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 |
Press Release dated January 30, 2018 |
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 | Twelve Months | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Gross premiums written | $ | 1,779,446 | $ | 1,779,791 | $ | 7,476,963 | $ | 7,543,701 | ||||||||
Net premiums written | 1,478,236 | 1,510,257 | 6,260,508 | 6,423,913 | ||||||||||||
Net income to common stockholders | 154,589 | 152,790 | 549,094 | 601,916 | ||||||||||||
Net income per diluted share | 1.21 | 1.20 | 4.26 | 4.68 | ||||||||||||
Return on equity (1) | 12.3 | % | 13.3 | % | 10.9 | % | 13.1 | % |
(1) | Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | The accident year combined ratio excluding catastrophes during the quarter was 94.2%. |
• | Investment income attributable to the core investment portfolio increased 12.4%. |
• | Realized pre-tax gains of $57 million, net of performance-based compensatory costs.(1) |
• | Estimated tax benefit from tax reform of $21 million, or $0.16 per share. |
• | Total catastrophe losses were $18 million, including $8 million related to wildfires in California. |
• | Total capital returned to shareholders was $236 million, including $48 million of share repurchases and $188 million of ordinary and special dividends. |
• | Before share repurchases and dividends, book value per share grew 10.9%. Book value per share grew 6.9% to $44.53. |
• | Return on equity of 10.9%, despite record industry catastrophe losses. |
Fourth Quarter | Full year | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,478,236 | $ | 1,510,257 | $ | 6,260,508 | $ | 6,423,913 | ||||||||
Change in unearned premiums | 112,939 | 110,020 | 50,911 | (130,565 | ) | |||||||||||
Net premiums earned | 1,591,175 | 1,620,277 | 6,311,419 | 6,293,348 | ||||||||||||
Net investment income | 149,186 | 159,313 | 575,788 | 564,163 | ||||||||||||
Net realized investment gains | 59,098 | 77,611 | 335,858 | 285,119 | ||||||||||||
Other than temporary impairments | — | — | — | (18,114 | ) | |||||||||||
Revenues from non-insurance businesses (1) | 101,132 | 84,561 | 326,165 | 390,348 | ||||||||||||
Insurance service fees | 34,254 | 29,508 | 134,729 | 138,944 | ||||||||||||
Other income | 111 | 63 | 805 | 376 | ||||||||||||
Total revenues | 1,934,956 | 1,971,333 | 7,684,764 | 7,654,184 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 976,872 | 993,461 | 4,002,348 | 3,845,800 | ||||||||||||
Other operating costs and expenses | 615,778 | 624,857 | 2,436,932 | 2,395,619 | ||||||||||||
Expenses from non-insurance businesses (1) | 104,027 | 84,304 | 325,417 | 375,431 | ||||||||||||
Interest expense | 36,879 | 36,877 | 147,297 | 140,896 | ||||||||||||
Total expenses | 1,733,556 | 1,739,499 | 6,911,994 | 6,757,746 | ||||||||||||
Income before income taxes | 201,400 | 231,834 | 772,770 | 896,438 | ||||||||||||
Income tax expense (2) | (45,128 | ) | (78,164 | ) | (219,433 | ) | (292,953 | ) | ||||||||
Net income before noncontrolling interests | 156,272 | 153,670 | 553,337 | 603,485 | ||||||||||||
Noncontrolling interests | (1,683 | ) | (880 | ) | (4,243 | ) | (1,569 | ) | ||||||||
Net income to common stockholders | $ | 154,589 | $ | 152,790 | $ | 549,094 | $ | 601,916 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.22 | $ | 1.26 | $ | 4.40 | $ | 4.91 | ||||||||
Diluted | $ | 1.21 | $ | 1.20 | $ | 4.26 | $ | 4.68 | ||||||||
Average shares outstanding (3): | ||||||||||||||||
Basic | 126,269 | 121,313 | 124,843 | 122,651 | ||||||||||||
Diluted | 128,221 | 127,446 | 129,018 | 128,553 |
Fourth Quarter | Full year | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Insurance: | ||||||||||||||||
Gross premiums written | $ | 1,636,139 | $ | 1,611,473 | $ | 6,869,831 | $ | 6,795,506 | ||||||||
Net premiums written | 1,351,233 | 1,356,674 | 5,715,871 | 5,743,620 | ||||||||||||
Premiums earned | 1,443,958 | 1,437,858 | 5,706,443 | 5,618,842 | ||||||||||||
Pre-tax income | 198,547 | 212,487 | 756,153 | 799,138 | ||||||||||||
Loss ratio | 61.3 | % | 60.9 | % | 61.6 | % | 61.0 | % | ||||||||
Expense ratio | 33.1 | % | 32.9 | % | 32.9 | % | 32.5 | % | ||||||||
GAAP combined ratio | 94.4 | % | 93.8 | % | 94.5 | % | 93.5 | % | ||||||||
Reinsurance: | ||||||||||||||||
Gross premiums written | $ | 143,307 | $ | 168,318 | $ | 607,132 | $ | 748,195 | ||||||||
Net premiums written | 127,003 | 153,583 | 544,637 | 680,293 | ||||||||||||
Premiums earned | 147,217 | 182,419 | 604,976 | 674,506 | ||||||||||||
Pre-tax income (loss) | 23,004 | 19,063 | (15,276 | ) | 98,278 | |||||||||||
Loss ratio | 61.9 | % | 64.7 | % | 80.2 | % | 61.6 | % | ||||||||
Expense ratio | 38.3 | % | 38.8 | % | 37.4 | % | 39.0 | % | ||||||||
GAAP combined ratio | 100.2 | % | 103.5 | % | 117.6 | % | 100.6 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized investment gains | $ | 59,098 | $ | 77,611 | $ | 335,858 | $ | 267,005 | ||||||||
Interest expense | (36,879 | ) | (36,877 | ) | (147,297 | ) | (140,896 | ) | ||||||||
Other revenues and expenses | (42,370 | ) | (40,450 | ) | (156,668 | ) | (127,087 | ) | ||||||||
Pre-tax (loss) income | (20,151 | ) | 284 | 31,893 | (978 | ) | ||||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,779,446 | $ | 1,779,791 | $ | 7,476,963 | $ | 7,543,701 | ||||||||
Net premiums written | 1,478,236 | 1,510,257 | 6,260,508 | 6,423,913 | ||||||||||||
Premiums earned | 1,591,175 | 1,620,277 | 6,311,419 | 6,293,348 | ||||||||||||
Pre-tax income | 201,400 | 231,834 | 772,770 | 896,438 | ||||||||||||
Loss ratio | 61.4 | % | 61.3 | % | 63.4 | % | 61.1 | % | ||||||||
Expense ratio | 33.5 | % | 33.6 | % | 33.3 | % | 33.2 | % | ||||||||
GAAP combined ratio | 94.9 | % | 94.9 | % | 96.7 | % | 94.3 | % |
Fourth Quarter | Full year | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net premiums written: | ||||||||||||||||
Other liability | $ | 446,236 | $ | 449,817 | $ | 1,831,039 | $ | 1,870,427 | ||||||||
Workers' compensation | 329,746 | 328,214 | 1,495,148 | 1,426,196 | ||||||||||||
Short-tail lines (1) | 273,399 | 292,964 | 1,163,009 | 1,254,404 | ||||||||||||
Commercial automobile | 164,557 | 147,216 | 675,366 | 642,313 | ||||||||||||
Professional liability | 137,295 | 138,463 | 551,309 | 550,280 | ||||||||||||
Total Insurance | 1,351,233 | 1,356,674 | 5,715,871 | 5,743,620 | ||||||||||||
Casualty reinsurance | 90,760 | 93,239 | 366,397 | 398,779 | ||||||||||||
Property reinsurance | 36,243 | 60,344 | 178,240 | 281,514 | ||||||||||||
Total Reinsurance | 127,003 | 153,583 | 544,637 | 680,293 | ||||||||||||
Total | $ | 1,478,236 | $ | 1,510,257 | $ | 6,260,508 | $ | 6,423,913 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance | $ | 13,301 | $ | 30,796 | $ | 107,147 | $ | 88,850 | ||||||||
Reinsurance | 4,402 | 6,006 | 77,129 | 16,264 | ||||||||||||
Total | $ | 17,703 | $ | 36,802 | $ | 184,276 | $ | 105,114 | ||||||||
Net investment income: | ||||||||||||||||
Core portfolio (2) | $ | 128,851 | $ | 114,589 | $ | 488,474 | $ | 446,169 | ||||||||
Investment funds | 17,425 | 38,914 | 68,169 | 99,301 | ||||||||||||
Arbitrage trading account | 2,910 | 5,810 | 19,145 | 18,693 | ||||||||||||
Total | $ | 149,186 | $ | 159,313 | $ | 575,788 | $ | 564,163 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Policy acquisition and insurance operating expenses | $ | 533,665 | $ | 544,410 | $ | 2,101,024 | $ | 2,089,203 | ||||||||
Insurance service expenses | 32,469 | 35,041 | 129,776 | 138,908 | ||||||||||||
Net foreign currency losses (gains) | 1,012 | (355 | ) | 15,267 | (11,904 | ) | ||||||||||
Other costs and expenses | 48,632 | 45,761 | 190,865 | 179,412 | ||||||||||||
Total | $ | 615,778 | $ | 624,857 | $ | 2,436,932 | $ | 2,395,619 | ||||||||
Cash flow from operations | $ | 189,025 | $ | 121,866 | $ | 710,883 | $ | 848,376 |
December 31, 2017 | December 31, 2016 | ||||||
Net invested assets (1) | $ | 18,508,646 | $ | 17,857,006 | |||
Total assets | 24,312,630 | 23,364,844 | |||||
Reserves for losses and loss expenses | 11,670,408 | 11,197,195 | |||||
Senior notes and other debt | 1,769,052 | 1,760,595 | |||||
Subordinated debentures | 728,218 | 727,630 | |||||
Common stockholders’ equity (2) | 5,411,344 | 5,047,208 | |||||
Common stock outstanding (3) | 121,515 | 121,194 | |||||
Book value per share (4) | 44.53 | 41.65 | |||||
Tangible book value per share (4) | 42.51 | 40.06 |
(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 $375 million and $427 million as of December 31, 2017 and December 31, 2016, respectively. Unrealized currency translation losses were $307 million and $372 million as of December 31, 2017 and December 31, 2016, respectively. |
(3) | During the three months ended December 31, 2017, the Company repurchased 289,884 shares of its common stock for $19.4 million. During the full year ended December 31, 2017, the Company repurchased 731,003 shares of its common stock for $47.8 million. The number of shares of common stock outstanding excludes shares held in a grantor trust. |
(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 | $ | 377,740 | 2.0 | % | |||
State and municipal: | |||||||
Special revenue | 2,725,833 | 14.7 | % | ||||
State general obligation | 490,890 | 2.7 | % | ||||
Pre-refunded | 464,802 | 2.5 | % | ||||
Local general obligation | 444,984 | 2.4 | % | ||||
Corporate backed | 384,467 | 2.1 | % | ||||
Total state and municipal | 4,510,976 | 24.4 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 821,815 | 4.4 | % | ||||
Commercial | 260,545 | 1.4 | % | ||||
Residential - Prime | 211,363 | 1.1 | % | ||||
Residential - Alt A | 19,658 | 0.2 | % | ||||
Total mortgage-backed securities | 1,313,381 | 7.1 | % | ||||
Asset-backed securities | 2,111,544 | 11.4 | % | ||||
Corporate: | |||||||
Industrial | 2,618,892 | 14.1 | % | ||||
Financial | 1,434,767 | 7.8 | % | ||||
Utilities | 294,954 | 1.6 | % | ||||
Other | 40,499 | 0.2 | % | ||||
Total corporate | 4,389,112 | 23.7 | % | ||||
Foreign government | 848,497 | 4.6 | % | ||||
Total fixed maturity securities (1) | 13,551,250 | 73.2 | % | ||||
Equity securities available for sale: | |||||||
Common stocks | 352,204 | 1.9 | % | ||||
Preferred stocks | 224,443 | 1.2 | % | ||||
Total equity securities available for sale | 576,647 | 3.1 | % | ||||
Real estate | 1,469,601 | 7.9 | % | ||||
Investment funds (2) | 1,154,342 | 6.2 | % | ||||
Cash and cash equivalents (3) | 1,059,473 | 5.7 | % | ||||
Arbitrage trading account | 617,649 | 3.3 | % | ||||
Loans receivable | 79,684 | 0.6 | % | ||||
Net invested assets | $ | 18,508,646 | 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 are net of related liabilities of $1.3 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 | $ | 212,821 | ||
Argentina | 179,581 | |||
Canada | 169,222 | |||
United Kingdom | 85,109 | |||
Brazil | 60,693 | |||
Germany | 39,520 | |||
Singapore | 36,450 | |||
Supranational (1) | 31,322 | |||
Norway | 9,589 | |||
Mexico | 9,107 | |||
Colombia | 7,690 | |||
Uruguay | 7,393 | |||
Total | $ | 848,497 |
(1) | Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development. |