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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 $3.96 billion; its shares were traded at around $24.75 with a P/E ratio of 11.51 and P/S ratio of 0.84. The dividend yield of W.r. Berkley Corp. stocks is 0.97%. W.r. Berkley Corp. had an annual average earning growth of 23.5% over the past 5 years. Highlight of Business Operations: 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 2009, specialty reserve development (before premium offsets) includes favorable reserve development of $6 million, $10 million, $20 million, $29 million and $13 million for accident years 2003 through 2007, respectively, and unfavorable reserve development of $20 million in prior years. For 2008, specialty reserve development (before premium offsets) includes favorable reserve development of $8 million, $17 million, $19 million, $29 million and $32 million for accident years 2003 through 2007, respectively, partially offset by unfavorable reserve development of $13 million in prior years.
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 Company’s 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 September 30, 2009, these discount rates ranged from 2.5% to 6.5%, with a weighted average discount rate of 4.5%. 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 $872 million and $847 million as of September 30, 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 $64 million and $49 million at September 30, 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
Read the The complete ReportWRB is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, John Keeley of Keeley Fund Management, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc.
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