Thank you, everybody. Thanks for joining. I'm Brian Meredith. I am the property casualty insurance analyst here at UBS, and thank you for joining us for our latest fireside chat with W.R. Berkley. It is a great pleasure to have Rob Berkley here with us, the president and CEO of W.R. Berkley. i've known rob forever and ever and ever right so it's been it's been a great time he's a great executive w berkeley's amazing company leading specialist call it commercial insurance company great businesses and a really interesting unique structure that we'll get into as well but i figured the best way to start off right now is just rob give us kind of big picture key strategic priorities for 2026 and maybe over the next you know several years as we look at the commercial and PNC landscape?

Well, first off, Brian, thanks for the invitation. Appreciate the opportunity to participate, and thanks for the kind words. Great company and insurance. They don't necessarily go hand in hand, so I appreciate the efforts on your part to throw some kudos in our direction. So it's an interesting time, without a doubt, for the world, for the industry, and for our organization. And clearly, there's changes abound, and it's moving at an ever-increasing pace. And that creates a lot of opportunity, and it creates some challenge, too. When we talk about what's going on and what are we focused on, we are, without a doubt, trying to make sure that we are understanding shifts and exposure, our clients and the world, and how we think about risk and what does that mean when you're in the business of accepting risk from clients. On the other hand, we're spending a lot of time thinking about not just the risk that we accept and how we approach that, but also how we operate. From our perspective, there's really two areas of focus. One is no surprise, day-to-day operational excellence, if you will, that we need to continue to block and tackle at a very high level and deliver that value proposition to customer because ultimately that is foundational to our ability to deliver value to capital. But it's not just about daily execution. It's also simultaneously about how are you thinking about positioning yourself for tomorrow because we are every day setting the table for tomorrow. And, again, much of that maps back to certainly tools and maps back to people and maps back ultimately to strategy. So, again, the way I would answer it, Brian, is when we think about where we are today, we're very much focused on executing, executing, executing every day at a high level, but simultaneously making sure that we are conscious of how do we see the world, how are we positioning our organization for that value proposition tomorrow.

Makes sense. And in that context, you know, how you see the world, maybe we talk a little bit to set the tone here with the P&C pricing cycle, right? You know, how do you see the competitive conditions we're seeing right now, particularly I know we've got property, Casley's a little bit better, but how are we kind of seeing it right now and kind of over the next 12 to 24 months? And then maybe a little bit on the reinsurance markets and how it's kind of spilling over maybe into the primary.

I mean, clearly one of the things that is different today, and you alluded to it a moment ago, and it's certainly different from when I entered the industry, is how, yes, it is still a cyclical industry across the board. The behaviors in the industry are driven by two human emotions, as Brian, you and I have talked about, fear and greed, and that's what determines more discipline or less discipline. But one of the things that also, as you alluded to a moment ago, that is different today is a decoupling of product lines and where they are in the cycle. When I got into the business some number of decades ago, all product lines, by and large, marched in lockstep throughout the cycle. Today, we have different product lines, as you suggested, that are at different points in the cycle. That all having been said, without a doubt, some of the major product lines are becoming more competitive today than they were yesterday. I would suggest that the leading example of that would be the property space, where, again, it has very clearly exemplified how fear and greed are what drives behavior. The property cat market, if we focus on reinsurance initially, went through an extended period of time of high competition, which was then followed by a frequency of severity of cat loss and ultimately year after year destruction of capital. And it got to the point where those organizations said, we don't really care anymore. We are not going to continue to do this. We cannot destroy capital any longer, and discipline returned. You saw a waterfall effect from that, which then brought firming into the insurance marketplace as they charged more for renting capital to insurance carriers. And that's what led to a firming in property pricing across the board. Certainly saw it in the commercial space. but arguably the greatest outcry came from what you saw in the consumer or particularly the homeowner's space. All things being equal, we are seeing a property market in some stage of eroding or softening. We are seeing a casualty market that at least for the moment continues to have some level of discipline and firming in response to social inflation, which is driving claims costs up. at a continuous pace. There are some outliers to that. But generally speaking, when we look at what is on the horizon, our expectation is that cat-exposed property, you'll likely continue to see rates erode for some extended period of time, and the casualty market, at least for the moment, seems to have greater resilience. For us as an organization, that's good news. We certainly caught the property wave. At the same time, if you look at our book of business, we are weighted towards the liability lines where there seems to be more staying power.

Terrific. So with that as a backdrop, maybe we can talk about your premium growth outlook for the insurance business in 2026. On your last conference call, you talked about, call it a flattish October, November, a little bit of rebound in December. or talk a little bit about which kind of factors that are influencing your outlook for premium growth in 2026 and maybe break it down a little bit by which lines of business kind of look better and worse.

I think that, you know, no surprise it's market conditions which are really driven by level of competition and capital coming into the marketplace. And not just capital coming into the marketplace, but it coming in in a disciplined or not manner. What we have seen more recently is, quite frankly, less discipline in the property and property-related products, whether that be reinsurance or that be insurance. And it's some version of what we've seen in the past. So we have a view as to what is rate adequacy. We, different from some of our peers, we are not driven by budgets. we are driven by opportunity, opportunity to make good risk-adjusted returns. So when the day is all done, we have been not surprised but nevertheless disappointed by what we're seeing going on in the property market. Equally, we have been quite outspoken about our disappointment when it comes to some of the professional liability lines, D&O being an extreme example of that. And furthermore, I think we have shouted from the rooftops how unhappy we are with the lack of discipline in the commercial auto space. On the other hand, there are other aspects of the casualty market which we think are offering great opportunity, whether that be in the excess in the umbrella space, whether that be in the primary casualty lines. In addition to that, we think workers' compensation is likely going to provide an opportunity, maybe not as much today, but we are increasingly encouraged with tomorrow. So the punchline is, Brian, we are a collection, if you will, of 60 different businesses under a holding company. Back to the point earlier, different product lines are at different places in the cycle. that naturally lends itself well to us as an organization given the breadth of our offering and at any moment in time we have some businesses that are taking more of a defensive posture others that are able to take more of an offensive posture with a laser view on risk adjusted return I think as you've heard me say too many times perhaps Brian I'm not sure you can ever say it enough we are not in business to issue insurance policies we are in business to make good returns. And that is a differentiating mindset between us and many of our peers. And in practice, what does that mean? It means in parts of the market where the opportunity is there, we have no problem letting the business shrink. At the same time, parts of the market where the opportunity is there and available, you will see us lean into it considerably. Punchline is, do I think we will grow in 26? Yes, I do. Do I think that we will grow at the same rate that we're able to grow in 23, 24, and 25? That could be more of a challenge.

It makes sense. Let's pivot over to kind of the hot topic that everybody wants to talk about, and that's AI, artificial intelligence. So I think maybe the first way we kind of hit it right now is, you know, let's talk specifically about W.R. Berkeley, you know, the investments you've made and are making in artificial intelligence, data technology, are they going to improve? Underwriting efficiency, claims efficiency? Colette, let's talk a little bit about what you're doing right now to embrace AI.

So I think AI is a broad category that the world seems to be using a very broad brush in my opinion. I think the view is shared by others. I think the reality is that we as an organization, and for that matter, the industry in the world, have been on a data and technology journey for what would be measured not just in years, but in decades. And if you are really committed to it, that journey, the pace is ever increasing, and the trajectory is becoming steeper. AI is without a doubt, But, you know, I think anyone who thinks that they have AI figured out and specifically how it applies to the insurance industry, with all due respect, I think it's early stages, and that would be naive to suggest that anyone's fully wrapped their head around it. I think we are all learning, and I think that it is just the next very big, very important chapter in this data technology journey that I referred to earlier, one person's opinion. So more specifically, so what are we doing as it relates to AI? You can go in countless different directions. Ultimately, what we've tried to do is focus on where do we think the greatest lift is for us over what period of time. We think going in every different direction simultaneously is certainly a way to go no place. So the specifics are two big areas of focus. One is intake, if you will, where we're able to increase the efficiency of our quotes by approximately 30% that's experimenting with it. And the other area is claims, where we as an organization, a very large percentage of our claims are ultimately the value is $5,000 or less. and as a result of that, that certainly in spite of the fact of it being specialty business, there's opportunity for us to explore quicker something more akin over time to straight-through processing. So both of these are providing opportunity of greater value to customer, distribution, and ultimately to the business and by extension our shareholders. Do I think that this is the beginning? Yes. Do I think it is the end?

Definitely not. Gotcha, gotcha. And on that topic, I think you kind of laid out that a couple of things that should start to hit in 2027 will start to see some benefits for some of these investments that you're making. Talk about what specifically they are. Are there any KPIs we should be looking for as far as potentially how this kind of...

So on the front end, for example, it would be about the number of submissions, how we prioritize them, and what we're able to get to, and then how that converts into hit ratios. And ultimately, what we're going to be able to do is become far more productive when the day is all done. And we will not just get more at-bats. We'll get more higher quality at-bats. and it's just going to create a lot of efficiency and we are experimenting with it and the early returns are quite compelling. That's good. It'd be great if you give us those statistics here

for the next 12 to 24 months because are you going to invite me back? So next question. You mentioned 60 operating units and kind of act as incubators here. There's all sorts of stuff going on. I mean, I think of W.R. Berkeley, Literally, it's like 60 different companies, right?

It's not quite the organized chaos that you're suggesting.

I know. It's not. It's not. They're all great little organizations, small businesses, let's call them, or actually pretty good-sized businesses. But I guess the question I have then, when you've got all these 60 different units, how do you ensure best practices and technological advancements are shared and scaled throughout the organization? What governance structures support kind of cross-pollination of kind of all these different units and the ideas that are going on?

So I think it's a couple of fold. We are big believers in creating community because community is a natural forum that you can create for sharing of ideas. When we talk about AI, of course we have governance, and of course we have, sure, that we do not inadvertently color outside of the lines. Of course, we have controls to make sure that the environment is well thought through and appropriately managed. But when the day is all done, our approach has been, I guess, multidimensional or multilayered, if you will. So there are some initiatives around AI which are somewhat top-down, if you like, where there's an opportunity for us to be exploring something at a group level, and that will be something that we're looking to try and push through the organization. Now, it may not apply to all, but the vast majority. Then there are initiatives where it's not going to apply to the broader majority, but it's certainly not going to be a local opportunity. And then we'll create certain cohorts, if you will, based on commonality of need and commonality of opportunity to ensure that there's collaboration there. And then finally, perhaps to part of the point, Brian, that you were making, We have empowered colleagues at each one of the businesses and extended an invitation to them in a controlled way to be exploring how they can use AI to, quite frankly, improve the tasks that they are doing every day. And then we take that knowledge and, because of the community that I was referring to earlier, are able to cross-pollinate. So one way to think about it is we have essentially 60 different laboratories populated with people with great skills experimenting every day, and we're able to get somewhat of an experimentation coming from the operations simultaneously with efforts that are at a broader level. So it's been really encouraging the number of colleagues that have been willing to engage and learn and play with these tools, and I think that some of our colleagues were reluctant and I think, quite frankly, may have been a little bit intimidated, but thanks to the work of many people on our team, We've been able to help people understand that this is a tool for you to do your job better, as opposed to something that is going to marginalize you or something you need to be fearful of. This also is not a surrogate for Google. This is not an alternative for search. You need to be thinking about this more as an assistant.

That makes sense. And then another aspect of AI that you brought up in your conference call that I think is really important is, you know, there's clearly a lot of opportunities, but as an insurance carrier, there's a lot of risk, right? And what are the new emerging risks that AI could potentially present for the insurance injury, be it in a GL policy, be it property policy? Maybe talk a little bit about, you know, what do you see as far as the risks here from an AI perspective over the next several years as this evolves? And then how are you as an organization making sure that your underwriters are kind of staying ahead of that curve?

So I think that we're always looking to try and unpack and understand what these types of changes, and this is a big one, means for society. And by extension, what does it mean for risk in society? and how do we as an organization want to responsibly engage with that as an acceptor of risk or risk being transferred to us. I think it's multilevel. I think that one needs to be really thinking very carefully about concentrations and systemic risk and how things map back. Now, the easy way perhaps, or one of the easier ways to think about it is, okay, a data center that is going to be providing God only knows what, to however many businesses and people around the world. Well, how do you think about business interruption when it comes to that type of exposure? What does that mean? How do you price for that? In addition to that, with AI and all of the things that it can do, and many of them are wonderful, but some of them are pretty scary, how do you think about that from a cyber risk and an identity issue and so on and so forth? So the answer is, Brian, from our perspective, One needs to be focused on it, unpacking it. It needs to not be something someone's trying to figure out in a vacuum, but we, again, back to this idea of community, we create working groups within the organization and talk about all the things that can go wrong and how do we approach that, how do we anticipate that, how do we prepare for that in a responsible way. So long story short, there's a lot of moving pieces. Clearly, it is going to be driving a big part of the economy, and we need to be prepared. I think the other piece that I should add is some carriers are taking a wait-and-see attitude when it comes to policy wording. We, as an organization, have been more proactive than some in, quite frankly, looking at policy wording and trying to address exposure to AI in somewhat of a standalone manner. Because from our perspective, we don't think it's just something that you throw in. We think it is a real exposure that needs to be considered and priced for. So I think there have been some that have taken issue with some of our policy wording and the exclusions that we're using. We don't have a problem offering coverage, but we want it to be separate, considered appropriately, and priced as fit. And also, we want to control the limits because of the systemic exposure.

Yeah, that's what I was going to say, the limits management, which I know you all do a great job at, particularly with all this, I think, of these data centers and things that are being built and these huge limits are getting thrown out. Big numbers. Big numbers. Big numbers. And then maybe this last question on AI, and I'm going to throw a little bit in there from some stuff that happened yesterday, but one, your perspective on what this means for the industry over the next five to 10 years. I know there's a lot of talk about will it lead to consolidation? You know, will they be the haves and have-nots? And then maybe as an add-on to that, because I know we'll get this question, you know, yesterday we probably had close to $50 or more than $50 billion of market cap knocked off all of these insurance brokers. Tough day. You know, because of a Spanish homeowner's insurance company. I'm just curious. Must be a hell of a company, huh? It's a great company, I guess, right? AI and ChatGPT.

Did you pick up coverage of them yet, Brian?

Yeah. Maybe your perspective on that, you know, is this something that's going to disintermediate the industry?

I don't pretend to understand the capital markets as well as you do, I'm sure, or for that matter, people in the room. But just having observed what went on yesterday, I found it to be a little bit, quite frankly, puzzling. because if you, on one hand, unpack what this business is doing, I'm not sure that it's really so remarkable and I'm not a believer, based on what I know so far, that it's this canary in the coal mine and it just struck me as bizarre when, yeah, they're using some AI models but if you really peel a few layers back, all it is is a really sophisticated algorithm, which is really just a decision tree on steroids, and they layer a chatbot model on top of it. And the reaction of the world, as a couple of my colleagues and I were talking about earlier, was like these people just discovered fire. It was just bizarre to me. That all having been said, what was equally bizarre to me is that there was this shock and awe when, from my perspective, what was brought into focus has been there for a long time. I think we all understand the path that we are on and the role of data and analytics and technology, particularly around what I would define as simpler exposures where there's more homogeneity and, you know, ultimately you can underwrite it by going through somewhere between a half a dozen and a dozen questions. So I've been of the view for some extended period of time that we are seeing in society a meaningful shift in customer behavior, that being in this case insureds, and how they think about what's their definition of services, what the experience they're looking for is, how they're comfortable with a self-serve model, how they're comfortable transacting online and self-educating. And I think that that is creating a huge headwind over time for traditional distribution, particularly in the consumer space and even in the small commercial space. And this idea that there was this announcement yesterday and all of a sudden the curtain was pulled back, This struck me as odd because I think we've been on this trajectory for some period of time. I think there's more to come. And in the end, we're putting aside carriers, putting aside distribution. Ultimately, in the end, it's the customer that is going to drive the change. And what we are seeing is a customer that is more emboldened than their parents and grandparents. and we are going to see more and more of that as they become more and more the decision maker.

Why don't you talk a little bit also about how W.R. Berkeley is embracing this evolving distribution, some new initiatives I know you've talked about, be it embedded, direct-to-consumer, those types of things.

Yeah, so I think we may have touched on this in our earnings call for the fourth quarter recently in the year and I think that I may have unintentionally but just ever transparent offended some of our partners on the traditional distribution side and essentially the notion or the idea is, and I think this is what you're referring to Brian and it goes back to what we were just talking about a few moments ago our view is in the end that the customer is queen, king, whatever fancy title you want to label it, and they are empowered too. And we as an organization who provides a product for risk transfer to help society manage risk, we have a great offering because there's more risk every day in the world and society wants to manage that. At the same time, we're conscious of the fact, to your point, Brian, that we are going to meet customers where and how they want to meet. Be met, excuse me. And for our purposes, if they want to be met in a traditional manner, whether that be wholesale, retail, whatever that may be, we will be there for them as we have always been. But at the same time, we are conscious of the fact that this world is changing and we need to be there, particularly for younger generations, in new, different, and alternative ways where they wish to engage and want to be met. So what does that mean? That means that we are offering some product direct to customer. We are offering some product that has traditionally been wholesale direct to retail. That means we are also investing and actively pursuing a point embedded or a point of sale. What does point of sale mean? It means that we are selling an insurance policy as an add-on to another type of transaction. Brian, when we were visiting earlier, I think an example that we provided is somebody here walks into Zales or Signet Jewelers or whatever to buy an engagement ring. And you pick one out, you go to the counter, they start to ring you up, and they say, would you like to buy insurance with that? and boom, you push the button and all of a sudden you have an insurance policy for that asset that you just bought. That's what point of sale is or oftentimes referred to as embedded. It certainly, if we all sort of take a moment to think about it, has clear application within the consumer space, but I would suggest that there is plenty of opportunity in the commercial space and you will see us on both fronts very active over the coming years. So mapping back, Brian, to your point or question, for us, the consumer is who we serve. That is how we look to generate a return for our shareholders. We need to have a value proposition to the customer that allows us to have a value proposition to capital. And that's it in a nutshell. Part of it is meeting customers where they want to be met and they want to be met in a different way often, not always,

but oftentimes than their parents and grandparents wish to. Makes sense. I just want to make sure everybody knows, everybody has a question. I've got plenty of them, but feel free to raise your hand or put it up here on the board and they'll be happy to do it. While we're waiting on that, let's pivot over to the UNS market. You are a major, major player, one of the leaders in the UNS markets. It's been a rapidly growing market for the last eight years, I would say, at least, you know, almost double the amount of share of the commercial insurance market it now represents. Where are we right now? Because when I talk to investors, people are concerned that we're all of a sudden going to soft market and we're going to pivot back the other way, that all of a sudden business starts to flow back to the standard markets and these growth rates that we're seeing are going to potentially go negative. Thoughts?

So I think in order to answer the question, and apologies in advance for the long-winded answer, but one needs to take a half a step back and think about how did we get ourselves into this situation where there was this explosive growth that went on in the specialty space, ENS being the tip of that spear, if you like. And what happened was when we were sort of during COVID, coming out of COVID, all of a sudden there were two things that reared its head and it was very dramatic from the perspective of lost costs, the cost of claims. One was economic or financial inflation where due to supply chain and a whole host of other things including economic stimulus, prices took off like a rocket. That had an impact particularly on the shorter tail lines. Simultaneously we saw this phenomenon that many have coined the phrase social inflation, which drove, quite frankly, lost costs on liability lines. And really, when you boil that down, what we saw was a situation where the legal system, particularly juries, were coming down with awards that were multiples of what we had seen in the past. Those realities came into focus, both financial and social inflation, drove loss costs through the roof and the standard market in an effort to respond to this increase in loss costs said holy cow our claims are a lot more expensive than we thought so we need to go to insurance departments across the country and ask them for permission to raise our rates and in some cases maybe change terms and conditions but particularly raise the rates. Insurance departments either said no or said, we'll get to you later.

So the traditional carrier had a choice.

Their choice was, I can either write the business at a rate, given what's happened with the lost cost, that is not acceptable, or I could say goodbye to the business. What drove the growth in the specialty market was the standard market not being able to get their rate increases approved and saying goodbye to the business. So you saw this flood of business coming out of the standard market into the specialty market. What we have seen more recently are early signs of a slowing of that flow. It continues to flow, but it is slowing. We are not seeing the standard market, which, by the way, the insurance departments are responding to them now. We are not seeing the standard market's appetite expand dramatically. History would suggest at some point we will see that. To the extent we see it, I would suggest you will likely see that in some of the shorter tail lines before you see it in the longer tail lines for a variety of reasons, including how financial or economic inflation has come down, though social inflation per se. As far as us, what does that mean? Our submission flow continues to be quite robust. The fact that we are more weighted towards the casualty lines as opposed to the property lines means that we will in all likelihood have more staying power as far as opportunity. But when the day is all done, the reality is that the specialty market, in particular the E&S market, picks up the crumbs that fall off the table of the standard market. We've been through a period of time when there were a lot of crumbs falling off the table. Will that persist? Probably for some period of time, but will slow. And more likely than not, over a more extended period of time, you will see it erode. And you will see it erode, again, more likely than not, first in the property lines and down the road, maybe you'll see more competition and casualty.

Yeah, that's a good point. One observation, too, on that that I find interesting is that a lot of these standard commercial lines carriers actually started excess and surplus lines operations, right? And I don't think they have any desire to push it back to the standard market.

Yeah, and I think some of them have done well, and some of them are learning that it is a different animal

and maybe learning some lessons. Absolutely. Once again, any questions in the audience? Perhaps we can pivot to capital management, right? And how do you think about capital management? You know, growth rates are slowing a little bit. You've got ample excess capital on your balance sheet. How do you think about using that for buybacks, dividends, reinvestment in the business, M&A, whatever? How do you think about it?

So when we think about capital, our view is we want to have what we would define as an appropriate amount of capital plus a cushion. A cushion is there for the unforeseen event, which doesn't necessarily have a negative connotation. it could be an opportunity that presents itself tomorrow. Anything above and beyond that cushion, we have a view, if we're not able to use it, then the question is, what is the most efficient way to return it to the people that it belongs to, that being our shareholders? We have the problem, a high-class problem, but still the problem, that we are generating capital more quickly than we're able to put it to work today. So that is pressurizing the surplus of capital circumstance. So there's three levers that people have to pull. One, which we can rule out very quickly, which is repurchasing debt. If you look at our capital structure and the work that my colleague Rich Baio did, who's towards the back of the room, in positioning our balance sheet and our capital structure during COVID, did a great job. And, you know, quite frankly, we're not eager to touch that. So let's put repurchasing debt aside. That leaves us two other tools, that being share repurchase and special dividend. You know, we are opportunistic. We have a mindset of an owner. And we return capital to shareholders and whatever we think is in the best interest of shareholders from a value perspective at any moment in time, as you would have seen last year, in particular in the fourth quarter, we are not shy to do both the dividend as well as the repurchase.

Excellent. Let's pivot over something I'd be remiss not to talk about, particularly with your company, because you do a great job, and that's the investment side of the balance sheet, right? And investment portfolio. Maybe talk a little bit about duration, what you're doing with your fixed income portfolio, outlook maybe for your investment funds and then one other one too that i'm just curious about because it's been negative here for the last two two and a half years your real estate line keeps saying and what's going on there and is there any outlook for that to pivot maybe

yeah so a couple of pieces there brian so maybe to to start as far as the the portfolio goes the the portfolio overall is is growing at a very healthy rate uh the cash flow for the organization is exceptionally strong, so more money to invest. In addition to that, I think we've been reasonably well-rewarded for how we've positioned a whole host of things, including the fixed-income portfolio, and where still today our new money rate is comfortably above our book yield. So the combination of the growth in investable assets along with that new money rate will likely continue to be a positive for the foreseeable. Given where interest rates are, we from a risk return perspective, we have found the public markets particularly or specifically the fixed income market to be a much more compelling opportunity than alternatives. We certainly have some alternatives, but if you look at where the new money is going, it's going into the fixed income. A little bit of noise here and there with the funds, as you referred to, and specifically on the real estate piece, Brian, I would just remind you and offer the thought for others' consideration as well that we take a total return approach to that. and sometimes the contributions and how it comes through and the numbers because we're making certain investments and there are costs associated with it so on and so forth it's maybe a less pretty picture that having been said I think we believe in the assets and the long term value creation but again that comes into focus upon exit as opposed to doesn't really do us much good from an operating perspective

makes sense makes sense I think that's all the time we have, Rob.

I really appreciate it. Thanks for the invitation, Brian. Great to be with you.

Thank you all for your time and interest.