-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KgQqzVR5vR51R+1nvUJZw1ITudSMkqdbwPcFTRnAecbDnUp5LBLg+i/xQkmz4f55 jwEIpSPWtSTflioV2gj7rg== 0000899140-02-000806.txt : 20021030 0000899140-02-000806.hdr.sgml : 20021030 20021030151410 ACCESSION NUMBER: 0000899140-02-000806 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021029 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKLEY W R CORP CENTRAL INDEX KEY: 0000011544 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 221867895 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15202 FILM NUMBER: 02803035 BUSINESS ADDRESS: STREET 1: 475 STEAMBOAT ROAD STREET 2: . CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036293000 MAIL ADDRESS: STREET 1: 475 STEAMBOAT ROAD STREET 2: . CITY: GREENWICH STATE: CT ZIP: 06830 8-K 1 wrb1119104b.txt CURRENT REPORT As filed with the Securities and Exchange Commission on October 30, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 29, 2002 W. R. BERKLEY CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 0-7849 22-1867895 - -------------- ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 475 Steamboat Road, Greenwich, CT 06830 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 629-3000 -------------- Not Applicable (Former name or former address, if changed since last report) Item 5. Other Events Reference is made to the press release of W. R. Berkley Corporation (the "Company") relating to the announcement of the Company's results of operations for the third quarter of 2002. The press release was issued on October 29, 2002. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by reference. Item 7. Financial Statements and Exhibits (a) Financial statements of businesses acquired: None. (b) Pro forma financial information: None. (c) Exhibits: 99.1 Press Release dated October 29, 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. W. R. BERKLEY CORPORATION By /s/ Eugene G. Ballard ----------------------------------- Name: Eugene G. Ballard Title: Senior Vice President, Chief Financial Officer and Treasurer Date: October 30, 2002 EXHIBIT INDEX Exhibit: - ------- 99.1 Press Release dated October 29, 2002 EX-99.1 4 wrb1119105.txt PRESS RELEASE - ------------------------------------- W. R. Berkley Corporation 475 Steamboat Road NEWS Greenwich, Connecticut 06830 RELEASE (203) 629-3000 - ------------------------------------- FOR IMMEDIATE RELEASE CONTACT: Eugene G. Ballard Chief Financial Officer 203-629-3000 W. R. BERKLEY CORPORATION REPORTS SHARPLY HIGHER THIRD QUARTER EARNINGS Greenwich, CT, October 29, 2002 -- W. R. Berkley Corporation (NYSE: BER) today reported third quarter operating income of $42 million, or 81 cents per share, compared with an operating loss of $12 million, or 28 cents per share, a year ago. For the first nine months of 2002, operating income was $108 million, or $2.06 per share, up from $16 million, or 37 cents per share, a year ago. Per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on July 2, 2002. The following table summarizes the third quarter and year-to-date financial performance (amounts in thousands, except per share data): For the Three Months For the Nine Months Ended September 30, Ended September 30, 2002 2001 2002 2001 ---- ---- ---- ---- Gross premiums written $801,612 $ 560,104 $2,268,823 $ 1,614,538 Net premiums written 678,990 469,227 1,897,078 1,355,026 Net income (loss) 40,544 (47,246) 102,314 (27,382) Operating income (loss)(a) 41,944 (12,163) 107,616 15,522 Operating income excluding WTC losses (b) 41,944 10,587 107,616 38,272 Per share amounts: Net income (loss) $ 0.78 $ (1.08) $ 1.96 $ (0.64) Operating income (loss)(a) 0.81 (0.28) 2.06 0.37 Operating income excluding WTC losses (b) 0.81 0.24 2.06 0.89 (a) Operating income (loss) represents net income (loss) before discontinued businesses and realized investment gains and losses. (b) Adjusted to exclude World Trade Center losses of $23 million, or 52 cents per share, in the third quarter and first nine months of 2001. W. R. Berkley Corporation Page 2 Highlights for the 2002 third quarter compared with the prior year quarter: o Gross premiums written for continuing business segments grew 58% to $789 million. o Gross premiums written increased 91% for facultative reinsurance and 81% for treaty reinsurance in the US. In addition, $35 million of new business was written as a result of our quota share reinsurance with Lloyd's. o Gross premiums written for specialty insurance grew 62% to $249 million. o GAAP combined ratio for continuing operations was 94.7% compared with a combined ratio in 2001 of 104.0% (excluding World Trade Center losses). o GAAP combined ratio for the regional segment improved 13.2 points to 91.8%. o The continuing operations paid loss ratio decreased to 45.0% in 2002 from 59.8% in 2001, and the paid-to-incurred ratio decreased to 69.4% in 2002 from 85.9% (excluding World Trade Center losses) in 2001. o Cash flow from operations increased to $303 million compared with $86 million in the third quarter of 2001. Commenting on the Company's results, William R. Berkley, chairman and chief executive officer, said: "We are extremely pleased with the continued excellent performance of our business. We are on track to meet or exceed a 15% return on stockholders' equity this year and anticipate achieving at least an 18% return next year in spite of the current interest rate environment. "Our latest financial results are only a partial reflection of the profitability of the 2002 underwriting year. As a result of how earned premiums are reported, each financial year is a blend of underwriting W. R. Berkley Corporation Page 3 results from the current year and prior years. Our underwriting year results have improved substantially from 2000 through the current period. Therefore, we believe that the next twelve months financial results will show continued improvement over the 2002 period. "There are many inherent uncertainties in predicting financial results for an insurance company. First, one can never be certain of loss reserves, which are by their nature based on judgment. We believe our reserves are adequate. Second, we cannot predict natural and man-made catastrophes or their impact on our financial results. A third issue is the level of investment returns that will be available in the future. "Prices of new business in every segment of the Company are approaching levels that should give us adequate returns. Fortunately, we have limited exposure to many of the insurance industry's significant problems. The Company has had no material asbestos-related problems. Due to the structure of our business, we are not purchasing large amounts of reinsurance and, consequently, are not negatively impacted by increasing reinsurance costs. In addition, we generally started increasing prices before our competition and are well-positioned to take advantage of the improving market conditions. We are also fortunate to have outstanding people who are fully capable of optimizing our results. We have every reason to continue to be enthusiastic about our future," Mr. Berkley concluded. W. R. Berkley Corporation Page 4 Founded in 1967, W. R. Berkley Corporation is an insurance holding company that operates in five segments of property casualty insurance business: specialty insurance, alternative markets, reinsurance, regional property casualty insurance and international. 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 2002 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 long-tail and potentially volatile nature of the reinsurance business, product demand and pricing, claims development and the process of estimating reserves, the uncertain nature of damage theories and loss amounts, the ultimate results of the various pending arbitration proceedings, the increased level of our retention, natural and man-made catastrophic losses, including as a result of terrorist activities, the impact of competition, the availability of reinsurance, the ability of our reinsurers to pay reinsurance recoverables owed to us, investment results and potential impairment of invested assets, exchange rate and political risks, legislative and regulatory developments, changes in the ratings assigned to us by ratings agencies, uncertainty as to our reinsurance coverage for terrorist acts, the availability of dividends from our insurance company subsidiaries, our successful integration of acquired companies or investment in new insurance ventures, our ability to attract and retain qualified employees, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These risks could cause actual results of the industry or our actual results for the year 2002 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. 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 Page 5 Consolidated Financial Summary
For the Three Months For the Nine Months Ended September 30, Ended September 30, ----------------------- --------------------- 2002 2001 2002 2001 ---- ---- ---- ---- (Amounts in thousands, except per share data) Revenues: Net premiums written $ 678,990 $ 469,227 $ 1,897,078 $ 1,355,026 Change in unearned premiums (116,519) (43,832) (347,453) (132,636) --------- --------- ----------- ----------- Premiums earned 562,471 425,395 1,549,625 1,222,390 Net investment income 48,316 46,802 137,032 147,600 Service fees 21,650 19,849 62,767 56,552 Realized investment gains (losses) 628 7,385 (2,858) 11,782 Other income 1,006 641 1,326 1,898 --------- --------- ----------- ----------- Total revenues 634,071 500,072 1,747,892 1,440,222 Expenses: Losses and loss expenses 368,763 391,477 1,015,879 959,598 Other operating expenses 194,182 170,864 550,508 492,806 Interest expense 11,593 11,570 34,058 34,432 --------- --------- ----------- ----------- Total expenses 574,538 573,911 1,600,445 1,486,836 Income (loss) before income taxes and minority interest 59,533 (73,839) 147,447 (46,614) Income tax (expense) benefit (19,470) 27,117 (51,255) 21,559 Minority interest 481 (524) 6,122 (2,327) --------- --------- ----------- ----------- Net income (loss) $ 40,544 $ (47,246) $ 102,314 $ (27,382) ========= ========= =========== =========== Net income (loss) per share: Basic $ 0.81 $ (1.08) $ 2.04 $ (0.64) Diluted 0.78 (1.08) 1.96 (0.64) Average shares outstanding: Basic 50,196 43,574 50,080 42,506 Diluted 51,990 45,080 52,328 44,405 Supplemental Information: Operating income (loss) (1) $ 41,944 $ (12,163) $ 107,616 $ 15,522 Operating income (loss) per share (1) 0.81 (0.28) 2.06 0.37 (1) Operating income (loss) represents net income (loss) before discontinued businesses and realized investment gains and losses.
W. R. Berkley Corporation Page 6 Supplemental After-Tax Earnings (Amounts in thousands, except per share data)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ---------------------- ----------------------- 2002 2001 2002 2001 ---- ---- ---- ---- After-tax earnings (loss) amounts: - ---------------------------------- Operating income (loss) (1)(2) $ 41,944 $(12,163) $ 107,616 $ 15,522 Discontinued businesses (3) (2,133) (39,883) (5,158) (50,562) Realized investment gains (losses), net of minority interest 733 4,800 (144) 7,658 --------- -------- --------- --------- Net income (loss) $ 40,544 $(47,246) $ 102,314 $ (27,382) ========= ======== ========= ========= Earnings (loss) per diluted share: - ---------------------------------- Operating income (loss)(1)(2) $ 0.81 $ (0.28) $ 2.06 $ 0.37 Discontinued businesses (3) (0.04) (0.91) (0.10) (1.19) Realized investment gains, net of minority interest 0.01 .11 -- 0.18 --------- -------- --------- --------- Net income (loss) $ 0.78 $ (1.08) $ 1.96 $ (0.64) ========= ======== ========= ========= Cash flow from operations before change in trading account $ 303,462 $ 85,756 $ 542,916 $ 128,904 (1) Operating income (loss) represents net income (loss) before discontinued businesses and realized investment gains and losses. (2) For the third quarter of 2002, weather-related losses for continuing business segments were $12 million pre-tax, or 15 cents per share after-tax, compared with $10 million pre-tax, or 14 cents per share after-tax, in the year-earlier period. For the first nine months of 2002, weather-related losses for continuing business segments were $35 million pre-tax, or 43 cents per share after-tax, compared with $32 million pre-tax, or 47 cents per share after-tax, in the year-earlier period. World Trade Center losses were $35 million pre-tax, or 52 cents per share after-tax, in the third quarter of 2001. (3) Represents after-tax loss from discontinued personal lines and alternative markets reinsurance businesses. For the third quarter of 2002, weather-related losses for discontinued business segment were $3 million pre-tax, or 4 cents per share after-tax, compared with $7 million pre-tax, or 11 cents per share after-tax, in the year-earlier period. For the first nine months of 2002, weather-related losses for discontinued business segment were $8 million pre-tax, or 10 cents per share after-tax, compared with $25 million pre-tax, or 38 cents per share after-tax, in the year-earlier period. The third quarter of 2001 also reflects an increase in loss reserves for the discontinued alternative markets reinsurance business of $35 million, after-tax.
W. R. Berkley Corporation Page 7 Operating Results by Segment (Amounts in thousands, except ratios)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------------ ---------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Specialty Insurance (2): Gross premiums written $ 249,098 $ 153,693 $ 684,136 $ 427,357 Net premiums written 222,064 134,901 604,889 366,632 Premiums earned 185,189 108,662 487,387 275,895 Pre-tax operating income (loss) 30,686 (1,151) 81,957 19,015 Loss ratio 64.2% 79.4% 62.9% 72.1% Expense ratio 26.2% 30.3% 27.6% 32.2% GAAP combined ratio 90.4% 109.7% 90.5% 104.3% Alternative Markets: Gross premiums written $ 102,763 $ 48,451 $ 248,803 $ 127,365 Net premiums written 89,134 42,877 215,771 113,275 Premiums earned 61,077 31,481 157,901 84,851 Pre-tax operating income 16,880 8,095 44,861 28,009 Loss ratio 66.2% 79.2% 67.0% 75.0% Expense ratio 31.9% 29.1% 30.3% 31.8% GAAP combined ratio 98.1% 108.3% 97.3% 106.8% Reinsurance (1)(2): Gross premiums written $ 188,321 $ 82,592 $ 528,946 $ 234,295 Net premiums written 155,316 56,119 432,383 167,174 Premiums earned 108,677 53,341 273,792 167,243 Pre-tax operating income (loss) 10,140 (20,227) 25,570 (12,700) Loss ratio 75.8% 117.9% 74.3% 87.0% Expense ratio 25.3% 38.0% 28.2% 39.2% GAAP combined ratio 101.1% 155.9% 102.5% 126.2% Regional Insurance (1): Gross premiums written $ 236,212 $ 173,471 $ 711,217 $ 511,168 Net premiums written 199,358 147,170 575,716 432,878 Premiums earned 183,424 137,809 512,067 401,177 Pre-tax operating income 26,736 5,799 67,736 21,763 Loss ratio 58.8% 69.2% 61.2% 69.4% Expense ratio 33.0% 35.8% 32.0% 35.1% GAAP combined ratio 91.8% 105.0% 93.2% 104.5% International: Gross premiums written $ 13,045 $ 42,484 $ 73,236 $ 123,181 Net premiums written 13,103 36,895 65,359 107,536 Premiums earned 14,967 36,286 74,357 102,036 Pre-tax operating income (loss) (2,241) 2,824 (2,775) 9,130 Loss ratio 62.1% 59.2% 59.4% 61.2% Expense ratio 59.4% 40.9% 47.4% 39.6% GAAP combined ratio 121.5% 100.1% 106.8% 100.8% Total Continuing Segments (1): Gross premiums written $ 789,439 $ 500,691 $ 2,246,338 $ 1,423,366 Net premiums written 678,975 417,962 1,894,118 1,187,495 Premiums earned 553,334 367,579 1,505,504 1,031,202 Pre-tax operating income (loss) 82,201 (4,660) 217,349 65,217 Loss ratio 64.9% 79.2% 64.6% 72.6% Expense ratio 29.8% 34.4% 30.5% 35.1% GAAP combined ratio 94.7% 113.6% 95.1% 107.7%
W. R. Berkley Corporation Page 8 (1) Segment information for 2001 has been restated to reflect the discontinuance of the personal lines and alternative markets reinsurance businesses. (2) 2001 World Trade Center losses were $9 million for the specialty segment and $26 million for the reinsurance segment. W. R. Berkley Corporation Page 9 Operating Results by Segment (Continued) (Amounts in thousands)
For the Three Months For the Nine Months Ended September 30, Ended September 30, --------------------- ---------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Discontinued business: Gross premiums written $ 12,173 $ 59,413 $ 22,485 $ 191,172 Net premiums written 15 51,265 2,960 167,531 Premiums earned 9,137 57,816 44,121 191,188 Pre-tax loss (3,282) (61,358) (7,936) (77,789) Loss ratio 107.5% 173.8% 96.8% 110.2% Expense ratio 37.2% 36.5% 29.8% 34.4% GAAP combined ratio 144.7% 210.3% 126.6% 144.6% Total Segments: Gross premiums written $ 801,612 $ 560,104 $2,268,823 $ 1,614,538 Net premiums written 678,990 469,227 1,897,078 1,355,026 Premiums earned 562,471 425,395 1,549,625 1,222,390 Pre-tax segment income (loss) (1) 78,919 (66,018) 209,413 (12,572) Loss ratio 65.6% 92.0% 65.6% 78.5% Expense ratio 29.9% 34.7% 30.5% 35.0% GAAP combined ratio 95.5% 126.7% 96.1% 113.5%
Balance Sheet Information (Amounts in thousands, except per share data) September 30, December 31, 2002 2001 ------------- ----------- Total investments (2) $ 4,227,909 $ 3,598,053 Total assets 6,488,714 5,633,509 Reserves for losses and loss expenses 3,003,247 2,817,682 Long-term debt 362,877 370,554 Trust preferred securities 198,241 198,210 Stockholders' equity (3) 1,110,829 931,595 Shares outstanding 50,216 49,862 Stockholders' equity per share 22.12 18.68 (1) Pre-tax segment income (loss) represents net income (loss) before income taxes, realized investment gains and losses and corporate expenses. (2) Investments include trading account receivable from brokers and clearing organizations and trading securities sold but not yet purchased. (3) Stockholders' equity includes after-tax unrealized gains from investments and foreign exchange of $120 million and $37 million as of September 30, 2002 and December 31, 2001, respectively. -----END PRIVACY-ENHANCED MESSAGE-----