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 October 23, 2014 |
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 |
Third Quarter | Nine Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross premiums written | $ | 1,779,356 | $ | 1,667,106 | $ | 5,357,024 | $ | 4,916,663 | ||||||||
Net premiums written | 1,525,382 | 1,423,625 | 4,541,038 | 4,142,489 | ||||||||||||
Net income | 188,539 | 136,974 | 538,173 | 369,546 | ||||||||||||
Net income per diluted share | 1.42 | 0.97 | 4.02 | 2.62 | ||||||||||||
Operating income (1) | 141,571 | 108,460 | 385,956 | 310,925 | ||||||||||||
Operating income per diluted share | 1.06 | 0.77 | 2.88 | 2.20 | ||||||||||||
Return on equity (2) | 17.4 | % | 12.7 | % | 16.5 | % | 11.4 | % |
(1) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains and after-tax debt extinguishment costs. |
(2) | Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | Net premiums written grew 7.1%. |
• | Return on equity was 17.4%. |
• | GAAP combined ratio improved to 93.5%. |
• | Net investment gains were $72 million. |
• | Book value per share was up 13.1% since December 31, 2013. |
Third Quarter | Nine Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,525,382 | $ | 1,423,625 | $ | 4,541,038 | $ | 4,142,489 | ||||||||
Change in unearned premiums | (64,578 | ) | (94,763 | ) | (298,977 | ) | (298,993 | ) | ||||||||
Net premiums earned | 1,460,804 | 1,328,862 | 4,242,061 | 3,843,496 | ||||||||||||
Investment income | 179,225 | 125,634 | 486,665 | 405,300 | ||||||||||||
Insurance service fees | 26,345 | 26,121 | 81,970 | 80,509 | ||||||||||||
Net investment gains | 72,258 | 43,869 | 234,180 | 96,896 | ||||||||||||
Revenues from wholly-owned investees | 101,568 | 109,390 | 298,693 | 284,900 | ||||||||||||
Other income | 405 | 248 | 931 | 754 | ||||||||||||
Total revenues | 1,840,605 | 1,634,124 | 5,344,500 | 4,711,855 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 887,123 | 798,276 | 2,576,996 | 2,348,425 | ||||||||||||
Other operating costs and expenses | 544,303 | 504,096 | 1,593,619 | 1,479,986 | ||||||||||||
Expenses from wholly-owned investees | 97,797 | 103,170 | 290,823 | 273,615 | ||||||||||||
Interest expense | 32,929 | 30,349 | 93,570 | 92,667 | ||||||||||||
Total expenses | 1,562,152 | 1,435,891 | 4,555,008 | 4,194,693 | ||||||||||||
Income before income taxes | 278,453 | 198,233 | 789,492 | 517,162 | ||||||||||||
Income tax expense | (89,662 | ) | (60,045 | ) | (250,840 | ) | (147,249 | ) | ||||||||
Net income before noncontrolling interests | 188,791 | 138,188 | 538,652 | 369,913 | ||||||||||||
Noncontrolling interests | (252 | ) | (1,214 | ) | (479 | ) | (367 | ) | ||||||||
Net income to common stockholders | $ | 188,539 | $ | 136,974 | $ | 538,173 | $ | 369,546 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.48 | $ | 1.01 | $ | 4.20 | $ | 2.72 | ||||||||
Diluted | $ | 1.42 | $ | 0.97 | $ | 4.02 | $ | 2.62 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 127,165 | 135,268 | 128,225 | 135,726 | ||||||||||||
Diluted | 133,001 | 140,758 | 133,886 | 141,095 |
Third Quarter | Nine Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Insurance-Domestic: | ||||||||||||||||
Gross premiums written | $ | 1,393,186 | $ | 1,254,868 | $ | 4,087,752 | $ | 3,620,776 | ||||||||
Net premiums written | 1,182,579 | 1,054,465 | 3,432,803 | 3,008,429 | ||||||||||||
Premiums earned | 1,093,554 | 958,994 | 3,138,806 | 2,769,369 | ||||||||||||
Pre-tax income | 228,359 | 172,177 | 607,399 | 465,861 | ||||||||||||
Loss ratio | 59.8 | % | 59.5 | % | 60.2 | % | 61.6 | % | ||||||||
Expense ratio | 31.1 | % | 33.0 | % | 32.0 | % | 32.9 | % | ||||||||
GAAP combined ratio | 90.9 | % | 92.5 | % | 92.2 | % | 94.5 | % | ||||||||
Insurance-International: | ||||||||||||||||
Gross premiums written | $ | 205,253 | $ | 193,557 | $ | 747,639 | $ | 686,870 | ||||||||
Net premiums written | 171,582 | 166,061 | 620,025 | 572,641 | ||||||||||||
Premiums earned | 205,529 | 189,054 | 592,721 | 540,365 | ||||||||||||
Pre-tax income | 12,603 | 16,129 | 41,860 | 51,094 | ||||||||||||
Loss ratio | 62.7 | % | 59.4 | % | 60.9 | % | 58.8 | % | ||||||||
Expense ratio | 40.7 | % | 38.0 | % | 39.9 | % | 38.3 | % | ||||||||
GAAP combined ratio | 103.4 | % | 97.4 | % | 100.8 | % | 97.1 | % | ||||||||
Reinsurance-Global: | ||||||||||||||||
Gross premiums written | $ | 180,917 | $ | 218,681 | $ | 521,633 | $ | 609,017 | ||||||||
Net premiums written | 171,221 | 203,099 | 488,210 | 561,419 | ||||||||||||
Premiums earned | 161,721 | 180,814 | 510,534 | 533,762 | ||||||||||||
Pre-tax income | 29,005 | 24,559 | 86,945 | 87,252 | ||||||||||||
Loss ratio | 64.5 | % | 63.7 | % | 64.2 | % | 60.9 | % | ||||||||
Expense ratio | 34.2 | % | 33.8 | % | 32.9 | % | 35.1 | % | ||||||||
GAAP combined ratio | 98.7 | % | 97.5 | % | 97.1 | % | 96.0 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized investment gains | $ | 72,258 | $ | 43,869 | $ | 234,180 | $ | 96,896 | ||||||||
Interest expense | (32,929 | ) | (30,349 | ) | (93,570 | ) | (92,667 | ) | ||||||||
Other revenues and expenses | (30,843 | ) | (28,152 | ) | (87,322 | ) | (91,274 | ) | ||||||||
Pre-tax gain (loss) | 8,486 | (14,632 | ) | 53,288 | (87,045 | ) | ||||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,779,356 | $ | 1,667,106 | $ | 5,357,024 | $ | 4,916,663 | ||||||||
Net premiums written | 1,525,382 | 1,423,625 | 4,541,038 | 4,142,489 | ||||||||||||
Premiums earned | 1,460,804 | 1,328,862 | 4,242,061 | 3,843,496 | ||||||||||||
Pre-tax income | 278,453 | 198,233 | 789,492 | 517,162 | ||||||||||||
Loss ratio | 60.7 | % | 60.1 | % | 60.7 | % | 61.1 | % | ||||||||
Expense ratio | 32.8 | % | 33.8 | % | 33.2 | % | 34.0 | % | ||||||||
GAAP combined ratio | 93.5 | % | 93.9 | % | 93.9 | % | 95.1 | % |
Third Quarter | Nine Months | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Insurance-Domestic net premiums written: | ||||||||||||||||
Other liability | $ | 386,376 | $ | 353,170 | $ | 1,158,096 | $ | 1,024,836 | ||||||||
Workers' compensation | 298,784 | 271,889 | 929,649 | 795,954 | ||||||||||||
Short-tail lines (1) | 252,262 | 215,710 | 695,343 | 601,866 | ||||||||||||
Commercial automobile | 142,027 | 138,062 | 405,835 | 382,711 | ||||||||||||
Professional liability | 103,130 | 75,634 | 243,880 | 203,062 | ||||||||||||
Total | $ | 1,182,579 | $ | 1,054,465 | $ | 3,432,803 | $ | 3,008,429 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance-Domestic | $ | 7,434 | $ | 5,603 | $ | 58,545 | $ | 35,959 | ||||||||
Insurance-International | 7,164 | 3,477 | 8,567 | 6,881 | ||||||||||||
Reinsurance-Global | 302 | 3,699 | 1,548 | 9,112 | ||||||||||||
Total | $ | 14,900 | $ | 12,779 | $ | 68,660 | $ | 51,952 | ||||||||
Investment income: | ||||||||||||||||
Core portfolio (2) | $ | 120,101 | $ | 108,404 | $ | 338,925 | $ | 345,787 | ||||||||
Investment funds | 59,077 | 11,738 | 135,232 | 45,248 | ||||||||||||
Arbitrage trading account | 47 | 5,492 | 12,508 | 14,265 | ||||||||||||
Total | $ | 179,225 | $ | 125,634 | $ | 486,665 | $ | 405,300 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Underwriting expenses | $ | 479,174 | $ | 449,711 | $ | 1,407,608 | $ | 1,305,195 | ||||||||
Service expenses | 23,266 | 21,064 | 69,130 | 66,505 | ||||||||||||
Debt extinguishment costs | — | — | — | 6,709 | ||||||||||||
Net foreign currency gain | (2,677 | ) | (1,617 | ) | (1,018 | ) | (6,388 | ) | ||||||||
Other costs and expenses | 44,540 | 34,938 | 117,899 | 107,965 | ||||||||||||
Total | $ | 544,303 | $ | 504,096 | $ | 1,593,619 | $ | 1,479,986 | ||||||||
Cash flow from operations | $ | 391,163 | $ | 312,763 | $ | 645,786 | $ | 626,695 | ||||||||
Reconciliation of operating and net income: | ||||||||||||||||
Operating income (3) | $ | 141,571 | $ | 108,460 | $ | 385,956 | $ | 310,925 | ||||||||
After-tax investment gains | 46,968 | 28,514 | 152,217 | 62,982 | ||||||||||||
After-tax debt extinguishment costs | — | — | — | (4,361 | ) | |||||||||||
Net income | $ | 188,539 | $ | 136,974 | $ | 538,173 | $ | 369,546 |
September 30, 2014 | December 31, 2013 | |||||||
Net invested assets (1) | $ | 16,633,570 | $ | 15,540,488 | ||||
Total assets | 22,097,597 | 20,551,796 | ||||||
Reserves for losses and loss expenses | 10,314,265 | 10,080,941 | ||||||
Senior notes and other debt | 2,051,030 | 1,692,442 | ||||||
Junior subordinated debentures | 339,995 | 339,800 | ||||||
Common stockholders’ equity (2) | 4,708,903 | 4,336,035 | ||||||
Common stock outstanding (3) | 126,908 | 132,233 | ||||||
Book value per share (4) | 37.10 | 32.79 | ||||||
Tangible book value per share (4) | 35.72 | 31.74 |
(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, net of related liabilities. |
(2) | After-tax unrealized investment gains were $365 million and $257 million as of September 30, 2014 and December 31, 2013, respectively. Unrealized currency translation losses were $89 million and $61 million as of September 30, 2014 and December 31, 2013, respectively. |
(3) | During the third quarter of 2014, the Company repurchased 738,302 shares of its common stock for $33 million. During the first nine months of 2014, the Company repurchased 5,647,003 shares of its common stock for $230 million. |
(4) | 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. |
Carrying Value | Percent of Total | ||||||
Fixed maturity securities: | |||||||
United States government and government agencies | $ | 813,034 | 4.9 | % | |||
State and municipal: | |||||||
Special revenue | 2,223,429 | 13.4 | % | ||||
State general obligation | 748,321 | 4.5 | % | ||||
Pre-refunded | 546,737 | 3.3 | % | ||||
Corporate backed | 433,235 | 2.6 | % | ||||
Local general obligation | 300,243 | 1.8 | % | ||||
Total state and municipal | 4,251,965 | 25.6 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 1,011,584 | 6.1 | % | ||||
Residential - Prime | 155,169 | 0.9 | % | ||||
Residential — Alt A | 78,506 | 0.5 | % | ||||
Commercial | 77,886 | 0.5 | % | ||||
Total mortgage-backed securities | 1,323,145 | 8.0 | % | ||||
Corporate: | |||||||
Asset-backed | 1,870,778 | 11.2 | % | ||||
Industrial | 1,694,885 | 10.2 | % | ||||
Financial | 1,201,906 | 7.2 | % | ||||
Utilities | 188,864 | 1.1 | % | ||||
Other | 90,268 | 0.5 | % | ||||
Total corporate | 5,046,701 | 30.2 | % | ||||
Foreign government | 962,911 | 5.8 | % | ||||
Total fixed maturity securities (1) | 12,397,756 | 74.5 | % | ||||
Equity securities available for sale: | |||||||
Preferred stocks | 142,051 | 0.9 | % | ||||
Common stocks | 79,973 | 0.5 | % | ||||
Total equity securities available for sale | 222,024 | 1.4 | % | ||||
Cash and cash equivalents (2) | 1,032,342 | 6.2 | % | ||||
Investment funds (3) | 1,015,931 | 6.1 | % | ||||
Arbitrage trading account | 918,223 | 5.5 | % | ||||
Real estate | 703,994 | 4.2 | % | ||||
Loans receivable | 343,300 | 2.1 | % | ||||
Net invested assets | $ | 16,633,570 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.1 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. |
(3) | Investment funds are net of related liabilities of $4.2 million. |
Carrying Value | |||||
Australia | $ | 234,902 | |||
United Kingdom | 184,133 | ||||
Canada | 170,101 | ||||
Argentina | 143,055 | ||||
Germany | 63,035 | ||||
Brazil | 58,198 | ||||
Norway | 49,948 | ||||
Supranational (1) | 49,448 | ||||
Singapore | 6,780 | ||||
Uruguay | 3,311 | ||||
Total | $ | 962,911 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development. |