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W. R. BERKLEY CORPORATION
165 MASON STREET, P.O. BOX 2518
GREENWICH, CONNECTICUT 06836-2518 NEWS
(203) 629-3000 RELEASE
FOR IMMEDIATE RELEASE CONTACT: Eugene G. Ballard
Senior Vice President-
Chief Financial Officer
and Treasurer
203-629-3000
W. R. BERKLEY CORPORATION ANNOUNCES
RESULTS OF OPERATIONS FOR THE SECOND QUARTER OF 2000
GREENWICH, CT, JULY 31, 2000 -- W.R. BERKLEY CORPORATION (NASDAQ: BKLY)
today reported that revenues for the second quarter ended June 30, 2000
increased four percent to $432 million from $416 million for the same period in
1999. For the first six months of 2000, revenues increased four percent to $855
million, compared with $824 million for the first six months of 1999.
Operating income for the second quarter of 2000 was $6.4 million, or 25
cents per diluted share, compared with $5.4 million, or 21 cents per diluted
share, for the second quarter of 1999. For the first six months of 2000,
operating income was $11.7 million, or 45 cents per diluted share, compared with
$14.2 million, or 54 cents per diluted share, for the first half of 1999.
Net income for the second quarter was $6.6 million, or 26 cents per
diluted share, compared with $5.6 million, or 22 cents per diluted share, for
the 1999 period. Net income for the first six months was $11.0 million, or 43
cents per diluted share, compared with $4.3 million, or 17 cents per diluted
share, for the first six months of last year. Net income includes realized
investment gains, restructuring charges and changes in accounting principles,
which are not part of operating income.
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W. R. BERKLEY CORPORATION PAGE 2
Commenting on the Company's results, William R. Berkley, Chairman and
President, said: "We are continuing to achieve strong price increases for most
lines of business, and our earnings for the second quarter are in line with our
expectations. We are still not satisfied with profit levels and are continuing
to raise prices and improve underwriting across all parts of the business. We
are confident that price increases and cost savings already achieved, along with
those underway, will lead to further earnings improvement over the remainder of
the year, and significant additional improvement in 2001."
W.R. Berkley Corporation is a holding company which, through its
subsidiaries, operates in all segments of the property casualty insurance
business. The operating units are grouped for management purposes into five
segments according to market served: Regional Property Casualty Insurance,
Reinsurance, Specialty Insurance, Alternative Markets and International.
# # #
This is a "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995. Any forward-looking statements contained herein, including those
related to the Company's performance for the year 2000 and beyond, are based
upon the Company's historical performance and on current plans, estimates and
expectations. They are subject to various risks and uncertainties, including but
not limited to the impact of competition, product demand and pricing, claims
development, catastrophe and storm losses, investment results, legislative and
regulatory developments and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission. These risks could
cause the Company's actual results for the 2000 fiscal year and beyond to differ
materially from those expressed in any forward-looking statement made by or on
behalf of the Company. Forward-looking statements speak only as of the date on
which they are made, and the Company undertakes no obligation to update publicly
or revise any forward-looking statement, whether as a result of new information,
future developments or otherwise.
(See accompanying financial tables)
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W. R. BERKLEY CORPORATION PAGE 3
<TABLE>
<CAPTION>
UNAUDITED
---------
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Net premiums written $ 350,081 $ 345,187 $ 735,842 $ 725,771
Change in unearned premiums 12,026 1,195 (14,991) (37,417)
--------- --------- --------- ---------
Premiums earned 362,107 346,382 720,851 688,354
Net investment income 49,584 51,181 96,512 97,175
Management fees and
Commissions 19,191 17,852 35,717 36,248
Realized gains on investments 325 285 793 1,013
Other income 726 550 1,384 1,173
--------- --------- --------- ---------
Total revenues 431,933 416,250 855,257 823,963
Operating costs and expenses:
Losses and loss expenses 265,493 249,258 527,252 492,097
Other operating costs
And expenses 148,220 152,133 293,577 296,358
Interest expense 11,791 13,017 24,284 25,822
Restructuring charge -- -- 1,850 11,505
--------- --------- --------- ---------
Income (loss) before income taxes
And minority interest 6,429 1,842 8,294 (1,819)
Federal income tax benefit 564 4,450 3,216 9,623
--------- --------- --------- ---------
Income before minority interest 6,993 6,292 11,510 7,804
Minority interest (357) (668) (528) 292
--------- --------- --------- ---------
Net income before preferred
Dividends 6,636 5,624 10,982 8,096
Preferred dividends -- -- -- (497)
--------- --------- --------- ---------
Net income attributable to common
Stockholders before change in
Accounting 6,636 5,624 10,982 7,599
Cumulative effect of change in
Accounting principle (net of taxes) -- -- -- (3,250)
--------- --------- --------- ---------
Net income attributable to common
Stockholders
$ 6,636 $ 5,624 $ 10,982 $ 4,349
========= ========= ========= =========
Earnings per share:
Basic $ .26 $ .22 $ .43 $ .17
========= ========= ========= =========
Diluted $ .26 $ .22 $ .43 $ .17
========= ========= ========= =========
Average shares outstanding:
Basic 25,621 25,955 25,619 26,139
========= ========= ========= =========
Diluted 25,796 26,095 25,725 26,304
========= ========= ========= =========
</TABLE>
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W. R. BERKLEY CORPORATION PAGE 4
ADDENDUM #1 TO PRESS RELEASE DATED JULY 31, 2000
OPERATING STATISTICS BY INSURANCE INDUSTRY SEGMENT
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UNAUDITED
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Regional Insurance:
Net premiums written $160,170 $ 163,351 $326,518 $ 332,456
Total revenues 174,963 167,801 354,890 346,475
Pre-tax operating loss (1) (2,299) (8,640) (875) (9,209)
Loss ratio 74.9% 76.1% 74.0% 73.8%
Expense ratio 34.0% 36.9% 33.5% 36.1%
Policyholders' dividend ratio .8% .8% .6% .8%
Combined ratio (2) 109.7% 113.8% 108.1% 110.7%
Reinsurance:
Net premiums written $63,283 $ 75,486 $133,643 $ 153,878
Total revenues 83,637 87,421 166,726 165,969
Pre-tax operating income (1) 6,529 6,551 12,622 9,764
Loss ratio 73.0% 73.4% 72.0% 75.6%
Expense ratio 32.7% 33.2% 33.7% 33.7%
Combined ratio (2) 105.7% 106.6% 105.7% 109.3%
Specialty Insurance:
Net premiums written $69,429 $ 67,312 $137,691 $ 136,249
Total revenues 81,044 81,217 157,818 152,987
Pre-tax operating income (1) 7,831 10,368 11,749 23,745
Loss ratio 72.0% 70.5% 75.0% 68.1%
Expense ratio 32.3% 33.5% 32.7% 31.1%
Policyholders' dividend ratio .1% .1% .1% --
Combined ratio (2) 104.4% 104.1% 107.8% 99.2%
Alternative Markets:
Net premiums written $29,861 $ 18,935 $84,231 $ 65,091
Total revenues 63,402 57,291 120,601 111,818
Pre-tax operating income (1) 6,850 8,841 14,246 16,571
Loss ratio 73.5% 64.1% 76.0% 67.2%
Expense ratio 46.2% 46.7% 34.8% 32.9%
Combined ratio (2) 119.7% 110.8% 110.8% 100.1%
International (3):
Net premiums written $27,338 $ 20,103 $53,759 $ 38,097
Total revenues 27,388 22,970 53,571 44,034
Pre-tax operating income (1) 1,094 1,857 2,009 1,231
Loss ratio 60.0% 44.7% 57.8% 51.9%
Expense ratio 37.4% 46.8% 39.1% 48.9%
Combined ratio (2) 97.4% 91.5% 96.9% 100.8%
Combined:
Net premiums written $350,081 $ 345,187 $735,842 $ 725,771
Total revenues 430,434 416,700 853,606 821,283
Pre-tax operating income (1) 20,005 18,977 39,751 42,102
Loss ratio 73.1% 71.9% 73.3% 71.5%
Expense ratio 34.7% 36.4% 33.8% 34.9%
Policyholders' dividend ratio .4% .4% .3% .4%
Combined ratio (2) 108.2% 108.7% 107.4% 106.8%
</TABLE>
(1) Pre-tax operating income (loss) represents earnings before the effects
of realized investment gains, restructuring charges and changes in
accounting principles.
(2) Ratios are based on statutory accounting practices.
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W. R. BERKLEY CORPORATION PAGE 5
(3) International includes life insurance premiums of $16.4 million and
$9.3 million for the six months ended June 30, 2000 and 1999,
respectively. Life insurance is not included in the statutory ratios.
W. R. BERKLEY CORPORATION
ADDENDUM #2 TO PRESS RELEASE DATED JULY 31, 2000
SUPPLEMENTARY INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UNAUDITED
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
After-tax earnings amounts:
Operating income (1) $ 6,425 $ 5,439 $ 11,670 $ 14,235
Restructuring charge (net of
minority interest) -- -- (1,203) (7,294)
Cumulative effect of change in
Accounting principle -- -- -- (3,250)
Realized investment gains 211 185 515 658
-------- -------- -------- --------
Net income $ 6,636 $ 5,624 $ 10,982 $ 4,349
======== ======== ======== ========
After-tax diluted earnings per share:
Operating income (1) $ .25 $ .21 $ .45 $ .54
Restructuring charge (net of
minority interest) -- -- (.04) (.28)
Cumulative effect of change in
Accounting principle -- -- -- (.12)
Realized investment gains .01 .01 .02 .03
-------- -------- -------- --------
Net income $ .26 $ .22 $ .43 $ .17
======== ======== ======== ========
Cash flow from(used in) operations (12,579) (13,824) (2,665) 5,916
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
Balance sheet information:
Total investments (2) $ 2,936,375 $ 2,975,929
Total assets 4,767,832 4,784,791
Reserves for losses and loss expenses 2,419,311 2,361,238
Long-term debt 369,978 394,792
Capital Trust Securities 198,147 198,126
Common stockholders' equity 604,617 591,778
Common shares outstanding 25,625 25,617
Common stockholders' equity per share (3) 23.59 23.10
</TABLE>
(1) Operating income includes after-tax catastrophe losses of $10.3 million,
or 40 cents per diluted share, for the second quarter of 2000 compared
with $16.4 million, or 63 cents per diluted share, for the second quarter
of 1999 and $15.5 million, or 60 cents per diluted share, for the first
six months of 2000 compared with $23.3 million or, 88 cents per diluted
share, for the first six months of 1999.
(2) Including trading account receivable from broker and clearing
organizations and trading securities sold but not yet purchased.
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W. R. BERKLEY CORPORATION PAGE 6
(3) Included in the calculation of common stockholders' equity per share are
after-tax unrealized investment losses of $36.1 million and $44.5 million
as of June 30, 2000 and December 31, 1999, respectively.
