Posted on 27 Jul 2010
W. R. Berkley Corporation today reported net income for the second quarter of 2010 of $110 million, or 70 cents per share, compared with $97 million, or 59 cents per share, for the second quarter of 2009. Operating income for the second quarter of 2010 was $102 million, or 65 cents per share, compared with $100 million, or 60 cents per share, for the corresponding quarter of 2009. Operating income is a non-GAAP financial measure defined by the Company as net income excluding income and losses from investment funds and net investment gains and losses.
Commenting on the company's performance, William R. Berkley, chairman and chief executive officer, said: "We are pleased with our second quarter results. Our new enterprises continue to gain traction, and their growth led to an increase in overall premiums for the first time in fifteen quarters. Written premium grew by more than 5.5% in the quarter as the growth in these new businesses more than offset the slight decline in our established business units. Our calendar year combined ratio was under ninety-five, and we continue to book our current accident year in a prudent manner. We are particularly cognizant of assuring adequate pricing for our new business units. There are a growing number of signs of a coming turn in the cycle, as prices are beginning to stabilize in most areas. Overall, prices were down less than one percent for the quarter. Given the current investment environment, adequate industry returns can only be achieved by improved underwriting results.
"The investment portfolio changed only slightly during the quarter. The current shape of the yield curve and the absolute level of returns available for long term securities caused us to reconsider our plans for extending the portfolio duration, which remained at 3.6 years. We continued to modestly shift our municipal portfolio away from general obligation bonds to other
types of municipal securities.
"Looking ahead, we remain cautiously optimistic. With current available yields down over 200 basis points from historic industry investment returns, investment results cannot be the drivers of profitability for property casualty companies. We believe that current investment yields and unsatisfactory underwriting year pricing are generating inadequate current levels of return for the industry. As we approach the end of the year, it is likely our competitors will reach a simila conclusion, and pricing will improve," Mr. Berkley concluded.