What drove the increase in W. R. Berkley's 1995 earnings?

Net income attributable to common stockholders rose to $49.8 million, or $2.86 per share, from $24.7 million, or $1.44 per share, in 1994. The filing points to growth in net premiums written, higher net investment income of $137.3 million, and an improved consolidated loss ratio of 70.7% versus 73.7% in 1994, which benefited from the absence of the 1994 Northridge Earthquake losses.

How did the company finance its 1995 acquisitions?

The company issued 3,450,000 shares of common stock at $43.75 per share, with net proceeds of approximately $145 million, to fund the Midwest Employers Casualty acquisition. The General Re interest in Signet Star was bought by issuing 458,667 shares of Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $68.8 million.

What is the company's exposure to pollution and environmental claims?

The filing states that net reserves for pollution and environmental claims were $30.8 million at December 31, 1995, up from $22.8 million a year earlier, and gross reserves were $59.4 million. The company says its subsidiaries generally did not insure the larger industrial companies with significant environmental exposures, and that these claims have not had a material impact on operations to date.

Why did reserves for losses and loss expenses decline in 1995?

Gross reserves fell to $1.66 billion from $2.07 billion. The filing attributes the decline to the sale of North Star Reinsurance Company to General Re, which reduced reserves for losses and loss expenses and due from reinsurers by $735.1 million. The transaction did not affect cash flow, equity, or the statement of operations.

What was the company's debt position after the January 1996 note issuance?

Long-term debt was $291.0 million at December 31, 1995. The company issued $100 million of 6.25% ten-year notes in January 1996 and used $28.4 million of the proceeds to retire Signet Star's bank debt. The filing states that the debt-to-capital percentage would have been 31% on a pro forma basis, compared with 26% at year-end 1995.

W. R. Berkley 10-K FY1995 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 26, 1996. Cited figures are marked; the original filing is the authoritative source.

R. Berkley Corporation, a Delaware insurance holding company, reported net premiums written of $860.4 million^a for 1995, up from $717.9 million in 1994, with growth in all four segments: regional insurance, reinsurance (conducted through Signet Star Holdings, Inc.), specialty insurance, and alternative markets. Net income attributable to common stockholders was $49.8 million, or $2.86 per share, compared with $24.7 million, or $1.44 per share, in 1994.

Results included after-tax realized investment gains of $6 million^b, or $.36 per share. The statutory combined ratio for the insurance operations improved to 102.5% from 105.0% in 1994, which the company attributed mainly to the Northridge Earthquake's effect on 1994 results. The balance sheet expanded significantly during 1995.

Total assets were $3.62 billion and stockholders' equity rose to $929.8 million^c from $597.6 million, driven by a $145 million common stock offering and a $66 million preferred stock issuance. The company acquired Midwest Employers Casualty Company for $141.9 million in November 1995 and bought General Re's 40% interest in Signet Star Holdings on December 31, 1995. Reserves for losses and loss expenses fell to $1.66 billion from $2.07 billion, largely because of the sale of North Star Reinsurance Company, which reduced ceded reserves.

The filing describes a company with a broad base of regional and specialty insurance subsidiaries and a growing alternative markets business. Investors would note the 1995 earnings recovery, the expansion of the balance sheet through acquisitions and equity issuance, and the January 1996 issuance of $100 million^d of 6.25% ten-year notes. The company also reported that its reserves for pollution and environmental claims were $30.8 million net at year-end 1995.

02—Key points

Key Highlights

Net premiums written rose 20% to $860.4 million in 1995 from $717.9 million in 1994, with all four segments contributing to growth.
Net income attributable to common stockholders was $49.8 million, or $2.86 per share, versus $24.7 million, or $1.44 per share, in 1994.
The statutory combined ratio for insurance operations improved to 102.5% from 105.0% in 1994, mainly reflecting the 1994 Northridge Earthquake impact.
Stockholders' equity increased to $929.8 million from $597.6 million, supported by a $145 million common stock offering and $66 million of preferred stock issuance.
Midwest Employers Casualty Company was acquired for $141.9 million in November 1995, and the remaining 40% of Signet Star Holdings was acquired on December 31, 1995.
Total assets were $3.62 billion at December 31, 1995, and net investment income rose to $137.3 million from $109.7 million.
Subsequent to year-end, the company issued $100 million of 6.25% ten-year notes on January 19, 1996.

03—Questions

Frequently Asked Questions

What drove the increase in W. R. Berkley's 1995 earnings?
Net income attributable to common stockholders rose to $49.8 million, or $2.86 per share, from $24.7 million, or $1.44 per share, in 1994. The filing points to growth in net premiums written, higher net investment income of $137.3 million, and an improved consolidated loss ratio of 70.7% versus 73.7% in 1994, which benefited from the absence of the 1994 Northridge Earthquake losses.
How did the company finance its 1995 acquisitions?
The company issued 3,450,000 shares of common stock at $43.75 per share, with net proceeds of approximately $145 million, to fund the Midwest Employers Casualty acquisition. The General Re interest in Signet Star was bought by issuing 458,667 shares of Series B Cumulative Redeemable Preferred Stock with a liquidation preference of $68.8 million.
What is the company's exposure to pollution and environmental claims?
The filing states that net reserves for pollution and environmental claims were $30.8 million at December 31, 1995, up from $22.8 million a year earlier, and gross reserves were $59.4 million. The company says its subsidiaries generally did not insure the larger industrial companies with significant environmental exposures, and that these claims have not had a material impact on operations to date.
Why did reserves for losses and loss expenses decline in 1995?
Gross reserves fell to $1.66 billion from $2.07 billion. The filing attributes the decline to the sale of North Star Reinsurance Company to General Re, which reduced reserves for losses and loss expenses and due from reinsurers by $735.1 million. The transaction did not affect cash flow, equity, or the statement of operations.
What was the company's debt position after the January 1996 note issuance?
Long-term debt was $291.0 million at December 31, 1995. The company issued $100 million of 6.25% ten-year notes in January 1996 and used $28.4 million of the proceeds to retire Signet Star's bank debt. The filing states that the debt-to-capital percentage would have been 31% on a pro forma basis, compared with 26% at year-end 1995.

04—Continue

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