W.R. Berkley Corp. (WRB, Financial) filed Quarterly Report for the period ended 2009-03-31.
W. R. Berkley Corporation is an insurance holding company which through its subsidiaries operates in all segments of the property casualty insurance business: regional property casualty insurance; reinsurance; specialty lines of insurance; alternative markets; and international. The company's regional insurance operations are conducted primarily in the Midwestern Southern and Northeastern sections of the United States. Reinsurance specialty insurance and alternative markets operations are conducted nationwide. W.R. Berkley Corp. has a market cap of $3.84 billion; its shares were traded at around $23.74 with a P/E ratio of 9.9 and P/S ratio of 0.8. The dividend yield of W.R. Berkley Corp. stocks is 1%. W.R. Berkley Corp. had an annual average earning growth of 23.5% over the past 5 years.
For the three months ended March 31, 2009, the Company reported losses and loss expenses of $610 million. Estimates for claims occurring in prior years decreased by $54 million. On an accident year basis, the change in prior year reserves is comprised of an increase in estimates for claims occurring in accident years 2002 and prior of $16 million and a decrease in estimates for claims occurring in accident years 2003 through 2008 of $70 million. The changes in prior year loss reserve estimates are generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information becomes known regarding individual claims and aggregate claim trends.
By segment, prior year reserves decreased by $17 million for specialty, $16 million for alternative markets, $10 million for regional, $7 million for reinsurance and $4 million for international. For primary business lines, prior year reserves decreased by $29 million for general liability, $13 million for workers compensation and $5 million for property. The decrease in prior year reserves for general liability reflects the favorable loss reserve trends for excess and surplus lines for accident years 2003 through 2008.
Loss Reserve Discount. The Company discounts its liabilities for excess and assumed workers compensation business because of the long period of time over which losses are paid. Discounting is intended to appropriately match losses and loss expenses to income earned on investment securities supporting the liabilities. The expected losses and loss expense payout pattern subject to discounting was derived from the Companys loss payout experience. For non-proportional business, reserves for losses and loss expenses have been discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. As of December 31, 2008, these discount rates ranged from 3.1% to 6.5%, with a weighted average discount rate of 4.6%. For proportional business, reserves for losses and loss expenses have been discounted at the statutory rate permitted by the Department of Insurance of the State of Delaware of 2.5%. The aggregate net discount, after reflecting the effects of ceded reinsurance, was $852 million and $847 million as of March 31, 2009 and December 31, 2008, respectively.
Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are made or revised, the related amount of earned premium, commissions and incurred losses associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $48 million and $49 million at March 31, 2009 and December 31, 2008, respectively. The assumed premium estimates are based upon terms set forth in the reinsurance agreement, information received from ceding companies during the underwriting and negotiation of the agreement, reports received from ceding companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own view of market conditions, economic trends and experience with similar lines of business. These premium estimates represent managements best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.
At March 31, 2009, the Company owned common stock in four companies with an aggregate fair value of $20 million and an aggregate unrealized loss of $19 million. As of March 31, 2009, these investments had been in an unrealized loss position for less than six months. The Company does not consider any of these stocks to be other than temporarily impaired. There were no other common stocks in an unrealized loss position at March 31, 2009.
Read the The complete ReportWRB is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Chris Davis of Davis Selected Advisers.
W. R. Berkley Corporation is an insurance holding company which through its subsidiaries operates in all segments of the property casualty insurance business: regional property casualty insurance; reinsurance; specialty lines of insurance; alternative markets; and international. The company's regional insurance operations are conducted primarily in the Midwestern Southern and Northeastern sections of the United States. Reinsurance specialty insurance and alternative markets operations are conducted nationwide. W.R. Berkley Corp. has a market cap of $3.84 billion; its shares were traded at around $23.74 with a P/E ratio of 9.9 and P/S ratio of 0.8. The dividend yield of W.R. Berkley Corp. stocks is 1%. W.R. Berkley Corp. had an annual average earning growth of 23.5% over the past 5 years.
Highlight of Business Operations:
Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags. For example, as of December 31, 2008, initial loss estimates for accident years 1999 through 2007 were decreased by an average of 3% for lines with short reporting lags and by an average of 12% for lines with long reporting lags. For the latest accident year ended December 31, 2008, initial loss estimates were $1.7 billion for lines with short reporting lags and $1.1 billion for lines with long reporting lags.For the three months ended March 31, 2009, the Company reported losses and loss expenses of $610 million. Estimates for claims occurring in prior years decreased by $54 million. On an accident year basis, the change in prior year reserves is comprised of an increase in estimates for claims occurring in accident years 2002 and prior of $16 million and a decrease in estimates for claims occurring in accident years 2003 through 2008 of $70 million. The changes in prior year loss reserve estimates are generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information becomes known regarding individual claims and aggregate claim trends.
By segment, prior year reserves decreased by $17 million for specialty, $16 million for alternative markets, $10 million for regional, $7 million for reinsurance and $4 million for international. For primary business lines, prior year reserves decreased by $29 million for general liability, $13 million for workers compensation and $5 million for property. The decrease in prior year reserves for general liability reflects the favorable loss reserve trends for excess and surplus lines for accident years 2003 through 2008.
Loss Reserve Discount. The Company discounts its liabilities for excess and assumed workers compensation business because of the long period of time over which losses are paid. Discounting is intended to appropriately match losses and loss expenses to income earned on investment securities supporting the liabilities. The expected losses and loss expense payout pattern subject to discounting was derived from the Companys loss payout experience. For non-proportional business, reserves for losses and loss expenses have been discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. As of December 31, 2008, these discount rates ranged from 3.1% to 6.5%, with a weighted average discount rate of 4.6%. For proportional business, reserves for losses and loss expenses have been discounted at the statutory rate permitted by the Department of Insurance of the State of Delaware of 2.5%. The aggregate net discount, after reflecting the effects of ceded reinsurance, was $852 million and $847 million as of March 31, 2009 and December 31, 2008, respectively.
Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are made or revised, the related amount of earned premium, commissions and incurred losses associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $48 million and $49 million at March 31, 2009 and December 31, 2008, respectively. The assumed premium estimates are based upon terms set forth in the reinsurance agreement, information received from ceding companies during the underwriting and negotiation of the agreement, reports received from ceding companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own view of market conditions, economic trends and experience with similar lines of business. These premium estimates represent managements best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.
At March 31, 2009, the Company owned common stock in four companies with an aggregate fair value of $20 million and an aggregate unrealized loss of $19 million. As of March 31, 2009, these investments had been in an unrealized loss position for less than six months. The Company does not consider any of these stocks to be other than temporarily impaired. There were no other common stocks in an unrealized loss position at March 31, 2009.
Read the The complete ReportWRB is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Chris Davis of Davis Selected Advisers.
