W.R. Berkley Corp. says its fourth-quarter net income rose 41 percent due to improved pricing.
“We are very pleased with the direction everything is moving in,” William R. Berkley, chairman and chief executive officer, said during a conference call with analysts today.
Fourth-quarter net income climbed by $48 million to more than $165 million. Revenues were up 17 percent, or $238 million, to $1.61 billion. The company’s combined ratio in the quarter rose 1.1 points to 98.1, primarily due to about $40 million in before-tax Superstorm Sandy losses.
For the year, the company’s net income rose 31 percent, or $119 million, to $511 million. Revenues were up 13 percent, or $668 million, to $5.8 billion. The combined ratio for the year was down 1.3 points to 97.2.
Berkley says the rate environment is turning toward a harder market as more and more companies realize the need for increases. He says price increases this year should rise as high as 8 to 10 percent.
Eugene G. Ballard, chief financial officer, says he does not believe there will be a continuation of gradual price increases, as was seen in 2012. Rather, he believes 2013 will see sharper increases.
Berkley says as prices increase, he expected business to flow into the specialty market more rapidly.
William Robert Berkley Jr., president and chief operating officer, says more companies are seeking increases as loss reserves continue to deteriorate, “serving as a catalyst for this behavior.”
“If we have a noteworthy event, that could be a shot in the arm,” says Robert Berkley, in answer to a question about what could cause a hard-market turn. He also notes that investment income is still performing poorly and “very few are thinking about it when they price their product. That could be the second shoe to drop.”
William Berkley says, “We are very excited, over the next several years, to take advantage of what is clearly a hardening market. Can I say it is the hardest market ever? Certainly not. Is it going to allow for profitability in a more than adequate way? Absolutely.”