EX-99.1 2 wrb63020218-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
Second Quarter Net Premiums Written Grew 27.2% and Return on Equity of 15.0%
Greenwich, CT, July 22, 2021 - W. R. Berkley Corporation (NYSE: WRB) today reported its second quarter 2021 results.


Summary Financial Data
(Amounts in thousands, except per share data)
Second QuarterSix Months
2021202020212020
Gross premiums written$2,661,236 $2,132,246 $5,145,948 $4,363,618 
Net premiums written2,212,181 1,739,818 4,262,219 3,585,664 
Net income to common stockholders237,238 71,260 466,763 66,842 
Net income per diluted share1.27 0.38 2.50 0.35 
Operating income (1)219,059 11,552 420,840 144,064 
Operating income per diluted share1.17 0.06 2.25 0.76 
Return on equity (2)15.0 %4.7 %14.8 %2.2 %


(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)Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year common stockholders’ equity.


W. R. Berkley Corporation        2

Second quarter highlights included:
•Net premiums written increased 27.2%.
•The reported combined ratio was 89.7%. The current accident year combined ratio before catastrophe losses of 2.2 loss ratio points was 87.5%.
•Return on equity of 15.0%.
•Record quarterly underwriting income of $202.2 million.
•Average rate increases excluding workers' compensation were approximately 9.7%.
•Net investment income increased 96.9% to $168.2 million.
•Total capital returned to shareholders was $112 million, consisting of $89 million of special dividends and $23 million of regular dividends.


The Company commented:
The Company reported outstanding results in the second quarter of 2021 with net premium growth in excess of 27%, a combined ratio of 89.7%, and an annualized return on equity of 15%.
Rate increases continued to outpace loss costs, further solidifying our current rate adequacy. As more products achieved or exceeded our target rate levels, our attention turned to exposure growth and business expansion. We expect this growth and rate achievement will contribute to additional underwriting profits as they are fully earned.
Our alternative investment portfolio also delivered strong performance, driven by investment funds and approximately $39 million of realized investment gains. We remain committed to a total return investment strategy and anticipate that it will continue to generate attractive returns for shareholders.
The combination of rate adequacy and an improving economy have created opportunities for profitable growth for the property casualty insurance market. Our structure, operating model and specialty product focus distinctly position us to outperform in such circumstances. We anticipate that these economic and market trends will continue to yield positive results for our Company for the foreseeable future.




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 22, 2021, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/news-and-events/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/annual-reports/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 2021 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 2021 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
2021202020212020
Revenues:
  Net premiums written$2,212,181 $1,739,818 $4,262,219 $3,585,664 
  Change in unearned premiums(240,557)(62,903)(440,639)(217,331)
    Net premium earned1,971,624 1,676,915 3,821,580 3,368,333 
  Net investment income168,187 85,431 326,764 260,194 
  Net investment gains (losses):
   Net realized and unrealized gains (losses) on investments20,461 61,653 72,219 (81,632)
   Change in allowance for credit losses on investments3,603 16,232 (13,316)(17,657)
  Net investment gains (losses)24,064 77,885 58,903 (99,289)
  Revenues from non-insurance businesses109,122 75,742 196,552 169,471 
  Insurance service fees22,256 19,870 48,064 45,621 
  Other Income833 183 1,092 2,305 
       Total Revenues2,296,086 1,936,026 4,452,955 3,746,635 
Expenses:
   Loss and loss expenses1,203,647 1,135,126 2,325,238 2,242,379 
   Other operating costs and expenses647,705 580,840 1,263,973 1,159,173 
   Expenses from non-insurance businesses106,698 76,238 192,989 170,996 
   Interest expense38,096 38,373 74,747 75,105 
     Total expenses1,996,146 1,830,577 3,856,947 3,647,653 
     Income before income tax299,940 105,449 596,008 98,982 
   Income tax expense(62,262)(33,793)(126,614)(30,852)
     Net Income before noncontrolling interests237,678 71,656 469,394 68,130 
   Noncontrolling interest(440)(396)(2,631)(1,288)
     Net income to common stockholders$237,238 $71,260 $466,763 $66,842 
 Net income per share:
 Basic$1.28 $0.38 $2.52 $0.36 
 Diluted$1.27 $0.38 $2.50 $0.35 
 Average shares outstanding (1):
 Basic185,155 185,979 185,175 188,133 
 Diluted187,106 187,862 186,985 190,078 



(1)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
2021202020212020
Insurance:
   Gross premiums written$2,421,846 $1,917,702 $4,561,859 $3,859,511 
   Net premiums written1,994,212 1,543,157 3,734,036 3,126,475 
   Net premiums earned1,727,202 1,465,044 3,332,181 2,949,999 
   Pre-tax income291,290 76,546 548,399 252,493 
   Loss ratio61.4 %67.0 %61.3 %66.1 %
   Expense ratio28.5 %30.7 %28.9 %31.0 %
   GAAP Combined ratio89.9 %97.7 %90.2 %97.1 %
Reinsurance & Monoline Excess:
   Gross premiums written$239,390 $214,544 $584,089 $504,107 
   Net premiums written217,969 196,661 528,183 459,189 
   Net premiums earned244,422 211,871 489,399 418,334 
   Pre-tax income74,794 12,566 143,443 49,080 
   Loss ratio58.2 %72.2 %57.4 %70.3 %
   Expense ratio30.4 %32.9 %30.6 %32.6 %
   GAAP Combined ratio88.6 %105.1 %88.0 %102.9 %
Corporate and Eliminations:
   Net investment gains (losses)$24,064 $77,885 $58,903 $(99,289)
   Interest expense(38,096)(38,373)(74,747)(75,105)
   Other revenues and expenses(52,112)(23,175)(79,990)(28,197)
   Pre-tax (loss) income(66,144)16,337 (95,834)(202,591)
Consolidated:
   Gross premiums written$2,661,236 $2,132,246 $5,145,948 $4,363,618 
   Net premiums written2,212,181 1,739,818 4,262,219 3,585,664 
   Net premiums earned1,971,624 1,676,915 3,821,580 3,368,333 
   Pre-tax income 299,940 105,449 596,008 98,982 
   Loss ratio61.0 %67.7 %60.8 %66.6 %
   Expense ratio28.7 %31.0 %29.1 %31.2 %
   GAAP Combined ratio89.7 %98.7 %89.9 %97.8 %


(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
2021202020212020
Net premiums written:
   Other liability$720,523 $559,727 $1,378,301 $1,141,371 
   Short-tail lines (1)391,778 323,164 716,830 631,053 
   Workers' compensation315,638 273,036 602,362 600,322 
   Commercial automobile279,204 213,063 527,771 418,490 
   Professional liability287,069 174,167 508,772 335,239 
     Total Insurance1,994,212 1,543,157 3,734,036 3,126,475 
   Casualty reinsurance156,216 132,927 331,081 276,388 
   Monoline excess23,664 19,571 109,172 94,838 
   Property reinsurance38,089 44,163 87,930 87,963 
     Total Reinsurance & Monoline Excess217,969 196,661 528,183 459,189 
          Total$2,212,181 $1,739,818 $4,262,219 $3,585,664 
Current accident year losses from catastrophes (including COVID-19 related losses):
   Insurance$36,803 $114,038 $69,632 $170,619 
   Reinsurance & Monoline Excess7,162 31,822 10,162 54,015 
     Total$43,965 $145,860 $79,794 $224,634 
Net Investment income:
   Core portfolio (2)$102,961 $111,679 $203,528 $244,727 
   Investment funds61,311 (57,552)100,246 (16,975)
   Arbitrage trading account3,915 31,304 22,989 32,442 
     Total$168,187 $85,431 $326,764 $260,194 
Net realized and unrealized gains (losses) on investments:
   Net realized gains (losses) on investments$38,700 $(261)$114,793 $10,921 
   Change in unrealized (losses) gains on equity securities(18,239)61,914 (42,574)(92,553)
     Total$20,461 $61,653 $72,219 $(81,632)
Other operating costs and expenses:
   Policy acquisition and insurance operating expenses$565,733 $519,234 $1,111,483 $1,051,158 
   Insurance service expenses21,789 20,423 42,575 42,995 
   Net foreign currency gains(1,125)(7,382)(6,719)(28,923)
   Debt extinguishment costs7,903 — 11,520 — 
   Other costs and expenses53,405 48,565 105,114 93,943 
     Total$647,705 $580,840 $1,263,973 $1,159,173 
Cash flow from operations$384,819 $427,282 $695,809 $579,851 
Reconciliation of net income to operating income:
   Net income$237,238 $71,260 $466,763 $66,842 
   Pre-tax investment (gains) losses, net of related expenses(23,271)(77,785)(56,573)99,807 
   Income tax expense (benefit)5,092 18,077 10,650 (22,585)
     Operating income after-tax (3)$219,059 $11,552 $420,840 $144,064 

(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, 2021December 31, 2020
Net invested assets (1)$22,315,029 $21,370,503 
Total assets30,297,917 28,571,965 
Reserves for losses and loss expenses14,480,947 13,784,430 
Senior notes and other debt1,911,753 1,623,025 
Subordinated debentures1,007,293 1,102,309 
Common stockholders' equity (2)6,578,276 6,310,802 
Common stock outstanding (3)177,414 177,825 
Book value per share (4)37.08 35.49 
Tangible book value per share (4)35.83 34.22 


(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, 2021, reflected in common stockholders' equity are after-tax unrealized investment gains of $223 million and unrealized currency translation losses of $345 million. As of December 31, 2020, after-tax unrealized investment gains were $290 million and unrealized currency translation losses were $352 million.
(3)During the six months ended June 30, 2021, the Company repurchased 465,063 shares of its common stock for $30 million. During the three months ended June 30, 2021, 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)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, 2021
(Amounts in thousands, except percentages)
Carrying ValuePercent of Total
Fixed maturity securities:
   United States government and government agencies$502,625 2.3 %
   State and municipal:
        Special revenue2,176,388 9.8 %
        Local general obligation452,710 2.0 %
        State general obligation451,588 2.0 %
        Pre-refunded 248,137 1.1 %
        Corporate backed165,190 0.8 %
            Total state and municipal3,494,013 15.7 %
   Mortgage-backed securities:
        Agency661,323 3.0 %
        Commercial143,586 0.6 %
        Residential - Prime117,488 0.5 %
        Residential - Alt A7,029 0.0 %
            Total mortgage-backed securities929,426 4.1 %
   Asset-backed securities4,317,863 19.4 %
   Corporate:
        Industrial3,106,003 13.9 %
        Financial1,633,318 7.3 %
        Utilities423,848 1.9 %
        Other177,494 0.8 %
            Total corporate 5,340,663 23.9 %
   Foreign government 1,068,918 4.8 %
            Total fixed maturity securities (1)15,653,508 70.2 %
Equity securities available for sale:
   Common stocks449,500 2.0 %
   Preferred stocks193,493 0.9 %
            Total equity securities available for sale642,993 2.9 %
Cash and cash equivalents (2)2,088,319 9.4 %
Real estate1,811,263 8.1 %
Investment funds (3)1,368,661 6.1 %
Arbitrage trading account634,276 2.8 %
Loans receivable116,009 0.5 %
          Net invested assets$22,315,029 100.0 %


(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.