EX-99.1 2 wrb93020228-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
Operating Return on Equity of 16.9% and Return on Equity of 13.8%;
Core Net Investment Income Up 51.0% and Pre-Tax Underwriting Income of $192 Million

Greenwich, CT, October 24, 2022 - W. R. Berkley Corporation (NYSE: WRB) today reported its third quarter 2022 results.
Summary Financial Data
(Amounts in thousands, except per share data)
Third QuarterNine Months
2022202120222021
Gross premiums written$3,081,938 $2,787,499 $8,994,175 $7,933,446 
Net premiums written2,577,274 2,325,138 7,576,163 6,587,357 
Net income to common stockholders228,879 261,297 998,839 728,060 
Net income per diluted share (2)0.82 0.93 3.57 2.59 
Operating income (1)281,833 246,699 901,436 667,539 
Operating income per diluted share (2)1.01 0.88 3.22 2.38 
Return on equity (3)13.8 %16.6 %20.0 %15.4 %
Operating return on equity (1) (3)16.9 %15.6 %18.1 %14.1 %


(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)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(3)Return on equity and operating return on equity represent net income and operating income, respectively, expressed on an annualized basis as a percentage of beginning of year common stockholders’ equity.


W. R. Berkley Corporation        2

Third quarter highlights included:
•Operating return on equity of 16.9%.
•Average rate increases excluding workers' compensation were approximately 7.3%.
•Pre-tax underwriting income of $192.1 million.
•The current accident year combined ratio before catastrophe losses of 3.9 loss ratio points was 86.6%.
•The reported combined ratio was 92.1%, including catastrophe losses of $94.1 million.
•Net investment income for the core portfolio grew 51.0%, driving record quarterly net investment income.
•Operating income increased 14.2% to $281.8 million.
•Record gross premiums written grew 10.6% to $3.1 billion and net premiums written grew 10.8% to $2.6 billion.



The Company commented:
Results for the third quarter of 2022 were excellent, with strong underwriting performance and net investment income driving a 16.9% annualized operating return on beginning stockholders’ equity. Net premiums written grew 10.8%. The short duration and high quality of our fixed-maturity securities tempered the market value impact on the Company’s book value and allowed us to quickly invest more funds at higher interest rates and grow core net investment income by 51%.
Growth in net premiums written reflected the continuation of favorable market conditions for many of our products. After several years of compounding rate, the majority of our businesses are achieving or exceeding our target return on equity. As a result, we continue to expand our business, while maintaining our focus on rate adequacy in this inflationary environment.
We manage the business for lower relative volatility, which was again demonstrated in our results during another quarter of significant industry-wide catastrophe losses. We continue to evaluate the changing market conditions and the opportunities available to deploy capital where we believe adequate risk-adjusted returns can be achieved.
The uncertainties and challenges of today’s environment provide many opportunities. Our knowledge, expertise and experience allow us to navigate the risks and embrace opportunities in our underwriting and investing activities. The Company continues to perform exceptionally well, delivering superior long-term risk-adjusted returns and creating value for shareholders. We remain optimistic about the 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 October 24, 2022, at 5:00 p.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 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/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.




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 2022 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 2022 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
2022202120222021
Revenues:
  Net premiums written$2,577,274 $2,325,138 $7,576,163 $6,587,357 
  Change in unearned premiums(135,313)(244,120)(527,958)(684,759)
    Net premiums earned2,441,961 2,081,018 7,048,205 5,902,598 
  Net investment income202,816 179,851 547,902 506,615 
  Net investment (losses) gains:
   Net realized and unrealized (losses) gains on investments(66,282)17,187 139,664 89,407 
   Change in allowance for credit losses on investments(1,128)2,314 (12,365)(11,003)
  Net investment (losses) gains (67,410)19,501 127,299 78,404 
  Revenues from non-insurance businesses119,013 120,374 345,210 316,927 
  Insurance service fees27,940 21,467 82,284 69,531 
  Other Income80 2,072 1,797 3,163 
       Total Revenues2,724,400 2,424,283 8,152,697 6,877,238 
Expenses:
   Loss and loss expenses1,564,578 1,298,392 4,339,646 3,623,630 
   Other operating costs and expenses725,537 643,045 2,139,256 1,907,020 
   Expenses from non-insurance businesses116,240 115,465 334,062 308,453 
   Interest expense31,780 35,100 98,473 109,846 
     Total expenses2,438,135 2,092,002 6,911,437 5,948,949 
     Income before income tax286,265 332,281 1,241,260 928,289 
   Income tax expense(55,791)(64,963)(238,290)(191,577)
     Net Income before noncontrolling interests230,474 267,318 1,002,970 736,712 
   Noncontrolling interest(1,595)(6,021)(4,131)(8,652)
     Net income to common stockholders$228,879 $261,297 $998,839 $728,060 
 Net income per share (1):
 Basic$0.83 $0.94 $3.61 $2.62 
 Diluted$0.82 $0.93 $3.57 $2.59 
 Average shares outstanding (1) (2):
 Basic277,192 277,547 276,928 277,691 
 Diluted279,642 280,113 279,644 280,590 


(1)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(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.



W. R. Berkley Corporation        6
Business Segment Operating Results
(Amounts in thousands, except ratios) (1)
Third QuarterNine Months
2022202120222021
Insurance:
   Gross premiums written$2,719,824 $2,446,758 $7,976,288 $7,008,617 
   Net premiums written2,237,608 2,007,194 6,637,024 5,741,229 
   Net premiums earned2,129,014 1,819,071 6,162,005 5,151,253 
   Pre-tax income322,312 314,000 1,052,185 862,399 
   Loss ratio63.2 %61.4 %61.3 %61.4 %
   Expense ratio28.0 %27.9 %27.9 %28.5 %
   GAAP Combined ratio91.2 %89.3 %89.2 %89.9 %
Reinsurance & Monoline Excess:
   Gross premiums written$362,114 $340,740 $1,017,887 $924,829 
   Net premiums written339,666 317,945 939,139 846,128 
   Net premiums earned312,947 261,947 886,200 751,345 
   Pre-tax income59,561 52,742 209,366 196,185 
   Loss ratio70.2 %69.3 %63.7 %61.5 %
   Expense ratio28.4 %29.1 %28.4 %30.1 %
   GAAP Combined ratio98.6 %98.4 %92.1 %91.6 %
Corporate and Eliminations:
   Net investment (losses) gains$(67,410)$19,501 $127,299 $78,404 
   Interest expense(31,780)(35,100)(98,473)(109,846)
   Other expenses3,582 (18,862)(49,117)(98,853)
   Pre-tax loss(95,608)(34,461)(20,291)(130,295)
Consolidated:
   Gross premiums written$3,081,938 $2,787,499 $8,994,175 $7,933,446 
   Net premiums written2,577,274 2,325,138 7,576,163 6,587,357 
   Net premiums earned2,441,961 2,081,018 7,048,205 5,902,598 
   Pre-tax income 286,265 332,281 1,241,260 928,289 
   Loss ratio64.1 %62.4 %61.6 %61.4 %
   Expense ratio28.0 %28.0 %28.0 %28.7 %
   GAAP Combined ratio92.1 %90.4 %89.6 %90.1 %


(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
2022202120222021
Net premiums written:
   Other liability$861,551 $768,261 $2,569,737 $2,169,678 
   Short-tail lines (1)439,630 373,427 1,318,398 1,090,257 
   Commercial automobile333,935 295,132 948,913 822,903 
   Workers' compensation306,593 277,490 940,734 879,852 
   Professional liability295,899 292,882 859,242 778,539 
     Total Insurance2,237,608 2,007,194 6,637,024 5,741,229 
   Casualty reinsurance195,642 194,253 583,780 525,333 
 Monoline excess75,959 75,504 192,723 184,676 
   Property reinsurance68,065 48,189 162,636 136,118 
     Total Reinsurance & Monoline Excess339,666 317,945 939,139 846,128 
          Total$2,577,274 $2,325,138 $7,576,163 $6,587,357 
Current accident year losses from catastrophes (including COVID-19 related losses):
   Insurance$51,144 $39,230 $101,802 $108,863 
   Reinsurance & Monoline Excess42,999 34,560 79,063 44,722 
     Total$94,143 $73,790 $180,865 $153,585 
Net Investment income:
   Core portfolio (2)$156,077 $103,372 $401,975 $306,901 
   Investment funds36,045 69,292 121,919 169,538 
   Arbitrage trading account10,694 7,187 24,008 30,176 
     Total$202,816 $179,851 $547,902 $506,615 
Net realized and unrealized (losses) gains on investments:
   Net realized (losses) gains on investments$(15,898)$36,431 $228,365 $151,225 
   Change in unrealized losses on equity securities(50,384)(19,244)(88,701)(61,818)
     Total$(66,282)$17,187 $139,664 $89,407 
Other operating costs and expenses:
   Policy acquisition and insurance operating expenses$685,325 $583,065 $1,974,676 $1,694,548 
   Insurance service expenses24,991 21,243 71,348 63,817 
   Net foreign currency gains(41,065)(12,497)(85,060)(19,216)
   Debt extinguishment costs— — — 11,521 
   Other costs and expenses56,286 51,234 178,292 156,350 
     Total$725,537 $643,045 $2,139,256 $1,907,020 
Cash flow from operations$767,649 $828,585 $1,773,303 $1,524,394 
Reconciliation of net income to operating income:
   Net income$228,879 $261,297 $998,839 $728,060 
   Pre-tax investment losses (gains), net of related expenses67,410 (18,820)(122,930)(75,393)
   Income tax (benefit) expense(14,456)4,222 25,527 14,872 
     Operating income after-tax (3)$281,833 $246,699 $901,436 $667,539 

(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, 2022December 31, 2021
Net invested assets (1)$23,636,966 $23,705,508 
Total assets33,076,819 32,047,876 
Reserves for losses and loss expenses16,540,123 15,390,888 
Senior notes and other debt1,834,287 2,259,416 
Subordinated debentures1,008,191 1,007,652 
Common stockholders' equity (2)6,346,066 6,653,011 
Common stock outstanding (3) (4)265,802 265,171 
Book value per share (4) (5)23.88 25.09 
Tangible book value per share (4) (5)22.93 24.27 


(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, 2022, reflected in common stockholders' equity are after-tax unrealized investment losses of $985 million and unrealized currency translation losses of $400 million. As of December 31, 2021, after-tax unrealized investment gains were $91 million and unrealized currency translation losses were $373 million.
(3)During the three and nine months ended September 30, 2022, the Company repurchased 106,304 shares of its common stock for $6.6 million. The number of shares of common stock outstanding excludes shares held in a grantor trust.
(4)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.
(5)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, 2022
(Amounts in thousands, except percentages)
Carrying ValuePercent of Total
Fixed maturity securities:
   United States government and government agencies$870,592 3.7 %
   State and municipal:
        Special revenue1,751,924 7.4 %
        Local general obligation433,131 1.8 %
        State general obligation392,565 1.7 %
        Corporate backed185,091 0.8 %
        Pre-refunded157,431 0.7 %
            Total state and municipal2,920,142 12.4 %
   Mortgage-backed securities:
        Agency906,645 3.9 %
        Commercial456,937 1.9 %
        Residential - Prime227,402 1.0 %
        Residential - Alt A3,857 0.0 %
            Total mortgage-backed securities1,594,841 6.8 %
   Asset-backed securities4,241,438 17.9 %
   Corporate:
        Industrial3,131,786 13.3 %
        Financial2,269,552 9.6 %
        Utilities458,097 1.9 %
        Other345,309 1.5 %
            Total corporate 6,204,744 26.3 %
   Foreign government 1,399,179 5.9 %
            Total fixed maturity securities (1)17,230,936 73.0 %
Equity securities available for sale:
   Common stocks952,369 4.0 %
   Preferred stocks221,220 1.0 %
            Total equity securities available for sale1,173,589 5.0 %
Investment funds (2)1,661,237 7.0 %
Real estate1,320,550 5.5 %
Arbitrage trading account 1,165,016 4.9 %
Cash and cash equivalents (3)972,838 4.1 %
Loans receivable112,800 0.5 %
          Net invested assets$23,636,966 100.0 %


(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)Investment funds are net of related liabilities of $0.8 million.
(3)Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.