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W. R. Berkley Annual Report, Year Ended Dec 31, 2001

Filing Date
Filed March 28, 2002
Period End
December 31, 2001
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 28, 2002. Cited figures are marked; the original filing is the authoritative source.

W.

R. Berkley Corporation reported a net loss of $91.5 milliona, or $3.14 per share, for 2001, compared with net income of $36.2 million, or $1.39 per share, for 2000. The loss was driven by an underwriting loss of $277.7 million, up from $122.6 million in 2000, and by an after-tax loss of $87 million from discontinued businesses (regional personal lines and the alternative markets reinsurance division).

The company strengthened loss reserves by $135 millionb during 2001, recorded estimated World Trade Center losses of $35 million, and set up an $18 million reinsurance reserve for potential surety losses tied to Enron. The combined ratio rose to 116.5% from 108.2% in 2000, with the reinsurance segment at 141.2%. Gross premiums written rose 22% to $2.21 billion and net premiums written rose 23% to $1.86 billion.

Growth came mainly from the specialty segment, where net premiums written increased 85%, and from the regional and international segments. Stockholders' equity rose to $931.6 millionc from $680.9 million, largely from a public stock offering and option exercises that brought in net proceeds of about $341 million, and book value per share was $28.03 versus $26.54. Net investment income fell to $195.0 million from $210.4 million as the yield dropped to 6.3% from 7.3%, reflecting lower merger arbitrage returns.

The company also reduced the carrying value of Argentine public bonds by $18 milliond and said it expects a significant reduction in premiums and underwriting losses for the discontinued business segment in 2002. The company stopped writing business with large national surety exposures effective January 1, 2002, entered quota share reinsurance contracts with MAP Capital and two Lloyd's syndicates managed by Kiln, and announced the formation of Berkley Medical Excess Underwriters and Berkley Capital Underwriters. Management also said it expects reinsurance costs to rise in 2002 following the September 11 attacks.

02—Key points

Key Highlights

  1. Net loss of $91.5 million ($3.14 per share) in 2001, versus net income of $36.2 million ($1.39 per diluted share) in 2000.
  2. Underwriting loss widened to $277.7 million from $122.6 million; combined ratio rose to 116.5% from 108.2%.
  3. Reserve strengthening of $135 million in 2001, including $103 million for discontinued alternative markets reinsurance and $32 million for treaty reinsurance.
  4. Estimated World Trade Center losses of $35 million, and an $18 million reinsurance reserve for potential Enron-related surety losses.
  5. Discontinued business (regional personal lines and alternative markets reinsurance) produced an after-tax loss of $87 million, or $2.98 per share.
  6. Gross premiums written grew 22% to $2.21 billion; net premiums written grew 23% to $1.86 billion, led by specialty (up 85% net).
  7. Stockholders' equity increased to $931.6 million from $680.9 million after about $341 million of net proceeds from stock issuance and option exercises.

03—Questions

Frequently Asked Questions

  1. Why did W. R. Berkley report a net loss in 2001?

    The loss came mainly from an underwriting loss of $277.7 million, which included $135 million of reserve strengthening, $35 million of estimated World Trade Center losses, and an $18 million Enron-related surety reserve. The discontinued business segment also produced an after-tax loss of $87 million.

  2. How did the company's premium volume change in 2001?

    Gross premiums written increased 22% to $2,208.5 million and net premiums written increased 23% to $1,858.1 million. Specialty net premiums written rose 85%, while reinsurance net premiums written fell 14%.

  3. What happened to investment income?

    Net investment income decreased to $195.0 million from $210.4 million. The average portfolio yield fell 100 basis points to 6.3%, mainly because the merger arbitrage yield dropped to 4.2% from 11.1%.

  4. What did the company say about 2002?

    The company expects the discontinued business segment to report a significant reduction in premiums and underwriting losses in 2002. It also anticipates further price increases for reinsurance it purchases beginning in 2002, following the September 11 attacks, and it stopped writing business with large national surety exposures effective January 1, 2002.

  5. How did the company fund its growth in capital?

    During 2001 the company issued 7.6 million shares and received net proceeds of $341 million from two public stock offerings and option exercises. Stockholders' equity rose to $931.6 million, and book value per share reached $28.03.

04—Continue

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