W. R. Berkley Corporation reported net income for the second quarter of 2017 of $109 million, or $0.85 per share. Second quarter highlights included:
- Pre-tax return on equity was 12.7%.
- Total capital returned to shareholders was $78 million, including $61 million of special dividends.
- Before ordinary and special dividends, book value per share grew 3.5%.
- The combined ratio was 95.1%, inclusive of 2.1 loss ratio points from catastrophes and 0.7 loss ratio points from non-catastrophe weather.
- Investment income increased 4.8%.
- Net realized investment gains were $40 million pre-tax and $26 million, or $0.20 per share, after-tax.
- We established a surety and specialty commercial insurance business in Mexico.
The company commented:
We continue to manage our business with a focus on creating long-term value for our shareholders. In the second quarter of 2017, book value grew at an annualized rate of 14% before dividends, and we declared a $0.50 special dividend to shareholders.
Market conditions are increasingly competitive, especially in the reinsurance business. We are willing to sacrifice growth in order to achieve underwriting profits and adequate returns. The combined ratio of 95.1%, including 2.8 points from weather-related losses, remained stable despite the competitive environment. We continue to see new opportunities in specialized areas.
Investment income, including realized gains, grew 30% year-over-year to $176 million. While our total return approach in our portfolio has resulted in more variability from quarter to quarter, it has provided improved returns overall. We expect the previously announced pre-tax gain of approximately $120 million from the sale of a real estate investment to contribute to our third quarter results.
Over the past five years, growth in book value per share before dividends and share repurchases has averaged 12%. Our focus continues to be on delivering value to shareholders through building book value as well as returning excess capital to shareholders.