WR Berkly 3Q15 Earnings Call Notes

Competition modestly on the rise, but hard to find any catalyst that would shift that

“Yes, competition is modestly on the rise, but truly is at its incremental rate. And in spite of some of the recent headlines that we heard about cat or cat-like events occurring and affecting the industry, the impact has really been quite modest and one that that’s hard-pressed to find any type of catalyst out on the horizon that is going to shift the direction or I should say the overall market climate.”

Cheap reinsurance has empowered less responsible behavior

“cheap reinsurance has perhaps empowered less responsible behavior. And to that point, both domestically and internationally, we have seen increasing correlation between areas of the industries that are under the greatest pressure and those that are most dependent on reinsurance.”

Pace of erosion in reinsurance may be slowing

“On the topic of reinsurance, certainly again a topic we’ve discussed with you all in the past, the marketplace remains exceptionally competitive. Having said that, it would seem as though the pace of competition seems to be not moving or increasing as quickly as it has over the past several quarters. I don’t think that we’ve necessarily touched bottom, but it would seem as though we continue to get closer as again the pace of erosion is slowing.”

Insurance companies are double hit by inflation

“We’re maintaining the quality of our investment portfolio and keeping a short duration, because the risks of an insurance company are doubling down if inflation comes. You get hurt with your loss reserves and if you extend the maturity and duration of your investment portfolio, you’re effectively doubling down. So we’ve chosen to reduce that risk, the one that we can control.”

(Only 1 analyst on the call)