W. R. Berkley Corporation
2019 ANNUAL REPORT
Financial Highlights
By taking advantage of challenging opportunities and
bringing together talented people and capital, we feel
confident we will be able to continue to deliver
outstanding returns.
COMBINED RATIO
AVERAGED 94.8% OVER
THE PAST 5 YEARS.
93.8%
TOTAL REVENUES
INCREASED 11% OVER
THE PAST 5 YEARS
$7.9B
RETURN ON
STOCKHOLDERS' EQUITY
AVERAGED 12% OVER
THE PAST 5 YEARS
TOTAL RETURN
GROWTH IN STOCK PRICE PLUS
DIVIDENDS OUTPACED THE 33%
S&P 500® TOTAL RETURN IN 2019
12.5%
43.7%
TABLE OF CONTENTS
01. FINANCIAL RESULTS
14. INVESTMENTS
03. LETTER TO OUR SHAREHOLDERS
15. FORM 10-K
08. SELECTED FINANCIAL DATA
149. OPERATING UNITS
10. OUR BUSINESS
159. BOARD OF DIRECTORS & OFFICERS
12. SEGMENT OVERVIEW
IBC. CORPORATE INFORMATION
Financial Results
AT-A-GLANCE
TOTAL REVENUES
(dollars in billions)
7.9
7.7
7.7
7.7
7.2
INVESTMENTS
Market Value
(dollars in billions)
18.5
17.7
17.5
16.6
15.4
15
16
17
18
19
15
16
17
18
19
RESERVES FOR LOSSES
AND LOSS EXPENSES
(dollars in billions)
12.6
12.0
11.7
11.2
10.7
COMMON
STOCKHOLDERS' EQUITY*
(dollars in billions)
6.1
5.4
5.4
5.0
4.6
15
16
17
18
19
15
16
17
18
19
* Net of $1.4 billion in special dividends and shares repurchased from 2015–2019.
W. R. BERKLEY CORPORATION’S PERFORMANCE VS. THE S&P 500®
Annual Percentage Change
In Per-Share Book Value of W. R. Berkley Corporation with Dividends Included
In S&P 500® with Dividends Included
Relative Results
Year
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Average Annual Gain — 1973–2019
Overall Gain — 1973–2019
Overall gain 1973–2019 with dividends compounded = 73,325%
■ W. R. Berkley Corporation ■ S&P 500®
75,000%
65,000%
40,000%
20,000%
0%
(1)
50.0%
12.5%
29.6%
28.6%
24.4%
18.2%
9.4%
14.5%
-9.0%
-11.6%
-16.9%
59.6%
106.8%
23.5%
22.5%
13.2%
7.8%
20.8%
13.5%
16.7%
-10.8%
34.5%
7.9%
15.9%
1.9%
-18.1%
17.1%
7.6%
31.2%
26.7%
25.6%
21.9%
30.1%
16.3%
-4.1%
23.3%
15.4%
12.2%
14.8%
4.8%
14.8%
4.3%
15.7%
10.6%
4.8%
17.1%
16.8%
(2)
-26.4%
37.2%
23.6%
-7.4%
6.4%
18.2%
32.3%
-5.0%
21.4%
22.4%
6.1%
31.6%
18.6%
5.1%
16.6%
31.7%
-3.1%
30.5%
7.6%
10.1%
1.3%
37.6%
23.0%
33.4%
28.6%
21.0%
-9.1%
-11.9%
-22.1%
28.7%
10.9%
4.9%
15.8%
5.5%
-37.0%
26.5%
15.1%
2.1%
16.0%
32.4%
13.7%
1.4%
12.0%
21.3%
-4.4%
31.5%
12.5%
(1)-(2)
76.4%
-24.7%
6.0%
36.0%
18.0%
0.0%
-22.9%
19.5%
-30.4%
-34.0%
-23.0%
28.0%
88.2%
18.4%
5.9%
-18.5%
10.9%
-9.7%
5.9%
6.6%
-12.1%
-3.1%
-15.1%
-17.5%
-26.7%
-39.1%
26.2%
19.5%
53.3%
-2.0%
14.7%
17.0%
14.3%
10.8%
32.9%
-3.2%
0.3%
10.1%
-1.2%
-27.6%
1.1%
3.0%
3.7%
-10.7%
9.2%
-14.4%
4.3%
69,998%
12,454%
73,325%
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016 2018
2019
Notes: W. R. Berkley Corporation’s book value per share has been adjusted for stock dividends paid from 1975 to 1983. Stock dividends were 6% in each year from
1975 to 1978, 14% in 1979, and 7% in each year from 1980 to 1983. The Company has paid cash dividends each year since 1976.
02 | W . R. Berkley Corporation | 2019 Annual Report
W. R. BERKLEY CORPORATION’S PERFORMANCE VS. THE S&P 500®
To Our
SHAREHOLDERS,
"Our people have
truly been our
greatest asset
during our more
than 50-year
history, and will
continue to be long
into the future."
"
(left to right) W. Robert Berkley, Jr.,
President and Chief Executive Officer &
William R. Berkley, Executive Chairman
BY EVERY MEASURE, OUR 2019 RESULTS WERE EXCELLENT.
OUR AFTER TAX RETURN ON CAPITAL WAS 12.5%,
UP FROM 11.8% IN 2018, AND WE WERE ABLE TO GROW
OUR PREMIUMS BY OVER 6%. THESE ARE GOOD SIGNS
OF A STRONG YEAR.
We achieved rate increases and growth at the same time,
while remaining steadfast in our focus on underwriting discipline.
Our loss ratio improved slightly, and we managed to further
reduce our expense ratio from 32.9% to 31.5%. These are
positive numbers for the underwriting results of our business,
and they are driving our momentum. We remain focused on
improving our underwriting results.
The key elements of our year were rate increases, premium
growth, maintaining our disciplined investment approach with
a focus on total-return, and embedding the behaviors that foster
innovation into our culture. The Company continues to focus
on improving underwriting margins and growing our most
profitable lines of business, and we believe our 2019 return
on equity is a sign of a positive trend. The improving rate
environment, along with continued opportunities for growth,
offers the likelihood of better risk-adjusted returns in the next
few years. Cost controls and growth will help with our
expense ratio.
The economy was favorable throughout 2019, which put the
wind at our backs. We became more confident as we saw
both rate increases and growth improve quarter to quarter.
The fourth quarter served as additional confirmation of the
growing momentum in rate, as well as the opportunities for
utilizing our competitive strengths. New business pricing,
which is a key indicator of the market temperament, was at
least as good, and sometimes even better than, pricing of our
renewal business. This trend is a good sign for the direction
of the market.
Investment income, the other key part of our economic model,
is being challenged by low interest rates and a relatively flat
yield curve. This environment puts pressure on our core invest-
ment income. We work diligently to maintain a very high-quality,
short duration fixed-maturity portfolio, which had an average
rating of AA- and an average duration under 2.8 years during
2019. This task has not been easy, but it is a key element of our
strategy to ameliorate investment risk.
Our high-quality, short-duration bond portfolio represents
approximately 75% of our invested assets. In addition, we invest
in a modest amount of common and preferred stocks, a merger
arbitrage portfolio, investment partnerships, and real estate that
consists of Class A office buildings primarily in New York City,
Washington, D.C., and London. We also have a modest private
equity business that is giving us outstanding returns that have
averaged close to 20% over the past 10 or more years. Each of
these asset classes has been critical to offsetting the impact
37%
FIVE YEAR GROWTH
IN BOOK VALUE
PER SHARE
12%
FIVE YEAR AVERAGE
RETURN ON EQUITY
04 | W . R. Berkley Corporation | 2019 Annual Report
"2019 was a year
full of challenges
and successes.
It was a year of
performance for
our Company."
"
of declining interest rates. We do not believe the inherent
risk in our aggregate portfolio of non-fixed income securities
significantly changes the risk profile of our total portfolio.
Their allocation does, however, change the liquidity profile,
yet we retain substantially more liquidity than we require.
Given our long-term view, we are not overly concerned with
the lack of quarterly predictability in returns for these asset
classes. Over time, they have been accretive to our overall
return on equity.
We are pleased overall with the portfolio and its balance.
We believe the physical assets in our real estate portfolio
and certain of our investment funds reasonably protect our
balance sheet from the prospect of inflation, while, at the
same time, the short duration in our bond portfolio provides
substantial flexibility.
We continue to focus on optimizing our long-term risk-adjusted
return, and, as we reflect on the year just passed, we must
recognize that it is not just about the numbers. While we
believe we have many obligations, all of which must be fulfilled
and none of which can be considered mutually exclusive, we
always start with our shareholders. We believe that we can
only achieve the best long-term return for our shareholders
by meeting the interrelated needs of our customers, agents
and brokers, and society. We meet those needs by providing
meaningful products and services along with the confidence
that we will meet our coverage commitments. Through our
business and charitable works, we contribute to society in
a manner that makes our world a better and more humane
place. Our success in these endeavors generates strong
returns, which in turn, provides access to the capital that
we need to grow.
All of these obligations go hand-in-hand. We have long
believed that in order to meet these obligations and to
make a successful enterprise, we must have the best people.
"It is just as
clear that we
have the people,
the mindset and
the tools to do
even greater
things in 2020.""
Our people have truly been our greatest asset during our
more than 50-year history, and will continue to be long
into the future.
We decided that in order to maintain our Company as a
dynamic entrepreneurial enterprise, we had to embed the
behaviors that foster innovation into our culture. We first
recognized the need to engage our full team in new ways
of thinking and doing if we wished to continue to grow and
prosper. Early on, it became clear that the best ideas often
come from cubicles rather than from corner offices.
We, therefore, invested heavily in training to ensure an under-
standing at every level of the organization that innovation
is not a separate function, but a way for each of us to look
at everything we do with a fresh set of eyes. Our innovation
mindset has now set standards for examining all of our
activities. It has compelled each individual to consider whether
what they do and how they do it will help us fulfill our mission.
We want to be sure we always remember that meeting the
needs of our customers, shareholders, employees, and the
society in which we operate is not just a series of one-time
tests, but in fact, is something we must think about continually.
Our innovation initiative has become a key element that will
enable us to maintain our entrepreneurial culture for many
years to come.
An annual report is a brief summary of 365 days of activity.
The good days and bad days are a blur, but without a doubt,
we can be proud of what we have accomplished in 2019. It
was a year full of challenges and successes. It was a year of
performance for our Company. It was a year we can look back
on with great satisfaction. Like every other year, we would
not have succeeded without the commitment of our agents,
brokers, shareholders and employees, and the support of
our Board of Directors. It is clear the current environment is
06 | W . R. Berkley Corporation | 2019 Annual Report
uncertain and the risks we face each day create challenges for
people in our business, because our job is to help ameliorate
the risks of other businesses, institutions and individuals who
are our insureds. And it is just as clear that we have the people,
the mindset and the tools to do even greater things in 2020.
William R. Berkley
Executive Chairman
W. Robert Berkley, Jr.
President and Chief Executive Officer
P.S. As this annual report goes to press, we are in what
feels like a different world since the beginning of 2020.
The Coronavirus, which originated in China, has now swept the
world. Nations are on lockdown as the infection rate increases
and thousands of lives have been lost. The economies of the
world are suspended, and we all sit and look in amazement
at things we have never seen. The level and speed of economic
rebound will be uncertain and, in part, depends on the nature
and speed of various government programs and efforts.
There is no question that the government wants to act positively.
There is a question of whether they can in fact put all the
pieces together. Fortunately, property casualty companies are
designed to deal with uncertainty and society should be able
to weather the storm. We are optimistic that by the time this
report is distributed, the world will be over the crest and things
will begin to get better. In the meantime, we hope we all
get through the current crisis and survive this great
uncertainty successfully.
Selected
FINANCIAL DATA
In thousands, except per share data
Years ended December 31,
2015
2016
2017
2018
2019
Total revenues
Net premiums written
Net investment income
Net realized and unrealized
gains on investments
$7,206,457
$7,654,184
$7,684,764
$7,691,651
$7,902,196
6,189,515
6,423,913
6,260,508
6,433,227
6,863,499
512,645
564,163
575,788
674,235
645,614
92,324
267,005
335,858
154,488
Insurance service fees
139,440
138,944
134,729
117,757
Net income to common stockholders
503,694
601,916
549,094
649,749
NET INCOME PER COMMON SHARE
Basic
Diluted
2.71
2.58
3.27
3.12
2.93
2.84
3.37
3.33
Return on common stockholders’ equity
11.0%
13.1%
10.9%
11.8%
120,703
92,680
681,944
3.58
3.52
12.5%
AT YEAR END
Total assets
Total investments
$21,730,967
$23,364,844
$24,299,917
$24,895,977
$26,643,428
15,351,467
16,649,792
17,450,508
17,723,089
18,473,674
Reserves for losses and loss expenses
10,669,150
11,197,195
11,670,408
11,966,448
12,583,249
Common stockholders’ equity
4,600,246
5,047,208
5,411,343
5,437,851
6,074,939
Common shares outstanding
Common stockholders’ equity per share
184,962
24.87
181,194
27.76
182,272
182,994
29.69
29.72
183,412
33.12
Per share data and common shares outstanding have been adjusted for the 3-for-2 common stock split effected on April 2, 2019.
* Beginning in 2018, net unrealized gains on equity securities are included within net income due to our adoption of ASU 2016-01 on January 1, 2018.
08 | W . R. Berkley Corporation | 2019 Annual Report
Relative Stock Price
PERFORMANCE:
Cumulative Growth
34,450%
■ W. R. Berkley Corporation ■ S&P 500®
3,212%
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
Our
BUSINESS
Today, as yesterday and tomorrow, the combined expertise
of underwriting, risk management, claims handling and
investing will deliver outstanding risk-adjusted returns.
INSURANCE:
The Insurance units underwrite predominately commercial
insurance business, including excess and surplus lines and
admitted lines, and specialty personal lines, throughout the
United States, as well as insurance business in the United
Kingdom, Continental Europe, South America, Canada,
Scandinavia, Australia, Asia and Mexico.
2019 RESULTS
TOTAL REVENUES WERE:
$6.4B
PRE-TAX INCOME WAS:
$815M
REINSURANCE & MONOLINE EXCESS:
2019 RESULTS
The Reinsurance & Monoline Excess units write reinsurance
business on a facultative and treaty basis, primarily in
the United States, United Kingdom, Continental Europe,
Australia, the Asia-Pacific Region and South Africa.
Monoline Excess units solely retain risk on an excess basis.
TOTAL REVENUES WERE:
$879M
PRE-TAX INCOME WAS:
$189M
10 | W . R. Berkley Corporation | 2019 Annual Report
Our
COMPANY
W. R. Berkley Corporation, founded in 1967, is one
of the nation’s premier commercial lines property
casualty insurance providers. Each of the operating
units within Berkley participates in a niche market
requiring specialized knowledge about a territory
or product.
Our competitive advantage lies in our long-term
strategy of decentralized operations, allowing each
of our units to identify and respond quickly and
effectively to changing market conditions and local
customer needs. This decentralized structure
provides financial accountability and incentives
to local management and enables us to attract and
retain the highest caliber professionals. We have
the expertise and resources to utilize our strengths
in the present environment, and the flexibility
to anticipate, innovate and respond to whatever
opportunities and challenges the future may hold.
HOW WE ARE DIFFERENT
RISK-ADJUSTED RETURNS
Management company-wide is
focused on obtaining the best
potential returns with a real
understanding of the amount of
risk being assumed. Superior risk-
adjusted returns are generated over
the insurance cycle.
ACCOUNTABILITY
The business is operated with an
ownership perspective and a clear
sense of fiduciary responsibility to
shareholders.
PEOPLE-ORIENTED STRATEGY
New businesses are started when
opportunities are identified and, most
importantly, when the right talent is
found to lead a business. Of the
Company’s 53 operating units, 46
were developed internally and seven
were acquired.
RESPONSIBLE FINANCIAL
PRACTICES
Risk exposures are managed
proactively. A strong balance sheet,
including a high-quality investment
portfolio, ensures ample resources to
grow the business profitably whenever
there are opportunities to do so.
TRANSPARENCY
Consistent and objective standards
are used to measure performance
— and, the same standards are used
regardless of the environment.
Segment
OVERVIEW
Each of our business segments—Insurance and
Reinsurance & Monoline Excess—comprises
individual operating units that serve a market
defined by geography, products, services,
or types of customers.
Our growth is based on meeting the needs of
customers, maintaining a high-quality balance sheet,
and allocating capital to our best opportunities.
We combine capital with outstanding people
and wrap it all in a culture that is focused
on optimizing risk-adjusted returns. It creates
a permanent competitive advantage that can
only be acquired over many years with
consistent discipline.
12 | W . R. Berkley Corporation | 2019 Annual Report
2019
SEGMENT DATA
2019 NET PREMIUMS WRITTEN BY MAJOR LINE OF BUSINESS
(in percent)
10%
13%
21%
20%
21%
35%
INSURANCE
$6.1B
21%
■ Other Liability
■ Short-tail Lines
■ Professional Liability
■ Workers' Compensation
■ Commercial Automobile
REINSURANCE &
MONOLINE EXCESS
59%
■ Casualty
■ Monoline Excess
■ Property
$777M
2019 ASSETS AND NET RESERVES
(dollars in billions)
INSURANCE
$9.8
RESERVES
$20.0
ASSETS
REINSURANCE & MONOLINE EXCESS
$4.7
ASSETS
$2.7
RESERVES
INVESTMENTS
Over the past few years, we have shortened the
duration of our fixed-income portfolio to 2.8 years,
while maintaining its high quality with an average
rating of AA-. As a result, there has been less
volatility in our book value from mark-to-market
accounting and we are better able to manage
the uncertain interest rate environment.
In addition, we have allocated a portion of our
portfolio to investments designed to generate
capital gains. As investment income is an important
component of our economic model, we will
continue to position our portfolio to manage the
yield curve as well as the impact of potential inflation.
INVESTMENT DATA
(dollars in millions)
2018
2019
CASH AND INVESTED ASSETS
Invested assets
17,723
18,473
Cash and cash equivalents
818
1,024
W. R. BERKLEY CORPORATION
2019 FINANCIAL INFORMATION
BREAKDOWN OF FIXED
MATURITY SECURITIES
(including cash)
6%
7%
6%
11%
27%
TOTAL
18,541
19,497
Net Investment Income
674
646
Net realized and unrealized
gains on investments
154
121
18%
25%
■ Corporate Bonds
■ State and Municipal Bonds
■ Asset-backed Securities
■ Mortgage-backed Securities
■ Foreign Bonds
■ Cash and Cash Equivalents
■ U.S. Government and Government Agency Bonds
14 | W . R. Berkley Corporation | 2019 Annual Report
Form 10K
W. R. BERKLEY CORPORATION
2019 FINANCIAL INFORMATION
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
3
SECURITIES A(cid:1)D EXCHA(cid:1)GE COMMISSIO(cid:1)
Washington, D.C. 20549
Form 10-K
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer,
smaller reporting company, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
(cid:1)on-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
(Mark One)
A(cid:1)(cid:1)UAL REPORT PURSUA(cid:1)T TO SECTIO(cid:1) 13 or 15(d) OF THE SECURITIES EXCHA(cid:1)GE ACT
OF 1934
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
For the fiscal year ended December 31, 2019
OR
TRA(cid:1)SITIO(cid:1) REPORT PURSUA(cid:1)T TO SECTIO(cid:1) 13 OR 15(d) OF THE SECURITIES EXCHA(cid:1)GE
ACT OF 1934
For the transition period from ______ to ______.
Commission file number 1-15202
W. R. BERKLEY CORPORATIO(cid:1)
(Exact name of registrant as specified in its charter)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
(cid:1)o
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 $9,617,776,032.
(cid:1)umber of shares of common stock, $.20 par value, outstanding as of February 18, 2020: 183,421,709
DOCUME(cid:1)TS I(cid:1)CORPORATED BY REFERE(cid:1)CE
Portions of the Companys definitive proxy statement, which will be filed with the Securities and Exchange Commission within
120 days after December 31, 2019, are incorporated herein by reference in Part III.
Delaware
(State or other jurisdiction of
incorporation or organization)
475 Steamboat Road
(Address of principal executive offices)
22-1867895
(I.R.S. Employer Identification (cid:1)umber)
Greenwich, CT
06830
(Zip Code)
Registrants telephone number, including area code: (203) 629-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
(cid:1)ame of each exchange on which registered
Common Stock, par value $.20 per share
WRB
5.625% Subordinated Debentures due 2053
5.90% Subordinated Debentures due 2056
5.75% Subordinated Debentures due 2056
5.70% Subordinated Debentures due 2058
5.10% Subordinated Debentures due 2059
WRB PRB
WRB PRC
WRB PRD
WRB PRE
WRB PRF
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
(cid:1)one
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
(cid:1)o
(cid:1)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
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes
(cid:1)o
(cid:1)o
1
3
27983be 10K
27983be_10K.indd 3
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
2/26/20 12:08 PM
2
27983be 10K
4
4
2
7
9
8
3
b
e
1
0
K
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer,
smaller reporting company, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
(cid:1)on-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
(cid:1)o
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 $9,617,776,032.
(cid:1)umber of shares of common stock, $.20 par value, outstanding as of February 18, 2020: 183,421,709
DOCUME(cid:1)TS I(cid:1)CORPORATED BY REFERE(cid:1)CE
Portions of the Companys definitive proxy statement, which will be filed with the Securities and Exchange Commission within
120 days after December 31, 2019, are incorporated herein by reference in Part III.
SECURITIES A(cid:1)D EXCHA(cid:1)GE COMMISSIO(cid:1)
Washington, D.C. 20549
Form 10-K
(Mark One)
OF 1934
A(cid:1)(cid:1)UAL REPORT PURSUA(cid:1)T TO SECTIO(cid:1) 13 or 15(d) OF THE SECURITIES EXCHA(cid:1)GE ACT
TRA(cid:1)SITIO(cid:1) REPORT PURSUA(cid:1)T TO SECTIO(cid:1) 13 OR 15(d) OF THE SECURITIES EXCHA(cid:1)GE
ACT OF 1934
For the fiscal year ended December 31, 2019
OR
For the transition period from ______ to ______.
Commission file number 1-15202
W. R. BERKLEY CORPORATIO(cid:1)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
22-1867895
(I.R.S. Employer Identification (cid:1)umber)
475 Steamboat Road
Greenwich, CT
(Address of principal executive offices)
06830
(Zip Code)
Registrants telephone number, including area code: (203) 629-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
(cid:1)ame of each exchange on which registered
Common Stock, par value $.20 per share
WRB
5.625% Subordinated Debentures due 2053
5.90% Subordinated Debentures due 2056
5.75% Subordinated Debentures due 2056
5.70% Subordinated Debentures due 2058
5.10% Subordinated Debentures due 2059
WRB PRB
WRB PRC
WRB PRD
WRB PRE
WRB PRF
(cid:1)one
Securities registered pursuant to Section 12(g) of the Act:
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
(cid:1)ew York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
(cid:1)o
Yes
(cid:1)o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
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
(cid:1)o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes
(cid:1)o
1
2
4
27983be 10K
27983be_10K.indd 4
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
2/26/20 12:08 PM
5
2
7
9
8
3
b
e
1
0
K
SAFE HARBOR STATEME(cid:1)T
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
PART I
1.
BUSI(cid:1)ESS
1A. RISK FACTORS
1B. U(cid:1)RESOLVED STAFF COMME(cid:1)TS
2.
3.
PROPERTIES
LEGAL PROCEEDI(cid:1)GS
4. MI(cid:1)E SAFETY DISCLOSURES
PART II
ITEM
5. MARKET FOR REGISTRA(cid:1)TS COMMO(cid:1) EQUITY, RELATED STOCKHOLDER MATTERS A(cid:1)D ISSUER
PURCHASES OF EQUITY SECURITIES
6.
SELECTED FI(cid:1)A(cid:1)CIAL DATA
7. MA(cid:1)AGEME(cid:1)TS DISCUSSIO(cid:1) A(cid:1)D A(cid:1)ALYSIS OF FI(cid:1)A(cid:1)CIAL CO(cid:1)DITIO(cid:1) A(cid:1)D RESULTS OF
OPERATIO(cid:1)S
7A. QUA(cid:1)TITATIVE A(cid:1)D QUALITATIVE DISCLOSURES ABOUT MARKET RISK
8.
9.
FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS A(cid:1)D SUPPLEME(cid:1)TARY DATA
CHA(cid:1)GES I(cid:1) A(cid:1)D DISAGREEME(cid:1)TS WITH ACCOU(cid:1)TA(cid:1)TS O(cid:1) ACCOU(cid:1)TI(cid:1)G A(cid:1)D FI(cid:1)A(cid:1)CIAL
DISCLOSURE
9A. CO(cid:1)TROLS A(cid:1)D PROCEDURES
9B. OTHER I(cid:1)FORMATIO(cid:1)
PART III
10. DIRECTORS, EXECUTIVE OFFICERS A(cid:1)D CORPORATE GOVER(cid:1)A(cid:1)CE
11.
12.
EXECUTIVE COMPE(cid:1)SATIO(cid:1)
SECURITY OW(cid:1)ERSHIP OF CERTAI(cid:1) BE(cid:1)EFICIAL OW(cid:1)ERS A(cid:1)D MA(cid:1)AGEME(cid:1)T A(cid:1)D RELATED
STOCKHOLDER MATTERS
13. CERTAI(cid:1) RELATIO(cid:1)SHIPS A(cid:1)D RELATED TRA(cid:1)SACTIO(cid:1)S, A(cid:1)D DIRECTOR I(cid:1)DEPE(cid:1)DE(cid:1)CE
14.
PRI(cid:1)CIPAL ACCOU(cid:1)TI(cid:1)G FEES A(cid:1)D SERVICES
PART IV
15. EXHIBITS, FI(cid:1)A(cid:1)CIAL STATEME(cid:1)T SCHEDULES
16.
FORM 10-K SUMMARY
DESCRIPTIO(cid:1) OF REGISTRA(cid:1)TS SECURITIES REGISTERED PURSUA(cid:1)T TO SECTIO(cid:1) 12 OF THE
SECURITIES EXCHA(cid:1)GE ACT OF 1934
LIST OF COMPA(cid:1)IES A(cid:1)D SUBSIDIARIES
CO(cid:1)SE(cid:1)T OF I(cid:1)DEPE(cid:1)DE(cid:1)T REGISTERED PUBLIC ACCOU(cid:1)TI(cid:1)G FIRM
27983be 10K
5
Page
1
18
27
27
27
28
29
31
32
56
57
108
108
110
111
111
111
111
111
112
116
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
EX-4.1
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-101
EX-101
EX-101
EX-101
EX-101
EX-101
CERTIFICATIO(cid:1) OF THE CHIEF EXECUTIVE OFFICER PURSUA(cid:1)T TO RULE 13a-14(a) /15d-14(a)
the availability of reinsurance;
CERTIFICATIO(cid:1) OF THE CHIEF FI(cid:1)A(cid:1)CIAL OFFICER PURSUA(cid:1)T TO RULE 13a-14(a) /15d-14(a)
CERTIFICATIO(cid:1) OF THE CHIEF EXECUTIVE OFFICER A(cid:1)D CHIEF FI(cid:1)A(cid:1)CIAL OFFICER PURSUA(cid:1)T TO 18
U.S.C. SECTIO(cid:1) 1350, AS ADOPTED PURSUA(cid:1)T TO SECTIO(cid:1) 906 OF THE SARBA(cid:1)ES-OXLEY ACT OF 2002
I(cid:1)STA(cid:1)CE DOCUME(cid:1)T
SCHEMA DOCUME(cid:1)T
CALCULATIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
LABELS LI(cid:1)KBASE DOCUME(cid:1)T
PRESE(cid:1)TATIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
DEFI(cid:1)ITIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
3
5
27983be 10K
27983be_10K.indd 5
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
2/26/20 12:08 PM
SAFE HARBOR STATEME(cid:1)T
U(cid:1)DER THE PRIVATE SECURITIES
LITIGATIO(cid:1) 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 in this report
including statements related to our outlook for the industry and for our performance for the year 2020 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:
the cyclical nature of the property casualty industry;
the impact of significant competition, including new alternative entrants to the industry;
the long-tail and potentially volatile nature of the insurance and reinsurance business;
product demand and pricing;
claims development and the process of estimating reserves;
investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities,
including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable,
investment funds, including real estate, merger arbitrage, energy related and private equity investments;
the effects of emerging claim and coverage issues;
the uncertain nature of damage theories and loss amounts, including claims for cyber security related risks;
natural and man-made catastrophic losses, including as a result of terrorist activities;
the impact of climate change, which may increase the frequency and severity of catastrophe events;
general economic and market activities, including inflation, interest rates and volatility in the credit and capital
markets;
the impact of conditions in the financial markets and the global economy, and the potential effect of legislative,
regulatory, accounting or other initiatives taken in response to it, on our results and financial condition;
foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the
European Union, or "Brexit") relating to our international operations;
our ability to attract and retain key personnel and qualified employees;
continued availability of capital and financing;
the success of our new ventures or acquisitions and the availability of other opportunities;
our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA");
the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us;
other legislative and regulatory developments, including those related to business practices in the insurance industry;
credit risk relating to our policyholders, independent agents and brokers;
changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies;
the availability of dividends from our insurance company subsidiaries;
potential difficulties with technology and/or cyber security issues;
the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and
4
6
2
7
9
8
3
b
e
1
0
K
Page
1
18
27
27
27
28
29
31
32
56
57
108
108
110
111
111
111
111
111
112
116
SAFE HARBOR STATEME(cid:1)T
PART I
1.
BUSI(cid:1)ESS
1A. RISK FACTORS
1B. U(cid:1)RESOLVED STAFF COMME(cid:1)TS
PROPERTIES
LEGAL PROCEEDI(cid:1)GS
4. MI(cid:1)E SAFETY DISCLOSURES
PART II
PURCHASES OF EQUITY SECURITIES
6.
SELECTED FI(cid:1)A(cid:1)CIAL DATA
2.
3.
8.
9.
PART III
11.
12.
PART IV
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
EX-4.1
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-101
EX-101
EX-101
EX-101
EX-101
EX-101
ITEM
5. MARKET FOR REGISTRA(cid:1)TS COMMO(cid:1) EQUITY, RELATED STOCKHOLDER MATTERS A(cid:1)D ISSUER
7. MA(cid:1)AGEME(cid:1)TS DISCUSSIO(cid:1) A(cid:1)D A(cid:1)ALYSIS OF FI(cid:1)A(cid:1)CIAL CO(cid:1)DITIO(cid:1) A(cid:1)D RESULTS OF
OPERATIO(cid:1)S
7A. QUA(cid:1)TITATIVE A(cid:1)D QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS A(cid:1)D SUPPLEME(cid:1)TARY DATA
CHA(cid:1)GES I(cid:1) A(cid:1)D DISAGREEME(cid:1)TS WITH ACCOU(cid:1)TA(cid:1)TS O(cid:1) ACCOU(cid:1)TI(cid:1)G A(cid:1)D FI(cid:1)A(cid:1)CIAL
DISCLOSURE
9A. CO(cid:1)TROLS A(cid:1)D PROCEDURES
9B. OTHER I(cid:1)FORMATIO(cid:1)
10. DIRECTORS, EXECUTIVE OFFICERS A(cid:1)D CORPORATE GOVER(cid:1)A(cid:1)CE
EXECUTIVE COMPE(cid:1)SATIO(cid:1)
STOCKHOLDER MATTERS
SECURITY OW(cid:1)ERSHIP OF CERTAI(cid:1) BE(cid:1)EFICIAL OW(cid:1)ERS A(cid:1)D MA(cid:1)AGEME(cid:1)T A(cid:1)D RELATED
13. CERTAI(cid:1) RELATIO(cid:1)SHIPS A(cid:1)D RELATED TRA(cid:1)SACTIO(cid:1)S, A(cid:1)D DIRECTOR I(cid:1)DEPE(cid:1)DE(cid:1)CE
14.
PRI(cid:1)CIPAL ACCOU(cid:1)TI(cid:1)G FEES A(cid:1)D SERVICES
15. EXHIBITS, FI(cid:1)A(cid:1)CIAL STATEME(cid:1)T SCHEDULES
16.
FORM 10-K SUMMARY
SECURITIES EXCHA(cid:1)GE ACT OF 1934
LIST OF COMPA(cid:1)IES A(cid:1)D SUBSIDIARIES
DESCRIPTIO(cid:1) OF REGISTRA(cid:1)TS SECURITIES REGISTERED PURSUA(cid:1)T TO SECTIO(cid:1) 12 OF THE
CO(cid:1)SE(cid:1)T OF I(cid:1)DEPE(cid:1)DE(cid:1)T REGISTERED PUBLIC ACCOU(cid:1)TI(cid:1)G FIRM
CERTIFICATIO(cid:1) OF THE CHIEF EXECUTIVE OFFICER PURSUA(cid:1)T TO RULE 13a-14(a) /15d-14(a)
CERTIFICATIO(cid:1) OF THE CHIEF FI(cid:1)A(cid:1)CIAL OFFICER PURSUA(cid:1)T TO RULE 13a-14(a) /15d-14(a)
CERTIFICATIO(cid:1) OF THE CHIEF EXECUTIVE OFFICER A(cid:1)D CHIEF FI(cid:1)A(cid:1)CIAL OFFICER PURSUA(cid:1)T TO 18
U.S.C. SECTIO(cid:1) 1350, AS ADOPTED PURSUA(cid:1)T TO SECTIO(cid:1) 906 OF THE SARBA(cid:1)ES-OXLEY ACT OF 2002
I(cid:1)STA(cid:1)CE DOCUME(cid:1)T
SCHEMA DOCUME(cid:1)T
CALCULATIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
LABELS LI(cid:1)KBASE DOCUME(cid:1)T
PRESE(cid:1)TATIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
DEFI(cid:1)ITIO(cid:1) LI(cid:1)KBASE DOCUME(cid:1)T
27983be 10K
6
SAFE HARBOR STATEME(cid:1)T
U(cid:1)DER THE PRIVATE SECURITIES
LITIGATIO(cid:1) 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 in this report
including statements related to our outlook for the industry and for our performance for the year 2020 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:
the cyclical nature of the property casualty industry;
the impact of significant competition, including new alternative entrants to the industry;
the long-tail and potentially volatile nature of the insurance and reinsurance business;
product demand and pricing;
claims development and the process of estimating reserves;
investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities,
including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable,
investment funds, including real estate, merger arbitrage, energy related and private equity investments;
the effects of emerging claim and coverage issues;
the uncertain nature of damage theories and loss amounts, including claims for cyber security related risks;
natural and man-made catastrophic losses, including as a result of terrorist activities;
the impact of climate change, which may increase the frequency and severity of catastrophe events;
general economic and market activities, including inflation, interest rates and volatility in the credit and capital
markets;
the impact of conditions in the financial markets and the global economy, and the potential effect of legislative,
regulatory, accounting or other initiatives taken in response to it, on our results and financial condition;
foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the
European Union, or "Brexit") relating to our international operations;
our ability to attract and retain key personnel and qualified employees;
continued availability of capital and financing;
the success of our new ventures or acquisitions and the availability of other opportunities;
the availability of reinsurance;
our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA");
the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us;
other legislative and regulatory developments, including those related to business practices in the insurance industry;
credit risk relating to our policyholders, independent agents and brokers;
changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies;
the availability of dividends from our insurance company subsidiaries;
potential difficulties with technology and/or cyber security issues;
the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and
3
4
K
0
1
e
b
3
8
9
7
2
6
6
27983be 10K
27983be_10K.indd 6
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
27983be 10K
7
7
2
7
9
8
3
b
e
1
0
K
other risks detailed in this Form 10-K and from time to time in our other filings with the Securities and Exchange
Commission (SEC).
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 2020 and beyond to differ materially from those expressed in any forward-looking statement
we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. 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.
5
7
27983be 10K
27983be_10K.indd 7
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
2/26/20 12:08 PM
PART I
ITEM 1. BUSI(cid:1)ESS
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the
United States and operates worldwide in two segments of the property casualty insurance business:
Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and
specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental
Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.
Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States,
the United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa, as well as operations that
solely retain risk on an excess basis.
Our two reporting segments are each composed of individual operating units that serve a market defined by geography,
products, services or industry served. Each of our operating units is positioned close to its customer base and participates in a
niche market requiring specialized knowledge. This strategy of decentralized operations allows each of our units to identify and
respond quickly and effectively to changing market conditions and specific customer needs, while capitalizing on the benefits of
centralized capital, investment and reinsurance management, and corporate actuarial, financial, enterprise risk management and
legal staff support.
Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet, and
allocating capital to our best opportunities. (cid:1)ew businesses are started when opportunities are identified and when the right
talent and expertise are found to lead a business. Of our 52 operating units, 45 have been organized and developed internally and
seven have been added through acquisition.
(cid:1)et premiums written, as reported based on United States generally accepted accounting principles (GAAP), for each
of our operating segments for each of the past five years were as follows:
(In thousands)
(cid:1)et premiums written:
Reinsurance & Monoline Excess
Percentage of net premiums written:
Reinsurance & Monoline Excess
Insurance
Total
Insurance
Total
2019
2018
2017
2016
2015
Year Ended December 31,
$
$
6,086,009
777,490
6,863,499
$
$
5,791,905
641,322
6,433,227
$
$
5,555,515
704,993
6,260,508
$
$
5,597,147
826,766
6,423,913
$
$
5,414,261
775,254
6,189,515
88.7%
11.3
100.0%
90.0%
10.0
100.0%
88.7%
11.3
100.0%
87.1%
12.9
100.0%
87.5%
12.5
100.0%
Thirty of our insurance company subsidiaries are rated by A.M. Best Company, Inc. ("A.M. Best") and have financial
strength ratings of A+ (Superior) (the second highest rating out of 15 possible ratings). A.M. Best's 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: The Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance
obligations. The ratings are not assigned to specific insurance policies or contracts and do not address any other risk. A.M. Best
reviews its ratings on a periodic basis, and its ratings of the Company's subsidiaries are therefore subject to change.
Our twenty-four insurance company subsidiaries rated by Standard & Poor's (S&P) have financial strength ratings of A+
(the seventh highest rating out of twenty-seven possible ratings).
Our Moody's financial strength ratings are A1 for Berkley Insurance Company, Berkley Regional Insurance Company and
Admiral Insurance Company (the sixth highest rating out of twenty-one possible ratings).
Our twenty-five insurance company subsidiaries rated by Fitch Ratings ("Fitch") have insurer financial strength ratings of
A+ (the seventh highest rating out of twenty-seven possible ratings).
1
other risks detailed in this Form 10-K and from time to time in our other filings with the Securities and Exchange
PART I
8
2
7
9
8
3
b
e
1
0
K
27983be 10K
8
Commission (SEC).
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 2020 and beyond to differ materially from those expressed in any forward-looking statement
we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. 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.
ITEM 1. BUSI(cid:1)ESS
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the
United States and operates worldwide in two segments of the property casualty insurance business:
Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and
specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental
Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.
Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States,
the United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa, as well as operations that
solely retain risk on an excess basis.
Our two reporting segments are each composed of individual operating units that serve a market defined by geography,
products, services or industry served. Each of our operating units is positioned close to its customer base and participates in a
niche market requiring specialized knowledge. This strategy of decentralized operations allows each of our units to identify and
respond quickly and effectively to changing market conditions and specific customer needs, while capitalizing on the benefits of
centralized capital, investment and reinsurance management, and corporate actuarial, financial, enterprise risk management and
legal staff support.
Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet, and
allocating capital to our best opportunities. (cid:1)ew businesses are started when opportunities are identified and when the right
talent and expertise are found to lead a business. Of our 52 operating units, 45 have been organized and developed internally and
seven have been added through acquisition.
(cid:1)et premiums written, as reported based on United States generally accepted accounting principles (GAAP), for each
of our operating segments for each of the past five years were as follows:
(In thousands)
(cid:1)et premiums written:
Insurance
Reinsurance & Monoline Excess
Total
Percentage of net premiums written:
Insurance
Reinsurance & Monoline Excess
Total
2019
2018
2017
2016
2015
Year Ended December 31,
$
$
6,086,009
777,490
6,863,499
$
$
5,791,905
641,322
6,433,227
$
$
5,555,515
704,993
6,260,508
$
$
5,597,147
826,766
6,423,913
$
$
5,414,261
775,254
6,189,515
88.7%
11.3
100.0%
90.0%
10.0
100.0%
88.7%
11.3
100.0%
87.1%
12.9
100.0%
87.5%
12.5
100.0%
Thirty of our insurance company subsidiaries are rated by A.M. Best Company, Inc. ("A.M. Best") and have financial
strength ratings of A+ (Superior) (the second highest rating out of 15 possible ratings). A.M. Best's 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: The Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance
obligations. The ratings are not assigned to specific insurance policies or contracts and do not address any other risk. A.M. Best
reviews its ratings on a periodic basis, and its ratings of the Company's subsidiaries are therefore subject to change.
Our twenty-four insurance company subsidiaries rated by Standard & Poor's (S&P) have financial strength ratings of A+
(the seventh highest rating out of twenty-seven possible ratings).
Our Moody's financial strength ratings are A1 for Berkley Insurance Company, Berkley Regional Insurance Company and
Admiral Insurance Company (the sixth highest rating out of twenty-one possible ratings).
Our twenty-five insurance company subsidiaries rated by Fitch Ratings ("Fitch") have insurer financial strength ratings of
A+ (the seventh highest rating out of twenty-seven possible ratings).
5
1
8
27983be 10K
27983be_10K.indd 8
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 15:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
2/26/20 3:11 PM
27983be 10K
9
9
2
7
9
8
3
b
e
1
0
K
The following sections describe our reporting segments and their operating units in greater detail. These operating units
Berkley Alliance Managers offers tailored insurance coverages and comprehensive risk management solutions designed to
underwrite on behalf of one or more affiliated insurance companies within the group. The operating units are identified by us for
descriptive purposes only and are not legal entities, but for marketing purposes may sometimes be referred to individually as "a
Berkley company" or collectively as "Berkley companies." Unless otherwise indicated, all references in this Form 10-K to
Berkley, we, us, our, the Company or similar terms refer to W. R. Berkley Corporation together with its subsidiaries
and operating units. W. R. Berkley Corporation is a Delaware corporation formed in 1970.
Insurance
Our U.S.-based operating units predominantly underwrite commercial insurance business primarily throughout the United
States, although many units offer coverage globally, focusing on the following general areas:
Excess & Surplus Lines: A number of our operating units are dedicated to the U.S. excess and surplus lines market. They
serve a diverse group of customers that often have complex risk or unique exposures that typically fall outside the underwriting
guidelines of the standard insurance market. Lines of business underwritten by our excess and surplus lines operating units
include premises operations, commercial automobile, property, products liability, general liability and professional liability lines.
Products are generally distributed through wholesale agents and brokers.
Industry Specialty: Certain other operating units focus on providing specialty coverages to customers within a particular
industry that are best served by underwriters and claims professionals with specialized knowledge of that industry. They offer
multiple lines of business with policies tailored to address these unique exposures, often with the flexibility of providing
coverages on either an admitted or a non-admitted basis in the U.S., as well as internationally. Each operating unit delivers its
products through one or more distribution channels, including retail and wholesale agents, brokers, and managing general agents
(MGAs), depending on the customer and the particular risks insured.
Product Specialty: Other operating units specialize in providing specific lines of insurance coverage, such as workers
compensation or professional liability, to a wide range of customers. They offer insurance products, analytical tools and risk
management services such as loss control and claims management that enable clients to manage their risk appropriately.
Business is typically written on an admitted basis, although some units may offer non-admitted products in the U.S. and offer
products internationally. Independent agents and brokers are the primary means of distribution.
enhance profitability and reduce susceptibility to loss in four target markets - Design Professionals, Construction Professionals,
Accounting Professionals and miscellaneous non-medical Service Professionals.
Berkley Aspire provides excess and surplus lines coverage on a national basis to small to medium-sized insureds with low
to moderate insurance risk. Its product lines include general liability, liquor liability and some property and inland marine
coverage. It serves a limited distribution channel consisting of select Berkley member company agents.
Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of Berkley
Insurance Company. It specializes in commercial casualty and professional liability, and offers a broad portfolio of risk products
that include commercial general liability, umbrella, professional liability, directors and officers, commercial property and surety,
in addition to niche products for specific industries such as technology, life sciences and travel.
Berkley Custom Insurance focuses on the excess casualty insurance market and offers umbrella and excess liability
coverages to clients from the small/middle market to Fortune 1000 companies in target classes of business including
construction, manufacturing, retail/wholesale trade, finance, real estate, public entities and oil & gas.
Berkley Cyber Risk Solutions focuses on insurance and risk management products that respond to the changing cyber
security vulnerabilities of organizations around the world. It offers specialty commercial cyber insurance coverages on a
worldwide basis to clients of all sizes.
Berkley Entertainment underwrites property casualty insurance products, both on an admitted and non-admitted basis, for
clients in the entertainment industry and sports-related organizations.
Berkley Environmental underwrites casualty and specialty environmental products for environmental customers including
contractors, consultants, property owners and facilities operators.
Berkley FinSecure serves the insurance needs of companies in the financial services industry. It offers a comprehensive
range of property, casualty, professional liability, and specialty lines insurance products. Its Berkley crime division provides
crime and fidelity related insurance products for commercial organizations, financial institutions and governmental entities.
Berkley Fire & Marine offers a broad range of preferred inland marine and related property risks and services to
Regional: Certain operating units offer standard insurance products and services focused on meeting the specific needs of
customers throughout the United States. Products are distributed through independent agents and brokers.
a geographically differentiated customer base. Key clients of these units are small-to-midsized businesses. These regionally
focused operating units provide a broad array of commercial insurance products to customers primarily in 45 states and the
District of Columbia and have developed expertise in niches that reflect local economies. They are organized geographically in
order to provide them with the flexibility to adapt quickly to local market conditions and customer needs.
In addition, through our non-U.S. insurance operating units, we write business in more than 60 countries worldwide, with
branches or offices in 29 locations outside the United States, including the United Kingdom, Continental Europe, South America,
Canada, Mexico, Scandinavia, Asia and Australia. In each of our operating territories, we have built decentralized structures that
allow products and services to be tailored to each regional customer base. Our businesses are managed by teams of professionals
with expertise in local markets and knowledge of regional environments.
In addition to providing insurance products, certain operating units also provide a wide variety of fee-based services,
including claims, administrative and consulting services.
Operating units comprising the Insurance segment are as follows:
Acadia Insurance is a (cid:1)ortheast regional property casualty underwriter offering a broad portfolio of products exclusively
through local independent agents in Connecticut, Maine, Massachusetts, (cid:1)ew Hampshire, (cid:1)ew York and Vermont. In addition to
its general offerings, Acadia has specialized expertise in insuring regional industries such as construction, lumber, fishing and
transportation.
Admiral Insurance provides excess and surplus lines coverage for commercial risks that generally consist of hard-to-
place, specialized risks that involve moderate to high degrees of hazard. In both general liability and professional lines, Admiral
has a broad line of products to meet the needs of existing as well as emerging opportunities. The distribution of products is
limited solely to wholesale brokers.
Berkley Accident and Health underwrites accident and health insurance and reinsurance products in four primary areas:
medical stop loss, managed care, special risk and group captive. It has a diversified product and service portfolio serving a range
of clients from small employers, health care organizations, and membership groups to Fortune 500 companies.
Berkley Agribusiness offers insurance for larger commercial risks across the United States involved in the supply, storage,
handling, processing and distribution of commodities related to the agriculture and food industries.
2
Berkley Global Product Recall Management provides worldwide insurance protection and technical assistance to help
clients with the prevention, management and indemnification of product recall and contamination events.
Berkley Healthcare underwrites customized, comprehensive insurance solutions for the full spectrum of healthcare
providers. Through Berkley Med, it offers a wide range of medical professional coverages. Through Berkley Healthcare
Financial Lines, it offers a comprehensive suite of financial lines coverages.
Berkley Human Services provides property casualty insurance coverages to human services organizations, including
nonprofit and for-profit organizations, public schools, sports and recreational organizations, and special events. Its product
offerings include traditional primary coverages and risk purchasing groups, as well as alternative market solutions for clients
who wish to retain a larger share of their risks.
Berkley Industrial specializes in mono-line workers compensation coverage for mining and mining related and high
hazard industries in select states.
Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in (cid:1)orth Asia and Southeast Asia
through offices in Hong Kong, Singapore, Labuan and Shanghai.
Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity
insurance for companies of all sizes.
Berkley Latinoamérica is a leading provider of property, casualty, automobile, surety, group life and workers'
compensation products and services in its operating territories of Argentina, Brazil, the Caribbean, Colombia, Mexico and
Uruguay.
Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a
global basis, including both primary and excess liability coverages. It serves pharmaceutical and biotech companies, medical
device companies, dietary supplement companies, medical and research related software developers, contract research and
manufacturing organizations, research institutions and organizations, and other related businesses.
K
0
1
e
b
3
8
9
7
2
9
3
9
27983be 10K
27983be_10K.indd 9
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
27983be 10K
10
1
0
2
7
9
8
3
b
e
1
0
K
The following sections describe our reporting segments and their operating units in greater detail. These operating units
underwrite on behalf of one or more affiliated insurance companies within the group. The operating units are identified by us for
descriptive purposes only and are not legal entities, but for marketing purposes may sometimes be referred to individually as "a
Berkley company" or collectively as "Berkley companies." Unless otherwise indicated, all references in this Form 10-K to
Berkley, we, us, our, the Company or similar terms refer to W. R. Berkley Corporation together with its subsidiaries
and operating units. W. R. Berkley Corporation is a Delaware corporation formed in 1970.
Insurance
Our U.S.-based operating units predominantly underwrite commercial insurance business primarily throughout the United
States, although many units offer coverage globally, focusing on the following general areas:
Excess & Surplus Lines: A number of our operating units are dedicated to the U.S. excess and surplus lines market. They
serve a diverse group of customers that often have complex risk or unique exposures that typically fall outside the underwriting
guidelines of the standard insurance market. Lines of business underwritten by our excess and surplus lines operating units
include premises operations, commercial automobile, property, products liability, general liability and professional liability lines.
Products are generally distributed through wholesale agents and brokers.
Industry Specialty: Certain other operating units focus on providing specialty coverages to customers within a particular
industry that are best served by underwriters and claims professionals with specialized knowledge of that industry. They offer
multiple lines of business with policies tailored to address these unique exposures, often with the flexibility of providing
coverages on either an admitted or a non-admitted basis in the U.S., as well as internationally. Each operating unit delivers its
products through one or more distribution channels, including retail and wholesale agents, brokers, and managing general agents
Berkley Alliance Managers offers tailored insurance coverages and comprehensive risk management solutions designed to
enhance profitability and reduce susceptibility to loss in four target markets - Design Professionals, Construction Professionals,
Accounting Professionals and miscellaneous non-medical Service Professionals.
Berkley Aspire provides excess and surplus lines coverage on a national basis to small to medium-sized insureds with low
to moderate insurance risk. Its product lines include general liability, liquor liability and some property and inland marine
coverage. It serves a limited distribution channel consisting of select Berkley member company agents.
Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of Berkley
Insurance Company. It specializes in commercial casualty and professional liability, and offers a broad portfolio of risk products
that include commercial general liability, umbrella, professional liability, directors and officers, commercial property and surety,
in addition to niche products for specific industries such as technology, life sciences and travel.
Berkley Custom Insurance focuses on the excess casualty insurance market and offers umbrella and excess liability
coverages to clients from the small/middle market to Fortune 1000 companies in target classes of business including
construction, manufacturing, retail/wholesale trade, finance, real estate, public entities and oil & gas.
Berkley Cyber Risk Solutions focuses on insurance and risk management products that respond to the changing cyber
security vulnerabilities of organizations around the world. It offers specialty commercial cyber insurance coverages on a
worldwide basis to clients of all sizes.
Berkley Entertainment underwrites property casualty insurance products, both on an admitted and non-admitted basis, for
clients in the entertainment industry and sports-related organizations.
(MGAs), depending on the customer and the particular risks insured.
Berkley Environmental underwrites casualty and specialty environmental products for environmental customers including
Product Specialty: Other operating units specialize in providing specific lines of insurance coverage, such as workers
compensation or professional liability, to a wide range of customers. They offer insurance products, analytical tools and risk
management services such as loss control and claims management that enable clients to manage their risk appropriately.
Business is typically written on an admitted basis, although some units may offer non-admitted products in the U.S. and offer
products internationally. Independent agents and brokers are the primary means of distribution.
contractors, consultants, property owners and facilities operators.
Berkley FinSecure serves the insurance needs of companies in the financial services industry. It offers a comprehensive
range of property, casualty, professional liability, and specialty lines insurance products. Its Berkley crime division provides
crime and fidelity related insurance products for commercial organizations, financial institutions and governmental entities.
Berkley Fire & Marine offers a broad range of preferred inland marine and related property risks and services to
Regional: Certain operating units offer standard insurance products and services focused on meeting the specific needs of
customers throughout the United States. Products are distributed through independent agents and brokers.
a geographically differentiated customer base. Key clients of these units are small-to-midsized businesses. These regionally
focused operating units provide a broad array of commercial insurance products to customers primarily in 45 states and the
District of Columbia and have developed expertise in niches that reflect local economies. They are organized geographically in
order to provide them with the flexibility to adapt quickly to local market conditions and customer needs.
In addition, through our non-U.S. insurance operating units, we write business in more than 60 countries worldwide, with
branches or offices in 29 locations outside the United States, including the United Kingdom, Continental Europe, South America,
Canada, Mexico, Scandinavia, Asia and Australia. In each of our operating territories, we have built decentralized structures that
allow products and services to be tailored to each regional customer base. Our businesses are managed by teams of professionals
with expertise in local markets and knowledge of regional environments.
In addition to providing insurance products, certain operating units also provide a wide variety of fee-based services,
including claims, administrative and consulting services.
Operating units comprising the Insurance segment are as follows:
Acadia Insurance is a (cid:1)ortheast regional property casualty underwriter offering a broad portfolio of products exclusively
through local independent agents in Connecticut, Maine, Massachusetts, (cid:1)ew Hampshire, (cid:1)ew York and Vermont. In addition to
Berkley Global Product Recall Management provides worldwide insurance protection and technical assistance to help
clients with the prevention, management and indemnification of product recall and contamination events.
Berkley Healthcare underwrites customized, comprehensive insurance solutions for the full spectrum of healthcare
providers. Through Berkley Med, it offers a wide range of medical professional coverages. Through Berkley Healthcare
Financial Lines, it offers a comprehensive suite of financial lines coverages.
Berkley Human Services provides property casualty insurance coverages to human services organizations, including
nonprofit and for-profit organizations, public schools, sports and recreational organizations, and special events. Its product
offerings include traditional primary coverages and risk purchasing groups, as well as alternative market solutions for clients
who wish to retain a larger share of their risks.
Berkley Industrial specializes in mono-line workers compensation coverage for mining and mining related and high
hazard industries in select states.
Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in (cid:1)orth Asia and Southeast Asia
through offices in Hong Kong, Singapore, Labuan and Shanghai.
its general offerings, Acadia has specialized expertise in insuring regional industries such as construction, lumber, fishing and
Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity
transportation.
insurance for companies of all sizes.
Admiral Insurance provides excess and surplus lines coverage for commercial risks that generally consist of hard-to-
place, specialized risks that involve moderate to high degrees of hazard. In both general liability and professional lines, Admiral
has a broad line of products to meet the needs of existing as well as emerging opportunities. The distribution of products is
Berkley Latinoamérica is a leading provider of property, casualty, automobile, surety, group life and workers'
compensation products and services in its operating territories of Argentina, Brazil, the Caribbean, Colombia, Mexico and
Uruguay.
limited solely to wholesale brokers.
Berkley Accident and Health underwrites accident and health insurance and reinsurance products in four primary areas:
medical stop loss, managed care, special risk and group captive. It has a diversified product and service portfolio serving a range
of clients from small employers, health care organizations, and membership groups to Fortune 500 companies.
Berkley Agribusiness offers insurance for larger commercial risks across the United States involved in the supply, storage,
handling, processing and distribution of commodities related to the agriculture and food industries.
Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a
global basis, including both primary and excess liability coverages. It serves pharmaceutical and biotech companies, medical
device companies, dietary supplement companies, medical and research related software developers, contract research and
manufacturing organizations, research institutions and organizations, and other related businesses.
2
3
10
27983be 10K
27983be_10K.indd 10
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
1
2/26/20 12:08 PM
27983be 10K
11
1
1
2
7
9
8
3
b
e
1
0
K
Berkley Luxury Group provides commercial package insurance programs for high-end cooperative, condominium, and
Continental Western Group is a Midwest regional property and casualty insurance operation based in Des Moines, Iowa,
quality rental apartment buildings and upscale restaurants in the (cid:1)ew York, (cid:1)ew Jersey, Chicago and Washington, D.C.
metropolitan markets, as well as other select markets.
Berkley Mid-Atlantic Group provides commercial property casualty coverages to a wide variety of businesses in
Delaware, the District of Columbia, Maryland, Ohio, Pennsylvania, and Virginia. Focusing on middle market accounts, it
complements its standard writings with specialized products in areas such as construction.
Berkley (cid:1)et Underwriters focuses on small and medium-sized commercial risks, using a web-based system to allow
producers to quote, bind and service workers' compensation insurance products on behalf of Berkley member insurance
companies. Berkley (cid:1)et Underwriters also manages Berkley's assigned risk servicing carrier operations.
Berkley (cid:1)orth Pacific provides local underwriting, claims and risk management services for businesses in the (cid:1)orthwest.
It operates with a select group of agents in Idaho, Montana, Oregon, Utah and Washington to sell and service property and
casualty policies for larger middle-market standard businesses and specialty lines, such as construction, restaurants and
manufacturing.
Berkley Offshore Underwriting Managers is a specialist global underwriter of energy and marine risks. Its three divisions
provide specialty insurance products in the energy upstream, energy liability and marine sectors.
Berkley Oil & Gas provides property casualty products and risk services to the United States energy sector. Its customer
base includes risks of all sizes that work in the oil patch, including operators, drillers, geophysical contractors, well-servicing
contractors, and manufacturers/distributors of oil field products, as well as those in the renewable energy sector.
Berkley One provides a customizable suite of personal lines insurance solutions including home, condo/co-op, auto,
liability and collectibles. Berkley One targets high net worth individuals and families with sophisticated risk management needs.
Berkley Professional Liability specializes in professional liability insurance for publicly-traded and private entities on a
worldwide basis. Its liability coverages include directors and officers, errors and omissions, fiduciary, employment practices, and
sponsored insurance agents' errors and omissions. Berkley Transactional, a division of Berkley Professional Liability,
underwrites a full suite of transactional insurance products, including representations and warranties insurance, tax opinion
insurance and contingency liability insurance.
Berkley Program Specialists is a program management company offering both admitted and non-admitted insurance
support on a nationwide basis for commercial casualty and property program administrators with specialized insurance expertise.
Its book is built around blocks of homogeneous business, or programs, allowing for efficient processes, effective oversight of
existing programs and sound implementation of new programs.
providing underwriting and risk management services to a broad array of regional businesses in thirteen Midwest states. In
addition to its generalist portfolio, Continental Western offers specialty underwriting solutions for diversified agriculture,
construction, light manufacturing, transportation, volunteer fire departments, rural utilities and public entities.
Gemini Transportation is a national provider of excess liability insurance for various domestic surface transportation
businesses, including the railroad industry as well as the trucking, busing and other industries that use rubber-wheeled vehicles
for over-the-road use. It includes Berkley Prime Transportation, which leverages analytics and technology to provide quality
products and responsive service to the commercial transportation industry.
Intrepid Direct offers business coverages to franchise restaurants, auto service and repair garages, junk hauler franchisors
and gym and fitness franchises on a direct basis.
Key Risk provides workers' compensation insurance to middle market accounts in several niches that appreciate expertise
and exceptional service. The unit operates two business units; one focused on middle market accounts located primarily in the
mid-Atlantic and southeastern United States and one focused on national temporary staffing and United States Longshoreman &
Harbor Act (USL&H) specialty programs. Its products are distributed by a select group of independent retail agents and
wholesale brokers located through the United States.
(cid:1)autilus Insurance Group insures excess and surplus lines risks for small to medium-sized commercial risks with low to
moderate susceptibility to loss. It writes commercial excess and surplus lines business nationwide and admitted lines commercial
business in a limited number of states. A substantial portion of (cid:1)autilus' business is written through its close, long-standing
network of general agents, who are chosen on a highly selective basis.
Preferred Employers Insurance focuses exclusively on workers' compensation products and services for businesses in
California. It serves over 18,000 customers covering a broad spectrum of industries throughout the state.
Union Standard offers preferred commercial property and casualty insurance products and services to a wide range of
small to medium size commercial entities through independent agents in Arizona, Arkansas, (cid:1)ew Mexico, Oklahoma and Texas.
Vela Insurance Services specializes in commercial casualty insurance on an excess and surplus lines basis. Its primary
focus is on general liability insurance for construction, manufacturing and general casualty clients as well as products liability
and miscellaneous professional liability coverages distributed through wholesale insurance brokers.
Verus Underwriting Managers offers general liability, professional liability and property coverages for small to mid-sized
commercial risks in the excess and surplus lines insurance market through a select group of appointed wholesale brokers and
agents.
Berkley Public Entity specializes in providing excess coverage and services to individual governmental and scholastic
W R B Europe is comprised of specialist operating units offering a focused range of insurance products to markets in
entities and intergovernmental risk sharing groups. Products include general liability, automobile liability, law enforcement
liability, public officials and educator's legal liability, employment practices liability, incidental medical, property and crime.
Berkley Risk provides at-risk and alternative risk insurance program management services for a broad range of groups and
individuals including public entity pools, professional associations, captives and self-insured clients. As a third party
administrator, it manages workers compensation, liability and property claims nationwide.
Berkley Select specializes in underwriting professional liability insurance on a surplus lines basis for law firms and
accounting firms through a limited number of brokers. It also offers executive and professional liability products, including
directors and officers liability, errors and omissions, and employment practices liability, to small to middle market privately held
and not for profit customers on both an admitted and surplus lines basis.
Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia,
Mississippi, (cid:1)orth Carolina, South Carolina and Tennessee, specializing in small to mid-sized accounts.
Berkley Surety provides a full spectrum of surety bonds for construction, environmental and commercial surety accounts
in the U.S. and Canada, through an independent agency and broker platform across 18 field locations.
Berkley Technology Underwriters provides a broad range of first and third-party insurance programs for technology
exposures and technology industries on both a local and global basis.
Carolina Casualty is a national provider of primary commercial insurance products and services to the transportation
industry. It underwrites on an admitted basis in all 50 states and the District of Columbia.
Continental Europe and (cid:1)ordic countries.
W / R / B Underwriting provides a broad range of leading insurance products to the Lloyd's marketplace, with a
concentration in specialist classes of business including property, professional indemnity, crisis management, and asset
protection.
4
11
27983be 10K
27983be_10K.indd 11
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
1
2/26/20 12:08 PM
5
27983be 10K
12
Berkley Luxury Group provides commercial package insurance programs for high-end cooperative, condominium, and
quality rental apartment buildings and upscale restaurants in the (cid:1)ew York, (cid:1)ew Jersey, Chicago and Washington, D.C.
metropolitan markets, as well as other select markets.
Berkley Mid-Atlantic Group provides commercial property casualty coverages to a wide variety of businesses in
1
2
2
7
9
8
3
b
e
1
0
K
Continental Western Group is a Midwest regional property and casualty insurance operation based in Des Moines, Iowa,
providing underwriting and risk management services to a broad array of regional businesses in thirteen Midwest states. In
addition to its generalist portfolio, Continental Western offers specialty underwriting solutions for diversified agriculture,
construction, light manufacturing, transportation, volunteer fire departments, rural utilities and public entities.
Delaware, the District of Columbia, Maryland, Ohio, Pennsylvania, and Virginia. Focusing on middle market accounts, it
Gemini Transportation is a national provider of excess liability insurance for various domestic surface transportation
complements its standard writings with specialized products in areas such as construction.
Berkley (cid:1)et Underwriters focuses on small and medium-sized commercial risks, using a web-based system to allow
producers to quote, bind and service workers' compensation insurance products on behalf of Berkley member insurance
companies. Berkley (cid:1)et Underwriters also manages Berkley's assigned risk servicing carrier operations.
Berkley (cid:1)orth Pacific provides local underwriting, claims and risk management services for businesses in the (cid:1)orthwest.
It operates with a select group of agents in Idaho, Montana, Oregon, Utah and Washington to sell and service property and
casualty policies for larger middle-market standard businesses and specialty lines, such as construction, restaurants and
manufacturing.
Berkley Offshore Underwriting Managers is a specialist global underwriter of energy and marine risks. Its three divisions
provide specialty insurance products in the energy upstream, energy liability and marine sectors.
Berkley Oil & Gas provides property casualty products and risk services to the United States energy sector. Its customer
base includes risks of all sizes that work in the oil patch, including operators, drillers, geophysical contractors, well-servicing
contractors, and manufacturers/distributors of oil field products, as well as those in the renewable energy sector.
Berkley One provides a customizable suite of personal lines insurance solutions including home, condo/co-op, auto,
liability and collectibles. Berkley One targets high net worth individuals and families with sophisticated risk management needs.
Berkley Professional Liability specializes in professional liability insurance for publicly-traded and private entities on a
worldwide basis. Its liability coverages include directors and officers, errors and omissions, fiduciary, employment practices, and
sponsored insurance agents' errors and omissions. Berkley Transactional, a division of Berkley Professional Liability,
underwrites a full suite of transactional insurance products, including representations and warranties insurance, tax opinion
insurance and contingency liability insurance.
Berkley Program Specialists is a program management company offering both admitted and non-admitted insurance
businesses, including the railroad industry as well as the trucking, busing and other industries that use rubber-wheeled vehicles
for over-the-road use. It includes Berkley Prime Transportation, which leverages analytics and technology to provide quality
products and responsive service to the commercial transportation industry.
Intrepid Direct offers business coverages to franchise restaurants, auto service and repair garages, junk hauler franchisors
and gym and fitness franchises on a direct basis.
Key Risk provides workers' compensation insurance to middle market accounts in several niches that appreciate expertise
and exceptional service. The unit operates two business units; one focused on middle market accounts located primarily in the
mid-Atlantic and southeastern United States and one focused on national temporary staffing and United States Longshoreman &
Harbor Act (USL&H) specialty programs. Its products are distributed by a select group of independent retail agents and
wholesale brokers located through the United States.
(cid:1)autilus Insurance Group insures excess and surplus lines risks for small to medium-sized commercial risks with low to
moderate susceptibility to loss. It writes commercial excess and surplus lines business nationwide and admitted lines commercial
business in a limited number of states. A substantial portion of (cid:1)autilus' business is written through its close, long-standing
network of general agents, who are chosen on a highly selective basis.
Preferred Employers Insurance focuses exclusively on workers' compensation products and services for businesses in
California. It serves over 18,000 customers covering a broad spectrum of industries throughout the state.
Union Standard offers preferred commercial property and casualty insurance products and services to a wide range of
small to medium size commercial entities through independent agents in Arizona, Arkansas, (cid:1)ew Mexico, Oklahoma and Texas.
Vela Insurance Services specializes in commercial casualty insurance on an excess and surplus lines basis. Its primary
focus is on general liability insurance for construction, manufacturing and general casualty clients as well as products liability
and miscellaneous professional liability coverages distributed through wholesale insurance brokers.
support on a nationwide basis for commercial casualty and property program administrators with specialized insurance expertise.
Verus Underwriting Managers offers general liability, professional liability and property coverages for small to mid-sized
Its book is built around blocks of homogeneous business, or programs, allowing for efficient processes, effective oversight of
existing programs and sound implementation of new programs.
commercial risks in the excess and surplus lines insurance market through a select group of appointed wholesale brokers and
agents.
Berkley Public Entity specializes in providing excess coverage and services to individual governmental and scholastic
W R B Europe is comprised of specialist operating units offering a focused range of insurance products to markets in
entities and intergovernmental risk sharing groups. Products include general liability, automobile liability, law enforcement
Continental Europe and (cid:1)ordic countries.
liability, public officials and educator's legal liability, employment practices liability, incidental medical, property and crime.
Berkley Risk provides at-risk and alternative risk insurance program management services for a broad range of groups and
individuals including public entity pools, professional associations, captives and self-insured clients. As a third party
administrator, it manages workers compensation, liability and property claims nationwide.
Berkley Select specializes in underwriting professional liability insurance on a surplus lines basis for law firms and
accounting firms through a limited number of brokers. It also offers executive and professional liability products, including
directors and officers liability, errors and omissions, and employment practices liability, to small to middle market privately held
and not for profit customers on both an admitted and surplus lines basis.
Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia,
Mississippi, (cid:1)orth Carolina, South Carolina and Tennessee, specializing in small to mid-sized accounts.
Berkley Surety provides a full spectrum of surety bonds for construction, environmental and commercial surety accounts
in the U.S. and Canada, through an independent agency and broker platform across 18 field locations.
Berkley Technology Underwriters provides a broad range of first and third-party insurance programs for technology
exposures and technology industries on both a local and global basis.
Carolina Casualty is a national provider of primary commercial insurance products and services to the transportation
industry. It underwrites on an admitted basis in all 50 states and the District of Columbia.
W / R / B Underwriting provides a broad range of leading insurance products to the Lloyd's marketplace, with a
concentration in specialist classes of business including property, professional indemnity, crisis management, and asset
protection.
4
5
12
27983be 10K
27983be_10K.indd 12
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
1
2/26/20 12:08 PM
1
3
2
7
9
8
3
b
e
1
0
K
The following table sets forth the percentage of gross premiums written by each Insurance operating unit:
The following table sets forth percentages of gross premiums written, by line, by our Insurance operations:
27983be 10K
13
Acadia Insurance
Admiral Insurance
Berkley Accident and Health
Berkley Agribusiness
Berkley Alliance Managers
Berkley Aspire
Berkley Canada
Berkley Custom Insurance
Berkley Cyber Risk Solutions
Berkley Entertainment
Berkley Environmental
Berkley FinSecure
Berkley Fire & Marine
Berkley Global Product Recall Management
Berkley Healthcare
Berkley Human Services
Berkley Industrial
Berkley Insurance Asia
Berkley Insurance Australia
Berkley Latinoamérica
Berkley Life Sciences
Berkley Luxury Group
Berkley Mid-Atlantic Group
Berkley (cid:1)et Underwriters
Berkley (cid:1)orth Pacific
Berkley Offshore Underwriting Managers
Berkley Oil & Gas
Berkley One
Berkley Professional Liability
Berkley Program Specialists
Berkley Public Entity
Berkley Risk
Berkley Select
Berkley Southeast
Berkley Surety
Berkley Technology Underwriters
Carolina Casualty
Continental Western Group
Gemini Transportation
Intrepid Direct
Key Risk
(cid:1)autilus Insurance Group
Preferred Employers Insurance
Union Standard
Vela Insurance Services
Verus Underwriting Managers
WRB Europe
W/R/B Underwriting
Other
Total
2019
5.9%
5.9
5.7
1.1
3.0
0.4
1.0
3.1
0.3
2.7
4.9
0.9
0.7
0.5
1.6
0.8
0.9
0.6
1.2
3.6
0.7
1.3
1.2
3.0
0.8
1.2
4.1
0.3
2.9
1.1
0.4
0.3
2.8
2.0
1.2
0.7
0.7
2.6
2.9
0.5
2.7
4.8
2.4
2.1
2.8
0.8
1.4
4.5
3.0
100.0%
6
Year Ended December 31,
2017
7.0%
5.8
4.9
1.2
2.0
0.3
0.9
2.6
0.1
2.2
4.7
1.0
0.5
0.3
1.1
0.7
0.8
0.2
1.0
4.9
0.8
1.4
1.1
6.8
1.5
1.1
2.7
1.6
1.3
0.5
0.3
3.5
1.9
1.2
0.7
0.4
3.9
2.1
0.1
2.8
5.2
2.9
2.8
3.1
0.9
1.8
3.2
2.2
100.0%
2016
6.9%
5.7
4.5
1.1
1.5
0.3
0.8
2.7
2.1
4.2
0.9
0.4
0.2
1.0
0.7
0.7
1.1
4.2
0.8
1.3
1.2
8.2
1.6
1.1
2.8
1.6
1.2
0.5
0.2
4.0
2.0
1.2
0.6
0.6
4.1
1.9
2.7
5.1
2.6
2.7
4.0
0.9
1.8
4.1
2.2
100.0%
2018
6.7%
5.8
5.7
1.2
2.6
0.3
1.0
2.7
0.2
2.6
5.1
0.9
0.6
0.5
1.2
0.8
0.9
0.4
1.2
4.2
0.8
1.4
1.2
5.0
1.2
1.1
3.6
0.2
1.9
1.1
0.4
0.2
3.2
2.0
1.3
0.7
0.5
3.5
2.3
0.3
2.9
5.0
2.5
2.7
2.6
0.9
1.9
3.5
1.5
100.0%
13
27983be 10K
27983be_10K.indd 13
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
Other liability
Short-tail lines (1)
Workers' compensation
Professional liability
Commercial auto
Total
Year Ended December 31,
2019
33.9%
23.5
17.8
13.3
11.5
2018
32.4%
23.5
20.6
12.0
11.5
2017
31.4%
23.5
22.7
11.2
11.2
2016
31.4%
23.6
23.4
11.0
10.6
2015
30.1%
24.8
23.8
9.7
11.6
100.0%
100.0%
100.0%
100.0%
100.0%
___________________
(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler
and machinery and other lines.
Reinsurance & Monoline Excess
We provide other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on
either a portfolio basis, through treaty reinsurance, or on an individual basis, through facultative reinsurance.
Operating units comprising the Reinsurance & Monoline Excess segment are as follows:
Berkley Re America provides treaty and facultative reinsurance solutions on a variety of product lines through reinsurance
brokers to companies whose primary operations are within the United States and Canada.
Berkley Re Asia Pacific provides property and casualty reinsurance to the Asia Pacific marketplace. With offices in
Brisbane, Melbourne, Sydney, Beijing, Hong Kong, Labuan and Singapore, each branch focuses on excess of loss reinsurance,
targeting both property and casualty treaty and facultative contracts, through multiple distribution channels.
Berkley Re Solutions is a direct casualty facultative reinsurance underwriter serving clients through a nationwide network
of regional offices. Its facultative reinsurance products include automatic, semi-automatic and individual risk assumed
reinsurance. It also provides its customers with turnkey products such as cyber, employment practices liability insurance
("EPLI"), and liquor liability insurance to help enhance their clients' product offerings, along with underwriting, claims, and
actuarial consultation.
Berkley Re UK writes international property casualty treaty accounts. Its territorial scope includes reinsured clients
domiciled in the United Kingdom, Europe, Africa, the Middle East and the Caribbean.
Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that writes a
broad range of mainly short-tail classes of business.
Midwest Employers Casualty provides excess workers' compensation insurance products to individual employers, groups
and workers' compensation insurance companies across the United States. Its workers' compensation excess of loss products
include self-insured excess of loss coverages and large deductible policies. Through its relationship with Berkley (cid:1)et
Underwriters, Midwest Employers Casualty also offers multi-state coverage for group self-insureds. It has developed
sophisticated, proprietary analytical tools and risk management services designed to help its insureds lower their total cost of
risk.
2015
6.9%
5.0
3.8
0.9
0.7
0.4
0.6
2.9
2.0
3.8
1.0
0.3
1.0
0.6
0.8
0.8
4.8
0.8
1.3
1.8
4.1
1.7
1.4
3.3
1.8
1.2
0.5
4.1
4.1
2.4
1.3
0.5
1.3
4.1
1.1
2.9
4.8
2.5
2.7
3.4
0.9
1.9
5.6
2.5
100.0%
K
0
1
e
b
3
8
9
7
2
3
1
2/26/20 12:08 PM
7
The following table sets forth the percentage of gross premiums written by each Insurance operating unit:
Year Ended December 31,
2019
5.9%
2018
6.7%
2017
7.0%
2016
6.9%
2015
6.9%
1
4
2
7
9
8
3
b
e
1
0
K
Berkley Global Product Recall Management
Acadia Insurance
Admiral Insurance
Berkley Accident and Health
Berkley Agribusiness
Berkley Alliance Managers
Berkley Aspire
Berkley Canada
Berkley Custom Insurance
Berkley Cyber Risk Solutions
Berkley Entertainment
Berkley Environmental
Berkley FinSecure
Berkley Fire & Marine
Berkley Healthcare
Berkley Human Services
Berkley Industrial
Berkley Insurance Asia
Berkley Insurance Australia
Berkley Latinoamérica
Berkley Life Sciences
Berkley Luxury Group
Berkley Mid-Atlantic Group
Berkley (cid:1)et Underwriters
Berkley (cid:1)orth Pacific
Berkley Oil & Gas
Berkley One
Berkley Professional Liability
Berkley Program Specialists
Berkley Public Entity
Berkley Risk
Berkley Select
Berkley Southeast
Berkley Surety
Berkley Technology Underwriters
Carolina Casualty
Continental Western Group
Gemini Transportation
Intrepid Direct
Key Risk
(cid:1)autilus Insurance Group
Preferred Employers Insurance
Union Standard
Vela Insurance Services
Verus Underwriting Managers
WRB Europe
W/R/B Underwriting
Other
Total
Berkley Offshore Underwriting Managers
5.9
5.7
1.1
3.0
0.4
1.0
3.1
0.3
2.7
4.9
0.9
0.7
0.5
1.6
0.8
0.9
0.6
1.2
3.6
0.7
1.3
1.2
3.0
0.8
1.2
4.1
0.3
2.9
1.1
0.4
0.3
2.8
2.0
1.2
0.7
0.7
2.6
2.9
0.5
2.7
4.8
2.4
2.1
2.8
0.8
1.4
4.5
3.0
5.8
5.7
1.2
2.6
0.3
1.0
2.7
0.2
2.6
5.1
0.9
0.6
0.5
1.2
0.8
0.9
0.4
1.2
4.2
0.8
1.4
1.2
5.0
1.2
1.1
3.6
0.2
1.9
1.1
0.4
0.2
3.2
2.0
1.3
0.7
0.5
3.5
2.3
0.3
2.9
5.0
2.5
2.7
2.6
0.9
1.9
3.5
1.5
5.8
4.9
1.2
2.0
0.3
0.9
2.6
0.1
2.2
4.7
1.0
0.5
0.3
1.1
0.7
0.8
0.2
1.0
4.9
0.8
1.4
1.1
6.8
1.5
1.1
2.7
1.6
1.3
0.5
0.3
3.5
1.9
1.2
0.7
0.4
3.9
2.1
0.1
2.8
5.2
2.9
2.8
3.1
0.9
1.8
3.2
2.2
5.7
4.5
1.1
1.5
0.3
0.8
2.7
2.1
4.2
0.9
0.4
0.2
1.0
0.7
0.7
1.1
4.2
0.8
1.3
1.2
8.2
1.6
1.1
2.8
1.6
1.2
0.5
0.2
4.0
2.0
1.2
0.6
0.6
4.1
1.9
2.7
5.1
2.6
2.7
4.0
0.9
1.8
4.1
2.2
5.0
3.8
0.9
0.7
0.4
0.6
2.9
2.0
3.8
1.0
0.3
1.0
0.6
0.8
0.8
4.8
0.8
1.3
1.8
4.1
1.7
1.4
3.3
1.8
1.2
0.5
4.1
4.1
2.4
1.3
0.5
1.3
4.1
1.1
2.9
4.8
2.5
2.7
3.4
0.9
1.9
5.6
2.5
100.0%
100.0%
100.0%
100.0%
100.0%
27983be 10K
14
The following table sets forth percentages of gross premiums written, by line, by our Insurance operations:
Other liability
Short-tail lines (1)
Workers' compensation
Professional liability
Commercial auto
Total
Year Ended December 31,
2019
33.9%
23.5
17.8
13.3
11.5
2018
32.4%
23.5
20.6
12.0
11.5
2017
31.4%
23.5
22.7
11.2
11.2
2016
31.4%
23.6
23.4
11.0
10.6
2015
30.1%
24.8
23.8
9.7
11.6
100.0%
100.0%
100.0%
100.0%
100.0%
___________________
(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler
and machinery and other lines.
Reinsurance & Monoline Excess
We provide other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on
either a portfolio basis, through treaty reinsurance, or on an individual basis, through facultative reinsurance.
Operating units comprising the Reinsurance & Monoline Excess segment are as follows:
Berkley Re America provides treaty and facultative reinsurance solutions on a variety of product lines through reinsurance
brokers to companies whose primary operations are within the United States and Canada.
Berkley Re Asia Pacific provides property and casualty reinsurance to the Asia Pacific marketplace. With offices in
Brisbane, Melbourne, Sydney, Beijing, Hong Kong, Labuan and Singapore, each branch focuses on excess of loss reinsurance,
targeting both property and casualty treaty and facultative contracts, through multiple distribution channels.
Berkley Re Solutions is a direct casualty facultative reinsurance underwriter serving clients through a nationwide network
of regional offices. Its facultative reinsurance products include automatic, semi-automatic and individual risk assumed
reinsurance. It also provides its customers with turnkey products such as cyber, employment practices liability insurance
("EPLI"), and liquor liability insurance to help enhance their clients' product offerings, along with underwriting, claims, and
actuarial consultation.
Berkley Re UK writes international property casualty treaty accounts. Its territorial scope includes reinsured clients
domiciled in the United Kingdom, Europe, Africa, the Middle East and the Caribbean.
Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that writes a
broad range of mainly short-tail classes of business.
Midwest Employers Casualty provides excess workers' compensation insurance products to individual employers, groups
and workers' compensation insurance companies across the United States. Its workers' compensation excess of loss products
include self-insured excess of loss coverages and large deductible policies. Through its relationship with Berkley (cid:1)et
Underwriters, Midwest Employers Casualty also offers multi-state coverage for group self-insureds. It has developed
sophisticated, proprietary analytical tools and risk management services designed to help its insureds lower their total cost of
risk.
6
7
14
27983be 10K
27983be_10K.indd 14
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
1
2/26/20 12:08 PM
27983be 10K
15
1
5
2
7
9
8
3
b
e
1
0
K
The following table sets forth the percentages of gross premiums written by each Reinsurance & Monoline Excess
operating unit:
Berkley Re America
Berkley Re Asia Pacific
Berkley Re Solutions
Berkley Re UK
Lloyd's Syndicate 2791 Participation
Midwest Employers Casualty
Other
Total
2019
2018
2017
2016
2015
Year Ended December 31,
34.2%
31.7%
41.0%
53.1%
12.0
12.2
15.3
4.8
21.5
11.2
10.7
16.8
5.1
24.5
9.8
10.0
12.3
4.3
22.0
0.6
8.3
7.6
9.0
3.7
17.8
0.5
49.4%
12.6
6.6
8.3
4.2
18.9
100.0%
100.0%
100.0%
100.0%
100.0%
The following table sets forth the percentages of gross premiums written, by line, by our Reinsurance & Monoline
Excess operations:
Casualty
Property
Monoline Excess
Total
Results by Segment
Year Ended December 31,
2019
2018
2017
2016
2015
55.7%
22.8%
21.5%
100.0%
53.0%
22.5%
24.5%
100.0%
52.2%
25.8%
22.0%
100.0%
47.9%
34.3%
17.8%
100.0%
52.6%
28.5%
18.9%
100.0%
Summary financial information about our segments is presented on a GAAP basis in the following table:
(In thousands)
Insurance
Revenue
Income before income taxes
Reinsurance & Monoline Excess
Revenue
Income before income taxes
Other (1)
Revenue
(Loss) income before income taxes
Total
Revenue
Income before income taxes
2019
2018
2017
2016
2015
Year Ended December 31,
$
6,397,074
$
6,208,290
$
6,003,130
$
5,935,268
$
5,664,654
814,862
717,154
623,746
671,347
658,748
877,551
189,188
848,966
201,001
627,571
(151,130)
634,395
(106,061)
922,478
117,131
759,156
31,893
990,065
226,069
957,125
212,697
728,851
(978)
584,678
(139,415)
$
$
7,902,196
852,920
$
$
7,691,651
812,094
$
$
7,684,764
772,770
$
$
7,654,184
896,438
$
$
7,206,457
732,030
_______________________________________
(1) Represents corporate revenues and expenses, net investment gains and losses, and revenues and expenses from non-
insurance businesses that are consolidated for financial reporting purposes.
8
15
27983be 10K
27983be_10K.indd 15
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
1
2/26/20 12:08 PM
62.4%
31.1
93.5%
61.5%
35.0
96.5%
62.3%
31.5
93.8%
62.5%
33.0
95.5%
70.0%
35.7
105.7%
63.4%
33.3
96.7%
61.9%
32.5
94.4%
55.7%
37.8
93.5%
61.1%
33.2
94.3%
60.9%
32.6
93.5%
57.7%
37.1
94.8%
60.5%
33.2
93.7%
62.5%
32.6
95.1%
61.0%
35.8
96.8%
62.4%
32.9
95.3%
$
$
$
$
The table below represents summary underwriting ratios on a GAAP basis for our segments. Loss ratio is losses and loss
expenses incurred expressed as a percentage of net premiums earned. Expense ratio is underwriting expenses expressed as a
percentage of net premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated
corporate expenses. Combined ratio is the sum of the loss ratio and the expense ratio. 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:
2019
2018
2017
2016
2015
Year Ended December 31,
Reinsurance & Monoline Excess
Insurance
Loss ratio
Expense ratio
Combined ratio
Loss ratio
Expense ratio
Combined ratio
Total
Loss ratio
Expense ratio
Combined ratio
Investments
Investment results, before income taxes, were as follows:
Year Ended December 31,
(In thousands)
Average investments, at cost (1)
(cid:1)et investment income (1)
2019
2018
2017
2016
2015
$
$
19,145,567
18,392,297
17,530,590
16,730,964
15,970,931
645,614
674,235
575,788
564,163
512,645
Percent earned on average investments (1)
3.4%
3.7%
3.3%
3.4%
3.2%
(cid:1)et realized and unrealized gains on investments (2) $
Change in unrealized investment gains (losses) (3)
$
120,703
261,970
154,488
(302,737)
335,858
(69,425)
267,005
371,715
92,324
(192,186)
_______________________________________
(1) Includes investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading
$
$
$
$
$
$
$
$
$
$
$
$
account securities sold but not yet purchased and unsettled purchases.
(2) Represents realized gains on investments not classified as trading account securities prior to 2018. The inclusion of change in
unrealized gains on equity securities within net income commenced January 1, 2018 due to our adoption of ASU 2016-01.
The twelve months ended December 31, 2019 includes net realized gains on investment sales of $36 million and increased by
a change in unrealized gains on equity securities of $85 million. The twelve months ended December 31, 2018 includes net
realized gains on investment sales of $480 million reduced by a change in unrealized gains on equity securities of $320
million as well as $6 million in other-than-temporary impairments.
(3) Represents the change in unrealized investment gains (losses) for available for sale securities recognized in stockholders'
equity. Effective January 1, 2018, the Company adopted accounting guidance that requires all equity investments with readily
determinable fair values (subject to certain exceptions) to be measured at fair value with changes in the fair value recognized
in net income. As a result of this guidance, the Company recorded a cumulative effect adjustment of $291 million that
increased retained earnings and decreased accumulated other comprehensive income ("AOCI"), resulting in no net impact to
total stockholders' equity.
returns for the S&P 500® Index:
Barclays U.S. Aggregate Bond Index
S&P 500® Index
For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend
2019
2018
2017
2016
2015
Year Ended December 31,
3.0%
2.0
3.0%
2.4
3.0%
2.4
3.0%
2.1
3.2%
2.3
9
The following table sets forth the percentages of gross premiums written by each Reinsurance & Monoline Excess
1
6
2
7
9
8
3
b
e
1
0
K
The following table sets forth the percentages of gross premiums written, by line, by our Reinsurance & Monoline
operating unit:
Berkley Re America
Berkley Re Asia Pacific
Berkley Re Solutions
Berkley Re UK
Lloyd's Syndicate 2791 Participation
Midwest Employers Casualty
Other
Total
Excess operations:
Casualty
Property
Monoline Excess
Total
Results by Segment
(In thousands)
Insurance
Revenue
Income before income taxes
Reinsurance & Monoline Excess
Income before income taxes
(Loss) income before income taxes
Revenue
Other (1)
Revenue
Total
Revenue
Income before income taxes
_______________________________________
Year Ended December 31,
2019
2018
2017
2016
2015
34.2%
31.7%
41.0%
53.1%
12.0
12.2
15.3
4.8
21.5
11.2
10.7
16.8
5.1
24.5
9.8
10.0
12.3
4.3
22.0
0.6
8.3
7.6
9.0
3.7
17.8
0.5
49.4%
12.6
6.6
8.3
4.2
18.9
100.0%
100.0%
100.0%
100.0%
100.0%
Year Ended December 31,
2019
2018
2017
2016
2015
55.7%
22.8%
21.5%
100.0%
53.0%
22.5%
24.5%
100.0%
52.2%
25.8%
22.0%
100.0%
47.9%
34.3%
17.8%
100.0%
52.6%
28.5%
18.9%
100.0%
2019
2018
2017
2016
2015
Year Ended December 31,
$
6,397,074
$
6,208,290
$
6,003,130
$
5,935,268
$
5,664,654
814,862
717,154
623,746
671,347
658,748
877,551
189,188
848,966
201,001
627,571
(151,130)
634,395
(106,061)
922,478
117,131
759,156
31,893
990,065
226,069
957,125
212,697
728,851
(978)
584,678
(139,415)
$
$
7,902,196
852,920
$
$
7,691,651
812,094
$
$
7,684,764
772,770
$
$
7,654,184
896,438
$
$
7,206,457
732,030
Summary financial information about our segments is presented on a GAAP basis in the following table:
(1) Represents corporate revenues and expenses, net investment gains and losses, and revenues and expenses from non-
insurance businesses that are consolidated for financial reporting purposes.
8
27983be 10K
16
The table below represents summary underwriting ratios on a GAAP basis for our segments. Loss ratio is losses and loss
expenses incurred expressed as a percentage of net premiums earned. Expense ratio is underwriting expenses expressed as a
percentage of net premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated
corporate expenses. Combined ratio is the sum of the loss ratio and the expense ratio. 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:
Insurance
Loss ratio
Expense ratio
Combined ratio
Reinsurance & Monoline Excess
Loss ratio
Expense ratio
Combined ratio
Total
Loss ratio
Expense ratio
Combined ratio
Investments
2019
2018
2017
2016
2015
Year Ended December 31,
62.4%
31.1
93.5%
61.5%
35.0
96.5%
62.3%
31.5
93.8%
62.5%
32.6
95.1%
61.0%
35.8
96.8%
62.4%
32.9
95.3%
62.5%
33.0
95.5%
70.0%
35.7
105.7%
63.4%
33.3
96.7%
61.9%
32.5
94.4%
55.7%
37.8
93.5%
61.1%
33.2
94.3%
60.9%
32.6
93.5%
57.7%
37.1
94.8%
60.5%
33.2
93.7%
Investment results, before income taxes, were as follows:
(In thousands)
Average investments, at cost (1)
(cid:1)et investment income (1)
2019
$
$
19,145,567
645,614
Percent earned on average investments (1)
(cid:1)et realized and unrealized gains on investments (2) $
Change in unrealized investment gains (losses) (3)
$
3.4%
120,703
261,970
Year Ended December 31,
2018
18,392,297
674,235
3.7%
154,488
(302,737)
$
$
$
$
2017
17,530,590
575,788
3.3%
335,858
(69,425)
$
$
$
$
2016
16,730,964
564,163
3.4%
267,005
371,715
$
$
$
$
2015
15,970,931
512,645
3.2%
92,324
(192,186)
$
$
$
$
_______________________________________
(1) Includes investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading
account securities sold but not yet purchased and unsettled purchases.
(2) Represents realized gains on investments not classified as trading account securities prior to 2018. The inclusion of change in
unrealized gains on equity securities within net income commenced January 1, 2018 due to our adoption of ASU 2016-01.
The twelve months ended December 31, 2019 includes net realized gains on investment sales of $36 million and increased by
a change in unrealized gains on equity securities of $85 million. The twelve months ended December 31, 2018 includes net
realized gains on investment sales of $480 million reduced by a change in unrealized gains on equity securities of $320
million as well as $6 million in other-than-temporary impairments.
(3) Represents the change in unrealized investment gains (losses) for available for sale securities recognized in stockholders'
equity. Effective January 1, 2018, the Company adopted accounting guidance that requires all equity investments with readily
determinable fair values (subject to certain exceptions) to be measured at fair value with changes in the fair value recognized
in net income. As a result of this guidance, the Company recorded a cumulative effect adjustment of $291 million that
increased retained earnings and decreased accumulated other comprehensive income ("AOCI"), resulting in no net impact to
total stockholders' equity.
For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend
returns for the S&P 500® Index:
Barclays U.S. Aggregate Bond Index
S&P 500® Index
2019
2018
2017
2016
2015
Year Ended December 31,
3.0%
2.0
3.0%
2.4
3.0%
2.4
3.0%
2.1
3.2%
2.3
9
K
0
1
e
b
3
8
9
7
2
6
1
16
27983be 10K
27983be_10K.indd 16
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
1
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
17
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.
1 year or less
Over 1 year through 5 years
Over 5 years through 10 years
Over 10 years
Mortgage-backed securities
Total
Year Ended December 31,
2019
2018
2017
2016
2015
6.5%
6.9%
5.0%
7.9%
5.8%
35.9
24.7
21.4
11.5
34.3
22.3
24.7
11.8
37.2
24.8
23.3
9.7
39.6
24.6
18.8
9.1
33.6
30.5
20.3
9.8
100.0%
100.0%
100.0%
100.0%
100.0%
At December 31, 2019, the fixed maturity portfolio had an effective duration of 2.8 years, including cash and cash
equivalents.
Loss and Loss 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 based upon known information about the claim at that time. 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 claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported
(IB(cid:1)R) 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 estimating the ultimate economic value of losses. These
factors include, among others, 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.
The risk and complexity of estimating loss reserves are greater when economic conditions are uncertain. It is especially
difficult to estimate the impact of inflation on loss reserves given the current economic environment and related government
actions. Whereas a slowing economy would generally lead to lower inflation or even deflation, increased government spending
would generally lead to higher inflation. A change in our assumptions regarding inflation would result in reserve increases or
decreases that would be reflected in our earnings in periods in which such 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 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. Although the loss reserves included in the Companys financial statements represent
10
17
27983be 10K
27983be_10K.indd 17
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
managements best estimates, setting reserves is inherently uncertain and the Company cannot provide assurance that its current
reserves will prove adequate in light of subsequent events.
The Company discounts its liabilities for certain workers compensation reserves. The amount of workers compensation
reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018, respectively. The
aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million and $563 million at
December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from 2.0% to 6.5%, with a
weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019) are
excess workers compensation reserves. In order to properly match loss expenses with income earned on investment securities
supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount rates
determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average
rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases
in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized.
The expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss payout
experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and
reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates permitted by the
Department of Insurance of the State of Delaware.
To date, known environmental and asbestos claims have not had a material impact on the Companys operations, because
its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos
exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.
The Companys net reserves for losses and loss expenses relating to environmental and asbestos claims on policies written
before adoption of the absolute exclusion was $24 million at December 31, 2019 and $28 million at December 31, 2018. The
estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to
make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these
exposures and the potential effect 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.
K
0
1
e
b
3
8
9
7
2
7
1
11
27983be 10K
18
1
8
2
7
9
8
3
b
e
1
0
K
managements best estimates, setting reserves is inherently uncertain and the Company cannot provide assurance that its current
reserves will prove adequate in light of subsequent events.
The Company discounts its liabilities for certain workers compensation reserves. The amount of workers compensation
reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018, respectively. The
aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million and $563 million at
December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from 2.0% to 6.5%, with a
weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019) are
excess workers compensation reserves. In order to properly match loss expenses with income earned on investment securities
supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount rates
determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average
rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases
in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized.
The expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss payout
experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and
reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates permitted by the
Department of Insurance of the State of Delaware.
To date, known environmental and asbestos claims have not had a material impact on the Companys operations, because
its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos
exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.
The Companys net reserves for losses and loss expenses relating to environmental and asbestos claims on policies written
before adoption of the absolute exclusion was $24 million at December 31, 2019 and $28 million at December 31, 2018. The
estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to
make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these
exposures and the potential effect 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.
1 year or less
Over 1 year through 5 years
Over 5 years through 10 years
Over 10 years
Mortgage-backed securities
Total
equivalents.
Loss and Loss Expense Reserves
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.
Year Ended December 31,
2019
2018
2017
2016
2015
6.5%
6.9%
5.0%
7.9%
5.8%
35.9
24.7
21.4
11.5
34.3
22.3
24.7
11.8
37.2
24.8
23.3
9.7
39.6
24.6
18.8
9.1
33.6
30.5
20.3
9.8
100.0%
100.0%
100.0%
100.0%
100.0%
At December 31, 2019, the fixed maturity portfolio had an effective duration of 2.8 years, including cash and cash
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 based upon known information about the claim at that time. 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 claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported
(IB(cid:1)R) 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 estimating the ultimate economic value of losses. These
factors include, among others, 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.
The risk and complexity of estimating loss reserves are greater when economic conditions are uncertain. It is especially
difficult to estimate the impact of inflation on loss reserves given the current economic environment and related government
actions. Whereas a slowing economy would generally lead to lower inflation or even deflation, increased government spending
would generally lead to higher inflation. A change in our assumptions regarding inflation would result in reserve increases or
decreases that would be reflected in our earnings in periods in which such 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 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. Although the loss reserves included in the Companys financial statements represent
10
11
18
27983be 10K
27983be_10K.indd 18
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:10PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
1
2/26/20 12:08 PM
1
9
2
7
9
8
3
b
e
1
0
K
The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the
Reinsurance
27983be 10K
19
indicated years:
(In thousands)
(cid:1)et reserves at beginning of year
(cid:1)et provision for losses and loss expenses:
Claims occurring during the current year (1)
Increase (decrease) in estimates for claims occurring in prior years (2)
Loss reserve discount amortization
Total
(cid:1)et payments for claims:
Current year
Prior years
Total
Foreign currency translation
(cid:1)et reserves at end of year
Ceded reserves at end of year
Gross reserves at end of year
2019
2018
2017
$
10,248,883
$
10,056,914
$
9,590,265
4,057,989
3,926,489
3,963,543
34,079
39,048
6,831
41,382
(5,165)
43,970
4,131,116
3,974,702
4,002,348
985,599
2,673,803
3,659,402
(22,599)
10,697,998
1,885,251
964,808
2,700,077
3,664,885
(117,848)
10,248,883
1,717,565
1,027,405
2,562,550
3,589,955
54,256
10,056,914
1,613,494
$
12,583,249
$
11,966,448
$
11,670,408
(cid:1)et change in premiums and losses occurring in prior years:
(Increase) decrease in estimates for claims occurring in prior years (2)
Retrospective premium adjustments for claims occurring in prior years (3)
(cid:1)et favorable premium and reserve development on prior years
$
$
(34,079) $
(6,831) $
53,511
45,638
19,432
$
38,807
$
5,165
32,162
37,327
____________________________________
(1) Claims occurring during the current year are net of loss reserve discounts of $20 million, $24 million and $22 million in
2019, 2018 and 2017, respectively.
(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the
estimates for claims occurring in prior years increased by $19 million in 2019, and decreased by $4 million in 2018 and $32
million in 2017, respectively.
(3) For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior
years are offset by additional or return premiums.
Also, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations and note 13,
Reserves for Losses and Loss Expenses included in our audited consolidated financial statements for further information
regarding the changes in estimates for claims occurring in prior years.
A reconciliation between the reserves as of December 31, 2019 as reported in the accompanying consolidated GAAP
financial statements and those reported on the basis of statutory accounting principles (SAP) in the Companys U.S. regulatory
filings is as follows:
(In thousands)
(cid:1)et reserves reported in U.S. regulatory filings on a SAP basis
Reserves for non-U.S. companies
Loss reserve discounting (1)
Ceded reserves
Gross reserves reported in the consolidated GAAP financial statements
$
10,292,373
447,526
(41,901)
1,885,251
$
12,583,249
_________________________
(1) For statutory purposes, the Company discounts its workers compensation reinsurance reserves at 3.3% as prescribed or
permitted by the Department of Insurance of the State of Delaware. In its GAAP financial statements, the Company
discounts excess workers compensation reserves at the risk-free rate and assumed workers compensation reserves at the
statutory rate.
12
19
27983be 10K
27983be_10K.indd 19
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
1
2/26/20 12:08 PM
We follow a common industry practice of reinsuring a portion of our exposures and paying to reinsurers a portion 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 $1 billion 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 $1 billion in policyholder surplus.
Regulation
U.S. Regulation
they do business.
Our U.S. insurance subsidiaries are subject to varying degrees of regulation and supervision in the jurisdictions in which
Overview. Our domestic insurance subsidiaries 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, loss expenses 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.
Holding Company Statutes. In addition to regulatory supervision of our insurance subsidiaries, we are subject to state
statutes governing insurance holding company systems. Under the terms of applicable state statutes, any person or entity desiring
to purchase more than a specified percentage (commonly 10%) of our outstanding voting securities would be required to obtain
prior regulatory approval of the purchase. 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.
In addition, we must annually submit to our lead state regulator an enterprise risk management report which identifies
the activities and circumstances of any affiliated company that might have a material adverse effect on the financial condition of
our group or our U.S. licensed insurers.
Approximately half the states have also adopted changes to the holding company act that authorize U.S. insurance
regulators to lead or participate in the group-wide supervision of certain international insurance groups. In (cid:1)ovember 2019, the
International Association of Insurance Supervisors (IAIS), an international standard setter, adopted a global framework for the
supervision of internationally active insurance groups, as discussed below under - International Regulation. This framework
includes a risk-based, group-wide global insurance capital standard (ICS), which will undergo a five-year monitoring period
starting in January 2020. In the U.S., the (cid:1)ational Association of Insurance Commissioners ((cid:1)AIC) is developing a group
capital calculation tool that uses a risk-based capital aggregation methodology for all entities in an insurance holding company
system. The goal is to provide U.S. regulators with a method to aggregate the available capital and the minimum capital of each
entity in a group in a way that applies to all companies regardless of their structure. The (cid:1)AIC expects to adopt the group
capital calculation tool in 2020. It is unclear how the development of group capital measures will interact with existing capital
requirements for insurance companies in the United States and with international capital standards. It is possible that we may be
required to hold additional capital as a result of these developments.
(cid:1)early all states have adopted the (cid:1)AIC's Risk Management and Own Risk and Solvency Assessment Model Act (the
ORSA Model Act), which requires an insurance holding company systems chief risk officer to submit annually to its lead state
insurance regulator an Own Risk and Solvency Assessment Summary Report (ORSA). The ORSA is a confidential internal
assessment of the material and relevant risks associated with an insurers current business plan and the sufficiency of capital
resources to support those risks. Under ORSA, we are required to:
regularly, no less than annually, conduct an ORSA to assess the adequacy of our risk management framework, and
current and estimated projected future solvency position;
internally document the process and results of the assessment; and
13
The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the
indicated years:
(In thousands)
(cid:1)et reserves at beginning of year
(cid:1)et provision for losses and loss expenses:
Claims occurring during the current year (1)
Increase (decrease) in estimates for claims occurring in prior years (2)
Loss reserve discount amortization
(cid:1)et payments for claims:
Total
Current year
Prior years
Total
Foreign currency translation
(cid:1)et reserves at end of year
Ceded reserves at end of year
Gross reserves at end of year
2019
2018
2017
$
10,248,883
$
10,056,914
$
9,590,265
4,057,989
3,926,489
3,963,543
34,079
39,048
6,831
41,382
(5,165)
43,970
4,131,116
3,974,702
4,002,348
985,599
2,673,803
3,659,402
(22,599)
10,697,998
1,885,251
964,808
2,700,077
3,664,885
(117,848)
10,248,883
1,717,565
1,027,405
2,562,550
3,589,955
54,256
10,056,914
1,613,494
$
12,583,249
$
11,966,448
$
11,670,408
(cid:1)et change in premiums and losses occurring in prior years:
(Increase) decrease in estimates for claims occurring in prior years (2)
Retrospective premium adjustments for claims occurring in prior years (3)
(cid:1)et favorable premium and reserve development on prior years
$
$
(34,079) $
(6,831) $
53,511
45,638
19,432
$
38,807
$
5,165
32,162
37,327
(1) Claims occurring during the current year are net of loss reserve discounts of $20 million, $24 million and $22 million in
____________________________________
2019, 2018 and 2017, respectively.
(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the
estimates for claims occurring in prior years increased by $19 million in 2019, and decreased by $4 million in 2018 and $32
(3) For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior
million in 2017, respectively.
years are offset by additional or return premiums.
Also, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations and note 13,
Reserves for Losses and Loss Expenses included in our audited consolidated financial statements for further information
regarding the changes in estimates for claims occurring in prior years.
A reconciliation between the reserves as of December 31, 2019 as reported in the accompanying consolidated GAAP
financial statements and those reported on the basis of statutory accounting principles (SAP) in the Companys U.S. regulatory
(cid:1)et reserves reported in U.S. regulatory filings on a SAP basis
Gross reserves reported in the consolidated GAAP financial statements
filings is as follows:
(In thousands)
Reserves for non-U.S. companies
Loss reserve discounting (1)
Ceded reserves
_________________________
statutory rate.
(1) For statutory purposes, the Company discounts its workers compensation reinsurance reserves at 3.3% as prescribed or
permitted by the Department of Insurance of the State of Delaware. In its GAAP financial statements, the Company
discounts excess workers compensation reserves at the risk-free rate and assumed workers compensation reserves at the
$
10,292,373
447,526
(41,901)
1,885,251
$
12,583,249
2
0
2
7
9
8
3
b
e
1
0
K
Reinsurance
27983be 10K
20
We follow a common industry practice of reinsuring a portion of our exposures and paying to reinsurers a portion 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 $1 billion 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 $1 billion in policyholder surplus.
Regulation
U.S. Regulation
Our U.S. insurance subsidiaries are subject to varying degrees of regulation and supervision in the jurisdictions in which
they do business.
Overview. Our domestic insurance subsidiaries 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, loss expenses 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.
Holding Company Statutes. In addition to regulatory supervision of our insurance subsidiaries, we are subject to state
statutes governing insurance holding company systems. Under the terms of applicable state statutes, any person or entity desiring
to purchase more than a specified percentage (commonly 10%) of our outstanding voting securities would be required to obtain
prior regulatory approval of the purchase. 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.
In addition, we must annually submit to our lead state regulator an enterprise risk management report which identifies
the activities and circumstances of any affiliated company that might have a material adverse effect on the financial condition of
our group or our U.S. licensed insurers.
Approximately half the states have also adopted changes to the holding company act that authorize U.S. insurance
regulators to lead or participate in the group-wide supervision of certain international insurance groups. In (cid:1)ovember 2019, the
International Association of Insurance Supervisors (IAIS), an international standard setter, adopted a global framework for the
supervision of internationally active insurance groups, as discussed below under - International Regulation. This framework
includes a risk-based, group-wide global insurance capital standard (ICS), which will undergo a five-year monitoring period
starting in January 2020. In the U.S., the (cid:1)ational Association of Insurance Commissioners ((cid:1)AIC) is developing a group
capital calculation tool that uses a risk-based capital aggregation methodology for all entities in an insurance holding company
system. The goal is to provide U.S. regulators with a method to aggregate the available capital and the minimum capital of each
entity in a group in a way that applies to all companies regardless of their structure. The (cid:1)AIC expects to adopt the group
capital calculation tool in 2020. It is unclear how the development of group capital measures will interact with existing capital
requirements for insurance companies in the United States and with international capital standards. It is possible that we may be
required to hold additional capital as a result of these developments.
(cid:1)early all states have adopted the (cid:1)AIC's Risk Management and Own Risk and Solvency Assessment Model Act (the
ORSA Model Act), which requires an insurance holding company systems chief risk officer to submit annually to its lead state
insurance regulator an Own Risk and Solvency Assessment Summary Report (ORSA). The ORSA is a confidential internal
assessment of the material and relevant risks associated with an insurers current business plan and the sufficiency of capital
resources to support those risks. Under ORSA, we are required to:
regularly, no less than annually, conduct an ORSA to assess the adequacy of our risk management framework, and
current and estimated projected future solvency position;
internally document the process and results of the assessment; and
12
13
20
27983be 10K
27983be_10K.indd 20
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
2
2/26/20 12:08 PM
27983be 10K
21
2
1
2
7
9
8
3
b
e
1
0
K
provide a confidential high-level ORSA Summary Report annually to the Commissioner of Insurance of the State of
Delaware (our lead state commissioner).
Cybersecurity Regulations. (cid:1)ew Yorks cybersecurity regulation for financial services institutions that are authorized by
the (cid:1)ew York State Department of Financial Services ("Part 500"), including our insurance subsidiaries licensed in (cid:1)ew York,
became effective on March 1, 2017. The regulation requires these entities to establish and maintain a cybersecurity program
designed to protect consumers private data and the confidentiality, integrity and availability of the licensees information
systems. On October 24, 2017, the (cid:1)AIC adopted the Insurance Data Security Model Law (the Cybersecurity Model Law),
which establishes standards for data security, the investigation of cybersecurity events involving unauthorized access to, or the
misuse of, certain nonpublic information, and reporting to insurance commissioners. The Cybersecurity Model Law imposes
significant new regulatory burdens intended to protect the confidentiality, integrity and availability of information systems. Its
implementation will be based on adoption by state legislatures. To date, the Cybersecurity Model Law has only been adopted in a
few states, including one of our domiciliary states. Importantly, a drafting note in the Cybersecurity Model Law states that a
licensees compliance with the (cid:1)ew York cybersecurity regulation is intended to constitute compliance with the Cybersecurity
Model Law.
Certain states are developing or have developed regulations related to privacy and data security. For example, in 2018
California enacted the California Consumer Privacy Act (CCPA), which broadly regulates the sale of California residents
personal information and grants California residents certain rights to, among other things, access and delete data about them in
certain circumstances. CCPA became effective on January 1, 2020, and compliance with the CCPA may increase the cost of
providing our services in California. Other states have considered - and may adopt - similar proposals. We cannot predict the
impact, if any, that any proposed or future cybersecurity regulations will have on our business, financial condition or results of
operations.
Risk-Based Capital Requirements. The (cid:1)AIC utilizes a Risk-Based Capital (RBC) formula that is designed to measure
the adequacy of an insurer's 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
(cid:1)AIC 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 any
RBC action level as of December 31, 2019.
Insurance Regulatory Information System. The (cid:1)AIC also has developed a set of 13 financial ratios for property and
casualty insurers referred to as the Insurance Regulatory Information System (IRIS). On the basis of statutory financial
statements filed with state insurance regulators, the (cid:1)AIC annually calculates these IRIS ratios to assist state insurance
regulators in monitoring the financial condition of insurance companies. The (cid:1)AIC has established an acceptable range for each
of the IRIS financial ratios.
Guaranty Funds. Our U.S. insurance subsidiaries are also subject to assessment by state guaranty funds when an insurer
in a particular jurisdiction has been judicially declared insolvent and the insolvent company's available funds are insufficient to
pay policyholders and claimants the amounts to which they are entitled. The protection afforded under a state's 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 in that state. The
(cid:1)AIC Post-Assessment Property and Liability Insurance Guaranty Association Model 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.
Additionally, state insurance laws and regulations require us to participate in mandatory property-liability shared
market, pooling or similar arrangements that provide certain types of insurance coverage to individuals or others who
otherwise are unable to purchase coverage voluntarily provided by private insurers. Shared market mechanisms include assigned
risk plans and fair access to insurance requirement or FAIR plans. In addition, some states require insurers to participate in
reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling
mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific arrangement
in the applicable state.
Trade Practices. State insurance laws and regulations include numerous provisions governing trade practices and the
marketplace activities of insurers, including provisions governing marketing and sales practices, policyholder services, claims
management and complaint handling. State regulatory authorities generally enforce these provisions through periodic market
conduct examinations.
Investment Regulation. Investments by our domestic insurance companies must comply with applicable laws and
regulations which prescribe the kind, quality and concentration of investments. In general, these laws and regulations permit
investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage
loans, real estate and certain other investments, subject to specified limits and certain other qualifications. Investments that do
not comply with these limits and qualifications are deducted in our insurance subsidiaries' calculation of their statutory capital
and surplus.
Terrorism Risk Insurance. The Terrorism Risk Insurance Act of 2002 established a Federal program that provides for a
system of shared public and private compensation for insured losses resulting from acts of terrorism. Pursuant to the Terrorism
Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), the program was extended until December 31, 2027.
TRIPRA provides a federal backstop to all U.S. based property and casualty insurers for insurance related losses resulting
from any act of terrorism on U.S. soil or against certain U.S. air carriers, vessels or foreign missions. TRIPRA 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. TRIPRA's definition of certified acts includes domestic terrorism. Federal participation will be triggered under
TRIPRA when the Secretary of Treasury certifies an act of terrorism.
Under the program, the federal government will pay 81% of an insurer's covered losses in excess of the insurer's
applicable deductible as of January 1, 2020. This amount will decrease to 80% on a pro-rata basis over a five-year period that
began in 2017. The insurer's deductible is based on 20% of earned premium for the prior year for covered lines of commercial
property and casualty insurance. Based on our 2019 earned premiums, our aggregate deductible under TRIPRA during 2020 will
be approximately $993 million. The federal program will not pay losses for certified acts unless such losses exceed $200 million
industry-wide for calendar year 2020 and any calendar year thereafter. TRIPRA limits the federal government's 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.
Excess and Surplus Lines. The regulation of our U.S. subsidiaries' excess and surplus lines insurance business differs
significantly from the regulation of our admitted business. Our surplus lines subsidiaries are subject to the surplus lines
regulation and reporting requirements of the jurisdictions in which they are eligible to write surplus lines insurance. Although the
surplus lines business is generally less regulated than admitted business, principally with respect to rates and policy forms, strict
regulations apply to surplus lines placements in the laws of every state and the regulation of surplus lines insurance may undergo
changes in the future. Federal or state measures may be introduced to increase the oversight of surplus lines insurance in the
future.
Federal Regulation. Although the federal government and its regulatory agencies generally do not directly regulate the
business of insurance, federal initiatives could have an impact on our business in a variety of ways. The Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) effected sweeping changes to financial services regulation
in the United States. The Dodd-Frank Act created two new federal government bodies, the Federal Insurance Office (the FIO)
and the Financial Stability Oversight Council (the FSOC), which may impact the regulation of insurance. Although the FIO
has preemption authority over state insurance laws that conflict with certain international agreements, it does not have general
supervisory or regulatory authority over the business of insurance. The FIO has authority to represent the United States in
international insurance matters and is authorized to monitor the U.S. insurance industry and identify potential regulatory gaps
that could contribute to systemic risk. In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act
(Economic Growth Act) was signed into law. Among other things, the Economic Growth Act addresses the roles played by
federal regulators at international insurance standard-setting forums. It directs the Director of the FIO and the Board of
Governors of the Federal Reserve to support increased transparency at international standard-setting regulatory forums (e.g., the
IAIS). These federal regulations also instruct the FIO and the Federal Reserve to achieve consensus positions with the states
through the (cid:1)AIC prior to taking a position on any insurance proposal by a global insurance regulatory forum.
Dividends. We receive funds from our insurance company subsidiaries in the form of dividends and management fees for
The Dodd-Frank Act authorizes the Secretary of the Treasury and U.S. Trade Representative to enter into international
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. See
Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.
14
21
27983be 10K
27983be_10K.indd 21
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
2
2/26/20 12:08 PM
agreements of mutual recognition regarding the prudential regulation of insurance or reinsurance (a Covered Agreement). In
September 2017, the U.S. and the European Union ("EU") signed the Covered Agreement.
The Covered Agreement addresses three areas of prudential supervision: reinsurance, group supervision and the exchange
of information between the U.S. and EU. Each party is working on its internal requirements and procedures (such as amending
15
27983be 10K
22
2
2
2
7
9
8
3
b
e
1
0
K
provide a confidential high-level ORSA Summary Report annually to the Commissioner of Insurance of the State of
Delaware (our lead state commissioner).
Cybersecurity Regulations. (cid:1)ew Yorks cybersecurity regulation for financial services institutions that are authorized by
the (cid:1)ew York State Department of Financial Services ("Part 500"), including our insurance subsidiaries licensed in (cid:1)ew York,
became effective on March 1, 2017. The regulation requires these entities to establish and maintain a cybersecurity program
designed to protect consumers private data and the confidentiality, integrity and availability of the licensees information
systems. On October 24, 2017, the (cid:1)AIC adopted the Insurance Data Security Model Law (the Cybersecurity Model Law),
which establishes standards for data security, the investigation of cybersecurity events involving unauthorized access to, or the
misuse of, certain nonpublic information, and reporting to insurance commissioners. The Cybersecurity Model Law imposes
significant new regulatory burdens intended to protect the confidentiality, integrity and availability of information systems. Its
implementation will be based on adoption by state legislatures. To date, the Cybersecurity Model Law has only been adopted in a
few states, including one of our domiciliary states. Importantly, a drafting note in the Cybersecurity Model Law states that a
licensees compliance with the (cid:1)ew York cybersecurity regulation is intended to constitute compliance with the Cybersecurity
Model Law.
operations.
Certain states are developing or have developed regulations related to privacy and data security. For example, in 2018
California enacted the California Consumer Privacy Act (CCPA), which broadly regulates the sale of California residents
personal information and grants California residents certain rights to, among other things, access and delete data about them in
certain circumstances. CCPA became effective on January 1, 2020, and compliance with the CCPA may increase the cost of
providing our services in California. Other states have considered - and may adopt - similar proposals. We cannot predict the
impact, if any, that any proposed or future cybersecurity regulations will have on our business, financial condition or results of
Risk-Based Capital Requirements. The (cid:1)AIC utilizes a Risk-Based Capital (RBC) formula that is designed to measure
the adequacy of an insurer's 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
(cid:1)AIC 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 any
RBC action level as of December 31, 2019.
Insurance Regulatory Information System. The (cid:1)AIC also has developed a set of 13 financial ratios for property and
casualty insurers referred to as the Insurance Regulatory Information System (IRIS). On the basis of statutory financial
statements filed with state insurance regulators, the (cid:1)AIC annually calculates these IRIS ratios to assist state insurance
regulators in monitoring the financial condition of insurance companies. The (cid:1)AIC has established an acceptable range for each
of the IRIS financial ratios.
Guaranty Funds. Our U.S. insurance subsidiaries are also subject to assessment by state guaranty funds when an insurer
in a particular jurisdiction has been judicially declared insolvent and the insolvent company's available funds are insufficient to
pay policyholders and claimants the amounts to which they are entitled. The protection afforded under a state's 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 in that state. The
(cid:1)AIC Post-Assessment Property and Liability Insurance Guaranty Association Model 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.
Additionally, state insurance laws and regulations require us to participate in mandatory property-liability shared
market, pooling or similar arrangements that provide certain types of insurance coverage to individuals or others who
otherwise are unable to purchase coverage voluntarily provided by private insurers. Shared market mechanisms include assigned
risk plans and fair access to insurance requirement or FAIR plans. In addition, some states require insurers to participate in
reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling
mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific arrangement
in the applicable state.
Trade Practices. State insurance laws and regulations include numerous provisions governing trade practices and the
marketplace activities of insurers, including provisions governing marketing and sales practices, policyholder services, claims
management and complaint handling. State regulatory authorities generally enforce these provisions through periodic market
conduct examinations.
Investment Regulation. Investments by our domestic insurance companies must comply with applicable laws and
regulations which prescribe the kind, quality and concentration of investments. In general, these laws and regulations permit
investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage
loans, real estate and certain other investments, subject to specified limits and certain other qualifications. Investments that do
not comply with these limits and qualifications are deducted in our insurance subsidiaries' calculation of their statutory capital
and surplus.
Terrorism Risk Insurance. The Terrorism Risk Insurance Act of 2002 established a Federal program that provides for a
system of shared public and private compensation for insured losses resulting from acts of terrorism. Pursuant to the Terrorism
Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), the program was extended until December 31, 2027.
TRIPRA provides a federal backstop to all U.S. based property and casualty insurers for insurance related losses resulting
from any act of terrorism on U.S. soil or against certain U.S. air carriers, vessels or foreign missions. TRIPRA 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. TRIPRA's definition of certified acts includes domestic terrorism. Federal participation will be triggered under
TRIPRA when the Secretary of Treasury certifies an act of terrorism.
Under the program, the federal government will pay 81% of an insurer's covered losses in excess of the insurer's
applicable deductible as of January 1, 2020. This amount will decrease to 80% on a pro-rata basis over a five-year period that
began in 2017. The insurer's deductible is based on 20% of earned premium for the prior year for covered lines of commercial
property and casualty insurance. Based on our 2019 earned premiums, our aggregate deductible under TRIPRA during 2020 will
be approximately $993 million. The federal program will not pay losses for certified acts unless such losses exceed $200 million
industry-wide for calendar year 2020 and any calendar year thereafter. TRIPRA limits the federal government's 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.
Excess and Surplus Lines. The regulation of our U.S. subsidiaries' excess and surplus lines insurance business differs
significantly from the regulation of our admitted business. Our surplus lines subsidiaries are subject to the surplus lines
regulation and reporting requirements of the jurisdictions in which they are eligible to write surplus lines insurance. Although the
surplus lines business is generally less regulated than admitted business, principally with respect to rates and policy forms, strict
regulations apply to surplus lines placements in the laws of every state and the regulation of surplus lines insurance may undergo
changes in the future. Federal or state measures may be introduced to increase the oversight of surplus lines insurance in the
future.
Federal Regulation. Although the federal government and its regulatory agencies generally do not directly regulate the
business of insurance, federal initiatives could have an impact on our business in a variety of ways. The Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) effected sweeping changes to financial services regulation
in the United States. The Dodd-Frank Act created two new federal government bodies, the Federal Insurance Office (the FIO)
and the Financial Stability Oversight Council (the FSOC), which may impact the regulation of insurance. Although the FIO
has preemption authority over state insurance laws that conflict with certain international agreements, it does not have general
supervisory or regulatory authority over the business of insurance. The FIO has authority to represent the United States in
international insurance matters and is authorized to monitor the U.S. insurance industry and identify potential regulatory gaps
that could contribute to systemic risk. In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act
(Economic Growth Act) was signed into law. Among other things, the Economic Growth Act addresses the roles played by
federal regulators at international insurance standard-setting forums. It directs the Director of the FIO and the Board of
Governors of the Federal Reserve to support increased transparency at international standard-setting regulatory forums (e.g., the
IAIS). These federal regulations also instruct the FIO and the Federal Reserve to achieve consensus positions with the states
through the (cid:1)AIC prior to taking a position on any insurance proposal by a global insurance regulatory forum.
Dividends. We receive funds from our insurance company subsidiaries in the form of dividends and management fees for
The Dodd-Frank Act authorizes the Secretary of the Treasury and U.S. Trade Representative to enter into international
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. See
Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.
agreements of mutual recognition regarding the prudential regulation of insurance or reinsurance (a Covered Agreement). In
September 2017, the U.S. and the European Union ("EU") signed the Covered Agreement.
The Covered Agreement addresses three areas of prudential supervision: reinsurance, group supervision and the exchange
of information between the U.S. and EU. Each party is working on its internal requirements and procedures (such as amending
14
15
K
0
1
e
b
3
8
9
7
2
2
2
22
27983be 10K
27983be_10K.indd 22
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
27983be 10K
23
2
3
2
7
9
8
3
b
e
1
0
K
or promulgating appropriate statutes and regulations) in order for the Covered Agreement to become effective. Under the
Covered Agreement, reinsurance collateral requirements will no longer apply to qualifying EU reinsurers that sell reinsurance to
the U.S. market, and U.S. reinsurers operating in the EU market will no longer be subject to local presence requirements. The
Covered Agreement establishes group supervision practices that apply only to U.S. and EU insurance groups operating in both
territories. For instance, the Covered Agreement states that, provided the U.S. has adopted group supervision including
worldwide group governance, solvency, capital and reporting, U.S.-headquartered insurance groups with operations in the EU
will be supervised at the worldwide level only by U.S. insurance regulators precluding EU insurance supervisors from exercising
solvency and capital requirements over the worldwide operations of U.S.-headquartered insurers.
U.S. states have five years from the date of signature to remove reinsurance collateral requirements for EU reinsurers that
meet certain standards (such as minimum capital and solvency ratios and claims payment standards), while EU member states
have two years to revise their local presence laws. Under the Dodd-Frank Act, the FIO has preemption authority over state
insurance laws that conflict with the Covered Agreement. In late December 2018, the U.S. Department of the Treasury and the
Office of the U.S. Trade Representative entered into a covered agreement with the U.K., which will extend the benefits of a
Covered Agreement to the U.K. after Brexit.
Additionally, in June 2019, the (cid:1)AIC adopted amendments to its Credit for Reinsurance Model Law in order to satisfy the
substantive and timing requirements of the Covered Agreement and to pave the way for U.S. states to similarly amend their
credit for reinsurance laws and avoid potential federal pre-emption of these laws. The (cid:1)AIC has also taken steps to make its
amended Credit for Reinsurance Model Law an accreditation standard for all states. The newly amended Credit for Reinsurance
Model Law also extends the zero reinsurance collateral provisions in the Covered Agreement to U.S. jurisdictions that are
accredited by the (cid:1)AIC and to non-U.S. jurisdictions that have not entered into a covered agreement with the U.S. but the (cid:1)AIC
has identified as reciprocal jurisdictions pursuant to the (cid:1)AIC Qualified Jurisdiction Process. We cannot currently predict the
impact of these changes to the law or whether any other covered agreements will be successfully adopted, and cannot currently
estimate the impact of these changes to the law and any such adopted covered agreements on our business, financial condition or
operating results.
The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United
States' financial stability in the event of the insurer's material financial distress or failure, i.e., a "systemically important financial
institution" or a "non-bank SIFI." An insurer so designated by FSOC will be subject to Federal Reserve supervision and
heightened prudential standards. There are currently no such non-bank SIFIs designated by FSOC. In (cid:1)ovember 2017, the U.S.
Department of Treasury issued a report recommending certain changes to FSOCs process for designating non-bank SIFIs in
order to make the designation process more rigorous, clear and transparent. On December 4, 2019, FSOC approved final
guidance related to a revised process for designating non-bank SIFIs, which substantially changes FSOCs previous procedures
by adopting an activities-based approach and moving away from the entities-based approach. The final guidance became
effective on January 29, 2020.
Based upon our current business model and balance sheet, we do not believe that we will be designated by the FSOC as
such an institution. Although the potential impacts of the Dodd-Frank Act, its implementing regulations and potential
amendments to the Dodd-Frank Act on the U.S. insurance industry are not clear, our business could be affected by changes to the
U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as
systemically important non-bank financial companies.
International Regulation
Our insurance subsidiaries based in the United Kingdom are regulated by the Prudential Regulation Authority ("PRA")
and/or the Financial Conduct Authority ("FCA"). The PRA's primary objectives with regard to insurers are to promote the safety
and soundness of insurers and to contribute to the securing of an appropriate degree of protection for current and future
policyholders, while the FCA has three operational objectives: (i) to secure an appropriate degree of protection for consumers,
(ii) to protect and enhance the integrity of the United Kingdom's financial system, and (iii) to promote effective competition in
the interests of consumers in the financial services markets. The PRA and FCA employ a variety of regulatory tools to achieve
their objectives, including periodic auditing and reporting requirements, risk assessment reviews, minimum solvency margins
and individual capital assessment requirements, dividend restrictions, in certain cases, approval requirements governing the
appointment of key officers, approval requirements governing controlling ownership interests and various other requirements.
Certain of our subsidiaries are authorized by the PRA to effect and carry out contracts of insurance (which includes reinsurance)
in the U.K. and are regulated by both the PRA and the FCA for prudential and conduct of business matters respectively.
Our Lloyd's managing agency is also regulated by Lloyd's, and the Lloyd's syndicate business is subject to Lloyd's
supervision. Through Lloyd's, we are licensed to write business in various countries throughout the world by virtue of Lloyd's
international licenses. In each such country, we are subject to the laws and insurance regulation of that country. Our insurance
subsidiary based in Liechtenstein is regulated by the Financial Market Authority of Liechtenstein, which has regulatory tools
16
analogous to those of the U.K. regulators noted above. Additionally, U.K. and Liechtenstein laws and regulations also impact us
as controllers of our European-regulated subsidiaries, whereby we are required to notify the appropriate authorities about
significant events relating to such regulated subsidiaries' controllers (i.e. persons or entities which have certain levels of direct or
indirect voting power or economic interests in the regulated entities) as well as changes of control, and to submit annual reports
regarding their controllers. The PRA/FCA's Senior Managers and Certification Regime and analogous regulation in
Liechtenstein further provide regulatory frameworks for standards of fitness and propriety, conduct and accountability for
individuals in positions of responsibility at insurers. In addition, certain employees are individually registered at Lloyd's.
An insurance company with authorization to write insurance business in the U.K. may currently provide cross-border
services in the other member states of the European Economic Area (EEA), a group including member states of the EU and
(cid:1)orway, Liechtenstein and Iceland. These rights may be restricted or modified depending on the United Kingdoms withdrawal
from the EU. See below Risks Relating To Our Business-The United Kingdom leaving the EU could adversely affect our
business for more information.
Our insurance business throughout the EU and EEA is subject to "Solvency II", an insurance regulatory regime governing,
among other things, capital adequacy and risk management which became effective on January 1, 2016. Lloyds applies a
capital adequacy test to all Lloyds syndicates, including our syndicate, that is based on Solvency II principles. Solvency II
provides for the supervision of group solvency. Under Solvency II, it is possible that the U.S. parent of a European Union
subsidiary could be subject to certain Solvency II requirements if the U.S. company is not already subject to regulations deemed
equivalent to Solvency II. Currently, the U.S. system of insurance regulation relating to group supervision is not deemed
"equivalent" to Solvency II by European Union authorities. However, we have received a waiver from the PRA, subject to
conditions, with respect to the PRA's supervision of our group, which waives the requirement on us to maintain a group solvency
capital requirement as calculated under Solvency II rules. The Covered Agreement also prohibits any EU supervisor from
exercising group-wide supervision at any level above the highest company organized in the country of that supervisor.
We must also comply with the EU General Data Protection Regulation (GDPR), which took effect in May 2018. The
regulations goal is to impose increased individual rights and protections for all personal data located in or originating from the
EU. GDPR is extraterritorial in that it applies to all businesses in the EU and any business outside the EU that process EU
personal data of individuals in the EU. Moreover, there are significant fines associated with non-compliance. In particular, we
will need to monitor our compliance with all relevant member states' laws and regulations, including where permitted
derogations from the GDPR are introduced. The introduction of the GDPR, and any resultant changes in EU member states
national laws and regulations, has increased our compliance obligations and has necessitated the review and implementation of
policies and processes relating to our collection and use of data, and has required us to change our business practices regarding
these matters.
In addition, we may be affected by regulatory policies adopted by the IAIS, an international standard setter consisting of
supervisors and regulators from more than 200 jurisdictions. The IAIS has been working on several initiatives to consider
changes to insurer solvency standards and group supervision of companies in a holding company system in response to the
increasing globalization of the insurance sector. In (cid:1)ovember 2019, the IAIS formally adopted a global framework for the
supervision of internationally active insurance groups (IAIGs), which is referred to as the Common Framework for the
Supervision of Internationally Active Insurance Groups, or ComFrame. ComFrame is intended to provide a framework of
basic standards for IAIGs and a process for supervisors to cooperate in the supervision of IAIGs. Also in (cid:1)ovember 2019, the
IAIS adopted a risk-based group-wide global insurance capital standard (ICS) that will apply to IAIGs and ultimately form a
part of ComFrame. The ICS will undergo a five-year monitoring period starting in January 2020 during which time it will be
used for confidential reporting and discussion in supervisory colleges to provide feedback to the IAIS on the ICSs design and
performance, but it will not trigger any supervisory action. Following the monitoring period, the ICS is expected to be
implemented in 2025 as a group-wide prescribed capital requirement for IAIGs and integrated into the rest of ComFrame. As
noted above under - U.S. Regulation, it is unclear how the development of the ICS will interact with existing capital
requirements for insurance companies in the United States and the (cid:1)AICs development of the GCC.
Our international operations are also subject to varying degrees of regulation in Mexico, Australia and Canada and in
certain other countries in Europe, South America, and Southeast Asia. Generally, our subsidiaries must satisfy local regulatory
requirements. While each country imposes licensing, solvency, auditing and financial reporting requirements, the type and extent
of the requirements differ substantially. Key areas where country regulations may differ include: (i) the type of financial reports
to be filed; (ii) a requirement to use local intermediaries; (iii) the amount of reinsurance permissible; (iv) the scope of any
regulation of policy forms and rates; and (v) the type and frequency of regulatory examinations.
K
0
1
e
b
3
8
9
7
2
3
2
17
23
27983be 10K
27983be_10K.indd 23
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
2
4
2
7
9
8
3
b
e
1
0
K
or promulgating appropriate statutes and regulations) in order for the Covered Agreement to become effective. Under the
Covered Agreement, reinsurance collateral requirements will no longer apply to qualifying EU reinsurers that sell reinsurance to
the U.S. market, and U.S. reinsurers operating in the EU market will no longer be subject to local presence requirements. The
Covered Agreement establishes group supervision practices that apply only to U.S. and EU insurance groups operating in both
territories. For instance, the Covered Agreement states that, provided the U.S. has adopted group supervision including
worldwide group governance, solvency, capital and reporting, U.S.-headquartered insurance groups with operations in the EU
will be supervised at the worldwide level only by U.S. insurance regulators precluding EU insurance supervisors from exercising
solvency and capital requirements over the worldwide operations of U.S.-headquartered insurers.
U.S. states have five years from the date of signature to remove reinsurance collateral requirements for EU reinsurers that
meet certain standards (such as minimum capital and solvency ratios and claims payment standards), while EU member states
have two years to revise their local presence laws. Under the Dodd-Frank Act, the FIO has preemption authority over state
insurance laws that conflict with the Covered Agreement. In late December 2018, the U.S. Department of the Treasury and the
Office of the U.S. Trade Representative entered into a covered agreement with the U.K., which will extend the benefits of a
Covered Agreement to the U.K. after Brexit.
Additionally, in June 2019, the (cid:1)AIC adopted amendments to its Credit for Reinsurance Model Law in order to satisfy the
substantive and timing requirements of the Covered Agreement and to pave the way for U.S. states to similarly amend their
credit for reinsurance laws and avoid potential federal pre-emption of these laws. The (cid:1)AIC has also taken steps to make its
amended Credit for Reinsurance Model Law an accreditation standard for all states. The newly amended Credit for Reinsurance
Model Law also extends the zero reinsurance collateral provisions in the Covered Agreement to U.S. jurisdictions that are
accredited by the (cid:1)AIC and to non-U.S. jurisdictions that have not entered into a covered agreement with the U.S. but the (cid:1)AIC
has identified as reciprocal jurisdictions pursuant to the (cid:1)AIC Qualified Jurisdiction Process. We cannot currently predict the
impact of these changes to the law or whether any other covered agreements will be successfully adopted, and cannot currently
estimate the impact of these changes to the law and any such adopted covered agreements on our business, financial condition or
operating results.
The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United
States' financial stability in the event of the insurer's material financial distress or failure, i.e., a "systemically important financial
institution" or a "non-bank SIFI." An insurer so designated by FSOC will be subject to Federal Reserve supervision and
heightened prudential standards. There are currently no such non-bank SIFIs designated by FSOC. In (cid:1)ovember 2017, the U.S.
Department of Treasury issued a report recommending certain changes to FSOCs process for designating non-bank SIFIs in
order to make the designation process more rigorous, clear and transparent. On December 4, 2019, FSOC approved final
guidance related to a revised process for designating non-bank SIFIs, which substantially changes FSOCs previous procedures
by adopting an activities-based approach and moving away from the entities-based approach. The final guidance became
effective on January 29, 2020.
Based upon our current business model and balance sheet, we do not believe that we will be designated by the FSOC as
such an institution. Although the potential impacts of the Dodd-Frank Act, its implementing regulations and potential
amendments to the Dodd-Frank Act on the U.S. insurance industry are not clear, our business could be affected by changes to the
U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as
systemically important non-bank financial companies.
International Regulation
Our insurance subsidiaries based in the United Kingdom are regulated by the Prudential Regulation Authority ("PRA")
and/or the Financial Conduct Authority ("FCA"). The PRA's primary objectives with regard to insurers are to promote the safety
and soundness of insurers and to contribute to the securing of an appropriate degree of protection for current and future
policyholders, while the FCA has three operational objectives: (i) to secure an appropriate degree of protection for consumers,
(ii) to protect and enhance the integrity of the United Kingdom's financial system, and (iii) to promote effective competition in
the interests of consumers in the financial services markets. The PRA and FCA employ a variety of regulatory tools to achieve
their objectives, including periodic auditing and reporting requirements, risk assessment reviews, minimum solvency margins
and individual capital assessment requirements, dividend restrictions, in certain cases, approval requirements governing the
appointment of key officers, approval requirements governing controlling ownership interests and various other requirements.
Certain of our subsidiaries are authorized by the PRA to effect and carry out contracts of insurance (which includes reinsurance)
in the U.K. and are regulated by both the PRA and the FCA for prudential and conduct of business matters respectively.
Our Lloyd's managing agency is also regulated by Lloyd's, and the Lloyd's syndicate business is subject to Lloyd's
supervision. Through Lloyd's, we are licensed to write business in various countries throughout the world by virtue of Lloyd's
international licenses. In each such country, we are subject to the laws and insurance regulation of that country. Our insurance
subsidiary based in Liechtenstein is regulated by the Financial Market Authority of Liechtenstein, which has regulatory tools
27983be 10K
24
analogous to those of the U.K. regulators noted above. Additionally, U.K. and Liechtenstein laws and regulations also impact us
as controllers of our European-regulated subsidiaries, whereby we are required to notify the appropriate authorities about
significant events relating to such regulated subsidiaries' controllers (i.e. persons or entities which have certain levels of direct or
indirect voting power or economic interests in the regulated entities) as well as changes of control, and to submit annual reports
regarding their controllers. The PRA/FCA's Senior Managers and Certification Regime and analogous regulation in
Liechtenstein further provide regulatory frameworks for standards of fitness and propriety, conduct and accountability for
individuals in positions of responsibility at insurers. In addition, certain employees are individually registered at Lloyd's.
An insurance company with authorization to write insurance business in the U.K. may currently provide cross-border
services in the other member states of the European Economic Area (EEA), a group including member states of the EU and
(cid:1)orway, Liechtenstein and Iceland. These rights may be restricted or modified depending on the United Kingdoms withdrawal
from the EU. See below Risks Relating To Our Business-The United Kingdom leaving the EU could adversely affect our
business for more information.
Our insurance business throughout the EU and EEA is subject to "Solvency II", an insurance regulatory regime governing,
among other things, capital adequacy and risk management which became effective on January 1, 2016. Lloyds applies a
capital adequacy test to all Lloyds syndicates, including our syndicate, that is based on Solvency II principles. Solvency II
provides for the supervision of group solvency. Under Solvency II, it is possible that the U.S. parent of a European Union
subsidiary could be subject to certain Solvency II requirements if the U.S. company is not already subject to regulations deemed
equivalent to Solvency II. Currently, the U.S. system of insurance regulation relating to group supervision is not deemed
"equivalent" to Solvency II by European Union authorities. However, we have received a waiver from the PRA, subject to
conditions, with respect to the PRA's supervision of our group, which waives the requirement on us to maintain a group solvency
capital requirement as calculated under Solvency II rules. The Covered Agreement also prohibits any EU supervisor from
exercising group-wide supervision at any level above the highest company organized in the country of that supervisor.
We must also comply with the EU General Data Protection Regulation (GDPR), which took effect in May 2018. The
regulations goal is to impose increased individual rights and protections for all personal data located in or originating from the
EU. GDPR is extraterritorial in that it applies to all businesses in the EU and any business outside the EU that process EU
personal data of individuals in the EU. Moreover, there are significant fines associated with non-compliance. In particular, we
will need to monitor our compliance with all relevant member states' laws and regulations, including where permitted
derogations from the GDPR are introduced. The introduction of the GDPR, and any resultant changes in EU member states
national laws and regulations, has increased our compliance obligations and has necessitated the review and implementation of
policies and processes relating to our collection and use of data, and has required us to change our business practices regarding
these matters.
In addition, we may be affected by regulatory policies adopted by the IAIS, an international standard setter consisting of
supervisors and regulators from more than 200 jurisdictions. The IAIS has been working on several initiatives to consider
changes to insurer solvency standards and group supervision of companies in a holding company system in response to the
increasing globalization of the insurance sector. In (cid:1)ovember 2019, the IAIS formally adopted a global framework for the
supervision of internationally active insurance groups (IAIGs), which is referred to as the Common Framework for the
Supervision of Internationally Active Insurance Groups, or ComFrame. ComFrame is intended to provide a framework of
basic standards for IAIGs and a process for supervisors to cooperate in the supervision of IAIGs. Also in (cid:1)ovember 2019, the
IAIS adopted a risk-based group-wide global insurance capital standard (ICS) that will apply to IAIGs and ultimately form a
part of ComFrame. The ICS will undergo a five-year monitoring period starting in January 2020 during which time it will be
used for confidential reporting and discussion in supervisory colleges to provide feedback to the IAIS on the ICSs design and
performance, but it will not trigger any supervisory action. Following the monitoring period, the ICS is expected to be
implemented in 2025 as a group-wide prescribed capital requirement for IAIGs and integrated into the rest of ComFrame. As
noted above under - U.S. Regulation, it is unclear how the development of the ICS will interact with existing capital
requirements for insurance companies in the United States and the (cid:1)AICs development of the GCC.
Our international operations are also subject to varying degrees of regulation in Mexico, Australia and Canada and in
certain other countries in Europe, South America, and Southeast Asia. Generally, our subsidiaries must satisfy local regulatory
requirements. While each country imposes licensing, solvency, auditing and financial reporting requirements, the type and extent
of the requirements differ substantially. Key areas where country regulations may differ include: (i) the type of financial reports
to be filed; (ii) a requirement to use local intermediaries; (iii) the amount of reinsurance permissible; (iv) the scope of any
regulation of policy forms and rates; and (v) the type and frequency of regulatory examinations.
16
17
24
27983be 10K
27983be_10K.indd 24
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
2
2/26/20 12:08 PM
2
5
2
7
9
8
3
b
e
1
0
K
Competition
27983be 10K
25
The property casualty insurance and reinsurance businesses are highly competitive, with many insurance companies of
various sizes, as well as other entities offering risk alternatives such as self-insured retentions or captive programs, transacting
business in the United States and internationally. We compete directly with a large number of these companies. Competition in
our industry is largely measured by the ability to provide insurance and services at a price and on terms that are reasonable and
acceptable to the customer. Our strategy in this highly fragmented industry is to seek specialized areas or geographic regions
where our operating units can gain a competitive advantage by responding quickly to changing market conditions. Our operating
units establish their own pricing practices based upon a Company-wide philosophy to price products with the intent of making an
underwriting profit.
Competition for insurance business within the United States comes from other specialty insurers, regional carriers, large
national multi-line companies and reinsurers. Our specialty operating units compete with excess and surplus insurers as well as
standard carriers. Other regional units compete with mutual and other regional stock companies as well as national carriers.
Additionally, direct writers of property casualty insurance compete with our regional units by writing insurance through their
salaried employees, generally at a lower acquisition cost than through independent agents such as those used by the Company.
We compete internationally with native insurance operations both large and small, which in some cases are related to
government entities, as well as with branches or local subsidiaries of multinational companies.
Competition for reinsurance business, which is especially strong, comes from domestic and foreign reinsurers, which
produce their business either on a direct basis or through the broker market. These competitors include Swiss Re, Munich Re,
Berkshire Hathaway, Transatlantic Reinsurance, Partner Re and others.
In recent years, various institutional investors have increasingly sought to participate in the property and casualty
insurance and reinsurance industries. Well-capitalized new entrants to the property and casualty insurance and reinsurance
industries, or existing competitors that receive substantial infusions of capital, provide increasing competition, which may
adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may lower costs for insurers
that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively.
Employees
As of January 31, 2020, we employed 7,493 individuals. Of this number, our subsidiaries employed 7,356 persons and the
remaining persons were employed at the parent company.
Other Information about the Company's Business
We maintain an interest in the acquisition and startup of complementary businesses and continue to evaluate possible
acquisitions and new ventures on an ongoing basis. In addition, our operating units develop new coverages or enter 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 operating units. Although the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms,
wildfires, 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 that 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 Company's internet address is www.berkley.com. The information on our website is not incorporated by reference in
this annual report on Form 10-K. The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
and other reports filed by us or with respect to our securities by others 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.
18
25
27983be 10K
27983be_10K.indd 25
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
2
2/26/20 12:08 PM
ITEM 1A. RISK FACTORS
Our businesses face significant risks. If any of the events or circumstances described as risks below occur, our
businesses, results of operations and/or financial condition could be materially and adversely affected. In addition to those
described below, our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we
currently consider immaterial.
Risks Relating to Our Industry
industry.
Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance
The results of companies in the property casualty insurance industry historically have been subject to significant
fluctuations and uncertainties in demand and pricing, causing cyclical changes in the insurance and reinsurance industry. The
demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often directly
related to available capacity or the perceived profitability of the business. In recent years, we have faced significant competition
in our business, as a result of new entrants and capital providers, as well as existing insurers seeking to gain or maintain market
share. Recently, premium rates have increased at an accelerating pace for most lines of business, while they have decreased in
others, most notably workers' compensation. 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 or social inflation on the amount of compensation due for
injuries or losses. In addition, investment rates of return have impacted rate adequacy, with interest rates remaining at or near
historic lows. 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.
We face significant competitive pressures in our businesses, which have pressured premium rates in certain areas 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, diversified financial services companies and insurtech companies.
Competitiveness in our businesses is based on many factors, including premium charges, ratings assigned by independent rating
agencies, commissions paid to producers, the perceived financial strength of the company, other terms and conditions offered,
services provided (including ease of doing business over the internet), speed of claims payment and reputation and experience
in the lines to be written. In recent years, the insurance industry has undergone consolidation, which may further increase
competition.
Some of our competitors, particularly in the reinsurance business, have greater financial and/or marketing resources than
we do. These competitors within the reinsurance market include Swiss Re, Munich Re, Berkshire Hathaway, Transatlantic
Reinsurance, and Partner Re. We expect that perceived financial strength, in particular, will become more important as
customers seek high quality reinsurers.
Over the past several years, increased supply has led to significant competition in our business. Our E&S operating units
have also encountered competition from admitted companies seeking to increase market share. More recently, insurance prices
have generally increased for most lines of business, excluding workers' compensation. However, loss costs have also increased
and the duration and magnitude of the improving pricing environment remains uncertain. With the low level of interest rates
available, current price levels for certain lines of business may remain below the prices required for us to achieve our long-term
return objectives. We expect to continue to face strong competition in these and our other lines of business.
In recent years, various types of investors have increasingly sought to participate in the property and casualty insurance
and reinsurance industries. Well-capitalized new entrants to the property and casualty insurance and reinsurance industries, or
existing competitors that receive substantial infusions of capital or access to third-party capital, provide increasing competition,
which may adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may lower costs
for insurers that rely on reinsurance and, as a consequence, those insurers may be able to price their products more
competitively. In addition, technology companies or other third parties have created, and may in the future create, technology-
enabled business models, processes, platforms or alternate distribution channels that may adversely impact our competitive
position.
This intense competition could cause the supply and/or demand for insurance or reinsurance to change, which affect our
ability to price our products at attractive rates and retain existing business or write new products at adequate rates or on terms
19
2
6
2
7
9
8
3
b
e
1
0
K
Competition
The property casualty insurance and reinsurance businesses are highly competitive, with many insurance companies of
various sizes, as well as other entities offering risk alternatives such as self-insured retentions or captive programs, transacting
business in the United States and internationally. We compete directly with a large number of these companies. Competition in
our industry is largely measured by the ability to provide insurance and services at a price and on terms that are reasonable and
acceptable to the customer. Our strategy in this highly fragmented industry is to seek specialized areas or geographic regions
where our operating units can gain a competitive advantage by responding quickly to changing market conditions. Our operating
units establish their own pricing practices based upon a Company-wide philosophy to price products with the intent of making an
underwriting profit.
Competition for insurance business within the United States comes from other specialty insurers, regional carriers, large
national multi-line companies and reinsurers. Our specialty operating units compete with excess and surplus insurers as well as
standard carriers. Other regional units compete with mutual and other regional stock companies as well as national carriers.
Additionally, direct writers of property casualty insurance compete with our regional units by writing insurance through their
salaried employees, generally at a lower acquisition cost than through independent agents such as those used by the Company.
We compete internationally with native insurance operations both large and small, which in some cases are related to
government entities, as well as with branches or local subsidiaries of multinational companies.
Competition for reinsurance business, which is especially strong, comes from domestic and foreign reinsurers, which
produce their business either on a direct basis or through the broker market. These competitors include Swiss Re, Munich Re,
Berkshire Hathaway, Transatlantic Reinsurance, Partner Re and others.
In recent years, various institutional investors have increasingly sought to participate in the property and casualty
insurance and reinsurance industries. Well-capitalized new entrants to the property and casualty insurance and reinsurance
industries, or existing competitors that receive substantial infusions of capital, provide increasing competition, which may
adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may lower costs for insurers
that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively.
Employees
As of January 31, 2020, we employed 7,493 individuals. Of this number, our subsidiaries employed 7,356 persons and the
remaining persons were employed at the parent company.
Other Information about the Company's Business
We maintain an interest in the acquisition and startup of complementary businesses and continue to evaluate possible
acquisitions and new ventures on an ongoing basis. In addition, our operating units develop new coverages or enter 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 operating units. Although the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms,
wildfires, 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 that 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 Company's internet address is www.berkley.com. The information on our website is not incorporated by reference in
this annual report on Form 10-K. The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
and other reports filed by us or with respect to our securities by others 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.
27983be 10K
26
ITEM 1A. RISK FACTORS
Our businesses face significant risks. If any of the events or circumstances described as risks below occur, our
businesses, results of operations and/or financial condition could be materially and adversely affected. In addition to those
described below, our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we
currently consider immaterial.
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 in demand and pricing, causing cyclical changes in the insurance and reinsurance industry. The
demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often directly
related to available capacity or the perceived profitability of the business. In recent years, we have faced significant competition
in our business, as a result of new entrants and capital providers, as well as existing insurers seeking to gain or maintain market
share. Recently, premium rates have increased at an accelerating pace for most lines of business, while they have decreased in
others, most notably workers' compensation. 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 or social inflation on the amount of compensation due for
injuries or losses. In addition, investment rates of return have impacted rate adequacy, with interest rates remaining at or near
historic lows. 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.
We face significant competitive pressures in our businesses, which have pressured premium rates in certain areas 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, diversified financial services companies and insurtech companies.
Competitiveness in our businesses is based on many factors, including premium charges, ratings assigned by independent rating
agencies, commissions paid to producers, the perceived financial strength of the company, other terms and conditions offered,
services provided (including ease of doing business over the internet), speed of claims payment and reputation and experience
in the lines to be written. In recent years, the insurance industry has undergone consolidation, which may further increase
competition.
Some of our competitors, particularly in the reinsurance business, have greater financial and/or marketing resources than
we do. These competitors within the reinsurance market include Swiss Re, Munich Re, Berkshire Hathaway, Transatlantic
Reinsurance, and Partner Re. We expect that perceived financial strength, in particular, will become more important as
customers seek high quality reinsurers.
Over the past several years, increased supply has led to significant competition in our business. Our E&S operating units
have also encountered competition from admitted companies seeking to increase market share. More recently, insurance prices
have generally increased for most lines of business, excluding workers' compensation. However, loss costs have also increased
and the duration and magnitude of the improving pricing environment remains uncertain. With the low level of interest rates
available, current price levels for certain lines of business may remain below the prices required for us to achieve our long-term
return objectives. We expect to continue to face strong competition in these and our other lines of business.
In recent years, various types of investors have increasingly sought to participate in the property and casualty insurance
and reinsurance industries. Well-capitalized new entrants to the property and casualty insurance and reinsurance industries, or
existing competitors that receive substantial infusions of capital or access to third-party capital, provide increasing competition,
which may adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may lower costs
for insurers that rely on reinsurance and, as a consequence, those insurers may be able to price their products more
competitively. In addition, technology companies or other third parties have created, and may in the future create, technology-
enabled business models, processes, platforms or alternate distribution channels that may adversely impact our competitive
position.
This intense competition could cause the supply and/or demand for insurance or reinsurance to change, which affect our
ability to price our products at attractive rates and retain existing business or write new products at adequate rates or on terms
18
19
K
0
1
e
b
3
8
9
7
2
6
2
26
27983be 10K
27983be_10K.indd 26
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
2
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
27
and conditions acceptable to us. If we are unable to retain existing business or write new business at adequate rates or on terms
and conditions acceptable to us, our results of operations could be materially and adversely affected.
The effects of these and other unforeseen emerging claim and coverage issues are difficult to predict and could harm our
business and materially and adversely affect our results of operations.
Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves.
As a property casualty insurer, we face losses from natural and man-made catastrophes.
Our gross reserves for losses and loss expenses were approximately $12.6 billion as of December 31, 2019. Our loss
reserves reflect our best estimates of the cost of settling 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 management's 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. It is especially difficult to estimate the impact of inflation
on loss reserves given the current economic environment and related government actions. Both inflation overall and medical
cost inflation, which has historically been greater than inflation overall, can have an adverse impact.
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 reporting period would decrease by a corresponding
amount.
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.
The effects of emerging claim and coverage issues on our business are uncertain.
As industry practices and economic, legal, judicial, social and other environmental conditions change, unexpected and
unintended issues related to claim and coverage may emerge. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the number or size of claims. Examples of emerging claims
and coverage issues include, but are not limited to:
judicial expansion of policy coverage and a greater propensity to grant claimants more favorable amounts and the
impact of new theories of liability;
plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-
handling and other practices;
social inflation trends, including higher and more frequent claims, more favorable judgments and legislated
increases;
medical developments that link health issues to particular causes, resulting in liability claims;
claims relating to unanticipated consequences of current or new technologies, including cyber security related risks;
claims relating to potentially changing climate conditions; and
increased claims due to third party funding of litigation.
In some instances, these emerging issues may not become apparent for some time after we have issued the affected
insurance policies. As a result, the full extent of liability under our insurance policies may not be known until many years after
the policies are issued.
In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on
recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on our
business.
20
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. For
example, catastrophe losses net of reinsurance recoveries were $90 million in 2019, $105 million in 2018, and $184 million in
2017. Similarly, man-made catastrophes can also have a material impact on our financial results.
Catastrophes can be caused by various events, including hurricanes, windstorms, earthquakes, tsunamis, hailstorms,
explosions, severe winter weather and fires, as well as terrorist and other man-made activities, including drilling, mining and
other industrial accidents, cyber events or terrorist activities. The incidence and severity of catastrophes are inherently
unpredictable. 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, earthquakes, tsunamis and other disasters may produce significant damage in large, heavily populated areas.
Catastrophes can cause losses in a variety of our property and casualty lines, and most of our past catastrophe-related claims
have resulted from severe storms. Seasonal weather variations or the impact of climate change 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.
Changing climate conditions may increase the frequency and severity of catastrophic events and thereby adversely
affect our financial condition and results.
Over the past several years, changing weather patterns and climatic conditions, such as global warming, appear to have
contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future
trends and exposures. There is a growing scientific consensus that global warming and other climate change are increasing the
frequency and severity of catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural
disasters. Such changes make it more difficult for us to predict and model catastrophic events, reducing our ability to
accurately price our exposure to such events and mitigate our risks. Any increase in the frequency or severity of natural
disasters may adversely affect our financial condition and results.
We, as a primary insurer, may have significant exposure for terrorist acts.
To the extent an act of terrorism, whether a domestic or foreign act, is certified by the Secretary of Treasury, we may be
covered under the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), for up to 81% of our covered
losses as of January 1, 2020 for certain property/casualty lines of insurance. However, any such coverage would be subject to a
mandatory deductible based on 20% of earned premium for the prior year for the covered lines of commercial property and
casualty insurance. Based on our 2019 earned premiums, our aggregate deductible under TRIPRA during 2020 is approximately
$993 million. In addition, the coverage provided under TRIPRA 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 in both the United States and foreign jurisdictions.
Most insurance regulations are designed to protect the interests of policyholders rather than stockholders and other investors.
This system of regulation, generally administered in the United States by a department of insurance in each state in which we
do business, relates to, among other things:
standards of solvency, including risk-based capital measurements;
restrictions on the nature, quality and concentration of investments;
requirements pertaining to certain methods of accounting;
evaluating enterprise risk to an insurer;
rate and form regulation pertaining to certain of our insurance businesses;
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; and
involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.
21
K
0
1
e
b
3
8
9
7
2
7
2
27
27983be 10K
27983be_10K.indd 27
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
2
8
2
7
9
8
3
b
e
1
0
K
27983be 10K
28
and conditions acceptable to us. If we are unable to retain existing business or write new business at adequate rates or on terms
The effects of these and other unforeseen emerging claim and coverage issues are difficult to predict and could harm our
and conditions acceptable to us, our results of operations could be materially and adversely affected.
business and materially and adversely affect our results of operations.
Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves.
As a property casualty insurer, we face losses from natural and man-made catastrophes.
Our gross reserves for losses and loss expenses were approximately $12.6 billion as of December 31, 2019. Our loss
reserves reflect our best estimates of the cost of settling 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
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. For
example, catastrophe losses net of reinsurance recoveries were $90 million in 2019, $105 million in 2018, and $184 million in
2017. Similarly, man-made catastrophes can also have a material impact on our financial results.
expects the ultimate settlement and claims administration will cost for claims that have occurred, whether known or unknown.
Catastrophes can be caused by various events, including hurricanes, windstorms, earthquakes, tsunamis, hailstorms,
The major assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. These estimates,
which generally involve actuarial projections, are based on management's 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. It is especially difficult to estimate the impact of inflation
on loss reserves given the current economic environment and related government actions. Both inflation overall and medical
cost inflation, which has historically been greater than inflation overall, can have an adverse impact.
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
explosions, severe winter weather and fires, as well as terrorist and other man-made activities, including drilling, mining and
other industrial accidents, cyber events or terrorist activities. The incidence and severity of catastrophes are inherently
unpredictable. 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, earthquakes, tsunamis and other disasters may produce significant damage in large, heavily populated areas.
Catastrophes can cause losses in a variety of our property and casualty lines, and most of our past catastrophe-related claims
have resulted from severe storms. Seasonal weather variations or the impact of climate change 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.
Changing climate conditions may increase the frequency and severity of catastrophic events and thereby adversely
affect our financial condition and results.
events. Should we need to increase our reserves, our pre-tax income for the reporting period would decrease by a corresponding
Over the past several years, changing weather patterns and climatic conditions, such as global warming, appear to have
amount.
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.
The effects of emerging claim and coverage issues on our business are uncertain.
As industry practices and economic, legal, judicial, social and other environmental conditions change, unexpected and
unintended issues related to claim and coverage may emerge. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the number or size of claims. Examples of emerging claims
and coverage issues include, but are not limited to:
judicial expansion of policy coverage and a greater propensity to grant claimants more favorable amounts and the
impact of new theories of liability;
handling and other practices;
increases;
plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-
social inflation trends, including higher and more frequent claims, more favorable judgments and legislated
medical developments that link health issues to particular causes, resulting in liability claims;
claims relating to unanticipated consequences of current or new technologies, including cyber security related risks;
claims relating to potentially changing climate conditions; and
increased claims due to third party funding of litigation.
In some instances, these emerging issues may not become apparent for some time after we have issued the affected
insurance policies. As a result, the full extent of liability under our insurance policies may not be known until many years after
In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on
recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on our
the policies are issued.
business.
contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future
trends and exposures. There is a growing scientific consensus that global warming and other climate change are increasing the
frequency and severity of catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural
disasters. Such changes make it more difficult for us to predict and model catastrophic events, reducing our ability to
accurately price our exposure to such events and mitigate our risks. Any increase in the frequency or severity of natural
disasters may adversely affect our financial condition and results.
We, as a primary insurer, may have significant exposure for terrorist acts.
To the extent an act of terrorism, whether a domestic or foreign act, is certified by the Secretary of Treasury, we may be
covered under the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), for up to 81% of our covered
losses as of January 1, 2020 for certain property/casualty lines of insurance. However, any such coverage would be subject to a
mandatory deductible based on 20% of earned premium for the prior year for the covered lines of commercial property and
casualty insurance. Based on our 2019 earned premiums, our aggregate deductible under TRIPRA during 2020 is approximately
$993 million. In addition, the coverage provided under TRIPRA 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 in both the United States and foreign jurisdictions.
Most insurance regulations are designed to protect the interests of policyholders rather than stockholders and other investors.
This system of regulation, generally administered in the United States by a department of insurance in each state in which we
do business, relates to, among other things:
standards of solvency, including risk-based capital measurements;
restrictions on the nature, quality and concentration of investments;
requirements pertaining to certain methods of accounting;
evaluating enterprise risk to an insurer;
rate and form regulation pertaining to certain of our insurance businesses;
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; and
involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.
20
21
28
27983be 10K
27983be_10K.indd 28
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
2
2/26/20 12:08 PM
2
9
2
7
9
8
3
b
e
1
0
K
27983be 10K
29
State insurance departments conduct periodic examinations of the affairs of insurance companies and require the filing of
Our investments in non-U.S.-denominated assets are subject to fluctuations in non-U.S. securities and currency markets,
annual and other reports relating to the financial condition of insurance companies, holding company issues and other matters.
Our Insurance business internationally is also generally subject to a similar regulatory scheme in each of the jurisdictions where
we conduct operations outside the United States.
Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be
taken in response to conditions in the financial markets, global insurance supervision and other factors may lead to additional
federal regulation of the insurance industry in the coming years.
The Dodd-Frank Act effected sweeping changes to financial services regulation in the United States. The Dodd-Frank
Act established the Financial Stability Oversight Council (FSOC), which is authorized to recommend that certain
systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors
of the Federal Reserve. The Dodd-Frank Act also established a Federal Insurance Office (FIO) which is authorized to study,
monitor and report to Congress on the U.S. insurance industry and the significance of global reinsurance to the U.S. insurance
market. The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United States
financial stability in the event of the insurer's material financial distress or failure. The potential impact of the Dodd-Frank Act,
as amended by the Economic Growth Act, on the U.S. insurance business is not clear. Our business could be affected by
changes, whether as a result of the Dodd-Frank Act or otherwise, to the U.S. system of insurance regulation or our designation
or the designation of insurers or reinsurers with which we do business as systemically significant non-bank financial
companies.
Although state regulation is the primary form of regulation of insurance and reinsurance in the United States, in addition
to the changes brought about by the Dodd-Frank Act, Congress has considered various proposals relating to the creation of an
optional federal charter and repeal of the insurance company antitrust exemption from the McCarran-Ferguson Act. We may be
subject to potentially increased federal oversight as a financial institution. In addition, the current administration and the
volatile political environment may increase the chance of other federal legislative and regulatory changes that could affect us in
ways we cannot predict.
With respect to international measures, Solvency II, the EU regime concerning the capital adequacy, risk management
and regulatory reporting for insurers and reinsurers may affect our insurance businesses. Implementation of Solvency II in EU
member states occurred on January 1, 2016, and as the Solvency II regime evolves over time, we may be required to utilize a
significant amount of resources to ensure compliance. In addition, despite the waiver of the Solvency II group capital
requirements we received, Solvency II may have the effect of increasing the capital requirements of our EU domiciled insurers.
Additionally, our capital requirements and compliance requirements may be adversely affected if the EU Commission does not
deem the insurance regulatory regimes of the jurisdictions outside the EU in which we have insurance or reinsurance companies
domiciled to be "equivalent" to Solvency II. If our compliance with Solvency II or any other regulatory regime is challenged,
we may be subject to monetary or other penalties. In addition, in order to ensure compliance with applicable regulatory
requirements or as a result of any investigation, including remediation efforts, we could be required to incur significant
expenses and undertake additional work, which in turn may divert resources from our business.
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 authority's 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, may further restrict the conduct of our business.
Risks Relating to Our Business
Our international operations expose us to investment, political and economic risks, including foreign currency and
credit risk.
Our expanding international operations in the United Kingdom, Continental Europe, South America, Canada, Mexico,
Scandinavia, the Asia-Pacific region, South Africa and Australia expose us to increased 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.
22
29
27983be 10K
27983be_10K.indd 29
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
2
2/26/20 12:08 PM
and those markets can be volatile. (cid:1)on-U.S. currency fluctuations also affect the value of any dividends paid by our non-
U.S. subsidiaries to their parent companies in the U.S.
The United Kingdom leaving the EU could adversely affect our business.
The 2016 U.K. referendum on its membership in the EU resulted in a majority of U.K. voters voting in favor of the U.K.
leaving the EU (Brexit). In accordance with the Withdrawal Agreement implementing Brexit, the U.K. formally left the EU
on January 31, 2020. The Withdrawal Agreement provides for a transitional period ending on December 31, 2020, during which
time the U.K. will continue to enjoy the same rights and obligations as it had as a member state, though without participating in
the EU institutions. During the transitional period, the U.K. and the EU are expected to negotiate a long-term agreement
covering, among other things, the terms of trade between them, which will be based on the principles set out in the
accompanying Political Declaration. However, EU officials and others have expressed skepticism that such a trade deal can be
agreed in the time frame allowed. The U.K. government has stated that it will not seek to extend the transitional period. There
is, therefore, a risk that at the end of 2020 no trade deal (or only a minimal trade deal) will have been completed, with the result
that a hard Brexit occurs on December 31, 2020.
Depending on the terms of the long-term trade deal with the EU and/or whether or not a hard Brexit occurs on
December 31, 2020, the U.K. could lose access to the single EU market and to free trade deals with several countries that
already have agreements with the EU.
Such barriers to trade could affect the attractiveness of the U.K. and impact our U.K. business. We also face risks
associated with the potential uncertainty and consequences related to Brexit, including with respect to volatility in financial
markets, exchange rates and interest rates. These uncertainties could increase the volatility of, or reduce, our investment results
in particular periods or over time. Brexit could adversely affect European or worldwide political, regulatory, economic or
market conditions and could contribute to instability in political institutions and regulatory agencies. Brexit could also lead to
legal uncertainty and differing laws and regulations between the U.K. and the EU. Any of these potential effects, and others we
cannot anticipate, could adversely affect our results of operations or financial condition.
We may be unable to attract and retain key personnel and qualified employees.
We depend on our ability to attract and retain key personnel, including our President and CEO, Executive Chairman,
senior executive officers, presidents of our operating units, experienced underwriters 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 products and markets.
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, 2019, the amount due from our reinsurers was approximately
$2,134 million, including amounts due from state funds and industry pools where it was intended that we would bear no risk.
Certain of these amounts are secured by letters of credit or by funds held in trust on our behalf.
We are subject to credit risk relating to our policyholders, independent agents and brokers.
In addition to exposure to credit risk related to our reinsurance recoverables and investment portfolio, we are exposed to
credit risk in several other areas of our business, including credit risk relating to policyholders, independent agents and brokers.
For example our policyholders, independent agents or brokers may not pay a part of or the full amount of premiums owed to us
or our brokers or other third party claim administrators may not deliver amounts owed on claims under our insurance and
reinsurance contracts for which we have provided funds.
As credit risk is generally a function of the economy, we face a greater credit risk in an economic downturn. While we
attempt to manage credit risks through underwriting guidelines, collateral requirements and other oversight mechanisms, our
efforts may not be successful. For example, to reduce such credit risk, we require certain third parties to post collateral for some
or all of their obligations to us. In cases where we receive pledged securities and the applicable counterparty is unable to honor
23
3
0
2
7
9
8
3
b
e
1
0
K
27983be 10K
30
State insurance departments conduct periodic examinations of the affairs of insurance companies and require the filing of
Our investments in non-U.S.-denominated assets are subject to fluctuations in non-U.S. securities and currency markets,
annual and other reports relating to the financial condition of insurance companies, holding company issues and other matters.
Our Insurance business internationally is also generally subject to a similar regulatory scheme in each of the jurisdictions where
and those markets can be volatile. (cid:1)on-U.S. currency fluctuations also affect the value of any dividends paid by our non-
U.S. subsidiaries to their parent companies in the U.S.
we conduct operations outside the United States.
Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be
taken in response to conditions in the financial markets, global insurance supervision and other factors may lead to additional
federal regulation of the insurance industry in the coming years.
The Dodd-Frank Act effected sweeping changes to financial services regulation in the United States. The Dodd-Frank
Act established the Financial Stability Oversight Council (FSOC), which is authorized to recommend that certain
systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors
of the Federal Reserve. The Dodd-Frank Act also established a Federal Insurance Office (FIO) which is authorized to study,
monitor and report to Congress on the U.S. insurance industry and the significance of global reinsurance to the U.S. insurance
market. The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United States
financial stability in the event of the insurer's material financial distress or failure. The potential impact of the Dodd-Frank Act,
as amended by the Economic Growth Act, on the U.S. insurance business is not clear. Our business could be affected by
changes, whether as a result of the Dodd-Frank Act or otherwise, to the U.S. system of insurance regulation or our designation
or the designation of insurers or reinsurers with which we do business as systemically significant non-bank financial
companies.
Although state regulation is the primary form of regulation of insurance and reinsurance in the United States, in addition
to the changes brought about by the Dodd-Frank Act, Congress has considered various proposals relating to the creation of an
optional federal charter and repeal of the insurance company antitrust exemption from the McCarran-Ferguson Act. We may be
subject to potentially increased federal oversight as a financial institution. In addition, the current administration and the
volatile political environment may increase the chance of other federal legislative and regulatory changes that could affect us in
ways we cannot predict.
With respect to international measures, Solvency II, the EU regime concerning the capital adequacy, risk management
and regulatory reporting for insurers and reinsurers may affect our insurance businesses. Implementation of Solvency II in EU
member states occurred on January 1, 2016, and as the Solvency II regime evolves over time, we may be required to utilize a
significant amount of resources to ensure compliance. In addition, despite the waiver of the Solvency II group capital
requirements we received, Solvency II may have the effect of increasing the capital requirements of our EU domiciled insurers.
Additionally, our capital requirements and compliance requirements may be adversely affected if the EU Commission does not
deem the insurance regulatory regimes of the jurisdictions outside the EU in which we have insurance or reinsurance companies
domiciled to be "equivalent" to Solvency II. If our compliance with Solvency II or any other regulatory regime is challenged,
we may be subject to monetary or other penalties. In addition, in order to ensure compliance with applicable regulatory
requirements or as a result of any investigation, including remediation efforts, we could be required to incur significant
expenses and undertake additional work, which in turn may divert resources from our business.
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 authority's 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, may further restrict the conduct of our business.
Risks Relating to Our Business
credit risk.
Our international operations expose us to investment, political and economic risks, including foreign currency and
Our expanding international operations in the United Kingdom, Continental Europe, South America, Canada, Mexico,
Scandinavia, the Asia-Pacific region, South Africa and Australia expose us to increased 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.
The United Kingdom leaving the EU could adversely affect our business.
The 2016 U.K. referendum on its membership in the EU resulted in a majority of U.K. voters voting in favor of the U.K.
leaving the EU (Brexit). In accordance with the Withdrawal Agreement implementing Brexit, the U.K. formally left the EU
on January 31, 2020. The Withdrawal Agreement provides for a transitional period ending on December 31, 2020, during which
time the U.K. will continue to enjoy the same rights and obligations as it had as a member state, though without participating in
the EU institutions. During the transitional period, the U.K. and the EU are expected to negotiate a long-term agreement
covering, among other things, the terms of trade between them, which will be based on the principles set out in the
accompanying Political Declaration. However, EU officials and others have expressed skepticism that such a trade deal can be
agreed in the time frame allowed. The U.K. government has stated that it will not seek to extend the transitional period. There
is, therefore, a risk that at the end of 2020 no trade deal (or only a minimal trade deal) will have been completed, with the result
that a hard Brexit occurs on December 31, 2020.
Depending on the terms of the long-term trade deal with the EU and/or whether or not a hard Brexit occurs on
December 31, 2020, the U.K. could lose access to the single EU market and to free trade deals with several countries that
already have agreements with the EU.
Such barriers to trade could affect the attractiveness of the U.K. and impact our U.K. business. We also face risks
associated with the potential uncertainty and consequences related to Brexit, including with respect to volatility in financial
markets, exchange rates and interest rates. These uncertainties could increase the volatility of, or reduce, our investment results
in particular periods or over time. Brexit could adversely affect European or worldwide political, regulatory, economic or
market conditions and could contribute to instability in political institutions and regulatory agencies. Brexit could also lead to
legal uncertainty and differing laws and regulations between the U.K. and the EU. Any of these potential effects, and others we
cannot anticipate, could adversely affect our results of operations or financial condition.
We may be unable to attract and retain key personnel and qualified employees.
We depend on our ability to attract and retain key personnel, including our President and CEO, Executive Chairman,
senior executive officers, presidents of our operating units, experienced underwriters 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 products and markets.
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, 2019, the amount due from our reinsurers was approximately
$2,134 million, including amounts due from state funds and industry pools where it was intended that we would bear no risk.
Certain of these amounts are secured by letters of credit or by funds held in trust on our behalf.
We are subject to credit risk relating to our policyholders, independent agents and brokers.
In addition to exposure to credit risk related to our reinsurance recoverables and investment portfolio, we are exposed to
credit risk in several other areas of our business, including credit risk relating to policyholders, independent agents and brokers.
For example our policyholders, independent agents or brokers may not pay a part of or the full amount of premiums owed to us
or our brokers or other third party claim administrators may not deliver amounts owed on claims under our insurance and
reinsurance contracts for which we have provided funds.
As credit risk is generally a function of the economy, we face a greater credit risk in an economic downturn. While we
attempt to manage credit risks through underwriting guidelines, collateral requirements and other oversight mechanisms, our
efforts may not be successful. For example, to reduce such credit risk, we require certain third parties to post collateral for some
or all of their obligations to us. In cases where we receive pledged securities and the applicable counterparty is unable to honor
22
23
K
0
1
e
b
3
8
9
7
2
0
3
30
27983be 10K
27983be_10K.indd 30
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
3
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
31
its obligations, we may be exposed to credit risk on the securities pledged and/or the risk that our access to that collateral may
be stayed as a result of bankruptcy. In cases where we receive letters of credit from banks as collateral and one of our
counterparties is unable to honor its obligations, we are exposed to the credit risk of the banks that issued the letters of credit.
We are rated by A.M. Best, Standard & Poor's, Moody's, and Fitch, 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 & Poor's, Moody's and Fitch. Our ratings are
subject to periodic review, and we cannot assure you that we will be able to retain our current or any future ratings.
If our ratings are reduced from their current levels by A.M. Best, Standard & Poor's, Moody's or Fitch, our competitive
position in the insurance industry could suffer and it would be more difficult for us to market our products. A ratings downgrade
could also adversely limit our access to capital markets, which may increase the cost of debt. A significant downgrade could
result in a substantial loss of business as policyholders move to other companies with higher 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.
renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions could
be significantly impaired and our business could be harmed.
Failure to maintain the security of our networks and confidential data may expose us to liability.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our
computer systems and networks. Computer viruses, hackers, employee misconduct and other external hazards could expose our
data systems to security breaches. Our electronic transmission of personal, confidential and proprietary information to third
parties with whom we have business relationships and our outsourcing of certain technology and business process functions to
third parties may expose us to enhanced risk related to data security. While we attempt to develop secure data transmission
capabilities with these third-party vendors and others with whom we do business, our vendors and third parties could still suffer
data breaches that could result in the exposure of sensitive data and the infiltration of our computer systems. Our failure to
protect sensitive personal and our proprietary information, whether owing to breaches of our own systems or those of our
vendors, could result in significant monetary and reputational damages. These increased risks, and expanding regulatory
requirements regarding data security, could expose us to data loss, monetary and reputational damages and significant increases
in compliance costs. As a result, our ability to conduct our business could be materially and adversely affected.
We could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and regulatory
As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk
standards are not effective.
underwritten by our insurance company subsidiaries, especially catastrophe risks and those risks with relatively high policy
limits. 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 seek to purchase, which may affect the level of our business
and profitability. Our reinsurance contracts are generally subject to annual renewal, and we may be unable to maintain our
current reinsurance contracts or to obtain other reinsurance contracts in adequate amounts and at favorable rates. In addition, we
may be unable to obtain reinsurance on terms acceptable to us relating to certain lines of business that we intend to begin
writing. If we are unable to renew our expiring contracts or to obtain new reinsurance contracts, 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 business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting,
claim processing and investment activities, many of which are highly complex. These activities often are subject to internal
guidelines and policies, as well as legal and regulatory standards, including those related to privacy, anti-corruption, anti-
bribery and global finance and insurance matters. Our continued expansion into new international markets has brought about
additional requirements. A control system, no matter how well designed and operated, can provide only reasonable assurance
that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated
risk exposure (including underwriting, credit and investment risk) or damage to our reputation.
We could be adversely affected by recent and future changes in U.S. Federal income tax laws.
Depending on conditions in the financial markets and the general economy, we may be unable to raise debt or equity
Tax legislation commonly referred to as the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017,
capital if needed.
If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions,
uncertainty or volatility in the capital and credit markets, we may be unable to access debt or equity capital on acceptable terms
if needed, which could have a negative impact on our ability to invest in our insurance company subsidiaries and/or to take
advantage of opportunities to expand our business, such as possible acquisitions and the creation of new ventures, and inhibit
our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.
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 you that we will be able to identify suitable acquisition targets or
insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or
start-up 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.
If we experience difficulties with our information technology, telecommunications or other computer systems, our
ability to conduct our business could be negatively or severely impacted.
Our business is highly dependent upon our employees' ability to perform necessary business functions in an efficient and
uninterrupted fashion. A shut-down of, or inability to access, one or more of our facilities, a power outage or a failure of one or
more of our information technology, telecommunications or other computer systems could significantly impair our employees'
ability to perform such functions on a timely basis. In the event of a disaster such as a natural catastrophe, terrorist attack or
industrial accident, or the infection of our systems by a malicious computer virus, our systems could be inaccessible for an
extended period of time. In addition, because our information technology and telecommunications systems interface with and
depend on third-party systems, we could experience service denials or failures of controls if demand for our service exceeds
capacity or a third-party system fails or experiences an interruption. If our business continuity plans or system security does not
sufficiently address such a business interruption, system failure or service denial, our ability to write and process new and
24
31
27983be 10K
27983be_10K.indd 31
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
3
2/26/20 12:08 PM
fundamentally overhauled the U.S. tax system by, among other significant changes, reducing the U.S. corporate income tax rate
to 21%. In the context of the taxation of U.S. property/casualty insurance companies such as the Company, the Act also
modifies the loss reserve discounting rules and the proration rules that apply to reduce reserve deductions to reflect the lower
corporate income tax rate. It is possible that other legislation could be introduced and enacted by the current Congress or future
Congresses that could have an adverse impact on us. (cid:1)ew regulations or pronouncements interpreting or clarifying provisions
of the Act may be forthcoming. We cannot predict if, when or in what form such regulations or pronouncements may be
provided, whether such guidance will have a retroactive effect or their potential impact on us.
Risks Relating to Our Investments
A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations.
Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2019, our investment in
fixed maturity securities was approximately $14.2 billion, or 72.6% of our total investment portfolio, including cash and cash
equivalents. As of that date, our portfolio of fixed maturity securities consisted of the following types of securities:
U.S. Government securities (5.5%); state and municipal securities (28.1%); corporate securities (29.2%); asset-backed
securities (19.7%); mortgage-backed securities (11.5%) and foreign government (6.0%).
The fair value of these assets and the investment income from these assets fluctuate depending on general economic and
market conditions. The fair value of fixed maturity securities generally decreases as interest rates rise. If significant inflation or
an increase in interest rates were to occur, the fair value of our fixed maturity securities would be negatively impacted.
Conversely, if interest rates decline, investment income earned from future investments in fixed maturity securities will be
lower. Some fixed maturity securities, such as mortgage-backed and other asset-backed securities, also carry prepayment risk as
a result of interest rate fluctuations. Additionally, given the low interest rate environment, we may not be able to successfully
reinvest the proceeds from maturing securities at yields commensurate with our target performance goals.
The value of investments in fixed maturity securities is subject to impairment as a result of deterioration in the credit
worthiness of the issuer, default by the issuer (including states and municipalities) in the performance of its obligations in
respect of the securities and/or increases in market interest rates. 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. During periods of market disruption, it
may be difficult to value certain of our securities, particularly if trading becomes less frequent and/or market data becomes less
25
3
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
32
its obligations, we may be exposed to credit risk on the securities pledged and/or the risk that our access to that collateral may
be stayed as a result of bankruptcy. In cases where we receive letters of credit from banks as collateral and one of our
counterparties is unable to honor its obligations, we are exposed to the credit risk of the banks that issued the letters of credit.
We are rated by A.M. Best, Standard & Poor's, Moody's, and Fitch, 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 & Poor's, Moody's and Fitch. Our ratings are
subject to periodic review, and we cannot assure you that we will be able to retain our current or any future ratings.
If our ratings are reduced from their current levels by A.M. Best, Standard & Poor's, Moody's or Fitch, our competitive
position in the insurance industry could suffer and it would be more difficult for us to market our products. A ratings downgrade
could also adversely limit our access to capital markets, which may increase the cost of debt. A significant downgrade could
result in a substantial loss of business as policyholders move to other companies with higher 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.
renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions could
be significantly impaired and our business could be harmed.
Failure to maintain the security of our networks and confidential data may expose us to liability.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our
computer systems and networks. Computer viruses, hackers, employee misconduct and other external hazards could expose our
data systems to security breaches. Our electronic transmission of personal, confidential and proprietary information to third
parties with whom we have business relationships and our outsourcing of certain technology and business process functions to
third parties may expose us to enhanced risk related to data security. While we attempt to develop secure data transmission
capabilities with these third-party vendors and others with whom we do business, our vendors and third parties could still suffer
data breaches that could result in the exposure of sensitive data and the infiltration of our computer systems. Our failure to
protect sensitive personal and our proprietary information, whether owing to breaches of our own systems or those of our
vendors, could result in significant monetary and reputational damages. These increased risks, and expanding regulatory
requirements regarding data security, could expose us to data loss, monetary and reputational damages and significant increases
in compliance costs. As a result, our ability to conduct our business could be materially and adversely affected.
We could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and regulatory
As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk
standards are not effective.
underwritten by our insurance company subsidiaries, especially catastrophe risks and those risks with relatively high policy
limits. 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 seek to purchase, which may affect the level of our business
and profitability. Our reinsurance contracts are generally subject to annual renewal, and we may be unable to maintain our
current reinsurance contracts or to obtain other reinsurance contracts in adequate amounts and at favorable rates. In addition, we
may be unable to obtain reinsurance on terms acceptable to us relating to certain lines of business that we intend to begin
writing. If we are unable to renew our expiring contracts or to obtain new reinsurance contracts, 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
Our business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting,
claim processing and investment activities, many of which are highly complex. These activities often are subject to internal
guidelines and policies, as well as legal and regulatory standards, including those related to privacy, anti-corruption, anti-
bribery and global finance and insurance matters. Our continued expansion into new international markets has brought about
additional requirements. A control system, no matter how well designed and operated, can provide only reasonable assurance
that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated
risk exposure (including underwriting, credit and investment risk) or damage to our reputation.
commitments, especially catastrophe exposed risks.
We could be adversely affected by recent and future changes in U.S. Federal income tax laws.
Depending on conditions in the financial markets and the general economy, we may be unable to raise debt or equity
Tax legislation commonly referred to as the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017,
capital if needed.
If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions,
uncertainty or volatility in the capital and credit markets, we may be unable to access debt or equity capital on acceptable terms
if needed, which could have a negative impact on our ability to invest in our insurance company subsidiaries and/or to take
advantage of opportunities to expand our business, such as possible acquisitions and the creation of new ventures, and inhibit
our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.
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 you that we will be able to identify suitable acquisition targets or
insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or
start-up 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.
If we experience difficulties with our information technology, telecommunications or other computer systems, our
ability to conduct our business could be negatively or severely impacted.
Our business is highly dependent upon our employees' ability to perform necessary business functions in an efficient and
uninterrupted fashion. A shut-down of, or inability to access, one or more of our facilities, a power outage or a failure of one or
more of our information technology, telecommunications or other computer systems could significantly impair our employees'
ability to perform such functions on a timely basis. In the event of a disaster such as a natural catastrophe, terrorist attack or
industrial accident, or the infection of our systems by a malicious computer virus, our systems could be inaccessible for an
extended period of time. In addition, because our information technology and telecommunications systems interface with and
depend on third-party systems, we could experience service denials or failures of controls if demand for our service exceeds
capacity or a third-party system fails or experiences an interruption. If our business continuity plans or system security does not
sufficiently address such a business interruption, system failure or service denial, our ability to write and process new and
fundamentally overhauled the U.S. tax system by, among other significant changes, reducing the U.S. corporate income tax rate
to 21%. In the context of the taxation of U.S. property/casualty insurance companies such as the Company, the Act also
modifies the loss reserve discounting rules and the proration rules that apply to reduce reserve deductions to reflect the lower
corporate income tax rate. It is possible that other legislation could be introduced and enacted by the current Congress or future
Congresses that could have an adverse impact on us. (cid:1)ew regulations or pronouncements interpreting or clarifying provisions
of the Act may be forthcoming. We cannot predict if, when or in what form such regulations or pronouncements may be
provided, whether such guidance will have a retroactive effect or their potential impact on us.
Risks Relating to Our Investments
A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations.
Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2019, our investment in
fixed maturity securities was approximately $14.2 billion, or 72.6% of our total investment portfolio, including cash and cash
equivalents. As of that date, our portfolio of fixed maturity securities consisted of the following types of securities:
U.S. Government securities (5.5%); state and municipal securities (28.1%); corporate securities (29.2%); asset-backed
securities (19.7%); mortgage-backed securities (11.5%) and foreign government (6.0%).
The fair value of these assets and the investment income from these assets fluctuate depending on general economic and
market conditions. The fair value of fixed maturity securities generally decreases as interest rates rise. If significant inflation or
an increase in interest rates were to occur, the fair value of our fixed maturity securities would be negatively impacted.
Conversely, if interest rates decline, investment income earned from future investments in fixed maturity securities will be
lower. Some fixed maturity securities, such as mortgage-backed and other asset-backed securities, also carry prepayment risk as
a result of interest rate fluctuations. Additionally, given the low interest rate environment, we may not be able to successfully
reinvest the proceeds from maturing securities at yields commensurate with our target performance goals.
The value of investments in fixed maturity securities is subject to impairment as a result of deterioration in the credit
worthiness of the issuer, default by the issuer (including states and municipalities) in the performance of its obligations in
respect of the securities and/or increases in market interest rates. 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. During periods of market disruption, it
may be difficult to value certain of our securities, particularly if trading becomes less frequent and/or market data becomes less
24
25
K
0
1
e
b
3
8
9
7
2
2
3
32
27983be 10K
27983be_10K.indd 32
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
3
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
33
observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid
due to the then current financial environment. In such cases, more securities may require additional subjectivity and
management judgment.
Although the historical rates of default on state and municipal securities have been relatively low, our state and
municipal fixed maturity securities could be subject to a higher risk of default or impairment due to declining municipal tax
bases and revenue. Many states and municipalities operate under deficits or projected deficits, the severity and duration of
which could have an adverse impact on both the valuation of our state and municipal fixed maturity securities and the issuer's
ability to perform its obligations thereunder. Additionally, 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.
Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms
and by diversifying our portfolio and emphasizing preservation of principal, our efforts may not be successful. Impairments,
defaults and/or rate increases could reduce our net investment income and net realized investment gains or result in investment
losses. Investment returns are currently, and will likely continue to remain, under pressure due to the continued low inflation,
actions by the Federal Reserve, economic uncertainty, more generally, and the shape of the yield curve. As a result, our
exposure to the risks described above could materially and adversely affect our results of operations, liquidity and financial
condition.
We have invested a portion of our assets in equity securities, merger arbitrage securities, investment funds, private
equity, loans and real estate related assets, which are subject to significant volatility and may decline in value.
We invest a portion of our investment portfolio in equity securities, merger arbitrage securities, investment funds, private
equity, loans and real estate related assets. At December 31, 2019, our investment in these assets was approximately $4.3
billion, or 22.1%, of our investment portfolio, including cash and cash equivalents.
Merger and arbitrage trading securities were $400.8 million, or 2.1% of our investment portfolio, including cash and
cash equivalents at December 31, 2019. Merger arbitrage involves 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.
Real estate related investments, including directly owned, investment funds and loans receivable, were $2.6 billion, or
13.2% of our investment portfolio, including cash and cash equivalents, at December 31, 2019. We also invest in real estate,
financial services, energy, transportation and other investment funds. The values of these investments are subject to fluctuation
based on changes in the economy and interest rates in general and the related asset valuations in particular. In addition, our
investments in real estate related assets and other alternative investments are less liquid than our other investments.
These investments are subject to significant volatility as a result of the conditions in the financial and commodity
markets and the global economy.
exist if any person, directly or indirectly, owns, controls, holds the power to vote, or holds proxies representing 10% or more of
the voting securities of that insurer or any parent company of such insurer. Indirect ownership includes ownership of the shares
of our common stock. Thus, the insurance regulatory authorities of the states in which our insurance subsidiaries are domiciled
are likely to apply these restrictions on acquisition of control to any proposed acquisition of our common stock. Some states
require a person seeking to acquire control of an insurer licensed but not domiciled in that state to make a filing prior to
completing an acquisition if the acquirer and its affiliates, on the one hand, and the target insurer and its affiliates, on the other
hand, have specified market shares in the same lines of insurance in that state. Additionally, many foreign jurisdictions where
we conduct business impose similar restrictions and requirements.
These provisions can also lead to the imposition of conditions on an acquisition that could delay or prevent its
consummation. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change in control
of us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be
desirable.
Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third
party takeovers and thus may prevent our stockholders from receiving premium prices for their shares in an unsolicited
takeover or make it more difficult for third parties to replace our current management.
Provisions of our Restated Certificate of Incorporation and By-Laws, as well as 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.
our classified board of directors and the ability of our board to increase its size and to appoint directors to fill newly
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
holder's acquisition of 5% of our shares; and
the need for advance notice in order to raise business or make nominations at stockholders' meetings.
These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of
us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be
desirable.
These provisions include:
created directorships;
ITEM 1B. U(cid:1)RESOLVED STAFF COMME(cid:1)TS
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.
Risks Relating to Purchasing Our Securities
ITEM 2. PROPERTIES
We are an insurance holding company and, therefore, 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, paying dividends to stockholders and repurchasing our shares and paying
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. During 2020, the maximum amount of dividends that can
be paid without regulatory approval is approximately $601 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, pay dividends or repurchase
shares.
Laws and regulations of the jurisdictions in which we conduct business could delay, deter or prevent an attempt to
acquire control of us that stockholders might consider to be desirable, and may restrict a stockholder's ability to purchase
our common stock.
Generally, United States insurance holding company laws require that, before a person can acquire control of an
insurance company, prior written approval must be obtained from the insurance regulatory authorities in the state in which that
insurance company is domiciled. Pursuant to applicable laws and regulations, control over an insurer is generally presumed to
26
W. R. Berkley and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At
December 31, 2019, the Company had aggregate office space of 4,227,391 square feet, of which 1,129,970 were owned and
3,097,421 were leased.
Rental expense for the Company's operations was approximately $44,107,000, $45,778,000 and $52,925,000 for 2019,
2018 and 2017, respectively. Future minimum lease payments, without provision for sublease income, are $49,293,000 in 2020,
$47,107,000 in 2021 and $189,134,000 thereafter.
ITEM 3. LEGAL PROCEEDI(cid:1)GS
The Company's subsidiaries are subject to disputes, including litigation and arbitration, arising in the ordinary course of
their insurance and reinsurance businesses. The Company's 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.
27
K
0
1
e
b
3
8
9
7
2
3
3
33
27983be 10K
27983be_10K.indd 33
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
3
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
34
observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid
due to the then current financial environment. In such cases, more securities may require additional subjectivity and
management judgment.
Although the historical rates of default on state and municipal securities have been relatively low, our state and
municipal fixed maturity securities could be subject to a higher risk of default or impairment due to declining municipal tax
bases and revenue. Many states and municipalities operate under deficits or projected deficits, the severity and duration of
which could have an adverse impact on both the valuation of our state and municipal fixed maturity securities and the issuer's
ability to perform its obligations thereunder. Additionally, 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.
Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms
and by diversifying our portfolio and emphasizing preservation of principal, our efforts may not be successful. Impairments,
defaults and/or rate increases could reduce our net investment income and net realized investment gains or result in investment
losses. Investment returns are currently, and will likely continue to remain, under pressure due to the continued low inflation,
actions by the Federal Reserve, economic uncertainty, more generally, and the shape of the yield curve. As a result, our
exposure to the risks described above could materially and adversely affect our results of operations, liquidity and financial
condition.
We have invested a portion of our assets in equity securities, merger arbitrage securities, investment funds, private
equity, loans and real estate related assets, which are subject to significant volatility and may decline in value.
We invest a portion of our investment portfolio in equity securities, merger arbitrage securities, investment funds, private
equity, loans and real estate related assets. At December 31, 2019, our investment in these assets was approximately $4.3
billion, or 22.1%, of our investment portfolio, including cash and cash equivalents.
Merger and arbitrage trading securities were $400.8 million, or 2.1% of our investment portfolio, including cash and
cash equivalents at December 31, 2019. Merger arbitrage involves 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.
Real estate related investments, including directly owned, investment funds and loans receivable, were $2.6 billion, or
13.2% of our investment portfolio, including cash and cash equivalents, at December 31, 2019. We also invest in real estate,
financial services, energy, transportation and other investment funds. The values of these investments are subject to fluctuation
based on changes in the economy and interest rates in general and the related asset valuations in particular. In addition, our
investments in real estate related assets and other alternative investments are less liquid than our other investments.
These investments are subject to significant volatility as a result of the conditions in the financial and commodity
markets and the global economy.
exist if any person, directly or indirectly, owns, controls, holds the power to vote, or holds proxies representing 10% or more of
the voting securities of that insurer or any parent company of such insurer. Indirect ownership includes ownership of the shares
of our common stock. Thus, the insurance regulatory authorities of the states in which our insurance subsidiaries are domiciled
are likely to apply these restrictions on acquisition of control to any proposed acquisition of our common stock. Some states
require a person seeking to acquire control of an insurer licensed but not domiciled in that state to make a filing prior to
completing an acquisition if the acquirer and its affiliates, on the one hand, and the target insurer and its affiliates, on the other
hand, have specified market shares in the same lines of insurance in that state. Additionally, many foreign jurisdictions where
we conduct business impose similar restrictions and requirements.
These provisions can also lead to the imposition of conditions on an acquisition that could delay or prevent its
consummation. These laws may discourage potential acquisition proposals and may delay, deter or prevent a change in control
of us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be
desirable.
Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third
party takeovers and thus may prevent our stockholders from receiving premium prices for their shares in an unsolicited
takeover or make it more difficult for third parties to replace our current management.
Provisions of our Restated Certificate of Incorporation and By-Laws, as well as 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
holder's acquisition of 5% of our shares; and
the need for advance notice in order to raise business or make nominations at stockholders' meetings.
These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of
us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be
desirable.
ITEM 1B. U(cid:1)RESOLVED STAFF COMME(cid:1)TS
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.
Risks Relating to Purchasing Our Securities
ITEM 2. PROPERTIES
We are an insurance holding company and, therefore, 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, paying dividends to stockholders and repurchasing our shares and paying
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. During 2020, the maximum amount of dividends that can
be paid without regulatory approval is approximately $601 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, pay dividends or repurchase
W. R. Berkley and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At
December 31, 2019, the Company had aggregate office space of 4,227,391 square feet, of which 1,129,970 were owned and
3,097,421 were leased.
Rental expense for the Company's operations was approximately $44,107,000, $45,778,000 and $52,925,000 for 2019,
2018 and 2017, respectively. Future minimum lease payments, without provision for sublease income, are $49,293,000 in 2020,
$47,107,000 in 2021 and $189,134,000 thereafter.
shares.
our common stock.
Laws and regulations of the jurisdictions in which we conduct business could delay, deter or prevent an attempt to
acquire control of us that stockholders might consider to be desirable, and may restrict a stockholder's ability to purchase
ITEM 3. LEGAL PROCEEDI(cid:1)GS
Generally, United States insurance holding company laws require that, before a person can acquire control of an
insurance company, prior written approval must be obtained from the insurance regulatory authorities in the state in which that
insurance company is domiciled. Pursuant to applicable laws and regulations, control over an insurer is generally presumed to
The Company's subsidiaries are subject to disputes, including litigation and arbitration, arising in the ordinary course of
their insurance and reinsurance businesses. The Company's 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.
26
27
K
0
1
e
b
3
8
9
7
2
4
3
34
27983be 10K
27983be_10K.indd 34
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
27983be 10K
35
3
5
2
7
9
8
3
b
e
1
0
K
ITEM 4. MI(cid:1)E SAFETY DISCLOSURES
(cid:1)ot applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRA(cid:1)T'S COMMO(cid:1) EQUITY, RELATED STOCKHOLDER MATTERS A(cid:1)D
ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of the Company is traded on the (cid:1)ew York Stock Exchange under the symbol WRB. All amounts
have been adjusted to reflect the 3-for-2 common stock split effected on April 2, 2019.
In 2019, the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter, and $0.11 per share in
each of the remaining three quarters, plus additional special dividends in the respective amounts of $0.50 per share in the
second quarter and $0.75 per share in the fourth quarter. Subject to availability, the Board currently expects to continue such
regular quarterly cash dividends.
The approximate number of record holders of the common stock on February 18, 2020 was 319.
28
35
27983be 10K
27983be_10K.indd 35
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
3
2/26/20 12:08 PM
29
ITEM 4. MI(cid:1)E SAFETY DISCLOSURES
(cid:1)ot applicable.
27983be 10K
36
3
6
2
7
9
8
3
b
e
1
0
K
PART II
ITEM 5. MARKET FOR THE REGISTRA(cid:1)T'S COMMO(cid:1) EQUITY, RELATED STOCKHOLDER MATTERS A(cid:1)D
ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of the Company is traded on the (cid:1)ew York Stock Exchange under the symbol WRB. All amounts
have been adjusted to reflect the 3-for-2 common stock split effected on April 2, 2019.
In 2019, the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter, and $0.11 per share in
each of the remaining three quarters, plus additional special dividends in the respective amounts of $0.50 per share in the
second quarter and $0.75 per share in the fourth quarter. Subject to availability, the Board currently expects to continue such
regular quarterly cash dividends.
The approximate number of record holders of the common stock on February 18, 2020 was 319.
28
29
36
27983be 10K
27983be_10K.indd 36
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
3
2/26/20 12:08 PM
3
7
2
7
9
8
3
b
e
1
0
K
The chart below shows a comparison of 5 year cumulative total return.
ITEM 6. SELECTED FI(cid:1)A(cid:1)CIAL DATA
27983be 10K
37
Comparison of 5 Year Cumulative Total Return
Assumes initial investment of $100 on January 1, 2014, with dividends reinvested.
(In thousands, except per share data)
2019
2018
2017
2016
As of and for the Year Ended December 31,
(cid:1)et premiums written
(cid:1)et premiums earned
(cid:1)et investment income
(cid:1)et realized and unrealized gains on investments
Revenues from non-insurance businesses
Insurance service fees
Total revenues
Interest expense
Income before income taxes
Income tax expense
(cid:1)oncontrolling interests
(cid:1)et income to common stockholders
Data per common share:
(cid:1)et income per basic share
(cid:1)et income per diluted share
Common stockholders equity
Cash dividends declared
Weighted average shares outstanding:
Basic
Diluted
Investments
Total assets
Reserves for losses and loss expenses
Senior notes and other debt
Subordinated debentures
Common stockholders equity
7,902,196
7,691,651
7,684,764
7,654,184
7,206,457
$
6,863,499
$
6,433,227
$
6,260,508
$
6,423,913
$
6,633,288
6,371,505
6,311,419
6,293,348
645,614
120,703
406,541
92,680
153,409
852,920
(168,935)
(2,041)
681,944
3.58
3.52
33.12
1.73
674,235
154,488
372,985
117,757
157,185
812,094
(163,028)
(8,317)
640,749
3.37
3.33
29.72
1.39
575,788
335,858
326,165
134,729
147,297
772,770
(219,433)
(4,243)
549,094
2.93
2.84
29.69
1.03
564,163
267,005
390,348
138,944
140,896
896,438
(292,953)
(1,569)
601,916
3.27
3.12
27.76
1.01
2015
6,189,515
6,040,609
512,645
92,324
421,102
139,440
130,946
732,030
(227,923)
(413)
503,694
2.71
2.58
24.87
0.31
190,722
193,521
190,048
192,395
187,265
193,527
183,977
192,830
186,060
195,284
$
18,473,674
$
17,723,089
$
17,450,508
$
16,649,792
$
15,351,467
26,643,428
12,583,249
1,427,575
1,198,704
6,074,939
24,895,977
11,966,448
1,882,028
907,491
5,437,851
24,299,917
11,670,408
1,769,052
728,218
5,411,344
23,364,844
11,197,195
1,760,595
727,630
5,047,208
21,730,967
10,669,150
1,844,621
340,320
4,600,246
The S&P 500® Property and Casualty Insurance Index consists of Allstate Corporation, Chubb, Ltd., Cincinnati Financial Corporation,
Progressive Corporation, The Travelers Companies, Inc., and W. R. Berkley Corporation (added Dec. 2019).
W. R. Berkley Corporation
S&P 500 Index - Total Returns
2014
2015
2016
2017
2018
2019
Cum $
100.00
107.76
134.43
148.11
154.95
222.86
Cum $
100.00
101.38
113.51
138.29
132.22
173.84
S&P 500 Property and Casualty Insurance Index
Cum $
100.00
109.53
126.73
155.10
147.83
186.07
Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of 2019 and the
remaining number of shares authorized for purchase by the Company during such period.
October 2019
(cid:1)ovember 2019
December 2019
Total (cid:1)umber of
Shares Purchased
Average Price
Paid per Share
51,163
217,909
67.77
67.72
Total (cid:1)umber of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum (cid:1)umber of
Shares that may yet be
Purchased Under the Plans
or Programs
51,163
217,909
13,367,095
13,315,932
13,098,023
30
37
27983be 10K
27983be_10K.indd 37
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
3
2/26/20 12:08 PM
31
The chart below shows a comparison of 5 year cumulative total return.
ITEM 6. SELECTED FI(cid:1)A(cid:1)CIAL DATA
(In thousands, except per share data)
2019
2018
2017
2016
As of and for the Year Ended December 31,
3
8
2
7
9
8
3
b
e
1
0
K
Comparison of 5 Year Cumulative Total Return
Assumes initial investment of $100 on January 1, 2014, with dividends reinvested.
27983be 10K
38
2015
6,189,515
6,040,609
512,645
92,324
421,102
139,440
(cid:1)et premiums written
(cid:1)et premiums earned
(cid:1)et investment income
(cid:1)et realized and unrealized gains on investments
Revenues from non-insurance businesses
Insurance service fees
Total revenues
Interest expense
Income before income taxes
Income tax expense
(cid:1)oncontrolling interests
(cid:1)et income to common stockholders
Data per common share:
(cid:1)et income per basic share
(cid:1)et income per diluted share
Common stockholders equity
Cash dividends declared
Weighted average shares outstanding:
Basic
Diluted
Investments
Total assets
Reserves for losses and loss expenses
Senior notes and other debt
Subordinated debentures
Common stockholders equity
$
6,863,499
$
6,433,227
$
6,260,508
$
6,423,913
$
6,633,288
6,371,505
6,311,419
6,293,348
645,614
120,703
406,541
92,680
674,235
154,488
372,985
117,757
575,788
335,858
326,165
134,729
564,163
267,005
390,348
138,944
7,902,196
7,691,651
7,684,764
7,654,184
7,206,457
153,409
852,920
(168,935)
(2,041)
681,944
3.58
3.52
33.12
1.73
157,185
812,094
(163,028)
(8,317)
640,749
3.37
3.33
29.72
1.39
147,297
772,770
(219,433)
(4,243)
549,094
2.93
2.84
29.69
1.03
140,896
896,438
(292,953)
(1,569)
601,916
3.27
3.12
27.76
1.01
130,946
732,030
(227,923)
(413)
503,694
2.71
2.58
24.87
0.31
190,722
193,521
190,048
192,395
187,265
193,527
183,977
192,830
186,060
195,284
$
18,473,674
$
17,723,089
$
17,450,508
$
16,649,792
$
15,351,467
26,643,428
12,583,249
1,427,575
1,198,704
6,074,939
24,895,977
11,966,448
1,882,028
907,491
5,437,851
24,299,917
11,670,408
1,769,052
728,218
5,411,344
23,364,844
11,197,195
1,760,595
727,630
5,047,208
21,730,967
10,669,150
1,844,621
340,320
4,600,246
The S&P 500® Property and Casualty Insurance Index consists of Allstate Corporation, Chubb, Ltd., Cincinnati Financial Corporation,
Progressive Corporation, The Travelers Companies, Inc., and W. R. Berkley Corporation (added Dec. 2019).
W. R. Berkley Corporation
S&P 500 Index - Total Returns
2014
2015
2016
2017
2018
2019
Cum $
100.00
107.76
134.43
148.11
154.95
222.86
Cum $
100.00
101.38
113.51
138.29
132.22
173.84
S&P 500 Property and Casualty Insurance Index
Cum $
100.00
109.53
126.73
155.10
147.83
186.07
Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of 2019 and the
remaining number of shares authorized for purchase by the Company during such period.
October 2019
(cid:1)ovember 2019
December 2019
Total (cid:1)umber of
Shares Purchased
Average Price
Paid per Share
51,163
217,909
67.77
67.72
Total (cid:1)umber of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum (cid:1)umber of
Shares that may yet be
Purchased Under the Plans
or Programs
51,163
217,909
13,367,095
13,315,932
13,098,023
30
31
38
27983be 10K
27983be_10K.indd 38
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
3
2/26/20 12:08 PM
3
9
2
7
9
8
3
b
e
1
0
K
27983be 10K
39
ITEM 7. MA(cid:1)AGEME(cid:1)T'S DISCUSSIO(cid:1) A(cid:1)D A(cid:1)ALYSIS OF FI(cid:1)A(cid:1)CIAL CO(cid:1)DITIO(cid:1) A(cid:1)D RESULTS OF
OPERATIO(cid:1)S
Overview
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the
United States and operates worldwide in two business segments of the property and casualty business: Insurance and
Reinsurance & Monoline Excess. Our decentralized structure provides us with the flexibility to respond quickly and efficiently
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. While providing our business units with certain
operating autonomy, our structure allows us to capitalize on the benefits of economies of scale through centralized capital,
investment, reinsurance and enterprise risk management, and actuarial, financial and corporate legal staff support. The
Company's primary sources of revenues and earnings are its insurance operations and its investments.
An important part of our strategy is to form new operating units to capitalize on various business opportunities. Over the
years, the Company has formed numerous new operating units that are focused on important parts of the economy in the U.S.,
including healthcare, cyber security, energy and agriculture, and on growing international markets, including the Asia-Pacific
region, South America and Mexico.
The profitability of the Companys insurance business is affected primarily by the adequacy of premium rates. The
ultimate adequacy of premium rates is not known with certainty at the time an insurance policy is issued because premiums are
determined before claims are reported. The ultimate adequacy of premium rates is affected mainly by the severity and
frequency of claims, which are influenced by many factors, including natural and other disasters, regulatory measures and court
decisions that define and change the extent of coverage and the effects of economic or social inflation on the amount of
compensation for injuries or losses. General insurance prices are also influenced by available insurance capacity, i.e., the level
of capital employed in the industry, and the industrys willingness to deploy that capital.
The Companys profitability is also affected by its investment income and investment gains. The Companys invested
assets are invested principally in fixed maturity securities. The return on fixed maturity securities is affected primarily by
general interest rates, as well as the credit quality and duration of the securities. Returns available on fixed maturity investments
have been at low levels for an extended period.
The Company also invests in equity securities, merger arbitrage securities, investment funds, private equity, loans and
real estate related assets. The Company's investments in investment funds and its other alternative investments have
experienced, and the Company expects to continue to experience, greater fluctuations in investment income.
On April 2, 2019, a 3-for-2 common stock split was paid in the form of a stock dividend to holders of record as of March
14, 2019. Shares outstanding and per share amounts in this Form 10-K reflect this 3-for-2 common stock split effected on April
2, 2019.
Commencing with the first quarter of 2019, the Company renamed the Reinsurance segment to Reinsurance & Monoline
Excess, and reclassified the monoline excess business from the Insurance segment. The reclassified business includes
operations that solely retain risk on an excess basis. Reclassifications have been made to the Company's prior periods financial
information in this Form 10-K to conform with this presentation.
Critical Accounting Estimates
The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses,
assumed reinsurance premiums and other-than-temporary impairments of investments. Management believes these policies and
estimates are the most critical to its operations and require the most difficult, subjective and complex judgments.
Reserves for Losses and Loss Expenses. 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 based upon known information about the claim at that time. The estimate represents an informed judgment based on
32
39
27983be 10K
27983be_10K.indd 39
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature and value of
the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported
(IB(cid:1)R) 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 estimating the ultimate economic value of losses. These
factors include, among other things, 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 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 a certain 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 reserves are well tested
over time, the major assumptions about anticipated loss emergence patterns are subject to uncertainty. These estimates, which
generally involve actuarial projections, are based on managements assessment of facts and circumstances then known, as well
as estimates of 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 provide assurance that its current reserves will
prove adequate in light of subsequent events.
Loss reserves included in the Companys financial statements represent managements best estimates based upon an
actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to
derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss
development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where
one actuarial method is considered more credible than the others, that method is used to set the point estimate. For example, the
paid loss and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where
there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in
claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods. The
actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods
considered. Industry loss experience is used to supplement the Companys own data in selecting tail factors and in areas
where the Companys own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy
year, as appropriate, for each operating unit.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors
that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting
initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.
Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of aggregate policy
limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles
and attachment points.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost
inflation, and reported and paid loss emergence patterns. Expected loss ratios represent managements expectation of losses at
the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant
determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to
consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost
trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business
within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty,
and claims with a high medical component, such as workers compensation. Reported and paid loss emergence patterns are used
to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the
historical emergence patterns of paid and incurred losses, and are derived from the Companys own experience and industry
data. The paid loss emergence pattern is also significant to excess and assumed workers compensation reserves because those
reserves are discounted to their estimated present value based upon such estimated payout patterns. Management believes the
estimates and assumptions it makes in the reserving process provide the best estimate of the ultimate cost of settling claims and
33
K
0
1
e
b
3
8
9
7
2
9
3
4
0
2
7
9
8
3
b
e
1
0
K
ITEM 7. MA(cid:1)AGEME(cid:1)T'S DISCUSSIO(cid:1) A(cid:1)D A(cid:1)ALYSIS OF FI(cid:1)A(cid:1)CIAL CO(cid:1)DITIO(cid:1) A(cid:1)D RESULTS OF
OPERATIO(cid:1)S
Overview
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the
United States and operates worldwide in two business segments of the property and casualty business: Insurance and
Reinsurance & Monoline Excess. Our decentralized structure provides us with the flexibility to respond quickly and efficiently
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. While providing our business units with certain
operating autonomy, our structure allows us to capitalize on the benefits of economies of scale through centralized capital,
investment, reinsurance and enterprise risk management, and actuarial, financial and corporate legal staff support. The
Company's primary sources of revenues and earnings are its insurance operations and its investments.
An important part of our strategy is to form new operating units to capitalize on various business opportunities. Over the
years, the Company has formed numerous new operating units that are focused on important parts of the economy in the U.S.,
including healthcare, cyber security, energy and agriculture, and on growing international markets, including the Asia-Pacific
region, South America and Mexico.
The profitability of the Companys insurance business is affected primarily by the adequacy of premium rates. The
ultimate adequacy of premium rates is not known with certainty at the time an insurance policy is issued because premiums are
determined before claims are reported. The ultimate adequacy of premium rates is affected mainly by the severity and
frequency of claims, which are influenced by many factors, including natural and other disasters, regulatory measures and court
decisions that define and change the extent of coverage and the effects of economic or social inflation on the amount of
compensation for injuries or losses. General insurance prices are also influenced by available insurance capacity, i.e., the level
of capital employed in the industry, and the industrys willingness to deploy that capital.
The Companys profitability is also affected by its investment income and investment gains. The Companys invested
assets are invested principally in fixed maturity securities. The return on fixed maturity securities is affected primarily by
general interest rates, as well as the credit quality and duration of the securities. Returns available on fixed maturity investments
have been at low levels for an extended period.
The Company also invests in equity securities, merger arbitrage securities, investment funds, private equity, loans and
real estate related assets. The Company's investments in investment funds and its other alternative investments have
experienced, and the Company expects to continue to experience, greater fluctuations in investment income.
On April 2, 2019, a 3-for-2 common stock split was paid in the form of a stock dividend to holders of record as of March
14, 2019. Shares outstanding and per share amounts in this Form 10-K reflect this 3-for-2 common stock split effected on April
2, 2019.
Commencing with the first quarter of 2019, the Company renamed the Reinsurance segment to Reinsurance & Monoline
Excess, and reclassified the monoline excess business from the Insurance segment. The reclassified business includes
operations that solely retain risk on an excess basis. Reclassifications have been made to the Company's prior periods financial
information in this Form 10-K to conform with this presentation.
Critical Accounting Estimates
The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses,
assumed reinsurance premiums and other-than-temporary impairments of investments. Management believes these policies and
estimates are the most critical to its operations and require the most difficult, subjective and complex judgments.
Reserves for Losses and Loss Expenses. 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 based upon known information about the claim at that time. The estimate represents an informed judgment based on
27983be 10K
40
general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature and value of
the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported
(IB(cid:1)R) 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 estimating the ultimate economic value of losses. These
factors include, among other things, 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 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 a certain 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 reserves are well tested
over time, the major assumptions about anticipated loss emergence patterns are subject to uncertainty. These estimates, which
generally involve actuarial projections, are based on managements assessment of facts and circumstances then known, as well
as estimates of 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 provide assurance that its current reserves will
prove adequate in light of subsequent events.
Loss reserves included in the Companys financial statements represent managements best estimates based upon an
actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to
derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss
development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where
one actuarial method is considered more credible than the others, that method is used to set the point estimate. For example, the
paid loss and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where
there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in
claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods. The
actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods
considered. Industry loss experience is used to supplement the Companys own data in selecting tail factors and in areas
where the Companys own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy
year, as appropriate, for each operating unit.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors
that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting
initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.
Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of aggregate policy
limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles
and attachment points.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost
inflation, and reported and paid loss emergence patterns. Expected loss ratios represent managements expectation of losses at
the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant
determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to
consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost
trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business
within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty,
and claims with a high medical component, such as workers compensation. Reported and paid loss emergence patterns are used
to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the
historical emergence patterns of paid and incurred losses, and are derived from the Companys own experience and industry
data. The paid loss emergence pattern is also significant to excess and assumed workers compensation reserves because those
reserves are discounted to their estimated present value based upon such estimated payout patterns. Management believes the
estimates and assumptions it makes in the reserving process provide the best estimate of the ultimate cost of settling claims and
32
33
40
27983be 10K
27983be_10K.indd 40
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
4
2/26/20 12:08 PM
4
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
41
related expenses with respect to insured events which have occurred; however, different assumptions and variables could lead
to significantly different reserve estimates.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions
described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and
reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure,
and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss
controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include
changes in policy limits, retentions, rate of inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time
between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects
our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well
as the amount of reserves needed for incurred but not reported losses (less IB(cid:1)R is required for lines with short reporting lags).
As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines
with short reporting lags, which include commercial automobile, primary workers compensation, other liability (claims-made)
and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known
losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence),
products liability, excess workers compensation and liability reinsurance, the key assumption is the expected loss ratio since
there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its
initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and
adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed. If the actual
level of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than managements
estimate. The following table reflects the impact of changes (which could be favorable or unfavorable) in frequency and
severity, relative to our assumptions, on our loss estimate for claims occurring in 2019:
(In thousands)
Severity (+/-)
1%
5%
10%
Frequency (+/-)
1%
5%
10%
$
81,566
$
245,508
$
245,508
450,437
415,944
628,988
450,437
628,988
852,178
Our net reserves for losses and loss expenses of approximately $10.7 billion as of December 31, 2019 relate to multiple
accident years. Therefore, the impact of changes in frequency or severity for more than one accident year could be higher or
lower than the amounts reflected above. The impact of such changes would likely be manifested gradually over the course of
many years, as the magnitude of the changes became evident.
Approximately $2.5 billion, or 23%, of the Companys net loss reserves as of December 31, 2019 relate to the
Reinsurance & Monoline Excess segment. There is a higher degree of uncertainty and greater variability regarding estimates of
excess workers' compensation and assumed reinsurance loss reserves. In the case of excess workers compensation, our policies
generally attach at $1 million or higher. The claims which reach our layer therefore tend to involve the most serious injuries and
many remain open for the lifetime of the claimant, which extends the claim settlement tail. These claims also occur less
frequently but tend to be larger than primary claims, which increases claim variability. In the case of assumed reinsurance our
loss reserve estimates are based, in part, upon information received from ceding companies. If information received from
ceding companies is not timely or correct, the Companys estimate of ultimate losses may not be accurate. Furthermore, due to
delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is also extended.
Management considers the impact of delayed reporting and the extended tail in its selection of loss development factors for
these lines of business.
Information received from ceding companies is used to set initial expected loss ratios, to establish case reserves and to
estimate reserves for incurred but not reported losses on assumed reinsurance business. This information, which is generally
provided through reinsurance intermediaries, is gathered through the underwriting process and from periodic claim reports and
other correspondence with ceding companies. The Company performs underwriting and claim audits of selected ceding
companies to determine the accuracy and completeness of information provided to the Company. The information received
from the ceding companies is supplemented by the Companys own loss development experience with similar lines of business
as well as industry loss trends and loss development benchmarks.
Following is a summary of the Company’s reserves for losses and loss expenses by business segment as of December 31,
Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of
2019
$
8,193,381
$
2,504,617
10,697,998
1,885,251
2018
7,727,447
2,521,436
10,248,883
1,717,565
$
12,583,249
$
11,966,448
Reported Case
Reserves
Incurred But
(cid:1)ot Reported
Total
$
1,421,378
$
2,522,957
$
$
$
$
$
1,307,068
2,329,659
$
$
918,619
399,411
412,036
271,192
3,422,636
1,469,363
4,891,999
962,664
306,018
365,253
294,122
3,235,125
1,479,604
964,102
713,433
300,339
269,914
4,770,745
1,035,254
5,805,999
955,711
659,596
290,217
257,139
4,492,322
1,041,832
3,944,335
1,882,721
1,112,844
712,375
541,106
8,193,381
2,504,617
10,697,998
3,636,727
1,918,375
965,614
655,470
551,261
7,727,447
2,521,436
$
4,714,729
$
5,534,154
$
10,248,883
2019 and 2018:
(In thousands)
Insurance
Reinsurance & Monoline Excess
(cid:1)et reserves for losses and loss expenses
Ceded reserves for losses and loss expenses
Gross reserves for losses and loss expenses
December 31, 2019 and 2018:
(In thousands)
December 31, 2019
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total Insurance
Reinsurance & Monoline Excess (1)
Total
December 31, 2018
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total Insurance
Reinsurance & Monoline Excess (1) (3)
Total
____________________
(1) Reserves for excess and assumed workers’ compensation business are net of an aggregate net discount of $530 million and
$563 million as of December 31, 2019 and 2018, respectively.
(2) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler
(3) Reinsurance & Monoline Excess includes property and casualty reinsurance as well as operations that solely retain risk on
and machinery and other lines.
an excess basis.
The Company evaluates reserves for losses and loss expenses on a quarterly basis. Changes in estimates of prior year
losses are reported when such changes are made. The changes in prior year loss reserve estimates are generally the result of
ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information
becomes known regarding individual claims and aggregate claim trends.
Certain of the Company's insurance and reinsurance contracts are retrospectively rated, whereby the Company collects
more or less premiums based on the level of loss activity. For those contracts, changes in loss and loss expenses for prior years
may be fully or partially offset by additional or return premiums.
34
41
27983be 10K
27983be_10K.indd 41
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
4
2/26/20 12:08 PM
35
related expenses with respect to insured events which have occurred; however, different assumptions and variables could lead
to significantly different reserve estimates.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions
described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and
reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure,
and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss
controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include
changes in policy limits, retentions, rate of inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time
between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects
our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well
as the amount of reserves needed for incurred but not reported losses (less IB(cid:1)R is required for lines with short reporting lags).
As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines
with short reporting lags, which include commercial automobile, primary workers compensation, other liability (claims-made)
and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known
losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence),
products liability, excess workers compensation and liability reinsurance, the key assumption is the expected loss ratio since
there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its
initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and
adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed. If the actual
level of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than managements
estimate. The following table reflects the impact of changes (which could be favorable or unfavorable) in frequency and
severity, relative to our assumptions, on our loss estimate for claims occurring in 2019:
(In thousands)
Severity (+/-)
1%
5%
10%
Frequency (+/-)
1%
5%
10%
$
81,566
$
245,508
$
245,508
450,437
415,944
628,988
450,437
628,988
852,178
Our net reserves for losses and loss expenses of approximately $10.7 billion as of December 31, 2019 relate to multiple
accident years. Therefore, the impact of changes in frequency or severity for more than one accident year could be higher or
lower than the amounts reflected above. The impact of such changes would likely be manifested gradually over the course of
many years, as the magnitude of the changes became evident.
Approximately $2.5 billion, or 23%, of the Companys net loss reserves as of December 31, 2019 relate to the
Reinsurance & Monoline Excess segment. There is a higher degree of uncertainty and greater variability regarding estimates of
excess workers' compensation and assumed reinsurance loss reserves. In the case of excess workers compensation, our policies
generally attach at $1 million or higher. The claims which reach our layer therefore tend to involve the most serious injuries and
27983be 10K
42
4
2
2
7
9
8
3
b
e
1
0
K
Following is a summary of the Company’s reserves for losses and loss expenses by business segment as of December 31,
2019 and 2018:
(In thousands)
Insurance
Reinsurance & Monoline Excess
(cid:1)et reserves for losses and loss expenses
Ceded reserves for losses and loss expenses
Gross reserves for losses and loss expenses
2019
$
8,193,381
$
2,504,617
10,697,998
1,885,251
2018
7,727,447
2,521,436
10,248,883
1,717,565
$
12,583,249
$
11,966,448
Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of
December 31, 2019 and 2018:
(In thousands)
December 31, 2019
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total Insurance
Reinsurance & Monoline Excess (1)
Total
December 31, 2018
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total Insurance
Reinsurance & Monoline Excess (1) (3)
Total
Reported Case
Reserves
Incurred But
(cid:1)ot Reported
Total
$
1,421,378
$
2,522,957
$
$
$
918,619
399,411
412,036
271,192
3,422,636
1,469,363
4,891,999
1,307,068
962,664
306,018
365,253
294,122
3,235,125
1,479,604
$
$
964,102
713,433
300,339
269,914
4,770,745
1,035,254
5,805,999
2,329,659
955,711
659,596
290,217
257,139
4,492,322
1,041,832
$
$
3,944,335
1,882,721
1,112,844
712,375
541,106
8,193,381
2,504,617
10,697,998
3,636,727
1,918,375
965,614
655,470
551,261
7,727,447
2,521,436
$
4,714,729
$
5,534,154
$
10,248,883
____________________
(1) Reserves for excess and assumed workers’ compensation business are net of an aggregate net discount of $530 million and
$563 million as of December 31, 2019 and 2018, respectively.
(2) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler
and machinery and other lines.
many remain open for the lifetime of the claimant, which extends the claim settlement tail. These claims also occur less
(3) Reinsurance & Monoline Excess includes property and casualty reinsurance as well as operations that solely retain risk on
frequently but tend to be larger than primary claims, which increases claim variability. In the case of assumed reinsurance our
an excess basis.
loss reserve estimates are based, in part, upon information received from ceding companies. If information received from
ceding companies is not timely or correct, the Companys estimate of ultimate losses may not be accurate. Furthermore, due to
delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is also extended.
Management considers the impact of delayed reporting and the extended tail in its selection of loss development factors for
these lines of business.
Information received from ceding companies is used to set initial expected loss ratios, to establish case reserves and to
estimate reserves for incurred but not reported losses on assumed reinsurance business. This information, which is generally
provided through reinsurance intermediaries, is gathered through the underwriting process and from periodic claim reports and
other correspondence with ceding companies. The Company performs underwriting and claim audits of selected ceding
companies to determine the accuracy and completeness of information provided to the Company. The information received
from the ceding companies is supplemented by the Companys own loss development experience with similar lines of business
as well as industry loss trends and loss development benchmarks.
The Company evaluates reserves for losses and loss expenses on a quarterly basis. Changes in estimates of prior year
losses are reported when such changes are made. The changes in prior year loss reserve estimates are generally the result of
ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information
becomes known regarding individual claims and aggregate claim trends.
Certain of the Company's insurance and reinsurance contracts are retrospectively rated, whereby the Company collects
more or less premiums based on the level of loss activity. For those contracts, changes in loss and loss expenses for prior years
may be fully or partially offset by additional or return premiums.
34
35
42
27983be 10K
27983be_10K.indd 42
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
4
2/26/20 12:08 PM
4
3
2
7
9
8
3
b
e
1
0
K
(cid:1)et prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each
For professional liability business, adverse development was primarily related to unexpected large directors and officers
27983be 10K
43
of the last three years ended December 31, are as follows:
(In thousands)
(Increase) decrease in prior year loss reserves
Increase in prior year earned premiums
(cid:1)et favorable prior year development
2019
2018
2017
$
$
(34,079) $
(6,831) $
53,511
45,638
19,432
$
38,807
$
5,165
32,162
37,327
Favorable prior year development (net of additional and return premiums) was $19 million in 2019.
Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return
premiums). This overall favorable development resulted from more significant favorable development on workers’
compensation business, which was largely offset by unfavorable development on professional liability and general liability
business.
For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010,
but was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’
compensation development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years,
particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of
declining workers’ compensation frequency can be attributable to improved workplace safety. Loss severity trends were also
aided by our continued investment in claims handling initiatives such as medical case management services and vendor savings
through usage of preferred provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of
business over the past few accident years have contemplated an increase in loss cost trends and reflect decreasing premium
rates in the marketplace; reported workers’ compensation losses in 2019 continued to be below our expectations at most of our
operating units, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates.
For professional liability business, the unfavorable development was driven mainly by an increase in the number of large
losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the
lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the
2008 financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of
business, we have seen evidence of social inflation in the form of higher jury awards on cases which go to trial, and
corresponding higher demands from plaintiffs and higher values required to reach settlement on cases which do not go to trial.
The unfavorable development for D&O affected mainly accident years 2014 through 2017.
For general liability business, most of the unfavorable development emanated from our excess and surplus lines (E&S)
businesses, and was driven by an increase in the number of large losses reported. Many of these large losses were from
construction and contracting classes of business, which have also been impacted by social inflation. The general liability
unfavorable development impacted mainly accident years 2015 through 2018.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by
$2 million in 2019. The unfavorable development in the segment was driven by non-proportional assumed liability business in
both the U.S. and U.K., and was largely offset by favorable development on excess workers’ compensation business. The
unfavorable non-proportional assumed liability development was concentrated in accident years 2015 through 2018, and
included an adjustment for the Ogden discount rate in the U.K.
Favorable prior year development (net of additional and return premiums) was $39 million in 2018.
Insurance - Reserves for the Insurance segment developed favorably by $19 million in 2018. The favorable development
was primarily attributable to workers’ compensation business, and was partially offset by unfavorable development for
professional liability business.
For workers’ compensation, the favorable development was spread across many accident years, but was most significant
in accident years 2015 through 2017. The favorable workers’ compensation development reflects a continuation during 2018 of
the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of
reported claims per unit of exposure). The long term trend of declining workers' compensation frequency can be attributable to
improved workplace safety. Loss severity trends were also aided by our continued investment in claims handling initiatives
such as medical case management services and vendor savings through usage of preferred provider networks. Reported
workers’ compensation losses in 2018 continued to be below our expectations at most of our operating units, and were below
the assumptions underlying our previous reserve estimates.
36
43
27983be 10K
27983be_10K.indd 43
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
4
2/26/20 12:08 PM
(D&O) liability losses at one of our U.S. operating units, as well as lawyers professional liability losses at another operating
unit. The adverse development stemmed primarily from accident years 2015 and 2016, and was driven by a higher frequency
of large losses than we had experienced in previous years.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by
$20 million in 2018. The favorable development was primarily due to excess workers compensation business, and was spread
across many accident years, including years prior to 2009. This favorable excess workers compensation development was
partially offset by unfavorable development on U.S. casualty facultative assumed business from accident years 2009 and prior
related to construction projects.
Favorable prior year development (net of additional and return premiums) was $37 million in 2017.
Insurance - Reserves for the Insurance segment developed favorably by $30 million in 2017. The favorable development
was primarily attributable to workers compensation business, and was partially offset by unfavorable development for
professional liability business.
For workers compensation, the favorable development was spread across many accident years but was most significant
in accident years 2014 through 2016. The favorable workers compensation development reflects a continuation during 2017 of
the benign loss cost trends experienced in recent years, particularly the favorable claim frequency trends (i.e., number of
reported claims per unit of exposure). Reported workers compensation losses in 2017 continued to be below our expectations
at most of our operating units, and were below the assumptions underlying our previous reserve estimates. The favorable
severity trends were also impacted by our continued investment in medical case management services and the higher usage of
preferred provider networks. The long term trend of declining workers compensation frequency can be attributed to improved
workplace safety.
For professional liability business, adverse development was primarily related to unexpected large directors and officers
(D&O) liability losses at one of our U.S. operating units, and large professional indemnity and D&O losses in the U.K. The
adverse development stemmed mainly from accident years 2013 through 2016 in the U.S. and 2011 through 2016 in the U.K.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by $7
million in 2017. This favorable development was primarily due to excess workers compensation business, and was spread
across many accident years, including years prior to 2008. The favorable excess workers compensation development resulted
due to the same causes discussed above for workers compensation in the Insurance segment.
The favorable excess workers compensation development was largely offset by adverse development on U.K. assumed
casualty reinsurance, as well as on U.S. facultative casualty excess of loss business. The adverse development on the U.K.
casualty reinsurance was due to reserve strengthening associated with claims impacted by the change in the Ogden discount rate
in the U.K. The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced
by the U.K. Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury
claims which we reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development on U.S.
facultative casualty business was due to construction related risks in accident years 2008 and prior.
Reserve Discount. The Company discounts its liabilities for certain workers compensation reserves. The amount of
workers compensation reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018,
respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million
and $563 million at December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from
2.0% to 6.5%, with a weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019)
are excess workers compensation reserves. In order to properly match loss expenses with income earned on investment
securities supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted
average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or
decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are
recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss
payout experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and
reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or
permitted by the Department of Insurance of the State of Delaware.
37
4
4
2
7
9
8
3
b
e
1
0
K
(cid:1)et prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each
of the last three years ended December 31, are as follows:
(In thousands)
(Increase) decrease in prior year loss reserves
Increase in prior year earned premiums
(cid:1)et favorable prior year development
2019
2018
2017
$
$
(34,079) $
(6,831) $
53,511
45,638
19,432
$
38,807
$
5,165
32,162
37,327
Favorable prior year development (net of additional and return premiums) was $19 million in 2019.
Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return
premiums). This overall favorable development resulted from more significant favorable development on workers’
compensation business, which was largely offset by unfavorable development on professional liability and general liability
business.
For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010,
but was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’
compensation development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years,
particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of
declining workers’ compensation frequency can be attributable to improved workplace safety. Loss severity trends were also
aided by our continued investment in claims handling initiatives such as medical case management services and vendor savings
through usage of preferred provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of
business over the past few accident years have contemplated an increase in loss cost trends and reflect decreasing premium
rates in the marketplace; reported workers’ compensation losses in 2019 continued to be below our expectations at most of our
operating units, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates.
For professional liability business, the unfavorable development was driven mainly by an increase in the number of large
losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the
lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the
2008 financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of
business, we have seen evidence of social inflation in the form of higher jury awards on cases which go to trial, and
corresponding higher demands from plaintiffs and higher values required to reach settlement on cases which do not go to trial.
The unfavorable development for D&O affected mainly accident years 2014 through 2017.
For general liability business, most of the unfavorable development emanated from our excess and surplus lines (E&S)
businesses, and was driven by an increase in the number of large losses reported. Many of these large losses were from
construction and contracting classes of business, which have also been impacted by social inflation. The general liability
unfavorable development impacted mainly accident years 2015 through 2018.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by
$2 million in 2019. The unfavorable development in the segment was driven by non-proportional assumed liability business in
both the U.S. and U.K., and was largely offset by favorable development on excess workers’ compensation business. The
unfavorable non-proportional assumed liability development was concentrated in accident years 2015 through 2018, and
included an adjustment for the Ogden discount rate in the U.K.
Favorable prior year development (net of additional and return premiums) was $39 million in 2018.
Insurance - Reserves for the Insurance segment developed favorably by $19 million in 2018. The favorable development
was primarily attributable to workers’ compensation business, and was partially offset by unfavorable development for
professional liability business.
For workers’ compensation, the favorable development was spread across many accident years, but was most significant
in accident years 2015 through 2017. The favorable workers’ compensation development reflects a continuation during 2018 of
the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of
reported claims per unit of exposure). The long term trend of declining workers' compensation frequency can be attributable to
improved workplace safety. Loss severity trends were also aided by our continued investment in claims handling initiatives
such as medical case management services and vendor savings through usage of preferred provider networks. Reported
workers’ compensation losses in 2018 continued to be below our expectations at most of our operating units, and were below
the assumptions underlying our previous reserve estimates.
27983be 10K
44
For professional liability business, adverse development was primarily related to unexpected large directors and officers
(D&O) liability losses at one of our U.S. operating units, as well as lawyers professional liability losses at another operating
unit. The adverse development stemmed primarily from accident years 2015 and 2016, and was driven by a higher frequency
of large losses than we had experienced in previous years.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by
$20 million in 2018. The favorable development was primarily due to excess workers compensation business, and was spread
across many accident years, including years prior to 2009. This favorable excess workers compensation development was
partially offset by unfavorable development on U.S. casualty facultative assumed business from accident years 2009 and prior
related to construction projects.
Favorable prior year development (net of additional and return premiums) was $37 million in 2017.
Insurance - Reserves for the Insurance segment developed favorably by $30 million in 2017. The favorable development
was primarily attributable to workers compensation business, and was partially offset by unfavorable development for
professional liability business.
For workers compensation, the favorable development was spread across many accident years but was most significant
in accident years 2014 through 2016. The favorable workers compensation development reflects a continuation during 2017 of
the benign loss cost trends experienced in recent years, particularly the favorable claim frequency trends (i.e., number of
reported claims per unit of exposure). Reported workers compensation losses in 2017 continued to be below our expectations
at most of our operating units, and were below the assumptions underlying our previous reserve estimates. The favorable
severity trends were also impacted by our continued investment in medical case management services and the higher usage of
preferred provider networks. The long term trend of declining workers compensation frequency can be attributed to improved
workplace safety.
For professional liability business, adverse development was primarily related to unexpected large directors and officers
(D&O) liability losses at one of our U.S. operating units, and large professional indemnity and D&O losses in the U.K. The
adverse development stemmed mainly from accident years 2013 through 2016 in the U.S. and 2011 through 2016 in the U.K.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by $7
million in 2017. This favorable development was primarily due to excess workers compensation business, and was spread
across many accident years, including years prior to 2008. The favorable excess workers compensation development resulted
due to the same causes discussed above for workers compensation in the Insurance segment.
The favorable excess workers compensation development was largely offset by adverse development on U.K. assumed
casualty reinsurance, as well as on U.S. facultative casualty excess of loss business. The adverse development on the U.K.
casualty reinsurance was due to reserve strengthening associated with claims impacted by the change in the Ogden discount rate
in the U.K. The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced
by the U.K. Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury
claims which we reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development on U.S.
facultative casualty business was due to construction related risks in accident years 2008 and prior.
Reserve Discount. The Company discounts its liabilities for certain workers compensation reserves. The amount of
workers compensation reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018,
respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million
and $563 million at December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from
2.0% to 6.5%, with a weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019)
are excess workers compensation reserves. In order to properly match loss expenses with income earned on investment
securities supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted
average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or
decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are
recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss
payout experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and
reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or
permitted by the Department of Insurance of the State of Delaware.
36
37
K
0
1
e
b
3
8
9
7
2
4
4
44
27983be 10K
27983be_10K.indd 44
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
4
5
2
7
9
8
3
b
e
1
0
K
Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will
Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
27983be 10K
45
receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual
amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are
made or revised, the related amount of earned premiums, commissions and incurred losses associated with those premiums are
recorded. Estimated assumed premiums receivable were approximately $43 million and $41 million at December 31, 2019 and
2018, respectively. The assumed premium estimates are based upon terms set forth in reinsurance agreements, information
received from ceding companies during the underwriting and negotiation of agreements, reports received from ceding
companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own view of
market conditions, economic trends and experience with similar lines of business. These premium estimates represent
managements best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.
Other-Than-Temporary Impairments (OTTI) of Investments. The cost of securities is adjusted where appropriate to
include a provision for decline in value which is considered to be other-than-temporary. An other-than-temporary decline is
considered to occur in investments where there has been a sustained reduction in fair value and where the Company does not
expect the fair value to recover prior to the time of sale or maturity.
The Company classifies its fixed maturity securities by credit rating, primarily based on ratings assigned by credit rating
agencies. For purposes of classifying securities with different ratings, the Company uses the average of the credit ratings
assigned, unless in limited situations the Company's own analysis indicates an internal rating is more appropriate. Securities
that are not rated by a rating agency are evaluated and classified by the Company on a case-by-case basis.
Fixed Maturity Securities For securities that we intend to sell or, more likely than not, would be required to sell, a
decline in value below amortized cost is considered to be OTTI. The amount of OTTI is equal to the difference between
amortized cost and fair value at the balance sheet date. For securities that we do not intend to sell or expect to be required to
sell, a decline in value below amortized cost is considered to be an OTTI if we do not expect to recover the entire amortized
cost basis of a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the
security).
The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash
flows expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline
in value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.
38
45
27983be 10K
27983be_10K.indd 45
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
4
2/26/20 12:08 PM
(cid:1)umber of
Securities
Aggregate
Fair Value
Unrealized
Loss
480
$
3,259,888
$
41,541
16
13
21,171
60,173
509
$
3,341,232
$
32,311
62,534
136,386
(cid:1)umber of
Securities
Aggregate
Fair Value
Unrealized
Loss
$
79,747
$
21
14
5
5
65,710
437
954
92,369
4,319
113
17
45
$
146,848
$
96,818
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.
The following table provides a summary of fixed maturity securities in an unrealized loss position as of December 31,
2019:
($ in thousands)
Unrealized loss less than 20% of amortized cost
Unrealized loss of 20% or greater of amortized cost:
Less than twelve months
Twelve months and longer
Total
A summary of the Companys non-investment grade fixed maturity securities that were in an unrealized loss position at
December 31, 2019 is presented in the table below.
($ in thousands)
Foreign government
Corporate
Asset-backed securities
Mortgage-backed securities
Total
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized loss is
due primarily to temporary market and sector-related factors rather than to issuer-specific factors. (cid:1)one of these securities are
delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to
continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be
OTTI. For the year ended December 31, 2019, there were no OTTI for fixed maturity securities recognized in earnings. For the
year ended December 31, 2018, there were $6 million of OTTI recognized on fixed maturity securities.
Loans Receivable The Company monitors the performance of its loans receivable, including current market conditions
for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the
contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge to
earnings. Loans receivable are reported net of a valuation reserve of $2 million for December 31, 2019 and $3 million for
December 31, 2018.
The Company monitors the performance of its loans receivable and assesses the ability of each borrower to pay principal
and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of
the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash
flow analysis and comparable cost and sales methodologies, if appropriate.
Fair Value Measurements. The Companys fixed maturity available for sale securities, equity securities, and its trading
account securities are carried at fair value. Fair value is defined as "the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date". The Company utilizes a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for similar assets in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs may
only be used to measure fair value to the extent that observable inputs are not available. The fair value of the vast majority of
the Companys portfolio is based on observable data (other than quoted prices) and, accordingly, is classified as Level 2.
39
4
6
2
7
9
8
3
b
e
1
0
K
Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will
receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual
amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are
made or revised, the related amount of earned premiums, commissions and incurred losses associated with those premiums are
recorded. Estimated assumed premiums receivable were approximately $43 million and $41 million at December 31, 2019 and
2018, respectively. The assumed premium estimates are based upon terms set forth in reinsurance agreements, information
received from ceding companies during the underwriting and negotiation of agreements, reports received from ceding
companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own view of
market conditions, economic trends and experience with similar lines of business. These premium estimates represent
managements best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.
Other-Than-Temporary Impairments (OTTI) of Investments. The cost of securities is adjusted where appropriate to
include a provision for decline in value which is considered to be other-than-temporary. An other-than-temporary decline is
considered to occur in investments where there has been a sustained reduction in fair value and where the Company does not
expect the fair value to recover prior to the time of sale or maturity.
The Company classifies its fixed maturity securities by credit rating, primarily based on ratings assigned by credit rating
agencies. For purposes of classifying securities with different ratings, the Company uses the average of the credit ratings
assigned, unless in limited situations the Company's own analysis indicates an internal rating is more appropriate. Securities
that are not rated by a rating agency are evaluated and classified by the Company on a case-by-case basis.
Fixed Maturity Securities For securities that we intend to sell or, more likely than not, would be required to sell, a
decline in value below amortized cost is considered to be OTTI. The amount of OTTI is equal to the difference between
amortized cost and fair value at the balance sheet date. For securities that we do not intend to sell or expect to be required to
sell, a decline in value below amortized cost is considered to be an OTTI if we do not expect to recover the entire amortized
cost basis of a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the
security).
The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash
flows expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline
in value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.
27983be 10K
46
Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.
The following table provides a summary of fixed maturity securities in an unrealized loss position as of December 31,
2019:
($ in thousands)
Unrealized loss less than 20% of amortized cost
Unrealized loss of 20% or greater of amortized cost:
Less than twelve months
Twelve months and longer
Total
(cid:1)umber of
Securities
Aggregate
Fair Value
Unrealized
Loss
480
$
3,259,888
$
41,541
16
13
21,171
60,173
509
$
3,341,232
$
32,311
62,534
136,386
A summary of the Companys non-investment grade fixed maturity securities that were in an unrealized loss position at
December 31, 2019 is presented in the table below.
($ in thousands)
Foreign government
Corporate
Asset-backed securities
Mortgage-backed securities
Total
(cid:1)umber of
Securities
Aggregate
Fair Value
Unrealized
Loss
21
14
5
5
$
79,747
$
65,710
437
954
92,369
4,319
113
17
45
$
146,848
$
96,818
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized loss is
due primarily to temporary market and sector-related factors rather than to issuer-specific factors. (cid:1)one of these securities are
delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to
continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be
OTTI. For the year ended December 31, 2019, there were no OTTI for fixed maturity securities recognized in earnings. For the
year ended December 31, 2018, there were $6 million of OTTI recognized on fixed maturity securities.
Loans Receivable The Company monitors the performance of its loans receivable, including current market conditions
for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the
contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge to
earnings. Loans receivable are reported net of a valuation reserve of $2 million for December 31, 2019 and $3 million for
December 31, 2018.
The Company monitors the performance of its loans receivable and assesses the ability of each borrower to pay principal
and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of
the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash
flow analysis and comparable cost and sales methodologies, if appropriate.
Fair Value Measurements. The Companys fixed maturity available for sale securities, equity securities, and its trading
account securities are carried at fair value. Fair value is defined as "the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date". The Company utilizes a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for similar assets in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs may
only be used to measure fair value to the extent that observable inputs are not available. The fair value of the vast majority of
the Companys portfolio is based on observable data (other than quoted prices) and, accordingly, is classified as Level 2.
38
39
46
27983be 10K
27983be_10K.indd 46
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
4
2/26/20 12:08 PM
4
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
47
In classifying particular financial securities in the fair value hierarchy, the Company uses its judgment to determine
whether the market for a security is active and whether significant pricing inputs are observable. The Company determines the
existence of an active market by assessing whether transactions occur with sufficient frequency and volume to provide reliable
pricing information. The Company determines whether inputs are observable based on the use of such information by pricing
services and external investment managers, the uninterrupted availability of such inputs, the need to make significant
adjustments to such inputs and the volatility of such inputs over time. If the market for a security is determined to be inactive or
if significant inputs used to price a security are determined to be unobservable, the security is categorized in Level 3 of the fair
value hierarchy.
Because many fixed maturity securities do not trade on a daily basis, the Company utilizes pricing models and processes
which may include benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Market inputs used
to evaluate securities include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets,
benchmark securities, bids, offers and reference data. Quoted prices are often unavailable for recently issued securities that are
infrequently traded or securities that are only traded in private transactions. For publicly traded securities for which quoted
prices are unavailable, the Company determines fair value based on independent broker quotations and other observable market
data. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such
securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial data, projections and
business developments of the issuer and other relevant information.
The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of
December 31, 2019:
(In thousands)
Pricing source:
Independent pricing services
Syndicate manager
Directly by the Company based on:
Observable data
Total
Carrying
Value
Percent
of Total
$
13,812,689
98.0%
33,716
255,873
0.2
1.8
$
14,102,278
100.0%
Independent pricing services - Substantially all of the Companys fixed maturity securities available for sale were priced
by independent pricing services (generally one U.S. pricing service plus additional pricing services with respect to a limited
number of foreign securities held by the Company). The prices provided by the independent pricing services are generally
based on observable market data in active markets (e.g., broker quotes and prices observed for comparable securities). The
determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset
class. The Company reviews the prices provided by pricing services for reasonableness based upon current trading levels for
similar securities. If the prices appear unusual to the Company, they are re-examined and the value is either confirmed or
revised. In addition, the Company periodically performs independent price tests of a sample of securities to ensure proper
valuation and to verify our understanding of how securities are priced. As of December 31, 2019, the Company did not make
any adjustments to the prices provided by the pricing services. Based upon the Companys review of the methodologies used by
the independent pricing services, these securities were classified as Level 2.
Syndicate manager The Company has a 15% participation in a Lloyds syndicate, and the Companys share of the
securities owned by the syndicate is priced by the syndicates manager. The majority of the securities are liquid, short duration
fixed maturity securities. The Company reviews the syndicate managers pricing methodology and audited financial statements
and holds discussions with the syndicate manager as necessary to confirm its understanding and agreement with security prices.
Based upon the Companys review of the methodologies used by the syndicate manager, these securities were classified as
Level 2.
Observable data If independent pricing is not available, the Company prices the securities directly. Prices are based on
observable market data where available, including current trading levels for similar securities and non-binding quotations from
brokers. The Company generally requests two or more quotes. If more than one quote is received, the Company sets a price
within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security.
The Company generally does not adjust quotes obtained from brokers. Since these securities were priced based on observable
data, they were classified as Level 2.
Cash flow model If the above methodologies are not available, the Company prices securities using a discounted cash
flow model based upon assumptions as to prevailing credit spreads, interest rates and interest rate volatility, time to maturity
40
47
27983be 10K
27983be_10K.indd 47
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
and subordination levels. Discount rates are adjusted to reflect illiquidity where appropriate. These securities were classified as
Level 3.
K
0
1
e
b
3
8
9
7
2
7
4
41
4
8
2
7
9
8
3
b
e
1
0
K
and subordination levels. Discount rates are adjusted to reflect illiquidity where appropriate. These securities were classified as
Level 3.
27983be 10K
48
In classifying particular financial securities in the fair value hierarchy, the Company uses its judgment to determine
whether the market for a security is active and whether significant pricing inputs are observable. The Company determines the
existence of an active market by assessing whether transactions occur with sufficient frequency and volume to provide reliable
pricing information. The Company determines whether inputs are observable based on the use of such information by pricing
services and external investment managers, the uninterrupted availability of such inputs, the need to make significant
adjustments to such inputs and the volatility of such inputs over time. If the market for a security is determined to be inactive or
if significant inputs used to price a security are determined to be unobservable, the security is categorized in Level 3 of the fair
value hierarchy.
Because many fixed maturity securities do not trade on a daily basis, the Company utilizes pricing models and processes
which may include benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Market inputs used
to evaluate securities include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets,
benchmark securities, bids, offers and reference data. Quoted prices are often unavailable for recently issued securities that are
infrequently traded or securities that are only traded in private transactions. For publicly traded securities for which quoted
prices are unavailable, the Company determines fair value based on independent broker quotations and other observable market
data. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such
securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial data, projections and
business developments of the issuer and other relevant information.
The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of
December 31, 2019:
(In thousands)
Pricing source:
Independent pricing services
Syndicate manager
Directly by the Company based on:
Observable data
Total
Carrying
Value
Percent
of Total
$
13,812,689
98.0%
33,716
255,873
0.2
1.8
$
14,102,278
100.0%
Independent pricing services - Substantially all of the Companys fixed maturity securities available for sale were priced
by independent pricing services (generally one U.S. pricing service plus additional pricing services with respect to a limited
number of foreign securities held by the Company). The prices provided by the independent pricing services are generally
based on observable market data in active markets (e.g., broker quotes and prices observed for comparable securities). The
determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset
class. The Company reviews the prices provided by pricing services for reasonableness based upon current trading levels for
similar securities. If the prices appear unusual to the Company, they are re-examined and the value is either confirmed or
revised. In addition, the Company periodically performs independent price tests of a sample of securities to ensure proper
valuation and to verify our understanding of how securities are priced. As of December 31, 2019, the Company did not make
any adjustments to the prices provided by the pricing services. Based upon the Companys review of the methodologies used by
the independent pricing services, these securities were classified as Level 2.
Syndicate manager The Company has a 15% participation in a Lloyds syndicate, and the Companys share of the
securities owned by the syndicate is priced by the syndicates manager. The majority of the securities are liquid, short duration
fixed maturity securities. The Company reviews the syndicate managers pricing methodology and audited financial statements
and holds discussions with the syndicate manager as necessary to confirm its understanding and agreement with security prices.
Based upon the Companys review of the methodologies used by the syndicate manager, these securities were classified as
Level 2.
Observable data If independent pricing is not available, the Company prices the securities directly. Prices are based on
observable market data where available, including current trading levels for similar securities and non-binding quotations from
brokers. The Company generally requests two or more quotes. If more than one quote is received, the Company sets a price
within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security.
The Company generally does not adjust quotes obtained from brokers. Since these securities were priced based on observable
data, they were classified as Level 2.
Cash flow model If the above methodologies are not available, the Company prices securities using a discounted cash
flow model based upon assumptions as to prevailing credit spreads, interest rates and interest rate volatility, time to maturity
40
41
48
27983be 10K
27983be_10K.indd 48
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:11PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
4
2/26/20 12:08 PM
27983be 10K
49
4
9
2
7
9
8
3
b
e
1
0
K
Results of Operations for the Years Ended December 31, 2019 and 2018
Business Segment Results
Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2019 and 2018. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.
(In thousands)
Insurance
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Reinsurance & Monoline Excess
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Consolidated
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
2019
2018
$
7,398,573
$
6,086,009
5,919,819
62.4%
31.1
93.5
$
863,646
$
777,490
713,469
61.5%
35.0
96.5
$
8,262,219
$
6,863,499
6,633,288
62.3%
31.5
93.8
6,980,202
5,791,905
5,702,073
62.5%
32.6
95.1
722,292
641,322
669,432
61.0%
35.8
96.8
7,702,494
6,433,227
6,371,505
62.4%
32.9
95.3
(cid:1)et Income to Common Stockholders. The following table presents the Companys net income to common stockholders
and net income per diluted share for the years ended December 31, 2019 and 2018.
(In thousands, except per share data)
(cid:1)et income to common stockholders
Weighted average diluted shares
(cid:1)et income per diluted share
2019
2018
$
$
681,944
193,521
3.52
$
$
640,749
192,395
3.33
The Company reported net income of $682 million in 2019 compared to $641 million in 2018. The 6% increase in net
income was primarily due to an after-tax increase in underwriting income of $91 million, an increase in income from minority
interest of $6 million, an after-tax decrease in interest expense of $3 million, a $3 million increase in after-tax foreign currency
gains, a $2 million decrease in tax expense, and an after-tax increase in other income of $2 million, partially offset by a
decrease in after-tax net investment gains of $27 million, an after-tax decrease in net investment income of $23 million mainly
driven by investment funds, an after-tax increase in corporate expenses of $6 million, an after-tax reduction in insurance service
fee income of $6 million, and an after-tax decrease in income from non-insurance businesses of $4 million. The number of
weighted average diluted shares slightly increased due to shares granted through an equity compensation based plan.
Premiums. Gross premiums written were $8,262 million in 2019, an increase of 7% from $7,702 million in 2018. The
increase was due to the growth in the Insurance segment of $418 million and $142 million in the Reinsurance & Monoline
Excess segment. Approximately 79% of policies expiring in 2019 were renewed, and 78% of policies expiring in 2018 were
renewed.
42
49
27983be 10K
27983be_10K.indd 49
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
4
2/26/20 12:08 PM
Average renewal premium rates for insurance and facultative reinsurance increased 4.8% in 2019 and 2.5% in 2018,
when adjusted for changes in exposures. Average renewal premium rates for insurance and facultative reinsurance excluding
workers' compensation increased 6.9% in 2019 and 4.0% in 2018, when adjusted for changes in exposures.
A summary of gross premiums written in 2019 compared with 2018 by line of business within each business segment
follows:
compensation.
Insurance gross premiums increased 6% to $7,398 million in 2019 from $6,980 million in 2018. Gross premiums
increased $250 million (11%) for other liability, $146 million (17%) for professional liability, $96 million (6%) for
short-tail lines and $50 million (6%) for commercial auto, and decreased $124 million (9%) for workers'
Reinsurance & Monoline Excess gross premiums increased 20% to $864 million in 2019 from $722 million in 2018.
Gross premiums written increased $99 million (26%) for casualty lines, $34 million (21%) for property lines, and $9
million (5%) for monoline excess.
(cid:1)et premiums written were $6,863 million in 2019, an increase of 7% from $6,433 million in 2018. Ceded reinsurance
premiums as a percentage of gross written premiums were 17% in both 2019 and 2018.
Premiums earned increased 4% to $6,633 million in 2019 from $6,372 million in 2018. Insurance premiums (including
the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be
earned over the upcoming quarters. Premiums earned in 2019 are related to business written during both 2019 and 2018. Audit
premiums were $199 million in 2019 compared with $192 million in 2018.
(cid:1)et Investment Income. Following is a summary of net investment income for the years ended December 31, 2019 and
2018:
(In thousands)
Fixed maturity securities, including cash and cash equivalents and loans
receivable
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expenses
Total
Amount
Average Annualized
Yield
2019
2018
2019
2018
$
517,925
$
3.4%
3.6%
69,194
34,585
24,218
5,439
651,361
(5,747)
519,269
109,349
28,157
18,591
3,230
678,596
(4,361)
5.2
7.8
1.2
2.0
3.4
8.8
4.7
1.0
1.4
3.7
$
645,614
$
674,235
3.4%
3.7%
(cid:1)et investment income decreased 4% to $646 million in 2019 from $674 million in 2018 primarily due to a $40 million
decrease in investment funds, as well as a decrease in income from fixed maturity securities of $1 million and an increase in
investment expenses of $1 million, partially offset by a $6 million increase in arbitrage trading account, an increase in real
estate of $6 million, and a $2 million increase in equity securities. Investment funds are reported on a one quarter lag. The
average annualized yield for fixed maturity securities was 3.4% in 2019 and 3.6% in 2018; accordingly, the decrease in fixed
maturity securities income was mainly the result of lower interest rates. The effective duration of the fixed maturity portfolio
was 2.8 years at both December 31, 2019 and 2018. The Company has maintained a shortened duration of its fixed maturity
security portfolio. This has reduced the potential impact of mark-to-market adjustments on the portfolio and positioned the
Company to react quickly to changes in the environment. Average invested assets, at cost (including cash and cash equivalents),
were $19.1 billion in 2019 and $18.4 billion in 2018.
Insurance Service Fees. The Company earns fees from an insurance distribution business, a third-party administrator, and
as a servicing carrier of workers' compensation assigned risk plans for certain states. Insurance service fees were $93 million in
2019 and $118 million in 2018. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018 and a reduction of assigned risk plan business.
(cid:1)et Realized and Unrealized Gains on Investments. The Company buys and sells securities and other investment assets
on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets
are based on managements view of the underlying fundamentals of specific investments as well as managements expectations
regarding interest rates, credit spreads, currency values and general economic conditions. Effective January 1, 2018, the
Company adopted accounting guidance that requires all equity investments with readily determinable fair values to be
43
Results of Operations for the Years Ended December 31, 2019 and 2018
Business Segment Results
Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2019 and 2018. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.
5
0
2
7
9
8
3
b
e
1
0
K
Reinsurance & Monoline Excess
(In thousands)
Insurance
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Consolidated
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
2019
2018
$
7,398,573
$
6,086,009
5,919,819
62.4%
31.1
93.5
777,490
713,469
61.5%
35.0
96.5
6,863,499
6,633,288
62.3%
31.5
93.8
$
863,646
$
$
8,262,219
$
6,980,202
5,791,905
5,702,073
62.5%
32.6
95.1
722,292
641,322
669,432
61.0%
35.8
96.8
7,702,494
6,433,227
6,371,505
62.4%
32.9
95.3
(cid:1)et Income to Common Stockholders. The following table presents the Companys net income to common stockholders
and net income per diluted share for the years ended December 31, 2019 and 2018.
(In thousands, except per share data)
(cid:1)et income to common stockholders
Weighted average diluted shares
(cid:1)et income per diluted share
2019
2018
$
$
681,944
193,521
3.52
$
$
640,749
192,395
3.33
The Company reported net income of $682 million in 2019 compared to $641 million in 2018. The 6% increase in net
income was primarily due to an after-tax increase in underwriting income of $91 million, an increase in income from minority
interest of $6 million, an after-tax decrease in interest expense of $3 million, a $3 million increase in after-tax foreign currency
gains, a $2 million decrease in tax expense, and an after-tax increase in other income of $2 million, partially offset by a
decrease in after-tax net investment gains of $27 million, an after-tax decrease in net investment income of $23 million mainly
driven by investment funds, an after-tax increase in corporate expenses of $6 million, an after-tax reduction in insurance service
fee income of $6 million, and an after-tax decrease in income from non-insurance businesses of $4 million. The number of
weighted average diluted shares slightly increased due to shares granted through an equity compensation based plan.
Premiums. Gross premiums written were $8,262 million in 2019, an increase of 7% from $7,702 million in 2018. The
increase was due to the growth in the Insurance segment of $418 million and $142 million in the Reinsurance & Monoline
Excess segment. Approximately 79% of policies expiring in 2019 were renewed, and 78% of policies expiring in 2018 were
renewed.
27983be 10K
50
Average renewal premium rates for insurance and facultative reinsurance increased 4.8% in 2019 and 2.5% in 2018,
when adjusted for changes in exposures. Average renewal premium rates for insurance and facultative reinsurance excluding
workers' compensation increased 6.9% in 2019 and 4.0% in 2018, when adjusted for changes in exposures.
A summary of gross premiums written in 2019 compared with 2018 by line of business within each business segment
follows:
Insurance gross premiums increased 6% to $7,398 million in 2019 from $6,980 million in 2018. Gross premiums
increased $250 million (11%) for other liability, $146 million (17%) for professional liability, $96 million (6%) for
short-tail lines and $50 million (6%) for commercial auto, and decreased $124 million (9%) for workers'
compensation.
Reinsurance & Monoline Excess gross premiums increased 20% to $864 million in 2019 from $722 million in 2018.
Gross premiums written increased $99 million (26%) for casualty lines, $34 million (21%) for property lines, and $9
million (5%) for monoline excess.
(cid:1)et premiums written were $6,863 million in 2019, an increase of 7% from $6,433 million in 2018. Ceded reinsurance
premiums as a percentage of gross written premiums were 17% in both 2019 and 2018.
Premiums earned increased 4% to $6,633 million in 2019 from $6,372 million in 2018. Insurance premiums (including
the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be
earned over the upcoming quarters. Premiums earned in 2019 are related to business written during both 2019 and 2018. Audit
premiums were $199 million in 2019 compared with $192 million in 2018.
(cid:1)et Investment Income. Following is a summary of net investment income for the years ended December 31, 2019 and
2018:
(In thousands)
Fixed maturity securities, including cash and cash equivalents and loans
receivable
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expenses
Total
Amount
Average Annualized
Yield
2019
2018
2019
2018
$
517,925
$
69,194
34,585
24,218
5,439
651,361
(5,747)
519,269
109,349
28,157
18,591
3,230
678,596
(4,361)
3.4%
3.6%
5.2
7.8
1.2
2.0
3.4
8.8
4.7
1.0
1.4
3.7
$
645,614
$
674,235
3.4%
3.7%
(cid:1)et investment income decreased 4% to $646 million in 2019 from $674 million in 2018 primarily due to a $40 million
decrease in investment funds, as well as a decrease in income from fixed maturity securities of $1 million and an increase in
investment expenses of $1 million, partially offset by a $6 million increase in arbitrage trading account, an increase in real
estate of $6 million, and a $2 million increase in equity securities. Investment funds are reported on a one quarter lag. The
average annualized yield for fixed maturity securities was 3.4% in 2019 and 3.6% in 2018; accordingly, the decrease in fixed
maturity securities income was mainly the result of lower interest rates. The effective duration of the fixed maturity portfolio
was 2.8 years at both December 31, 2019 and 2018. The Company has maintained a shortened duration of its fixed maturity
security portfolio. This has reduced the potential impact of mark-to-market adjustments on the portfolio and positioned the
Company to react quickly to changes in the environment. Average invested assets, at cost (including cash and cash equivalents),
were $19.1 billion in 2019 and $18.4 billion in 2018.
Insurance Service Fees. The Company earns fees from an insurance distribution business, a third-party administrator, and
as a servicing carrier of workers' compensation assigned risk plans for certain states. Insurance service fees were $93 million in
2019 and $118 million in 2018. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018 and a reduction of assigned risk plan business.
(cid:1)et Realized and Unrealized Gains on Investments. The Company buys and sells securities and other investment assets
on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets
are based on managements view of the underlying fundamentals of specific investments as well as managements expectations
regarding interest rates, credit spreads, currency values and general economic conditions. Effective January 1, 2018, the
Company adopted accounting guidance that requires all equity investments with readily determinable fair values to be
42
43
K
0
1
e
b
3
8
9
7
2
0
5
50
27983be 10K
27983be_10K.indd 50
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not
allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs
and expenses increased to $201 million in 2019 from $193 million in 2018.
Expenses from (cid:1)on-Insurance Businesses. Expenses from non-insurance businesses represent costs associated with
businesses engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related
businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and (ii) general and
administrative expenses. Expenses from non-insurance businesses were $403 million in 2019 compared to $364 million in
2018. The increase mainly relates to expenses from a promotional merchandise business purchased in the second half of 2018
as well as growth in expenses from the aviation-related businesses.
Interest Expense. Interest expense was $153 million in 2019 compared with $157 million in 2018. In March 2018, the
Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058, and in April 2018, the
Company issued another $10 million principal amount of such debentures. Additionally in 2018, the Company issued
subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate property in
Florida. During 2019, the Company repaid at maturity $489 million aggregate principal amount of senior notes and other debt.
In December 2019, the Company issued $300 million aggregate principal amount of 5.10% subordinated debentures due 2059.
Income Taxes. The effective income tax rate was 19.8% in 2019 and 20.1% in 2018. The effective income tax rate
differs from the federal income tax rate of 21% primarily because of the tax-exempt income and tax on income from foreign
jurisdictions with different tax rates.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $124 million
of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
5
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
51
measured at fair value with changes in the fair value recognized through net income (other than those equity securities
accounted for under the equity method of accounting or those that result in consolidation of the investee). (cid:1)et realized and
unrealized gains on investments were $121 million in 2019 compared with $154 million in 2018. In 2019, the gains reflected
net realized gains on investment sales of $36 million and increased by a change in unrealized gains on equity securities of $85
million. In 2018, the gains reflected net realized gains on investment sales of $480 million reduced by a change in unrealized
gains on equity securities of $320 million as well as $6 million in OTTI.
Other-Than-Temporary Impairments. The cost of securities is adjusted when appropriate to include a provision for a
decline in value that is considered to be other-than-temporary. There were no other-than-temporary impairments in 2019 and $6
million in 2018.
Revenues from (cid:1)on-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses
engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related businesses that
provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues
from non-insurance businesses increased to $407 million in 2019 from $373 million in 2018, primarily due to growth in
revenues from the aviation-related businesses and the purchase of a promotional merchandise business in the second half of
2018.
Losses and Loss Expenses. Losses and loss expenses increased to $4,131 million in 2019 from $3,975 million in 2018.
The consolidated loss ratio was 62.3% in 2019 and 62.4% in 2018. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $90 million in 2019 compared with $105 million in 2018. Favorable prior year reserve
development (net of premium offsets) was $19 million in 2019 compared with $39 million in 2018. The loss ratio excluding
catastrophe losses and prior year reserve development decreased 0.1 points to 61.2% in 2019 from 61.3% in 2018.
A summary of loss ratios in 2019 compared with 2018 by business segment follows:
Insurance - The loss ratio of 62.4% in 2019 was 0.1 points lower than the loss ratio of 62.5% in 2018. Catastrophe
losses were $68 million in 2019 compared with $76 million in 2018. Favorable prior year reserve development was
$21 million in 2019 compared with $19 million in 2018. The loss ratio excluding catastrophe losses and prior year
reserve development increased 0.1 points to 61.6% in 2019 from 61.5% in 2018.
Reinsurance & Monoline Excess - The loss ratio of 61.5% in 2019 was 0.5 points higher than the loss ratio of 61.0%
in 2018. Catastrophe losses were $22 million in 2019 compared with $30 million in 2018. Adverse prior year reserve
development was $2 million in 2019 compared with favorable prior year reserve development of $20 million in
2018. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.5 points to 58.1%
in 2019 from 59.6% in 2018.
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
(In thousands)
Policy acquisition and insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency gains
Other costs and expenses
Total
2019
2018
2,090,301
$
2,098,881
101,317
(30,715)
201,179
118,357
(27,067)
193,050
2,362,082
$
2,383,221
$
$
Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium
taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses decreased less
than 1% and net premiums earned increased 4% from 2018. The expense ratio (policy acquisition and insurance operating
expenses expressed as a percentage of premiums earned) was 31.5% in 2019 and 32.9% in 2018. The improvement is primarily
attributable to higher net premiums earned and lower expenses.
Service expenses, which represent the costs associated with the fee-based businesses, decreased 14% to $101 million in
2019 from $118 million in 2018. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018 and a reduction of assigned risk plan business.
(cid:1)et foreign currency (gains) losses result from transactions denominated in a currency other than an operating units
functional currency. (cid:1)et foreign currency gains were $31 million in 2019 compared to gains of $27 million in 2018, mainly
resulting from the continued strengthening of the U.S. dollar in the relation to the Argentine peso.
44
51
27983be 10K
27983be_10K.indd 51
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
5
2/26/20 12:08 PM
45
27983be 10K
52
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not
allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs
and expenses increased to $201 million in 2019 from $193 million in 2018.
Expenses from (cid:1)on-Insurance Businesses. Expenses from non-insurance businesses represent costs associated with
businesses engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related
businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and (ii) general and
administrative expenses. Expenses from non-insurance businesses were $403 million in 2019 compared to $364 million in
2018. The increase mainly relates to expenses from a promotional merchandise business purchased in the second half of 2018
as well as growth in expenses from the aviation-related businesses.
Interest Expense. Interest expense was $153 million in 2019 compared with $157 million in 2018. In March 2018, the
Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058, and in April 2018, the
Company issued another $10 million principal amount of such debentures. Additionally in 2018, the Company issued
subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate property in
Florida. During 2019, the Company repaid at maturity $489 million aggregate principal amount of senior notes and other debt.
In December 2019, the Company issued $300 million aggregate principal amount of 5.10% subordinated debentures due 2059.
Income Taxes. The effective income tax rate was 19.8% in 2019 and 20.1% in 2018. The effective income tax rate
differs from the federal income tax rate of 21% primarily because of the tax-exempt income and tax on income from foreign
jurisdictions with different tax rates.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $124 million
of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
5
2
2
7
9
8
3
b
e
1
0
K
measured at fair value with changes in the fair value recognized through net income (other than those equity securities
accounted for under the equity method of accounting or those that result in consolidation of the investee). (cid:1)et realized and
unrealized gains on investments were $121 million in 2019 compared with $154 million in 2018. In 2019, the gains reflected
net realized gains on investment sales of $36 million and increased by a change in unrealized gains on equity securities of $85
million. In 2018, the gains reflected net realized gains on investment sales of $480 million reduced by a change in unrealized
gains on equity securities of $320 million as well as $6 million in OTTI.
Other-Than-Temporary Impairments. The cost of securities is adjusted when appropriate to include a provision for a
decline in value that is considered to be other-than-temporary. There were no other-than-temporary impairments in 2019 and $6
million in 2018.
Revenues from (cid:1)on-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses
engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related businesses that
provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues
from non-insurance businesses increased to $407 million in 2019 from $373 million in 2018, primarily due to growth in
revenues from the aviation-related businesses and the purchase of a promotional merchandise business in the second half of
2018.
Losses and Loss Expenses. Losses and loss expenses increased to $4,131 million in 2019 from $3,975 million in 2018.
The consolidated loss ratio was 62.3% in 2019 and 62.4% in 2018. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $90 million in 2019 compared with $105 million in 2018. Favorable prior year reserve
development (net of premium offsets) was $19 million in 2019 compared with $39 million in 2018. The loss ratio excluding
catastrophe losses and prior year reserve development decreased 0.1 points to 61.2% in 2019 from 61.3% in 2018.
A summary of loss ratios in 2019 compared with 2018 by business segment follows:
Insurance - The loss ratio of 62.4% in 2019 was 0.1 points lower than the loss ratio of 62.5% in 2018. Catastrophe
losses were $68 million in 2019 compared with $76 million in 2018. Favorable prior year reserve development was
$21 million in 2019 compared with $19 million in 2018. The loss ratio excluding catastrophe losses and prior year
reserve development increased 0.1 points to 61.6% in 2019 from 61.5% in 2018.
Reinsurance & Monoline Excess - The loss ratio of 61.5% in 2019 was 0.5 points higher than the loss ratio of 61.0%
in 2018. Catastrophe losses were $22 million in 2019 compared with $30 million in 2018. Adverse prior year reserve
development was $2 million in 2019 compared with favorable prior year reserve development of $20 million in
2018. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.5 points to 58.1%
in 2019 from 59.6% in 2018.
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
(In thousands)
Policy acquisition and insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency gains
Other costs and expenses
Total
2019
2018
2,090,301
$
2,098,881
101,317
(30,715)
201,179
118,357
(27,067)
193,050
2,362,082
$
2,383,221
$
$
Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium
taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses decreased less
than 1% and net premiums earned increased 4% from 2018. The expense ratio (policy acquisition and insurance operating
expenses expressed as a percentage of premiums earned) was 31.5% in 2019 and 32.9% in 2018. The improvement is primarily
attributable to higher net premiums earned and lower expenses.
Service expenses, which represent the costs associated with the fee-based businesses, decreased 14% to $101 million in
2019 from $118 million in 2018. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018 and a reduction of assigned risk plan business.
(cid:1)et foreign currency (gains) losses result from transactions denominated in a currency other than an operating units
functional currency. (cid:1)et foreign currency gains were $31 million in 2019 compared to gains of $27 million in 2018, mainly
resulting from the continued strengthening of the U.S. dollar in the relation to the Argentine peso.
44
45
52
27983be 10K
27983be_10K.indd 52
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
5
2/26/20 12:08 PM
5
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
53
Results of Operations for the Years Ended December 31, 2018 and 2017
A summary of gross premiums written in 2018 compared with 2017 by line of business within each business segment
Business Segment Results
Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2018 and 2017. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.
(In thousands)
Insurance
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Reinsurance & Monoline Excess
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Consolidated
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
2018
2017
$
6,980,202
$
5,791,905
5,702,073
62.5%
32.6
95.1
$
722,292
$
641,322
669,432
61.0%
35.8
96.8
$
7,702,494
$
6,433,227
6,371,505
62.4%
32.9
95.3
6,699,171
5,555,515
5,549,403
62.5%
33.0
95.5
777,792
704,993
762,016
70.0%
35.7
105.7
7,476,963
6,260,508
6,311,419
63.4%
33.3
96.7
(cid:1)et Income to Common Stockholders. The following table presents the Companys net income to common stockholders
and net income per diluted share for the years ended December 31, 2018 and 2017.
(In thousands, except per share data)
(cid:1)et income to common stockholders
Weighted average diluted shares
(cid:1)et income per diluted share
2018
2017
$
$
640,749
192,395
3.33
$
$
549,094
193,527
2.84
The Company reported net income of $641 million in 2018 compared to $549 million in 2017. The 17% increase in net
income was primarily due to an after-tax increase in net investment income of $79 million, mainly driven by growth in the fixed
maturity security portfolio, higher interest rates and an increase in investment funds, an after-tax increase in underwriting
income of $72 million, a $34 million increase in after-tax foreign currency gains, an after-tax increase in income from non-
insurance businesses of $6 million, and a $60 million decrease in tax expense primarily due to the reduction of the federal
corporate tax rate from 35% to 21%, partially offset by a decrease in after-tax net investment gains of $145 million, an after-tax
increase in interest expense of $8 million, an after-tax reduction in insurance service fee income of $4 million, and an after-tax
increase in corporate expenses of $2 million. The number of weighted average diluted shares decreased slightly primarily due to
share repurchases.
Premiums. Gross premiums written were $7,702 million in 2018, an increase of 3% from $7,477 million in 2017. The
increase was due to growth in the Insurance segment of $281 million, partially offset by a decrease in the Reinsurance &
Monoline Excess segment of $56 million. Approximately 78% of policies expiring in 2018 were renewed, and 79% of policies
expiring in 2017 were renewed.
Average renewal premium rates (adjusted for change in exposures) increased 2.5% in 2018 and 0.9% in 2017.
46
follows:
Insurance gross premiums increased 4% to $6,980 million in 2018 from $6,699 million in 2017. Gross premiums
increased $157 million (7%) for other liability, $87 million (12%) for professional liability, $64 million (4%) for
short-tail lines and $54 million (7%) for commercial auto, and decreased $81 million (5%) for workers'
compensation.
Reinsurance & Monoline Excess gross premiums decreased 7% to $722 million in 2018 from $778 million in 2017.
Gross premiums written decreased $38 million (19%) for property lines and $24 million (6%) for casualty lines and
increased $6 million (4%) for monoline excess.
(cid:1)et premiums written were $6,433 million in 2018, an increase of 3% from $6,261 million in 2017. Ceded reinsurance
premiums as a percentage of gross written premiums were 17% and 16% in 2018 and 2017, respectively.
Premiums earned increased 1% to $6,372 million in 2018 from $6,311 million in 2017. Insurance premiums (including
the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be
earned over the upcoming quarters. Premiums earned in 2018 are related to business written during both 2018 and 2017. Audit
premiums were $192 million in 2018 compared with $172 million in 2017.
(cid:1)et Investment Income. Following is a summary of net investment income for the years ended December 31, 2018 and
2017:
(In thousands)
Fixed maturity securities, including cash and cash equivalents and
loans receivable
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expenses
Total
Amount
Average Annualized
Yield
2018
2017
2018
2017
$
519,269
$
473,101
3.6%
3.3%
109,349
28,157
18,591
3,230
678,596
(4,361)
68,169
19,145
19,975
2,350
582,740
(6,952)
8.8
4.7
1.0
1.4
3.7
5.7
3.6
1.5
1.1
3.3
$
674,235
$
575,788
3.7%
3.3%
(cid:1)et investment income increased 17% to $674 million in 2018 from $576 million in 2017 primarily due to an increase in
income from fixed maturity securities of $46 million, a $41 million increase in investment funds, a $9 million increase in
arbitrage trading account and a decrease in investment expenses of $2 million, partially offset by a decrease in real estate of $1
million. Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 3.6%
in 2018 and 3.3% in 2017; accordingly, the increase in fixed maturity securities income was mainly the result of a larger
investment portfolio and higher interest rates. The effective duration of the fixed maturity portfolio was 2.8 years at
December 31, 2018, down from 3.0 years at December 31, 2017. The Company has maintained a shortened duration of its fixed
maturity security portfolio. This has reduced the potential impact of mark-to-market adjustments on the portfolio and positioned
the Company to take advantage of rising interest rates. Average invested assets, at cost (including cash and cash equivalents),
were $18.4 billion in 2018 and $17.5 billion in 2017.
Insurance Service Fees. The Company earns fees from an insurance distribution business, a third-party administrator, and
as a servicing carrier of workers' compensation assigned risk plans for certain states. Insurance service fees were $118 million
in 2018 and $135 million in 2017. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018.
(cid:1)et Realized and Unrealized Gains on Investments. The Company buys and sells securities and other investment assets
on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets
are based on managements view of the underlying fundamentals of specific investments as well as managements expectations
regarding interest rates, credit spreads, currency values and general economic conditions. Effective January 1, 2018, the
Company adopted accounting guidance that requires all equity investments with readily determinable fair values to be
measured at fair value with changes in the fair value recognized through net income (other than those equity securities
accounted for under the equity method of accounting or those that result in consolidation of the investee). (cid:1)et realized and
unrealized gains on investments were $154 million in 2018 compared with $336 million in 2017. In 2018, the gains reflected
net realized gains on investment sales of $480 million reduced by a change in unrealized gains on equity securities of $320
47
K
0
1
e
b
3
8
9
7
2
3
5
53
27983be 10K
27983be_10K.indd 53
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
5
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
54
Results of Operations for the Years Ended December 31, 2018 and 2017
A summary of gross premiums written in 2018 compared with 2017 by line of business within each business segment
Business Segment Results
Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2018 and 2017. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.
Reinsurance & Monoline Excess
(In thousands)
Insurance
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Consolidated
Gross premiums written
(cid:1)et premiums written
(cid:1)et premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
2018
2017
$
6,980,202
$
5,791,905
5,702,073
62.5%
32.6
95.1
641,322
669,432
61.0%
35.8
96.8
6,433,227
6,371,505
62.4%
32.9
95.3
$
722,292
$
$
7,702,494
$
6,699,171
5,555,515
5,549,403
62.5%
33.0
95.5
777,792
704,993
762,016
70.0%
35.7
105.7
7,476,963
6,260,508
6,311,419
63.4%
33.3
96.7
(cid:1)et Income to Common Stockholders. The following table presents the Companys net income to common stockholders
and net income per diluted share for the years ended December 31, 2018 and 2017.
(In thousands, except per share data)
(cid:1)et income to common stockholders
Weighted average diluted shares
(cid:1)et income per diluted share
2018
2017
$
$
640,749
192,395
3.33
$
$
549,094
193,527
2.84
The Company reported net income of $641 million in 2018 compared to $549 million in 2017. The 17% increase in net
income was primarily due to an after-tax increase in net investment income of $79 million, mainly driven by growth in the fixed
maturity security portfolio, higher interest rates and an increase in investment funds, an after-tax increase in underwriting
income of $72 million, a $34 million increase in after-tax foreign currency gains, an after-tax increase in income from non-
insurance businesses of $6 million, and a $60 million decrease in tax expense primarily due to the reduction of the federal
corporate tax rate from 35% to 21%, partially offset by a decrease in after-tax net investment gains of $145 million, an after-tax
increase in interest expense of $8 million, an after-tax reduction in insurance service fee income of $4 million, and an after-tax
increase in corporate expenses of $2 million. The number of weighted average diluted shares decreased slightly primarily due to
share repurchases.
Premiums. Gross premiums written were $7,702 million in 2018, an increase of 3% from $7,477 million in 2017. The
increase was due to growth in the Insurance segment of $281 million, partially offset by a decrease in the Reinsurance &
Monoline Excess segment of $56 million. Approximately 78% of policies expiring in 2018 were renewed, and 79% of policies
expiring in 2017 were renewed.
Average renewal premium rates (adjusted for change in exposures) increased 2.5% in 2018 and 0.9% in 2017.
follows:
Insurance gross premiums increased 4% to $6,980 million in 2018 from $6,699 million in 2017. Gross premiums
increased $157 million (7%) for other liability, $87 million (12%) for professional liability, $64 million (4%) for
short-tail lines and $54 million (7%) for commercial auto, and decreased $81 million (5%) for workers'
compensation.
Reinsurance & Monoline Excess gross premiums decreased 7% to $722 million in 2018 from $778 million in 2017.
Gross premiums written decreased $38 million (19%) for property lines and $24 million (6%) for casualty lines and
increased $6 million (4%) for monoline excess.
(cid:1)et premiums written were $6,433 million in 2018, an increase of 3% from $6,261 million in 2017. Ceded reinsurance
premiums as a percentage of gross written premiums were 17% and 16% in 2018 and 2017, respectively.
Premiums earned increased 1% to $6,372 million in 2018 from $6,311 million in 2017. Insurance premiums (including
the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be
earned over the upcoming quarters. Premiums earned in 2018 are related to business written during both 2018 and 2017. Audit
premiums were $192 million in 2018 compared with $172 million in 2017.
(cid:1)et Investment Income. Following is a summary of net investment income for the years ended December 31, 2018 and
2017:
(In thousands)
Fixed maturity securities, including cash and cash equivalents and
loans receivable
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expenses
Total
Amount
Average Annualized
Yield
2018
2017
2018
2017
$
519,269
$
473,101
3.6%
3.3%
109,349
28,157
18,591
3,230
678,596
(4,361)
68,169
19,145
19,975
2,350
582,740
(6,952)
8.8
4.7
1.0
1.4
3.7
5.7
3.6
1.5
1.1
3.3
$
674,235
$
575,788
3.7%
3.3%
(cid:1)et investment income increased 17% to $674 million in 2018 from $576 million in 2017 primarily due to an increase in
income from fixed maturity securities of $46 million, a $41 million increase in investment funds, a $9 million increase in
arbitrage trading account and a decrease in investment expenses of $2 million, partially offset by a decrease in real estate of $1
million. Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 3.6%
in 2018 and 3.3% in 2017; accordingly, the increase in fixed maturity securities income was mainly the result of a larger
investment portfolio and higher interest rates. The effective duration of the fixed maturity portfolio was 2.8 years at
December 31, 2018, down from 3.0 years at December 31, 2017. The Company has maintained a shortened duration of its fixed
maturity security portfolio. This has reduced the potential impact of mark-to-market adjustments on the portfolio and positioned
the Company to take advantage of rising interest rates. Average invested assets, at cost (including cash and cash equivalents),
were $18.4 billion in 2018 and $17.5 billion in 2017.
Insurance Service Fees. The Company earns fees from an insurance distribution business, a third-party administrator, and
as a servicing carrier of workers' compensation assigned risk plans for certain states. Insurance service fees were $118 million
in 2018 and $135 million in 2017. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018.
(cid:1)et Realized and Unrealized Gains on Investments. The Company buys and sells securities and other investment assets
on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets
are based on managements view of the underlying fundamentals of specific investments as well as managements expectations
regarding interest rates, credit spreads, currency values and general economic conditions. Effective January 1, 2018, the
Company adopted accounting guidance that requires all equity investments with readily determinable fair values to be
measured at fair value with changes in the fair value recognized through net income (other than those equity securities
accounted for under the equity method of accounting or those that result in consolidation of the investee). (cid:1)et realized and
unrealized gains on investments were $154 million in 2018 compared with $336 million in 2017. In 2018, the gains reflected
net realized gains on investment sales of $480 million reduced by a change in unrealized gains on equity securities of $320
46
47
K
0
1
e
b
3
8
9
7
2
4
5
54
27983be 10K
27983be_10K.indd 54
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
Expenses from (cid:1)on-Insurance Businesses. Expenses from non-insurance businesses represent costs associated with
businesses engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related
businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and (ii) general and
administrative expenses. Expenses from non-insurance businesses were $364 million in 2018 compared to $325 million in
2017. The increase mainly relates to a new business purchased in the second half of 2018 as well as the textile business
purchased in March 2017.
Interest Expense. Interest expense was $157 million in 2018 compared with $147 million in 2017. In March 2018, the
Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058, and in April 2018, the
Company issued another $10 million principal amount of such debentures. Additionally in 2018, the Company issued
subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate property in
Florida.
Income Taxes. The effective income tax rate was 20% in 2018 compared to 28% in 2017. The decrease in the effective
tax rate in 2018 from 2017 was primarily due to the Tax Cuts and Jobs Act of 2017, which reduced the federal corporate tax rate
from 35% to 21%.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $70 million
of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
5
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
55
million as well as $6 million in OTTI. In 2017, realized gains were primarily related to the sale of an investment in an office
building located in Washington, D.C. and the sale of shares of a publicly traded common stock.
Other-Than-Temporary Impairments. The cost of securities is adjusted when appropriate to include a provision for a
decline in value that is considered to be other-than-temporary. In 2018, there were $6 million of other-than-temporary
impairments. There was no other-than-temporary impairments in 2017.
Revenues from (cid:1)on-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses
engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related businesses that
provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues
from non-insurance businesses increased to $373 million in 2018 from $326 million in 2017, primarily due to the purchase of a
business in the second half of 2018 and revenues from a textile business purchased in March 2017.
Losses and Loss Expenses. Losses and loss expenses decreased to $3,975 million in 2018 from $4,002 million in 2017.
The consolidated loss ratio was 62.4% in 2018 and 63.4% in 2017. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $105 million in 2018 compared with $184 million in 2017. The more significant 2017
catastrophe losses largely related to hurricanes Harvey, Irma, and Maria, along with two earthquakes in Mexico. Favorable prior
year reserve development (net of premium offsets) was $39 million in 2018 compared with $37 million in 2017. The loss ratio
excluding catastrophe losses and prior year reserve development increased 0.2 points to 61.3% in 2018 from 61.1% in 2017.
A summary of loss ratios in 2018 compared with 2017 by business segment follows:
Insurance - The loss ratio was 62.5% in both 2018 and 2017. Catastrophe losses were $76 million in 2018 compared
with $107 million in 2017. Favorable prior year reserve development was $19 million in 2018 compared with $30
million in 2017. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points
to 61.5% in 2018 from 61.1% in 2017.
Reinsurance & Monoline Excess - The loss ratio of 61.0% in 2018 was 9.0 points lower than the loss ratio of 70.0%
in 2017. Catastrophe losses were $29 million in 2018 compared with $77 million in 2017. Favorable prior year
reserve development was $20 million in 2018 compared with $7 million in 2017. The loss ratio excluding
catastrophe losses and prior year reserve development decreased 1.1 points to 59.6% in 2018 from 60.7% in 2017.
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
(In thousands)
Policy acquisition and insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency (gains) losses
Other costs and expenses
Total
2018
2017
2,098,881
$
2,101,024
118,357
(27,067)
193,050
129,776
15,267
190,865
2,383,221
$
2,436,932
$
$
Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium
taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses remained flat
and net premiums earned increased 1% from 2017. The expense ratio (policy acquisition and insurance operating expenses
expressed as a percentage of premiums earned) was 32.9% in 2018 and 33.3% in 2017.
Service expenses, which represent the costs associated with the fee-based businesses, decreased 9% to $118 million in
2018 from $130 million in 2017. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018.
(cid:1)et foreign currency (gains) losses result from transactions denominated in a currency other than an operating units
functional currency. (cid:1)et foreign currency gains were $27 million in 2018 compared to losses of $15 million in 2017, resulting
from the strengthening U.S. dollar and the change of functional currency for the Company's Argentine operations to the U.S.
dollar as of July 1, 2018. The Argentine economy was determined to be highly inflationary under GAAP requiring the change in
functional currency beginning with the third quarter of 2018.
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not
allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs
and expenses increased to $193 million in 2018 from $191 million in 2017.
48
55
27983be 10K
27983be_10K.indd 55
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
5
2/26/20 12:08 PM
49
million as well as $6 million in OTTI. In 2017, realized gains were primarily related to the sale of an investment in an office
Expenses from (cid:1)on-Insurance Businesses. Expenses from non-insurance businesses represent costs associated with
5
6
2
7
9
8
3
b
e
1
0
K
27983be 10K
56
businesses engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related
businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and (ii) general and
administrative expenses. Expenses from non-insurance businesses were $364 million in 2018 compared to $325 million in
2017. The increase mainly relates to a new business purchased in the second half of 2018 as well as the textile business
purchased in March 2017.
Interest Expense. Interest expense was $157 million in 2018 compared with $147 million in 2017. In March 2018, the
Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058, and in April 2018, the
Company issued another $10 million principal amount of such debentures. Additionally in 2018, the Company issued
subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate property in
Florida.
Income Taxes. The effective income tax rate was 20% in 2018 compared to 28% in 2017. The decrease in the effective
tax rate in 2018 from 2017 was primarily due to the Tax Cuts and Jobs Act of 2017, which reduced the federal corporate tax rate
from 35% to 21%.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $70 million
of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
building located in Washington, D.C. and the sale of shares of a publicly traded common stock.
Other-Than-Temporary Impairments. The cost of securities is adjusted when appropriate to include a provision for a
decline in value that is considered to be other-than-temporary. In 2018, there were $6 million of other-than-temporary
impairments. There was no other-than-temporary impairments in 2017.
Revenues from (cid:1)on-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses
engaged in the distribution of promotional merchandise, world-wide textile solutions, and aviation-related businesses that
provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues
from non-insurance businesses increased to $373 million in 2018 from $326 million in 2017, primarily due to the purchase of a
business in the second half of 2018 and revenues from a textile business purchased in March 2017.
Losses and Loss Expenses. Losses and loss expenses decreased to $3,975 million in 2018 from $4,002 million in 2017.
The consolidated loss ratio was 62.4% in 2018 and 63.4% in 2017. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $105 million in 2018 compared with $184 million in 2017. The more significant 2017
catastrophe losses largely related to hurricanes Harvey, Irma, and Maria, along with two earthquakes in Mexico. Favorable prior
year reserve development (net of premium offsets) was $39 million in 2018 compared with $37 million in 2017. The loss ratio
excluding catastrophe losses and prior year reserve development increased 0.2 points to 61.3% in 2018 from 61.1% in 2017.
A summary of loss ratios in 2018 compared with 2017 by business segment follows:
Insurance - The loss ratio was 62.5% in both 2018 and 2017. Catastrophe losses were $76 million in 2018 compared
with $107 million in 2017. Favorable prior year reserve development was $19 million in 2018 compared with $30
million in 2017. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points
to 61.5% in 2018 from 61.1% in 2017.
Reinsurance & Monoline Excess - The loss ratio of 61.0% in 2018 was 9.0 points lower than the loss ratio of 70.0%
in 2017. Catastrophe losses were $29 million in 2018 compared with $77 million in 2017. Favorable prior year
reserve development was $20 million in 2018 compared with $7 million in 2017. The loss ratio excluding
catastrophe losses and prior year reserve development decreased 1.1 points to 59.6% in 2018 from 60.7% in 2017.
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
(In thousands)
Policy acquisition and insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency (gains) losses
Other costs and expenses
Total
2018
2017
2,098,881
$
2,101,024
118,357
(27,067)
193,050
129,776
15,267
190,865
2,383,221
$
2,436,932
$
$
Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium
taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses remained flat
and net premiums earned increased 1% from 2017. The expense ratio (policy acquisition and insurance operating expenses
expressed as a percentage of premiums earned) was 32.9% in 2018 and 33.3% in 2017.
Service expenses, which represent the costs associated with the fee-based businesses, decreased 9% to $118 million in
2018 from $130 million in 2017. The decrease is primarily due to the sale of a third party administration business in the third
quarter of 2018.
(cid:1)et foreign currency (gains) losses result from transactions denominated in a currency other than an operating units
functional currency. (cid:1)et foreign currency gains were $27 million in 2018 compared to losses of $15 million in 2017, resulting
from the strengthening U.S. dollar and the change of functional currency for the Company's Argentine operations to the U.S.
dollar as of July 1, 2018. The Argentine economy was determined to be highly inflationary under GAAP requiring the change in
functional currency beginning with the third quarter of 2018.
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not
allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs
and expenses increased to $193 million in 2018 from $191 million in 2017.
48
49
56
27983be 10K
27983be_10K.indd 56
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
5
2/26/20 12:08 PM
27983be 10K
57
5
7
2
7
9
8
3
b
e
1
0
K
Investments
As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-
term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations. Due to the low
fixed maturity investment returns, the Company invests in equity securities, merger arbitrage securities, investment funds,
private equity, loans and real estate related assets. The Company's investments in investment funds and its other alternative
investments have experienced, and the Company expects to continue to experience, greater fluctuations in investment income.
The Company also attempts to maintain an appropriate relationship between the effective duration of the investment
portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the
investment portfolio was 2.8 years at December 31, 2019 and 2018. The Companys investment portfolio and investment-
related assets as of December 31, 2019 were as follows:
($ in thousands)
Fixed maturity securities:
Carrying
Value
Percent
of Total
portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio
as a result of changes in financial market conditions and tax considerations.
The Companys philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing
total return. The key factors that management considers in its investment decisions as to whether to hold or sell fixed maturity
securities are its view of the underlying fundamentals of specific securities as well as its expectations regarding interest rates,
credit spreads and currency values. In a period in which management expects interest rates to rise, the Company may sell longer
duration securities in order to mitigate the impact of an interest rate rise on the fair value of the portfolio. Similarly, in a period
in which management expects credit spreads to widen, the Company may sell lower quality securities, and in a period in which
management expects certain foreign currencies to decline in value, the Company may sell securities denominated in those
foreign currencies. The sale of fixed maturity securities in order to achieve the objective of maximizing total return may result
in realized gains; however, there is no reason to expect these gains to continue in future periods.
Equity Securities. Equity securities primarily represent investments in common and preferred stocks in companies with
potential growth opportunities in different sectors, mainly in the financial institutions sector.
U.S. government and government agencies
$
786,931
4.0%
Investment Funds. At December 31, 2019, the carrying value of investment funds was $1,214 million, including
State and municipal:
Special revenue
Local general obligation
State general obligation
Pre-refunded (1)
Corporate backed
Total state and municipal
Mortgage-backed securities:
Agency
Residential-Prime
Commercial
Residential-Alt A
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
Total fixed maturity securities
Equity securities available for sale:
Preferred stocks
Common stocks
Total equity securities available for sale
Real estate
Investment funds
Cash and cash equivalents
Arbitrage trading account
Loans receivable
2,422,700
469,855
421,704
390,126
261,559
3,965,944
859,043
432,418
309,374
33,130
1,633,965
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
14,180,961
313,815
166,805
480,620
2,105,950
1,213,535
1,023,710
400,809
91,799
12.4
2.4
2.2
2.0
1.3
20.3
4.4
2.2
1.6
0.2
8.3
14.3
12.0
7.6
1.7
21.3
4.3
72.6
1.6
0.9
2.5
10.8
6.2
5.3
2.1
0.5
investments in real estate funds of $412 million, financial services funds of $281 million, energy funds of $157 million,
transportation funds of $147 million, and other funds of $217 million. Investment funds are primarily reported on a one-quarter
lag.
Real Estate. Real estate is directly owned property held for investment. At December 31, 2019, real estate properties in
operation included a long-term ground lease in Washington D.C., a hotel in Memphis, Tennessee, two office complexes in (cid:1)ew
York City, office buildings in West Palm Beach and Palm Beach, Florida, and an office building in London, U.K. In addition,
there is a mixed-use project in Washington D.C. under development. The Company expects to fund further development costs
for the project with a combination of its own funds and external financing.
Arbitrage Trading Account. The arbitrage trading account is comprised of direct investments in arbitrage securities.
Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced
tender offers and mergers.
Loans Receivable. Loans receivable, which are carried at amortized cost, had an amortized cost of $92 million and an
aggregate fair value of $95 million at December 31, 2019. The amortized cost of loans receivable is net of a valuation
allowance of $2 million as of December 31, 2019. Loans receivable include real estate loans of $59 million that are secured by
commercial real estate located primarily in (cid:1)ew York. Real estate loans receivable generally earn interest at floating LIBOR-
based interest rates and have maturities (inclusive of extension options) through August 2025. Loans receivable include
commercial loans of $33 million that are secured by business assets and have fixed interest rates and varying maturities not
exceeding 10 years.
Total investments
$ 19,497,384
100.0%
______________
(1) Pre-refunded securities are securities for which an escrow account has been established to fund the remaining payments of
principal and interest through maturity. Such escrow accounts are funded almost exclusively with U.S. Treasury and U.S.
government agency securities.
Fixed Maturity Securities. The Companys investment policy with respect to fixed maturity securities is generally to
purchase instruments with the expectation of holding them to their maturity. However, management of the available for sale
50
57
27983be 10K
27983be_10K.indd 57
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
5
2/26/20 12:08 PM
51
($ in thousands)
Fixed maturity securities:
State and municipal:
Special revenue
Local general obligation
State general obligation
Pre-refunded (1)
Corporate backed
Total state and municipal
Mortgage-backed securities:
Agency
Residential-Prime
Commercial
Residential-Alt A
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
Total fixed maturity securities
Equity securities available for sale:
Preferred stocks
Common stocks
Real estate
Investment funds
Cash and cash equivalents
Arbitrage trading account
Loans receivable
Total investments
______________
Total equity securities available for sale
2,422,700
469,855
421,704
390,126
261,559
3,965,944
859,043
432,418
309,374
33,130
1,633,965
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
14,180,961
313,815
166,805
480,620
2,105,950
1,213,535
1,023,710
400,809
91,799
12.4
2.4
2.2
2.0
1.3
20.3
4.4
2.2
1.6
0.2
8.3
14.3
12.0
7.6
1.7
21.3
4.3
72.6
10.8
1.6
0.9
2.5
6.2
5.3
2.1
0.5
Investments
As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-
5
8
2
7
9
8
3
b
e
1
0
K
portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio
as a result of changes in financial market conditions and tax considerations.
term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations. Due to the low
The Companys philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing
27983be 10K
58
fixed maturity investment returns, the Company invests in equity securities, merger arbitrage securities, investment funds,
private equity, loans and real estate related assets. The Company's investments in investment funds and its other alternative
investments have experienced, and the Company expects to continue to experience, greater fluctuations in investment income.
The Company also attempts to maintain an appropriate relationship between the effective duration of the investment
portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the
investment portfolio was 2.8 years at December 31, 2019 and 2018. The Companys investment portfolio and investment-
related assets as of December 31, 2019 were as follows:
Carrying
Value
Percent
of Total
U.S. government and government agencies
$
786,931
4.0%
total return. The key factors that management considers in its investment decisions as to whether to hold or sell fixed maturity
securities are its view of the underlying fundamentals of specific securities as well as its expectations regarding interest rates,
credit spreads and currency values. In a period in which management expects interest rates to rise, the Company may sell longer
duration securities in order to mitigate the impact of an interest rate rise on the fair value of the portfolio. Similarly, in a period
in which management expects credit spreads to widen, the Company may sell lower quality securities, and in a period in which
management expects certain foreign currencies to decline in value, the Company may sell securities denominated in those
foreign currencies. The sale of fixed maturity securities in order to achieve the objective of maximizing total return may result
in realized gains; however, there is no reason to expect these gains to continue in future periods.
Equity Securities. Equity securities primarily represent investments in common and preferred stocks in companies with
potential growth opportunities in different sectors, mainly in the financial institutions sector.
Investment Funds. At December 31, 2019, the carrying value of investment funds was $1,214 million, including
investments in real estate funds of $412 million, financial services funds of $281 million, energy funds of $157 million,
transportation funds of $147 million, and other funds of $217 million. Investment funds are primarily reported on a one-quarter
lag.
Real Estate. Real estate is directly owned property held for investment. At December 31, 2019, real estate properties in
operation included a long-term ground lease in Washington D.C., a hotel in Memphis, Tennessee, two office complexes in (cid:1)ew
York City, office buildings in West Palm Beach and Palm Beach, Florida, and an office building in London, U.K. In addition,
there is a mixed-use project in Washington D.C. under development. The Company expects to fund further development costs
for the project with a combination of its own funds and external financing.
Arbitrage Trading Account. The arbitrage trading account is comprised of direct investments in arbitrage securities.
Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced
tender offers and mergers.
Loans Receivable. Loans receivable, which are carried at amortized cost, had an amortized cost of $92 million and an
aggregate fair value of $95 million at December 31, 2019. The amortized cost of loans receivable is net of a valuation
allowance of $2 million as of December 31, 2019. Loans receivable include real estate loans of $59 million that are secured by
commercial real estate located primarily in (cid:1)ew York. Real estate loans receivable generally earn interest at floating LIBOR-
based interest rates and have maturities (inclusive of extension options) through August 2025. Loans receivable include
commercial loans of $33 million that are secured by business assets and have fixed interest rates and varying maturities not
exceeding 10 years.
(1) Pre-refunded securities are securities for which an escrow account has been established to fund the remaining payments of
principal and interest through maturity. Such escrow accounts are funded almost exclusively with U.S. Treasury and U.S.
government agency securities.
Fixed Maturity Securities. The Companys investment policy with respect to fixed maturity securities is generally to
purchase instruments with the expectation of holding them to their maturity. However, management of the available for sale
$ 19,497,384
100.0%
50
51
58
27983be 10K
27983be_10K.indd 58
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
5
2/26/20 12:08 PM
5
9
2
7
9
8
3
b
e
1
0
K
Liquidity and Capital Resources
Reinsurance
27983be 10K
59
Cash Flow. Cash flow provided from operating activities increased to $1,144 million in 2019 from $620 million in 2018,
primarily due to an increase in net premium receipts and the timing of loss and loss expense payments as well as payments to tax
authorities.
The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and proceeds
from sales and maturities of portfolio investments. The principal uses of cash are payments for claims, taxes, operating expenses and
dividends. The Company expects its insurance subsidiaries to fund the payment of losses with cash received from premiums,
investment income and fees. The Company generally targets an average duration for its investment portfolio that is within one year
of the average duration of its liabilities so that portions of its investment portfolio mature throughout the claim cycle and are
available for the payment of claims if necessary. In the event operating cash flow and proceeds from maturities and prepayments of
fixed maturity securities are not sufficient to fund claim payments and other cash requirements, the remainder of the Company's
cash and investments is available to pay claims and other obligations as they become due. The Company's investment portfolio is
highly liquid, with approximately 78% invested in cash, cash equivalents and marketable fixed maturity securities as of December
31, 2019. If the sale of fixed maturity securities were to become necessary, a realized gain or loss equal to the difference between
the cost and sales price of securities sold would be recognized.
Debt. At December 31, 2019, the Company had senior notes, subordinated debentures and other debt outstanding with a
carrying value of $2,626 million and a face amount of $2,671 million. The maturities of the outstanding debt are $6 million in 2019,
$300 million in 2020, $1 million in 2021, $427 million in 2022, $102 million in 2028, $250 million in 2037, $350 million in 2044,
$350 million in 2053, $400 million in 2056, $185 million in 2058 and $300 million in 2059.
In March 2018, the Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058,
and in April 2018, the Company issued another $10 million principal amount of such debentures. Additionally in 2018, the
Company issued subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate
property in Florida. During 2019, the Company repaid at maturity $489 million aggregate principal amount of senior notes and other
debt. In December 2019, the Company issued $300 million aggregate principal amount of 5.10% subordinated debentures due 2059.
Equity. The Company repurchased 269,072, 357,600, and 731,003 shares of its common stock in 2019, 2018 and 2017,
respectively. The aggregate cost of the repurchases was $18 million in 2019, $25 million in 2018 and $48 million in 2017. In 2019,
the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter, and $0.11 per share in each of the
remaining three quarters, plus additional special dividends in the respective amounts of $0.50 per share in the second quarter and
$0.75 per share in the fourth quarter, for a total of $308 million in aggregate dividends in 2019. At December 31, 2019, total
common stockholders equity was $6.1 billion, common shares outstanding were 183,411,907 and stockholders equity per
outstanding share was $33.12.
Total Capital. Total capitalization (equity, debt and subordinated debentures) was $8.7 billion at December 31, 2019. The
percentage of the Companys capital attributable to senior notes, subordinated debentures and other debt was 30% at December 31,
2019 and 34% at December 31, 2018.
Federal and Foreign Income Taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in each of the countries in which it
has overseas operations. At December 31, 2019, the Company had a gross deferred tax asset (net of valuation allowance) of $392
million (which primarily relates to loss and loss expense reserves and unearned premium reserves) and a gross deferred tax liability
of $410 million (which primarily relates to deferred policy acquisition costs, unrealized investment gains and investment funds).
The realization of the deferred tax asset is dependent upon the Company's ability to generate sufficient taxable income in future
periods. Based on historical results and the prospects for future operations, management anticipates that it is more likely than not
that future taxable income will be sufficient for the realization of this asset.
The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying reinsurers a
part of the premiums received on the policies it writes. Reinsurance is purchased by the Company principally to reduce its net
liability on individual risks and to protect it 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 liable to the insurer to the extent of
the reinsurance coverage. The Company monitors the financial condition of its reinsurers and attempts to place its coverages only
with financially sound carriers. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and
nature of loss. The Companys reinsurance purchases include the following:
Property reinsurance treaties - The Company purchases property reinsurance to reduce its exposure to large individual
property losses and catastrophe events. Following is a summary of significant property reinsurance treaties in effect as of
January 1, 2020: The Companys property per risk reinsurance generally covers losses between $2.5 million and $60
million. The Companys catastrophe excess of loss reinsurance program provides protection for net losses between $15
million and $395 million for the majority of business written by its U.S. Insurance segment operating units and Lloyd's
Syndicate, excluding offshore energy. The Companys catastrophe reinsurance agreements are subject to certain limits,
exclusions and reinstatement premiums.
Casualty reinsurance treaties - The Company purchases casualty reinsurance to reduce its exposure to large individual
casualty losses, workers compensation catastrophe losses and casualty losses involving multiple claimants or insureds
for the majority of business written by its U.S. companies. A significant casualty treaty (casualty catastrophe) in effect as
of January 1, 2020 provides significant protection for losses between $5 million and $75 million from single events with
claims involving two or more insurable interests or for systemic events involving multiple insureds and/or policy years.
The treaty also covers casualty contingency losses in excess of $2 million and up to $97 million. For losses involving
two or more claimants for primary workers compensation business, coverage is generally in place for losses between $5
million and $270 million. For excess workers compensation business, such coverage is generally in place for losses
between $25 million and $545 million.
are in excess of treaty reinsurance capacity.
supplement the above programs.
Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that
Other reinsurance - Depending on the operating unit, the Company purchases specific additional reinsurance to
The Company places a number of its casualty treaties on a risk attaching basis. Under risk attaching treaties, all claims
from policies incepting during the period of the reinsurance contract are covered even if they occur after the expiration date of the
reinsurance contract. If the Company is unable to renew or replace its existing reinsurance coverage, protection for unexpired
policies would remain in place until their expiration. In such case, the Company could revise its underwriting strategy for new
business to reflect the absence of reinsurance protection. The casualty catastrophe treaty highlighted above was purchased on a
claims made basis. Property catastrophe and workers compensation catastrophe reinsurance is generally placed on a losses
occurring basis, whereby only claims occurring during the period are covered. If the Company is unable to renew or replace these
reinsurance coverages, unexpired policies would not be protected, though we frequently have the option to purchase run-off
coverage in our treaties.
Following is a summary of earned premiums and loss and loss expenses ceded to reinsurers for each of the three years ended
December 31, 2019:
(In thousands)
Earned premiums
Losses and loss expenses
Year Ended December 31,
2019
2018
2017
$
1,328,843
$
1,236,049
$
1,161,936
836,831
829,742
601,769
Ceded earned premiums increased 7.5% in 2019 to $1,329 million. The ceded losses and loss expenses ratio decreased 4
points to 63% in 2019 from 67% in 2018.
52
59
27983be 10K
27983be_10K.indd 59
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
5
2/26/20 12:08 PM
53
27983be 10K
60
Liquidity and Capital Resources
6
0
2
7
9
8
3
b
e
1
0
K
Reinsurance
Cash Flow. Cash flow provided from operating activities increased to $1,144 million in 2019 from $620 million in 2018,
The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying reinsurers a
primarily due to an increase in net premium receipts and the timing of loss and loss expense payments as well as payments to tax
authorities.
The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and proceeds
from sales and maturities of portfolio investments. The principal uses of cash are payments for claims, taxes, operating expenses and
dividends. The Company expects its insurance subsidiaries to fund the payment of losses with cash received from premiums,
investment income and fees. The Company generally targets an average duration for its investment portfolio that is within one year
of the average duration of its liabilities so that portions of its investment portfolio mature throughout the claim cycle and are
available for the payment of claims if necessary. In the event operating cash flow and proceeds from maturities and prepayments of
fixed maturity securities are not sufficient to fund claim payments and other cash requirements, the remainder of the Company's
cash and investments is available to pay claims and other obligations as they become due. The Company's investment portfolio is
highly liquid, with approximately 78% invested in cash, cash equivalents and marketable fixed maturity securities as of December
31, 2019. If the sale of fixed maturity securities were to become necessary, a realized gain or loss equal to the difference between
the cost and sales price of securities sold would be recognized.
Debt. At December 31, 2019, the Company had senior notes, subordinated debentures and other debt outstanding with a
carrying value of $2,626 million and a face amount of $2,671 million. The maturities of the outstanding debt are $6 million in 2019,
$300 million in 2020, $1 million in 2021, $427 million in 2022, $102 million in 2028, $250 million in 2037, $350 million in 2044,
$350 million in 2053, $400 million in 2056, $185 million in 2058 and $300 million in 2059.
In March 2018, the Company issued $175 million aggregate principal amount of 5.70% subordinated debentures due 2058,
and in April 2018, the Company issued another $10 million principal amount of such debentures. Additionally in 2018, the
Company issued subsidiary debt of $116 million, which was primarily attributable to a non-recourse mortgage loan on a real estate
property in Florida. During 2019, the Company repaid at maturity $489 million aggregate principal amount of senior notes and other
debt. In December 2019, the Company issued $300 million aggregate principal amount of 5.10% subordinated debentures due 2059.
Equity. The Company repurchased 269,072, 357,600, and 731,003 shares of its common stock in 2019, 2018 and 2017,
respectively. The aggregate cost of the repurchases was $18 million in 2019, $25 million in 2018 and $48 million in 2017. In 2019,
the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter, and $0.11 per share in each of the
remaining three quarters, plus additional special dividends in the respective amounts of $0.50 per share in the second quarter and
$0.75 per share in the fourth quarter, for a total of $308 million in aggregate dividends in 2019. At December 31, 2019, total
common stockholders equity was $6.1 billion, common shares outstanding were 183,411,907 and stockholders equity per
Total Capital. Total capitalization (equity, debt and subordinated debentures) was $8.7 billion at December 31, 2019. The
percentage of the Companys capital attributable to senior notes, subordinated debentures and other debt was 30% at December 31,
outstanding share was $33.12.
2019 and 34% at December 31, 2018.
Federal and Foreign Income Taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in each of the countries in which it
part of the premiums received on the policies it writes. Reinsurance is purchased by the Company principally to reduce its net
liability on individual risks and to protect it 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 liable to the insurer to the extent of
the reinsurance coverage. The Company monitors the financial condition of its reinsurers and attempts to place its coverages only
with financially sound carriers. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and
nature of loss. The Companys reinsurance purchases include the following:
Property reinsurance treaties - The Company purchases property reinsurance to reduce its exposure to large individual
property losses and catastrophe events. Following is a summary of significant property reinsurance treaties in effect as of
January 1, 2020: The Companys property per risk reinsurance generally covers losses between $2.5 million and $60
million. The Companys catastrophe excess of loss reinsurance program provides protection for net losses between $15
million and $395 million for the majority of business written by its U.S. Insurance segment operating units and Lloyd's
Syndicate, excluding offshore energy. The Companys catastrophe reinsurance agreements are subject to certain limits,
exclusions and reinstatement premiums.
Casualty reinsurance treaties - The Company purchases casualty reinsurance to reduce its exposure to large individual
casualty losses, workers compensation catastrophe losses and casualty losses involving multiple claimants or insureds
for the majority of business written by its U.S. companies. A significant casualty treaty (casualty catastrophe) in effect as
of January 1, 2020 provides significant protection for losses between $5 million and $75 million from single events with
claims involving two or more insurable interests or for systemic events involving multiple insureds and/or policy years.
The treaty also covers casualty contingency losses in excess of $2 million and up to $97 million. For losses involving
two or more claimants for primary workers compensation business, coverage is generally in place for losses between $5
million and $270 million. For excess workers compensation business, such coverage is generally in place for losses
between $25 million and $545 million.
Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that
are in excess of treaty reinsurance capacity.
Other reinsurance - Depending on the operating unit, the Company purchases specific additional reinsurance to
supplement the above programs.
The Company places a number of its casualty treaties on a risk attaching basis. Under risk attaching treaties, all claims
from policies incepting during the period of the reinsurance contract are covered even if they occur after the expiration date of the
reinsurance contract. If the Company is unable to renew or replace its existing reinsurance coverage, protection for unexpired
policies would remain in place until their expiration. In such case, the Company could revise its underwriting strategy for new
business to reflect the absence of reinsurance protection. The casualty catastrophe treaty highlighted above was purchased on a
claims made basis. Property catastrophe and workers compensation catastrophe reinsurance is generally placed on a losses
occurring basis, whereby only claims occurring during the period are covered. If the Company is unable to renew or replace these
reinsurance coverages, unexpired policies would not be protected, though we frequently have the option to purchase run-off
coverage in our treaties.
has overseas operations. At December 31, 2019, the Company had a gross deferred tax asset (net of valuation allowance) of $392
Following is a summary of earned premiums and loss and loss expenses ceded to reinsurers for each of the three years ended
million (which primarily relates to loss and loss expense reserves and unearned premium reserves) and a gross deferred tax liability
December 31, 2019:
of $410 million (which primarily relates to deferred policy acquisition costs, unrealized investment gains and investment funds).
The realization of the deferred tax asset is dependent upon the Company's ability to generate sufficient taxable income in future
periods. Based on historical results and the prospects for future operations, management anticipates that it is more likely than not
that future taxable income will be sufficient for the realization of this asset.
(In thousands)
Earned premiums
Losses and loss expenses
Year Ended December 31,
2019
2018
2017
$
1,328,843
$
1,236,049
$
1,161,936
836,831
829,742
601,769
Ceded earned premiums increased 7.5% in 2019 to $1,329 million. The ceded losses and loss expenses ratio decreased 4
points to 63% in 2019 from 67% in 2018.
52
53
60
27983be 10K
27983be_10K.indd 60
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
6
2/26/20 12:08 PM
6
1
2
7
9
8
3
b
e
1
0
K
The following table presents the credit quality of amounts due from reinsurers as of December 31, 2019. Amounts due from
Contractual Obligations
reinsurers are net of reserves for uncollectible reinsurance of $1 million in the aggregate.
27983be 10K
61
(In thousands)
Reinsurer
Amounts due in excess of $20 million:
Munich Re
Lloyds of London
Swiss Re
Alleghany Group
Partner Re
Hannover Re Group
Axis Capital
Berkshire Hathaway
Renaissance Re
Korean Re
Everest Re
Liberty Mutual
Arch Capital Group
Qatar Re
Chubb Limited
Other reinsurers:
Rated A- or better
Secured (2)
All Others
Subtotal
Residual market pools (3)
Total
_________________
Rating
(1)
Amount
(In thousands)
Following is a summary of the Company's contractual obligations as of December 31, 2019:
AA-
A+
AA-
A+
A+
AA-
A+
AA+
A+
A
A+
A
A+
A
AA
$
243,021
201,092
179,274
169,185
127,638
95,486
93,547
82,882
79,954
64,464
55,431
49,346
27,116
22,477
15,199
166,658
118,550
23,195
1,814,515
319,168
$
2,133,683
Estimated Payments By Periods
2020
2021
2022
2023
2024
Thereafter
Gross reserves for losses
Operating lease obligations
Purchase obligations
Subordinated debentures
Debt maturities
Interest payments
Other long-term liabilities
Total
$
3,329,476
$
2,340,960
$
1,744,383
$
1,270,669
$
906,267
$
3,553,186
49,293
125,828
305,934
142,552
3,346
47,107
64,798
1,120
126,427
2,998
41,652
43,172
426,503
119,771
2,650
37,510
40,014
103,584
2,382
31,152
40,383
103,584
2,131
78,820
1,235,000
701,750
2,775,560
24,696
$
3,956,429
$
2,583,410
$
2,378,131
$
1,454,159
$
1,083,517
$
8,369,012
The estimated payments for reserves for losses and loss expenses in the above table represent the projected (undiscounted)
payments for gross loss and loss expense reserves related to losses incurred as of December 31, 2019. The estimated payments in
the above table do not consider payments for losses to be incurred in future periods. These amounts include reserves for reported
losses and reserves for incurred but not reported losses. Estimated amounts recoverable from reinsurers are not reflected. The
estimated payments by year are based on historical loss payment patterns.The actual payments may differ from the estimated
amounts due to changes in ultimate loss reserves and in the timing of the settlement of those reserves. In addition, at December 31,
2019, the Company had commitments to invest up to $232 million and $114 million in certain investment funds and real estate
construction projects, respectively. These amounts are not included in the above table.
The Company utilizes letters of credit to back certain reinsurance payments and obligations. Outstanding letters of credit
were $4 million as of December 31, 2019. The Company has made certain guarantees to state regulators that the statutory capital of
certain subsidiaries will be maintained above certain minimum levels.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated
entity under which a company has (1) made guarantees, (2) a retained or contingent interest in transferred assets, (3) an obligation
under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated
entity that provides financing, liquidity, market risk or credit risk support to the Company, or that engages in leasing, hedging or
research and development arrangements with the Company. The Company has no arrangements of these types that management
believes may have a material current or future effect on our financial condition, liquidity or results of operations.
(1) S&P rating, or if not rated by S&P, A.M. Best rating.
(2) Secured by letters of credit or other forms of collateral.
(3) Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide
workers' compensation to employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill this
residual market obligation by participating in pools where results are shared by the participating companies. The Company acts
as a servicing carrier for workers' compensation pools in certain states. As a servicing carrier, the Company writes residual
market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier, the Company
receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as ceded balances
are jointly shared by all the pool members.
54
61
27983be 10K
27983be_10K.indd 61
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
6
2/26/20 12:08 PM
55
The following table presents the credit quality of amounts due from reinsurers as of December 31, 2019. Amounts due from
reinsurers are net of reserves for uncollectible reinsurance of $1 million in the aggregate.
6
2
2
7
9
8
3
b
e
1
0
K
Contractual Obligations
Following is a summary of the Company's contractual obligations as of December 31, 2019:
Rating
(1)
Amount
(In thousands)
27983be 10K
62
Estimated Payments By Periods
2020
2021
2022
2023
2024
Thereafter
Gross reserves for losses
Operating lease obligations
Purchase obligations
Subordinated debentures
Debt maturities
Interest payments
Other long-term liabilities
Total
$
3,329,476
$
2,340,960
$
1,744,383
$
1,270,669
$
906,267
$
3,553,186
49,293
125,828
305,934
142,552
3,346
47,107
64,798
1,120
126,427
2,998
41,652
43,172
426,503
119,771
2,650
37,510
40,014
103,584
2,382
31,152
40,383
103,584
2,131
78,820
1,235,000
701,750
2,775,560
24,696
$
3,956,429
$
2,583,410
$
2,378,131
$
1,454,159
$
1,083,517
$
8,369,012
The estimated payments for reserves for losses and loss expenses in the above table represent the projected (undiscounted)
payments for gross loss and loss expense reserves related to losses incurred as of December 31, 2019. The estimated payments in
the above table do not consider payments for losses to be incurred in future periods. These amounts include reserves for reported
losses and reserves for incurred but not reported losses. Estimated amounts recoverable from reinsurers are not reflected. The
estimated payments by year are based on historical loss payment patterns.The actual payments may differ from the estimated
amounts due to changes in ultimate loss reserves and in the timing of the settlement of those reserves. In addition, at December 31,
2019, the Company had commitments to invest up to $232 million and $114 million in certain investment funds and real estate
construction projects, respectively. These amounts are not included in the above table.
The Company utilizes letters of credit to back certain reinsurance payments and obligations. Outstanding letters of credit
were $4 million as of December 31, 2019. The Company has made certain guarantees to state regulators that the statutory capital of
certain subsidiaries will be maintained above certain minimum levels.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated
entity under which a company has (1) made guarantees, (2) a retained or contingent interest in transferred assets, (3) an obligation
under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an unconsolidated
entity that provides financing, liquidity, market risk or credit risk support to the Company, or that engages in leasing, hedging or
research and development arrangements with the Company. The Company has no arrangements of these types that management
believes may have a material current or future effect on our financial condition, liquidity or results of operations.
(1) S&P rating, or if not rated by S&P, A.M. Best rating.
(2) Secured by letters of credit or other forms of collateral.
(3) Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide
workers' compensation to employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill this
residual market obligation by participating in pools where results are shared by the participating companies. The Company acts
as a servicing carrier for workers' compensation pools in certain states. As a servicing carrier, the Company writes residual
market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier, the Company
receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as ceded balances
are jointly shared by all the pool members.
(In thousands)
Reinsurer
Amounts due in excess of $20 million:
Munich Re
Lloyds of London
Swiss Re
Alleghany Group
Partner Re
Hannover Re Group
Axis Capital
Berkshire Hathaway
Renaissance Re
Korean Re
Everest Re
Liberty Mutual
Arch Capital Group
Qatar Re
Chubb Limited
Other reinsurers:
Rated A- or better
Secured (2)
All Others
Subtotal
Total
Residual market pools (3)
_________________
AA-
A+
AA-
A+
A+
AA-
A+
AA+
A+
A
A+
A
A+
A
AA
$
243,021
201,092
179,274
169,185
127,638
95,486
93,547
82,882
79,954
64,464
55,431
49,346
27,116
22,477
15,199
166,658
118,550
23,195
1,814,515
319,168
$
2,133,683
54
55
62
27983be 10K
27983be_10K.indd 62
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
6
2/26/20 12:08 PM
6
3
2
7
9
8
3
b
e
1
0
K
ITEM 7A. QUA(cid:1)TITATIVE A(cid:1)D QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS A(cid:1)D SUPPLEME(cid:1)TARY DATA
27983be 10K
63
Market Risk. The fair value of the Companys investments is subject to risks of fluctuations in credit quality and interest
rates. The Company uses various models and stress test scenarios to monitor and manage interest rate risk. The Company
attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the
investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective
duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.8 years at December 31, 2019 and 2018.
In addition, the fair value of the Companys international investments is subject to currency risk. The Company attempts
to manage its currency risk by matching its foreign currency assets and liabilities where considered appropriate.
The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2019:
($ in thousands)
State and municipal
Corporate
Mortgage-backed securities
Foreign government
U.S. government and government agencies
Asset-backed securities
Loans receivable
Cash and cash equivalents
Total
Effective
Duration
(Years)
3.9
$
3.5
3.3
2.4
2.3
1.3
0.8
2.8
Fair Value
3,978,944
4,156,415
1,634,959
847,076
786,931
2,790,630
94,613
1,023,710
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
W. R. Berkley Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and Subsidiaries (the Company)
as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, stockholders equity,
and cash flows for each of the years in the three year period ended December 31, 2019, and the related notes and financial
statement schedules II to VI (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and
the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2019, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Companys internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 20, 2020 expressed an unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.
$
15,313,278
Change in Accounting Principle
Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates. The
Company determines the estimated change in fair value of the fixed maturity securities, assuming parallel shifts in
the yield curve for treasury securities while keeping spreads between individual securities and treasury securities static. The
estimated fair value at specified levels at December 31, 2019 would be as follows:
As discussed in (cid:1)ote 10 to the consolidated financial statements, the Company has changed its method of accounting for equity
investments measured at fair value with changes in the fair value recognized through net income (other than those accounted for
under equity method of accounting or those that result in consolidation of the investee) effective January 1, 2018 due to the
adoption of ASU 2016-01, Financial Instruments.
(In thousands)
Change in interest rates:
300 basis point rise
200 basis point rise
100 basis point rise
Base scenario
100 basis point decline
200 basis point decline
300 basis point decline
Estimated Fair
Value
Change in Fair
Value
$
13,953,211
$
(1,360,067)
14,413,112
14,866,470
15,313,278
15,750,805
16,181,783
16,606,149
(900,167)
(446,809)
437,526
868,504
1,292,871
Arbitrage investing differs from other types of investments in that its focus is on transactions and events believed likely
to bring about a change in value over a relatively short time period (usually four months or less). The Company believes that
this makes arbitrage investments less vulnerable to changes in general stock market conditions. Potential changes in market
conditions are also mitigated by the implementation of hedging strategies, including short sales.
Additionally, the arbitrage positions are generally hedged against market declines by purchasing put options, selling call
options or entering into swap contracts. The Company's merger arbitrage securities are primarily exposed to the risk of
completion of announced deals, which are subject to regulatory as well as transactional and other risks.
56
63
27983be 10K
27983be_10K.indd 63
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
6
2/26/20 12:08 PM
Basis for Opinion
These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the estimate of the reserves for losses and loss expenses
As discussed in (cid:1)otes 1 and 13 to the consolidated financial statements, the Company estimates the reserves for losses
and loss expenses (reserves) using a variety of actuarial techniques and methods based on expected loss ratios, rate of
57
27983be 10K
64
ITEM 7A. QUA(cid:1)TITATIVE A(cid:1)D QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS A(cid:1)D SUPPLEME(cid:1)TARY DATA
6
4
2
7
9
8
3
b
e
1
0
K
Market Risk. The fair value of the Companys investments is subject to risks of fluctuations in credit quality and interest
rates. The Company uses various models and stress test scenarios to monitor and manage interest rate risk. The Company
attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the
investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective
duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.8 years at December 31, 2019 and 2018.
In addition, the fair value of the Companys international investments is subject to currency risk. The Company attempts
to manage its currency risk by matching its foreign currency assets and liabilities where considered appropriate.
The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2019:
Fair Value
$
3,978,944
4,156,415
1,634,959
847,076
786,931
2,790,630
94,613
1,023,710
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
W. R. Berkley Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and Subsidiaries (the Company)
as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, stockholders equity,
and cash flows for each of the years in the three year period ended December 31, 2019, and the related notes and financial
statement schedules II to VI (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and
the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2019, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Companys internal control over financial reporting as of December 31, 2019, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 20, 2020 expressed an unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.
Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates. The
Company determines the estimated change in fair value of the fixed maturity securities, assuming parallel shifts in
the yield curve for treasury securities while keeping spreads between individual securities and treasury securities static. The
estimated fair value at specified levels at December 31, 2019 would be as follows:
As discussed in (cid:1)ote 10 to the consolidated financial statements, the Company has changed its method of accounting for equity
investments measured at fair value with changes in the fair value recognized through net income (other than those accounted for
under equity method of accounting or those that result in consolidation of the investee) effective January 1, 2018 due to the
adoption of ASU 2016-01, Financial Instruments.
$
15,313,278
Change in Accounting Principle
Effective
Duration
(Years)
3.9
3.5
3.3
2.4
2.3
1.3
0.8
2.8
Estimated Fair
Change in Fair
Value
Value
$
13,953,211
$
(1,360,067)
14,413,112
14,866,470
15,313,278
15,750,805
16,181,783
16,606,149
(900,167)
(446,809)
437,526
868,504
1,292,871
Arbitrage investing differs from other types of investments in that its focus is on transactions and events believed likely
to bring about a change in value over a relatively short time period (usually four months or less). The Company believes that
this makes arbitrage investments less vulnerable to changes in general stock market conditions. Potential changes in market
conditions are also mitigated by the implementation of hedging strategies, including short sales.
Additionally, the arbitrage positions are generally hedged against market declines by purchasing put options, selling call
options or entering into swap contracts. The Company's merger arbitrage securities are primarily exposed to the risk of
completion of announced deals, which are subject to regulatory as well as transactional and other risks.
Basis for Opinion
These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of the estimate of the reserves for losses and loss expenses
As discussed in (cid:1)otes 1 and 13 to the consolidated financial statements, the Company estimates the reserves for losses
and loss expenses (reserves) using a variety of actuarial techniques and methods based on expected loss ratios, rate of
56
57
($ in thousands)
State and municipal
Corporate
Mortgage-backed securities
Foreign government
Asset-backed securities
Loans receivable
Cash and cash equivalents
Total
U.S. government and government agencies
(In thousands)
Change in interest rates:
300 basis point rise
200 basis point rise
100 basis point rise
Base scenario
100 basis point decline
200 basis point decline
300 basis point decline
K
0
1
e
b
3
8
9
7
2
4
6
64
27983be 10K
27983be_10K.indd 64
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
27983be 10K
65
6
5
2
7
9
8
3
b
e
1
0
K
loss cost inflation, reported and paid loss emergence patterns, loss frequency and severity, and the loss reporting lag.
Such amounts are adjusted for certain qualitative factors. The reserves as of December 31, 2019 were $12,583 million.
We identified the assessment of the estimate of reserves as a critical audit matter because it involved significant
measurement uncertainty, which required complex auditor judgment. Specialized actuarial expertise was required to
evaluate the actuarial method or methods and assumptions used. Assumptions included loss development factors; the
weighting of actuarial methods when more than one was used; the impact of qualitative factors; and whether payments
are fixed and reliably determinable for certain reserves subject to discounting.
The primary procedures we performed to address the critical audit matter included the following. We tested certain
internal controls over the Companys reserving process, including controls over the Companys process to develop the
Companys best estimate of reserves based on actuarial methodologies and assumptions employed by the Companys
actuaries. We involved actuarial professionals with specialized skills and knowledge, who assisted in:
Examining the Companys actuarial methodologies for compliance with Actuarial Standards of Practice;
Evaluating the Companys actuarial point estimate by performing independent actuarial analyses for certain of
the larger, more complex operating units;
Evaluating the Companys actuarial point estimate by examining the Company actuaries procedures, and
certain key assumptions for the remaining operating units;
Developing an independent range of reserves based on actuarial methodologies and assumptions and comparing
to the Companys reserves;
Evaluating the Companys reserves and year-over-year movements of the Companys reserves relative to, and
within, the independently developed range of reserves; and
Evaluating the Companys ability to discount certain reserves by comparing the expected payout pattern of
claims paid to actual claims paid.
We have served as the Companys auditor since 1972.
(cid:1)ew York, (cid:1)ew York
February 20, 2020
/S/ KPMG LLP
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF I(cid:1)COME
(In thousands, except per share data)
REVE(cid:1)UES:
(cid:1)et premiums written
(cid:1)et premiums earned
(cid:1)et investment income
Change in net unearned premiums
(cid:1)et realized and unrealized gains on investments:
(cid:1)et realized and unrealized gains before OTTI
Other-than-temporary impairments ("OTTI")
(cid:1)et realized and unrealized gains on investments
Revenues from non-insurance businesses
Insurance service fees
Other income
Total revenues
OPERATI(cid:1)G COSTS A(cid:1)D EXPE(cid:1)SES:
Losses and loss expenses
Other operating costs and expenses
Expenses from non-insurance businesses
Interest expense
Total operating costs and expenses
Income before income taxes
Income tax expense
(cid:1)et income before noncontrolling interests
(cid:1)oncontrolling interests
(cid:1)et income to common stockholders
(cid:1)ET I(cid:1)COME PER SHARE:
Basic
Diluted
Year Ended December 31,
2019
2018
2017
$
6,863,499
$
6,433,227
$
6,260,508
(230,211)
(61,722)
50,911
6,633,288
6,371,505
6,311,419
645,614
674,235
575,788
120,703
160,175
335,858
—
(5,687)
120,703
406,541
92,680
3,370
154,488
372,985
117,757
681
—
335,858
326,165
134,729
805
7,902,196
7,691,651
7,684,764
4,131,116
3,974,702
4,002,348
2,362,082
2,383,221
2,436,932
402,669
153,409
364,449
157,185
325,417
147,297
7,049,276
6,879,557
6,911,994
852,920
812,094
772,770
(168,935)
(163,028)
(219,433)
683,985
649,066
553,337
(2,041)
(8,317)
(4,243)
681,944
$
640,749
$
549,094
3.58
3.52
$
$
3.37
3.33
$
$
2.93
2.84
$
$
$
See accompanying notes to consolidated financial statements.
58
65
27983be 10K
27983be_10K.indd 65
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
6
2/26/20 12:08 PM
59
loss cost inflation, reported and paid loss emergence patterns, loss frequency and severity, and the loss reporting lag.
Such amounts are adjusted for certain qualitative factors. The reserves as of December 31, 2019 were $12,583 million.
We identified the assessment of the estimate of reserves as a critical audit matter because it involved significant
measurement uncertainty, which required complex auditor judgment. Specialized actuarial expertise was required to
evaluate the actuarial method or methods and assumptions used. Assumptions included loss development factors; the
weighting of actuarial methods when more than one was used; the impact of qualitative factors; and whether payments
are fixed and reliably determinable for certain reserves subject to discounting.
The primary procedures we performed to address the critical audit matter included the following. We tested certain
internal controls over the Companys reserving process, including controls over the Companys process to develop the
Companys best estimate of reserves based on actuarial methodologies and assumptions employed by the Companys
actuaries. We involved actuarial professionals with specialized skills and knowledge, who assisted in:
Examining the Companys actuarial methodologies for compliance with Actuarial Standards of Practice;
Evaluating the Companys actuarial point estimate by performing independent actuarial analyses for certain of
the larger, more complex operating units;
Evaluating the Companys actuarial point estimate by examining the Company actuaries procedures, and
certain key assumptions for the remaining operating units;
Developing an independent range of reserves based on actuarial methodologies and assumptions and comparing
to the Companys reserves;
Evaluating the Companys reserves and year-over-year movements of the Companys reserves relative to, and
within, the independently developed range of reserves; and
Evaluating the Companys ability to discount certain reserves by comparing the expected payout pattern of
claims paid to actual claims paid.
We have served as the Companys auditor since 1972.
(cid:1)ew York, (cid:1)ew York
February 20, 2020
/S/ KPMG LLP
27983be 10K
66
6
6
2
7
9
8
3
b
e
1
0
K
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF I(cid:1)COME
(In thousands, except per share data)
REVE(cid:1)UES:
(cid:1)et premiums written
Change in net unearned premiums
(cid:1)et premiums earned
(cid:1)et investment income
(cid:1)et realized and unrealized gains on investments:
(cid:1)et realized and unrealized gains before OTTI
Other-than-temporary impairments ("OTTI")
(cid:1)et realized and unrealized gains on investments
Revenues from non-insurance businesses
Insurance service fees
Other income
Total revenues
OPERATI(cid:1)G COSTS A(cid:1)D EXPE(cid:1)SES:
Losses and loss expenses
Other operating costs and expenses
Expenses from non-insurance businesses
Interest expense
Total operating costs and expenses
Income before income taxes
Income tax expense
(cid:1)et income before noncontrolling interests
(cid:1)oncontrolling interests
(cid:1)et income to common stockholders
(cid:1)ET I(cid:1)COME PER SHARE:
Basic
Diluted
Year Ended December 31,
2019
2018
2017
$
6,863,499
$
6,433,227
$
6,260,508
(230,211)
(61,722)
50,911
6,633,288
6,371,505
6,311,419
645,614
674,235
575,788
120,703
160,175
335,858
—
(5,687)
120,703
406,541
92,680
3,370
154,488
372,985
117,757
681
—
335,858
326,165
134,729
805
7,902,196
7,691,651
7,684,764
4,131,116
3,974,702
4,002,348
2,362,082
2,383,221
2,436,932
402,669
153,409
364,449
157,185
325,417
147,297
7,049,276
6,879,557
6,911,994
852,920
812,094
772,770
(168,935)
(163,028)
(219,433)
683,985
649,066
553,337
(2,041)
(8,317)
(4,243)
681,944
$
640,749
$
549,094
3.58
3.52
$
$
3.37
3.33
$
$
2.93
2.84
$
$
$
See accompanying notes to consolidated financial statements.
58
59
66
27983be 10K
27983be_10K.indd 66
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
6
2/26/20 12:08 PM
6
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
67
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF COMPREHE(cid:1)SIVE I(cid:1)COME
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED BALA(cid:1)CE SHEETS
(In thousands)
(cid:1)et income before noncontrolling interests
Other comprehensive gain (loss):
Change in unrealized translation adjustments
Change in unrealized investment gains (losses), net of taxes
Other comprehensive gain (loss)
Comprehensive income
Comprehensive income to the noncontrolling interest
Comprehensive income to common stockholders
Year Ended December 31,
2019
2018
2017
$
683,985
$
649,066
$
553,337
37,166
215,902
253,068
937,053
(2,144)
(112,099)
(252,327)
(364,426)
284,640
(8,271)
64,706
(51,752)
12,954
566,291
(4,262)
$
934,909
$
276,369
$
562,029
See accompanying notes to consolidated financial statements.
60
67
27983be 10K
27983be_10K.indd 67
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
6
2/26/20 12:08 PM
(In thousands, except share data)
Assets
Investments:
Fixed maturity securities
Investment funds
Real estate
Arbitrage trading account
Equity securities
Loans receivable
Total investments
Cash and cash equivalents
Premiums and fees receivable
Due from reinsurers
Deferred policy acquisition costs
Prepaid reinsurance premiums
Trading account receivable from brokers and clearing organizations
Trading account securities sold but not yet purchased
Deferred federal and foreign income taxes
Property, furniture and equipment
Goodwill
Accrued investment income
Current federal and foreign income taxes
Deferred federal and foreign income taxes
Other assets
Total assets
Liabilities and Equity
Liabilities:
Unearned premiums
Due to reinsurers
Other liabilities
Senior notes and other debt
Subordinated debentures
Total liabilities
Equity:
Preferred stock, par value $.10 per share:
Common stock, par value $.20 per share:
182,993,640 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total common stockholders equity
(cid:1)oncontrolling interests
Total equity
Total liabilities and equity
Treasury stock, at cost, 169,264,857 and 169,683,237 shares, respectively
Reserves for losses and loss expenses
12,583,249
$
11,966,448
Authorized 5,000,000 shares; issued and outstanding none
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 183,411,907 and
See accompanying notes to consolidated financial statements.
61
December 31,
2019
2018
$
14,180,961
$
13,606,812
18,473,674
17,723,089
1,213,535
2,105,950
400,809
480,620
91,799
1,023,710
1,997,186
2,133,683
517,364
567,595
423,543
422,091
169,652
138,789
13,398
762,743
3,656,507
360,314
36,143
17,706
1,244,888
1,427,575
1,198,704
1,332,818
1,957,092
452,548
279,006
94,813
817,602
1,807,762
1,932,291
497,629
498,880
347,228
416,372
173,037
144,481
703
35,490
501,413
3,359,991
256,917
38,120
1,005,184
1,882,028
907,491
26,643,428
$
24,895,977
$
$
20,525,086
19,416,179
70,535
1,056,042
7,932,372
(257,299)
(2,726,711)
6,074,939
43,403
6,118,342
70,535
1,039,633
7,558,619
(510,470)
(2,720,466)
5,437,851
41,947
5,479,798
$
26,643,428
$
24,895,977
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF COMPREHE(cid:1)SIVE I(cid:1)COME
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED BALA(cid:1)CE SHEETS
6
8
2
7
9
8
3
b
e
1
0
K
(In thousands)
(cid:1)et income before noncontrolling interests
Other comprehensive gain (loss):
Change in unrealized translation adjustments
Change in unrealized investment gains (losses), net of taxes
Other comprehensive gain (loss)
Comprehensive income
Comprehensive income to the noncontrolling interest
Comprehensive income to common stockholders
Year Ended December 31,
2019
2018
2017
$
683,985
$
649,066
$
553,337
37,166
215,902
253,068
937,053
(2,144)
(112,099)
(252,327)
(364,426)
284,640
(8,271)
64,706
(51,752)
12,954
566,291
(4,262)
$
934,909
$
276,369
$
562,029
See accompanying notes to consolidated financial statements.
(In thousands, except share data)
Assets
Investments:
Fixed maturity securities
Investment funds
Real estate
Arbitrage trading account
Equity securities
Loans receivable
Total investments
Cash and cash equivalents
Premiums and fees receivable
Due from reinsurers
Deferred policy acquisition costs
Prepaid reinsurance premiums
Trading account receivable from brokers and clearing organizations
Property, furniture and equipment
Goodwill
Accrued investment income
Current federal and foreign income taxes
Deferred federal and foreign income taxes
Other assets
Total assets
Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses
Unearned premiums
Due to reinsurers
Trading account securities sold but not yet purchased
Deferred federal and foreign income taxes
Other liabilities
Senior notes and other debt
Subordinated debentures
Total liabilities
Equity:
Preferred stock, par value $.10 per share:
27983be 10K
68
December 31,
2019
2018
$
14,180,961
$
13,606,812
1,213,535
2,105,950
400,809
480,620
91,799
1,332,818
1,957,092
452,548
279,006
94,813
18,473,674
17,723,089
1,023,710
1,997,186
2,133,683
517,364
567,595
423,543
422,091
169,652
138,789
13,398
762,743
817,602
1,807,762
1,932,291
497,629
498,880
347,228
416,372
173,037
144,481
703
35,490
501,413
$
$
26,643,428
$
24,895,977
12,583,249
$
11,966,448
3,656,507
360,314
36,143
17,706
1,244,888
1,427,575
1,198,704
3,359,991
256,917
38,120
1,005,184
1,882,028
907,491
20,525,086
19,416,179
Authorized 5,000,000 shares; issued and outstanding none
Common stock, par value $.20 per share:
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 183,411,907 and
182,993,640 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost, 169,264,857 and 169,683,237 shares, respectively
Total common stockholders equity
(cid:1)oncontrolling interests
Total equity
Total liabilities and equity
70,535
1,056,042
7,932,372
(257,299)
(2,726,711)
6,074,939
43,403
6,118,342
70,535
1,039,633
7,558,619
(510,470)
(2,720,466)
5,437,851
41,947
5,479,798
$
26,643,428
$
24,895,977
60
See accompanying notes to consolidated financial statements.
61
68
27983be 10K
27983be_10K.indd 68
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
6
2/26/20 12:08 PM
6
9
2
7
9
8
3
b
e
1
0
K
27983be 10K
69
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF STOCKHOLDERS EQUITY
(In thousands, except per share data)
COMMO(cid:1) STOCK:
Beginning and end of period
ADDITIO(cid:1)AL PAID I(cid:1) CAPITAL:
Beginning of period
Restricted stock units issued
Restricted stock units expensed
End of period
RETAI(cid:1)ED EAR(cid:1)I(cid:1)GS:
Beginning of period
Cumulative effect adjustment resulting from changes in accounting principles
(cid:1)et income to common stockholders
Dividends ($1.68, $1.39, and $1.03 per share, respectively)
End of period
ACCUMULATED OTHER COMPREHE(cid:1)SIVE (LOSS) I(cid:1)COME:
Unrealized investment gains (losses):
Beginning of period
Cumulative effect adjustment resulting from changes in accounting principles
Unrealized gains (losses) on securities not other-than-temporarily impaired
Unrealized gains (losses) on other-than-temporarily impaired securities
End of period
Currency translation adjustments:
Beginning of period
(cid:1)et change in period
End of period
Total accumulated other comprehensive (loss) income
TREASURY STOCK:
Beginning of period
Stock exercised/vested
Stock issued
Stock repurchased
End of period
(cid:1)O(cid:1)CO(cid:1)TROLLI(cid:1)G I(cid:1)TERESTS:
Beginning of period
(Distributions) contributions
(cid:1)et income
Other comprehensive income (loss), net of tax
End of period
Year Ended December 31,
2019
2018
2017
$
$
$
$
70,535
1,039,633
(32,370)
48,779
1,056,042
7,558,619
—
681,944
(308,191)
$
$
$
$
70,535
1,024,772
(19,547)
34,408
1,039,633
6,956,882
215,939
640,749
(254,951)
70,535
1,013,935
(27,959)
38,796
1,024,772
6,595,987
—
549,094
(188,199)
7,932,372
$
7,558,619
$
6,956,882
(91,491) $
375,421
$
427,154
—
215,636
369
124,514
(418,979)
37,166
(381,813)
(214,539)
(252,241)
(132)
(91,491)
(306,880)
(112,099)
(418,979)
—
(52,628)
895
375,421
(371,586)
64,706
(306,880)
(257,299) $
(510,470) $
68,541
(2,720,466) $
(2,709,386) $
(2,688,817)
11,431
549
(18,225)
12,981
689
(24,750)
26,511
727
(47,807)
(2,726,711) $
(2,720,466) $
(2,709,386)
41,947
$
39,819
$
33,926
(688)
2,041
103
(6,143)
8,317
(46)
1,631
4,243
19
43,403
$
41,947
$
39,819
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
62
69
27983be 10K
27983be_10K.indd 69
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
6
2/26/20 12:08 PM
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF CASH FLOWS
(In thousands)
CASH FROM OPERATI(cid:1)G ACTIVITIES:
(cid:1)et income to common stockholders
Adjustments to reconcile net income to net cash from operating activities:
(cid:1)et realized and unrealized gains on investments
Depreciation and amortization
Year Ended December 31,
2019
2018
2017
$
681,944
$
640,749
$
549,094
(cid:1)oncontrolling interests
Investment funds
Stock incentive plans
Change in:
Arbitrage trading account
Premiums and fees receivable
Reinsurance accounts
Deferred policy acquisition costs
Current income taxes
Deferred income taxes
Reserves for losses and loss expenses
Unearned premiums
Other
(cid:1)et cash from operating activities
CASH FLOWS USED I(cid:1) I(cid:1)VESTI(cid:1)G ACTIVITIES:
Proceeds from sale of fixed maturity securities
Proceeds from sale of equity securities
Distributions (contributions) from investment funds
Purchase of fixed maturity securities
Purchase of equity securities
Real estate purchased
Change in loans receivable
(cid:1)et additions to property, furniture and equipment
Change in balances due from security brokers
Cash received in connection with business disposition
Payment for business purchased, net of cash acquired
(cid:1)et cash used in investing activities
CASH FLOWS USED I(cid:1) FI(cid:1)A(cid:1)CI(cid:1)G ACTIVITIES:
(cid:1)et proceeds from issuance of debt
Repayment of senior notes and other debt
Cash dividends to common stockholders
Purchase of common treasury shares
Other, net
(cid:1)et cash used in financing activities
(cid:1)et impact on cash due to change in foreign exchange rates
(cid:1)et increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Proceeds from maturities and prepayments of fixed maturity securities
2,093,271
3,525,149
4,035,162
497,989
(79,635)
2,676,455
(6,677,753)
195,270
247,404
3,556,744
(7,940,957)
(120,703)
113,387
2,041
(69,194)
49,274
(26,553)
(189,151)
(165,898)
(20,057)
(12,530)
7,130
612,254
301,355
(19,506)
1,143,793
79,963
194,663
2,933,980
(5,352,886)
(172,978)
(146,752)
3,481
(60,457)
2,844
(424,871)
290,974
(456,360)
(308,191)
(18,225)
(21,391)
(513,193)
379
206,108
817,602
(154,488)
131,108
8,317
(109,349)
36,591
(19,093)
(43,813)
(165,287)
7,788
(11,950)
(74,761)
339,015
84,142
(48,770)
620,199
(85,610)
(514,064)
(13,204)
(49,860)
4,262
8,664
(6,637)
(714,244)
294,562
(4,524)
(254,951)
(24,750)
(17,740)
(7,403)
(31,421)
(132,869)
950,471
(335,858)
112,956
4,243
(69,333)
40,490
(4,896)
(67,752)
(66,542)
30,343
25,859
(16,893)
438,530
4,160
66,482
710,883
(27,522)
(236,039)
27,135
(115,719)
(4,372)
(70,570)
(333,464)
6,983
(20)
(188,199)
(47,807)
(6,043)
(235,086)
12,853
155,186
795,285
950,471
See accompanying notes to consolidated financial statements.
$
1,023,710
$
817,602
$
63
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF STOCKHOLDERS EQUITY
7
0
2
7
9
8
3
b
e
1
0
K
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
CO(cid:1)SOLIDATED STATEME(cid:1)TS OF CASH FLOWS
27983be 10K
70
Year Ended December 31,
2019
2018
2017
$
$
$
$
$
$
$
$
70,535
70,535
70,535
1,039,633
1,024,772
1,013,935
(32,370)
48,779
(19,547)
34,408
(27,959)
38,796
1,056,042
1,039,633
1,024,772
7,558,619
6,956,882
6,595,987
—
681,944
(308,191)
215,939
640,749
(254,951)
—
549,094
(188,199)
7,932,372
$
7,558,619
$
6,956,882
(91,491) $
375,421
$
427,154
—
215,636
369
124,514
(418,979)
37,166
(381,813)
(214,539)
(252,241)
(132)
(91,491)
(306,880)
(112,099)
(418,979)
—
(52,628)
895
375,421
(371,586)
64,706
(306,880)
Total accumulated other comprehensive (loss) income
(257,299) $
(510,470) $
68,541
(2,720,466) $
(2,709,386) $
(2,688,817)
11,431
549
(18,225)
12,981
689
(24,750)
26,511
727
(47,807)
(2,726,711) $
(2,720,466) $
(2,709,386)
41,947
$
39,819
$
33,926
(688)
2,041
103
(6,143)
8,317
(46)
1,631
4,243
19
43,403
$
41,947
$
39,819
(In thousands, except per share data)
COMMO(cid:1) STOCK:
Beginning and end of period
ADDITIO(cid:1)AL PAID I(cid:1) CAPITAL:
Beginning of period
Restricted stock units issued
Restricted stock units expensed
End of period
RETAI(cid:1)ED EAR(cid:1)I(cid:1)GS:
Beginning of period
Cumulative effect adjustment resulting from changes in accounting principles
(cid:1)et income to common stockholders
Dividends ($1.68, $1.39, and $1.03 per share, respectively)
End of period
ACCUMULATED OTHER COMPREHE(cid:1)SIVE (LOSS) I(cid:1)COME:
Unrealized investment gains (losses):
Beginning of period
Cumulative effect adjustment resulting from changes in accounting principles
Unrealized gains (losses) on securities not other-than-temporarily impaired
Unrealized gains (losses) on other-than-temporarily impaired securities
End of period
Currency translation adjustments:
Beginning of period
(cid:1)et change in period
End of period
TREASURY STOCK:
Beginning of period
Stock exercised/vested
Stock issued
Stock repurchased
End of period
(cid:1)O(cid:1)CO(cid:1)TROLLI(cid:1)G I(cid:1)TERESTS:
Beginning of period
(Distributions) contributions
(cid:1)et income
End of period
Other comprehensive income (loss), net of tax
$
$
$
$
$
$
$
$
$
$
$
See accompanying notes to consolidated financial statements.
(In thousands)
CASH FROM OPERATI(cid:1)G ACTIVITIES:
(cid:1)et income to common stockholders
Adjustments to reconcile net income to net cash from operating activities:
(cid:1)et realized and unrealized gains on investments
Depreciation and amortization
(cid:1)oncontrolling interests
Investment funds
Stock incentive plans
Change in:
Arbitrage trading account
Premiums and fees receivable
Reinsurance accounts
Deferred policy acquisition costs
Current income taxes
Deferred income taxes
Reserves for losses and loss expenses
Unearned premiums
Other
(cid:1)et cash from operating activities
CASH FLOWS USED I(cid:1) I(cid:1)VESTI(cid:1)G ACTIVITIES:
Proceeds from sale of fixed maturity securities
Proceeds from sale of equity securities
Distributions (contributions) from investment funds
Proceeds from maturities and prepayments of fixed maturity securities
Purchase of fixed maturity securities
Purchase of equity securities
Real estate purchased
Change in loans receivable
(cid:1)et additions to property, furniture and equipment
Change in balances due from security brokers
Cash received in connection with business disposition
Payment for business purchased, net of cash acquired
(cid:1)et cash used in investing activities
CASH FLOWS USED I(cid:1) FI(cid:1)A(cid:1)CI(cid:1)G ACTIVITIES:
(cid:1)et proceeds from issuance of debt
Repayment of senior notes and other debt
Cash dividends to common stockholders
Purchase of common treasury shares
Other, net
(cid:1)et cash used in financing activities
(cid:1)et impact on cash due to change in foreign exchange rates
(cid:1)et increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
62
63
See accompanying notes to consolidated financial statements.
70
27983be 10K
27983be_10K.indd 70
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
Year Ended December 31,
2019
2018
2017
$
681,944
$
640,749
$
549,094
(120,703)
113,387
2,041
(69,194)
49,274
(26,553)
(189,151)
(165,898)
(20,057)
(12,530)
7,130
612,254
301,355
(19,506)
1,143,793
(154,488)
131,108
8,317
(109,349)
36,591
(19,093)
(43,813)
(165,287)
7,788
(11,950)
(74,761)
339,015
84,142
(48,770)
620,199
(335,858)
112,956
4,243
(69,333)
40,490
(4,896)
(67,752)
(66,542)
30,343
25,859
(16,893)
438,530
4,160
66,482
710,883
2,093,271
3,525,149
4,035,162
497,989
(79,635)
2,676,455
(6,677,753)
195,270
247,404
3,556,744
(7,940,957)
79,963
194,663
2,933,980
(5,352,886)
(172,978)
(146,752)
3,481
(60,457)
2,844
(424,871)
290,974
(456,360)
(308,191)
(18,225)
(21,391)
(513,193)
379
206,108
817,602
(85,610)
(514,064)
(13,204)
(49,860)
4,262
8,664
(6,637)
(714,244)
294,562
(4,524)
(254,951)
(24,750)
(17,740)
(7,403)
(31,421)
(132,869)
950,471
$
1,023,710
$
817,602
$
(27,522)
(236,039)
27,135
(115,719)
(4,372)
(70,570)
(333,464)
6,983
(20)
(188,199)
(47,807)
(6,043)
(235,086)
12,853
155,186
795,285
950,471
K
0
1
e
b
3
8
9
7
2
0
7
2/26/20 12:08 PM
7
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
71
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
(cid:1)OTES TO CO(cid:1)SOLIDATED FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS
For the years ended December 31, 2019, 2018 and 2017
(1) Summary of Significant Accounting Policies
(A) Principles of consolidation and basis of presentation
The consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the
"Company"), have been prepared on the basis of U.S. generally accepted accounting principles ("GAAP"). All significant
intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses reflected
during the reporting period. The most significant items on our balance sheet that involve a greater degree of accounting
estimates that are subject to change in the future are the valuation of investments, other-than-temporary impairments, reserves
for losses and loss expenses and premium estimates. Actual results could differ from those estimates.
Reclassifications have been made in the 2018 and 2017 financial statements as originally reported to conform to the
presentation of the 2019 financial statements. Shares outstanding and per share amounts have been adjusted to reflect the 3-
for-2 common stock split effected on April 2, 2019. Additionally, commencing with the first quarter of 2019, the Company
renamed the Reinsurance segment as Reinsurance & Monoline Excess, and reclassified the monoline excess business from the
Insurance segment to such renamed segment. The reclassified business includes operations that solely retain risk on an excess
basis.
(B) Revenue recognition
Insurance premiums are recognized as written at the inception of the policy. Reinsurance premiums are estimated based
upon information received from ceding companies, and subsequent differences from such estimates are recorded in the period
they are determined. Insurance and reinsurance premiums are primarily earned on a pro rata basis over the policy term. Fees for
services are earned over the period that the services are provided.
Audit premiums are recognized when they are reliably determinable. The change in accruals for earned but unbilled
audit premiums increased (decreased) net premiums written and premiums earned by $4 million, $(4) million and $8 million in
2019, 2018 and 2017, respectively.
Revenues from non-insurance businesses are derived from businesses engaged in the distribution of promotional
merchandise, world-wide textile solutions, and aircraft services provided to the general, commercial and military aviation
markets. These aircraft services include (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenue is
recognized upon the shipment of products and parts, the delivery of aircraft, the delivery of fuel, and over the completion
period of services.
Insurance service fee revenue represents servicing fees for program administration and claims management services
provided by the Company, including workers' compensation assigned risk plans, as well as insurance brokerage and risk
management services. Fees for program administration, claims management and risk management services are primarily
recognized ratably over the related contract period for which the underlying services are rendered. Commissions for insurance
brokerage are generally recognized when the underlying insurance policy is effective.
(C) Cash and cash equivalents
Cash equivalents consist of funds invested in money market accounts and investments with an effective maturity of three
months or less when purchased.
(D) Investments
Fixed maturity securities classified as available for sale are carried at estimated fair value, with unrealized gains and
losses, net of applicable income taxes, excluded from earnings and reported as a component of comprehensive income and a
separate component of stockholders' equity. Fixed maturity securities that the Company has the positive intent and ability to
hold to maturity are classified as held to maturity and reported at amortized cost. Investment income from fixed maturity
securities is recognized based on the constant effective yield method. Premiums and discounts on mortgage-backed securities
are adjusted for the effects of actual and anticipated prepayments on a retrospective basis.
64
Equity securities with readily determinable fair values are measured at fair value, with changes in the fair value
recognized in net income within net realized and unrealized gains on investments.
Fixed maturity securities that the Company purchased with the intent to sell in the near-term are classified as trading
account securities and are reported at estimated fair value. Realized and unrealized gains and losses from trading activity are
reported as net investment income and are recorded at the trade date. Short sales and short call options are presented as trading
securities sold but not yet purchased. Unsettled trades and the net margin balances held by the clearing broker are presented as
a trading account receivable from brokers and clearing organizations.
Investment funds are carried under the equity method of accounting. The Company's share of the earnings or losses of
investment funds is primarily reported on a one-quarter lag in order to facilitate the timely completion of the Company's
consolidated financial statements.
Loans receivable primarily represent commercial real estate mortgage loans and bank loans and are carried at amortized
cost. The Company monitors the performance of its loans receivable and establishes an allowance for loan losses for loans
where the Company determines it is probable that the contractual terms will not be met, with a corresponding charge to
earnings. For loans that are evaluated individually and deemed to be impaired, the Company establishes a specific allowance
based on a discounted cash flow analysis and comparable cost and sales methodologies, if appropriate. Individual loans that are
not considered impaired and smaller-balance homogeneous loans are evaluated collectively and a general allowance is
established if it is considered probable that a loss has been incurred.
The accrual of interest on loans receivable is discontinued if the loan is 90 days past due based on the contractual terms
of the loan unless the loan is adequately secured and in process of collection. In general, loans are placed on non-accrual status
or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest on these loans is accounted
for on a cash basis until qualifying for return to accrual status. Loans are returned to accrual status when all principal and
interest amounts contractually due are brought current and future payments are reasonably assured.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Fair value of investments is determined based on a fair value
hierarchy that prioritizes the use of observable inputs over the use of unobservable inputs and requires the use of observable
inputs when available. (See (cid:1)ote 12 of the (cid:1)otes to Consolidated Financial Statements.)
Realized gains or losses represent the difference between the cost of securities sold and the proceeds realized upon sale
and are recorded at the trade date. The Company uses primarily the first-in, first-out method to determine the cost of securities
sold.
The cost of securities is adjusted where appropriate to include a provision for a decline in value which is considered to
be other than temporary. An other-than-temporary decline is considered to occur in investments where there has been a
sustained reduction in fair value and where the Company does not expect to recover the cost basis of the investment prior to the
time of sale or maturity.
For fixed maturity securities that the Company intends to sell or, more likely than not, would be required to sell, a
decline in value below amortized cost is considered to be an other-than-temporary impairment (OTTI). The amount of OTTI
is equal to the difference between amortized cost and fair value at the balance sheet date. For fixed maturity securities that the
Company does not intend to sell or believes that it is more likely than not it would not be required to sell, a decline in value
below amortized cost is considered to be an OTTI if the Company does not expect to recover the entire amortized cost basis of
a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the security).
The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash flows
expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline in
value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.
Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.
Real estate held for investment purposes is initially recorded at the purchase price, which is generally fair value, and is
subsequently reported at cost less accumulated depreciation. Real estate taxes, interest and other costs incurred during
65
K
0
1
e
b
3
8
9
7
2
1
7
71
27983be 10K
27983be_10K.indd 71
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
7
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
72
W. R. BERKLEY CORPORATIO(cid:1) A(cid:1)D SUBSIDIARIES
(cid:1)OTES TO CO(cid:1)SOLIDATED FI(cid:1)A(cid:1)CIAL STATEME(cid:1)TS
For the years ended December 31, 2019, 2018 and 2017
(1) Summary of Significant Accounting Policies
(A) Principles of consolidation and basis of presentation
The consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the
"Company"), have been prepared on the basis of U.S. generally accepted accounting principles ("GAAP"). All significant
intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses reflected
during the reporting period. The most significant items on our balance sheet that involve a greater degree of accounting
estimates that are subject to change in the future are the valuation of investments, other-than-temporary impairments, reserves
for losses and loss expenses and premium estimates. Actual results could differ from those estimates.
Reclassifications have been made in the 2018 and 2017 financial statements as originally reported to conform to the
presentation of the 2019 financial statements. Shares outstanding and per share amounts have been adjusted to reflect the 3-
for-2 common stock split effected on April 2, 2019. Additionally, commencing with the first quarter of 2019, the Company
renamed the Reinsurance segment as Reinsurance & Monoline Excess, and reclassified the monoline excess business from the
Insurance segment to such renamed segment. The reclassified business includes operations that solely retain risk on an excess
basis.
(B) Revenue recognition
Insurance premiums are recognized as written at the inception of the policy. Reinsurance premiums are estimated based
upon information received from ceding companies, and subsequent differences from such estimates are recorded in the period
they are determined. Insurance and reinsurance premiums are primarily earned on a pro rata basis over the policy term. Fees for
services are earned over the period that the services are provided.
Audit premiums are recognized when they are reliably determinable. The change in accruals for earned but unbilled
audit premiums increased (decreased) net premiums written and premiums earned by $4 million, $(4) million and $8 million in
2019, 2018 and 2017, respectively.
Revenues from non-insurance businesses are derived from businesses engaged in the distribution of promotional
merchandise, world-wide textile solutions, and aircraft services provided to the general, commercial and military aviation
markets. These aircraft services include (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenue is
recognized upon the shipment of products and parts, the delivery of aircraft, the delivery of fuel, and over the completion
period of services.
Insurance service fee revenue represents servicing fees for program administration and claims management services
provided by the Company, including workers' compensation assigned risk plans, as well as insurance brokerage and risk
management services. Fees for program administration, claims management and risk management services are primarily
recognized ratably over the related contract period for which the underlying services are rendered. Commissions for insurance
brokerage are generally recognized when the underlying insurance policy is effective.
Cash equivalents consist of funds invested in money market accounts and investments with an effective maturity of three
(C) Cash and cash equivalents
months or less when purchased.
(D) Investments
Fixed maturity securities classified as available for sale are carried at estimated fair value, with unrealized gains and
losses, net of applicable income taxes, excluded from earnings and reported as a component of comprehensive income and a
separate component of stockholders' equity. Fixed maturity securities that the Company has the positive intent and ability to
hold to maturity are classified as held to maturity and reported at amortized cost. Investment income from fixed maturity
securities is recognized based on the constant effective yield method. Premiums and discounts on mortgage-backed securities
are adjusted for the effects of actual and anticipated prepayments on a retrospective basis.
Equity securities with readily determinable fair values are measured at fair value, with changes in the fair value
recognized in net income within net realized and unrealized gains on investments.
Fixed maturity securities that the Company purchased with the intent to sell in the near-term are classified as trading
account securities and are reported at estimated fair value. Realized and unrealized gains and losses from trading activity are
reported as net investment income and are recorded at the trade date. Short sales and short call options are presented as trading
securities sold but not yet purchased. Unsettled trades and the net margin balances held by the clearing broker are presented as
a trading account receivable from brokers and clearing organizations.
Investment funds are carried under the equity method of accounting. The Company's share of the earnings or losses of
investment funds is primarily reported on a one-quarter lag in order to facilitate the timely completion of the Company's
consolidated financial statements.
Loans receivable primarily represent commercial real estate mortgage loans and bank loans and are carried at amortized
cost. The Company monitors the performance of its loans receivable and establishes an allowance for loan losses for loans
where the Company determines it is probable that the contractual terms will not be met, with a corresponding charge to
earnings. For loans that are evaluated individually and deemed to be impaired, the Company establishes a specific allowance
based on a discounted cash flow analysis and comparable cost and sales methodologies, if appropriate. Individual loans that are
not considered impaired and smaller-balance homogeneous loans are evaluated collectively and a general allowance is
established if it is considered probable that a loss has been incurred.
The accrual of interest on loans receivable is discontinued if the loan is 90 days past due based on the contractual terms
of the loan unless the loan is adequately secured and in process of collection. In general, loans are placed on non-accrual status
or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest on these loans is accounted
for on a cash basis until qualifying for return to accrual status. Loans are returned to accrual status when all principal and
interest amounts contractually due are brought current and future payments are reasonably assured.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Fair value of investments is determined based on a fair value
hierarchy that prioritizes the use of observable inputs over the use of unobservable inputs and requires the use of observable
inputs when available. (See (cid:1)ote 12 of the (cid:1)otes to Consolidated Financial Statements.)
Realized gains or losses represent the difference between the cost of securities sold and the proceeds realized upon sale
and are recorded at the trade date. The Company uses primarily the first-in, first-out method to determine the cost of securities
sold.
The cost of securities is adjusted where appropriate to include a provision for a decline in value which is considered to
be other than temporary. An other-than-temporary decline is considered to occur in investments where there has been a
sustained reduction in fair value and where the Company does not expect to recover the cost basis of the investment prior to the
time of sale or maturity.
For fixed maturity securities that the Company intends to sell or, more likely than not, would be required to sell, a
decline in value below amortized cost is considered to be an other-than-temporary impairment (OTTI). The amount of OTTI
is equal to the difference between amortized cost and fair value at the balance sheet date. For fixed maturity securities that the
Company does not intend to sell or believes that it is more likely than not it would not be required to sell, a decline in value
below amortized cost is considered to be an OTTI if the Company does not expect to recover the entire amortized cost basis of
a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the security).
The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash flows
expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline in
value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.
Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.
Real estate held for investment purposes is initially recorded at the purchase price, which is generally fair value, and is
subsequently reported at cost less accumulated depreciation. Real estate taxes, interest and other costs incurred during
64
65
K
0
1
e
b
3
8
9
7
2
2
7
72
27983be 10K
27983be_10K.indd 72
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
7
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
73
development and construction are capitalized. Buildings are depreciated on a straight-line basis over the estimated useful lives
of the building. Minimum rental income is recognized on a straight-line basis over the lease term. Income and expenses from
real estate are reported as net investment income. The carrying value of real estate is reviewed for impairment and an
impairment loss is recognized if the estimated undiscounted cash flows from the use and disposition of the property are less
than the carrying value of the property.
(E) Per share data
The Company presents both basic and diluted net income per share (EPS) amounts. Basic EPS is calculated by
dividing net income by weighted average number of common shares outstanding during the year (including 7,575,168 common
shares held in a grantor trust). The common shares held in the grantor trust are for delivery upon settlement of vested but
mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding
since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon
the weighted average number of basic and common equivalent shares outstanding during the year and is calculated using the
treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in
which they have an anti-dilutive effect.
(F) Deferred policy acquisition costs
Acquisition costs associated with the successful acquisition of new and renewed insurance and reinsurance contracts are
deferred and amortized ratably over the terms of the related contracts. Ceding commissions received on reinsurance contracts
are netted against acquisition costs and are recognized ratably over the life of the contract. Deferred policy acquisition costs are
presented net of unearned ceding commissions. Deferred policy acquisition costs are comprised primarily of commissions, as
well as employment-related underwriting costs and premium taxes. Deferred policy acquisition costs are reviewed to determine
if they are recoverable from future income and, if not, are charged to expense. The recoverability of deferred policy acquisition
costs is evaluated separately by each of our operating companies. Future investment income is taken into account in measuring
the recoverability of deferred policy acquisition costs.
(G) Reserves for losses and loss expenses
Reserves for losses and loss expenses are an accumulation of amounts determined on the basis of (1) evaluation of
claims for business written directly by the Company; (2) estimates received from other companies for reinsurance assumed by
the Company; and (3) estimates for losses incurred but not reported (based on Company and industry experience). These
estimates are periodically reviewed and, as experience develops and new information becomes known, the reserves are adjusted
as necessary. Such adjustments are reflected in the statements of income in the period in which they are determined. The
Company discounts its reserves for excess and assumed workers' compensation claims using a risk-free or statutory rate. (See
(cid:1)ote 13 of (cid:1)otes to Consolidated Financial Statements.)
(H) Reinsurance ceded
The unearned portion of premiums ceded to reinsurers is reported as prepaid reinsurance premiums and earned ratably
over the policy term. The estimated amounts of reinsurance recoverable on unpaid losses are reported as due from reinsurers.
To the extent any reinsurer does not meet its obligations under reinsurance agreements, the Company must discharge its
liability. Amounts due from reinsurers are reflected net of funds held where the right of offset is present. The Company has
provided reserves for estimated uncollectible reinsurance.
(I) Deposit accounting
Contracts that do not meet the risk transfer requirements of GAAP are accounted for using the deposit accounting
method. Under this method, an asset or liability is recognized at the inception of the contract based on consideration paid or
received. The amount of the deposit asset or liability is adjusted at subsequent reporting dates using the interest method with a
corresponding credit or charge to interest income or expense. Deposit liabilities for assumed reinsurance contracts were $41
million and $45 million at December 31, 2019 and 2018, respectively.
(J) Federal and foreign income taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in countries where it has
overseas operations. The Company's method of accounting for income taxes is the asset and liability method. Under this
method, deferred tax assets and liabilities are measured using tax rates currently in effect or expected to apply in the years in
which those temporary differences are expected to reverse. Interest and penalties, if any, are reported as income tax expense.
66
The Company believes there are no tax positions that would require disclosure under GAAP. Deferred tax assets are reduced by
a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized.
(K) Foreign currency
Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the
entity's functional currency) are reported on the statements of income as other operating costs and expenses. Unrealized gains
or losses resulting from translating the results of non-U.S. dollar denominated operations are reported in accumulated other
comprehensive income. Revenues and expenses denominated in currencies other than U.S. dollars are generally translated at
the weighted average exchange rate during the year. Assets and liabilities are translated at the rate of exchange in effect at the
balance sheet date.
(L) Property, furniture and equipment
Property, furniture and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the
estimated useful lives of the respective assets. Depreciation expense was $54 million, $54 million and $50 million for 2019,
2018 and 2017, respectively.
(M) Comprehensive income
Comprehensive income encompasses all changes in stockholders' equity (except those arising from transactions with
stockholders) and includes net income, net unrealized holding gains or losses on available for sale securities and unrealized
foreign currency translation adjustments.
((cid:1)) Goodwill and other intangible assets
Goodwill and other intangible assets are tested for impairment on an annual basis and at interim periods where
circumstances require. The Company's impairment test as of December 31, 2019 indicated that there were no material
impairment losses related to goodwill and other intangible assets. Intangible assets of $99 million and $104 million are
included in other assets as of December 31, 2019 and 2018, respectively.
(O) Restricted stock units
The costs resulting from all share-based payment transactions with employees are recognized in the consolidated
financial statements using a fair-value-based measurement method. Compensation cost is recognized for financial reporting
purposes over the period in which the employee is required to provide service in exchange for the award (generally the vesting
period).
(P) Statements of cash flows
Interest payments were $160 million, $155 million and $145 million in 2019, 2018 and 2017, respectively. Income taxes
paid were $125 million, $186 million and $207 million in 2019, 2018 and 2017, respectively. Other non-cash items include
unrealized investment gains and losses. (See (cid:1)ote 10 of (cid:1)otes to Consolidated Financial Statements.)
(Q) Recent accounting pronouncements
Recently adopted accounting pronouncements:
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications
of a lease, as either an operating or finance lease, both of which require lessees to recognize a right-of-use asset and a lease
liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability are determined based upon
the present value of cash flows. Finance leases reflect the financial arrangement by recognizing interest expense on the lease
liability separately from the amortization expense of the right-of-use asset. Operating leases recognize lease expense (with no
separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not
significantly changed by the updated guidance. The updated guidance was effective for reporting periods beginning after
December 15, 2018. As permitted by the rules, the Company adopted the new guidance prospectively effective January 1, 2019.
The Company elected to use the practical expedient permitted by the transition guidance which allowed companies to not
reassess existing lease classifications for already effective leases. The adoption of this guidance resulted in the recognition of a
right-of-use asset of $185 million and a lease liability of $215 million (prior to adoption the Company had a $30 million
67
K
0
1
e
b
3
8
9
7
2
3
7
73
27983be 10K
27983be_10K.indd 73
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
7
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
74
development and construction are capitalized. Buildings are depreciated on a straight-line basis over the estimated useful lives
of the building. Minimum rental income is recognized on a straight-line basis over the lease term. Income and expenses from
real estate are reported as net investment income. The carrying value of real estate is reviewed for impairment and an
The Company believes there are no tax positions that would require disclosure under GAAP. Deferred tax assets are reduced by
a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized.
impairment loss is recognized if the estimated undiscounted cash flows from the use and disposition of the property are less
(K) Foreign currency
than the carrying value of the property.
(E) Per share data
The Company presents both basic and diluted net income per share (EPS) amounts. Basic EPS is calculated by
dividing net income by weighted average number of common shares outstanding during the year (including 7,575,168 common
shares held in a grantor trust). The common shares held in the grantor trust are for delivery upon settlement of vested but
mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding
Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the
entity's functional currency) are reported on the statements of income as other operating costs and expenses. Unrealized gains
or losses resulting from translating the results of non-U.S. dollar denominated operations are reported in accumulated other
comprehensive income. Revenues and expenses denominated in currencies other than U.S. dollars are generally translated at
the weighted average exchange rate during the year. Assets and liabilities are translated at the rate of exchange in effect at the
balance sheet date.
since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon
(L) Property, furniture and equipment
the weighted average number of basic and common equivalent shares outstanding during the year and is calculated using the
treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in
which they have an anti-dilutive effect.
(F) Deferred policy acquisition costs
Acquisition costs associated with the successful acquisition of new and renewed insurance and reinsurance contracts are
deferred and amortized ratably over the terms of the related contracts. Ceding commissions received on reinsurance contracts
are netted against acquisition costs and are recognized ratably over the life of the contract. Deferred policy acquisition costs are
presented net of unearned ceding commissions. Deferred policy acquisition costs are comprised primarily of commissions, as
well as employment-related underwriting costs and premium taxes. Deferred policy acquisition costs are reviewed to determine
if they are recoverable from future income and, if not, are charged to expense. The recoverability of deferred policy acquisition
costs is evaluated separately by each of our operating companies. Future investment income is taken into account in measuring
the recoverability of deferred policy acquisition costs.
(G) Reserves for losses and loss expenses
Reserves for losses and loss expenses are an accumulation of amounts determined on the basis of (1) evaluation of
claims for business written directly by the Company; (2) estimates received from other companies for reinsurance assumed by
the Company; and (3) estimates for losses incurred but not reported (based on Company and industry experience). These
estimates are periodically reviewed and, as experience develops and new information becomes known, the reserves are adjusted
as necessary. Such adjustments are reflected in the statements of income in the period in which they are determined. The
Company discounts its reserves for excess and assumed workers' compensation claims using a risk-free or statutory rate. (See
(cid:1)ote 13 of (cid:1)otes to Consolidated Financial Statements.)
(H) Reinsurance ceded
The unearned portion of premiums ceded to reinsurers is reported as prepaid reinsurance premiums and earned ratably
over the policy term. The estimated amounts of reinsurance recoverable on unpaid losses are reported as due from reinsurers.
To the extent any reinsurer does not meet its obligations under reinsurance agreements, the Company must discharge its
Property, furniture and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the
estimated useful lives of the respective assets. Depreciation expense was $54 million, $54 million and $50 million for 2019,
2018 and 2017, respectively.
(M) Comprehensive income
Comprehensive income encompasses all changes in stockholders' equity (except those arising from transactions with
stockholders) and includes net income, net unrealized holding gains or losses on available for sale securities and unrealized
foreign currency translation adjustments.
((cid:1)) Goodwill and other intangible assets
Goodwill and other intangible assets are tested for impairment on an annual basis and at interim periods where
circumstances require. The Company's impairment test as of December 31, 2019 indicated that there were no material
impairment losses related to goodwill and other intangible assets. Intangible assets of $99 million and $104 million are
included in other assets as of December 31, 2019 and 2018, respectively.
(O) Restricted stock units
The costs resulting from all share-based payment transactions with employees are recognized in the consolidated
financial statements using a fair-value-based measurement method. Compensation cost is recognized for financial reporting
purposes over the period in which the employee is required to provide service in exchange for the award (generally the vesting
period).
(P) Statements of cash flows
Interest payments were $160 million, $155 million and $145 million in 2019, 2018 and 2017, respectively. Income taxes
paid were $125 million, $186 million and $207 million in 2019, 2018 and 2017, respectively. Other non-cash items include
unrealized investment gains and losses. (See (cid:1)ote 10 of (cid:1)otes to Consolidated Financial Statements.)
liability. Amounts due from reinsurers are reflected net of funds held where the right of offset is present. The Company has
(Q) Recent accounting pronouncements
provided reserves for estimated uncollectible reinsurance.
(I) Deposit accounting
Contracts that do not meet the risk transfer requirements of GAAP are accounted for using the deposit accounting
method. Under this method, an asset or liability is recognized at the inception of the contract based on consideration paid or
received. The amount of the deposit asset or liability is adjusted at subsequent reporting dates using the interest method with a
corresponding credit or charge to interest income or expense. Deposit liabilities for assumed reinsurance contracts were $41
million and $45 million at December 31, 2019 and 2018, respectively.
(J) Federal and foreign income taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in countries where it has
overseas operations. The Company's method of accounting for income taxes is the asset and liability method. Under this
method, deferred tax assets and liabilities are measured using tax rates currently in effect or expected to apply in the years in
which those temporary differences are expected to reverse. Interest and penalties, if any, are reported as income tax expense.
Recently adopted accounting pronouncements:
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications
of a lease, as either an operating or finance lease, both of which require lessees to recognize a right-of-use asset and a lease
liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability are determined based upon
the present value of cash flows. Finance leases reflect the financial arrangement by recognizing interest expense on the lease
liability separately from the amortization expense of the right-of-use asset. Operating leases recognize lease expense (with no
separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not
significantly changed by the updated guidance. The updated guidance was effective for reporting periods beginning after
December 15, 2018. As permitted by the rules, the Company adopted the new guidance prospectively effective January 1, 2019.
The Company elected to use the practical expedient permitted by the transition guidance which allowed companies to not
reassess existing lease classifications for already effective leases. The adoption of this guidance resulted in the recognition of a
right-of-use asset of $185 million and a lease liability of $215 million (prior to adoption the Company had a $30 million
66
67
K
0
1
e
b
3
8
9
7
2
4
7
74
27983be 10K
27983be_10K.indd 74
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
7
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
75
deferred rent liability recognized) reported within other assets and other liabilities, respectively, in the consolidated balance
sheet. The adoption of this guidance did not have an impact on the Company's results of operations or liquidity.
All other accounting and reporting standards that became effective in 2019 were either not applicable to the Company or
(2) Consolidated Statement of Comprehensive (Loss) Income
The following tables present the components of the changes in accumulated other comprehensive (loss) income ("AOCI")
as of and for the years ended December 31, 2019 and 2018:
their adoption did not have a material impact on the Company.
Accounting and reporting standards that are not yet effective:
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting
guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment
model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an
allowance account and limits the amount of credit loss to the difference between a securitys amortized cost basis and its fair
value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for
financial instruments measured at amortized cost, such as reinsurance recoverables. The updated guidance is effective for
reporting periods beginning after December 15, 2019.
The adoption of this guidance will result in the recognition of an allowance for credit loss in connection with operating
assets (such as premiums and fees receivable and due from reinsurers) of less than 0.25% of these assets and a corresponding
cumulative effect adjustment that will decrease common stockholders' equity. Certain investments (primarily fixed maturity
securities available for sale) will also establish an allowance for credit loss of approximately 0.25% of these assets, with a
cumulative effect adjustment decreasing retained earnings and increasing AOCI by offsetting amounts, resulting in no impact to
total common stockholders' equity.
All other recently issued but not yet effective accounting and reporting standards are either not applicable to the
Company or are not expected to have a material impact on the Company.
68
75
27983be 10K
27983be_10K.indd 75
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:12PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
7
2/26/20 12:08 PM
(In thousands)
December 31, 2019
Changes in AOCI
Beginning of period
Other comprehensive gains before reclassifications
Amounts reclassified from AOCI
Other comprehensive gain
Unrealized investment gain related to non-controlling interest
Ending balance
Amounts reclassified from AOCI
Pre-tax
Tax effect
After-tax amounts reclassified
Other comprehensive gain
Pre-tax
Tax effect
Other comprehensive gain
(In thousands)
December 31, 2018
Changes in AOCI
Beginning of period
Cumulative effect adjustment resulting from changes in
accounting principles
Restated beginning of period
Other comprehensive income before reclassifications
Amounts reclassified from AOCI
Other comprehensive loss
Unrealized investment loss related to non-controlling interest
Ending balance
Amounts reclassified from AOCI
Pre-tax
Tax effect
After-tax amounts reclassified
Other comprehensive loss
Pre-tax
Tax effect
Other comprehensive loss
_______________
(1) (cid:1)et realized and unrealized gains on investments in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.
Unrealized
investment gains
(losses)
Currency translation
adjustments
Accumulated other
comprehensive (loss)
income
(418,979) $
37,166
37,166
(381,813) $
$
$
37,166
37,166
$
$
(306,880)
(112,099)
(112,099)
$
$
(112,099) $
(112,099) $
(510,470)
261,177
(8,109)
253,068
103
(257,299)
(10,265)
2,156
(8,109)
299,136
(46,068)
253,068
(214,539)
(145,998)
(358,634)
(5,792)
(364,426)
(46)
(510,470)
(7,332)
1,540
(5,792)
(414,836)
50,410
(364,426)
Unrealized
investment (losses)
gains
Currency translation
adjustments
Accumulated other
comprehensive (loss)
income
375,421
$
(306,880) $
68,541
(91,491)
$
(418,979) $
(91,491)
224,011
(8,109)
215,902
103
124,514
(10,265) (1) $
2,156 (2)
(8,109)
261,970
(46,068)
215,902
(214,539)
160,882
(246,535)
(5,792)
(252,327)
(46)
(7,332) (1) $
1,540 (2)
(5,792)
(302,737)
50,410
(252,327)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
69
deferred rent liability recognized) reported within other assets and other liabilities, respectively, in the consolidated balance
(2) Consolidated Statement of Comprehensive (Loss) Income
sheet. The adoption of this guidance did not have an impact on the Company's results of operations or liquidity.
All other accounting and reporting standards that became effective in 2019 were either not applicable to the Company or
The following tables present the components of the changes in accumulated other comprehensive (loss) income ("AOCI")
as of and for the years ended December 31, 2019 and 2018:
7
6
2
7
9
8
3
b
e
1
0
K
27983be 10K
76
their adoption did not have a material impact on the Company.
Accounting and reporting standards that are not yet effective:
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting
guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment
model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an
allowance account and limits the amount of credit loss to the difference between a securitys amortized cost basis and its fair
value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for
financial instruments measured at amortized cost, such as reinsurance recoverables. The updated guidance is effective for
reporting periods beginning after December 15, 2019.
The adoption of this guidance will result in the recognition of an allowance for credit loss in connection with operating
assets (such as premiums and fees receivable and due from reinsurers) of less than 0.25% of these assets and a corresponding
cumulative effect adjustment that will decrease common stockholders' equity. Certain investments (primarily fixed maturity
securities available for sale) will also establish an allowance for credit loss of approximately 0.25% of these assets, with a
cumulative effect adjustment decreasing retained earnings and increasing AOCI by offsetting amounts, resulting in no impact to
total common stockholders' equity.
All other recently issued but not yet effective accounting and reporting standards are either not applicable to the
Company or are not expected to have a material impact on the Company.
(In thousands)
December 31, 2019
Changes in AOCI
Beginning of period
Other comprehensive gains before reclassifications
Amounts reclassified from AOCI
Other comprehensive gain
Unrealized investment gain related to non-controlling interest
Ending balance
Amounts reclassified from AOCI
Pre-tax
Tax effect
After-tax amounts reclassified
Other comprehensive gain
Pre-tax
Tax effect
Other comprehensive gain
(In thousands)
December 31, 2018
Changes in AOCI
Beginning of period
Cumulative effect adjustment resulting from changes in
accounting principles
Restated beginning of period
Other comprehensive income before reclassifications
Amounts reclassified from AOCI
Other comprehensive loss
Unrealized investment loss related to non-controlling interest
Ending balance
Amounts reclassified from AOCI
Pre-tax
Tax effect
After-tax amounts reclassified
Other comprehensive loss
Pre-tax
Tax effect
Other comprehensive loss
Unrealized
investment gains
(losses)
Currency translation
adjustments
Accumulated other
comprehensive (loss)
income
(91,491)
224,011
(8,109)
215,902
103
$
(418,979) $
37,166
37,166
124,514
$
(381,813) $
(10,265) (1) $
2,156 (2)
(8,109)
261,970
(46,068)
215,902
$
$
$
$
$
37,166
37,166
$
$
(510,470)
261,177
(8,109)
253,068
103
(257,299)
(10,265)
2,156
(8,109)
299,136
(46,068)
253,068
Unrealized
investment (losses)
gains
Currency translation
adjustments
Accumulated other
comprehensive (loss)
income
375,421
$
(306,880) $
68,541
(214,539)
160,882
(246,535)
(5,792)
(252,327)
(46)
(306,880)
(112,099)
(112,099)
(91,491)
$
(418,979) $
(7,332) (1) $
1,540 (2)
(5,792)
(302,737)
50,410
(252,327)
$
$
$
$
$
(112,099) $
(112,099) $
(214,539)
(145,998)
(358,634)
(5,792)
(364,426)
(46)
(510,470)
(7,332)
1,540
(5,792)
(414,836)
50,410
(364,426)
$
$
$
$
$
$
$
$
$
$
$
$
_______________
(1) (cid:1)et realized and unrealized gains on investments in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.
68
69
76
27983be 10K
27983be_10K.indd 76
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
7
2/26/20 12:08 PM
7
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
77
(3) Investments in Fixed Maturity Securities
At December 31, 2019 and 2018, investments in fixed maturity securities were as follows:
(In thousands)
December 31, 2019
Held to maturity:
State and municipal
Residential mortgage-backed
Total held to maturity
Available for sale:
Amortized
Cost
Gross Unrealized
Gains
Losses
Fair
Value
Carrying
Value
$
70,312
$
13,000
$
$
83,312
$
8,371
78,683
994
13,994
9,365
92,677
70,312
8,371
78,683
U.S. government and government agency
775,157
13,249
(1,475)
786,931
786,931
State and municipal:
Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation
Total state and municipal
Mortgage-backed securities:
Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
Total available for sale
2,343,209
359,298
364,571
255,230
432,333
64,586
22,074
20,342
7,232
32,684
(4,152)
2,403,643
2,403,643
(97)
(128)
(903)
(647)
381,275
384,785
261,559
464,370
381,275
384,785
261,559
464,370
3,754,641
146,918
(5,927)
3,895,632
3,895,632
1,298,145
304,506
1,602,651
2,802,588
2,260,073
1,447,589
325,762
5,219
4,038,643
924,284
13,897,964
23,230
5,214
28,444
9,532
72,900
37,681
15,281
230
126,092
16,465
340,700
(5,155)
(346)
(5,501)
(21,490)
(3,800)
(4,118)
(402)
(8,320)
(93,673)
1,316,220
309,374
1,625,594
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
1,316,220
309,374
1,625,594
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
(136,386)
14,102,278
14,102,278
Total investments in fixed maturity securities
$
13,976,647
$
354,694
$
(136,386) $
14,194,955
$
14,180,961
70
77
27983be 10K
27983be_10K.indd 77
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
7
2/26/20 12:08 PM
U.S. government and government agency
697,931
9,219
(4,910)
702,240
702,240
Amortized
Cost
Gross Unrealized
Gains
Losses
Fair
Value
Carrying
Value
$
67,891
$
11,549
$
$
79,440
$
10,744
78,635
1,259
12,808
12,003
91,443
67,891
10,744
78,635
2,396,089
335,626
408,141
272,440
403,219
3,815,515
1,264,376
345,070
1,609,446
2,462,303
2,295,778
1,502,427
330,326
60,238
4,188,769
822,093
13,596,057
30,507
11,951
16,568
4,319
18,350
81,695
7,729
1,304
9,033
10,131
15,355
7,178
2,997
322
25,852
11,753
147,683
(24,612)
3,872,598
3,872,598
(19,790)
(1,103)
(30)
(2,350)
(1,339)
(20,225)
(3,708)
(23,933)
(33,687)
(53,312)
(45,683)
(4,148)
(167)
(103,310)
(25,111)
2,406,806
2,406,806
346,474
424,679
274,409
420,230
1,251,880
342,666
1,594,546
2,438,747
2,257,821
1,463,922
329,175
60,393
4,111,311
808,735
346,474
424,679
274,409
420,230
1,251,880
342,666
1,594,546
2,438,747
2,257,821
1,463,922
329,175
60,393
4,111,311
808,735
(In thousands)
December 31, 2018
Held to maturity:
State and municipal
Residential mortgage-backed
Total held to maturity
Available for sale:
State and municipal:
Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation
Total state and municipal
Mortgage-backed securities:
Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
Total available for sale
(215,563)
13,528,177
13,528,177
Total investments in fixed maturity securities
$ 13,674,692
$
160,491
$
(215,563) $ 13,619,620
$ 13,606,812
____________________
(1) Gross unrealized gains (losses) for mortgage-backed securities include $314,347 and ($55,090) as of December 31, 2019
and 2018, respectively, related to the non-credit portion of OTTI recognized in other comprehensive income.
The amortized cost and fair value of fixed maturity securities at December 31, 2019, by contractual maturity, are shown
below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay
obligations.
(In thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Total
Amortized
Cost
Fair Value
$
959,583
$
917,059
5,010,862
3,391,154
3,004,026
1,611,022
5,087,806
3,511,621
3,043,510
1,634,959
$ 13,976,647
$ 14,194,955
At December 31, 2019 and 2018, there were no investments, other than investments in United States government and
government agency securities, which exceeded 10% of common stockholders equity. At December 31, 2019, investments with
a carrying value of $1,639 million were on deposit in custodial or trust accounts, of which $1,219 million was on deposit with
insurance regulators, $380 million was on deposit in support of the Companys underwriting activities at Lloyds, $36 million
was on deposit as security for reinsurance clients and $4 million was on deposit as security for letters of credit issued in support
of the Companys reinsurance operations.
71
7
8
2
7
9
8
3
b
e
1
0
K
(3) Investments in Fixed Maturity Securities
At December 31, 2019 and 2018, investments in fixed maturity securities were as follows:
Amortized
Cost
Gross Unrealized
Gains
Losses
Fair
Value
Carrying
Value
$
70,312
$
13,000
$
$
83,312
$
8,371
78,683
994
13,994
9,365
92,677
70,312
8,371
78,683
U.S. government and government agency
775,157
13,249
(1,475)
786,931
786,931
(4,152)
2,403,643
2,403,643
381,275
384,785
261,559
464,370
3,754,641
146,918
(5,927)
3,895,632
3,895,632
1,316,220
309,374
1,625,594
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
Total available for sale
(136,386)
14,102,278
14,102,278
Total investments in fixed maturity securities
$
13,976,647
$
354,694
$
(136,386) $
14,194,955
$
14,180,961
(In thousands)
December 31, 2019
Held to maturity:
State and municipal
Residential mortgage-backed
Total held to maturity
Available for sale:
State and municipal:
Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation
Total state and municipal
Mortgage-backed securities:
Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
2,343,209
359,298
364,571
255,230
432,333
1,298,145
304,506
1,602,651
2,802,588
2,260,073
1,447,589
325,762
5,219
4,038,643
924,284
13,897,964
64,586
22,074
20,342
7,232
32,684
23,230
5,214
28,444
9,532
72,900
37,681
15,281
230
126,092
16,465
340,700
(97)
(128)
(903)
(647)
(5,155)
(346)
(5,501)
(21,490)
(3,800)
(4,118)
(402)
(8,320)
(93,673)
381,275
384,785
261,559
464,370
1,316,220
309,374
1,625,594
2,790,630
2,329,173
1,481,152
340,641
5,449
4,156,415
847,076
27983be 10K
78
(In thousands)
December 31, 2018
Held to maturity:
State and municipal
Residential mortgage-backed
Total held to maturity
Available for sale:
Amortized
Cost
Gross Unrealized
Gains
Losses
Fair
Value
Carrying
Value
$
67,891
$
11,549
$
$
79,440
$
10,744
78,635
1,259
12,808
12,003
91,443
67,891
10,744
78,635
U.S. government and government agency
697,931
9,219
(4,910)
702,240
702,240
State and municipal:
Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation
Total state and municipal
Mortgage-backed securities:
Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities
Corporate:
Industrial
Financial
Utilities
Other
Total corporate
Foreign government
Total available for sale
2,396,089
335,626
408,141
272,440
403,219
3,815,515
1,264,376
345,070
1,609,446
2,462,303
2,295,778
1,502,427
330,326
60,238
4,188,769
822,093
13,596,057
30,507
11,951
16,568
4,319
18,350
81,695
7,729
1,304
9,033
10,131
15,355
7,178
2,997
322
25,852
11,753
147,683
(19,790)
(1,103)
(30)
(2,350)
(1,339)
2,406,806
2,406,806
346,474
424,679
274,409
420,230
346,474
424,679
274,409
420,230
(24,612)
3,872,598
3,872,598
(20,225)
(3,708)
(23,933)
(33,687)
(53,312)
(45,683)
(4,148)
(167)
(103,310)
(25,111)
1,251,880
342,666
1,594,546
2,438,747
2,257,821
1,463,922
329,175
60,393
4,111,311
808,735
1,251,880
342,666
1,594,546
2,438,747
2,257,821
1,463,922
329,175
60,393
4,111,311
808,735
(215,563)
13,528,177
13,528,177
Total investments in fixed maturity securities
$ 13,674,692
$
160,491
$
(215,563) $ 13,619,620
$ 13,606,812
____________________
(1) Gross unrealized gains (losses) for mortgage-backed securities include $314,347 and ($55,090) as of December 31, 2019
and 2018, respectively, related to the non-credit portion of OTTI recognized in other comprehensive income.
The amortized cost and fair value of fixed maturity securities at December 31, 2019, by contractual maturity, are shown
below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay
obligations.
(In thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Total
Amortized
Cost
Fair Value
$
959,583
$
917,059
5,010,862
3,391,154
3,004,026
1,611,022
5,087,806
3,511,621
3,043,510
1,634,959
$ 13,976,647
$ 14,194,955
At December 31, 2019 and 2018, there were no investments, other than investments in United States government and
government agency securities, which exceeded 10% of common stockholders equity. At December 31, 2019, investments with
a carrying value of $1,639 million were on deposit in custodial or trust accounts, of which $1,219 million was on deposit with
insurance regulators, $380 million was on deposit in support of the Companys underwriting activities at Lloyds, $36 million
was on deposit as security for reinsurance clients and $4 million was on deposit as security for letters of credit issued in support
of the Companys reinsurance operations.
70
71
78
27983be 10K
27983be_10K.indd 78
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
7
7
9
2
7
9
8
3
b
e
1
0
K
(4) Investments in Equity Securities
(7) Investment Funds
27983be 10K
79
At December 31, 2019 and 2018, investments in equity securities were as follows:
(In thousands)
December 31, 2019
Common stocks
Preferred stocks
Total
December 31, 2018
Common stocks
Preferred stocks
Total
Gross Unrealized
Cost
Gains
Losses
Fair
Value
Carrying
Value
175,928
$
16,967
$
(26,090) $
166,805
$
166,805
169,171
148,243
(3,599)
313,815
313,815
345,099
$
165,210
$
(29,689) $
480,620
$
480,620
113,576
$
4,335
$
(19,719) $
98,192
$
98,192
115,201
72,364
(6,751)
180,814
180,814
228,777
$
76,699
$
(26,470) $
279,006
$
279,006
$
$
$
$
(5) Arbitrage Trading Account
At December 31, 2019 and 2018, the fair value and carrying value of the arbitrage trading account were $401 million and
$453 million, respectively. The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of
investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Arbitrage
investing differs from other types of investing 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).
The Company uses put options and call options in order to mitigate the impact of potential changes in market conditions on
the merger arbitrage trading account. These options are reported at fair value. As of December 31, 2019, the fair value of long
option contracts outstanding was $9 thousand (notional amount of $15.5 million) and the fair value of short option contracts
outstanding was $56 thousand (notional amount of $17.1 million). Other than with respect to the use of these trading account
securities, the Company does not make use of derivatives.
(6) (cid:1)et Investment Income
(cid:1)et investment income consists of the following:
(In thousands)
Investment income earned on:
2019
2018
2017
Fixed maturity securities, including cash and cash equivalents and loans receivable
$
517,925
$
519,269
$
473,101
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expense
(cid:1)et investment income
69,194
34,585
24,218
5,439
109,349
28,157
18,591
3,230
68,169
19,145
19,975
2,350
651,361
678,596
582,740
(5,747)
(4,361)
(6,952)
$
645,614
$
674,235
$
575,788
The Company evaluates whether it is an investor in a variable interest entity ("VIE"). Such entities do not have sufficient
equity at risk to finance their activities without additional subordinated financial support, or the equity investors, as a group, do
not have the characteristics of a controlling financial interest (primary beneficiary). The Company determines whether it is the
primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure,
contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks of the
VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary
in any of its investment funds, and accordingly, carries its interests in investments funds under the equity method of accounting.
The Companys maximum exposure to loss with respect to these investments is limited to the carrying amount reported on
the Companys consolidated balance sheet and its unfunded commitments of $232 million as of December 31, 2019.
Investment funds consist of the following:
(In thousands)
Real estate
Financial services
Energy
Transportation
Other funds
Total
Carrying Value
as of December 31,
Income (Losses)
2019
2018
2019
2018
2017
$
412,275
$
642,137
$
19,154
$
61,453
$
45,068
280,705
156,869
147,034
216,652
195,706
183,627
136,640
174,708
29,005
(18,136)
14,193
24,978
11,044
7,084
15,390
14,378
3,762
6,147
1,686
11,506
$
1,213,535
$
1,332,818
$
69,194
$
109,349
$
68,169
The Company's share of the earnings or losses of investment funds is primarily reported on a one-quarter lag in order to
facilitate the timely completion of the Company's consolidated financial statements.
Investment in real estate represents directly owned property held for investment, as follows:
(8) Real Estate
(In thousands)
Properties in operation
Properties under development
Total
As of December 31,
2019
2018
$
$
1,351,249
$
1,279,584
754,701
677,508
2,105,950
$
1,957,092
In 2019, properties in operation included a long-term ground lease in Washington, D.C., a hotel in Memphis, Tennessee,
two office complexes in (cid:1)ew York City, office buildings in West Palm Beach and Palm Beach, Florida, and an office building
in London, U.K. Properties in operation are net of accumulated depreciation and amortization of $59,832,000 and $44,340,000
as of December 31, 2019 and 2018, respectively. Related depreciation expense was $15,033,000 and $20,644,000 for the years
ended December 31, 2019 and 2018, respectively. Future minimum rental income expected on operating leases relating to
properties in operation is $59,975,701 in 2020, $62,145,941 in 2021, $62,734,252 in 2022, $56,477,620 in 2023, $54,281,781
in 2024 and $573,636,251 thereafter.
The Company borrowed $101,750,000 through a non-recourse loan secured by the West Palm Beach office building in
2018. The loan matures in (cid:1)ovember 2028 and carries a fixed interest rate of 4.21%. The carrying value does not reflect the
outstanding financing, but rather is reflected in subsidiary debt referenced in (cid:1)ote 15, Indebtedness.
A mixed-use project in Washington, D.C. has been under development in 2019 and 2018.
72
79
27983be 10K
27983be_10K.indd 79
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
7
2/26/20 12:08 PM
73
8
0
2
7
9
8
3
b
e
1
0
K
27983be 10K
80
(4) Investments in Equity Securities
(7) Investment Funds
At December 31, 2019 and 2018, investments in equity securities were as follows:
(In thousands)
December 31, 2019
Common stocks
Preferred stocks
Total
December 31, 2018
Common stocks
Preferred stocks
Total
Gross Unrealized
Cost
Gains
Losses
Fair
Value
Carrying
Value
175,928
$
16,967
$
(26,090) $
166,805
$
166,805
169,171
148,243
(3,599)
313,815
313,815
345,099
$
165,210
$
(29,689) $
480,620
$
480,620
113,576
$
4,335
$
(19,719) $
98,192
$
98,192
115,201
72,364
(6,751)
180,814
180,814
228,777
$
76,699
$
(26,470) $
279,006
$
279,006
$
$
$
$
(5) Arbitrage Trading Account
At December 31, 2019 and 2018, the fair value and carrying value of the arbitrage trading account were $401 million and
$453 million, respectively. The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of
investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Arbitrage
investing differs from other types of investing 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).
The Company uses put options and call options in order to mitigate the impact of potential changes in market conditions on
the merger arbitrage trading account. These options are reported at fair value. As of December 31, 2019, the fair value of long
option contracts outstanding was $9 thousand (notional amount of $15.5 million) and the fair value of short option contracts
outstanding was $56 thousand (notional amount of $17.1 million). Other than with respect to the use of these trading account
The Company evaluates whether it is an investor in a variable interest entity ("VIE"). Such entities do not have sufficient
equity at risk to finance their activities without additional subordinated financial support, or the equity investors, as a group, do
not have the characteristics of a controlling financial interest (primary beneficiary). The Company determines whether it is the
primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure,
contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks of the
VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary
in any of its investment funds, and accordingly, carries its interests in investments funds under the equity method of accounting.
The Companys maximum exposure to loss with respect to these investments is limited to the carrying amount reported on
the Companys consolidated balance sheet and its unfunded commitments of $232 million as of December 31, 2019.
Investment funds consist of the following:
(In thousands)
Real estate
Financial services
Energy
Transportation
Other funds
Total
Carrying Value
as of December 31,
Income (Losses)
2019
2018
2019
2018
2017
$
412,275
$
642,137
$
19,154
$
61,453
$
45,068
280,705
156,869
147,034
216,652
195,706
183,627
136,640
174,708
29,005
(18,136)
14,193
24,978
11,044
7,084
15,390
14,378
3,762
6,147
1,686
11,506
$
1,213,535
$
1,332,818
$
69,194
$
109,349
$
68,169
The Company's share of the earnings or losses of investment funds is primarily reported on a one-quarter lag in order to
facilitate the timely completion of the Company's consolidated financial statements.
(8) Real Estate
Investment in real estate represents directly owned property held for investment, as follows:
securities, the Company does not make use of derivatives.
(6) (cid:1)et Investment Income
(cid:1)et investment income consists of the following:
(In thousands)
Investment income earned on:
Investment funds
Arbitrage trading account
Real estate
Equity securities
Gross investment income
Investment expense
(cid:1)et investment income
2019
2018
2017
(In thousands)
Properties in operation
Properties under development
Total
As of December 31,
2019
2018
$
$
1,351,249
$
1,279,584
754,701
677,508
2,105,950
$
1,957,092
Fixed maturity securities, including cash and cash equivalents and loans receivable
$
517,925
$
519,269
$
473,101
69,194
34,585
24,218
5,439
109,349
28,157
18,591
3,230
68,169
19,145
19,975
2,350
651,361
678,596
582,740
(5,747)
(4,361)
(6,952)
$
645,614
$
674,235
$
575,788
In 2019, properties in operation included a long-term ground lease in Washington, D.C., a hotel in Memphis, Tennessee,
two office complexes in (cid:1)ew York City, office buildings in West Palm Beach and Palm Beach, Florida, and an office building
in London, U.K. Properties in operation are net of accumulated depreciation and amortization of $59,832,000 and $44,340,000
as of December 31, 2019 and 2018, respectively. Related depreciation expense was $15,033,000 and $20,644,000 for the years
ended December 31, 2019 and 2018, respectively. Future minimum rental income expected on operating leases relating to
properties in operation is $59,975,701 in 2020, $62,145,941 in 2021, $62,734,252 in 2022, $56,477,620 in 2023, $54,281,781
in 2024 and $573,636,251 thereafter.
The Company borrowed $101,750,000 through a non-recourse loan secured by the West Palm Beach office building in
2018. The loan matures in (cid:1)ovember 2028 and carries a fixed interest rate of 4.21%. The carrying value does not reflect the
outstanding financing, but rather is reflected in subsidiary debt referenced in (cid:1)ote 15, Indebtedness.
A mixed-use project in Washington, D.C. has been under development in 2019 and 2018.
72
73
80
27983be 10K
27983be_10K.indd 80
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
8
2/26/20 12:08 PM
8
1
2
7
9
8
3
b
e
1
0
K
(9) Loans Receivable
Loans receivable are as follows:
(In thousands)
Amortized cost (net of valuation allowance):
Real estate loans
Commercial loans
Total
Fair value:
Real estate loans
Commercial loans
Total
Valuation allowance:
Specific
General
Total
Decrease in valuation allowance
27983be 10K
81
As of December 31,
2019
2018
$
$
$
$
$
$
58,541
33,258
91,799
59,853
34,760
94,613
$
$
$
$
165
$
1,981
2,146
$
62,289
32,524
94,813
63,047
34,026
97,073
1,200
2,183
3,383
For the Year Ended
December 31,
2019
2018
$
(1,237) $
Loans receivable in non-accrual status were $0.2 million and $1.2 million as of December 31, 2019 and 2018,
respectively.
The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay principal
and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance
of the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash
flow analysis and comparable cost and sales methodologies, if appropriate.
The real estate loans are secured by commercial real estate primarily located in (cid:1)ew York. These loans generally earn
interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025. The
commercial loans are with small business owners who have secured the related financing with the assets of the business.
Commercial loans generally earn interest on a fixed basis and have varying maturities not exceeding 10 years.
In evaluating the real estate loans, the Company considers their credit quality indicators, including loan to value ratios,
which compare the outstanding loan amount to the estimated value of the property, the borrowers financial condition and
performance with respect to loan terms, the position in the capital structure, the overall leverage in the capital structure and
other market conditions. Based on these considerations, none of the real estate loans were considered to be impaired at
December 31, 2019, and accordingly, the Company determined that a specific valuation allowance was not required.
(10) (cid:1)et Realized and Unrealized Gains (Losses) on Investments
(cid:1)et realized and unrealized gains (losses) on investments are as follows:
(In thousands)
2019
2018
2017
(cid:1)et realized and unrealized gains (losses) on investments in earnings
Fixed maturity securities:
Gains
Losses
Equity securities (1):
Investment funds (2)
Real estate
Loans receivable
Other
(cid:1)et realized gains on investment sales
Change in unrealized gains (losses)
(cid:1)et realized and unrealized gains on investments in earnings before OTTI
Other-than-temporary impairments (3)
(cid:1)et realized and unrealized gains on investments in earnings
Income tax expense
Change in unrealized investment gains (losses) of available for sales securities:
Fixed maturity securities
Previously impaired fixed maturity securities
Equity securities available for sale (4)
Investment funds
Other
Income tax (expense) benefit
(cid:1)oncontrolling interests
Total change in unrealized investment gains (losses)
$
23,900
$
26,752
$
(13,636)
(13,733)
23,306
85,292
(2,825)
5,965
(970)
(329)
120,703
120,703
(25,348)
369
(2,299)
(7,925)
261,970
(46,068)
103
$
$
435,150
(320,413)
(212)
27,816
2,838
1,977
160,175
(5,687)
154,488
(32,442)
(132)
(5,672)
151
(302,737)
50,410
(46)
28,217
(5,342)
154,539
125,423
12,880
20,141
335,858
335,858
(117,550)
895
(77,971)
10,179
(336)
(69,425)
17,673
19
271,825
$
(297,084) $
(2,192)
After-tax net realized and unrealized gains on investments in earnings
95,355
$
122,046
$
218,308
After-tax change in unrealized investment gains (losses) of available for sale securities
$
216,005
$
(252,373) $
(51,733)
____________________
(1) The net realized gains or losses on investment sales represent the total gains or losses from the purchase dates of the equity
securities. The change in unrealized gains consists of two components: (i) the reversal of the gain or loss recognized in previous
periods on equity securities sold and (ii) the change in unrealized gain or loss resulting from mark-to-market adjustments on
equity securities still held.
(2) Investment funds includes a gain of $124 million from the sale of an investment in an office building located in
Washington, D.C. for the year ended December 31, 2017.
(3) There were no OTTI for the years ended December 31, 2019 and 2017. For the year ended December 31, 2018, OTTI
related to fixed maturity securities was $6 million.
(4) Effective January 1, 2018, the Company adopted accounting guidance that requires all equity investments with readily
determinable fair values (subject to certain exceptions) to be measured at fair value, with changes in the fair value recognized in
net income. The Company recorded an adjustment of $291 million to opening AOCI net of tax as a result of this guidance.
74
81
27983be 10K
27983be_10K.indd 81
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
8
2/26/20 12:08 PM
75
(9) Loans Receivable
Loans receivable are as follows:
Amortized cost (net of valuation allowance):
(In thousands)
Real estate loans
Commercial loans
Total
Fair value:
Real estate loans
Commercial loans
Total
Valuation allowance:
Specific
General
Total
Decrease in valuation allowance
respectively.
Loans receivable in non-accrual status were $0.2 million and $1.2 million as of December 31, 2019 and 2018,
The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay principal
and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance
of the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash
flow analysis and comparable cost and sales methodologies, if appropriate.
The real estate loans are secured by commercial real estate primarily located in (cid:1)ew York. These loans generally earn
interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025. The
commercial loans are with small business owners who have secured the related financing with the assets of the business.
Commercial loans generally earn interest on a fixed basis and have varying maturities not exceeding 10 years.
In evaluating the real estate loans, the Company considers their credit quality indicators, including loan to value ratios,
which compare the outstanding loan amount to the estimated value of the property, the borrowers financial condition and
performance with respect to loan terms, the position in the capital structure, the overall leverage in the capital structure and
other market conditions. Based on these considerations, none of the real estate loans were considered to be impaired at
December 31, 2019, and accordingly, the Company determined that a specific valuation allowance was not required.
8
2
2
7
9
8
3
b
e
1
0
K
As of December 31,
2019
2018
$
$
$
$
$
$
58,541
33,258
91,799
59,853
34,760
94,613
$
$
$
$
165
$
1,981
2,146
$
62,289
32,524
94,813
63,047
34,026
97,073
1,200
2,183
3,383
For the Year Ended
December 31,
2019
2018
$
(1,237) $
27983be 10K
82
(10) (cid:1)et Realized and Unrealized Gains (Losses) on Investments
(cid:1)et realized and unrealized gains (losses) on investments are as follows:
(In thousands)
2019
2018
2017
(cid:1)et realized and unrealized gains (losses) on investments in earnings
Fixed maturity securities:
Gains
Losses
Equity securities (1):
(cid:1)et realized gains on investment sales
Change in unrealized gains (losses)
Investment funds (2)
Real estate
Loans receivable
Other
(cid:1)et realized and unrealized gains on investments in earnings before OTTI
Other-than-temporary impairments (3)
(cid:1)et realized and unrealized gains on investments in earnings
Income tax expense
After-tax net realized and unrealized gains on investments in earnings
Change in unrealized investment gains (losses) of available for sales securities:
Fixed maturity securities
Previously impaired fixed maturity securities
Equity securities available for sale (4)
Investment funds
Other
Total change in unrealized investment gains (losses)
Income tax (expense) benefit
(cid:1)oncontrolling interests
$
23,900
$
26,752
$
(13,636)
(13,733)
23,306
85,292
(2,825)
5,965
(970)
(329)
120,703
120,703
(25,348)
435,150
(320,413)
(212)
27,816
2,838
1,977
160,175
(5,687)
154,488
(32,442)
28,217
(5,342)
154,539
125,423
12,880
20,141
335,858
335,858
(117,550)
$
$
95,355
$
122,046
$
218,308
271,825
$
(297,084) $
(2,192)
369
(2,299)
(7,925)
261,970
(46,068)
103
(132)
(5,672)
151
(302,737)
50,410
(46)
895
(77,971)
10,179
(336)
(69,425)
17,673
19
After-tax change in unrealized investment gains (losses) of available for sale securities
$
216,005
$
(252,373) $
(51,733)
____________________
(1) The net realized gains or losses on investment sales represent the total gains or losses from the purchase dates of the equity
securities. The change in unrealized gains consists of two components: (i) the reversal of the gain or loss recognized in previous
periods on equity securities sold and (ii) the change in unrealized gain or loss resulting from mark-to-market adjustments on
equity securities still held.
(2) Investment funds includes a gain of $124 million from the sale of an investment in an office building located in
Washington, D.C. for the year ended December 31, 2017.
(3) There were no OTTI for the years ended December 31, 2019 and 2017. For the year ended December 31, 2018, OTTI
related to fixed maturity securities was $6 million.
(4) Effective January 1, 2018, the Company adopted accounting guidance that requires all equity investments with readily
determinable fair values (subject to certain exceptions) to be measured at fair value, with changes in the fair value recognized in
net income. The Company recorded an adjustment of $291 million to opening AOCI net of tax as a result of this guidance.
74
75
82
27983be 10K
27983be_10K.indd 82
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
8
2/26/20 12:08 PM
8
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
83
(11) Securities in an Unrealized Loss Position
(12) Fair Value Measurements
The following tables summarize all fixed maturity securities in an unrealized loss position at December 31, 2019 and
The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are
2018 by the length of time those securities have been continuously in an unrealized loss position.
(In thousands)
December 31, 2019
Less Than 12 Months
12 Months or Greater
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. government and government agency
$
83,837
$
618
$
53,089
$
857
$
136,926
$
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
365,184
301,358
755,259
307,367
164,536
4,245
2,281
2,307
3,148
32,028
127,210
180,148
774,508
121,470
107,266
1,682
3,220
19,183
5,172
61,645
492,394
481,506
1,529,767
428,837
271,802
1,475
5,927
5,501
21,490
8,320
93,673
Fixed maturity securities
$
1,977,541
$
44,627
$
1,363,691
$
91,759
$
3,341,232
$
136,386
December 31, 2018
U.S. government and government agency
$
195,359
$
933
$
130,815
$
3,977
$
326,174
$
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
701,700
334,063
1,687,665
1,730,513
246,273
6,874
2,911
28,965
54,181
24,197
744,905
712,595
342,855
954,763
80,004
17,738
21,022
4,722
49,129
914
1,446,605
1,046,658
2,030,520
2,685,276
326,277
4,910
24,612
23,933
33,687
103,310
25,111
Fixed maturity securities
$
4,895,573
$
118,061
$
2,965,937
$
97,502
$
7,861,510
$
215,563
Fixed Maturity Securities A summary of the Companys non-investment grade fixed maturity securities that were in an
unrealized loss position at December 31, 2019 is presented in the table below:
($ in thousands)
Foreign government
Corporate
Asset-backed securities
Mortgage-backed securities
Total
(cid:1)umber of
Securities
Aggregate
Fair Value
Gross
Unrealized
Loss
21
14
5
5
$
79,747
$
65,710
437
954
92,369
4,319
113
17
45
$
146,848
$
96,818
For OTTI of fixed maturity securities that management does not intend to sell or, more likely than not, would not be
required to sell, the portion of the decline in value considered to be due to credit factors is recognized in earnings and the
portion of the decline in value considered to be due to non-credit factors is recognized in other comprehensive income.
For the year ended December 31, 2019, there were no OTTI recognized in earnings for fixed maturity securities. For the
year ended December 31, 2018, there were $6 million of OTTI recognized on fixed maturity securities.
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses
are due primarily to temporary market and sector-related factors. (cid:1)one of these securities are delinquent or in default on
financial covenants. Based on its assessment of these issuers, the Company expects them to continue to meet their contractual
payment obligations as they become due and does not consider any of these securities to be OTTI.
carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date”. The Company utilizes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.
Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs
are only used to measure fair value to the extent that observable inputs are not available.
Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices
provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing
models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may
prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for
each security evaluation on any given day. The pricing services used by the Company have indicated that they will only
produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are
active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices
provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to
ensure proper valuation.
If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair
value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector
groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference
data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of
quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company
generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company
determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of
securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant
information.
For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed
maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest
rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect
illiquidity, where appropriate.
76
83
27983be 10K
27983be_10K.indd 83
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
8
2/26/20 12:08 PM
77
(11) Securities in an Unrealized Loss Position
(12) Fair Value Measurements
The following tables summarize all fixed maturity securities in an unrealized loss position at December 31, 2019 and
The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are
8
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
84
(In thousands)
December 31, 2019
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
December 31, 2018
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
($ in thousands)
Foreign government
Corporate
Asset-backed securities
Mortgage-backed securities
Total
2018 by the length of time those securities have been continuously in an unrealized loss position.
Less Than 12 Months
12 Months or Greater
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
U.S. government and government agency
$
83,837
$
618
$
53,089
$
857
$
136,926
$
1,475
5,927
5,501
21,490
8,320
93,673
Fixed maturity securities
$
1,977,541
$
44,627
$
1,363,691
$
91,759
$
3,341,232
$
136,386
U.S. government and government agency
$
195,359
$
933
$
130,815
$
3,977
$
326,174
$
4,910
24,612
23,933
33,687
103,310
25,111
Fixed maturity securities
$
4,895,573
$
118,061
$
2,965,937
$
97,502
$
7,861,510
$
215,563
Fixed Maturity Securities A summary of the Companys non-investment grade fixed maturity securities that were in an
unrealized loss position at December 31, 2019 is presented in the table below:
365,184
301,358
755,259
307,367
164,536
701,700
334,063
1,687,665
1,730,513
246,273
4,245
2,281
2,307
3,148
32,028
6,874
2,911
28,965
54,181
24,197
127,210
180,148
774,508
121,470
107,266
744,905
712,595
342,855
954,763
80,004
1,682
3,220
19,183
5,172
61,645
17,738
21,022
4,722
49,129
914
492,394
481,506
1,529,767
428,837
271,802
1,446,605
1,046,658
2,030,520
2,685,276
326,277
(cid:1)umber of
Securities
Aggregate
Fair Value
Gross
Unrealized
Loss
$
79,747
$
21
14
5
5
65,710
437
954
92,369
4,319
113
17
45
$
146,848
$
96,818
For OTTI of fixed maturity securities that management does not intend to sell or, more likely than not, would not be
required to sell, the portion of the decline in value considered to be due to credit factors is recognized in earnings and the
portion of the decline in value considered to be due to non-credit factors is recognized in other comprehensive income.
For the year ended December 31, 2019, there were no OTTI recognized in earnings for fixed maturity securities. For the
year ended December 31, 2018, there were $6 million of OTTI recognized on fixed maturity securities.
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses
are due primarily to temporary market and sector-related factors. (cid:1)one of these securities are delinquent or in default on
financial covenants. Based on its assessment of these issuers, the Company expects them to continue to meet their contractual
payment obligations as they become due and does not consider any of these securities to be OTTI.
carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date”. The Company utilizes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.
Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs
are only used to measure fair value to the extent that observable inputs are not available.
Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices
provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing
models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may
prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for
each security evaluation on any given day. The pricing services used by the Company have indicated that they will only
produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are
active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices
provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to
ensure proper valuation.
If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair
value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector
groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference
data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of
quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company
generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company
determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of
securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant
information.
For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed
maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest
rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect
illiquidity, where appropriate.
76
77
84
27983be 10K
27983be_10K.indd 84
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
8
2/26/20 12:08 PM
8
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
85
The following tables present the assets and liabilities measured at fair value as of December 31, 2019 and 2018 by level:
The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2019 and 2018:
(In thousands)
December 31, 2019
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
Total fixed maturity securities available for sale
Equity securities:
Common stocks
Preferred stocks
Total equity securities
Arbitrage trading account
Total
Liabilities:
Trading account securities sold but not yet purchased
December 31, 2018
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
Total fixed maturity securities available for sale
Equity securities:
Common stocks
Preferred stocks
Total equity securities
Arbitrage trading account
Total
Liabilities:
Trading account securities sold but not yet purchased
Total
Level 1
Level 2
Level 3
$
786,931
$
$
786,931
$
3,895,632
1,625,594
2,790,630
4,156,415
847,076
14,102,278
166,805
313,815
480,620
400,809
157,752
157,752
381,061
3,895,632
1,625,594
2,790,630
4,156,415
847,076
14,102,278
307,310
307,310
19,748
9,053
6,505
15,558
$
$
14,983,707
$
538,813
$
14,429,336
$
15,558
36,143
$
36,143
$
$
$
702,240
$
$
702,240
$
3,872,598
1,594,546
2,438,747
4,111,311
808,735
13,528,177
98,192
180,814
279,006
452,548
89,596
89,596
353,335
3,872,598
1,594,546
2,438,648
4,111,311
808,735
13,528,078
176,869
176,869
81,905
14,259,731
$
442,931
$
13,786,852
$
99
99
8,596
3,945
12,541
17,308
29,948
38,120
$
37,327
$
$
793
$
$
78
Beginning
Balance
Earnings
(Losses)
Impairments
Purchases
Sales
Paydowns/
Maturities
Transfers
In / Out
Ending
Balance
Gains (Losses) Included in:
Other
Comprehensive
Income
(Losses)
Asset-backed securities
$
$
(26) $
$
$
$
(134) $
$
$
2,602
2,602
(134)
(1,548)
(1,548)
9,053
6,505
15,558
$ 29,948
$ (6,794) $
$
$ 17,369
$(39,915) $
$ 14,889
$ 15,558
14,767
(38,233)
14,889
$
793
$
133
$
$
$
7,609
$ (8,535) $
$
$
(In thousands)
Year ended December 31, 2019
Assets:
Fixed maturity securities
available for sale:
Total
Equity securities:
Common stocks
Preferred stocks
Arbitrage trading account
Total
Total
Liabilities:
Trading account securities sold
but not yet purchased
Year ended December 31, 2018
Assets:
Fixed maturity securities
available for sale:
Total
Equity securities:
Common stocks
Preferred stocks
Arbitrage trading account
Total
Total
Liabilities:
Trading account securities sold
but not yet purchased
99
99
8,596
3,945
12,541
17,308
(26)
2,005
(42)
1,963
(8,731)
172
172
9,370
10,843
20,213
(2)
(548)
100
(448)
(6)
Asset-backed securities
$
$
(2) $
$
$
$
(117) $
$
$
11,523
(117)
(227)
(6,998)
(7,225)
(11)
1
1
5,802
99
99
8,596
3,945
12,541
17,308
$ 20,385
$
(456) $
$
$ 11,523
$ (7,353) $
$ 5,803
$ 29,948
$
$
(67) $
$
$
860
$
$
$
$
793
For the year ended December 31, 2019, there were two common stocks transferred into Level 3 in the arbitrage trading
account where publicly traded prices were no longer available, and both were sold by year end. For the year ended
December 31, 2018, one common stock in the arbitrage trading account was transferred into Level 3 and one common stock
was transferred out of Level 3. In the case of the transfer into Level 3, a publicly traded price was no longer available and in the
case of the transfer out, a publicly traded price became available.
61
61
61
46
46
46
79
K
0
1
e
b
3
8
9
7
2
5
8
2/26/20 12:08 PM
85
27983be 10K
27983be_10K.indd 85
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
The following tables present the assets and liabilities measured at fair value as of December 31, 2019 and 2018 by level:
The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2019 and 2018:
8
6
2
7
9
8
3
b
e
1
0
K
27983be 10K
86
Trading account securities sold but not yet purchased
36,143
$
36,143
$
14,983,707
$
14,429,336
$
15,558
Year ended December 31, 2018
Assets:
Fixed maturity securities
available for sale:
Asset-backed securities
$
9,053
6,505
15,558
(In thousands)
December 31, 2019
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
Total
Level 1
Level 2
Level 3
$
786,931
$
$
786,931
$
Total fixed maturity securities available for sale
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
Equity securities:
Common stocks
Preferred stocks
Total equity securities
Arbitrage trading account
Total
Liabilities:
State and municipal
Mortgage-backed securities
Asset-backed securities
Corporate
Foreign government
Equity securities:
Common stocks
Preferred stocks
Total equity securities
Arbitrage trading account
Total
Liabilities:
December 31, 2018
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
Total fixed maturity securities available for sale
3,895,632
1,625,594
2,790,630
4,156,415
847,076
14,102,278
166,805
313,815
480,620
400,809
3,872,598
1,594,546
2,438,747
4,111,311
808,735
13,528,177
98,192
180,814
279,006
452,548
157,752
157,752
381,061
538,813
$
$
89,596
89,596
353,335
3,895,632
1,625,594
2,790,630
4,156,415
847,076
14,102,278
307,310
307,310
19,748
3,872,598
1,594,546
2,438,648
4,111,311
808,735
13,528,078
176,869
176,869
81,905
14,259,731
$
442,931
$
13,786,852
$
$
702,240
$
$
702,240
$
$
$
$
$
78
99
99
8,596
3,945
12,541
17,308
29,948
Trading account securities sold but not yet purchased
38,120
$
37,327
$
$
793
Beginning
Balance
Earnings
(Losses)
Other
Comprehensive
Income
(Losses)
Impairments
Purchases
Sales
Paydowns/
Maturities
Transfers
In / Out
Ending
Balance
Gains (Losses) Included in:
(In thousands)
Year ended December 31, 2019
Assets:
Fixed maturity securities
available for sale:
Asset-backed securities
$
$
99
99
(26) $
(26)
Total
Equity securities:
Common stocks
Preferred stocks
Total
Arbitrage trading account
Total
Liabilities:
Trading account securities sold
but not yet purchased
8,596
2,005
3,945
12,541
17,308
$ 29,948
(42)
1,963
(8,731)
$ (6,794) $
61
61
61
$
$
$
$
(134) $
(134)
$
$
(1,548)
9,053
2,602
2,602
14,767
$ 17,369
(1,548)
(38,233)
$(39,915) $
14,889
$ 14,889
6,505
15,558
$ 15,558
$
793
$
133
$
$
$
7,609
$ (8,535) $
$
$
$
172
172
(2) $
(2)
9,370
10,843
20,213
$ 20,385
$
(548)
100
(448)
(6)
(456) $
46
46
46
$
$
$
$
(117) $
(117)
$
$
99
99
11,523
$ 11,523
(227)
(6,998)
(7,225)
(11)
$ (7,353) $
1
1
5,802
$ 5,803
8,596
3,945
12,541
17,308
$ 29,948
Total
Equity securities:
Common stocks
Preferred stocks
Total
Arbitrage trading account
Total
Liabilities:
Trading account securities sold
but not yet purchased
$
$
(67) $
$
$
860
$
$
$
$
793
For the year ended December 31, 2019, there were two common stocks transferred into Level 3 in the arbitrage trading
account where publicly traded prices were no longer available, and both were sold by year end. For the year ended
December 31, 2018, one common stock in the arbitrage trading account was transferred into Level 3 and one common stock
was transferred out of Level 3. In the case of the transfer into Level 3, a publicly traded price was no longer available and in the
case of the transfer out, a publicly traded price became available.
79
86
27983be 10K
27983be_10K.indd 86
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
8
2/26/20 12:08 PM
The most commonly used claim count method is by event. Most of the Company's operating units use the number of events to
define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim
damages arising from a single event, an operating unit may quantify claims on the basis of the number of separate parties involved in
an event. This may be the case with businesses writing substantial automobile or transportation exposure.
Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further
variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of
participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below
Reinsurance & Monoline Excess segment tables due to this variability.
The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss
payouts by product line.
The following tables present undiscounted incurred and paid claims development as of December 31, 2019, net of reinsurance,
as well as cumulative claim frequency and the total of incurred but not reported liabilities (IB(cid:1)R). The information about incurred
and paid claims development for the years ended December 31, 2010 to 2018 is presented as supplementary information. To enhance
the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using
the December 31, 2019 exchange rate for all periods. Beginning with accident year 2012, the Company's U.K. and European
insurance business is included in the Insurance segment's tables for Other Liability, Professional Liability, Commercial Automobile
and Short-Tail Lines. Prior to 2012, the actuarial analysis for its U.K. and European insurance business was performed on an
underwriting year basis and accident year data is not available for those years.
8
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
87
(13) Reserves for Losses and Loss Expenses
The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities
(IB(cid:1)R). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information
about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as
appropriate. Reserves are also established on an aggregate basis to provide for IB(cid:1)R liabilities and expected loss reserve
development on reported claims.
Loss reserves included in the Companys financial statements represent managements best estimates based upon an actuarially
derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an
actuarial point estimate for each operating unit. These methods may include paid loss development, incurred loss development, paid
and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is
considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based
on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to
supplement the Companys own data in selecting tail factors in areas where the Companys own data is limited. The actuarial data
is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that
may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives,
changes in claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms
and conditions.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation,
and reported and paid loss emergence patterns. Expected loss ratios represent managements expectation of losses at the time the
business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the
estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios
are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the
type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss
cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component,
such as workers compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts
to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred
losses, and are derived from the Companys own experience and industry data. The paid loss emergence pattern is also significant to
excess and assumed workers compensation reserves because those reserves are discounted to their estimated present value based
upon such estimated payout patterns.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in
our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss
emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure
of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and
changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of
inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between
the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to
accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of
reserves needed for incurred but not reported losses (less IB(cid:1)R is required for lines with short reporting lags). As a result, loss
reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting
lags, which include commercial automobile, primary workers compensation, other liability (claims-made) and property business, the
key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For
lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers compensation
and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider.
Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting
lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to
the extent necessary, to reflect the latest reported loss data, current trends and other factors observed.
A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type
(e.g., an event may give rise to two parties, each claiming loss for bodily injury and property damage).
80
87
27983be 10K
27983be_10K.indd 87
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
8
2/26/20 12:08 PM
81
8
8
2
7
9
8
3
b
e
1
0
K
27983be 10K
88
(13) Reserves for Losses and Loss Expenses
The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities
(IB(cid:1)R). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information
about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as
appropriate. Reserves are also established on an aggregate basis to provide for IB(cid:1)R liabilities and expected loss reserve
development on reported claims.
Loss reserves included in the Companys financial statements represent managements best estimates based upon an actuarially
derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an
The most commonly used claim count method is by event. Most of the Company's operating units use the number of events to
define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim
damages arising from a single event, an operating unit may quantify claims on the basis of the number of separate parties involved in
an event. This may be the case with businesses writing substantial automobile or transportation exposure.
Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further
variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of
participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below
Reinsurance & Monoline Excess segment tables due to this variability.
actuarial point estimate for each operating unit. These methods may include paid loss development, incurred loss development, paid
The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss
and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is
payouts by product line.
The following tables present undiscounted incurred and paid claims development as of December 31, 2019, net of reinsurance,
as well as cumulative claim frequency and the total of incurred but not reported liabilities (IB(cid:1)R). The information about incurred
and paid claims development for the years ended December 31, 2010 to 2018 is presented as supplementary information. To enhance
the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using
the December 31, 2019 exchange rate for all periods. Beginning with accident year 2012, the Company's U.K. and European
insurance business is included in the Insurance segment's tables for Other Liability, Professional Liability, Commercial Automobile
and Short-Tail Lines. Prior to 2012, the actuarial analysis for its U.K. and European insurance business was performed on an
underwriting year basis and accident year data is not available for those years.
considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based
on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to
supplement the Companys own data in selecting tail factors in areas where the Companys own data is limited. The actuarial data
is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that
may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives,
changes in claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms
and conditions.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation,
and reported and paid loss emergence patterns. Expected loss ratios represent managements expectation of losses at the time the
business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the
estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios
are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the
type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss
cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component,
such as workers compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts
to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred
losses, and are derived from the Companys own experience and industry data. The paid loss emergence pattern is also significant to
excess and assumed workers compensation reserves because those reserves are discounted to their estimated present value based
upon such estimated payout patterns.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in
our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss
emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure
of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and
changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of
inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between
the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to
accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of
reserves needed for incurred but not reported losses (less IB(cid:1)R is required for lines with short reporting lags). As a result, loss
reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting
lags, which include commercial automobile, primary workers compensation, other liability (claims-made) and property business, the
key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For
lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers compensation
and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider.
Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting
lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to
the extent necessary, to reflect the latest reported loss data, current trends and other factors observed.
A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type
(e.g., an event may give rise to two parties, each claiming loss for bodily injury and property damage).
80
81
88
27983be 10K
27983be_10K.indd 88
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
8
2/26/20 12:08 PM
8
9
2
7
9
8
3
b
e
1
0
K
Insurance
Other Liability
(In thousands)
27983be 10K
89
Workers' Compensation
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
As of December 31,
2019
Cumulative
(cid:1)umber of
Reported Claims
$612,467 $616,023 $589,921 $588,602 $575,528 $572,785 $ 571,637 $ 569,440 $ 564,873 $
561,579
$ 19,742
— 665,420
671,537
657,679
656,976
651,973
647,091
643,195
632,382
— 691,803
700,539
701,144
707,326
711,287
721,460
715,996
— 750,054
790,314
782,260
782,039
802,908
809,250
— 847,034
848,641
846,644
851,044
863,899
642,774
714,020
803,856
870,017
22,746
32,727
49,079
83,500
—
—
—
—
—
— 951,028
986,655
961,441
964,598
966,662
134,615
—
—
—
—
— 1,018,009
1,010,984
1,019,893
1,031,150
245,835
—
—
—
— 1,066,362
1,100,127
1,122,209
377,307
—
—
— 1,104,631
1,131,202
606,500
—
— 1,237,276
937,110
$ 9,080,745
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 45,194 $128,948 $246,647 $334,054 $414,945 $459,478 $ 489,077 $ 506,283 $ 522,939 $
531,085
— 48,830
141,192
265,071
377,769
469,004
522,369
554,152
573,236
—
—
—
—
—
—
—
—
— 57,568
157,316
298,095
415,890
511,601
578,617
620,507
—
—
—
—
—
—
—
— 63,293
188,240
330,928
471,648
587,102
647,891
—
—
—
—
—
—
— 78,921
190,876
338,365
480,418
594,488
—
—
—
—
—
— 82,712
210,773
382,185
538,071
—
—
—
—
—
—
—
—
69,477
208,991
390,231
—
—
—
80,037
255,849
—
—
86,858
—
591,990
651,000
693,306
680,436
676,037
558,539
453,389
264,392
88,260
$ 5,188,434
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
106,200
Reserves for loss and loss adjustment expenses, net of reinsurance $ 3,998,511
$352,138 $355,305 $411,527 $420,604 $426,622 $429,952 $429,762 $427,698 $ 424,374 $
424,195
$ 13,552
— 413,429
444,887
457,134
470,026
472,087
474,076
475,729
471,471
— 501,681
501,810
503,956
503,863
509,167
512,707
508,169
473,766
506,730
541,926
604,029
626,431
660,508
17,276
24,736
29,205
44,633
60,862
71,710
— 552,570
547,295
546,995
543,238
547,000
542,274
— 639,436
637,307
627,767
617,242
615,435
— 712,800
690,525
650,997
641,169
— 702,716
696,339
684,700
—
—
—
—
—
—
—
—
—
—
—
—
— 762,093
733,505
689,559
107,981
—
—
— 778,964
724,463
153,587
—
—
783,244
372,381
$ 6,034,851
45
46
48
53
57
58
57
57
55
50
22
23
23
25
26
25
25
25
23
20
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$108,675 $215,882 $281,280 $320,154 $344,631 $362,078 $374,013 $382,665 $ 388,405 $
392,672
— 106,899
236,207
309,509
355,909
385,759
408,304
420,945
428,811
— 115,536
255,063
339,560
387,368
419,588
437,196
451,991
— 117,900
277,538
363,028
414,160
447,894
466,580
— 148,405
319,743
412,611
471,235
503,915
—
—
—
—
—
— 139,320
323,744
421,734
477,541
—
—
—
—
— 142,998
338,835
446,072
—
—
—
— 153,456
362,299
—
—
— 171,006
—
—
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
193,837
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,870,968
436,905
459,119
479,104
521,141
512,933
504,850
468,817
397,464
184,715
$ 4,357,720
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
82
89
27983be 10K
27983be_10K.indd 89
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
8
2/26/20 12:08 PM
83
Insurance
Other Liability
(In thousands)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
27983be 10K
90
9
0
2
7
9
8
3
b
e
1
0
K
Workers' Compensation
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
$612,467 $616,023 $589,921 $588,602 $575,528 $572,785 $ 571,637 $ 569,440 $ 564,873 $
561,579
$ 19,742
— 665,420
671,537
657,679
656,976
651,973
647,091
643,195
632,382
— 691,803
700,539
701,144
707,326
711,287
721,460
715,996
— 750,054
790,314
782,260
782,039
802,908
809,250
— 847,034
848,641
846,644
851,044
863,899
642,774
714,020
803,856
870,017
22,746
32,727
49,079
83,500
—
—
—
—
—
— 951,028
986,655
961,441
964,598
966,662
134,615
—
—
—
—
— 1,018,009
1,010,984
1,019,893
1,031,150
245,835
—
—
—
— 1,066,362
1,100,127
1,122,209
377,307
—
—
— 1,104,631
1,131,202
606,500
—
— 1,237,276
937,110
$ 9,080,745
22
23
23
25
26
25
25
25
23
20
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 45,194 $128,948 $246,647 $334,054 $414,945 $459,478 $ 489,077 $ 506,283 $ 522,939 $
531,085
— 48,830
141,192
265,071
377,769
469,004
522,369
554,152
573,236
— 57,568
157,316
298,095
415,890
511,601
578,617
620,507
— 63,293
188,240
330,928
471,648
587,102
647,891
— 78,921
190,876
338,365
480,418
594,488
—
—
—
—
—
— 82,712
210,773
382,185
538,071
—
—
—
—
—
—
—
—
69,477
208,991
390,231
—
—
—
80,037
255,849
—
—
86,858
—
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
106,200
Reserves for loss and loss adjustment expenses, net of reinsurance $ 3,998,511
591,990
651,000
693,306
680,436
676,037
558,539
453,389
264,392
88,260
$ 5,188,434
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
$352,138 $355,305 $411,527 $420,604 $426,622 $429,952 $429,762 $427,698 $ 424,374 $
424,195
$ 13,552
— 413,429
444,887
457,134
470,026
472,087
474,076
475,729
471,471
— 501,681
501,810
503,956
503,863
509,167
512,707
508,169
— 552,570
547,295
546,995
543,238
547,000
542,274
— 639,436
637,307
627,767
617,242
615,435
— 712,800
690,525
650,997
641,169
— 702,716
696,339
684,700
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 762,093
733,505
689,559
107,981
—
—
— 778,964
724,463
153,587
—
—
783,244
372,381
$ 6,034,851
473,766
506,730
541,926
604,029
626,431
660,508
17,276
24,736
29,205
44,633
60,862
71,710
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$108,675 $215,882 $281,280 $320,154 $344,631 $362,078 $374,013 $382,665 $ 388,405 $
392,672
— 106,899
236,207
309,509
355,909
385,759
408,304
420,945
428,811
—
—
—
—
—
—
—
—
— 115,536
255,063
339,560
387,368
419,588
437,196
451,991
—
—
—
—
—
—
—
— 117,900
277,538
363,028
414,160
447,894
466,580
—
—
—
—
—
—
— 148,405
319,743
412,611
471,235
503,915
—
—
—
—
—
— 139,320
323,744
421,734
477,541
—
—
—
—
— 142,998
338,835
446,072
—
—
—
— 153,456
362,299
—
—
— 171,006
—
—
436,905
459,119
479,104
521,141
512,933
504,850
468,817
397,464
184,715
$ 4,357,720
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
193,837
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,870,968
82
83
90
27983be 10K
27983be_10K.indd 90
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
45
46
48
53
57
58
57
57
55
50
K
0
1
e
b
3
8
9
7
2
0
9
2/26/20 12:08 PM
27983be 10K
91
9
1
2
7
9
8
3
b
e
1
0
K
Professional Liability
(In thousands)
Commercial Automobile
(In thousands)
$147,632 $165,689 $179,344 $177,951 $176,653 $172,493 $174,796 $177,757 $ 182,717 $
182,860
$
62
— 179,818
165,291
187,074
189,988
176,936
173,309
176,606
175,689
— 238,978
242,541
265,690
251,230
239,458
245,945
244,730
— 269,993
248,080
243,887
249,797
271,469
280,018
— 253,992
247,373
260,498
244,454
239,982
— 260,216
258,780
275,608
276,842
— 311,099
325,241
361,996
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 333,758
332,864
339,021
112,457
—
—
— 335,728
322,952
168,475
—
—
337,228
259,157
$ 2,843,002
176,230
245,338
285,262
258,781
292,401
402,929
2,187
7,091
14,062
26,194
37,634
56,934
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
4
4
5
6
6
7
8
9
9
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
$310,591 $320,098 $330,224 $328,901 $332,748 $331,615 $330,586 $330,297 $ 329,976 $
329,768
$
— 312,224
320,920
328,320
331,732
341,394
341,200
342,094
343,566
— 314,309
326,831
342,588
355,609
364,084
364,328
366,541
— 327,514
349,136
368,894
376,860
367,264
366,822
— 363,913
385,251
418,161
416,123
413,589
— 389,660
417,053
423,180
431,376
—
—
—
—
— 431,261
430,911
442,210
—
—
—
— 430,768
428,708
— 442,788
—
—
—
—
483,206
162,432
$ 4,070,528
As of December 31,
2019
Cumulative
(cid:1)umber of
Reported Claims
144
964
807
1,592
4,385
7,808
18,162
31,607
67,700
343,433
365,806
365,953
413,424
432,415
443,268
430,499
462,756
37
37
37
39
42
46
45
41
40
37
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 14,806 $ 58,851 $108,438 $129,619 $144,336 $160,466 $164,894 $171,206 $ 178,756 $
179,865
— 18,726
62,305
102,898
134,253
150,487
158,678
166,949
168,526
—
—
—
—
—
—
—
—
— 21,697
86,734
128,245
159,285
190,584
214,821
223,988
—
—
—
—
—
—
—
— 23,939
63,951
119,567
177,525
207,020
249,005
—
—
—
—
—
—
— 19,446
83,694
138,678
176,134
199,337
—
—
—
—
—
— 20,415
85,470
139,835
187,664
—
—
—
—
— 28,631
102,661
201,854
—
—
—
— 36,579
96,456
—
—
—
—
28,231
—
170,205
232,160
258,394
216,228
216,575
255,841
163,003
99,789
31,790
$ 1,823,850
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$136,029 $208,790 $263,639 $295,355 $313,262 $324,997 $326,804 $327,240 $ 327,863 $
328,006
— 135,350
211,756
262,685
296,370
321,814
333,987
338,325
340,360
— 136,844
215,214
273,446
312,342
344,326
355,631
360,681
— 142,929
218,596
267,253
322,441
343,556
353,424
— 155,572
237,665
328,125
365,376
394,063
— 160,024
265,083
324,976
370,037
—
—
—
—
— 184,516
279,381
341,423
—
—
—
— 180,755
267,587
—
—
— 180,162
—
—
340,799
361,755
362,152
402,013
397,666
390,359
327,135
281,651
185,344
$ 3,376,880
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
15,104
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
4,313
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,034,256
Reserves for loss and loss adjustment expenses, net of reinsurance $
697,961
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
84
91
27983be 10K
27983be_10K.indd 91
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
9
2/26/20 12:08 PM
85
9
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
92
Professional Liability
(In thousands)
Commercial Automobile
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
144
964
807
1,592
4,385
7,808
18,162
31,607
67,700
—
—
483,206
162,432
$ 4,070,528
$310,591 $320,098 $330,224 $328,901 $332,748 $331,615 $330,586 $330,297 $ 329,976 $
329,768
$
—
—
—
—
—
— 442,788
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 430,768
428,708
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 431,261
430,911
442,210
— 389,660
417,053
423,180
431,376
— 363,913
385,251
418,161
416,123
413,589
— 327,514
349,136
368,894
376,860
367,264
366,822
— 314,309
326,831
342,588
355,609
364,084
364,328
366,541
— 312,224
320,920
328,320
331,732
341,394
341,200
342,094
343,566
343,433
365,806
365,953
413,424
432,415
443,268
430,499
462,756
$147,632 $165,689 $179,344 $177,951 $176,653 $172,493 $174,796 $177,757 $ 182,717 $
182,860
$
62
— 179,818
165,291
187,074
189,988
176,936
173,309
176,606
175,689
— 238,978
242,541
265,690
251,230
239,458
245,945
244,730
176,230
245,338
285,262
258,781
292,401
402,929
2,187
7,091
14,062
26,194
37,634
56,934
— 269,993
248,080
243,887
249,797
271,469
280,018
— 253,992
247,373
260,498
244,454
239,982
— 260,216
258,780
275,608
276,842
— 311,099
325,241
361,996
—
—
—
—
—
—
—
— 333,758
332,864
339,021
112,457
—
—
— 335,728
322,952
168,475
—
—
337,228
259,157
$ 2,843,002
4
4
5
6
6
7
8
9
9
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 14,806 $ 58,851 $108,438 $129,619 $144,336 $160,466 $164,894 $171,206 $ 178,756 $
179,865
— 18,726
62,305
102,898
134,253
150,487
158,678
166,949
168,526
— 21,697
86,734
128,245
159,285
190,584
214,821
223,988
— 23,939
63,951
119,567
177,525
207,020
249,005
— 19,446
83,694
138,678
176,134
199,337
— 20,415
85,470
139,835
187,664
—
—
—
—
— 28,631
102,661
201,854
—
—
—
— 36,579
96,456
—
—
—
—
28,231
—
170,205
232,160
258,394
216,228
216,575
255,841
163,003
99,789
31,790
$ 1,823,850
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$136,029 $208,790 $263,639 $295,355 $313,262 $324,997 $326,804 $327,240 $ 327,863 $
328,006
— 135,350
211,756
262,685
296,370
321,814
333,987
338,325
340,360
—
—
—
—
—
—
—
—
— 136,844
215,214
273,446
312,342
344,326
355,631
360,681
—
—
—
—
—
—
—
— 142,929
218,596
267,253
322,441
343,556
353,424
—
—
—
—
—
—
— 155,572
237,665
328,125
365,376
394,063
—
—
—
—
—
— 160,024
265,083
324,976
370,037
—
—
—
—
— 184,516
279,381
341,423
—
—
—
— 180,755
267,587
—
—
— 180,162
—
—
340,799
361,755
362,152
402,013
397,666
390,359
327,135
281,651
185,344
$ 3,376,880
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
15,104
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
4,313
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,034,256
Reserves for loss and loss adjustment expenses, net of reinsurance $
697,961
84
85
92
27983be 10K
27983be_10K.indd 92
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
37
37
37
39
42
46
45
41
40
37
K
0
1
e
b
3
8
9
7
2
2
9
2/26/20 12:08 PM
27983be 10K
93
9
3
2
7
9
8
3
b
e
1
0
K
Short-tail lines
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
Cumulative
(cid:1)umber of
Reported Claims
$385,319 $370,080 $358,254 $355,602 $345,937 $346,380 $346,493 $346,074 $ 345,777 $
345,546
$
— 478,520
471,678
463,253
460,030
457,182
450,325
449,529
451,410
— 529,564
537,716
538,141
533,491
507,509
506,464
508,354
— 576,784
586,382
577,353
553,680
552,192
548,673
— 707,121
712,320
664,718
663,342
664,169
233
649
2,229
3,405
4,366
10,676
12,383
18,189
33,738
451,064
507,416
546,766
664,416
718,506
758,881
748,451
750,780
19
21
28
30
34
37
40
46
52
42
—
—
—
—
—
— 743,454
731,950
728,186
726,748
—
—
—
—
— 773,945
777,270
764,278
—
—
—
— 753,512
753,803
— 760,474
—
—
—
—
726,820
168,528
$ 6,218,646
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$245,037 $325,163 $337,688 $346,622 $340,066 $342,773 $343,899 $344,887 $ 344,908 $
344,989
— 303,016
417,730
436,718
440,937
445,234
446,944
447,538
450,352
—
—
—
—
—
—
—
—
— 281,830
454,731
504,954
515,520
498,207
499,355
503,614
—
—
—
—
—
—
—
— 314,122
488,140
536,630
531,474
538,304
539,553
—
—
—
—
—
—
— 372,670
599,119
613,530
632,796
648,072
—
—
—
—
—
— 395,440
612,369
668,012
690,037
—
—
—
—
— 417,424
671,219
712,815
—
—
—
— 445,560
690,029
—
—
— 415,206
—
—
450,439
504,342
540,158
655,332
699,770
728,122
718,949
662,185
405,213
$ 5,709,499
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
1,019
Reserves for loss and loss adjustment expenses, net of reinsurance $
510,166
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Reinsurance & Monoline Excess
Casualty
(In thousands)
14,322
16,563
17,481
25,073
34,043
43,622
51,973
85,671
109,087
196,623
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$290,438 $298,265 $288,146 $276,049 $265,455 $256,271 $ 252,900 $ 250,596 $ 249,599 $
249,472
$
— 290,770
309,836
304,352
299,244
307,969
304,780
296,280
292,762
— 331,991
335,867
330,882
325,224
333,982
336,492
334,588
— 319,491
270,382
275,539
285,032
293,686
299,224
— 320,579
320,226
319,573
331,339
325,497
— 259,922
232,272
230,856
252,959
—
—
—
—
— 241,533
253,501
246,019
—
—
—
— 232,010
221,769
—
—
— 222,100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 17,814 $ 45,338 $ 76,845 $105,912 $128,476 $150,665 $166,361 $181,857 $ 191,532 $
198,822
— 17,812
52,231
97,476
133,808
169,219
192,724
208,347
220,566
— 22,329
62,037
111,538
152,590
187,196
219,637
241,318
— 28,910
63,718
110,306
144,405
178,174
205,716
— 21,280
68,992
115,873
155,207
198,196
— 17,866
48,445
91,198
141,348
—
—
—
—
— 19,895
61,787
100,262
—
—
—
— 16,473
40,138
—
—
—
—
11,092
—
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
383,199
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,556,057
299,130
331,270
303,568
324,941
293,718
268,508
239,788
211,227
237,412
$ 2,759,034
232,452
257,010
226,083
227,684
178,657
140,411
69,465
41,018
14,574
$ 1,586,176
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
86
93
27983be 10K
27983be_10K.indd 93
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
9
2/26/20 12:08 PM
87
Short-tail lines
(In thousands)
As of December 31,
2019
Cumulative
(cid:1)umber of
Reported Claims
233
649
2,229
3,405
4,366
10,676
12,383
18,189
33,738
451,064
507,416
546,766
664,416
718,506
758,881
748,451
750,780
19
21
28
30
34
37
40
46
52
42
— 743,454
731,950
728,186
726,748
—
—
—
—
— 773,945
777,270
764,278
—
—
—
— 753,512
753,803
— 760,474
—
—
—
—
726,820
168,528
$ 6,218,646
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$385,319 $370,080 $358,254 $355,602 $345,937 $346,380 $346,493 $346,074 $ 345,777 $
345,546
$
— 478,520
471,678
463,253
460,030
457,182
450,325
449,529
451,410
— 529,564
537,716
538,141
533,491
507,509
506,464
508,354
— 576,784
586,382
577,353
553,680
552,192
548,673
— 707,121
712,320
664,718
663,342
664,169
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$245,037 $325,163 $337,688 $346,622 $340,066 $342,773 $343,899 $344,887 $ 344,908 $
344,989
— 303,016
417,730
436,718
440,937
445,234
446,944
447,538
450,352
— 281,830
454,731
504,954
515,520
498,207
499,355
503,614
— 314,122
488,140
536,630
531,474
538,304
539,553
— 372,670
599,119
613,530
632,796
648,072
— 395,440
612,369
668,012
690,037
—
—
—
—
— 417,424
671,219
712,815
—
—
—
— 445,560
690,029
—
—
— 415,206
—
—
450,439
504,342
540,158
655,332
699,770
728,122
718,949
662,185
405,213
$ 5,709,499
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
1,019
Reserves for loss and loss adjustment expenses, net of reinsurance $
510,166
27983be 10K
94
9
4
2
7
9
8
3
b
e
1
0
K
Reinsurance & Monoline Excess
Casualty
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$290,438 $298,265 $288,146 $276,049 $265,455 $256,271 $ 252,900 $ 250,596 $ 249,599 $
249,472
$
— 290,770
309,836
304,352
299,244
307,969
304,780
296,280
292,762
—
—
—
—
—
—
—
—
— 331,991
335,867
330,882
325,224
333,982
336,492
334,588
—
—
—
—
—
—
—
— 319,491
270,382
275,539
285,032
293,686
299,224
—
—
—
—
—
—
— 320,579
320,226
319,573
331,339
325,497
—
—
—
—
—
— 259,922
232,272
230,856
252,959
—
—
—
—
— 241,533
253,501
246,019
—
—
—
— 232,010
221,769
—
—
— 222,100
—
—
299,130
331,270
303,568
324,941
293,718
268,508
239,788
211,227
237,412
$ 2,759,034
14,322
16,563
17,481
25,073
34,043
43,622
51,973
85,671
109,087
196,623
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 17,814 $ 45,338 $ 76,845 $105,912 $128,476 $150,665 $166,361 $181,857 $ 191,532 $
198,822
— 17,812
52,231
97,476
133,808
169,219
192,724
208,347
220,566
—
—
—
—
—
—
—
—
— 22,329
62,037
111,538
152,590
187,196
219,637
241,318
—
—
—
—
—
—
—
— 28,910
63,718
110,306
144,405
178,174
205,716
—
—
—
—
—
—
— 21,280
68,992
115,873
155,207
198,196
—
—
—
—
—
— 17,866
48,445
91,198
141,348
—
—
—
—
— 19,895
61,787
100,262
—
—
—
— 16,473
40,138
—
—
—
—
11,092
—
232,452
257,010
226,083
227,684
178,657
140,411
69,465
41,018
14,574
$ 1,586,176
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
383,199
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,556,057
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
86
87
94
27983be 10K
27983be_10K.indd 94
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
9
2/26/20 12:08 PM
27983be 10K
95
9
5
2
7
9
8
3
b
e
1
0
K
Monoline Excess
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Property
(In thousands)
As of December 31,
2019
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$135,639 $123,497 $120,272 $118,712 $102,424 $104,732 $100,065 $ 94,986 $ 95,374 $
99,944
$
— 88,650
93,993
98,051
89,031
85,299
83,850
78,246
74,109
—
—
—
—
—
—
—
—
— 72,366
73,230
73,670
73,653
72,441
67,878
69,361
—
—
—
—
—
—
—
— 63,995
50,355
46,025
42,419
38,551
35,120
—
—
—
—
—
—
— 63,561
57,558
49,478
45,758
41,671
—
—
—
—
—
— 69,977
57,897
50,099
45,115
—
—
—
—
— 72,657
70,281
71,404
—
—
—
— 76,701
80,508
—
—
—
—
77,820
—
72,091
67,205
31,752
42,541
39,682
64,957
70,749
72,505
78,929
$ 640,355
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$
2,867 $
4,003 $
5,571 $
8,701 $ 11,260 $ 11,699 $ 14,261 $ 18,821 $ 22,355 $
28,431
15,731
14,075
11,249
12,626
15,347
19,040
23,676
29,999
36,930
48,526
—
—
—
—
—
—
—
—
—
2,593
—
—
—
—
—
—
—
—
4,848
1,127
—
—
—
—
—
—
—
6,395
14,042
15,684
18,638
20,164
21,463
6,097
10,815
11,167
13,234
15,738
17,982
647
1,897
—
—
—
—
—
—
377
—
—
—
—
—
2,158
1,729
2,069
—
—
—
—
3,008
3,354
2,481
2,498
—
—
—
3,396
4,175
3,272
4,783
6,282
—
—
23,686
20,004
5,349
7,595
4,416
5,928
4,418
5,808
4,099
5,573
12,810
15,356
6,141
—
8,230
6,241
$ 125,236
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
765,323
Reserves for loss and loss adjustment expenses, net of reinsurance $1,280,442
88
95
27983be 10K
27983be_10K.indd 95
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
208
490
1,032
643
1,685
2,478
4,891
11,224
19,159
52,334
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$ 58,367 $ 55,399 $ 52,306 $ 51,186 $ 51,230 $ 50,694 $ 50,571 $ 50,398 $ 50,630 $
50,362
$
— 95,201
87,837
84,914
86,326
84,791
84,522
84,246
84,651
— 103,833
94,661
86,330
85,334
83,814
83,822
84,746
— 141,563
112,684
114,123
111,945
112,579
111,895
109,699
— 113,126
96,636
97,279
100,011
99,250
— 127,259
117,563
131,755
130,391
—
—
—
—
— 168,129
174,570
181,757
—
—
—
— 206,672
200,510
—
—
— 108,342
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 23,424 $ 37,483 $ 42,153 $ 43,634 $ 44,550 $ 46,141 $ 48,745 $ 49,001 $ 49,749 $
— 31,402
58,702
73,142
75,778
78,357
81,560
82,094
83,169
— 15,663
51,641
64,098
70,524
77,412
78,971
81,673
— 36,578
74,573
92,619
101,539
104,326
106,045
107,606
— 38,803
66,869
82,172
88,317
91,452
— 53,477
89,153
109,090
118,603
—
—
—
—
— 78,936
133,576
157,491
—
—
—
— 72,132
141,389
—
—
—
—
34,004
—
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
798
Reserves for loss and loss adjustment expenses, net of reinsurance $
186,679
84,432
84,555
98,912
129,492
181,002
199,497
112,152
103,240
$ 1,153,343
49,690
83,250
82,541
93,160
122,621
168,605
171,745
65,193
23,051
$
967,462
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
K
0
1
e
b
3
8
9
7
2
5
9
2/26/20 12:08 PM
89
27983be 10K
96
9
6
2
7
9
8
3
b
e
1
0
K
Property
(In thousands)
As of December 31,
2019
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
As of December 31,
2019
Monoline Excess
(In thousands)
Loss and Loss Expenses Incurred, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$135,639 $123,497 $120,272 $118,712 $102,424 $104,732 $100,065 $ 94,986 $ 95,374 $
99,944
$
— 88,650
93,993
98,051
89,031
85,299
83,850
78,246
74,109
— 72,366
73,230
73,670
73,653
72,441
67,878
69,361
— 63,995
50,355
46,025
42,419
38,551
35,120
— 63,561
57,558
49,478
45,758
41,671
72,091
67,205
31,752
42,541
39,682
64,957
70,749
72,505
78,929
$ 640,355
15,731
14,075
11,249
12,626
15,347
19,040
23,676
29,999
36,930
48,526
— 69,977
57,897
50,099
45,115
—
—
—
—
— 72,657
70,281
71,404
—
—
—
— 76,701
80,508
—
—
—
—
77,820
—
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4,848
1,127
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$
2,867 $
4,003 $
5,571 $
8,701 $ 11,260 $ 11,699 $ 14,261 $ 18,821 $ 22,355 $
28,431
2,593
6,395
14,042
15,684
18,638
20,164
21,463
6,097
10,815
11,167
13,234
15,738
17,982
647
1,897
2,158
1,729
2,069
—
—
—
—
3,008
3,354
2,481
2,498
—
—
—
3,396
4,175
3,272
4,783
6,282
—
—
377
—
—
—
—
—
4,418
5,808
4,099
5,573
6,141
—
23,686
20,004
5,349
7,595
4,416
5,928
8,230
6,241
$ 125,236
12,810
15,356
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
765,323
Reserves for loss and loss adjustment expenses, net of reinsurance $ 1,280,442
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
Accident
Year
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
IB(cid:1)R
$ 58,367 $ 55,399 $ 52,306 $ 51,186 $ 51,230 $ 50,694 $ 50,571 $ 50,398 $ 50,630 $
50,362
$
— 95,201
87,837
84,914
86,326
84,791
84,522
84,246
84,651
— 103,833
94,661
86,330
85,334
83,814
83,822
84,746
84,432
84,555
—
—
—
—
—
—
—
— 141,563
112,684
114,123
111,945
112,579
111,895
109,699
—
—
—
—
—
—
— 113,126
96,636
97,279
100,011
99,250
—
—
—
—
—
— 127,259
117,563
131,755
130,391
—
—
—
—
— 168,129
174,570
181,757
—
—
—
— 206,672
200,510
—
—
— 108,342
—
—
98,912
129,492
181,002
199,497
112,152
103,240
$ 1,153,343
Cumulative Paid Claims and Claim Adjustment Expenses, (cid:1)et of Reinsurance
For the Year Ended December 31,
Unaudited
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
$ 23,424 $ 37,483 $ 42,153 $ 43,634 $ 44,550 $ 46,141 $ 48,745 $ 49,001 $ 49,749 $
— 31,402
58,702
73,142
75,778
78,357
81,560
82,094
83,169
49,690
83,250
82,541
— 15,663
51,641
64,098
70,524
77,412
78,971
81,673
—
—
—
—
—
—
—
— 36,578
74,573
92,619
101,539
104,326
106,045
107,606
—
—
—
—
—
—
— 38,803
66,869
82,172
88,317
91,452
—
—
—
—
—
— 53,477
89,153
109,090
118,603
—
—
—
—
— 78,936
133,576
157,491
—
—
—
— 72,132
141,389
—
—
—
—
34,004
—
93,160
122,621
168,605
171,745
65,193
23,051
$
967,462
Reserves for loss and loss adjustment expenses before 2010, net of reinsurance
798
Reserves for loss and loss adjustment expenses, net of reinsurance $
186,679
88
89
96
27983be 10K
27983be_10K.indd 96
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
208
490
1,032
643
1,685
2,478
4,891
11,224
19,159
52,334
K
0
1
e
b
3
8
9
7
2
6
9
2/26/20 12:08 PM
27983be 10K
97
9
7
2
7
9
8
3
b
e
1
0
K
The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the
consolidated balance sheet is as follows:
(In thousands)
Undiscounted reserves for loss and loss expenses, net of reinsurance:
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Other
Insurance
Casualty
Monoline excess
Property
Total undiscounted reserves for loss and loss expenses, net of reinsurance
Reinsurance & Monoline Excess
(In thousands)
Due from reinsurers on unpaid claims:
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Other
Insurance
Casualty
Monoline excess
Property
Reinsurance & Monoline Excess
December 31,
2019
$
3,998,511
1,870,968
1,034,256
697,961
510,166
92,495
8,204,357
1,556,057
1,280,442
186,679
3,023,178
$
11,227,535
December 31,
2019
$
518,759
300,966
509,828
24,486
243,333
46,197
1,643,569
113,332
38,384
89,966
241,682
Total due from reinsurers on unpaid claims
$
1,885,251
90
K
0
1
e
b
3
8
9
7
2
7
9
2/26/20 12:08 PM
97
27983be 10K
27983be_10K.indd 97
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the
consolidated balance sheet is as follows:
(In thousands)
Loss reserve discount:
9
8
2
7
9
8
3
b
e
1
0
K
December 31,
2019
3,998,511
1,870,968
1,034,256
697,961
510,166
92,495
8,204,357
1,556,057
1,280,442
186,679
3,023,178
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Other
Insurance
Casualty
Monoline excess
Property
Reinsurance & Monoline Excess
Total loss reserve discount
Total gross reserves for loss and loss expenses
27983be 10K
98
December 31,
2019
$
$
$
—
(10,976)
—
—
—
—
(10,976)
(107,929)
(410,632)
—
(518,561)
(529,537)
12,583,249
Total undiscounted reserves for loss and loss expenses, net of reinsurance
$
11,227,535
The following is supplementary information regarding average historical claims duration as of December 31, 2019:
(In thousands)
Undiscounted reserves for loss and loss expenses, net of reinsurance:
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Other
Insurance
Casualty
Monoline excess
Property
Reinsurance & Monoline Excess
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Other
Insurance
Casualty
Monoline excess
Property
Reinsurance & Monoline Excess
(In thousands)
Due from reinsurers on unpaid claims:
$
$
December 31,
2019
518,759
300,966
509,828
24,486
243,333
46,197
1,643,569
113,332
38,384
89,966
241,682
Total due from reinsurers on unpaid claims
$
1,885,251
Insurance
Years
Other liability
Workers' compensation
Professional liability
Commercial automobile
Short-tail lines
Reinsurance & Monoline Excess
Average Annual Percentage Payout of Incurred Claims by Age, (cid:1)et of Reinsurance
1
2
3
4
5
6
7
8
9
10
7.8%
23.1%
8.7%
39.3%
58.8%
14.4%
28.7%
21.6%
21.6%
30.9%
18.4%
15.8%
21.3%
15.5%
5.7%
16.6%
14.0%
9.3%
15.2%
10.8%
1.8%
6.0%
9.9%
6.8%
0.1%
8.6%
3.7%
8.9%
3.0%
0.5%
5.4%
2.7%
3.5%
1.4%
0.4%
3.4%
1.7%
2.6%
0.3%
0.4%
2.9%
1.5%
3.8%
0.2%
—%
1.5%
1.0%
0.6%
—%
—%
Years
Casualty
Monoline excess
Property
Average Annual Percentage Payout of Incurred Claims by Age, (cid:1)et of Reinsurance
1
2
3
4
5
6
7
8
9
10
6.8%
4.5%
12.3%
14.2%
13.1%
11.4%
3.9%
2.8%
34.9%
31.8%
14.6%
3.1%
5.9%
2.3%
3.6%
8.9%
3.1%
2.4%
6.2%
2.7%
2.6%
5.0%
3.1%
0.9%
3.9%
3.3%
0.8%
2.9%
6.1%
—%
90
91
98
27983be 10K
27983be_10K.indd 98
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
9
2/26/20 12:08 PM
9
9
2
7
9
8
3
b
e
1
0
K
27983be 10K
99
The table below provides a reconciliation of the beginning and ending reserve balances:
(In thousands)
(cid:1)et reserves at beginning of year
(cid:1)et provision for losses and loss expenses:
Claims occurring during the current year (1)
Increase (decrease) in estimates for claims occurring in prior years (2)
Loss reserve discount accretion
Total
(cid:1)et payments for claims:
Current year
Prior year
Total
Foreign currency translation
(cid:1)et reserves at end of year
Ceded reserve at end of year
Gross reserves at end of year
(cid:1)et change in premiums and losses occurring in prior years:
(Increase) decrease in estimates for claims occurring in prior years (2)
Retrospective premium adjustments for claims occurring in prior years (3)
(cid:1)et favorable premium and reserve development on prior years
2019
2018
2017
$
10,248,883
$
10,056,914
$
9,590,265
4,057,989
3,926,489
3,963,543
34,079
39,048
6,831
41,382
(5,165)
43,970
4,131,116
3,974,702
4,002,348
985,599
2,673,803
3,659,402
964,808
2,700,077
3,664,885
(22,599)
(117,848)
10,697,998
1,885,251
10,248,883
1,717,565
1,027,405
2,562,550
3,589,955
54,256
10,056,914
1,613,494
12,583,249
$
11,966,448
$
11,670,408
(34,079) $
(6,831) $
53,511
45,638
19,432
$
38,807
$
5,165
32,162
37,327
$
$
$
_______________________________________
(1) Claims occurring during the current year are net of loss reserve discounts of $20 million, $24 million and $22 million in 2019,
2018, and 2017, respectively.
(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the
estimates for claims occurring in prior years increased by $19 million in 2019, and decreased $4 million and $32 million in 2018
and 2017, respectively.
(3) For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years
are offset by additional or return premiums.
Favorable prior year development (net of additional and return premiums) was $19 million in 2019.
Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return
premiums). This overall favorable development resulted from more significant favorable development on workers’ compensation
business, which was largely offset by unfavorable development on professional liability and general liability business.
For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010, but
was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’ compensation
development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years, particularly the
favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers’
compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued
investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred
provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of business over the past few accident
years have contemplated an increase in loss cost trends and reflect decreasing premium rates in the marketplace; reported workers’
compensation losses in 2019 continued to be below our expectations at most of our operating units, and were below the assumptions
underlying our initial loss ratio picks and our previous reserve estimates.
For professional liability business, the unfavorable development was driven mainly by an increase in the number of large
losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the
lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the 2008
financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of business, we
92
K
0
1
e
b
3
8
9
7
2
9
9
99
27983be 10K
27983be_10K.indd 99
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
The table below provides a reconciliation of the beginning and ending reserve balances:
(In thousands)
(cid:1)et reserves at beginning of year
(cid:1)et provision for losses and loss expenses:
Claims occurring during the current year (1)
Increase (decrease) in estimates for claims occurring in prior years (2)
Loss reserve discount accretion
(cid:1)et payments for claims:
Total
Current year
Prior year
Total
Foreign currency translation
(cid:1)et reserves at end of year
Ceded reserve at end of year
Gross reserves at end of year
1
0
0
2
7
9
8
3
b
e
1
0
K
2019
2018
2017
$
10,248,883
$
10,056,914
$
9,590,265
4,057,989
3,926,489
3,963,543
34,079
39,048
6,831
41,382
(5,165)
43,970
4,131,116
3,974,702
4,002,348
985,599
2,673,803
3,659,402
964,808
2,700,077
3,664,885
(22,599)
(117,848)
10,697,998
1,885,251
10,248,883
1,717,565
1,027,405
2,562,550
3,589,955
54,256
10,056,914
1,613,494
12,583,249
$
11,966,448
$
11,670,408
(cid:1)et change in premiums and losses occurring in prior years:
(Increase) decrease in estimates for claims occurring in prior years (2)
(34,079) $
(6,831) $
Retrospective premium adjustments for claims occurring in prior years (3)
53,511
45,638
(cid:1)et favorable premium and reserve development on prior years
19,432
$
38,807
$
5,165
32,162
37,327
(1) Claims occurring during the current year are net of loss reserve discounts of $20 million, $24 million and $22 million in 2019,
_______________________________________
2018, and 2017, respectively.
(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the
estimates for claims occurring in prior years increased by $19 million in 2019, and decreased $4 million and $32 million in 2018
(3) For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years
and 2017, respectively.
are offset by additional or return premiums.
Favorable prior year development (net of additional and return premiums) was $19 million in 2019.
Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return
premiums). This overall favorable development resulted from more significant favorable development on workers’ compensation
business, which was largely offset by unfavorable development on professional liability and general liability business.
For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010, but
was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’ compensation
development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years, particularly the
favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers’
compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued
investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred
provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of business over the past few accident
years have contemplated an increase in loss cost trends and reflect decreasing premium rates in the marketplace; reported workers’
compensation losses in 2019 continued to be below our expectations at most of our operating units, and were below the assumptions
underlying our initial loss ratio picks and our previous reserve estimates.
For professional liability business, the unfavorable development was driven mainly by an increase in the number of large
losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the
lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the 2008
financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of business, we
$
$
$
27983be 10K
100
have seen evidence of social inflation in the form of higher jury awards on cases which go to trial, and corresponding higher demands
from plaintiffs and higher values required to reach settlement on cases which do not go to trial. The unfavorable development for
D&O affected mainly accident years 2014 through 2017.
For general liability business, most of the unfavorable development emanated from our excess and surplus lines (E&S)
businesses, and was driven by an increase in the number of large losses reported. Many of these large losses were from construction
and contracting classes of business, which have also been impacted by social inflation. The general liability unfavorable
development impacted mainly accident years 2015 through 2018.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $2
million in 2019. The unfavorable development in the segment was driven by non-proportional assumed liability business in both the
U.S. and U.K., and was largely offset by favorable development on excess workers’ compensation business. The unfavorable non-
proportional assumed liability development was concentrated in accident years 2015 through 2018, and included an adjustment for
the Ogden discount rate in the U.K.
Favorable prior year development (net of additional and return premiums) was $39 million in 2018.
Insurance - Reserves for the Insurance segment developed favorably by $19 million in 2018. The favorable development was
primarily attributable to workers’ compensation business, and was partially offset by unfavorable development for professional
liability business.
For workers’ compensation, the favorable development was spread across many accident years, but was most significant in
accident years 2015 through 2017. The favorable workers’ compensation development reflects a continuation during 2018 of the
benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported
claims per unit of exposure). The long term trend of declining workers' compensation frequency can be attributable to improved
workplace safety. Loss severity trends were also aided by our continued investment in claims handling initiatives such as medical
case management services and vendor savings through usage of preferred provider networks. Reported workers’ compensation losses
in 2018 continued to be below our expectations at most of our operating units, and were below the assumptions underlying our
previous reserve estimates.
For professional liability business, adverse development was primarily related to unexpected large directors and officers
(“D&O”) liability losses at one of our U.S. operating units, as well as lawyers professional liability losses at another operating unit.
The adverse development stemmed primarily from accident years 2015 and 2016, and was driven by a higher frequency of large
losses than we had experienced in previous years.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by $20
million in 2018. The favorable development was primarily due to excess workers’ compensation business, and was spread across
many accident years, including years prior to 2009. This favorable excess workers’ compensation development was partially offset by
unfavorable development on U.S. casualty facultative assumed business from accident years 2009 and prior related to construction
projects.
Favorable prior year development (net of additional and return premiums) was $37 million in 2017.
Insurance - Reserves for the Insurance segment developed favorably by $30 million in 2017. The favorable development was
primarily attributable to workers’ compensation business, and was partially offset by unfavorable development for professional
liability business.
For workers’ compensation, the favorable development was spread across many accident years but was most significant in
accident years 2014 through 2016. The favorable workers’ compensation development reflects a continuation during 2017 of the
benign loss cost trends experienced in recent years, particularly the favorable claim frequency trends (i.e., number of reported claims
per unit of exposure). Reported workers’ compensation losses in 2017 continued to be below our expectations at most of our
operating units, and were below the assumptions underlying our previous reserve estimates. The favorable severity trends were also
impacted by our continued investment in medical case management services and the higher usage of preferred provider networks.
The long term trend of declining workers’ compensation frequency can be attributed to improved workplace safety.
For professional liability business, adverse development was primarily related to unexpected large directors and officers
(“D&O”) liability losses at one of our U.S. operating units, and large professional indemnity and D&O losses in the U.K. The
adverse development stemmed mainly from accident years 2013 through 2016 in the U.S. and 2011 through 2016 in the U.K.
Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by $7
million in 2017. This favorable development was primarily due to excess workers’ compensation business, and was spread across
92
93
K
0
1
e
b
3
8
9
7
2
0
0
1
100
27983be 10K
27983be_10K.indd 100
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
1
0
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
101
many accident years, including years prior to 2008. The favorable excess workers compensation development resulted due to the
same causes discussed above for workers compensation in the Insurance segment.
The favorable excess workers compensation development was largely offset by adverse development on U.K. assumed
casualty reinsurance, as well as on U.S. facultative casualty excess of loss business. The adverse development on the U.K. casualty
reinsurance was due to reserve strengthening associated with claims impacted by the change in the Ogden discount rate in the U.K.
The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced by the U.K.
Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury claims which we
reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development on U.S. facultative casualty
business was due to construction related risks in accident years 2008 and prior.
Environmental and Asbestos To date, known environmental and asbestos claims have not had a material impact on the
Companys operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant
environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.
The Companys net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written
before adoption of the absolute exclusion was $24 million at December 31, 2019 and $28 million at December 31, 2018. The
estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an
actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the
potential effect 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.
Discounting The Company discounts its liabilities for certain workers compensation reserves. The amount of workers
compensation reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018, respectively.
The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million and $563 million at
December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from 2.0% to 6.5%, with a
weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019) are
excess workers compensation reserves. In order to properly match loss expenses with income earned on investment securities
supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount rates
determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for
the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss
reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The
expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss payout experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and reserves
related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the
Department of Insurance of the State of Delaware.
(14) Reinsurance
The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and
catastrophe losses. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and nature
of loss. The Companys reinsurance purchases include the following: property reinsurance treaties that reduce exposure to large
individual property losses and catastrophe events; casualty reinsurance treaties that reduce its exposure to large individual
casualty losses, workers compensation catastrophe losses and casualty losses involving multiple claimants or insureds; and
facultative reinsurance that reduces exposure on individual policies or risks for losses that exceed treaty reinsurance capacity.
Depending on the operating unit, the Company purchases specific additional reinsurance to supplement the above programs.
The following is a summary of reinsurance financial information:
(In thousands)
Written premiums:
Direct
Assumed
Ceded
Earned premiums:
Direct
Assumed
Ceded
Total net written premiums
Total net earned premiums
Ceded losses and loss expenses incurred
Ceded commission earned
2019
2018
2017
$
7,386,759
$
6,973,216
$
6,726,029
875,459
729,278
750,934
(1,398,719)
(1,269,267)
(1,216,455)
$
6,863,499
$
6,433,227
$
6,260,508
$
7,141,427
$
6,851,795
$
6,661,046
820,705
755,759
812,309
(1,328,844)
(1,236,049)
(1,161,936)
6,633,288
$
6,371,505
$
6,311,419
836,831
314,191
$
$
829,742
268,037
$
$
601,769
241,983
$
$
$
The Company reinsures a portion of its exposures principally to reduce its net liability on individual risks and to protect
against catastrophic losses. Estimated amounts due from reinsurers are reported net of reserves for uncollectible reinsurance of
$690,127, $946,965 and $1,010,000 as of December 31, 2019, 2018 and 2017, respectively.
94
101
27983be 10K
27983be_10K.indd 101
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
0
1
2/26/20 12:08 PM
95
1
0
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
102
many accident years, including years prior to 2008. The favorable excess workers compensation development resulted due to the
(14) Reinsurance
same causes discussed above for workers compensation in the Insurance segment.
The favorable excess workers compensation development was largely offset by adverse development on U.K. assumed
casualty reinsurance, as well as on U.S. facultative casualty excess of loss business. The adverse development on the U.K. casualty
reinsurance was due to reserve strengthening associated with claims impacted by the change in the Ogden discount rate in the U.K.
The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced by the U.K.
Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury claims which we
reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development on U.S. facultative casualty
business was due to construction related risks in accident years 2008 and prior.
The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and
catastrophe losses. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and nature
of loss. The Companys reinsurance purchases include the following: property reinsurance treaties that reduce exposure to large
individual property losses and catastrophe events; casualty reinsurance treaties that reduce its exposure to large individual
casualty losses, workers compensation catastrophe losses and casualty losses involving multiple claimants or insureds; and
facultative reinsurance that reduces exposure on individual policies or risks for losses that exceed treaty reinsurance capacity.
Depending on the operating unit, the Company purchases specific additional reinsurance to supplement the above programs.
Environmental and Asbestos To date, known environmental and asbestos claims have not had a material impact on the
The following is a summary of reinsurance financial information:
Companys operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant
environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.
The Companys net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written
before adoption of the absolute exclusion was $24 million at December 31, 2019 and $28 million at December 31, 2018. The
estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an
actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the
potential effect 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.
Discounting The Company discounts its liabilities for certain workers compensation reserves. The amount of workers
compensation reserves that were discounted was $1,731 million and $1,793 million at December 31, 2019 and 2018, respectively.
The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $530 million and $563 million at
December 31, 2019 and 2018, respectively. At December 31, 2019, discount rates by year ranged from 2.0% to 6.5%, with a
weighted average discount rate of 3.7%.
Substantially all discounted workers compensation reserves (97% of total discounted reserves at December 31, 2019) are
excess workers compensation reserves. In order to properly match loss expenses with income earned on investment securities
supporting the liabilities, reserves for excess workers compensation business are discounted using risk-free discount rates
determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for
the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss
reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The
expected loss and loss expense payout patterns subject to discounting are derived from the Companys loss payout experience.
The Company also discounts reserves for certain other long-duration workers compensation reserves (representing
approximately 3% of total discounted reserves at December 31, 2019), including reserves for quota share reinsurance and reserves
related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the
Department of Insurance of the State of Delaware.
(In thousands)
Written premiums:
Direct
Assumed
Ceded
Total net written premiums
Earned premiums:
Direct
Assumed
Ceded
Total net earned premiums
Ceded losses and loss expenses incurred
Ceded commission earned
2019
2018
2017
$
7,386,759
$
6,973,216
$
6,726,029
875,459
729,278
750,934
(1,398,719)
(1,269,267)
(1,216,455)
$
6,863,499
$
6,433,227
$
6,260,508
$
7,141,427
$
6,851,795
$
6,661,046
820,705
755,759
812,309
(1,328,844)
(1,236,049)
(1,161,936)
6,633,288
$
6,371,505
$
6,311,419
836,831
314,191
$
$
829,742
268,037
$
$
601,769
241,983
$
$
$
The Company reinsures a portion of its exposures principally to reduce its net liability on individual risks and to protect
against catastrophic losses. Estimated amounts due from reinsurers are reported net of reserves for uncollectible reinsurance of
$690,127, $946,965 and $1,010,000 as of December 31, 2019, 2018 and 2017, respectively.
94
95
102
27983be 10K
27983be_10K.indd 102
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
0
1
2/26/20 12:08 PM
1
0
3
2
7
9
8
3
b
e
1
0
K
The following table presents the amounts due from reinsurers as of December 31, 2019:
(15) Indebtedness
27983be 10K
103
(In thousands)
Munich Re
Lloyds of London
Swiss Re
Alleghany Group
Partner Re
Hannover Re Group
Axis Capital
Berkshire Hathaway
Renaissance Re
Korean Re
Everest Re
Liberty Mutual
Arch Capital Group
Qatar Re
Chubb Limited
Other reinsurers less than $20,000
Subtotal
Residual market pools
Total
Indebtedness consisted of the following as of December 31, 2019 (the difference between the face value and the carrying
value is unamortized discount and debt issuance costs):
$
243,021
201,092
179,274
169,185
127,638
95,486
93,547
82,882
79,954
64,464
55,431
49,346
27,116
22,477
15,199
308,404
1,814,515
319,168
(In thousands)
Senior notes due on:
August 15, 2019
September 15, 2019
September 15, 2020
January 1, 2022
March 15, 2022
February 15, 2037
August 1, 2044
Subsidiary debt (1) (2)
Total senior notes and other debt
Subordinated debentures due on:
April 30, 2053
March 1, 2056
June 1, 2056
March 30, 2058
$
2,133,683
December 30, 2059
Total subordinated debentures
$
1,235,000
$
1,198,704
$
907,491
________________
(1) Subsidiary debt is due as follows: $6 million in 2020, $1 million in 2021, and $102 million in 2028.
(2) Includes non-recourse loan in the amount of $102 million secured by an office building. See (cid:1)ote 8, Real Estate, for more
details.
Interest Rate
Face Value
2019
2018
Carrying Value
6.15%
$
$
140,568
$
7.375%
5.375%
8.7%
4.625%
6.25%
4.75%
Various
5.9%
5.75%
5.70%
5.1%
300,000
76,503
350,000
250,000
350,000
108,804
110,000
290,000
185,000
300,000
$
$
299,756
76,343
349,088
248,116
345,467
108,805
106,262
281,777
178,845
290,464
299,816
299,420
76,273
348,670
248,006
345,283
123,992
106,159
281,551
178,684
1,435,307
$
1,427,575
$
1,882,028
5.625%
350,000
$
341,356
$
341,097
96
103
27983be 10K
27983be_10K.indd 103
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
0
1
2/26/20 12:08 PM
97
The following table presents the amounts due from reinsurers as of December 31, 2019:
(15) Indebtedness
Indebtedness consisted of the following as of December 31, 2019 (the difference between the face value and the carrying
value is unamortized discount and debt issuance costs):
1
0
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
104
$
243,021
201,092
179,274
169,185
127,638
95,486
93,547
82,882
79,954
64,464
55,431
49,346
27,116
22,477
15,199
308,404
1,814,515
319,168
(In thousands)
Senior notes due on:
August 15, 2019
September 15, 2019
September 15, 2020
January 1, 2022
March 15, 2022
February 15, 2037
August 1, 2044
Subsidiary debt (1) (2)
Total senior notes and other debt
Subordinated debentures due on:
April 30, 2053
March 1, 2056
June 1, 2056
March 30, 2058
$
2,133,683
December 30, 2059
Interest Rate
Face Value
2019
2018
Carrying Value
6.15%
$
7.375%
5.375%
8.7%
4.625%
6.25%
4.75%
Various
5.625%
5.9%
5.75%
5.70%
5.1%
$
$
$
300,000
76,503
350,000
250,000
350,000
108,804
$
140,568
299,756
76,343
349,088
248,116
345,467
108,805
299,816
299,420
76,273
348,670
248,006
345,283
123,992
1,435,307
$
1,427,575
$
1,882,028
350,000
$
341,356
$
341,097
110,000
290,000
185,000
300,000
106,262
281,777
178,845
290,464
106,159
281,551
178,684
Total subordinated debentures
$
1,235,000
$
1,198,704
$
907,491
________________
(1) Subsidiary debt is due as follows: $6 million in 2020, $1 million in 2021, and $102 million in 2028.
(2) Includes non-recourse loan in the amount of $102 million secured by an office building. See (cid:1)ote 8, Real Estate, for more
details.
(In thousands)
Munich Re
Lloyds of London
Swiss Re
Alleghany Group
Partner Re
Hannover Re Group
Axis Capital
Berkshire Hathaway
Renaissance Re
Korean Re
Everest Re
Liberty Mutual
Arch Capital Group
Qatar Re
Chubb Limited
Subtotal
Total
Residual market pools
Other reinsurers less than $20,000
96
97
104
27983be 10K
27983be_10K.indd 104
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
0
1
2/26/20 12:08 PM
1
0
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
105
(16) Income Taxes
Income tax expense (benefit) consists of:
At December 31, 2019 and 2018, the tax effects of differences that give rise to significant portions of the deferred tax asset
and deferred tax liability are as follows:
(In thousands)
December 31, 2019
Domestic
Foreign
Total expense
December 31, 2018
Domestic
Foreign
Total expense (benefit)
December 31, 2017
Domestic
Foreign
Total expense (benefit)
Current
Expense
Deferred
Expense
(Benefit)
Total
124,231
$
27,616
$
151,847
9,030
8,058
17,088
133,261
$
35,674
$
168,935
188,712
$
(63,134) $
125,578
13,963
23,487
37,450
202,675
$
(39,647) $
163,028
(In thousands)
Deferred tax asset:
Loss reserve discounting
Unearned premiums
(cid:1)et operating losses
Other-than-temporary impairments
Employee compensation plans
Other
Gross deferred tax asset
Less valuation allowance
Deferred tax asset
Deferred tax liability:
Amortization of intangibles
225,694
$
(27,601) $
198,093
Loss reserve discounting - transition rule
8,803
12,537
21,340
Deferred policy acquisition costs
234,497
$
(15,064) $
219,433
Unrealized investment gains
$
$
$
$
$
$
Income before income taxes from domestic operations was $739 million, $755 million and $797 million for the years
ended December 31, 2019, 2018 and 2017, respectively. Income (loss) before income taxes from foreign operations was $114
million, $57 million and $(25) million for the years ended December 31, 2019, 2018 and 2017, respectively.
Property, furniture and equipment
Investment funds
Other
Deferred tax liability
A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate
(cid:1)et deferred tax liability (asset)
of 21% for 2019 and 2018 and 35% for 2017 to pre-tax income are as follows:
2019
2018
$
136,100
$
130,513
120,246
112,190
37,147
8,049
60,552
63,633
425,727
(33,250)
392,477
12,832
29,697
103,947
93,330
47,082
73,083
50,212
37,463
9,910
56,027
58,809
404,912
(35,195)
369,717
13,641
41,088
99,293
35,430
39,239
51,712
53,824
410,183
334,227
$
17,706
$
(35,490)
(In thousands)
Computed expected tax expense
Tax-exempt investment income
Change in valuation allowance
Impact of foreign tax rates
State and local taxes
Impact of change in U.S. tax rate
Other, net
Total expense
2019
2018
2017
$
179,113
$
170,540
$
270,470
(14,666)
(1,945)
7,700
4,842
(6,109)
(18,833)
18,576
7,683
3,901
(10,950)
(7,889)
(37,209)
11,161
3,508
1,644
(30,531)
390
$
168,935
$
163,028
$
219,433
The Company had a current tax receivable of $13.4 million and $0.7 million at December 31, 2019 and 2018, respectively.
At December 31, 2019, the Company had foreign net operating loss carryforwards of $9.0 million that expire beginning in
2027, and an additional $169.0 million that have no expiration date. At December 31, 2019, the Company had a valuation
allowance of $33.3 million, as compared to $35.2 million at December 31, 2018. The Company has provided a valuation
allowance against the utilization of foreign tax credits and the future net operating loss carryforward benefits of certain foreign
operations. The statute of limitations has closed for the Companys U.S. Federal tax returns through December 31, 2013.
The realization of the deferred tax asset is dependent upon the Companys ability to generate sufficient taxable income in
future periods. Based on historical results and the prospects for future current operations, management anticipates that it is
more likely than not that future taxable income will be sufficient for the realization of this asset.
The Tax Cuts and Jobs Act of 2017 (the "Tax Act") provided for a reduction of the U.S. corporate income tax rate from
35% to 21% effective January 1, 2018. The U.S. tax law requires insurance reserves to be discounted for tax purposes. The Tax
Act modified this computation. At the end of 2018, the IRS issued revised discount factors to be applied to the 2017 reserves.
During 2019, the IRS updated the revised discount factors. This modified the increase in the beginning of year 2018 deferred
tax asset for loss reserve discounting to $40 million. Under the related transition rule, a deferred tax liability was established
which will be included in taxable income over eight years beginning in 2018.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $124 million of
its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
98
105
27983be 10K
27983be_10K.indd 105
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
5
0
1
2/26/20 12:08 PM
99
(In thousands)
December 31, 2019
Domestic
Foreign
Total expense
December 31, 2018
Domestic
Foreign
Total expense (benefit)
December 31, 2017
Domestic
Foreign
Total expense (benefit)
(In thousands)
Computed expected tax expense
Tax-exempt investment income
Change in valuation allowance
Impact of foreign tax rates
State and local taxes
Impact of change in U.S. tax rate
Other, net
Total expense
(16) Income Taxes
Income tax expense (benefit) consists of:
At December 31, 2019 and 2018, the tax effects of differences that give rise to significant portions of the deferred tax asset
and deferred tax liability are as follows:
1
0
6
2
7
9
8
3
b
e
1
0
K
27983be 10K
106
Current
Expense
Deferred
Expense
(Benefit)
Total
124,231
$
27,616
$
151,847
9,030
8,058
17,088
133,261
$
35,674
$
168,935
188,712
$
(63,134) $
125,578
13,963
23,487
37,450
202,675
$
(39,647) $
163,028
(In thousands)
Deferred tax asset:
Loss reserve discounting
Unearned premiums
(cid:1)et operating losses
Other-than-temporary impairments
Employee compensation plans
Other
Gross deferred tax asset
Less valuation allowance
Deferred tax asset
Deferred tax liability:
Amortization of intangibles
225,694
$
(27,601) $
198,093
Loss reserve discounting - transition rule
8,803
12,537
21,340
Deferred policy acquisition costs
234,497
$
(15,064) $
219,433
Unrealized investment gains
$
$
$
$
$
$
Income before income taxes from domestic operations was $739 million, $755 million and $797 million for the years
ended December 31, 2019, 2018 and 2017, respectively. Income (loss) before income taxes from foreign operations was $114
million, $57 million and $(25) million for the years ended December 31, 2019, 2018 and 2017, respectively.
Property, furniture and equipment
Investment funds
Other
Deferred tax liability
A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate
(cid:1)et deferred tax liability (asset)
of 21% for 2019 and 2018 and 35% for 2017 to pre-tax income are as follows:
2019
2018
$
136,100
$
130,513
120,246
112,190
37,147
8,049
60,552
63,633
425,727
(33,250)
392,477
12,832
29,697
103,947
93,330
47,082
73,083
50,212
37,463
9,910
56,027
58,809
404,912
(35,195)
369,717
13,641
41,088
99,293
35,430
39,239
51,712
53,824
410,183
334,227
$
17,706
$
(35,490)
2019
2018
2017
$
179,113
$
170,540
$
270,470
(14,666)
(1,945)
7,700
4,842
(6,109)
(18,833)
18,576
7,683
3,901
(10,950)
(7,889)
(37,209)
11,161
3,508
1,644
(30,531)
390
$
168,935
$
163,028
$
219,433
The Company had a current tax receivable of $13.4 million and $0.7 million at December 31, 2019 and 2018, respectively.
At December 31, 2019, the Company had foreign net operating loss carryforwards of $9.0 million that expire beginning in
2027, and an additional $169.0 million that have no expiration date. At December 31, 2019, the Company had a valuation
allowance of $33.3 million, as compared to $35.2 million at December 31, 2018. The Company has provided a valuation
allowance against the utilization of foreign tax credits and the future net operating loss carryforward benefits of certain foreign
operations. The statute of limitations has closed for the Companys U.S. Federal tax returns through December 31, 2013.
The realization of the deferred tax asset is dependent upon the Companys ability to generate sufficient taxable income in
future periods. Based on historical results and the prospects for future current operations, management anticipates that it is
more likely than not that future taxable income will be sufficient for the realization of this asset.
The Tax Cuts and Jobs Act of 2017 (the "Tax Act") provided for a reduction of the U.S. corporate income tax rate from
35% to 21% effective January 1, 2018. The U.S. tax law requires insurance reserves to be discounted for tax purposes. The Tax
Act modified this computation. At the end of 2018, the IRS issued revised discount factors to be applied to the 2017 reserves.
During 2019, the IRS updated the revised discount factors. This modified the increase in the beginning of year 2018 deferred
tax asset for loss reserve discounting to $40 million. Under the related transition rule, a deferred tax liability was established
which will be included in taxable income over eight years beginning in 2018.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $124 million of
its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the
future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
98
99
106
27983be 10K
27983be_10K.indd 106
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
0
1
2/26/20 12:08 PM
1
0
7
2
7
9
8
3
b
e
1
0
K
27983be 10K
107
(17) Dividends from Subsidiaries and Statutory Financial Information
(18) Common Stockholders’ Equity
The Companys insurance subsidiaries are restricted by law as to the amount of dividends they may pay without the
The weighted average number of shares used in the computation of net income per share was as follows:
approval of regulatory authorities. The Companys lead insurer, Berkley Insurance Company ("BIC"), directly or indirectly
owns all of the Companys other insurance companies. During 2020, the maximum amount of dividends that can be paid by
BIC without such approval is approximately $601 million.
BICs combined net income and statutory capital and surplus, as determined in accordance with statutory accounting
(In thousands)
Basic
Diluted
2019
2018
2017
190,722
193,521
190,048
192,395
187,265
193,527
practices ("SAP"), are as follows:
(In thousands)
(cid:1)et income
Statutory capital and surplus
2019
2018
2017
$
$
601,564
6,013,062
$
$
1,099,953
5,587,930
$
$
698,862
5,479,603
The significant variances between SAP and GAAP are that for statutory purposes bonds are carried at amortized cost,
unrealized gains and losses on equity securities are recorded in surplus, acquisition costs are charged to income as incurred,
deferred Federal income taxes are subject to limitations, excess and assumed workers compensation reserves are discounted at
different discount rates and certain assets designated as non-admitted assets are charged against surplus. The Commissioner
of Insurance of the State of Delaware has allowed BIC to recognize a non-tabular discount on certain workers' compensation
loss reserves, which is a permitted practice that differs from SAP. The effect of using this permitted practice was an increase to
BICs statutory capital and surplus by $268 million at December 31, 2019.
The (cid:1)ational Association of Insurance Commissioners ((cid:1)AIC) has risk-based capital (RBC) requirements that require
insurance companies to calculate and report information under a risk-based formula which measures statutory capital and
surplus needs based on a regulatory definition of risk in a companys mix of products and its balance sheet. This guidance is
used to calculate two capital measurements: Total Adjusted Capital and RBC Authorized Control Level. Total Adjusted Capital
is equal to the Companys statutory capital and surplus excluding capital and surplus derived from the use of permitted
practices that differ from statutory accounting practices. RBC Authorized Control Level is the capital level used by regulatory
authorities to determine whether remedial action is required. Generally, no remedial action is required if Total Adjusted Capital
is 200% or more of the RBC Authorized Control Level. At December 31, 2019, BICs Total Adjusted Capital of $5.746 billion
was 396% of its RBC Authorized Control Level.
See (cid:1)ote 3, Investments in Fixed Maturity Securities, for a description of assets held on deposit as security.
100
107
27983be 10K
27983be_10K.indd 107
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:13PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
0
1
2/26/20 12:08 PM
Treasury shares have been excluded from average outstanding shares from the date of acquisition. The weighted average
number of basic shares outstanding includes the impact of 7,575,168 common shares held in a grantor trust. The common
shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units
("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since shares deliverable under vested RSUs
were already included in diluted shares outstanding. The difference in calculating basic and diluted net income per share is
attributable entirely to the dilutive effect of stock-based compensation plans. Changes in shares of common stock outstanding,
net of treasury shares, are presented below. Shares of common stock issued and outstanding do not include shares related to
unissued restricted stock units (including shares held in the grantor trust).
Balance, beginning of year
Shares issued
Shares repurchased
Balance, end of year
2019
2018
2017
182,993,640
182,272,278
181,790,399
687,339
(269,072)
1,257,762
1,578,384
(536,400)
(1,096,505)
183,411,907
182,993,640
182,272,278
The amount of dividends paid is dependent upon factors such as the receipt of dividends from our subsidiaries, our results
of operations, cash flow, financial condition and business needs, the capital and surplus requirements of our subsidiaries, and
applicable insurance regulations that limit the amount of dividends that may be paid by our regulated insurance subsidiaries.
(19) Fair Value of Financial Instruments
December 31, 2019 and 2018:
The following table presents the carrying amounts and estimated fair values of the Companys financial instruments as of
(In thousands)
Assets:
Fixed maturity securities
Equity securities
Arbitrage trading account
Loans receivable
Cash and cash equivalents
organizations
Liabilities:
Due to broker
Trading accounts receivable from brokers and clearing
Trading account securities sold but not yet purchased
Senior notes and other debt
Subordinated debentures
2019
2018
Carrying Value
Fair Value
Carrying Value
Fair Value
$
14,180,961
$
14,194,955
$
13,606,812
$
13,619,620
480,620
400,809
91,799
480,620
400,809
94,613
1,023,710
1,023,710
423,543
423,543
27,116
36,143
1,427,575
1,198,704
27,116
36,143
1,582,290
1,274,088
279,006
452,548
94,813
817,602
347,228
20,144
38,120
1,882,028
907,491
279,006
452,548
97,073
817,602
347,228
20,144
38,120
1,968,996
840,002
The estimated fair values of the Companys fixed maturity securities, equity securities available for sale and arbitrage
trading account securities are based on various valuation techniques that rely on fair value measurements as described in (cid:1)ote
12 above. The fair value of loans receivable is estimated by using current institutional purchaser yield requirements for loans
with similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the
subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input.
101
1
0
8
2
7
9
8
3
b
e
1
0
K
27983be 10K
108
(17) Dividends from Subsidiaries and Statutory Financial Information
(18) Common Stockholders’ Equity
The Companys insurance subsidiaries are restricted by law as to the amount of dividends they may pay without the
The weighted average number of shares used in the computation of net income per share was as follows:
approval of regulatory authorities. The Companys lead insurer, Berkley Insurance Company ("BIC"), directly or indirectly
owns all of the Companys other insurance companies. During 2020, the maximum amount of dividends that can be paid by
BIC without such approval is approximately $601 million.
BICs combined net income and statutory capital and surplus, as determined in accordance with statutory accounting
(In thousands)
Basic
Diluted
2019
2018
2017
190,722
193,521
190,048
192,395
187,265
193,527
practices ("SAP"), are as follows:
(In thousands)
(cid:1)et income
Statutory capital and surplus
2019
2018
2017
$
$
601,564
6,013,062
$
$
1,099,953
5,587,930
$
$
698,862
5,479,603
The significant variances between SAP and GAAP are that for statutory purposes bonds are carried at amortized cost,
unrealized gains and losses on equity securities are recorded in surplus, acquisition costs are charged to income as incurred,
deferred Federal income taxes are subject to limitations, excess and assumed workers compensation reserves are discounted at
different discount rates and certain assets designated as non-admitted assets are charged against surplus. The Commissioner
of Insurance of the State of Delaware has allowed BIC to recognize a non-tabular discount on certain workers' compensation
loss reserves, which is a permitted practice that differs from SAP. The effect of using this permitted practice was an increase to
BICs statutory capital and surplus by $268 million at December 31, 2019.
The (cid:1)ational Association of Insurance Commissioners ((cid:1)AIC) has risk-based capital (RBC) requirements that require
insurance companies to calculate and report information under a risk-based formula which measures statutory capital and
surplus needs based on a regulatory definition of risk in a companys mix of products and its balance sheet. This guidance is
used to calculate two capital measurements: Total Adjusted Capital and RBC Authorized Control Level. Total Adjusted Capital
is equal to the Companys statutory capital and surplus excluding capital and surplus derived from the use of permitted
practices that differ from statutory accounting practices. RBC Authorized Control Level is the capital level used by regulatory
authorities to determine whether remedial action is required. Generally, no remedial action is required if Total Adjusted Capital
is 200% or more of the RBC Authorized Control Level. At December 31, 2019, BICs Total Adjusted Capital of $5.746 billion
was 396% of its RBC Authorized Control Level.
See (cid:1)ote 3, Investments in Fixed Maturity Securities, for a description of assets held on deposit as security.
Treasury shares have been excluded from average outstanding shares from the date of acquisition. The weighted average
number of basic shares outstanding includes the impact of 7,575,168 common shares held in a grantor trust. The common
shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units
("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since shares deliverable under vested RSUs
were already included in diluted shares outstanding. The difference in calculating basic and diluted net income per share is
attributable entirely to the dilutive effect of stock-based compensation plans. Changes in shares of common stock outstanding,
net of treasury shares, are presented below. Shares of common stock issued and outstanding do not include shares related to
unissued restricted stock units (including shares held in the grantor trust).
Balance, beginning of year
Shares issued
Shares repurchased
Balance, end of year
2019
2018
2017
182,993,640
182,272,278
181,790,399
687,339
(269,072)
1,257,762
1,578,384
(536,400)
(1,096,505)
183,411,907
182,993,640
182,272,278
The amount of dividends paid is dependent upon factors such as the receipt of dividends from our subsidiaries, our results
of operations, cash flow, financial condition and business needs, the capital and surplus requirements of our subsidiaries, and
applicable insurance regulations that limit the amount of dividends that may be paid by our regulated insurance subsidiaries.
(19) Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair values of the Companys financial instruments as of
December 31, 2019 and 2018:
(In thousands)
Assets:
Fixed maturity securities
Equity securities
Arbitrage trading account
Loans receivable
Cash and cash equivalents
Trading accounts receivable from brokers and clearing
organizations
Liabilities:
Due to broker
Trading account securities sold but not yet purchased
Senior notes and other debt
Subordinated debentures
2019
2018
Carrying Value
Fair Value
Carrying Value
Fair Value
$
$
14,180,961
480,620
400,809
91,799
1,023,710
$
14,194,955
480,620
400,809
94,613
1,023,710
$
13,606,812
279,006
452,548
94,813
817,602
13,619,620
279,006
452,548
97,073
817,602
423,543
423,543
347,228
347,228
27,116
36,143
1,427,575
1,198,704
27,116
36,143
1,582,290
1,274,088
20,144
38,120
1,882,028
907,491
20,144
38,120
1,968,996
840,002
The estimated fair values of the Companys fixed maturity securities, equity securities available for sale and arbitrage
trading account securities are based on various valuation techniques that rely on fair value measurements as described in (cid:1)ote
12 above. The fair value of loans receivable is estimated by using current institutional purchaser yield requirements for loans
with similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the
subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input.
100
101
108
27983be 10K
27983be_10K.indd 108
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
0
1
2/26/20 12:08 PM
1
0
9
2
7
9
8
3
b
e
1
0
K
27983be 10K
109
(20) Commitments, Litigation and Contingent Liabilities
In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance
and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are considered in the
establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal actions which
seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of insurance
claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial condition.
However, adverse outcomes on such matters are possible, from time to time, and could be material to the Companys results of
operations in any particular financial reporting period.
At December 31, 2019, the Company had commitments to invest up to $232 million and $114 million in certain investment
funds and real estate construction projects, respectively.
(21) Leases
As described in (cid:1)ote 1, the Company prospectively adopted ASU 2016-02, Leases, effective January 1, 2019, which
requires lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months on the
balance sheet. All leases disclosed within this note are classified as operating leases. Recognized right-of-use asset and lease
liability are reported within other assets and other liabilities, respectively, in the consolidated balance sheet. Lease expense is
reported in other operating costs and expenses in the consolidated statement of income and accounted for on a straight-line
basis over the lease term.
(In thousands)
Contractual Maturities:
2020
2021
2022
2023
2024
Thereafter
Total undiscounted future minimum lease payments
Less: Discount impact
Total lease liability
(22) Stock Incentive Plan
December 31,
2019
$
$
49,293
47,107
41,652
37,510
31,152
78,820
285,534
(55,196)
230,338
Pursuant to the Company's stock incentive plan, the Company may issue restricted stock units ("RSUs") to employees of
the Company and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other
vesting and forfeiture provisions contained in the award agreement. The following table summarizes RSU information for the
three years ended December 31, 2019:
To determine the discount rate used to calculate present value of future minimum lease payments, the Company uses
RSUs granted and unvested at beginning of period:
its incremental borrowing rate during the lease commencement period in line with the respective lease duration. In certain
cases, the Company has the option to renew the lease. Lease renewal future payments are included in the present value of the
future minimum lease payments when the Company determines it is reasonably certain to renew.
The main leases entered into by the Company are for office space used by the Companys operating units across the
world. Additionally, the Company, to a lesser extent, has equipment leases mainly for office equipment. Further information
relating to operating lease expense and other operating lease information is as follows:
(In thousands)
Leases:
Lease cost
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows
Right-of-use assets obtained in exchange for new lease liabilities
($ in thousands)
Right-of-use assets
Lease liabilities
Weighted-average remaining lease term
Weighted-average discount rate
Contractual maturities of the Companys future minimum lease payments are as follows:
Twelve Months
Ended
December 31,
2019
$
$
$
44,107
40,083
32,881
December 31,
2019
$
$
193,311
230,338
7.11 years
5.97%
Upon vesting, shares of the Companys common stock equal to the number of vested RSUs are issued or deferred to a later
date, depending on the terms of the specific award agreement. As of December 31, 2019, 7,532,977 RSUs had been deferred.
RSUs that have not yet vested and vested RSUs that have been deferred are not considered to be issued and outstanding shares.
The fair value of RSUs at the date of grant are recorded as unearned compensation, a component of stockholders equity,
and expensed over the vesting period. Following is a summary of changes in unearned compensation for the three years ended
December 31, 2019:
(In thousands)
Unearned compensation at beginning of year
RSUs granted, net of cancellations
RSUs expensed
RSUs forfeitures
Unearned compensation at end of year
2019
2018
2017
$
129,669
$
122,910
$
115,965
53,583
(47,329)
(7,533)
52,204
(34,408)
(11,037)
52,897
(38,796)
(7,156)
$
128,390
$
129,669
$
122,910
Granted
Vested
Canceled
RSUs granted and unvested at end of period:
2019
5,062,661
840,796
(1,447,522)
(331,675)
2018
5,216,972
1,140,048
(900,254)
(394,105)
2017
7,293,147
1,283,976
(2,990,261)
(369,890)
4,124,260
5,062,661
5,216,972
102
109
27983be 10K
27983be_10K.indd 109
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
0
1
2/26/20 12:08 PM
103
(20) Commitments, Litigation and Contingent Liabilities
In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance
and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are considered in the
establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal actions which
seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of insurance
claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial condition.
However, adverse outcomes on such matters are possible, from time to time, and could be material to the Companys results of
operations in any particular financial reporting period.
At December 31, 2019, the Company had commitments to invest up to $232 million and $114 million in certain investment
funds and real estate construction projects, respectively.
1
1
0
2
7
9
8
3
b
e
1
0
K
(In thousands)
Contractual Maturities:
2020
2021
2022
2023
2024
Thereafter
Total undiscounted future minimum lease payments
Less: Discount impact
Total lease liability
(22) Stock Incentive Plan
27983be 10K
110
December 31,
2019
$
$
49,293
47,107
41,652
37,510
31,152
78,820
285,534
(55,196)
230,338
To determine the discount rate used to calculate present value of future minimum lease payments, the Company uses
RSUs granted and unvested at beginning of period:
Granted
Vested
Canceled
RSUs granted and unvested at end of period:
2019
5,062,661
840,796
(1,447,522)
(331,675)
2018
5,216,972
1,140,048
(900,254)
(394,105)
2017
7,293,147
1,283,976
(2,990,261)
(369,890)
4,124,260
5,062,661
5,216,972
Pursuant to the Company's stock incentive plan, the Company may issue restricted stock units ("RSUs") to employees of
the Company and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other
vesting and forfeiture provisions contained in the award agreement. The following table summarizes RSU information for the
three years ended December 31, 2019:
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows
Right-of-use assets obtained in exchange for new lease liabilities
(In thousands)
Leases:
Lease cost
($ in thousands)
Right-of-use assets
Lease liabilities
Weighted-average remaining lease term
Weighted-average discount rate
Contractual maturities of the Companys future minimum lease payments are as follows:
Twelve Months
Ended
December 31,
2019
44,107
40,083
32,881
December 31,
2019
193,311
230,338
7.11 years
5.97%
$
$
$
$
$
Upon vesting, shares of the Companys common stock equal to the number of vested RSUs are issued or deferred to a later
date, depending on the terms of the specific award agreement. As of December 31, 2019, 7,532,977 RSUs had been deferred.
RSUs that have not yet vested and vested RSUs that have been deferred are not considered to be issued and outstanding shares.
The fair value of RSUs at the date of grant are recorded as unearned compensation, a component of stockholders equity,
and expensed over the vesting period. Following is a summary of changes in unearned compensation for the three years ended
December 31, 2019:
(In thousands)
Unearned compensation at beginning of year
RSUs granted, net of cancellations
RSUs expensed
RSUs forfeitures
Unearned compensation at end of year
2019
2018
2017
$
129,669
$
122,910
$
115,965
53,583
(47,329)
(7,533)
52,204
(34,408)
(11,037)
52,897
(38,796)
(7,156)
$
128,390
$
129,669
$
122,910
(21) Leases
As described in (cid:1)ote 1, the Company prospectively adopted ASU 2016-02, Leases, effective January 1, 2019, which
requires lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months on the
balance sheet. All leases disclosed within this note are classified as operating leases. Recognized right-of-use asset and lease
liability are reported within other assets and other liabilities, respectively, in the consolidated balance sheet. Lease expense is
reported in other operating costs and expenses in the consolidated statement of income and accounted for on a straight-line
basis over the lease term.
its incremental borrowing rate during the lease commencement period in line with the respective lease duration. In certain
cases, the Company has the option to renew the lease. Lease renewal future payments are included in the present value of the
future minimum lease payments when the Company determines it is reasonably certain to renew.
The main leases entered into by the Company are for office space used by the Companys operating units across the
world. Additionally, the Company, to a lesser extent, has equipment leases mainly for office equipment. Further information
relating to operating lease expense and other operating lease information is as follows:
102
103
110
27983be 10K
27983be_10K.indd 110
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
1
1
2/26/20 12:08 PM
1
1
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
111
(23) Compensation Plans
The Company and its subsidiaries have profit sharing plans in which substantially all employees participate. The plans
provide for minimum annual contributions of 5% of eligible compensation; contributions above the minimum are discretionary
and vary with each participating operating unit's profitability. Employees become eligible to participate in the plan on the first
day of the calendar quarter following the first full calendar quarter after the employee's date of hire provided the employee has
completed 250 hours of service during the calendar quarter. The plans provide that 40% of the contributions vest immediately
and that the remaining 60% vest at varying percentages based upon years of service. Profit sharing expense was $47 million,
$42 million and $42 million in 2019, 2018 and 2017, respectively.
The Company has a long-term incentive compensation plan ("LTIP") that provides for compensation to key executives
based on the growth in the Company's book value per share over a five year period.
The following table summarizes the outstanding LTIP awards as of December 31, 2019:
2015 grant
2016 grant
2017 grant
2018 grant
2019 grant
Units Outstanding
Maximum Value
Inception to date earned
through December 31, 2019 on
outstanding units
179,250 $
17,925,000 $
199,500
210,000
215,250
228,750
19,950,000
21,000,000
21,525,000
22,875,000
17,925,000
15,243,000
10,938,900
7,501,463
3,068,338
The following table summarizes the LTIP expense for each of the three years ended December 31, 2019:
(In thousands)
2013 grant
2014 grant
2015 grant
2016 grant
2017 grant
2018 grant
2019 grant
Total
(24) Supplemental Financial Statement Data
Other operating costs and expenses consist of the following:
(In thousands)
Amortization of deferred policy acquisition costs
Insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency (gains) losses
Other costs and expenses
Total
104
2019
2018
2017
$
$
(1,124) $
(558)
3,319
3,548
3,432
3,310
3,068
3,227
5,170
5,148
4,700
4,317
7,667
3,167
3,667
3,601
3,162
$
16,119
$
21,438
$
21,264
2019
2018
2017
$
1,001,611
$
915,246
$
1,111,489
1,088,690
1,183,635
101,317
(30,715)
201,179
118,357
(27,067)
193,050
989,535
129,776
15,267
190,865
$
2,362,082
$
2,383,221
$
2,436,932
111
27983be 10K
27983be_10K.indd 111
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
(25) Industry Segments
The Companys reportable segments include the following two business segments, plus a corporate segment:
Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty
personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe,
South America, Canada, Mexico, Scandinavia, Asia and Australia.
Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States,
United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa, as well as operations that solely
retain risk on an excess basis.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Income tax expense and benefits are calculated based upon the Companys overall effective tax rate.
Summary financial information about the Companys reporting segments is presented in the following table. Income before
income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or
allocated to the operation of each segment.
(In thousands)
Year ended December 31, 2019
(cid:1)et investment gains
Consolidated
Year ended December 31, 2018
(cid:1)et investment gains
Consolidated
Year ended December 31, 2017
Revenues
Earned
Premiums (1)
Investment
Income
Other
Total (2)
Pre-Tax
Income
(Loss)
(cid:1)et
Income
(Loss)
to Common
Stockholders
Insurance
$
5,919,819
$
429,405
$
47,850
$
6,397,074
$
814,862
$
650,510
Reinsurance & Monoline Excess
713,469
Corporate, other and eliminations (3)
164,082
52,127
454,741
120,703
877,551
506,868
120,703
189,188
152,046
(271,833)
(215,967)
120,703
95,355
$
6,633,288
$
645,614
$
623,294
$
7,902,196
$
852,920
$
681,944
Insurance
$
5,702,073
$
433,490
$
72,727
$
6,208,290
$
717,154
$
571,381
Reinsurance & Monoline Excess
669,432
Corporate, other and eliminations (3)
179,534
61,211
418,696
154,488
848,966
479,907
154,488
201,001
160,791
(260,549)
(213,469)
154,488
122,046
$
6,371,505
$
674,235
$
645,911
$
7,691,651
$
812,094
$
640,749
Insurance
$
5,549,403
$
366,862
$
86,865
$
6,003,130
$
623,746
$
437,953
Reinsurance & Monoline Excess
762,016
Corporate, other and eliminations (3)
160,462
48,464
374,834
335,858
922,478
423,298
335,858
117,131
90,358
(303,965)
(197,525)
335,858
218,308
$
6,311,419
$
575,788
$
797,557
$
7,684,764
$
772,770
$
549,094
(cid:1)et investment gains
Consolidated
K
0
1
e
b
3
8
9
7
2
1
1
1
2/26/20 12:08 PM
105
1
1
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
112
(23) Compensation Plans
The Company and its subsidiaries have profit sharing plans in which substantially all employees participate. The plans
provide for minimum annual contributions of 5% of eligible compensation; contributions above the minimum are discretionary
and vary with each participating operating unit's profitability. Employees become eligible to participate in the plan on the first
day of the calendar quarter following the first full calendar quarter after the employee's date of hire provided the employee has
completed 250 hours of service during the calendar quarter. The plans provide that 40% of the contributions vest immediately
and that the remaining 60% vest at varying percentages based upon years of service. Profit sharing expense was $47 million,
$42 million and $42 million in 2019, 2018 and 2017, respectively.
The Company has a long-term incentive compensation plan ("LTIP") that provides for compensation to key executives
based on the growth in the Company's book value per share over a five year period.
The following table summarizes the outstanding LTIP awards as of December 31, 2019:
(25) Industry Segments
The Companys reportable segments include the following two business segments, plus a corporate segment:
Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty
personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe,
South America, Canada, Mexico, Scandinavia, Asia and Australia.
Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States,
United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa, as well as operations that solely
retain risk on an excess basis.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Income tax expense and benefits are calculated based upon the Companys overall effective tax rate.
Summary financial information about the Companys reporting segments is presented in the following table. Income before
income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or
allocated to the operation of each segment.
Inception to date earned
through December 31, 2019 on
outstanding units
Revenues
Units Outstanding
Maximum Value
179,250 $
17,925,000 $
199,500
210,000
215,250
228,750
19,950,000
21,000,000
21,525,000
22,875,000
The following table summarizes the LTIP expense for each of the three years ended December 31, 2019:
2015 grant
2016 grant
2017 grant
2018 grant
2019 grant
(In thousands)
2013 grant
2014 grant
2015 grant
2016 grant
2017 grant
2018 grant
2019 grant
Total
(24) Supplemental Financial Statement Data
Other operating costs and expenses consist of the following:
(In thousands)
Amortization of deferred policy acquisition costs
Insurance operating expenses
Insurance service expenses
(cid:1)et foreign currency (gains) losses
Other costs and expenses
Total
17,925,000
15,243,000
10,938,900
7,501,463
3,068,338
7,667
3,167
3,667
3,601
3,162
2019
2018
2017
$
$
(1,124) $
(558)
3,319
3,548
3,432
3,310
3,068
3,227
5,170
5,148
4,700
4,317
$
16,119
$
21,438
$
21,264
2019
2018
2017
$
1,001,611
$
915,246
$
1,111,489
1,088,690
1,183,635
101,317
(30,715)
201,179
118,357
(27,067)
193,050
989,535
129,776
15,267
190,865
$
2,362,082
$
2,383,221
$
2,436,932
(In thousands)
Year ended December 31, 2019
Earned
Premiums (1)
Investment
Income
Other
Total (2)
Pre-Tax
Income
(Loss)
(cid:1)et
Income
(Loss)
to Common
Stockholders
Insurance
$
5,919,819
$
429,405
$
47,850
$
6,397,074
$
814,862
$
650,510
Reinsurance & Monoline Excess
713,469
164,082
52,127
454,741
120,703
877,551
506,868
120,703
189,188
152,046
(271,833)
(215,967)
120,703
95,355
$
6,633,288
$
645,614
$
623,294
$
7,902,196
$
852,920
$
681,944
Corporate, other and eliminations (3)
(cid:1)et investment gains
Consolidated
Year ended December 31, 2018
Corporate, other and eliminations (3)
(cid:1)et investment gains
Consolidated
Year ended December 31, 2017
Insurance
$
5,702,073
$
433,490
$
72,727
$
6,208,290
$
717,154
$
571,381
Reinsurance & Monoline Excess
669,432
179,534
61,211
418,696
154,488
848,966
479,907
154,488
201,001
160,791
(260,549)
(213,469)
154,488
122,046
$
6,371,505
$
674,235
$
645,911
$
7,691,651
$
812,094
$
640,749
Insurance
$
5,549,403
$
366,862
$
86,865
$
6,003,130
$
623,746
$
437,953
Reinsurance & Monoline Excess
762,016
Corporate, other and eliminations (3)
(cid:1)et investment gains
Consolidated
160,462
48,464
374,834
335,858
922,478
423,298
335,858
117,131
90,358
(303,965)
(197,525)
335,858
218,308
$
6,311,419
$
575,788
$
797,557
$
7,684,764
$
772,770
$
549,094
104
105
112
27983be 10K
27983be_10K.indd 112
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
1
1
2/26/20 12:08 PM
1
1
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
113
Identifiable Assets
(In thousands)
Insurance
Reinsurance & Monoline Excess
Corporate, other and eliminations (3)
Consolidated
December 31,
2019
2018
$
20,003,202
$
18,214,293
4,709,724
1,930,502
4,371,151
2,310,533
$
26,643,428
$
24,895,977
_______________________________________
(1) Certain amounts included in earned premiums of each segment are related to inter-segment transactions.
(2) Revenues for Insurance includes $725.4 million, $714.2 million, and $688.2 million in 2019, 2018, and 2017, respectively,
from foreign countries. Revenues for Reinsurance & Monoline Excess includes $249.6 million, $228.1 million, and $201.3
million in 2019, 2018 and 2017, respectively, from foreign countries.
(3) Corporate, other and eliminations represent corporate revenues and expenses and other items that are not allocated to
business segments.
(cid:1)et premiums earned by major line of business are as follows:
(In thousands)
Insurance
Other liability
Workers' compensation
Short-tail lines
Commercial automobile
Professional liability
Total Insurance
Reinsurance & Monoline Excess
Casualty
Monoline Excess
Property
Total Reinsurance & Monoline Excess
Total
2019
2018
2017
$
2,063,401
$
1,912,071
$
1,843,826
1,301,980
1,223,902
750,051
580,485
1,327,206
1,184,447
722,236
556,113
1,324,801
1,184,465
650,441
545,870
5,919,819
5,702,073
5,549,403
405,063
160,071
148,335
713,469
362,886
162,908
143,638
669,432
377,650
157,039
227,327
762,016
$
6,633,288
$
6,371,505
$
6,311,419
(26) Quarterly Financial Information (Unaudited)
The following is a summary of quarterly financial data:
(In thousands, except per share data)
Three months ended
Revenues
(cid:1)et income
(cid:1)et income per share (1)
Basic (2)
Diluted
Three months ended
Revenues
(cid:1)et income
(cid:1)et income per share (1)
Basic (2)
Diluted
March 31
June 30
September 30
December 31
$
1,937,022
$
2,023,384
$
1,965,716
$
1,976,074
180,722
216,709
165,208
119,306
0.95
0.94
0.87
0.85
0.62
0.62
2019
1.14
1.12
2018
March 31
June 30
September 30
December 31
$
1,891,247
$
1,910,916
$
1,937,902
$
1,951,586
166,397
180,075
161,920
132,357
0.88
0.87
0.95
0.93
0.85
0.84
0.69
0.69
_______________________________________
(1) (cid:1)et income per share (“EPS”) in each quarter is computed using the weighted-average number of shares outstanding during
that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding during the year.
Thus, the sum of the four quarters EPS does not necessarily equal the full-year EPS.
(2) Basic shares outstanding includes shares held in a grantor trust.
106
113
27983be 10K
27983be_10K.indd 113
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
1
1
2/26/20 12:08 PM
107
Identifiable Assets
1
1
4
2
7
9
8
3
b
e
1
0
K
December 31,
2019
2018
$
20,003,202
$
18,214,293
4,709,724
1,930,502
4,371,151
2,310,533
$
26,643,428
$
24,895,977
(1) Certain amounts included in earned premiums of each segment are related to inter-segment transactions.
(2) Revenues for Insurance includes $725.4 million, $714.2 million, and $688.2 million in 2019, 2018, and 2017, respectively,
from foreign countries. Revenues for Reinsurance & Monoline Excess includes $249.6 million, $228.1 million, and $201.3
million in 2019, 2018 and 2017, respectively, from foreign countries.
(3) Corporate, other and eliminations represent corporate revenues and expenses and other items that are not allocated to
(cid:1)et premiums earned by major line of business are as follows:
2019
2018
2017
$
2,063,401
$
1,912,071
$
1,843,826
1,324,801
1,184,465
650,441
545,870
5,919,819
5,702,073
5,549,403
377,650
157,039
227,327
762,016
$
6,633,288
$
6,371,505
$
6,311,419
1,301,980
1,223,902
750,051
580,485
405,063
160,071
148,335
713,469
1,327,206
1,184,447
722,236
556,113
362,886
162,908
143,638
669,432
(In thousands)
Insurance
Reinsurance & Monoline Excess
Corporate, other and eliminations (3)
Consolidated
_______________________________________
business segments.
(In thousands)
Insurance
Other liability
Workers' compensation
Short-tail lines
Commercial automobile
Professional liability
Total Insurance
Casualty
Monoline Excess
Property
Total
Reinsurance & Monoline Excess
Total Reinsurance & Monoline Excess
27983be 10K
114
(26) Quarterly Financial Information (Unaudited)
The following is a summary of quarterly financial data:
(In thousands, except per share data)
Three months ended
Revenues
(cid:1)et income
(cid:1)et income per share (1)
Basic (2)
Diluted
Three months ended
Revenues
(cid:1)et income
(cid:1)et income per share (1)
Basic (2)
Diluted
2019
March 31
June 30
September 30
December 31
$
1,937,022
$
2,023,384
$
1,965,716
$
1,976,074
180,722
216,709
165,208
119,306
0.95
0.94
1.14
1.12
2018
0.87
0.85
0.62
0.62
March 31
June 30
September 30
December 31
$
1,891,247
$
1,910,916
$
1,937,902
$
1,951,586
166,397
180,075
161,920
132,357
0.88
0.87
0.95
0.93
0.85
0.84
0.69
0.69
_______________________________________
(1) (cid:1)et income per share (“EPS”) in each quarter is computed using the weighted-average number of shares outstanding during
that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding during the year.
Thus, the sum of the four quarters EPS does not necessarily equal the full-year EPS.
(2) Basic shares outstanding includes shares held in a grantor trust.
106
107
114
27983be 10K
27983be_10K.indd 114
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
1
1
2/26/20 12:08 PM
1
1
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
115
ITEM 9. CHA(cid:1)GES I(cid:1) A(cid:1)D DISAGREEME(cid:1)TS WITH ACCOU(cid:1)TA(cid:1)TS O(cid:1) ACCOU(cid:1)TI(cid:1)G A(cid:1)D FI(cid:1)A(cid:1)CIAL
DISCLOSURE
Report of Independent Registered Public Accounting Firm
(cid:1)one.
ITEM 9A. CO(cid:1)TROLS A(cid:1)D PROCEDURES
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the Company's 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 Commission's rules and
forms.
During the quarter ended December 31, 2019, there have been no changes in our internal controls over financial
reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial
reporting.
Management's Report On Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our
management concluded that our internal control over financial reporting was effective as of December 31, 2019.
To the Stockholders and Board of Directors
W. R. Berkley Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited W. R. Berkley Corporation and Subsidiaries (the Company) internal control over financial reporting as of
December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated
statements of income, comprehensive income, stockholders equity, and cash flows for each of the years in the three-year period
ended December 31, 2019, and the related notes and financial statement schedules II to VI (collectively, the consolidated
financial statements), and our report dated February 20, 2020 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Companys management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managementss
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companys internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
108
(cid:1)ew York, (cid:1)ew York
February 20, 2020
K
0
1
e
b
3
8
9
7
2
5
1
1
/S/ KPMG LLP
109
115
27983be 10K
27983be_10K.indd 115
2/26/20 12:08 PM
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
DISCLOSURE
(cid:1)one.
ITEM 9A. CO(cid:1)TROLS A(cid:1)D PROCEDURES
ITEM 9. CHA(cid:1)GES I(cid:1) A(cid:1)D DISAGREEME(cid:1)TS WITH ACCOU(cid:1)TA(cid:1)TS O(cid:1) ACCOU(cid:1)TI(cid:1)G A(cid:1)D FI(cid:1)A(cid:1)CIAL
Report of Independent Registered Public Accounting Firm
1
1
6
2
7
9
8
3
b
e
1
0
K
27983be 10K
116
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the Company's 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 Commission's rules and
During the quarter ended December 31, 2019, there have been no changes in our internal controls over financial
reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial
forms.
reporting.
Management's Report On Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our
management concluded that our internal control over financial reporting was effective as of December 31, 2019.
108
To the Stockholders and Board of Directors
W. R. Berkley Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited W. R. Berkley Corporation and Subsidiaries (the Company) internal control over financial reporting as of
December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated
statements of income, comprehensive income, stockholders equity, and cash flows for each of the years in the three-year period
ended December 31, 2019, and the related notes and financial statement schedules II to VI (collectively, the consolidated
financial statements), and our report dated February 20, 2020 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Companys management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managementss
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companys internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/S/ KPMG LLP
109
(cid:1)ew York, (cid:1)ew York
February 20, 2020
116
27983be 10K
27983be_10K.indd 116
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
1
1
2/26/20 12:08 PM
27983be 10K
117
1
1
7
2
7
9
8
3
b
e
1
0
K
ITEM 9B. OTHER I(cid:1)FORMATIO(cid:1)
(cid:1)one.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS A(cid:1)D CORPORATE GOVER(cid:1)A(cid:1)CE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPE(cid:1)SATIO(cid:1)
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 12. SECURITY OW(cid:1)ERSHIP OF CERTAI(cid:1) BE(cid:1)EFICIAL OW(cid:1)ERS A(cid:1)D MA(cid:1)AGEME(cid:1)T A(cid:1)D RELATED
STOCKHOLDER MATTERS
(a) Security ownership of certain beneficial owners
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
(b) Security ownership of management
(c) Changes in control
(d) Equity compensation plan information
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 13. CERTAI(cid:1) RELATIO(cid:1)SHIPS A(cid:1)D RELATED TRA(cid:1)SACTIO(cid:1)S, A(cid:1)D DIRECTOR I(cid:1)DEPE(cid:1)DE(cid:1)CE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 14. PRI(cid:1)CIPAL ACCOU(cid:1)TI(cid:1)G FEES A(cid:1)D SERVICES
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
110
117
27983be 10K
27983be_10K.indd 117
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
1
1
2/26/20 12:08 PM
111
ITEM 9B. OTHER I(cid:1)FORMATIO(cid:1)
(cid:1)one.
1
1
8
2
7
9
8
3
b
e
1
0
K
27983be 10K
118
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS A(cid:1)D CORPORATE GOVER(cid:1)A(cid:1)CE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPE(cid:1)SATIO(cid:1)
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 12. SECURITY OW(cid:1)ERSHIP OF CERTAI(cid:1) BE(cid:1)EFICIAL OW(cid:1)ERS A(cid:1)D MA(cid:1)AGEME(cid:1)T A(cid:1)D RELATED
STOCKHOLDER MATTERS
(a) Security ownership of certain beneficial owners
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
(b) Security ownership of management
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
(c) Changes in control
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
(d) Equity compensation plan information
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 13. CERTAI(cid:1) RELATIO(cid:1)SHIPS A(cid:1)D RELATED TRA(cid:1)SACTIO(cid:1)S, A(cid:1)D DIRECTOR I(cid:1)DEPE(cid:1)DE(cid:1)CE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
ITEM 14. PRI(cid:1)CIPAL ACCOU(cid:1)TI(cid:1)G FEES A(cid:1)D SERVICES
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange
Commission within 120 days after December 31, 2019, and which is incorporated herein by reference.
110
111
118
27983be 10K
27983be_10K.indd 118
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
1
1
2/26/20 12:08 PM
27983be 10K
119
1
1
9
2
7
9
8
3
b
e
1
0
K
PART IV
ITEM 15. EXHIBITS A(cid:1)D FI(cid:1)A(cid:1)CIAL STATEME(cid:1)T SCHEDULES
(a) Index to Financial Statements
(b) Exhibits
(cid:1)umber
EXHIBITS
The schedules to the consolidated financial statements listed below should be read in conjunction with the consolidated
financial statements included in this Annual Report on Form 10-K. 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
Schedule II Condensed Financial Information of Registrant
Schedule III Supplementary Insurance Information
Schedule IV Reinsurance
Schedule V Valuation and Qualifying Accounts
Schedule VI Supplementary Information Concerning Property Casualty Insurance Operations
Page
119
123
124
125
126
112
119
27983be 10K
27983be_10K.indd 119
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
1
1
2/26/20 12:08 PM
(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 (cid:1)o. 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 (cid:1)o. 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 (cid:1)o. 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
(cid:1)o. 1-15202) filed with the Commission on August 5, 2015).
(4.1)
Description of Registrants Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(4.2)
Indenture, dated as of February 14, 2003, between the Company and The Bank of (cid:1)ew York, as trustee (incorporated by
reference to Exhibit 4.1 of the Companys Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with the Commission of March
31, 2003).
(4.3)
(4.4)
(4.5)
(4.6)
Fifth Supplemental Indenture, dated as of February 9, 2007, between the Company and The Bank of (cid:1)ew York, as Trustee,
relating to $250,000,000 principal amount of the Companys 6.25% Senior (cid:1)otes due 2037, including form of the (cid:1)otes as
Exhibit A (incorporated by reference to Exhibit 4.7 of the Companys Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with
the Commission on March 1, 2007).
Seventh Supplemental Indenture, dated as of September 16, 2010, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $300,000,000 principal amount of the Companys 5.375% Senior (cid:1)otes due 2020, including form of the
(cid:1)otes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202)
filed with the Commission on September 16, 2010).
Eighth Supplemental Indenture, dated as of March 16, 2012, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $350,000,000 principal amount of the Companys 4.625% Senior (cid:1)otes due 2022, including form of the
(cid:1)otes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202)
filed with the Commission on March 16, 2012).
(cid:1)inth Supplemental Indenture, dated as of August 6, 2014, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $350,000,000 principal amount of the Companys 4.75% Senior (cid:1)otes due 2044, including form of the (cid:1)otes as
Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with
the Commission on August 6, 2014).
(4.7)
Subordinated Indenture, dated as of May 2, 2013, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on May 2, 2013).
(4.8)
First Supplemental Indenture, dated as of May 2, 2013, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $350,000,000 principal amount of the Company's 5.625% Subordinated Debentures due 2053, including the form of
the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on May 2, 2013).
(4.9)
Subordinated Indenture, dated as of March 1, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on March 1, 2016).
113
PART IV
ITEM 15. EXHIBITS A(cid:1)D FI(cid:1)A(cid:1)CIAL STATEME(cid:1)T SCHEDULES
(a) Index to Financial Statements
The schedules to the consolidated financial statements listed below should be read in conjunction with the consolidated
financial statements included in this Annual Report on Form 10-K. 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
Schedule II Condensed Financial Information of Registrant
Schedule III Supplementary Insurance Information
Schedule IV Reinsurance
Schedule V Valuation and Qualifying Accounts
Schedule VI Supplementary Information Concerning Property Casualty Insurance Operations
Page
119
123
124
125
126
27983be 10K
120
1
2
0
2
7
9
8
3
b
e
1
0
K
(b) Exhibits
(cid:1)umber
EXHIBITS
(3.1)
(3.2)
(3.3)
(3.4)
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 (cid:1)o. 1-15202) filed with the Commission on August 6, 2003).
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 (cid:1)o. 1-15202) filed with the Commission on August 5,
2004).
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 (cid:1)o. 1-15202) filed with the Commission on May 17, 2006).
Amended and Restated By-Laws (incorporated by reference to Exhibit 3 (ii) of the Companys Current Report on Form 8-K (File
(cid:1)o. 1-15202) filed with the Commission on August 5, 2015).
(4.1)
Description of Registrants Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(4.2)
(4.3)
(4.4)
(4.5)
(4.6)
(4.7)
(4.8)
(4.9)
Indenture, dated as of February 14, 2003, between the Company and The Bank of (cid:1)ew York, as trustee (incorporated by
reference to Exhibit 4.1 of the Companys Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with the Commission of March
31, 2003).
Fifth Supplemental Indenture, dated as of February 9, 2007, between the Company and The Bank of (cid:1)ew York, as Trustee,
relating to $250,000,000 principal amount of the Companys 6.25% Senior (cid:1)otes due 2037, including form of the (cid:1)otes as
Exhibit A (incorporated by reference to Exhibit 4.7 of the Companys Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with
the Commission on March 1, 2007).
Seventh Supplemental Indenture, dated as of September 16, 2010, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $300,000,000 principal amount of the Companys 5.375% Senior (cid:1)otes due 2020, including form of the
(cid:1)otes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202)
filed with the Commission on September 16, 2010).
Eighth Supplemental Indenture, dated as of March 16, 2012, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $350,000,000 principal amount of the Companys 4.625% Senior (cid:1)otes due 2022, including form of the
(cid:1)otes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202)
filed with the Commission on March 16, 2012).
(cid:1)inth Supplemental Indenture, dated as of August 6, 2014, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $350,000,000 principal amount of the Companys 4.75% Senior (cid:1)otes due 2044, including form of the (cid:1)otes as
Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with
the Commission on August 6, 2014).
Subordinated Indenture, dated as of May 2, 2013, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on May 2, 2013).
First Supplemental Indenture, dated as of May 2, 2013, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $350,000,000 principal amount of the Company's 5.625% Subordinated Debentures due 2053, including the form of
the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on May 2, 2013).
Subordinated Indenture, dated as of March 1, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on March 1, 2016).
112
113
120
27983be 10K
27983be_10K.indd 120
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
0
2
1
2/26/20 12:08 PM
1
2
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
121
(4.10)
(4.11)
First Supplemental Indenture, dated as of March 1, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $110,000,000 principal amount of the Company's 5.9% Subordinated Debentures due 2056, including the form of the
Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on March 1, 2016).
Second Supplemental Indenture, dated as of May 25, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $290,000,000 principal amount of the Company's 5.75% Subordinated Debentures due 2056, including the
form of the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File
(cid:1)o. 1-15202) filed with the Commission on May 25, 2016).
(4.12)
Subordinated Indenture, dated as of March 26, 2018, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on March 26, 2018).
(4.13)
(4.14)
First Supplemental Indenture, dated as of March 26, 2018, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $175,000,000 principal amount of the Companys 5.7% Subordinated Debentures due 2058, including the form of the
Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on March 26, 2018).
Second Supplemental Indenture, dated as of December 16, 2019, between the Company and the Bank of (cid:1)ew York Mellon, as
Trustee, relating to $300,000,000 principal amount of the Company's 5.10% Subordinated Debentures due 2059, including the
form of the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File
(cid:1)o. 1-15202) filed with the Commission on December 16, 2019)
(4.15)
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 2018 Stock Incentive Plan (incorporated by reference to Annex A of the Companys 2018 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 19, 2018).
(10.9)
Form of 2018 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2018 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 7, 2018).
(10.10) W. R. Berkley Corporation Deferred Compensation Plan for Officers as amended and restated (cid:1)ovember 2, 2016 (incorporated
by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
(cid:1)ovember 7, 2018).
(10.11) 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 (cid:1)o. 1-15202) filed with the
Commission on December 19, 2007).
(10.12) W. R. Berkley Corporation Amended and Restated Annual Incentive Compensation Plan (incorporated by reference to Exhibit
10.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the Commission on February 25, 2019).
(10.13) W. R. Berkley Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Annex A of the Companys 2014 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 7, 2014).
(10.14)
Form of 2015 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 4, 2015).
(10.15)
Form of 2016 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 10, 2016).
(10.2)
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 (cid:1)o. 1-15202) filed with the Commission on August 6, 2003).
(10.16)
Form of 2018 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 7, 2018).
(10.3)
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 (cid:1)o. 1-15202) filed with the Commission on
May 3, 2005).
(10.17) W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company's current
Report on Form 8-K (File (cid:1)o. 1-15202) filed with the Commission on February 25, 2019).
(10.4)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
August 6, 2010).
(10.18)
Form of 2019 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on February 25, 2019).
(10.5)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
(cid:1)ovember 8, 2012).
(10.6)
Form of 2014 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 7, 2014).
(10.7)
Form of 2015 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 9, 2015).
(10.8)
Form of 2017 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 8, 2017).
114
121
27983be 10K
27983be_10K.indd 121
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
2
1
2/26/20 12:08 PM
(10.19) W. R. Berkley Corporation 2009 Directors Stock Plan (incorporated by reference to Annex B of the Companys 2015 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 20, 2015).
(10.20)
Supplemental Benefits Agreement between William R. Berkley and the Company as amended and restated as of December 21,
2011 (incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with
the Commission on February 28, 2012).
(14)
Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14 of the Companys Annual Report on Form
10-K (File (cid:1)o. 1-15202) filed with the Commission on March 14, 2005).
(21)
List of the Companys subsidiaries.
(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).
115
1
2
2
2
7
9
8
3
b
e
1
0
K
27983be 10K
122
(4.10)
First Supplemental Indenture, dated as of March 1, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $110,000,000 principal amount of the Company's 5.9% Subordinated Debentures due 2056, including the form of the
Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on March 1, 2016).
(4.11)
Second Supplemental Indenture, dated as of May 25, 2016, between the Company and The Bank of (cid:1)ew York Mellon, as
Trustee, relating to $290,000,000 principal amount of the Company's 5.75% Subordinated Debentures due 2056, including the
form of the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File
(cid:1)o. 1-15202) filed with the Commission on May 25, 2016).
(4.12)
Subordinated Indenture, dated as of March 26, 2018, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee
(incorporated by reference to Exhibit 4.1 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on March 26, 2018).
(4.13)
First Supplemental Indenture, dated as of March 26, 2018, between the Company and The Bank of (cid:1)ew York Mellon, as Trustee,
relating to $175,000,000 principal amount of the Companys 5.7% Subordinated Debentures due 2058, including the form of the
Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Companys Current Report on Form 8-K (File (cid:1)o.
1-15202) filed with the Commission on March 26, 2018).
(4.14)
Second Supplemental Indenture, dated as of December 16, 2019, between the Company and the Bank of (cid:1)ew York Mellon, as
Trustee, relating to $300,000,000 principal amount of the Company's 5.10% Subordinated Debentures due 2059, including the
form of the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K (File
(cid:1)o. 1-15202) filed with the Commission on December 16, 2019)
(4.15)
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 2018 Stock Incentive Plan (incorporated by reference to Annex A of the Companys 2018 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 19, 2018).
(10.9)
Form of 2018 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2018 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 7, 2018).
(10.10) W. R. Berkley Corporation Deferred Compensation Plan for Officers as amended and restated (cid:1)ovember 2, 2016 (incorporated
by reference to Exhibit 10.2 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
(cid:1)ovember 7, 2018).
(10.11) 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 (cid:1)o. 1-15202) filed with the
Commission on December 19, 2007).
(10.12) W. R. Berkley Corporation Amended and Restated Annual Incentive Compensation Plan (incorporated by reference to Exhibit
10.1 of the Company's Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the Commission on February 25, 2019).
(10.13) W. R. Berkley Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Annex A of the Companys 2014 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 7, 2014).
(10.14)
Form of 2015 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 4, 2015).
(10.15)
Form of 2016 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 10, 2016).
(10.2)
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 (cid:1)o. 1-15202) filed with the Commission on August 6, 2003).
(10.16)
Form of 2018 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the
Commission on May 7, 2018).
(10.3)
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 (cid:1)o. 1-15202) filed with the Commission on
(10.17) W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company's current
Report on Form 8-K (File (cid:1)o. 1-15202) filed with the Commission on February 25, 2019).
(10.4)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
(10.18)
Form of 2019 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K (File (cid:1)o. 1-15202) filed with the
Commission on February 25, 2019).
May 3, 2005).
August 6, 2010).
(10.5)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with the Commission on
(cid:1)ovember 8, 2012).
(10.6)
Form of 2014 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 7, 2014).
(10.7)
Form of 2015 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 9, 2015).
(10.8)
Form of 2017 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Companys Quarterly Report on Form 10-Q (File (cid:1)o. 1-15202) filed with
the Commission on (cid:1)ovember 8, 2017).
(10.19) W. R. Berkley Corporation 2009 Directors Stock Plan (incorporated by reference to Annex B of the Companys 2015 Proxy
Statement (File (cid:1)o. 1-15202) filed with the Commission on April 20, 2015).
(10.20)
Supplemental Benefits Agreement between William R. Berkley and the Company as amended and restated as of December 21,
2011 (incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K (File (cid:1)o. 1-15202) filed with
the Commission on February 28, 2012).
(14)
Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14 of the Companys Annual Report on Form
10-K (File (cid:1)o. 1-15202) filed with the Commission on March 14, 2005).
(21)
List of the Companys subsidiaries.
(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).
114
115
122
27983be 10K
27983be_10K.indd 122
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
2
1
2/26/20 12:08 PM
1
2
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
123
(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.
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.
SIG(cid:1)ATURES
ITEM 16. FORM 10-K Summary
(cid:1)one.
February 20, 2020
W. R. BERKLEY CORPORATIO(cid:1)
By
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
President and Chief Executive Officer
116
123
27983be 10K
27983be_10K.indd 123
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
2
1
2/26/20 12:08 PM
117
1
2
4
2
7
9
8
3
b
e
1
0
K
27983be 10K
124
(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.
ITEM 16. FORM 10-K Summary
(cid:1)one.
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.
SIG(cid:1)ATURES
W. R. BERKLEY CORPORATIO(cid:1)
By
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
President and Chief Executive Officer
February 20, 2020
116
117
124
27983be 10K
27983be_10K.indd 124
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
4
2
1
2/26/20 12:08 PM
1
2
5
2
7
9
8
3
b
e
1
0
K
27983be 10K
125
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
W. R. Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)
Executive Chairman
of the Board of Directors
February 20, 2020
(In thousands)
Assets:
/s/ William R. Berkley
William R. Berkley
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
/s/ Christopher L. Augostini
Christopher L. Augostini
/s/ Ronald E. Blaylock
Ronald E. Blaylock
/s/ Mark E. Brockbank
Mark E. Brockbank
/s/ Mary C. Farrell
Mary C. Farrell
/s/ María Luisa Ferré
María Luisa Ferré
/s/ Jack H. (cid:1)usbaum
Jack H. (cid:1)usbaum
/s/ Leigh Ann Pusey
Leigh Ann Pusey
/s/ Mark L. Shapiro
Mark L. Shapiro
/s/ Jonathan Talisman
Jonathan Talisman
/s/ Richard M. Baio
Richard M. Baio
Schedule II
December 31,
2019
2018
$
389,801
$
83,950
723,959
1,307,347
7,623,639
6,786,999
55,794
3,430
18,857
12,323
13,294
51,544
3,430
9,068
66,995
13,391
12,340
$
8,841,097
$
8,335,064
$
107,245
$
116,125
118,593
22,846
115,562
1,198,704
907,491
1,318,770
1,758,035
2,766,158
2,897,213
70,535
70,535
1,056,042
1,039,633
7,932,372
7,558,619
(257,299)
(510,470)
(2,726,711)
(2,720,466)
6,074,939
5,437,851
$
8,841,097
$
8,335,064
President
Chief Executive Officer and Director
(Principal executive officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Executive Vice President
Chief Financial Officer and Treasurer
(Principal financial officer
and principal accounting officer)
118
February 20, 2020
Cash and cash equivalents
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
Fixed maturity securities available for sale at fair value (cost $718,642 and $1,317,058 at December 31, 2019 and
2018, respectively)
Loans receivable
Equity securities, at fair value (cost $3,430 in 2019 and $3,430 in 2018)
Investment in subsidiaries
Current federal income taxes
Deferred federal income taxes
Property, furniture and equipment at cost, less accumulated depreciation
Other assets
Total assets
Liabilities and stockholders equity:
Liabilities:
Due to subsidiaries
Other liabilities
Deferred federal income taxes
Subordinated debentures
Senior notes
Total liabilities
Stockholders equity:
Preferred stock
Common stock
Additional paid-in capital
Accumulated other comprehensive income
Treasury stock, at cost
Total stockholders equity
Total liabilities and stockholders equity
________________
Retained earnings (including accumulated undistributed net income of subsidiaries of $5,564,980 and
$5,068,139 at December 31, 2019 and 2018, respectively)
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
K
0
1
e
b
3
8
9
7
2
5
2
1
2/26/20 12:08 PM
119
125
27983be 10K
27983be_10K.indd 125
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
/s/ William R. Berkley
William R. Berkley
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
/s/ Christopher L. Augostini
Christopher L. Augostini
/s/ Ronald E. Blaylock
Ronald E. Blaylock
/s/ Mark E. Brockbank
Mark E. Brockbank
/s/ Mary C. Farrell
Mary C. Farrell
/s/ María Luisa Ferré
María Luisa Ferré
/s/ Jack H. (cid:1)usbaum
Jack H. (cid:1)usbaum
/s/ Leigh Ann Pusey
Leigh Ann Pusey
/s/ Mark L. Shapiro
Mark L. Shapiro
/s/ Jonathan Talisman
Jonathan Talisman
/s/ Richard M. Baio
Richard M. Baio
Chief Executive Officer and Director
(Principal executive officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
February 20, 2020
Executive Vice President
February 20, 2020
Chief Financial Officer and Treasurer
(Principal financial officer
and principal accounting officer)
1
2
6
2
7
9
8
3
b
e
1
0
K
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
W. R. Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)
Executive Chairman
of the Board of Directors
February 20, 2020
(In thousands)
Assets:
President
February 20, 2020
Cash and cash equivalents
Fixed maturity securities available for sale at fair value (cost $718,642 and $1,317,058 at December 31, 2019 and
2018, respectively)
Loans receivable
Equity securities, at fair value (cost $3,430 in 2019 and $3,430 in 2018)
Investment in subsidiaries
Current federal income taxes
Deferred federal income taxes
Property, furniture and equipment at cost, less accumulated depreciation
Other assets
Total assets
Liabilities and stockholders equity:
Liabilities:
Due to subsidiaries
Other liabilities
Deferred federal income taxes
Subordinated debentures
Senior notes
Total liabilities
Stockholders equity:
Preferred stock
Common stock
Additional paid-in capital
Retained earnings (including accumulated undistributed net income of subsidiaries of $5,564,980 and
$5,068,139 at December 31, 2019 and 2018, respectively)
Accumulated other comprehensive income
Treasury stock, at cost
Total stockholders equity
Total liabilities and stockholders equity
________________
27983be 10K
126
Schedule II
December 31,
2019
2018
$
389,801
$
83,950
723,959
1,307,347
55,794
3,430
51,544
3,430
7,623,639
6,786,999
18,857
12,323
13,294
9,068
66,995
13,391
12,340
$
8,841,097
$
8,335,064
$
107,245
$
116,125
118,593
22,846
115,562
1,198,704
907,491
1,318,770
1,758,035
2,766,158
2,897,213
70,535
70,535
1,056,042
1,039,633
7,932,372
7,558,619
(257,299)
(510,470)
(2,726,711)
(2,720,466)
6,074,939
5,437,851
$
8,841,097
$
8,335,064
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
118
119
126
27983be 10K
27983be_10K.indd 126
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
6
2
1
2/26/20 12:08 PM
27983be 10K
127
1
2
7
2
7
9
8
3
b
e
1
0
K
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Income (Parent Company)
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Cash Flows (Parent Company)
Schedule II, Continued
Schedule II, Continued
(In thousands)
Management fees and investment income including dividends from subsidiaries of
$416,027, $639,477, and $694,462 for the years ended December 31, 2019, 2018 and
2017, respectively
(cid:1)et investment gains (losses)
Other income
Total revenues
Operating costs and expense
Interest expense
Income before federal income taxes
Federal income taxes:
Year Ended December 31,
2018
2019
2017
$
470,773
$
697,687
$
738,923
850
117
471,740
204,812
148,282
118,646
(1,685)
530
696,532
191,873
155,082
349,577
(4,286)
805
735,442
182,145
146,929
406,368
Federal income taxes provided by subsidiaries on a separate return basis
207,647
409,439
115,597
Federal income tax expense on a consolidated return basis
(cid:1)et federal income tax expense (benefit)
Income before undistributed equity in net income of subsidiaries
Equity in undistributed net income (loss) of subsidiaries
(cid:1)et income
________________
(141,190)
(113,138)
(195,261)
66,457
185,103
496,841
296,301
645,878
(5,129)
(79,664)
326,704
222,390
$
681,944
$
640,749
$
549,094
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
Federal income taxes provided by subsidiaries on a separate return basis
(207,646)
(409,439)
(115,597)
(In thousands)
Cash flows from operating activities:
(cid:1)et income
Adjustments to reconcile net income to net cash from operating activities:
(cid:1)et investment (gains) losses
Depreciation and amortization
Equity in undistributed earnings of subsidiaries
Tax payments received from subsidiaries
Proceeds from sales of fixed maturity securities
Proceeds from maturities and prepayments of fixed maturity securities
Stock incentive plans
Change in:
Federal income taxes
Other assets
Other liabilities
Accrued investment income
(cid:1)et cash from operating activities
Cash from (used) in investing activities:
Cost of purchases of fixed maturity securities
Change in loans receivable
Investments in and advances to subsidiaries, net
Change in balance due to security broker
(cid:1)et additions to real estate, furniture & equipment
Other, net
(cid:1)et cash from (used in) investing activities
Cash used in financing activities:
(cid:1)et proceeds from issuance of senior notes
Repayment of senior notes
Purchase of common treasury shares
Cash dividends to common stockholders
(cid:1)et cash used in financing activities
(cid:1)et increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
________________
Year Ended December 31,
2019
2018
2017
$
681,944
$
640,749
$
549,094
(850)
7,058
(496,841)
192,407
1,685
9,441
5,129
282,084
4,286
2,039
(222,390)
98,313
28,389
28,531
38,075
11,841
(5,343)
11,866
4,395
227,220
(77,415)
1,348
109,016
(2,870)
588,259
2,711
(877)
18,661
(2,818)
371,497
619,334
435,473
668,447
255,528
849,330
316,611
(459,418)
(1,188,821)
(1,329,379)
555,244
(448,232)
(215,232)
(4,250)
(36,170)
1,475
(184,597)
245
(112)
142
(264)
290,454
(440,651)
(18,225)
(308,191)
(476,613)
305,851
83,950
178,562
(24,750)
(254,951)
(101,139)
38,888
45,062
(29,600)
(21,139)
(1,055)
(47,807)
(188,199)
(236,006)
(79,741)
124,803
$
389,801
$
83,950
$
45,062
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
120
127
27983be 10K
27983be_10K.indd 127
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
7
2
1
2/26/20 12:08 PM
121
1
2
8
2
7
9
8
3
b
e
1
0
K
Schedule II, Continued
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Income (Parent Company)
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Cash Flows (Parent Company)
27983be 10K
128
Schedule II, Continued
Management fees and investment income including dividends from subsidiaries of
$416,027, $639,477, and $694,462 for the years ended December 31, 2019, 2018 and
(In thousands)
2017, respectively
(cid:1)et investment gains (losses)
Other income
Total revenues
Operating costs and expense
Interest expense
Income before federal income taxes
Federal income taxes:
Year Ended December 31,
2019
2018
2017
$
470,773
$
697,687
$
738,923
850
117
471,740
204,812
148,282
118,646
(1,685)
530
696,532
191,873
155,082
349,577
(4,286)
805
735,442
182,145
146,929
406,368
Federal income taxes provided by subsidiaries on a separate return basis
207,647
409,439
115,597
Federal income tax expense on a consolidated return basis
(cid:1)et federal income tax expense (benefit)
Income before undistributed equity in net income of subsidiaries
Equity in undistributed net income (loss) of subsidiaries
(cid:1)et income
________________
(141,190)
(113,138)
(195,261)
66,457
185,103
496,841
296,301
645,878
(5,129)
(79,664)
326,704
222,390
$
681,944
$
640,749
$
549,094
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
(In thousands)
Cash flows from operating activities:
(cid:1)et income
Adjustments to reconcile net income to net cash from operating activities:
(cid:1)et investment (gains) losses
Depreciation and amortization
Equity in undistributed earnings of subsidiaries
Tax payments received from subsidiaries
Year Ended December 31,
2018
2017
2019
$
681,944
$
640,749
$
549,094
(850)
7,058
(496,841)
192,407
1,685
9,441
5,129
282,084
4,286
2,039
(222,390)
98,313
Federal income taxes provided by subsidiaries on a separate return basis
(207,646)
(409,439)
(115,597)
Stock incentive plans
Change in:
Federal income taxes
Other assets
Other liabilities
Accrued investment income
(cid:1)et cash from operating activities
Cash from (used) in investing activities:
Proceeds from sales of fixed maturity securities
Proceeds from maturities and prepayments of fixed maturity securities
Cost of purchases of fixed maturity securities
Change in loans receivable
Investments in and advances to subsidiaries, net
Change in balance due to security broker
(cid:1)et additions to real estate, furniture & equipment
Other, net
(cid:1)et cash from (used in) investing activities
Cash used in financing activities:
(cid:1)et proceeds from issuance of senior notes
Repayment of senior notes
Purchase of common treasury shares
Cash dividends to common stockholders
(cid:1)et cash used in financing activities
(cid:1)et increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
________________
28,389
28,531
38,075
11,841
(5,343)
11,866
4,395
227,220
(77,415)
1,348
109,016
(2,870)
588,259
2,711
(877)
18,661
(2,818)
371,497
619,334
435,473
668,447
255,528
849,330
316,611
(459,418)
(1,188,821)
(1,329,379)
(4,250)
(36,170)
1,475
(184,597)
245
(112)
142
(264)
(29,600)
(21,139)
(1,055)
555,244
(448,232)
(215,232)
290,454
(440,651)
(18,225)
(308,191)
(476,613)
305,851
83,950
178,562
(24,750)
(254,951)
(101,139)
38,888
45,062
(47,807)
(188,199)
(236,006)
(79,741)
124,803
$
389,801
$
83,950
$
45,062
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
120
121
128
27983be 10K
27983be_10K.indd 128
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
8
2
1
2/26/20 12:08 PM
27983be 10K
129
1
2
9
2
7
9
8
3
b
e
1
0
K
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
December 31, 2019
(cid:1)ote to Condensed Financial Information (Parent Company)
I
I
I
e
l
u
d
e
h
c
S
The accompanying condensed financial information should be read in conjunction with the notes to consolidated
financial statements included elsewhere herein. Reclassifications have been made in the 2018 and 2017 financial statements
as originally reported to conform them to the presentation of the 2019 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.
122
129
27983be 10K
27983be_10K.indd 129
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
9
2
1
2/26/20 12:08 PM
s
e
i
r
a
i
d
i
s
b
u
S
d
n
a
n
o
i
t
a
r
o
p
r
o
C
y
e
l
k
r
e
B
.
R
.
W
n
o
i
t
a
m
r
o
f
n
I
e
c
n
a
r
u
s
n
I
y
r
a
t
n
e
m
e
l
p
p
u
S
7
1
0
2
d
n
a
8
1
0
2
,
9
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
e
(cid:1)
s
m
u
i
m
e
r
P
n
e
t
t
i
r
W
r
e
h
t
O
g
n
i
t
a
r
e
p
O
s
t
s
o
C
s
e
s
n
e
p
x
E
d
n
a
n
o
i
t
a
z
i
t
r
o
m
A
f
o
d
e
r
r
e
f
e
D
y
c
i
l
o
P
n
o
i
t
i
s
i
u
q
c
A
t
s
o
C
d
n
a
s
s
o
L
s
s
o
L
s
e
s
n
e
p
x
E
t
e
(cid:1)
t
n
e
m
t
s
e
v
n
I
e
m
o
c
n
I
t
e
(cid:1)
s
m
u
i
m
e
r
P
d
e
n
r
a
E
d
e
n
r
a
e
n
U
s
m
u
i
m
e
r
P
r
o
f
e
v
r
e
s
e
R
d
n
a
s
e
s
s
o
L
s
s
o
L
s
e
s
n
e
p
x
E
d
e
r
r
e
f
e
D
y
c
i
l
o
P
n
o
i
t
i
s
i
u
q
c
A
t
s
o
C
$
$
$
$
2
2
3
,
1
4
6
5
8
8
,
2
1
1
1
2
8
,
8
1
2
5
0
9
,
1
9
7
,
5
9
6
2
,
6
3
1
,
1
3
9
9
,
4
0
7
1
3
4
,
9
6
9
4
5
,
4
5
2
5
1
5
,
5
5
5
,
5
3
6
4
,
1
0
0
,
1
$
$
$
$
8
0
5
,
8
8
7
8
3
7
,
6
2
1
6
4
7
,
8
0
9
3
4
7
,
2
0
2
$
$
$
$
4
4
3
,
8
0
4
8
5
3
,
6
6
5
,
3
3
7
1
,
3
3
5
5
7
1
,
9
6
4
,
3
$
$
$
$
2
8
0
,
4
6
1
7
2
1
,
2
5
4
1
6
,
5
4
6
0
9
4
,
3
3
4
4
3
5
,
9
7
1
1
1
2
,
1
6
5
3
2
,
4
7
6
2
6
8
,
6
6
3
2
6
4
,
0
6
1
4
6
4
,
8
4
$
$
$
$
$
$
$
$
$
$
$
$
7
2
2
,
3
3
4
,
6
5
7
9
,
7
6
4
,
1
6
4
2
,
5
1
9
2
0
7
,
4
7
9
,
3
5
0
5
,
1
7
3
,
6
1
9
9
,
9
5
3
,
3
8
4
4
,
6
6
9
,
1
1
$
9
2
6
,
7
9
4
9
0
0
,
6
8
0
,
6
$
8
2
3
,
9
4
0
,
1
$
3
3
3
,
0
4
8
$
1
5
5
,
2
9
6
,
3
$
5
0
4
,
9
2
4
$
9
1
8
,
9
1
9
,
5
$
2
5
1
,
4
0
3
,
3
$
0
5
9
,
6
3
8
,
9
$
2
8
0
,
8
3
4
9
9
4
,
3
6
8
,
6
1
7
4
,
0
6
3
,
1
1
1
6
,
1
0
0
,
1
6
1
1
,
1
3
1
,
4
8
8
2
,
3
3
6
,
6
7
0
5
,
6
5
6
,
3
9
4
2
,
3
8
5
,
2
1
$
4
6
3
,
7
1
5
0
9
4
,
7
7
7
0
2
5
,
8
8
3
2
6
,
2
2
2
8
7
2
,
1
6
1
5
6
5
,
8
3
4
9
6
4
,
3
1
7
5
5
3
,
2
5
3
9
9
2
,
6
4
7
,
2
2
8
2
,
9
7
s
s
e
c
x
E
e
n
i
l
o
n
o
M
&
e
c
n
a
r
u
s
n
i
e
R
s
n
o
i
t
a
n
i
m
i
l
e
d
n
a
r
e
h
t
o
,
e
t
a
r
o
p
r
o
C
3
7
0
,
2
0
7
,
5
3
3
4
,
1
8
0
,
3
9
2
7
,
8
7
2
,
9
$
8
6
5
,
2
3
4
2
3
4
,
9
6
6
8
5
5
,
8
7
2
9
1
7
,
7
8
6
,
2
1
6
0
,
5
6
s
s
e
c
x
E
e
n
i
l
o
n
o
M
&
e
c
n
a
r
u
s
n
i
e
R
s
n
o
i
t
a
n
i
m
i
l
e
d
n
a
r
e
h
t
o
,
e
t
a
r
o
p
r
o
C
3
0
4
,
9
4
5
,
5
5
0
8
,
7
8
9
,
2
6
2
9
,
8
5
8
,
8
$
5
3
5
,
8
2
4
6
1
0
,
2
6
7
5
7
3
,
2
0
3
2
8
4
,
1
1
8
,
2
4
1
0
,
9
7
s
s
e
c
x
E
e
n
i
l
o
n
o
M
&
e
c
n
a
r
u
s
n
i
e
R
s
n
o
i
t
a
n
i
m
i
l
e
d
n
a
r
e
h
t
o
,
e
t
a
r
o
p
r
o
C
.
m
r
i
F
g
n
i
t
n
u
o
c
c
A
c
i
l
b
u
P
d
e
r
e
t
s
i
g
e
R
t
n
e
d
n
e
p
e
d
n
I
f
o
t
r
o
p
e
R
e
e
S
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
8
0
5
,
0
6
2
,
6
$
3
4
4
,
5
2
3
,
1
$
9
8
4
,
1
1
1
,
1
$
8
4
3
,
2
0
0
,
4
$
8
8
7
,
5
7
5
$
9
1
4
,
1
1
3
,
6
$
0
8
1
,
0
9
2
,
3
$
8
0
4
,
0
7
6
,
1
1
$
9
4
5
,
7
0
5
l
a
t
o
T
$
$
$
$
$
$
9
1
0
2
,
1
3
r
e
b
m
e
c
e
D
)
s
d
n
a
s
u
o
h
t
n
I
(
e
c
n
a
r
u
s
n
I
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
e
c
n
a
r
u
s
n
I
l
a
t
o
T
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
e
c
n
a
r
u
s
n
I
l
a
t
o
T
3
2
1
27983be 10K
130
Condensed Financial Information of Registrant, Continued
W. R. Berkley Corporation
December 31, 2019
(cid:1)ote to Condensed Financial Information (Parent Company)
The accompanying condensed financial information should be read in conjunction with the notes to consolidated
financial statements included elsewhere herein. Reclassifications have been made in the 2018 and 2017 financial statements
as originally reported to conform them to the presentation of the 2019 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.
1
3
0
2
7
9
8
3
b
e
1
0
K
1
2
3
S
e
e
R
e
p
o
r
t
o
f
I
n
d
e
p
e
n
d
e
n
t
R
e
g
i
s
t
e
r
e
d
P
u
b
l
i
c
A
c
c
o
u
n
t
i
n
g
F
i
r
m
.
T
o
t
a
l
C
o
r
p
o
r
a
t
e
,
o
t
h
e
r
a
n
d
e
l
i
m
i
n
a
t
i
o
n
s
R
e
i
n
s
u
r
a
n
c
e
&
M
o
n
o
l
i
n
e
E
x
c
e
s
s
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
T
o
t
a
l
I
n
s
u
r
a
n
c
e
D
e
c
e
m
b
e
r
3
1
,
2
0
1
7
C
o
r
p
o
r
a
t
e
,
o
t
h
e
r
a
n
d
e
l
i
m
i
n
a
t
i
o
n
s
R
e
i
n
s
u
r
a
n
c
e
&
M
o
n
o
l
i
n
e
E
x
c
e
s
s
T
o
t
a
l
I
n
s
u
r
a
n
c
e
D
e
c
e
m
b
e
r
3
1
,
2
0
1
8
I
n
s
u
r
a
n
c
e
(
I
n
t
h
o
u
s
a
n
d
s
)
D
e
c
e
m
b
e
r
3
1
,
2
0
1
9
C
o
r
p
o
r
a
t
e
,
o
t
h
e
r
a
n
d
e
l
i
m
i
n
a
t
i
o
n
s
R
e
i
n
s
u
r
a
n
c
e
&
M
o
n
o
l
i
n
e
E
x
c
e
s
s
$
$
$
$
$
$
5
0
7
,
5
4
9
$
1
1
,
6
7
0
,
4
0
8
$
3
,
2
9
0
,
1
8
0
$
6
,
3
1
1
,
4
1
9
$
5
7
5
,
7
8
8
$
4
,
0
0
2
,
3
4
8
$
1
,
1
1
1
,
4
8
9
$
1
,
3
2
5
,
4
4
3
$
6
,
2
6
0
,
5
0
8
7
9
,
0
1
4
2
,
8
1
1
,
4
8
2
4
2
8
,
5
3
5
$
8
,
8
5
8
,
9
2
6
4
9
7
,
6
2
9
$
1
1
,
9
6
6
,
4
4
8
6
5
,
0
6
1
2
,
6
8
7
,
7
1
9
4
3
2
,
5
6
8
$
9
,
2
7
8
,
7
2
9
5
1
7
,
3
6
4
$
1
2
,
5
8
3
,
2
4
9
$
$
$
$
2
,
9
8
7
,
8
0
5
3
0
2
,
3
7
5
3
,
3
5
9
,
9
9
1
3
,
0
8
1
,
4
3
3
2
7
8
,
5
5
8
3
,
6
5
6
,
5
0
7
$
$
$
$
5
,
5
4
9
,
4
0
3
7
6
2
,
0
1
6
6
,
3
7
1
,
5
0
5
5
,
7
0
2
,
0
7
3
6
6
9
,
4
3
2
6
,
6
3
3
,
2
8
8
$
$
$
$
7
9
,
2
8
2
2
,
7
4
6
,
2
9
9
3
5
2
,
3
5
5
7
1
3
,
4
6
9
4
8
,
4
6
4
1
6
0
,
4
6
2
3
6
6
,
8
6
2
6
7
4
,
2
3
5
6
1
,
2
1
1
1
7
9
,
5
3
4
4
3
3
,
4
9
0
6
4
5
,
6
1
4
5
2
,
1
2
7
1
6
4
,
0
8
2
$
$
$
$
3
,
4
6
9
,
1
7
5
5
3
3
,
1
7
3
3
,
9
7
4
,
7
0
2
3
,
5
6
6
,
3
5
8
4
0
8
,
3
4
4
4
,
1
3
1
,
1
1
6
$
$
$
$
2
0
2
,
7
4
3
9
0
8
,
7
4
6
9
1
5
,
2
4
6
1
2
6
,
7
3
8
7
8
8
,
5
0
8
1
,
0
0
1
,
6
1
1
$
$
$
$
4
3
8
,
5
6
5
1
6
1
,
2
7
8
2
5
4
,
5
4
9
6
9
,
4
3
1
1
,
0
0
1
,
4
6
3
1
,
4
6
7
,
9
7
5
2
1
8
,
8
2
1
1
1
2
,
8
8
5
1
,
1
3
6
,
2
6
9
1
,
3
6
0
,
4
7
1
2
2
2
,
6
2
3
8
8
,
5
2
0
$
$
$
$
5
,
5
5
5
,
5
1
5
7
0
4
,
9
9
3
6
,
4
3
3
,
2
2
7
5
,
7
9
1
,
9
0
5
6
4
1
,
3
2
2
6
,
8
6
3
,
4
9
9
7
7
7
,
4
9
0
4
3
8
,
0
8
2
$
9
,
8
3
6
,
9
5
0
$
3
,
3
0
4
,
1
5
2
$
5
,
9
1
9
,
8
1
9
$
4
2
9
,
4
0
5
$
3
,
6
9
2
,
5
5
1
$
8
4
0
,
3
3
3
$
1
,
0
4
9
,
3
2
8
$
6
,
0
8
6
,
0
0
9
C
o
s
t
A
c
q
u
i
s
i
t
i
o
n
P
o
l
i
c
y
D
e
f
e
r
r
e
d
E
x
p
e
n
s
e
s
L
o
s
s
L
o
s
s
e
s
a
n
d
R
e
s
e
r
v
e
f
o
r
P
r
e
m
i
u
m
s
U
n
e
a
r
n
e
d
E
a
r
n
e
d
P
r
e
m
i
u
m
s
(cid:1)
e
t
I
n
c
o
m
e
I
n
v
e
s
t
m
e
n
t
(cid:1)
e
t
E
x
p
e
n
s
e
s
L
o
s
s
L
o
s
s
a
n
d
C
o
s
t
A
c
q
u
i
s
i
t
i
o
n
P
o
l
i
c
y
D
e
f
e
r
r
e
d
o
f
A
m
o
r
t
i
z
a
t
i
o
n
a
n
d
E
x
p
e
n
s
e
s
C
o
s
t
s
O
p
e
r
a
t
i
n
g
O
t
h
e
r
W
r
i
t
t
e
n
P
r
e
m
i
u
m
s
(cid:1)
e
t
D
e
c
e
m
b
e
r
3
1
,
2
0
1
9
,
2
0
1
8
a
n
d
2
0
1
7
S
u
p
p
l
e
m
e
n
t
a
r
y
I
n
s
u
r
a
n
c
e
I
n
f
o
r
m
a
t
i
o
n
122
130
27983be 10K
27983be_10K.indd 130
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 15:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
.
W
R
.
B
e
r
k
l
e
y
C
o
r
p
o
r
a
t
i
o
n
a
n
d
S
u
b
s
i
d
i
a
r
i
e
s
S
c
h
e
d
u
l
e
I
I
I
K
0
1
e
b
3
8
9
7
2
0
3
1
2/26/20 3:11 PM
1
3
1
2
7
9
8
3
b
e
1
0
K
27983be 10K
131
Schedule IV
W. R. Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2019, 2018 and 2017
(In thousands, other than percentages)
Year ended December 31, 2019
Insurance
Reinsurance & Monoline Excess
Total
Year ended December 31, 2018
Insurance
Reinsurance & Monoline Excess
Total
Year ended December 31, 2017
Insurance
Reinsurance & Monoline Excess
Total
Premiums Written
Direct
Amount
Ceded
to Other
Companies
Assumed
from Other
Companies
(cid:1)et
Amount
Percentage
of Amount
Assumed
to (cid:1)et
$
$
$
$
$
$
7,180,759
$
1,312,564
$
217,814
$
6,086,009
206,000
86,155
657,645
777,490
7,386,759
$
1,398,719
$
875,459
$
6,863,499
6,782,757
$
1,188,297
$
197,445
$
5,791,905
190,459
80,970
531,833
641,322
6,973,216
$
1,269,267
$
729,278
$
6,433,227
6,537,777
$
1,143,656
$
161,394
$
5,555,515
188,252
72,799
589,540
704,993
6,726,029
$
1,216,455
$
750,934
$
6,260,508
3.6%
84.6%
12.8%
3.4%
82.9%
11.3%
2.9%
83.6%
12.0%
___________________________
See Report of Independent Registered Public Accounting Firm.
W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2019, 2018 and 2017
Schedule V
(In thousands)
Year ended December 31, 2019
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
Year ended December 31, 2018
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
Year ended December 31, 2017
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
_______________________
See Report of Independent Registered Public Accounting Firm.
Opening
Balance
Additions-
Charged to
Expense
Deduction-
Amounts
Written Off
Ending
Balance
$
39,093
$
(5,549) $
(6,998) $
26,546
$
$
$
$
947
35,195
3,383
1,010
16,619
3,383
1,049
5,457
3,397
78,618
$
(4,251) $
(11,735) $
62,632
39,926
$
6,985
$
(7,817) $
39,093
1,298
18,772
65
(257)
(3,243)
(1,237)
(128)
(196)
(29)
12,663
(14)
(10)
(1,501)
690
33,250
2,146
947
35,195
3,383
1,010
16,619
3,383
60,938
$
25,822
$
(8,141) $
78,618
26,569
$
20,720
$
(7,363) $
39,926
$
36,472
$
33,340
$
(8,874) $
60,938
124
131
27983be 10K
27983be_10K.indd 131
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
1
3
1
2/26/20 12:08 PM
125
1
3
2
2
7
9
8
3
b
e
1
0
K
Schedule IV
W. R. Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2019, 2018 and 2017
Reinsurance & Monoline Excess
206,000
86,155
657,645
777,490
Reinsurance & Monoline Excess
190,459
80,970
531,833
641,322
Premiums Written
Direct
Amount
Ceded
to Other
Companies
Assumed
from Other
Companies
(cid:1)et
Amount
Percentage
of Amount
Assumed
to (cid:1)et
$
$
$
$
$
$
7,180,759
$
1,312,564
$
217,814
$
6,086,009
7,386,759
$
1,398,719
$
875,459
$
6,863,499
6,782,757
$
1,188,297
$
197,445
$
5,791,905
6,973,216
$
1,269,267
$
729,278
$
6,433,227
6,537,777
$
1,143,656
$
161,394
$
5,555,515
6,726,029
$
1,216,455
$
750,934
$
6,260,508
3.6%
84.6%
12.8%
3.4%
82.9%
11.3%
2.9%
83.6%
12.0%
(In thousands, other than percentages)
Year ended December 31, 2019
Year ended December 31, 2018
Year ended December 31, 2017
Insurance
Total
Insurance
Total
Insurance
Total
Reinsurance & Monoline Excess
188,252
72,799
589,540
704,993
___________________________
See Report of Independent Registered Public Accounting Firm.
27983be 10K
132
Schedule V
W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2019, 2018 and 2017
(In thousands)
Year ended December 31, 2019
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
Year ended December 31, 2018
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
Year ended December 31, 2017
Premiums and fees receivable
Due from reinsurers
Deferred federal and foreign income taxes
Loan loss reserves
Total
_______________________
See Report of Independent Registered Public Accounting Firm.
Opening
Balance
Additions-
Charged to
Expense
Deduction-
Amounts
Written Off
Ending
Balance
$
39,093
$
(5,549) $
(6,998) $
26,546
$
$
$
$
947
35,195
3,383
1,298
(257)
(3,243)
(1,237)
690
33,250
2,146
78,618
$
(4,251) $
(11,735) $
62,632
39,926
$
6,985
$
(7,817) $
39,093
1,010
16,619
3,383
65
18,772
(128)
(196)
947
35,195
3,383
60,938
$
25,822
$
(8,141) $
78,618
26,569
$
20,720
$
(7,363) $
39,926
1,049
5,457
3,397
(29)
12,663
(14)
(10)
(1,501)
1,010
16,619
3,383
$
36,472
$
33,340
$
(8,874) $
60,938
124
125
132
27983be 10K
27983be_10K.indd 132
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
2
3
1
2/26/20 12:08 PM
1
3
3
2
7
9
8
3
b
e
1
0
K
27983be 10K
133
Schedule VI
W. R. Berkley Corporation and Subsidiaries
Supplementary Information Concerning Property-Casualty Insurance Operations
Years Ended December 31, 2019, 2018 and 2017
(In thousands)
Deferred policy acquisition costs
Reserves for losses and loss expenses
Unearned premiums
(cid:1)et premiums earned
(cid:1)et investment income
Losses and loss expenses incurred:
Current year
Prior years
Loss reserve discount accretion
Amortization of deferred policy acquisition costs
Paid losses and loss expenses
(cid:1)et premiums written
___________________
See Report of Independent Registered Public Accounting Firm.
2019
2018
2017
$
517,364
$
497,629
$
507,549
12,583,249
11,966,448
11,670,408
3,656,507
3,359,991
3,290,180
6,633,288
6,371,505
6,311,419
645,614
674,235
575,788
4,057,989
3,926,489
3,963,543
34,079
39,048
6,831
41,382
(5,165)
43,970
1,001,611
915,246
1,111,489
3,659,402
3,664,885
3,589,955
6,863,499
6,433,227
6,260,508
126
133
27983be 10K
27983be_10K.indd 133
K
8.250 in x 12.000 in
W. R. Berkley Corporation
02.26.2020 12:14PM
27983be
brobson (sa1)
27983be 10K
fviruet
file://sanjfs5.sa1.com/Sandy2/27983be
K
0
1
e
b
3
8
9
7
2
3
3
1
2/26/20 12:08 PM
OPERATING UNITS
BERKLEY INSURANCE COMPANY
475 Steamboat Road
Greenwich, Connecticut 06830
Tel: (203) 542 3800
William R. Berkley, Chairman
W. Robert Berkley, Jr., President and
Chief Executive Officer
Insurance
ACADIA INSURANCE
One Acadia Commons
Westbrook, Maine 04092
Tel: (800) 773 4300
www.acadiainsurance.com
David J. LeBlanc, President
Albany, New York
Tel: (800) 773 4300
Bedford, New Hampshire
Tel: (800) 224 8850
Colchester, Vermont
Tel: (800) 224 8847
Marlborough, Massachusetts
Tel: (888) 665 1170
Rocky Hill, Connecticut
Tel: (866) 382 0036
Syracuse, New York
Tel: (866) 811 7722
ADMIRAL INSURANCE GROUP
1000 Howard Boulevard, Suite 300
P. O. Box 5430
Mount Laurel, New Jersey 08054
Tel: (856) 429 9200
www.admiralins.com
Curtis E. Fletcher, President and
Chief Executive Officer
Atlanta, Georgia
Austin, Texas
Chicago, Illinois
Seattle, Washington
Tel: (770) 476 1561
Tel: (512) 795 0766
Tel: (312) 368 1107
Tel: (206) 467 6511
BERKLEY ACCIDENT AND HEALTH
2445 Kuser Road, Suite 201
Hamilton Square, New Jersey 08690
Tel: (609) 584 6990
www.berkleyah.com
Brad N. Nieland, President and Chief Executive Officer
Atlanta, Georgia
Tel: (678) 387 1824
Charlotte, North Carolina
Tel: (727) 415 0759
Chicago, Illinois
Cleveland, Ohio
Dallas, Texas
Denver, Colorado
Tel: (847) 946 8406
Tel: (440) 728 1805
Tel: (972) 849 7406
Tel: (303) 667 5198
Hamilton Square, New Jersey
Tel: (973) 616 0685
Hartford, Connecticut
Kansas City, Kansas
Tel: (860) 380 1190
Tel: (913) 515 7374
Marlborough, Massachusetts
Tel: (908) 415 2711
Minneapolis, Minnesota
Tel: (303) 667 5198
Philadelphia, Pennsylvania
Tel: (908) 415 2711
San Francisco, California
Tel: (623) 208 0556
Seattle, Washington
Tel: (425) 401 4246
BERKLEY ACCIDENT & HEALTH SPECIAL RISK DIVISION
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 822 3333
Susan M. Clarke, President
BERKLEY AGRIBUSINESS
11201 Douglas Avenue
Urbandale, Iowa 50322
Tel: (866) 382 7314
www.berkleyag.com
Michael Ekiss, President
BERKLEY ALLIANCE MANAGERS
30 South Pearl Street, 6th Floor
Albany, New York 12207
Tel: (518) 407 0088
Stephen L. Porcelli, President
BERKLEY CONSTRUCTION PROFESSIONAL
Tel: (405) 805 6635
www.berkleycp.com
BERKLEY DESIGN PROFESSIONAL
Tel: (405) 805 6635
www.berkleydp.com
BERKLEY SERVICE PROFESSIONALS
BERKLEY MANAGERS INSURANCE SERVICES, LLC
Tel: (405) 805 6635
www.berkleysp.com
BERKLEY ASPIRE
14902 North 73rd Street
Scottsdale, Arizona 85260
Tel: (480) 444 5950
www.berkleyaspire.com
Miklos F. Kallo, President
Charlotte, North Carolina
Tel: (704) 759 7049
Glen Allen, Virginia
Scottsdale, Arizona
West Chester, Ohio
Tel: (804) 237 5273
Tel: (866) 412 7742
Tel: (513) 826 4875
BERKLEY ASSET PROTECTION
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 497 3700
www.berkleyassetpro.com
Joseph P. Dowd, President
BERKLEY CANADA
145 King Street West, Suite 1000
Toronto, Ontario M5H 1J8
Tel: (416) 304 1178
www.berkleycanada.com
1002, Rue Sherbrooke Ouest
Bureau 2220
Montreal, Quebec H3A 3L6
Tel: (514) 842 5587
Andrew Steen, President
BERKLEY CUSTOM INSURANCE
Three Stamford Plaza
301 Tresser Boulevard, 8th Floor
Stamford, Connecticut 06901
Tel: (203) 658 1500
www.berkleycustom.com
Michael P. Fujii, President and
Chief Executive Officer
BERKLEY CUSTOM INSURANCE SERVICES, LLC
Los Angeles, California
Tel: (213) 417 5431
BXM INSURANCE SERVICES, INC.
Chicago, Illinois
Tel: (312) 605 4655
Los Angeles, California
Tel: (213) 417 5431
BERKLEY CYBER RISK SOLUTIONS
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
Tel: (973) 775 7494
www.berkleycyberrisk.com
Tracey Vispoli, President
BERKLEY MANAGERS INSURANCE SERVICES, LLC
Walnut Creek, California
Tel: (480) 251 6963
BERKLEY ENTERTAINMENT
600 Las Colinas Boulevard, Suite 1400
Irving, Texas 75039
Tel: (972) 819 8980
www.berkleyentertainment.com
Cindy Broschart, President
BERKLEY ENVIRONMENTAL
101 Hudson Street, Suite 2550
Jersey City, New Jersey 07302
Tel: (201) 748 3100
www.berkleyenvironmental.com
Kenneth J. Berger, President
Atlanta, Georgia
Boston, Massachusetts
Chicago, Illinois
Irving, Texas
Jersey City, New Jersey
Tel: (404) 443 2117
Tel: (857) 265 7479
Tel: (312) 727 0302
Tel: (972) 819 8863
Tel: (201) 748 3047
Philadelphia, Pennsylvania
Tel: (215) 533 7360
BERKLEY MANAGERS INSURANCE SERVICES, LLC
Walnut Creek, California
Tel: (925) 472 8210
BERKLEY FINSECURE
849 Fairmount Avenue, Suite 301
Towson, Maryland 21286
Tel: (866) 539 3995
www.berkleyfinsecure.com
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (866) 539 3995
Michael G. Connor, President
150 | W . R. Berkley Corporation | 2019 Annual Report
BERKLEY CRIME
29 South Main Street, 3rd Floor
West Hartford, Connecticut 06107
Tel: (844) 44 CRIME
www.berkleycrime.com
BERKLEY HEALTHCARE FINANCIAL LINES
Chicago, Illinois
Tel: (312) 469 6986
Los Angeles, California
Nashville, Tennessee
Tel: (213) 787 2125
Tel: (860) 380 4934
West Hartford, Connecticut
Tel: (860) 380 4920
BERKLEY FIRE & MARINE UNDERWRITERS
BERKLEY HUMAN SERVICES
425 North Martingale Road, Suite 1520
Schaumburg, Illinois 60173
Tel: (847) 466 9371
www.berkleymarine.com
John T. Geary, President
BERKLEY GLOBAL PRODUCT RECALL MANAGEMENT
80 Broad Street, Suite 3200
New York, New York 10004
Tel: (212) 413 2499
www.berkleygpr.com
Louis Lubrano, President
Dallas, Texas
Tel: (972) 552 6100
London, United Kingdom
Tel: 44 (0) 20 7088 1900
BERKLEY MANAGERS INSURANCE SERVICES, LLC
Los Angeles, California
San Francisco, California
Tel: (213) 372 1727
Tel: (415) 417 5950
BERKLEY HEALTHCARE
16305 Swingley Ridge Road, Suite 450
St. Louis, Missouri 63017
Tel: (212) 822 3343
www.berkleyhealthcare.com
Gregg A. Piltch, President
BERKLEYMED
New York, New York
Tel: (212) 822 3369
Philadelphia, Pennsylvania
Tel: (215) 553 7365
St. Louis, Missouri
Tel: (314) 523 3655
BERKLEY HEALTHCARE PROFESSIONAL
INSURANCE SERVICES, LLC
Sebastopol, California
Tel: (707) 829 4720
BERKLEY MANAGERS INSURANCE SERVICES, LLC
San Diego, California
Sebastopol, California
Tel: (858) 812 2935
Tel: (707) 829 4720
222 South Ninth Street, Suite 2700
Minneapolis, Minnesota 55402
Tel: (612) 766 3100
www.berkleyhumanservices.com
Roger M. Nulton, President
BERKLEY INDUSTRIAL COMP
One Metroplex Drive, Suite 500
Birmingham, Alabama 35209
Tel: (205) 870 3535
www.berkindcomp.com
Chandler F. Cox, Jr., President and
Chief Executive Officer
Las Vegas, Nevada
Lexington, Kentucky
BERKLEY INSURANCE ASIA
www.berkleyasia.com
Room 4407, 44/F Hopewell Centre
183 Queen’s Road East
Wan Chai, Hong Kong
Tel: (852) 3708 5000
18 Cross Street
Unit 07-01, Cross Street Exchange
Singapore 048423, China
Tel: (65) 6902 0601
30th Floor, Shanghai Tower
501 Middle Yincheng Road
Pudong, Shanghai 200120, China
Tel: 86 (21) 6162 8122
Shasi Nair, Chief Executive Officer
Tel: (855) 425 5800
Tel: (888) 886 9006
BERKLEY INSURANCE AUSTRALIA
Level 7, 321 Kent Street
Sydney NSW 2000, Australia
Tel: 61 (2) 9275 8500
www.berkleyinaus.com.au
Tony Wheatley, Chief Executive Officer
Adelaide SA, Australia
Tel: 61 (8) 8470 9020
Brisbane QLD, Australia
Tel: 61 (7) 3220 9900
Melbourne VIC, Australia
Tel: 61 (3) 8622 2000
Perth WA, Australia
Tel: 61 (8) 6488 0900
BERKLEY INTERNATIONAL LATINOAMÉRICA
BERKLEY INTERNATIONAL SEGUROS S.A.
BERKLEY INTERNATIONAL ASEGURADORA DE RIESGOS
DEL TRABAJO S.A.
BERKLEY ARGENTINA DE REASEGUROS S.A.
Carlos Pellegrini 1023, Piso 8
C1009ABU Buenos Aires, Argentina
Tel: 54 (11) 4378 8100
www.berkley.com.ar
Bartolomé Mitre 699
S2000COM Rosario, Argentina
Tel: 54 (341) 410 4200
Eduardo I. Llobet, President and
Chief Executive Officer
BERKLEY INTERNATIONAL DO BRASIL SEGUROS S.A.
Avenida Presidente Juscelino Kubitschek, 1455
15º andar - cj. 151 Vila Nova Conceição
04543-011 São Paulo, Brazil
Tel: 55 (11) 3848 8622
www.berkley.com.br
Eduardo Viegas, President and
Chief Executive Officer
BERKLEY INTERNATIONAL PUERTO RICO, LLC
Atrium Office Center
530 Avenida de la Constitución
San Juan, Puerto Rico 00901
Tel: (787) 289 7846
Eduardo I. Llobet, President
BERKLEY INTERNATIONAL SEGUROS COLOMBIA S.A.
Carrera 7 # 71 – 21 Torre B, Oficina 1002
110231 Bogotá, Colombia
Tel: 57 (1) 357 2727
www.berkley.com.co
Sylvia Luz Rincón, President and
Chief Executive Officer
BERKLEY INTERNATIONAL SEGUROS MÉXICO, S.A. DE C.V.
Avenida Santa Fe 505
Piso 17, Oficina 1702
Cruz Manca, Cuajimalpa de Morelos, 05349, México
Tel: 52 (55) 1037 5300
www.berkleymex.com
Javier García Ortíz de Zárate, President and
Chief Executive Officer
BERKLEY INTERNATIONAL SEGUROS S.A. (URUGUAY)
Rincón 391, Piso 5
11100 Montevideo, Uruguay
Tel: (598) 2916 6998
www.berkley.com.uy
Eduardo I. Llobet, President
BERKLEY LATIN AMERICA AND CARIBBEAN MANAGERS
600 Brickell Avenue, Suite 3900
Miami, Florida 33131
Tel: (305) 921 6200
BERKLEY INTERNATIONAL FIANZAS MÉXICO, S.A. DE C.V.
Eduardo I. Llobet, President and
Avenida Santa Fe 505
Piso 17, Oficina 1702
Cruz Manca, Cuajimalpa de Morelos, 05349, México
Tel: 52 (55) 1037 5300
www.berkleymex.com
Guillermo Espinosa Barragan, President and
Chief Executive Officer
Chief Executive Officer
BERKLEY INSURANCE COMPANY
REPRESENTATIVE OFFICE IN COLOMBIA
Carrera 11 No. 77ª-49/65, Oficina 202
Edificio Semana
110231 Bogotá, Colombia
Tel: 57 (1) 744 4015
Jaime Aramburo, Director
152 | W . R. Berkley Corporation | 2019 Annual Report
REPRESENTATIVE OFFICE IN MÉXICO
Avenida Santa Fe 505
Piso 17, Oficina 1702
Cruz Manca, Cuajimalpa de Morelos, 05349, México
Tel: 52 (55) 1037 5300
www.berkleymex.com
Hiram García, Director
BERKLEY LIFE SCIENCES
200 PrincetonSouth Corporate Center, Suite 250
Ewing, New Jersey 08628
Tel: (609) 844 7800
www.berkleyls.com
Emily J. Urban, President
Naperville, Illinois
Tel: (630) 210 0360
BERKLEY LS INSURANCE SOLUTIONS, LLC
Walnut Creek, California
BERKLEY LUXURY GROUP
301 Route 17 North, Suite 900
Rutherford, New Jersey 07070
Tel: (201) 518 2500
www.berkleyluxurygroup.com
Maureen E. Hackett, President
Chicago, Illinois
Tel: (312) 881 1456
BERKLEY MID-ATLANTIC GROUP
4820 Lake Brook Drive, Suite 300
Glen Allen, Virginia 23060
Tel: (804) 285 2700
www.wrbmag.com
John F. Kearns, President
Columbus, Ohio
Glen Allen, Virginia
Harrisburg, Pennsylvania
Pittsburgh, Pennsylvania
Tel: (800) 283 1153
Tel: (800) 283 1153
Tel: (800) 283 1153
Tel: (800) 283 1153
BERKLEY NET UNDERWRITERS
9301 Innovation Drive, Suite 200
Manassas, Virginia 20110
Tel: (877) 497 2637
www.berkleynet.com
Brian P. Douglas, President
Las Vegas, Nevada
Minneapolis, Minnesota
Tel: (877) 497 2637
Tel: (877) 497 2637
BERKLEY NORTH PACIFIC GROUP
13920 SE Eastgate Way, Suite 120
Bellevue, Washington 98005
Tel: (877) 316 9038
www.berkleynpac.com
Gary Gudex, President
BERKLEY FINE DINING SPECIALISTS
Meridian, Idaho
Tel: (800) 480 2942
Tel: (800) 504 7012
www.berkleyfinedining.com
BERKLEY LUXURY REAL ESTATE SPECIALISTS
Tel: (800) 504 7012
www.berkleyluxuryrealestate.com
BERKLEY MEDICAL MANAGEMENT SOLUTIONS
10851 Mastin Boulevard, Suite 200
Overland Park, Kansas 66210
Tel: (855) 444 2667
www.berkleymms.com
BERKLEY OFFSHORE UNDERWRITING MANAGERS
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 618 2950
www.berkleyoffshore.com
Frank A. Costa, President
Houston, Texas
Tel: (832) 547 2900
BERKLEY OFFSHORE UNDERWRITING MANAGERS
UK, LIMITED
Level 13, 52 Lime Street
Eric-Jason Smith, Chief Operating Officer
London EC3M 7AF, United Kingdom
Boston, Massachusetts
Tel: (855) 444 2667
Tel: 44 (0) 20 3943 1400
Greensboro, North Carolina
Tel: (855) 444 2667
R. Christian Walker, Executive Vice President
BERKLEY OIL & GAS
2107 CityWest Boulevard, 8th Floor
Houston, Texas 77042
Tel: (877) 972 2264
www.berkleyoil-gas.com
Carol A. Randall, President
BERKLEY RENEWABLE ENERGY
www.berkleyrenewable.com
BERKLEY ONE
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
Tel: (203) 542 3301
www.berkleyone.com
Kathleen M. Tierney, President
BERKLEY PROFESSIONAL LIABILITY
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 618 2900
www.berkleypro.com
John R. Benedetto, President
London, United Kingdom
Tel: 44 (0) 20 7088 1916
Schaumburg, Illinois
Toronto, Ontario
Tel: (630) 237 3650
Tel: (416) 304 1178
BERKLEY TRANSACTIONAL
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
Tel: (973) 775 7499
www.berkleytransactional.com
Randolph Hein, President
BERKLEY PROGRAM SPECIALISTS
1250 East Diehl Road, Suite 200
Naperville, Illinois 60563
Tel: (630) 210 0360
www.berkley-ps.com
Gregory A. Douglas, President
BERKLEY EQUINE & CATTLE DIVISION
3655 North Point Parkway, Suite 625
Alpharetta, Georgia 30005
Tel: (866) 298 5525
www.berkleyequine.com
Lexington, Kentucky
Tel: (859) 300 8035
BERKLEY PUBLIC ENTITY
200 PrincetonSouth Corporate Center, Suite 280
Ewing, New Jersey 08628
Tel: (844) 972 2736
www.berkleypublicentity.com
Scott R. Barraclough, Chief Executive Officer
Ewing, New Jersey
Tel: (609) 963 3321
BERKLEY RISK
222 South Ninth Street, Suite 2700
Minneapolis, Minnesota 55402
Tel: (612) 766 3000
www.berkleyrisk.com
John M. Goodwin, President
Council Bluffs, Iowa
Denver, Colorado
Nashville, Tennessee
Scottsdale, Arizona
St. Paul, Minnesota
Tel: (800) 832 0137
Tel: (303) 357 2600
Tel: (615) 493 7746
Tel: (602) 996 8810
Tel: (651) 281 1200
BERKLEY SELECT
550 West Jackson Boulevard, Suite 500
Chicago, Illinois 60661
Tel: (312) 800 6200
www.berkleyselect.com
Daniel R. Spragg, President
BERKLEY SOUTHEAST INSURANCE GROUP
1745 North Brown Road, Suite 400
Lawrenceville, Georgia 30043
Tel: (678) 533 3400
www.berkleysig.com
Dennis L. Barger, President
Birmingham, Alabama
Tel: (855) 610 4545
154 | W . R. Berkley Corporation | 2019 Annual Report
Charlotte, North Carolina
Tel: (855) 610 4545
Lawrenceville, Georgia
Meridian, Mississippi
Nashville, Tennessee
Tel: (855) 610 4545
Tel: (855) 610 4545
Tel: (855) 610 4545
BERKLEY SURETY
412 Mount Kemble Avenue, Suite 310N
Morristown, New Jersey 07960
CAROLINA CASUALTY
5011 Gate Parkway
Building 200, Suite 200
Jacksonville, Florida 32256
Tel: (904) 363 0900
www.carolinacas.com
David A. Dunn, President
Tel: (973) 775 5024
www.berkleysurety.com
Andrew M. Tuma, President
Atlanta, Georgia
Blue Bell, Pennsylvania
Centennial, Colorado
Tel: (678) 624 1818
Tel: (610) 729 7606
Tel: (303) 357 2620
Charlotte, North Carolina
Tel: (704) 759 7065
Dallas, Texas
Danvers, Massachusetts
Fulton, Maryland
Houston, Texas
Morristown, New Jersey
Naperville, Illinois
Nashville, Tennessee
New York, New York
Orlando, Florida
Tel: (972) 385 1140
Tel: (978) 539 3303
Tel: (973) 775 5078
Tel: (832) 308 6893
Tel: (973) 775 5021
Tel: (630) 210 0454
Tel: (615) 514 8077
Tel: (212) 882 6390
Tel: (407) 867 4595
San Francisco, California
Tel: (415) 216 0877
CONTINENTAL WESTERN GROUP
11201 Douglas Avenue
Urbandale, Iowa 50322
Tel: (515) 473 3500
www.cwgins.com
Michael A. Lex, President
Denver, Colorado
Lincoln, Nebraska
Luverne, Minnesota
Tel: (800) 235 2942
Tel: (800) 235 2942
Tel: (800) 235 2942
GEMINI TRANSPORTATION UNDERWRITERS
99 Summer Street, Suite 1800
Boston, Massachusetts 02110
Tel: (617) 310 8200
www.geminiunderwriters.com
David R. Lockhart, President
Santa Ana, California
Seattle, Washington
Tampa, Florida
Toronto, Ontario
Urbandale, Iowa
Westbrook, Maine
Tel: (657) 356 2892
Tel: (206) 830 2565
Tel: (813) 392 5962
Tel: (416) 594 4802
Tel: (800) 456 5486
Tel: (207) 228 1922
BERKLEY PRIME TRANSPORTATION
433 South Main Street, Suite 300
West Hartford, Connecticut 06110
Tel: (833) 79 PRIME (77463)
www.berkleyprimetrans.com
Jeanne R. Fenster, President
BERKLEY TECHNOLOGY UNDERWRITERS
222 South Ninth Street, Suite 2550
Minneapolis, Minnesota 55402
Tel: (612) 344 4550
www.berkley-tech.com
Matthew A. Mueller, President
Washington, D.C.
Irvine, California
New York, New York
Tel: (571) 778 6635
Tel: (714) 215 9322
Tel: (516) 987 5901
San Francisco, California
Tel: (415) 216 2202
INTREPID DIRECT INSURANCE
7400 College Boulevard, Suite 350
Overland Park, Kansas 66210
Tel: (877) 249 7181
www.intrepiddirect.com
Bill Strout, President
KEY RISK INSURANCE
7823 National Service Road
Greensboro, North Carolina 27409
Tel: (800) 942 0225
www.keyrisk.com
Scott A. Holbrook, President
MIDWEST EMPLOYERS CASUALTY
14755 North Outer Forty Drive, Suite 300
Chesterfield, Missouri 63017
Tel: (636) 449 7000
www.mecasualty.com
Timothy F. Galvin, President
NAUTILUS INSURANCE GROUP
7233 East Butherus Drive
Scottsdale, Arizona 85260
Tel: (480) 951 0905
www.nautilusinsgroup.com
Thomas M. Kuzma, President and
Chief Executive Officer
PREFERRED EMPLOYERS INSURANCE
9797 Aero Drive, Suite 200
San Diego, California 92123
Tel: (888) 472 9001
www.peiwc.com
Dennis J. Levesque, President
UNION STANDARD INSURANCE GROUP
222 Las Colinas Boulevard W, Suite 1300
Irving, Texas 75039
Tel: (972) 719 2400
www.usic.com
B. Keith Mitchell, President
Albuquerque, New Mexico
Tel: (480) 281 3949
Dallas, Texas
Little Rock, Arkansas
Tel: (972) 719 2463
Tel: (501) 707 6543
Oklahoma City, Oklahoma
Tel: (501) 707 6543
Phoenix, Arizona
San Antonio, Texas
Tel: (480) 281 3949
Tel: (972) 719 2463
VELA INSURANCE SERVICES
550 West Jackson Boulevard, Suite 500
Chicago, Illinois 60661
Tel: (877) 835 2467
www.vela-ins.com
Arthur G. Davis, President
Atlanta, Georgia
Chicago, Illinois
Minneapolis, Minnesota
Naperville, Illinois
New York, New York
Omaha, Nebraska
Scottsdale, Arizona
Tel: (877) 835 2467
Tel: (877) 835 2467
Tel: (877) 835 2467
Tel: (877) 835 2467
Tel: (877) 835 2467
Tel: (877) 835 2467
Tel: (877) 835 2467
VELA INSURANCE SERVICES, LLC
Los Angeles, California
Tel: (213) 417 5452
Walnut Creek, California
Tel: (925) 472 8220
VERUS UNDERWRITING MANAGERS
4820 Lake Brook Drive, Suite 200
Glen Allen, Virginia 23060
Tel: (804) 525 1360
www.verusins.com
Marlo M. Edwards, President
W. R. BERKLEY EUROPEAN HOLDINGS AG
Genferstrasse 23
8002 Zürich, Switzerland
www.berkleyinsurance.li
Mark Talbot, Managing Director
W. R. BERKLEY EUROPE AG
Städtle 35A, P.O. Box 835
9490 Vaduz, Liechtenstein
Tel: 423 237 27 47
Hans-Peter Naef, General Manager
Akersgata 35-39
N-0158 Oslo, Norway
Tel: 47 (0) 23 27 24 00
Birger Jarlsgatan 22, 4 tr
114 34 Stockholm, Sweden
Tel: 46 (8) 410 337 00
Drottninggatan 11
702 10 Örebro, Sweden
Tel: 46 (8) 410 337 00
156 | W . R. Berkley Corporation | 2019 Annual Report
Kaiser-Wilhelm-Ring 27-29
50672 Cologne, Germany
Tel: 49 (0) 221 99386-0
Werner-Eckert-Strasse 14
81829 Munich, Germany
Tel: 49 (0) 89 262042 800
Paseo de la Castellana, 141-Planta 18
28046 Madrid, Spain
Tel: 34 (0) 91 449 26 46
Gran Via de les Corts Catalanes 632
Escalera C, 2o 1a
08007 Barcelona, Spain
Tel: 34 (0) 93 481 47 29
W/R/B UNDERWRITING
W. R. BERKLEY SYNDICATE MANAGEMENT LIMITED
SYNDICATE 1967 AT LLOYD’S
W. R. BERKLEY UK LIMITED
Level 14, 52 Lime Street
London EC3M 7AF, United Kingdom
Tel: 44 (0) 20 3943 1900
www.wrbunderwriting.com
Alastair Blades, President and Chief Executive Officer
Reinsurance and Monoline Excess
BERKLEY RE
www.berkleyre.com
BERKLEY RE AMERICA
Three Stamford Plaza
301 Tresser Boulevard, 7th Floor
Stamford, Connecticut 06901
Tel: (203) 905 4444
Daniel R. Westcott, President
BERKLEY RE AUSTRALIA
Level 7, 321 Kent Street
Sydney NSW 2000, Australia
Tel: 61 (2) 8117 2100
Level 10, 340 Adelaide Street
Brisbane QLD 4000, Australia
Tel: 61 (7) 3175 0200
Level 10, 350 Collins Street
Melbourne VIC 3000, Australia
Tel: 61 (3) 9607 8404
Tony Piper, Chief Executive Officer,
Australia and New Zealand
BERKLEY RE BEIJING
Room 4901, China World Tower B
No. 1 Jian Guo Men Wai Avenue
Beijing 100004, China
Tel: (86) 108 526 4826
BERKLEY RE HONG KONG
Room 4407, 44/F Hopewell Centre
183 Queen’s Road East
Wan Chai, Hong Kong
Tel: (852) 3120 7000
BERKLEY RE SINGAPORE
18 Cross Street
Unit 09-04, Cross Street Exchange
Singapore 048423, China
Tel: (65) 6671 2070
Glen Riddell, Chief Executive Officer, Asia
BERKLEY RE SOLUTIONS
Three Stamford Plaza
301 Tresser Boulevard, 9th Floor
Stamford, Connecticut 06901
Tel: (800) 974 5714
Gregory A. Douglas, President
Dublin, Ohio
Johns Creek, Georgia
Lakewood, Ohio
Tel: (800) 606 8360
Tel: (800) 348 4229
Tel: (216) 978 1652
Philadelphia, Pennsylvania
Tel: (800) 519 6341
Walnut Creek, California
Tel: (800) 970 2550
BERKLEY RE UK LIMITED
Level 17, 52 Lime Street
London EC3M 7AF, United Kingdom
Tel: 44 (0) 20 3943 1000
Richard Fothergill, Chief Executive Officer
Service Operations
BERKLEY CAPITAL, LLC
600 Brickell Avenue, 39th Floor
Miami, Florida 33131
Tel: (786) 450 5510
Frank T. Medici, President
BERKLEY DEAN & COMPANY, INC.
475 Steamboat Road
Greenwich, Connecticut 06830
Tel: (203) 629 3000
James G. Shiel, President
BERKLEY TECHNOLOGY SERVICES LLC
101 Bellevue Parkway
Wilmington, Delaware 19809
Tel: (302) 439 2000
James B. Gilbert, President
Des Moines, Iowa
Tel: (515) 564 2300
W. R. Berkley Corporation’s operating units conduct
business through the following insurance entities:
Acadia Insurance Company; Admiral Indemnity Company;
Admiral Insurance Company; Berkley Argentina de
Reaseguros S.A.; Berkley Assurance Company; Berkley
Casualty Company; Berkley Insurance Company; Berkley
International Aseguradora de Riesgos del Trabajo S.A.;
Berkley International do Brasil Seguros S.A.; Berkley
International Fianzas México, S.A. de C.V.; Berkley
International Seguros Colombia S.A.; Berkley International
Seguros México, S.A. de C.V.; Berkley International
Seguros S.A.; Berkley International Seguros S.A. (Uruguay);
Berkley Life and Health Insurance Company; Berkley
National Insurance Company; Berkley Regional Insurance
Company; Berkley Specialty Insurance Company; Carolina
Casualty Insurance Company; Clermont Insurance
Company; Continental Western Insurance Company; East
Isles Reinsurance, Ltd.; Firemen’s Insurance Company of
Washington, D.C.; Gemini Insurance Company; Great Divide
Insurance Company; Greenwich Knight Insurance Company,
Ltd.; Intrepid Insurance Company;
Key Risk Insurance Company; Midwest Employers Casualty
Company; Nautilus Insurance Company; Preferred Employers
Insurance Company; Queen’s Island Insurance Company,
Ltd.; Riverport Insurance Company; StarNet Insurance
Company; Syndicate 1967 at Lloyd’s; Tri-State Insurance
Company of Minnesota; Union Insurance Company; Union
Standard Lloyds; W. R. Berkley Europe AG.
158 | W . R. Berkley Corporation | 2019 Annual Report
Directors
William R. Berkley
Executive Chairman
W. Robert Berkley, Jr.
President and Chief Executive Officer
Christopher L. Augostini
Executive Vice President - Business
Emory University
Ronald E. Blaylock
Managing Partner
GenNx360 Capital Partners
Mark E. Brockbank
Retired Chief Executive Officer
XL Brockbank Ltd.
Mary C. Farrell
President, The Howard Gilman Foundation
Retired Managing Director, Chief Investment Strategist
UBS Wealth Management USA
María Luisa Ferré
President and Chief Executive Officer
FRG, Inc.
Jack H. Nusbaum
Senior Partner
Willkie Farr & Gallagher LLP
Leigh Ann Pusey
Senior Vice President, Corporate Affairs
and Communications, Eli Lilly and Company
Mark L. Shapiro
Private Investor
Jonathan Talisman
Managing Partner
Capitol Tax Partners
Officers
William R. Berkley
Executive Chairman
W. Robert Berkley, Jr.
President and Chief Executive Officer
Richard M. Baio
Executive Vice President – Chief Financial Officer
and Treasurer
James B. Gilbert
Executive Vice President – Enterprise Technology
Ira S. Lederman
Executive Vice President – Secretary
Lucille T. Sgaglione
Executive Vice President
James G. Shiel
Robert D. Stone
Executive Vice President
Joseph L. Sullivan
Executive Vice President
Nelson Tavares
Executive Vice President
Kathleen M. Tierney
Executive Vice President
Jared E. Abbey
Senior Vice President – Corporate Strategy
and Development
Marina S. Barg
Senior Vice President – Claims
Melissa M. Emmendorfer
Executive Vice President – Investments
Senior Vice President – Insurance Risk Management
Philip S. Welt
Michele L. Fleckenstein
Executive Vice President – General Counsel
Senior Vice President – Underwriting and Analytics
James P. Bronner
Executive Vice President
John K. Goldwater
Executive Vice President
Jeffrey M. Hafter
Executive Vice President
Robert C. Hewitt
Executive Vice President
Michael J. Maloney
Executive Vice President
William M. Rohde, Jr.
Executive Vice President
Robert W. Standen
Executive Vice President
Paul J. Hancock
Senior Vice President – Chief Corporate Actuary
Gillian James
Senior Vice President – Enterprise Risk Management
Peter L. Kamford
Senior Vice President
Carol J. LaPunzina
Senior Vice President – Human Resources
Edward F. Linekin
Senior Vice President – Investments
A. Scott Mansolillo
Senior Vice President – Chief Compliance Officer
Mir Mazhar
Senior Vice President – Chief Project Officer
160 | W . R. Berkley Corporation | 2019 Annual Report
ANNUAL MEETING
The Annual Meeting of Stockholders of W. R. Berkley
Corporation will be held at 1:30 p.m. on June 12, 2020 at the
offices of W. R. Berkley Corporation, 475 Steamboat Road,
Greenwich, Connecticut 06830.
SHARES TRADED
Common Stock of W. R. Berkley Corporation is traded on the
New York Stock Exchange.
Symbol: WRB
TRANSFER AGENT AND REGISTRAR
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, Minnesota 55120-4100
Tel: (800) 468 9716
www.shareowneronline.com
WEBSITE
For additional information, including press releases, visit our
website at: www.berkley.com
Follow us on Twitter @WRBerkleyCorp
AUDITORS
KPMG LLP, New York, New York
OUTSIDE COUNSEL
Willkie Farr & Gallagher LLP, New York, New York
The W. R. Berkley Corporation 2019 Annual Report editorial
sections are printed on recycled paper made from fiber sourced
from well-managed forests and other controlled wood sources
and is independently certified to the Forest Stewardship Council™
(FSC®) standards.
© Copyright 2020 W. R. Berkley Corporation. All rights reserved.
" Always do right.
This will gratify
some people and
astonish the rest."
—Mark Twain
ON THE COVER:
MULTICOLOURED ORION/ORION MULTICOLORE
VICTOR VASARELY
W. R. BERKLEY CORPORATION
475 Steamboat Road, Greenwich, CT 06830
203.629.3000 www.berkley.com
@WRBerkleyCorp
© Copyright 2020 W. R. Berkley Corporation.
All rights reserved.
W
.
R
.
B
E
R
K
L
E
Y
C
O
R
P
O
R
A
T
I
O
N
|
2
0
1
9
A
N
N
U
A
L
R
E
P
O
R
T