William R. Berkley, chairman and CEO of W.R. Berkley Corp., says the company isn't planning any celebratory parties, but for the first time in about four years the commercial-lines writer can say prices during a quarter were up, albeit very slightly.
Berkley says he sees the uptick in prices of nearly 1 percent in nearly all areas as a “real change directionally.” The outspoken executive's prediction late last year for a turn in the market was off, but now it appears people are behaving differently, as poor underwriting results and low returns on investment income are impacting companies' thinking, he says.
“Fear will replace greed,” Berkley said during a conference call on first-quarter earnings.
W.R. Berkley reported first-quarter net income of $116 million compared to $119 million for the first quarter a year ago.
Berkley predicts a gradual increase in prices of 5 percent to 8 percent by the fourth quarter.
First-quarter catastrophes and revisions to models are leading companies to think differently about how they consider the world and their exposures, he says.
W.R. Berkley's combined ratio was 96.3 during the first quarter, up more than 2 points from the same period a year ago. Catastrophe and weather-related losses were $24 million, with the earthquakes in Japan and New Zealand and the floods in Australia accounting for a total of $15 million in losses. About $12 million in losses were from Japan.
Industrywide, these events, coupled with the changes in modeling and other factors, are “serving as the catalyst in changing behavior” and tightening underwriting, says W. Robert Berkley, the firm's president and chief operating officer. “Overall momentum is becoming more visible,” he adds. “There is growing evidence that the industry is going through a time of transition.
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