-----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, MZZsIIlWyybJDUs9PrN8r2MT2lH3z3c2cptjpqGrBlpKoHB6wynq8Ok0U1goqXgT 575p6Lh5CNCxFwuQS4+lKg== 0000914039-99-000464.txt : 19991027 0000914039-99-000464.hdr.sgml : 19991027 ACCESSION NUMBER: 0000914039-99-000464 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991022 ITEM INFORMATION: FILED AS OF DATE: 19991026 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: 99734037 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 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) October 22, 1999 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 October 22, 1999, 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) October 26, 1999 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 October 22, 1999 EX-99.1 2 EX-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 RESULTS OF OPERATIONS FOR THE THIRD QUARTER OF 1999 Greenwich, CT, October 22, 1999 -- W.R. Berkley Corporation (NASDAQ: BKLY), a property casualty insurance holding company, today announced results of operations for the third quarter and nine months ended September 30, 1999. Third quarter 1999 operating income was $865,000, or 3 cents per diluted share, compared with $8.5 million, or 30 cents per diluted share, for the third quarter of 1998. For the first nine months of 1999, operating income was $15.1 million, or 57 cents per diluted share, compared with $46.3 million, or $1.55 per diluted share, for the same period a year ago. Third quarter catastrophe losses were $12.3 million, or 48 cents per diluted share, compared with $11.2 million, or 39 cents per diluted share, for the same period last year. Catastrophe losses for the first nine months were $35.6 million, or $1.36 cents per diluted share, compared with last year's $31.6 million, or $1.06 per diluted share. Hurricane Floyd generated after-tax losses of approximately $2.6 million, or 10 cents per diluted share, in the third quarter. Net premiums written in the third quarter decreased 2 percent to $359.9 million, while total third-quarter revenues rose 8 percent to $427.8 million, up from $394.4 million for the same quarter a year ago. For the first nine months of 1999, net premiums 2 W. R. Berkley Corporation 2 written and total revenues rose 4 percent and 7 percent, respectively, compared with the first nine months of 1998. Third quarter net loss attributable to common stockholders was $621,000, or 2 cents per diluted share, compared with net income of $10.4 million, or 36 cents per diluted share, for the same period a year ago. For the first nine months of 1999, net income attributable to common stockholders was $3.7 million, or 14 cents per diluted share, versus $50.0 million, or $1.68 per diluted share, for the same period last year. Results for the first nine months 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 previously announced restructuring of certain of its operating units. Under generally accepted accounting principles, the restructuring charge does not include costs related to systems changes, financial incentives and other activities, although they are directly related to the restructuring plan. Through the first nine months of 1999, the Company has incurred approximately $2.8 million of such additional costs on an after-tax basis. The restructuring is expected to result in annual after-tax savings of approximately $12.4 million. Management estimates that as of September 30, 1999, the Company has achieved approximately two-thirds of such savings, on an annualized basis. 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. Third quarter 1999 net income includes capital losses, net of taxes, of $2.2 million, or 8 cents per diluted share, compared with capital gains of $1.9 million, or 6 cents per diluted share, for the same period a year ago. For the first nine months of 1999, capital losses totaled $1.6 million, or 6 cents per diluted share, versus capital gains a year earlier of $8.7 million, or 30 cents per diluted share. -more- 3 W. R. Berkley Corporation 3 The repurchase and retirement of $10.0 million of capital trust securities and $34.7 million of long-term debt for the nine months ended 1999 and 1998, respectively, produced an extraordinary gain of $735,000 for the first nine months of 1999 and an extraordinary loss of $5.0 million for the first nine months of 1998. Thus far in 1999, the Company has 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. Commenting on third-quarter results, William R. Berkley, chairman and chief executive officer, said, "The competitive marketplace combined with high catastrophe losses produced unsatisfactory underwriting results for our regional insurance businesses. Our reinsurance businesses, while still quite profitable, were also impacted by adverse market conditions and catastrophe losses. However, our core specialty and alternative markets businesses reported strong results again this quarter. While they are not immune to price competition, we continue to be bullish about the long-term prospects for these knowledge-driven businesses. "While the current operating climate remains difficult, we continue to believe that the ongoing restructuring of our regional business will yield significant positive changes in our cost structure next year. "Looking ahead to the balance of the year, we believe that inadequate price levels on the business written in prior periods will continue to be a serious drag on performance as operating income will reflect pricing levels in effect during the previous twelve months. In addition, while our regional businesses have met with some degree of success in increasing prices in certain lines, current price levels for many products continue to be impacted by industry-wide competitive pressures and must be further improved to generate underwriting profits. Recognizing that the environment remains uncertain at least in the near term, we will continue to monitor all aspects of our financial position, including the effects of price competition on our anticipated loss ratios, as we work to reshape our business to improve real returns." -more- 4 W. R. Berkley Corporation 4 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 are based upon the Company's historical performance. They are subject to various risks and uncertainties, including but not limited to the impact of competition, product demand, catastrophe and storm losses, investment results 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 1999 fiscal year and beyond to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. (See accompanying financial tables) 5
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Revenues: (Amounts in thousands except per share data) Gross Premiums written $ 436,051 $ 435,403 $ 1,316,166 $ 1,239,529 ----------- ----------- ----------- ----------- Net premiums written 359,881 366,625 1,085,652 1,040,283 Change in unearned premiums 3,657 (36,073) (33,760) (88,110) ----------- ----------- ----------- ----------- Premiums earned 363,538 330,552 1,051,892 952,173 Net investment income 48,090 42,727 145,265 151,505 Management fees and Commissions 19,099 17,330 55,347 53,693 Realized gains (losses) on investments (3,417) 2,879 (2,404) 13,386 Other income 513 937 1,686 3,853 ----------- ----------- ----------- ----------- Total revenues 427,823 394,425 1,251,786 1,174,610 Operating costs and expenses: Losses and loss expenses (272,819) (229,526) (764,916) (652,306) Other operating costs And expenses (151,792) (141,561) (448,150) (413,784) Interest expense (12,246) (11,960) (38,068) (36,291) Restructuring charge -- -- (11,505) -- ----------- ----------- ----------- ----------- Income (loss) before income taxes And minority interest (9,034) 11,378 (10,853) 72,229 Federal income tax (expense) benefit 8,145 482 17,768 (13,218) ----------- ----------- ----------- ----------- Income (loss) before minority interest (889) 11,860 6,915 59,011 Minority interest (467) 401 (175) 1,666 ----------- ----------- ----------- ----------- Net income (loss) before preferred Dividends (1,356) 12,261 6,740 60,677 Preferred dividends -- (1,887) (497) (5,661) ----------- ----------- ----------- ----------- Net income (loss) attributable to common Stockholders before change in Accounting and extraordinary loss (1,356) 10,374 6,243 55,016 Cumulative effect of change in Accounting principle (net of taxes) -- -- (3,250) -- Extraordinary gain (loss) on early Extinquishment of long-term debt (net of taxes) 735 -- 735 (5,017) ----------- ----------- ----------- ----------- Net income (loss) attributable to Common stockholders (621) $ 10,374 $ 3,728 $ 49,999 =========== =========== =========== =========== Earnings (loss) per share: Basic $ (.02) $ .37 $ .14 $ 1.74 =========== =========== =========== =========== Diluted $ (.02) $ .36 $ .14 $ 1.68 =========== =========== =========== =========== Average shares outstanding: Basic 25,723 28,024 25,999 28,687 =========== =========== =========== =========== Diluted 25,822 28,672 26,133 29,805 =========== =========== =========== ===========
6 ADDENDUM #1 TO PRESS RELEASE DATED October 22, 1999 Operating Statistics by Insurance Industry Segment (Amounts in thousands except per share data)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Regional Insurance (1): Net premiums written $ 159,893 $ 173,134 $ 492,349 $ 500,989 Total revenues 173,505 173,453 519,980 518,362 Pre-tax operating income (loss) (2) (17,343) (135) (26,552) 5,221 Loss ratio 81.5% 70.6% 76.4% 71.1% Expense ratio 35.4% 35.2% 35.9% 34.7% Policyholders' dividend ratio .7% .8% .8% .8% Combined ratio (3) 117.6% 106.6% 113.1% 106.6% Reinsurance: Net premiums written $ 78,079 $ 73,300 $ 231,957 $ 199,788 Total revenues 91,251 70,470 257,220 213,081 Pre-tax operating income (2) 5,822 2,866 15,586 24,532 Loss ratio 75.4% 78.8% 75.5% 73.2% Expense ratio 30.4% 31.0% 32.6% 31.3% Combined ratio (3) 105.8% 109.8% 108.1% 104.5% Specialty Insurance (4): Net premiums written $ 64,776 $ 64,237 $ 202,707 $ 193,416 Total revenues 82,522 77,193 237,077 228,619 Pre-tax operating income (2) 12,808 13,560 36,138 54,808 Loss ratio 64.9% 61.9% 67.1% 60.0% Expense ratio 34.8% 33.1% 32.5% 32.1% Policyholders' dividend ratio .4% 0.7% .2% .4% Combined ratio (3) 100.1% 95.7% 99.8% 92.5% Alternative Markets: Net premiums written $ 34,866 $ 34,459 $ 98,275 $ 88,590 Total revenues 55,290 51,969 165,540 152,405 Pre-tax operating income (2) 7,700 8,054 24,686 26,427 Loss ratio 63.1% 57.0% 65.5% 61.7% Expense ratio 39.3% 32.3% 34.6% 33.6% Combined ratio (3) 102.4% 89.3% 100.1% 95.3% International: Net premiums written $ 22,267 $ 21,495 $ 60,364 $ 57,500 Total revenues 24,522 20,450 68,556 58,921 Pre-tax operating income (loss)(2)(4) 1,022 (1,010) 2,253 (4,765) Loss ratio 52.2% 60.1% 52.2% 59.8% Expense ratio 46.3% 37.4% 48.2% 44.7% Combined ratio (3) 98.5% 97.5% 100.4% 104.5% Combined: Net premiums written $ 359,881 $ 366,625 $ 1,085,652 $ 1,040,283 Total revenues 427,090 393,535 1,248,373 1,171,388 Pre-tax operating income (2) 10,009 23,335 52,111 106,223 Loss ratio 74.0% 68.7% 72.4% 68.1% Expense ratio 35.0% 33.5% 34.9% 34.0% Policyholders' dividend ratio .4% 0.5% .4% .5% Combined ratio (3) 109.4% 102.7% 107.7% 102.6%
(1) The regional results were impacted by the purchase of additional reinsurance which resulted in a reduction in net premiums written of $8.1 million and $20.9 million, and an increase in reinsurance recoveries of $12.8 million and $35.0 million, for the third quarter and first nine months of 1999, respectively. The expense ratio for the regional group was impacted by the additional reinsurance premiums and by certain costs directly attributable to the restructuring. After adjusting for these items, the expense ratio would have been 32.5 percent for the third quarter and 33.6 percent for the first nine months of 1999. (2) Pre-tax operating income (loss) represents earnings before the effects of realized investment gains (losses). (3) Based on statutory accounting practices. (4) Represents results before minority interest. 7 W. R. BERKLEY CORPORATION ADDENDUM #2 TO PRESS RELEASE DATED October 22, 1999 Supplementary Information (Amounts in thousands except per share data)
For the Three Months For the Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1999 1998 1999 1998 ---- ---- ---- ---- After-tax earnings amounts: Operating income (1) $ 865 $ 8,503 $ 15,100 $ 46,315 Restructuring charge (net of minority interest) -- -- (7,294) -- Extraordinary gain (loss) 735 -- 735 (5,017) Cumulative effect of change in Accounting principle -- -- (3,250) -- Realized investment gains (losses) (2,221) 1,871 (1,563) 8,701 --------- --------- --------- --------- Net income (loss) $ (621) $ 10,374 $ 3,728 $ 49,999 ========= ========= ========= ========= After-tax diluted earnings per share: Operating income (1) $ .03 $ .30 $ .57 1.55 Restructuring charge (net of minority interest) -- -- (.28) -- Extraordinary gain (loss) .03 -- .03 (.17) Cumulative effect of change in Accounting principle -- -- (.12) -- Realized investment gains (losses) (.08) .06 (.06) .30 --------- --------- --------- --------- Net income (loss) $ (.02) $ .36 $ .14 $ 1.68 ========= ========= ========= ========= Cash flow from operations 21,149 55,979 27,065 111,798
September 30, December 31, 1999 1998 ---- ---- Balance sheet information: Total investments (2) $3,000,427 $3,233,458 Total assets 4,818,110 4,983,431 Reserves for losses and loss expenses 2,236,514 2,126,566 Long-term debt 394,705 394,444 Capital Trust Securities 198,114 207,988 Preferred equity -- 98,093 Common stockholders' equity 657,699 763,188 Common shares outstanding 25,616 26,504 Common stockholders' equity per share (3) 25.68 28.80
(1) Operating income represents net income or loss before realized investment gains or losses, restructuring charges, the change in accounting principle and extraordinary items. (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 $22.7 million and unrealized investment gains of $54.7 million as of September 30, 1999 and December 31, 1998, respectively. -----END PRIVACY-ENHANCED MESSAGE-----