01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
W.
R. Berkley Corporation is an insurance holding company and one of the largest commercial lines writers in the United States, operating in two segments: Insurance and Reinsurance & Monoline Excess. In 2021 net premiums written rose to $8.86 billiona from $7.26 billion in 2020, gross premiums written reached $10.70 billion, and net income to common stockholders was $1.02 billion, or $5.48 per diluted share, versus $531 million ($2.81 per diluted share) in 2020.
The consolidated GAAP combined ratio improved to 89.6% from 94.9%, with the loss ratio at 61.1% versus 64.5%, and the company cited higher premium rates and lower catastrophe losses ($202 millionb in 2021 versus $340 million in 2020). Average renewal premium rates for insurance and facultative reinsurance increased 9.1% in 2021. The balance sheet grew, with total assets of $32.09 billion and total common stockholders' equity of $6.65 billion, and book value per outstanding share of $37.63.
Shareholder returns included regular quarterly dividends of $0.12c and $0.13 per share, special dividends of $0.50 and $1.00 per share, and total dividends of $356 million in 2021. Net reserves for losses and loss expenses increased to $12.85 billion, and the fixed maturity portfolio had an effective duration of 2.4 years.
The company also reported unfavorable developments on the 2016 through 2019 accident years for the Insurance segment, offset by favorable development on the 2020 accident year, and noted ongoing COVID-19 uncertainty, including about $274 milliond of recognized COVID-19-related losses net of reinsurance. Subsequent to year end, the company agreed on February 23, 2022 to sell an office building in London known as "The Scalpel" for £718 million, with a pretax gain estimated at more than $300 million in the first quarter of 2022, subject to closing on March 7, 2022.
02—Key points
Key Highlights
- Net income to common stockholders rose to $1.02 billion ($5.48 per diluted share) in 2021, up from $531 million ($2.81 per diluted share) in 2020.
- Net premiums written grew to $8.86 billion in 2021 from $7.26 billion in 2020, and gross premiums written increased 21% to $10.70 billion.
- The consolidated GAAP combined ratio improved to 89.6% in 2021 from 94.9% in 2020, with the loss ratio at 61.1% versus 64.5%.
- Average renewal premium rates for insurance and facultative reinsurance increased 9.1% in 2021 and 11.3% in 2020, when adjusted for changes in exposures.
- Total dividends of $356 million were paid in 2021, including special dividends of $0.50 per share in the second quarter and $1.00 per share in the fourth quarter.
- Net reserves for losses and loss expenses reached $12.85 billion at December 31, 2021, and the company recognized about $274 million of COVID-19-related losses net of reinsurance.
- A subsequent-event agreement to sell the London office building 'The Scalpel' for £718 million is expected to produce a pretax gain of more than $300 million in the first quarter of 2022.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $9.46B$8.10B | +16.7% |
| Interest Expense | $147.18M$150.54M | −2.2% |
| Net Income | $1.02B$530.67M | +92.6% |
| EPS (Basic) | $3.69$1.89 | +95.2% |
| EPS (Diluted) | $3.66$1.87 | +95.7% |
| Shares Outstanding (Basic) | 277K280K | −1.1% |
| Shares Outstanding (Diluted) | 280K283K | −1.2% |
05—Questions
Frequently Asked Questions
How profitable was W. R. Berkley in 2021 compared with 2020?
Net income to common stockholders was $1,022 million in 2021, compared with $531 million in 2020. Diluted net income per share was $5.48, versus $2.81 in 2020. The filing attributes the $491 million increase mainly to higher underwriting income, net investment income and lower tax expense, partly offset by higher corporate expenses.
What drove the improvement in underwriting results?
The consolidated loss ratio fell to 61.1% from 64.5%, and the expense ratio fell to 28.5% from 30.4%. The company credited premium rate increases and exposure growth, lower catastrophe losses ($202 million in 2021 versus $340 million in 2020), and net earned premium growth outpacing expense growth.
How much did the company return to shareholders in 2021?
The Board declared regular quarterly cash dividends of $0.12 per share in the first quarter and $0.13 per share in each of the remaining three quarters, plus special dividends of $0.50 and $1.00 per share. Total dividends were $356 million. The company also repurchased shares for $122 million in 2021.
What is the status of COVID-19 exposure and reserves?
As of December 31, 2021, the company had recognized about $274 million of COVID-19-related losses net of reinsurance, including $239 million of reported losses and $35 million of IBNR. The filing states that the ultimate impact remains unclear and that reserves may materially change.
What significant event occurred after year end?
On February 23, 2022, the company agreed to sell the office building 'The Scalpel' at 52 Lime Street, London, for £718 million, subject to adjustments. The sale is scheduled to close on March 7, 2022, and the company estimates a pretax gain of more than $300 million in the first quarter of 2022.
06—Continue