BERKLEY W R CORP (WRB) Q2 2025 Earnings Summary

Executive Summary

Q2 delivered strong underwriting and record investment income: total revenues $3.67B, net premiums written (NPW) $3.35B, operating EPS $1.05, GAAP EPS $1.00; ROE 19.1% and operating ROE 20.0% .
Beats vs S&P Global consensus: operating/“Primary” EPS $1.05 vs $1.02* and revenue $3.67B vs $3.10B*; upside driven by record net investment income ($379.3M) and higher earned premium base, partially offset by CATs of $99.2M .
Sequentially, combined ratio rose to 91.6% (vs 90.9% in Q1) on CAT frequency and slightly higher accident-year loss ratio; rate increases ex-workers’ comp remained firm at ~7.6% .
Capital return remained a catalyst: BVPS +6.8% in the quarter (pre-dividends) to $24.50, and $223.8M returned (incl. $0.50 special and ordinary dividends); regular dividend was raised 12.5% to $0.36 annualized .

Note: Values marked with an asterisk (*) are from S&P Global consensus estimates.

What Went Well and What Went Wrong

What Went Well

Record net investment income ($379.3M) on higher yields and larger invested asset base; fixed-maturity book yield ex-Argentina 4.7% and new money ~5.25% (management), supporting forward NII growth .
Rate environment remained constructive: average rate increases ex-workers’ comp ~7.6%, underpinning pricing adequacy across casualty and selected property .
Book value accretion and capital returns: BVPS +6.8% QoQ (pre-dividends) to $24.50; total capital returned $223.8M, supported by strong operating cash flow ($703.8M) .
- Quote: “Net investment income rose…fueled by higher yields on our expanding domestic fixed-maturity portfolio…positioning us well for further investment income growth.”

What Went Wrong

CAT losses elevated at $99.2M (3.2 pts), raising the consolidated combined ratio to 91.6% vs 90.9% in Q1; reinsurance segment combined ratio rose YoY to 87.4% (from 81.8%) amid market normalization .
Foreign currency losses of $55M weighed on results (offset in equity translation); operating definition changed to exclude after-tax FX from operating income (2024 restated) .
Property market becoming more competitive (shared/layered large accounts) and disappointment with casualty reinsurance ceding commission discipline; WRB is being selective, which may temper growth .

Financial Results

Headline metrics: Q4 2024 → Q1 2025 → Q2 2025

Metric	Q4 2024	Q1 2025	Q2 2025
Total Revenues ($USD Millions)	3,667.6	3,547.4	3,670.8
Net Premiums Written ($USD Millions)	2,936.8	3,133.3	3,351.4
Net Premiums Earned ($USD Millions)	3,010.9	3,012.4	3,098.2
Net Investment Income ($USD Millions)	317.4	360.3	379.3
Diluted EPS (GAAP) ($)	1.44	1.04	1.00
Operating EPS ($)	1.13	1.01	1.05
GAAP Combined Ratio (%)	90.2	90.9	91.6
ROE / Op. ROE (%)	30.9 / 24.3	19.9 / 19.3	19.1 / 20.0

Year-over-Year (Q2 2025 vs Q2 2024)

Metric	Q2 2024	Q2 2025
Net Premiums Written ($USD Millions)	3,126.8	3,351.4
Net Premiums Earned ($USD Millions)	2,846.4	3,098.2
Net Investment Income ($USD Millions)	372.1	379.3
Diluted EPS (GAAP) ($)	0.92	1.00
Operating EPS ($)	1.02	1.05
GAAP Combined Ratio (%)	91.1	91.6

Segment performance

Segment	Metric	Q2 2024	Q1 2025	Q2 2025
Insurance	Net Premiums Written ($M)	2,810.4	2,694.5	3,013.7
	Pre-tax Income ($M)	490.1	509.5	512.7
	Combined Ratio (%)	92.4	91.7	92.1
Reinsurance & Monoline Excess	Net Premiums Written ($M)	316.3	438.8	337.7
	Pre-tax Income ($M)	124.4	120.4	127.3
	Combined Ratio (%)	81.8	85.4	87.4

KPIs and underwriting quality

KPI	Q4 2024	Q1 2025	Q2 2025
Rate increases ex-workers’ comp	~7.7%	~8.3%	~7.6%
Current AY combined ratio ex-CAT	87.7%	87.2%	88.4%
CAT losses (current AY, $M)	79.6	111.1	99.2
Expense ratio (%)	28.4	27.8	28.5
Cash flow from operations ($M)	810.0	743.8	703.8
Book value per share ($)	22.09 (12/31/24)	23.50 (3/31/25)	24.50 (6/30/25)
Net invested assets ($B)	29.78 (12/31/24)	30.73 (3/31/25)	31.58 (6/30/25)

Non-GAAP note: Beginning Q2, operating income excludes after-tax net foreign currency gains/losses; 2024 figures restated to conform . FX losses were $55M pre-tax in Q2 (offset by $69M translation gain within equity) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Effective tax rate	FY 2025	~23% ± (Q1 call)	Q2 effective 23.2%; “in line with expectations for full-year 2025”	Maintained
Expense ratio	FY 2025	“Comfortably below 30%” (Q1 call)	Q2 at 28.5% (no explicit change)	Maintained (implied)
Investment funds income	Q2 2025	“May be lower end of $10–$20M” next quarter (Q1 call)	Actual Q2: $27.3M (above prior commentary)	Result > prior commentary
Dividend policy	Ongoing	Regular dividend rate $0.32 annual; no special (pre-June) — context	Regular dividend increased 12.5% to $0.36 annual; declared $0.50 special dividend (paid 6/30)	Raised/one-time special

No quantitative revenue or margin guidance was provided; management continues to emphasize disciplined growth and risk-adjusted returns .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Macro/Inflation/Tariffs	Focus on risk-adjusted returns; rates solid; NII tailwind (Q4)	Tariffs and wage inflation watched; not yet in loss activity; pricing adjusted as needed	Monitoring intensifies; pricing discipline maintained
Property market	Strong pricing (Q4)	More competitive in large/shared-layered; selective writing	Softening at large end; selective growth
Casualty/social inflation	Emphasis on maintaining rate adequacy; umbrella focus (Q1)	Opportunity in primary/excess casualty; sticky smaller-account rates	Opportunity persists; disciplined
Workers’ comp	Specialty comp growth; watch medical costs (Q1)	CA +8.7% rate action seen as positive; growth in higher hazard niches	Firming signals; targeted growth
MGAs/delegated authority	N/A	Concern over misaligned incentives; surge in banker outreach to sell MGAs	Heightened caution
Reinsurance (ceding commissions)	Pulled back where terms unattractive; especially professional lines (Q1)	Disappointed with ceded commission terms when assuming; property cat pricing easing	Discipline stressed; margins normalizing
Investments	Duration extended to 2.7 yrs; new money ~5.2% (Q1)	Duration to 2.8 yrs; new money ~5.25%; potential to add duration if curve steepens	Incremental duration; NII tailwind
Capital allocation	Q4 capital returns + buybacks	Special dividend favored in Q2; buybacks remain on the table	Flexible toolkit, case-by-case
Technology/AI	Not a strategic focus disclosed	AI cited as risk in filings; no initiatives highlighted	Risk-monitoring only (no strategy update)

Management Commentary

“Rate at the 7.6 ex comp continues to be meaningful… puts us in a comfortable place… the 3.2 points of CAT was really frequency of… modest severity.”
“New money rate… ~5.25%, and the book yield… 4.7%… bodes well for where investment income is going…”
“Property… becoming more competitive… larger accounts… where greater competition is… Smaller accounts… pales in comparison.”
“There has been extraordinary growth in the MGA space… a mismatch of interests… we’re seeing bankers shop MGAs—perhaps a leading indicator the music is slowing.”
“Effective tax rate was 23.2%… in line with our expectations for the full year of 2025.”

Q&A Highlights

Growth outlook recalibrated: management now sees ~8–12% growth (from prior 10–15%) given property headwinds; casualty opportunity remains intact .
Capital return mix: no Q2 buybacks as special dividend deemed most efficient; buybacks remain under consideration depending on opportunity and valuation .
Reinsurance economics: frustration with high ceding commissions when assuming casualty; property cat pricing easing also affecting reinsurance margins .
Tariffs and labor costs: not yet visible in losses, but being priced into required rates, particularly short-tail lines; ongoing sensitivity analysis (e.g., pharma) .
Investment positioning: duration extended to 2.8 years; potential to lengthen further if curve steepens; alternatives face a higher hurdle given fixed income opportunity set .

Estimates Context

Metric	S&P Global Consensus (Q2’25)	Actual (Q2’25)	Surprise
Primary (Operating) EPS ($)	1.0245*	1.05	+$0.03
Revenue ($USD Billions)	3.100*	3.671	+$0.571

Both EPS and revenue exceeded consensus; upside reflects record NII and earned premium growth despite CATs.
Implication: Estimate models may need higher run-rate NII (book yield 4.7%, new money ~5.25%) and slightly higher cat load given frequency; expense ratio tracking sub-30% supports margins .
Note: Values marked with an asterisk (*) are from S&P Global.

Key Takeaways for Investors

Mix of underwriting discipline and NII tailwind continues to drive high-teens ROE; management reiterated confidence in sustaining high-teens/low-20s returns near term .
Expect selective growth with property decelerating (large/shared-layered most competitive) and casualty/umbrella/commercial auto remaining opportunities; rates ex-comp ~mid-to-high single digits .
Record NII should persist as reinvestment rates exceed book yield and net invested assets grow; modest further duration extension is possible if curve steepens .
Near-term margins: combined ratio likely sensitive to CAT frequency and reinsurance terms (ceding commissions, property cat prices); expense ratio remains <30% .
Capital returns remain active and flexible (special + regular dividends; buybacks opportunistic); BVPS compounding stayed robust at +6.8% QoQ (pre-dividends) .
Watch macro (tariffs, wage/medical inflation) and delegated-authority underwriting trends; management is proactively pricing and managing exposure .

Appendix: Additional Relevant Q2 Press Releases

Declared $0.50 special dividend and raised regular dividend 12.5% to $0.36 annualized (paid 6/30/25) .
Q2 earnings date announcement (7/21/25) .