Delaware | 1-15202 | 22-1867895 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation or organization) | File Number) | Identification No.) |
475 Steamboat Road, Greenwich, CT | 06830 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code: | (203) 629-3000 |
99.1 | Press Release dated April 23, 2012 |
99.2 | Supplementary Financial Information |
NEWS RELEASE | ||||||
W. R. Berkley Corporation 475 Steamboat Road Greenwich, Connecticut 06830 (203) 629-3000 | ||||||
FOR IMMEDIATE RELEASE | CONTACT: | Karen A. Horvath | ||||
Vice President - External | ||||||
Financial Communications | ||||||
(203) 629-3000 |
First Quarter | |||||||||
2012 | 2011 | ||||||||
Gross premiums written | $ | 1,401,526 | $ | 1,269,858 | |||||
Net premiums written | 1,203,526 | 1,083,303 | |||||||
Net income | 135,318 | 115,590 | |||||||
Net income per diluted share | 0.94 | 0.78 | |||||||
Operating income (1) | 104,236 | 96,800 | |||||||
Operating income per diluted share | 0.73 | 0.66 |
(1) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding net investment gains and losses. |
• | Book value per share increased $1.10, or 3.8%, to $29.85. |
• | Average rates on renewed policies increased 6.5%. |
• | GAAP combined ratio was 96.5%. |
• | Net premiums written increased 11%. |
First Quarter | |||||||||
2012 | 2011 | ||||||||
Revenues: | |||||||||
Net premiums written | $ | 1,203,526 | $ | 1,083,303 | |||||
Change in unearned premiums | (103,875 | ) | (100,806 | ) | |||||
Net premiums earned | 1,099,651 | 982,497 | |||||||
Net investment income | 157,619 | 146,126 | |||||||
Insurance service fees | 23,877 | 22,173 | |||||||
Net investment gains: | |||||||||
Net realized gains on investment sales | 43,477 | 29,284 | |||||||
Change in valuation allowance, net of other-than-temporary impairments | 4,014 | — | |||||||
Net investment gains | 47,491 | 29,284 | |||||||
Revenues from wholly-owned investees | 49,675 | 53,887 | |||||||
Other income | 392 | 384 | |||||||
Total revenues | 1,378,705 | 1,234,351 | |||||||
Expenses: | |||||||||
Losses and loss expenses | 679,472 | 607,095 | |||||||
Other operating costs and expenses | 431,779 | 386,129 | |||||||
Expenses from wholly-owned investees | 51,330 | 53,816 | |||||||
Interest expense | 28,821 | 28,117 | |||||||
Total expenses | 1,191,402 | 1,075,157 | |||||||
Income before income taxes | 187,303 | 159,194 | |||||||
Income tax expense | (52,071 | ) | (43,599 | ) | |||||
Net income before noncontrolling interests | 135,232 | 115,595 | |||||||
Noncontrolling interests | 86 | (5 | ) | ||||||
Net income to common stockholders | $ | 135,318 | $ | 115,590 | |||||
Net income per share: | |||||||||
Basic | $ | 0.98 | $ | 0.82 | |||||
Diluted | $ | 0.94 | $ | 0.78 | |||||
Average shares outstanding: | |||||||||
Basic | 137,814 | 141,177 | |||||||
Diluted | 143,411 | 147,425 |
First Quarter | |||||||||
2012 | 2011 | ||||||||
Specialty: | |||||||||
Gross premiums written | $ | 450,621 | $ | 415,730 | |||||
Net premiums written | 389,528 | 358,117 | |||||||
Premiums earned | 387,110 | 330,207 | |||||||
Pre-tax income | 68,261 | 89,914 | |||||||
Loss ratio | 61.5 | % | 54.2 | % | |||||
Expense ratio | 33.6 | % | 33.8 | % | |||||
GAAP combined ratio | 95.1 | % | 88.0 | % | |||||
Regional: | |||||||||
Gross premiums written | $ | 313,584 | $ | 298,841 | |||||
Net premiums written | 290,199 | 279,624 | |||||||
Premiums earned | 264,266 | 261,517 | |||||||
Pre-tax income | 31,787 | 24,435 | |||||||
Loss ratio | 59.0 | % | 62.4 | % | |||||
Expense ratio | 36.7 | % | 36.3 | % | |||||
GAAP combined ratio | 95.7 | % | 98.7 | % | |||||
Alternative Markets: | |||||||||
Gross premiums written | $ | 274,229 | $ | 254,847 | |||||
Net premiums written | 203,216 | 200,554 | |||||||
Premiums earned | 158,693 | 148,337 | |||||||
Pre-tax income | 47,687 | 41,537 | |||||||
Loss ratio | 72.6 | % | 72.6 | % | |||||
Expense ratio | 26.5 | % | 26.2 | % | |||||
GAAP combined ratio | 99.1 | % | 98.8 | % | |||||
Reinsurance: | |||||||||
Gross premiums written | $ | 120,000 | $ | 112,564 | |||||
Net premiums written | 112,880 | 106,354 | |||||||
Premiums earned | 106,338 | 105,478 | |||||||
Pre-tax income | 27,697 | 25,337 | |||||||
Loss ratio | 56.9 | % | 62.6 | % | |||||
Expense ratio | 41.3 | % | 39.2 | % | |||||
GAAP combined ratio | 98.2 | % | 101.8 | % | |||||
International: | |||||||||
Gross premiums written | $ | 243,092 | $ | 187,876 | |||||
Net premiums written | 207,703 | 138,654 | |||||||
Premiums earned | 183,244 | 136,958 | |||||||
Pre-tax income | 19,640 | 2,253 | |||||||
Loss ratio | 59.9 | % | 66.5 | % | |||||
Expense ratio | 37.7 | % | 39.3 | % | |||||
GAAP combined ratio | 97.6 | % | 105.8 | % |
First Quarter | |||||||||
2012 | 2011 | ||||||||
Corporate and Eliminations: | |||||||||
Net investment gains | $ | 47,491 | $ | 29,284 | |||||
Interest expense | (28,821 | ) | (28,117 | ) | |||||
Other revenues and expenses (3) | (26,439 | ) | (25,449 | ) | |||||
Pre-tax loss | (7,769 | ) | (24,282 | ) | |||||
Consolidated: | |||||||||
Gross premiums written | $ | 1,401,526 | $ | 1,269,858 | |||||
Net premiums written | 1,203,526 | 1,083,303 | |||||||
Premiums earned | 1,099,651 | 982,497 | |||||||
Pre-tax income | 187,303 | 159,194 | |||||||
Loss ratio | 61.8 | % | 61.8 | % | |||||
Expense ratio | 34.7 | % | 34.7 | % | |||||
GAAP combined ratio | 96.5 | % | 96.5 | % |
(1) | Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated corporate expenses. GAAP combined ratio is the sum of the loss ratio and the expense ratio. |
(2) | For the first quarters of 2012 and 2011, catastrophe losses were $4 million and $24 million, respectively. |
(3) | Other revenues and expenses include corporate investment income, expenses not allocated to the business segments and revenues and expenses from investments in wholly-owned, non-insurance subsidiaries that are consolidated for financial reporting purposes. |
March 31, 2012 | December 31, 2011 | |||||||
Net invested assets (1) | $ | 15,114,999 | $ | 14,559,781 | ||||
Total assets | 19,133,632 | 18,403,873 | ||||||
Reserves for losses and loss expenses | 9,394,152 | 9,337,134 | ||||||
Senior notes and other debt | 1,853,512 | 1,500,503 | ||||||
Junior subordinated debentures | 243,050 | 242,997 | ||||||
Common stockholders’ equity (2) | 4,126,916 | 3,953,356 | ||||||
Common stock outstanding | 138,274 | 137,520 | ||||||
Book value per share (3) | 29.85 | 28.75 | ||||||
Tangible book value per share (3) | 29.14 | 28.04 |
(1) | Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. |
(2) | After-tax unrealized investment gains were $452 million and $430 million as of March 31, 2012 and December 31, 2011, respectively. Unrealized currency translation losses were $46 million and $61 million as of March 31, 2012 and December 31, 2011, respectively. |
(3) | Book value per share is total common stockholders’ equity divided by the number of common shares outstanding. Tangible book value per share is total common stockholders’ equity excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. |
First Quarter | |||||||||
2012 | 2011 | ||||||||
Reconciliation of operating income to net income: | |||||||||
Operating income (1) | $ | 104,236 | $ | 96,800 | |||||
Investment gains, net of tax | 31,082 | 18,790 | |||||||
Net income | $ | 135,318 | $ | 115,590 | |||||
Return on equity (2) | 13.7 | % | 12.7 | % | |||||
Cash flow from operations | $ | 73,762 | $ | 51,771 | |||||
Other operating costs and expenses: | |||||||||
Underwriting expenses | $ | 382,023 | $ | 340,483 | |||||
Service expenses | 19,592 | 17,329 | |||||||
Net foreign currency losses (gains) | (1,434 | ) | 520 | ||||||
Other costs and expenses | 31,598 | 27,797 | |||||||
Total | $ | 431,779 | $ | 386,129 |
(1) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding net investment gains and losses. Management believes that excluding net investment gains and losses, which are often discretionary and frequently relate to economic factors, provides a useful indicator of trends in the Company’s underlying operations. |
(2) | Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
Carrying Value | Percent of Total | ||||||
Fixed maturity securities: | |||||||
United States government and government agencies | $ | 1,026,262 | 6.8 | % | |||
State and municipal: | |||||||
Special revenue | 2,175,615 | 14.4 | % | ||||
State general obligation | 946,343 | 6.3 | % | ||||
Local general obligation | 476,284 | 3.1 | % | ||||
Pre-refunded | 1,277,913 | 8.5 | % | ||||
Corporate backed | 461,126 | 3.0 | % | ||||
Total state and municipal | 5,337,281 | 35.3 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 1,113,765 | 7.4 | % | ||||
Residential — Prime | 224,559 | 1.5 | % | ||||
Residential — Alt A | 122,221 | 0.8 | % | ||||
Commercial | 108,852 | 0.7 | % | ||||
Total mortgage-backed securities | 1,569,397 | 10.4 | % | ||||
Corporate: | |||||||
Industrial | 1,304,343 | 8.6 | % | ||||
Financial | 620,007 | 4.1 | % | ||||
Utilities | 186,362 | 1.2 | % | ||||
Asset-backed | 394,934 | 2.6 | % | ||||
Other | 109,630 | 0.7 | % | ||||
Total corporate | 2,615,276 | 17.2 | % | ||||
Foreign | 1,005,993 | 6.7 | % | ||||
Total fixed maturity securities (1) | 11,554,209 | 76.4 | % | ||||
Equity securities available for sale: | |||||||
Common stocks | 365,237 | 2.4 | % | ||||
Preferred stocks | 123,983 | 0.8 | % | ||||
Total equity securities available for sale | 489,220 | 3.2 | % | ||||
Cash and cash equivalents (2) | 1,387,976 | 9.2 | % | ||||
Investment funds (2) | 626,327 | 4.1 | % | ||||
Real estate | 355,254 | 2.4 | % | ||||
Arbitrage trading account | 344,892 | 2.3 | % | ||||
Loans receivable | 357,121 | 2.4 | % | ||||
Net invested assets | $ | 15,114,999 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.4 years. |
(2) | Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. Investment funds are net of related liabilities of $53 million. |
Government | Corporate | Total | ||||||||||
Australia | $ | 168,538 | $ | 103,027 | $ | 271,565 | ||||||
United Kingdom | 150,605 | 42,504 | 193,109 | |||||||||
Germany | 93,932 | 27,692 | 121,624 | |||||||||
Canada | 91,179 | 47,790 | 138,969 | |||||||||
Argentina | 93,411 | — | 93,411 | |||||||||
Brazil | 49,430 | — | 49,430 | |||||||||
Supranational (1) | 37,796 | — | 37,796 | |||||||||
Norway | 36,980 | — | 36,980 | |||||||||
Switzerland | — | 30,983 | 30,983 | |||||||||
Finland | — | 11,370 | 11,370 | |||||||||
Netherlands | — | 11,331 | 11,331 | |||||||||
Singapore | 4,736 | — | 4,736 | |||||||||
Uruguay | 3,261 | — | 3,261 | |||||||||
New Zealand | 1,428 | — | 1,428 | |||||||||
Total | $ | 731,296 | $ | 274,697 | $ | 1,005,993 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and Inter-American Development Bank. |
W. R. Berkley Corporation | Exhibit 99.2 | |||||||||||||||||||||||
Selected Financial Statement Balances | ||||||||||||||||||||||||
2011 | ||||||||||||||||||||||||
2008 | 2009 | 2010 | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Full Year | |||||||||||||||||
After Retrospective Change in Accounting for Deferred Policy Acquisition Costs | ||||||||||||||||||||||||
Underwriting expenses | $ | 1,305,593 | $ | 1,250,815 | $ | 1,318,878 | $ | 340,483 | $ | 355,113 | $ | 363,889 | $ | 378,644 | $ | 1,438,129 | ||||||||
Tax on operations | 169,196 | 85,883 | 132,519 | 33,105 | 18,354 | 12,321 | 14,331 | 78,111 | ||||||||||||||||
After-tax operating income | 511,753 | 332,380 | 409,531 | 96,800 | 67,848 | 62,626 | 82,290 | 309,564 | ||||||||||||||||
Net income | 279,795 | 307,506 | 446,405 | 115,590 | 82,184 | 76,410 | 117,027 | 391,211 | ||||||||||||||||
Operating earnings per share | 2.95 | 2.00 | 2.64 | 0.66 | 0.46 | 0.43 | 0.58 | 2.13 | ||||||||||||||||
Net income earnings per share | 1.61 | 1.85 | 2.88 | 0.78 | 0.56 | 0.53 | 0.82 | 2.69 | ||||||||||||||||
Return on equity | 7.9 | % | 10.3 | % | 12.6 | % | 12.7 | % | 9 | % | 8.4 | % | 12.8 | % | 10.7 | % | ||||||||
Loss ratio | 62.7 | % | 61.4 | % | 60.2 | % | 61.8 | % | 66.3 | % | 64.8 | % | 62.7 | % | 63.9 | % | ||||||||
Expense ratio | 30.4 | % | 32.9 | % | 34.4 | % | 34.7 | % | 34.9 | % | 34.5 | % | 34.3 | % | 34.6 | % | ||||||||
Combined Ratio | 93.1 | % | 94.3 | % | 94.6 | % | 96.5 | % | 101.2 | % | 99.3 | % | 97 | % | 98.5 | % | ||||||||
Deferred Acquisition costs | 322,895 | 317,093 | 327,282 | 349,975 | 359,387 | 367,995 | 364,937 | 364,937 | ||||||||||||||||
Deferred income tax asset (liability) | 354,285 | 216,121 | 92,676 | 103,751 | 42,942 | 23,195 | (2,834 | ) | (2,834 | ) | ||||||||||||||
Common stockholders' equity | 2,999,271 | 3,547,473 | 3,651,397 | 3,739,411 | 3,859,535 | 3,808,222 | 3,953,356 | 3,953,356 | ||||||||||||||||
Book value per share | 18.58 | 22.66 | 25.89 | 26.41 | 27.39 | 27.78 | 28.75 | 28.75 | ||||||||||||||||
As Originally Reported | ||||||||||||||||||||||||
Underwriting expenses | $ | 1,303,551 | $ | 1,248,463 | $ | 1,314,483 | $ | 339,185 | $ | 353,814 | $ | 362,590 | $ | 377,343 | $ | 1,432,932 | ||||||||
Tax on operations | 169,892 | 86,684 | 134,032 | 33,506 | 18,755 | 12,722 | 14,733 | 79,716 | ||||||||||||||||
After-tax operating income | 513,099 | 333,931 | 412,413 | 97,697 | 68,746 | 63,524 | 83,189 | 313,156 | ||||||||||||||||
Net income | 281,141 | 309,057 | 449,287 | 116,487 | 83,082 | 77,308 | 117,926 | 394,803 | ||||||||||||||||
Operating earnings per share | 2.96 | 2.00 | 2.66 | 0.66 | 0.46 | 0.44 | 0.58 | 2.15 | ||||||||||||||||
Net income earnings per share | 1.62 | 1.86 | 2.90 | 0.79 | 0.56 | 0.53 | 0.82 | 2.71 | ||||||||||||||||
Return on equity | 7.8 | % | 10.1 | % | 12.5 | % | 12.6 | % | 9 | % | 8.4 | % | 12.7 | % | 10.7 | % | ||||||||
Loss ratio | 62.7 | % | 61.4 | % | 60.2 | % | 61.8 | % | 66.3 | % | 64.8 | % | 62.7 | % | 63.9 | % | ||||||||
Expense ratio | 30.4 | % | 32.8 | % | 34.3 | % | 34.5 | % | 34.8 | % | 34.3 | % | 34.1 | % | 34.4 | % | ||||||||
Combined Ratio | 93.1 | % | 94.2 | % | 94.5 | % | 96.3 | % | 101.1 | % | 99.1 | % | 96.8 | % | 98.3 | % | ||||||||
Deferred Acquisition costs | 394,807 | 391,360 | 405,942 | 429,933 | 440,644 | 450,552 | 448,795 | 448,795 | ||||||||||||||||
Deferred income tax asset (liability) | 329,417 | 190,450 | 65,492 | 76,167 | 14,957 | (5,192 | ) | (31,623 | ) | (31,623 | ) | |||||||||||||
Common stockholders' equity | 3,046,319 | 3,596,067 | 3,702,876 | 3,791,784 | 3,912,807 | 3,862,393 | 4,008,426 | 4,008,426 | ||||||||||||||||
Book value per share | 18.87 | 22.97 | 26.26 | 26.78 | 27.77 | 28.18 | 29.15 | 29.15 |