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W. R. Berkley Corporation Reports First Quarter Results
Summary Financial Data
(Amounts in thousands, except per share data)
First Quarter First Quarter
-------------------- ----------------------------------------------------------------------------------------------------------------------
2024 2024 2023
-------------------- ------------------------------------------------- -------------------------------------------------
Gross premiums written $ $ 3,362,755 $ 3,049,317
Net premiums written 2,851,291 2,574,824
Net income to common stockholders 442,471 294,126
Net income per diluted share 1.64 1.06
Operating income (1) 423,324 275,966
Operating income per diluted share 1.56 1.00
Return on equity (2) 23.7 % 17.4 %
(1) Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains and related expenses. Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains and related expenses.
First quarter highlights included:
Return on equity and operating return on equity of 23.7% and 22.7%, respectively. Net investment income grew 43.2% to a record $319.8 million. Record net premiums written grew 10.7% to $2.9 billion. The current accident year combined ratio before catastrophe losses of 1.1 loss ratio points was 87.7%. The reported combined ratio was 88.8%, including current accident year catastrophe losses of $30.5 million. Pre-tax underwriting income grew 31.8% to $309.0 million. Average rate increases excluding workers' compensation were approximately 7.8%. Operating cash flow increased 67.6% to $746.2 million.
The Company commented:
The Company continued to have very strong results in the first quarter 2024, with a 23.7% annualized return on beginning of year common stockholders' equity.
Growth in first quarter net premiums written accelerated year over year to 10.7%, as market conditions remained favorable in many areas of our business. Our combined ratio was 88.8% even as we continued our prudent view of loss trends. Our flexibility to expand or contract each of our businesses according to specific market conditions continues to be a competitive advantage.
Net investment income increased 43.2% over the prior year first quarter, despite challenges during this quarter with our investment funds. Our total-return investment strategy seeks to maximize risk-adjusted returns over the long-term across all market cycles and economic environments. New money rates remain higher than our book yield, which along with extremely strong operating cash flow, positions us well for future investment income growth.
Our results demonstrate how our persistent focus on risk-adjusted return in all aspects of our business allows us to successfully navigate risks and embrace opportunities. We remain confident that we will continue to deliver outstanding value to shareholders in 2024 and beyond.
Webcast Conference Call
The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on April 23, 2024, at 9:00 a.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/events-and-presentations/default.aspx. Please log on early to register. 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/quarterly-results/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.
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 2024 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 cyber security-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing effects of the COVID-19 pandemic, or other epidemics and pandemics; 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 to such conditions, on our results and financial condition; foreign currency and political risks 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; cyber security breaches of our information technology systems and the information technology systems of our vendors and other third parties, or related processes and systems; 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 2024 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)
First Quarter First Quarter
-------------------- ----------------------------------------------------------------------------------------------------------------------
2024 2024 2023
-------------------- ------------------------------------------------- -------------------------------------------------
Revenues:
$ $ 2,851,291 $ 2,574,824
Net premiums written
(86,944 ) (83,392 )
Change in unearned premiums
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
2,764,347 2,491,432
Net premiums earned
319,839 223,398
Net investment income
Net investment gains:
11,503 22,611
Net realized and unrealized gains on investments
14,277 399
Change in allowance for credit losses on investments
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
25,780 23,010
Net investment gains
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
120,992 124,200
Revenues from non-insurance businesses
25,319 32,857
Insurance service fees
496 107
Other Income
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
3,256,773 2,895,004
Total Revenues
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
Expenses:
1,663,778 1,538,755
Loss and loss expenses
868,589 825,575
Other operating costs and expenses
118,607 122,767
Expenses from non-insurance businesses
31,728 31,836
Interest expense
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
2,682,702 2,518,933
Total expenses
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
574,071 376,071
Income before income tax
(132,036 ) (80,342 )
Income tax expense
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
442,035 295,729
Net Income before noncontrolling interests
436 (1,603 )
Noncontrolling interest
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 442,471 $ 294,126
Net income to common stockholders
==================== ==================== ========= ==================== ==================== ========= ====================
Net income per share:
Basic $ $ 1.65 $ 1.07
Diluted $ $ 1.64 $ 1.06
Average shares outstanding (1):
Basic 268,211 274,977
(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. 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) (2)
First Quarter First Quarter
-------------------- ----------------------------------------------------------------------------------------------------------------------
2024 2024 2023
-------------------- ------------------------------------------------- -------------------------------------------------
Insurance:
$ $ 2,921,050 $ 2,626,346
Gross premiums written
2,445,715 2,185,421
Net premiums written
2,398,768 2,142,924
Net premiums earned
478,149 352,626
Pre-tax income
61.8 % 62.6 %
Loss ratio
28.4 % 28.6 %
Expense ratio
90.2 % 91.2 %
GAAP Combined ratio
Reinsurance & Monoline Excess:
$ $ 441,705 $ 422,971
Gross premiums written
405,576 389,403
Net premiums written
365,579 348,508
Net premiums earned
127,624 101,285
Pre-tax income
49.8 % 56.4 %
Loss ratio
29.8 % 30.2 %
Expense ratio
79.6 % 86.6 %
GAAP Combined ratio
Corporate and Eliminations:
$ $ 25,780 $ 23,010
Net investment gains
(31,728 ) (31,836 )
Interest expense
(25,754 ) (69,014 )
Other expenses
(31,702 ) (77,840 )
Pre-tax loss
Consolidated:
$ $ 3,362,755 $ 3,049,317
Gross premiums written
2,851,291 2,574,824
Net premiums written
2,764,347 2,491,432
Net premiums earned
574,071 376,071
Pre-tax income
60.2 % 61.8 %
Loss ratio
28.6 % 28.8 %
Expense ratio
(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. 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)
First Quarter First Quarter
-------------------- ----------------------------------------------------------------------------------------------------------------------
2024 2024 2023
-------------------- ------------------------------------------------- -------------------------------------------------
Net premiums written:
$ $ 1,015,614 $ 901,293
Other liability
532,341 426,654
Short-tail lines (1)
348,582 293,857
Auto
304,632 309,984
Workers' compensation
244,546 253,633
Professional liability
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
2,445,715 2,185,421
Total Insurance
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
190,019 211,291
Casualty (2)
116,895 104,518
Monoline excess
98,662 73,594
Property (2)
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
405,576 389,403
Total Reinsurance & Monoline Excess
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 2,851,291 $ 2,574,824
Total
==================== ==================== ========= ==================== ==================== ========= ====================
Current accident year losses from catastrophes:
$ $ 27,451 $ 45,242
Insurance
3,055 2,627
Reinsurance & Monoline Excess
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 30,506 $ 47,869
Total
==================== ==================== ========= ==================== ==================== ========= ====================
Net Investment income:
$ $ 331,177 $ 202,962
Core portfolio (3)
(29,349 ) 2,180
Investment funds
18,011 18,256
Arbitrage trading account
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 319,839 $ 223,398
Total
==================== ==================== ========= ==================== ==================== ========= ====================
Net realized and unrealized gains (losses) on investments:
$ $ (14,308 ) $ (20,793 )
Net realized losses on investments
25,811 43,404
Change in unrealized gains on equity securities
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 11,503 $ 22,611
Total
==================== ==================== ========= ==================== ==================== ========= ====================
Other operating costs and expenses:
$ $ 791,532 $ 718,276
Policy acquisition and insurance operating expenses
21,439 25,180
Insurance service expenses
(13,177 ) 9,495
Net foreign currency (gains) losses
68,795 72,624
Other costs and expenses
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
$ $ 868,589 $ 825,575
Total
==================== ==================== ========= ==================== ==================== ========= ====================
Cash flow from operations $ $ 746,235 $ 445,323
==================== ==================== ========= ==================== ==================== ========= ====================
Reconciliation of net income to operating income:
$ $ 442,471 $ 294,126
Net income
(25,780 ) (23,010 )
Pre-tax investment gains, net of related expenses
6,633 4,850
Income tax expense
-------------------- -------------------- --------- -------------------- -------------------- --------- --------------------
(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery, high net worth homeowners and other lines. Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery, high net worth homeowners and other lines. (2) Includes reinsurance casualty and property and certain program management business. Includes reinsurance casualty and property and certain program management business. (3) Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable. Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.
Selected Balance Sheet Information
(Amounts in thousands, except per share data)
March 31, March 31, December 31,
2024 2024 2023
-------------------- ------------------------------ ------------------------------
Net invested assets (1) $ $ 27,583,673 $ 26,973,703
Total assets 37,851,072 37,111,830
Reserves for losses and loss expenses 19,099,628 18,739,652
Senior notes and other debt 1,827,997 1,827,951
Subordinated debentures 1,009,269 1,009,090
Common stockholders' equity (2) 7,784,832 7,455,431
Common stock outstanding (3) 256,549 256,545
Book value per share (4) 30.34 29.06
(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. 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 March 31, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $657 million and unrealized currency translation losses of $367 million. As of December 31, 2023, reflected in common stockholders' equity are after-tax unrealized investment losses of $586 million and unrealized currency translation losses of $340 million. As of March 31, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $657 million and unrealized currency translation losses of $367 million. As of December 31, 2023, reflected in common stockholders' equity are after-tax unrealized investment losses of $586 million and unrealized currency translation losses of $340 million. (3) During the three months ended March 31, 2024, 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. During the three months ended March 31, 2024, 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.
Investment Portfolio
March 31, 2024
(Amounts in thousands, except percentages)
Carrying Value Carrying Value Percent of Total
-------------------- ------------------------------ -------------------
Fixed maturity securities:
$ $ 1,829,552 6.6 %
United States government and government agencies
State and municipal:
1,546,112 5.6 %
Special revenue
430,544 1.6 %
State general obligation
382,778 1.4 %
Local general obligation
155,519 0.6 %
Corporate backed
89,053 0.3 %
Pre-refunded
-------------------- -------------------- ---------- ---------- ---------
2,604,006 9.5 %
Total state and municipal
-------------------- -------------------- ---------- ---------- ---------
Mortgage-backed securities:
1,612,183 5.8 %
Agency
609,880 2.2 %
Commercial
185,957 0.7 %
Residential - Prime
2,760 0.0 %
Residential - Alt A
-------------------- -------------------- ---------- ---------- ---------
2,410,780 8.7 %
Total mortgage-backed securities
-------------------- -------------------- ---------- ---------- ---------
4,239,561 15.4 %
Asset-backed securities
-------------------- -------------------- ---------- ---------- ---------
Corporate:
3,734,275 13.5 %
Industrial
3,113,296 11.3 %
Financial
729,662 2.6 %
Utilities
585,470 2.1 %
Other
-------------------- -------------------- ---------- ---------- ---------
8,162,703 29.5 %
Total corporate
-------------------- -------------------- ---------- ---------- ---------
1,718,252 6.2 %
Foreign government
-------------------- -------------------- ---------- ---------- ---------
20,964,854 75.9 %
Total fixed maturity securities (1)
-------------------- -------------------- ---------- ---------- ---------
Equity securities available for sale:
846,669 3.1 %
Common stocks
331,379 1.2 %
Preferred stocks
-------------------- -------------------- ---------- ---------- ---------
1,178,048 4.3 %
Total equity securities available for sale
-------------------- -------------------- ---------- ---------- ---------
Investment funds 1,555,818 5.6 %
Real estate 1,273,063 4.6 %
Cash and cash equivalents (2) 1,237,005 4.5 %
Arbitrage trading account 1,146,119 4.2 %
Loans receivable 228,766 0.9 %
-------------------- -------------------- ---------- ---------- ---------
(1) Total fixed maturity securities had an average rating of AA- and an average duration of 2.5 years, including cash and cash equivalents. Total fixed maturity securities had an average rating of AA- and an average duration of 2.5 years, including cash and cash equivalents.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240423359852/en/
SOURCE: W. R. Berkley Corporation
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Karen A. Horvath Vice President - External Financial Communications (203) 629-3000
COMTEX_451278269/1006/2024-04-23T08:00:21