W.R. Berkley Corporation

Good day and welcome to WR Berkeley Corporation's second quarter 2020 earnings conference call. Today's conference call is being recorded. The speaker's remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words, including without limitation, believes, accepts, and estimates. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will in fact be achieved. Please refer to our annual report on Form 10-K for the year ended December 31, 2019 and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. WR Berkeley Corporation is not under any obligation and expressly disclaims Any such obligation, looking statements, whether as a result of new information, future events, we turn the call over to Mr. Rob Berkley.

Thank you, Chantal, and good afternoon all. Thank you for joining us for our Q2 call. We have on the phone, in addition to myself, Bill Berkley, Executive Chairman, and Rich Baio, Executive Vice President, Chief Financial Officer. We're going to follow a similar format to what we've done in the past. Rich is going to lead us through a summary around the numbers and the performance in the quarter. I am then going to offer a couple of thoughts on the heels of his comments, and then we will be opening it up for questions. So with that, Rich, if you want to get us started, please.

Absolutely. Thanks, Rob. Starting with our premium production, gross premiums written grew 2% to more than $2.1 billion despite a shrinking economy arising from the global pandemic. The growth was driven by an overall rate improvement and a comparable historic premium renewal retention ratio that Rob will be discussing shortly. Offsetting this improvement is a decline in exposures from the economic downturn as well as the strengthening of the U.S. dollar against certain foreign currencies. Net premiums written of approximately $1.7 billion was relatively unchanged from the prior year's quarter. The insurance segment decreased 2% to approximately $1.5 billion, primarily due to reduced exposure and rate decline in workers' compensation, as well as higher reinsurance reinstatement premiums. The reinsurance and monoline excess segment grew 16.5% to about $200 million in the quarter relating to improving markets. Pre-tax underwriting income of $23 million was adversely impacted in the quarter due to approximately $86 million of COVID-19 related losses. This compares with $100 million. In addition, we reported approximately $20 million and $40 million for severe weather-related losses to approximately $146 million in the quarter or 8.7 loss ratio points. COVID-19 related to 0.1 of these loss ratio points. The reported loss ratio was 67.7% in the current quarter compared with 62.4%. Prior year loss reserves developed favorably by $3 million or 0.2 loss ratio points. Our current accident year loss ratio excluding catastrophes was 59.2% compared with 61.4% a year ago. The improvement is driven by lower non-compact property losses and a change in the expense ratio was 31%, reflecting a decrease of 0.5% compared with a year ago and the 2019 full year. As we've seen over the recent quarters, the growth in net premiums earned has outpaced which has favorably impacted In addition, due to the global pandemic, expenses are considerably lower in travel and entertainment, writing expenses in dollar terms quarter over quarter. To this end, the impact from COVID-19 expense ratio, attributable to normalized operating costs and investments we make in the business. The ratio excluding catastrophes and COVID-19 for 2020 was 90.2%, compared with 92.9% for the prior year. Net investment income decreased to $85 million, primarily due to investment funds. As we mentioned last quarter, the net investment income for investment funds to markets due to the one-quarter lag. Accordingly, we are our second quarter results, which amounted to this decrease was evident in the energy, financial services, and transportation funds. We understand that for modeling purposes you may want some direction funds in the third quarter from the investment fund managers and accordingly are unable to provide. In addition, A combination of the low interest rate and taken to enhance our liquidity and shorten our duration to 2. Lower net investment income in the current quarter for fixed maturity securities. Cash and cash equivalent position has increased to almost $2.7 billion as of second quarter end, or 13% of net invested assets. We believe this is prudent given the uncertainty in the financial markets and the economy. The fixed maturity of cash and cash equivalents maintained a high credit quality of AA minus and reported a significant recovery in after-tax unrealized gains in the quarter. From the first quarter of 2020, the total after-tax unrealized gain in stockholder tax unrealized loss of $100,000 to the after-tax unrealized gain of $250,000. Tax net investment gains in the quarter of $78 million is primarily attributable to the change in... ...realized gains on equity securities of $62 million and a reduction in the allowance for expected $16 million. The change in fair value on equity securities... ...and Freddie preferred stock. Expected credit losses is driven by the improved prices on foreign government... bonds. Our net income in the quarter is $71 million, or $0.38 per share. Stockholders' equity was approximately $5.8 billion at the end of the quarter, an increase of more than $300 million, and dividends of $107 million. We repurchased approximately 2 million shares for $96 million at an average price per share of $49.29. As a result, book value per share increased 7.7% before share repurchase. The company had strong cash flow from operations in the quarter of $427 million, which benefited under the CARE Act from the deferral of tax payments until July 15th. The liquidity is strong at the holding company with more than $1.5 billion in cash and liquid investments. At this point, I'll turn it back to Rob. Thank you.