-----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, DJzk2x8Bc0lQpXICCF7MEaYez5K9GIKS0AKV2YSrGNFv7kDiRXSCYV+dfR/ghHKF 82dQ8F2hbEJ/8s3E482YqA== 0000950123-07-010185.txt : 20070724 0000950123-07-010185.hdr.sgml : 20070724 20070724060916 ACCESSION NUMBER: 0000950123-07-010185 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070723 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070724 DATE AS OF CHANGE: 20070724 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: 07994934 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 y37451e8vk.htm FORM 8-K 8-K
Table of Contents

As filed with the Securities and Exchange Commission on July 24, 2007
 
 
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): July 23, 2007
W. R. BERKLEY CORPORATION
 
(Exact name of registrant as specified in its charter)
         
Delaware   1-15202   22-1867895
         
(State or other jurisdiction
of incorporation)
  (Commission File
Number)
  (IRS Employer
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
Not Applicable
(Former name or former address, if changed since last report)
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
     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))
 
 

 


TABLE OF CONTENTS

Item 2.02 Results of Operation and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-99.1: PRESS RELEASE


Table of Contents

Item 2.02 Results of Operation and Financial Condition.
     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 second quarter of 2007. The press release was issued on July 23, 2007. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
     The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
     (c) Exhibits
     99.1 Press Release, dated July 23, 2007

 


Table of Contents

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: July 23, 2007

 


Table of Contents

EXHIBIT INDEX
     
Exhibit:    
99.1
  Press Release dated July 23, 2007

 

EX-99.1 2 y37451exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
 

EXHIBIT 99.1

 


 

     
W. R. Berkley Corporation
  NEWS
475 Steamboat Road
  RELEASE
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 INCOME UP 15% TO $191 MILLION
     Greenwich, CT, July 23, 2007 — W. R. Berkley Corporation (NYSE: BER) today reported net income for the second quarter of 2007 of $191 million, or 93 cents per share, a 15% increase from $165 million, or 82 cents per share, for the second quarter of 2006. Net operating income for the second quarter of 2007 increased 13% to $187 million, or 92 cents per share, compared with $166 million, or 82 cents per share, for the corresponding quarter of 2006. Net operating income is a non-GAAP financial measure defined by the Company as net income excluding realized investment gains and losses.
Summary Financial Data
(Amounts in thousands, except per share data)
                                 
    Second Quarter   Six Months
    2007   2006   2007   2006
Gross premiums written
  $ 1,265,679     $ 1,341,347     $ 2,649,041     $ 2,752,182  
Net premiums written
    1,136,764       1,217,985       2,391,536       2,496,516  
 
Net income
    190,633       165,452       379,059       327,154  
Net income per diluted share
    0.93       0.82       1.86       1.62  
 
Net operating income
    187,216       165,986       370,846       325,935  
Net operating income per diluted share
    0.92       0.82       1.82       1.61  

 


 

     
W. R. Berkley Corporation
  Page 2
Second quarter highlights included:
    Return on equity was 22.9% on an annualized basis.
 
    GAAP combined ratio was 87.9%.
 
    Net investment income grew 16% to $169 million.
 
    Paid loss ratio was 42%.
     Commenting on the Company’s activities, William R. Berkley, chairman and chief executive officer, said: “We’ve completed another excellent quarter. Our underwriting results continue to be strong. The strength of our balance sheet is outstanding and our assets have not been adversely impacted by the various uncertainties in the current environment.
     “Investment income increased as a result of our growing asset base and higher interest rates. While we have a significant portfolio of mortgage backed securities, they contain virtually no sub-prime element. Our direct real estate participation continues to perform well as has our portfolio of equity investments. There are a significant number of capital gains embedded in our portfolio that should become realized over the next several years.
     “The insurance pricing environment is continuing its downward trend with modest acceleration. On average, year over year prices were down approximately five percent for the quarter. While it takes five quarters for these prices to be fully reflected in our financial statements, it is very likely that over time our underwriting profitability will decline. There are still some attractive opportunities but they are fewer and harder to find.
     “We continue to manage our capital and expect to deliver an after tax return in excess of twenty percent again this year. We believe that our Company has the ability to deliver outstanding returns for our shareholders throughout the cycle,” Mr. Berkley concluded.

 


 

W. R. Berkley Corporation   Page 3
Webcast Conference Call
     The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on Tuesday, July 24, 2007 at 9:00 a.m. eastern time. The conference call will be webcast live on the Company’s website at www.wrberkley.com. A recording of the call will be available on the Company’s website approximately two hours after the end of the conference call.
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 in five segments of the property casualty insurance business: specialty insurance, regional property casualty insurance, alternative markets, reinsurance and international.
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 2007 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 insurance and reinsurance business, product demand and pricing, claims development and the process of estimating reserves, the uncertain nature of damage theories and loss amounts, natural and man-made catastrophic losses, including as a result of terrorist activities, the impact of competition, the success of our new ventures or acquisitions and the availability of other opportunities, the availability of reinsurance, exposure as to coverage for terrorist acts, our retention under The Terrorism Risk Insurance Act of 2002, as amended (“TRIA”), and the potential expiration of TRIA, the ability of our reinsurers to pay reinsurance recoverables owed to us, investment risks, including those of our portfolio of fixed income securities and investments in equity securities, including merger arbitrage investments, exchange rate and political risks relating to our international operations, legislative and regulatory developments, including those related to alleged anti-competitive or other improper business practices in the insurance industry, changes in the ratings assigned to us by ratings agencies, the availability of dividends from our insurance company subsidiaries, our ability to successfully acquire and integrate companies and invest 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 2007 and beyond to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. Any projections of growth in the Company’s net premiums written and management fees would not necessarily result in commensurate levels of underwriting and operating profits. 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 4
Consolidated Financial Summary
(Amounts in thousands, except per share data)
                                 
    Second Quarter     Six Months  
    2007     2006     2007     2006  
Revenues:
                               
Net premiums written
  $ 1,136,764     $ 1,217,985     $ 2,391,536     $ 2,496,516  
Change in unearned premiums
    34,876       (31,305 )     (64,963 )     (163,459 )
 
                       
Premiums earned
    1,171,640       1,186,680       2,326,573       2,333,057  
Net investment income
    168,943       145,067       334,364       276,564  
Service fees
    25,343       26,966       51,336       53,560  
Realized investment gains (losses)
    5,280       (673 )     12,670       2,002  
Other income
    15,377       306       20,661       697  
 
                       
Total revenues
    1,386,583       1,358,346       2,745,604       2,665,880  
 
                       
 
                               
Expenses:
                               
Losses and loss expenses
    703,669       742,110       1,388,816       1,443,308  
Other operating expenses
    389,791       358,926       775,022       714,580  
Interest expense
    22,700       23,272       43,400       46,741  
 
                       
Total expenses
    1,116,160       1,124,308       2,207,238       2,204,629  
 
                       
 
                               
Income before income taxes and minority interest
    270,423       234,038       538,366       461,251  
 
                               
Income tax expense
    (79,376 )     (67,883 )     (158,511 )     (132,806 )
Minority interest
    (414 )     (703 )     (796 )     (1,291 )
 
                       
Net income
  $ 190,633     $ 165,452     $ 379,059     $ 327,154  
 
                       
 
                               
Net income per share:
                               
Basic
  $ 0.98     $ 0.86     $ 1.96     $ 1.70  
 
                       
Diluted
  $ 0.93     $ 0.82     $ 1.86     $ 1.62  
 
                       
 
                               
Average shares outstanding:
                               
Basic
    194,345       192,337       193,775       192,041  
Diluted
    203,922       202,450       203,930       202,450  

 


 

     
W. R. Berkley Corporation   Page 5
Operating Results by Segment
(Amounts in thousands, except ratios (1))
                                 
    Second Quarter   Six Months
    2007   2006   2007   2006
Specialty:
                               
Gross premiums written
  $ 480,674     $ 521,825     $ 938,526     $ 996,126  
Net premiums written
    452,610       496,017       886,585       943,580  
Premiums earned
    442,110       443,212       885,565       861,457  
Pre-tax income
    136,843       112,732       264,555       219,218  
Loss ratio
    55.7 %     60.7 %     56.9 %     60.3 %
Expense ratio
    26.4 %     25.0 %     26.2 %     25.2 %
GAAP combined ratio
    82.1 %     85.7 %     83.1 %     85.5 %
 
                               
Regional (2):
                               
Gross premiums written
  $ 371,879     $ 372,481     $ 749,297     $ 737,147  
Net premiums written
    330,057       322,910       655,430       634,291  
Premiums earned
    309,812       299,613       614,179       589,575  
Pre-tax income
    51,903       43,930       107,224       98,560  
Loss ratio
    60.1 %     62.0 %     59.3 %     59.4 %
Expense ratio
    31.0 %     30.2 %     31.0 %     30.6 %
GAAP combined ratio
    91.1 %     92.2 %     90.3 %     90.0 %
 
                               
Alternative Markets:
                               
Gross premiums written
  $ 123,906     $ 123,843     $ 404,334     $ 397,291  
Net premiums written
    100,808       102,709       351,331       341,131  
Premiums earned
    159,266       162,028       321,930       324,769  
Pre-tax income
    63,592       74,520       131,310       141,642  
Loss ratio
    57.2 %     51.8 %     56.7 %     53.6 %
Expense ratio
    24.2 %     23.1 %     23.4 %     22.2 %
GAAP combined ratio
    81.4 %     74.9 %     80.1 %     75.8 %
 
                               
Reinsurance:
                               
Gross premiums written
  $ 210,053     $ 258,628     $ 415,235     $ 505,661  
Net premiums written
    190,705       242,957       381,566       478,766  
Premiums earned
    196,986       226,307       382,264       451,549  
Pre-tax income
    45,892       34,037       92,299       64,096  
Loss ratio
    70.2 %     74.5 %     67.5 %     73.6 %
Expense ratio
    26.9 %     25.1 %     29.5 %     26.3 %
GAAP combined ratio
    97.1 %     99.6 %     97.0 %     99.9 %
 
                               
International:
                               
Gross premiums written
  $ 79,167     $ 64,570     $ 141,649     $ 115,957  
Net premiums written
    62,584       53,392       116,624       98,748  
Premiums earned
    63,466       55,520       122,635       105,707  
Pre-tax income
    7,900       10,820       15,271       16,732  
Loss ratio
    65.8 %     62.4 %     65.5 %     64.0 %
Expense ratio
    33.3 %     30.1 %     32.5 %     31.7 %
GAAP combined ratio
    99.1 %     92.5 %     98.0 %     95.7 %
(Continued)


 

     
W. R. Berkley Corporation   Page 6
Operating Results by Segment (continued)
(Amounts in thousands, except ratios (1))
                                 
    Second Quarter   Six Months
    2007   2006   2007   2006
Corporate and Eliminations:
                               
Realized investment gains (losses)
  $ 5,280     $ (673 )   $ 12,670     $ 2,002  
Interest and other, net
    (40,987 )     (41,328 )     (84,963 )     (80,999 )
Pre-tax loss
    (35,707 )     (42,001 )     (72,293 )     (78,997 )
 
                               
Total:
                               
Gross premiums written
  $ 1,265,679     $ 1,341,347     $ 2,649,041     $ 2,752,182  
Net premiums written
    1,136,764       1,217,985       2,391,536       2,496,516  
Premiums earned
    1,171,640       1,186,680       2,326,573       2,333,057  
Pre-tax income
    270,423       234,038       538,366       461,251  
Loss ratio
    60.1 %     62.5 %     59.7 %     61.9 %
Expense ratio
    27.8 %     26.4 %     28.0 %     26.7 %
GAAP combined ratio
    87.9 %     88.9 %     87.7 %     88.6 %
 
(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. Underwriting expenses do not include expenses related to insurance services or unallocated corporate expenses. For the international segment, the loss and expense ratios do not include life insurance business. GAAP combined ratio is the sum of the loss ratio and the expense ratio.
 
(2)   For the second quarters of 2007 and 2006, weather-related losses were $16 million and $20 million, respectively. For the first six months of 2007 and 2006, weather-related losses were $22 million and $25 million, respectively.


 

W. R. Berkley Corporation   Page 7                
Selected Balance Sheet Information
(Amounts in thousands, except per share data)
                 
    June 30,   December 31,
    2007   2006
Net invested assets (1)
  $ 12,656,927     $ 12,012,298  
Total assets
    16,626,837       15,656,489  
Reserves for losses and loss expenses
    8,207,877       7,784,269  
Senior notes and other debt
    1,121,653       869,l87  
Junior subordinated debentures
    242,056       241,953  
Stockholders’ equity (2)
    3,571,177       3,335,159  
Shares outstanding
    192,876       192,772  
Stockholders’ equity per share
    18.52       17.30  
 
(1)   Net invested assets include investments, cash investments and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.
 
(2)   Stockholders’ equity includes after-tax unrealized gains from investments and currency translation adjustments of $46 million and $126 million as of June 30, 2007 and December 31, 2006, respectively.


 

W. R. Berkley Corporation   Page 8
Supplemental Information
(Amounts in thousands)
                                 
    Second Quarter     Six Months  
    2007     2006     2007     2006  
Reconciliation of net operating income to net income:
                               
 
Net operating income (1)
  $ 187,216     $ 165,986     $ 370,846     $ 325,935  
Realized investment gains (losses), net of taxes
    3,417       (534 )     8,213       1,219  
 
                       
 
                               
Net income
  $ 190,633     $ 165,452     $ 379,059     $ 327,154  
 
                       
 
                               
Return on equity:
                               
 
                               
Net Income (2)
    22.9 %     25.8 %     22.7 %     25.5 %
 
                               
Net operating income (2)
    22.5 %     25.9 %     22.2 %     25.4 %
 
                               
Cash flow:
                               
 
                               
Cash flow from operations before cash transfers to/from trading account (3)
  $ 279,993     $ 341,364     $ 637,214     $ 777,530  
 
                               
Trading account transfers
          (25,000 )           (225,000 )
 
                       
 
                               
Cash flow from operations
  $ 279,993     $ 316,364     $ 637,214     $ 552,530  
 
                       
 
(1)   Net operating income is a non-GAAP financial measure defined by the Company as net income excluding realized investment gains and losses. Management believes that excluding realized investment gains and losses, which result primarily from changes in general economic conditions, provides a useful indicator of trends in the Company’s underlying operations.
 
(2)   Return on equity represents net income and net operating income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity.
 
(3)   Cash flow before trading account transfers is a non-GAAP financial measure that excludes cash contributions to and withdrawals from the arbitrage trading account. Management believes that cash transfers to and withdrawals from the arbitrage trading account are the result of changes in investment allocations and that excluding such transfers provides a useful measure of the Company’s cash flow. Reclassifications have been made to the 2006 cash flow amounts to conform with the presentation in 2007.

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