EX-99.1 2 wrb93020218-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 THIRD QUARTER RESULTS
Third Quarter Net Income Increased 72.3% and Return on Equity of 16.6%
Greenwich, CT, October 21, 2021 - W. R. Berkley Corporation (NYSE: WRB) today reported its third quarter 2021 results.


Summary Financial Data
(Amounts in thousands, except per share data)
Third QuarterNine Months
2021202020212020
Gross premiums written$2,787,499 $2,262,545 $7,933,446 $6,626,163 
Net premiums written2,325,138 1,879,316 6,587,357 5,464,980 
Net income to common stockholders261,297 151,678 728,060 218,520 
Net income per diluted share1.40 0.81 3.89 1.15 
Operating income (1)246,699 121,146 667,539 265,210 
Operating income per diluted share1.32 0.65 3.57 1.40 
Return on equity (2)16.6 %10.0 %15.4 %4.8 %


(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

Third quarter highlights included:
•Return on equity of 16.6%.
•Net premiums written increased 23.7%.
•The current accident year combined ratio before catastrophe losses of 3.5 loss ratio points was 86.9%.
•The reported combined ratio was 90.4%, including catastrophe losses of $73.8 million.
•Average rate increases excluding workers' compensation were approximately 10.1%.
•Net investment income increased 26.1% to $179.9 million.
•Operating income increased 103.6% to $246.7 million.
•Total capital returned to shareholders was $115.8 million, consisting of $92.7 million of share repurchases and $23.1 million of dividends.



The Company commented:
The Company had another outstanding quarter with 24% growth in net premiums written, a combined ratio of 90.4%, and an annualized return on equity of 16.6%. These results were achieved in spite of significant industry catastrophe losses and low interest rates.
Overall rate increases remained robust in nearly all lines of business, and we expect this to continue for the foreseeable future. We see expanding opportunities to write business at attractive underwriting margins, given the strong commercial property and casualty pricing environment. The increasing focus that distribution partners and clients are placing on stable markets with balance sheet strength and expertise, particularly in specialty and E&S lines, is also contributing to growth.
Underwriting income increased 80% in the quarter. We expect that exposure growth and compounding rate achievement will contribute to additional underwriting profits as premiums are fully earned. While we maintain a high-quality short-duration fixed-maturity portfolio, investment income grew 26% in the quarter as investment funds delivered another strong performance.
The Company is performing well as we remain focused on our total risk-adjusted return strategy. Opportunities like the current environment are infrequent in the property casualty insurance market, and we are striving to make the most of it.



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 October 21, 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)
Third QuarterNine Months
2021202020212020
Revenues:
  Net premiums written$2,325,138 $1,879,316 $6,587,357 $5,464,980 
  Change in unearned premiums(244,120)(130,395)(684,759)(347,727)
    Net premium earned2,081,018 1,748,921 5,902,598 5,117,253 
  Net investment income179,851 142,650 506,615 402,844 
  Net investment gains (losses):
   Net realized and unrealized gains (losses) on investments17,187 (7,772)89,407 (89,404)
   Change in allowance for credit losses on investments2,314 46,750 (11,003)29,093 
  Net investment gains (losses)19,501 38,978 78,404 (60,311)
  Revenues from non-insurance businesses120,374 87,495 316,927 256,966 
  Insurance service fees21,467 21,635 69,531 67,256 
  Other Income2,072 140 3,163 2,446 
       Total Revenues2,424,283 2,039,819 6,877,238 5,786,454 
Expenses:
   Loss and loss expenses1,298,392 1,114,632 3,623,630 3,357,011 
   Other operating costs and expenses643,045 593,969 1,907,020 1,753,142 
   Expenses from non-insurance businesses115,465 85,036 308,453 256,032 
   Interest expense35,100 39,768 109,846 114,874 
     Total expenses2,092,002 1,833,405 5,948,949 5,481,059 
     Income before income tax332,281 206,414 928,289 305,395 
   Income tax expense(64,963)(54,048)(191,577)(84,900)
     Net Income before noncontrolling interests267,318 152,366 736,712 220,495 
   Noncontrolling interest(6,021)(688)(8,652)(1,975)
     Net income to common stockholders$261,297 $151,678 $728,060 $218,520 
 Net income per share:
 Basic$1.41 $0.82 $3.93 $1.17 
 Diluted$1.40 $0.81 $3.89 $1.15 
 Average shares outstanding (1):
 Basic185,031 185,765 185,127 187,338 
 Diluted186,742 187,717 187,060 189,515 



(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)
Third QuarterNine Months
2021202020212020
Insurance:
   Gross premiums written$2,446,758 $1,981,816 $7,008,617 $5,841,328 
   Net premiums written2,007,194 1,628,316 5,741,229 4,754,791 
   Net premiums earned1,819,071 1,531,093 5,151,253 4,481,092 
   Pre-tax income314,000 178,971 862,399 431,464 
   Loss ratio61.4 %64.4 %61.4 %65.5 %
   Expense ratio27.9 %29.7 %28.5 %30.6 %
   GAAP Combined ratio89.3 %94.1 %89.9 %96.1 %
Reinsurance & Monoline Excess:
   Gross premiums written$340,740 $280,729 $924,829 $784,835 
   Net premiums written317,945 251,000 846,128 710,189 
   Net premiums earned261,947 217,828 751,345 636,161 
   Pre-tax income52,742 61,532 196,185 110,611 
   Loss ratio69.3 %59.1 %61.5 %66.5 %
   Expense ratio29.1 %31.2 %30.1 %32.1 %
   GAAP Combined ratio98.4 %90.3 %91.6 %98.6 %
Corporate and Eliminations:
   Net investment gains (losses)$19,501 $38,978 $78,404 $(60,311)
   Interest expense(35,100)(39,768)(109,846)(114,874)
   Other revenues and expenses(18,862)(33,299)(98,853)(61,495)
   Pre-tax loss(34,461)(34,089)(130,295)(236,680)
Consolidated:
   Gross premiums written$2,787,499 $2,262,545 $7,933,446 $6,626,163 
   Net premiums written2,325,138 1,879,316 6,587,357 5,464,980 
   Net premiums earned2,081,018 1,748,921 5,902,598 5,117,253 
   Pre-tax income 332,281 206,414 928,289 305,395 
   Loss ratio62.4 %63.7 %61.4 %65.6 %
   Expense ratio28.0 %30.0 %28.7 %30.8 %
   GAAP Combined ratio90.4 %93.7 %90.1 %96.4 %


(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)
Third QuarterNine Months
2021202020212020
Net premiums written:
   Other liability$760,515 $606,967 $2,138,816 $1,748,338 
   Short-tail lines (1)373,427 343,888 1,090,257 974,941 
   Workers' compensation277,490 257,629 879,852 857,951 
   Commercial automobile295,132 230,352 822,903 648,842 
   Professional liability300,629 189,480 809,401 524,719 
     Total Insurance2,007,194 1,628,316 5,741,229 4,754,791 
   Casualty reinsurance194,253 142,847 525,333 419,235 
   Monoline excess75,504 59,267 184,676 154,105 
   Property reinsurance48,189 48,886 136,118 136,849 
     Total Reinsurance & Monoline Excess317,945 251,000 846,128 710,189 
          Total$2,325,138 $1,879,316 $6,587,357 $5,464,980 
Current accident year losses from catastrophes (including COVID-19 related losses):
   Insurance$39,230 $74,038 $108,863 $244,657 
   Reinsurance & Monoline Excess34,560 (1,282)44,722 52,733 
     Total$73,790 $72,756 $153,585 $297,390 
Net Investment income:
   Core portfolio (2)$103,372 $104,872 $306,901 $349,598 
   Investment funds69,292 18,235 169,538 1,260 
   Arbitrage trading account7,187 19,543 30,176 51,986 
     Total$179,851 $142,650 $506,615 $402,844 
Net realized and unrealized gains (losses) on investments:
   Net realized gains (losses) on investments$36,431 $(38,466)$151,225 $(27,545)
   Change in unrealized (losses) gains on equity securities(19,244)30,694 (61,818)(61,859)
     Total$17,187 $(7,772)$89,407 $(89,404)
Other operating costs and expenses:
   Policy acquisition and insurance operating expenses$583,065 $523,349 $1,694,548 $1,574,507 
   Insurance service expenses21,243 21,034 63,817 64,029 
   Net foreign currency (gains) losses(12,497)5,078 (19,216)(23,845)
   Debt extinguishment costs— — 11,521 — 
   Other costs and expenses51,234 44,508 156,350 138,451 
     Total$643,045 $593,969 $1,907,020 $1,753,142 
Cash flow from operations$828,585 $557,094 $1,524,394 $1,136,945 
Reconciliation of net income to operating income:
   Net income$261,297 $151,678 $728,060 $218,520 
   Pre-tax investment (gains) losses, net of related expenses(18,820)(39,497)(75,393)60,311 
   Income tax expense (benefit)4,222 8,965 14,872 (13,621)
     Operating income after-tax (3)$246,699 $121,146 $667,539 $265,210 

(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)
September 30, 2021December 31, 2020
Net invested assets (1)$23,292,268 $21,370,503 
Total assets31,544,288 28,571,965 
Reserves for losses and loss expenses14,919,576 13,784,430 
Senior notes and other debt2,258,646 1,623,025 
Subordinated debentures1,007,472 1,102,309 
Common stockholders' equity (2)6,648,441 6,310,802 
Common stock outstanding (3)176,639 177,825 
Book value per share (4)37.64 35.49 
Tangible book value per share (4)36.39 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 September 30, 2021, reflected in common stockholders' equity are after-tax unrealized investment gains of $187 million and unrealized currency translation losses of $378 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 nine months ended September 30, 2021, the Company repurchased 1,752,619 shares of its common stock for $122 million. During the three months ended September 30, 2021, the Company repurchased 1,287,556 shares of its common stock for $93 million. 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
September 30, 2021
(Amounts in thousands, except percentages)
Carrying ValuePercent of Total
Fixed maturity securities:
   United States government and government agencies$518,333 2.2 %
   State and municipal:
        Special revenue2,110,271 9.1 %
        State general obligation447,320 1.9 %
        Local general obligation431,522 1.9 %
        Pre-refunded 230,840 1.0 %
        Corporate backed177,916 0.7 %
            Total state and municipal3,397,869 14.6 %
   Mortgage-backed securities:
        Agency681,798 2.9 %
        Residential - Prime159,826 0.7 %
        Commercial130,637 0.6 %
        Residential - Alt A6,326 0.0 %
            Total mortgage-backed securities978,587 4.2 %
   Asset-backed securities4,655,555 20.0 %
   Corporate:
        Industrial3,132,362 13.5 %
        Financial1,699,840 7.3 %
        Utilities418,853 1.8 %
        Other173,009 0.7 %
            Total corporate 5,424,064 23.3 %
   Foreign government 1,098,727 4.7 %
            Total fixed maturity securities (1)16,073,135 69.0 %
Equity securities available for sale:
   Common stocks609,939 2.6 %
   Preferred stocks208,799 0.9 %
            Total equity securities available for sale818,738 3.5 %
Cash and cash equivalents (2)2,182,020 9.4 %
Real estate1,842,400 7.9 %
Investment funds (3)1,400,140 6.0 %
Arbitrage trading account860,339 3.7 %
Loans receivable115,496 0.5 %
          Net invested assets$23,292,268 100.0 %


(1)Total fixed maturity securities had an average rating of AA- and an average duration of 2.3 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.