2.85 billion, fueled by higher rates and greater exposure. The combined ratio also saw improvement, dropping to 88.8%.
Baio further detailed that insurance net premiums written (NPW) saw a growth of 11.9%, while reinsurance and monoline excess NPW grew by 4.2%. Catastrophe losses decreased to $31 million from $48 million the previous year, alongside a $1 million favorable prior-year development.
Berkley highlighted the company's strategic focus on setting claims reserves that align with commercial auto loss trends and excess and umbrella policies, particularly given the challenges posed by social inflation. He remarked on the strong pricing in both admitted and non-admitted general liability markets driven by this trend.
The discussion of catastrophe exposure for property/casualty writers has become increasingly complex, due in part to recent experiences with wildfires and severe convective storms, Berkley explained.
In the first quarter, Berkley observed significant activity in the excess and surplus lines, partly driven by pressures on casualty and liability lines. He expects this momentum to continue, citing ongoing challenges in the legal and social environments that propel loss costs.
“There is still E&S opportunity in property, although it’s probably not what it was a year ago. That’s just the reality of things and the cycle,” Berkley explained, acknowledging a shift in the property sector.
When questioned about the potential of writing more property business as it returns to admitted markets, Berkley affirmed the company's capability but emphasized the importance of assessing whether it constitutes a prudent use of capital based on the terms, pricing, and conditions offered.
Berkley also noted a divergence in market performance and movements, which “seem to be decoupling more and more every day.”
He also highlighted that the overall 7.8% rate increase in the quarter significantly surpassed aggregate trends, positioning the company for a potential growth of 10% to 15% in the near term.
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