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W. R. Berkley Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 23, 1999
Period End
December 31, 1998
In the record · 2016–202610-K1110-Q338-K96

WRB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 96 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’18Mar ’18
  2. Leadership change8-K · Dec ’20Dec ’20
  3. Leadership change8-K · Dec ’22Dec ’22
  4. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 23, 1999. Cited figures are marked; the original filing is the authoritative source.

W.

R. Berkley Corporation's 1998 Form 10-K reports that net income attributable to common stockholders declined to $46.2 milliona, or $1.59 per diluted share, from $91.2 million, or $3.02 per diluted share, in 1997. Management attributes the decline primarily to deterioration in underwriting results, driven by higher weather-related losses (weather losses of $58.8 million versus $32.8 million in 1997) and the effects of competition on rate adequacy.

The consolidated statutory combined ratio rose to 106.6% from 101.2%, and the loss ratio increased to 71.2% from 66.4%. The regional insurance operations posted a loss before income taxes of $24.5 millionb in 1998, compared with pre-tax income of $47.6 million in 1997. Top-line growth remained strong: net premiums written rose 14% to $1.35 billion, with growth across all segments, including a 30% increase in reinsurance and a 79% increase in international operations.

Net investment income was roughly flat at $202.4 million, and realized investment gains rose to $25.4 millionc. Stockholders' equity fell to $861.3 million from $947.3 million, reflecting $117.9 million of share repurchases. Book value per share was $28.80, versus $28.72 a year earlier.

The company disclosed a planned restructuring of its ten regional insurance companies into four geographic groups, expected to be completed by the end of 1999, with a one-time after-tax charge of $9 million to $13 milliond in the first quarter of 1999. The Series A Preferred Stock was redeemed on January 25, 1999 at $150 per share. Management also reports that pollution and environmental claims have not had a material impact on operations, and that Year 2000 costs have been modest, at about $6 million expensed through 1998 with roughly $2 million more expected in 1999.

02—Key points

Key Highlights

  1. Net income attributable to common stockholders fell to $46.2 million ($1.59 diluted EPS) from $91.2 million ($3.02 diluted EPS) in 1997.
  2. Consolidated statutory combined ratio rose to 106.6% in 1998 from 101.2% in 1997, driven by a loss ratio increase to 71.2% from 66.4%.
  3. Weather-related losses were $58.8 million in 1998 versus $32.8 million in 1997.
  4. Net premiums written grew 14% to $1,346 million, with growth across all five segments.
  5. Regional insurance operations posted a pre-tax loss of $24.5 million in 1998 versus pre-tax income of $47.6 million in 1997.
  6. Stockholders' equity declined to $861.3 million from $947.3 million, mainly due to $117.9 million of common stock repurchases.
  7. A restructuring of the ten regional insurers into four geographic groups is expected to cost $9 million to $13 million after tax in Q1 1999.

03—Questions

Frequently Asked Questions

  1. Why did W. R. Berkley's earnings decline in 1998?

    The decline was due primarily to deterioration in underwriting results, attributable to higher weather-related losses and competitive pressure on rate adequacy. The consolidated statutory combined ratio increased to 106.6% from 101.2%, and the loss ratio rose to 71.2% from 66.4%.

  2. Did premium volume grow in 1998?

    Yes. Net premiums written rose 14% to $1,346 million from $1,178 million, with growth recorded by all segments. Reinsurance grew 30% and international operations grew 79%, while regional operations grew 4%.

  3. What restructuring is the company undertaking?

    On January 20, 1999, the company announced plans to restructure the management and back-office operations of its ten regional insurance companies into four geographic segments: New England, Mid Atlantic, Midwest and Southern Tier. The restructuring is expected to be completed before the end of 1999, with a one-time after-tax charge of $9 million to $13 million in the first quarter of 1999.

  4. How did the company use its capital in 1998?

    The company repurchased 3,172,222 shares of common stock for approximately $117.9 million, leaving 2,000,000 shares authorized for repurchase. It also issued $40 million of 6.375% medium-term notes due 2005 and repurchased $16.3 million and $18.4 million face value of its 9.875% and 8.7% debentures. The Series A Preferred Stock was redeemed on January 25, 1999 for $150 per share.

  5. Are environmental claims a material risk for the company?

    The filing states that known pollution and environmental claims have not had a material impact on operations. Net reserves for these claims were $33.4 million at December 31, 1998, and net incurred losses for reported pollution and environmental claims were about $2.2 million in 1998.

04—Continue

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