EX-99.1 2 wrb63020228-kex991.htm EX-99.1 Document

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


W. R. Berkley Corporation Reports Second Quarter Results
Net Premiums Written Grew 16.9% to a Quarterly Record of $2.6 Billion;
Operating Income Increased 43.0%

Greenwich, CT, July 21, 2022 - W. R. Berkley Corporation (NYSE: WRB) today reported its second quarter 2022 results.
Summary Financial Data
(Amounts in thousands, except per share data)
Second QuarterSix Months
2022202120222021
Gross premiums written$3,052,401 $2,661,236 $5,912,237 $5,145,948 
Net premiums written2,585,635 2,212,181 4,998,889 4,262,219 
Net income to common stockholders179,322 237,238 769,960 466,763 
Net income per diluted share (2)0.64 0.85 2.76 1.66 
Operating income (1)313,359 219,059 619,827 420,840 
Operating income per diluted share (2)1.12 0.78 2.22 1.50 
Return on equity (3)10.8 %15.0 %23.1 %14.8 %
Operating return on equity (1) (3)18.8 %13.9 %18.6 %13.3 %


(1)Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses) and related expenses.
(2)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(3)Return on equity and operating return on equity represent net income and operating income, respectively, expressed on an annualized basis as a percentage of beginning of year common stockholders’ equity.


W. R. Berkley Corporation        2

Second quarter highlights included:
•Record gross and net premiums written grew 14.7% and 16.9% to $3.1 billion and $2.6 billion, respectively.
•Underwriting income increased 32.6% to $268.2 million.
•The current accident year combined ratio before catastrophe losses of 2.5 loss ratio points was 86.2%.
•The reported combined ratio was 88.6%, including catastrophe losses of $57.9 million.
•Net investment income for the core portfolio grew 29.7%.
•Total capital returned to shareholders was $159.2 million, consisting of $132.7 million of special dividends and $26.5 million of regular dividends.
•Operating return on equity of 18.8%.



The Company commented:
The Company reported excellent results for the second quarter of 2022, principally due to strong underwriting income, with an 88.6% combined ratio and an 18.8% annualized operating return on beginning stockholders’ equity. The short duration of our investment portfolio tempered the impact of rising interest rates on the value of the Company’s fixed-maturity securities and consequently its book value.
Net premiums written grew by nearly 17% as market conditions remained favorable for most lines of business. The majority of our businesses expanded, particularly in the E&S and specialty markets. After several years of compounding rate, most of our businesses are achieving or exceeding our target return on equity, and we are placing greater emphasis on exposure growth. In addition, this growth has driven further improvement in our expense ratio.
Core net investment income grew nearly 30% due primarily to higher yields. Our investment funds, which are reported on a one-quarter lag, performed well despite challenging equity markets in the first quarter of 2022. We expect investment income will benefit further as interest rates continue to move higher.
The Company is performing exceptionally well. Our results demonstrate how our strategy and execution translate into consistently superior long-term risk-adjusted returns and value creation. Our talented team is well-prepared and our underwriting and investment portfolios remain well-positioned for the uncertainties and challenges of today’s environment, including inflation. We continue to be optimistic about the remainder of 2022 and beyond.



W. R. Berkley Corporation        3
Webcast Conference Call
    The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on July 21, 2022, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/events-and-presentations/default.aspx. Please log on at least ten minutes early to register and download and install any necessary software. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call. Additional financial information can be found on the Company's website at https://ir.berkley.com/investor-relations/financial-information/quarterly-results/default.aspx.
About W. R. Berkley Corporation
    Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty business: Insurance and Reinsurance & Monoline Excess.




W. R. Berkley Corporation        4
Forward Looking Information

This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2022 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts, including claims for cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing COVID-19 pandemic; the impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, interest rates, and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response, on our results and financial condition; foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the European Union, or "Brexit") relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; potential difficulties with technology and/or cyber security issues; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties could cause our actual results for the year 2022 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.



# # #



W. R. Berkley Corporation        5
Consolidated Financial Summary
(Amounts in thousands, except per share data)
Second QuarterSix Months
2022202120222021
Revenues:
  Net premiums written$2,585,635 $2,212,181 $4,998,889 $4,262,219 
  Change in unearned premiums(228,477)(240,557)(392,645)(440,639)
    Net premiums earned2,357,158 1,971,624 4,606,244 3,821,580 
  Net investment income171,574 168,187 345,086 326,764 
  Net investment (losses) gains:
   Net realized and unrealized (losses) gains on investments(163,935)20,461 205,947 72,219 
   Change in allowance for credit losses on investments(7,620)3,603 (11,237)(13,316)
  Net investment (losses) gains (171,555)24,064 194,710 58,903 
  Revenues from non-insurance businesses128,421 109,122 226,197 196,552 
  Insurance service fees26,393 22,256 54,344 48,064 
  Other Income896 833 1,716 1,092 
       Total Revenues2,512,887 2,296,086 5,428,297 4,452,955 
Expenses:
   Loss and loss expenses1,435,817 1,203,647 2,775,069 2,325,238 
   Other operating costs and expenses699,819 647,705 1,413,718 1,263,973 
   Expenses from non-insurance businesses122,966 106,698 217,822 192,989 
   Interest expense31,723 38,096 66,693 74,747 
     Total expenses2,290,325 1,996,146 4,473,302 3,856,947 
     Income before income tax222,562 299,940 954,995 596,008 
   Income tax expense(43,095)(62,262)(182,499)(126,614)
     Net Income before noncontrolling interests179,467 237,678 772,496 469,394 
   Noncontrolling interest(145)(440)(2,536)(2,631)
     Net income to common stockholders$179,322 $237,238 $769,960 $466,763 
 Net income per share (1):
 Basic$0.65 $0.85 $2.78 $1.68 
 Diluted$0.64 $0.85 $2.76 $1.66 
 Average shares outstanding (1) (2):
 Basic276,815 277,733 276,794 277,763 
 Diluted279,525 280,659 279,327 280,478 


(1)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(2)Basic shares outstanding consist of the weighted average number of common shares outstanding during the period (including shares held in a grantor trust). Diluted shares outstanding consist of the weighted average number of basic and common equivalent shares outstanding during the period.



W. R. Berkley Corporation        6
Business Segment Operating Results
(Amounts in thousands, except ratios) (1)
Second QuarterSix Months
2022202120222021
Insurance:
   Gross premiums written$2,771,665 $2,421,846 $5,256,464 $4,561,859 
   Net premiums written2,326,125 1,994,212 4,399,416 3,734,036 
   Net premiums earned2,070,157 1,727,202 4,032,991 3,332,181 
   Pre-tax income347,461 291,290 729,873 548,399 
   Loss ratio61.0 %61.4 %60.3 %61.3 %
   Expense ratio27.7 %28.5 %27.9 %28.9 %
   GAAP Combined ratio88.7 %89.9 %88.2 %90.2 %
Reinsurance & Monoline Excess:
   Gross premiums written$280,736 $239,390 $655,773 $584,089 
   Net premiums written259,510 217,969 599,473 528,183 
   Net premiums earned287,001 244,422 573,253 489,399 
   Pre-tax income92,177 74,794 149,805 143,443 
   Loss ratio60.4 %58.2 %60.2 %57.4 %
   Expense ratio27.4 %30.4 %28.4 %30.6 %
   GAAP Combined ratio87.8 %88.6 %88.6 %88.0 %
Corporate and Eliminations:
   Net investment (losses) gains$(171,555)$24,064 $194,710 $58,903 
   Interest expense(31,723)(38,096)(66,693)(74,747)
   Other expenses(13,798)(52,112)(52,700)(79,990)
   Pre-tax (loss) gain(217,076)(66,144)75,317 (95,834)
Consolidated:
   Gross premiums written$3,052,401 $2,661,236 $5,912,237 $5,145,948 
   Net premiums written2,585,635 2,212,181 4,998,889 4,262,219 
   Net premiums earned2,357,158 1,971,624 4,606,244 3,821,580 
   Pre-tax income 222,562 299,940 954,995 596,008 
   Loss ratio60.9 %61.0 %60.2 %60.8 %
   Expense ratio27.7 %28.7 %28.0 %29.1 %
   GAAP Combined ratio88.6 %89.7 %88.2 %89.9 %


(1)Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. GAAP combined ratio is the sum of the loss ratio and the expense ratio.





W. R. Berkley Corporation        7
Supplemental Information
(Amounts in thousands)
Second QuarterSix Months
2022202120222021
Net premiums written:
   Other liability$878,120 $727,384 $1,708,187 $1,401,416 
   Short-tail lines (1)484,849 391,778 878,767 716,830 
   Workers' compensation330,721 315,638 634,141 602,362 
   Commercial automobile335,451 279,204 614,978 527,771 
   Professional liability296,984 280,208 563,343 485,657 
     Total Insurance2,326,125 1,994,212 4,399,416 3,734,036 
   Casualty reinsurance189,983 156,216 388,138 331,081 
 Monoline excess24,228 23,664 116,764 109,172 
   Property reinsurance45,299 38,089 94,571 87,930 
     Total Reinsurance & Monoline Excess259,510 217,969 599,473 528,183 
          Total$2,585,635 $2,212,181 $4,998,889 $4,262,219 
Current accident year losses from catastrophes (including COVID-19 related losses):
   Insurance$39,891 $36,803 $50,658 $69,632 
   Reinsurance & Monoline Excess18,000 7,162 36,065 10,162 
     Total$57,891 $43,965 $86,723 $79,794 
Net Investment income:
   Core portfolio (2)$133,587 $102,961 $245,899 $203,528 
   Investment funds33,861 61,311 85,874 100,246 
   Arbitrage trading account4,126 3,915 13,313 22,989 
     Total$171,574 $168,187 $345,086 $326,764 
Net realized and unrealized (losses) gains on investments:
   Net realized (losses) gains on investments$(32,405)$38,700 $244,264 $114,793 
   Change in unrealized losses on equity securities(131,530)(18,239)(38,317)(42,574)
     Total$(163,935)$20,461 $205,947 $72,219 
Other operating costs and expenses:
   Policy acquisition and insurance operating expenses$653,093 $565,733 $1,288,547 $1,111,483 
   Insurance service expenses23,890 21,789 46,356 42,575 
   Net foreign currency gains(39,827)(1,125)(43,995)(6,719)
   Debt extinguishment costs— 7,903 — 11,520 
   Other costs and expenses62,663 53,405 122,810 105,114 
     Total$699,819 $647,705 $1,413,718 $1,263,973 
Cash flow from operations$527,971 $384,819 $1,005,653 $695,809 
Reconciliation of net income to operating income:
   Net income$179,322 $237,238 $769,960 $466,763 
   Pre-tax investment losses (gains), net of related expenses171,555 (23,271)(190,056)(56,573)
   Income tax (benefit) expense(37,518)5,092 39,923 10,650 
     Operating income after-tax (3)$313,359 $219,059 $619,827 $420,840 

(1)Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.
(2)Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.
(3)Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses). Net investment gains (losses) are computed net of related expenses, including performance-based compensatory costs associated with realized investment gains. Management believes this measurement provides a useful indicator of trends in the Company’s underlying operations.


W. R. Berkley Corporation        8
Selected Balance Sheet Information
(Amounts in thousands, except per share data)
June 30, 2022December 31, 2021
Net invested assets (1)$23,545,192 $23,705,508 
Total assets32,692,447 32,047,876 
Reserves for losses and loss expenses16,145,821 15,390,888 
Senior notes and other debt1,832,273 2,259,416 
Subordinated debentures1,008,011 1,007,652 
Common stockholders' equity (2)6,514,485 6,653,011 
Common stock outstanding (3) (4)265,273 265,171 
Book value per share (4) (5)24.56 25.09 
Tangible book value per share (4) (5)23.60 24.27 


(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, 2022, reflected in common stockholders' equity are after-tax unrealized investment losses of $670 million and unrealized currency translation losses of $360 million. As of December 31, 2021, after-tax unrealized investment gains were $91 million and unrealized currency translation losses were $373 million.
(3)During the six months ended June 30, 2022, 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)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(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.



W. R. Berkley Corporation        9
Investment Portfolio
June 30, 2022
(Amounts in thousands, except percentages)
Carrying ValuePercent of Total
Fixed maturity securities:
   United States government and government agencies$720,914 3.1 %
   State and municipal:
        Special revenue1,867,636 7.9 %
        Local general obligation416,940 1.8 %
        State general obligation414,939 1.7 %
        Pre-refunded 203,899 0.9 %
        Corporate backed160,208 0.7 %
            Total state and municipal3,063,622 13.0 %
   Mortgage-backed securities:
        Agency821,398 3.5 %
        Commercial405,597 1.7 %
        Residential - Prime250,052 1.1 %
        Residential - Alt A4,207 0.0 %
            Total mortgage-backed securities1,481,254 6.3 %
   Asset-backed securities4,292,488 18.2 %
   Corporate:
        Industrial3,215,637 13.7 %
        Financial1,811,661 7.7 %
        Utilities422,101 1.8 %
        Other239,726 1.0 %
            Total corporate 5,689,125 24.2 %
   Foreign government 1,604,111 6.8 %
            Total fixed maturity securities (1)16,851,514 71.6 %
Equity securities available for sale:
   Common stocks932,672 4.0 %
   Preferred stocks222,654 0.9 %
            Total equity securities available for sale1,155,326 4.9 %
Investment funds (3)1,701,478 7.2 %
Real estate1,304,094 5.5 %
Cash and cash equivalents (2)1,277,294 5.4 %
Arbitrage trading account1,142,003 4.9 %
Loans receivable113,483 0.5 %
          Net invested assets$23,545,192 100.0 %


(1)Total fixed maturity securities had an average rating of AA- and an average duration of 2.4 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 $0.8 million.