W.R. Berkley Corp. Reports Operating Results (10-Q)
W.r. Berkley Corp. has a market cap of $4.08 billion; its shares were traded at around $26.7 with a P/E ratio of 10 and P/S ratio of 0.9. The dividend yield of W.r. Berkley Corp. stocks is 0.9%.WRB is in the portfolios of Robert Olstein of Olstein Financial Alert Fund, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Bruce Kovner of Caxton Associates, John Keeley of Keeley Fund Management, Chuck Royce of Royce& Associates, John Buckingham of Al Frank Asset Management, Inc., Jeremy Grantham of GMO LLC, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: 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 March 31, 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 $888 million and $877 million as of March 31, 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 $57 million and $53 million at March 31, 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.
Preferred Stocks At March 31, 2010, there were 28 preferred stocks in an unrealized loss position, with an aggregate fair value of $209 million and a gross unrealized loss of $10 million. None of the securities had an unrealized loss of greater than 20%. Three of these securities (with an aggregate fair value of $67 million and an aggregate unrealized loss of $1 million) are rated non-investment grade. The Company does not consider any of these securities to be OTTI.
Common Stocks At March 31, 2010, the Company owned one common stock in an unrealized loss position with an aggregate fair value of $9 million and an aggregate unrealized loss of $1 million. The Company does not consider this investment to be OTTI.
Loans Receivable The Company monitors the performance of its loans receivable, including current market conditions for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the contractual terms will not be met, a valuation reserve is established with a charge to net realized capital losses. Loans receivable are reported net of a valuation reserve of $16 million and $14 million at March 31, 2010 and December 31, 2009, respectively.
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