W. R. Berkley(US:WRB)2023-08-03 20:07Investment Gains and Losses - W. R. Berkley Corporation reported a pre-tax net realized gain on investment of $88 million from the sale of Breckenridge IS, Inc.'s property and casualty insurance services division in June 2023[126]. - The company realized a pre-tax gain of $317 million from the sale of a London office building for £718 million in Q1 2022, with a net gain of $251 million after adjustments[127]. - The Company recognized an impairment of $51 million on a real estate investment during the second quarter of 2023[225]. - Net realized and unrealized gains on investments were $91 million in 2023, down from $206 million in 2022, reflecting a pre-tax net realized gain of $88 million from the sale of a division[186]. Reserves and Losses - As of June 30, 2023, the company's net reserves for losses and loss expenses were approximately $15.0 billion, with about $3.1 billion, or 20%, related to the Reinsurance & Monoline Excess segment[141][142]. - The establishment of loss reserves involves complex judgments and is subject to change based on new data and trends[134]. - The company utilizes various actuarial methods to derive loss reserve estimates, including paid loss development and incurred loss development techniques[135]. - The Insurance segment's reserves for losses and loss expenses amounted to $11,902,235 thousand as of June 30, 2023, up from $11,233,924 thousand at the end of 2022, indicating an increase of about 5.9%[144]. - The Reinsurance & Monoline Excess segment's reserves were $3,066,246 thousand as of June 30, 2023, compared to $3,014,955 thousand as of December 31, 2022, reflecting a rise of approximately 1.7%[144]. - The Company recognized COVID-19-related claims losses of approximately $352 million as of June 30, 2023, with $298 million attributed to the Insurance segment and $54 million to the Reinsurance & Monoline Excess segment[149]. - For the six months ended June 30, 2023, the net unfavorable prior year development was $(20,798) thousand, compared to a favorable development of $2,647 thousand for the same period in 2022[148]. - The Company reported an increase in prior year loss reserves of $(28,853) thousand for the six months ended June 30, 2023, compared to $(9,765) thousand for the same period in 2022[148]. - The overall adverse development for the Insurance segment during the six months ended June 30, 2023, included $25 million of adverse development, primarily due to property catastrophe losses[150]. - The favorable development in the Reinsurance & Monoline Excess segment was mainly driven by excess workers' compensation, which benefited from lower claim frequency and favorable claim settlements[154]. Premiums and Revenue - Gross premiums written increased by 8% to $6.386 billion in 2023 from $5.912 billion in 2022, driven by a $412 million increase in the Insurance segment[180]. - Net premiums earned rose by 10% to $5.044 billion in 2023, compared to $4.606 billion in 2022[182]. - Average renewal premium rates for insurance and facultative reinsurance increased by 7.1% in 2023, adjusted for changes in exposures[181]. - Net premiums written increased by 9% to $2,812 million in 2023 from $2,586 million in 2022[201]. - Premiums earned rose by 8% to $2,553 million in 2023 compared to $2,357 million in 2022[202]. - Insurance service fees rose to $58 million in 2023 from $54 million in 2022, mainly due to organic growth within the business[184]. Financial Performance - The Company reported net income to common stockholders of $650 million for the six months ended June 30, 2023, a decrease of 15.4% from $770 million in the same period of 2022[179]. - Net income to common stockholders was $356 million in 2023, compared to $179 million in 2022, driven by an after-tax increase in net investment gains[199]. - The GAAP combined ratio for the consolidated segment was 90.1% in 2023, indicating an underwriting profit, compared to 88.2% in 2022[179]. - The loss ratio for the Insurance segment increased to 62.9% in 2023 from 60.3% in 2022, while the expense ratio rose to 28.4% from 27.9%[179]. - Losses and loss expenses increased to $3,108 million in 2023 from $2,775 million in 2022, with a consolidated loss ratio of 61.6% in 2023 compared to 60.2% in 2022[189]. - Other operating costs and expenses rose to $1,649 million in 2023 from $1,414 million in 2022, with policy acquisition and insurance operating expenses increasing by 11%[190]. Investment Income - The company's investment income is primarily derived from fixed maturity securities, with returns influenced by general interest rates and credit quality[124]. - The Company expects continued fluctuations in investment income from its alternative investments, including private equity and real estate[125]. - Net investment income increased 36% to $469 million in 2023 from $345 million in 2022, primarily due to an $188 million increase in income from fixed maturity securities[183]. - Net investment income surged by 43% to $245 million in 2023 from $172 million in 2022, driven by a $93 million increase in income from fixed maturity securities[203]. Capitalization and Equity - Total common stockholders' equity was $6.9 billion as of June 30, 2023, with stockholders' equity per outstanding share at $26.74[235]. - The Company repurchased 7,098,959 shares of its common stock for $427.6 million during the six months ended June 30, 2023[235]. - Total capitalization, including equity and debt, was $9.7 billion at June 30, 2023, with 29% attributable to debt[236]. - At June 30, 2023, the Company had outstanding debt with a carrying value of $2,836 million, with maturities extending to 2061[233]. Tax and Allowances - The effective income tax rate increased to 21.8% in 2023 from 19.1% in 2022, primarily due to a net reduction in the valuation allowance against foreign tax credits[195]. - The effective income tax rate increased to 22.2% in 2023 from 19.4% in 2022 due to higher foreign and state income taxes[215]. - Loans receivable reported an allowance for expected credit losses of $5 million as of June 30, 2023, up from $2 million at the end of 2022[168]. - Loans receivable had an amortized cost of $182 million, with an allowance for expected credit losses of $5 million as of June 30, 2023[227]. Operating Activities - Cash flow from operating activities increased to $1,154 million for the six months ended June 30, 2023, up from $1,006 million in the same period of 2022, primarily due to increased premium receipts[231]. - The Company declared a regular quarterly cash dividend of $0.11 per share in the second quarter of 2023[235].