EXHIBIT 99.1
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W. R. Berkley Corporation
165 Mason Street, P.O. Box 2518 NEWS
Greenwich, Connecticut 06836-2518 RELEASE
(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 FOURTH QUARTER RESULTS
Greenwich, CT, February 14, 2002 -- W. R. Berkley Corporation (NYSE: BER)
today reported an operating loss for the fourth quarter ended December 31, 2001
of $15 million, or 49 cents per share, compared with operating income of $14
million, or 52 cents per share, for the same period in 2000. As previously
announced, operating results for the fourth quarter of 2001 reflect an after tax
charge of $21 million, or 68 cents per share, for an increase in treaty
reinsurance loss reserves and an after tax charge of $12 million, or 38 cents
per share, for potential losses from the Enron bankruptcy. Operating income or
loss excludes net income or loss from discontinued businesses, realized gains or
losses on investment sales and restructuring charges.
For full year 2001, the company reported breakeven operating results
compared with operating income of $38 million, or $1.48 per share, for 2000. In
addition to the fourth quarter charges referred to above, operating results for
2001 reflect an after tax charge in the third quarter of $23 million, or 78
cents per share, for potential losses related to the World Trade Center attack.
Net premiums written for continuing business segments increased 46 percent
to $477 million for the fourth quarter of 2001 from $327 million for the fourth
quarter of 2000. During this period the increased volume was due entirely to
price increases. The premium
growth was led by the company's specialty and alternative markets segments,
which reported increases in net premiums written of 107 percent and 93 percent,
respectively, over the fourth quarter of 2000. For full year 2001, net premiums
written for continuing business segments increased 30 percent to $1,664 million.
Net investment income decreased by $10 million to $47 million for the
fourth quarter of 2001 due to lower returns from merger arbitrage investments.
For full year 2001, net investment income was $195 million compared with $210
million for the year-earlier period.
The company reported a net loss of $64 million, or $2.04 per share, for the
fourth quarter of 2001 compared with net income of $18 million, or 68 cents per
share, for the year-earlier period. For full year 2001, the net loss was $92
million, or $3.14 per share, compared with net income of $36 million, or $1.39
per share, for 2000. The net loss for 2001 reflects a net loss from discontinued
businesses of $36 million for the fourth quarter of 2001 and $87 million for the
full year 2001. The net loss from discontinued operations includes increases in
loss reserves for the alternative markets reinsurance business of $34 million,
after tax, in the fourth quarter and $67 million, after tax, for the full year
2001.
Commenting on the company's results, William R. Berkley, chairman and chief
executive officer, said: "The results for the fourth quarter and full year of
2001 were both disappointing and exciting. Disappointing because the results of
prior years, primarily of the reinsurance business, required substantial
additional reserves in order to maintain the integrity of our balance sheet.
Exciting because pricing levels for new and renewal business have continued to
show substantial increases. We continue to believe that 2002 will prove to be an
outstanding year."
Founded in 1967, W.R. Berkley Corporation is an insurance holding company
that operates in five segments of 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
statements related to our outlook for the industry and for our performance for
the year 2002 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 long-tail and potentially volatile nature of the reinsurance
business, product demand and pricing, claims development and the process of
estimating reserves, timing and development of losses related to the Enron
bankruptcy, the uncertain nature of damage theories and loss amounts and the
development of additional facts related to the attacks of September 11, 2001,
the increased level of our retention, natural and man-made catastrophic losses,
including as a result of terrorist activities, the impact of competition, the
availability of reinsurance, the ability of our reinsurers to pay reinsurance
recoverables owed to us, investment results, exchange rate and political risks,
legislative and regulatory developments, changes in the ratings assigned to us
by ratings agencies, the effects of the refocusing of our business, including
our withdrawal from the personal lines business, uncertainty as to reinsurance
coverage for terrorist acts, the availability of dividends from our insurance
company subsidiaries, our successful integration of acquired companies or
investment in new insurance ventures, our ability to attract and retain
qualified employees, and other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission. These risks could cause
actual results of the industry or our actual results for the year 2002 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
Consolidated Financial Summary
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
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2001 2000 2001 2000
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(Amounts in thousands except per share data)
Revenues:
Net premiums written $ 503,070 $ 394,318 $ 1,858,096 $ 1,506,244
Change in unearned premiums (44,991) 5,013 (177,627) (15,230)
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Premiums earned 458,079 399,331 1,680,469 1,491,014
Net investment income 47,421 57,423 195,021 210,448
Service fees 19,219 16,514 75,771 68,049
Realized investment gains (losses) (23,276) 6,479 (11,494) 8,364
Other income 132 326 2,030 3,412
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Total revenues 501,575 480,073 1,941,797 1,781,287
Expenses:
Losses and loss expenses 420,902 290,815 1,380,500 1,094,411
Other operating expenses 170,970 152,173 663,776 596,579
Interest expense 11,287 11,642 45,719 47,596
Restructuring charge 3,196 -- 3,196 1,850
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Total expenses 606,355 454,630 2,093,191 1,740,436
Income (loss) before income taxes
and minority interest (104,780) 25,443 (151,394) 40,851
Income tax benefit (expense) 35,102 (6,536) 56,661 (2,451)
Minority interest 5,514 (743) 3,187 (2,162)
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Net income (loss) $ (64,164) $ 18,164 $ (91,546) $ 36,238
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Earnings (loss) per share:
Basic $ (2.04) $ 0.71 $ (3.14) $ 1.41
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Diluted $ (2.04) $ 0.68 $ (3.14) $ 1.39
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Average shares outstanding:
Basic 31,517 25,536 29,139 25,632
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Diluted 33,110 26,539 30,555 25,991
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W. R. BERKLEY CORPORATION
After Tax Earnings
(Amounts in thousands except per share data)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
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2001 2000 2001 2000
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After tax earnings:
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Operating income before special charges $ 17,946 $ 13,610 $ 56,218 $ 38,463
World Trade Center charge -- -- (22,750) --
Enron charge (12,000) -- (12,000) --
Reserve strengthening (21,288) -- (21,288) --
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Operating income (loss) (15,342) 13,610 180 38,463
Discontinued businesses (36,200) 343 (86,762) (6,458)
Restructuring charge (2,077) -- (2,077) (1,203)
Realized gains (losses), net of minority interest(4) (10,545) 4,211 (2,887) 5,436
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Net income (loss) $(64,164) $ 18,164 $(91,546) $ 36,238
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Earnings (loss) per share:
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Operating income before special charges $ 0.57 $ 0.52 $ 1.93 $ 1.48
World Trade Center charge -- -- (0.78) --
Enron charge (0.38) -- (0.41) --
Reserve strengthening (0.68) -- (0.73) --
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Operating income (loss) (0.49) 0.52 0.01 1.48
Discontinued businesses (1.15) 0.01 (2.98) (0.25)
Restructuring charge (0.07) -- (0.07) (0.05)
Realized gains (losses), net of minority interest(4) (0.33) 0.15 (0.10) 0.21
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Net income (loss) $ (2.04) $ 0.68 $ (3.14) $ 1.39
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Cash flow from operations before
change in trading account $ 81,013 $ (3,095) $209,917 $ 76,334
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(1) Catastrophe losses for continuing business segments were $5.2 million pretax, or 11 cents per
share after tax, in the fourth quarter of 2001 compared with $4.5 million pretax, or 11 cents per
share after tax, in the year-earlier period. Catastrophe losses for continuing business segments,
excluding losses related to the World Trade Center attack, were $37.1 million pretax, or 83 cents
per share after tax, for the full year 2001 compared with $30.8 million pretax, or 77 cents per
share after tax, in 2000.
(2) Operating income or loss excludes net income or loss from discontinued businesses, realized gains
or losses on investment sales and restructuring charges.
(3) Catastrophe losses for the discontinued businesses were $24.1 million pretax, or 54 cents per
share after tax, for the full year 2001 compared with $18.3 million pretax, or 46 cents per share
after tax, in 2000.
(4) Realized gains (losses) for 2001 include a fourth quarter charge of approximately $7 million,
after tax and minority interest, for a reduction in the value of certain investments held by a
subsidiary in Argentina.
W. R. BERKLEY CORPORATION
Operating Results By Segment
(Amounts in thousands)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
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2001 2000 2001 2000
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Specialty Insurance:
Gross premiums written $ 184,007 $104,555 $ 611,364 $ 407,545
Net premiums written 160,870 77,595 527,502 285,525
Premiums earned 125,716 72,009 401,611 270,896
Pretax operating income 11,170 13,302 30,185 30,993
Loss ratio 70.1% 69.2% 71.4% 73.2%
Expense ratio 28.8% 30.4% 31.1% 33.6%
GAAP combined ratio 98.9% 99.6% 102.5% 106.8%
Alternative Markets:
Gross premiums written $ 42,074 $ 22,201 $ 169,439 $ 108,802
Net premiums written 38,667 20,014 151,942 98,001
Premiums earned 38,322 26,216 123,173 88,872
Pretax operating income 6,246 10,552 34,255 34,944
Loss ratio 80.0% 72.4% 76.5% 70.2%
Expense ratio 31.3% 34.0% 32.9% 38.7%
GAAP combined ratio 111.3% 106.4% 109.4% 108.9%
Reinsurance (1):
Gross premiums written $ 98,087 $ 87,233 $ 332,382 $ 323,846
Net premiums written 69,610 76,034 236,784 276,640
Premiums earned 69,142 81,912 236,385 298,102
Pretax operating income (44,334) 9,489 (57,034) 28,987
Loss ratio 146.3% 74.1% 104.4% 73.2%
Expense ratio 31.0% 30.5% 36.8% 33.2%
GAAP combined ratio 177.3% 104.6% 141.2% 106.4%
Regional Insurance (1):
Gross premiums written $ 193,833 $ 132,857 $ 705,001 $ 579,890
Net premiums written 165,271 117,295 598,149 499,526
Premiums earned 154,573 120,363 555,750 503,029
Pretax operating income (loss) 18,636 (1,145) 40,399 4,182
Loss ratio 61.6% 74.4% 67.2% 75.5%
Expense ratio 34.8% 39.2% 35.0% 35.1%
GAAP combined ratio 96.4% 113.6% 102.2% 110.6%
International:
Gross premiums written $ 47,419 $ 41,485 $ 170,600 $ 143,523
Net premiums written 42,554 36,424 150,090 118,981
Premiums earned 38,874 30,930 140,909 107,285
Pretax operating income 3,020 3,083 12,149 6,591
Loss ratio 62.1% 62.1% 61.4% 62.1%
Expense ratio 43.2% 37.3% 40.6% 41.7%
GAAP combined ratio 105.3% 99.4% 02.0% 103.8%
Total continuing segments:
Gross premiums written $ 565,420 $ 388,331 $1,988,786 $1,563,606
Net premiums written 476,972 327,362 1,664,467 1,278,673
Premiums earned 426,627 331,430 1,457,828 1,268,184
Pretax operating income (5,262) 35,281 59,954 105,697
Loss ratio 79.5% 71.9% 74.6% 73.0%
Expense ratio 32.9% 34.6% 34.6% 35.2%
GAAP combined ratio 112.4% 106.5% 109.2% 108.2%
(1) In the third quarter of 2001, the Company re-aligned the operating segments to reflect
the discontinuance of the personal lines and alternative markets reinsurance
businesses.
W. R. BERKLEY CORPORATION
Operating Results By Segment (continued)
(Amounts in thousands)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
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2001 2000 2001 2000
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Discontinued:
Gross premiums written $ 28,508 $ 78,066 $ 219,680 $ 253,149
Net premiums written 26,098 66,956 193,629 227,571
Premiums earned 31,452 67,901 222,641 222,830
Pretax operating income (loss) (55,692) 528 (133,480) (9,936)
Loss ratio 259.8% 77.3% 131.4% 75.9%
Expense ratio 24.4% 25.7% 33.0% 32.8%
GAAP combined ratio 284.2% 103.0% 164.4% 108.7%
Total:
Gross premiums written $ 593,928 $ 466,397 $ 2,208,466 $ 1,816,755
Net premiums written 503,070 394,318 1,858,096 1,506,244
Premiums earned 458,079 399,331 1,680,469 1,491,014
Pretax operating income (loss) (60,954) 35,809 (73,526) 95,761
Loss ratio 91.9% 72.8% 82.1% 73.4%
Expense ratio 32.3% 33.1% 34.4% 34.8%
GAAP combined ratio 124.2% 105.9% 116.5% 108.2%
Balance Sheet Information
(Amounts in thousands except per share data)
December 31, December 31,
2001 2000
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Total investments (1) $3,598,053 $3,111,602
Total assets 5,633,509 5,022,070
Reserves for losses 2,817,682 2,533,917
Long-term debt 370,554 370,158
Trust preferred securities 198,210 198,169
Stockholders' equity (2) 931,595 680,896
Shares outstanding 33,241 25,656
Stockholders' equity per share 28.03 26.54
(1) Investments include trading account receivable from brokers and clearing
organizations and trading securities sold but not yet purchased.
(2) Stockholders' equity includes after tax unrealized investment gains of
$37.3 million and $19.4 million as of December 31, 2001 and December 31,
2000, respectively.