W.R. Berkley Corporation (NYSE:WRB) Q3 2020 Earnings Conference Call - Final Transcript

Oct 20, 2020 • 05:00 pm ET

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W.R. Berkley Corporation (NYSE:WRB) Q3 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Certainly. [Operator Instructions]

Executive
W. Robert Berkley, Jr.

Thank you.

Operator
Operator

Your first question comes from the line of Mike Zaremski with Credit Suisse. Your line is open.

Executive
W. Robert Berkley, Jr.

Mike, good afternoon. Thanks for calling in.

Analyst
Michael Zaremski

Hey, of course, good afternoon. I guess the first question is going to be on expense ratio, which I know, I think sometimes I speak to investors, I think it's kind of boring but kind of look back at the last year or so at underwriting income and versus consensus expectations and it seems like most of that would be -- a good amount of that has been on the expense ratio, especially this quarter. How much of the improvement do you feel is kind of structural directionally more sustainable versus somewhat cyclical and could it kind of ebb and flow during the next soft market whenever that is probably not for a while clearly. Directionally, do you think that you can build upon the current below the 30% threshold like I'm trying to figure out.

Executive
W. Robert Berkley, Jr.

Well, it certainly is our goal to be able to push through 30% but I think that the big opportunity there is yes, efficiency, but even more so scale. One of the things that you need to remember is that or keep in mind is that the vast majority of the businesses in this group are businesses that have started from scratch and oftentimes because they operate with such outstanding underwriting discipline, once they get started, they may not be able to achieve scale. But as you come into market conditions that allow you to scale that allows you to leverage those fixed expenses.

So long story short, I think the improvements that we are seeing on the expense ratio putting aside, those that are related to COVID on the T&E front, I think those are real, and we are very focused on not just maintaining them but continuing to build upon them.

Analyst
Michael Zaremski

Okay. I guess, next question, Rob, I think you last quarter and this quarter, you talked about there being some benefit as a result of slow down, I believe in claims activity during COVID. I think you keep reminding us here that you are not short tail lines are taking some of the credit, but not for the long tail lines. Any quantification or color you wanted to kind of give us and try to think about how much of the loss ratio improvement might be driven by temporary factors and understanding that there might be more benefit if you are being -- if your assumptions prove conservative.

Executive
W. Robert Berkley, Jr.

Well, I think the position that we're taking is that it would be premature to reach a conclusion. There may be if you look at our mix of business, the vast majority of what we do has some tail to it. So again it's a very modest amount of our short tail business, very short tail business that we would be willing to reach a conclusion on. So from our perspective, we need to take