Berkley: Flow of business from admitted to E&S accelerated in Q3

The amount of business flowing from the admitted markets into the excess and surplus lines sector has continued to accelerate in Q3 2021, according to WR Berkley president and CEO Rob Berkley, who said the carrier has also been taking advantage of casualty treaty opportunities to grow its reinsurance book.

The insurer reported net premiums written that increased 24 percent year on year to $2.33bn in 2021’s third quarter, and on a call with analysts to discuss his firm’s results, Berkley said it “is a good moment for specialty writers, particularly casualty-related specialty writers and even more so the E&S market”.

“We continue to see a growing flow of opportunities, both in specialty and even more so in E&S,” the executive said.

“There’s nothing that leads us to believe that [the] tide is going to reverse anytime soon,” he added.

Indeed, Berkley said the flow of business from the admitted to E&S markets is continuing to increase.

“It’s certainly more robust now than it was, without a doubt, last year. It’s more robust than it was in Q1. And quite frankly, it’s notably more robust than it was in Q2. So we’re seeing that continue to accelerate,” he stated.

WR Berkley’s reinsurance and monoline excess business saw its Q3 2021 NPW increase 26.7 year on year to $317.9mn.

Casualty reinsurance NPW went up by 36 percent year on year, monoline excess grew 27.4 percent, while property reinsurance saw a slight 1.4 percent decrease.

The reinsurance and monoline excess NPW growth was “primarily a reflection of the liability lines and the strength that we’re seeing opportunities there on the treaty side”, Berkley said.

The executive also said WR Berkley is seeing opportunity in the facultative reinsurance market in both property and liability.

“There was a time that we were shrinking the daylights out of our reinsurance business in general because the reinsurance market… didn’t make any sense to us.

“Now as you can see, we’re growing it considerably,” Berkley said during the call.

Loss costs uncertainty

After WR Berkley’s Q3 2021 loss ratio improved by 1.3 points year on year to 62.4 percent, Berkley said during the call that the industry “needs to be very mindful” about how it considers loss trend.

“It’s a pretty foggy picture at this moment in time between the inflationary environment we’re in both social and financial,” said Berkley.

He added that Covid-19 “muddies the water” owing to the lulls in the court system it has caused, as well as fewer lawsuits.

Berkley said he does not think anyone knows for sure how much the reduction in frequency is real or just a delay, or whether it is a permanent trend.

And while Berkley said some people “may be susceptible to possibly declaring victory prematurely”, he and his colleagues “don’t think we know for sure how much is still hanging out there”.

“We, as an organization, are trying to be very thoughtful about it,” he said.