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/ | |
Name: | Richard M. Baio | |
Title: | Senior Vice President - | |
Chief Financial Officer and | ||
Treasurer |
99.1 | Press Release dated January 31, 2017 |
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 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Gross premiums written | $ | 1,779,791 | $ | 1,764,209 | $ | 7,543,701 | $ | 7,249,993 | ||||||||
Net premiums written | 1,510,257 | 1,499,151 | 6,423,913 | 6,189,515 | ||||||||||||
Net income to common stockholders | 152,790 | 109,745 | 601,916 | 503,694 | ||||||||||||
Net income per diluted share | 1.20 | 0.85 | 4.68 | 3.87 | ||||||||||||
Operating income (1) | 103,912 | 114,833 | 437,434 | 445,957 | ||||||||||||
Operating income per diluted share | 0.82 | 0.89 | 3.40 | 3.43 | ||||||||||||
Return on equity (2) | 13.3 | % | 9.6 | % | 13.1 | % | 11.0 | % |
(1) | Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains and related expenses. |
(2) | Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | The combined ratio was 94.9%, inclusive of 2.3 loss ratio points from catastrophes. |
• | We established two new businesses - Berkley Cyber Risk Solutions and Berkley Transactional. |
• | Investment income increased 24.8%. |
• | The sale of a portion of our investment in HealthEquity, Inc. (HQY) resulted in a realized pre-tax gain of $68 million and a pre-tax unrealized gain, recognized in equity, of $351 million on our remaining shares. |
• | Total capital returned to shareholders was $316 million, including $132 million of share repurchases and $184 million of special and ordinary dividends. |
• | Book value per share grew 11.6% to $41.65. Before share repurchases and dividends, book value per share grew 16.3%. |
Fourth Quarter | Full Year | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,510,257 | $ | 1,499,151 | $ | 6,423,913 | $ | 6,189,515 | ||||||||
Change in unearned premiums | 110,020 | 44,846 | (130,565 | ) | (148,906 | ) | ||||||||||
Net premiums earned | 1,620,277 | 1,543,997 | 6,293,348 | 6,040,609 | ||||||||||||
Investment income | 159,313 | 127,609 | 564,163 | 512,645 | ||||||||||||
Insurance service fees | 29,508 | 31,788 | 138,944 | 139,440 | ||||||||||||
Net realized investment gains | 77,611 | 12,613 | 285,119 | 125,633 | ||||||||||||
Other than temporary impairments | — | (20,794 | ) | (18,114 | ) | (33,309 | ) | |||||||||
Revenues from non-insurance businesses | 84,561 | 115,841 | 390,348 | 421,102 | ||||||||||||
Other income | 63 | 2 | 376 | 337 | ||||||||||||
Total revenues | 1,971,333 | 1,811,056 | 7,654,184 | 7,206,457 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 993,461 | 922,972 | 3,845,800 | 3,656,270 | ||||||||||||
Other operating costs and expenses | 624,857 | 591,581 | 2,395,619 | 2,289,750 | ||||||||||||
Expenses from non-insurance businesses | 84,304 | 108,561 | 375,431 | 397,461 | ||||||||||||
Interest expense | 36,877 | 31,736 | 140,896 | 130,946 | ||||||||||||
Total expenses | 1,739,499 | 1,654,850 | 6,757,746 | 6,474,427 | ||||||||||||
Income before income taxes | 231,834 | 156,206 | 896,438 | 732,030 | ||||||||||||
Income tax expense | (78,164 | ) | (46,328 | ) | (292,953 | ) | (227,923 | ) | ||||||||
Net income before noncontrolling interests | 153,670 | 109,878 | 603,485 | 504,107 | ||||||||||||
Noncontrolling interests | (880 | ) | (133 | ) | (1,569 | ) | (413 | ) | ||||||||
Net income to common stockholders | $ | 152,790 | $ | 109,745 | $ | 601,916 | $ | 503,694 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.26 | $ | 0.89 | $ | 4.91 | $ | 4.06 | ||||||||
Diluted | $ | 1.20 | $ | 0.85 | $ | 4.68 | $ | 3.87 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 121,313 | 123,287 | 122,651 | 124,040 | ||||||||||||
Diluted | 127,446 | 129,016 | 128,553 | 130,189 |
Fourth Quarter | Full Year | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Insurance: | ||||||||||||||||
Gross premiums written | $ | 1,622,647 | $ | 1,604,889 | $ | 6,835,062 | $ | 6,607,492 | ||||||||
Net premiums written | 1,365,659 | 1,352,853 | 5,775,913 | 5,591,397 | ||||||||||||
Premiums earned | 1,446,016 | 1,389,341 | 5,652,903 | 5,431,500 | ||||||||||||
Pre-tax income | 217,792 | 200,845 | 822,617 | 776,593 | ||||||||||||
Loss ratio | 60.9 | % | 60.1 | % | 61.0 | % | 60.8 | % | ||||||||
Expense ratio | 33.0 | % | 32.6 | % | 32.6 | % | 32.6 | % | ||||||||
GAAP combined ratio | 93.9 | % | 92.7 | % | 93.6 | % | 93.4 | % | ||||||||
Reinsurance: | ||||||||||||||||
Gross premiums written | $ | 157,144 | $ | 159,320 | $ | 708,639 | $ | 642,501 | ||||||||
Net premiums written | 144,598 | 146,298 | 648,000 | 598,118 | ||||||||||||
Premiums earned | 174,261 | 154,656 | 640,445 | 609,109 | ||||||||||||
Pre-tax income | 13,758 | 25,055 | 74,799 | 94,852 | ||||||||||||
Loss ratio | 64.9 | % | 57.1 | % | 61.8 | % | 58.4 | % | ||||||||
Expense ratio | 38.5 | % | 39.4 | % | 38.8 | % | 38.2 | % | ||||||||
GAAP combined ratio | 103.4 | % | 96.5 | % | 100.6 | % | 96.6 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized investment gains (losses) | $ | 77,611 | $ | (8,181 | ) | $ | 267,005 | $ | 92,324 | |||||||
Interest expense | (36,877 | ) | (31,736 | ) | (140,896 | ) | (130,946 | ) | ||||||||
Other revenues and expenses | (40,450 | ) | (29,777 | ) | (127,087 | ) | (100,793 | ) | ||||||||
Pre-tax income (loss) | 284 | (69,694 | ) | (978 | ) | (139,415 | ) | |||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,779,791 | $ | 1,764,209 | $ | 7,543,701 | $ | 7,249,993 | ||||||||
Net premiums written | 1,510,257 | 1,499,151 | 6,423,913 | 6,189,515 | ||||||||||||
Premiums earned | 1,620,277 | 1,543,997 | 6,293,348 | 6,040,609 | ||||||||||||
Pre-tax income | 231,834 | 156,206 | 896,438 | 732,030 | ||||||||||||
Loss ratio | 61.3 | % | 59.8 | % | 61.1 | % | 60.5 | % | ||||||||
Expense ratio | 33.6 | % | 33.3 | % | 33.2 | % | 33.2 | % | ||||||||
GAAP combined ratio | 94.9 | % | 93.1 | % | 94.3 | % | 93.7 | % |
Fourth Quarter | Full Year | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net premiums written: | ||||||||||||||||
Other liability | $ | 454,765 | $ | 450,259 | $ | 1,904,625 | $ | 1,742,938 | ||||||||
Workers' compensation | 331,000 | 322,073 | 1,432,579 | 1,405,793 | ||||||||||||
Short-tail lines (1) | 297,317 | 294,883 | 1,272,563 | 1,286,104 | ||||||||||||
Commercial automobile | 147,216 | 164,625 | 642,313 | 677,608 | ||||||||||||
Professional liability | 135,361 | 121,013 | 523,833 | 478,954 | ||||||||||||
Total Insurance | 1,365,659 | 1,352,853 | 5,775,913 | 5,591,397 | ||||||||||||
Casualty reinsurance | 88,607 | 100,171 | 384,644 | 413,626 | ||||||||||||
Property reinsurance | 55,991 | 46,127 | 263,356 | 184,492 | ||||||||||||
Total Reinsurance | 144,598 | 146,298 | 648,000 | 598,118 | ||||||||||||
Total | $ | 1,510,257 | $ | 1,499,151 | $ | 6,423,913 | $ | 6,189,515 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance | $ | 30,796 | $ | 10,566 | $ | 88,850 | $ | 54,265 | ||||||||
Reinsurance | 6,006 | 587 | 16,264 | 3,343 | ||||||||||||
Total | $ | 36,802 | $ | 11,153 | $ | 105,114 | $ | 57,608 | ||||||||
Investment income: | ||||||||||||||||
Core portfolio (2) | $ | 114,589 | $ | 110,798 | $ | 446,169 | $ | 433,526 | ||||||||
Investment funds | 38,914 | 11,390 | 99,301 | 62,228 | ||||||||||||
Arbitrage trading account | 5,810 | 5,421 | 18,693 | 16,891 | ||||||||||||
Total | $ | 159,313 | $ | 127,609 | $ | 564,163 | $ | 512,645 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Policy acquisition and insurance operating expenses | $ | 544,410 | $ | 514,389 | $ | 2,089,203 | $ | 2,005,498 | ||||||||
Service expenses | 35,041 | 34,051 | 138,908 | 127,365 | ||||||||||||
Net foreign currency (gains) losses | (355 | ) | 3,634 | (11,904 | ) | 400 | ||||||||||
Other costs and expenses | 45,761 | 39,507 | 179,412 | 156,487 | ||||||||||||
Total | $ | 624,857 | $ | 591,581 | $ | 2,395,619 | $ | 2,289,750 | ||||||||
Cash flow from operations | $ | 121,866 | $ | 260,969 | $ | 848,376 | $ | 881,304 | ||||||||
Reconciliation of net income to operating income: | ||||||||||||||||
Net Income | $ | 152,790 | $ | 109,745 | $ | 601,916 | $ | 503,694 | ||||||||
Pre-tax investment (gains) losses, net of related expenses | (75,196 | ) | 7,827 | (257,200 | ) | (88,826 | ) | |||||||||
Income tax expense (benefit) | 26,318 | (2,739 | ) | 92,718 | 31,089 | |||||||||||
Operating income after tax (3) | $ | 103,912 | $ | 114,833 | $ | 437,434 | $ | 445,957 |
December 31, 2016 | December 31, 2015 | ||||||
Net invested assets (1) | $ | 17,857,006 | $ | 16,460,690 | |||
Total assets | 23,364,843 | 21,730,967 | |||||
Reserves for losses and loss expenses | 11,197,195 | 10,669,150 | |||||
Senior notes and other debt | 1,760,595 | 1,844,621 | |||||
Subordinated debentures | 727,630 | 340,320 | |||||
Common stockholders’ equity (2) | 5,047,208 | 4,600,246 | |||||
Common stock outstanding (3) | 121,194 | 123,308 | |||||
Book value per share (4) | 41.65 | 37.31 | |||||
Tangible book value per share (4) | 40.06 | 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 $427 million and $181 million as of December 31, 2016 and December 31, 2015, respectively. Unrealized currency translation losses were $372 million and $247 million as of December 31, 2016 and December 31, 2015, respectively. |
(3) | During the three months ended December 31, 2016, the Company repurchased 574,552 shares of its common stock for $32.5 million. During the full year 2016, the Company repurchased 2,395,892 shares of its common stock for $132.4 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 | $ | 513,802 | 2.9 | % | |||
State and municipal: | |||||||
Special revenue | 2,847,343 | 15.9 | % | ||||
State general obligation | 570,699 | 3.2 | % | ||||
Corporate backed | 410,653 | 2.3 | % | ||||
Local general obligation | 387,129 | 2.2 | % | ||||
Pre-refunded | 376,261 | 2.1 | % | ||||
Total state and municipal | 4,592,085 | 25.7 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 826,796 | 4.6 | % | ||||
Residential - Prime | 191,492 | 1.1 | % | ||||
Commercial | 152,863 | 0.9 | % | ||||
Residential — Alt A | 34,438 | 0.2 | % | ||||
Total mortgage-backed securities | 1,205,589 | 6.8 | % | ||||
Asset-backed securities | 1,907,860 | 10.7 | % | ||||
Corporate: | |||||||
Industrial | 2,379,400 | 13.3 | % | ||||
Financial | 1,397,274 | 7.8 | % | ||||
Utilities | 237,544 | 1.3 | % | ||||
Other | 54,309 | 0.3 | % | ||||
Total corporate | 4,068,527 | 22.8 | % | ||||
Foreign government | 902,805 | 5.1 | % | ||||
Total fixed maturity securities (1) | 13,190,668 | 73.9 | % | ||||
Equity securities available for sale: | |||||||
Common stocks | 445,858 | 2.5 | % | ||||
Preferred stocks | 223,342 | 1.3 | % | ||||
Total equity securities available for sale | 669,200 | 3.7 | % | ||||
Cash and cash equivalents (2) | 1,209,281 | 6.8 | % | ||||
Investment funds (3) | 1,196,080 | 6.7 | % | ||||
Real estate | 1,184,981 | 6.6 | % | ||||
Arbitrage trading account | 299,999 | 1.7 | % | ||||
Loans receivable | 106,797 | 0.6 | % | ||||
Net invested assets | $ | 17,857,006 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 3.1 years, including cash and cash equivalents. |
(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 $2.1 million. |
Carrying Value | ||||
Argentina | $ | 239,064 | ||
Australia | 227,075 | |||
Canada | 162,584 | |||
United Kingdom | 105,906 | |||
Brazil | 48,830 | |||
Germany | 41,419 | |||
Supranational (1) | 35,172 | |||
Norway | 25,187 | |||
Colombia | 6,057 | |||
Singapore | 6,003 | |||
Uruguay | 5,508 | |||
Total | $ | 902,805 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development. |