Berkley W R (WRB) Q3 FY26 earnings call: guidance and Q&A

Analyst inquired about further details on the core loss ratio improvement and early insights into design loss ratios for next year, referencing prior comments on favorable claim trends.

Management stated that loss trends, excluding auto, are generally quieting down, though it's too early to declare victory. The Q3 improvement was attributed to well-performing non-cat property and incremental comfort in some liability lines. Specific math for future design loss ratios is not available yet.

“aside from the auto line, we are seeing signs that the steepness of that trajectory is perhaps abating somewhat or certainly not becoming ever more steep.”

asked by Rob Cox · answered by W. Robert Berkley, Jr.

Analyst asked if the company's view on trading price for growth had changed, given marginally better pricing and consistent premium growth guidance.

Management affirmed no change in strategy, emphasizing a granular approach to rate needs by product line and territory. They reiterated that reinsurance will be challenging, commercial property will get 'uglier,' and liability lines present the main opportunities, which informs their growth speculation.

“Generally speaking, we think it's going to prove to be a more challenging time for the reinsurance market, hence, the comments that we offered earlier. We think that if you look at the commercial property market, that is going to get uglier before it gets prettier.”

asked by Elyse Greenspan · answered by W. Robert Berkley, Jr.

Analyst questioned the light capital returns in Q3 despite undeployed capital, asking if negative marks on the security book were a factor.

Management stated that negative marks on the security book were not weighing down capital deployment. They clarified that buybacks are opportunistic, executed when stock price movements create value, rather than on a fixed schedule. The company still holds a '10-figure number' of excess capital and intends to return it thoughtfully.

“Do I -- do we still have what I suggested in the past, a 9-figure -- or excuse me, a 10-figure number of excess capital? Yes, we do. Do I expect that we will continue to be thoughtful on how we return it to the people that it belongs to without a doubt.”

asked by Tracy Benguigui · answered by W. Robert Berkley, Jr.

Analyst asked for elaboration on how AI, particularly in relation to robotics, might affect workers' compensation.

Management explained that advancements in robotics, driven by AI, will undoubtedly impact the workforce beyond white-collar jobs. They foresee certain jobs disappearing due to robotics, potentially leading to challenges in retooling skill sets and implications for the workers' comp line in parts of the economy.

“I think that ultimately, the labor force in this country and around the world is going to be a challenge as to how quickly we can retool people's skill sets. And there are certain jobs that are going to go away, not just because of AI in an office environment but robotics can play an ever-increasing role.”

asked by Andrew Kligerman · answered by W. Robert Berkley, Jr.

Analyst asked if, given healthy interest rates and potentially lower loss trends, pricing power in longer-tail casualty lines would likely move south.

Management expressed satisfaction with current rates for maintaining/enhancing margins. They noted that many peers are 'stuck' regarding duration extension, while W. R. Berkley has significant leverage from reinvesting $24 billion at 80-100 bps above current book yield. They anticipate property to be choppy but liability markets stable, with more tailwinds than headwinds due to their mix and investment positioning.

“Do I think the big headline for us is learning with $24 billion that can get reinvested at 80 basis points to 100 basis points above where we currently are, yes, I think that, that is a lot of leverage in our economic model to be had.”

asked by Michael Zaremski · answered by W. Robert Berkley, Jr.

Analyst inquired about the company's approach to AI liability risk from clients using AI models and potential silent coverage.

Management views AI as a real exposure, with business units actively grappling to understand and price it appropriately. They have developed specific wordings to manage this exposure, not relying on industry standards. While acknowledging no absolute guarantee against latency exposure, they are diligently working to identify, understand, control, and get paid for the risk, including applying exclusionary language where deemed appropriate.

“So long story short, we have a view that AI is a real exposure, and our colleagues are running the various businesses, particularly on the front end are actively grappling with that exposure and making sure that they understand it, they are comfortable with it and see that they are getting paid appropriately for it.”

asked by David Motemaden · answered by W. Robert Berkley, Jr.