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 |
By: | /s/ Richard M. Baio | |
Name: | Richard M. Baio | |
Title: | Senior Vice President - | |
Chief Financial Officer and | ||
Treasurer |
99.1 | Press Release dated July 25, 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 |
Second Quarter | Six Months | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Gross premiums written | $ | 1,939,365 | $ | 1,811,398 | $ | 3,895,062 | $ | 3,663,203 | |||||||
Net premiums written | 1,642,569 | 1,543,925 | 3,306,291 | 3,119,327 | |||||||||||
Net income | 108,967 | 123,035 | 228,477 | 241,342 | |||||||||||
Net income per diluted share | 0.85 | 0.95 | 1.78 | 1.84 | |||||||||||
Operating income (1) | 104,862 | 105,124 | 219,599 | 211,052 | |||||||||||
Operating income per diluted share | 0.82 | 0.81 | 1.71 | 1.61 | |||||||||||
Return on equity (2) | 9.5 | % | 10.7 | % | 9.9 | % | 10.5 | % |
(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 expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | Net premiums written increased 6.4%. |
• | The combined ratio was 92.3% before catastrophe losses and 94.9% after catastrophe losses. |
• | Book value per share grew 3.2% in the quarter and 7.1% for the first six months of 2016. |
• | Pre-tax return on equity was 13.8%. |
Second Quarter | Six Months | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,642,569 | $ | 1,543,925 | $ | 3,306,291 | $ | 3,119,327 | ||||||||
Change in unearned premiums | (82,776 | ) | (50,884 | ) | (219,163 | ) | (154,273 | ) | ||||||||
Net premiums earned | 1,559,793 | 1,493,041 | 3,087,128 | 2,965,054 | ||||||||||||
Investment income | 129,049 | 127,583 | 259,182 | 251,822 | ||||||||||||
Insurance service fees | 36,939 | 35,942 | 77,301 | 72,460 | ||||||||||||
Net realized investment gains | 6,315 | 27,557 | 31,772 | 46,601 | ||||||||||||
Other than temporary impairments | — | — | (18,114 | ) | — | |||||||||||
Revenues from non-insurance businesses | 123,764 | 105,596 | 225,544 | 198,202 | ||||||||||||
Other income | 54 | 46 | 312 | 305 | ||||||||||||
Total revenues | 1,855,914 | 1,789,765 | 3,663,125 | 3,534,444 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 964,162 | 906,235 | 1,886,483 | 1,806,943 | ||||||||||||
Other operating costs and expenses | 581,955 | 573,582 | 1,164,414 | 1,124,628 | ||||||||||||
Expenses from non-insurance businesses | 116,731 | 98,730 | 212,262 | 188,400 | ||||||||||||
Interest expense | 34,752 | 33,031 | 66,976 | 67,569 | ||||||||||||
Total expenses | 1,697,600 | 1,611,578 | 3,330,135 | 3,187,540 | ||||||||||||
Income before income taxes | 158,314 | 178,187 | 332,990 | 346,904 | ||||||||||||
Income tax expense | (49,408 | ) | (55,138 | ) | (103,837 | ) | (105,411 | ) | ||||||||
Net income before noncontrolling interests | 108,906 | 123,049 | 229,153 | 241,493 | ||||||||||||
Noncontrolling interests | 61 | (14 | ) | (676 | ) | (151 | ) | |||||||||
Net income to common stockholders | $ | 108,967 | $ | 123,035 | $ | 228,477 | $ | 241,342 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.89 | $ | 0.99 | $ | 1.86 | $ | 1.93 | ||||||||
Diluted | $ | 0.85 | $ | 0.95 | $ | 1.78 | $ | 1.84 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 122,616 | 123,781 | 122,698 | 124,869 | ||||||||||||
Diluted | 128,575 | 129,988 | 128,562 | 131,228 |
Second Quarter | Six Months | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Insurance: | ||||||||||||||||
Gross premiums written | $ | 1,753,273 | $ | 1,658,954 | $ | 3,516,343 | $ | 3,351,357 | ||||||||
Net premiums written | 1,471,749 | 1,401,078 | 2,960,486 | 2,826,217 | ||||||||||||
Premiums earned | 1,399,865 | 1,351,382 | 2,775,223 | 2,662,658 | ||||||||||||
Pre-tax income | 183,261 | 183,470 | 389,176 | 371,639 | ||||||||||||
Loss ratio | 61.9 | % | 61.3 | % | 61.2 | % | 61.2 | % | ||||||||
Expense ratio | 32.3 | % | 33.0 | % | 32.4 | % | 32.7 | % | ||||||||
GAAP combined ratio | 94.2 | % | 94.3 | % | 93.6 | % | 93.9 | % | ||||||||
Reinsurance: | ||||||||||||||||
Gross premiums written | $ | 186,092 | $ | 152,444 | $ | 378,719 | $ | 311,846 | ||||||||
Net premiums written | 170,820 | 142,847 | 345,805 | 293,110 | ||||||||||||
Premiums earned | 159,928 | 141,659 | 311,905 | 302,396 | ||||||||||||
Pre-tax income | 17,073 | 27,122 | 38,870 | 47,384 | ||||||||||||
Loss ratio | 61.3 | % | 54.9 | % | 60.5 | % | 58.8 | % | ||||||||
Expense ratio | 40.1 | % | 38.7 | % | 39.2 | % | 37.1 | % | ||||||||
GAAP combined ratio | 101.4 | % | 93.6 | % | 99.7 | % | 95.9 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized investment gains | $ | 6,315 | $ | 27,557 | $ | 13,658 | $ | 46,601 | ||||||||
Interest expense | (34,752 | ) | (33,031 | ) | (66,976 | ) | (67,569 | ) | ||||||||
Other revenues and expenses | (13,583 | ) | (26,931 | ) | (41,738 | ) | (51,151 | ) | ||||||||
Pre-tax loss | (42,020 | ) | (32,405 | ) | (95,056 | ) | (72,119 | ) | ||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,939,365 | $ | 1,811,398 | $ | 3,895,062 | $ | 3,663,203 | ||||||||
Net premiums written | 1,642,569 | 1,543,925 | 3,306,291 | 3,119,327 | ||||||||||||
Premiums earned | 1,559,793 | 1,493,041 | 3,087,128 | 2,965,054 | ||||||||||||
Pre-tax income | 158,314 | 178,187 | 332,990 | 346,904 | ||||||||||||
Loss ratio | 61.8 | % | 60.7 | % | 61.1 | % | 60.9 | % | ||||||||
Expense ratio | 33.1 | % | 33.5 | % | 33.1 | % | 33.1 | % | ||||||||
GAAP combined ratio | 94.9 | % | 94.2 | % | 94.2 | % | 94.0 | % |
Second Quarter | Six Months | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net premiums written: | ||||||||||||||||
Other liability | $ | 498,466 | $ | 432,462 | $ | 956,764 | $ | 854,496 | ||||||||
Workers' compensation | 346,167 | 348,972 | 748,949 | 726,841 | ||||||||||||
Short-tail lines (1) | 327,409 | 328,745 | 679,305 | 675,440 | ||||||||||||
Commercial automobile | 167,277 | 167,969 | 326,279 | 338,920 | ||||||||||||
Professional liability | 132,430 | 122,930 | 249,189 | 230,520 | ||||||||||||
Total Insurance | 1,471,749 | 1,401,078 | 2,960,486 | 2,826,217 | ||||||||||||
Casualty reinsurance | 105,507 | 94,842 | 204,694 | 204,442 | ||||||||||||
Property reinsurance | 65,313 | 48,005 | 141,111 | 88,668 | ||||||||||||
Total Reinsurance | 170,820 | 142,847 | 345,805 | 293,110 | ||||||||||||
Total | $ | 1,642,569 | $ | 1,543,925 | $ | 3,306,291 | $ | 3,119,327 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance | $ | 32,609 | $ | 22,690 | $ | 47,706 | $ | 37,152 | ||||||||
Reinsurance | 7,901 | 1,797 | 8,440 | 1,797 | ||||||||||||
Total | $ | 40,510 | $ | 24,487 | $ | 56,146 | $ | 38,949 | ||||||||
Investment income | ||||||||||||||||
Core portfolio (2) | $ | 107,341 | $ | 105,849 | $ | 217,647 | $ | 215,048 | ||||||||
Investment funds | 18,456 | 21,851 | 35,093 | 27,912 | ||||||||||||
Arbitrage trading account | $ | 3,252 | (117 | ) | $ | 6,442 | 8,862 | |||||||||
Total | $ | 129,049 | $ | 127,583 | $ | 259,182 | $ | 251,822 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Underwriting expenses | $ | 516,287 | $ | 500,234 | $ | 1,021,542 | $ | 982,294 | ||||||||
Service expenses | 37,628 | 32,374 | 71,426 | 63,458 | ||||||||||||
Net foreign currency (gains) losses | (13,084 | ) | 3,076 | (9,356 | ) | 2,509 | ||||||||||
Other costs and expenses | 41,124 | 37,898 | 80,802 | 76,367 | ||||||||||||
Total | $ | 581,955 | $ | 573,582 | $ | 1,164,414 | $ | 1,124,628 | ||||||||
Cash flow from operations | $ | 155,991 | $ | 271,871 | $ | 296,759 | $ | 332,883 | ||||||||
Reconciliation of operating and net income: | ||||||||||||||||
Operating income (3) | $ | 104,862 | $ | 105,124 | $ | 219,599 | $ | 211,052 | ||||||||
After-tax investment gains | 4,105 | 17,911 | 8,878 | 30,290 | ||||||||||||
Net income | $ | 108,967 | $ | 123,035 | $ | 228,477 | $ | 241,342 |
June 30, 2016 | December 31, 2015 | ||||||
Net invested assets (1) | $ | 17,235,050 | $ | 16,460,690 | |||
Total assets | 23,025,863 | 21,724,156 | |||||
Reserves for losses and loss expenses | 10,897,876 | 10,669,150 | |||||
Senior notes and other debt | 1,808,522 | 1,844,621 | |||||
Subordinated debentures | 727,242 | 340,320 | |||||
Common stockholders’ equity (2) | 4,902,501 | 4,600,246 | |||||
Common stock outstanding (3) | 122,642 | 123,308 | |||||
Book value per share (4) | 39.97 | 37.31 | |||||
Tangible book value per share (4) | 38.21 | 35.78 |
(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 $363 million and $181 million as of June 30, 2016 and December 31, 2015, respectively. Unrealized currency translation losses were $305 million and $247 million as of June 30, 2016 and December 31, 2015, respectively. |
(3) | During the first six months of 2016, the Company repurchased 734,055 shares of its common stock for $37.4 million, all of which took place in the first quarter. |
(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 | $ | 560,490 | 3.3 | % | |||
State and municipal: | |||||||
Special revenue | 2,759,821 | 16.0 | % | ||||
State general obligation | 644,791 | 3.7 | % | ||||
Pre-refunded | 485,518 | 2.8 | % | ||||
Corporate backed | 404,060 | 2.3 | % | ||||
Local general obligation | 392,923 | 2.3 | % | ||||
Total state and municipal | 4,687,113 | 27.1 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 770,222 | 4.5 | % | ||||
Residential - Prime | 241,798 | 1.4 | % | ||||
Commercial | 97,724 | 0.6 | % | ||||
Residential — Alt A | 43,418 | 0.3 | % | ||||
Total mortgage-backed securities | 1,153,162 | 6.8 | % | ||||
Asset-backed securities | 1,916,276 | 11.1 | % | ||||
Corporate: | |||||||
Industrial | 2,214,423 | 12.9 | % | ||||
Financial | 1,239,538 | 7.2 | % | ||||
Utilities | 214,564 | 1.2 | % | ||||
Other | 71,017 | 0.4 | % | ||||
Total corporate | 3,739,542 | 21.7 | % | ||||
Foreign government | 898,339 | 5.2 | % | ||||
Total fixed maturity securities (1) | 12,954,922 | 75.2 | % | ||||
Equity securities available for sale: | |||||||
Preferred stocks | 147,765 | 0.9 | % | ||||
Common stocks | 138,887 | 0.8 | % | ||||
Total equity securities available for sale | 286,652 | 1.7 | % | ||||
Investment funds (2) | 1,203,067 | 7.0 | % | ||||
Cash and cash equivalents (3) | 1,126,927 | 6.5 | % | ||||
Real estate | 1,024,102 | 5.9 | % | ||||
Arbitrage trading account | 496,522 | 2.9 | % | ||||
Loans receivable | 142,858 | 0.8 | % | ||||
Net invested assets | $ | 17,235,050 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.0 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 June 30, 2016, the investment in HQY had a carrying value of $50.1 million and a fair value of $363.7 million. Investment funds are net of related liabilities of $2.1 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 | $ | 238,363 | ||
Argentina | 189,683 | |||
Canada | 161,744 | |||
United Kingdom | 140,600 | |||
Germany | 46,177 | |||
Supranational (1) | 35,706 | |||
Brazil | 35,581 | |||
Norway | 33,261 | |||
Singapore | 6,436 | |||
Colombia | 6,050 | |||
Uruguay | 4,738 | |||
Total | $ | 898,339 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development. |