W.R. Berkley Corp. Reports Operating Results (10-Q)
W.r. Berkley Corp. has a market cap of $4.09 billion; its shares were traded at around $26.75 with a P/E ratio of 9.8 and P/S ratio of 0.9. The dividend yield of W.r. Berkley Corp. stocks is 1%.WRB is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, John Keeley of Keeley Fund Management, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Michael Price of MFP Investors LLC, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Pioneer Investments, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: For the six months ended June 30, 2010, estimates for claims occurring in prior years decreased by $151 million, before premium offsets, and by $129 million, net of premium offsets. On an accident year basis, the change in prior year reserves for 2010 is comprised of an increase in estimates for claims occurring in accident years 2002 and prior of $23 million and a decrease in estimates for claims occurring in accident years 2003 through 2009 of $174 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.
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. 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 2.7%. As of June 30, 2010, the aggregate blended discount rates ranged from 2.7% to 6.5%, with a weighted average discount rate of 4.4%. The aggregate net discount, after reflecting the effects of ceded reinsurance, was $894 million and $877 million as of June 30, 2010 and December 31, 2009, 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 $102 million and $71 million at June 30, 2010 and December 31, 2009, 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.
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