June 21, 2018

W.R. Berkley Corporation Reports Fourth Quarter 2017 Results

Greenwich, CT – W. R. Berkley Corporation (NYSE:WRB) today reported net income for the fourth quarter of 2017 of $155 million, or $1.21 per share.

Fourth quarter highlights included:

  • The accident year combined ratio excluding catastrophes during the quarter was 94.2%.
  • Investment income attributable to the core investment portfolio increased 12.4%.
  • Realized pre-tax gains of $57 million, net of performance-based compensatory costs.(1)
  • Estimated tax benefit from tax reform of $21 million, or $0.16 per share.
  • Total catastrophe losses were $18 million, including $8 million related to wildfires in California.

Full year highlights included:

  • Total capital returned to shareholders was $236 million, including $48 million of share repurchases and $188 million of ordinary and special dividends.
  • Before share repurchases and dividends, book value per share grew 10.9%. Book value per share grew 6.9% to $44.53.
  • Return on equity of 10.9%, despite record industry catastrophe losses.

The Company commented:

We are pleased with our 12.3% return on equity for the fourth quarter of 2017. While the industry experienced another period of heightened catastrophe losses due to the California wildfires, our results demonstrated characteristically low volatility.

Our accident year underwriting results before catastrophe losses were relatively stable, while gross premiums written were virtually unchanged. We achieved modest aggregate price increases even as competition persisted, and we maintained our discipline in both pricing and risk selection. Going forward, we anticipate opportunities will increase in select areas as the industry addresses the need for rate adequacy. At the same time, the recently enacted corporate tax reform has created improving prospects for a strengthening economy and a more level playing field for domestic insurers, while also lowering the corporate tax rate. With a strong balance sheet and exceptional expertise in our select markets, we are well positioned to benefit from these cyclical and secular changes. We anticipate premium volume will increase modestly beginning in 2018.

Net investment income in the core portfolio grew as strong operating cash flow provided additional monies to invest and the yield on our fixed income portfolio improved by 30 basis points compared to the fourth quarter of 2016. Net realized investment gains enhanced our pre-tax performance by $59 million, bringing total gains for the year to $336 million. Our investment strategy has enabled us to mitigate the impact of low interest rates on investment income, while providing a defensive position for inflation and opportunities to grow book value through realized investment gains. As investment income is an important component of our economic model, we anticipate improving returns in 2018 as interest rates move higher.

In a year characterized by record catastrophic losses for the industry, our focus on risk-adjusted returns has enabled us to produce excellent results with lower volatility, while returning $236 million to shareholders through dividends and share repurchases. We are enthusiastic that the market is moving in the right direction with respect to both opportunity and pricing, and we look forward to continuing to deliver superior long-term value to our shareholders in 2018.

The complete results release is available here: W. R. Berkley Corporation Fourth Quarter 2017 Results

Source: WR Berkley

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