W. R. Berkley Corporation (NYSE:WRB) Q2 2023 Earnings Conference Call July 20, 2023 5:00 PM ET Company Participants Robert Berkley - President & Chief Executive Officer Richard Baio - Executive Vice President & Chief Financial Officer William Berkley - Executive Chairman of the Board Conference Call Participants Elyse Greenspan - Wells Fargo Alex Scott - Goldman Sachs Mike Zaremski - BMO Capital Markets Josh Shanker - Bank of America Mark Hughes - Truist Securities Ryan Tunis - Autonomous Research David Mot ...

Part I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements and notes for Q1 2023, covering balance sheets, income, and cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a slight increase in total assets and total equity from December 31, 2022, to March 31, 2023, primarily driven by an increase in investments and a reduction in accumulated other comprehensive loss Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change | Change (%) | | :-------------------------------- | :------------- | :---------------- | :----- | :--------- | | Total Assets | $34,296,064 | $33,815,103 | $480,961 | 1.42% | | Total Liabilities | $27,330,441 | $27,046,942 | $283,499 | 1.05% | | Total Equity | $6,965,623 | $6,768,161 | $197,462 | 2.92% | | Reserves for losses and loss expenses | $17,431,635 | $17,011,223 | $420,412 | 2.47% | | Fixed maturity securities | $18,091,113 | $17,587,349 | $503,764 | 2.86% | | Cash and cash equivalents | $1,242,357 | $1,449,346 | $(206,989) | -14.28% | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Net income to common stockholders significantly decreased for Q1 2023 compared to Q1 2022, primarily due to lower net investment gains and higher losses and loss expenses, despite increased net premiums earned Consolidated Statements of Income Highlights (in thousands, except per share data) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | Change | Change (%) | | :-------------------------------- | :---------------------------- | :---------------------------- | :----- | :--------- | | Net premiums earned | $2,491,432 | $2,249,087 | $242,345 | 10.78% | | Net investment income | $223,398 | $173,512 | $49,886 | 28.75% | | Net investment gains | $23,010 | $366,265 | $(343,255) | -93.72% | | Total revenues | $2,895,004 | $2,915,409 | $(20,405) | -0.70% | | Losses and loss expenses | $1,538,755 | $1,339,252 | $199,503 | 14.90% | | Income before income taxes | $376,071 | $732,433 | $(356,362) | -48.65% | | Net income to common stockholders | $294,126 | $590,638 | $(296,512) | -50.20% | | Basic EPS | $1.07 | $2.13 | $(1.06) | -49.77% | | Diluted EPS | $1.06 | $2.12 | $(1.06) | -50.00% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income to common stockholders significantly increased for Q1 2023 compared to Q1 2022, primarily due to a positive change in unrealized investment gains (losses), net of taxes Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | Change | Change (%) | | :-------------------------------- | :---------------------------- | :---------------------------- | :----- | :--------- | | Net income before noncontrolling interests | $295,729 | $593,030 | $(297,301) | -50.13% | | Change in unrealized currency translation adjustments | $4,866 | $56,272 | $(51,406) | -91.36% | | Change in unrealized investment gains (losses), net of taxes | $180,799 | $(423,545) | $604,344 | -142.69% | | Other comprehensive income (loss) | $185,665 | $(367,273) | $552,938 | -150.55% | | Comprehensive income to common stockholders | $479,792 | $223,366 | $256,426 | 114.71% | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) The consolidated statements of stockholders' equity reflect an increase in retained earnings and a significant improvement in accumulated other comprehensive loss for Q1 2023 compared to the prior year, despite substantial dividends paid and treasury stock repurchases Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :----- | | Retained earnings (End of period) | $10,296,539 | $9,582,790 | $713,749 | | Net income to common stockholders | $294,126 | $590,638 | $(296,512) | | Dividends paid | $(158,592) | $(22,983) | $(135,609) | | Accumulated other comprehensive loss (End of period) | $(1,078,917) | $(649,229) | $(429,688) | | Treasury stock (End of period) | $(3,387,538) | $(3,166,873) | $(220,665) | | Stock repurchased | $(135,152) | $0 | $(135,152) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased, and investing activities shifted from a net cash inflow to a net cash outflow for Q1 2023 compared to Q1 2022, primarily due to increased loss payments and reduced proceeds from investment sales Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | Change | | :-------------------------------- | :---------------------------- | :---------------------------- | :----- | | Net cash from operating activities | $445,323 | $477,682 | $(32,359) | | Net cash (used in) from investing activities | $(359,430) | $518,563 | $(877,993) | | Net cash used in financing activities | $(295,726) | $(451,330) | $155,604 | | Net change in cash and cash equivalents | $(206,989) | $545,998 | $(752,987) | | Cash and cash equivalents at end of period | $1,242,357 | $2,114,841 | $(872,484) | [Notes to Interim Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) The notes provide detailed explanations and breakdowns of the financial statements, covering accounting principles, per share data, investment portfolios, fair value measurements, loss reserves, and business segment performance [(1) General](index=9&type=section&id=(1)%20General) - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, reflecting normal recurring adjustments and consistent presentation with prior audited statements[23](index=23&type=chunk) - Management makes estimates and assumptions affecting reported amounts, with further details available in the Annual Report on Form 10-K for December 31, 2022[24](index=24&type=chunk) - The effective income tax rate differs from the federal rate primarily due to state and foreign income taxes, partially offset by tax-exempt investment income[25](index=25&type=chunk) [(2) Per Share Data](index=9&type=section&id=(2)%20Per%20Share%20Data) - Basic EPS is calculated by dividing net income by the weighted average common shares outstanding, including shares in a grantor trust for vested but deferred restricted stock units (RSUs)[26](index=26&type=chunk) - Diluted EPS uses the treasury stock method for stock incentive plans, with common equivalent shares excluded if anti-dilutive[26](index=26&type=chunk) Weighted Average Common Shares (in thousands) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :----- | :---------------------------- | :---------------------------- | | Basic | 274,977 | 276,772 | | Diluted | 277,339 | 279,157 | [(3) Recent Accounting Pronouncements and Accounting Policies](index=9&type=section&id=(3)%20Recent%20Accounting%20Pronouncements%20and%20Accounting%20Policies) - All accounting and reporting standards effective in 2023 or not yet effective were either not applicable or did not have a material impact on the Company[28](index=28&type=chunk)[29](index=29&type=chunk) [(4) Consolidated Statements of Comprehensive Income](index=10&type=section&id=(4)%20Consolidated%20Statements%20of%20Comprehensive%20Income) Changes in Accumulated Other Comprehensive Income (AOCI) (in thousands) | Metric | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Beginning AOCI | $(1,264,581) | $(281,955) | | Other comprehensive income (loss) | $185,665 | $(367,273) | | Ending AOCI | $(1,078,917) | $(649,229) | | Amounts reclassified from AOCI (After-tax) | $25,584 | $9,591 | - The change in AOCI for Q1 2023 was primarily driven by a positive change in unrealized investment gains, contrasting with a loss in Q1 2022[30](index=30&type=chunk) [(5) Statements of Cash Flows](index=10&type=section&id=(5)%20Statements%20of%20Cash%20Flows) Interest Payments (in thousands) | Period | Interest Payments | | :----- | :---------------- | | Q1 2023 | $41,150 | | Q1 2022 | $52,899 | - No income taxes were paid for the three months ended March 31, 2023 and 2022[32](index=32&type=chunk) [(6) Investments in Fixed Maturity Securities](index=11&type=section&id=(6)%20Investments%20in%20Fixed%20Maturity%20Securities) Fixed Maturity Securities by Type (March 31, 2023, in thousands) | Type | Amortized Cost | Fair Value | | :-------------------------------- | :------------- | :--------- | | Held to maturity | $51,873 | $55,721 | | Available for sale: | | | | U.S. government and government agency | $1,100,204 | $1,049,267 | | State and municipal | $2,899,206 | $2,789,359 | | Mortgage-backed | $2,060,674 | $1,897,729 | | Asset-backed | $3,960,140 | $3,845,453 | | Corporate | $7,447,625 | $7,125,649 | | Foreign government | $1,468,737 | $1,331,890 | | **Total available for sale** | **$18,936,586** | **$18,039,347** | | **Total fixed maturity securities** | **$18,988,459** | **$18,095,068** | Allowance for Expected Credit Losses - Held to Maturity Securities (in thousands) | Metric | 2023 | 2022 | | :-------------------------------- | :--- | :--- | | Beginning of period | $114 | $387 | | Provision for expected credit losses | $(7) | $(9) | | End of period | $107 | $378 | - The allowance for expected credit losses for available for sale securities decreased in Q1 2023 due to a decrease in unrealized losses, primarily associated with corporate securities, offset by foreign government securities[38](index=38&type=chunk) Fixed Maturity Securities by Contractual Maturity (March 31, 2023, in thousands) | Maturity | Amortized Cost | Fair Value | | :-------------------------- | :------------- | :--------- | | Due in one year or less | $1,568,436 | $1,528,990 | | Due after one year through five years | $8,864,666 | $8,503,127 | | Due after five years through ten years | $4,287,881 | $4,084,883 | | Due after ten years | $2,203,296 | $2,076,887 | | Mortgage-backed securities | $2,064,073 | $1,901,181 | | **Total** | **$18,988,352** | **$18,095,068** | [(7) Investments in Equity Securities](index=14&type=section&id=(7)%20Investments%20in%20Equity%20Securities) Equity Securities (in thousands) | Type | March 31, 2023 Fair Value | December 31, 2022 Fair Value | | :------------- | :------------------------ | :------------------------ | | Common stocks | $1,057,599 | $982,751 | | Preferred stocks | $222,356 | $203,143 | | **Total** | **$1,279,955** | **$1,185,894** | - Total equity securities increased by **$94 million** from December 31, 2022, to March 31, 2023[43](index=43&type=chunk) [(8) Arbitrage Trading Account](index=14&type=section&id=(8)%20Arbitrage%20Trading%20Account) Arbitrage Trading Account Value (in thousands) | Date | Fair and Carrying Value | | :------------- | :---------------------- | | March 31, 2023 | $609,001 | | December 31, 2022 | $944,230 | - The primary focus of the arbitrage trading account is merger arbitrage, investing in securities of companies targeted in announced tender offers and mergers, typically with a short time horizon[44](index=44&type=chunk) - The Company uses put and call options to mitigate market condition impacts on the trading account, reporting them at fair value[45](index=45&type=chunk) [(9) Net Investment Income](index=14&type=section&id=(9)%20Net%20Investment%20Income) Net Investment Income (in thousands) | Source | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :---------------------------------------------------- | :---------------------------- | :---------------------------- | | Fixed maturity securities, cash & cash equivalents, loans | $195,642 | $101,284 | | Arbitrage trading account | $18,256 | $9,187 | | Equity securities | $13,746 | $10,856 | | Investment funds | $2,180 | $52,012 | | Real estate | $(3,711) | $2,146 | | **Gross investment income** | **$226,113** | **$175,485** | | Investment expense | $(2,715) | $(1,973) | | **Net investment income** | **$223,398** | **$173,512** | - Net investment income increased by **28.75%** year-over-year, primarily driven by higher income from fixed maturity securities[46](index=46&type=chunk) [(10) Investment Funds](index=15&type=section&id=(10)%20Investment%20Funds) - The Company is not the primary beneficiary in any of its investment funds and accounts for its interests using the equity method[47](index=47&type=chunk) - Maximum exposure to loss from investment funds is limited to the carrying amount and unfunded commitments, which were **$408 million** as of March 31, 2023[48](index=48&type=chunk) Investment Funds Carrying Value and Income (in thousands) | Fund Type | Carrying Value (March 31, 2023) | Income (Loss) (Q1 2023) | Income (Loss) (Q1 2022) | | :---------------- | :------------------------------ | :---------------------- | :---------------------- | | Financial services | $444,645 | $(13,047) | $25,932 | | Transportation | $336,808 | $11,788 | $11,179 | | Real Estate | $216,871 | $956 | $16,364 | | Infrastructure | $119,042 | $3,355 | $841 | | Energy | $117,461 | $3,439 | $(892) | | Other funds | $366,740 | $(4,311) | $(1,412) | | **Total** | **$1,601,567** | **$2,180** | **$52,012** | - Lifson Re, a Bermuda reinsurance company, increased its participation in the Company's reinsurance placements from **22.5% to 30.0%** effective July 1, 2022[49](index=49&type=chunk) [(11) Real Estate](index=15&type=section&id=(11)%20Real%20Estate) Real Estate Investment Carrying Value (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :-------------------- | :------------- | :---------------- | | Properties in operation | $1,111,713 | $1,114,167 | | Properties under development | $226,791 | $226,455 | | **Total** | **$1,338,504** | **$1,340,622** | - Properties in operation include a long-term ground lease in Washington, D.C., an office complex in New York City, and a completed portion of a mixed-use project in Washington D.C[51](index=51&type=chunk) - During Q1 2022, the Company sold a real estate investment in London, generating proceeds reported on the business disposition line in cash flows[52](index=52&type=chunk) [(12) Loans Receivable](index=16&type=section&id=(12)%20Loans%20Receivable) Loans Receivable (in thousands) | Category | March 31, 2023 Amortized Cost | December 31, 2022 Amortized Cost | | :--------------- | :---------------------------- | :---------------------------- | | Real estate loans | $175,745 | $173,616 | | Commercial loans | $19,199 | $19,386 | | **Total** | **$194,944** | **$193,002** | - Real estate loans are secured by commercial and residential properties primarily in London and New York, with maturities through 2026[54](index=54&type=chunk) - The allowance for expected credit losses for loans receivable decreased in Q1 2023, primarily due to a decrease in the weighted average life of the loan portfolio[55](index=55&type=chunk) [(13) Net Investment Gains](index=17&type=section&id=(13)%20Net%20Investment%20Gains) Net Investment Gains (Losses) (in thousands) | Source | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :-------------------------------------------------------------------- | :---------------------------- | :---------------------------- | | Fixed maturity securities (net) | $(17,187) | $(1,279) | | Equity securities (net realized & unrealized) | $44,464 | $94,118 | | Real estate | $10,739 | $286,192 | | Other (net) | $(15,405) | $(6,987) | | **Net realized and unrealized gains on investments** | **$22,611** | **$369,882** | | Change in allowance for expected credit losses on investments | $399 | $(3,617) | | **Net investment gains** | **$23,010** | **$366,265** | | After-tax net investment gains | $18,160 | $287,823 | - Net investment gains significantly decreased to **$23 million** in Q1 2023 compared to **$366 million** in Q1 2022, primarily due to a large gain from the sale of a London real estate investment in 2022[58](index=58&type=chunk)[59](index=59&type=chunk) [(14) Fixed Maturity Securities in an Unrealized Loss Position](index=18&type=section&id=(14)%20Fixed%20Maturity%20Securities%20in%20an%20Unrealized%20Loss%20Position) Fixed Maturity Securities in Unrealized Loss Position (March 31, 2023, in thousands) | Type | Fair Value | Gross Unrealized Losses | | :-------------------------------- | :------------- | :---------------------- | | U.S. government and government agency | $741,134 | $54,665 | | State and municipal | $2,079,792 | $127,420 | | Mortgage-backed | $1,632,585 | $166,440 | | Asset-backed | $3,406,951 | $117,853 | | Corporate | $5,869,295 | $340,440 | | Foreign government | $1,026,306 | $109,835 | | **Total** | **$14,756,063** | **$916,653** | - Substantially all securities in an unrealized loss position are investment grade, except for foreign government securities, where a significant portion of the loss is due to currency exchange rates[61](index=61&type=chunk) - The Company believes unrealized losses are primarily due to temporary market and sector-related factors, not issuer-specific credit issues, and expects issuers to meet contractual obligations[63](index=63&type=chunk) [(15) Fair Value Measurements](index=19&type=section&id=(15)%20Fair%20Value%20Measurements) - Fair value is measured using a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[64](index=64&type=chunk)[65](index=65&type=chunk) - Substantially all fixed maturity securities are priced by independent pricing services using observable market data and are classified as Level 2[66](index=66&type=chunk) Assets Measured at Fair Value (March 31, 2023, in thousands) | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :------------ | :---------- | :------------ | :-------- | | Fixed maturity securities available for sale | $18,039,347 | $— | $18,039,347 | $— | | Equity securities | $1,279,955 | $1,054,268 | $212,219 | $13,468 | | Arbitrage trading account | $609,001 | $574,096 | $31,251 | $3,654 | | **Total** | **$19,928,303** | **$1,628,364** | **$18,282,817** | **$17,122** | - There were no transfers into or out of Level 3 securities for the three months ended March 31, 2023, or for the year ended December 31, 2022[71](index=71&type=chunk) [(16) Reserves for Loss and Loss Expenses](index=22&type=section&id=(16)%20Reserves%20for%20Loss%20and%20Loss%20Expenses) - Reserves for losses and loss expenses include case reserves and incurred but not reported (IBNR) liabilities, established based on actuarial estimates and qualitative factors[73](index=73&type=chunk)[75](index=75&type=chunk) - Key assumptions include expected loss ratios, loss cost inflation rates, and reported/paid loss emergence patterns, which are reviewed and adjusted quarterly[76](index=76&type=chunk)[79](index=79&type=chunk) Reconciliation of Net Reserves for Losses and Loss Expenses (in thousands) | Metric | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Net reserves at beginning of period | $14,248,879 | $12,848,362 | | Net provision for losses and loss expenses | $1,538,755 | $1,339,252 | | Net payments for claims | $1,216,755 | $1,018,254 | | Foreign currency translation | $1,154 | $9,983 | | **Net reserves at end of period** | **$14,572,033** | **$13,179,343** | | **Gross reserves at end of period** | **$17,431,635** | **$15,722,889** | - Adverse prior year development (net of additional and return premiums) was **$24 million** in Q1 2023, primarily due to property catastrophe losses from 2022 events and adverse development on casualty lines for 2016-2019 accident years, partially offset by favorable development on 2022 casualty lines[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - COVID-19 related claims, net of reinsurance, totaled approximately **$344 million** as of March 31, 2023, with **$43 thousand** recognized in Q1 2023[87](index=87&type=chunk) [(17) Fair Value of Financial Instruments](index=25&type=section&id=(17)%20Fair%20Value%20of%20Financial%20Instruments) Fair Value of Financial Instruments (in thousands) | Instrument | March 31, 2023 Carrying Value | March 31, 2023 Fair Value | December 31, 2022 Carrying Value | December 31, 2022 Fair Value | | :---------------------------------------------------- | :---------------------------- | :------------------------ | :------------------------------- | :------------------------ | | Fixed maturity securities | $18,091,113 | $18,095,068 | $17,587,349 | $17,591,626 | | Equity securities | $1,279,955 | $1,279,955 | $1,185,894 | $1,185,894 | | Arbitrage trading account | $609,001 | $609,001 | $944,230 | $944,230 | | Loans receivable | $194,944 | $187,455 | $193,002 | $187,981 | | Senior notes and other debt | $1,827,981 | $1,501,671 | $1,828,823 | $1,439,188 | | Subordinated debentures | $1,008,551 | $836,796 | $1,008,371 | $805,600 | - Fair values for fixed maturity securities, equity securities, and arbitrage trading accounts are based on valuation techniques described in Note 15[96](index=96&type=chunk) - Fair values of loans receivable, senior notes, and subordinated debentures are estimated using Level 2 inputs, such as current institutional purchaser yield requirements or spreads for similar securities[96](index=96&type=chunk) [(18) Premiums and Reinsurance Related Information](index=25&type=section&id=(18)%20Premiums%20and%20Reinsurance%20Related%20Information) Premiums and Reinsurance Financial Information (in thousands) | Metric | 3 Months Ended March 31, 2023 | 3 Months Ended March 31, 2022 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Total net premiums written | $2,574,824 | $2,413,254 | | Total net premiums earned | $2,491,432 | $2,249,087 | | Ceded losses and loss expenses incurred | $315,476 | $243,294 | | Ceded commissions earned | $118,418 | $117,445 | Allowance for Expected Credit Losses - Premiums and Fees Receivable (in thousands) | Metric | 2023 | 2022 | | :-------------------------------- | :--- | :--- | | Beginning of period | $30,660 | $25,218 | | Change in expected credit losses | $1,693 | $3,018 | | End of period | $32,353 | $28,236 | - The Company reinsures a portion of its exposures to reduce net liability and catastrophe losses, with estimated amounts due from reinsurers reported net of an allowance for expected credit losses[98](index=98&type=chunk) [(19) Restricted Stock Units](index=26&type=section&id=(19)%20Restricted%20Stock%20Units) - Restricted Stock Units (RSUs) generally vest over three to five years and are expensed pro-ratably over the vesting period[99](index=99&type=chunk) RSU Expenses (in thousands) | Period | RSU Expenses | | :----- | :----------- | | Q1 2023 | $12,000 | | Q1 2022 | $11,000 | [(20) Litigation and Contingent Liabilities](index=26&type=section&id=(20)%20Litigation%20and%20Contingent%20Liabilities) - The Company is subject to disputes, litigation, and arbitration in the ordinary course of business, primarily related to insurance and reinsurance claims, which are considered in loss reserves[100](index=100&type=chunk) - While adverse outcomes are possible, the Company expects its ultimate liability from such matters not to be material to its financial condition[100](index=100&type=chunk) [(21) Leases](index=26&type=section&id=(21)%20Leases) - The Company recognizes a right-of-use asset and a lease liability for operating leases with terms over 12 months, reported within other assets and other liabilities, respectively[101](index=101&type=chunk) Lease Information (in thousands, except years and rates) | Metric | March 31, 2023 | March 31, 2022 | | :-------------------------------------------------------------------- | :------------- | :------------- | | Lease cost (Q1) | $10,188 | $10,198 | | Cash paid for lease liabilities (Q1) | $10,563 | $10,993 | | Right-of-use assets obtained in exchange for new lease liabilities (Q1) | $5,313 | $17,269 | | Right-of-use assets (period end) | $164,547 | $180,424 | | Lease liabilities (period end) | $199,225 | $217,086 | | Weighted-average remaining lease term | 7.1 years | 7.3 years | | Weighted-average discount rate | 4.49% | 4.58% | [(22) Business Segments](index=28&type=section&id=(22)%20Business%20Segments) - The Company operates in two reportable business segments: Insurance (commercial insurance globally) and Reinsurance & Monoline Excess (reinsurance and excess risk retention globally)[105](index=105&type=chunk)[110](index=110&type=chunk) Segment Revenues and Pre-Tax Income (Q1 2023, in thousands) | Segment | Earned Premiums | Investment Income | Other Revenues | Total Revenues | Pre-Tax Income (Loss) | | :-------------------------- | :-------------- | :---------------- | :------------- | :------------- | :-------------------- | | Insurance | $2,181,876 | $166,086 | $9,577 | $2,357,539 | $352,199 | | Reinsurance & Monoline Excess | $309,556 | $52,055 | $— | $361,611 | $101,712 | | Corporate, other and eliminations | $— | $5,257 | $147,587 | $152,844 | $(100,850) | | Net investment gains | $— | $— | $23,010 | $23,010 | $23,010 | | **Total** | **$2,491,432** | **$223,398** | **$180,174** | **$2,895,004** | **$376,071** | Net Premiums Earned by Major Line of Business (in thousands) | Line of Business | 2023 | 2022 | | :-------------------------- | :----------- | :----------- | | **Insurance:** | | | | Other liability | $857,149 | $749,391 | | Short-tail lines | $430,503 | $375,212 | | Commercial automobile | $311,422 | $282,234 | | Workers' compensation | $305,561 | $285,423 | | Professional liability | $277,241 | $270,575 | | **Total Insurance** | **$2,181,876** | **$1,962,835** | | **Reinsurance & Monoline Excess:** | | | | Casualty reinsurance | $193,730 | $184,122 | | Monoline excess | $58,644 | $51,896 | | Property reinsurance | $57,182 | $50,234 | | **Total Reinsurance & Monoline Excess** | **$309,556** | **$286,252** | | **Total** | **$2,491,432** | **$2,249,087** | [SAFE HARBOR STATEMENT](index=30&type=section&id=SAFE%20HARBOR%20STATEMENT) This statement indicates that forward-looking statements are based on current plans and expectations, subject to various risks and uncertainties, and the Company does not undertake to update them - Forward-looking statements are based on historical performance and current plans, estimates, and expectations[114](index=114&type=chunk) - These statements are subject to various risks and uncertainties, including the cyclical nature of the property casualty industry, competition, claims development, investment risks, catastrophic losses, economic conditions, and regulatory changes[114](index=114&type=chunk) - The Company does not undertake any obligation to update or revise any forward-looking statement, except as required by applicable laws[115](index=115&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, detailing its business strategy, critical accounting estimates, and a comprehensive analysis of revenues, expenses, and investment performance for Q1 2023 compared to 2022 [Overview](index=31&type=section&id=Overview) W. R. Berkley Corporation is a decentralized insurance holding company operating globally in Insurance and Reinsurance & Monoline Excess segments, with profitability driven by insurance operations and diverse investments - W. R. Berkley Corporation is a decentralized insurance holding company with two segments: Insurance and Reinsurance & Monoline Excess, operating globally[117](index=117&type=chunk) - Profitability is primarily affected by premium rates, claim severity and frequency, and investment income/gains from a diverse portfolio including fixed maturity securities, equity, merger arbitrage, investment funds, loans, and real estate[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - The Company sold a London office building in Q1 2022, realizing a pre-tax gain of **$317 million** (**$251 million** after adjustments)[122](index=122&type=chunk) - The COVID-19 pandemic continues to affect results, leading to reduced loss frequency in some lines, but its ultimate impact remains uncertain[123](index=123&type=chunk) [Critical Accounting Estimates](index=31&type=section&id=Critical%20Accounting%20Estimates) This section details critical accounting estimates, including reserves for losses and loss expenses, assumed reinsurance premiums, and allowance for expected credit losses on investments, highlighting their subjective nature and influencing factors [Reserves for Losses and Loss Expenses](index=31&type=section&id=Reserves%20for%20Losses%20and%20Loss%20Expenses) - Reserves for losses and loss expenses are management's best estimates based on actuarially derived point estimates and qualitative factors, subject to change due to the long period between loss occurrence and payment[125](index=125&type=chunk)[126](index=126&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - Actuarial methods include paid/incurred loss development, Bornhuetter-Ferguson, and frequency/severity methods, supplemented by industry data for 'tail factors'[130](index=130&type=chunk) - Key assumptions are expected loss ratios, loss cost inflation, and reported/paid loss emergence patterns, with greater uncertainty for long-tail lines of business[132](index=132&type=chunk)[135](index=135&type=chunk) Net Reserves for Losses and Loss Expenses by Segment (in thousands) | Segment | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Insurance | $11,524,946 | $11,233,924 | | Reinsurance & Monoline Excess | $3,047,087 | $3,014,955 | | **Total Net Reserves** | **$14,572,033** | **$14,248,879** | - Net prior year development was unfavorable by **$23.9 million** in Q1 2023, compared to favorable **$0.6 million** in Q1 2022, primarily due to property catastrophe losses and adverse casualty development[143](index=143&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The Company discounts its liabilities for certain workers' compensation reserves, with an aggregate net discount of **$411 million** at March 31, 2023, using risk-free discount rates[154](index=154&type=chunk)[155](index=155&type=chunk) [Assumed Reinsurance Premiums](index=36&type=section&id=Assumed%20Reinsurance%20Premiums) - Assumed reinsurance premiums are estimated at contract inception and revised as actual amounts are reported, with related earned premiums, commissions, and incurred losses recorded accordingly[157](index=157&type=chunk) - Estimates are based on reinsurance agreement terms, information from ceding companies, market conditions, economic trends, and the Company's experience[157](index=157&type=chunk) Estimated Assumed Premiums Receivable (in thousands) | Date | Amount | | :------------- | :----- | | March 31, 2023 | $61,000 | | December 31, 2022 | $60,000 | [Allowance for Expected Credit Losses on Investments](index=37&type=section&id=Allowance%20for%20Expected%20Credit%20Losses%20on%20Investments) - For fixed maturity securities in an unrealized loss position, credit losses are recognized in net investment gains, while non-credit factors are recognized in other comprehensive income[158](index=158&type=chunk) - The allowance for expected credit losses uses a third-party model based on underlying collateral performance under various economic and default scenarios, involving subjective judgments[159](index=159&type=chunk) - As of March 31, 2023, the allowance for expected credit losses on fixed maturity securities was **$37 million**, and for loans receivable was **$2 million**[161](index=161&type=chunk)[162](index=162&type=chunk) [Fair Value Measurements](index=37&type=section&id=Fair%20Value%20Measurements) - The Company classifies financial securities into a three-level fair value hierarchy (Level 1: quoted prices, Level 2: observable inputs, Level 3: unobservable inputs) based on market activity and input observability[164](index=164&type=chunk)[165](index=165&type=chunk) - The vast majority of the Company's portfolio is classified as Level 2, with prices provided by independent pricing services or syndicate managers based on observable market data[164](index=164&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) Fixed Maturity Securities Available for Sale by Pricing Source (March 31, 2023, in thousands) | Pricing Source | Carrying Value | Percent of Total | | :-------------------------- | :------------- | :--------------- | | Independent pricing services | $17,555,166 | 97.3% | | Syndicate manager | $67,780 | 0.4% | | Directly by the Company (Observable data) | $416,401 | 2.3% | | **Total** | **$18,039,347** | **100.0%** | [Results of Operations for the Three Months Ended March 31, 2023 and 2022](index=40&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202023%20and%202022) This section analyzes the Company's financial performance for Q1 2023 compared to Q1 2022, highlighting changes in premiums, net income, investment income, and operating expenses, detailing segment-specific results, loss ratios, and the impact of catastrophe losses and prior year reserve development [Business Segment Results](index=40&type=section&id=Business%20Segment%20Results) Business Segment Underwriting Performance (Q1 2023 vs. Q1 2022) | Segment | Gross Premiums Written 2023 | Gross Premiums Written 2022 | Net Premiums Earned 2023 | Net Premiums Earned 2022 | Loss Ratio 2023 | Loss Ratio 2022 | Expense Ratio 2023 | Expense Ratio 2022 | GAAP Combined Ratio 2023 | GAAP Combined Ratio 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------- | :------------------------- | :-------------- | :-------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | Insurance | $2,652,234 | $2,484,799 | $2,181,876 | $1,962,835 | 62.8% | 59.5% | 28.7% | 28.1% | 91.5% | 87.6% | | Reinsurance & Monoline Excess | $397,083 | $375,038 | $309,556 | $286,252 | 54.5% | 59.9% | 29.5% | 29.5% | 84.0% | 89.4% | | **Consolidated** | **$3,049,317** | **$2,859,837** | **$2,491,432** | **$2,249,087** | **61.8%** | **59.5%** | **28.8%** | **28.3%** | **90.6%** | **87.8%** | - The consolidated GAAP combined ratio increased to **90.6%** in Q1 2023 from **87.8%** in Q1 2022, indicating a decrease in underwriting profitability[173](index=173&type=chunk) [Net Income to Common Stockholders](index=40&type=section&id=Net%20Income%20to%20Common%20Stockholders) Net Income to Common Stockholders (in thousands, except per share data) | Metric | 2023 | 2022 | Change | Change (%) | | :-------------------------- | :----------- | :----------- | :----- | :--------- | | Net income to common stockholders | $294,126 | $590,638 | $(296,512) | -50.20% | | Weighted average diluted shares | 277,339 | 279,157 | (1,818) | -0.65% | | Net income per diluted share | $1.06 | $2.12 | $(1.06) | -50.00% | - The **$297 million** decrease in net income was primarily due to a **$270 million** after-tax reduction in net investment gains (from a 2022 real estate sale and reduced equity security gains) and a **$31 million** after-tax reduction in underwriting income[173](index=173&type=chunk) - Partially offsetting factors included a **$39 million** after-tax increase in net investment income due to rising interest rates and a larger portfolio, and a **$2 million** after-tax reduction in interest expense[173](index=173&type=chunk) [Premiums](index=40&type=section&id=Premiums) Premiums Written (in thousands) | Metric | 2023 | 2022 | Change | Change (%) | | :-------------------- | :----------- | :----------- | :----- | :--------- | | Gross premiums written | $3,049,317 | $2,859,837 | $189,480 | 6.62% | | Net premiums written | $2,574,824 | $2,413,254 | $161,570 | 6.69% | | Net premiums earned | $2,491,432 | $2,249,087 | $242,345 | 10.78% | - Gross premiums written increased by **7%** in 2023, driven by increases in both the Insurance segment (**$167 million**) and Reinsurance & Monoline Excess segment (**$22 million**)[174](index=174&type=chunk) - Average renewal premium rates for insurance and facultative reinsurance increased by **7.2%** (**7.2%** adjusted for exposures, **8.3%** excluding workers' compensation) in 2023[175](index=175&type=chunk) [Net Investment Income](index=41&type=section&id=Net%20Investment%20Income) Net Investment Income and Yields (in thousands) | Source | 2023 Amount | 2022 Amount | 2023 Yield | 2022 Yield | | :---------------------------------------------------- | :------------ | :------------ | :--------- | :--------- | | Fixed maturity securities, cash & cash equivalents, loans | $195,642 | $101,284 | 3.8% | 2.2% | | Arbitrage trading account | $18,256 | $9,187 | 9.4% | 3.1% | | Equity securities | $13,746 | $10,856 | 4.8% | 4.7% | | Investment funds | $2,180 | $52,012 | 0.5% | 13.7% | | Real estate | $(3,711) | $2,146 | (1.1%) | 0.5% | | **Total Net Investment Income** | **$223,398** | **$173,512** | **3.5%** | **2.9%** | - Net investment income increased by **29%** to **$223 million** in 2023, primarily due to a **$94 million** increase from fixed maturity securities driven by rising interest rates and a larger portfolio[177](index=177&type=chunk) - This increase was partially offset by a **$50 million** decrease in income from investment funds[177](index=177&type=chunk) [Insurance Service Fees](index=41&type=section&id=Insurance%20Service%20Fees) Insurance Service Fees (in thousands) | Period | Amount | | :----- | :----- | | 2023 | $32,857 | | 2022 | $27,951 | - Insurance service fees increased to **$33 million** in 2023 from **$28 million** in 2022, mainly due to organic growth in the insurance distribution, third-party administrator, and workers' compensation assigned risk plan servicing businesses[178](index=178&type=chunk) [Net Realized and Unrealized Gains on Investments](index=41&type=section&id=Net%20Realized%20and%20Unrealized%20Gains%20on%20Investments) Net Realized and Unrealized Gains on Investments (in thousands) | Period | Amount | | :----- | :----- | | 2023 | $22,611 | | 2022 | $369,882 | - Net realized and unrealized gains on investments decreased significantly to **$23 million** in 2023 from **$370 million** in 2022[179](index=179&type=chunk) - The 2022 gains included a **$251 million** net gain from the sale of a London real estate investment and a **$93 million** increase in unrealized gains on equity securities[180](index=180&type=chunk) [Change in Allowance for Expected Credit Losses on Investments](index=42&type=section&id=Change%20in%20Allowance%20for%20Expected%20Credit%20Losses%20on%20Investments) Change in Allowance for Expected Credit Losses on Investments (in thousands) | Period | Pre-tax Change | | :----- | :------------- | | 2023 | $(399) | | 2022 | $3,617 | - The pre-tax change in allowance for expected credit losses on investments decreased by **$399 thousand** in 2023, primarily due to a change in estimate[181](index=181&type=chunk) [Revenues from Non-Insurance Businesses](index=42&type=section&id=Revenues%20from%20Non-Insurance%20Businesses) Revenues from Non-Insurance Businesses (in thousands) | Period | Amount | | :----- | :----- | | 2023 | $124,200 | | 2022 | $97,776 | - Revenues from non-insurance businesses increased to **$124 million** in 2023 from **$98 million** in 2022, mainly due to growth in aviation-related and commercial/residential textile businesses acquired in 2022[182](index=182&type=chunk) [Losses and Loss Expenses](index=42&type=section&id=Losses%20and%20Loss%20Expenses) Losses and Loss Expenses (in thousands) | Metric | 2023 | 2022 | | :---------------------------------------------------- | :----------- | :----------- | | Losses and loss expenses | $1,538,755 | $1,339,252 | | Consolidated loss ratio | 61.8% | 59.5% | | Catastrophe losses (net of reinsurance recoveries) | $48,000 | $29,000 | | Adverse prior year reserve development (net of premium offsets) | $24,000 | $(1,000) | | Loss ratio excluding catastrophe losses and prior year reserve development | 58.9% | 58.3% | - The consolidated loss ratio increased to **61.8%** in 2023 from **59.5%** in 2022, driven by higher catastrophe losses and adverse prior year reserve development[183](index=183&type=chunk) - Insurance segment loss ratio increased to **62.8%** (from **59.5%**), while Reinsurance & Monoline Excess segment loss ratio decreased to **54.5%** (from **59.9%**)[185](index=185&type=chunk) [Other Operating Costs and Expenses](index=43&type=section&id=Other%20Operating%20Costs%20and%20Expenses) Other Operating Costs and Expenses (in thousands) | Category | 2023 | 2022 | | :-------------------------------- | :----------- | :----------- | | Policy acquisition and insurance operating expenses | $718,276 | $635,453 | | Insurance service expenses | $25,180 | $22,466 | | Net foreign currency losses (gains) | $9,495 | $(4,168) | | Other costs and expenses | $72,624 | $60,148 | | **Total** | **$825,575** | **$713,899** | - The expense ratio increased by **0.5 points** to **28.8%** in 2023, mainly due to lower ceding commissions, increased compensation costs, and new start-up operating unit expenses[184](index=184&type=chunk) - Net foreign currency losses were **$9 million** in 2023, compared to gains of **$4 million** in 2022, primarily due to the strengthening of the U.K. sterling and Euro against the U.S. dollar[186](index=186&type=chunk) [Expenses from Non-Insurance Businesses](index=43&type=section&id=Expenses%20from%20Non-Insurance%20Businesses) Expenses from Non-Insurance Businesses (in thousands) | Period | Amount | | :----- | :----- | | 2023 | $122,767 | | 2022 | $94,855 | - Expenses from non-insurance businesses increased to **$123 million** in 2023 from **$95 million** in 2022, mainly due to the acquired aviation-related and residential/commercial textile businesses[188](index=188&type=chunk) [Interest Expense](index=43&type=section&id=Interest%20Expense) Interest Expense (in thousands) | Period | Amount | | :----- | :----- | | 2023 | $31,836 | | 2022 | $34,970 | - Interest expense decreased to **$32 million** in 2023 from **$35 million** in 2022, following the repayment of **$77 million** of 8.7% senior notes and **$350 million** of 4.625% senior notes in Q1 2022[189](index=189&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) Effective Income Tax Rate | Period | Rate | | :----- | :--- | | Q1 2023 | 21.4% | | Q1 2022 | 19.0% | - The higher effective income tax rate in Q1 2023 was primarily due to a net reduction in the Company's valuation allowance against foreign tax credits and foreign net operating losses[190](index=190&type=chunk) - U.S. deferred income taxes have not been provided on approximately **$173 million** of undistributed earnings from non-U.S. subsidiaries, as these earnings are intended for permanent reinvestment[191](index=191&type=chunk) [Investments](index=44&type=section&id=Investments) The Company's investment strategy focuses on maintaining liquidity and matching asset duration with liabilities, with a portfolio including fixed maturity securities, equity securities, investment funds, real estate, arbitrage trading accounts, and loans receivable, while managing market risks - The Company's investment strategy aims to maintain adequate liquidity and match the average duration of its investment portfolio (**2.4 years** at March 31, 2023) with its liabilities[193](index=193&type=chunk)[203](index=203&type=chunk) Total Investments by Asset Class (March 31, 2023, in thousands) | Asset Class | Carrying Value | Percent of Total | | :------------------------------------ | :------------- | :--------------- | | Fixed maturity securities | $18,091,113 | 72.4% | | Equity securities | $1,279,955 | 5.1% | | Cash and cash equivalents | $1,843,534 | 7.4% | | Investment funds | $1,601,567 | 6.5% | | Real estate | $1,338,504 | 5.4% | | Arbitrage trading account | $609,001 | 2.4% | | Loans receivable | $194,944 | 0.8% | | **Total Investments** | **$24,958,618** | **100.0%** | - The Company manages interest rate risk through portfolio duration and currency risk by matching foreign currency assets and liabilities[203](index=203&type=chunk)[204](index=204&type=chunk) [Fixed Maturity Securities](index=45&type=section&id=Fixed%20Maturity%20Securities) - The Company's policy is generally to hold fixed maturity securities to maturity, but the available-for-sale portfolio is actively managed to match assets and liabilities and adjust for market conditions and tax considerations[196](index=196&type=chunk) - Investment decisions to hold or sell are based on underlying fundamentals, expectations for interest rates, credit spreads, and currency values to maximize total return[197](index=197&type=chunk) [Equity Securities](index=45&type=section&id=Equity%20Securities) - Equity securities primarily consist of common and preferred stocks in companies across various sectors, with a focus on financial institutions and energy, chosen for potential growth opportunities[198](index=198&type=chunk) [Investment Funds](index=45&type=section&id=Investment%20Funds) - As of March 31, 2023, investment funds had a carrying value of **$1.6 billion**, including significant holdings in financial services, other funds (deferred compensation trust), transportation, real estate, infrastructure, and energy funds[199](index=199&type=chunk) - Investment fund earnings or losses are generally reported on a one-quarter lag[199](index=199&type=chunk) [Real Estate](index=45&type=section&id=Real%20Estate) - Real estate investments include directly owned properties held for investment, such as a long-term ground lease in Washington D.C., an office complex in New York City, and a mixed-use project in Washington D.C. (partially under development)[200](index=200&type=chunk) - The Company plans to fund further development costs for the mixed-use project using a combination of its own funds and external financing[200](index=200&type=chunk) [Arbitrage Trading Account](index=45&type=section&id=Arbitrage%20Trading%20Account) - The arbitrage trading account consists of direct investments in merger arbitrage securities, focusing on publicly held companies subject to announced tender offers and mergers[201](index=201&type=chunk) [Loans Receivable](index=45&type=section&id=Loans%20Receivable) - Loans receivable, carried at amortized cost net of a **$2 million** allowance for expected credit losses, totaled **$195 million** (fair value **$187 million**) at March 31, 2023[202](index=202&type=chunk) - This includes **$176 million** in real estate loans (secured by commercial and residential properties in London and New York) and **$19 million** in commercial loans (secured by business assets)[202](index=202&type=chunk) [Market Risk](index=45&type=section&id=Market%20Risk) - The fair value of investments is exposed to fluctuations in credit quality and interest rates, managed through models and stress tests[203](index=203&type=chunk) - Currency risk on international investments is managed by matching foreign currency assets and liabilities where appropriate[204](index=204&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash flow, debt structure, equity, and total capitalization, highlighting the decrease in operating cash flow, debt repayments, credit facility availability, and the impact of common stock repurchases and dividends - Cash flow from operating activities decreased to **$445 million** in Q1 2023 from **$478 million** in Q1 2022, primarily due to increased loss and loss expense payments[206](index=206&type=chunk) - The Company maintains a highly liquid investment portfolio (**79%** in cash, cash equivalents, and marketable fixed maturity securities) to meet payment obligations[207](index=207&type=chunk) - Total debt outstanding was **$2.837 billion** (carrying value) at March 31, 2023, with significant repayments made in Q1 2022[208](index=208&type=chunk) - The Company has a **$300 million** senior unsecured revolving credit facility (expandable to **$500 million**) with no outstanding borrowings as of March 31, 2023[209](index=209&type=chunk) - Total common stockholders' equity was **$6.9 billion** at March 31, 2023, with **2,038,391 shares** repurchased for **$135.2 million** during Q1 2023[210](index=210&type=chunk) - The Company declared a regular quarterly cash dividend of **$0.10 per share** and a special cash dividend of **$0.50 per share** in Q1 2023[210](index=210&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section refers to the market risk disclosures provided within the 'Investments - Market Risk' subsection of the Management's Discussion and Analysis of Financial Condition and Results of Operations - Market risk disclosures are incorporated by reference from the 'Investments - Market Risk' section within the MD&A[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the Company's disclosure controls and procedures, concluding they were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2023[214](index=214&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[215](index=215&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 20 of the interim consolidated financial statements for information regarding legal proceedings - Information on legal proceedings is provided in Note 20 to the interim consolidated financial statements[216](index=216&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes have occurred to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022[217](index=217&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the Company's common stock repurchases during the three months ended March 31, 2023, and the remaining authorized shares for purchase Common Stock Repurchases (Q1 2023) | Month | Total Shares Purchased | Average Price Paid Per Share | | :------------ | :--------------------- | :--------------------------- | | January 2023 | 729,600 | $69.09 | | February 2023 | 644,965 | $67.06 | | March 2023 | 663,826 | $62.50 | - The Company repurchased a total of **2,038,391 shares** of common stock during the three months ended March 31, 2023[218](index=218&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the 2023 Performance Unit Award Agreement, CEO and CFO certifications under Rule 13a-14(a)/15d-14(a), and certifications under 18 U.S.C. Section 1350 - Exhibits include the 2023 Performance Unit Award Agreement, CEO and CFO certifications (Rule 13a-14(a)/15d-14(a)), and certifications under 18 U.S.C. Section 1350[219](index=219&type=chunk) [SIGNATURES](index=49&type=section&id=SIGNATURES) This section contains the signatures of W. Robert Berkley, Jr., President and Chief Executive Officer, and Richard M. Baio, Executive Vice President and Chief Financial Officer, certifying the filing of the report on May 4, 2023 - The report is signed by W. Robert Berkley, Jr., President and Chief Executive Officer, and Richard M. Baio, Executive Vice President and Chief Financial Officer, on May 4, 2023[222](index=222&type=chunk)

Financial Data and Key Metrics Changes - The company reported an annualized return on equity of 17.4% for Q1 2023, despite significant catastrophe losses [7] - Stockholders' equity grew to a record level of over $6.9 billion, with book value per share increasing by 3.7% in the quarter [8] - Net investment income increased by almost 29% to $223 million, driven by a higher new money rate on fixed maturity securities [9] - The current accident year combined ratio excluding catastrophes was a strong 87.7%, while the calendar year loss ratio for Q1 2023 was 61.8% [7][11] Business Line Data and Key Metrics Changes - Net premiums written grew by almost 7% to approximately $2.6 billion, with the insurance segment growing 6.6% to $2.2 billion [13] - Underwriting income was $234 million, which included current accident year catastrophe losses of $48 million [11] - The Reinsurance & Monoline Excess segment increased 7.1% to $363 million, achieving record levels for the segment [13] Market Data and Key Metrics Changes - The company noted that the property market is in early stages of meaningful firming, with significant traction in rate observed in April [15] - The D&O marketplace continues to face challenges, particularly in large account D&O, which remains in a state of decline [16] - The casualty market shows meaningful opportunities, especially in E&S lines, although social inflation remains a concern [17] Company Strategy and Development Direction - The company is focused on building book value through a risk-adjusted return lens, emphasizing bottom-line growth [19] - The management is taking a disciplined approach to underwriting, avoiding exposure to inadequate pricing in the D&O market [41] - The company is looking to opportunistically expand its investment portfolio, particularly in commercial real estate, while being cautious of market challenges [65] Management's Comments on Operating Environment and Future Outlook - Management expressed guarded optimism about growth picking up in the second half of the year, with expectations of returning to double-digit growth [40][42] - The company is addressing non-CAT property losses through improved selection and rate adjustments [86] - Concerns about social inflation and its impact on claims remain a focus for management, with a commitment to maintaining appropriate premium levels [78] Other Important Information - The company returned almost $300 million of capital to shareholders through dividends and share repurchases, resulting in a growth in book value per share before dividends and repurchases of 7.2% [8] - The investment portfolio's short duration of 2.4 years and high credit quality helped mitigate unrealized investment losses [8] Q&A Session Summary Question: What drove the premium growth changes, particularly in workers' compensation? - Management noted that the growth in workers' compensation was primarily driven by payroll increases and some traction from new initiatives in California [29] Question: Can you provide additional color on Berkley's commercial real estate portfolio? - Management indicated that much of the commercial real estate is unleveraged, with a focus on occupancy rates and tenant credit quality [31] Question: What drove the accident year ex-CAT loss ratio deterioration? - The primary driver was non-CAT property-related losses, which management is actively addressing [38] Question: Do you expect to see double-digit growth in the back half of the year? - Management expressed a desire to return to double-digit growth, contingent on market conditions stabilizing [40] Question: How are you addressing non-CAT property losses? - Management emphasized that both rate adjustments and improved selection are key strategies to address these losses [86]

[Part I](index=6&type=section&id=PART%20I) [Item 1. Business](index=6&type=section&id=ITEM%201.%20BUSINESS) The company is a major commercial lines insurance holding company operating globally through Insurance and Reinsurance & Monoline Excess segments via a decentralized model - The company operates through a decentralized model with 59 businesses, 52 of which were developed internally, focusing on specialized niche markets[18](index=18&type=chunk)[19](index=19&type=chunk) - The company's insurance subsidiaries hold strong financial strength ratings: **A+ (Superior) from A.M. Best**, **A+ from S&P**, **A1 from Moody's**, and **AA- from Fitch**[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) Net Premiums Written by Segment (2020-2022) | Segment | 2022 (In thousands) | 2021 (In thousands) | 2020 (In thousands) | | :--- | :--- | :--- | :--- | | **Insurance** | $8,784,146 | $7,743,814 | $6,347,101 | | **Reinsurance & Monoline Excess** | $1,219,924 | $1,119,053 | $915,336 | | **Total** | **$10,004,070** | **$8,862,867** | **$7,262,437** | [Insurance Segment](index=7&type=section&id=Insurance%20Segment) The Insurance segment, comprising 87.8% of 2022 net premiums written, offers diverse commercial insurance with a combined ratio of 89.2% in 2022 - The Insurance segment is diversified across several specialty areas, including Excess & Surplus Lines for complex risks, tailored coverages for specific industries, specialized product lines like workers' compensation, and regionally focused standard commercial products[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) Insurance Segment Gross Premiums Written by Line (2020-2022) | Line of Business | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Other liability | 37.0% | 35.6% | 36.0% | | Short-tail lines | 23.2% | 22.2% | 23.3% | | Professional liability | 15.5% | 17.3% | 14.6% | | Workers' compensation | 11.7% | 12.4% | 14.3% | | Commercial auto | 12.6% | 12.5% | 11.8% | Insurance Segment Underwriting Ratios (2020-2022) | Ratio | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Loss ratio | 61.3% | 61.1% | 64.9% | | Expense ratio | 27.9% | 28.3% | 30.3% | | **Combined ratio** | **89.2%** | **89.4%** | **95.2%** | [Reinsurance & Monoline Excess Segment](index=13&type=section&id=Reinsurance%20%26%20Monoline%20Excess%20Segment) This segment provides treaty and facultative reinsurance, with casualty lines representing 61.7% of gross premiums and an improved combined ratio of 89.7% in 2022 - The segment offers reinsurance on both a portfolio (treaty) and individual risk (facultative) basis, with its monoline excess operations retaining risk solely on an excess basis[77](index=77&type=chunk) Reinsurance & Monoline Excess Gross Premiums Written by Line (2020-2022) | Line of Business | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Casualty | 61.7% | 61.8% | 58.1% | | Property | 19.9% | 19.2% | 22.1% | | Monoline Excess | 18.4% | 19.0% | 19.8% | Reinsurance & Monoline Excess Underwriting Ratios (2020-2022) | Ratio | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Loss ratio | 61.3% | 61.0% | 61.3% | | Expense ratio | 28.4% | 29.7% | 31.8% | | **Combined ratio** | **89.7%** | **90.7%** | **93.1%** | [Loss and Loss Expense Reserves](index=16&type=section&id=Loss%20and%20Loss%20Expense%20Reserves) Gross reserves for losses and loss expenses increased to $17.0 billion in 2022, reflecting a complex and subjective estimation process - Establishing loss reserves is a complex process involving estimates for known claims (case reserves) and incurred but not reported (IBNR) losses, considering factors like inflation and legal trends[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company discounts certain workers' compensation reserves, primarily excess workers' compensation, using risk-free rates based on the U.S. Treasury yield curve, with an **aggregate net discount of $416 million** at the end of 2022[95](index=95&type=chunk)[96](index=96&type=chunk) Reconciliation of Loss and Loss Expense Reserves (Net) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | **Net reserves at beginning of year** | **$12,848,362** | **$11,620,393** | **$10,697,998** | | Net provision for losses | $5,861,750 | $4,953,960 | $4,468,706 | | Net payments for claims | ($4,347,910) | ($3,665,694) | ($3,598,649) | | **Net reserves at end of year** | **$14,248,879** | **$12,848,362** | **$11,620,393** | | **Gross reserves at end of year** | **$17,011,223** | **$15,390,888** | **$13,784,430** | [Regulation](index=18&type=section&id=Regulation) The company is subject to extensive state, federal, and international regulations governing solvency, investments, market conduct, and data privacy - U.S. insurance subsidiaries are principally regulated by their domiciliary state insurance departments, which oversee solvency, investments, rates, and policy forms[104](index=104&type=chunk)[105](index=105&type=chunk) - The company must comply with NAIC's Risk-Based Capital (RBC) requirements and annually submit an Own Risk and Solvency Assessment (ORSA) report[112](index=112&type=chunk)[116](index=116&type=chunk) - International operations are subject to complex regulations, including the U.K.'s prudential regime (similar to Solvency II) and the EU's GDPR for data protection[138](index=138&type=chunk)[141](index=141&type=chunk)[146](index=146&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from industry cycles, competition, reserve adequacy, catastrophes, regulations, and investment market fluctuations - Industry risks include cyclical pricing, significant competition, and the uncertainty of estimating loss reserves, which could prove inadequate[167](index=167&type=chunk)[168](index=168&type=chunk)[173](index=173&type=chunk) - The company is exposed to significant losses from natural and man-made catastrophes, with **net catastrophe losses of $212 million in 2022**[181](index=181&type=chunk) - The ongoing effects of the COVID-19 pandemic, potential for adverse legislative action, and uncertainty around ultimate claim losses remain a significant risk[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - Investment portfolio risks include the impact of interest rate changes on the value of fixed maturity securities and volatility in equity, real estate, and other alternative investments[228](index=228&type=chunk)[234](index=234&type=chunk) [Item 2. Properties](index=37&type=section&id=ITEM%202.%20PROPERTIES) The company owned or leased approximately 4.3 million square feet of office space at year-end 2022, with rental expenses of $43.4 million - The company's total office space is **4,295,165 square feet**, of which 1,048,136 sq. ft. is owned and 3,247,029 sq. ft. is leased[244](index=244&type=chunk) - Rental expense was **$43.4 million in 2022**, a slight decrease from $44.1 million in 2021[245](index=245&type=chunk) [Item 3. Legal Proceedings](index=37&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course litigation, with estimated costs reflected in loss reserves and not expected to materially impact financial condition - The company is subject to legal proceedings arising in the ordinary course of business, and the estimated costs are included in its loss reserves[246](index=246&type=chunk) [Part II](index=37&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock significantly outperformed market indices, and it executed share repurchases and paid both regular and special dividends in 2022 - The Board declared regular quarterly dividends and a **special dividend of $0.50 per share** in the second quarter of 2022[249](index=249&type=chunk) Comparison of 5-Year Cumulative Total Return (Assumes $100 Investment) | Index | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **W. R. Berkley Corporation** | $100.00 | $104.61 | $150.46 | $145.72 | $185.56 | **$240.56** | | **S&P 500 Index** | $100.00 | $95.61 | $125.70 | $148.81 | $191.48 | **$156.69** | | **S&P 500 P&C Insurance Index** | $100.00 | $95.31 | $119.97 | $127.56 | $149.90 | **$178.27** | Share Repurchases in Q4 2022 | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 2022 | 325,596 | $69.22 | | November 2022 | 938,494 | $69.29 | | December 2022 | — | — | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Net income grew to $1.38 billion in 2022, driven by a 13% increase in net premiums written and a significant gain from a real estate sale - The company's profitability is driven by its insurance operations and investments, with a decentralized structure allowing it to capitalize on niche opportunities[257](index=257&type=chunk)[258](index=258&type=chunk) - A **3-for-2 common stock split** was completed on March 23, 2022, and all per-share amounts in the report reflect this split[262](index=262&type=chunk) - The company sold a London office building in March 2022, realizing a **pre-tax gain of $317 million** ($251 million after adjustments)[263](index=263&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) Reserves for losses and loss expenses are the most critical accounting estimate, with net reserves totaling $14.2 billion at year-end 2022 - Establishing loss reserves is inherently uncertain and involves management's best estimates based on actuarial projections and qualitative factors like inflation and loss emergence patterns[269](index=269&type=chunk)[272](index=272&type=chunk) - As of December 31, 2022, the company had recognized approximately **$341 million in losses for COVID-19-related claims**, net of reinsurance[285](index=285&type=chunk) Net Prior Year Development (2020-2022) | (In thousands) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Increase in prior year loss reserves | ($54,511) | ($863) | ($627) | | Increase in prior year earned premiums | $18,106 | $7,510 | $16,807 | | **Net (unfavorable) favorable prior year development** | **($36,405)** | **$6,647** | **$16,180** | [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Net income rose to $1.38 billion in 2022, supported by strong premium growth, increased investment income, and a stable combined ratio of 89.3% - Net investment income **increased 16% to $779 million** in 2022, primarily due to rising interest rates and a larger fixed maturity portfolio[324](index=324&type=chunk) Consolidated Underwriting Results (2021-2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Gross premiums written | $11,909,052 | $10,700,134 | | Net premiums written | $10,004,070 | $8,862,867 | | Net premiums earned | $9,561,429 | $8,106,031 | | Loss ratio | 61.3% | 61.1% | | Expense ratio | 28.0% | 28.5% | | **GAAP combined ratio** | **89.3%** | **89.6%** | Net Income to Common Stockholders (2021-2022) | (In thousands, except per share data) | 2022 | 2021 | | :--- | :--- | :--- | | Net income to common stockholders | $1,381,062 | $1,022,490 | | Net income per diluted share | $4.94 | $3.66 | [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with operating cash flow of $2.6 billion and total capitalization of $9.6 billion at year-end 2022 - Cash flow from operating activities **increased to $2,569 million in 2022** from $2,184 million in 2021, driven by higher premium receipts[356](index=356&type=chunk) - Total capitalization was **$9.6 billion** at December 31, 2022, with debt representing 30% of the total[361](index=361&type=chunk) - In 2022, the company repurchased **1.4 million shares for $94 million** and paid **$235 million in common stock dividends**[360](index=360&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risk is interest rate fluctuation, managed by maintaining a short portfolio duration of 2.4 years - The company manages interest rate risk by matching the duration of its investment portfolio to its liabilities; the **effective duration of the fixed maturity portfolio was 2.4 years** at the end of 2022[375](index=375&type=chunk) Interest Rate Sensitivity of Fixed Maturity Portfolio (as of Dec 31, 2022) | Change in Interest Rates | Estimated Change in Fair Value (In thousands) | | :--- | :--- | | 300 basis point rise | ($1,297,772) | | 100 basis point rise | ($450,899) | | **Base scenario** | **$0** | | 100 basis point decline | $463,339 | | 300 basis point decline | $1,403,291 | [Item 8. Financial Statements and Supplementary Data](index=63&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section includes audited financial statements for 2020-2022 and an unqualified audit opinion from KPMG LLP, which identified loss reserves as a critical audit matter - The independent auditor, KPMG LLP, issued an unqualified opinion, stating the financial statements are presented fairly in all material respects[380](index=380&type=chunk) - The auditor identified the **estimation of reserves for losses and loss expenses as a critical audit matter** due to the significant measurement uncertainty and complex judgments involved[385](index=385&type=chunk)[386](index=386&type=chunk) [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, including the valuation of the $22.9 billion investment portfolio and the composition of the $17.0 billion in gross loss reserves [Item 9A. Controls and Procedures](index=115&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2022 - Management concluded that both **disclosure controls and internal controls over financial reporting were effective** as of December 31, 2022[584](index=584&type=chunk)[589](index=589&type=chunk) - The independent registered public accounting firm issued an **unqualified opinion on the effectiveness of the company's internal control** over financial reporting[592](index=592&type=chunk) [Part III](index=118&type=section&id=PART%20III) [Items 10-14](index=118&type=section&id=ITEMS%2010,%2011,%2012,%2013,%20and%2014) Required information on governance, compensation, and security ownership is incorporated by reference from the company's forthcoming proxy statement - Details regarding directors, executive compensation, security ownership, related transactions, and accountant fees are incorporated by reference from the forthcoming proxy statement[603](index=603&type=chunk)[604](index=604&type=chunk)[605](index=605&type=chunk)[609](index=609&type=chunk)[610](index=610&type=chunk) [Part IV](index=119&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=119&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statement schedules and exhibits, such as material contracts and governance documents, filed with the Form 10-K report - This section provides an index to supplementary financial schedules and a list of all exhibits filed with the report, including governance documents and material contracts[611](index=611&type=chunk)[613](index=613&type=chunk)

W. R. Berkley Corporation (NYSE:WRB) Q4 2022 Earnings Conference Call January 26, 2023 5:00 PM ET Company Participants Robert Berkley - President & CEO Richard Baio - EVP & CFO Conference Call Participants Elyse Greenspan - Wells Fargo David Motemaden - Evercore ISI Mark Hughes - Truist Securities Alex Scott - Goldman Sachs Ryan Tunis - Autonomous Research Josh Shanker - Bank of America Yaron Kinar - Jefferies Meyer Shields - KBW Mike Zaremski - BMO Operator Good day, and welcome to the W. R. Berkley Corpor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Transition Period from to . Commission File Number 1-15202 W. R. BERKLEY CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-1867895 (State or other ...

W. R. Berkley Corporation (NYSE:WRB) Q3 2022 Earnings Conference Call October 24, 2022 5:00 PM ET Company Participants Robert Berkley - President and Chief Executive Officer Rich Baio - Executive Vice President and Chief Financial Officer Conference Call Participants Elyse Greenspan - Wells Fargo Mike Zaremski - BMO Michael Phillips - Morgan Stanley Yaron Kinar - Jefferies Josh Shanker - Bank of America Ryan Tunis - Autonomous Research Brian Meredith - UBS Mark Dwelle - RBC Capital Markets Mark Hughes - Tru ...

Part I — FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for the period ended June 30, 2022, show asset growth and increased net income [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Total assets grew to $32.7 billion, while net income for the six-month period increased significantly to $770 million Consolidated Balance Sheet Highlights (Unaudited) | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Investments | 22,268,690 | 22,171,814 | | Total Assets | 32,692,447 | 32,047,876 | | Reserves for losses and loss expenses | 16,145,821 | 15,390,888 | | Total Liabilities | 26,155,574 | 25,380,146 | | Total Stockholders' Equity | 6,514,485 | 6,653,011 | Consolidated Statement of Income Highlights (Unaudited) | Metric | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | | :--- | :--- | :--- | | Net Premiums Written | 4,998,889 | 4,262,219 | | Net Premiums Earned | 4,606,244 | 3,821,580 | | Total Revenues | 5,428,297 | 4,452,955 | | Income Before Income Taxes | 954,995 | 596,008 | | Net Income to Common Stockholders | 769,960 | 466,763 | Net Income Per Share (Unaudited) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Basic EPS | $2.78 | $1.68 | | Diluted EPS | $2.76 | $1.66 | - Net cash from operating activities increased to **$1.01 billion** for the first six months of 2022, compared to $695.8 million in the same period of 2021[23](index=23&type=chunk) [Note 7: Investments in Fixed Maturity Securities](index=14&type=section&id=Note%207%3A%20Investments%20in%20Fixed%20Maturity%20Securities) The fixed maturity securities portfolio, valued at $16.85 billion, experienced a significant increase in unrealized losses due to rising interest rates Fixed Maturity Securities by Type (June 30, 2022) | Security Type | Carrying Value ($ thousands) | | :--- | :--- | | Corporate | 5,689,125 | | Asset-backed | 4,292,488 | | State and municipal | 3,017,263 | | Foreign government | 1,604,111 | | Mortgage-backed | 1,477,099 | | U.S. government and government agency | 720,914 | | **Total Available for Sale** | **16,801,000** | - Gross unrealized losses on fixed maturity securities stood at **$840.2 million** as of June 30, 2022, a substantial increase from $124.2 million at December 31, 2021, primarily due to rising interest rates[38](index=38&type=chunk)[39](index=39&type=chunk) - The allowance for expected credit losses on available-for-sale securities increased to **$33.3 million** as of June 30, 2022, from $22.2 million at the beginning of the period, mainly due to an increase in unrealized losses on foreign government securities[41](index=41&type=chunk) [Note 14: Net Investment (Losses) Gains](index=21&type=section&id=Note%2014%3A%20Net%20Investment%20(Losses)%20Gains) Net investment gains for the six-month period reached $194.7 million, driven by a real estate sale, despite a net investment loss in the second quarter - A gain of **$251 million** was realized on the sale of a real estate investment in London during March 2022, which was the primary driver of net investment gains for the first half of the year[62](index=62&type=chunk) Net Investment (Losses) Gains Breakdown (in thousands) | Component | For the Six Months Ended June 30, 2022 | For the Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net realized and unrealized gains on investments | $205,947 | $72,219 | | Change in allowance for expected credit losses | ($11,237) | ($13,316) | | **Total Net Investment Gains** | **$194,710** | **$58,903** | - For the three months ended June 30, 2022, the company experienced a net investment loss of **$171.6 million**, driven by a $131.5 million change in unrealized losses on equity securities[62](index=62&type=chunk) [Note 17: Reserves for Loss and Loss Expenses](index=26&type=section&id=Note%2017%3A%20Reserves%20for%20Loss%20and%20Loss%20Expenses) Gross loss reserves increased to $16.1 billion, with cumulative net COVID-19 related losses reaching approximately $303 million since the pandemic's start Reconciliation of Net Loss Reserves (Six Months Ended June 30, in thousands) | Description | 2022 | 2021 | | :--- | :--- | :--- | | Net reserves at beginning of period | $12,848,362 | $11,620,393 | | Net provision for losses (current year) | 2,748,725 | 2,308,309 | | Increase in estimates for prior years | 9,765 | 1,530 | | Net payments for claims | (2,006,972) | (1,764,819) | | **Net reserves at end of period** | **$13,521,933** | **$12,164,659** | - As of June 30, 2022, the company had recognized cumulative losses for COVID-19-related claims of approximately **$303 million**, net of reinsurance[88](index=88&type=chunk)[150](index=150&type=chunk) - Favorable prior year development for the six months ended June 30, 2022 was **$3 million** (net of premiums), primarily from the Insurance segment's 2020 and 2021 accident years, partially offset by adverse development in the 2015-2019 accident years attributed to social inflation[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 23: Business Segments](index=34&type=section&id=Note%2023%3A%20Business%20Segments) The Insurance and Reinsurance segments both demonstrated strong premium growth, contributing $730 million and $150 million in pre-tax income respectively Segment Performance (Six Months Ended June 30, 2022, in thousands) | Segment | Net Premiums Earned | Pre-Tax Income (Loss) (excl. net investment gains) | | :--- | :--- | :--- | | Insurance | $4,032,991 | $729,873 | | Reinsurance & Monoline Excess | $573,253 | $149,805 | | Corporate, other and eliminations | $0 | ($119,393) | Net Premiums Earned by Line of Business (Six Months Ended June 30, 2022, in thousands) | Line of Business | Net Premiums Earned | | :--- | :--- | | **Insurance Segment** | | | Other liability | $1,538,754 | | Short-tail lines | $776,980 | | Workers' compensation | $585,067 | | Commercial automobile | $583,975 | | Professional liability | $548,215 | | **Reinsurance & Monoline Excess Segment** | | | Casualty reinsurance | $374,781 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong premium growth, an improved combined ratio, and the significant impact of a real estate sale on net income [Critical Accounting Estimates](index=37&type=section&id=Critical%20Accounting%20Estimates) Key estimates include loss reserves and investment fair values, which involve significant judgment, particularly for long-tail lines and illiquid securities - Reserves for losses and loss expenses are management's best estimate based on actuarial point estimates and qualitative factors[130](index=130&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - Approximately **21% of net loss reserves** relate to the Reinsurance & Monoline Excess segment, which has a higher degree of uncertainty due to long settlement tails and reliance on information from ceding companies[141](index=141&type=chunk) - The fair value of the vast majority of the Company's investment portfolio is based on **observable data (Level 2 inputs)**, utilizing pricing models, benchmark curves, and broker quotes, as many fixed maturity securities do not trade daily[169](index=169&type=chunk)[171](index=171&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Net income for the six-month period rose to $770 million, driven by higher underwriting income and investment gains, with the GAAP combined ratio improving to 88.2% Consolidated GAAP Combined Ratio (Six Months Ended June 30) | Component | 2022 | 2021 | | :--- | :--- | :--- | | Loss Ratio | 60.2% | 60.8% | | Expense Ratio | 28.0% | 29.1% | | **GAAP Combined Ratio** | **88.2%** | **89.9%** | - Gross premiums written increased **15% to $5.9 billion** for the first six months of 2022, with the Insurance segment growing 15% and the Reinsurance & Monoline Excess segment growing 12%[179](index=179&type=chunk)[183](index=183&type=chunk) - The increase in net income for the first half of 2022 was primarily due to higher underwriting income and a significant gain from the sale of a real estate investment, which offset unrealized losses on equity securities[178](index=178&type=chunk)[184](index=184&type=chunk) - The expense ratio improved to **28.0%** in the first half of 2022 from 29.1% in 2021, as the 21% growth in net premiums earned outpaced the 16% increase in policy acquisition and insurance operating expenses[189](index=189&type=chunk) [Investments](index=56&type=section&id=Investments) The $23.5 billion investment portfolio is dominated by fixed maturity securities with a short average duration of 2.4 years to manage interest rate risk Investment Portfolio Composition (June 30, 2022) | Asset Class | Carrying Value ($ thousands) | Percent of Total | | :--- | :--- | :--- | | Fixed maturity securities | 16,851,514 | 71.6% | | Investment funds | 1,702,270 | 7.2% | | Real estate | 1,304,094 | 5.5% | | Cash and cash equivalents | 1,277,294 | 5.4% | | Arbitrage trading account | 1,142,003 | 4.9% | | Equity securities | 1,155,326 | 4.9% | | Loans receivable | 113,483 | 0.5% | | **Total Investments** | **23,545,984** | **100.0%** | - The average duration of the fixed maturity portfolio, including cash, was maintained at **2.4 years** at both June 30, 2022, and December 31, 2021, reflecting a strategy to manage interest rate risk[224](index=224&type=chunk)[233](index=233&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with increased operating cash flow of $1.0 billion and an improved debt-to-capital ratio of 30% - Cash flow from operating activities increased to **$1.006 billion** in H1 2022 from $696 million in H1 2021, driven by higher premium receipts[235](index=235&type=chunk) - In Q1 2022, the company repaid **$427 million** in senior notes at maturity[237](index=237&type=chunk) - In April 2022, it entered into a new **$300 million** revolving credit facility, which was undrawn as of the report date[238](index=238&type=chunk) - The debt-to-total capital ratio improved to **30%** at June 30, 2022, compared to 33% at December 31, 2021[240](index=240&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risks, including credit, interest rate, and foreign currency risks, are managed through asset-liability matching - The company's disclosure on market risk is contained within the MD&A section, specifically under "Investments - Market Risk"[242](index=242&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[243](index=243&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter[244](index=244&type=chunk) Part II — OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing legal matters from ordinary business operations are not expected to have a material impact on the company's financial condition - The company is involved in legal proceedings in the ordinary course of business, which are considered in the establishment of loss reserves and are not expected to have a material impact on its financial condition[101](index=101&type=chunk)[102](index=102&type=chunk)[245](index=245&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors were reported for the period - No material changes to risk factors were reported for the period[246](index=246&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any of its common stock during the second quarter of 2022 - No common stock was repurchased during the three months ended June 30, 2022[247](index=247&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required CEO and CFO certifications - The report includes required certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act rules[249](index=249&type=chunk)

W. R. Berkley Corporation (NYSE:WRB) Q2 2022 Earnings Conference Call July 21, 2022 5:00 PM ET Company Participants Rob Berkley - President and CEO Rich Baio - Group Chief Financial Officer Bill Berkley - Executive Chair Conference Call Participants Elyse Greenspan - Wells Fargo Michael Phillips - Morgan Stanley Yaron Kinar - Jefferies David Motemaden - Evercore ISI Mark Hughes - Truist Securities Alex Scott - Goldman Sachs Ryan Tunis - Autonomous Research Brian Meredith - UBS Josh Shanker - BofA Securities ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the Transition Period from to . Commission File Number 1-15202 W. R. BERKLEY CORPORATION (Exact name of registrant as specified in its charter) Delaware 22-1867895 (State or other juri ...