EXHIBIT 99.1
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W. R. Berkley Corporation NEWS
165 Mason Street, P.O. Box 2518 RELEASE
Greenwich, Connecticut 06836-2518
(203) 629-3000
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FOR IMMEDIATE RELEASE CONTACT:
Eugene G. Ballard
Senior Vice President -
Chief Financial Officer
and Treasurer
203-629-3000
W. R. BERKLEY CORPORATION ANNOUNCES SECOND QUARTER RESULTS
Greenwich, CT, July 26, 2001 -- W. R. Berkley Corporation (NYSE: BER) today
reported net premiums written increased 30 percent to $454 million for the
second quarter ended June 30, 2001 from $350 million in the year-earlier period.
The premium growth was led by the company's specialty business, which reported
an 81 percent increase in net premiums written for the quarter. For the first
six months of 2001, total net premiums written for the company increased 20
percent to $886 million.
Operating income was $8 million, or 26 cents per diluted share, for the
second quarter of 2001 compared with $6 million, or 25 cents per diluted share,
for the same period in 2000. For the first six months, the company reported
operating income of $17 million, or 58 cents per diluted share, in 2001 compared
with $12 million, or 45 cents per diluted share, in 2000.
Net income for the second quarter of 2001 was $10 million, or 32 cents per
diluted share, compared with $7 million, or 26 cents per diluted share, for the
second quarter of 2000. For the first six months of 2001, net income was $20
million, or 68 cents per diluted share, compared with $11 million, or 43 cents
per diluted share, in 2000.
W. R. Berkley Corporation 2
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Commenting on the company's results, William R. Berkley, chairman and chief
executive officer, said: "It has been an exciting quarter. While our results
were severely impacted by storm activity, more than half of which related to our
personal lines business, the overall direction of our key operating divisions
continues to show excellent progress.
"Gross premiums written for specialty, alternative markets and facultative
reinsurance grew by approximately 50 percent over the second quarter last year.
These gains in premium volume primarily reflect price increases, although there
was slight growth in policy count. Our pre-tax operating income in the second
quarter increased by more than 80 percent over the comparable quarter a year
ago."
Mr. Berkley continued, "We made several changes which will generate a
marked increase in our premium volume over the next five quarters, including
purchasing less reinsurance. This is not likely, however, to have a
consequential impact on our overall profitability during the balance of the
year, but should substantially increase our investable assets in the long term
and create additional future investment income. In addition, we continue to
raise prices in all areas of the business and anticipate price improvements to
continue in the foreseeable future.
"We expect improvement in operating results and substantial growth in our
gross and net premiums. We are continuing to focus our efforts on the specialty
and alternative markets segments, which offer extraordinary opportunities in the
current marketplace. We also are benefiting from the improving operating results
at our regional businesses. Our international business is delivering
double-digit returns, and we are generating outstanding results from our
facultative reinsurance business. The current underwriting year results for the
balance
W. R. Berkley Corporation 3
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of our reinsurance business are slowly showing signs of improvement, although we
continue to be adversely impacted by the underpriced business written in prior
years.
"The direction of our company continues to be extremely positive, and we
remain optimistic," 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
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W. R. BERKLEY CORPORATION
Consolidated Statements of Operations
(Amounts in thousands except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
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2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Net premiums written $ 453,888 $ 350,081 $ 885,799 $ 735,842
Change in unearned premiums (35,828) 12,026 (88,804) (14,991)
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Premiums earned 418,060 362,107 796,995 720,851
Net investment income 50,368 49,584 100,798 96,512
Service fees 19,111 19,191 36,703 35,717
Realized investment gains 2,561 325 4,397 793
Other income 897 726 1,257 1,384
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Total revenues 490,997 431,933 940,150 855,257
Expenses:
Losses and loss expenses 296,653 265,493 568,121 527,252
Other operating expenses 169,319 148,220 321,942 293,577
Interest expense 11,412 11,791 22,862 24,284
Restructuring charge -- -- -- 1,850
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Total expenses 477,384 425,504 912,925 846,963
Income before income taxes
And minority interest 13,613 6,429 27,225 8,294
Income tax (expense) benefit (3,074) 564 (5,558) 3,216
Minority interest (941) (357) (1,803) (528)
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Net income $ 9,598 $ 6,636 $ 19,864 $ 10,982
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Net income per share:
Basic $ 0.33 $ 0.26 $ 0.71 $ 0.43
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Diluted $ 0.32 $ 0.26 $ 0.68 $ 0.43
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Average shares outstanding:
Basic 28,990 25,621 27,975 25,619
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Diluted 30,051 25,796 29,243 25,725
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W. R. Berkley Corporation 5
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W. R. BERKLEY CORPORATION
Supplemental Information by Segment
(Amounts in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
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2001 2000 2001 2000
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Specialty Insurance:
Gross premiums written $ 142,279 $ 102,596 $ 273,664 $ 204,389
Net premiums written 125,708 69,429 231,731 137,691
Pre-tax operating income (1) 12,298 7,831 20,166 11,749
Loss ratio 66.3% 72.1% 67.3% 75.1%
Expense ratio 31.8% 34.1% 33.3% 33.7%
GAAP combined ratio 98.1% 106.2% 100.6% 108.8%
Alternative Markets (2):
Gross premiums written $ 26,486 $ 15,207 $ 78,914 $ 54,807
Net premiums written 23,842 13,604 70,398 49,580
Pre-tax operating income (1) 11,109 7,838 19,914 14,253
Loss ratio 68.1% 63.2% 72.5% 69.5%
Expense ratio 32.2% 43.3% 33.3% 40.3%
GAAP combined ratio 100.3% 106.5% 105.8% 109.8%
Reinsurance (2)(3):
Gross premiums written $ 119,497 $ 95,199 $ 209,904 $ 195,472
Net premiums written 85,847 79,540 160,222 168,294
Pre-tax operating income (1) 176 5,541 2,862 12,615
Loss ratio 70.7% 74.4% 73.5% 72.5%
Expense ratio 42.6% 34.0% 38.9% 34.8%
GAAP combined ratio 113.3% 108.4% 112.4% 107.3%
Regional Insurance:
Gross premiums written $ 208,830 $ 187,637 $ 411,255 $ 375,203
Net premiums written 181,574 160,170 352,807 326,518
Pre-tax operating income
(loss)(1) (1,033) (2,299) 4,199 (875)
Loss ratio 75.7% 75.5% 73.7% 74.5%
Expense ratio 33.3% 35.3% 33.7% 34.4%
GAAP combined ratio 109.0% 110.8% 107.4% 108.9%
International:
Gross premiums written $ 42,071 $ 33,639 $ 80,697 $ 66,797
Net premiums written 36,917 27,338 70,641 53,759
Pre-tax operating income (1) 4,218 1,094 6,306 2,009
Loss ratio 62.5% 67.7% 62.3% 63.9%
Expense ratio 36.0% 36.2% 38.8% 40.6%
GAAP combined ratio 98.5% 103.9% 101.1% 104.5%
Combined:
Gross premiums written $ 539,163 $ 434,278 $ 1,054,434 $ 896,668
Net premiums written 453,888 350,081 885,799 735,842
Pre-tax operating income (1) 26,768 20,005 53,447 39,751
Loss ratio 71.0% 73.3% 71.3% 73.1%
Expense ratio 35.1% 35.3% 35.2% 35.1%
GAAP combined ratio 106.1% 108.6% 106.5% 108.2%
Statutory combined ratio 104.4% 108.2% 104.5% 107.4%
(1) Pre-tax operating income represents segment earnings before realized investment gains,
restructuring charges and minority interest.
(2) In 2001, the company realigned the operating segments to reflect changes in the
organizational structure of the business. Segment information for the prior period has been
restated to reflect the change.
(3) The decrease in reinsurance operating income for the second quarter reflects unfavorable
prior year loss development. The increase in the expense ratio and decrease in the loss
ratio reflects the effects of a new group-wide reinsurance treaty.
W. R. Berkley Corporation 6
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W. R. BERKLEY CORPORATION
Consolidated Supplemental Information
(Amounts in thousands except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
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2001 2000 2001 2000
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After-tax earnings amounts:
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Operating income (1) $ 7,933 $ 6,425 $ 17,006 $ 11,670
Restructuring charge -- -- -- (1,203)
Realized investment gains 1,665 211 2,858 515
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Net income $ 9,598 $ 6,636 $ 19,864 $ 10,982
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Earnings per diluted share:
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Operating income (1) $ .26 $ .25 $ .58 $ .45
Restructuring charge -- -- -- (.04)
Realized investment gains .06 .01 .10 .02
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Net income $ .32 $ .26 $ .68 $ .43
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Cash flow from operations before
change in trading account $ 36,047 $ (2,965) $ 43,148 $ 14,244
Balance sheet information: June 30, December 31,
-------------------------- 2001 2000
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Total investments (2) $ 3,247,722 $ 3,111,602
Total assets 5,197,215 5,022,070
Reserves for losses and loss expenses 2,544,854 2,533,917
Long-term debt 370,356 370,158
Trust preferred securities 198,189 198,169
Stockholders' equity (3) 827,560 680,896
Common shares outstanding 29,014 25,656
Stockholders' equity per share 28.52 26.54
(1) Catastrophe losses were $31 million pretax, or 68 cents per diluted share after-tax, in the
second quarter of 2001 compared with $16 million pretax, or 40 cents per diluted share
after-tax, in the year-earlier period. Catastrophe losses were $40 million pretax, or 88
cents per diluted share after-tax, in the first six months of 2001 compared with $24
million pretax, or 60 cents per diluted share after-tax, in the year-earlier period.
(2) Investments include trading account receivable from brokers and clearing organizations and
trading securities sold but not yet purchased.
(3) Stockholders' equity includes after-tax unrealized investment gains of $25.9 million and
$19.4 million as of June 30, 2001 and December 31, 2000, respectively.