Equibles

8-K

BERKLEY W R CORP (WRB)

8-K 2023-01-26 For: 2023-01-26
View Original
Added on April 08, 2026

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 26, 2023

Commission File Number 1-15202

W. R. BERKLEY CORPORATION      (Exact name of registrant as specified in its charter)

Delaware 22-1867895
(State or other jurisdiction of<br>incorporation or organization) (I.R.S. Employer Identification No.)
475 Steamboat Road Greenwich Connecticut 06830
(Address of principal executive offices) (Zip Code) (203) 629-3000
--- ---

(Registrant’s telephone number, including area code)

None
Former name, former address and former fiscal year, if changed since last report.

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of Each Class Trading Symbol Name of Each Exchange<br>on Which Registered
Common Stock, par value $.20 per share WRB New York Stock Exchange
5.700% Subordinated Debentures due 2058 WRB-PE New York Stock Exchange
5.100% Subordinated Debentures due 2059 WRB-PF New York Stock Exchange
4.250% Subordinated Debentures due 2060 WRB-PG New York Stock Exchange
4.125% Subordinated Debentures due 2061 WRB-PH New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).    Emerging growth company     ☐

W. R. Berkley Corporation         2

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

W. R. Berkley Corporation         3

Item 2.02 Results of Operations and Financial Condition.

Reference is made to the press release of W. R. Berkley Corporation (the “Company”) relating to the announcement of the Company’s results of operations for the fourth quarter of 2022. The press release was issued on January 26, 2023. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information contained herein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

W. R. Berkley Corporation         4

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1 Press Release dated January 26, 2023

W. R. Berkley Corporation         5

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

W. R. BERKLEY CORPORATION

By: /s/ Richard M. Baio
Name: Richard M. Baio
Title: Executive Vice President and
Chief Financial Officer

Date: January 26, 2023

W. R. Berkley Corporation         6

EXHIBIT INDEX

Exhibit:

99.1         Press Release dated January 26, 2023

Document

NEWS<br>RELEASE
W. R. Berkley Corporation<br><br>475 Steamboat Road<br><br>Greenwich, Connecticut 06830<br><br>(203) 629-3000

FOR IMMEDIATE RELEASE     CONTACT:    Karen A. Horvath

Vice President - External

Financial Communications

(203) 629-3000

W. R. Berkley Corporation Reports Fourth Quarter and Full Year Results Fourth Quarter Net Income Grew 29.8% and Return on Equity of 23.0% Record Annual Pre-Tax Underwriting Income of $1.0 Billion and Record Net Income of $1.4 Billion

Greenwich, CT, January 26, 2023 - W. R. Berkley Corporation (NYSE: WRB) today reported its fourth quarter and full year 2022 results.

Summary Financial Data

(Amounts in thousands, except per share data)

Fourth Quarter Twelve Months
2022 2021 2022 2021
Gross premiums written $ 2,914,877 $ 2,766,688 $ 11,909,052 $ 10,700,134
Net premiums written 2,427,907 2,275,509 10,004,070 8,862,867
Net income to common stockholders 382,223 294,430 1,381,062 1,022,490
Net income per diluted share (1) 1.37 1.06 4.94 3.66
Operating income (2) 323,329 284,323 1,223,934 951,861
Operating income per diluted share (1) 1.16 1.02 4.38 3.40
Return on equity (3) 23.0 % 18.7 % 20.8 % 16.2 %
Operating return on equity (2) (3) 19.4 % 18.0 % 18.4 % 15.1 %

(1)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.

(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.

W. R. Berkley Corporation        2

Fourth quarter highlights included:

•Return on equity of 23.0%.

•Book value per share grew 8.1%, before dividends and share repurchases.

•Net investment income grew 40.2% to a record $231.3 million.

•Record quarterly pre-tax underwriting income of $291.9 million.

•The current accident year combined ratio before catastrophe losses of 1.2 loss ratio points was 87.2%.

•The reported combined ratio was 88.4%, including catastrophe losses of $30.8 million.

•Average rate increases excluding workers' compensation were approximately 6.9%.

Full year highlights included:

•Return on equity of 20.8%.

•Book value per share grew 6.1%, before dividends and share repurchases.

•Record annual pre-tax underwriting income and net income of $1.0 billion and $1.4 billion, respectively.

•Gross and net premiums written grew 11.3% and 12.9% to records $11.9 billion and $10.0 billion, respectively.

•Average rate increases excluding workers' compensation were approximately 7.5%.

•Net investment income grew 16.0% to a record $779.2 million.

•Operating cash flow increased 17.6% to a record of approximately $2.6 billion.

•Total capital returned to shareholders was $329.3 million, consisting of $132.6 million of special dividends, $102.6 million of regular dividends and $94.1 million of share repurchases.

The Company commented:

Our exceptional 23.0% annualized return on beginning equity in the fourth quarter of 2022 capped a record-setting year, characterized by continued growth, strong underwriting performance and increasing net investment income.

Net premiums written advanced nearly 7% in the fourth quarter, with further growth in areas of business that are achieving or exceeding our targeted risk-adjusted return on equity. We continue to thoughtfully position our book of business to navigate the uncertainties of the current inflationary environment and carefully evaluate the opportunities available to profitably deploy capital as we continue to expand our business.

Net investment income grew by 40% during the quarter and core net investment income grew by 75%. The short duration and high quality of our fixed-maturity portfolio, combined with record annual cash flow, allowed us to invest more funds at higher interest rates and increase book value per share for the full year by 6.1%, before dividends and share repurchases.

During 2022, our Company performed exceptionally well. Our results demonstrated how our core knowledge in underwriting and investing, combined with our focus on risk-adjusted return, allowed us to better navigate risks and embrace opportunities to deliver superior results for our shareholders. We remain encouraged about the opportunities that we see in 2023 and beyond.

W. R. Berkley Corporation        3

Webcast Conference Call

The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on January 26, 2023, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/news-and-events/events-and-presentations/default.aspx. Please log on at least ten minutes early to register and download and install any necessary software. 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.

W. R. Berkley Corporation        4

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 2023 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 cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing COVID-19 pandemic; 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, on our results and financial condition; foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the European Union, or "Brexit") 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; potential difficulties with technology and/or cyber security issues; 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 2023 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.

#

W. R. Berkley Corporation        5

Consolidated Financial Summary

(Amounts in thousands, except per share data)

Fourth Quarter Twelve Months
2022 2021 2022 2021
Revenues:
Net premiums written $ 2,427,907 $ 2,275,509 $ 10,004,070 $ 8,862,867
Change in unearned premiums 85,317 (72,076) (442,641) (756,836)
Net premium earned 2,513,224 2,203,433 9,561,429 8,106,031
Net investment income 231,283 165,003 779,185 671,618
Net investment gains:
Net realized and unrealized gains on investments 77,647 17,551 217,311 106,958
Change in allowance for credit losses on investments (2,549) (5,322) (14,914) (16,326)
Net investment gains 75,098 12,229 202,397 90,632
Revenues from non-insurance businesses 164,338 172,225 509,548 489,151
Insurance service fees 28,260 24,326 110,544 93,857
Other Income 1,599 1,014 3,396 4,177
Total Revenues 3,013,802 2,578,230 11,166,499 9,455,466
Expenses:
Loss and loss expenses 1,522,104 1,330,330 5,861,750 4,953,960
Other operating costs and expenses 822,248 692,252 2,961,505 2,599,270
Expenses from non-insurance businesses 159,127 163,698 493,189 472,151
Interest expense 31,902 37,333 130,374 147,180
Total expenses 2,535,381 2,223,613 9,446,818 8,172,561
Income before income tax 478,421 354,617 1,719,681 1,282,905
Income tax expense (96,437) (60,313) (334,727) (251,890)
Net Income before noncontrolling interests 381,984 294,304 1,384,954 1,031,015
Noncontrolling interest 239 126 (3,892) (8,525)
Net income to common stockholders $ 382,223 $ 294,430 $ 1,381,062 $ 1,022,490
Net income per share (1):
Basic $ 1.38 $ 1.06 $ 4.99 $ 3.69
Diluted $ 1.37 $ 1.06 $ 4.94 $ 3.66
Average shares outstanding (1) (2):
Basic 276,625 276,654 276,852 277,430
Diluted 278,888 278,535 279,461 279,749

(1)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.

(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.

W. R. Berkley Corporation        6

Business Segment Operating Results

(Amounts in thousands, except ratios) (1)

Fourth Quarter Twelve Months
2022 2021 2022 2021
Insurance:
Gross premiums written $ 2,607,497 $ 2,463,050 $ 10,583,785 $ 9,471,667
Net premiums written 2,147,121 2,002,584 8,784,146 7,743,814
Net premiums earned 2,207,057 1,926,456 8,369,062 7,077,708
Pre-tax income 403,473 357,399 1,455,658 1,219,798
Loss ratio 61.4 % 60.5 % 61.3 % 61.1 %
Expense ratio 27.8 % 27.6 % 27.9 % 28.3 %
GAAP Combined ratio 89.2 % 88.1 % 89.2 % 89.4 %
Reinsurance & Monoline Excess:
Gross premiums written $ 307,380 $ 303,638 $ 1,325,267 $ 1,228,467
Net premiums written 280,786 272,925 1,219,924 1,119,053
Net premiums earned 306,167 276,977 1,192,367 1,028,323
Pre-tax income 107,161 74,378 316,527 270,563
Loss ratio 54.2 % 59.7 % 61.3 % 61.0 %
Expense ratio 28.6 % 28.7 % 28.4 % 29.7 %
GAAP Combined ratio 82.8 % 88.4 % 89.7 % 90.7 %
Corporate and Eliminations:
Net investment gains $ 75,098 $ 12,229 $ 202,397 $ 90,632
Interest expense (31,902) (37,333) (130,374) (147,180)
Other revenues and expenses (75,409) (52,056) (124,527) (150,908)
Pre-tax loss (32,213) (77,160) (52,504) (207,456)
Consolidated:
Gross premiums written $ 2,914,877 $ 2,766,688 $ 11,909,052 $ 10,700,134
Net premiums written 2,427,907 2,275,509 10,004,070 8,862,867
Net premiums earned 2,513,224 2,203,433 9,561,429 8,106,031
Pre-tax income 478,421 354,617 1,719,681 1,282,905
Loss ratio 60.6 % 60.4 % 61.3 % 61.1 %
Expense ratio 27.8 % 27.8 % 28.0 % 28.5 %
GAAP Combined ratio 88.4 % 88.2 % 89.3 % 89.6 %

(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.

W. R. Berkley Corporation        7

Supplemental Information

(Amounts in thousands)

Fourth Quarter Twelve Months
2022 2021 2022 2021
Net premiums written:
Other liability $ 838,516 $ 744,972 $ 3,408,254 $ 2,914,651
Short-tail lines (1) 431,528 392,430 1,749,926 1,482,687
Workers' compensation 281,070 269,060 1,221,804 1,148,912
Commercial automobile 308,746 297,663 1,257,659 1,120,566
Professional liability 287,261 298,459 1,146,503 1,076,998
Total Insurance 2,147,121 2,002,584 8,784,146 7,743,814
Casualty reinsurance 201,851 199,263 785,631 724,595
Monoline excess 29,798 27,346 222,521 212,022
Property reinsurance 49,137 46,317 211,772 182,436
Total Reinsurance & Monoline Excess 280,786 272,925 1,219,924 1,119,053
Total $ 2,427,907 $ 2,275,509 $ 10,004,070 $ 8,862,867
Current accident year losses from catastrophes (including COVID-19 related losses):
Insurance $ 24,592 $ 41,462 $ 126,393 $ 150,326
Reinsurance & Monoline Excess 6,253 7,000 85,317 51,721
Total $ 30,845 $ 48,462 $ 211,710 $ 202,047
Net Investment income:
Core portfolio (2) $ 186,897 $ 107,027 $ 588,873 $ 413,928
Investment funds 23,180 50,476 145,099 220,014
Arbitrage trading account 21,206 7,500 45,213 37,676
Total $ 231,283 $ 165,003 $ 779,185 $ 671,618
Net realized and unrealized gains on investments:
Net realized (losses) gains on investments $ (10,422) $ (5,812) $ 217,943 $ 145,413
Change in unrealized gains (losses) on equity securities 88,069 23,363 (632) (38,455)
Total $ 77,647 $ 17,551 $ 217,311 $ 106,958
Other operating costs and expenses:
Policy acquisition and insurance operating expenses $ 699,227 $ 612,179 $ 2,673,903 $ 2,306,727
Insurance service expenses 25,071 22,186 96,419 86,003
Net foreign currency losses (gains) 34,130 (6,508) (50,930) (25,725)
Debt extinguishment costs — — — 11,521
Other costs and expenses 63,820 64,395 242,113 220,744
Total $ 822,248 $ 692,252 $ 2,961,505 $ 2,599,270
Cash flow from operations $ 795,301 $ 659,593 $ 2,568,604 $ 2,183,987
Reconciliation of net income to operating income:
Net income $ 382,223 $ 294,430 $ 1,381,062 $ 1,022,490
Pre-tax investment gains, net of related expenses (75,098) (12,317) (199,087) (87,712)
Income tax expense 16,204 2,210 41,959 17,083
Operating income after-tax (3) $ 323,329 $ 284,323 $ 1,223,934 $ 951,861

(1)Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.

(2)Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.

(3)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.

W. R. Berkley Corporation        8

Selected Balance Sheet Information

(Amounts in thousands, except per share data)

December 31, 2022 December 31, 2021
Net invested assets (1) $ 24,545,672 $ 23,705,508
Total assets 33,861,099 32,086,414
Reserves for losses and loss expenses 17,011,223 15,390,888
Senior notes and other debt 1,828,823 2,259,416
Subordinated debentures 1,008,371 1,007,652
Common stockholders' equity (2) 6,748,332 6,653,011
Common stock outstanding (3) (4) 264,546 265,171
Book value per share (4) (5) 25.51 25.09
Tangible book value per share (4) (5) 24.58 24.27

(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 December 31, 2022, reflected in common stockholders' equity are after-tax unrealized investment losses of $893 million and unrealized currency translation losses of $372 million. As of December 31, 2021, after-tax unrealized investment gains were $91 million and unrealized currency translation losses were $373 million.

(3)During the twelve months ended December 31, 2022, the Company repurchased 1,370,394 shares of its common stock for $94.1 million. During the three months ended December 31, 2022, the Company repurchased 1,264,090 shares of its common stock for $87.6 million. The number of shares of common stock outstanding excludes shares held in a grantor trust.

(4)The 2021 per share amounts were restated for comparative purposes to reflect the 3-for-2 common stock split effected on March 23, 2022.

(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.

W. R. Berkley Corporation        9

Investment Portfolio

December 31, 2022

(Amounts in thousands, except percentages)

Carrying Value Percent of Total
Fixed maturity securities:
United States government and government agencies $ 892,258 3.6 %
State and municipal:
Special revenue 1,721,497 7.0 %
Local general obligation 441,097 1.8 %
State general obligation 416,713 1.7 %
Corporate backed 199,639 0.8 %
Pre-refunded 158,840 0.7 %
Total state and municipal 2,937,786 12.0 %
Mortgage-backed securities:
Agency 901,332 3.7 %
Commercial 528,609 2.1 %
Residential - Prime 235,315 1.0 %
Residential - Alt A 3,762 0.1 %
Total mortgage-backed securities 1,669,018 6.9 %
Asset-backed securities 3,982,773 16.2 %
Corporate:
Industrial 3,252,999 13.3 %
Financial 2,470,372 10.1 %
Utilities 551,048 2.2 %
Other 429,573 1.7 %
Total corporate 6,703,992 27.3 %
Foreign government 1,401,522 5.7 %
Total fixed maturity securities (1) 17,587,349 71.7 %
Equity securities available for sale:
Common stocks 982,751 4.0 %
Preferred stocks 203,143 0.8 %
Total equity securities available for sale 1,185,894 4.8 %
Cash and cash equivalents (2) 1,686,819 6.9 %
Investment funds (3) 1,607,756 6.5 %
Real estate 1,340,622 5.4 %
Arbitrage trading account 944,230 3.9 %
Loans receivable 193,002 0.8 %
Net invested assets $ 24,545,672 100.0 %

(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.

(3)Investment funds are net of related liabilities of $0.8 million.

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