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W. R. Berkley Corporation Reports Fourth Quarter ResultsW. R. Berkley Corporation (NYSE:WRB) today reported operating income for the fourth quarter of 2015 of $115 million, or $0.89 per share.
(1) Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains. (2) Return on equity represents net income and operating income expressed on an annualized basis as a percentage of beginning of year stockholders' equity. Fourth quarter highlights included:
The Company commented: We were pleased with our operating results in both the fourth quarter and full year 2015. Our combined ratio for the quarter was 93.1% and our investment results were more than satisfactory given the conservative risk profile of our portfolio. We continue to focus on managing risk and volatility throughout the business. Maintaining a consistent and stable risk-adjusted return has enabled us to deliver superior value creation to our shareholders over the long term. Written premium growth in the domestic insurance segment was strong, especially in the fourth quarter. Overall, due to the strong dollar, foreign currency translations reduced our total premium growth by 1.5% for both the quarter and the year. We are confident our unique specialist approach and various market dislocations will provide us with greater opportunities in the coming year. We maintain a cautious approach to reserves due to the potential for inflation. Consequently, our loss reserves continue to develop favorably and our accident-year loss ratio, excluding catastrophes, has been stable. The domestic insurance expense ratio is generally satisfactory, and there are opportunities for further improvement in our international expense ratio. Our investment portfolio is very high quality, with an average rating of AA-, and ample liquidity. We have modest exposure to the oil industry, the vast majority of which is in investment grade securities. The after-tax exposure to the oil industry for our investment funds is less than half of one percent of our invested assets. We believe we are well positioned for the current environment and have the flexibility to manage whatever the future presents. In spite of the various uncertainties in the insurance and investment markets, we are positive about our future and foresee better returns for 2016. Webcast Conference Call The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on Tuesday, February 2, 2016 at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at www.wrberkley.com. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call. 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 in three segments of the property casualty business: Insurance-Domestic, Insurance-International and Reinsurance-Global. 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 2016 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 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; natural and man-made catastrophic losses, including as a result of terrorist activities; 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 it, 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 Act of 2002, as amended ("TRIA"); the ability 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 data security; 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 2016 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.
(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.
(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. Management believes that excluding net investment gains provides a useful indicator of trends in the Company's underlying operations.
(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) After-tax unrealized investment gains were $181 million and $306 million as of December 31, 2015 and December 31, 2014, respectively. Unrealized currency translation losses were $247 million and $123 million as of December 31, 2015 and December 31, 2014, respectively. (3) During the full year 2015, the Company repurchased 4,502,025 shares of its common stock for $224 million. (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.
(1) Total fixed maturity securities had an average rating of AA- and an average duration of 3.3 years, including cash and cash equivalents. (2) Investment funds include an investment in publicly traded common stock of HealthEquity, Inc. (HQY), which is carried on the equity method of accounting. At December 31, 2015, the investment in HQY had a carrying value of $45.4 million and a fair value of $300.1 million. Investment funds are reported net of related liabilities of $2.2 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.
(1) Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development
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