W. Robert Berkley
President and Chief Executive Officer at W. R. Berkley
Rich, thanks very much. That was great. So let me provide a couple of observations through my lens, and then, again, as promised, we'll open it up for Q&A.
So upon reflection, certainly, one of the things that we chat quite a bit about on our end of the phone is just taking note of how clearly the cycle remains alive and well, and the emotions that drive the behaviors remain very much intact. But we continue to take note of the fact how major product lines, while they are still subject to the cyclical behavior, the fact of the matter is, they are clearly not in lockstep at all. And we've talked about this in the past, but it seems to be coming more and more pronounced. So to that end, just a snapshot on how we're thinking about property clearly in 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. And April, I think there was meaningful traction as far as rate goes. While it perhaps is a little bit more announced or extreme on the cat side, I would tell you these comments apply to non-cat or risk exposure as well.
Professional liability, on the other hand, clearly, it's a very broad category, and it is a mixed bag. I think on the miscellaneous E&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, I would tell you for some number of quarters, and it continues to be in a state of free fall as far as rate adequacy or pricing, if you will, and it is concerning to us. In addition to that, though a smaller line than D&O, I would tell you hospital professional liability is another product line where it's in desperate need of some discipline returning to the marketplace.
Moving away from professional onto the topic of casualty. I would tell you that it seems, from our perspective, there is also a meaningful opportunity there, particularly in the E&S lines on the primary front. On the excess front, particularly large accounts becoming more challenging. Clearly, a similar situation on the auto classes as well, where excess is becoming a bit more competitive, and the 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. And from our perspective, while there are signs that economic inflation is cooling a little bit from the heights that it reached social inflation, there's really no sign or indication that we see that calming at all.
Moving on to comp. Clearly, it continues to bounce along the bottom. One observation there historically or at least often times, California has lagged the rest of the market as far as where it stood in the cycle. There is some evidence that California is actually ahead of the rest of the market, is showing potential signs of firming.
Finally, reinsurance. I think there was a lot of excitement and discussion around affirming 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, somewhat disciplined, and there are certain parts of the professional marketplace that have given us reason to pause as we were just not seeing the ceding commissions coming down even though we are seeing the pricing of the underlying erode.
Pivoting over to us. A couple of sound bites. I think as Rich suggested, 17.4% return, a great way to start the year. In our opinion, the top line was impacted by what I would refer to as strong or excellent cycle management by our colleagues, as we are deemphasizing certain product lines and leaning into other product lines. Just as a reminder, our priority is the bottom line. We are focused on building book value through a lens that we refer to as risk-adjusted return, and we applaud the discipline and opportunistic approach that our colleagues operate with.
On the topic of rate, as we were touching earlier, clearly, the rate was quite strong in the quarter, which we were pleased to see. The 8.3 times comp is the strongest that we've seen on the rate front since this time last year or the same time last year. Additionally, I would mention that the renewal retention ratio still is hanging in there around 80%, which as we've mentioned in the past, we think it's an important data point because it reminds us that we are not churning the book, but it actually -- the rate we are getting is sticking. We are not changing the quality or integrity of the book, important thing again. I guess finally, just on the 8.3 times, I think by any measure, we are comfortably outpacing trend. And I think it is likely that you will see that coming through in our loss ratios over time.
Even with the cat activity, the 90.6% combined, I think, is quite attractive. If you're a but-for, which I am not, it would have been an 87.7%. Obviously, the difference, as Rich alluded to, and you would have picked up in the release, was two things, one, obviously, the cats that we had during the period, which equated to approximately 1.9 points, and then we had 1 point of negative development. Now before anyone gets too carried away with the negative development, it was essentially driven by property and property cat losses that happened during the fourth quarter. And as people will recall, some of that cat activity happened late in the fourth quarter, and we just didn't have our arms fully around it. So please don't misconstrue the development for being something different than it really is.
Paid loss ratio, 48 and change. I think people will presumably continue to take note of the delta between the paid versus what we are booking the loss ratio to. We get questions from time to time given how well the paid loss ratio has been running relative to what we -- the loss ratio picks that we are carrying, when are those going to converge? And I would tell you that it's coming.
In my opinion, I think there's a reality for the industry, and we are not completely insulated from it. '16 through '19 was a challenging period of time. I think that we have been cautious and measured as to how quickly we want to recognize the progress that was made '20 and more recent than that. But I think that's coming. I think it's going to come more into focus as we make our way through this year into next year. And likely, we'll have implications for the loss picks that we are carrying in the more recent years and also how we think about current year loss picks.
Rich touched on the expense ratio, the 28.8%. As he suggested, partly driven by new business initiatives, partly driven by some investments that we are making, particularly on the technology front. And finally, some shifts that we are making on the reinsurance, as he alluded to, the cede on something proportional or a quota share, obviously, is very different than an XOL. And while we are very keen for our reinsurance partners to make a reasonable return, we are unaccepting of being inappropriately gouged, and we will use our flexibility as appropriate.
Pivoting over to the investment portfolio. Without a doubt, a lot of momentum there. I think we've discussed it in some detail in the past. You can kind of see it coming our way. I think there is more opportunity from here, the duration at the 2.4 years. I think we are looking opportunistically to nudge that out. I don't think we're going to move the needle dramatically overnight, but certainly, our hope is that there will be windows of opportunity to nudge that out a little bit. The book yield at the 3.8% is notably below where the new money rate is. So our best guesstimate that a new money rate today is sort of between 4.25%, 4.5%, so you can do the math as to the upside there.
Rich touched on the funds. We had a little bit of noise in the quarter, not a complete surprise. By and large, it was stemming from some private equity funds that we participate in. We feel like we have clarity around it. And it is our expectation that going forward, funds performance, more likely than not, will return to sort of that range of between $20 million and $50 million a quarter.
So long story short, 17.4% return, combined ratio of a 90.6%, with some cat activity both in the quarter and a bit spilling over from Q4 '22. Rate increases robust is effort. And of course, the new money rate, 50 basis points plus upside relative to the book yield, I think all those things put together are very encouraging. To the extent you're a but-for person, which I am not, again, 87.7% would deliver you a 20%-plus return.
So I think that was more than enough for me. Why don't we, Emma, go ahead and open it up for Q&A, please?
