W. R. Berkley Corporation Reports Third Quarter Results

W. R. Berkley Corporation (NYSE:WRB) today reported net income for the third quarter of 2015 of $153 million, or $1.18 per share.

(1) Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains.

(2) Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity.

Third quarter highlights included:

• Return on equity was 19.9% pre-tax and 13.3% after-tax.
• Insurance-Domestic net premiums written grew 6%.
• GAAP combined ratio was 93.7%.
• Realized $54 million net pre-tax gains principally from alternative investment portfolio.
• Started five new businesses.

Commenting on the Company's performance, William R. Berkley, chairman and chief executive officer, said: "We were pleased with our third quarter results. Our loss and expense ratios were in line with our expectations. Most of our operating units delivered excellent returns as margins remain adequate relative to our return objectives. Positive net reserve development continued with loss costs increasing at modest rates. Although we are not immune to global catastrophe losses, our approach to writing business where we can achieve superior long-term risk-adjusted returns again resulted in low volatility in what was a challenging quarter for many companies that operate on a global basis.

"While investment income from fixed maturity securities continued to gradually decline, the overall portfolio provided satisfactory returns as a result of income from various other classes of investments. Repositioning our portfolio to generate somewhat regular capital gains has benefited our total investment return.

"Opportunities continue to be available in the market, and we were able to start several new ventures. Our view at this time is that the cyclical decline in direct insurance pricing will likely be gradual. With our return on equity close to 20% on a pre-tax basis and more than 13% on an after-tax basis, along with modest growth, our Company remains well-positioned.

"We continue to have a favorable view of price levels in most lines of business and look forward to a continuation of positive investment results. As such, we expect the balance of the year will be in line with our expectations and are optimistic about our returns," Mr. Berkley concluded.

Webcast Conference Call

The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on Monday, October 26, 2015 at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at www.wrberkley.com. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call.

About W. R. Berkley Corporation

Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates in three segments of the property casualty business: Insurance-Domestic, Insurance-International and Reinsurance-Global.

Forward Looking Information

This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2015 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new alternative entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts; natural and man-made catastrophic losses, including as a result of terrorist activities; general economic and market activities, including inflation, interest rates, and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response to it, on our results and financial condition; foreign currency and political risks relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Act of 2002, as amended ("TRIA"); the ability of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; potential difficulties with technology and/or data security; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. These risks and uncertainties could cause our actual results for the year 2015 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

(1) Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. GAAP combined ratio is the sum of the loss ratio and the expense ratio.

(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.

(2) Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.

(3) Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains. Management believes that excluding net investment gains provides a useful indicator of trends in the Company’s underlying operations.

(1) Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases, net of related liabilities.

(2) After-tax unrealized investment gains were $227 million and $306 million as of September 30, 2015 and December 31, 2014, respectively. Unrealized currency translation losses were $199 million and $123 million as of September 30, 2015 and December 31, 2014, respectively.

(3) During the third quarter of 2015, the Company repurchased 106,113 shares of its common stock for $5.5 million. During the first nine months of 2015, the Company repurchased 4,502,025 shares of its common stock for $223.7 million.

(4) Book value per share is total common stockholders’ equity divided by the number of common shares outstanding. Tangible book value per share is total common stockholders’ equity excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding.

(1) Total fixed maturity securities had an average rating of AA- and an average duration of 3.2 years.

(2) Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.

(3) Investment funds include an investment in publicly traded common stock of HealthEquity, Inc. (HQY), which is carried on the equity method of accounting. At September 30, 2015, the investment in HQY had a carrying value of $44.2 million and a fair value of $353.7 million.

Investment funds are reported net of related liabilities of $2.2 million.

(1) Supranational represents investments in the North American Development Bank, European Investment Bank and International Bank for Reconstruction & Development.

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