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Highlights

  • Catastrophe losses more than tripled to $111.1 million, driven by one of California’s most expensive disasters.

  • Q1 profit fell 5.6%, marking the insurer’s first quarterly decline since 2022.

  • Net premiums and investment income rose 9.9% and 12.6%, respectively, cushioning underwriting setbacks.

Commercial insurer W.R. Berkley Corp. (NYSE:WRB) reported a 5.6% decline in first-quarter earnings on Monday, as mounting catastrophe losses dragged down its underwriting performance, marking the company’s first quarterly profit drop in nearly two years.

The Greenwich, Connecticut-based firm said profit available to common stockholders fell to $417.6 million, or $1.04 per share, for the quarter ended March 31, compared with $442.5 million, or $1.09 per share, in the same period last year.

The earnings miss underscores the growing impact of extreme weather events on the insurance industry. The company faced catastrophe losses of $111.1 million, a figure that more than tripled from $30.5 million a year ago. Much of this spike was attributed to a catastrophic event in California—one of the state's costliest disasters to date—that not only caused extensive property damage but also claimed several lives. Preliminary estimates have pegged total economic losses from the event at up to $250 billion.

Despite the drag from claims, W.R. Berkley saw a healthy increase in its core insurance operations. Net written premiums rose by 9.9% to $3.13 billion, reflecting heightened demand for insurance coverage as businesses aim to shield themselves from increasing macroeconomic and environmental risks.

The company also benefited from a robust performance in its investment portfolio. Net investment income climbed 12.6% year-over-year to $360.3 million, largely due to improved returns from the company’s alternative investment holdings. These assets delivered a $27 million gain during the quarter, rebounding from a $29.3 million loss in the same period last year.

However, rising claims took a toll on the company's underwriting efficiency. The combined ratio—a key measure of profitability in the insurance sector—rose to 90.9%, compared to 88.8% last year. While still below the critical threshold of 100%, which indicates underwriting profitability, the increase reflects rising claim costs and disaster-related payouts.

W.R. Berkley’s performance comes at a time when insurers globally are grappling with the growing frequency and severity of natural disasters, a trend widely linked to climate change. Industry-wide, this has led to increased scrutiny of underwriting models and greater caution in risk assessment.

Adding intrigue to the company’s outlook, Japanese insurance giant Mitsui Sumitomo Insurance announced in March its intention to acquire a 15% stake in W.R. Berkley. The planned investment signals international interest in the 58-year-old American insurer and could pave the way for deeper strategic collaboration in the future.