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W. R. Berkley Annual Report, Year Ended Dec 31, 2011

Filing Date
Filed February 28, 2012
Period End
December 31, 2011
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 28, 2012. Cited figures are marked; the original filing is the authoritative source.

W.

R. Berkley Corporation, an insurance holding company among the largest commercial lines writers in the United States, reported net income to common stockholders of $394.8 milliona for 2011, down from $449.3 million in 2010, and diluted EPS of $2.71 versus $2.90. The decline was attributed primarily to lower underwriting income, with catastrophe losses rising by $72 million and favorable prior-year reserve development decreasing by $52 million, partially offset by higher net investment gains.

Net premiums written grew to $4.36 billionb from $3.85 billion, and gross premiums written rose 15% to $5.08 billion, driven by Specialty and International growth. The consolidated GAAP combined ratio worsened to 98.3% from 94.5%, with the Regional segment deteriorating most sharply to 103.9%. Total revenues increased to $5.16 billion from $4.72 billion, and total common stockholders' equity reached $4.01 billion, or $29.15 per outstanding share, up from $26.26.

Operating cash flow improved to $670 millionc from $451 million. The company stated that 26 of its 27 A.M. Best-rated insurance subsidiaries carry A+ (Superior) ratings, and that statutory dividends of approximately $417 million can be paid to the parent in 2012 without regulatory approval.

The filing also notes a $542 milliond TRIA deductible for 2012 and an expected reduction in equity of $50 million to $60 million from new deferred acquisition cost guidance effective January 1, 2012. The filing describes a company in a mixed environment: prices rose modestly in 2011, but loss costs were also increasing, and management stated that current price levels for certain lines remain below the levels needed to achieve its return objectives. Investment income was stable at $526 million, with a portfolio averaging 3.6 years in duration and fixed maturities representing 84% of total investments.

02—Key points

Key Highlights

  1. Net income to common stockholders was $394.8 million ($2.71 per diluted share) in 2011, versus $449.3 million ($2.90 per diluted share) in 2010.
  2. Gross premiums written increased 15% to $5.08 billion, led by Specialty (up 19% to $1.82 billion) and International (up 38% to $829 million).
  3. The consolidated GAAP combined ratio rose to 98.3% from 94.5%, with the Regional segment at 103.9% and Reinsurance at 102.0%.
  4. Catastrophe losses increased to $153 million from $81 million, and favorable prior-year reserve development fell to $182 million from $234 million.
  5. Common stockholders' equity grew to $4.01 billion ($29.15 per share) from $3.70 billion, and operating cash flow rose to $670 million from $451 million.
  6. Net investment income was $526 million, with a fixed maturity portfolio averaging a 3.6-year duration and representing 84% of total investments.
  7. Management expects a $50 million to $60 million equity reduction on January 1, 2012 from new deferred acquisition cost accounting guidance.

03—One dollar

04—Financials

Financial Highlights

Figures from 10-KFY2011filed February 28, 2012
Revenue$5.16BNet Income$391.21M7.6% Net MarginEPS (Diluted)$2.69Total Assets$18.40BCash & Equivalents$911.74MFree Cash Flow$624.96M

Financial Statements

FY2011 against FY2010

Line itemFY2011FY2010Change
Revenue$5.16B$4.72B+9.1%
Interest Expense$112.51M$106.97M+5.2%
Net Income$391.21M$446.40M−12.4%
EPS (Basic)$2.80$3.00−6.7%
EPS (Diluted)$2.69$2.88−6.6%
Shares Outstanding (Basic)139.69M148.75M−6.1%
Shares Outstanding (Diluted)145.67M155.08M−6.1%

05—Questions

Frequently Asked Questions

  1. Why did net income decline in 2011 despite growing premiums?

    The filing attributes the $54 million decline in net income primarily to lower underwriting income. Catastrophe losses rose by $72 million and favorable prior-year reserve development fell by $52 million, partly offset by higher net investment gains of $125 million versus $57 million in 2010.

  2. Which segments drove premium growth in 2011?

    Specialty gross premiums rose 19% to $1.82 billion, mainly from energy and environmental markets. International gross premiums rose 38% to $829 million, driven by Lloyd's operations, Australia, and new branches in Germany and Norway. Alternative Markets gross premiums increased 18%, and Regional gross premiums decreased 1%.

  3. How strong is the company's capital position and dividend capacity?

    Common stockholders' equity was $4.01 billion at year-end 2011. The insurance subsidiaries can pay up to approximately $417 million in dividends in 2012 without regulatory approval. Twenty-six of twenty-seven insurers rated by A.M. Best carry an A+ (Superior) rating.

  4. What was the company's shareholder return activity in 2011?

    The company repurchased 5,218,097 shares for $157 million in 2011 and paid cash dividends of $0.31 per share, up from $0.27 in 2010. The repurchase authorization was increased to 10,000,000 shares on November 3, 2011.

  5. What risks did management highlight for 2012?

    Management noted that prices rose modestly in 2011 but loss costs were also increasing, and current price levels for certain lines remain below return objectives. It also cited a 2012 TRIA deductible of approximately $542 million, ongoing reinsurance and reserve uncertainty, and Solvency II implementation expected around 2013.

06—Continue

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