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 |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Common Stock, par value $.20 per share | WRB | New York Stock Exchange | ||
5.625% Subordinated Debentures due 2053 | WRB B | New York Stock Exchange | ||
5.9% Subordinated Debentures due 2056 | WRB C | New York Stock Exchange | ||
5.75% Subordinated Debentures due 2056 | WRB D | New York Stock Exchange | ||
5.70% Subordinated Debentures due 2058 | WRB E | New York Stock Exchange |
By: | /s/ Richard M. Baio | |
Name: | Richard M. Baio | |
Title: | Executive Vice President | |
Chief Financial Officer and Treasurer |
99.1 | Press Release dated July 23, 2019 |
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 | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Gross premiums written | $ | 2,089,861 | $ | 1,948,074 | $ | 4,136,090 | $ | 3,927,495 | ||||||||
Net premiums written | 1,743,464 | 1,624,104 | 3,453,065 | 3,289,442 | ||||||||||||
Net income to common stockholders | 216,709 | 180,075 | 397,431 | 346,472 | ||||||||||||
Net income per diluted share (1) | 1.12 | 0.93 | 2.06 | 1.80 | ||||||||||||
Return on equity (2) | 15.9 | % | 13.3 | % | 14.6 | % | 12.8 | % |
• | The accident year combined ratio excluding catastrophe losses was 92.8%. The reported combined ratio was 93.9%, inclusive of 1.5 loss ratio points from catastrophes. |
• | Book value per share grew 5.6% for the quarter, before dividends. |
• | Total capital returned to shareholders was $112 million, including $92 million of special dividends. |
• | Net realized and unrealized pre-tax gains on investments were $73 million, net of performance-based compensation costs(1). |
Second Quarter | Six Months | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Net premiums written | $ | 1,743,464 | $ | 1,624,104 | $ | 3,453,065 | $ | 3,289,442 | ||||||||
Change in unearned premiums | (96,623 | ) | (43,051 | ) | (213,368 | ) | (140,981 | ) | ||||||||
Net premiums earned | 1,646,841 | 1,581,053 | 3,239,697 | 3,148,461 | ||||||||||||
Net investment income | 188,333 | 153,777 | 346,587 | 328,295 | ||||||||||||
Net realized and unrealized gains on investments | 73,574 | 69,631 | 142,226 | 118,095 | ||||||||||||
Revenues from non-insurance businesses | 89,297 | 76,698 | 181,124 | 146,869 | ||||||||||||
Insurance service fees | 22,446 | 29,719 | 47,759 | 60,393 | ||||||||||||
Other income | 2,893 | 38 | 3,013 | 50 | ||||||||||||
Total revenues | 2,023,384 | 1,910,916 | 3,960,406 | 3,802,163 | ||||||||||||
Expenses: | ||||||||||||||||
Losses and loss expenses | 1,028,830 | 973,636 | 2,017,479 | 1,936,856 | ||||||||||||
Other operating costs and expenses | 591,828 | 593,142 | 1,179,916 | 1,203,581 | ||||||||||||
Expenses from non-insurance businesses | 88,272 | 75,191 | 178,397 | 144,734 | ||||||||||||
Interest expense | 40,718 | 39,705 | 81,439 | 76,760 | ||||||||||||
Total expenses | 1,749,648 | 1,681,674 | 3,457,231 | 3,361,931 | ||||||||||||
Income before income taxes | 273,736 | 229,242 | 503,175 | 440,232 | ||||||||||||
Income tax expense | (56,309 | ) | (48,464 | ) | (104,134 | ) | (91,881 | ) | ||||||||
Net income before noncontrolling interests | 217,427 | 180,778 | 399,041 | 348,351 | ||||||||||||
Noncontrolling interests | (718 | ) | (703 | ) | (1,610 | ) | (1,879 | ) | ||||||||
Net income to common stockholders | $ | 216,709 | $ | 180,075 | $ | 397,431 | $ | 346,472 | ||||||||
Net income per share (1): | ||||||||||||||||
Basic | $ | 1.14 | $ | 0.95 | $ | 2.09 | $ | 1.83 | ||||||||
Diluted | $ | 1.12 | $ | 0.93 | $ | 2.06 | $ | 1.80 | ||||||||
Average shares outstanding (1) (2): | ||||||||||||||||
Basic | 190,512 | 189,776 | 190,456 | 189,669 | ||||||||||||
Diluted | 193,059 | 192,509 | 192,804 | 192,284 |
Second Quarter | Six Months | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Insurance: | ||||||||||||||||
Gross premiums written | $ | 1,905,367 | $ | 1,798,074 | $ | 3,715,850 | $ | 3,558,247 | ||||||||
Net premiums written | 1,574,585 | 1,491,432 | 3,071,964 | 2,964,676 | ||||||||||||
Premiums earned | 1,475,184 | 1,415,579 | 2,902,218 | 2,806,868 | ||||||||||||
Pre-tax income | 225,871 | 163,181 | 410,387 | 362,109 | ||||||||||||
Loss ratio | 62.9 | % | 62.4 | % | 62.5 | % | 61.7 | % | ||||||||
Expense ratio | 30.9 | % | 32.9 | % | 31.4 | % | 32.9 | % | ||||||||
GAAP combined ratio | 93.8 | % | 95.3 | % | 93.9 | % | 94.6 | % | ||||||||
Reinsurance & Monoline Excess: | ||||||||||||||||
Gross premiums written | $ | 184,494 | $ | 150,000 | $ | 420,240 | $ | 369,248 | ||||||||
Net premiums written | 168,879 | 132,672 | 381,101 | 324,766 | ||||||||||||
Premiums earned | 171,657 | 165,474 | 337,479 | 341,593 | ||||||||||||
Pre-tax income | 52,635 | 56,174 | 97,490 | 100,866 | ||||||||||||
Loss ratio | 59.2 | % | 54.6 | % | 60.0 | % | 60.3 | % | ||||||||
Expense ratio | 36.0 | % | 36.8 | % | 36.0 | % | 36.2 | % | ||||||||
GAAP combined ratio | 95.2 | % | 91.4 | % | 96.0 | % | 96.5 | % | ||||||||
Corporate and Eliminations: | ||||||||||||||||
Net realized and unrealized gains on investments | $ | 73,574 | $ | 69,631 | $ | 142,226 | $ | 118,095 | ||||||||
Interest expense | (40,718 | ) | (39,705 | ) | (81,439 | ) | (76,760 | ) | ||||||||
Other revenues and expenses | (37,626 | ) | (20,039 | ) | (65,489 | ) | (64,078 | ) | ||||||||
Pre-tax (loss) income | (4,770 | ) | 9,887 | (4,702 | ) | (22,743 | ) | |||||||||
Consolidated: | ||||||||||||||||
Gross premiums written | $ | 2,089,861 | $ | 1,948,074 | $ | 4,136,090 | $ | 3,927,495 | ||||||||
Net premiums written | 1,743,464 | 1,624,104 | 3,453,065 | 3,289,442 | ||||||||||||
Premiums earned | 1,646,841 | 1,581,053 | 3,239,697 | 3,148,461 | ||||||||||||
Pre-tax income | 273,736 | 229,242 | 503,175 | 440,232 | ||||||||||||
Loss ratio | 62.4 | % | 61.6 | % | 62.2 | % | 61.5 | % | ||||||||
Expense ratio | 31.5 | % | 33.3 | % | 31.9 | % | 33.3 | % | ||||||||
GAAP combined ratio | 93.9 | % | 94.9 | % | 94.1 | % | 94.8 | % |
Second Quarter | Six Months | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net premiums written: | ||||||||||||||||
Other liability | $ | 546,861 | $ | 504,315 | $ | 1,053,811 | $ | 973,155 | ||||||||
Workers' compensation | 340,430 | 355,006 | 694,617 | 704,547 | ||||||||||||
Short-tail lines (1) | 337,611 | 312,221 | 616,447 | 603,248 | ||||||||||||
Commercial automobile | 198,728 | 185,804 | 411,683 | 400,449 | ||||||||||||
Professional liability | 150,955 | 134,086 | 295,406 | 283,277 | ||||||||||||
Total Insurance | 1,574,585 | 1,491,432 | 3,071,964 | 2,964,676 | ||||||||||||
Casualty reinsurance | 106,690 | 80,306 | 211,206 | 162,641 | ||||||||||||
Monoline excess | 23,929 | 22,094 | 91,721 | 91,902 | ||||||||||||
Property reinsurance | 38,260 | 30,272 | 78,174 | 70,223 | ||||||||||||
Total Reinsurance & Monoline Excess | 168,879 | 132,672 | 381,101 | 324,766 | ||||||||||||
Total | $ | 1,743,464 | $ | 1,624,104 | $ | 3,453,065 | $ | 3,289,442 | ||||||||
Losses from catastrophes: | ||||||||||||||||
Insurance | $ | 25,446 | $ | 12,929 | $ | 38,064 | $ | 20,060 | ||||||||
Reinsurance & Monoline Excess | 57 | 627 | 99 | 884 | ||||||||||||
Total | $ | 25,503 | $ | 13,556 | $ | 38,163 | $ | 20,944 | ||||||||
Net investment income: | ||||||||||||||||
Core portfolio (2) | $ | 134,294 | $ | 132,728 | $ | 270,552 | $ | 261,701 | ||||||||
Investment funds | 46,840 | 12,716 | 58,251 | 53,070 | ||||||||||||
Arbitrage trading account | 7,199 | 8,333 | 17,784 | 13,524 | ||||||||||||
Total | $ | 188,333 | $ | 153,777 | $ | 346,587 | $ | 328,295 | ||||||||
Net realized and unrealized gains on investments: | ||||||||||||||||
Net realized gains on investment sales | $ | 4,156 | $ | 124,283 | $ | 30,730 | $ | 266,952 | ||||||||
Change in unrealized gains on equity securities | 69,418 | (54,652 | ) | 111,496 | (148,857 | ) | ||||||||||
Total | $ | 73,574 | $ | 69,631 | $ | 142,226 | $ | 118,095 | ||||||||
Other operating costs and expenses: | ||||||||||||||||
Policy acquisition and insurance operating expenses | $ | 518,160 | $ | 526,862 | $ | 1,031,951 | $ | 1,047,093 | ||||||||
Insurance service expenses | 25,386 | 30,990 | 51,343 | 63,702 | ||||||||||||
Net foreign currency losses (gains) | 470 | (18,251 | ) | (6,494 | ) | (4,767 | ) | |||||||||
Other costs and expenses | 47,812 | 53,541 | 103,116 | 97,553 | ||||||||||||
Total | $ | 591,828 | $ | 593,142 | $ | 1,179,916 | $ | 1,203,581 | ||||||||
Cash flow from operations | $ | 324,316 | $ | 139,397 | $ | 402,646 | $ | 119,362 |
June 30, 2019 | December 31, 2018 | ||||||
Net invested assets (1) | $ | 19,707,264 | $ | 18,828,321 | |||
Total assets | 26,487,903 | 24,895,977 | |||||
Reserves for losses and loss expenses | 12,320,278 | 11,966,448 | |||||
Senior notes and other debt | 1,873,799 | 1,882,028 | |||||
Subordinated debentures | 907,866 | 907,491 | |||||
Common stockholders’ equity (2) | 5,976,760 | 5,437,851 | |||||
Common stock outstanding (3) (4) | 183,168 | 182,994 | |||||
Book value per share (4) (5) | 32.63 | 29.72 | |||||
Tangible book value per share (4) (5) | 31.36 | 28.42 |
(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, 2019, reflected in common stockholders' equity are after-tax unrealized investment gains of $153 million and unrealized currency translation losses of $414 million. As of December 31, 2018, after-tax unrealized investment losses were $91 million and unrealized currency translation losses were $419 million. |
(3) | During the three and six months ended June 30, 2019, 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) | December 31, 2018 shares outstanding and per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on April 2, 2019. |
(5) | 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 | $ | 777,070 | 3.9 | % | |||
State and municipal: | |||||||
Special revenue | 2,402,349 | 12.2 | % | ||||
Local general obligation | 464,109 | 2.4 | % | ||||
State general obligation | 381,719 | 1.9 | % | ||||
Pre-refunded | 324,068 | 1.6 | % | ||||
Corporate backed | 244,745 | 1.2 | % | ||||
Total state and municipal | 3,816,990 | 19.3 | % | ||||
Mortgage-backed securities: | |||||||
Agency | 902,565 | 4.6 | % | ||||
Residential - Prime | 335,938 | 1.7 | % | ||||
Commercial | 309,781 | 1.6 | % | ||||
Residential - Alt A | 36,962 | 0.2 | % | ||||
Total mortgage-backed securities | 1,585,246 | 8.1 | % | ||||
Asset-backed securities | 2,701,785 | 13.7 | % | ||||
Corporate: | |||||||
Industrial | 2,230,207 | 11.3 | % | ||||
Financial | 1,453,723 | 7.4 | % | ||||
Utilities | 324,322 | 1.7 | % | ||||
Other | 28,033 | 0.1 | % | ||||
Total corporate | 4,036,285 | 20.5 | % | ||||
Foreign government | 815,424 | 4.1 | % | ||||
Total fixed maturity securities (1) | 13,732,800 | 69.7 | % | ||||
Equity securities available for sale: | |||||||
Preferred stocks | 276,362 | 1.4 | % | ||||
Common stocks | 140,226 | 0.7 | % | ||||
Total equity securities available for sale | 416,588 | 2.1 | % | ||||
Real estate | 2,067,544 | 10.5 | % | ||||
Cash and cash equivalents (2) | 1,461,956 | 7.4 | % | ||||
Investment funds (3) | 1,400,237 | 7.1 | % | ||||
Arbitrage trading account | 533,442 | 2.7 | % | ||||
Loans receivable | 94,697 | 0.5 | % | ||||
Net invested assets | $ | 19,707,264 | 100.0 | % |
(1) | Total fixed maturity securities had an average rating of AA- and an average duration of 2.6 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 $1.3 million. |