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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 24, 2000
W.R. BERKLEY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<CAPTION>
<S> <C> <C>
Delaware 0-7849 22-1867895
(State or Other Jurisdiction of (Commission File No.) (IRS Employer
Incorporation) Identification Number)
165 Mason Street, P.O. Box 2518, Greenwich, CT 06836-2518
(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code (203) 629-3000
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of Registrant, issued on
February 24, 2000, which is incorporated herein by this reference. A copy of the
press release is attached to this Form 8-K as Exhibit 99.1
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
W.R. BERKLEY CORPORATION
------------------------
(Registrant)
February 25, 2000 By: /s/ Eugene G. Ballard
------------------------
Eugene G. Ballard
Senior Vice President,
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
Exhibits:
99.1 Press Release dated February 24, 2000
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W. R. BERKLEY CORPORATION NEWS
165 MASON STREET, P.O. BOX 2518 RELEASE
GREENWICH, CONNECTICUT 06836-2518
(203) 629-3000
FOR IMMEDIATE RELEASE CONTACT:Eugene G. Ballard
Senior Vice President,
Chief Financial Officer
and Treasurer
203-629-3000
W. R. BERKLEY CORPORATION ANNOUNCES
FULL YEAR AND FOURTH QUARTER RESULTS FOR 1999
GREENWICH, CT, FEBRUARY 24, 2000 -- W.R. BERKLEY CORPORATION (NASDAQ:
BKLY) today announced an operating loss of $23.3 million, or 91 cents per
diluted share, for 1999, compared with operating income of $34.7 million, or
$1.19 per diluted share, for 1998. For the fourth quarter of 1999, the Company
reported an operating loss of $38.4 million, or $1.50 per diluted share,
compared with an operating loss of $11.6 million, or 43 cents per diluted share,
for the same period a year ago.
The net loss for 1999 was $37.1 million, or $1.43 per diluted share,
compared with net income of $46.2 million, or $1.59 per diluted share, for 1998.
For the fourth quarter of 1999, the Company reported a net loss of $40.8
million, or $1.59 per diluted share, compared with a net loss of $3.8 million,
or 14 cents per diluted share, for the fourth quarter of 1998.
Revenues for the year increased 5.8% to $1.67 billion, up from $1.58
billion in 1998. For the fourth quarter, revenues rose to $421.9 million,
compared with $407.9 million for the fourth quarter a year ago.
Realized capital losses, after tax, were $3.9 million, or 15 cents per
diluted share, in 1999 compared with realized capital gains of $16.5 million, or
57 cents per diluted share, in 1998. Fourth quarter results included realized
capital losses, net of taxes, of $2.4 million, or 9 cents per diluted share,
compared with realized capital gains of $7.8 million, or 29 cents per diluted
share, for the same period last year.
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W.R. Berkley Corporation
Catastrophe losses after-tax were $39.1 million, or $1.50 per diluted
share, in 1999 compared with $38.2 million, or $1.31 per diluted share, in 1998.
Fourth quarter catastrophe losses were $3.5 million, or 14 cents per diluted
share, compared with $6.6 million, or 24 cents per diluted share, for the same
period last year.
As previously announced, the Company established additional loss
reserves for the regional insurance group in the 1999 fourth quarter of $55
million (before tax). The reserve increase was primarily related to accident
years 1998 and 1999 and was prompted by increased loss development during 1999.
Results for 1999 include an after-tax restructuring charge in the first
quarter of $7.3 million, or 28 cents per diluted share, related to the Company's
restructuring of certain of its operating units. The restructuring is expected
to result in annual after-tax savings of approximately $12.4 million. Management
estimates that as of December 31, 1999, the Company had achieved approximately
90% of such savings, on an annualized basis.
The Company reported an extraordinary gain of $735,000 in 1999 and an
extraordinary loss of $5.0 million in 1998 related to the repurchase and
retirement of capital trust securities and long-term debt. In 1999, the Company
repurchased 905,000 shares of its common stock, leaving a balance of 1,095,000
shares available for repurchase under its current share repurchase
authorization.
As previously disclosed, in the first quarter of 1999 the Company
adopted AICPA Statement of Position 97-3, Accounting by Insurance and Other
Enterprises for Insurance-Related Assessments. A non-cash, after-tax charge of
$3.3 million, or 12 cents per diluted share, was recorded during the first
quarter and is reflected in the financial statements as a cumulative effect of a
change in accounting principle.
Commenting on the Company's results, William R. Berkley, Chairman and
Chief Executive Officer, said: "Obviously, 1999 was a difficult year, as pricing
pressures continued. While we expect the environment to improve in 2000, we have
taken a number of actions which we expect will result in significantly better
performance even if market conditions do not improve. We have substantially
completed the restructuring of
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W. R. Berkley Corporation
our regional businesses and will see expense savings this year from that effort.
We increased reserves for the regional group by $55 million in the fourth
quarter, an action that should allow us to go forward on the basis of our
historical levels of reserve adequacy. Finally, we have implemented price
increases across many of our lines of business, including increases averaging
more than 10% for the regional group. We are comfortable with the actions we
have taken and anticipate success in facing the challenges of the new year."
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, 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
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For the Three Months For the Year Ended
Ended December 31, December 31,
------------------------ ----------------------
1999 1998 1999 1998
---- ---- ---- ----
(Amounts in thousands except per share Data)
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Revenues:
Net premiums written $ 342,067 $ 305,971 $1,427,719 $1,346,254
Change in unearned premiums 20,425 20,255 (13,335) (67,855)
-------- -------- --------- ---------
Premiums earned 362,492 326,226 1,414,384 1,278,399
Net investment income 45,051 50,915 190,316 202,420
Management fees and commissions 16,997 17,034 72,344 70,727
Realized gains (losses) on investments (3,660) 12,014 (6,064) 25,400
Other income 1,002 1,718 2,688 5,571
-------- ------- --------- ---------
Total revenues 421,882 407,907 1,673,668 1,582,517
Operating costs and expenses:
Losses and loss expenses 320,910 262,456 1,085,826 914,762
Other operating costs and expenses 156,634 142,371 604,784 556,155
Interest expense 12,733 12,528 50,801 48,819
Restructuring charge -- -- 11,505 --
-------- --------- --------- ---------
Income (loss) before income taxes
and minority interest (68,395) (9,448) (79,248) 62,781
Federal and foreign income tax
(expense) benefit 27,998 7,753 45,766 (5,465)
-------- -------- --------- ---------
Income (loss) before minority interest (40,397) (1,695) (33,482) 57,316
Minority interest (391) (222) (566) 1,444
-------- -------- --------- ---------
Net income (loss) before preferred
Dividends (40,788) (1,917) (34,048) 58,760
Preferred dividends -- (1,887) (497) (7,548)
-------- -------- --------- ---------
Net income (loss) attributable to
Common stockholders before change
in accounting and extraordinary
gains (loss) (40,788) (3,804) (34,545) 51,212
Cumulative effect of change in
accounting principle (net of taxes) -- -- (3,250) --
Extraordinary gains (losses) on early
extinguishment of long-term debt
(net of taxes) -- -- 735 (5,017)
-------- -------- --------- ---------
Net income (loss) attributable to
Common stockholders $ (40,788) $ (3,804) $ (37,060) $ 46,195
======== ======== ========= =========
Earnings (loss) per share:
Basic $ (1.59) $ (.14) $ (1.44) $ 1.64
======== ======== ========= =========
Diluted $ (1.59) $ (.14) $ (1.43) $ 1.59
======== ======== ========= =========
Average shares outstanding:
Basic 25,616 26,732 25,823 28,194
======== ======== ========= =========
Diluted 25,689 27,213 25,927 29,115
======== ======== ========= =========
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W. R. Berkley Corporation
ADDENDUM #1 TO PRESS RELEASE DATED FEBRUARY 24, 2000
Operating Statistics by Insurance
Industry Segment
(Amounts in thousands except per share data)
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For the Three Months For the Year Ended
Ended December 31, December 31,
Regional Insurance (1): 1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net premiums written $ 157,500 $ 140,327 $ 649,849 $ 641,316
Total revenues 182,149 164,157 702,129 682,519
Pre-tax operating (loss)(2) (62,879) (35,417) (89,431) (30,196)
Loss ratio 108.2% 91.6% 84.7% 76.0%
Expense ratio 36.6% 39.6% 36.1% 35.8%
Policyholders' dividend ratio .4% 1.1% .7% .9%
Combined ratio (3) 145.2% 132.3% 121.5% 112.7%
Reinsurance Markets:
Net premiums written $ 77,224 $ 69,846 $ 309,181 $ 269,634
Total revenues 84,720 84,063 341,940 297,144
Pre-tax operating income (2) 1,530 6,023 17,116 30,555
Loss ratio 77.5% 77.1% 76.0% 74.3%
Expense ratio 34.8% 32.2% 33.2% 31.5%
Combined ratio (3) 112.3% 109.3% 109.2% 105.8%
Specialty Insurance:
Net premiums written $ 60,474 $ 60,587 $ 260,380 $ 254,003
Total revenues 74,761 83,336 309,068 311,955
Pre-tax operating income (2) 6,046 19,536 42,677 74,344
Loss ratio 63.1% 66.6% 66.0% 61.8%
Expense ratio 35.5% 30.6% 32.9% 31.7%
Policyholders' dividend ratio .1% .1% .2% .3%
Combined ratio (3) 98.7% 97.3% 99.1% 93.8%
Alternative Markets:
Net premiums written $ 21,061 $ 17,605 $ 122,137 $ 106,195
Total revenues 53,966 53,530 222,276 205,935
Pre-tax operating income (2) 5,940 4,944 30,133 31,371
Loss ratio 72.1% 69.5% 67.4% 63.7%
Expense ratio 46.6% 48.2% 37.3% 36.0%
Combined ratio (3) 118.7% 117.7% 104.7% 99.7%
International(4):
Net premiums written $ 25,808 $ 17,606 $ 86,172 $ 75,106
Total revenues 25,322 21,366 93,878 80,287
Pre-tax operating income (loss)(2) 1,947 (1,980) 4,200 (6,745)
Loss ratio 52.6% 59.3% 53.3% 59.7%
Expense ratio 42.3% 61.0% 46.4% 48.5%
Combined ratio (3) 94.9% 120.3% 99.7% 108.2%
Combined:
Net premiums written $ 342,067 $ 305,971 $ 1,427,719 $ 1,346,254
Total revenues 420,918 406,452 1,669,291 1,577,840
Pre-tax operating income (loss)(2) (47,416) (6,894) 4,695 99,329
Loss ratio 88.2% 80.0% 76.5% 71.2%
Expense ratio 36.9% 37.9% 35.4% 34.9%
Policyholders' dividend ratio .2% .5% .3% .5%
Combined ratio (3) 125.3% 118.4% 112.2% 106.6%
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(1) The regional results were impacted by the purchase of additional reinsurance
which resulted in a reduction in net premiums written of $21.0 million and
an increase in reinsurance recoveries of $35.0 million for 1999. The expense
ratio for the regional group was impacted by the additional reinsurance
premiums and by certain costs directly attributed to the restructuring.
After adjusting for these items, the expense ratio in 1999 would have been
36.0 percent for the fourth quarter and 34.1 percent for the full year.
(2) Pre-tax operating income (loss) represents earnings before the effects of
realized investment gains (losses), the restructuring charge, the change in
accounting principle and extraordinary gains (losses).
(3) Ratios based on statutory accounting practices.
(4) International includes life insurance premiums of $7.8 million and $3.1
million for the three months ended December 31, 1999 and 1998, respectively,
and $24.5 million and $8.0 million for the years ended December 31, 1999 and
1998, respectively. Life insurance is not included in the statutory ratios.
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W. R. Berkley Corporation
ADDENDUM #2 TO PRESS RELEASE DATED FEBRUARY 24, 2000
Supplementary Information
(Amounts in thousands except per share data)
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<CAPTION>
For the Three Months For the Year Ended
Ended December 31, December 31,
---------------------------- ------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
After-tax earnings (loss) amounts:
Operating income (loss) $ (38,409) $ (11,613) $ (23,309) $ 34,702
Restructuring charge (net of
minority interest) -- -- (7,294) --
Extraordinary gain (loss) -- -- 735 (5,017)
Cumulative effect of change in
accounting principle -- -- (3,250) --
Realized investment gains (losses) (2,379) 7,809 (3,942) 16,510
--------- --------- --------- ---------
Net income (loss) $ (40,788) $ (3,804) $ (37,060) $ 46,195
========= ========= ========= =========
After-tax diluted earnings (loss) per share:
Operating income (loss) $ (1.50) $ (.43) (.91) $ 1.19
Restructuring charge (net of
minority interest) -- -- (.28) --
Extraordinary gain (loss) -- -- .03 (.17)
Cumulative effect of change in
accounting principle -- -- (.12) --
Realized investment gains (losses) (.09) .29 (.15) .57
--------- --------- --------- ---------
Net income (loss) $ (1.59) $ (.14) $ (1.43) $ 1.59
========= ========= ========= =========
Net cash provided by operating
activities(1) $ 21,450 $ 112,472 $ 48,515 $ 224,270
========= ========= ========= =========
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<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Balance sheet information:
Total investments (2) $2,975,929 $3,233,458
Total assets 4,784,791 4,983,431
Reserves for losses and loss expenses 2,361,238 2,126,566
Long-term debt 394,792 394,444
Capital Trust Securities 198,126 207,988
Preferred equity -- 98,093
Common Stockholders' equity 591,778 763,188
Common shares outstanding 25,617 26,504
Common stockholders' equity per share (3) 23.10 28.80
</TABLE>
(1) Cash flow for the quarter and year ended December 31, 1998 was impacted
favorably by an assumption of a portfolio of loss reserves, the proceeds
of which were approximately $60 million.
(2) Including trading account receivable from broker and clearing
organizations and trading securities sold but not yet purchased.
(3) Included in the calculation of common stockholders' equity per share are
after-tax unrealized investment losses of $44.5 million as of December
31, 1999 and unrealized investment gains of $54.7 million as of December
31, 1998.
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