Berkley sees firming property market but large account D&O in ‘freefall’

Specialty carrier W R Berkley said that the US property market is in the early stages of a “meaningful hardening” but that large account D&O business is in “freefall”, underlining again how the cycle is not in lockstep. As CEO Robert Berkley reported profits hit by catastrophe, and notably Covid-19-related losses, he told analysts that the underwriting cycle remains “alive and well and the emotions that drive the behaviours remain very much intact”. But Berkley said this cycle is imbalanced. “We continue to take note of… how major product lines, while they are still subject to the cyclical behaviour… are clearly not in lockstep at all… we've talked about this in the past, but it seems to be becoming more and more pronounced,” he told analysts, according to reporting service Seeking Alpha. “Clearly in [property] what I would suggest is early stages of meaningful firming. From our perspective, it is a little bit disappointing as to the momentum that we saw on the insurance side when it comes to property in January. We saw a little bit more momentum in February, and quite frankly March. We started to see real progress in April. I think there was meaningful traction as far as rate goes,” continued Berkley. But risk managers will be interested to hear there is positive news for them in some sectors, notably D&O. “Professional liability on the one hand, clearly it's a very broad category and it is a mixed bag. I think on the miscellaneous D&O front, particularly written on an E&S basis, there is still great opportunity and we are making meaningful hay there. On the other hand, the D&O marketplace, particularly large account D&O… continues to be in the state of free fall as far as rate adequacy or pricing… and it is concerning to us. In addition to that, though a smaller line than D&O… hospital professional liability is another product line that’s in desperate need of some discipline returning to the marketplace,” he said. However, Berkley sees “meaningful opportunity” in general casualty, particularly in excess and surplus lines. He reported a similar situation in auto classes. “Where excess is becoming a bit more competitive, in primary there is competition but not as bad. I think the industry needs to be very careful with the professional casualty and auto, in particular, because they are notably susceptible to social inflation,” said Berkley. The reinsurance market continues to firm, he continued. “I think there was a lot of excitement and discussion around a firming reinsurance market. Certainly from our perspective, the reinsurance market, particularly around property and property cat, has gained a meaningful level of additional discipline relative to where it's been in past years. That having been said, the casualty [market has been] somewhat disciplined and there are certain parts of the professional marketplace that had given us reason to pause as we are just not seeing the ceding commissions coming down, even though we are seeing the pricing of the underlying erode,” said Berkley. Despite strong performance on rate, W R Berkley suffered a significant increase in catastrophe losses in Q1 and saw a 50.2% decrease in net income for the first quarter to $294.1m. The US-based insurer posted a 6.7% increase in net premiums written to reach $2.57bn. The combined ratio for the quarter worsened to 90.6% from 87.8%. This first-quarter results reflected a 66% increase in current accident year losses from catastrophes. This included Covid-19-related losses that were up to $47.9m and winter storm losses carried over from the last quarter of 2022. The insurer also posted prior year development, principally from property cat losses, of about $24m.

Berkley sees firming property market but large account D&O in ‘freefall’

Want to read this article?

Read Next

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Want to read this article?

Read Next

Evolving modern slavery risk poses mounting supply chain challenges

R&Q confirms talks to sell Accredited

Continued rate hikes forecast for energy buyers: Amwins

Generali GC&C strengthens senior leadership in Asia

Sompo International names European head of cyber

Related Articles