EXHIBIT 99.1
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W. R. Berkley Corporation
475 Steamboat Road NEWS
Greenwich, Connecticut 06830 RELEASE
(203) 629-3000
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FOR IMMEDIATE RELEASE CONTACT: Eugene G. Ballard
Chief Financial Officer
203-629-3000
W. R. BERKLEY CORPORATION REPORTS RECORD
QUARTERLY EARNINGS FOR FIRST QUARTER 2002
Greenwich, CT, April 29, 2002 -- W. R. Berkley Corporation (NYSE: BER) today
reported first quarter operating earnings, excluding realized investment gains
and results from discontinued businesses, of $31 million, or 90 cents per share,
up from $10 million, or 36 cents per share, a year ago.
The following table summarizes first quarter financial performance (amounts in
thousands, except per share data):
First Quarter
2002 2001
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Operating income (a) $31,205 $10,302
Operating income per share (a) 0.90 0.36
Gross premiums written 757,208 515,271
Net premiums written 625,993 431,911
Net premiums earned 477,466 378,935
Income before income taxes 50,618 12,750
Net income 34,396 10,266
Net income per share 0.99 0.36
Combined ratio 96.1% 106.8%
(a) Excludes realized investment gains and results from discontinued
businesses.
First quarter highlights include:
o Net premiums written for continuing operations grew 61% to $623 million
o Net premiums written for specialty insurance and facultative reinsurance
grew by 70% and 114%, respectively
W. R. Berkley Corporation Page 2
o Combined ratio for continuing operations improved by 11 points to 95.5%
o Cash flow from operations increased to $94 million
Commenting on the Company's results, William R. Berkley, chairman and chief
executive officer, said: "We are seeing the results of the actions taken over
the prior eighteen months to improve our underwriting standards, raise prices
and reduce expenses. We are simultaneously benefiting from the dramatically
improving insurance pricing environment.
"The majority of the increase in first quarter premiums written was the result
of price increases. While policy count for the quarter was virtually flat, we
are now beginning to see growth in the number of policies written. The pricing
environment remains strong and with policy counts beginning to rise, we expect
similar year over year growth in premium volume and increasing underwriting
profits.
"Cash flow remains strong, despite a decline in investment income due to lower
yields available on our merger arbitrage account and new investments. While we
are optimistic overall, the difficult investing environment and international
uncertainties continue to pose challenges.
"Looking ahead, we expect to deliver on our commitment to achieve at least a 15
percent after-tax return. We also remain enthusiastic in seeking new
opportunities such as our Lloyd's quota share and entry into the excess hospital
malpractice business," Mr. Berkley concluded.
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.
W. R. Berkley Corporation Page 3
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, the uncertain nature of damage theories and loss amounts,
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, uncertainty as to our 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 Page 4
Consolidated Financial Summary
For the Three Months
Ended March 31,
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2002 2001
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(Amounts in thousands except per share data)
Revenues:
Net premiums written $ 625,993 $ 431,911
Change in unearned premiums (148,527) (52,976)
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Premiums earned 477,466 378,935
Net investment income 44,152 50,430
Service fees 20,193 17,592
Realized investment gains 4,963 1,836
Other income 112 360
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Total revenues 546,886 449,153
Expenses:
Losses and loss expenses 310,601 271,468
Other operating expenses 174,443 152,623
Interest expense 11,135 11,450
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Total expenses 496,179 435,541
Income before income taxes
and minority interest 50,707 13,612
Income tax expense (16,222) (2,484)
Minority interest (89) (862)
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Net income $ 34,396 $ 10,266
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Earnings per share:
Basic $ 1.03 $ 0.38
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Diluted $ 0.99 $ 0.36
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Average shares outstanding:
Basic 33,276 26,949
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Diluted 34,651 28,255
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W. R. Berkley Corporation Page 5
Supplemental After Tax Earnings
(Amounts in thousands except per share data)
For the Three Months
Ended March 31,
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2002 2001
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After-tax earnings amounts:
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Operating income (1)(2) 31,205 10,302
Discontinued businesses (3) (35) (1,229)
Realized investment gains 3,226 1,193
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Net income $ 34,396 $ 10,266
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Earnings (loss) per diluted share:
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Operating income (1)(2) $ 0.90 $ 0.36
Discontinued businesses (3) -- (0.04)
Realized investment gains 0.09 0.04
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Net income $ 0.99 $ 0.36
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Cash flow from operations before
change in trading account $ 94,150 $ 7,101
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(1) Catastrophe losses for continuing business segments, were $3 million
pre-tax, or 5 cents per share after-tax, in the first quarter of 2002
compared with $2 million pre-tax, or 5 cents per share after-tax, in the
year-earlier period.
(2) Operating income represents net income before discontinued businesses,
realized investment gains and restructuring charges.
(3) Catastrophe losses for the discontinued businesses were $4 million pre-tax,
or 7 cents per share after-tax, in the first quarter of 2002 compared with
$6 million pre-tax, or 14 cents per share after-tax, in the year-earlier
period.
W. R. Berkley Corporation Page 6
Operating Results by Segment
(Amounts in thousands)
For the Three Months
Ended March 31,
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2002 2001
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Specialty Insurance:
Gross premiums written $ 202,333 $ 131,385
Net premiums written 179,727 106,023
Premiums earned 140,644 75,137
Pre-tax operating income 18,380 7,868
Loss ratio 66.3% 68.5%
Expense ratio 28.8% 35.2%
GAAP combined ratio 95.1% 103.7%
Alternative Markets:
Gross premiums written $ 98,173 $ 52,428
Net premiums written 84,580 46,556
Premiums earned 45,337 25,618
Pre-tax operating income 14,232 8,805
Loss ratio 66.8% 77.2%
Expense ratio 28.7% 34.4%
GAAP combined ratio 95.5% 111.6%
Reinsurance (1):
Gross premiums written $ 163,546 $ 73,052
Net premiums written 133,991 60,824
Premiums earned 73,357 64,555
Pre-tax operating income 10,190 4,291
Loss ratio 69.8% 75.2%
Expense ratio 30.3% 35.1%
GAAP combined ratio 100.1% 110.3%
Regional Insurance (1):
Gross premiums written $ 238,319 $ 167,322
Net premiums written 183,703 139,465
Premiums earned 156,581 124,827
Pre-tax operating income 22,435 5,518
Loss ratio 60.5% 70.6%
Expense ratio 31.6% 35.7%
GAAP combined ratio 92.1% 106.3%
International:
Gross premiums written $ 46,218 $ 38,626
Net premiums written 40,550 33,724
Premiums earned 39,184 31,777
Pre-tax operating income 266 2,088
Loss ratio 60.1% 62.1%
Expense ratio 41.8% 41.9%
GAAP combined ratio 101.9% 104.0%
Total Continuing Segments (1):
Gross premiums written $ 748,589 $ 462,813
Net premiums written 622,551 386,592
Premiums earned 455,103 321,914
Pre-tax operating income 65,503 28,570
Loss ratio 64.4% 70.7%
Expense ratio 31.1% 36.0%
GAAP combined ratio 95.5% 106.7%
(1) Segment information for 2001 has been restated to reflect the
discontinuance of the personal lines and alternative markets reinsurance
businesses.
W. R. Berkley Corporation Page 7
Operating Results by Segment (Continued)
(Amounts in thousands)
For the Three Months
Ended March 31,
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2002 2001
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Discontinued businesses:
Gross premiums written $ 8,619 $ 52,458
Net premiums written 3,442 45,319
Premiums earned 22,363 57,021
Pre-tax operating loss (54) (1,891)
Loss ratio 78.7% 76.8%
Expense ratio 29.9% 31.0%
GAAP combined ratio 108.6% 107.8%
Total
Gross premiums written $ 757,208 $ 515,271
Net premiums written 625,993 431,911
Premiums earned 477,466 378,935
Pre-tax operating income 65,449 26,679
Loss ratio 65.1% 71.6%
Expense ratio 31.0% 35.2%
GAAP combined ratio 96.1% 106.8%
Balance Sheet Information
(Amounts in thousands, except per share data)
March 31, December 31,
2002 2001
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Total investments (1) $3,696,987 $3,598,053
Total assets 5,907,531 5,633,509
Reserves for losses and loss expenses 2,874,627 2,817,682
Long-term debt 362,661 370,554
Trust preferred securities 198,221 198,210
Stockholders' equity (2) 947,953 931,595
Shares outstanding 33,373 33,241
Stockholders' equity per share 28.40 28.03
(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 gains from investments
and foreign exchange of $20 million and $37 million as of March 31, 2002
and December 31, 2001, respectively.