BERKLEY W R (WRB)·Q4 2025 Earnings Summary

W. R. Berkley Posts Record Underwriting Income, ROE Holds at 21%

January 26, 2026 · by Fintool AI Agent

W. R. Berkley delivered a solid Q4 2025, posting its fifth consecutive year of record underwriting income with a 21.4% return on equity. Operating EPS came in at $1.13, essentially matching consensus expectations, while pre-tax underwriting income surged 14.9% YoY to a record $338 million. The stock traded down modestly (-1.2%) as investors had largely priced in strong results.

CEO Rob Berkley opened the call expressing gratitude to the company's 7,600 employees while setting the tone with a candid market assessment: "The world is moving at an ever-increasing pace... the simple question is whether this industry is gonna be able to keep up."

Did W. R. Berkley Beat Earnings?

Sources:

CFO Rich Baio highlighted that the expense ratio improved to 28.2%, driven by record net premiums earned and operational efficiencies, though he noted a 30 basis point non-recurring benefit from commission-related accruals. Management expects the expense ratio to remain "comfortably below 30%" in 2026.

Prior Year Development: The quarter included modest adverse development of ~$11 million in the insurance segment, offset by ~$13 million of favorable development in reinsurance. When asked about the insurance segment adverse development, management noted the amounts were immaterial relative to the $18+ billion reserve base and offered to provide additional detail offline.

How Did the Stock React?

W. R. Berkley shares closed at $66.88, down 1.2% on the day of the earnings release. The muted reaction suggests the strong underwriting results were largely anticipated. The stock has pulled back from its 52-week high of $78.96 and now trades at a 6.3% discount to its 50-day moving average of $71.36.

Stock Performance Context:

• Day of earnings: -1.2%
• 52-week range: $57.75 - $78.96
• Current price: $66.88 (down 15% from 52-week high)
• Market cap: $25.4 billion

What Did Management Say About Market Conditions?

CEO Berkley delivered an unusually candid assessment of insurance market dynamics during the call:

Auto Liability — "It continues to be a challenge... while we did speak about possibly seeing some green shoots early in 2025, that proved to be a mirage. The market has continued to find new lows, and our hope is, as we make our way towards the end of 2026, we find a bottom."

Large Account Property — "This market is a feeding frenzy at this stage. And furthermore, I would tell you that London, particularly Lloyd's, is perhaps the hotspot for this feeding frenzy."

Property Cat Reinsurance — The company's main property cat treaty renewed at a 19% risk-adjusted rate decrease, which Berkley said "speaks volumes to the challenges in the market."

Casualty Spillover — "We are seeing early signs that the competitiveness in the property cat market would seem to be spilling over into the casualty market. Many participants are struggling with getting to their premium targets on the property front, and as a result, are trying to lean into casualty."

Bright Spots:

• Excess & Umbrella: "Offering opportunity for meaningful rate"
• E&S Market: "Also stands out" with opportunity
• Medical Stop-Loss: "Continues to be an attractive place"
• Berkley One (Private Client): "Continues to see great opportunity to grow"
• Workers' Comp: "Early signs that perhaps participants in the California market are starting to come to grips with reality"

Workers' Comp Medical Inflation Warning:

When asked about medical inflation in workers' comp, Berkley offered a structural explanation:

"We think the medical costs and just, quite frankly, claims activity in general within the space of workers' comp has been somewhat artificially suppressed because of how the benefits get priced, and the reimbursement gets priced in many, many states."

On the Medicare relationship: Workers' comp rates in several states price off a multiple of Medicare schedules, which pay "below cost." Berkley noted that states like Florida have begun reviewing these multiples, and expects this trend to continue. "Medical trend is going to prove to be a bigger and bigger challenge. Certainly, pharma is a piece of that... and I think it's going to be not just pharma."

What Changed From Last Quarter?

Premium Growth Color:

Management revealed that October and November growth was "flat-ish" and "particularly disappointing," but December gross written premiums were up 7% and January is showing "encouraging signs."

"I would caution people not to leap to the conclusion that what you saw for the quarter is the new reality. I think it is quite the contrary, in all likelihood." — Rob Berkley

Rate Outlook:

Rate ex-comp came in at just over 7%, but management signaled less pressure to push rate going forward:

"Given what we are seeing in some of the more recent years... we are not feeling across the board the same level of pressure to keep pushing on rate. We think that we're in a pretty good place."

When pressed on whether this implied improving loss trends, Berkley said: "Some of the activity, or lack of activity, in some of the more recent years would suggest that we're in a comfortable place... the underwriting actions and rate actions are having the impact plus that we had hoped for."

Importantly, management confirmed they did NOT adjust 2025 accident year loss picks despite the positive early signals: "No, we did not touch them." This conservative approach leaves room for future favorable development if trends continue.

Product Line "Traffic Light" Assessment:

When asked about rate adequacy across the portfolio, Berkley described a nuanced picture:

"There are certain product lines where I would tell you there's a green light, and it would be advisable to try and lean into it more. There are certain that are amber, and there are some that are red."

• Green light: Excess & umbrella, parts of E&S
• Amber: GL (monitoring)
• Red: Auto liability (exposure shrinking), professional lines (D&O, A&E), large account property

Full Year 2025 Records:

• Net premiums written: $12.7 billion (+6.2% YoY)
• Pre-tax underwriting income: $1.2 billion
• Net investment income: $1.4 billion
• Book value per share growth: +26.7% (before dividends and buybacks)

Q&A Highlights: Technology & Distribution

AI and Technology Investments:

Berkley announced meaningful technology investments planned for 2026-2027, with benefits expected to materialize in 2027 and scale from there:

"We are going to be making some pretty meaningful investments... both on the tech side and the broader banner, both data, AI, et cetera, and that will come at a price, but we're confident that these are going to be investments that generate very good returns."

On the underwriting side, AI is already being deployed for intake processing: "We are able to utilize certain technologies, and they are enabling us to increase our efficiency dramatically. We are able to get to more business, and we are able to effectively prioritize."

Distribution Evolution:

Management signaled a shift in how they view distribution partnerships:

"Customers are much more comfortable with a self-serve model, and it is becoming increasingly clear that convenience is more important to many customers than price."

"Traditional partners, traditional distribution, oftentimes is not just a partner, but is actually a competitor."

The company is launching Berkley Embedded in 2026 for point-of-sale insurance integration, part of a strategy to "meet the customer wherever she or he wishes to be met."

Capital Returns and Balance Sheet

W. R. Berkley returned $608 million to shareholders in Q4 alone:

Source:

Chairman Bill Berkley emphasized the company's strengthened balance sheet: "We've become a very much more financially conservative company. We've gone from 35% debt to equity to 22.6% debt to equity. We've got lots of capacity to do lots of things."

On buyback philosophy: "Our business is returning 20%+ on capital... it's a pretty good investment from my point of view. I would expect that we'll continue to look if opportunities present themselves to buy back stock."

Investment Portfolio

Invested assets reached a record $33.2 billion, growing 11.4% in 2025. Fixed-maturity investment income grew 13.3% quarter-over-quarter to $346 million.

The $32 million investment fund loss in Q4 was driven by one fund that has been "a disappointing relationship." Management stated: "We do not expect that to be the norm going forward."

Portfolio positioning: AA- credit quality (Berkley noted it's "teetering on almost becoming AA"), duration extended to 3.0 years with neutral closer to 4 years. New money is being put to work at ~5% vs. 4-6% rolling off.

What's the Outlook for 2026?

Insurance Business: Expected to grow better than Q4 results (which were impacted by Oct/Nov weakness).

Reinsurance: "The reinsurance marketplace, you know, some version of history may be repeating itself... it would seem like the table is being set" for more challenging conditions.

ROE Guidance:

"Barring the unforeseen event, it's not that hard to connect the dots that it should be another very good year, and with every passing day, we're setting the table for 2027."

Expense Ratio: Expected to remain "comfortably below 30%" despite increased tech investments.

Tax Rate: Expected effective tax rate of approximately 23% for full year 2026.

Key Takeaways

1. Record underwriting results: Fifth consecutive year of record pre-tax underwriting income at $1.2 billion for 2025

2. ROE remains elite: 21.4% quarterly and 21.2% annual ROE, well above 15% target

3. Market caution warranted: Auto liability "finding new lows," large property a "feeding frenzy," property cat rates down 19%

4. Tech investments ahead: Meaningful AI/data investments in 2026-2027; benefits expected to materialize in 2027+

5. Capital returns accelerating: Nearly $1 billion returned in 2025; debt-to-equity down to historic low of 22.6%

6. Rate discipline easing: Less pressure to push rate as recent accident years show favorable development; 2025 loss picks NOT adjusted

---

Related: W. R. Berkley Company Profile | Q4 2025 Earnings Call Transcript | Q3 2025 Earnings