W. R. Berkley Corporation Reports Second Quarter Results

Rhea-AI Summary

W. R. Berkley (NYSE: WRB) reported strong second quarter 2024 results, with a 20.0% return on equity and 22.4% operating return on equity. The company achieved record quarterly net investment income of $372 million, up 51.8% year-over-year. Net premiums written grew 11.2% to a record $3.1 billion. The reported combined ratio was 91.1%, including 3.2 loss ratio points from catastrophe losses.

Key highlights include:

• Net income per diluted share increased to $0.92 from $0.87 in Q2 2023
• Operating income per diluted share rose to $1.04 from $0.76
• Book value per share grew 4.7% before dividends and share repurchases
• Total capital returned to shareholders was $381.3 million
• Operating cash flow increased 24.4% to $881.3 million

Positive

• Record quarterly net investment income of $372.1 million, up 51.8% year-over-year
• Net premiums written grew 11.2% to a record $3.1 billion
• Return on equity of 20.0% and operating return on equity of 22.4%
• Combined ratio of 91.1%, indicating strong underwriting performance
• Book value per share grew 4.7% before dividends and share repurchases
• Operating cash flow increased 24.4% to $881.3 million

Negative

• Catastrophe losses contributed 3.2 loss ratio points to the combined ratio

Insights

Financial Analyst

W. R. Berkley Corporation reported impressive financial results for the second quarter of 2024. The company achieved a return on equity (ROE) of 20% and an operating ROE of 22.4%, which are robust indicators of profitability and efficient capital management. Notably, the net investment income surged by 51.8% to a record $372.1 million, driven by higher yields in their fixed-maturity portfolio. This income growth is a strong positive signal for investors, indicating effective asset management and favorable market conditions. Additionally, the 11.2% growth in net premiums written to $3.1 billion suggests successful underwriting and market penetration strategies. The company's combined ratio of 91.1%, inclusive of catastrophe losses, reflects strong underwriting practices. These financial metrics collectively suggest that W. R. Berkley is well-positioned for sustained growth and profitability.

Market Research Analyst

The reported figures show a solid market performance for W. R. Berkley Corporation. The 8.3% average rate increase, excluding workers' compensation, indicates strong pricing power in the market, which can lead to better margins and profitability. The company's operating cash flow increased by 24.4% to $881.3 million, highlighting strong cash generation capabilities. The significant capital returns to shareholders, totaling $381.3 million, through share repurchases and dividends suggests confidence in future performance and a shareholder-friendly approach. The growth in book value per share by 4.7% before dividends and share repurchases further underlines the company's financial health and value creation for shareholders. These factors collectively point to a positive outlook for the company in the near to mid-term.

Insurance Industry Expert

W. R. Berkley's performance in the second quarter reflects strong operational efficiencies and effective risk management. The combined ratio of 91.1%, which includes 3.2 loss ratio points from catastrophe losses, indicates disciplined underwriting and effective management of claims. The company's decentralized structure likely contributes to its agility and ability to adapt to market changes, which is important in the insurance industry. Their focus on long-term risk-adjusted returns and expertise in both underwriting and investing is a strategic advantage. The anticipated continuation of higher yields in their investment portfolio reinforces their strong position for future income growth. Overall, W. R. Berkley's strategic initiatives and market positioning appear robust and well-aligned for ongoing success.

Return on Equity of 20.0% and Operating Return on Equity of 22.4%; Record Quarterly Net Investment Income of $372 Million

GREENWICH, Conn.--(BUSINESS WIRE)-- W. R. Berkley Corporation (NYSE: WRB) today reported its second quarter 2024 results.

Summary Financial Data
(Amounts in thousands, except per share data)
	Second Quarter								Six Months
	2024				2023				2024				2023
Gross premiums written	$	3,717,772			$	3,336,773			$	7,080,528			$	6,386,091
Net premiums written		3,126,779				2,811,515				5,978,070				5,386,339
Net income to common stockholders		371,909				356,308				814,380				650,434
Net income per diluted share (1)		0.92				0.87				2.01				1.58
Operating income (2)		418,114				310,862				841,344				586,531
Operating income per diluted share (1)		1.04				0.76				2.08				1.42
Return on equity (3)		20.0	%			21.1	%			21.8	%			19.3	%
Operating return on equity (2) (3)		22.4	%			18.4	%			22.6	%			17.4	%

(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.

Second quarter highlights included:

• Return on equity and operating return on equity of 20.0% and 22.4%, respectively.
• Net investment income grew 51.8% to a record $372.1 million.
• Record net premiums written grew 11.2% to $3.1 billion.
• The current accident year combined ratio before catastrophe losses of 3.2 loss ratio points was 88.0%, and the reported combined ratio was 91.1%.
• Average rate increase excluding workers' compensation were approximately 8.3%.
• Book value per share grew 4.7%, before dividends and share repurchases.
• Total capital returned to shareholders was $381.3 million, consisting of $223.8 million of share repurchases, $127.0 million of special dividends and $30.5 million of regular dividends.
• Operating cash flow increased 24.4% to $881.3 million.

The Company commented:

Continued strong underwriting and investment income drove our 20.0% annualized return on beginning of year common stockholders’ equity in the second quarter.

Market conditions remained favorable in many areas of our business, fueling growth in net premiums written of 11.2%. Our combined ratio was 91.1% inclusive of 3.2 loss ratio points of catastrophe losses.

Net investment income increased 51.8% over the prior year second quarter, driven by an increase in fixed-maturity income from a growing portfolio with higher yields. We anticipate that the Company’s new money rate will remain higher than the current yield of our fixed-maturity securities for the foreseeable future. Coupled with our increasing investment portfolio from continuing record cash flow, we remain well-positioned for further investment income growth.

Our decentralized structure and consistent focus on long-term risk-adjusted return allow us to effectively operate in a rapidly-changing environment. We continue to believe that expertise matters in both underwriting and investing. The Company expects to continue to deliver outstanding 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 July 22, 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)
	Second Quarter								Six Months
	2024				2023				2024				2023
Revenues:
Net premiums written	$	3,126,779			$	2,811,515			$	5,978,070			$	5,386,339
Change in unearned premiums		(280,364	)			(258,788	)			(367,308	)			(342,180	)
Net premiums earned		2,846,415				2,552,727				5,610,762				5,044,159
Net investment income		372,129				245,152				691,967				468,551
Net investment (losses) gains:
Net realized and unrealized (losses) gains on investments		(60,306	)			68,647				(48,803	)			91,258
Change in allowance for credit losses on investments		1,794				(9,993	)			16,070				(9,594	)
Net investment (losses) gains		(58,512	)			58,654				(32,733	)			81,664
Revenues from non-insurance businesses		125,705				113,910				246,696				238,110
Insurance service fees		27,597				25,471				52,917				58,328
Other income		698				—				1,196				106
Total Revenues		3,314,032				2,995,914				6,570,805				5,890,918
Expenses:
Loss and loss expenses		1,780,596				1,569,654				3,444,374				3,108,409
Other operating costs and expenses		892,935				823,682				1,761,524				1,649,255
Expenses from non-insurance businesses		121,120				113,538				239,727				236,306
Interest expense		31,708				31,856				63,436				63,692
Total expenses		2,826,359				2,538,730				5,509,061				5,057,662
Income before income tax		487,673				457,184				1,061,744				833,256
Income tax expense		(115,788	)			(101,460	)			(247,824	)			(181,803	)
Net Income before noncontrolling interests		371,885				355,724				813,920				651,453
Noncontrolling interest		24				584				460				(1,019	)
Net income to common stockholders	$	371,909			$	356,308			$	814,380			$	650,434
Net income per share (1):
Basic	$	0.93			$	0.88			$	2.03			$	1.59
Diluted	$	0.92			$	0.87			$	2.01			$	1.58
Average shares outstanding (1) (2):
Basic		400,273				406,296				401,295				409,364
Diluted		403,737				409,643				404,679				412,819

(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)
	Second Quarter								Six Months
	2024				2023				2024				2023
Insurance:
Gross premiums written	$	3,360,850			$	2,994,059			$	6,281,900			$	5,620,406
Net premiums written		2,810,448				2,505,856				5,256,163				4,691,277
Net premiums earned		2,484,569				2,215,186				4,883,338				4,358,110
Pre-tax income		490,053				386,350				968,202				738,977
Loss ratio		64.0	%			63.1	%			62.9	%			62.8	%
Expense ratio		28.4	%			27.8	%			28.4	%			28.3	%
GAAP Combined ratio		92.4	%			90.9	%			91.3	%			91.1	%
Reinsurance & Monoline Excess:
Gross premiums written	$	356,922			$	342,714			$	798,628			$	765,685
Net premiums written		316,331				305,659				721,907				695,062
Net premiums earned		361,846				337,541				727,424				686,049
Pre-tax income		124,449				105,420				252,074				206,704
Loss ratio		52.8	%			51.2	%			51.3	%			53.9	%
Expense ratio		29.0	%			30.1	%			29.4	%			30.1	%
GAAP Combined ratio		81.8	%			81.3	%			80.7	%			84.0	%
Corporate and Eliminations:
Net investment (losses) gains	$	(58,512	)		$	58,654			$	(32,733	)		$	81,664
Interest expense		(31,708	)			(31,856	)			(63,436	)			(63,692	)
Other expenses		(36,609	)			(61,384	)			(62,363	)			(130,397	)
Pre-tax loss		(126,829	)			(34,586	)			(158,532	)			(112,425	)
Consolidated:
Gross premiums written	$	3,717,772			$	3,336,773			$	7,080,528			$	6,386,091
Net premiums written		3,126,779				2,811,515				5,978,070				5,386,339
Net premiums earned		2,846,415				2,552,727				5,610,762				5,044,159
Pre-tax income		487,673				457,184				1,061,744				833,256
Loss ratio		62.6	%			61.5	%			61.4	%			61.6	%
Expense ratio		28.5	%			28.1	%			28.6	%			28.5	%
GAAP Combined ratio		91.1	%			89.6	%			90.0	%			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)
	Second Quarter								Six Months
	2024				2023				2024				2023
Net premiums written:
Other liability	$	1,131,676			$	987,687			$	2,147,291			$	1,888,978
Short-tail lines (1)		643,101				558,123				1,175,442				984,777
Auto		408,178				352,584				756,760				646,442
Workers' compensation		332,432				325,170				637,064				635,154
Professional liability		295,061				282,292				539,606				535,926
Total Insurance		2,810,448				2,505,856				5,256,163				4,691,277
Casualty (2)		188,117				189,970				378,136				401,261
Property (2)		102,158				90,585				200,820				164,179
Monoline excess		26,056				25,104				142,951				129,622
Total Reinsurance & Monoline Excess		316,331				305,659				721,907				695,062
Total	$	3,126,779			$	2,811,515			$	5,978,070			$	5,386,339
Current accident year losses from catastrophes:
Insurance	$	86,632			$	48,007			$	114,082			$	93,249
Reinsurance & Monoline Excess		3,047				5,540				6,103				8,167
Total	$	89,679			$	53,547			$	120,185			$	101,416
Net Investment income:
Core portfolio (3)	$	329,971			$	229,302			$	661,147			$	432,265
Investment funds		25,476				(1,187	)			(3,873	)			993
Arbitrage trading account		16,682				17,037				34,693				35,293
Total	$	372,129			$	245,152			$	691,967			$	468,551
Net realized and unrealized (losses) gains on investments:
Net realized gains (losses) on investments	$	6,411			$	47,387			$	(7,898	)		$	26,594
Change in unrealized (losses) gains on equity securities		(66,717	)			21,260				(40,905	)			64,664
Total	$	(60,306	)		$	68,647			$	(48,803	)		$	91,258
Other operating costs and expenses:
Policy acquisition and insurance operating expenses	$	811,997			$	718,234			$	1,603,529			$	1,436,510
Insurance service expenses		23,084				23,931				44,523				49,111
Net foreign currency (gains) losses		(10,118	)			11,226				(23,295	)			20,721
Other costs and expenses		67,972				70,291				136,767				142,913
Total	$	892,935			$	823,682			$	1,761,524			$	1,649,255
Cash flow from operations	$	881,330			$	708,745			$	1,627,565			$	1,154,069
Reconciliation of net income to operating income:
Net income	$	371,909			$	356,308			$	814,380			$	650,434
Pre-tax investment losses (gains), net of related expenses		58,631				(57,862	)			32,733				(81,250	)
Income tax (benefit) expense		(12,426	)			12,416				(5,769	)			17,347
Operating income after-tax (4)	$	418,114			$	310,862			$	841,344			$	586,531

(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)
	June 30, 2024			December 31, 2023
Net invested assets (1)	$	28,011,519		$	26,973,703
Total assets		38,909,919			37,111,830
Reserves for losses and loss expenses		19,567,190			18,739,652
Senior notes and other debt		1,828,422			1,827,951
Subordinated debentures		1,009,449			1,009,090
Common stockholders' equity (2)		7,773,782			7,455,431
Common stock outstanding (3) (4)		380,647			384,817
Book value per share (4) (5)		20.42			19.37
Tangible book value per share (4) (5)		19.78			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 June 30, 2024, reflected in common stockholders' equity are after-tax unrealized investment losses of $670 million and unrealized currency translation losses of $364 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 six months ended and three months ended June 30, 2024, the Company repurchased 4,298,510 shares of its common stock for $223.8 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
June 30, 2024
(Amounts in thousands, except percentages)
	Carrying Value			Percent of Total
Fixed maturity securities:
United States government and government agencies	$	1,822,376		6.5	%
State and municipal:
Special revenue		1,508,209		5.4	%
State general obligation		443,673		1.6	%
Local general obligation		379,024		1.4	%
Corporate backed		161,332		0.6	%
Pre-refunded		87,978		0.3	%
Total state and municipal		2,580,216		9.3	%
Mortgage-backed securities:
Agency		1,855,209		6.6	%
Commercial		558,051		2.0	%
Residential - Prime		179,841		0.6	%
Residential - Alt A		2,508		0.0	%
Total mortgage-backed securities		2,595,609		9.2	%
Asset-backed securities		4,014,446		14.3	%
Corporate:
Industrial		3,893,745		13.9	%
Financial		3,196,583		11.4	%
Utilities		711,967		2.5	%
Other		610,125		2.2	%
Total corporate		8,412,420		30.0	%
Foreign government		1,657,609		5.9	%
Total fixed maturity securities (1)		21,082,676		75.2	%
Equity securities available for sale:
Common stocks		696,555		2.5	%
Preferred stocks		381,537		1.4	%
Total equity securities available for sale		1,078,092		3.9	%
Investment funds		1,589,119		5.7	%
Cash and cash equivalents (2)		1,411,140		5.0	%
Real estate		1,279,306		4.6	%
Arbitrage trading account		1,221,861		4.4	%
Loans receivable		349,325		1.2	%
Net invested assets	$	28,011,519		100.0	%

(1)		Total fixed maturity securities had an average rating of AA- and an average duration of 2.5 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/20240722013182/en/

Karen A. Horvath

Vice President - External

Financial Communications

(203) 629-3000

Source: W. R. Berkley Corporation

FAQ

What was W. R. Berkley's (WRB) return on equity in Q2 2024?

W. R. Berkley (WRB) reported a return on equity of 20.0% in the second quarter of 2024.

How much did W. R. Berkley's (WRB) net investment income grow in Q2 2024?

W. R. Berkley's net investment income grew 51.8% year-over-year to a record $372.1 million in Q2 2024.

What was W. R. Berkley's (WRB) combined ratio in the second quarter of 2024?

W. R. Berkley's reported combined ratio was 91.1% in Q2 2024, including 3.2 loss ratio points from catastrophe losses.

How much capital did W. R. Berkley (WRB) return to shareholders in Q2 2024?

W. R. Berkley returned $381.3 million to shareholders in Q2 2024, consisting of $223.8 million in share repurchases, $127.0 million in special dividends, and $30.5 million in regular dividends.