W.R. Berkley Corporation is bracing for a continued pullback in its assumed reinsurance operations, warning that deteriorating market conditions across both casualty and property lines will likely drive a double-digit contraction in segment volume over the foreseeable future.
Speaking during the group’s quarterly earnings call, President and Chief Executive Officer W. Robert Berkley Jr. noted that mounting competitive pressures ahead of the January 1 renewal season will serve as a key test of market resolve.
He said: “I guess there’s no point in crying any further over spilt milk, but when the day’s all done, as you have heard us talk about for several quarters now, there’s a dissatisfaction with market conditions within casualty, reinsurance, and property.
“Quite frankly, we are waiting with bated breath, not in a happy way, to see what happens at 1/1 and what will follow. That, in all likelihood, will prove to be a challenging time.”
For its Q3 2026 financial results, the company reported a very strong current accident year for its reinsurance and monoline excess segment, with a combined ratio, excluding catastrophes, of 86.9%, resulting in pre-tax underwriting income of $58 million.
As the reinsurance market remains competitive, Berkley is keen on maintaining underwriting discipline, which is reflected in the segment’s net premiums written declining 11.6% to $369 million, driven by casualty and, to a lesser extent, property. Gross written premiums stood at $391 million.
And while the group’s primary insurance operations are projected to maintain mid-single-digit top-line growth or better, the reinsurance book is expected to shrink by 10% to 20% over the coming quarters.
“We think the reinsurance business is likely going to continue to shrink for the foreseeable future at a 10% rate, somewhere between 10% and 20%, and that’s fine with us. That’s just the realities of the business, and we accept that,” Berkley stated.
The projected retrenchment follows persistent dissatisfaction with both casualty and property treaty terms; Berkley highlighted property lines as an area of particular concern, pointing to early market sentiment that suggests meaningful rate concessions may be on the horizon.
“I think that at 1/1, it is going to be very telling around the property front. There is not a huge amount of visibility at this stage. We are going to have to see what comes of it. Certainly, we are hearing commentary that people are expecting rates using a very broad brush to be off between 10% and 20%. That certainly takes a lot of the fun out of it for many people,” he commented.
Adding: “That having been said, for us as an organisation, we buy more reinsurance than we sell, so we have a pretty good hedge on that front. But we will have to see how it unfolds.”
Addressing the broader competitive environment, Berkeley questioned the sustainability of aggressive pricing strategies, and that capital flexibility differs sharply across balance sheets.
He said: “At this stage, we are pleased with the rate that we are able to achieve by and large and how that will maintain or enhance margins. We feel like we are in a pretty good place. What will that mean for tomorrow? I do not know. Will the reinsurance market continue to be very aggressive and create more competition in the insurance marketplace? Possibly, but I think it is probably pretty thin, in my opinion, to begin with.
“The other reality is that different folks are taking different approaches to their investment portfolio and to what extent they are able to capitalise on a higher interest rate environment that varies by operation. When we look at what people’s durations are, give or take, given their mix of business, and how that compares to where they can take duration, I think many of our peers are somewhat stuck.”
