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 February 3, 2015 |
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 |
Fourth Quarter | Full Year | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross premiums written | $ | 1,705,814 | $ | 1,594,428 | $ | 7,062,838 | $ | 6,511,091 | ||||||||
Net premiums written | 1,455,909 | 1,357,684 | 5,996,947 | 5,500,173 | ||||||||||||
Net income | 110,711 | 130,379 | 648,884 | 499,925 | ||||||||||||
Net income per diluted share | 0.83 | 0.93 | 4.86 | 3.55 | ||||||||||||
Operating income (1) | 97,274 | 119,243 | 483,230 | 430,168 | ||||||||||||
Operating income per diluted share | 0.73 | 0.85 | 3.62 | 3.06 | ||||||||||||
Return on equity (2) | 10.2 | % | 12.1 | % | 15.0 | % | 11.6 | % |
(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 9.0% for the full year and 7.2% for the fourth quarter. |
• | GAAP combined ratio improved to 93.8% for the full year and 93.3% for the fourth quarter. |
• | Expense ratio improved to 33.0% for the full year and 32.5% for the fourth quarter. |
• | Net investment gains were $255 million for the full year and $21 million for the fourth quarter. |
• | Return on investment funds was 12.7% for the full year and -1.3% for the fourth quarter. |
• | Return on equity was 15.0% for the full year and 10.2% for the fourth quarter. |
• | The Company paid a $1.00 per share special dividend in December 2014. |
• | Book value per share increased 13.5% for the year, inclusive of the special dividend. |
Fourth Quarter | Full Year | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,455,909 | $ | 1,357,684 | $ | 5,996,947 | $ | 5,500,173 | ||||||||
Change in unearned premiums | 46,448 | 25,357 | (252,529 | ) | (273,636 | ) | ||||||||||
Net premiums earned | 1,502,357 | 1,383,041 | 5,744,418 | 5,226,537 | ||||||||||||
Investment income | 114,220 | 138,991 | 600,885 | 544,291 | ||||||||||||
Insurance service fees | 35,473 | 27,004 | 117,443 | 107,513 | ||||||||||||
Net investment gains | 20,672 | 30,690 | 254,852 | 127,586 | ||||||||||||
Change in investment valuation allowance, net of other than temporary impairments | — | (6,042 | ) | — | (6,042 | ) | ||||||||||
Revenues from wholly-owned investees | 111,329 | 122,723 | 410,022 | 407,623 | ||||||||||||
Other income | 377 | 272 | 1,308 | 1,026 | ||||||||||||
Total revenues | 1,784,428 | 1,696,679 | 7,128,928 | 6,408,534 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 913,571 | 848,599 | 3,490,567 | 3,197,024 | ||||||||||||
Other operating costs and expenses | 563,837 | 520,698 | 2,157,456 | 2,000,684 | ||||||||||||
Expenses from wholly-owned investees | 109,712 | 115,146 | 400,535 | 388,761 | ||||||||||||
Interest expense | 34,604 | 30,510 | 128,174 | 123,177 | ||||||||||||
Total expenses | 1,621,724 | 1,514,953 | 6,176,732 | 5,709,646 | ||||||||||||
Income before income taxes | 162,704 | 181,726 | 952,196 | 698,888 | ||||||||||||
Income tax expense | (51,753 | ) | (46,338 | ) | (302,593 | ) | (193,587 | ) | ||||||||
Net income before noncontrolling interests | 110,951 | 135,388 | 649,603 | 505,301 | ||||||||||||
Noncontrolling interests | (240 | ) | (5,009 | ) | (719 | ) | (5,376 | ) | ||||||||
Net income to common stockholders | $ | 110,711 | $ | 130,379 | $ | 648,884 | $ | 499,925 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.87 | $ | 0.97 | $ | 5.07 | $ | 3.69 | ||||||||
Diluted | $ | 0.83 | $ | 0.93 | $ | 4.86 | $ | 3.55 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 126,830 | 134,054 | 127,874 | 135,305 | ||||||||||||
Diluted | 132,879 | 139,665 | 133,652 | 140,743 |
Fourth Quarter | Full Year | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Insurance-Domestic: | ||||||||||||||||
Gross premiums written | $ | 1,295,927 | $ | 1,182,977 | $ | 5,383,679 | $ | 4,803,753 | ||||||||
Net premiums written | 1,084,784 | 985,958 | 4,517,587 | 3,994,387 | ||||||||||||
Premiums earned | 1,133,127 | 1,013,047 | 4,271,933 | 3,782,416 | ||||||||||||
Pre-tax income | 188,910 | 182,879 | 796,309 | 648,740 | ||||||||||||
Loss ratio | 60.2 | % | 60.5 | % | 60.2 | % | 61.3 | % | ||||||||
Expense ratio | 30.4 | % | 32.3 | % | 31.6 | % | 32.7 | % | ||||||||
GAAP combined ratio | 90.6 | % | 92.8 | % | 91.8 | % | 94.0 | % | ||||||||
Insurance-International: | ||||||||||||||||
Gross premiums written | $ | 236,632 | $ | 211,906 | $ | 984,271 | $ | 898,776 | ||||||||
Net premiums written | 208,051 | 183,544 | 828,076 | 756,185 | ||||||||||||
Premiums earned | 209,654 | 182,786 | 802,375 | 723,151 | ||||||||||||
Pre-tax income (loss) | (12,081 | ) | 5,828 | 29,779 | 56,922 | |||||||||||
Loss ratio | 68.2 | % | 61.4 | % | 62.8 | % | 59.4 | % | ||||||||
Expense ratio | 40.2 | % | 41.0 | % | 40.0 | % | 39.0 | % | ||||||||
GAAP combined ratio | 108.4 | % | 102.4 | % | 102.8 | % | 98.4 | % | ||||||||
Reinsurance-Global: | ||||||||||||||||
Gross premiums written | $ | 173,255 | $ | 199,545 | $ | 694,888 | $ | 808,562 | ||||||||
Net premiums written | 163,074 | 188,182 | 651,284 | 749,601 | ||||||||||||
Premiums earned | 159,576 | 187,208 | 670,110 | 720,970 | ||||||||||||
Pre-tax income | 28,732 | 23,173 | 115,677 | 110,425 | ||||||||||||
Loss ratio | 55.2 | % | 66.1 | % | 62.0 | % | 62.2 | % | ||||||||
Expense ratio | 37.3 | % | 34.1 | % | 34.0 | % | 34.8 | % | ||||||||
GAAP combined ratio | 92.5 | % | 100.2 | % | 96.0 | % | 97.0 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized investment gains | $ | 20,672 | $ | 24,648 | $ | 254,852 | $ | 121,544 | ||||||||
Interest expense | (34,604 | ) | (30,510 | ) | (128,174 | ) | (123,177 | ) | ||||||||
Other revenues and expenses | (28,925 | ) | (24,292 | ) | (116,247 | ) | (115,566 | ) | ||||||||
Pre-tax gain (loss) | (42,857 | ) | (30,154 | ) | 10,431 | (117,199 | ) | |||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,705,814 | $ | 1,594,428 | $ | 7,062,838 | $ | 6,511,091 | ||||||||
Net premiums written | 1,455,909 | 1,357,684 | 5,996,947 | 5,500,173 | ||||||||||||
Premiums earned | 1,502,357 | 1,383,041 | 5,744,418 | 5,226,537 | ||||||||||||
Pre-tax income | 162,704 | 181,726 | 952,196 | 698,888 | ||||||||||||
Loss ratio | 60.8 | % | 61.4 | % | 60.8 | % | 61.2 | % | ||||||||
Expense ratio | 32.5 | % | 33.7 | % | 33.0 | % | 33.9 | % | ||||||||
GAAP combined ratio | 93.3 | % | 95.1 | % | 93.8 | % | 95.1 | % |
Fourth Quarter | Full Year | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Insurance-Domestic net premiums written: | ||||||||||||||||
Other liability | $ | 378,009 | $ | 348,817 | $ | 1,536,105 | $ | 1,373,653 | ||||||||
Workers' compensation | 263,844 | 245,164 | 1,193,493 | 1,041,118 | ||||||||||||
Short-tail lines (1) | 217,915 | 198,216 | 913,258 | 800,082 | ||||||||||||
Commercial automobile | 141,293 | 119,824 | 547,128 | 502,535 | ||||||||||||
Professional liability | 83,723 | 73,937 | 327,603 | 276,999 | ||||||||||||
Total | $ | 1,084,784 | $ | 985,958 | $ | 4,517,587 | $ | 3,994,387 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance-Domestic | $ | 6,392 | $ | 1,387 | $ | 64,937 | $ | 37,346 | ||||||||
Insurance-International | 11,495 | 4,557 | 20,062 | 11,438 | ||||||||||||
Reinsurance-Global | 528 | 7,102 | 2,076 | 16,214 | ||||||||||||
Total | $ | 18,415 | $ | 13,046 | $ | 87,075 | $ | 64,998 | ||||||||
Investment income (loss): | ||||||||||||||||
Core portfolio | $ | 117,867 | $ | 116,527 | $ | 469,300 | $ | 476,579 | ||||||||
Investment funds | (3,647 | ) | 22,464 | 131,585 | 67,712 | |||||||||||
Total | $ | 114,220 | $ | 138,991 | $ | 600,885 | $ | 544,291 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Underwriting expenses | $ | 488,920 | $ | 465,933 | $ | 1,896,528 | $ | 1,771,128 | ||||||||
Service expenses | 33,597 | 22,157 | 102,727 | 88,662 | ||||||||||||
Debt extinguishment costs | — | — | — | 6,709 | ||||||||||||
Net foreign currency (gain) loss | 991 | (3,732 | ) | (27 | ) | (10,120 | ) | |||||||||
Other costs and expenses | 40,329 | 36,340 | 158,228 | 144,305 | ||||||||||||
Total | $ | 563,837 | $ | 520,698 | $ | 2,157,456 | $ | 2,000,684 | ||||||||
Cash flow from operations before reinsurance commutation payments | $ | 116,811 | $ | 254,640 | $ | 762,597 | $ | 881,335 | ||||||||
Cash flow from operations | $ | 78,297 | $ | 193,103 | $ | 724,083 | $ | 819,798 | ||||||||
Reconciliation of operating and net income: | ||||||||||||||||
Operating income (2) | $ | 97,274 | $ | 119,243 | $ | 483,230 | $ | 430,168 | ||||||||
After-tax investment gains | 13,437 | 11,136 | 165,654 | 74,118 | ||||||||||||
After-tax debt extinguishment costs | — | — | — | (4,361 | ) | |||||||||||
Net income | $ | 110,711 | $ | 130,379 | $ | 648,884 | $ | 499,925 |
December 31, 2014 | December 31, 2013 | |||||||
Net invested assets (1) | $ | 16,508,087 | $ | 15,540,488 | ||||
Total assets | 21,716,691 | 20,551,796 | ||||||
Reserves for losses and loss expenses | 10,369,701 | 10,080,941 | ||||||
Senior notes and other debt | 2,115,527 | 1,692,442 | ||||||
Subordinated debentures | 340,060 | 339,800 | ||||||
Common stockholders’ equity (2) | 4,589,945 | 4,336,035 | ||||||
Common stock outstanding (3) | 126,749 | 132,233 | ||||||
Book value per share (4) | 36.21 | 32.79 | ||||||
Tangible book value per share (4) | 34.72 | 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 $306 million and $257 million as of December 31, 2014 and December 31, 2013, respectively. Unrealized currency translation losses were $123 million and $61 million as of December 31, 2014 and December 31, 2013, respectively. |
(3) | During the fourth quarter of 2014, the Company repurchased 169,465 shares of its common stock for $8.6 million. During the full year 2014, the Company repurchased 5,816,468 shares of its common stock for $238.9 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 | $ | 803,388 | 4.9 | % | |||
State and municipal: | |||||||
Special revenue | 2,395,424 | 14.5 | % | ||||
State general obligation | 741,429 | 4.5 | % | ||||
Pre-refunded | 541,183 | 3.3 | % | ||||
Corporate backed | 431,355 | 2.6 | % | ||||
Local general obligation | 326,506 | 2.0 | % | ||||
Total state and municipal | 4,435,897 | 26.9 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 1,019,165 | 6.2 | % | ||||
Residential - Prime | 151,367 | 0.9 | % | ||||
Commercial | 76,037 | 0.5 | % | ||||
Residential — Alt A | 72,345 | 0.4 | % | ||||
Total mortgage-backed securities | 1,318,914 | 8.0 | % | ||||
Corporate: | |||||||
Asset-backed | 2,025,927 | 12.3 | % | ||||
Industrial | 1,718,799 | 10.4 | % | ||||
Financial | 1,176,206 | 7.1 | % | ||||
Utilities | 196,542 | 1.2 | % | ||||
Other | 87,661 | 0.5 | % | ||||
Total corporate | 5,205,135 | 31.5 | % | ||||
Foreign government | 941,826 | 5.7 | % | ||||
Total fixed maturity securities (1) | 12,705,160 | 77.0 | % | ||||
Equity securities available for sale: | |||||||
Common stocks | 76,346 | 0.5 | % | ||||
Preferred stocks | 94,645 | 0.5 | % | ||||
Total equity securities available for sale | 170,991 | 1.0 | % | ||||
Investment funds (2) | 1,207,960 | 7.3 | % | ||||
Cash and cash equivalents (3) | 919,704 | 5.6 | % | ||||
Real estate | 731,612 | 4.4 | % | ||||
Arbitrage trading account | 450,648 | 2.7 | % | ||||
Loans receivable | 322,012 | 2.0 | % | ||||
Net invested assets | $ | 16,508,087 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.2 years. |
(2) | Investment funds are net of related liabilities of $3.4 million. |
(3) | Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. |
Carrying Value | |||||
Australia | $ | 234,645 | |||
United Kingdom | 204,160 | ||||
Canada | 155,368 | ||||
Argentina | 129,572 | ||||
Brazil | 57,925 | ||||
Germany | 57,599 | ||||
Supranational (1) | 48,710 | ||||
Norway | 43,784 | ||||
Singapore | 6,507 | ||||
Uruguay | 3,556 | ||||
Total | $ | 941,826 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development. |