W. R. Berkley Q4 2024 Earnings Report

W. R. Berkley EPS Results

• Actual EPS: $1.13
• Consensus EPS: $0.95
• Beat/Miss: Beat by +$0.18
• One Year Ago EPS: N/A

W. R. Berkley Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $2.98 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

W. R. Berkley Announcement Details

• Quarter: Q4 2024
• Date: 1/27/2025
• Time: After Market Closes
• Conference Call Date: Monday, January 27, 2025
• Conference Call Time: 5:00PM ET

W. R. Berkley (NYSE:WRB) was founded in 1967 by W.R. Berkley with the goal of creating sustainable, long-term value. As of November 2022, Mr. Berkley remained as executive chairman with his son W.R. Berkley Jr. in the CEO's office. The company is based in Greenwich, Connecticut, and operates as an insurance holding company in the U.S. and internationally. It is one of the largest commercial lines insurers in the US and has more than 190 offices worldwide.
 
The company’s operations have grown steadily since its founding, including several key acquisitions. The company now operates in two segments which are Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance businesses of all varieties. The Reinsurance & Monoline Excess segment provides reinsurance services to other insurance agencies and self-insured organizations. W. R. Berkley Corporation went public in 1973 and is now listed 397th on the Forbes Fortune 500 list.
 
There are more than 50 businesses operating under the Berkley umbrella. They each capitalize on niche markets that require specialized knowledge about industries, regions, or business structures. The company’s goal is to create peace of mind, both by simplifying the insurance buying process and by providing the insurance products its customers need.
 
W. R. Berkley was added to the S&P 500 in 2019. The company’s market cap grew more than 20% or over $1 billion in the first year alone. As of November 2022, the company is worth upwards of $19.5 billion or more than a 200% increase since its launch. The company’s underlying insurance businesses are all rated A+ by Standard & Poors and A.M. Best.
 
Some of the key businesses and industries served by W.R. Berkley include but are not limited to agribusiness, cannabis, energy, environmental, hospitality, manufacturing, public entity, retail, and transportation. Some of the products offered include but are not limited to workers' compensation, general liability, commercial auto & trucking, accident & health, cyber, and property. In 2021, the company brought in more than $9.5 billion in revenue and produced a 16.2% return on stockholders' equity.



W. R. Berkley Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good day and welcome to W. R. Berkeley Corporation's Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. Today's call is being recorded. The speakers' remarks may contain forward looking statements.

[Operator]

Some of the forward looking statements can be identified by the use of forward looking words, including, without limitation, believes, expects, or estimates. We caution you that such forward looking statements should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will, in fact, be achieved. Please refer to our annual report on Form 10 ks for the year ended Dec. 31, 2023, and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W.

[Operator]

R. Berkeley Corporation is not under any obligation and expressly disclaims any such obligation to update or alter its forward looking statements whether as a result of new information, future events or otherwise. I would now like to turn the call over to Mr. Rob Berkley. Please go ahead, sir.

[Robert Berkley, President & CEO at W. R. Berkley]

Lisa, thank you very much and good afternoon all. And let me echo Lisa's welcome to our call. So as in the past, we have Bill Berkeley, Executive Chairman joining on this end along with Rich Dayo, Chief Financial Officer. And we're going to follow our typical agenda where shortly I'm going to hand it over to Rich. He's going to walk us through some highlights.

[Robert Berkley, President & CEO at W. R. Berkley]

I'm going to then follow-up with a few quick comments on my end, and then we'll be very happy to take the conversation in any direction that participants wish to take in. Before I do hand it over to Rich, just a very quick comment, really not just on behalf of myself, but on behalf of all of my colleagues expressing our concern for all who have been impacted not just by the recent events in California and these horrific fires, but also we shouldn't forget about the many people that were terribly impacted during the as a result of hurricanes and other events. From our perspective, it is certainly a moment for the industry to demonstrate its value to society. I know that my colleagues and I are very focused on ensuring that we as an organization do what we are supposed to do to live up to our responsibilities and certainly our hope that our peers at other organizations will be doing the same. So with that, I will hand it over to Rich.

[Robert Berkley, President & CEO at W. R. Berkley]

Rich, if you want to run us through the highlights and then we'll take it from there.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

Great. Thanks, Rob. Appreciate it. Good evening, everyone. The 2024 full year closed out with record top line and bottom line results, yielding return on equity of 23.6% and operating return on equity of 22.4%.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

The record operating earnings increased 15.5% to $4.53,000,000 dollars or $1,.13 per share with an operating return on equity of 24.3%. Net income represented our second best quarter increasing 45% to $5.76,000,000 dollars or 1.44 per share with return on equity of 30.9%. The key drivers behind the quarter were strong underwriting results combined with the continuation of growth in our core investment portfolio. Starting with underwriting performance. Our current accident year combined ratio before cat losses of 2.6 loss ratio points was 87.7%, consistent with the full year 2024.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

The calendar year combined ratio was 90.2%, resulting in $2.94,000,000 dollars of underwriting income, bringing the full year 2024 to 90.3 and a record underwriting income of more than $110,000,000,0.0 The prior year development was favorable by $160,000,0.0 in the quarter. Drilling down further into the component parts, the current accident year loss ratio ex cats was 59.2, which ticked up slightly from the prior year due to business mix and remains flat to the full years 2024 and 2023. Cat losses increased over the prior year, primarily due to Hurricane Milton, driving the increase quarter over quarter of 1.4 loss ratio points. The expense ratio of 28.4% was flat to the prior year quarter, continuing to benefit from record net premiums earned of more than $3,000,000,000 and initiatives driving technological and operational efficiencies throughout the business. We believe 2025 will reflect an expense ratio comfortably below 30%.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

The full year 2024 marked another record year on top line. The gross in net premiums written grew 9.6% to 9.3%, respectively. In the the Insurance segment's net premiums written increased 9.9 to more than $260,000,000,0.0 with growth in all lines of business. The Reinsurance and Monoline Excess segment grew in Property and Monoline Excess with a decrease in casualty due to the competitive pricing environment. Moving on to investments.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

The core portfolio increased 9.4 to $3.13,000,000 dollars We do expect the core portfolio to continue to grow over the in the foreseeable future due to higher new money rates compared with the roll off book yields and growth in the size of the investment portfolio. Our record operating cash flow from 2024 of almost $370,000,000,0.0 followed the year before its operating cash flow of $290,000,000,0.0 which was also a record and has enabled us to invest more while maintaining the high credit quality of AA- In addition, we've increased our investment duration from two point four years to two point six years in the quarter. And at the we had cash and cash equivalents of almost $2,000,000,000 Net investment gains were primarily driven by favorable market value movements in common and preferred equity securities. Investments in the energy and certain financial services sectors led to the $163,000,000 unrealized gain. The effective tax rate of 21% in the quarter benefited from the utilization of some foreign valuation allowances established against operating loss carryforwards and true up adjustments for prior periods.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

This brings our full year effective tax rate to 22.5% and we expect 2025% will be 23% plus or minus. As it relates to capital, the stockholders' equity increased 12.6% to $840,000,000,0.0 primarily due to record net income of $180,000,000,0.0 partially offset by the return of capital to shareholders of $8.36,000,000 dollars through dividends and share repurchases. In the we paid regular and special dividends of two twenty million dollars and repurchased $67,000,000 in shares. Our after tax unrealized investment loss is $5.17,000,000 dollars as of year end 2024, an improvement of $69,000,000 from the prior year. And finally, book value per share before repurchases and dividends grew 23.5% for the full year.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

Rob, I'll

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

turn it back to you.

[Robert Berkley, President & CEO at W. R. Berkley]

Okay. Mitch, thank you very much. Very clear and appreciated by all. So before I offer a few thoughts on the marketplace and then on our quarter, Just highlighting the obvious at this stage as you've likely had an opportunity to flip through the release and would have heard Rich's comments. 2024 was truly another exceptional year for the organization.

[Robert Berkley, President & CEO at W. R. Berkley]

And I did before we get into the nooks and crannies that we typically do on these calls, I did want to take a moment just to pause and both thank and congratulate our roughly 7300 colleagues for yet again a job very well done. The 3 of us have the privilege of speaking on behalf of the full team. But as a reminder to all, this is a team sport and the outcome is a reflection of the team, not just the folks that happen to be speaking to you on this call today. So again, to the team, thank you and truly a congratulations on yet another great performance. Maybe pivoting over to a couple of thoughts on the marketplace.

[Robert Berkley, President & CEO at W. R. Berkley]

As far as much of the liability market, it continues to be plagued by social inflation. The combination of an emboldened, plaintiff bar along with quite frankly, this jet fuel that they have in their back pocket, otherwise known as litigation funding, continues just to up the game. That having been said, social inflation does not apply to all product lines equally. So maybe to give an example or to be more specific, while it is certainly prevalent in most places within the liability space, if you look at certain lines of business where claims are more exposed or is more commonplace where there is actually physical injury to someone, you will see a reaction coming out of a jury that tends to be far more inflated. By example, the type of awards that are coming out related to auto liability or med mal and the inflation that we are seeing in those types of claims is far more than what we would be seeing in the D and O space or what we would be seeing in the accountants' liability space, just to pick a few to try and articulate the point.

[Robert Berkley, President & CEO at W. R. Berkley]

1 of the things that's been both surprising and quite frankly a bit disappointing to me has been how slow or sluggish the reinsurance market has been to respond to social inflation and some of the challenges. It is our suspicion that you are seeing a gradual groundswell that is building and we will see discipline coming to the casualty reinsurance market, hopefully over the coming months and years and that will create an opportunity for our colleagues in the reinsurance space. But in the meantime, when there is that lack of discipline, we very much applaud our colleagues, for the discipline that they are exercising. Pivoting over to the short tail line, specifically property, certainly for the moment and we'll have to see what the impact of the California fires is. But for the moment, property insurance, there is still a tailwind, but it is slowing.

[Robert Berkley, President & CEO at W. R. Berkley]

And if you pivot over to the property reinsurance market and even more so the retro market, it is clear that at oneone, there was no tailwind to be found. In fact, it was quite to the contrary, there was a growing headwind. By example, our property cat renewal risk adjusted, it was down 15% -ish and a similar percentage for our retro. Moving on to our quarter, I don't have a lot to add and I guess at the risk of being a little bit repetitive, following Rich. The net written premium, yeah, it was 8%.

[Robert Berkley, President & CEO at W. R. Berkley]

But going back to our comment earlier and what Rich had unpacked for us a little bit, I think you need to look at that a little more carefully. And the fact of the matter is, if you backed out the casualty reinsurance where we find market conditions to be concerning and we believe that more of a defensive posture is appropriate, if you back that out, we're at 10%. Rate ex workers' comp came in at 7.7% renewal retention ratio a little bit above 80% which continues to be very consistent with what it's been for this stage. I don't know how many quarters or for that matter how many years. On the expense front, the 28.4% Rich talked about us continuing to be sub-thirty percent for the foreseeable.

[Robert Berkley, President & CEO at W. R. Berkley]

Richie, this is a little bit of a heads up. I'm going to ask you to talk about expenses for a moment. But if you go back and you look at the journey that we've been on, we've been able to hold the line on expenses through investment in technology along with the utilization of BPO. And if you think about where our expense ratio was pre COVID and where we are today, even with the COVID benefit on expenses having gone away, we continue to be in a very good place. So I'm going to keep going in a minute, but I'm going to take a pause, catch my breath.

[Robert Berkley, President & CEO at W. R. Berkley]

And Richie, if you want to speak to expenses for a moment, please.

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

Sure. So as Rob alluded to, certainly, post COVID, we've benefited where our expense ratio has been in the low 20s to mid-20s low 28% to 28.5% area. But proceeding that going back to 2020 and prior certainly began with a 3 handle. And if we go back to the decade ago, basically at 33 and change. So certainly have seen close to a 5 improvement in the expense ratio over that period of time.

[Robert Berkley, President & CEO at W. R. Berkley]

And I would just add to that. 1 needs to keep in mind our mix of business and a meaningful amount of the business we write has an acquisition cost that is greater due to the fact that we do a fair amount of business in the wholesale market. So Rich covered the combined ratio, again, a 90.2% given the cat activity in the quarter, not a bad place to come out. Just speaking of that, on the topic of cats, obviously, it's very early to be speculating around California and what it will mean. But I would just remind folks that we are California light when it comes to property.

[Robert Berkley, President & CEO at W. R. Berkley]

Obviously, 1 of the areas that has gotten a lot of attention is the personal line space and the, our efforts known as BerkeleyOne within the private client personal line space, we do not participate in the California market. So hopefully, that is helpful. And I think the punch line is while I'm sure we will have some lost activity associated with the fires, I expect that it will not keep us from still delivering a respectable return to our shareholders in based on everything I can see today. Switching over to the investments again, Rich covered this. The AA- continues to get stronger with every passing day and we're feeling very good about that.

[Robert Berkley, President & CEO at W. R. Berkley]

Simultaneously, you would note as Rich flagged the duration. We've talked about this, for some number of quarters. When we see the opportunity, we're going to nudge that duration out. We saw an opportunity, so it popped out from 2.4 and change at 2.6 and change. And again, we feel no pressure, but when we see the window of opportunity, our colleagues are not going to let that pass by without taking advantage of it.

[Robert Berkley, President & CEO at W. R. Berkley]

I think another data point that really plays into the whole economic model, and I think as we've talked about over the past couple of quarters, when we were going through an extended period of time and interest rates were reduced or depressed, if you will, I think a lot of folks forgot about the component of our economic model, that being the investment portfolio and investment income. Obviously, that has been reawoken, everyone can see that, but that story is not fully told at this stage. So a couple of data points for you. Our domestic book yield for the quarter was approximately 4.6%. Our new money rate today is 5.25% plus.

[Robert Berkley, President & CEO at W. R. Berkley]

So as you can see, that increase along with the cash flow that Rich talked about for the year of 03/ or $8.10,000,000 dollars in the quarter, We have a growing portfolio where new money rate is considerably above the book yield and I think we all know what that means. So long story short, what's the punch line? It's the following. 2025 is a year that we think the table is already set and it's set in a very attractive way. And with every passing day, we're setting the table more and more for 2026.

[Robert Berkley, President & CEO at W. R. Berkley]

The reality is that our underwriting margin is likely to improve from here over time and certainly at a minimum will not be deteriorating. In addition to that, as far as the investment portfolio, the other key component of our economic model, as I mentioned just a moment ago, the investable assets continue to grow at a healthy pace and that new money rate given our view on where quite frankly government borrowing is going to need to be, where inflation is going to be, there will continue to be an opportunity for us to put money to work at a healthy spread above the current book yield. As it is today, we do not see that disappearing overnight. So obviously, people will digest and process the data any way they like, but the numbers and the information that we shared with you all today, those are statements of fact. And quite frankly, you don't need to be particularly insightful to see how the story is likely to unfold, not just over the twenty five year, but more and more likely with every passing day, twenty six and perhaps beyond.

[Robert Berkley, President & CEO at W. R. Berkley]

Okay. That was, as usual, probably more than I promised. Why don't we pause there? And Lisa, if we could go ahead and open it up for Q and A.

[Operator]

We'll take the first question today from Alex Scott, Barclays.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Alex. Good afternoon.

[Alex Scott, Insurance Research Analyst at Barclays]

Good afternoon.

[Alex Scott, Insurance Research Analyst at Barclays]

First one I have for you all is just how we should think through balancing growth. It sounded like you're not willing to budge on the margins you're seeing and potential improvement even, just given the landscape, particularly for reinsurance, but even in insurance with what's going on with property. Do you think we're going to go through a period where we have to potentially be lower than where you all would like to be on growth over the medium to long term? And how does that get balanced out with potential capital return and just how we should think about where you're running your leverage through a period like that?

[Robert Berkley, President & CEO at W. R. Berkley]

Sure. Well, A, thank you for the question. And B, my thoughts on it are as follows. We as an organization are unapologetic in the fact that we're in business to make good risk adjusted returns. We will write the business and lean into it when we think the margin is there and we will have no qualms taking a more defensive posture when we don't think the margin is there.

[Robert Berkley, President & CEO at W. R. Berkley]

I think we have demonstrated that time and time again. And you can see that actually we laid the numbers out for you on Slide 7 or Page 7, if you will, of our press release. And you can see our casualty reinsurance in the quarter was down more than 15%. That's because of the comments not only that I shared earlier today, but we have talked about in past quarters and earlier where we just don't think that the market is exercising the discipline and quite frankly is expecting an appropriate risk adjusted return. So we will participate where we think it makes sense and not.

[Robert Berkley, President & CEO at W. R. Berkley]

So when you put that all together, Alex, we can only control what we can control. We can't control the market. We can control our behavior. We are seeing opportunities in much of the market today. We think we have great colleagues with great expertise.

[Robert Berkley, President & CEO at W. R. Berkley]

They understand how to separate the wheat from the chaff. And I think we're in a pretty good place. Again, if you look at some of the growth in the insurance front and you can see the opportunity that while slowing still exists, even on the property reinsurance front, we're going to try and take advantage of that. But when the day is all done, we think that there is still a lot of opportunity out there and we're looking to capitalize on it. And our comment around opportunity to grow, nobody knows for sure until you're there.

[Robert Berkley, President & CEO at W. R. Berkley]

But at this stage, the fact is we have a lot of we have businesses that when you put it all together are growing at high single digit or more and there are parts of our business quite frankly that are growing at a much higher rate. So again, hopefully, that was a lot of babble on my part. But if you look at Slide 7, I think or Page 7 of the release, it demonstrates we grow where the margin is. And so what does that mean? We think the business should be able to continue to grow at a healthy rate in excess of trend.

[Alex Scott, Insurance Research Analyst at Barclays]

Got it. That's all very helpful. Maybe focusing a little more on the primary side, I guess we heard from 1 of the other smaller specialty companies that property, they were seeing a lot of competition. I think they flagged MGAs. I think others have flagged the Lloyd's market.

[Alex Scott, Insurance Research Analyst at Barclays]

How is price adequacy in property within the insurance business? And is that still a place that you can grow at your targeted profitability?

[Robert Berkley, President & CEO at W. R. Berkley]

We think that there is still an opportunity, generally speaking, in property. That having been said, it's reasonably evident that there is a bit more competition, today than there was yesterday in certain pockets. We'll have to see what the impact is of the California fires, whether that changes, the appetite of some. But yes, as I tried to articulate earlier, I think for property insurance, there is still a tailwind, but it is clearly diminished from what it was yesterday. But it has not become a headwind or eroding to the extent that the reinsurance market has on the property front.

[Alex Scott, Insurance Research Analyst at Barclays]

Got it. Thank you.

[Robert Berkley, President & CEO at W. R. Berkley]

Thank you.

[Operator]

The next question is from Elyse Greenspan from Wells Fargo.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Elyse. Good afternoon.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Hi, thanks. Good evening. My first question, you guys in the last couple of calls, right, have been willing to kind of provide the reserve breakdown right by segment. I was hoping you could give that to us tonight and then just provide any color you might have seen within insurance or reinsurance that stands out with short or long tail reserves in the quarter?

[Robert Berkley, President & CEO at W. R. Berkley]

Elise, I don't have it in front of me. I think what if you wouldn't mind, Rich can probably give that to you or Karen, Karen, if you wouldn't mind circling up after the call because we wouldn't want to give you anything but the accurate information. As far as where are the challenges, I think as we've talked about in past calls, we're paying close attention to auto liability and we're paying close attention to access, particular and umbrella and particularly how auto liability feeds into that. Going the other way, workers' compensation continues to be a good guy and we have some other lines where it continues to be very encouraging as well. I think the actions that we have taken regarding auto both in the primary and how it applies to the excess are well entrenched at this stage.

[Robert Berkley, President & CEO at W. R. Berkley]

So I would never go so far as to declare victory prematurely, but I think we're on the right path.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Thanks. And it sounds like from your comments, right, you guys are pretty cautious, right, on the casualty reinsurance market. So as you think about how that market, I guess, could play out in as well as, right, other markets, be that other long or short tail lines, do you think you'd get back, Rob, to 10% to 15%? I know, right, it's less top line to grow. You don't want to grow in areas, right, that aren't offering good opportunities.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

How do you see growth from a top line perspective playing out in 2025?

[Robert Berkley, President & CEO at W. R. Berkley]

So, so this is the part where I guess you see if I take the bait or not. And I guess the the answer is this. I don't know with any greater certainty than anyone else what 2025 is going to hold for us. I believe that there should be an opportunity for this organization for the twenty twenty five year to grow in double digits. Is it possible that that could prove to be 9%?

[Robert Berkley, President & CEO at W. R. Berkley]

Yes, it is. Is it possible that that could prove to be 16%? Yes, it is. But do I think that we should be able to grow our exposure in something in excess of the rate that we are achieving? Yes, I do.

[Robert Berkley, President & CEO at W. R. Berkley]

And given that we are getting more than 7 points of rate, I think that that should help us get to what I'm pointing you in the direction of.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

And then 1 last 1. Was there anything it looks like the insurance underlying loss ratio maybe picked up a little bit in the quarter from where it had been running. Was there anything,

[Robert Berkley, President & CEO at W. R. Berkley]

It was about 0.5 or 0.5 or so. And I would caution you not to read too deeply into it because Rich and I did spend some time on this and it really just boiled down to mix of business.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Okay. Thank you.

[Operator]

The next question is Andrew Kligerman, TD Securities.

[Andrew Kligerman, Managing Director at TD Securities]

Good

[Andrew Kligerman, Managing Director at TD Securities]

evening. Looking at the other liability net written premium, it was up at a solid 9.5%. And if I remember correctly, Rob, you had expressed a fair amount of optimism around pricing in the insurance casualty line in Oct. 0 and you felt pretty good that it might see some pickup. Could you kind of elaborate on where that is now in Jan.

[Andrew Kligerman, Managing Director at TD Securities]

0?

[Robert Berkley, President & CEO at W. R. Berkley]

So I've not seen our Jan. 0 price monitor, so I'm a little bit on my heels. That having been said, based on the anecdotal information that I have heard from colleagues, I think that the momentum continues to be very strong around rate achieved on much of the liability and other liability included in that.

[Andrew Kligerman, Managing Director at TD Securities]

Okay. So it's strong. So what Rob, what's the disconnect between your concerns about the reinsurance casualty pricing? How do you reconcile the reinsurance pricing coming off? And I think you said down 15%.

[Robert Berkley, President & CEO at W. R. Berkley]

Our premium just to be clear, sorry, our premium was down about just shy of 15.5% for our casualty reinsurance in the quarter.

[Andrew Kligerman, Managing Director at TD Securities]

For casualty and yet you seem to like it on the primary level. Could you maybe reconcile the 2 and why you're far less favorably disposed on reinsurance casualty?

[Robert Berkley, President & CEO at W. R. Berkley]

Because I think the casualty reinsurance market needs more discipline and they need to charge more, whether that needs to adjusting ceding commissions or in an actual basis getting at it a different way. And I think there's a disconnect. No different than if you go back a few years ago before the reinsurance market woke up, there was a disconnect between property primary and property reinsurance.

[Andrew Kligerman, Managing Director at TD Securities]

Interesting. And then maybe 1 last quick 1. International, not a lot of color on that, but kind of curious because your insurance ops are in Asia, Latin America, UK, Europe. And any color that you could share with us on what's going on abroad and how you're seeing those markets for your business?

[Robert Berkley, President & CEO at W. R. Berkley]

Well, obviously, we participate in a lot of different markets and no one is a mirror image of another, including the market conditions. But what I would tell you is this, that we have some really exceptional people running those businesses and they are amongst some of our highest margin businesses. And going back in time, that hasn't always been the case across the board. But some of our best risk adjusted returns are coming from our are being generated by our colleagues outside of The United States. I think there are certainly parts of the international effort where the market is particularly competitive and the opportunity to grow has become more challenging.

[Robert Berkley, President & CEO at W. R. Berkley]

Nevertheless, our colleagues and their ability to navigate through those competitive environments, I think we have a great deal of confidence in.

[Andrew Kligerman, Managing Director at TD Securities]

Thanks a lot.

[Robert Berkley, President & CEO at W. R. Berkley]

Thank you.

[Operator]

We'll take the next question from Mark Hughes, Truist Securities.

[Mark Hughes, Analyst at Truist Securities]

Yes. Thank you. Good afternoon.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Mark. Good afternoon.

[Mark Hughes, Analyst at Truist Securities]

Rob, any comments on the mix between E and S and admitted, there's still strong movement into E and S? How do you see that now?

[Robert Berkley, President & CEO at W. R. Berkley]

Yes. Thanks for the question, Mark. And maybe if you don't mind taking half a step back. The submission flow coming into the E and S marketplace continues to be robust. We'll have to see again what the impact of the California fires is, but we're probably seeing a little less momentum on the property side and more momentum on the casualty side as far as the submission flow regarding E and S.

[Robert Berkley, President & CEO at W. R. Berkley]

I would tell you there are pockets of professional that have become a little bit more competitive on the E and S front. But that having been said, overall, our E and S business is growing considerably faster than our admitted business today.

[Mark Hughes, Analyst at Truist Securities]

And then, you expressed a lot of confidence that the underwriting profitability wouldn't be deteriorating or would be likely improving and definitely not a deteriorating. Pricing is still up nicely. What should we think about the inflation and loss costs? Are you seeing a step down in loss inflation? I know you've talked about the social inflation and those drivers, but it seems like you have a little more optimism about the spread on a go forward basis?

[Robert Berkley, President & CEO at W. R. Berkley]

I think we've been getting a lot of rate for a long time at this stage. In addition to that, I think we have growing visibility and confidence in the underwriting actions that have already been taken and continue to be applied. And when you put all of that together, I think we are cautiously optimistic as to what that likely bodes for the results over time. I think the reality is when we look at our mix of business and we look at the rate that we have achieved and that we continue to achieve and if you look at the aggregate 7.7% or so and we look at how we think about trend at a pretty granular level, we think we're in a good place. So again, none of us know for sure, particularly with some of the longer tail lines other than through the passage of time.

[Robert Berkley, President & CEO at W. R. Berkley]

But there's some encouraging data that we're seeing.

[Operator]

From BMO Capital Markets, next up is Mike Zaremski.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Mike. Good evening.

[Michael Zaremski, Research Analyst at BMO Capital Markets]

Hey, good evening. First question, coming back to, I'm going to assume we don't know the you don't have the answer to the reserve changes this quarter, but based on kind of the year to date nine months, it looks like workers' comp was definitely a big, good guy in terms of reserve releases. So I'm just trying to kind of curious 1 of the tougher questions we get is, why is Rob bearish on kind of workers' comp if profits are so good and it still continues to release a lot of reserves. So just kind of curious if your views on comp are improving potentially or just kind of talking through the dynamics there?

[Robert Berkley, President & CEO at W. R. Berkley]

I think that when it comes to workers' compensation, I misassessed frequency trend and how remarkably negative it has remained for an extended period of time. In addition to that, I probably did not give enough credit to wage inflation and what that has meant for pricing and by extension margin. On the other hand, I continue to be concerned about medical cost and medical trend. And it is hard for me to imagine that the workers' comp market will be insulated from that reality indefinitely. So at this stage, as you would have noticed in the quarter, we had grew a little bit in comp even though our rate was ever so modestly negative.

[Robert Berkley, President & CEO at W. R. Berkley]

But we are finding opportunities to grow in comp, but it tends to be very specialized. We are not growing what I would describe as Main Street comp. We are growing in specialized comp as far as the exposure goes.

[Michael Zaremski, Research Analyst at BMO Capital Markets]

Got it. Okay. Appreciate the candidness there. Switching gears, if we reflect on the past year or whatever amount of time you would like to reflect on, is it fair to assume that given you're growing faster in E and S than in scanner commercial, that that's having kind of a positive impact on the overall company's combined ratio? Or is that not a fair assessment?

[Robert Berkley, President & CEO at W. R. Berkley]

Well, I hope every place we're growing is going to have a positive impact on the combined ratio. I understand your point is E and S higher margin, and in some cases that is the case, but that's not always the case. But maybe specifically to your point, I think that our loss ratios are in a very good place. Do I think possible through the passage of time that they will improve? Yes, I do believe that that is a possibility.

[Robert Berkley, President & CEO at W. R. Berkley]

Are we going to sort of get ahead of ourselves? No, we are not. Mike, I don't know if we had the conversation, but certainly, Rich and I have chatted with others about it. It was that 2016 through 2019 year and that stark reminder of the mismatch between when you write your business and when you'd really know your cost of goods sold, that was a very sobering experience for us. And as a result of that, we're just not going to get ahead of ourselves.

[Robert Berkley, President & CEO at W. R. Berkley]

Quite frankly, at this stage, the business is generating without any strain 20 plus percent returns. So there's really no incentive, in my opinion, to do anything other than make sure we are thoughtful and measured and continue to have a healthy respect for that reality of not knowing your cost of goods sold until some number of years after we made the sale. So yes, when I when we look back on it in the future, I think things are going to look possibly better than they do today, but we're not going to get ahead of ourselves.

[Michael Zaremski, Research Analyst at BMO Capital Markets]

Got it. And just lastly, sticking on the E and S marketplace and loud and clear about growth your growth outlook kind of direction remains the same as last quarter. But specifically in the E and S marketplace, given how, I guess, good returns are for most companies, because we're hearing some companies talk about some pricing deceleration in the E and S casualty marketplace. Are you seeing that at all?

[Robert Berkley, President & CEO at W. R. Berkley]

I don't see that in the E and S casualty space. I can imagine that potentially happening in the property space, putting aside whatever the California impact is. But I don't see that happening in the casualty space. And quite frankly, I think if anything, that pricing environment is more likely than not to remain quite resilient when it comes to casualty. We'll have to see professional perhaps as a different animal.

[Robert Berkley, President & CEO at W. R. Berkley]

But if we're talking about E and S casualty, then I think that that is quite strong and there's nothing that leads me to believe that you're going to see that momentum erode. Again, property a little bit different. And if you unpack a lot of the growth that the E and S market has seen over the past several years, it is weighted towards property. So as I think we've all talked about, property tends to respond quickly and very severely, but it tends to be shorter lived as opposed to casualty tends to be slower, but oftentimes has more staying power as far as market conditions.

[Michael Zaremski, Research Analyst at BMO Capital Markets]

Thank you, Rob.

[Robert Berkley, President & CEO at W. R. Berkley]

Thanks for the question.

[Operator]

We'll go next to Katie Sakas, Autonomous Research.

[Katie Sakys, Equity Analyst at Autonomous Research]

Yes. Thank you. Good evening. My first question is on the reinsurance and mono line excess loss ratio. I mean, it was an exceptional result this quarter on an underlying basis.

[Katie Sakys, Equity Analyst at Autonomous Research]

I know for the insurance segment, you guys cautioned not to read too much into the uptick in the underwriting ratio there. Perhaps you can offer us some color on the result in the reinsurance segment and really what you're thinking on the margins there as you look into 2025.

[Robert Berkley, President & CEO at W. R. Berkley]

So maybe going back to a couple of the comments earlier. Obviously, we have reservations around some of the casualty lines and for that matter some of the professional within the reinsurance market. In addition to that, on the other hand, we have the property market, we believe, is clearly under pressure. You could see that clear as day at oneone, but we think that there continues to be margin in the business and for the moment, it's adequately priced. So we are going to continue to ride that property horse as long as we can until we reach a conclusion that it no longer makes sense.

[Robert Berkley, President & CEO at W. R. Berkley]

And then you will see us go from an offensive posture to a defensive posture. As far as the casualty goes, I think we already covered that. And that action on the reinsurance front was, again, demonstrated by us shrinking the book by more than 15% in the quarter. And again, I think that it's just a reflection of our view that we're in we're capital managers, we're in business to make money. If we don't think it's a good risk adjusted return, we're happy to let it go.

[Katie Sakys, Equity Analyst at Autonomous Research]

Got it. Okay. And then circling back to your commentary, Rob, on the workers' comp growth this quarter, you've mentioned there were particular niches of workers' comp where you guys were seeing some opportunities for growth. Are those pockets of growth sustainable? And can we expect to continue to see some modest growth out of that line over the next couple of quarters?

[Katie Sakys, Equity Analyst at Autonomous Research]

Or are these niches that kind of pop up and come and go?

[Robert Berkley, President & CEO at W. R. Berkley]

So obviously, again, nobody knows for sure what tomorrow will bring. But the couple of monoline businesses that participate in the specialty comp space, the momentum that they're enjoying today, we do not see that going away tomorrow. So certainly, we think there will likely continue to be some opportunity throughout 2025.

[Katie Sakys, Equity Analyst at Autonomous Research]

Okay.

[Katie Sakys, Equity Analyst at Autonomous Research]

And then if I may sneak in 1 more, do you guys have any updates on your 2025 reinsurance program and how your catastrophe loss budget for this year might compare to 2024?

[Robert Berkley, President & CEO at W. R. Berkley]

I would suggest I don't have it at my fingertips. I don't think Rich does. But certainly, if you give Karen a call, she can get into it in some detail or at least as much detail as we're allowed to. But I would remind you of the comment that we shared earlier around our property cat reinsurance. Risk adjusted was down 15% -ish or so and a similar reduction in risk adjusted rate on the retro.

[Katie Sakys, Equity Analyst at Autonomous Research]

Got it. Thank you.

[Robert Berkley, President & CEO at W. R. Berkley]

Thanks for the questions. Have a good night.

[Operator]

Next up is Bob Huang, Morgan Stanley.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Bob. Good evening.

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Good evening. So quick question on like I'm curious your view on social inflation really. So it does feel like Plaintiff's Bar is more active in the Northeast and West Coast. In fact, something that California's commissioner also touched on when it comes to L. A.

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Wildfire. Are there any particular geography in The U. S. Where you feel it could be represented like a higher risk area for social inflation? Like is there a way to think about the Northeast, West Coast, Midwest?

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Curious your way to think about it. Is it shifting away from Florida and Georgia?

[Robert Berkley, President & CEO at W. R. Berkley]

So I mean, I would tell you that there are certain territories or states or really counties that part of the country would that are obviously more challenging than others. I think the difficulty, is not the states that have historically been very challenging, but it's the ones that are changing very quickly. And from a legal environment perspective, we have some states that were that are very red and have always been red. We have some states that have perhaps are more blue and they've always been blue. And now what's becoming more challenging is some states that were 1 color changing to a different color or some states, for example, that were perhaps once red and now they're more purple.

[Robert Berkley, President & CEO at W. R. Berkley]

I would tell you an example of a state that has shifted dramatically, would be 1 that you just mentioned, the state of Georgia, where once upon a time, that was an easier place to do business, but it has become ever more aggressive, as far as the plaintiff bar goes. Another state that once upon a time was defendant friendly or more defendant friendly would be Texas. And there are counties in Texas that I'm not quite sure they've become Cook County, but they are definitely trending in that direction. So I think you raised a really important point. It's 1 that we internally spend a lot of time thinking about because just rate alone is a very blunt instrument and so are terms and conditions.

[Robert Berkley, President & CEO at W. R. Berkley]

My colleagues, to their credit are obviously using the rate tool and the term and condition tool, but they are also at a very granular level down to county thinking about exposure based on legal environment. And I think that is going to have to be that is has become and will become increasingly more and more something that this industry is going to have to grapple with.

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Got it. Okay. I guess my follow-up is just so that like I'm clear. Then in that case, is it fair to say that some of the commercial casualty lines could potentially behave more similar to personal line in the sense where geography and region is more important than the business mix? Like is that a fair statement down the road?

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Just curious as to if that is the direction of the

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

global world.

[Robert Berkley, President & CEO at W. R. Berkley]

You're leaning in the direction of NACTAT, if you will, and what that means for exposure. And you're extrapolating from that as far as legal environment by territory and what that means for exposure?

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Yes, yes. Just to see if that makes sense on your side.

[Robert Berkley, President & CEO at W. R. Berkley]

So the answer is to us, while it's a bit of a generalization directionally, not only do we share your view, we are applying that to how the business operates.

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Okay.

[Jian (Bob) Huang, Executive Director at Morgan Stanley]

Got it. Really appreciate it. Thank you.

[Robert Berkley, President & CEO at W. R. Berkley]

Thanks for the question.

[Operator]

And we'll go next to David Motomaden, Evercore ISI.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Hey, good evening. So Rob, you spoke a little bit about some of the competitiveness in the casualty reinsurance market and commend you guys for stepping back a little bit from that market. I guess, has that made you reevaluate at all your outward program? 1 of your peers, purchased a little bit more coverage. Has that entered your thought process at all here as we, or did that enter your thought process at all at the oneone renewal?

[Robert Berkley, President & CEO at W. R. Berkley]

So we are, we're conscious of cost of capital, both the capital that we effectively own and the capital that we effectively rent, I. E. Reinsurance. We also are conscious of the fact that there are some reinsurance relationships that are true partnerships and there are other reinsurance relationships that are truly transactional. Those that are partnerships, are ones that tend to endure time.

[Robert Berkley, President & CEO at W. R. Berkley]

From our perspective, our colleagues are very skilled in understanding where the marketplace is and I think are attentive to making sure that we are doing what is in the best interest of our shareholders and simultaneously treating those that are truly our partners with the care and respect that they deserve. So when the day is all done, we're conscious of where the market is and we're going to do what we think makes sense for this organization, its shareholders and our long term partners.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Got it. That's helpful.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

And then it was good to see

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

the commercial auto growth tick up a little bit as well as the other liability growth in the quarter. I guess, our rates in those lines, are they at levels that are, I guess, good enough for you guys to continue to lean in as we head into 2025?

[Robert Berkley, President & CEO at W. R. Berkley]

Obviously, we were satisfied with the available rate. Otherwise, we wouldn't have written the business, I. E, as you saw what we did in the reinsurance space. Today, given the rates that we were able to achieve, we're happy with it. I don't know what the rating environment will be for the balance of the year.

[Robert Berkley, President & CEO at W. R. Berkley]

But from my perspective, the loss activity that the marketplace is facing and some of our competitors have finally come into grips with reality is creating an opportunity for those of us that have been already grappling with that reality to move forward more quickly.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Got it. That's helpful. And then I know you guys didn't give the reserve development by segment. So I'll follow-up with Karen. I guess I'm just wondering

[Robert Berkley, President & CEO at W. R. Berkley]

It's like the 1 piece of paper I left in my office and it's a long haul and I got short legs. So give Karen a call.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

Yes, we'll do. I guess there's obviously a lot more focus on the more recent accident years. I'm sure you guys are also laser focused on that as well and we can see it in the pics. Any sort of incremental color that you can provide on that would be helpful?

[Robert Berkley, President & CEO at W. R. Berkley]

Yes. I mean nothing really beyond what we talked about. I think we continue to be very as we've mentioned even earlier in this call, we're very focused on auto liability. We're very focused on other product lines where there's the potential for injury to individual that seems to turbocharge social inflation. So I think 1 needs to do it.

[Robert Berkley, President & CEO at W. R. Berkley]

Is social inflation impacting most liability lines or cash? Yes, the answer is. But it does not apply equally to all product lines. We are concerned about MedNow. We are concerned about auto liability.

[Robert Berkley, President & CEO at W. R. Berkley]

We're even concerned about other types of coverage where you could have an individual or a group of people physically hurt. That seems to be where a jury will take someone to the woodshed. And we are doing what we need to do on that front as covered earlier from a rate perspective, from a selection perspective, from a terms and conditions perspective. And part of selection as discussed with our colleague a few moments ago is territory, jurisdiction, whatever, county.

[Operator]

Our next question is from Meyer Shields, KBW.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Meyer. Good afternoon or evening, Robert.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hi. Hi, Rob. How are you?

[Robert Berkley, President & CEO at W. R. Berkley]

Good. How are you?

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

I guess, I'm doing okay. Thanks. So we spent some time talking about like these examples where bodily injury to individuals is exacerbating social inflation. How is the lock trend in those situations, is that getting worse or is it just something that you're talking about now, what you've been seeing internally for longer?

[Robert Berkley, President & CEO at W. R. Berkley]

I think that it is just very apparent that that trend is a bit steeper and that's not something new. It just has been and I couldn't figure out what the heck to talk about today. So I figured I should talk mention that.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Fair enough. Okay.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

When you talk about, I guess, the various court jurisdictions, so the 1 that stands out as a concern is older ones getting sorry, better ones historically getting worse. How should we think about that in the context of longer tail or medium tail lines reserves?

[Robert Berkley, President & CEO at W. R. Berkley]

I think for people who haven't been paying attention, it's likely for them to have some catch up to do. I think for people who have been paying I mean, what I was describing as far as Georgia, Texas, whatever, as just placeholders, This isn't like something that just happened last quarter. This has been a groundswell that has been percolating and we just happen to be talking about it tonight. But we've been talking about this internally for not what would be measured in quarters, what would be measured in years. So the response to those realities, those are already well in place.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Understood. And then final quick question. You talked about a mix change impacting the ex cat, Accenture loss ratio in the insurance segment. How is it impacting the expense ratio, that mix change?

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

I don't think it's having much of an impact on the expense ratio. What's really driving the movement, and as you saw, I think period over period, it only moved 0.1%, so it's fairly small. So I would say as it relates to the acquisition costs, we're not seeing huge changes other than perhaps where there might be a change in the reinsurance structure that we have from 1 year to another year where we might have gone from a quota share to an excess of loss or vice versa. So there would obviously be some differences in terms of where that runs through in the income statement.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Fantastic. Thanks so much.

[Operator]

Next up is Brian Meredith, UBS.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Brian. Good evening.

[Brian Meredith, Managing Director at UBS Securities LLC]

Yes.

[Brian Meredith, Managing Director at UBS Securities LLC]

Thanks. Hey, how are you doing? A couple of questions here for you, Rob. The first one, little big picture. So a number of the standard commercial carriers have talked about and granted still small growing in the E and S market, right, have E and S operations and are growing there.

[Brian Meredith, Managing Director at UBS Securities LLC]

I'm just curious kind of what your thoughts are there? Is that at all impeding on some of maybe your opportunities in the marketplace? Are you seeing that?

[Robert Berkley, President & CEO at W. R. Berkley]

In the interest of time, I'm going to be direct, but I don't mean to be a little bit disrespectful. We don't see them.

[Brian Meredith, Managing Director at UBS Securities LLC]

Good. That's helpful. And then I guess the other 1 I'm curious about is maybe you can kind of flush out a little bit what's going on with Berkeley One. I know that's been a good operation growing kind of expectations here for 2025 homeowners insurance still pretty hard market. Maybe give us some view on kind of opportunity there?

[Robert Berkley, President & CEO at W. R. Berkley]

So, okay, I think that the opportunity that existed yesterday, that exists today will be just as strong tomorrow. I think we have truly an exceptional team of people that are very skilled when it comes to managing the shareholders' capital. I think they have done truly a fantastic job in building a franchise that is not just accretive to their operation, but is truly accretive economically and brand wise to the group overall. And I think that their contribution to the profitability of the group in the will be considerable.

[Brian Meredith, Managing Director at UBS Securities LLC]

Great. Thank you.

[Robert Berkley, President & CEO at W. R. Berkley]

Thanks, Brian. Have a good evening.

[Operator]

And the next question is Josh Shanker, Bank of America.

[Robert Berkley, President & CEO at W. R. Berkley]

Hi, Josh. Good evening.

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

Yes. Thank you very much. Hi there, everybody. I just wanted to maybe ask a little more specific question on Brian's, well, about Berkeley One. Obviously, you don't write homeowners in California.

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

There's certain things about that market that are unattractive to you. I'm wondering what kind of reforms you could see in that state's insurance regime that would make that market more attractive for Berkeley One? And are there other states that you have a prohibition against writing in until some things change about those states?

[Robert Berkley, President & CEO at W. R. Berkley]

Josh, thanks for the question. And I think the Berkeley One team at this stage when it comes to homeowners, they are very focused on the opportunities in the markets that they're in. Will they add other markets over time? Yes. Is California in the on deck circle?

[Robert Berkley, President & CEO at W. R. Berkley]

I think that there is a healthy recognition and appreciation and respect for the challenges that exist in that market on multiple levels. And consequently, I think the team has appropriately made the decision that this is not a distraction or that we would like to have today, not an area of focus for the foreseeable. And certainly for the people of California and that insurance market and those that participate there and other stakeholders, we wish them nothing but the best. But at this moment in time, we are very focused on other opportunities that are before us.

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

And I want to switch to an investment question. Over the long term, Berkeley shareholders have been rewarded very well through some of the alternative investments that the Berkeley team has made over many years. It's not been really the case in 2024 in a year which has enjoyed very significant market appreciation for public equities. Can you talk a little bit about what you see for 2025? Is the positioning of the portfolio potentially improved?

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

Obviously, you're not going to make foolish investments overall, but what's been preventing Berkeley from realizing the potential of that part of its strategy? And what can we see

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

in the future?

[Robert Berkley, President & CEO at W. R. Berkley]

So Josh, maybe a couple of quick comments. First off, as far as alternatives, Rich had flagged what we saw coming through in a couple of our investments, particularly in the unrealized associated with public securities. So I think it was about $150,000,000 1 hundred and 60 million dollars unrealized, which was, I think pretty healthy for a ninety day period. Putting that aside, as far as other areas of the alternative investment portfolio, I would suggest that 1 not leap to a conclusion.

[Robert Berkley, President & CEO at W. R. Berkley]

Obviously, oftentimes there is value that exists that may not necessarily be as visible. So I understand your point about the twenty four year. Again, no different than the underwriting or the investing on the public securities. Our focus is long term risk adjusted return. We're and sometimes in the alternative portfolio that could be a little bit lumpy.

[Robert Berkley, President & CEO at W. R. Berkley]

But the focus on total return is not something that is any is lost on us today just like it wasn't lost on us tomorrow. But before we go any further on to any other questions or discussion you'd like to have, Josh, maybe I can turn it over to my boss here who takes a particular interest in the alternative investment portfolio.

[William Berkley, Executive Chairman at W. R. Berkley]

Good evening, Josh. I think that our portfolio as a whole, especially our public company portfolio, had a very good year. I think that the performance for the year was adversely impacted primarily by 1 private equity fund that did not do well. It was a surprise to us on a couple of things, and it had a consequential adverse impact. We think we think that's behind us.

[William Berkley, Executive Chairman at W. R. Berkley]

But I think honestly, some of that private equity investing will be reduced as the available returns in more liquid markets are such that the advantage of private equity is somewhat diminished. That doesn't mean we won't take advantage of things when they come up, but our bogey is a little higher with a little less risk. So it was no doubt a bump in the road that can always happen. But I wouldn't expect it to be a problem going forward.

[Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities]

I will cede the evening to you gentlemen. Thank you very much.

[Robert Berkley, President & CEO at W. R. Berkley]

Thanks, Josh. Have a good evening. Lisa?

[Operator]

Hello, Nick. We do have 1 further question. It's Yaron Kinar from Jefferies.

[Robert Berkley, President & CEO at W. R. Berkley]

Okay. Good evening.

[Analyst]

Hey, Hey, good afternoon. This is Andrew on for Yaron. I was just hoping within insurance and short tail lines, some pretty good growth this year and particularly in the quarter. Can you help us just think about the drivers there? Was it property and LaMarine?

[Analyst]

A and H?

[Robert Berkley, President & CEO at W. R. Berkley]

Yes. Mainly it was yes. Yes and yes.

[Analyst]

Okay. So kind of all 3 contributing.

[Robert Berkley, President & CEO at W. R. Berkley]

Property and inland marine, though it's not as big a play for us as property. But yes, mainly Property.

[Analyst]

And then just on the 50 basis points impact to current year picks, I know you mentioned it was business mix, but I would think with the growth in Property that would be beneficial to the underlying. So was perhaps that offset a bit by auto related exposures or a different factor going on there?

[Richard Baio, Executive Vice President & CFO at W. R. Berkley]

This is Rich. I think it's that's certainly part of the equation, but you also have to look at the contribution that the Short Care lines make relative to the other casualty lines as well, which have higher loss ratios. So if you look, for instance, at other liability in auto as an example, that represents close to 50% of the total book of business, which does have typically higher loss ratios than property or short tail lines.

[Analyst]

All right. Thank you.

[Robert Berkley, President & CEO at W. R. Berkley]

Thank you.

[Operator]

At this time, there are no further questions. I'll hand things back to Mr. Rob Berkley for any additional or closing remarks.

[Robert Berkley, President & CEO at W. R. Berkley]

Okay. Lisa, thank you very much for hosting us this evening. And thank you to all our participants for dialing in. I think I'll just flag again clearly an outstanding year, but that's a reflection of what we did yesterday. But perhaps equally, if not more important is how we have set the table for 2025 and that is very well positioned.

[Robert Berkley, President & CEO at W. R. Berkley]

In addition to that, with every passing day, we are setting the table for 2026. So the business is firing on all cylinders and we do not see that changing for the foreseeable. Thank you again for dialing in and we look forward to speaking with you in about ninety days. Have a good evening.

[Operator]

Participation. You may now disconnect.

Participants

Executives

• Robert Berkley, President & CEO
• Richard Baio, Executive Vice President & CFO
• William Berkley, Executive Chairman

Analysts

• Alex Scott, Insurance Research Analyst at Barclays
• Elyse Greenspan, Managing Director at Wells Fargo Securities
• Andrew Kligerman, Managing Director at TD Securities
• Mark Hughes, Analyst at Truist Securities
• Michael Zaremski, Research Analyst at BMO Capital Markets
• Katie Sakys, Equity Analyst at Autonomous Research
• Jian (Bob) Huang, Executive Director at Morgan Stanley
• David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI
• Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)
• Brian Meredith, Managing Director at UBS Securities LLC
• Joshua Shanker, Managing Director & Equity Analyst at Bank of America Securities
• Analyst