EX-99.1 2 wrb63020238-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
Return on Equity of 21.1%;
Quarterly Net Income Doubles to $356 Million

Greenwich, CT, July 20, 2023 - W. R. Berkley Corporation (NYSE: WRB) today reported its second quarter 2023 results.
Summary Financial Data
(Amounts in thousands, except per share data)
Second QuarterSix Months
2023202220232022
Gross premiums written$3,336,773 $3,052,401 $6,386,091 $5,912,237 
Net premiums written2,811,515 2,585,635 5,386,339 4,998,889 
Net income to common stockholders356,308 179,322 650,434 769,960 
Net income per diluted share1.30 0.64 2.36 2.76 
Operating income (1)310,862 313,359 586,531 619,827 
Operating income per diluted share1.14 1.12 2.13 2.22 
Return on equity (2)21.1 %10.8 %19.3 %23.1 %
Operating return on equity (1) (2)18.4 %18.8 %17.4 %18.6 %


(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 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

Second quarter highlights included:
•Return on equity and operating return on equity of 21.1% and 18.4%, respectively.
•Net income doubles to $356.3 million.
•Record net investment income of $245.2 million driven by core portfolio increase of 71.6%.
•Average rate increases excluding workers' compensation were approximately 8.2%.
•The current accident year combined ratio before catastrophe losses of 2.1 loss ratio points was 87.6%.
•The reported combined ratio was 89.6%, including current accident year catastrophe losses of $53.5 million.
•Record gross and net premiums written grew 9.3% and 8.7% to $3.3 billion and $2.8 billion, respectively.
•Total capital returned to shareholders was $320.8 million, consisting of $292.5 million of share repurchases and $28.3 million of regular dividends.


The Company commented:
The Company reported excellent results for the second quarter of 2023, with an annualized return on equity of 21.1%.
As anticipated, growth in premiums written accelerated compared to the first quarter of 2023, setting premium on pace for another record year. We continue to selectively expand in areas that we anticipate will meet or exceed our targeted risk-adjusted return, as distinct market segments and lines of business move independently. We maintained our rate momentum and reported a strong combined ratio, though the industry experienced another quarter of elevated natural catastrophe losses.
Net investment income grew 42.9% during the quarter as an increasingly greater portion of our fixed-maturity portfolio was (re)invested at higher interest rates. The short duration and high quality of our fixed-maturity portfolio has enabled us to simultaneously benefit from improved yields and grow book value as interest rates have risen. In addition, during the quarter, our investment results continued to benefit from our total return approach.
The Company’s focus on risk-adjusted return in all aspects of our business continues to generate superior results for our shareholders. Having a decentralized model allows us to navigate risks and embrace opportunities in a wide range of economic and operating environments. We have positive momentum as we head into the second half of the year and are very optimistic about the remainder of 2023 and beyond.


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 20, 2023, 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 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.




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 2023 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 effects of the 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 2023 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
2023202220232022
Revenues:
  Net premiums written$2,811,515 $2,585,635 $5,386,339 $4,998,889 
  Change in unearned premiums(258,788)(228,477)(342,180)(392,645)
    Net premiums earned2,552,727 2,357,158 5,044,159 4,606,244 
  Net investment income245,152 171,574 468,551 345,086 
  Net investment gains (losses):
  Net realized and unrealized gains (losses) on investments68,647 (163,935)91,258 205,947 
   Change in allowance for credit losses on investments(9,993)(7,620)(9,594)(11,237)
  Net investment gains (losses) 58,654 (171,555)81,664 194,710 
  Revenues from non-insurance businesses113,910 128,421 238,110 226,197 
  Insurance service fees25,471 26,393 58,328 54,344 
  Other Income— 896 106 1,716 
       Total Revenues2,995,914 2,512,887 5,890,918 5,428,297 
Expenses:
   Loss and loss expenses1,569,654 1,435,817 3,108,409 2,775,069 
   Other operating costs and expenses823,682 699,819 1,649,255 1,413,718 
   Expenses from non-insurance businesses113,538 122,966 236,306 217,822 
   Interest expense31,856 31,723 63,692 66,693 
     Total expenses2,538,730 2,290,325 5,057,662 4,473,302 
     Income before income tax457,184 222,562 833,256 954,995 
   Income tax expense(101,460)(43,095)(181,803)(182,499)
     Net Income before noncontrolling interests355,724 179,467 651,453 772,496 
   Noncontrolling interest584 (145)(1,019)(2,536)
     Net income to common stockholders$356,308 $179,322 $650,434 $769,960 
 Net income per share:
 Basic$1.32 $0.65 $2.38 $2.78 
 Diluted$1.30 $0.64 $2.36 $2.76 
 Average shares outstanding (1):
 Basic270,864 276,815 272,909 276,794 
 Diluted273,095 279,525 275,213 279,327 


(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
2023202220232022
Insurance:
   Gross premiums written$3,016,024 $2,771,665 $5,668,259 $5,256,464 
   Net premiums written2,527,198 2,326,125 4,738,033 4,399,416 
   Net premiums earned2,246,394 2,070,157 4,428,269 4,032,991 
   Pre-tax income386,264 347,461 738,463 729,873 
   Loss ratio63.1 %61.0 %62.9 %60.3 %
   Expense ratio28.0 %27.7 %28.4 %27.9 %
   GAAP Combined ratio91.1 %88.7 %91.3 %88.2 %
Reinsurance & Monoline Excess:
   Gross premiums written$320,749 $280,736 $717,832 $655,773 
   Net premiums written284,317 259,510 648,306 599,473 
   Net premiums earned306,333 287,001 615,890 573,253 
   Pre-tax income105,506 92,177 207,218 149,805 
   Loss ratio49.7 %60.4 %52.1 %60.2 %
   Expense ratio29.0 %27.4 %29.2 %28.4 %
   GAAP Combined ratio78.7 %87.8 %81.3 %88.6 %
Corporate and Eliminations:
   Net investment gains (losses)$58,654 $(171,555)$81,664 $194,710 
   Interest expense(31,856)(31,723)(63,692)(66,693)
   Other expenses(61,384)(13,798)(130,397)(52,700)
   Pre-tax (loss) income(34,586)(217,076)(112,425)75,317 
Consolidated:
   Gross premiums written$3,336,773 $3,052,401 $6,386,091 $5,912,237 
   Net premiums written2,811,515 2,585,635 5,386,339 4,998,889 
   Net premiums earned2,552,727 2,357,158 5,044,159 4,606,244 
   Pre-tax income 457,184 222,562 833,256 954,995 
   Loss ratio61.5 %60.9 %61.6 %60.2 %
   Expense ratio28.1 %27.7 %28.5 %28.0 %
   GAAP Combined ratio89.6 %88.6 %90.1 %88.2 %


(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
2023202220232022
Net premiums written:
   Other liability$988,393 $878,120 $1,890,272 $1,708,187 
   Short-tail lines (1)575,050 484,849 1,019,162 878,767 
   Workers' compensation325,170 330,721 635,154 634,141 
   Commercial automobile356,293 335,451 657,519 614,978 
   Professional liability282,292 296,984 535,926 563,343 
     Total Insurance2,527,198 2,326,125 4,738,033 4,399,416 
   Casualty reinsurance185,554 189,983 388,891 388,138 
 Monoline excess25,104 24,228 129,621 116,764 
   Property reinsurance73,659 45,299 129,794 94,571 
     Total Reinsurance & Monoline Excess284,317 259,510 648,306 599,473 
          Total$2,811,515 $2,585,635 $5,386,339 $4,998,889 
Current accident year losses from catastrophes (including COVID-19 related losses):
   Insurance$48,007 $39,891 $93,249 $50,658 
   Reinsurance & Monoline Excess5,540 18,000 8,167 36,065 
     Total$53,547 $57,891 $101,416 $86,723 
Net Investment income:
   Core portfolio (2)$229,302 $133,587 $432,265 $245,899 
   Investment funds(1,187)33,861 993 85,874 
   Arbitrage trading account17,037 4,126 35,293 13,313 
     Total$245,152 $171,574 $468,551 $345,086 
Net realized and unrealized gains (losses) on investments:
   Net realized gains (losses) on investments$47,387 $(32,405)$26,594 $244,264 
   Change in unrealized gains (losses) on equity securities21,260 (131,530)64,664 (38,317)
     Total$68,647 $(163,935)$91,258 $205,947 
Other operating costs and expenses:
   Policy acquisition and insurance operating expenses$718,234 $653,093 $1,436,510 $1,288,547 
   Insurance service expenses23,931 23,890 49,111 46,356 
   Net foreign currency losses (gains) 11,226 (39,827)20,721 (43,995)
   Other costs and expenses70,291 62,663 142,913 122,810 
     Total$823,682 $699,819 $1,649,255 $1,413,718 
Cash flow from operations$708,745 $527,971 $1,154,069 $1,005,653 
Reconciliation of net income to operating income:
   Net income$356,308 $179,322 $650,434 $769,960 
   Pre-tax investment (gains) losses, net of related expenses(57,862)171,555 (81,250)(190,056)
   Income tax expense (benefit)12,416 (37,518)17,347 39,923 
     Operating income after-tax (3)$310,862 $313,359 $586,531 $619,827 

(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. Net investment gains 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, 2023December 31, 2022
Net invested assets (1)$25,293,717 $24,545,672 
Total assets35,308,694 33,815,103 
Reserves for losses and loss expenses17,919,996 17,011,223 
Senior notes and other debt1,827,080 1,828,823 
Subordinated debentures1,008,730 1,008,371 
Common stockholders' equity (2)6,887,185 6,748,332 
Common stock outstanding (3)257,517 264,546 
Book value per share (4)26.74 25.51 
Tangible book value per share (4) 25.85 24.58 


(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, 2023, reflected in common stockholders' equity are after-tax unrealized investment losses of $825 million and unrealized currency translation losses of $356 million. As of December 31, 2022, after-tax unrealized investment losses were $893 million and unrealized currency translation losses were $372 million.
(3)During the six months ended June 30, 2023, the Company repurchased 7,098,959 shares of its common stock for $427.6 million. During the three months ended June 30, 2023, the Company repurchased 5,060,568 shares of its common stock for $292.5 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
June 30, 2023
(Amounts in thousands, except percentages)
Carrying ValuePercent of Total
Fixed maturity securities:
   United States government and government agencies$1,238,117 4.9 %
   State and municipal:
        Special revenue1,641,909 6.5 %
        Local general obligation412,160 1.6 %
        State general obligation402,251 1.6 %
        Corporate backed188,741 0.7 %
        Pre-refunded107,086 0.4 %
            Total state and municipal2,752,147 10.8 %
   Mortgage-backed securities:
        Agency1,081,894 4.3 %
        Commercial604,096 2.4 %
        Residential - Prime217,690 0.9 %
        Residential - Alt A3,200 0.0 %
            Total mortgage-backed securities1,906,880 7.6 %
   Asset-backed securities3,743,803 14.8 %
   Corporate:
        Industrial3,299,928 13.0 %
        Financial2,618,100 10.4 %
        Utilities621,425 2.5 %
        Other467,615 1.8 %
            Total corporate 7,007,068 27.7 %
   Foreign government 1,407,608 5.6 %
            Total fixed maturity securities (1)18,055,623 71.4 %
Equity securities available for sale:
   Common stocks1,014,820 4.0 %
   Preferred stocks224,892 0.9 %
            Total equity securities available for sale1,239,712 4.9 %
Cash and cash equivalents (2)2,207,220 8.7 %
Investment funds (3)1,593,433 6.3 %
Real estate1,292,200 5.1 %
Arbitrage trading account723,967 2.9 %
Loans receivable181,562 0.7 %
          Net invested assets$25,293,717 100.0 %


(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.