W.R. Berkley Sees 3Q Profit Gain; Chief Says Market Turn Coming

NU Online News Service, Oct. 28, 3:48 p.m. EDT

Insurer W.R. Berkley Corp. reported third-quarter net income rose substantially from a loss for the period last year, and its chief executive predicted a 2010 insurance market upturn.

Greenwich, Conn.-based Berkley reported net income of $98 million, or 59 cents per share, compared to net loss of $28 million, or negative 17 cents per share, for the same period last year. Revenues for the period grew close to 8 percent, or $80 million, to $1.14 billion for the third quarter.

For the first nine months net income was $175 million, off 27 percent, or $66 million, from last year, resulting in a 32 cent drop per share to $1.05. Revenues were off 10 percent, or $374 million, to $3.26 billion.

Investment income rose 15 percent, the combined ratio dropped 1.1 points from the third quarter last year improving to 95, and the operating return on equity was close to 15 percent.

In a statement, Berkley Chairman and Chief Executive Officer William R. Berkley said, "Our balanced approach to managing the insurance cycle and our overall conservative risk management have enabled us to meet our risk-adjusted return objectives, even as we approach the bottom of the insurance cycle."

He continued, "Although the insurance cycle has not yet turned, for the quarter pricing on renewal business year over year is down less than one half percent, and our premium volume is down less than 3 percent. New business from our start-ups is, in part, offsetting premium declines from our established companies."

Reflecting on the general market, he said, "At current pricing levels with existing low interest rates, we believe the industry is operating at a net loss on an accident-year basis, and a turn in the cycle is inevitable. We anticipate modest improvement in the economy and a turn in the insurance pricing environment in the first half of next year. We continue to believe that we will meet our objective of a return of 15 percent equity."