Skip to content
AnalystLens

W. R. Berkley Annual Report, Year Ended Dec 31, 2007

Filing Date
Filed February 29, 2008
Period End
December 31, 2007
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 February 29, 2008. Cited figures are marked; the original filing is the authoritative source.

W.

R. Berkley Corporation, a Delaware insurance holding company, reported net income of $743.6 milliona for 2007, up from $699.5 million in 2006, with diluted earnings per share of $3.78 compared with $3.46. Total revenues were $5.55 billion and income before income taxes was $1.06 billion.

The filing attributes the earnings increase to higher investment income from operating cash flow, with underwriting profits essentially unchanged as favorable prior-year reserve development offset a higher expected loss ratio for accident year 2007 and higher underwriting expenses. Net premiums written declined to $4.58 billionb from $4.82 billion, and the company stated that price levels for renewal business fell approximately 5% in 2007 amid increased competition, a trend it expects to continue in 2008. The company operates in five segments: specialty, regional, alternative markets, reinsurance and international.

Specialty was the largest by premium, with net premiums written of $1.70 billionc, and recorded a combined ratio of 84.0%. Total stockholders' equity was $3.57 billion at year end, or $19.80 per share. Gross loss reserves reached $8.68 billion, and the company reported favorable prior-year loss reserve development of $106 million.

Management repurchased 16,130,773 shares for $489 milliond during 2007, and the board authorized a 20,000,000-share repurchase program in November 2007. The filing states that the company's insurance subsidiaries can pay approximately $653 million in dividends during 2008 without regulatory approval.

Total debt rose to $1.12 billion of senior notes and other debt after a $250 million 6.25% senior note issuance in February 2007. Management's discussion, financial statements and portions of the annual report are incorporated by reference from Exhibit 13.

02—Key points

Key Highlights

  1. Net income rose to $743.6 million in 2007 from $699.5 million in 2006; diluted EPS was $3.78 versus $3.46.
  2. Net premiums written fell to $4.58 billion from $4.82 billion, reflecting increased competition and renewal price declines of approximately 5%.
  3. Specialty segment combined ratio was 84.0%, and total consolidated combined ratio was 88.1% versus 88.0% in 2006.
  4. Net investment income increased to $672.7 million from $586.2 million, driven by growth in average invested assets to $12.6 billion.
  5. Favorable prior-year loss reserve development of $106 million helped the 2007 loss ratio of 59.6%, compared with 61.0% in 2006.
  6. Stockholders' equity reached $3.57 billion, and the company repurchased 16.1 million shares for $489 million in 2007.
  7. Approximately $653 million of subsidiary dividends can be paid in 2008 without regulatory approval, and the company acquired four businesses in 2007 for a total cost of $98 million.

03—Questions

Frequently Asked Questions

  1. How profitable was W. R. Berkley in 2007 and what drove the change?

    Net income was $743.6 million, or $3.78 per diluted share, up from $699.5 million, or $3.46 per diluted share, in 2006. The filing attributes the increase mainly to higher investment income from operating cash flow, while underwriting profits were essentially unchanged.

  2. Is pricing pressure affecting the company's premium volume?

    Yes. Gross premiums written were $5.05 billion, and net premiums written declined to $4.58 billion. Management reported that renewal price levels fell approximately 5% and expects competition and downward pricing pressure to continue in 2008.

  3. Which business segment contributes the most premium?

    Specialty lines produced net premiums written of $1.70 billion in 2007, about 37.3% of the total, with a combined ratio of 84.0%. Regional commercial lines were next at $1.27 billion.

  4. What capital actions did the company take in 2007?

    The company issued $250 million of 6.25% senior notes due 2037 in February 2007 and repurchased 16,130,773 shares for $489 million. The board approved a repurchase authorization of 20,000,000 shares in November 2007, with 17,283,500 shares remaining at year end.

  5. What are the main risks highlighted in the filing?

    Key risks include cyclical pricing, reserve adequacy, catastrophe losses and terrorism exposure, reinsurer credit risk, ratings downgrades, and investment market volatility. The filing notes that a 100 basis point increase in interest rates would reduce investment fair value by approximately $338 million.

04—Continue

← View all 10-K filings