<PAGE> 1
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) April 26, 2000
--------------
W.R. BERKLEY CORPORATION
--------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
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)
Registrant's telephone number, including area code (203) 629-3000
--------------
Not Applicable
-----------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
Reference is made to the press release of Registrant, issued on April 26,
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
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities 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)
April 27, 2000 By: /s/ Eugene G. Ballard
- ---------------------- ---------------------------------------
Eugene G. Ballard
Senior Vice President,
Chief Financial Officer and Treasurer
<PAGE> 4
EXHIBIT INDEX
Exhibits:
- ---------
99.1 Press Release dated April 26, 2000
<PAGE> 1
W.R. BERKLEY CORPORATION
165 MASON STREET, P.O. BOX 2518 NEWS
GREENWICH, CONNECTICUT 06836-2518 RELEASE
(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
RESULTS OF OPERATIONS FOR THE FIRST QUARTER OF 2000
GREENWICH, CT, APRIL 26, 2000 -- W.R. BERKLEY CORPORATION (NASDAQ: BKLY)
today reported that revenues for the first quarter of 2000 increased 4 percent
to $423 million from $408 million for the same period in 1999. Operating income
for the first quarter of 2000 was $5.2 million, or 20 cents per diluted share,
compared with $8.8 million, or 33 cents per diluted share, for the first quarter
of 1999.
Net income for the first quarter was $4.3 million, or 17 cents per diluted
share, compared with a net loss of $1.3 million, or five cents per diluted
share, for the 1999 period. Net income includes realized investment gains,
restructuring charges and changes in accounting principles, which are not part
of operating income.
The first quarter of 2000 includes an after-tax restructuring charge of
$1.2 million, or five cents per diluted share, related to the Company's
reinsurance operations. As previously announced, the reinsurance segment is
withdrawing from the Latin American and Caribbean market. The domestic
reinsurance operations have also been restructured to focus on specialty
reinsurance lines that are expected to produce higher underwriting margins,
while de-emphasizing certain commodity-type lines.
m o r e . . . . . . . . . . . . .
<PAGE> 2
W.R. BERKLEY CORPORATION PAGE 2
In the first quarter of 1999, the Company reported an after-tax restructuring
charge of $7.3 million, or 28 cents per diluted share, primarily related to the
restructuring of its regional property casualty business.
Commenting on the Company's results, William R. Berkley, Chairman and
President, said: "The first quarter represents the start of our improving
results. While the quarter was profitable, many of the operating and pricing
changes are not visible simply by looking at the numbers. The regional
businesses have continued to consolidate operations and increase prices, and
their financial results should continue to improve through the balance of the
year. Our reinsurance business has taken steps to eliminate unprofitable areas
of business and to concentrate on areas where we can deliver value to our
distribution network and customers. It is likely that our reinsurance volume
will decline during the balance of the year as we refocus this business. The
alternative markets group continued to perform satisfactorily with fine results
from Midwest Employers Casualty and a very good quarter at Berkley Risk
Administrators. Results from the specialty division were mixed, with Monitor
Liability and Nautilus performing exceptionally well, Admiral doing
satisfactorily and unacceptable financial results from Carolina Casualty. Our
international operations in Argentina delivered double digit returns, and the
Philippine business was slightly unprofitable. All of our business units are
taking the actions necessary to achieve outstanding operating results.
"Prices are increasing in most lines from seven to ten percent. Generally,
price increases for commercial transportation and workers' compensation are
substantially more, as they need to be. Unfortunately, it takes time for these
price increases to be implemented, and once implemented it takes approximately
five quarters before they are fully reflected in our financial results. We are
moving in the right direction. The process is difficult and slower than we would
like, in part because many of our
m o r e . . . . . . . . . . . . .
<PAGE> 3
W.R. BERKLEY CORPORATION PAGE 3
agents and brokers have never before participated in a period of increasing
prices. We are committed to this path, and we anticipate continuing in this
positive direction. We look forward to an improving balance of the 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)
m o r e . . . . . . . . . . . . .
<PAGE> 4
W.R. BERKLEY CORPORATION PAGE 4
<TABLE>
<CAPTION>
UNAUDITED
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
2000 1999
--------- ---------
Revenues: (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
Net premiums written $ 385,761 $ 380,584
Change in unearned premiums (27,017) (38,612)
--------- ---------
Premiums earned 358,744 341,972
Net investment income 46,928 45,994
Management fees and
Commissions 16,526 18,396
Realized gains on investments 468 728
Other income 658 623
--------- ---------
Total revenues 423,324 407,713
Operating costs and expenses:
Losses and loss expenses 261,759 242,839
Other operating costs
And expenses 145,357 144,225
Interest expense 12,493 12,805
Restructuring charges 1,850 11,505
--------- ---------
Income (loss) before income taxes
And minority interest 1,865 (3,661)
Federal income tax benefit 2,652 5,173
--------- ---------
Income before minority interest 4,517 1,512
Minority interest (171) 960
--------- ---------
Net income before preferred dividends 4,346 2,472
Preferred dividends -- (497)
--------- ---------
Net income attributable to common
Stockholders before change in
Accounting principle 4,346 1,975
Cumulative effect of change in accounting
Principle (net of taxes of $1,750) -- (3,250)
--------- ---------
Net income (loss) attributable
To common stockholders $ 4,346 $ (1,275)
========= =========
Earnings per share:
Basic $ .17 $ (.05)
========= =========
Diluted $ .17 $ (.05)
========= =========
Average shares outstanding:
Basic 25,617 26,325
========= =========
Diluted 25,679 26,503
========= =========
</TABLE>
<PAGE> 5
W.R. BERKLEY CORPORATION PAGE 5
ADDENDUM #1 TO PRESS RELEASE DATED APRIL 26, 2000
OPERATING STATISTICS BY INSURANCE INDUSTRY SEGMENT
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UNAUDITED
FOR THE THREE MONTHS ENDED MARCH 31,
2000 1999
---------- ----------
<S> <C> <C>
Regional Insurance:
Net premiums written $ 166,348 $ 169,105
Total revenues 179,927 178,674
Pre-tax operating income (loss) (1) 1,424 (569)
Loss ratio 73.2% 71.7%
Expense ratio 33.1% 35.4%
Policyholders' dividend ratio .5% .8%
Combined ratio (2) 106.8% 107.9%
Reinsurance:
Net premiums written $ 70,360 $ 78,392
Total revenues 83,089 78,548
Pre-tax operating income (1) 6,093 3,213
Loss ratio 71.1% 77.9%
Expense ratio 34.6% 34.2%
Combined ratio (2) 105.7% 112.1%
Specialty Insurance:
Net premiums written $ 68,262 $ 68,937
Total revenues 76,774 71,770
Pre-tax operating income (1) 3,918 13,377
Loss ratio 78.3% 65.6%
Expense ratio 33.2% 28.7%
Combined ratio (2) 111.5% 94.3%
Alternative Markets:
Net premiums written $ 54,370 $ 46,156
Total revenues 57,199 54,527
Pre-tax operating income (1) 7,396 7,730
Loss ratio 78.6% 70.4%
Expense ratio 28.6% 27.2%
Combined ratio (2) 107.2% 97.6%
International (3):
Net premiums written $ 26,421 $ 17,994
Total revenues 26,183 21,064
Pre-tax operating income (loss) (1) 915 (626)
Loss ratio 55.5% 59.1%
Expense ratio 40.9% 51.0%
Combined ratio (2) 96.4% 110.1%
Combined:
Net premiums written $ 385,761 $ 380,584
Total revenues 423,172 404,583
Pre-tax operating income (1) 19,746 23,125
Loss ratio 73.4% 70.9%
Expense ratio 33.1% 33.8%
Policyholders' dividend ratio .2% .4%
Combined ratio (2) 106.7% 105.1%
</TABLE>
(1) Pre-tax operating income represents earnings before the effects of realized
investment gains, restructuring charges and the effects of changes in
accounting principles.
(2) Ratios are based on statutory accounting practices.
(3) International includes life insurance premiums of $8.3 million and $4.0
million for the three months ended March 31, 2000 and 1999, respectively.
Life insurance is not included in the statutory ratios.
<PAGE> 6
W.R. BERKLEY CORPORATION PAGE 6
ADDENDUM #2 TO PRESS RELEASE DATED APRIL 26, 2000
SUPPLEMENTARY INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UNAUDITED
FOR THE THREE MONTHS ENDED MARCH 31,
-------------------------------------
2000 1999
-------- --------
<S> <C> <C>
After-tax earnings (loss) amounts:
Operating income (1) $ 5,245 $ 8,796
Restructuring charge (net of minority interest) (1,203) (7,294)
Cumulative effect of change in accounting -- (3,250)
Realized investment gains 304 473
-------- --------
Net income (loss) $ 4,346 $ (1,275)
======== ========
After-tax diluted earnings (loss) per share:
Operating income $ .20 $ .33
Restructuring charge (net of minority interest) (.05) (.28)
Cumulative effect of change in accounting -- (.12)
Realized investment gains .02 .02
-------- --------
Net income (loss) $ .17 $ (.05)
======== ========
Cash flow from operations $ 9,914 $ 19,740
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
BALANCE SHEET INFORMATION: 2000 1999
---------- ----------
<S> <C> <C>
Total investments (2) $3,017,861 $2,975,929
Total assets 4,857,450 4,784,791
Reserves for losses and loss expenses 2,398,711 2,361,238
Long-term debt 369,888 394,792
Capital Trust Securities 198,137 198,126
Common Stockholders' equity 598,348 591,778
Common shares outstanding 25,617 25,617
Common Stockholders' equity per share (3) 23.36 23.10
</TABLE>
(1) Operating income includes after-tax catastrophe losses of $5.2 million, or
20 cents per diluted share, for the first quarter of 2000 compared with
$6.8 million, or 26 cents per diluted share, for the first quarter of 1999.
(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 $38.9 million and $44.5 million
as of March 31, 2000 and December 31, 1999, respectively.
