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 2, 2016 |
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 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gross premiums written | $ | 1,764,209 | $ | 1,705,814 | $ | 7,249,993 | $ | 7,062,838 | ||||||||
Net premiums written | 1,499,151 | 1,455,909 | 6,189,515 | 5,996,947 | ||||||||||||
Net income | 109,745 | 110,711 | 503,694 | 648,884 | ||||||||||||
Net income per diluted share | 0.85 | 0.83 | 3.87 | 4.86 | ||||||||||||
Operating income (1) | 115,062 | 97,274 | 443,683 | 483,230 | ||||||||||||
Operating income per diluted share | 0.89 | 0.73 | 3.41 | 3.62 | ||||||||||||
Net income return on equity (2) | 9.6 | % | 10.2 | % | 11.0 | % | 15.0 | % | ||||||||
Operating income return on equity (2) | 10.0 | % | 9.0 | % | 9.7 | % | 11.1 | % |
(1) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains. |
(2) | Return on equity represents net income and operating income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | Operating income per share increased 22%. |
• | Insurance-Domestic net premiums written grew 8%. |
• | Investment income was up 12%. |
• | GAAP combined ratio was 93.1%. |
• | Pre-tax return on equity was 13.6%. |
Fourth Quarter | Full Year | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenues: | |||||||||||||||||
Net premiums written | $ | 1,499,151 | $ | 1,455,909 | $ | 6,189,515 | $ | 5,996,947 | |||||||||
Change in unearned premiums | 44,846 | 46,448 | (148,906 | ) | (252,529 | ) | |||||||||||
Net premiums earned | 1,543,997 | 1,502,357 | 6,040,609 | 5,744,418 | |||||||||||||
Investment income | 127,609 | 114,220 | 512,645 | 600,885 | |||||||||||||
Insurance service fees | 31,788 | 35,473 | 139,440 | 117,443 | |||||||||||||
Net realized gains on investment sales | 12,613 | 20,672 | 125,633 | 254,852 | |||||||||||||
Other-than-temporary impairments | (20,794 | ) | — | (33,309 | ) | — | |||||||||||
Revenues from wholly-owned investees | 115,841 | 111,329 | 421,102 | 410,022 | |||||||||||||
Other income | 2 | 377 | 337 | 1,308 | |||||||||||||
Total revenues | 1,811,056 | 1,784,428 | 7,206,457 | 7,128,928 | |||||||||||||
Expenses: | |||||||||||||||||
Losses and loss expenses | 922,972 | 913,571 | 3,656,270 | 3,490,567 | |||||||||||||
Other operating costs and expenses | 591,581 | 563,837 | 2,289,750 | 2,157,456 | |||||||||||||
Expenses from wholly-owned investees | 108,561 | 109,712 | 397,461 | 400,535 | |||||||||||||
Interest expense | 31,736 | 34,604 | 130,946 | 128,174 | |||||||||||||
Total expenses | 1,654,850 | 1,621,724 | 6,474,427 | 6,176,732 | |||||||||||||
Income before income taxes | 156,206 | 162,704 | 732,030 | 952,196 | |||||||||||||
Income tax expense | (46,328 | ) | (51,753 | ) | (227,923 | ) | (302,593 | ) | |||||||||
Net income before noncontrolling interests | 109,878 | 110,951 | 504,107 | 649,603 | |||||||||||||
Noncontrolling interests | (133 | ) | (240 | ) | (413 | ) | (719 | ) | |||||||||
Net income to common stockholders | $ | 109,745 | $ | 110,711 | $ | 503,694 | $ | 648,884 | |||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.89 | $ | 0.87 | $ | 4.06 | $ | 5.07 | |||||||||
Diluted | $ | 0.85 | $ | 0.83 | $ | 3.87 | $ | 4.86 | |||||||||
Average shares outstanding: | |||||||||||||||||
Basic | 123,287 | 126,830 | 124,040 | 127,874 | |||||||||||||
Diluted | 129,016 | 132,879 | 130,189 | 133,652 |
Fourth Quarter | Full Year | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Insurance-Domestic: | ||||||||||||||||
Gross premiums written | $ | 1,395,146 | $ | 1,295,927 | $ | 5,684,188 | $ | 5,383,679 | ||||||||
Net premiums written | 1,167,871 | 1,084,784 | 4,812,830 | 4,517,587 | ||||||||||||
Net premiums earned | 1,200,241 | 1,133,127 | 4,659,359 | 4,271,933 | ||||||||||||
Pre-tax income | 190,266 | 188,910 | 724,667 | 796,309 | ||||||||||||
Loss ratio | 60.4 | % | 60.2 | % | 61.2 | % | 60.2 | % | ||||||||
Expense ratio | 31.2 | % | 30.4 | % | 31.2 | % | 31.6 | % | ||||||||
GAAP combined ratio | 91.6 | % | 90.6 | % | 92.4 | % | 91.8 | % | ||||||||
Insurance-International: | ||||||||||||||||
Gross premiums written | $ | 209,743 | $ | 236,632 | $ | 923,304 | $ | 984,271 | ||||||||
Net premiums written | 184,982 | 208,051 | 778,567 | 828,076 | ||||||||||||
Net premiums earned | 189,100 | 209,654 | 772,141 | 802,375 | ||||||||||||
Pre-tax income (loss) | 10,579 | (12,081 | ) | 51,926 | 29,779 | |||||||||||
Loss ratio | 58.2 | % | 68.2 | % | 58.2 | % | 62.8 | % | ||||||||
Expense ratio | 41.5 | % | 40.2 | % | 41.4 | % | 40.0 | % | ||||||||
GAAP combined ratio | 99.7 | % | 108.4 | % | 99.6 | % | 102.8 | % | ||||||||
Reinsurance-Global: | ||||||||||||||||
Gross premiums written | $ | 159,320 | $ | 173,255 | $ | 642,501 | $ | 694,888 | ||||||||
Net premiums written | 146,298 | 163,074 | 598,118 | 651,284 | ||||||||||||
Net premiums earned | 154,656 | 159,576 | 609,109 | 670,110 | ||||||||||||
Pre-tax income | 25,055 | 28,732 | 94,852 | 115,677 | ||||||||||||
Loss ratio | 57.1 | % | 55.2 | % | 58.4 | % | 62.0 | % | ||||||||
Expense ratio | 39.4 | % | 37.3 | % | 38.2 | % | 34.0 | % | ||||||||
GAAP combined ratio | 96.5 | % | 92.5 | % | 96.6 | % | 96.0 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net investment gains (losses) | $ | (8,181 | ) | $ | 20,672 | $ | 92,324 | $ | 254,852 | |||||||
Interest expense | (31,736 | ) | (34,604 | ) | (130,946 | ) | (128,174 | ) | ||||||||
Other revenues and expenses | (29,777 | ) | (28,925 | ) | (100,793 | ) | (116,247 | ) | ||||||||
Pre-tax gain (loss) | (69,694 | ) | (42,857 | ) | (139,415 | ) | 10,431 | |||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,764,209 | $ | 1,705,814 | $ | 7,249,993 | $ | 7,062,838 | ||||||||
Net premiums written | 1,499,151 | 1,455,909 | 6,189,515 | 5,996,947 | ||||||||||||
Net premiums earned | 1,543,997 | 1,502,357 | 6,040,609 | 5,744,418 | ||||||||||||
Pre-tax income | 156,206 | 162,704 | 732,030 | 952,196 | ||||||||||||
Loss ratio | 59.8 | % | 60.8 | % | 60.5 | % | 60.8 | % | ||||||||
Expense ratio | 33.3 | % | 32.5 | % | 33.2 | % | 33.0 | % | ||||||||
GAAP combined ratio | 93.1 | % | 93.3 | % | 93.7 | % | 93.8 | % |
Fourth Quarter | Full Year | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Insurance-Domestic net premiums written: | ||||||||||||||||
Other liability | $ | 411,691 | $ | 378,009 | $ | 1,623,710 | $ | 1,536,105 | ||||||||
Workers' compensation | 297,936 | 263,844 | 1,311,303 | 1,193,493 | ||||||||||||
Short-tail lines (1) | 221,103 | 217,915 | 933,726 | 913,258 | ||||||||||||
Commercial automobile | 129,426 | 141,293 | 541,426 | 547,128 | ||||||||||||
Professional liability | 107,715 | 83,723 | 402,665 | 327,603 | ||||||||||||
Total | $ | 1,167,871 | $ | 1,084,784 | $ | 4,812,830 | $ | 4,517,587 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance-Domestic | $ | 8,662 | $ | 6,392 | $ | 49,880 | $ | 64,937 | ||||||||
Insurance-International | 1,904 | 11,495 | 4,385 | 20,062 | ||||||||||||
Reinsurance-Global | 587 | 528 | 3,343 | 2,076 | ||||||||||||
Total | $ | 11,153 | $ | 18,415 | $ | 57,608 | $ | 87,075 | ||||||||
Investment income: | ||||||||||||||||
Core portfolio (2) | $ | 110,798 | $ | 107,937 | $ | 433,526 | $ | 446,862 | ||||||||
Investment funds | 11,390 | (3,647 | ) | 62,228 | 131,585 | |||||||||||
Arbitrage trading account | 5,421 | 9,930 | 16,891 | 22,438 | ||||||||||||
Total | $ | 127,609 | $ | 114,220 | $ | 512,645 | $ | 600,885 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Underwriting expenses | $ | 514,389 | $ | 488,920 | $ | 2,005,498 | $ | 1,896,528 | ||||||||
Service expenses | 34,051 | 33,597 | 127,365 | 102,727 | ||||||||||||
Net foreign currency losses (gains) | 3,634 | 991 | 400 | (27 | ) | |||||||||||
Other costs and expenses | 39,507 | 40,329 | 156,487 | 158,228 | ||||||||||||
Total | $ | 591,581 | $ | 563,837 | $ | 2,289,750 | $ | 2,157,456 | ||||||||
Cash flow from operations | $ | 260,969 | $ | 89,061 | $ | 881,304 | $ | 734,847 | ||||||||
Reconciliation of operating and net income: | ||||||||||||||||
Operating income (3) | $ | 115,062 | $ | 97,274 | $ | 443,683 | $ | 483,230 | ||||||||
After-tax investment (losses) gains | (5,317 | ) | 13,437 | 60,011 | 165,654 | |||||||||||
Net income | $ | 109,745 | $ | 110,711 | $ | 503,694 | $ | 648,884 |
December 31, 2015 | December 31, 2014 | |||||||
Net invested assets (1) | $ | 16,460,690 | $ | 16,508,087 | ||||
Total assets | 21,730,967 | 21,716,691 | ||||||
Reserves for losses and loss expenses | 10,669,150 | 10,369,701 | ||||||
Senior notes and other debt | 1,844,621 | 2,115,527 | ||||||
Subordinated debentures | 340,320 | 340,060 | ||||||
Common stockholders’ equity (2) | 4,600,246 | 4,589,945 | ||||||
Common stock outstanding (3) | 123,308 | 126,749 | ||||||
Book value per share (4) | 37.31 | 36.21 | ||||||
Tangible book value per share (4) | 35.78 | 34.79 |
(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 $181 million and $306 million as of December 31, 2015 and December 31, 2014, respectively. Unrealized currency translation losses were $247 million and $123 million as of December 31, 2015 and December 31, 2014, respectively. |
(3) | During the full year 2015, the Company repurchased 4,502,025 shares of its common stock for $224 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 | $ | 670,419 | 4.1 | % | |||
State and municipal: | |||||||
Special revenue | 2,632,626 | 16.0 | % | ||||
State general obligation | 641,790 | 3.9 | % | ||||
Pre-refunded | 472,697 | 2.9 | % | ||||
Corporate backed | 402,541 | 2.4 | % | ||||
Local general obligation | 387,654 | 2.3 | % | ||||
Total state and municipal | 4,537,308 | 27.5 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 855,195 | 5.2 | % | ||||
Residential - Prime | 245,611 | 1.5 | % | ||||
Commercial | 65,722 | 0.4 | % | ||||
Residential - Alt A | 52,469 | 0.3 | % | ||||
Total mortgage-backed securities | 1,218,997 | 7.4 | % | ||||
Asset-backed securities | 1,705,172 | 10.4 | % | ||||
Corporate: | |||||||
Industrial | 2,021,534 | 12.3 | % | ||||
Financial | 1,173,021 | 7.1 | % | ||||
Utilities | 198,651 | 1.2 | % | ||||
Other | 81,832 | 0.5 | % | ||||
Total corporate | 3,475,038 | 21.1 | % | ||||
Foreign government | 837,460 | 5.1 | % | ||||
Total fixed maturity securities (1) | 12,444,394 | 75.6 | % | ||||
Equity securities available for sale: | |||||||
Preferred stocks | 113,593 | 0.7 | % | ||||
Common stocks | 37,273 | 0.2 | % | ||||
Total equity securities available for sale | 150,866 | 0.9 | % | ||||
Investment funds (2) | 1,167,839 | 7.1 | % | ||||
Arbitrage trading account | 376,697 | 2.3 | % | ||||
Real estate | 936,367 | 5.7 | % | ||||
Cash and cash equivalents (3) | 1,111,424 | 6.7 | % | ||||
Loans receivable | 273,103 | 1.7 | % | ||||
Net invested assets | $ | 16,460,690 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.3 years, including cash and cash equivalents. |
(2) | Investment funds include an investment in publicly traded common stock of HealthEquity, Inc. (HQY), which is carried on the equity method of accounting. At December 31, 2015, the investment in HQY had a carrying value of $45.4 million and a fair value of $300.1 million. Investment funds are reported net of related liabilities of $2.2 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 | $ | 230,036 | |||
United Kingdom | 165,114 | ||||
Canada | 150,501 | ||||
Argentina | 105,428 | ||||
Germany | 51,759 | ||||
Brazil | 51,405 | ||||
Supranational (1) | 36,090 | ||||
Norway | 31,656 | ||||
Singapore | 6,101 | ||||
Colombia | 5,502 | ||||
Uruguay | 3,868 | ||||
Total | $ | 837,460 |
(1) | Supranational represents investments in the North American Development Bank, |