EXHIBIT 99.1
- ------------------------------------
W. R. Berkley Corporation NEWS
165 Mason Street, P.O. Box 2518 RELEASE
Greenwich, Connecticut 06836-2518
(203) 629-3000
- ------------------------------------
FOR IMMEDIATE RELEASE CONTACT:
Eugene G. Ballard
Senior Vice President -
Chief Financial Officer
and Treasurer
203-629-3000
W. R. BERKLEY CORPORATION ANNOUNCES FIRST QUARTER RESULTS
OPERATING INCOME PER SHARE UP 60 PERCENT
Greenwich, CT, April 26, 2001 -- W. R. Berkley Corporation (NASDAQ: BKLY)
today reported that revenues for the first quarter of 2001 increased six percent
to $449 million from $423 million for the same period in 2000. Net premiums
written rose 12 percent in the first quarter to $432 million. The premium growth
was led by the specialty segment, which reported a 55 percent increase in net
premiums written.
Operating income for the first quarter of 2001 was $9.1 million, or 32
cents per diluted share, compared with $5.2 million, or 20 cents per diluted
share, for the first quarter of 2000. Net income for the first quarter was $10.3
million, or 36 cents per diluted share, compared with $4.3 million, or 17 cents
per diluted share, for the same 2000 period. Net income includes realized
investment gains, which are not part of operating income.
The earnings per share for the first quarter of 2001 reflect the increase
in average shares outstanding as a result of the issuance of 3.1 million shares
of common stock on March 6, 2001. The Company received net proceeds of $121
million from the offering.
W.R. Berkley Corporation 2
- -------------------------------------------------------------------------------
Commenting on the Company's results, William R. Berkley, chairman and chief
executive officer, said: "The insurance operating results for the quarter were
generally in line with our expectations. The increase in premium volume was a
result of price increases, as policy counts declined. Underwriting results
improved from the prior period. We were disappointed with the investment returns
from our merger arbitrage account, which were approximately one hundred basis
points below the average quarterly returns of past years. This shortfall would
have represented after-tax earnings of approximately $3 million or 10 cents per
share. While the merger arbitrage result was unsatisfactory for the quarter, we
have not lowered our long-term expected returns from this segment of our
investment portfolio.
"The improvements in our businesses continue. The regional operations are
showing continued improvement despite increased storm losses. Their policy count
is down, and price increases average over 10 percent.
"The alternative markets business shows all the signs of a tightening
market. Volume is up, profits are improving and we believe the most dramatic
changes in this segment of our business will be reflected in 2002 and beyond.
"Our international business has shown substantial increases in volume and
profitability. The life insurance business in the Philippines has begun to
achieve the results we planned, and the Argentine business continues to perform
well, led by the excellent performance of its property casualty business.
"The reinsurance business had a difficult quarter. As we previously stated,
we have taken dramatic steps to refocus this business, and as a consequence,
premium volume is down. We expect the reinsurance business to have a challenging
year in 2001 but to see the benefits of our efforts reflected in 2002.
W.R. Berkley Corporation 3
- -------------------------------------------------------------------------------
"Our specialty insurance business is continuing to achieve double-digit
price increases and represents an increasing portion of our insurance premiums.
During the first quarter, the specialty business represented 25 percent of our
net written premiums compared with 18 percent in the same period of the prior
year. We are especially pleased with the dramatic improvement in commercial
transportation this quarter. Underwriting results for this segment indicate
substantial improvement in the current accident year; we believe a cautious
assessment of these improvements is required. It is clear that the insurance
marketplace is tightening at an increasing pace, allowing for the continuing
ability to raise prices and strengthen underwriting standards. Our enthusiasm
for the next several years is undiminished," Mr. Berkley concluded.
Founded in 1967, W. R. Berkley Corporation is an insurance holding company
which operates in five segments of the property casualty insurance business:
specialty insurance, alternative markets, reinsurance, regional property
casualty insurance and international.
This is a "Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995. Any forward-looking statements contained herein, including
those related to the Company's performance for the year 2001 and beyond, are
based upon the Company's historical performance and on current plans, estimates
and expectations. They are subject to various risks and uncertainties, including
but not limited to, the cyclical nature of the property casualty industry, the
long-tail and potentially volatile nature of the reinsurance business, the
impact of competition, product demand and pricing, claims development and the
process of estimating reserves, catastrophe and storm losses, legislative and
regulatory developments, investment results, availability and use of
reinsurance, and other risks detailed from time to time in the Company's filings
with the Securities and Exchange Commission. These risks could cause the
Company's actual results for the year 2001 and beyond to differ materially from
those expressed in any forward-looking statement made by or on behalf of the
Company. 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 4
- --------------------------------------------------------------------------------
W. R. BERKLEY CORPORATION
Consolidated Statements of Operations
(Amounts in thousands except per share data)
For the Three Months
Ended March 31,
---------------------------
2001 2000
---- ----
Revenues:
Net premiums written $ 431,911 $ 385,761
Change in unearned premiums (52,976) (27,017)
--------- ---------
Premiums earned 378,935 358,744
Net investment income 50,430 46,928
Service fees 17,592 16,526
Realized investment gains 1,836 468
Other income 360 658
--------- ---------
Total revenues 449,153 423,324
--------- ---------
Expenses:
Losses and loss expenses 271,468 261,759
Other operating expenses 152,623 145,357
Interest expense 11,450 12,493
Restructuring charge -- 1,850
--------- ---------
Total expenses 435,541 421,459
--------- ---------
Income before income taxes
And minority interest 13,612 1,865
Income tax (expense) benefit (2,484) 2,652
Minority interest (862) (171)
--------- ---------
Net Income $ 10,266 $ 4,346
========= =========
Net income per share:
Basic $ .38 $ .17
========= =========
Diluted $ .36 $ .17
========= =========
Average shares outstanding:
Basic 26,949 25,617
========= =========
Diluted 28,255 25,679
========= =========
W. R. Berkley Corporation 5
- --------------------------------------------------------------------------------
W. R. BERKLEY CORPORATION
Supplemental Information by Segment
(Amounts in thousands)
For the Three Months
Ended March 31,
-------------------------
2001 2000 % Change
--------- --------- --------
Specialty Insurance:
Net premiums written $ 106,023 $ 68,262 55%
Pre-tax operating income (1) 7,868 3,918 101%
Loss ratio 68.4% 78.3%
Expense ratio 31.6% 33.2%
Policyholders' dividend ratio 0.1% --
Statutory combined ratio 100.1% 111.5%
Alternative Markets (2):
Net premiums written $ 46,556 $ 35,976 29%
Pre-tax operating income (1) 8,805 6,415 37%
Loss ratio 78.9% 86.8%
Expense ratio 26.7% 25.4%
Statutory combined ratio 105.6% 112.2%
Reinsurance (2):
Net premiums written $ 74,375 $ 88,754 -16%
Pre-tax operating income (1) 2,686 7,074 -62%
Loss ratio 76.5% 70.7%
Expense ratio 31.8% 34.6%
Statutory combined ratio 108.3% 105.3%
Regional Insurance:
Net premiums written $ 171,233 $ 166,348 3%
Pre-tax operating income (1) 5,232 1,424 267%
Loss ratio 70.8% 73.2%
Expense ratio 32.5% 33.1%
Policyholders' dividend ratio 0.9% .5%
Statutory combined ratio 104.2% 106.8%
International (3):
Net premiums written $ 33,724 $ 26,421 28%
Pre-tax operating income (1) 2,088 915 128%
Loss ratio 64.1% 55.5%
Expense ratio 37.7% 40.9%
Statutory combined ratio 101.8% 96.4%
Combined:
Net premiums written $ 431,911 $ 385,761 12%
Pre-tax operating income (1) 26,679 19,746 35%
Loss ratio 71.8% 73.4%
Expense ratio 31.9% 33.1%
Policyholders' dividend ratio .4% .2%
Statutory combined ratio 104.1% 106.7%
GAAP combined ratio 106.0% 107.0%
(1) Pre-tax operating income represents segment earnings before realized
investment gains, restructuring charges and minority interest.
(2) Effective January 1, 2001, management responsibility and financial
reporting for alternative markets business produced through traditional
reinsurance intermediaries was transferred from the alternative markets
segment to the reinsurance segment. Segment information for the prior
period has been restated to reflect the change.
(3) International includes life insurance premiums of $7.9 million and $8.3
million for the three months ended March 31, 2001 and 2000, respectively.
Life insurance results are not included in the ratios.
W. R. Berkley Corporation 6
- --------------------------------------------------------------------------------
W. R. BERKLEY CORPORATION
Consolidated Supplemental Information
(Amounts in thousands except per share data)
For the Three Months
Ended March 31,
--------------------
2001 2000
---- ----
After-tax earnings amounts:
- --------------------------
Operating income (1) $ 9,073 $ 5,245
Restructuring charge -- (1,203)
Realized investment gains 1,193 304
-------- --------
Net income $ 10,266 $ 4,346
======== ========
After-tax earnings per diluted share:
- ------------------------------------
Operating income (1) $ .32 $ .20
Restructuring charge -- (.05)
Realized investment gains .04 .02
-------- --------
Net income $ .36 $ .17
======== ========
Cash flow from operations before
increase in trading account $ 7,101 $ 17,209
======== ========
Balance sheet information: March 31, December 31,
- ------------------------- 2001 2000
---------- ----------
Total investments (2) $3,254,679 $3,111,602
Total assets 5,216,866 5,022,070
Reserves for losses and loss expenses 2,538,650 2,533,917
Long-term debt 370,257 370,158
Trust preferred securities 198,179 198,169
Stockholders' equity 833,178 680,896
Common shares outstanding 28,977 25,656
Stockholders' equity per share (3) 28.75 26.54
(1) Operating income includes after-tax catastrophe losses of $5.4 million,
or 19 cents per diluted share, for the first quarter of 2001 compared to
$5.2 million, or 20 cents per diluted share, for the first quarter
of 2000.
(2) Investments include trading account receivable from broker and clearing
organizations and trading securities sold but not yet purchased.
(3) The calculation of stockholders' equity per share includes net after-tax
unrealized gains of $38.5 million and $19.4 million as of March 31, 2001
and December 31, 2000, respectively.