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Share Name | Share Symbol | Market | Type |
---|---|---|---|
WR Berkley Corp | NYSE:WRB | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.59 | 0.74% | 80.20 | 80.79 | 79.74 | 79.96 | 615,958 | 22:35:22 |
Fourth Quarter Return on Equity of 23.6% and Operating Return on Equity of 23.2%;
Record Quarterly and Annual Pre-Tax Underwriting Income and Net Investment Income
W. R. Berkley Corporation (NYSE: WRB) today reported its fourth quarter and full year 2023 results.
Summary Financial Data
(Amounts in thousands, except per share data)
Fourth Quarter
Twelve Months
2023
2022
2023
2022
Gross premiums written
$
3,232,710
$
2,914,877
$
12,972,006
$
11,909,052
Net premiums written
2,719,668
2,427,907
10,954,467
10,004,070
Net income to common stockholders
397,340
382,223
1,381,359
1,381,062
Net income per diluted share
1.47
1.37
5.05
4.94
Operating income (1)
391,753
323,329
1,344,567
1,223,934
Operating income per diluted share
1.45
1.16
4.92
4.38
Return on equity (2)
23.6
%
23.0
%
20.5
%
20.8
%
Operating return on equity (1) (2)
23.2
%
19.4
%
19.9
%
18.4
%
(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.
(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.
Fourth quarter highlights included:
Full year highlights included:
The Company commented:
Our Company completed another record-setting year in 2023, achieving a 23.6% annualized return on beginning equity in the fourth quarter. Our quarter and full year results were characterized by growth in net premiums written, along with record underwriting performance and net investment income. Book value per share grew 11.6% during the fourth quarter, before the return of $264 million of capital to shareholders through special and ordinary dividends and share repurchases.
Growth in net premiums written accelerated to 12% in the fourth quarter, as we deployed capital in areas of the business that we expect to achieve or exceed our targeted risk-adjusted return on equity. In a market where lines of business increasingly move independently from each other, our decentralized structure provides us with a competitive advantage that allows us to better navigate risks and embrace opportunities.
Net investment income from our fixed-maturity portfolio increased more than 50% during the quarter and 60% for the year as our portfolio grew and we (re)invested at higher interest rates. The current rates at which we can reinvest remains higher than our annual book yield, and record operating cash flow positions us well for future investment income growth.
Our Company performed exceptionally well during 2023, and we anticipate 2024 will continue to be rewarding for our shareholders. We view the current property and casualty insurance and investment environments as favorable to our business model. We are confident that we will continue to deliver superior long-term risk-adjusted returns and increase 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 January 24, 2024, 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.
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)
Fourth Quarter
Twelve Months
2023
2022
2023
2022
Revenues:
Net premiums written
$
2,719,668
$
2,427,907
$
10,954,467
$
10,004,070
Change in unearned premiums
(5,054
)
85,317
(553,780
)
(442,641
)
Net premiums earned
2,714,614
2,513,224
10,400,687
9,561,429
Net investment income
313,341
231,283
1,052,835
779,185
Net investment gains:
Net realized and unrealized (losses) gains on investments
(2,862
)
77,647
47,540
217,311
Change in allowance for credit losses on investments
10,666
(2,549
)
(498
)
(14,914
)
Net investment gains
7,804
75,098
47,042
202,397
Revenues from non-insurance businesses
160,283
164,338
535,508
509,548
Insurance service fees
25,194
28,260
106,485
110,544
Other Income
146
1,599
381
3,396
Total Revenues
3,221,382
3,013,802
12,142,938
11,166,499
Expenses:
Loss and loss expenses
1,627,540
1,522,104
6,372,142
5,861,750
Other operating costs and expenses
906,011
822,248
3,363,936
2,961,505
Expenses from non-insurance businesses
154,754
159,127
524,998
493,189
Interest expense
31,879
31,902
127,459
130,374
Total expenses
2,720,184
2,535,381
10,388,535
9,446,818
Income before income tax
501,198
478,421
1,754,403
1,719,681
Income tax expense
(102,234
)
(96,437
)
(370,557
)
(334,727
)
Net Income before noncontrolling interests
398,964
381,984
1,383,846
1,384,954
Noncontrolling interest
(1,624
)
239
(2,487
)
(3,892
)
Net income to common stockholders
$
397,340
$
382,223
$
1,381,359
$
1,381,062
Net income per share:
Basic
$
1.48
$
1.38
$
5.10
$
4.99
Diluted
$
1.47
$
1.37
$
5.05
$
4.94
Average shares outstanding (1):
Basic
269,053
276,625
271,000
276,852
Diluted
271,015
278,888
273,298
279,461
(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.
Business Segment Operating Results
(Amounts in thousands, except ratios) (1)
Fourth Quarter
Twelve Months
2023
2022
2023
2022
Insurance:
Gross premiums written
$
2,902,010
$
2,607,497
$
11,561,138
$
10,583,785
Net premiums written
2,410,348
2,147,121
9,657,121
8,784,146
Net premiums earned
2,382,621
2,207,057
9,130,324
8,369,062
Pre-tax income
486,697
403,473
1,640,438
1,455,658
Loss ratio
60.8
%
61.4
%
62.3
%
61.3
%
Expense ratio
28.6
%
27.8
%
28.4
%
27.9
%
GAAP Combined ratio
89.4
%
89.2
%
90.7
%
89.2
%
Reinsurance & Monoline Excess:
Gross premiums written
$
330,700
$
307,380
$
1,410,868
$
1,325,267
Net premiums written
309,320
280,786
1,297,346
1,219,924
Net premiums earned
331,993
306,167
1,270,363
1,192,367
Pre-tax income
125,474
107,161
438,765
316,527
Loss ratio
53.8
%
54.2
%
53.8
%
61.3
%
Expense ratio
27.4
%
28.6
%
28.3
%
28.4
%
GAAP Combined ratio
81.2
%
82.8
%
82.1
%
89.7
%
Corporate and Eliminations:
Net investment gains
$
7,804
$
75,098
$
47,042
$
202,397
Interest expense
(31,879
)
(31,902
)
(127,459
)
(130,374
)
Other expenses
(86,898
)
(75,409
)
(244,383
)
(124,527
)
Pre-tax loss
(110,973
)
(32,213
)
(324,800
)
(52,504
)
Consolidated:
Gross premiums written
$
3,232,710
$
2,914,877
$
12,972,006
$
11,909,052
Net premiums written
2,719,668
2,427,907
10,954,467
10,004,070
Net premiums earned
2,714,614
2,513,224
10,400,687
9,561,429
Pre-tax income
501,198
478,421
1,754,403
1,719,681
Loss ratio
60.0
%
60.6
%
61.3
%
61.3
%
Expense ratio
28.4
%
27.8
%
28.4
%
28.0
%
GAAP Combined ratio
88.4
%
88.4
%
89.7
%
89.3
%
(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)
Fourth Quarter
Twelve Months
2023
2022
2023
2022
Net premiums written:
Other liability
$
971,611
$
838,516
$
3,840,908
$
3,408,254
Short-tail lines (1)
527,074
431,528
2,099,684
1,749,926
Auto
351,934
308,746
1,397,585
1,257,659
Workers' compensation
290,203
281,070
1,228,058
1,221,804
Professional liability
269,526
287,261
1,090,886
1,146,503
Total Insurance
2,410,348
2,147,121
9,657,121
8,784,146
Casualty reinsurance
197,059
201,851
769,161
785,631
Property reinsurance
76,975
49,137
280,060
211,772
Monoline excess
35,286
29,798
248,125
222,521
Total Reinsurance & Monoline Excess
309,320
280,786
1,297,346
1,219,924
Total
$
2,719,668
$
2,427,907
$
10,954,467
$
10,004,070
Current accident year losses from catastrophes (including COVID-19 related losses):
Insurance
$
20,488
$
24,592
$
159,897
$
126,393
Reinsurance & Monoline Excess
11,529
6,253
35,065
85,317
Total
$
32,017
$
30,845
$
194,962
$
211,710
Net Investment income:
Core portfolio (2)
$
285,841
$
186,897
$
966,723
$
588,873
Investment funds
11,300
23,180
16,743
145,099
Arbitrage trading account
16,200
21,206
69,369
45,213
Total
$
313,341
$
231,283
$
1,052,835
$
779,185
Net realized and unrealized (losses) gains on investments:
Net realized (losses) gains on investments
$
(27,705
)
$
(10,422
)
$
(22,908
)
$
217,943
Change in unrealized gains (losses) on equity securities
24,843
88,069
70,448
(632
)
Total
$
(2,862
)
$
77,647
$
47,540
$
217,311
Other operating costs and expenses:
Policy acquisition and insurance operating expenses
$
771,170
$
699,227
$
2,954,686
$
2,673,903
Insurance service expenses
21,379
25,071
91,714
96,419
Net foreign currency losses (gains)
33,577
34,130
31,799
(50,930
)
Other costs and expenses
79,885
63,820
285,737
242,113
Total
$
906,011
$
822,248
$
3,363,936
$
2,961,505
Cash flow from operations
$
698,076
$
795,301
$
2,929,238
$
2,568,604
Reconciliation of net income to operating income:
Net income
$
397,340
$
382,223
$
1,381,359
$
1,381,062
Pre-tax investment gains, net of related expenses
(7,804
)
(75,098
)
(47,042
)
(199,087
)
Income tax expense
2,217
16,204
10,250
41,959
Operating income after-tax (3)
$
391,753
$
323,329
$
1,344,567
$
1,223,934
(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.
(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)
December 31,
2023
December 31
2022
Net invested assets (1)
$
26,973,703
$
24,545,672
Total assets
37,202,015
33,861,099
Reserves for losses and loss expenses
18,739,652
17,011,223
Senior notes and other debt
1,827,951
1,828,823
Subordinated debentures
1,009,090
1,008,371
Common stockholders' equity (2)
7,455,431
6,748,332
Common stock outstanding (3)
256,545
264,546
Book value per share (4)
29.06
25.51
Tangible book value per share (4)
28.08
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 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 December 31, 2022, after-tax unrealized investment losses were $893 million and unrealized currency translation losses were $372 million.
(3)
During the twelve months ended December 31, 2023, the Company repurchased 8,707,676 shares of its common stock for $537.2 million. During the three months ended December 31, 2023, the Company repurchased 1,560,701 shares of its common stock for $106.7 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
December 31, 2023
(Amounts in thousands, except percentages)
Carrying Value
Percent of Total
Fixed maturity securities:
United States government and government agencies
$
1,716,731
6.4
%
State and municipal:
Special revenue
1,606,195
6.0
%
State general obligation
432,078
1.6
%
Local general obligation
387,336
1.4
%
Corporate backed
154,839
0.6
%
Pre-refunded
104,478
0.4
%
Total state and municipal
2,684,926
10.0
%
Mortgage-backed securities:
Agency
1,429,956
5.3
%
Commercial
644,313
2.4
%
Residential - Prime
192,193
0.7
%
Residential - Alt A
2,861
0.0
%
Total mortgage-backed securities
2,269,323
8.4
%
Asset-backed securities
4,187,040
15.5
%
Corporate:
Industrial
3,559,555
13.2
%
Financial
2,779,234
10.3
%
Utilities
684,924
2.5
%
Other
630,346
2.3
%
Total corporate
7,654,059
28.3
%
Foreign government
1,666,229
6.2
%
Total fixed maturity securities (1)
20,178,308
74.8
%
Equity securities available for sale:
Common stocks
838,054
3.1
%
Preferred stocks
252,293
0.9
%
Total equity securities available for sale
1,090,347
4.0
%
Cash and cash equivalents (2)
1,694,199
6.3
%
Investment funds
1,621,655
6.0
%
Real estate
1,249,874
4.6
%
Arbitrage trading account
938,049
3.5
%
Loans receivable
201,271
0.8
%
Net invested assets
$
26,973,703
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)
Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchase.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240124926833/en/
Karen A. Horvath Vice President - External Financial Communications (203) 629-3000
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