WRB WR Berkley Corp

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:

• Return on equity of 23.6%.
• Book value per share grew 11.6%, before dividends and share repurchases.
• Record net investment income of $313.3 million driven by 52.9% increase in the core portfolio.
• Net premiums written growth increased to 12.0%.
• The current accident year combined ratio before catastrophe losses of 1.2 loss ratio points was 87.2%.
• The reported combined ratio was 88.4%, including current accident year catastrophe losses of $32.0 million.
• Record pre-tax underwriting income grew 8.2% to $315.9 million.
• Average rate increases excluding workers' compensation were approximately 8.0%.
• Total capital returned to shareholders was $263.8 million, consisting of $106.7 million of share repurchases, $128.8 million of special dividends and $28.3 million of regular dividends.

Full year highlights included:

• Return on equity of 20.5%.
• Book value per share grew 25.5%, before dividends and share repurchases.
• Record annual pre-tax underwriting income of $1.1 billion.
• Gross and net premiums written grew 8.9% and 9.5% to records of $13.0 billion and $11.0 billion, respectively.
• Average rate increases excluding workers' compensation were approximately 8.1%.
• Net investment income grew 35.1% to a record $1.1 billion.
• Operating cash flow increased 14.0% to a record of $2.9 billion.
• Total capital returned to shareholders was $1.0 billion, consisting of $537.2 million of share repurchases, $390.0 million of special dividends and $111.4 million of regular dividends.

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