W. R. Berkley Corporation Reports Third Quarter Results

Nachrichtenquelle: Business Wire (engl.)
20.10.2020, 22:10  |  113   |   |   

W. R. Berkley Corporation (NYSE: WRB) today reported its third quarter 2020 results.

Summary Financial Data

(Amounts in thousands, except per share data)

 

 

Third Quarter

 

Nine Months

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Gross premiums written

 

$

2,262,545

 

$

2,093,050

 

$

6,626,163

 

$

6,229,141

Net premiums written

 

1,879,316

 

1,749,906

 

5,464,980

 

5,202,971

 

 

 

 

 

 

 

 

 

Net income to common stockholders

 

151,678

 

165,208

 

218,520

 

562,638

Net income per diluted share

 

0.81

 

0.85

 

1.15

 

2.91

 

 

 

 

 

 

 

 

 

Operating income (1)

 

121,146

 

163,761

 

265,210

 

451,528

Operating income per diluted share

 

0.65

 

0.85

 

1.40

 

2.33

 

 

 

 

 

 

 

 

 

Return on equity (2)

 

10.0%

 

12.2%

 

4.8%

 

13.8%

 

(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 stockholders’ equity.

Third quarter highlights included:

  • Average rate increases excluding workers' compensation were approximately 14.5%.
  • The reported combined ratio was 93.7%. The accident year combined ratio before catastrophe losses was 89.8%.
  • Catastrophes added 4.2 loss ratio points to the reported combined ratio, with no change in previously reported COVID-19 related losses.
  • Gross and net premiums written increased 8.1% and 7.4%, respectively.
  • Book value per share grew 3.7%, before dividends and share repurchases.
  • Cash and liquid investments of more than $1.6 billion at the holding company.

The Company commented:

The Company reported strong third quarter 2020 results with a combined ratio of 93.7%, in spite of 4.2 points of catastrophe losses. Gross premiums written grew more than 8%, even with the economic disruption and extraordinary challenges COVID-19 presented. Rate increases continued to accelerate in response to rising loss costs and the extremely low interest rate environment. Growth and efficiency initiatives have helped drive our expense ratio to its lowest level in many years.

The Company continues to actively manage market exposure in its investment portfolio by increasing its allocation to high-quality short-term assets, including cash and cash equivalents, which has somewhat moderated fixed-maturity income. We will maintain this defensive position until the uncertainty in the financial markets and the economy begins to abate, and we find a more attractive entry point. Income from investment funds in the third quarter returned to a more normalized level.

The industry’s need for disciplined underwriting and additional rate has been reinforced by, among other factors, the global pandemic, the continued increase in the frequency of catastrophe losses, the ongoing impacts of social inflation and the low interest rate environment. We remain focused on profitable underwriting with low volatility, growth in attractive areas of the market, and total risk-adjusted returns in our investment portfolio.

Our Company is built to succeed in periods of uncertainty through a constant evaluation of risk and reward in all aspects of our business, and to excel in periods of market improvement. The momentum is building, and we are excited for the opportunity before us.

Webcast Conference Call

The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on October 20, 2020, 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/defaul .... 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 ....

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.

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 2020 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 ongoing COVID-19 pandemic, including the related impact on the U.S. and global economies; the cyclical nature of the property casualty industry; the impact of significant competition, including new alternative 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, epidemics or pandemics, such as COVID-19; the impact of climate change, which may increase the frequency and 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 2020 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.

Consolidated Financial Summary

(Amounts in thousands, except per share data)

 

 

Third Quarter

 

Nine Months

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

Net premiums written

 

$

1,879,316

 

 

 

$

1,749,906

 

 

 

$

5,464,980

 

 

 

$

5,202,971

 

 

Change in unearned premiums

 

(130,395

)

 

 

(73,096

)

 

 

(347,727

)

 

 

(286,464

)

 

Net premiums earned

 

1,748,921

 

 

 

1,676,810

 

 

 

5,117,253

 

 

 

4,916,507

 

 

Net investment income

 

142,650

 

 

 

161,692

 

 

 

402,844

 

 

 

508,279

 

 

Net investment gains (losses):

 

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments

 

(7,772

)

 

 

1,465

 

 

 

(89,404

)

 

 

143,691

 

 

Change in allowance for credit losses on investments (1)

 

46,750

 

 

 

 

 

 

29,093

 

 

 

 

 

Net investment gains (losses)

 

38,978

 

 

 

1,465

 

 

 

(60,311

)

 

 

143,691

 

 

Revenues from non-insurance businesses

 

87,495

 

 

 

101,880

 

 

 

256,966

 

 

 

283,005

 

 

Insurance service fees

 

21,635

 

 

 

23,681

 

 

 

67,256

 

 

 

71,440

 

 

Other income

 

140

 

 

 

188

 

 

 

2,446

 

 

 

3,200

 

 

Total revenues

 

2,039,819

 

 

 

1,965,716

 

 

 

5,786,454

 

 

 

5,926,122

 

 

Expenses:

 

 

 

 

 

 

 

 

Losses and loss expenses

 

1,114,632

 

 

 

1,041,471

 

 

 

3,357,011

 

 

 

3,058,950

 

 

Other operating costs and expenses

 

593,969

 

 

 

581,045

 

 

 

1,753,142

 

 

 

1,760,961

 

 

Expenses from non-insurance businesses

 

85,036

 

 

 

101,743

 

 

 

256,032

 

 

 

280,141

 

 

Interest expense

 

39,768

 

 

 

38,475

 

 

 

114,874

 

 

 

119,913

 

 

Total expenses

 

1,833,405

 

 

 

1,762,734

 

 

 

5,481,059

 

 

 

5,219,965

 

 

Income before income taxes

 

206,414

 

 

 

202,982

 

 

 

305,395

 

 

 

706,157

 

 

Income tax expense

 

(54,048

)

 

 

(37,831

)

 

 

(84,900

)

 

 

(141,965

)

 

Net income before noncontrolling interests

 

152,366

 

 

 

165,151

 

 

 

220,495

 

 

 

564,192

 

 

Noncontrolling interests

 

(688

)

 

 

57

 

 

 

(1,975

)

 

 

(1,554

)

 

Net income to common stockholders

 

$

151,678

 

 

 

$

165,208

 

 

 

$

218,520

 

 

 

$

562,638

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

 

$

0.87

 

 

 

$

1.17

 

 

 

$

2.95

 

 

Diluted

 

$

0.81

 

 

 

$

0.85

 

 

 

$

1.15

 

 

 

$

2.91

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (2):

 

 

 

 

 

 

 

 

Basic

 

185,765

 

 

 

190,862

 

 

187,338

 

 

 

190,593

 

Diluted

 

187,717

 

 

 

193,589

 

 

189,515

 

 

 

193,557

 

(1) The inclusion of the allowance for credit losses on investments commenced January 1, 2020 due to the adoption of ASU 2016-13.

(2) 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.

Business Segment Operating Results

(Amounts in thousands, except ratios) (1)

 

 

Third Quarter

 

Nine Months

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Insurance:

 

 

 

 

 

 

 

 

Gross premiums written

 

$

1,981,816

 

 

$

1,850,012

 

 

$

5,841,328

 

 

$

5,565,862

 

Net premiums written

 

1,628,316

 

 

1,529,113

 

 

4,754,791

 

 

4,601,077

 

Premiums earned

 

1,531,093

 

 

1,493,854

 

 

4,481,092

 

 

4,396,071

 

Pre-tax income

 

178,971

 

 

202,390

 

 

431,464

 

 

612,777

 

Loss ratio

 

64.4

%

 

61.8

%

 

65.5

%

 

62.3

%

Expense ratio

 

29.7

%

 

31.2

%

 

30.6

%

 

31.3

%

GAAP combined ratio

 

94.1

%

 

93.0

%

 

96.1

%

 

93.6

%

 

 

 

 

 

 

 

 

 

Reinsurance & Monoline Excess:

 

 

 

 

 

 

 

 

Gross premiums written

 

$

280,729

 

 

$

243,038

 

 

$

784,835

 

 

$

663,279

 

Net premiums written

 

251,000

 

 

220,793

 

 

710,189

 

 

601,894

 

Premiums earned

 

217,828

 

 

182,956

 

 

636,161

 

 

520,436

 

Pre-tax income

 

61,532

 

 

46,863

 

 

110,611

 

 

144,353

 

Loss ratio

 

59.1

%

 

64.6

%

 

66.5

%

 

61.6

%

Expense ratio

 

31.2

%

 

33.7

%

 

32.1

%

 

35.2

%

GAAP combined ratio

 

90.3

%

 

98.3

%

 

98.6

%

 

96.8

%

 

 

 

 

 

 

 

 

 

Corporate and Eliminations:

 

 

 

 

 

 

 

 

Net investment gains (losses)

 

$

38,978

 

 

$

1,465

 

 

$

(60,311

)

 

$

143,691

 

Interest expense

 

(39,768

)

 

(38,475

)

 

(114,874

)

 

(119,913

)

Other revenues and expenses

 

(33,299

)

 

(9,261

)

 

(61,495

)

 

(74,751

)

Pre-tax loss

 

(34,089

)

 

(46,271

)

 

(236,680

)

 

(50,973

)

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

Gross premiums written

 

$

2,262,545

 

 

$

2,093,050

 

 

$

6,626,163

 

 

$

6,229,141

 

Net premiums written

 

1,879,316

 

 

1,749,906

 

 

5,464,980

 

 

5,202,971

 

Premiums earned

 

1,748,921

 

 

1,676,810

 

 

5,117,253

 

 

4,916,507

 

Pre-tax income

 

206,414

 

 

202,982

 

 

305,395

 

 

706,157

 

Loss ratio

 

63.7

%

 

62.1

%

 

65.6

%

 

62.2

%

Expense ratio

 

30.0

%

 

31.5

%

 

30.8

%

 

31.7

%

GAAP combined ratio

 

93.7

%

 

93.6

%

 

96.4

%

 

93.9

%

(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.

Supplemental Information

(Amounts in thousands)

 

 

Third Quarter

 

Nine Months

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net premiums written:

 

 

 

 

 

 

 

 

Other liability

 

$

606,967

 

 

 

$

553,802

 

 

 

$

1,748,338

 

 

 

$

1,607,613

 

 

Short-tail lines (1)

 

343,888

 

 

 

318,310

 

 

 

974,941

 

 

 

934,757

 

 

Workers' compensation

 

257,629

 

 

 

303,116

 

 

 

857,951

 

 

 

997,733

 

 

Commercial automobile

 

230,352

 

 

 

196,851

 

 

 

648,842

 

 

 

608,533

 

 

Professional liability

 

189,480

 

 

 

157,034

 

 

 

524,719

 

 

 

452,441

 

 

Total Insurance

 

1,628,316

 

 

 

1,529,113

 

 

 

4,754,791

 

 

 

4,601,077

 

 

Casualty reinsurance

 

142,847

 

 

 

132,335

 

 

 

419,235

 

 

 

343,541

 

 

Monoline excess

 

59,267

 

 

 

49,851

 

 

 

154,105

 

 

 

141,572

 

 

Property reinsurance

 

48,886

 

 

 

38,607

 

 

 

136,849

 

 

 

116,781

 

 

Total Reinsurance & Monoline Excess

 

251,000

 

 

 

220,793

 

 

 

710,189

 

 

 

601,894

 

 

Total

 

$

1,879,316

 

 

 

$

1,749,906

 

 

 

$

5,464,980

 

 

 

$

5,202,971

 

 

 

 

 

 

 

 

 

 

 

Losses from catastrophes (including COVID-19 related losses):

 

 

 

 

 

 

Insurance

 

$

74,038

 

 

 

$

15,381

 

 

 

$

244,657

 

 

 

$

53,444

 

 

Reinsurance & Monoline Excess

 

(1,282

)

 

 

16,079

 

 

 

$

52,733

 

 

 

16,178

 

 

Total

 

$

72,756

 

 

 

$

31,460

 

 

 

297,390

 

 

 

$

69,622

 

 

 

 

 

 

 

 

 

 

 

Net investment income:

 

 

 

 

 

 

 

 

Core portfolio (2)

 

$

104,872

 

 

 

$

134,259

 

 

 

$

349,598

 

 

 

$

404,812

 

 

Investment funds

 

18,235

 

 

 

19,033

 

 

 

1,260

 

 

 

77,284

 

 

Arbitrage trading account

 

19,543

 

 

 

8,400

 

 

 

51,986

 

 

 

26,183

 

 

Total

 

$

142,650

 

 

 

$

161,692

 

 

 

$

402,844

 

 

 

$

508,279

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments:

 

 

 

 

 

 

 

 

Net realized (losses) gains on investments

 

$

(38,466

)

 

 

$

(2,761

)

 

 

$

(27,545

)

 

 

$

27,969

 

 

Change in unrealized gains (losses) on equity securities

 

30,694

 

 

 

4,226

 

 

 

(61,859

)

 

 

115,722

 

 

Total

 

$

(7,772

)

 

 

$

1,465

 

 

 

$

(89,404

)

 

 

$

143,691

 

 

 

 

 

 

 

 

 

 

 

Other operating costs and expenses:

 

 

 

 

 

 

 

 

Policy acquisition and insurance operating expenses

 

$

523,349

 

 

 

$

528,399

 

 

 

$

1,574,507

 

 

 

$

1,560,350

 

 

Insurance service expenses

 

21,034

 

 

 

26,171

 

 

 

64,029

 

 

 

77,513

 

 

Net foreign currency losses (gains)

 

5,078

 

 

 

(22,590

)

 

 

(23,845

)

 

 

(29,084

)

 

Other costs and expenses

 

44,508

 

 

 

49,065

 

 

 

138,451

 

 

 

152,182

 

 

Total

 

$

593,969

 

 

 

$

581,045

 

 

 

$

1,753,142

 

 

 

$

1,760,961

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operations

 

$

557,094

 

 

 

$

392,398

 

 

 

$

1,136,945

 

 

 

$

795,044

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income to operating income:

 

 

 

 

 

 

 

 

Net income

 

$

151,678

 

 

 

$

165,208

 

 

 

$

218,520

 

 

 

$

562,638

 

 

Pre-tax investment (gains) losses, net of related expenses

 

(39,497

)

 

 

(1,552

)

 

 

60,311

 

 

 

(140,797

)

 

Income tax expense (benefit)

 

8,965

 

 

 

105

 

 

 

(13,621

)

 

 

29,687

 

 

Operating income after-tax (3)

 

$

121,146

 

 

 

$

163,761

 

 

 

$

265,210

 

 

 

$

451,528

 

 

(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.

Selected Balance Sheet Information

(Amounts in thousands, except per share data)

 

September 30,
2020

 

December 31,
2019

 

 

 

 

Net invested assets (1)

$

21,023,658

 

 

$

19,856,776

 

Total assets

28,212,370

 

 

26,630,030

 

Reserves for losses and loss expenses

13,459,359

 

 

12,583,249

 

Senior notes and other debt

1,629,077

 

 

1,427,575

 

Subordinated debentures

1,443,736

 

 

1,198,704

 

Common stockholders’ equity (2)

5,995,112

 

 

6,074,939

 

Common stock outstanding (3)

178,218

 

 

183,412

 

Book value per share (4)

33.64

 

 

33.12

 

Tangible book value per share (4)

32.38

 

 

31.87

 

(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, 2020, reflected in common stockholders' equity are after-tax unrealized investment gains of $247 million and unrealized currency translation losses of $418 million. As of December 31, 2019, after-tax unrealized investment gains were $125 million and unrealized currency translation losses were $382 million.

(3) During the three months ended September 30, 2020, the Company repurchased 216,764 shares of its common stock for $13 million. During the nine months ended September 30, 2020, the Company repurchased 5,820,867 shares of its common stock for $312 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.

Investment Portfolio

September 30, 2020

(Amounts in thousands)

 

 

Carrying
Value

 

Percent
of Total

Fixed maturity securities:

 

 

 

 

United States government and government agencies

 

$

697,432

 

 

3.3

%

State and municipal:

 

 

 

 

Special revenue

 

$

2,305,308

 

 

11.0

%

Local general obligation

 

438,272

 

 

2.1

%

State general obligation

 

429,652

 

 

2.0

%

Pre-refunded

 

285,224

 

 

1.4

%

Corporate backed

 

232,600

 

 

1.1

%

Total state and municipal

 

3,691,056

 

 

17.6

%

Mortgage-backed securities:

 

 

 

 

Agency

 

613,680

 

 

2.9

%

Residential - Prime

 

260,362

 

 

1.2

%

Commercial

 

206,025

 

 

1.0

%

Residential - Alt A

 

9,168

 

 

%

Total mortgage-backed securities

 

1,089,235

 

 

5.2

%

Asset-backed securities

 

3,306,439

 

 

15.7

%

Corporate:

 

 

 

 

Industrial

 

2,326,598

 

 

11.1

%

Financial

 

1,524,636

 

 

7.3

%

Utilities

 

355,619

 

 

1.7

%

Other

 

32,687

 

 

0.2

%

Total corporate

 

4,239,540

 

 

20.2

%

Foreign government

 

869,344

 

 

4.1

%

Total fixed maturity securities (1)

 

13,893,046

 

 

66.1

%

Equity securities available for sale:

 

 

 

 

Preferred stocks

 

274,445

 

 

1.3

%

Common stocks

 

160,858

 

 

0.8

%

Total equity securities available for sale

 

435,303

 

 

2.1

%

Cash and cash equivalents (2)

 

2,745,523

 

 

13.1

%

Real estate

 

2,106,474

 

 

10.0

%

Investment funds (3)

 

1,162,814

 

 

5.5

%

Arbitrage trading account

 

595,727

 

 

2.8

%

Loans receivable

 

84,771

 

 

0.4

%

Net invested assets

 

$

21,023,658

 

 

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 $0.9 million.

WR Berkley Aktie jetzt über den Testsieger (Finanztest 11/2020) handeln, ab 0 € auf Smartbroker.de



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Disclaimer

W. R. Berkley Corporation Reports Third Quarter Results W. R. Berkley Corporation (NYSE: WRB) today reported its third quarter 2020 results. Summary Financial Data (Amounts in thousands, except per share data)     Third Quarter   Nine Months     2020   2019   2020   2019                   Gross premiums …

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