WRB WR Berkley Corp

Return on Equity of 20.0% and Operating Return on Equity of 22.4%; Record Quarterly Net Investment Income of $372 Million

W. R. Berkley Corporation (NYSE: WRB) today reported its second quarter 2024 results.

Summary Financial Data

(Amounts in thousands, except per share data)

 

 

Second Quarter

 

Six Months

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Gross premiums written

$

3,717,772

 

 

$

3,336,773

 

 

$

7,080,528

 

 

$

6,386,091

 

Net premiums written

 

3,126,779

 

 

 

2,811,515

 

 

 

5,978,070

 

 

 

5,386,339

 

 

 

 

 

 

 

 

 

Net income to common stockholders

 

371,909

 

 

 

356,308

 

 

 

814,380

 

 

 

650,434

 

Net income per diluted share (1)

 

0.92

 

 

 

0.87

 

 

 

2.01

 

 

 

1.58

 

 

 

 

 

 

 

 

 

Operating income (2)

 

418,114

 

 

 

310,862

 

 

 

841,344

 

 

 

586,531

 

Operating income per diluted share (1)

 

1.04

 

 

 

0.76

 

 

 

2.08

 

 

 

1.42

 

 

 

 

 

 

 

 

 

Return on equity (3)

 

20.0

%

 

 

21.1

%

 

 

21.8

%

 

 

19.3

%

Operating return on equity (2) (3)

 

22.4

%

 

 

18.4

%

 

 

22.6

%

 

 

17.4

%

(1)

The 2024 per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on July 10, 2024, and the 2023 per share amounts were restated for comparative purposes to reflect such common stock split.

(2)

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.

(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.

Second quarter highlights included:

• Return on equity and operating return on equity of 20.0% and 22.4%, respectively.
• Net investment income grew 51.8% to a record $372.1 million.
• Record net premiums written grew 11.2% to $3.1 billion.
• The current accident year combined ratio before catastrophe losses of 3.2 loss ratio points was 88.0%, and the reported combined ratio was 91.1%.
• Average rate increase excluding workers' compensation were approximately 8.3%.
• Book value per share grew 4.7%, before dividends and share repurchases.
• Total capital returned to shareholders was $381.3 million, consisting of $223.8 million of share repurchases, $127.0 million of special dividends and $30.5 million of regular dividends.
• Operating cash flow increased 24.4% to $881.3 million.

The Company commented:

Continued strong underwriting and investment income drove our 20.0% annualized return on beginning of year common stockholders’ equity in the second quarter.

Market conditions remained favorable in many areas of our business, fueling growth in net premiums written of 11.2%. Our combined ratio was 91.1% inclusive of 3.2 loss ratio points of catastrophe losses.

Net investment income increased 51.8% over the prior year second quarter, driven by an increase in fixed-maturity income from a growing portfolio with higher yields. We anticipate that the Company’s new money rate will remain higher than the current yield of our fixed-maturity securities for the foreseeable future. Coupled with our increasing investment portfolio from continuing record cash flow, we remain well-positioned for further investment income growth.

Our decentralized structure and consistent focus on long-term risk-adjusted return allow us to effectively operate in a rapidly-changing environment. We continue to believe that expertise matters in both underwriting and investing. The Company expects to continue to deliver outstanding returns to our shareholders for the remainder of 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 July 22, 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)

 

 

Second Quarter

 

Six Months

 

2024

 

2023

 

2024

 

2023

Revenues:

 

 

 

 

 

 

 

Net premiums written

$

3,126,779

 

 

$

2,811,515

 

 

$

5,978,070

 

 

$

5,386,339

 

Change in unearned premiums

 

(280,364

)

 

 

(258,788

)

 

 

(367,308

)

 

 

(342,180

)

Net premiums earned

 

2,846,415

 

 

 

2,552,727

 

 

 

5,610,762

 

 

 

5,044,159

 

Net investment income

 

372,129

 

 

 

245,152

 

 

 

691,967

 

 

 

468,551

 

Net investment (losses) gains:

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments

 

(60,306

)

 

 

68,647

 

 

 

(48,803

)

 

 

91,258

 

Change in allowance for credit losses on investments

 

1,794

 

 

 

(9,993

)

 

 

16,070

 

 

 

(9,594

)

Net investment (losses) gains

 

(58,512

)

 

 

58,654

 

 

 

(32,733

)

 

 

81,664

 

Revenues from non-insurance businesses

 

125,705

 

 

 

113,910

 

 

 

246,696

 

 

 

238,110

 

Insurance service fees

 

27,597

 

 

 

25,471

 

 

 

52,917

 

 

 

58,328

 

Other income

 

698

 

 

 

—

 

 

 

1,196

 

 

 

106

 

Total Revenues

 

3,314,032

 

 

 

2,995,914

 

 

 

6,570,805

 

 

 

5,890,918

 

Expenses:

 

 

 

 

 

 

 

Loss and loss expenses

 

1,780,596

 

 

 

1,569,654

 

 

 

3,444,374

 

 

 

3,108,409

 

Other operating costs and expenses

 

892,935

 

 

 

823,682

 

 

 

1,761,524

 

 

 

1,649,255

 

Expenses from non-insurance businesses

 

121,120

 

 

 

113,538

 

 

 

239,727

 

 

 

236,306

 

Interest expense

 

31,708

 

 

 

31,856

 

 

 

63,436

 

 

 

63,692

 

Total expenses

 

2,826,359

 

 

 

2,538,730

 

 

 

5,509,061

 

 

 

5,057,662

 

Income before income tax

 

487,673

 

 

 

457,184

 

 

 

1,061,744

 

 

 

833,256

 

Income tax expense

 

(115,788

)

 

 

(101,460

)

 

 

(247,824

)

 

 

(181,803

)

Net Income before noncontrolling interests

 

371,885

 

 

 

355,724

 

 

 

813,920

 

 

 

651,453

 

Noncontrolling interest

 

24

 

 

 

584

 

 

 

460

 

 

 

(1,019

)

Net income to common stockholders

$

371,909

 

 

$

356,308

 

 

$

814,380

 

 

$

650,434

 

 

 

 

 

 

 

 

 

Net income per share (1):

 

 

 

 

 

 

 

Basic

$

0.93

 

 

$

0.88

 

 

$

2.03

 

 

$

1.59

 

Diluted

$

0.92

 

 

$

0.87

 

 

$

2.01

 

 

$

1.58

 

 

 

 

 

 

 

 

 

Average shares outstanding (1) (2):

 

 

 

 

 

 

 

Basic

 

400,273

 

 

 

406,296

 

 

 

401,295

 

 

 

409,364

 

Diluted

 

403,737

 

 

 

409,643

 

 

 

404,679

 

 

 

412,819

 

(1)

The 2024 per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on July 10, 2024, and the 2023 per share amounts were restated for comparative purposes to reflect such common stock split.

(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.

Business Segment Operating Results

(Amounts in thousands, except ratios) (1) (2)

 

 

Second Quarter

 

Six Months

 

2024

 

2023

 

2024

2023

Insurance:

 

 

 

 

 

 

Gross premiums written

$

3,360,850

 

 

$

2,994,059

 

 

$

6,281,900

 

$

5,620,406

 

Net premiums written

 

2,810,448

 

 

 

2,505,856

 

 

 

5,256,163

 

 

4,691,277

 

Net premiums earned

 

2,484,569

 

 

 

2,215,186

 

 

 

4,883,338

 

 

4,358,110

 

Pre-tax income

 

490,053

 

 

 

386,350

 

 

 

968,202

 

 

738,977

 

Loss ratio

 

64.0

%

 

 

63.1

%

 

 

62.9

%

 

62.8

%

Expense ratio

 

28.4

%

 

 

27.8

%

 

 

28.4

%

 

28.3

%

GAAP Combined ratio

 

92.4

%

 

 

90.9

%

 

 

91.3

%

 

91.1

%

 

 

 

 

 

 

 

Reinsurance & Monoline Excess:

 

 

 

 

 

 

Gross premiums written

$

356,922

 

 

$

342,714

 

 

$

798,628

 

$

765,685

 

Net premiums written

 

316,331

 

 

 

305,659

 

 

 

721,907

 

 

695,062

 

Net premiums earned

 

361,846

 

 

 

337,541

 

 

 

727,424

 

 

686,049

 

Pre-tax income

 

124,449

 

 

 

105,420

 

 

 

252,074

 

 

206,704

 

Loss ratio

 

52.8

%

 

 

51.2

%

 

 

51.3

%

 

53.9

%

Expense ratio

 

29.0

%

 

 

30.1

%

 

 

29.4

%

 

30.1

%

GAAP Combined ratio

 

81.8

%

 

 

81.3

%

 

 

80.7

%

 

84.0

%

 

 

 

 

 

 

 

Corporate and Eliminations:

 

 

 

 

 

 

Net investment (losses) gains

$

(58,512

)

 

$

58,654

 

 

$

(32,733

)

$

81,664

 

Interest expense

 

(31,708

)

 

 

(31,856

)

 

 

(63,436

)

 

(63,692

)

Other expenses

 

(36,609

)

 

 

(61,384

)

 

 

(62,363

)

 

(130,397

)

Pre-tax loss

 

(126,829

)

 

 

(34,586

)

 

 

(158,532

)

 

(112,425

)

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Gross premiums written

$

3,717,772

 

 

$

3,336,773

 

 

$

7,080,528

 

$

6,386,091

 

Net premiums written

 

3,126,779

 

 

 

2,811,515

 

 

 

5,978,070

 

 

5,386,339

 

Net premiums earned

 

2,846,415

 

 

 

2,552,727

 

 

 

5,610,762

 

 

5,044,159

 

Pre-tax income

 

487,673

 

 

 

457,184

 

 

 

1,061,744

 

 

833,256

 

Loss ratio

 

62.6

%

 

 

61.5

%

 

 

61.4

%

 

61.6

%

Expense ratio

 

28.5

%

 

 

28.1

%

 

 

28.6

%

 

28.5

%

GAAP Combined ratio

 

91.1

%

 

 

89.6

%

 

 

90.0

%

 

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.

(2)

Commencing with the first quarter of 2024, the Company reclassified a program management business from the Insurance segment to the Reinsurance & Monoline Excess segment. The reclassified business is a program management business offering support on a nationwide basis for commercial casualty and property program administrators. Reclassifications have been made to the Company's 2023 financial information to conform with this presentation.

Supplemental Information

(Amounts in thousands)

 

 

Second Quarter

 

Six Months

 

2024

 

2023

 

2024

 

2023

Net premiums written:

 

 

 

 

 

 

 

Other liability

$

1,131,676

 

 

$

987,687

 

 

$

2,147,291

 

 

$

1,888,978

 

Short-tail lines (1)

 

643,101

 

 

 

558,123

 

 

 

1,175,442

 

 

 

984,777

 

Auto

 

408,178

 

 

 

352,584

 

 

 

756,760

 

 

 

646,442

 

Workers' compensation

 

332,432

 

 

 

325,170

 

 

 

637,064

 

 

 

635,154

 

Professional liability

 

295,061

 

 

 

282,292

 

 

 

539,606

 

 

 

535,926

 

Total Insurance

 

2,810,448

 

 

 

2,505,856

 

 

 

5,256,163

 

 

 

4,691,277

 

Casualty (2)

 

188,117

 

 

 

189,970

 

 

 

378,136

 

 

 

401,261

 

Property (2)

 

102,158

 

 

 

90,585

 

 

 

200,820

 

 

 

164,179

 

Monoline excess

 

26,056

 

 

 

25,104

 

 

 

142,951

 

 

 

129,622

 

Total Reinsurance & Monoline Excess

 

316,331

 

 

 

305,659

 

 

 

721,907

 

 

 

695,062

 

Total

$

3,126,779

 

 

$

2,811,515

 

 

$

5,978,070

 

 

$

5,386,339

 

 

 

 

 

 

 

 

 

Current accident year losses from catastrophes:

 

 

 

 

Insurance

$

86,632

 

 

$

48,007

 

 

$

114,082

 

 

$

93,249

 

Reinsurance & Monoline Excess

 

3,047

 

 

 

5,540

 

 

 

6,103

 

 

 

8,167

 

Total

$

89,679

 

 

$

53,547

 

 

$

120,185

 

 

$

101,416

 

 

 

 

 

 

 

 

 

Net Investment income:

 

 

 

 

 

 

 

Core portfolio (3)

$

329,971

 

 

$

229,302

 

 

$

661,147

 

 

$

432,265

 

Investment funds

 

25,476

 

 

 

(1,187

)

 

 

(3,873

)

 

 

993

 

Arbitrage trading account

 

16,682

 

 

 

17,037

 

 

 

34,693

 

 

 

35,293

 

Total

$

372,129

 

 

$

245,152

 

 

$

691,967

 

 

$

468,551

 

 

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments:

 

 

 

 

 

 

 

Net realized gains (losses) on investments

$

6,411

 

 

$

47,387

 

 

$

(7,898

)

 

$

26,594

 

Change in unrealized (losses) gains on equity securities

 

(66,717

)

 

 

21,260

 

 

 

(40,905

)

 

 

64,664

 

Total

$

(60,306

)

 

$

68,647

 

 

$

(48,803

)

 

$

91,258

 

 

 

 

 

 

 

 

 

Other operating costs and expenses:

 

 

 

 

 

 

 

Policy acquisition and insurance operating expenses

$

811,997

 

 

$

718,234

 

 

$

1,603,529

 

 

$

1,436,510

 

Insurance service expenses

 

23,084

 

 

 

23,931

 

 

 

44,523

 

 

 

49,111

 

Net foreign currency (gains) losses

 

(10,118

)

 

 

11,226

 

 

 

(23,295

)

 

 

20,721

 

Other costs and expenses

 

67,972

 

 

 

70,291

 

 

 

136,767

 

 

 

142,913

 

Total

$

892,935

 

 

$

823,682

 

 

$

1,761,524

 

 

$

1,649,255

 

 

 

 

 

 

 

 

 

Cash flow from operations

$

881,330

 

 

$

708,745

 

 

$

1,627,565

 

 

$

1,154,069

 

 

 

 

 

 

 

 

 

Reconciliation of net income to operating income:

 

 

 

 

 

 

 

Net income

$

371,909

 

 

$

356,308

 

 

$

814,380

 

 

$

650,434

 

Pre-tax investment losses (gains), net of related expenses

 

58,631

 

 

 

(57,862

)

 

 

32,733

 

 

 

(81,250

)

Income tax (benefit) expense

 

(12,426

)

 

 

12,416

 

 

 

(5,769

)

 

 

17,347

 

Operating income after-tax (4)

$

418,114

 

 

$

310,862

 

 

$

841,344

 

 

$

586,531

 

(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)

Includes reinsurance casualty and property and certain program management business.

(3)

Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.

(4)

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)

 

 

June 30, 2024

 

December 31, 2023

 

 

 

 

Net invested assets (1)

$

28,011,519

 

$

26,973,703

Total assets

 

38,909,919

 

 

37,111,830

Reserves for losses and loss expenses

 

19,567,190

 

 

18,739,652

Senior notes and other debt

 

1,828,422

 

 

1,827,951

Subordinated debentures

 

1,009,449

 

 

1,009,090

Common stockholders' equity (2)

 

7,773,782

 

 

7,455,431

Common stock outstanding (3) (4)

 

380,647

 

 

384,817

Book value per share (4) (5)

 

20.42

 

 

19.37

Tangible book value per share (4) (5)

 

19.78

 

 

18.72

(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, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $670 million and unrealized currency translation losses of $364 million. 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.

(3)

During the six months ended and three months ended June 30, 2024, the Company repurchased 4,298,510 shares of its common stock for $223.8 million. The number of shares of common stock outstanding excludes shares held in a grantor trust.

(4)

The 2024 per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on July 10, 2024, and the 2023 per share amounts were restated for comparative purposes to reflect such common stock split.

(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.

Investment Portfolio

June 30, 2024

(Amounts in thousands, except percentages)

 

 

Carrying Value

 

Percent of Total

Fixed maturity securities:

 

 

 

United States government and government agencies

$

1,822,376

 

6.5

%

State and municipal:

 

 

 

Special revenue

 

1,508,209

 

5.4

%

State general obligation

 

443,673

 

1.6

%

Local general obligation

 

379,024

 

1.4

%

Corporate backed

 

161,332

 

0.6

%

Pre-refunded

 

87,978

 

0.3

%

Total state and municipal

 

2,580,216

 

9.3

%

Mortgage-backed securities:

 

 

 

Agency

 

1,855,209

 

6.6

%

Commercial

 

558,051

 

2.0

%

Residential - Prime

 

179,841

 

0.6

%

Residential - Alt A

 

2,508

 

0.0

%

Total mortgage-backed securities

 

2,595,609

 

9.2

%

Asset-backed securities

 

4,014,446

 

14.3

%

Corporate:

 

 

 

Industrial

 

3,893,745

 

13.9

%

Financial

 

3,196,583

 

11.4

%

Utilities

 

711,967

 

2.5

%

Other

 

610,125

 

2.2

%

Total corporate

 

8,412,420

 

30.0

%

Foreign government

 

1,657,609

 

5.9

%

Total fixed maturity securities (1)

 

21,082,676

 

75.2

%

Equity securities available for sale:

 

 

 

Common stocks

 

696,555

 

2.5

%

Preferred stocks

 

381,537

 

1.4

%

Total equity securities available for sale

 

1,078,092

 

3.9

%

Investment funds

 

1,589,119

 

5.7

%

Cash and cash equivalents (2)

 

1,411,140

 

5.0

%

Real estate

 

1,279,306

 

4.6

%

Arbitrage trading account

 

1,221,861

 

4.4

%

Loans receivable

 

349,325

 

1.2

%

Net invested assets

$

28,011,519

 

100.0

%

(1)

Total fixed maturity securities had an average rating of AA- and an average duration of 2.5 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240722013182/en/

Karen A. Horvath Vice President - External Financial Communications (203) 629-3000