WRB WR Berkley Corp

Return on Equity of 19.6% and Operating Return on Equity of 20.0%; Record Third Quarter Net Income Increased to $366 Million

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

Summary Financial Data

(Amounts in thousands, except per share data)

 

 

Third Quarter

 

Nine Months

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Gross premiums written

$

3,633,278

 

 

$

3,353,205

 

 

$

10,713,806

 

 

$

9,739,296

 

Net premiums written

 

3,057,276

 

 

 

2,848,459

 

 

 

9,035,346

 

 

 

8,234,799

 

 

 

 

 

 

 

 

 

Net income to common stockholders

 

365,634

 

 

 

333,586

 

 

 

1,180,014

 

 

 

984,020

 

Net income per diluted share (1)

 

0.91

 

 

 

0.82

 

 

 

2.92

 

 

 

2.39

 

 

 

 

 

 

 

 

 

Operating income (2)

 

373,677

 

 

 

366,608

 

 

 

1,215,022

 

 

 

952,868

 

Operating income per diluted share (1)

 

0.93

 

 

 

0.90

 

 

 

3.01

 

 

 

2.32

 

 

 

 

 

 

 

 

 

Return on equity (3)

 

19.6

%

 

 

19.8

%

 

 

21.1

%

 

 

19.4

%

Operating return on equity (2) (3)

 

20.0

%

 

 

21.7

%

 

 

21.7

%

 

 

18.8

%

(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.

Third quarter highlights included:

• Return on equity and operating return on equity of 19.6% and 20.0%, respectively.
• Net investment income grew 19.5% to $323.8 million compared to the prior year.
• The current accident year combined ratio before catastrophe losses of 3.3 loss ratio points was 87.6%, and the reported combined ratio was 90.9%.
• Average rate increases excluding workers' compensation were approximately 8.4%.
• Book value per share grew 10.0%, before dividends and share repurchases.
• Total capital returned to shareholders was $138.3 million, consisting of $95.3 million of special dividends, $30.5 million of regular dividends and $12.5 million of share repurchases.
• Record operating cash flow increased 15.2% to $1.2 billion.

The Company commented:

The Company reported record third quarter net income in 2024. Continued strong underwriting margins and increasing investment income drove our 19.6% annualized return on beginning of year common stockholders’ equity.

We continue to grow thoughtfully by focusing on business we expect to achieve or exceed our targeted risk-adjusted return, being ever mindful of rate adequacy, loss trend, and exposure management. Our 90.9% calendar year combined ratio again demonstrated below average volatility, with a modest 3.3 loss ratio points of catastrophe losses, despite the frequency of severe market-wide events.

Net investment income increased 19.5% over the prior year third quarter, driven by an increase in fixed-maturity income. We anticipate that the Company’s new money rate will remain above the current yield of our U.S. fixed-maturity securities, notwithstanding the recent and expected decreases in short-term rates. Coupled with increases in invested assets from continuing record cash flow, we remain well-positioned for further investment income growth.

Our success in navigating a wide variety of underwriting and investment environments has resulted in best-in-class returns on equity and below-average volatility that has generated significant shareholder value over many years. Fueled by knowledge and expertise, our decentralized structure allows us to take a flexible, proactive, and innovative approach to whatever risks and opportunities the market may present. We expect to continue to deliver outstanding risk-adjusted 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 October 21, 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)

 

 

Third Quarter

 

Nine Months

 

2024

 

2023

 

2024

 

2023

Revenues:

 

 

 

 

 

 

 

Net premiums written

$

3,057,276

 

 

$

2,848,459

 

 

$

9,035,346

 

 

$

8,234,799

 

Change in unearned premiums

 

(130,453

)

 

 

(206,545

)

 

 

(497,761

)

 

 

(548,726

)

Net premiums earned

 

2,926,823

 

 

 

2,641,914

 

 

 

8,537,585

 

 

 

7,686,073

 

Net investment income

 

323,756

 

 

 

270,944

 

 

 

1,015,723

 

 

 

739,494

 

Net investment (losses) gains:

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments

 

(23,362

)

 

 

(40,855

)

 

 

(72,165

)

 

 

50,403

 

Change in allowance for credit losses on investments

 

15,276

 

 

 

(1,571

)

 

 

31,347

 

 

 

(11,164

)

Net investment (losses) gains

 

(8,086

)

 

 

(42,426

)

 

 

(40,818

)

 

 

39,239

 

Revenues from non-insurance businesses

 

128,610

 

 

 

137,116

 

 

 

375,307

 

 

 

375,225

 

Insurance service fees

 

28,666

 

 

 

22,962

 

 

 

81,583

 

 

 

81,290

 

Other income

 

610

 

 

 

128

 

 

 

1,804

 

 

 

235

 

Total Revenues

 

3,400,379

 

 

 

3,030,638

 

 

 

9,971,184

 

 

 

8,921,556

 

Expenses:

 

 

 

 

 

 

 

Loss and loss expenses

 

1,825,960

 

 

 

1,636,193

 

 

 

5,270,334

 

 

 

4,744,602

 

Other operating costs and expenses

 

943,365

 

 

 

808,669

 

 

 

2,704,890

 

 

 

2,457,925

 

Expenses from non-insurance businesses

 

124,885

 

 

 

133,939

 

 

 

364,612

 

 

 

370,244

 

Interest expense

 

31,720

 

 

 

31,888

 

 

 

95,156

 

 

 

95,580

 

Total expenses

 

2,925,930

 

 

 

2,610,689

 

 

 

8,434,992

 

 

 

7,668,351

 

Income before income tax

 

474,449

 

 

 

419,949

 

 

 

1,536,192

 

 

 

1,253,205

 

Income tax expense

 

(109,135

)

 

 

(86,519

)

 

 

(356,958

)

 

 

(268,322

)

Net Income before noncontrolling interests

 

365,314

 

 

 

333,430

 

 

 

1,179,234

 

 

 

984,883

 

Noncontrolling interest

 

320

 

 

 

156

 

 

 

780

 

 

 

(863

)

Net income to common stockholders

$

365,634

 

 

$

333,586

 

 

$

1,180,014

 

 

$

984,020

 

 

 

 

 

 

 

 

 

Net income per share (1):

 

 

 

 

 

 

 

Basic

$

0.92

 

 

$

0.83

 

 

$

2.95

 

 

$

2.41

 

Diluted

$

0.91

 

 

$

0.82

 

 

$

2.92

 

 

$

2.39

 

 

 

 

 

 

 

 

 

Average shares outstanding (1) (2):

 

 

 

 

 

 

 

Basic

 

398,338

 

 

 

403,787

 

 

 

400,302

 

 

 

407,484

 

Diluted

 

401,817

 

 

 

407,158

 

 

 

404,053

 

 

 

411,219

 

(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)

 

 

Third Quarter

 

Nine Months

 

2024

 

2023

 

2024

 

2023

Insurance:

 

 

 

 

 

 

Gross premiums written

$

3,219,128

 

 

$

2,965,787

 

 

$

9,501,027

 

$

8,586,193

 

Net premiums written

 

2,673,275

 

 

 

2,484,626

 

 

 

7,929,439

 

 

7,175,904

 

Net premiums earned

 

2,564,490

 

 

 

2,291,917

 

 

 

7,447,828

 

 

6,650,027

 

Pre-tax income

 

469,421

 

 

 

410,909

 

 

 

1,437,623

 

 

1,149,886

 

Loss ratio

 

63.1

%

 

 

62.8

%

 

 

63.0

%

 

62.8

%

Expense ratio

 

28.4

%

 

 

28.2

%

 

 

28.4

%

 

28.2

%

GAAP Combined ratio

 

91.5

%

 

 

91.0

%

 

 

91.4

%

 

91.0

%

 

 

 

 

 

 

 

Reinsurance & Monoline Excess:

 

 

 

 

 

 

Gross premiums written

$

414,150

 

 

$

387,418

 

 

$

1,212,779

 

$

1,153,103

 

Net premiums written

 

384,001

 

 

 

363,833

 

 

 

1,105,907

 

 

1,058,895

 

Net premiums earned

 

362,333

 

 

 

349,997

 

 

 

1,089,757

 

 

1,036,046

 

Pre-tax income

 

105,225

 

 

 

110,442

 

 

 

357,299

 

 

317,146

 

Loss ratio

 

57.0

%

 

 

56.5

%

 

 

53.2

%

 

54.8

%

Expense ratio

 

29.7

%

 

 

28.8

%

 

 

29.5

%

 

29.6

%

GAAP Combined ratio

 

86.7

%

 

 

85.3

%

 

 

82.7

%

 

84.4

%

 

 

 

 

 

 

 

Corporate and Eliminations:

 

 

 

 

 

 

Net investment (losses) gains

$

(8,086

)

 

$

(42,426

)

 

$

(40,818

)

$

39,239

 

Interest expense

 

(31,720

)

 

 

(31,888

)

 

 

(95,156

)

 

(95,580

)

Other expenses

 

(60,391

)

 

 

(27,088

)

 

 

(122,756

)

 

(157,486

)

Pre-tax loss

 

(100,197

)

 

 

(101,402

)

 

 

(258,730

)

 

(213,827

)

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

Gross premiums written

$

3,633,278

 

 

$

3,353,205

 

 

$

10,713,806

 

$

9,739,296

 

Net premiums written

 

3,057,276

 

 

 

2,848,459

 

 

 

9,035,346

 

 

8,234,799

 

Net premiums earned

 

2,926,823

 

 

 

2,641,914

 

 

 

8,537,585

 

 

7,686,073

 

Pre-tax income

 

474,449

 

 

 

419,949

 

 

 

1,536,192

 

 

1,253,205

 

Loss ratio

 

62.4

%

 

 

61.9

%

 

 

61.7

%

 

61.7

%

Expense ratio

 

28.5

%

 

 

28.3

%

 

 

28.6

%

 

28.4

%

GAAP Combined ratio

 

90.9

%

 

 

90.2

%

 

 

90.3

%

 

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)

 

 

Third Quarter

 

Nine Months

 

2024

 

2023

 

2024

 

2023

Net premiums written:

 

 

 

 

 

 

 

Other liability

$

1,066,005

 

 

$

978,193

 

 

$

3,213,296

 

 

$

2,867,172

 

Short-tail lines (1)

 

592,913

 

 

 

534,567

 

 

 

1,768,355

 

 

 

1,519,345

 

Auto

 

413,260

 

 

 

383,730

 

 

 

1,170,020

 

 

 

1,030,172

 

Workers' compensation

 

302,179

 

 

 

302,701

 

 

 

939,243

 

 

 

937,854

 

Professional liability

 

298,918

 

 

 

285,435

 

 

 

838,525

 

 

 

821,361

 

Total Insurance

 

2,673,275

 

 

 

2,484,626

 

 

 

7,929,439

 

 

 

7,175,904

 

Casualty (2)

 

189,386

 

 

 

188,445

 

 

 

567,522

 

 

 

589,706

 

Property (2)

 

106,106

 

 

 

92,171

 

 

 

306,925

 

 

 

256,350

 

Monoline excess

 

88,509

 

 

 

83,217

 

 

 

231,460

 

 

 

212,839

 

Total Reinsurance & Monoline Excess

 

384,001

 

 

 

363,833

 

 

 

1,105,907

 

 

 

1,058,895

 

Total

$

3,057,276

 

 

$

2,848,459

 

 

$

9,035,346

 

 

$

8,234,799

 

 

 

 

 

 

 

 

 

Current accident year losses from catastrophes:

 

 

 

 

Insurance

$

76,848

 

 

$

46,160

 

 

$

190,931

 

 

$

139,409

 

Reinsurance & Monoline Excess

 

20,970

 

 

 

15,369

 

 

 

27,073

 

 

 

23,536

 

Total

$

97,818

 

 

$

61,529

 

 

$

218,004

 

 

$

162,945

 

 

 

 

 

 

 

 

 

Net Investment income:

 

 

 

 

 

 

 

Core portfolio (3)

$

301,146

 

 

$

248,618

 

 

$

962,293

 

 

$

680,883

 

Investment funds

 

4,741

 

 

 

4,450

 

 

 

868

 

 

 

5,443

 

Arbitrage trading account

 

17,869

 

 

 

17,876

 

 

 

52,562

 

 

 

53,168

 

Total

$

323,756

 

 

$

270,944

 

 

$

1,015,723

 

 

$

739,494

 

 

 

 

 

 

 

 

 

Net realized and unrealized (losses) gains on investments:

 

 

 

 

 

 

 

Net realized (losses) gains on investments

$

(21,825

)

 

$

(21,796

)

 

$

(29,723

)

 

$

4,798

 

Change in unrealized (losses) gains on equity securities

 

(1,537

)

 

 

(19,059

)

 

 

(42,442

)

 

 

45,605

 

Total

$

(23,362

)

 

$

(40,855

)

 

$

(72,165

)

 

$

50,403

 

 

 

 

 

 

 

 

 

Other operating costs and expenses:

 

 

 

 

 

 

 

Policy acquisition and insurance operating expenses

$

835,376

 

 

$

747,007

 

 

$

2,438,905

 

 

$

2,183,517

 

Insurance service expenses

 

21,786

 

 

 

21,225

 

 

 

66,309

 

 

 

70,336

 

Net foreign currency losses (gains)

 

24,619

 

 

 

(22,498

)

 

 

1,324

 

 

 

(1,777

)

Other costs and expenses

 

61,584

 

 

 

62,935

 

 

 

198,352

 

 

 

205,849

 

Total

$

943,365

 

 

$

808,669

 

 

$

2,704,890

 

 

$

2,457,925

 

 

 

 

 

 

 

 

 

Cash flow from operations

$

1,240,770

 

 

$

1,077,093

 

 

$

2,868,335

 

 

$

2,231,162

 

 

 

 

 

 

 

 

 

Reconciliation of net income to operating income:

 

 

 

 

 

 

 

Net income

$

365,634

 

 

$

333,586

 

 

$

1,180,014

 

 

$

984,020

 

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

 

8,086

 

 

 

42,426

 

 

 

40,818

 

 

 

(39,170

)

Income tax (benefit) expense

 

(43

)

 

 

(9,404

)

 

 

(5,810

)

 

 

8,018

 

Operating income after-tax (4)

$

373,677

 

 

$

366,608

 

 

$

1,215,022

 

 

$

952,868

 

(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)

 

 

September 30, 2024

 

December 31,

2023

 

 

 

 

Net invested assets (1)

$

29,689,477

 

$

26,973,703

Total assets

 

40,359,298

 

 

37,111,830

Reserves for losses and loss expenses

 

20,155,310

 

 

18,739,652

Senior notes and other debt

 

1,827,788

 

 

1,827,951

Subordinated debentures

 

1,009,629

 

 

1,009,090

Common stockholders' equity (2)

 

8,426,264

 

 

7,455,431

Common stock outstanding (3) (4)

 

381,190

 

 

384,817

Book value per share (4) (5)

 

22.11

 

 

19.37

Tangible book value per share (4) (5)

 

21.47

 

 

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 September 30, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $289 million and unrealized currency translation losses of $314 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 nine months ended September 30, 2024, the Company repurchased 4,537,130 shares of its common stock for $236.2 million. During the three months ended September 30, 2024, the Company repurchased 238,620 shares of its common stock for $12.5 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

September 30, 2024

(Amounts in thousands, except percentages)

 

 

Carrying Value

 

Percent of Total

Fixed maturity securities:

 

 

 

United States government and government agencies

$

2,070,985

 

7.0

%

State and municipal:

 

 

 

Special revenue

 

1,689,758

 

5.7

%

State general obligation

 

311,953

 

1.0

%

Local general obligation

 

304,114

 

1.0

%

Corporate backed

 

165,155

 

0.6

%

Pre-refunded

 

86,853

 

0.3

%

Total state and municipal

 

2,557,833

 

8.6

%

Mortgage-backed securities:

 

 

 

Agency

 

2,424,228

 

8.2

%

Commercial

 

600,881

 

2.0

%

Residential - Prime

 

212,909

 

0.7

%

Residential - Alt A

 

2,352

 

0.0

%

Total mortgage-backed securities

 

3,240,370

 

10.9

%

Asset-backed securities

 

4,107,321

 

13.8

%

Corporate:

 

 

 

Industrial

 

3,954,408

 

13.3

%

Financial

 

3,348,562

 

11.3

%

Utilities

 

774,398

 

2.6

%

Other

 

775,396

 

2.6

%

Total corporate

 

8,852,764

 

29.8

%

Foreign government

 

1,834,605

 

6.2

%

Total fixed maturity securities (1)

 

22,663,878

 

76.3

%

Equity securities available for sale:

 

 

 

Common stocks

 

701,667

 

2.3

%

Preferred stocks

 

346,459

 

1.2

%

Total equity securities available for sale

 

1,048,126

 

3.5

%

Cash and cash equivalents (2)

 

1,861,981

 

6.3

%

Investment funds

 

1,607,381

 

5.4

%

Real estate

 

1,297,314

 

4.4

%

Arbitrage trading account

 

820,928

 

2.8

%

Loans receivable

 

389,869

 

1.3

%

Net invested assets

$

29,689,477

 

100.0

%

(1)

Total fixed maturity securities had an average rating of AA- and an average duration of 2.4 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/20241021586786/en/

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