NU Online News Service, July 26, 12:47 p.m. EDT

W.R. Berkley Corp. says second-quarter net income fell about 25 percent as catastrophes during the period more than doubled compared to last year.

Net income for the 2011 second quarter was about $83.1 million compared to $110.2 million during the same time in 2010.

Catastrophe losses, driven by weather events in the U.S. in April and May, were $63 million after reinsurance and reinstatements. Cat losses were $30 million during the 2010 second quarter.

The Greenwich, Conn.-based specialty insurer’s combined ratio for the second quarter was 101.1, “tolerable in light of the level of catastrophes,” says W. Robert Berkley, president and chief operating officer, during a conference call.

Chairman and CEO William R. Berkley says the company’s expectations for improving rates in the commercial market “are coming about,” albeit “slower than anticipated.”

The chief executive says that while rate increases are positive—though they vary by line and geography—loss costs are also increasing, which leads him to “anticipate accelerating rate increases as the year progresses.”

Loss costs “directionally have turned from a long-term decline to upward slightly—not a lot, but there is a change,” the elder Berkley explains. Loss costs are “moving in ways we can’t predict at the moment,” he adds, which is why W.R. Berkley is cautious in reserving and pricing.

Year-to-year net-premiums written increased 10 percent to about $1.06 billion. Growth was driven mainly by the company’s newer subsidiaries, but W. Robert Berkley says the company is seeing “improving contributions from our more mature companies.”

The primary workers’ compensation market is showing some encouraging signs of improvement, but excess workers’ compensation is not revealing any “noteworthy discipline,” he says. This segment of the market shows no signs of turning, he adds.

Special Reports /

W.R. Berkley 2Q Profit Drop 25%; Accelerated Rate Hikes Anticipated

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