-----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, PAR5Kp6Cxej+KQtRdL0GgHOjqHOGjI4P7ygM3oX+BDMJIEfEwtG4dF6ST4gJqEu1 o9XyiUuEvGL2W4D7sxSXsQ== 0000914039-00-000060.txt : 20000302 0000914039-00-000060.hdr.sgml : 20000302 ACCESSION NUMBER: 0000914039-00-000060 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000224 ITEM INFORMATION: FILED AS OF DATE: 20000229 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: SEC FILE NUMBER: 000-07849 FILM NUMBER: 557471 BUSINESS ADDRESS: STREET 1: 165 MASON ST STREET 2: P O BOX 2518 CITY: GREENWICH STATE: CT ZIP: 06836-2518 BUSINESS PHONE: 2036293000 MAIL ADDRESS: STREET 1: 165 MASON ST STREET 2: PO BOX 2518 CITY: GREENWICH STATE: CT ZIP: 06836-2518 8-K 1 FORM 8-K 1 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) February 24, 2000 W.R. BERKLEY CORPORATION (Exact Name of Registrant as Specified in its Charter)
Delaware 0-7849 22-1867895 (State or Other Jurisdiction of (Commission File No.) (IRS Employer Incorporation) Identification Number) 165 Mason Street, P.O. Box 2518, Greenwich, CT 06836-2518 (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) 2 ITEM 5. OTHER EVENTS Reference is made to the press release of Registrant, issued on February 24, 2000, which is incorporated herein by this reference. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 3 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. W.R. BERKLEY CORPORATION ------------------------ (Registrant) February 25, 2000 By: /s/ Eugene G. Ballard ------------------------ Eugene G. Ballard Senior Vice President, Chief Financial Officer and Treasurer 4 EXHIBIT INDEX Exhibits: 99.1 Press Release dated February 24, 2000 EX-99.1 2 EXHIBIT 99.1 1 W. R. BERKLEY CORPORATION NEWS 165 MASON STREET, P.O. BOX 2518 RELEASE GREENWICH, CONNECTICUT 06836-2518 (203) 629-3000 FOR IMMEDIATE RELEASE CONTACT:Eugene G. Ballard Senior Vice President, Chief Financial Officer and Treasurer 203-629-3000 W. R. BERKLEY CORPORATION ANNOUNCES FULL YEAR AND FOURTH QUARTER RESULTS FOR 1999 GREENWICH, CT, FEBRUARY 24, 2000 -- W.R. BERKLEY CORPORATION (NASDAQ: BKLY) today announced an operating loss of $23.3 million, or 91 cents per diluted share, for 1999, compared with operating income of $34.7 million, or $1.19 per diluted share, for 1998. For the fourth quarter of 1999, the Company reported an operating loss of $38.4 million, or $1.50 per diluted share, compared with an operating loss of $11.6 million, or 43 cents per diluted share, for the same period a year ago. The net loss for 1999 was $37.1 million, or $1.43 per diluted share, compared with net income of $46.2 million, or $1.59 per diluted share, for 1998. For the fourth quarter of 1999, the Company reported a net loss of $40.8 million, or $1.59 per diluted share, compared with a net loss of $3.8 million, or 14 cents per diluted share, for the fourth quarter of 1998. Revenues for the year increased 5.8% to $1.67 billion, up from $1.58 billion in 1998. For the fourth quarter, revenues rose to $421.9 million, compared with $407.9 million for the fourth quarter a year ago. Realized capital losses, after tax, were $3.9 million, or 15 cents per diluted share, in 1999 compared with realized capital gains of $16.5 million, or 57 cents per diluted share, in 1998. Fourth quarter results included realized capital losses, net of taxes, of $2.4 million, or 9 cents per diluted share, compared with realized capital gains of $7.8 million, or 29 cents per diluted share, for the same period last year. -more- 2 W.R. Berkley Corporation Catastrophe losses after-tax were $39.1 million, or $1.50 per diluted share, in 1999 compared with $38.2 million, or $1.31 per diluted share, in 1998. Fourth quarter catastrophe losses were $3.5 million, or 14 cents per diluted share, compared with $6.6 million, or 24 cents per diluted share, for the same period last year. As previously announced, the Company established additional loss reserves for the regional insurance group in the 1999 fourth quarter of $55 million (before tax). The reserve increase was primarily related to accident years 1998 and 1999 and was prompted by increased loss development during 1999. Results for 1999 include an after-tax restructuring charge in the first quarter of $7.3 million, or 28 cents per diluted share, related to the Company's restructuring of certain of its operating units. The restructuring is expected to result in annual after-tax savings of approximately $12.4 million. Management estimates that as of December 31, 1999, the Company had achieved approximately 90% of such savings, on an annualized basis. The Company reported an extraordinary gain of $735,000 in 1999 and an extraordinary loss of $5.0 million in 1998 related to the repurchase and retirement of capital trust securities and long-term debt. In 1999, the Company repurchased 905,000 shares of its common stock, leaving a balance of 1,095,000 shares available for repurchase under its current share repurchase authorization. As previously disclosed, in the first quarter of 1999 the Company adopted AICPA Statement of Position 97-3, Accounting by Insurance and Other Enterprises for Insurance-Related Assessments. A non-cash, after-tax charge of $3.3 million, or 12 cents per diluted share, was recorded during the first quarter and is reflected in the financial statements as a cumulative effect of a change in accounting principle. Commenting on the Company's results, William R. Berkley, Chairman and Chief Executive Officer, said: "Obviously, 1999 was a difficult year, as pricing pressures continued. While we expect the environment to improve in 2000, we have taken a number of actions which we expect will result in significantly better performance even if market conditions do not improve. We have substantially completed the restructuring of -more- 2 3 W. R. Berkley Corporation our regional businesses and will see expense savings this year from that effort. We increased reserves for the regional group by $55 million in the fourth quarter, an action that should allow us to go forward on the basis of our historical levels of reserve adequacy. Finally, we have implemented price increases across many of our lines of business, including increases averaging more than 10% for the regional group. We are comfortable with the actions we have taken and anticipate success in facing the challenges of the new year." W.R. Berkley Corporation is a holding company which, through its subsidiaries, operates in all segments of the property casualty insurance business. The operating units are grouped for management purposes into five segments according to market served: Regional Property Casualty Insurance, Reinsurance, Specialty Insurance, Alternative Markets and International. # # # This is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including those related to the Company's performance for the year 2000, are based upon the Company's historical performance and on current plans, estimates and expectations. They are subject to various risks and uncertainties, including but not limited to, the impact of competition, product demand and pricing, claims development, catastrophe and storm losses, investment results, legislative and regulatory developments and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These risks could cause the Company's actual results for the 2000 fiscal year 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. (See accompanying financial tables) -more- 3 4 W. R. Berkley Corporation
For the Three Months For the Year Ended Ended December 31, December 31, ------------------------ ---------------------- 1999 1998 1999 1998 ---- ---- ---- ---- (Amounts in thousands except per share Data) Revenues: Net premiums written $ 342,067 $ 305,971 $1,427,719 $1,346,254 Change in unearned premiums 20,425 20,255 (13,335) (67,855) -------- -------- --------- --------- Premiums earned 362,492 326,226 1,414,384 1,278,399 Net investment income 45,051 50,915 190,316 202,420 Management fees and commissions 16,997 17,034 72,344 70,727 Realized gains (losses) on investments (3,660) 12,014 (6,064) 25,400 Other income 1,002 1,718 2,688 5,571 -------- ------- --------- --------- Total revenues 421,882 407,907 1,673,668 1,582,517 Operating costs and expenses: Losses and loss expenses 320,910 262,456 1,085,826 914,762 Other operating costs and expenses 156,634 142,371 604,784 556,155 Interest expense 12,733 12,528 50,801 48,819 Restructuring charge -- -- 11,505 -- -------- --------- --------- --------- Income (loss) before income taxes and minority interest (68,395) (9,448) (79,248) 62,781 Federal and foreign income tax (expense) benefit 27,998 7,753 45,766 (5,465) -------- -------- --------- --------- Income (loss) before minority interest (40,397) (1,695) (33,482) 57,316 Minority interest (391) (222) (566) 1,444 -------- -------- --------- --------- Net income (loss) before preferred Dividends (40,788) (1,917) (34,048) 58,760 Preferred dividends -- (1,887) (497) (7,548) -------- -------- --------- --------- Net income (loss) attributable to Common stockholders before change in accounting and extraordinary gains (loss) (40,788) (3,804) (34,545) 51,212 Cumulative effect of change in accounting principle (net of taxes) -- -- (3,250) -- Extraordinary gains (losses) on early extinguishment of long-term debt (net of taxes) -- -- 735 (5,017) -------- -------- --------- --------- Net income (loss) attributable to Common stockholders $ (40,788) $ (3,804) $ (37,060) $ 46,195 ======== ======== ========= ========= Earnings (loss) per share: Basic $ (1.59) $ (.14) $ (1.44) $ 1.64 ======== ======== ========= ========= Diluted $ (1.59) $ (.14) $ (1.43) $ 1.59 ======== ======== ========= ========= Average shares outstanding: Basic 25,616 26,732 25,823 28,194 ======== ======== ========= ========= Diluted 25,689 27,213 25,927 29,115 ======== ======== ========= =========
4 5 W. R. Berkley Corporation ADDENDUM #1 TO PRESS RELEASE DATED FEBRUARY 24, 2000 Operating Statistics by Insurance Industry Segment (Amounts in thousands except per share data)
For the Three Months For the Year Ended Ended December 31, December 31, Regional Insurance (1): 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net premiums written $ 157,500 $ 140,327 $ 649,849 $ 641,316 Total revenues 182,149 164,157 702,129 682,519 Pre-tax operating (loss)(2) (62,879) (35,417) (89,431) (30,196) Loss ratio 108.2% 91.6% 84.7% 76.0% Expense ratio 36.6% 39.6% 36.1% 35.8% Policyholders' dividend ratio .4% 1.1% .7% .9% Combined ratio (3) 145.2% 132.3% 121.5% 112.7% Reinsurance Markets: Net premiums written $ 77,224 $ 69,846 $ 309,181 $ 269,634 Total revenues 84,720 84,063 341,940 297,144 Pre-tax operating income (2) 1,530 6,023 17,116 30,555 Loss ratio 77.5% 77.1% 76.0% 74.3% Expense ratio 34.8% 32.2% 33.2% 31.5% Combined ratio (3) 112.3% 109.3% 109.2% 105.8% Specialty Insurance: Net premiums written $ 60,474 $ 60,587 $ 260,380 $ 254,003 Total revenues 74,761 83,336 309,068 311,955 Pre-tax operating income (2) 6,046 19,536 42,677 74,344 Loss ratio 63.1% 66.6% 66.0% 61.8% Expense ratio 35.5% 30.6% 32.9% 31.7% Policyholders' dividend ratio .1% .1% .2% .3% Combined ratio (3) 98.7% 97.3% 99.1% 93.8% Alternative Markets: Net premiums written $ 21,061 $ 17,605 $ 122,137 $ 106,195 Total revenues 53,966 53,530 222,276 205,935 Pre-tax operating income (2) 5,940 4,944 30,133 31,371 Loss ratio 72.1% 69.5% 67.4% 63.7% Expense ratio 46.6% 48.2% 37.3% 36.0% Combined ratio (3) 118.7% 117.7% 104.7% 99.7% International(4): Net premiums written $ 25,808 $ 17,606 $ 86,172 $ 75,106 Total revenues 25,322 21,366 93,878 80,287 Pre-tax operating income (loss)(2) 1,947 (1,980) 4,200 (6,745) Loss ratio 52.6% 59.3% 53.3% 59.7% Expense ratio 42.3% 61.0% 46.4% 48.5% Combined ratio (3) 94.9% 120.3% 99.7% 108.2% Combined: Net premiums written $ 342,067 $ 305,971 $ 1,427,719 $ 1,346,254 Total revenues 420,918 406,452 1,669,291 1,577,840 Pre-tax operating income (loss)(2) (47,416) (6,894) 4,695 99,329 Loss ratio 88.2% 80.0% 76.5% 71.2% Expense ratio 36.9% 37.9% 35.4% 34.9% Policyholders' dividend ratio .2% .5% .3% .5% Combined ratio (3) 125.3% 118.4% 112.2% 106.6%
(1) The regional results were impacted by the purchase of additional reinsurance which resulted in a reduction in net premiums written of $21.0 million and an increase in reinsurance recoveries of $35.0 million for 1999. The expense ratio for the regional group was impacted by the additional reinsurance premiums and by certain costs directly attributed to the restructuring. After adjusting for these items, the expense ratio in 1999 would have been 36.0 percent for the fourth quarter and 34.1 percent for the full year. (2) Pre-tax operating income (loss) represents earnings before the effects of realized investment gains (losses), the restructuring charge, the change in accounting principle and extraordinary gains (losses). (3) Ratios based on statutory accounting practices. (4) International includes life insurance premiums of $7.8 million and $3.1 million for the three months ended December 31, 1999 and 1998, respectively, and $24.5 million and $8.0 million for the years ended December 31, 1999 and 1998, respectively. Life insurance is not included in the statutory ratios. 5 6 W. R. Berkley Corporation ADDENDUM #2 TO PRESS RELEASE DATED FEBRUARY 24, 2000 Supplementary Information (Amounts in thousands except per share data)
For the Three Months For the Year Ended Ended December 31, December 31, ---------------------------- ------------------ 1999 1998 1999 1998 --------- --------- --------- --------- After-tax earnings (loss) amounts: Operating income (loss) $ (38,409) $ (11,613) $ (23,309) $ 34,702 Restructuring charge (net of minority interest) -- -- (7,294) -- Extraordinary gain (loss) -- -- 735 (5,017) Cumulative effect of change in accounting principle -- -- (3,250) -- Realized investment gains (losses) (2,379) 7,809 (3,942) 16,510 --------- --------- --------- --------- Net income (loss) $ (40,788) $ (3,804) $ (37,060) $ 46,195 ========= ========= ========= ========= After-tax diluted earnings (loss) per share: Operating income (loss) $ (1.50) $ (.43) (.91) $ 1.19 Restructuring charge (net of minority interest) -- -- (.28) -- Extraordinary gain (loss) -- -- .03 (.17) Cumulative effect of change in accounting principle -- -- (.12) -- Realized investment gains (losses) (.09) .29 (.15) .57 --------- --------- --------- --------- Net income (loss) $ (1.59) $ (.14) $ (1.43) $ 1.59 ========= ========= ========= ========= Net cash provided by operating activities(1) $ 21,450 $ 112,472 $ 48,515 $ 224,270 ========= ========= ========= =========
December 31, December 31, 1999 1998 ------------ ------------ Balance sheet information: Total investments (2) $2,975,929 $3,233,458 Total assets 4,784,791 4,983,431 Reserves for losses and loss expenses 2,361,238 2,126,566 Long-term debt 394,792 394,444 Capital Trust Securities 198,126 207,988 Preferred equity -- 98,093 Common Stockholders' equity 591,778 763,188 Common shares outstanding 25,617 26,504 Common stockholders' equity per share (3) 23.10 28.80
(1) Cash flow for the quarter and year ended December 31, 1998 was impacted favorably by an assumption of a portfolio of loss reserves, the proceeds of which were approximately $60 million. (2) Including trading account receivable from broker and clearing organizations and trading securities sold but not yet purchased. (3) Included in the calculation of common stockholders' equity per share are after-tax unrealized investment losses of $44.5 million as of December 31, 1999 and unrealized investment gains of $54.7 million as of December 31, 1998. 6 -----END PRIVACY-ENHANCED MESSAGE-----