SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2007
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to .
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Commission file number 1-15202
W. R. BERKLEY
CORPORATION
(Exact name of registrant as
specified in its charter)
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Delaware
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22-1867895
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification Number)
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475 Steamboat Road, Greenwich, CT
(Address of principal
executive offices)
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06830
(Zip Code)
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Registrants telephone number, including area code:
(203) 629-3000
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $.20 per share
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New York Stock Exchange
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Rights to purchase Series A Junior
Participating Preferred Stock
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New York Stock Exchange
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6.75% Trust Originated Preferred Securities
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
þ
No
o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act.
Yes
o
No
þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes
þ
No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Annual Report on
Form 10-K
or any amendment to this Annual Report on
Form 10-K.
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated
filer
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(Do not check if a smaller reporting company)
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Smaller reporting
company
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Act).
Yes
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No
þ
The aggregate market value of the voting and non-voting common
stock held by non-affiliates (computed by reference to the price
at which the common stock was last sold) as of the last business
day of the Registrants most recently completed second
fiscal quarter was $5,476,577,114.
Number of shares of common stock, $.20 par value,
outstanding as of February 20, 2008: 176,918,107.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the Companys 2007 Annual Report to
Stockholders for the year ended December 31, 2007 are
incorporated herein by reference in Part II, and portions
of the registrants definitive proxy statement, which will
be filed with the Securities and Exchange Commission within
120 days after December 31, 2007, are incorporated
herein by reference in Part III.
W. R.
BERKLEY CORPORATION
ANNUAL REPORT ON
FORM 10-K
December 31, 2007
2
SAFE
HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This is a Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995. This document may
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Some of the
forward-looking statements can be identified by the use of
forward-looking words such as believes,
expects, potential,
continued, may, will,
should, seeks,
approximately, predicts,
intends, plans, estimates,
anticipates or the negative version of those words
or other comparable words. Any forward-looking statements
contained herein including statements related to our outlook for
the industry and for our performance for the year 2008 and
beyond, are based upon our 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 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:
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the cyclical nature of the property casualty industry;
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the long-tail and potentially volatile nature of the insurance
and reinsurance business;
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product demand and pricing;
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claims development and the process of estimating reserves;
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the uncertain nature of damage theories and loss amounts;
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natural and man-made catastrophic losses, including as a result
of terrorist activities;
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the impact of significant and increasing competition;
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the success of our new ventures or acquisitions and the
availability of other opportunities;
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the availability of reinsurance;
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exposure as to coverage for terrorist acts and our retention
under the Terrorism Risk Insurance Programs Reauthorization Act
of 2007 (TRIPRA)
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the ability of our reinsurers to pay reinsurance recoverables
owed to us;
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investment risks, including those of our portfolio of fixed
income securities and investments in equity securities,
including merger arbitrage investments;
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exchange rate and political risks relating to our international
operations;
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legislative and regulatory developments, including those related
to alleged anti-competitive or other improper business practices
in the insurance industry;
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changes in the ratings assigned to us by rating agencies;
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availability of dividends from our insurance company
subsidiaries;
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our ability to attract and retain qualified employees; and
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other risks detailed from time to time in this
Form 10-K
and in our other filings with the Securities and Exchange
Commission (SEC).
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We describe these risks and uncertainties in greater detail in
Item 1A, Risk Factors. These risks and uncertainties could
cause our actual results for the year 2008 and beyond to differ
materially from those expressed in any forward-looking statement
we make. Any projections of growth in our net premiums written
and management fees would not necessarily result in commensurate
levels of underwriting and operating profits. Our future
financial performance is dependent upon factors discussed
elsewhere in this
Form 10-K
and our other SEC filings. Forward-looking statements speak only
as of the date on which they are made.
3
PART I
W. R. Berkley Corporation, a Delaware corporation, is an
insurance holding company that is among the largest commercial
lines writers in the United States and operates in five segments
of the property casualty insurance business:
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Specialty lines of insurance, including excess and surplus
lines, premises operations, professional liability and
commercial automobile
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Regional commercial property casualty insurance
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Alternative markets, including workers compensation and
the management of self-insurance programs
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Reinsurance, including treaty, facultative and Lloyds
business
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International
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Our holding company structure provides us with the flexibility
to respond to local or specific market conditions and to pursue
specialty business niches. It also allows us to be closer to our
customers in order to better understand their individual needs
and risk characteristics. Our structure allows us to capitalize
on the benefits of economies of scale through centralized
capital, investment and reinsurance management, and actuarial,
financial and corporate legal staff support.
Unless otherwise indicated, all references in this
Form 10-K
to W. R. Berkley, we, us,
our, the Company or similar terms refer
to W. R. Berkley Corporation together with its subsidiaries.
Our specialty insurance and reinsurance operations are conducted
nationwide. Regional insurance operations are conducted
primarily in the Midwest, Northeast, Southern (excluding Florida
and Louisiana) and Mid Atlantic regions of the United States.
Alternative markets operations are conducted throughout the
United States. Our international operations are conducted in
Australia, Hong Kong, South America, the United Kingdom and
Continental Europe.
4
Net premiums written, as reported based on United States
generally accepted accounting principles (GAAP), for
each of the past five years were as follows:
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Year Ended December 31,
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2007
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2006
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2005
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2004
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2003
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(Amounts in thousands)
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Net premiums written:
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Specialty
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$
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1,704,880
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$
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1,814,479
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$
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1,827,865
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$
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1,497,567
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$
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1,258,273
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Regional
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1,267,451
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1,235,302
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1,196,487
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1,128,800
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963,988
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Alternative markets
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656,369
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651,255
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669,774
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640,491
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505,830
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Reinsurance
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682,241
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892,769
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719,540
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823,772
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832,634
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International
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265,048
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225,188
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190,908
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175,731
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109,790
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Total
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$
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4,575,989
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$
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4,818,993
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$
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4,604,574
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$
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4,266,361
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$
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3,670,515
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Percentage of net premiums written:
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Specialty
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37.3
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%
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37.7
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%
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39.8
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%
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35.1
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%
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34.2
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%
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Regional
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27.7
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25.6
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26.0
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26.5
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26.3
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Alternative markets
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14.3
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13.5
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14.5
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15.0
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13.8
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Reinsurance
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14.9
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18.5
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15.6
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19.3
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22.7
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International
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5.8
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4.7
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4.1
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4.1
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3.0
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Total
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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The following sections describe our insurance segments and their
operating units. These operating units underwrite on behalf of
one or more affiliated insurance companies within the group
pursuant to underwriting management agreements. Certain
operating units are identified by us for descriptive purposes
only and are not legal entities.
Twenty of our twenty-three insurance company subsidiaries have
A.M. Best Company, Inc. (A.M. Best)
ratings of A+ (Superior) which is
A.M. Bests second highest rating out of 15 possible
ratings by A.M. Best. Carolina Casualty Insurance Company
and W. R. Berkley Insurance (Europe), Limited have
A.M. Best ratings of A (Excellent) which is
A.M. Bests third highest rating. Investors Guaranty
Life Insurance Company, which the Company purchased in 2007,
does not have an A.M. Best rating. A.M. Bests
ratings are based upon factors of concern to policyholders,
insurance agents and brokers and are not directed toward the
protection of investors. A.M. Best states: While
Bests Financial Strength Ratings reflect [its] opinion as
to a companys financial strength and ability to meet its
ongoing obligations to policyholders, they are not a warranty,
nor are they a recommendation of a specific policy form,
contract, rate or claim practice. A.M. Best reviews
its ratings on a periodic basis, and ratings of the
Companys subsidiaries are therefore subject to change.
SPECIALTY
Our specialty segment underwrites complex and sophisticated
third-party liability risks, principally within excess and
surplus lines. Excess and surplus lines differ from standard
market lines in that excess and surplus lines are generally free
of rate and form regulation and provide coverage for more
complex and hard-to-place risks. The primary specialty lines of
business are premises and completed operations liability,
professional liability, commercial automobile, property and
products liability lines. The specialty business is conducted
through nine operating units. The specialty units deliver their
products through a variety of distribution channels depending on
the customer base and particular risks insured. The customers in
this segment are highly diverse.
Admiral Insurance Company
(Admiral) provides
excess and surplus lines coverage that generally involves a
moderate to high degree of hazard due to the nature of the class
of coverage or type of business insured. Admiral concentrates on
general liability, professional liability, property, and excess
and umbrella liability lines of business.
5
Admiral products are distributed by wholesale brokers. The
average annual premium per policy was approximately $29,000 in
2007.
Nautilus Insurance Company
(Nautilus) insures
excess and surplus risks for small to medium-sized commercial
risks with low to moderate susceptibility to loss. Admitted
business is also written through an affiliate, Great Divide
Insurance Company. A substantial portion of Nautilus
business is written on a binding authority basis, subject to
certain contractual limitations. The average annual premium per
policy was approximately $3,000 in 2007.
Carolina Casualty Insurance Company
(Carolina) provides commercial insurance products
and services to the transportation industry with an emphasis on
intermediate and long-haul trucking and various classes of
business and public auto. Carolina operates as an admitted
carrier in all states.
Vela Insurance Services, LLC
(Vela)
underwrites excess and surplus lines casualty business with a
primary focus on contractors along with a portfolio of
miscellaneous professional liability. Vela underwrites a variety
of classes nationwide through a network of appointed excess and
surplus lines brokers. Vela also underwrites
wrap-up
policies for large residential projects, primarily in
California, through a managing general agency. The average
annual premium per policy was approximately $45,000 in 2007.
Berkley Specialty Underwriting Managers LLC
(Berkley Specialty) has three underwriting
divisions. The specialty casualty division underwrites excess
and surplus lines general liability coverage with an emphasis on
products liability. The entertainment and sports division
underwrites property casualty insurance products, both on an
admitted and non-admitted basis, for the entertainment industry
and sports-related organizations. The environmental division
underwrites specialty insurance products to environmental
customers such as contractors, consultants and owners of sites
and facilities.
Monitor Liability Managers,
Inc.
(Monitor) specializes in
professional liability insurance, including directors and
officers liability, employment practices liability,
lawyers professional liability, management liability,
non-profit directors and officers liability and
accountants preferred liability.
Berkley Underwriting Partners, LLC
(Berkley
Underwriting Partners) underwrites specialty insurance
products through program administrators and managing general
underwriters. Berkley Underwriting Partners underwrites business
nationwide on an admitted and non-admitted basis.
Clermont Specialty Managers,
Ltd.
(Clermont) underwrites package
insurance programs, including workers compensation, for
luxury condominium, cooperative and rental apartment buildings
and restaurants in the New York City and Chicago metropolitan
areas.
Berkley Aviation, LLC
(Aviation) underwrites
general and specialty aviation insurance. It underwrites
coverage for airlines, helicopters, miscellaneous general
aviation operations, non-owned aircraft, fixed-base operations,
control towers, airports and related businesses.
Select Specialty Managers, LLC
(Select),
which began operations in May 2007, specializes in underwriting
professional liability insurance with a particular emphasis on
lawyers, accountants, medical facilities and miscellaneous
E&O exposures. Selects products are distributed
through a select number of brokers.
American Mining Insurance Company
(American
Mining), which was acquired in October 2007, specializes
in writing workers compensation insurance for the mining
industry.
Berkley Life Sciences, LLC
(Berkley Life
Science), which began operations in May 2007, underwrites
casualty products to the life science marketplace, including
medical devices, biotechnology and pharmaceutical companies.
6
The following table sets forth the percentage of gross premiums
written by specialty unit:
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Year Ended December 31,
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2007
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2006
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2005
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2004
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2003
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Admiral
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28.2
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%
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28.5
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%
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27.8
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%
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32.2
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%
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33.3
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%
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Nautilus
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18.2
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17.3
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17.1
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18.7
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18.3
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Carolina
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14.9
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14.3
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13.6
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16.0
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14.8
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Vela
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7.9
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11.9
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14.1
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9.6
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10.0
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Berkley Specialty
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9.2
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9.0
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8.6
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3.3
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Monitor
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7.4
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7.1
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8.0
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11.1
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13.2
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Berkley Underwriting Partners
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6.3
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6.2
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7.9
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5.9
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5.8
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Clermont
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3.4
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3.0
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2.8
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3.2
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3.4
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Aviation
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3.3
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2.7
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0.1
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Select
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0.8
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American Mining
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0.4
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Berkley Life Science
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0.0
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Surety(1)
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1.2
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Total
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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100.0
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%
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(1)
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Surety was transferred to the regional segment in 2004.
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The following table sets forth the percentages of gross premiums
written, by line, by our specialty insurance operations:
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Year Ended December 31,
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2007
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2006
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2005
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2004
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2003
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Premises operations
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38.0
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%
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42.2
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%
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43.7
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%
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40.2
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%
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40.4
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%
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Commercial automobile
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15.8
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15.0
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15.0
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17.0
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17.3
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Property
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14.4
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12.2
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9.1
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9.5
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10.1
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Products liability
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12.0
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13.1
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13.8
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14.0
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9.1
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Professional liability
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9.9
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8.9
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9.9
|
|
|
|
12.9
|
|
|
|
15.1
|
|
Other
|
|
|
9.9
|
|
|
|
8.6
|
|
|
|
8.5
|
|
|
|
6.4
|
|
|
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REGIONAL
Our regional companies provide commercial insurance products to
customers primarily in 42 states and the District of
Columbia. Key clients of this segment are small-to-mid-sized
businesses and state and local governmental entities. The
regional business is sold through a network of non-exclusive
independent agents who are compensated on a commission basis.
The regional companies are organized geographically in order to
provide them with the flexibility to adapt quickly to local
market conditions.
Continental Western Group
(Continental Western
Group) is based in Des Moines, Iowa and operates in
18 states in the Midwest and Pacific Northwest.
Acadia Insurance Company
(Acadia) is based in
Westbrook, Maine and operates in 8 states in the Northeast.
Union Standard Insurance Group
(Union
Standard) is based in Irving, Texas and operates in
9 states in southern states other than Florida and
Louisiana.
Berkley Mid Atlantic Group
is based in Glen Allen,
Virginia and operates in 7 states in the Mid Atlantic
region and District of Columbia.
7
Berkley Surety Group, Inc.
(Berkley
Surety) offers surety bonds on a nationwide basis through
a network of thirteen regional and branch offices.
Berkley Regional Specialty Insurance Company
(BRSIC) offers excess and surplus lines products
through independent agents in our regional territories.
The following table sets forth the percentage of gross premiums
written by each region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Continental Western Group
|
|
|
33.2
|
%
|
|
|
33.1
|
%
|
|
|
34.3
|
%
|
|
|
35.2
|
%
|
|
|
36.3
|
%
|
Acadia
|
|
|
24.3
|
|
|
|
25.1
|
|
|
|
25.7
|
|
|
|
26.4
|
|
|
|
27.1
|
|
Union Standard
|
|
|
17.0
|
|
|
|
16.6
|
|
|
|
15.2
|
|
|
|
15.0
|
|
|
|
15.1
|
|
Berkley Mid Atlantic Group
|
|
|
15.6
|
|
|
|
15.5
|
|
|
|
14.6
|
|
|
|
13.8
|
|
|
|
12.8
|
|
Berkley Surety
|
|
|
2.7
|
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
2.2
|
|
|
|
|
|
BRSIC
|
|
|
1.1
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assigned risk plans(1)
|
|
|
6.1
|
|
|
|
7.2
|
|
|
|
8.2
|
|
|
|
7.4
|
|
|
|
8.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Assigned risk premiums are written on behalf of assigned risk
plans managed by the Company and 100% reinsured by the
respective state-sponsored assigned risk pools.
|
The following table sets forth the percentages of gross premiums
written, by line, by our regional insurance operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Commercial Multi-Peril
|
|
|
34.8
|
%
|
|
|
35.5
|
%
|
|
|
35.8
|
%
|
|
|
36.6
|
%
|
|
|
36.6
|
%
|
Automobile
|
|
|
25.8
|
|
|
|
25.3
|
|
|
|
25.4
|
|
|
|
26.0
|
|
|
|
25.9
|
|
Workers Compensation
|
|
|
17.8
|
|
|
|
17.9
|
|
|
|
17.6
|
|
|
|
17.1
|
|
|
|
17.5
|
|
Assigned risk plans
|
|
|
6.1
|
|
|
|
7.2
|
|
|
|
8.2
|
|
|
|
7.4
|
|
|
|
8.7
|
|
Other
|
|
|
15.5
|
|
|
|
14.1
|
|
|
|
13.0
|
|
|
|
12.9
|
|
|
|
11.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
The following table sets forth the percentages of direct
premiums written, by state, by our regional insurance operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
State
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Massachusetts
|
|
|
7.1
|
%
|
|
|
7.0
|
%
|
|
|
7.5
|
%
|
|
|
7.6
|
%
|
|
|
7.7
|
%
|
Texas
|
|
|
6.4
|
|
|
|
6.2
|
|
|
|
6.0
|
|
|
|
6.1
|
|
|
|
6.4
|
|
Kansas
|
|
|
6.1
|
|
|
|
6.8
|
|
|
|
6.7
|
|
|
|
7.5
|
|
|
|
7.9
|
|
Pennsylvania
|
|
|
5.8
|
|
|
|
5.6
|
|
|
|
5.5
|
|
|
|
5.1
|
|
|
|
4.2
|
|
New Hampshire
|
|
|
5.1
|
|
|
|
5.3
|
|
|
|
5.4
|
|
|
|
5.9
|
|
|
|
6.2
|
|
Maine
|
|
|
4.9
|
|
|
|
5.1
|
|
|
|
5.3
|
|
|
|
5.7
|
|
|
|
6.2
|
|
Iowa
|
|
|
4.2
|
|
|
|
4.6
|
|
|
|
4.8
|
|
|
|
4.7
|
|
|
|
4.7
|
|
Nebraska
|
|
|
3.8
|
|
|
|
4.0
|
|
|
|
4.0
|
|
|
|
4.2
|
|
|
|
4.5
|
|
Colorado
|
|
|
3.7
|
|
|
|
3.3
|
|
|
|
3.1
|
|
|
|
3.0
|
|
|
|
3.0
|
|
North Carolina
|
|
|
3.4
|
|
|
|
3.2
|
|
|
|
3.1
|
|
|
|
3.1
|
|
|
|
3.2
|
|
Vermont
|
|
|
3.3
|
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
3.6
|
|
|
|
3.8
|
|
Minnesota
|
|
|
3.2
|
|
|
|
3.4
|
|
|
|
3.9
|
|
|
|
4.0
|
|
|
|
3.8
|
|
Washington
|
|
|
3.1
|
|
|
|
2.3
|
|
|
|
2.0
|
|
|
|
1.8
|
|
|
|
1.7
|
|
Missouri
|
|
|
3.0
|
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
3.6
|
|
|
|
3.5
|
|
Connecticut
|
|
|
2.9
|
|
|
|
2.9
|
|
|
|
2.9
|
|
|
|
2.8
|
|
|
|
1.7
|
|
Mississippi
|
|
|
2.8
|
|
|
|
2.4
|
|
|
|
2.0
|
|
|
|
2.0
|
|
|
|
2.1
|
|
Arkansas
|
|
|
2.5
|
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
2.4
|
|
|
|
1.9
|
|
Wisconsin
|
|
|
2.5
|
|
|
|
2.7
|
|
|
|
2.9
|
|
|
|
3.1
|
|
|
|
2.8
|
|
Virginia
|
|
|
2.4
|
|
|
|
2.6
|
|
|
|
2.8
|
|
|
|
2.8
|
|
|
|
2.7
|
|
South Dakota
|
|
|
2.2
|
|
|
|
2.6
|
|
|
|
3.0
|
|
|
|
3.3
|
|
|
|
3.6
|
|
Maryland
|
|
|
2.1
|
|
|
|
2.1
|
|
|
|
1.7
|
|
|
|
1.5
|
|
|
|
1.2
|
|
New York
|
|
|
2.1
|
|
|
|
1.8
|
|
|
|
1.9
|
|
|
|
1.7
|
|
|
|
0.8
|
|
Illinois
|
|
|
1.7
|
|
|
|
2.0
|
|
|
|
1.8
|
|
|
|
2.0
|
|
|
|
2.0
|
|
Tennessee
|
|
|
1.6
|
|
|
|
1.7
|
|
|
|
1.7
|
|
|
|
1.8
|
|
|
|
4.1
|
|
Oklahoma
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
1.6
|
|
|
|
1.5
|
|
|
|
1.5
|
|
Idaho
|
|
|
1.2
|
|
|
|
1.2
|
|
|
|
1.2
|
|
|
|
1.2
|
|
|
|
1.5
|
|
Other
|
|
|
11.3
|
|
|
|
10.0
|
|
|
|
9.6
|
|
|
|
8.0
|
|
|
|
7.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALTERNATIVE
MARKETS
Our alternative markets operations specialize in insuring,
reinsuring and administering self-insurance programs and other
alternative risk transfer mechanisms. Our clients include
commercial and governmental entities employers, employer groups,
insurers, and other groups or entities seeking alternative ways
to manage their exposure to risks. Often, this results in our
customers choosing to retain more of this risk than they might
otherwise retain in the traditional insurance market. In
addition to providing insurance products, the alternative
markets segment also provides a wide variety of fee-based
services, including claims, administrative and consulting
services.
Midwest Employers Casualty Company
(MECC)
provides excess workers compensation coverage and risk
management services to self-insured employers and groups as well
as to insurance companies in the workers compensation
business. Excess workers compensation is coverage above an
amount retained, or self-insured, by the employer or group and
includes large deductible and reinsurance programs.
9
Key Risk Insurance Company
(Key Risk) offers
primary workers compensation insurance principally in the
southeastern United States. Key Risk focuses on middle-market
accounts in specialty niches and on larger self-insured
entities, with a special emphasis on managed care services. An
affiliate, Key Risk Management Services, Inc., provides third
party administration of self-insured workers compensation
programs.
Preferred Employers Insurance Company
(Preferred
Employers) offers workers compensation insurance in
California with an emphasis on owner-managed small employers.
Berkley Risk Administrators Company, LLC
(BRAC) underwrites property casualty insurance
primarily for human services and not-for profit entities and
provides risk management services to business, governmental
entities, assigned risk plans, non-profit entities and insurance
companies. BRACs services include third-party
administration, claims administration, risk management,
accounting services, loss control and safety consulting,
management information systems, regulatory compliance and
alternative markets program management.
Berkley Medical Excess Underwriters, LLC
(Medical
Excess) underwrites medical malpractice excess insurance
and reinsurance coverage and services to hospitals and hospital
associations.
Berkley Net Underwriters, LLC
(Berkley Net)
uses a web-based system to allow producers to quote, bind and
service insurance policies. Its initial focus is on the
workers compensation market.
Berkley Accident and Health, LLC
(Berkley
A&H) underwrites accident and health insurance and
reinsurance products.
The following table sets forth the percentages of gross premiums
written by each alternative markets unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
MECC
|
|
|
45.1
|
%
|
|
|
44.6
|
%
|
|
|
41.6
|
%
|
|
|
36.9
|
%
|
|
|
37.8
|
%
|
Key Risk
|
|
|
17.6
|
|
|
|
16.8
|
|
|
|
15.4
|
|
|
|
13.6
|
|
|
|
12.9
|
|
Preferred Employers
|
|
|
11.3
|
|
|
|
16.0
|
|
|
|
20.9
|
|
|
|
26.4
|
|
|
|
27.4
|
|
BRAC
|
|
|
7.7
|
|
|
|
7.0
|
|
|
|
7.6
|
|
|
|
7.1
|
|
|
|
8.2
|
|
Medical Excess
|
|
|
4.6
|
|
|
|
5.4
|
|
|
|
6.2
|
|
|
|
6.4
|
|
|
|
8.0
|
|
Berkley Net
|
|
|
3.1
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Berkley A&H
|
|
|
2.6
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assigned risk plans(1)
|
|
|
8.0
|
|
|
|
9.0
|
|
|
|
8.3
|
|
|
|
9.6
|
|
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Assigned risk premiums are written on behalf of assigned risk
plans managed by the Company and 100% reinsured by the
respective state-sponsored assigned risk pools.
|
The following table sets forth services fees for insurance
services business conducted by BRAC and Key Risk Management
Services, Inc. (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Services fees
|
|
$
|
97,292
|
|
|
$
|
104,812
|
|
|
$
|
110,697
|
|
|
$
|
109,344
|
|
|
$
|
101,715
|
|
REINSURANCE
Our reinsurance operations consist of seven operating units,
which specialize in underwriting property casualty reinsurance
on both a treaty and a facultative basis on behalf of Berkley
Insurance Company. Treaty reinsurance is the reinsurance of all
or a specified portion or category of risks underwritten by the
ceding company during the term of the agreement. Facultative
reinsurance is the reinsurance of individual risks whereby a
reinsurer generally has the opportunity to analyze and
separately underwrite a risk prior to agreeing to be bound.
10
Signet Star Re, LLC
(Treaty) focuses on
underwriting specialty lines of business, including professional
liability, umbrella, workers compensation, commercial
automobile and trucking. Treaty emphasizes casualty excess of
loss treaties and seeks significant participations in order to
have greater influence over the terms and conditions of
coverage. Treaty business is produced through reinsurance
brokers or intermediaries as opposed to direct relationships
with the ceding companies.
Facultative ReSources, Inc.
(Fac
Re) specializes in underwriting individual certificate and
program facultative business developed through brokers. Its
experienced underwriters seek to offset the underwriting and
pricing cycles in the underlying insurance business by working
closely with ceding company clients to develop appropriate
underwriting criteria and through superior risk selection.
Lloyds of London
(Lloyds)
represents a broad range of mainly short-tail classes of
business, which are written through Lloyds.
BF Re Underwriters, LLC
(BF Re) is a direct
facultative casualty reinsurance underwriting manager that
serves clients through a nationwide network of regional offices.
BF Res primary lines of business are professional
liability, excess and surplus, umbrella and medical malpractice.
Berkley Risk Solutions, Inc.
(Berkley
Risk Solutions) underwrites insurance and
reinsurance-based financial solutions to insurance companies and
self-insured entities. It also underwrites traditional treaty
reinsurance of domestic medical malpractice insurers.
Watch Hill Fac Management, LLC
(Watch Hill)
underwrites facultative reinsurance business on an excess of
loss basis or, in the case of umbrella business, on a
contributing excess basis, for most commercial casualty lines of
business with an emphasis on general liability, products
liability, construction risks, automobile liability and umbrella.
Hong Kong Reinsurance Division
(Hong Kong),
which was formed in 2006, provides most major classes of general
insurance business in the Asia Pacific region with an initial
focus on property facultative reinsurance.
The following table sets forth the percentages of gross premiums
written by each reinsurance unit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Treaty
|
|
|
39.6
|
%
|
|
|
36.1
|
%
|
|
|
42.2
|
%
|
|
|
38.8
|
%
|
|
|
37.5
|
%
|
Fac Re
|
|
|
17.3
|
|
|
|
16.2
|
|
|
|
23.1
|
|
|
|
27.3
|
|
|
|
30.4
|
|
Lloyds
|
|
|
22.6
|
|
|
|
18.7
|
|
|
|
21.6
|
|
|
|
24.4
|
|
|
|
25.9
|
|
BF Re
|
|
|
11.2
|
|
|
|
9.6
|
|
|
|
12.3
|
|
|
|
9.1
|
|
|
|
6.2
|
|
Berkley Risk Solutions
|
|
|
4.6
|
|
|
|
16.6
|
|
|
|
0.8
|
|
|
|
0.4
|
|
|
|
|
|
Watch Hill
|
|
|
3.9
|
|
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong(1)
|
|
|
0.8
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Hong Kong reinsurance division was transferred to the
international segment on January 1, 2008.
|
The following table sets forth the percentages of gross premiums
written, by property versus casualty business, by our
reinsurance operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Casualty
|
|
|
76.2
|
%
|
|
|
83.2
|
%
|
|
|
81.2
|
%
|
|
|
79.4
|
%
|
|
|
79.4
|
%
|
Property
|
|
|
23.8
|
|
|
|
16.8
|
|
|
|
18.8
|
|
|
|
20.6
|
|
|
|
20.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
INTERNATIONAL
Our international segment has operations in Australia, South
America, the United Kingdom and Continental Europe. The Hong
Kong division of the reinsurance segment was transferred to the
international segment on January 1, 2008. We apply the same
long-term strategies that we use in our domestic
operations decentralized structures with products
and services tailored to the local environments.
W. R. Berkley Insurance (Europe), Limited
(Berkley
Europe) is a London-based specialty casualty insurer that
writes professional indemnity, directors and
officers liability, medical malpractice, general
liability, construction risks and personal accident and travel
business principally in the United Kingdom and through its
branch offices in Spain and Australia.
Berkley International Argentina
S.A.
(South America) provides
commercial and personal property casualty insurance primarily in
Argentina and surety business through its subsidiary in Brazil.
Berkley Re Australia
(Australia), which began
operations in December 2007, provides property and casualty
reinsurance on a treaty and facultative basis in Australia.
The following table sets forth the percentages of direct
premiums for our international operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Berkley Europe
|
|
|
52.6
|
%
|
|
|
53.1
|
%
|
|
|
56.5
|
%
|
|
|
58.1
|
%
|
|
|
40.7
|
%
|
South America
|
|
|
46.8
|
|
|
|
42.5
|
|
|
|
39.5
|
|
|
|
38.9
|
|
|
|
54.7
|
|
Australia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippines(1)
|
|
|
0.6
|
|
|
|
4.4
|
|
|
|
4.0
|
|
|
|
3.0
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Philippines operation was sold in March 2007.
|
12
Results
by Industry Segment
Summary financial information about our operating segments is
presented on a GAAP basis in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Amounts in thousands)
|
|
|
Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
2,006,027
|
|
|
$
|
1,952,928
|
|
|
$
|
1,816,483
|
|
|
$
|
1,491,104
|
|
|
$
|
1,204,746
|
|
Income before income taxes
|
|
$
|
516,931
|
|
|
$
|
479,105
|
|
|
$
|
345,896
|
|
|
$
|
275,689
|
|
|
$
|
200,428
|
|
Regional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,347,800
|
|
|
$
|
1,289,869
|
|
|
$
|
1,230,793
|
|
|
$
|
1,112,801
|
|
|
$
|
923,965
|
|
Income before income taxes
|
|
$
|
215,228
|
|
|
$
|
201,417
|
|
|
$
|
216,495
|
|
|
$
|
184,152
|
|
|
$
|
153,292
|
|
Alternative Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
874,899
|
|
|
$
|
878,531
|
|
|
$
|
856,792
|
|
|
$
|
774,397
|
|
|
$
|
569,463
|
|
Income before income taxes
|
|
$
|
248,080
|
|
|
$
|
291,416
|
|
|
$
|
238,462
|
|
|
$
|
133,438
|
|
|
$
|
88,742
|
|
Reinsurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
893,855
|
|
|
$
|
993,120
|
|
|
$
|
849,207
|
|
|
$
|
915,276
|
|
|
$
|
763,861
|
|
Income before income taxes
|
|
$
|
178,302
|
|
|
$
|
135,424
|
|
|
$
|
63,606
|
|
|
$
|
85,995
|
|
|
$
|
58,201
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
284,558
|
|
|
$
|
248,894
|
|
|
$
|
208,836
|
|
|
$
|
167,849
|
|
|
$
|
85,145
|
|
Income (loss) before income taxes
|
|
$
|
44,457
|
|
|
$
|
34,447
|
|
|
$
|
20,890
|
|
|
$
|
18,790
|
|
|
$
|
3,242
|
|
Other(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
146,500
|
|
|
$
|
31,489
|
|
|
$
|
34,728
|
|
|
$
|
50,808
|
|
|
$
|
82,928
|
|
Loss before income taxes
|
|
$
|
(145,364
|
)
|
|
$
|
(153,164
|
)
|
|
$
|
(114,812
|
)
|
|
$
|
(59,551
|
)
|
|
$
|
(14,601
|
)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,553,639
|
|
|
$
|
5,394,831
|
|
|
$
|
4,996,839
|
|
|
$
|
4,512,235
|
|
|
$
|
3,630,108
|
|
Income before income tax
|
|
$
|
1,057,634
|
|
|
$
|
988,645
|
|
|
$
|
770,537
|
|
|
$
|
638,513
|
|
|
$
|
489,304
|
|
|
|
|
(1)
|
|
Represents corporate revenues, corporate expenses, realized
investment gains and losses, and revenues and expenses from
investments in wholly-owned, non-insurance subsidiaries that are
consolidated for financial reporting purposes.
|
13
The table below represents summary underwriting ratios, on a
GAAP basis for our insurance segments. The combined ratio
represents a measure of underwriting profitability, excluding
investment income. A number in excess of 100 indicates an
underwriting loss; a number below 100 indicates an underwriting
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Specialty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
57.3
|
%
|
|
|
59.1
|
%
|
|
|
62.4
|
%
|
|
|
61.7
|
%
|
|
|
63.3
|
%
|
Expense ratio
|
|
|
26.7
|
|
|
|
25.0
|
|
|
|
25.1
|
|
|
|
25.6
|
|
|
|
25.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
84.0
|
%
|
|
|
84.1
|
%
|
|
|
87.5
|
%
|
|
|
87.3
|
%
|
|
|
88.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
59.1
|
%
|
|
|
59.7
|
%
|
|
|
55.8
|
%
|
|
|
55.7
|
%
|
|
|
56.3
|
%
|
Expense ratio
|
|
|
31.4
|
|
|
|
30.6
|
|
|
|
30.6
|
|
|
|
31.2
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
90.5
|
%
|
|
|
90.3
|
%
|
|
|
86.4
|
%
|
|
|
86.9
|
%
|
|
|
87.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
59.2
|
%
|
|
|
53.5
|
%
|
|
|
59.4
|
%
|
|
|
70.6
|
%
|
|
|
68.7
|
%
|
Expense ratio
|
|
|
23.1
|
|
|
|
22.1
|
|
|
|
20.1
|
|
|
|
21.2
|
|
|
|
24.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
82.3
|
%
|
|
|
75.6
|
%
|
|
|
79.5
|
%
|
|
|
91.8
|
%
|
|
|
92.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
65.3
|
%
|
|
|
72.0
|
%
|
|
|
74.1
|
%
|
|
|
69.5
|
%
|
|
|
69.6
|
%
|
Expense ratio
|
|
|
31.3
|
|
|
|
27.8
|
|
|
|
30.1
|
|
|
|
29.1
|
|
|
|
29.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
96.6
|
%
|
|
|
99.8
|
%
|
|
|
104.2
|
%
|
|
|
98.6
|
%
|
|
|
99.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
62.6
|
%
|
|
|
64.2
|
%
|
|
|
66.5
|
%
|
|
|
61.0
|
%
|
|
|
58.7
|
%
|
Expense ratio
|
|
|
32.4
|
|
|
|
32.0
|
|
|
|
29.6
|
|
|
|
30.0
|
|
|
|
38.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
95.0
|
%
|
|
|
96.2
|
%
|
|
|
96.1
|
%
|
|
|
91.0
|
%
|
|
|
97.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss ratio
|
|
|
59.6
|
%
|
|
|
61.0
|
%
|
|
|
62.4
|
%
|
|
|
63.0
|
%
|
|
|
63.4
|
%
|
Expense ratio
|
|
|
28.5
|
|
|
|
27.0
|
|
|
|
26.9
|
|
|
|
27.4
|
|
|
|
28.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
|
|
|
88.1
|
%
|
|
|
88.0
|
%
|
|
|
89.3
|
%
|
|
|
90.4
|
%
|
|
|
91.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Investments
Investment results, before income taxes, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Amounts in thousands)
|
|
|
Average investments, at cost
|
|
$
|
12,560,638
|
|
|
$
|
11,062,491
|
|
|
$
|
9,221,710
|
|
|
$
|
7,176,955
|
|
|
$
|
5,326,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income, before expenses
|
|
$
|
684,112
|
|
|
$
|
593,413
|
|
|
$
|
409,915
|
|
|
$
|
293,866
|
|
|
$
|
244,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent earned on average investments
|
|
|
5.4
|
%
|
|
|
5.3
|
%
|
|
|
4.4
|
%
|
|
|
4.1
|
%
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized investment gains
|
|
$
|
14,938
|
|
|
$
|
9,648
|
|
|
$
|
17,209
|
|
|
$
|
48,268
|
|
|
$
|
81,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized investment gains (losses)(1)
|
|
$
|
(94,957
|
)
|
|
$
|
113,539
|
|
|
$
|
(118,934
|
)
|
|
$
|
(4,424
|
)
|
|
$
|
7,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents the change in unrealized investment gains (losses)
for available for sale securities and investments in
partnerships and affiliates.
|
For comparison, the following are the coupon returns for
selected bond indices and the dividend returns for the S&P
500
®
Index:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
Lehman Brothers U.S. Aggregate Bond Index
|
|
|
5.5
|
%
|
|
|
5.3
|
%
|
|
|
4.9
|
%
|
|
|
5.0
|
%
|
|
|
5.3
|
%
|
Lehman Brothers Municipal Bond Index
|
|
|
4.7
|
%
|
|
|
4.8
|
%
|
|
|
4.7
|
%
|
|
|
4.8
|
%
|
|
|
4.8
|
%
|
S&P
500
®
Index
|
|
|
2.0
|
%
|
|
|
2.2
|
%
|
|
|
1.8
|
%
|
|
|
1.9
|
%
|
|
|
2.3
|
%
|
The percentages of the fixed maturity portfolio categorized by
contractual maturity, based on fair value, on the dates
indicated, are set forth below. Actual maturities may differ
from contractual maturities because certain issuers may have the
right to call or prepay certain obligations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
1 year or less
|
|
|
7.4
|
%
|
|
|
11.2
|
%
|
|
|
10.6
|
%
|
|
|
10.8
|
%
|
|
|
1.6
|
%
|
Over 1 year through 5 years
|
|
|
19.4
|
|
|
|
17.5
|
|
|
|
13.1
|
|
|
|
15.8
|
|
|
|
21.1
|
|
Over 5 years through 10 years
|
|
|
30.2
|
|
|
|
26.3
|
|
|
|
26.6
|
|
|
|
19.0
|
|
|
|
19.0
|
|
Over 10 years
|
|
|
25.1
|
|
|
|
22.8
|
|
|
|
32.1
|
|
|
|
36.4
|
|
|
|
36.8
|
|
Mortgage-backed securities
|
|
|
17.9
|
|
|
|
22.2
|
|
|
|
17.6
|
|
|
|
18.0
|
|
|
|
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
and Loss Adjustment Expense Reserves
To recognize liabilities for unpaid losses, either known or
unknown, insurers establish reserves, which is a balance sheet
account representing estimates of future amounts needed to pay
claims and related expenses with respect to insured events which
have occurred. Estimates and assumptions relating to reserves
for losses and loss expenses are based on complex and subjective
judgments, often including the interplay of specific
uncertainties with related accounting and actuarial
measurements. Such estimates are also susceptible to change as
significant periods of time may elapse between the occurrence of
an insured loss, the report of the loss to the insurer, the
ultimate determination of the cost of the loss and the
insurers payment of that loss.
In general, when a claim is reported, claims personnel establish
a case reserve for the estimated amount of the
ultimate payment. The estimate represents an informed judgment
based on general reserving practices and reflects the experience
and knowledge of the claims personnel regarding the nature and
value of the specific type of
15
claim. Reserves are also established on an aggregate basis to
provide for losses incurred but not reported (IBNR)
to the insurer, potential inadequacy of case reserves and the
estimated expenses of settling claims, including legal and other
fees and general expenses of administrating the claims
adjustment process. Reserves are established based upon the then
current legal interpretation of coverage provided.
In examining reserve adequacy, several factors are considered in
addition to the economic value of losses. These factors include
historical data, legal developments, changes in social attitudes
and economic conditions, including the effects of inflation. The
actuarial process relies on the basic assumption that past
experience, adjusted judgmentally for the effects of current
developments and anticipated trends, is an appropriate basis for
predicting future outcomes. Reserve amounts are necessarily
based on managements informed estimates and judgments
using currently available data. As additional experience and
other data become available and are reviewed, these estimates
and judgments may be revised. This may result in reserve
increases or decreases that would be reflected in our results in
periods in which such estimates and assumptions are changed.
Reserves do not represent an exact calculation of liability.
Rather, reserves represent an estimate of what management
expects the ultimate settlement and claim administration will
cost. While the methods for establishing the reserves are well
tested over time, some of the major assumptions about
anticipated loss emergence patterns are subject to unanticipated
fluctuation. These estimates, which generally involve actuarial
projections, are based on managements assessment of facts
and circumstances then known, as well as estimates of future
trends in claims severity and frequency, judicial theories of
liability and other factors, including the actions of third
parties which are beyond the Companys control. These
variables are affected by external and internal events, such as
inflation and economic volatility, judicial and litigation
trends, reinsurance coverage, legislative changes and claim
handling and reserving practices, which make it more difficult
to accurately predict claim costs. The inherent uncertainties of
estimating reserves are greater for certain types of liabilities
where long periods of time elapse before a definitive
determination of liability is made. Because setting reserves is
inherently uncertain, the Company cannot assure that its current
reserves will prove adequate in light of subsequent events.
We discount our liabilities for excess workers
compensation business and the workers compensation portion
of our reinsurance 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. These discount
rates range from 3.7% to 6.5% with a weighted average discount
rate of 4.9%. 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 2.6%. The aggregate net discount, after reflecting
the effects of ceded reinsurance, is $787,988,000, $699,883,000
and $575,485,000 at December 31, 2007, 2006 and 2005,
respectively. The increase in the aggregate discount from 2006
to 2007 and from 2005 to 2006 resulted from the increase in
workers compensation gross reserves.
To date, known asbestos and environmental claims at our
insurance company subsidiaries have not had a material impact on
our operations. These claims have not materially impacted us
because these subsidiaries generally did not insure the larger
industrial companies which are subject to significant
environmental exposures.
Our net reserves for losses and loss adjustment expenses
relating to asbestos and environmental claims were $41,590,000
and $37,473,000 at December 31, 2007 and 2006,
respectively. The Companys gross reserves for losses and
loss adjustment expenses relating to asbestos and environmental
claims were $60,836,000 and $49,937,000 at December 31,
2007 and 2006, respectively. Net incurred losses and loss
expenses for reported asbestos and environmental claims were
approximately $7,029,000, $3,000,000 and $1,853,000 in 2007,
2006 and 2005, respectively. Net paid losses and loss expenses
for reported asbestos and environmental claims were
approximately $2,912,000, $2,980,000 and $2,658,000 in 2007,
2006 and 2005, respectively. The estimation of these liabilities
is subject to significantly greater than normal variation and
uncertainty because it is difficult to make a reasonable
actuarial estimate of these liabilities due to the absence of a
generally accepted actuarial methodology for these exposures and
the potential affect of significant unresolved legal matters,
including coverage issues as well as the cost of litigating the
legal issues. Additionally, the determination of ultimate
damages and the final allocation of such damages to financially
responsible parties are highly uncertain.
16
The table below provides a reconciliation of the beginning of
year and end of year property casualty reserves for the
indicated years (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Net reserves at beginning of year
|
|
$
|
6,947,597
|
|
|
$
|
5,867,290
|
|
|
$
|
4,722,842
|
|
Net reserves of company acquired
|
|
|
68,392
|
|
|
|
|
|
|
|
|
|
Net provision for losses and loss expenses(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
Claims occurring during the current year(b)
|
|
|
2,837,647
|
|
|
|
2,791,500
|
|
|
|
2,531,655
|
|
(Decrease)/Increase in estimates for claims occurring in prior
years(c)
|
|
|
(105,879
|
)
|
|
|
26,663
|
|
|
|
186,728
|
|
Decrease in discount for prior years
|
|
|
46,808
|
|
|
|
39,507
|
|
|
|
57,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,778,576
|
|
|
|
2,857,670
|
|
|
|
2,776,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net payments for claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year
|
|
|
538,364
|
|
|
|
456,073
|
|
|
|
447,018
|
|
Prior years
|
|
|
1,433,304
|
|
|
|
1,321,290
|
|
|
|
1,184,707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,971,668
|
|
|
|
1,777,363
|
|
|
|
1,631,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net reserves at end of year
|
|
|
7,822,897
|
|
|
|
6,947,597
|
|
|
|
5,867,290
|
|
Ceded reserves at end of year
|
|
|
855,137
|
|
|
|
836,672
|
|
|
|
844,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross reserves at end of year
|
|
$
|
8,678,034
|
|
|
$
|
7,784,269
|
|
|
$
|
6,711,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Net provision for loss and loss expenses excludes $1,002, $6,828
and $5,629 in 2007, 2006 and 2005, respectively, relating to the
policyholder benefits incurred on life insurance that are
included in the statement of income.
|
|
(b)
|
|
Claims occurring during the current year are net of discounts of
$117,177, $133,965 and $103,558 in 2007, 2006 and 2005,
respectively.
|
|
(c)
|
|
The increase in estimates for claims occurring in prior years is
net of discounts of $17,736, $29,940 and $26,845 in 2007, 2006
and 2005, respectively. On an undiscounted basis, the estimates
for claims occurring in prior years before decreased by $88,143
in 2007 and increased by $56,603 and $213,573 in 2006 and 2005,
respectively.
|
Also, see Item 7, Managements Discussion and
Analysis of Financial Condition and Results of Operations
for further information regarding the increase in estimates for
claims occurring in prior years.
A reconciliation between the reserves as of December 31,
2007 as reported in the accompanying consolidated GAAP financial
statements and those reported on the basis of statutory
accounting principles (SAP) is as follows (amounts
in thousands):
|
|
|
|
|
Net reserves reported on a SAP basis
|
|
$
|
7,758,993
|
|
Additions (deductions) to statutory reserves:
|
|
|
|
|
International property & casualty reserves
|
|
|
308,014
|
|
Loss reserve discounting(1)
|
|
|
(244,260
|
)
|
Other
|
|
|
150
|
|
|
|
|
|
|
Net reserves reported on a GAAP basis
|
|
|
7,822,897
|
|
Ceded reserves reclassified as assets
|
|
|
855,137
|
|
|
|
|
|
|
Gross reserves reported on a GAAP basis
|
|
$
|
8,678,034
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For statutory purposes, we use a discount rate of 2.6% for
non-proportional business as permitted by the Department of
Insurance of the State of Delaware.
|
17
The following table presents the development of net reserves for
1997 through 2007. The top line of the table shows the estimated
reserves for unpaid losses and loss expenses recorded at the
balance sheet date for each of the indicated years. This
represents the estimated amount of losses and loss expenses for
claims arising in all prior years that are unpaid at the balance
sheet date, including losses that had been incurred but not
reported to us. The upper portion of the table shows the
re-estimated amount of the previously recorded reserves based on
experience as of the end of each succeeding year. The estimate
changes as more information becomes known about the frequency
and severity of claims for individual years.
The cumulative redundancy (deficiency) represents
the aggregate change in the estimates over all prior years. For
example, the 1997 reserves have developed a $36 million
redundancy over ten years. That amount has been reflected in
income over the ten years. The impact on the results of
operations of the past three years of changes in reserve
estimates is shown in the reconciliation tables above. It should
be noted that the table presents a run off of
balance sheet reserves, rather than accident or policy year loss
development. Therefore, each amount in the table includes the
effects of changes in reserves for all prior years. For example,
assume a claim that occurred in 1997 is reserved for $2,000 as
of December 31, 1997. Assuming this claim estimate was
changed in 2007 to $2,300, and was settled for $2,300 in 2006,
the $300 deficiency would appear as a deficiency in each year
from 1997 through 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
1997
|
|
|
1998
|
|
|
1999
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
(Amounts in millions)
|
|
|
Net reserves, discounted
|
|
$
|
1,433
|
|
|
$
|
1,583
|
|
|
$
|
1,724
|
|
|
$
|
1,818
|
|
|
$
|
2,033
|
|
|
$
|
2,323
|
|
|
$
|
3,505
|
|
|
$
|
4,723
|
|
|
$
|
5,867
|
|
|
$
|
6,948
|
|
|
$
|
7,823
|
|
Reserve discount
|
|
|
190
|
|
|
|
187
|
|
|
|
196
|
|
|
|
223
|
|
|
|
243
|
|
|
|
293
|
|
|
|
393
|
|
|
|
503
|
|
|
|
575
|
|
|
|
700
|
|
|
|
788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net reserves, undiscounted
|
|
$
|
1,623
|
|
|
$
|
1,770
|
|
|
$
|
1,920
|
|
|
$
|
2,041
|
|
|
$
|
2,276
|
|
|
$
|
2,616
|
|
|
$
|
3,898
|
|
|
$
|
5,226
|
|
|
$
|
6,442
|
|
|
$
|
7,648
|
|
|
$
|
8,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net re-estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year later
|
|
$
|
1,580
|
|
|
$
|
1,798
|
|
|
$
|
1,934
|
|
|
$
|
2,252
|
|
|
$
|
2,450
|
|
|
$
|
2,889
|
|
|
$
|
4,220
|
|
|
$
|
5,440
|
|
|
$
|
6,499
|
|
|
$
|
7,560
|
|
|
|
|
|
Two years later
|
|
|
1,566
|
|
|
|
1,735
|
|
|
|
2,082
|
|
|
|
2,397
|
|
|
|
2,671
|
|
|
|
3,242
|
|
|
|
4,552
|
|
|
|
5,588
|
|
|
|
6,578
|
|
|
|
|
|
|
|
|
|
Three years later
|
|
|
1,446
|
|
|
|
1,805
|
|
|
|
2,203
|
|
|
|
2,520
|
|
|
|
2,932
|
|
|
|
3,611
|
|
|
|
4,720
|
|
|
|
5,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four years later
|
|
|
1,463
|
|
|
|
1,856
|
|
|
|
2,260
|
|
|
|
2,634
|
|
|
|
3,233
|
|
|
|
3,769
|
|
|
|
4,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five years later
|
|
|
1,494
|
|
|
|
1,859
|
|
|
|
2,330
|
|
|
|
2,841
|
|
|
|
3,339
|
|
|
|
3,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six years later
|
|
|
1,488
|
|
|
|
1,886
|
|
|
|
2,449
|
|
|
|
2,889
|
|
|
|
3,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seven years later
|
|
|
1,495
|
|
|
|
1,955
|
|
|
|
2,460
|
|
|
|
3,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eight years later
|
|
|
1,539
|
|
|
|
1,958
|
|
|
|
2,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine years later
|
|
|
1,537
|
|
|
|
2,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ten years later
|
|
|
1,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative redundancy (deficiency), undiscounted
|
|
$
|
36
|
|
|
$
|
(254
|
)
|
|
$
|
(644
|
)
|
|
$
|
(992
|
)
|
|
$
|
(1,258
|
)
|
|
$
|
(1,366
|
)
|
|
$
|
(1,051
|
)
|
|
$
|
(537
|
)
|
|
$
|
(136
|
)
|
|
$
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative amount of net liability paid through:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year later
|
|
$
|
365
|
|
|
$
|
496
|
|
|
$
|
584
|
|
|
$
|
702
|
|
|
$
|
794
|
|
|
$
|
599
|
|
|
$
|
929
|
|
|
$
|
1,185
|
|
|
$
|
1,321
|
|
|
$
|
1,433
|
|
|
|
|
|
Two years later
|
|
|
574
|
|
|
|
795
|
|
|
|
1,011
|
|
|
|
1,255
|
|
|
|
1,191
|
|
|
|
1,216
|
|
|
|
1,749
|
|
|
|
2,107
|
|
|
|
2,342
|
|
|
|
|
|
|
|
|
|
Three years later
|
|
|
737
|
|
|
|
1,032
|
|
|
|
1,426
|
|
|
|
1,501
|
|
|
|
1,594
|
|
|
|
1,792
|
|
|
|
2,388
|
|
|
|
2,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four years later
|
|
|
852
|
|
|
|
1,306
|
|
|
|
1,567
|
|
|
|
1,722
|
|
|
|
1,971
|
|
|
|
2,223
|
|
|
|
2,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five years later
|
|
|
1,033
|
|
|
|
1,387
|
|
|
|
1,699
|
|
|
|
1,964
|
|
|
|
2,245
|
|
|
|
2,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six years later
|
|
|
1,068
|
|
|
|
1,448
|
|
|
|
1,831
|
|
|
|
2,138
|
|
|
|
2,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seven years later
|
|
|
1,112
|
|
|
|
1,522
|
|
|
|
1,934
|
|
|
|
2,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eight years later
|
|
|
1,163
|
|
|
|
1,583
|
|
|
|
2,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine years later
|
|
|
1,208
|
|
|
|
1,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ten years later
|
|
|
1,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
The following table presents the development of gross reserves
for 1997 through 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
1997
|
|
|
1998
|
|
|
1999
|
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
|
(Amounts in millions)
|
|
|
Net reserves, discounted
|
|
$
|
1,433
|
|
|
$
|
1,583
|
|
|
$
|
1,724
|
|
|
$
|
1,818
|
|
|
$
|
2,033
|
|
|
$
|
2,323
|
|
|
$
|
3,505
|
|
|
$
|
4,723
|
|
|
$
|
5,867
|
|
|
$
|
6,947
|
|
|
$
|
7,823
|
|
Ceded reserves
|
|
|
477
|
|
|
|
538
|
|
|
|
617
|
|
|
|
658
|
|
|
|
731
|
|
|
|
845
|
|
|
|
687
|
|
|
|
727
|
|
|
|
845
|
|
|
|
837
|
|
|
|
855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross reserves, discounted
|
|
|
1,910
|
|
|
|
2,121
|
|
|
|
2,341
|
|
|
|
2,476
|
|
|
|
2,764
|
|
|
|
3,168
|
|
|
|
4,192
|
|
|
|
5,450
|
|
|
|
6,712
|
|
|
|
7,784
|
|
|
|
8,678
|
|
Reserve discount
|
|
|
241
|
|
|
|
248
|
|
|
|
250
|
|
|
|
286
|
|
|
|
324
|
|
|
|
384
|
|
|
|
462
|
|
|
|
573
|
|
|
|
654
|
|
|
|
761
|
|
|
|
867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross reserves, undiscounted
|
|
$
|
2,151
|
|
|
$
|
2,369
|
|
|
$
|
2,591
|
|
|
$
|
2,762
|
|
|
$
|
3,088
|
|
|
$
|
3,552
|
|
|
$
|
4,654
|
|
|
$
|
6,023
|
|
|
$
|
7,366
|
|
|
$
|
8,545
|
|
|
$
|
9,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross re-estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year later
|
|
$
|
2,132
|
|
|
$
|
2,390
|
|
|
$
|
2,653
|
|
|
$
|
2,827
|
|
|
$
|
3,153
|
|
|
$
|
3,957
|
|
|
$
|
5,030
|
|
|
$
|
6,241
|
|
|
$
|
7,406
|
|
|
$
|
8,509
|
|
|
|
|
|
Two years later
|
|
|
2,096
|
|
|
|
2,389
|
|
|
|
2,556
|
|
|
|
2,730
|
|
|
|
3,461
|
|
|
|
4,353
|
|
|
|
5,380
|
|
|
|
6,382
|
|
|
|
7,529
|
|
|
|
|
|
|
|
|
|
Three years later
|
|
|
2,010
|
|
|
|
2,218
|
|
|
|
2,385
|
|
|
|
2,900
|
|
|
|
3,777
|
|
|
|
4,744
|
|
|
|
5,546
|
|
|
|
6,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four years later
|
|
|
1,871
|
|
|
|
2,079
|
|
|
|
2,465
|
|
|
|
3,054
|
|
|
|
4,103
|
|
|
|
4,885
|
|
|
|
5,807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five years later
|
|
|
1,787
|
|
|
|
2,102
|
|
|
|
2,564
|
|
|
|
3,267
|
|
|
|
4,192
|
|
|
|
5,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six years later
|
|
|
1,795
|
|
|
|
2,139
|
|
|
|
2,684
|
|
|
|
3,296
|
|
|
|
4,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seven years later
|
|
|
1,805
|
|
|
|
2,212
|
|
|
|
2,682
|
|
|
|
3,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eight years later
|
|
|
1,857
|
|
|
|
2,198
|
|
|
|
2,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine years later
|
|
|
1,842
|
|
|
|
2,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ten Years later
|
|
|
1,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross cumulative redundancy (deficiency)
|
|
$
|
243
|
|
|
$
|
86
|
|
|
$
|
(223
|
)
|
|
$
|
(714
|
)
|
|
$
|
(1,340
|
)
|
|
$
|
(1,580
|
)
|
|
$
|
(1,153
|
)
|
|
$
|
(577
|
)
|
|
$
|
(163
|
)
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance
We follow a common industry practice of reinsuring a portion of
our exposures and paying to reinsurers a part of the premiums
received on the policies that we write. Reinsurance is purchased
principally to reduce net liability on individual risks and to
protect against catastrophic losses. Although reinsurance does
not legally discharge an insurer from its primary liability for
the full amount of the policies, it does make the assuming
reinsurer contractually liable to the insurer to the extent of
the reinsurance coverage. We monitor the financial condition of
our reinsurers and attempt to place our coverages only with
substantial, financially sound carriers. As a result, generally
the reinsurers who reinsure our casualty insurance must have an
A.M. Best rating of A (Excellent) or better
with at least $500 million in policyholder surplus and the
reinsurers who cover our property insurance must have an
A.M. Best rating of A-(Excellent) or better
with at least $250 million in policyholder surplus.
Regulation
Our insurance subsidiaries are subject to varying degrees of
regulation and supervision in the jurisdictions in which they do
business, and the Company believes that it is in compliance in
all material respects with such regulations. They are subject to
statutes which delegate regulatory, supervisory and
administrative powers to state insurance commissioners. This
regulation relates to such matters as the standards of solvency
which must be met and maintained; the licensing of insurers and
their agents; the nature of and limitations on investments;
deposits of securities for the benefit of policyholders;
approval of certain policy forms and premium rates; periodic
examination of the affairs of insurance companies; annual and
other reports required to be filed on the financial condition of
insurers or for other purposes; establishment and maintenance of
reserves for unearned premiums and losses; and requirements
regarding numerous other matters. Our property casualty
subsidiaries, other than excess and surplus and reinsurance
subsidiaries, must generally file all rates with the insurance
department of each state in which they operate. Our excess and
surplus and reinsurance subsidiaries generally operate free of
rate and form regulation.
In addition to regulatory supervision of our insurance
subsidiaries, we are subject to state statutes governing
insurance holding company systems. Typically, such statutes
require that we periodically file information with the
appropriate state insurance commissioner, including information
concerning our capital structure, ownership, financial condition
and general business operations. Under the terms of applicable
state statutes, any person or
19
entity desiring to purchase more than a specified percentage
(commonly 10%) of our outstanding voting securities would be
required to obtain regulatory approval of the purchase. Further,
state insurance statutes typically place limitations on the
amount of dividends or other distributions payable by insurance
companies in order to protect their solvency. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital
Resources.
Various state and federal organizations, including Congressional
committees and the National Association of Insurance
Commissioners (NAIC), have been conducting reviews
into various aspects of the insurance business. No assurance can
be given that future legislative or regulatory changes resulting
from such activity will not adversely affect our insurance
subsidiaries.
The NAIC utilizes a Risk Based Capital (RBC) formula
that is designed to measure the adequacy of an insurers
statutory surplus in relation to the risks inherent in its
business. The RBC formula develops a risk adjusted target level
of adjusted statutory capital by applying certain factors to
various asset, premium and reserve items. The RBC Model Law
provides for four incremental levels of regulatory attention for
insurers whose surplus is below the calculated RBC target. These
levels of attention range in severity from requiring the insurer
to submit a plan for corrective action to actually placing the
insurer under regulatory control. The RBC of each of our
domestic insurance subsidiaries was above the authorized RBC
control level as of December 31, 2007.
The Gramm-Leach-Bliley Act, or Financial Services Modernization
Act of 1999 (the Act), was enacted in 1999 and
significantly affects the financial services industry, including
insurance companies, banks and securities firms. The Act
modifies federal law to permit the creation of financial holding
companies, which, as regulated by the Act, can maintain
cross-holdings in insurance companies, banks and securities
firms to an extent not previously allowed. The Act also permits
or facilitates certain types of combinations or affiliations for
financial holding companies. The Act establishes a functional
regulatory scheme under which state insurance departments will
maintain primary regulation over insurance activities, subject
to provisions for certain federal preemptions.
Our insurance company subsidiaries are also subject to
assessment by state guaranty funds when an insurer in a
particular jurisdiction has been judicially declared insolvent
and insufficient funds are available from the liquidated company
to pay policyholders and claimants. The protection afforded
under a states guaranty fund to policyholders of the
insolvent insurer varies from state to state. Generally, all
licensed property casualty insurers are considered to be members
of the fund, and assessments are based upon their pro rata share
of direct written premiums. The NAIC Model Post-Assessment
Guaranty Fund Act, which many states have adopted, limits
assessments to an insurer to 2% of its subject premium and
permits recoupment of assessments through rate setting.
Likewise, several states (or underwriting organizations of which
our insurance subsidiaries are required to be members) have
limited assessment authority with regard to deficits in certain
lines of business.
We receive funds from our insurance company subsidiaries in the
form of dividends and management fees for certain management
services. Annual dividends in excess of maximum amounts
prescribed by state statutes may not be paid without the
approval of the insurance commissioner of the state in which an
insurance subsidiary is domiciled.
The Terrorism Risk Insurance Act of 2002 became effective
November 26, 2002, was amended on December 22, 2005 by
the Terrorism Risk Insurance Extension Act of 2005 and further
amended effective December 26, 2007 by the Terrorism Risk
Insurance Program Reauthorization Act of 2007(collectively,
TRIA). TRIA established a Federal program that
provides for a system of shared public and private compensation
for insured losses resulting from acts of terrorism. The program
is effective through December 31, 2014. TRIA is applicable
to almost all commercial lines of property and casualty
insurance but excludes commercial auto, burglary and theft,
surety, professional liability and farm owners multi-peril
insurance. Insurers with direct commercial property and casualty
insurance exposure in the United States are required to
participate in the program and make available coverage for
certified acts of terrorism. The most recent amendment to TRIA
broadened the definition of certified acts to include domestic
terrorism. Federal participation will be triggered under TRIA
when the Secretary of Treasury certifies an act of terrorism.
Under the program, the federal government will pay 85% of an
insurers covered losses in excess of the insurers
applicable deductible. The insurers deductible is based on
20% percent of earned premium for the prior year for covered
lines of commercial property and casualty insurance. Based on
our 2007 earned premiums, our deductible under TRIA during 2008
will be approximately $611 million.
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The federal program will not pay losses for certified acts
unless such losses exceed $100 million. TRIA limits the
federal governments share of losses at $100 billion
for a program year. In addition, an insurer that has satisfied
its deductible is not liable for the payment of losses in excess
of the $100 billion cap.
The insurance industry has been the subject of increasing
scrutiny with respect to insurance broker and agent compensation
arrangements and sales practices. The New York State Attorney
General and other state and federal regulators have conducted
investigations and other proceedings relating to compensation
and bidding arrangements between producers and issuers of
insurance products, and alleged unsuitable sales practices by
producers on behalf of either the issuer or the purchaser. The
practices under investigation included, among other things,
allegations that so-called contingent commission arrangements
may conflict with a brokers duties to its customers and
that certain brokers and insurers may have engaged in
anti-competitive practices in connection with insurance premium
quotes. The New York State Attorney General has entered into
settlement agreements with several large insurance brokers and
insurance companies. New investigative proceedings may be
commenced in the future. These investigations and proceedings
could result in legal precedents and new industry-wide practices
or legislation, rules or regulations that could significantly
affect the insurance industry and the Company.
Competition
The property casualty insurance and reinsurance businesses are
highly competitive, with over 2,000 insurance companies
transacting business in the United States. We compete directly
with a large number of these companies. Our strategy in this
highly fragmented industry is to seek specialized areas or
geographic regions where our insurance subsidiaries can gain a
competitive advantage by responding quickly to changing market
conditions. Our subsidiaries establish their own pricing
practices. Such practices are based upon a Company-wide
philosophy to price products with the intent of making an
underwriting profit. Competition in our industry generally
changes with profitability and has increased since 2004. As a
result of increased competition, we are experiencing both
downward pressure on pricing for many of our insurance lines as
well as demands by insureds and cedants for better terms and
conditions.
Competition for specialty and alternative markets business comes
from other specialty insurers, regional carriers, large national
multi-line companies and reinsurers. Recently standard carriers
have increasingly competed for excess and surplus business.
Competition for the reinsurance business comes from domestic and
foreign reinsurers, which produce their business either on a
direct basis or through the broker market. These competitors
include Berkshire Hathaway, Swiss Re, Transatlantic Reinsurance
and Everest Reinsurance.
The regional property casualty subsidiaries compete with mutual
and other regional stock companies as well as national carriers.
Direct writers of property casualty insurance compete with the
regional subsidiaries by writing insurance through their
salaried employees, generally at a lower cost than through
independent agents such as those used by the Company.
The international operations compete with native insurance
operations both large and small, which may be related to
government entities, as well as with branch or local
subsidiaries of multinational companies.
Competition from insurers based in Bermuda and other tax
advantaged jurisdictions has increased over the last several
years, including from domestic based subsidiaries of foreign
based entities especially as to excess and surplus lines
business.
Employees
As of February 14, 2008, we employed 5,494 individuals. Of
this number, our subsidiaries employed 5,413 persons, of
whom 3,846 were executive and administrative personnel and 1,559
were clerical personnel. We employed the remaining
81 persons at the parent company and in investment
operations, of whom 64 were executive and administrative
personnel and 17 were clerical personnel.
21
Other
Information about the Companys business
We maintain an interest in the acquisition or start up of
complementary businesses and continue to evaluate possible
acquisitions and new ventures on an ongoing basis. In addition,
our insurance subsidiaries develop new coverages or lines of
business to meet the needs of insureds.
Seasonal weather variations and other events affect the severity
and frequency of losses sustained by the insurance and
reinsurance subsidiaries. Although the effect on our business of
catastrophes such as tornadoes, hurricanes, hailstorms,
earthquakes and terrorist acts may be mitigated by reinsurance,
they nevertheless can have a significant impact on the results
of any one or more reporting periods.
We have no customer which accounts for 10 percent or more
of our consolidated revenues.
Compliance by W. R. Berkley and its subsidiaries with federal,
state and local provisions that have been enacted or adopted
regulating the discharge of materials into the environment, or
otherwise relating to protection of the environment has not had
a material effect upon our capital expenditures, earnings or
competitive position.
The Companys internet address is www.wrberkley.com. The
information on our website is not incorporated by reference in
this annual report on
Form 10-K.
The Companys annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act are
accessible free of charge through this website as soon as
reasonably practicable after they have been electronically filed
with or furnished to the SEC.
CERTAIN
FACTORS THAT MAY AFFECT FUTURE RESULTS
Our business faces significant risks. If any of the events or
circumstances described as risks below actually occurs, our
business, results of operations or financial condition could be
materially and adversely affected.
Risks
Relating to Our Industry
Our
results may fluctuate as a result of many factors, including
cyclical changes in the insurance and reinsurance
industry.
The results of companies in the property casualty insurance
industry historically have been subject to significant
fluctuations and uncertainties. The demand for insurance is
influenced primarily by general economic conditions, while the
supply of insurance is directly related to available capacity.
Over the past several years, we have faced increasing
competition in our business, resulting in decreased premium
rates, primarily as a result of increased competition. The
adequacy of premium rates is affected mainly by the severity and
frequency of claims, which are influenced by many factors,
including natural disasters, regulatory measures and court
decisions that define and expand the extent of coverage and the
effects of economic inflation on the amount of compensation due
for injuries or losses. In addition, investment rates of return
may impact policy rates. These factors can have a significant
impact on ultimate profitability because a property casualty
insurance policy is priced before its costs are known, as
premiums usually are determined long before claims are reported.
These factors could produce results that would have a negative
impact on our results of operations and financial condition.
Our
actual claims losses may exceed our reserves for claims, which
may require us to establish additional reserves.
Our gross reserves for losses and loss expenses were
approximately $8.7 billion as of December 31, 2007.
Our loss reserves reflect our best estimates of the cost of
settling all claims and related expenses with respect to insured
events that have occurred.
Reserves do not represent an exact calculation of liability.
Rather, reserves represent an estimate of what management
expects the ultimate settlement and claims administration will
cost for claims that have occurred, whether known or unknown.
The major assumptions about anticipated loss emergence patterns
are subject to unanticipated fluctuation. These estimates, which
generally involve actuarial projections, are based on
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managements assessment of facts and circumstances then
known, as well as estimates of future trends in claims severity
and frequency, inflation, judicial theories of liability,
reinsurance coverage, legislative changes and other factors,
including the actions of third parties which are beyond our
control.
The inherent uncertainties of estimating reserves are greater
for certain types of liabilities, where long periods of time
elapse before a definitive determination of liability is made
and settlement is reached. In periods with increased economic
volatility, it becomes more difficult to accurately predict
claim costs. Reserve estimates are continually refined in an
ongoing process as experience develops and further claims are
reported and settled. Adjustments to reserves are reflected in
the results of the periods in which such estimates are changed.
Because setting reserves is inherently uncertain, we cannot
assure that our current reserves will prove adequate in light of
subsequent events. Should we need to increase our reserves, our
pre-tax income for the period would decrease by a corresponding
amount.
We decreased our estimates for claims occurring in prior years
by $106 million in 2007, and increased our estimate by
$27 million in 2006 and $187 million in 2005. We,
along with the property casualty insurance industry in general,
have experienced higher than expected losses for certain types
of business written from 1998 to 2001. Although our reserves
reflect our best estimate of the costs of settling claims, we
cannot assure you that our claim estimates will not need to be
increased in the future.
We discount our reserves 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 liabilities. The expected loss and loss
expense payout pattern subject to discounting is derived from
our loss payout experience. Changes in the loss and loss expense
payout pattern are recorded in the period they are determined.
If the actual loss payout pattern is shorter than anticipated,
the discount will be reduced and pre-tax income will decrease by
a corresponding amount.
As a
property casualty insurer, we face losses from natural and
man-made catastrophes.
Property casualty insurers are subject to claims arising out of
catastrophes that may have a significant effect on their results
of operations, liquidity and financial condition. Catastrophe
losses have had a significant impact on our results. In
addition, through our recent quota share arrangements with
certain Lloyds syndicates, we have additional exposure to
catastrophic losses. For example, weather-related losses were
$34 million in 2007, $39 million in 2006 and
$99 million in 2005.
Catastrophes can be caused by various events, including
hurricanes, windstorms, earthquakes, hailstorms, explosions,
severe winter weather and fires, as well as terrorist
activities. The incidence and severity of catastrophes are
inherently unpredictable but have increased in recent years. The
extent of losses from a catastrophe is a function of both the
total amount of insured exposure in the area affected by the
event and the severity of the event. Some catastrophes are
restricted to small geographic areas; however, hurricanes and
earthquakes may produce significant damage in large, heavily
populated areas. Catastrophes can cause losses in a variety of
our property casualty lines, and most of our past
catastrophe-related claims have resulted from severe storms.
Seasonal weather variations may affect the severity and
frequency of our losses. Insurance companies are not permitted
to reserve for a catastrophe until it has occurred. It is
therefore possible that a catastrophic event or multiple
catastrophic events could produce significant losses and have a
material adverse effect on our results of operations and
financial condition.
We
face significant and increasing competitive pressures in our
businesses, which have reduced premium rates and could harm our
ability to maintain or increase our profitability and premium
volume.
We compete with a large number of other companies in our
selected lines of business. We compete, and will continue to
compete, with major U.S. and
non-U.S. insurers
and reinsurers, other regional companies, as well as mutual
companies, specialty insurance companies, underwriting agencies
and diversified financial services companies. Competitiveness in
our businesses is based on many factors, including the perceived
financial strength of the company, premium charges, other terms
and conditions offered, services provided, commissions paid to
producers, ratings assigned by independent rating agencies,
speed of claims payment and reputation and experience in the
lines to be written.
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Some of our competitors, particularly in the reinsurance
business, have greater financial and marketing resources than we
do. These competitors within the reinsurance segment include
Berkshire Hathaway, Swiss Re, Transatlantic Reinsurance and
Everest Reinsurance Company. We expect that perceived financial
strength, in particular, will become more important as customers
seek high quality reinsurers. Certain of our competitors operate
from tax advantaged or less regulated jurisdictions that may
provide them with additional competitive and pricing advantages.
Over the past several years, we have faced increased competition
in our business, particularly in our reinsurance segment, as
increased supply has led to reduced prices. We expect to
continue to face strong competition in our lines of business,
with further reduced pricing and weaker terms and conditions.
This intense competition could cause the supply
and/or
demand for insurance or reinsurance to change, which could
affect our ability to price our products at attractive rates and
retain existing business or write new products at adequate
rates. If we are unable to retain existing business or write new
business at adequate rates, our results of operations could be
materially and adversely affected.
We, as
a primary insurer, may have significant exposure for terrorist
acts.
To the extent an act of terrorism is certified by the Secretary
of Treasury, we may be covered under the Terrorism Risk
Insurance Act of 2002, as amended on December 22, 2005 and
further amended on December 26, 2007 (TRIA),
for up to 85% of our losses for certain property/casualty lines
of insurance. However, any such coverage would be subject to a
mandatory deductible based on 20 percent of earned premium
for the covered lines of commercial property and casualty
insurance. Based on our 2007 earned premiums, our deductible
under TRIA during 2008 will be approximately $611 million.
TRIA will be in effect through December 31, 2014 unless
extended or replaced by a similar program. This coverage
provided under TRIA does not apply to reinsurance that we write.
We are
subject to extensive governmental regulation, which increases
our costs and could restrict the conduct of our
business.
We are subject to extensive governmental regulation and
supervision. Most insurance regulations are designed to protect
the interests of policyholders rather than stockholders and
other investors. This system of regulation, generally
administered by a department of insurance in each state in which
we do business, relates to, among other things:
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standards of solvency, including risk-based capital measurements;
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restrictions on the nature, quality and concentration of
investments;
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requiring certain methods of accounting;
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rate and form regulation pertaining to certain of our insurance
businesses; and
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potential assessments for the provision of funds necessary for
the settlement of covered claims under certain policies provided
by impaired, insolvent or failed insurance companies.
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State insurance departments conduct periodic examinations of the
affairs of insurance companies and require the filing of annual
and other reports relating to the financial condition of
insurance companies, holding company issues and other matters.
Recently adopted federal financial services modernization
legislation may lead to additional federal regulation of the
insurance industry in the coming years. Also, foreign
governments regulate our international operations.
The insurance industry has been the subject of increasing
scrutiny with respect to insurance broker and agent compensation
arrangements and sales practices. The New York State Attorney
General and other state and federal regulators have conducted
investigations and other proceedings relating to compensation
and bidding arrangements between producers and issuers of
insurance products, and alleged unsuitable sales practices by
producers on behalf of either the issuer or the purchaser. The
practices under investigation included, among other things,
allegations that contingent commission arrangements may conflict
with a brokers duties to its customers and that certain
brokers and insurers may have engaged in anti-competitive
practices in connection with insurance premium quotes. The
24
New York State Attorney General has entered into settlement
agreements with several large insurance brokers and insurance
companies. New investigative proceedings may be commenced in the
future. These investigations and proceedings could result in
legal precedents and new industry-wide practices or legislation,
rules or regulations that could significantly affect the
insurance industry and the Company.
We may be unable to maintain all required licenses and approvals
and our business may not fully comply with the wide variety of
applicable laws and regulations or the relevant authoritys
interpretation of the laws and regulations. Also, some
regulatory authorities have relatively broad discretion to
grant, renew or revoke licenses and approvals. If we do not have
the requisite licenses and approvals or do not comply with
applicable regulatory requirements, the insurance regulatory
authorities could preclude or temporarily suspend us from
carrying on some or all of our activities or monetarily penalize
us. Also, changes in the level of regulation of the insurance
industry, whether federal, state or foreign, or changes in laws
or regulations themselves or interpretations by regulatory
authorities, restrict the conduct of our business.
In certain of our insurance businesses, the rates we charge our
policyholders are subject to regulatory approval. Certain lines
of business are subject to a greater degree of regulatory
scrutiny then others. For example, the workers
compensation business is highly regulated. During 2007,
approximately 13% of our net premiums written represented
primary workers compensation business. Of our net premiums
written, approximately 2% represented primary workers
compensation business written in the State of California, where
the impact of workers compensation reform has recently
resulted in significant rate reductions.
Risks
Relating to Our Business
We
cannot guarantee that our reinsurers will pay in a timely
fashion, if at all, and, as a result, we could experience
losses.
We purchase reinsurance by transferring part of the risk that we
have assumed, known as ceding, to a reinsurance company in
exchange for part of the premium we receive in connection with
the risk. Although reinsurance makes the reinsurer contractually
liable to us to the extent the risk is transferred or ceded to
the reinsurer, it does not relieve us, the reinsured, of our
liability to our policyholders. Our reinsurers may not pay the
reinsurance recoverables that they owe to us or they may not pay
such recoverables on a timely basis. Accordingly, we bear credit
risk with respect to our reinsurers, and if our reinsurers fail
to pay us, our financial results would be adversely affected.
Underwriting results and investment returns of some of our
reinsurers may affect their future ability to pay claims. As of
December 31, 2007, the amount due from our reinsurers was
$905 million, including amounts due from state funds and
industry pools. Certain of these amounts due from reinsurers are
secured by letters of credit or by funds held in trust on our
behalf.
We are
rated by A.M. Best, Standard & Poors, and
Moodys, and a decline in these ratings could affect our
standing in the insurance industry and cause our sales and
earnings to decrease.
Ratings have become an increasingly important factor in
establishing the competitive position of insurance companies.
Certain of our insurance company subsidiaries are rated by
A.M. Best, Standard & Poors and
Moodys Investors Services. While A.M. Best,
Standard & Poors and Moodys ratings
reflect their opinions as to a companys financial
strength, operating performance, strategic position and ability
to meet its obligations to policyholders, they are not
evaluations directed to investors and are not recommendations to
buy, sell or hold our securities. Our ratings are subject to
periodic review, and we cannot assure you that we will be able
to retain those ratings. Twenty of our twenty-three insurance
company subsidiaries have A.M. Best Company, Inc.
(A.M. Best) ratings of A+
(Superior) which is A.M. Bests second highest
rating out of 15 possible ratings by A.M. Best. Carolina
Casualty Insurance Company and W. R. Berkley Insurance (Europe),
Limited have A.M. Best ratings of A (Excellent)
which is A.M. Bests third highest rating. Investors
Guaranty Life Insurance Company, which the Company purchased in
2007, does not have an A.M. Best rating. The
Standard & Poors financial strength rating for
our domestic insurance subsidiaries is A+ (the seventh highest
rating out of twenty-seven possible ratings). Our Moodys
rating is A2 for Berkley Insurance Company (the sixth highest
rating out of twenty-one possible ratings).
If our ratings are reduced from their current levels by
A.M. Best, Standard & Poors or
Moodys, our competitive position in the insurance industry
could suffer and it would be more difficult for us to market our
25
products. A significant downgrade could result in a substantial
loss of business as policyholders move to other companies with
higher claims-paying and financial strength ratings.
If
market conditions cause reinsurance to be more costly or
unavailable, we may be required to bear increased risks or
reduce the level of our underwriting commitments.
As part of our overall risk and capacity management strategy, we
purchase reinsurance for certain amounts of risk underwritten by
our insurance company subsidiaries, especially catastrophe
risks. We also purchase reinsurance on risks underwritten by
others which we reinsure. Market conditions beyond our control
determine the availability and cost of the reinsurance
protection we purchase, which may affect the level of our
business and profitability. Our reinsurance facilities are
generally subject to annual renewal. We may be unable to
maintain our current reinsurance facilities or to obtain other
reinsurance facilities in adequate amounts and at favorable
rates. If we are unable to renew our expiring facilities or to
obtain new reinsurance facilities, either our net exposures
would increase or, if we are unwilling to bear an increase in
net exposures, we would have to reduce the level of our
underwriting commitments, especially catastrophe exposed risks.
Our
international operations expose us to investment, political and
economic risks.
Our international operations expose us to investment, political
and economic risks, including foreign currency and credit risk.
Changes in the value of the U.S. dollar relative to other
currencies could have an adverse effect on our results of
operations and financial condition.
We may
not find suitable acquisition candidates or new insurance
ventures and even if we do, we may not successfully integrate
any such acquired companies or successfully invest in such
ventures.
As part of our present strategy, we continue to evaluate
possible acquisition transactions and the
start-up
of
complementary businesses on an ongoing basis, and at any given
time, we may be engaged in discussions with respect to possible
acquisitions and new ventures. We cannot assure that we will be
able to identify suitable acquisition transactions or insurance
ventures, that such transactions will be financed and completed
on acceptable terms or that our future acquisitions or ventures
will be successful. The process of integrating any companies we
do acquire or investing in new ventures may have a material
adverse effect on our results of operations and financial
condition.
We may
be unable to attract and retain qualified
employees.
We depend on our ability to attract and retain experienced
underwriting talent and other skilled employees who are
knowledgeable about our business. If the quality of our
underwriting team and other personnel decreases, we may be
unable to maintain our current competitive position in the
specialized markets in which we operate, and be unable to expand
our operations into new markets.
Risks
Relating to Our Investments
A
significant amount of our assets is invested in fixed income
securities and is subject to market fluctuations.
Our investment portfolio consists substantially of fixed income
securities. As of December 31, 2007, our investment in
fixed income securities was approximately $9.8 billion, or
74% of our total investment portfolio.
The fair market value of these assets and the investment income
from these assets fluctuate depending on general economic and
market conditions. The fair market value of fixed income
securities generally decreases as interest rates rise.
Conversely, if interest rates decline, investment income earned
from future investments in fixed income securities will be
lower. In addition, some fixed income securities, such as
mortgage-backed and other
asset-backed
securities, carry prepayment risk as a result of interest rate
fluctuations. Based upon the composition and duration of our
investment portfolio at December 31, 2007, a 100 basis
point increase in interest rates would result in a decrease in
the fair value of our investments of approximately
$338 million.
26
The value of investments in fixed income securities, and
particularly our investments in high-yield securities, is
subject to impairment as a result of deterioration in the credit
worthiness of the issuer or increases in market interest rates.
Although we attempt to manage this risk by diversifying our
portfolio and emphasizing preservation of principal, our
investments are subject to losses as a result of a general
decrease in commercial and economic activity for an industry
sector in which we invest, as well as risks inherent in
particular securities. Investment returns are currently, and
could continue to remain, under pressure due to current economic
uncertainty and volatility and the shape of the yield curve.
The value of our fixed income portfolio is also subject to the
risk that certain investments may become impaired due to a
downgrade of the credit ratings of an insurer that guarantees an
issuers payments of such investments in our portfolio. In
addition, defaults by the issuer and, where applicable, its
guarantor, of certain investments that result in the failure of
such parties to fulfill their obligations with regard to any of
these investments could reduce our net investment income and net
realized investment gains or result in investment losses.
While we attempt to manage these risks through investment
guidelines, collateral requirements and other oversight
mechanisms, our efforts may not be successful. To a large
degree, the credit risk we face is a function of the economy;
accordingly, we face a greater risk in an economic downturn or
recession. As a result, our exposure to any of the above credit
risks could materially and adversely affect our results of
operations.
We
invest some of our assets in equity securities, including merger
arbitrage investments, private equity and real estate
securities, which may decline in value.
We invest a portion of our investment portfolio in equity
securities, including merger arbitrage investments, private
equity and real estate securities. At December 31, 2007,
our investments in equity securities were approximately
$1.8 billion, or 15% of our investment portfolio. We
reported provisions for other than temporary impairments in the
value of our equity securities provisions in the amounts of
$2.7 million in 2007, $0.1 million in 2006 and
$1.6 million in 2005.
Merger and convertible arbitrage trading securities represented
25% of our equity securities at December 31, 2007. Merger
arbitrage is the business of investing in the securities of
publicly held companies that are the targets in announced tender
offers and mergers. Merger arbitrage differs from other types of
investments in its focus on transactions and events believed
likely to bring about a change in value over a relatively short
time period, usually four months or less. Our merger arbitrage
positions are exposed to the risk associated with the completion
of announced deals, which are subject to regulatory as well as
political and other risks. If there is reduced activity in the
merger and acquisitions area, we may not be able achieve the
returns that we have enjoyed in the past.
Included in our equity security portfolio are investments in
publicly traded real estate investment trusts
(REITs) and private real estate investment funds,
real estate limited partnerships and venture capital
investments. At December 31, 2007 our investments in these
securities were approximately $504 million, or 29% of our
equity portfolio. The values of our real estate investments are
subject to fluctuations based on changes in the economy in
general and real estate valuations in particular. In addition,
the real estate investment funds, limited partnerships, and
venture capital investments in which we invest are less liquid
than our other investments.
Risks
Relating to Purchasing Our Securities
We are
an insurance holding company and may not be able to receive
dividends in needed amounts.
As an insurance holding company, our principal assets are the
shares of capital stock of our insurance company subsidiaries.
We have to rely on dividends from our insurance company
subsidiaries to meet our obligations for paying principal and
interest on outstanding debt obligations and for paying
dividends to stockholders and corporate expenses. The payment of
dividends by our insurance company subsidiaries is subject to
regulatory restrictions and will depend on the surplus and
future earnings of these subsidiaries, as well as the regulatory
restrictions. During 2008, the maximum amount of dividends that
can be paid without regulatory approval is approximately
$653 million. As a result, in the future we may not be able
to receive dividends from these subsidiaries at times and in
amounts necessary to meet our obligations or pay dividends.
27
We are
subject to certain provisions that may have the effect of
hindering, delaying or preventing third party takeovers, which
may prevent our shareholders from receiving premium prices for
their shares in an unsolicited takeover and make it more
difficult for third parties to replace our current
management.
Provisions of our certificate of incorporation and by-laws, as
well as our rights agreement and state insurance statutes, may
hinder, delay or prevent unsolicited acquisitions or changes of
our control. These provisions may also have the effect of making
it more difficult for third parties to cause the replacement of
our current management without the concurrence of our board of
directors.
These provisions include:
|
|
|
|
|
our classified board of directors and the ability of our board
to increase its size and to appoint directors to fill newly
created directorships;
|
|
|
|
the requirement that 80% of our stockholders must approve
mergers and other transactions between us and the holder of 5%
or more of our shares, unless the transaction was approved by
our board of directors prior to such holders acquisition
of 5% of our shares;
|
|
|
|
the need for advance notice in order to raise business or make
nominations at stockholders meetings;
|
|
|
|
our rights agreement which subjects persons (other than William
R. Berkley) who acquire beneficial ownership of 15% or more of
our common stock without board approval to substantial
dilution; and
|
|
|
|
state insurance statutes that restrict the acquisition of
control (generally defined as 10% of the outstanding shares) of
an insurance company without regulatory approval.
|
|
|
ITEM 1B.
|
UNRESOLVED
STAFF COMMENTS
|
There are no unresolved written comments that were received from
the SEC staff 180 days or more before the end of our fiscal
year relating to our periodic or current reports under the
Securities Exchange Act of 1934.
W. R. Berkley and its subsidiaries own or lease office
buildings or office space suitable to conduct their operations.
At December 31, 2007, the Company had aggregate office
space of 1,640,602 square feet, of which 641,231 were owned
and 999,371 were leased.
Rental expense was approximately $21,438,000, $19,348,000 and
$17,429,000 for 2007, 2006 and 2005, respectively. Future
minimum lease payments (without provision for sublease income)
are $20,889,000 in 2008, $18,570,000 in 2009 and $65,654,000
thereafter.
|
|
ITEM 3.
|
LEGAL
PROCEEDINGS
|
The Companys subsidiaries are subject to disputes,
including litigation and arbitration, arising in the ordinary
course of their insurance and reinsurance businesses. The
Companys estimates of the costs of settling such matters
are reflected in its aggregate reserves for losses and loss
expenses, and the Company does not believe that the ultimate
outcome of such matters will have a material adverse effect on
its financial condition or results of operations.
|
|
ITEM 4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
No matters were submitted during the fourth quarter of 2007 to a
vote of holders of the Companys Common Stock.
28
PART II
|
|
ITEM 5.
|
MARKET
FOR THE REGISTRANTS COMMON EQUITY RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
The common stock of the Company is traded on the New York Stock
Exchange under the symbol BER.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
Price Range
|
|
|
Dividends Declared
|
|
|
|
High
|
|
|
Low
|
|
|
per Share
|
|
|
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
32.21
|
|
|
$
|
28.04
|
|
|
$
|
.05
|
|
Third Quarter
|
|
|
32.81
|
|
|
|
25.20
|
|
|
|
.05
|
|
Second Quarter
|
|
|
33.80
|
|
|
|
31.89
|
|
|
|
.05
|
|
First Quarter
|
|
|
35.10
|
|
|
|
31.30
|
|
|
|
.05
|
|
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
37.72
|
|
|
$
|
34.34
|
|
|
$
|
.04
|
|
Third Quarter
|
|
|
37.25
|
|
|
|
32.26
|
|
|
|
.04
|
|
Second Quarter
|
|
|
40.95
|
|
|
|
30.61
|
|
|
|
.04
|
|
First Quarter
|
|
|
40.15
|
|
|
|
31.87
|
|
|
|
.04
|
|
The closing price of the Common Stock on February 14, 2008,
as reported on the New York Stock Exchange, was $28.70 per
share. The approximate number of record holders of the Common
Stock on February 14, 2008 was 513.
Set forth below is a summary of the shares repurchased by the
Company during the fourth quarter of 2007 and the remaining
number of shares authorized for purchase by the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Maximum Number of
|
|
|
|
|
|
|
|
|
|
Shares Purchased as
|
|
|
Shares that may yet
|
|
|
|
|
|
|
|
|
|
Part of Publicly
|
|
|
be Purchased Under
|
|
|
|
Total Number of
|
|
|
Average Price
|
|
|
Announced Plans
|
|
|
the Plans or
|
|
|
|
Shares Purchased
|
|
|
Paid per Share
|
|
|
or Programs
|
|
|
Programs(1)
|
|
|
October 2007
|
|
|
188,300
|
|
|
$
|
29.18
|
|
|
|
188,300
|
|
|
|
10,471,088
|
|
November 2007
|
|
|
3,013,400
|
|
|
|
28.91
|
|
|
|
3,013,400
|
|
|
|
17,283,500
|
|
December 2007
|
|
|
6,686
|
|
|
|
29.91
|
|
|
|
None
|
|
|
|
17,283,500
|
|
|
|
|
(1)
|
|
Remaining shares available for repurchase under the
Companys repurchase authorization of
20,000,000 shares that was approved by the Board of
Directors on November 6, 2007.
|
29
|
|
ITEM 6.
|
SELECTED
FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Amounts in thousands, except per share data)
|
|
|
Premiums written
|
|
$
|
4,575,989
|
|
|
$
|
4,818,993
|
|
|
$
|
4,604,574
|
|
|
$
|
4,266,361
|
|
|
$
|
3,670,515
|
|
Net premiums earned
|
|
|
4,663,701
|
|
|
|
4,692,622
|
|
|
|
4,460,935
|
|
|
|
4,061,092
|
|
|
|
3,234,610
|
|
Net investment income
|
|
|
672,660
|
|
|
|
586,175
|
|
|
|
403,962
|
|
|
|
291,295
|
|
|
|
210,056
|
|
Service fees
|
|
|
97,689
|
|
|
|
104,812
|
|
|
|
110,697
|
|
|
|
109,344
|
|
|
|
101,715
|
|
Realized investment gains
|
|
|
14,938
|
|
|
|
9,648
|
|
|
|
17,209
|
|
|
|
48,268
|
|
|
|
81,692
|
|
Revenues from wholly-owned investees
|
|
|
102,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
5,553,639
|
|
|
|
5,394,831
|
|
|
|
4,996,839
|
|
|
|
4,512,235
|
|
|
|
3,630,108
|
|
Interest expense
|
|
|
88,996
|
|
|
|
92,522
|
|
|
|
85,926
|
|
|
|
66,423
|
|
|
|
54,733
|
|
Income before income taxes
|
|
|
1,057,634
|
|
|
|
988,645
|
|
|
|
770,537
|
|
|
|
638,513
|
|
|
|
489,304
|
|
Income tax expense
|
|
|
(310,905
|
)
|
|
|
(286,398
|
)
|
|
|
(222,521
|
)
|
|
|
(196,235
|
)
|
|
|
(150,626
|
)
|
Minority interest
|
|
|
(3,083
|
)
|
|
|
(2,729
|
)
|
|
|
(3,124
|
)
|
|
|
(3,446
|
)
|
|
|
(1,458
|
)
|
Income before change in accounting
|
|
|
743,646
|
|
|
|
699,518
|
|
|
|
544,892
|
|
|
|
438,832
|
|
|
|
337,220
|
|
Cumulative effect of change in accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(727
|
)
|
|
|
|
|
Net income
|
|
|
743,646
|
|
|
|
699,518
|
|
|
|
544,892
|
|
|
|
438,105
|
|
|
|
337,220
|
|
Data per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per basic share
|
|
|
3.94
|
|
|
|
3.65
|
|
|
|
2.86
|
|
|
|
2.32
|
|
|
|
1.81
|
|
Net income per diluted share
|
|
|
3.78
|
|
|
|
3.46
|
|
|
|
2.72
|
|
|
|
2.21
|
|
|
|
1.72
|
|
Stockholders equity
|
|
|
19.80
|
|
|
|
17.30
|
|
|
|
13.42
|
|
|
|
11.13
|
|
|
|
8.95
|
|
Cash dividends declared
|
|
|
.20
|
|
|
|
.16
|
|
|
|
.12
|
|
|
|
.12
|
|
|
|
.12
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
188,981
|
|
|
|
191,809
|
|
|
|
190,533
|
|
|
|
188,912
|
|
|
|
187,029
|
|
Diluted
|
|
|
196,698
|
|
|
|
201,961
|
|
|
|
200,426
|
|
|
|
198,408
|
|
|
|
195,893
|
|
Investments
|
|
$
|
11,893,522
|
|
|
$
|
11,114,364
|
|
|
$
|
9,810,225
|
|
|
$
|
7,303,889
|
|
|
$
|
5,068,670
|
|
Total assets
|
|
|
16,832,170
|
|
|
|
15,656,489
|
|
|
|
13,896,287
|
|
|
|
11,451,033
|
|
|
|
9,334,685
|
|
Reserves for losses and loss expenses
|
|
|
8,678,034
|
|
|
|
7,784,269
|
|
|
|
6,711,760
|
|
|
|
5,449,611
|
|
|
|
4,192,091
|
|
Junior subordinated debentures
|
|
|
249,375
|
|
|
|
241,953
|
|
|
|
450,634
|
|
|
|
208,286
|
|
|
|
193,336
|
|
Senior notes and other debt
|
|
|
1,121,793
|
|
|
|
869,187
|
|
|
|
967,818
|
|
|
|
808,264
|
|
|
|
659,208
|
|
Stockholders equity
|
|
|
3,569,775
|
|
|
|
3,335,159
|
|
|
|
2,567,077
|
|
|
|
2,109,702
|
|
|
|
1,682,562
|
|
|
|
ITEM 7.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Reference is made to the information under the caption
Managements Discussion and Analysis of Financial
Condition and Results of Operations which will be
contained in the registrants 2007 Annual Report to
Stockholders (attached hereto as Exhibit 13), which
information is incorporated herein by reference.
|
|
ITEM 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Reference is made to the information under Market
Risk under the caption Managements Discussion
and Analysis of Financial Condition and Results of
Operations which will be contained in the
registrants 2007 Annual Report to Stockholders (attached
hereto as Exhibit 13), which information is incorporated
herein by reference.
30
|
|
ITEM 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
The consolidated financial statements of the registrant which
will be contained in the registrants 2007 Annual Report to
Stockholders (attached hereto as Exhibit 13) are
incorporated herein by reference.
|
|
ITEM 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
None.
|
|
ITEM 9A.
|
CONTROLS
AND PROCEDURES
|
|
|
(a)
|
Evaluation
Of Disclosure Controls And Procedures
|
The Companys management, including its Chief Executive
Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the Companys disclosure
controls and procedures pursuant to Exchange Act
Rule 13a-15(b)
as of the end of the period covered by this annual report. Based
on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company has in place
effective controls and procedures designed to ensure that
information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act and the rules
thereunder, is recorded, processed, summarized and reported
within the time periods specified in the Commissions rules
and forms.
|
|
(b)
|
Managements
Report On Internal Control Over Financial
Reporting
|
Management has conducted an evaluation of the effectiveness of
the Companys internal control over financial reporting as
of December 31, 2007. See pages 20 and 21 of
Exhibit 13 of this
Form 10-K
for managements report and the related attestation by KPMG
LLP, an independent registered public accounting firm.
|
|
(c)
|
Change
In Internal Control
|
During the quarter ended December 31, 2007, there have been
no changes in our internal control over financial reporting that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
|
|
ITEM 9B.
|
OTHER
INFORMATION
|
None.
PART III
|
|
ITEM 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
|
|
ITEM 11.
|
EXECUTIVE
COMPENSATION
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
|
|
ITEM 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
|
|
(a)
|
Security
ownership of certain beneficial owners
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
31
|
|
(b)
|
Security
ownership of management
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
|
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
|
|
ITEM 14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
Reference is made to the registrants definitive proxy
statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2007,
and which is incorporated herein by reference.
PART IV
|
|
ITEM 15.
|
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
|
|
|
(a)
|
Index
to Financial Statements
|
The Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Companys
financial statements, together with the reports on the financial
statements, and managements assessment of the
effectiveness of the Companys internal control over
financial reporting and the effectiveness of internal control
over financial reporting of KPMG LLP, appear in the
Companys 2007 Annual Report to Stockholders (attached
hereto as exhibit 13) and are incorporated by
reference in this Annual Report on
Form 10-K.
With the exception of the aforementioned information, the 2007
Annual Report to Stockholders is not deemed to be filed as part
of this report. The schedules to the financial statements listed
below should be read in conjunction with the financial
statements in such 2007 Annual Report to Stockholders. Financial
statement schedules not included in this Annual Report on
Form 10-K
have been omitted because they are not applicable or required
information is shown in the financial statements or notes
thereto.
|
|
|
|
|
Index to Financial Statement Schedules
|
|
Page
|
|
Independent Registered Public Accountants Report on
Schedules
|
|
|
38
|
|
Schedule II Condensed Financial Information of
Registrant
|
|
|
39
|
|
Schedule III Supplementary Insurance Information
|
|
|
43
|
|
Schedule IV Reinsurance
|
|
|
44
|
|
Schedule V Valuation and Qualifying Accounts
|
|
|
45
|
|
Schedule VI Supplementary Information
Concerning Property Casualty Insurance Operations
|
|
|
46
|
|
The exhibits filed as part of this report are listed on
pages 35, 36 and 37 hereof.
32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
W. R. BERKLEY CORPORATION
|
|
|
|
By
|
/s/ William
R. Berkley
|
William R. Berkley,
Chairman of the Board and
Chief Executive Officer
February 29, 2008
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ William
R. Berkley
William
R. Berkley
|
|
Chairman of the Board and Chief Executive Officer
(Principal executive officer)
|
|
February 29, 2008
|
|
|
|
|
|
/s/ W.
Robert Berkley, Jr.
W.
Robert Berkley, Jr.
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Philip
J. Ablove
Philip
J. Ablove
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Ronald
E. Blaylock
Ronald
E. Blaylock
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Mark
E. Brockbank
Mark
E. Brockbank
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ George
G. Daly
George
G. Daly
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Mary
C. Farrell
Mary
C. Farrell
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Rodney
A. Hawes, Jr.
Rodney
A. Hawes, Jr.
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Jack
H. Nusbaum
Jack
H. Nusbaum
|
|
Director
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Mark
L. Shapiro
Mark
L. Shapiro
|
|
Director
|
|
February 29, 2008
|
33
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Eugene
G. Ballard
Eugene
G. Ballard
|
|
Senior Vice President, Chief Financial Officer and Treasurer
(Principal accounting officer)
|
|
February 29, 2008
|
|
|
|
|
|
/s/ Clement
P. Patafio
Clement
P. Patafio
|
|
Vice President, Corporate Controller
|
|
February 29, 2008
|
34
|
|
|
|
|
Number
|
|
|
|
|
(3
|
.1)
|
|
The Companys Restated Certificate of Incorporation, as
amended through May 10, 2004 (incorporated by reference to
Exhibits 3.1 and 3.2 of the Companys Quarterly Report
on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 6, 2003).
|
|
(3
|
.2)
|
|
Amendment, dated May 11, 2004, to the Companys
Restated Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.2 of the Companys Quarterly
report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 5, 2004).
|
|
(3
|
.3)
|
|
Amendment, dated May 16, 2006, to the Companys
Restated Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.2 of the Companys Current
Report on
Form 8-K
(File
No. 1-15202)
filed with the Commission on May 17, 2006).
|
|
(3
|
.4)
|
|
Amended and Restated By-Laws (incorporated by reference to
Exhibit 3(ii) of the Companys Current Report on
Form 8-K
(File
No. 0-7849)
filed with the Commission on May 11, 1999).
|
|
(4
|
.1)
|
|
Rights Agreement, dated as of May 11, 1999, between the
Company and Wells Fargo Bank N.A. (as successor to ChaseMellon
Shareholder Services, LLC), as Rights Agent (incorporated by
reference to Exhibit 99.1 of the Companys Current
Report on
Form 8-K
(File
No. 0-7849)
filed with the Commission on May 11, 1999).
|
|
(4
|
.2)
|
|
Indenture, dated as of February 14, 2003, between the
Company and The Bank of New York, as trustee (incorporated by
reference to Exhibit 4.1 of the Companys Annual
Report on
Form 10-K
(File
No. 1-15202)
filed with the Commission of March 31, 2003).
|
|
(4
|
.3)
|
|
First Supplemental Indenture, dated February 14, 2003,
between the Company and The Bank of New York, as trustees,
relating to $200,000,000 principal amount of the Companys
5.875% Senior Notes due 2013, including form of the Notes
as Exhibit A (incorporated by reference to Exhibit 4.1
of the Companys Annual Report on
Form 10-K
(File
No. 1-15202)
filed with the Commission of March 31, 2003).
|
|
(4
|
.4)
|
|
Second Supplemental Indenture, dated as of September 12,
2003, between the Company and The Bank of New York, as Trustee,
relating to $150,000,000 principal amount of the Companys
5.125% Senior Notes due 2010, including form of the Notes
as Exhibit A (incorporated by reference to Exhibit 4.2
of the Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on November 14, 2003).
|
|
(4
|
.5)
|
|
Third Supplemental Indenture, dated as of August 24, 2004,
between the Company and The Bank of New York, as Trustee,
relating to $150,000,000 principal amount of the Companys
6.150% Senior Notes due 2019, including form of the Notes
as Exhibit A (incorporated by reference to Exhibit 4.4
of the Companys Annual Report on
Form 10-K
(File
No. 1-15202)
filed with the Commission on March 14, 2005).
|
|
(4
|
.6)
|
|
Fourth Supplemental Indenture, dated as of May 9, 2005,
between the Company and The Bank of New York, as Trustee,
relating to $200,000,000 principal amount of the Companys
5.60% Senior Notes due 2015, including form of the Notes as
Exhibit A (incorporated by reference to Exhibit 4.2 of
the Companys quarterly report on
Form 10-Q
(File
No. 1-15200)
filed with the Commission on August 2, 2005).
|
|
(4
|
.7)
|
|
Fifth Supplemental Indenture, dated as of February 9, 2007,
between the Company and The Bank of New York, as Trustee,
relating to $250,000,000 principal amount of the Companys
6.25% Senior Notes due 2037, including form of the Notes as
Exhibit A (incorporated by reference to Exhibit 4.7 of
the companys Annual Report on
Form 10-K
(File
No. 1-15202)
filed with the Commission on March 1, 2007).
|
|
(4
|
.8)
|
|
Amended and Restated Trust Agreement of W. R. Berkley
Capital Trust II, dated as of July 26, 2005
(incorporated by reference to Exhibit 4.3 of the
Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 2, 2005).
|
35
|
|
|
|
|
Number
|
|
|
|
|
(4
|
.9)
|
|
Subordinated Indenture between W. R. Berkley Corporation and The
Bank of New York, as Trustee, dated as of July 26, 2005
(incorporated by reference to Exhibit 4.4 of the
Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 2, 2005).
|
|
(4
|
.10)
|
|
Supplemental Indenture No. 1 to the Subordinated Indenture
between W. R. Berkley Corporation and The Bank of New York, as
Trustee, dated as of July 26, 2005, relating to
6.750% Subordinated Debentures Due 2045 (incorporated by
reference to Exhibit 4.6 of the Companys Quarterly
Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 2, 2005).
|
|
(4
|
.11)
|
|
Preferred Securities Guarantee Agreement between W. R. Berkley
Corporation, as Guarantor, and The Bank of New York, as
Preferred Guarantee Trustee, dated as of July 26, 2005,
relating to W. R. Berkley Capital Trust II (incorporated by
reference to Exhibit 4.6 of the Companys Quarterly
Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 2, 2005).
|
|
(4
|
.12)
|
|
The instruments defining the rights of holders of the other long
term debt securities of the Company are omitted pursuant to
Section (b)(4)(iii)(A) of Item 601 of
Regulation S-K.
The Company agrees to furnish supplementally copies of these
instruments to the Commission upon request.
|
|
(10
|
.1)
|
|
W. R. Berkley Corporation 2003 Stock Incentive Plan
(incorporated by reference to Annex A of the Companys
2003 Proxy Statement (File
No. 1-15202)
filed with the Commission on April 14, 2003).
|
|
(10
|
.2)
|
|
Form of Restricted Stock Unit Agreement under the W. R. Berkley
Corporation 2003 Stock Incentive Plan (incorporated by reference
to Exhibit 10.2 of the Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on May 3, 2005).
|
|
(10
|
.3)
|
|
Form of Restricted Stock Unit Agreement for grant of
April 4, 2003 (incorporated by reference to
Exhibit 10.2 of the Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 6, 2003).
|
|
(10
|
.4)
|
|
W. R. Berkley Corporation Deferred Compensation Plan for
Officers as amended and restated effective December 3, 2007
(incorporated by reference to Exhibit 10.4 of the
Companys Current Report on
Form 8-K
(File
No. 1-15202)
filed with the Commission on December 19, 2007).
|
|
(10
|
.5)
|
|
W. R. Berkley Corporation Deferred Compensation Plan for
Directors as amended and restated effective December 3,
2007 (incorporated by reference to Exhibit 10.2 of the
Companys Current Report on
Form 8-K
(File
No. 1-15202)
filed with the Commission on December 19, 2007).
|
|
(10
|
.6)
|
|
W. R. Berkley Corporation 2007 Annual Incentive Compensation
Plan (incorporated by reference to Annex A of the
Companys 2006 Proxy Statement (File
No. 1-15202)
filed with the Commission on April 18, 2006).
|
|
(10
|
.7)
|
|
W. R. Berkley 2004 Long-Term Incentive Plan (incorporated by
reference to Annex B from the Companys 2004 Proxy
Statement (File
No. 1-15202)
filed with the Commission on April 12, 2004).
|
|
(10
|
.8)
|
|
Form of Performance Unit Award Agreement under the W. R. Berkley
Corporation 2004 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly
Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on May 3, 2005).
|
|
(10
|
.9)
|
|
W. R. Berkley Corporation 1997 Directors Stock Plan,
effective as of May 13, 1997, amended as of May 11,
1999, and amended and restated as of May 3, 2005
(incorporated by reference to Exhibit 10.1 of the
Companys Quarterly Report on
Form 10-Q
(File
No. 1-15202)
filed with the Commission on August 2, 2005).
|
|
(10
|
.10)
|
|
Supplemental Benefits Agreement between William R. Berkley and
the Company as amended and restated as of December 17, 2007
(incorporated by reference to Exhibit 10.3 of the
Companys Current Report on
Form 8-K
(File
No. 1-15202)
filed with the Commission on December 19, 2007).
|
|
(13)
|
|
|
Portions of the 2007 Annual Report to Stockholders of W. R.
Berkley Corporation that are incorporated by reference in this
Report on
Form 10-K.
|
|
(14)
|
|
|
Code of Ethics for Senior Financial Officers (incorporated by
reference to Exhibit 14 of the Companys Annual Report
on
Form 10-K
(File
No. 1-15202)
filed with the Commission on March 14, 2005).
|
36
|
|
|
|
|
Number
|
|
|
|
|
(21)
|
|
|
Following is a list of the Companys significant
subsidiaries and other operating entities. Subsidiaries of
subsidiaries are indented and the parent of each such
corporation owns 100% of the outstanding voting securities of
such corporation except as noted below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
Jurisdiction of
|
|
|
Owned
|
|
|
|
Incorporation
|
|
|
by the Company(1)
|
|
|
Berkley International, LLC(2)
|
|
|
New York
|
|
|
|
100
|
%
|
Berkley Surety Group, Inc.
|
|
|
Delaware
|
|
|
|
100
|
%
|
Carolina Casualty Insurance Company
|
|
|
Iowa
|
|
|
|
100
|
%
|
Clermont Specialty Managers, Ltd.
|
|
|
New Jersey
|
|
|
|
100
|
%
|
J/I Holding Corporation:
|
|
|
Delaware
|
|
|
|
100
|
%
|
Admiral Insurance Company:
|
|
|
Delaware
|
|
|
|
100
|
%
|
Admiral Indemnity Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
Berkley London Holdings, Inc.(3)
|
|
|
Delaware
|
|
|
|
100
|
%
|
W. R. Berkley London Finance, Limited
|
|
|
United Kingdom
|
|
|
|
100
|
%
|
W. R. Berkley London Holdings, Limited
|
|
|
United Kingdom
|
|
|
|
100
|
%
|
W. R. Berkley Insurance (Europe), Limited
|
|
|
United Kingdom
|
|
|
|
100
|
%
|
Berkley Risk Administrators Company, LLC
|
|
|
Minnesota
|
|
|
|
100
|
%
|
Nautilus Insurance Company:
|
|
|
Arizona
|
|
|
|
100
|
%
|
Great Divide Insurance Company
|
|
|
North Dakota
|
|
|
|
100
|
%
|
Key Risk Management Services, Inc.
|
|
|
North Carolina
|
|
|
|
100
|
%
|
Monitor Liability Managers, Inc.
|
|
|
Delaware
|
|
|
|
100
|
%
|
Signet Star Holdings, Inc.:
|
|
|
Delaware
|
|
|
|
100
|
%
|
Berkley Insurance Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
Berkley Regional Insurance Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
Acadia Insurance Company
|
|
|
New Hampshire
|
|
|
|
100
|
%
|
Berkley Regional Specialty Insurance Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
CGH Insurance Group, Inc
|
|
|
Alabama
|
|
|
|
100
|
%
|
American Mining Insurance Company
|
|
|
Alabama
|
|
|
|
100
|
%
|
Continental Western Insurance Company
|
|
|
Iowa
|
|
|
|
100
|
%
|
Firemens Insurance Company of Washington, D.C.
|
|
|
Delaware
|
|
|
|
100
|
%
|
Tri-State Insurance Company of Minnesota
|
|
|
Minnesota
|
|
|
|
100
|
%
|
Union Insurance Company
|
|
|
Iowa
|
|
|
|
100
|
%
|
Union Standard Insurance Company
|
|
|
Oklahoma
|
|
|
|
100
|
%
|
Key Risk Insurance Company
|
|
|
North Carolina
|
|
|
|
100
|
%
|
Midwest Employers Casualty Company:
|
|
|
Delaware
|
|
|
|
100
|
%
|
Preferred Employers Insurance Company
|
|
|
California
|
|
|
|
100
|
%
|
Gemini Insurance Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
Riverport Insurance Company
|
|
|
Minnesota
|
|
|
|
100
|
%
|
StarNet Insurance Company
|
|
|
Delaware
|
|
|
|
100
|
%
|
Facultative ReSources, Inc.
|
|
|
Connecticut
|
|
|
|
100
|
%
|
|
|
|
1)
|
|
W. R. Berkley Corporation is the ultimate parent. The subsidiary
of a direct parent in indicated by an indentation, and its
percentage ownership is as indicated in this column.
|
|
2)
|
|
Berkley International, LLC is held by W. R. Berkley Corporation
and its subsidiaries as follows: W. R. Berkley Corporation (2%),
Admiral Insurance Company (35%), Berkley Regional Insurance
Company (14%), Nautilus Insurance Company (14%) and Berkley
Insurance Company (35%).
|
|
3)
|
|
Held by Admiral Insurance Company (66.67%) and Berkley Insurance
Company (33.33%)
|
|
(23)
|
|
Consent of Independent Registered Public Accounting Firm
|
|
(31.1)
|
|
Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/ 15d-14(a).
|
|
(31.2)
|
|
Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/ 15d-14(a).
|
|
(32.1)
|
|
Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
37
Report
of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
W. R. Berkley Corporation:
Under date of February 29, 2008, we reported on the
consolidated balance sheets of W. R. Berkley Corporation and
subsidiaries as of December 31, 2007 and 2006, and the
related consolidated statements of income, stockholders
equity, comprehensive income, and cash flows for each of the
years in the three-year period ended December 31, 2007, as
contained in the 2007 Annual Report to stockholders. These
consolidated financial statements and our report thereon are
incorporated by reference in the December 31, 2007 Annual
Report on
Form 10-K
for the year 2007. In connection with our audits of the
aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedules.
These financial statement schedules are the responsibility of
the Companys management. Our responsibility is to express
an opinion on these financial statement schedules based on our
audits.
In our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
KPMG LLP
New York, New York
February 29, 2008
38
Schedule II
W. R.
Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Amounts in thousands)
|
|
|
Cash and cash equivalents
|
|
$
|
131,798
|
|
|
$
|
84,188
|
|
Fixed maturity securities available for sale at fair value (cost
$223,242 and $66,280 in 2007 and 2006, respectively)
|
|
|
223,709
|
|
|
|
66,289
|
|
Equity securities available for sale, at fair value (cost $781
and $310)
|
|
|
39,170
|
|
|
|
32,089
|
|
Investment in affiliate
|
|
|
1,972
|
|
|
|
1,846
|
|
Investments in subsidiaries
|
|
|
4,596,445
|
|
|
|
4,294,197
|
|
Deferred Federal income taxes
|
|
|
190,629
|
|
|
|
145,675
|
|
Real estate, furniture & equipment at cost, less
accumulated depreciation
|
|
|
6,954
|
|
|
|
5,866
|
|
Other assets
|
|
|
4,472
|
|
|
|
1,274
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,195,149
|
|
|
$
|
4,631,424
|
|
|
|
|
|
|
|
|
|
|
Liabilities, debt and stockholders equity
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Due to Subsidiaries
|
|
$
|
120,638
|
|
|
$
|
79,800
|
|
Other liabilities
|
|
|
156,986
|
|
|
|
117,067
|
|
Junior subordinated debentures
|
|
|
242,163
|
|
|
|
241,954
|
|
Senior notes
|
|
|
1,105,587
|
|
|
|
857,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,625,374
|
|
|
|
1,296,265
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
47,024
|
|
|
|
47,024
|
|
Additional paid-in capital
|
|
|
907,016
|
|
|
|
859,787
|
|
Retained earnings (including accumulated undistributed net
income of subsidiaries of $2,914,073, and $2,680,731 in 2007 and
2006, respectively)
|
|
|
3,248,762
|
|
|
|
2,542,744
|
|
Accumulated other comprehensive income
|
|
|
53,201
|
|
|
|
111,613
|
|
Treasury stock, at cost
|
|
|
(686,228
|
)
|
|
|
(226,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,569,775
|
|
|
|
3,335,159
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,195,149
|
|
|
$
|
4,631,424
|
|
|
|
|
|
|
|
|
|
|
See note to condensed financial statements.
39
Schedule II,
Continued
W. R.
Berkley Corporation
Condensed Financial Information of
Registrant (Continued)
Statements of Income (Parent Company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Amounts in thousands)
|
|
|
Management fees and investment income including dividends from
subsidiaries of $616,688, $244,066 and $17,870 for 2007, 2006
and 2005, respectively
|
|
$
|
637,594
|
|
|
$
|
263,166
|
|
|
$
|
24,813
|
|
Realized investment gains (losses)
|
|
|
(220
|
)
|
|
|
(3
|
)
|
|
|
54
|
|
Other income
|
|
|
180
|
|
|
|
186
|
|
|
|
9,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
637,554
|
|
|
|
263,349
|
|
|
|
34,026
|
|
Operating costs and expense
|
|
|
98,406
|
|
|
|
86,986
|
|
|
|
62,550
|
|
Interest expense
|
|
|
87,716
|
|
|
|
91,498
|
|
|
|
84,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before Federal income taxes
|
|
|
451,432
|
|
|
|
84,865
|
|
|
|
(113,449
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income taxes provided by subsidiaries on a separate
return Basis
|
|
|
347,018
|
|
|
|
324,190
|
|
|
|
181,392
|
|
Federal income tax expense on a consolidated return basis
|
|
|
(292,537
|
)
|
|
|
(276,945
|
)
|
|
|
(214,214
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit (expense)
|
|
|
54,481
|
|
|
|
47,245
|
|
|
|
(32,822
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before undistributed equity in net income of
subsidiaries
|
|
|
505,913
|
|
|
|
132,110
|
|
|
|
(146,271
|
)
|
Equity in undistributed net income of subsidiaries
|
|
|
237,733
|
|
|
|
567,408
|
|
|
|
691,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
743,646
|
|
|
|
699,518
|
|
|
|
544,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See note to condensed financial statements.
40
Schedule II,
Continued
W. R.
Berkley Corporation
Condensed Financial Information of Registrant
(Continued)
Statements of Cash Flows (Parent Company)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Amounts in thousands
|
|
|
Cash flows from (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
743,646
|
|
|
$
|
699,518
|
|
|
$
|
544,892
|
|
Adjustments to reconcile net income to net cash from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized investment losses (gains)
|
|
|
220
|
|
|
|
3
|
|
|
|
(54
|
)
|
Depreciation and amortization
|
|
|
2,324
|
|
|
|
4,804
|
|
|
|
3,144
|
|
Equity in undistributed earnings of subsidiaries
|
|
|
(237,734
|
)
|
|
|
(567,408
|
)
|
|
|
(691,163
|
)
|
Tax payments received from subsidiaries
|
|
|
349,173
|
|
|
|
307,677
|
|
|
|
244,373
|
|
Federal income taxes provided by subsidiaries on a separate
return basis
|
|
|
(347,017
|
)
|
|
|
(324,190
|
)
|
|
|
(181,392
|
)
|
Stock Incentive Plans
|
|
|
20,836
|
|
|
|
17,861
|
|
|
|
8,852
|
|
Change in:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income taxes
|
|
|
14,838
|
|
|
|
(9,055
|
)
|
|
|
21,715
|
|
Other assets
|
|
|
101
|
|
|
|
43,008
|
|
|
|
(104,156
|
)
|
Other liabilities
|
|
|
30,884
|
|
|
|
(24,736
|
)
|
|
|
122,963
|
|
Accrued investment income
|
|
|
(3,299
|
)
|
|
|
1,400
|
|
|
|
(1,316
|
)
|
Other, net
|
|
|
(126
|
)
|
|
|
|
|
|
|
952
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in) operating activities
|
|
|
573,846
|
|
|
|
148,882
|
|
|
|
(31,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from (used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of fixed maturity securities
|
|
|
86,050
|
|
|
|
29,997
|
|
|
|
129,114
|
|
Proceeds from maturities and prepayments of fixed maturity
securities
|
|
|
35,976
|
|
|
|
157,802
|
|
|
|
|
|
Cost of purchases of fixed maturity securities
|
|
|
(278,986
|
)
|
|
|
(69,978
|
)
|
|
|
(246,474
|
)
|
Cost of purchases of equity securities
|
|
|
(726
|
)
|
|
|
|
|
|
|
|
|
Investments in affiliate
|
|
|
(68,064
|
)
|
|
|
(1,846
|
)
|
|
|
|
|
Investments in and advances to subsidiaries, net
|
|
|
(46,051
|
)
|
|
|
(25,541
|
)
|
|
|
(76,145
|
)
|
Net additions to real estate, furniture & equipment
|
|
|
(1,927
|
)
|
|
|
(469
|
)
|
|
|
(343
|
)
|
Other, net
|
|
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in) investing activities
|
|
|
(273,473
|
)
|
|
|
89,965
|
|
|
|
(193,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of junior subordinated debentures
|
|
|
|
|
|
|
|
|
|
|
241,655
|
|
Net proceeds from issuance of senior notes
|
|
|
246,644
|
|
|
|
|
|
|
|
198,142
|
|
Net proceeds from stock options exercised
|
|
|
25,676
|
|
|
|
19,405
|
|
|
|
11,250
|
|
Retirement of junior subordinated notes
|
|
|
|
|
|
|
(210,000
|
)
|
|
|
|
|
Repayment of senior notes
|
|
|
|
|
|
|
(100,000
|
)
|
|
|
(40,000
|
)
|
Purchase of common treasury shares
|
|
|
(488,794
|
)
|
|
|
(45,062
|
)
|
|
|
(636
|
)
|
Cash dividends to common stockholders
|
|
|
(36,284
|
)
|
|
|
(29,430
|
)
|
|
|
(19,055
|
)
|
Other, net
|
|
|
(5
|
)
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in) financing activities
|
|
|
(252,763
|
)
|
|
|
(365,087
|
)
|
|
|
391,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
47,610
|
|
|
|
(126,240
|
)
|
|
|
166,320
|
|
Cash and cash equivalents at beginning of year
|
|
|
84,188
|
|
|
|
210,428
|
|
|
|
44,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
131,798
|
|
|
$
|
84,188
|
|
|
$
|
210,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See note to condensed financial statements.
41
Schedule II,
Continued
W. R.
Berkley Corporation
Condensed Financial Information of Registrant
(Continued)
December 31,
2007
Note
to Condensed Financial Statements (Parent Company)
The accompanying condensed financial statements should be read
in conjunction with the notes to consolidated financial
statements included elsewhere herein. Reclassifications have
been made in the 2006 and 2005 financial statements as
originally reported to conform them to the presentation of the
2007 financial statements.
The Company files a consolidated federal tax return with the
results of its domestic insurance subsidiaries included on a
statutory basis. Under present Company policy, Federal income
taxes payable by subsidiary companies on a separate-return basis
are paid to W. R. Berkley Corporation, and the Company pays the
tax due on a consolidated return basis.
42
Schedule III
W. R.
Berkley Corporation and Subsidiaries
Supplementary Insurance Information
December 31, 2007, 2006 and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Deferred
|
|
|
Other
|
|
|
|
|
|
|
Policy
|
|
|
Reserve for
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
Policy
|
|
|
Operating
|
|
|
Net
|
|
|
|
Acquisition
|
|
|
Losses and
|
|
|
Unearned
|
|
|
Premiums
|
|
|
Investment
|
|
|
Loss and Loss
|
|
|
Acquisition
|
|
|
Cost &
|
|
|
Premiums
|
|
|
|
Cost
|
|
|
Loss Expenses
|
|
|
Premiums
|
|
|
Earned
|
|
|
Income
|
|
|
Expenses
|
|
|
Cost
|
|
|
Expenses
|
|
|
Written
|
|
|
|
|
|
|
(Amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
165,608
|
|
|
$
|
3,044,134
|
|
|
$
|
886,519
|
|
|
$
|
1,772,547
|
|
|
$
|
233,080
|
|
|
$
|
1,015,176
|
|
|
$
|
361,221
|
|
|
$
|
112,699
|
|
|
$
|
1,704,880
|
|
Regional
|
|
|
152,063
|
|
|
|
1,337,611
|
|
|
|
621,566
|
|
|
|
1,250,914
|
|
|
|
96,886
|
|
|
|
739,667
|
|
|
|
317,653
|
|
|
|
75,252
|
|
|
|
1,267,451
|
|
Alternative markets
|
|
|
35,325
|
|
|
|
1,994,569
|
|
|
|
315,676
|
|
|
|
651,909
|
|
|
|
125,698
|
|
|
|
385,837
|
|
|
|
90,096
|
|
|
|
150,886
|
|
|
|
656,369
|
|
Reinsurance
|
|
|
78,420
|
|
|
|
1,968,923
|
|
|
|
302,442
|
|
|
|
740,439
|
|
|
|
153,416
|
|
|
|
483,757
|
|
|
|
160,522
|
|
|
|
71,274
|
|
|
|
682,241
|
|
International
|
|
|
23,828
|
|
|
|
332,797
|
|
|
|
114,487
|
|
|
|
247,892
|
|
|
|
36,666
|
|
|
|
155,141
|
|
|
|
72,875
|
|
|
|
12,085
|
|
|
|
265,048
|
|
Corporate and adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,914
|
|
|
|
|
|
|
|
|
|
|
|
106,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
455,244
|
|
|
$
|
8,678,034
|
|
|
$
|
2,240,690
|
|
|
$
|
4,663,701
|
|
|
$
|
672,660
|
|
|
$
|
2,779,578
|
|
|
$
|
1,002,367
|
|
|
$
|
528,620
|
|
|
$
|
4,575,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
172,938
|
|
|
$
|
2,660,880
|
|
|
$
|
949,545
|
|
|
$
|
1,752,507
|
|
|
$
|
200,421
|
|
|
$
|
1,035,090
|
|
|
$
|
336,633
|
|
|
$
|
102,100
|
|
|
$
|
1,814,479
|
|
Regional
|
|
|
145,327
|
|
|
|
1,350,948
|
|
|
|
639,163
|
|
|
|
1,205,912
|
|
|
|
83,957
|
|
|
|
719,764
|
|
|
|
309,356
|
|
|
|
59,332
|
|
|
|
1,235,302
|
|
Alternative markets
|
|
|
34,277
|
|
|
|
1,632,120
|
|
|
|
274,932
|
|
|
|
658,805
|
|
|
|
114,914
|
|
|
|
352,693
|
|
|
|
91,261
|
|
|
|
143,161
|
|
|
|
651,255
|
|
Reinsurance
|
|
|
90,780
|
|
|
|
1,876,712
|
|
|
|
358,698
|
|
|
|
859,411
|
|
|
|
133,709
|
|
|
|
618,627
|
|
|
|
185,986
|
|
|
|
53,083
|
|
|
|
892,769
|
|
International
|
|
|
45,921
|
|
|
|
263,609
|
|
|
|
91,944
|
|
|
|
215,987
|
|
|
|
32,907
|
|
|
|
138,324
|
|
|
|
54,793
|
|
|
|
21,330
|
|
|
|
225,188
|
|
Corporate and adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,267
|
|
|
|
|
|
|
|
|
|
|
|
92,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
489,243
|
|
|
$
|
7,784,269
|
|
|
$
|
2,314,282
|
|
|
$
|
4,692,622
|
|
|
$
|
586,175
|
|
|
$
|
2,864,498
|
|
|
$
|
978,029
|
|
|
$
|
471,137
|
|
|
$
|
4,818,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
164,609
|
|
|
$
|
2,259,162
|
|
|
$
|
889,265
|
|
|
$
|
1,682,193
|
|
|
$
|
134,290
|
|
|
$
|
1,048,927
|
|
|
$
|
329,386
|
|
|
$
|
92,274
|
|
|
$
|
1,827,865
|
|
Regional
|
|
|
140,538
|
|
|
|
1,160,171
|
|
|
|
615,141
|
|
|
|
1,173,174
|
|
|
|
57,619
|
|
|
|
655,027
|
|
|
|
304,537
|
|
|
|
54,734
|
|
|
|
1,196,487
|
|
Alternative markets
|
|
|
36,161
|
|
|
|
1,452,578
|
|
|
|
284,572
|
|
|
|
663,478
|
|
|
|
82,617
|
|
|
|
393,783
|
|
|
|
86,696
|
|
|
|
137,851
|
|
|
|
669,774
|
|
Reinsurance
|
|
|
78,285
|
|
|
|
1,667,475
|
|
|
|
327,844
|
|
|
|
754,097
|
|
|
|
95,110
|
|
|
|
558,950
|
|
|
|
182,566
|
|
|
|
44,085
|
|
|
|
719,540
|
|
International
|
|
|
40,180
|
|
|
|
172,374
|
|
|
|
72,179
|
|
|
|
187,993
|
|
|
|
20,749
|
|
|
|
125,115
|
|
|
|
56,395
|
|
|
|
6,436
|
|
|
|
190,908
|
|
Corporate and adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,577
|
|
|
|
|
|
|
|
|
|
|
|
63,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
459,773
|
|
|
$
|
6,711,760
|
|
|
$
|
2,189,001
|
|
|
$
|
4,460,935
|
|
|
$
|
403,962
|
|
|
$
|
2,781,802
|
|
|
$
|
959,580
|
|
|
$
|
398,994
|
|
|
$
|
4,604,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
Schedule IV
W. R.
Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2007, 2006 and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
|
Ceded to
|
|
|
Assumed
|
|
|
|
|
|
of Amount
|
|
|
|
Direct
|
|
|
Other
|
|
|
from Other
|
|
|
Net
|
|
|
Assumed
|
|
|
|
Amount
|
|
|
Companies
|
|
|
Companies
|
|
|
Amount
|
|
|
to Net
|
|
|
|
|
|
|
(Amounts in thousands)
|
|
|
|
|
|
Year ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
1,796,620
|
|
|
$
|
111,847
|
|
|
$
|
20,107
|
|
|
$
|
1,704,880
|
|
|
|
1.2
|
%
|
Regional
|
|
|
1,422,015
|
|
|
|
173,626
|
|
|
|
19,062
|
|
|
|
1,267,451
|
|
|
|
1.5
|
|
Alternative markets
|
|
|
645,680
|
|
|
|
101,916
|
|
|
|
112,605
|
|
|
|
656,369
|
|
|
|
17.2
|
|
Reinsurance
|
|
|
4,633
|
|
|
|
49,992
|
|
|
|
727,600
|
|
|
|
682,241
|
|
|
|
106.6
|
|
International
|
|
|
304,908
|
|
|
|
39,860
|
|
|
|
|
|
|
|
265,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,173,856
|
|
|
$
|
477,241
|
|
|
$
|
879,374
|
|
|
$
|
4,575,989
|
|
|
|
19.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
1,898,741
|
|
|
$
|
104,042
|
|
|
$
|
19,780
|
|
|
$
|
1,814,479
|
|
|
|
1.1
|
%
|
Regional
|
|
|
1,394,526
|
|
|
|
180,009
|
|
|
|
20,785
|
|
|
|
1,235,302
|
|
|
|
1.7
|
|
Alternative markets
|
|
|
657,964
|
|
|
|
96,425
|
|
|
|
89,716
|
|
|
|
651,255
|
|
|
|
13.8
|
|
Reinsurance
|
|
|
3,057
|
|
|
|
48,028
|
|
|
|
937,740
|
|
|
|
892,769
|
|
|
|
105.0
|
|
International
|
|
|
254,605
|
|
|
|
29,417
|
|
|
|
|
|
|
|
225,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,208,893
|
|
|
$
|
457,921
|
|
|
$
|
1,068,021
|
|
|
$
|
4,818,993
|
|
|
|
22.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty
|
|
$
|
1,911,309
|
|
|
$
|
104,956
|
|
|
$
|
21,512
|
|
|
$
|
1,827,865
|
|
|
|
1.2
|
%
|
Regional
|
|
|
1,358,304
|
|
|
|
188,087
|
|
|
|
26,270
|
|
|
|
1,196,487
|
|
|
|
2.2
|
|
Alternative markets
|
|
|
696,917
|
|
|
|
111,637
|
|
|
|
84,494
|
|
|
|
669,774
|
|
|
|
12.6
|
|
Reinsurance
|
|
|
370
|
|
|
|
51,241
|
|
|
|
770,411
|
|
|
|
719,540
|
|
|
|
107.1
|
|
International
|
|
|
218,396
|
|
|
|
27,488
|
|
|
|
|
|
|
|
190,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,185,296
|
|
|
$
|
483,409
|
|
|
$
|
902,687
|
|
|
$
|
4,604,574
|
|
|
|
19.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
Schedule V
W. R.
Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2007, 2006 and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions -
|
|
|
Deduction-
|
|
|
|
|
|
|
Opening
|
|
|
Charged to
|
|
|
Amounts
|
|
|
Ending
|
|
|
|
Balance
|
|
|
Expense
|
|
|
Written Off
|
|
|
Balance
|
|
|
|
(Amounts in thousands)
|
|
|
Year ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and fees receivable
|
|
$
|
20,458
|
|
|
$
|
6,176
|
|
|
$
|
(8,382
|
)
|
|
$
|
18,252
|
|
Due from reinsurers
|
|
|
2,531
|
|
|
|
328
|
|
|
|
|
|
|
|
2,859
|
|
Deferred federal and foreign income taxes
|
|
|
9,621
|
|
|
|
|
|
|
|
(8,027
|
)
|
|
|
1,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
32,610
|
|
|
$
|
6,504
|
|
|
$
|
(16,409
|
)
|
|
$
|
22,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and fees received
|
|
$
|
19,460
|
|
|
$
|
8,756
|
|
|
$
|
(7,758
|
)
|
|
$
|
20,458
|
|
Due from reinsurers
|
|
|
2,402
|
|
|
|
402
|
|
|
|
(273
|
)
|
|
|
2,531
|
|
Deferred federal and foreign income taxes
|
|
|
6,575
|
|
|
|
3,046
|
|
|
|
|
|
|
|
9,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
28,437
|
|
|
$
|
12,204
|
|
|
$
|
(8,031
|
)
|
|
$
|
32,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and fees received
|
|
$
|
14,687
|
|
|
$
|
12,684
|
|
|
$
|
(7,911
|
)
|
|
$
|
19,460
|
|
Due from reinsurers
|
|
|
2,457
|
|
|
|
48
|
|
|
|
(103
|
)
|
|
|
2,402
|
|
Deferred federal and foreign income taxes
|
|
|
4,813
|
|
|
|
1,762
|
|
|
|
|
|
|
|
6,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,957
|
|
|
$
|
14,494
|
|
|
$
|
(8,014
|
)
|
|
$
|
28,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
Schedule VI
W. R.
Berkley Corporation and Subsidiaries
Supplementary
Information Concerning Property-Casualty Insurance Operations
December 31,
2007, 2006 and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Amounts in thousands)
|
|
|
Deferred policy acquisition costs
|
|
$
|
455,244
|
|
|
$
|
489,243
|
|
|
$
|
459,773
|
|
Reserves for losses and loss expenses
|
|
|
8,678,034
|
|
|
|
7,784,269
|
|
|
|
6,711,760
|
|
Unearned premium
|
|
|
2,240,690
|
|
|
|
2,314,282
|
|
|
|
2,189,001
|
|
Premiums earned
|
|
|
4,663,701
|
|
|
|
4,692,622
|
|
|
|
4,460,935
|
|
Net investment income
|
|
|
672,660
|
|
|
|
586,175
|
|
|
|
403,962
|
|
Losses and loss expenses incurred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Year
|
|
|
2,837,647
|
|
|
|
2,791,500
|
|
|
|
2,531,655
|
|
Prior Years
|
|
|
(105,879
|
)
|
|
|
26,663
|
|
|
|
186,728
|
|
Decrease in discount for prior years
|
|
|
46,808
|
|
|
|
39,507
|
|
|
|
57,790
|
|
Amortization of deferred policy acquisition costs
|
|
|
1,002,367
|
|
|
|
978,029
|
|
|
|
959,580
|
|
Paid losses and loss expenses
|
|
|
1,971,668
|
|
|
|
1,777,363
|
|
|
|
1,631,725
|
|
Net premiums written
|
|
|
4,575,989
|
|
|
|
4,818,993
|
|
|
|
4,604,574
|
|
46
W.R. Berkley (NYSE:BER)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
W.R. Berkley (NYSE:BER)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024