Greenwich, Conn.-based insurer W.R. Berkley addressed the possibility of a sale yesterday as the firm reported second-quarter net income fell 58 percent primarily on storm and investment losses.
The company reported net income was down more than $110 million to $80 million for the second quarter of this year compared to last. This translated into earnings per share loss of 46 cents a share, down from 93 cents a share from the comparative period. The results were on revenues of $1.2 billion, down 14 percent, or $187 million from the same period last year.
During a conference call, Chairman and Chief Executive Officer William R. Berkley, when asked about his interest in selling the company, said he is willing to talk to anyone who is willing to create shareholder value, but that neither he nor his son would work for anyone else.
For the six months, net income dropped 29 percent, or $110 million, to $269 million, which resulted in an earnings per share drop of 36 cents a share to $1.50. Revenues fell 6 percent, or $171 million, to $2.57 billion.
CEO Berkley said in a statement that the second quarter was acceptable. He said continued underwriting discipline along with soft market conditions resulted in writing less premium.
Underwriting margins were compressed, he said, because of the more competitive environment and the impact of storm losses amounting to $15 million more than the prior period.
"We continue to buy back stock and invest in new opportunities to better position ourselves for the inevitable turn in the insurance cycle," said Mr. Berkley. "We would not expect this to take place for at least eighteen months."
The company showed a loss of more than $8 million on a write-down of its investment in Fannie Mae and Freddie Mac securities. The company holds more than $1.3 billion in investments in the debt obligations.
During yesterday's conference call, Mr. Berkley said he is more optimistic that there will be a market turn sometime in the first or second quarter of 2010 than he was 10 months ago. He reasoned that the combined ratio will rise, possibly as much as 109 to 110 in 2009 as an industry whole.
In other remarks concerning the possibility that the insurer might be sold, he said that at the rate the company is buying back stock it will eventually become a private company. He noted that he holds 19 percent of the company's shares.
"If they want to call me, I'll talk to them," he said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.