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 24, 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 |
Second Quarter | Six Months | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Gross premiums written | $ | 1,948,074 | $ | 1,887,152 | $ | 3,927,495 | $ | 3,823,359 | ||||||||
Net premiums written | 1,624,104 | 1,564,251 | 3,289,442 | 3,211,089 | ||||||||||||
Net income to common stockholders | 180,075 | 109,004 | 346,472 | 232,451 | ||||||||||||
Net income per diluted share | 1.40 | 0.85 | 2.70 | 1.81 | ||||||||||||
Return on equity (1) | 13.3 | % | 8.6 | % | 12.8 | % | 9.2 | % |
(1) | Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. |
• | We reported annualized pre-tax return on equity of 16.9%. (Excluding the accounting change for equity securities that became effective January 1, 2018, the annualized pre-tax return on equity would have been 20.9%.) |
• | Insurance net premiums written increased 5.2%. |
• | Investment income increased 13.7%. Investment income attributable to the core investment portfolio increased 9.8%(1). |
• | The combined ratio was 94.9%. |
• | Total catastrophe losses were $14 million; non-catastrophe weather-related losses were $15 million. |
• | Net realized pre-tax gains and net unrealized pre-tax gains on equity securities of $66 million, net of performance-based compensatory costs(2). |
• | Total capital returned to shareholders was $79 million, including $61 million of special dividends. |
Second Quarter | Six Months | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,624,104 | $ | 1,564,251 | $ | 3,289,442 | $ | 3,211,089 | ||||||||
Change in unearned premiums | (43,051 | ) | 4,452 | (140,981 | ) | (72,345 | ) | |||||||||
Net premiums earned | 1,581,053 | 1,568,703 | 3,148,461 | 3,138,744 | ||||||||||||
Net investment income | 153,777 | 135,264 | 328,295 | 284,123 | ||||||||||||
Net realized and unrealized gains on investments (1) | 69,631 | 40,453 | 118,095 | 92,801 | ||||||||||||
Revenues from non-insurance businesses | 76,698 | 69,857 | 146,869 | 135,247 | ||||||||||||
Insurance service fees | 29,719 | 33,584 | 60,393 | 66,864 | ||||||||||||
Other income | 38 | 188 | 50 | 688 | ||||||||||||
Total revenues | 1,910,916 | 1,848,049 | 3,802,163 | 3,718,467 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 973,636 | 964,698 | 1,936,856 | 1,944,302 | ||||||||||||
Other operating costs and expenses | 593,142 | 616,632 | 1,203,581 | 1,220,332 | ||||||||||||
Expenses from non-insurance businesses | 75,191 | 68,959 | 144,734 | 134,978 | ||||||||||||
Interest expense | 39,705 | 36,799 | 76,760 | 73,597 | ||||||||||||
Total expenses | 1,681,674 | 1,687,088 | 3,361,931 | 3,373,209 | ||||||||||||
Income before income taxes | 229,242 | 160,961 | 440,232 | 345,258 | ||||||||||||
Income tax expense | (48,464 | ) | (51,388 | ) | (91,881 | ) | (111,011 | ) | ||||||||
Net income before noncontrolling interests | 180,778 | 109,573 | 348,351 | 234,247 | ||||||||||||
Noncontrolling interests | (703 | ) | (569 | ) | (1,879 | ) | (1,796 | ) | ||||||||
Net income to common stockholders | $ | 180,075 | $ | 109,004 | $ | 346,472 | $ | 232,451 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 1.42 | $ | 0.87 | $ | 2.74 | $ | 1.88 | ||||||||
Diluted | $ | 1.40 | $ | 0.85 | $ | 2.70 | $ | 1.81 | ||||||||
Average shares outstanding (2): | ||||||||||||||||
Basic | 126,517 | 125,334 | 126,446 | 123,623 | ||||||||||||
Diluted | 128,339 | 128,601 | 128,189 | 128,546 |
Second Quarter | Six Months | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Insurance: | ||||||||||||||||
Gross premiums written | $ | 1,821,228 | $ | 1,745,734 | $ | 3,659,199 | $ | 3,515,139 | ||||||||
Net premiums written | 1,513,526 | 1,438,169 | 3,056,578 | 2,932,303 | ||||||||||||
Premiums earned | 1,456,008 | 1,415,586 | 2,888,345 | 2,828,755 | ||||||||||||
Pre-tax income | 198,052 | 186,134 | 427,080 | 386,127 | ||||||||||||
Loss ratio | 61.5 | % | 61.1 | % | 61.1 | % | 61.0 | % | ||||||||
Expense ratio | 32.9 | % | 33.0 | % | 32.8 | % | 33.0 | % | ||||||||
GAAP combined ratio | 94.4 | % | 94.1 | % | 93.9 | % | 94.0 | % | ||||||||
Reinsurance: | ||||||||||||||||
Gross premiums written | $ | 126,846 | $ | 141,418 | $ | 268,296 | $ | 308,220 | ||||||||
Net premiums written | 110,578 | 126,082 | 232,864 | 278,786 | ||||||||||||
Premiums earned | 125,045 | 153,117 | 260,116 | 309,989 | ||||||||||||
Pre-tax income | 21,303 | 14,771 | 35,895 | 19,364 | ||||||||||||
Loss ratio | 62.0 | % | 65.2 | % | 66.1 | % | 70.6 | % | ||||||||
Expense ratio | 38.7 | % | 39.2 | % | 38.1 | % | 38.1 | % | ||||||||
GAAP combined ratio | 100.7 | % | 104.4 | % | 104.2 | % | 108.7 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized and unrealized gains on investments | $ | 69,631 | $ | 40,453 | $ | 118,095 | $ | 92,801 | ||||||||
Interest expense | (39,705 | ) | (36,799 | ) | (76,760 | ) | (73,597 | ) | ||||||||
Other revenues and expenses | (20,039 | ) | (43,598 | ) | (64,078 | ) | (79,437 | ) | ||||||||
Pre-tax income (loss) | 9,887 | (39,944 | ) | (22,743 | ) | (60,233 | ) | |||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 1,948,074 | $ | 1,887,152 | $ | 3,927,495 | $ | 3,823,359 | ||||||||
Net premiums written | 1,624,104 | 1,564,251 | 3,289,442 | 3,211,089 | ||||||||||||
Premiums earned | 1,581,053 | 1,568,703 | 3,148,461 | 3,138,744 | ||||||||||||
Pre-tax income | 229,242 | 160,961 | 440,232 | 345,258 | ||||||||||||
Loss ratio | 61.6 | % | 61.5 | % | 61.5 | % | 61.9 | % | ||||||||
Expense ratio | 33.3 | % | 33.6 | % | 33.3 | % | 33.5 | % | ||||||||
GAAP combined ratio | 94.9 | % | 95.1 | % | 94.8 | % | 95.4 | % |
Second Quarter | Six Months | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net premiums written: | ||||||||||||||||
Other liability | $ | 504,315 | $ | 478,595 | $ | 973,155 | $ | 915,041 | ||||||||
Workers' compensation | 377,003 | 372,006 | 796,261 | 798,563 | ||||||||||||
Short-tail lines (1) | 312,318 | 280,100 | 603,436 | 567,178 | ||||||||||||
Commercial automobile | 185,804 | 173,956 | 400,449 | 378,155 | ||||||||||||
Professional liability | 134,086 | 133,512 | 283,277 | 273,366 | ||||||||||||
Total Insurance | 1,513,526 | 1,438,169 | 3,056,578 | 2,932,303 | ||||||||||||
Casualty reinsurance | 80,306 | 86,386 | 162,641 | 179,928 | ||||||||||||
Property reinsurance | 30,272 | 39,696 | 70,223 | 98,858 | ||||||||||||
Total Reinsurance | 110,578 | 126,082 | 232,864 | 278,786 | ||||||||||||
Total | $ | 1,624,104 | $ | 1,564,251 | $ | 3,289,442 | $ | 3,211,089 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance | $ | 12,929 | $ | 32,540 | $ | 20,060 | $ | 46,844 | ||||||||
Reinsurance | 627 | 429 | 884 | 623 | ||||||||||||
Total | $ | 13,556 | $ | 32,969 | $ | 20,944 | $ | 47,467 | ||||||||
Net investment income: | ||||||||||||||||
Core portfolio (2) | $ | 132,728 | $ | 120,912 | $ | 261,701 | $ | 236,761 | ||||||||
Investment funds | 12,716 | 8,895 | 53,070 | 35,544 | ||||||||||||
Arbitrage trading account | 8,333 | 5,457 | 13,524 | 11,818 | ||||||||||||
Total | $ | 153,777 | $ | 135,264 | $ | 328,295 | $ | 284,123 | ||||||||
Net realized and unrealized gains on investments: | ||||||||||||||||
Net realized gains on investment sales | $ | 124,283 | $ | 40,453 | $ | 266,952 | $ | 92,801 | ||||||||
Change in unrealized gains on equity securities (3) | (54,652 | ) | — | (148,857 | ) | — | ||||||||||
Total | $ | 69,631 | $ | 40,453 | $ | 118,095 | $ | 92,801 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Policy acquisition and insurance operating expenses | $ | 526,862 | $ | 527,707 | $ | 1,047,093 | $ | 1,051,116 | ||||||||
Insurance service expenses | 30,990 | 34,923 | 63,702 | 64,856 | ||||||||||||
Net foreign currency (gains) losses | (18,251 | ) | 6,968 | (4,767 | ) | 12,477 | ||||||||||
Other costs and expenses | 53,541 | 47,034 | 97,553 | 91,883 | ||||||||||||
Total | $ | 593,142 | $ | 616,632 | $ | 1,203,581 | $ | 1,220,332 | ||||||||
Cash flow from operations | $ | 139,397 | $ | 149,386 | $ | 119,362 | $ | 224,858 |
June 30, 2018 | December 31, 2017 | ||||||
Net invested assets (1) | $ | 18,479,194 | $ | 18,508,646 | |||
Total assets | 24,621,144 | 24,299,917 | |||||
Reserves for losses and loss expenses | 11,736,575 | 11,670,408 | |||||
Senior notes and other debt | 1,792,055 | 1,769,052 | |||||
Subordinated debentures | 907,117 | 728,218 | |||||
Common stockholders’ equity (2) | 5,426,118 | 5,411,344 | |||||
Common stock outstanding (3) | 121,716 | 121,515 | |||||
Book value per share (4) | 44.58 | 44.53 | |||||
Tangible book value per share (4) | 42.59 | 42.51 |
(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) | As of June 30, 2018, reflected in common stockholders' equity are after-tax unrealized investment gains of $3 million and unrealized currency translation losses of $399 million. As of December 31, 2017, after-tax unrealized investment gains were $375 million and unrealized currency translation losses were $307 million. The decrease in unrealized investment gains during 2018 was primarily attributable to the change in accounting treatment of equity securities and the impact on fixed maturity securities from rising interest rates. |
(3) | During the six months ended June 30, 2018, the Company repurchased 101,000 shares of its common stock for $6.8 million. During the three months ended June 30, 2018, the Company did not repurchase any shares of its common stock. 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 | $ | 481,633 | 2.6 | % | |||
State and municipal: | |||||||
Special revenue | 2,554,685 | 13.8 | % | ||||
Pre-refunded | 453,704 | 2.5 | % | ||||
Local general obligation | 406,327 | 2.2 | % | ||||
State general obligation | 385,800 | 2.1 | % | ||||
Corporate backed | 331,387 | 1.8 | % | ||||
Total state and municipal | 4,131,903 | 22.4 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 874,125 | 4.7 | % | ||||
Commercial | 363,182 | 2.0 | % | ||||
Residential - Prime | 205,996 | 1.1 | % | ||||
Residential - Alt A | 27,246 | 0.1 | % | ||||
Total mortgage-backed securities | 1,470,549 | 7.9 | % | ||||
Asset-backed securities | 2,354,915 | 12.7 | % | ||||
Corporate: | |||||||
Industrial | 2,308,693 | 12.5 | % | ||||
Financial | 1,352,954 | 7.3 | % | ||||
Utilities | 275,026 | 1.5 | % | ||||
Other | 41,516 | 0.2 | % | ||||
Total corporate | 3,978,189 | 21.5 | % | ||||
Foreign government | 801,540 | 4.3 | % | ||||
Total fixed maturity securities (1) | 13,218,729 | 71.4 | % | ||||
Equity securities available for sale: | |||||||
Common stocks | 288,027 | 1.6 | % | ||||
Preferred stocks | 184,362 | 1.0 | % | ||||
Total equity securities available for sale | 472,389 | 2.6 | % | ||||
Real estate | 1,883,622 | 10.2 | % | ||||
Investment funds (2) | 1,207,251 | 6.5 | % | ||||
Cash and cash equivalents (3) | 878,027 | 4.8 | % | ||||
Arbitrage trading account | 721,088 | 3.9 | % | ||||
Loans receivable | 98,088 | 0.6 | % | ||||
Net invested assets | $ | 18,479,194 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA - and an average duration of 2.9 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. |