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Connecticut-based W.R. Berkley Corp. bounced back strongly from last year’s losses, reporting $53.040 million in operating earnings and $72.731 million net income for the fourth quarter, compared to a $10.606 million operating loss and a $64.164 million net loss in 2001.
The company’s full-year results were equally good – $160.655 million in operating profits; $175.045 million in net income and a 32 percent rise in gross premiums written from $2.208 billion in 2001 to $3.208 billion last year.
Other highlights announced in Berkley’s report included:
— Gross premiums written for continuing business grew 56% in the fourth quarter to $885 million.
— GAAP combined ratio for continuing business was 93.3% in the fourth quarter compared with a combined ratio of 112.4% in the prior year quarter.
— The paid loss ratio for continuing business decreased to 43.5% in the fourth quarter from 61.0% in the prior year quarter, and the paid-to-incurred loss ratio decreased to 67.8% in 2002 from 76.8% in 2001.
— Cash flow from operations increased to $223 million in the fourth quarter compared with $81 million in the prior year quarter. For the full year, cash flow from operations increased to $766 million from $210 million in 2001.
Commenting on the Company’s results, William R. Berkley, chairman and CEO, stated:”Our excellent results continue to reflect strategic decisions made over the past several years to consolidate our operations and focus on our most profitable lines of business. This focus also resulted in the early recognition of past reserve deficiencies, and thus, we are able to reflect in our current results the benefits of higher prices and improved terms and conditions.”
He noted that the company was continuing to be cautious in its reserving practices “to guard against the possibility of future adverse reserve development,” and added that, “We believe our current financial statements reflect a prudent view in an uncertain world.”
“The earned premiums reported on our 2002 financial statements only partially reflect the increased pricing that was in effect in 2002,” Berkley continued, “If in fact year-end price levels had been in effect for the full year and earned in that year, our 2002 results would have been substantially better than those reported. As a result, we expect significantly better results in 2003.”
“This year, even with lower investment returns, we achieved a return on beginning capital of over 18%, and a return of 17% on an operating basis. We look ahead with continued enthusiasm and believe overall industry problems will result in a continuation of the current pricing environment of increasing rates at least through 2004,” Berkley concluded.