W. Robert Berkley
President and Chief Executive Officer at W. R. Berkley
Rich, thank you. That was great. Let me just offer a couple of quick sound bites. I think Rich did a really thorough job in covering that. But a couple of thoughts from me. One, on the rate, the rate ex comp for the quarter came in at 8.4%. A little additional context, auto liability is leading the way and closely followed by excess and umbrella. As we've been talking about for some number of quarters, perhaps at this stage it can even be measured in years. The loss trend on the auto line is something that we have been focused on. We feel good about where we are, but assuming this trend continues, we're going to need these additional dollars to make sure that we're well positioned for claims getting settled tomorrow.
Rich obviously covered the loss ratio. I think 62.4% was three-ish points of CATs, not a bad outcome given the frequency of severity for those that are part of the but-for-club. That's the 59.1%. That having been said, we've talked about this and talked about it, and I suspect we'll continue to talk about it. In our opinion, it's all about building book value with an eye towards risk-adjusted return and the concept of backing out cash as if they don't exist. You would have thought that would have run its course by now given every year we seem to have CATs as an industry. So again, from our perspective, when we measure the business, it is a 62.4%.
Rich also covered the expense ratio. Just a couple of quick comments from me. One, at this stage, we have a couple of businesses that are not at scale but are in the process to scaling over time. I expect that as they grow, you're going to see the benefit of that increased earned premium and that will enter [Phonetic] to the overall benefit of the Group's expense ratio. That having been said, we are actively making investments as you would expect on the technology and data front in particular and that's not cheap, but we believe we will get a good return on the investment as well.
Obviously, Rich talked about mix of business that can have an impact. I think the last piece that I would flag is the topic of reinsurance. By and large, we are a low-limits player, so our need to buy reinsurance is not the same as many of our peers that are far more dependent on reinsurance. We have absolutely no problem with our reinsurance partners making a profit. In fact, we expect and respect their need to make a reasonable risk-adjusted return. But every now and then, if you find oneself in market conditions where people are looking to take a more aggressive position or even gouge, we have the optionality to change our approach to reinsurance buying and that can impact the expense ratio as well.
Lastly, Rich touched a lot on the FX piece and the various ways that it's impacting our P&L, but the punchline for me as far as FX goes, Rich, you'll correct me if I'm wrong, but it was about $0.05 to us on the per share.
Let me turn to investments for a moment and I'm going to take a brief trip down memory lane, so I apologize in advance for that and thank all for indulging me. I think everyone recalls what was going on during the financial crisis. There was -- excuse me, during the financial crisis -- and then again, during COVID, there was massive amounts of economic stimulation rammed into the system. When we saw that occurring, we had a view that there was no way that you were not going to see some level of inflation following that activity. It took a while to come through, but it did come through. And it came through in spades. Ultimately, the government took the action one would expect and interest rates moved up, particularly on the short end. We found ourselves with an inverted yield curve and we as an organization were rewarded for the decision to keep our duration short. Our investment income increased dramatically over a relatively short period of time. From our perspective looking forward, it is likely, in our opinion, more likely than not that yes, while inflation may be coming down, we don't think it is going to fall off a cliff. And our expectation is that short-term rates will come down, but they are perhaps not going to come down as quickly or as aggressively as some have suggested.
In addition to that, regardless of who you expect will be in the White House, there is no doubt if you take them at their word, which is a hard thing to do, but for purposes of conversation, if you take each candidate at their word, they are looking to grow the deficit by what would be measured by the trillions of dollars. So with that as a reality, from our perspective, it is inevitable that the federal government in this country, not dissimilar to other parts of the world, but certainly in this country, will be growing its deficit and there is a real question about supply and demand for government debt going forward.
So what does this all mean? It means from our perspective, we think you're going to see the yield curve take more and more of a traditional shape. We think that, that is going to create as we've discussed in the past, an opportunity for us to be nudging out our duration and simultaneously our book yields picking up. So speaking more specifically to our numbers today, as Rich mentioned earlier, the duration is sitting at 2.4 years, our domestic book yield is 4.5%, our new money rate today on that is something north of 5%. We do not believe that we are going to have to give up much on that new money rate rather than what you will see is we will be taking that 2.4 years duration and nudging it out. As a reminder, for us, if you look at the average life of our loss reserves, it is just inside of four years. So given that reality, we have a lot of room to take that duration out. And that again, will allow us to maintain or actually improve the book yield from where it is today and quite frankly, maintain that new money rate at levels that I was referring to earlier.
So let's get to the punch line, if we will, and then we'll turn the conversation to anywhere participants would like to take it. So what is the story? What is the -- I guess, the punch line? The punchline is this, the business continues to grow, the rate increases that we're getting, we believe is keeping up with trend, actually probably exceeding trend. So all things being equal, our underwriting margin is likely to continue to improve.
In addition to that, when you look at the contribution of the other part of our economic model, that being the investment portfolio, the fact of the matter is our new money rate is and will likely remain above our current book yield. Our cash flow remains exceptionally strong. Hence, the portfolio is growing and so what does that mean? That means investment income is going to continue to increase from here. So more underwriting income, more investment income is ultimately going to mean more earnings for the foreseeable future. And quite frankly, we think the business is as well positioned today as it has ever been.
So let me pause there. Krista, we will ask you to please open it up for questions.
