filings.toolsItem 16. FORM 10-K Summary
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Item 16. FORM 10-K Summary
None.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
W. R. Berkley Corporation:
Under date of February 27, 2017, we reported on the consolidated balance sheets of W. R. Berkley Corporation and subsidiaries as of December 31, 2016 and 2015, and 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, 2016, which are included in the Annual Report on Form 10-K for the year ended December 31, 2016. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules II through VI. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/S/ KPMG LLP
New York, New York
February 27, 2017
Schedule II
W. R. Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)
| December 31, | |||||||
| (In thousands) | 2016 | 2015 | |||||
| Assets: | |||||||
| Cash and cash equivalents | $ | 124,803 | $ | 195,658 | |||
| Fixed maturity securities available for sale at fair value (cost $899,206 and $201,256 at December 31, 2016 and 2015, respectively) | 894,748 | 201,738 | |||||
| Loans receivable | 23,419 | — | |||||
| Equity securities available for sale, at fair value (cost $3,430 in 2016 and 2015) | 3,430 | 3,430 | |||||
| Investment in subsidiaries | 6,891,246 | 6,454,065 | |||||
| Deferred federal income taxes | — | 37,135 | |||||
| Current federal income taxes | 15,455 | 51,512 | |||||
| Property, furniture and equipment at cost, less accumulated depreciation | 14,798 | 13,150 | |||||
| Other assets | 7,122 | 6,153 | |||||
| Total assets | $ | 7,975,021 | $ | 6,962,841 | |||
| Liabilities and stockholders’ equity | |||||||
| Liabilities: | |||||||
| Due to subsidiaries | $ | 234,014 | $ | 143,669 | |||
| Other liabilities | 120,160 | 115,737 | |||||
| Deferred federal income taxes | 90,966 | — | |||||
| Subordinated debentures | 727,630 | 340,320 | |||||
| Senior notes | 1,755,043 | 1,762,869 | |||||
| Total liabilities | 2,927,813 | 2,362,595 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | 47,024 | 47,024 | |||||
| Additional paid-in capital | 1,037,446 | 1,005,455 | |||||
| Retained earnings (including accumulated undistributed net income of subsidiaries of $4,850,878 and $4,746,934 at December 31, 2016 and 2015, respectively) | 6,595,987 | 6,178,070 | |||||
| Accumulated other comprehensive income (loss) | 55,568 | (66,698 | ) | ||||
| Treasury stock, at cost | (2,688,817 | ) | (2,563,605 | ) | |||
| Total stockholders’ equity | 5,047,208 | 4,600,246 | |||||
| Total liabilities and stockholders’ equity | $ | 7,975,021 | $ | 6,962,841 |
See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.
Schedule II, Continued
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Income (Parent Company)
| Year Ended December 31, | |||||||||||
| (In thousands) | 2016 | 2015 | 2014 | ||||||||
| Management fees and investment income including dividends from subsidiaries of $700,664, $642,421 and $503,483 for the years ended December 31, 2016, 2015 and 2014, respectively | $ | 726,742 | $ | 655,318 | $ | 515,775 | |||||
| Net investment gains | 909 | 696 | 5,487 | ||||||||
| Other income | 376 | 348 | 450 | ||||||||
| Total revenues | 728,027 | 656,362 | 521,712 | ||||||||
| Operating costs and expense | 171,967 | 143,391 | 148,288 | ||||||||
| Interest expense | 139,216 | 128,248 | 125,352 | ||||||||
| Income before federal income taxes | 416,844 | 384,723 | 248,072 | ||||||||
| Federal income taxes: | |||||||||||
| Federal income taxes provided by subsidiaries on a separate return basis | 327,520 | 272,180 | 366,721 | ||||||||
| Federal income tax expense on a consolidated return basis | (246,389 | ) | (199,322 | ) | (273,310 | ) | |||||
| Net expense | 81,131 | 72,858 | 93,411 | ||||||||
| Income before undistributed equity in net income of subsidiaries | 497,975 | 457,581 | 341,483 | ||||||||
| Equity in undistributed net income of subsidiaries | 103,941 | 46,113 | 307,401 | ||||||||
| Net income | $ | 601,916 | $ | 503,694 | $ | 648,884 |
See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.
Schedule II, Continued
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Cash Flows (Parent Company)
| Year Ended December 31, | |||||||||||
| (In thousands) | 2016 | 2015 | 2014 | ||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 601,919 | $ | 503,694 | $ | 648,884 | |||||
| Adjustments to reconcile net income to net cash from operating activities: | |||||||||||
| Net investment gains | 3,649 | (696 | ) | (5,487 | ) | ||||||
| Depreciation and amortization | 2,744 | 2,693 | 2,916 | ||||||||
| Equity in undistributed earnings of subsidiaries | (103,944 | ) | (46,113 | ) | (307,401 | ) | |||||
| Tax payments received from subsidiaries | 414,386 | 311,482 | 462,809 | ||||||||
| Federal income taxes provided by subsidiaries on a separate return basis | (327,520 | ) | (272,180 | ) | (366,721 | ) | |||||
| Stock incentive plans | 37,174 | 29,725 | 28,068 | ||||||||
| Change in: | |||||||||||
| Federal income taxes | 44,839 | 51,772 | (15,239 | ) | |||||||
| Other assets | 1,772 | 301 | (364 | ) | |||||||
| Other liabilities | (88,282 | ) | (92,752 | ) | (39,780 | ) | |||||
| Accrued investment income | (2,743 | ) | 524 | (820 | ) | ||||||
| Net cash from operating activities | 583,994 | 488,450 | 406,865 | ||||||||
| Cash from (used in) investing activities: | |||||||||||
| Proceeds from sales of fixed maturity securities | 373,252 | 380,986 | 289,683 | ||||||||
| Proceeds from maturities and prepayments of fixed maturity securities | 210,904 | 123,639 | 103,646 | ||||||||
| Proceeds from sales of equity securities | — | 308 | 7,356 | ||||||||
| Cost of purchases of fixed maturity securities | (1,285,101 | ) | (432,645 | ) | (605,768 | ) | |||||
| Change in loans receivable | (23,419 | ) | — | — | |||||||
| Cost of acquired companies | — | — | (82,879 | ) | |||||||
| Investments in and advances to subsidiaries, net | 11,471 | 30,338 | 34,191 | ||||||||
| Change in balance due to security broker | — | — | (2,151 | ) | |||||||
| Net additions to real estate, furniture & equipment | (3,042 | ) | (4,425 | ) | (1,615 | ) | |||||
| Net cash from (used in) investing activities | (715,935 | ) | 98,201 | (257,537 | ) | ||||||
| Cash from (used in) financing activities: | |||||||||||
| Net proceeds from issuance of senior notes | 386,830 | — | 344,472 | ||||||||
| Repayment of senior notes | (9,353 | ) | (200,000 | ) | — | ||||||
| Purchase of common treasury shares | (132,392 | ) | (223,652 | ) | (238,933 | ) | |||||
| Cash dividends to common stockholders | (183,999 | ) | (58,034 | ) | (181,489 | ) | |||||
| Net cash from (used in) financing activities | 61,086 | (481,686 | ) | (75,950 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | (70,855 | ) | 104,965 | 73,378 | |||||||
| Cash and cash equivalents at beginning of year | 195,658 | 90,693 | 17,315 | ||||||||
| Cash and cash equivalents at end of year | $ | 124,803 | $ | 195,658 | $ | 90,693 |
See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
December 31, 2016
Note to Condensed Financial Statements (Parent Company)
The accompanying condensed financial statements should be read in conjunction with the notes to consolidated financial statements included elsewhere herein. Reclassifications have been made in the 2015 and 2014 financial statements as originally reported to conform them to the presentation of the 2016 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.
Schedule III
W. R. Berkley Corporation and Subsidiaries
Supplementary Insurance Information
December 31, 2016, 2015 and 2014
| (In thousands) | Deferred Policy Acquisition Cost | Reserve for Losses and Loss Expenses | Unearned Premiums | Net Premiums Earned | Net Investment Income | Loss and Loss Expenses | Amortization of Deferred Policy Acquisition Cost | Other Operating Costs and Expenses | Net Premiums Written | ||||||||||||||||||||||||||
| December 31, 2016 | |||||||||||||||||||||||||||||||||||
| Insurance | $ | 446,875 | $ | 9,747,934 | $ | 2,993,063 | $ | 5,652,903 | $ | 455,139 | $ | 3,449,857 | $ | 964,838 | $ | 968,611 | $ | 5,775,913 | |||||||||||||||||
| Reinsurance | 91,015 | 1,449,261 | 290,237 | 640,445 | 78,967 | 395,943 | 191,116 | 57,552 | 648,000 | ||||||||||||||||||||||||||
| Corporate and adjustments | — | — | — | — | 30,057 | — | — | 213,502 | — | ||||||||||||||||||||||||||
| Total | $ | 537,890 | $ | 11,197,195 | $ | 3,283,300 | $ | 6,293,348 | $ | 564,163 | $ | 3,845,800 | $ | 1,155,954 | $ | 1,239,665 | $ | 6,423,913 | |||||||||||||||||
| December 31, 2015 | |||||||||||||||||||||||||||||||||||
| Insurance | $ | 430,664 | $ | 9,248,306 | $ | 2,854,461 | $ | 5,431,500 | $ | 410,457 | $ | 3,300,283 | $ | 929,982 | $ | 931,586 | $ | 5,591,397 | |||||||||||||||||
| Reinsurance | 82,464 | 1,420,844 | 282,672 | 609,109 | 74,226 | 355,987 | 172,510 | 59,986 | 598,118 | ||||||||||||||||||||||||||
| Corporate and adjustments | — | — | — | — | 27,962 | — | — | 195,686 | — | ||||||||||||||||||||||||||
| Total | $ | 513,128 | $ | 10,669,150 | $ | 3,137,133 | $ | 6,040,609 | $ | 512,645 | $ | 3,656,270 | $ | 1,102,492 | $ | 1,187,258 | $ | 6,189,515 | |||||||||||||||||
| December 31, 2014 | |||||||||||||||||||||||||||||||||||
| Insurance | $ | 408,161 | $ | 8,856,715 | $ | 2,727,257 | $ | 5,074,308 | $ | 484,039 | $ | 3,075,007 | $ | 884,018 | $ | 880,087 | $ | 5,345,663 | |||||||||||||||||
| Reinsurance | 80,364 | 1,512,986 | 299,475 | 670,110 | 88,821 | 415,560 | 169,379 | 58,315 | 651,284 | ||||||||||||||||||||||||||
| Corporate and adjustments | — | — | — | — | 28,025 | — | — | 165,657 | — | ||||||||||||||||||||||||||
| Total | $ | 488,525 | $ | 10,369,701 | $ | 3,026,732 | $ | 5,744,418 | $ | 600,885 | $ | 3,490,567 | $ | 1,053,397 | $ | 1,104,059 | $ | 5,996,947 |
See accompanying Report of Independent Registered Public Accounting Firm.
Schedule IV
W. R. Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2016, 2015 and 2014
| Premiums Written | ||||||||||||||||||
| (In thousands, other than percentages) | Direct Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | Percentage of Amount Assumed to Net | |||||||||||||
| Year ended December 31, 2016: | ||||||||||||||||||
| Insurance | $ | 6,634,540 | $ | 1,059,149 | $ | 200,522 | $ | 5,775,913 | 3.5 | % | ||||||||
| Reinsurance | 13,060 | 60,639 | 695,579 | 648,000 | 107.3 | % | ||||||||||||
| Total | $ | 6,647,600 | $ | 1,119,788 | $ | 896,101 | $ | 6,423,913 | 13.9 | % | ||||||||
| Year ended December 31, 2015: | ||||||||||||||||||
| Insurance | $ | 6,395,806 | $ | 1,016,095 | $ | 211,686 | $ | 5,591,397 | 3.8 | % | ||||||||
| Reinsurance | 16,727 | 44,383 | 625,774 | 598,118 | 104.6 | % | ||||||||||||
| Total | $ | 6,412,533 | $ | 1,060,478 | $ | 837,460 | $ | 6,189,515 | 13.5 | % | ||||||||
| Year ended December 31, 2014: | ||||||||||||||||||
| Insurance | $ | 6,142,648 | $ | 1,022,287 | $ | 225,302 | $ | 5,345,663 | 4.2 | % | ||||||||
| Reinsurance | 42,594 | 43,604 | 652,294 | 651,284 | 100.2 | % | ||||||||||||
| Total | $ | 6,185,242 | $ | 1,065,891 | $ | 877,596 | $ | 5,996,947 | 14.6 | % |
See accompanying Report of Independent Registered Public Accounting Firm.
Schedule V
W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2016, 2015 and 2014
| (In thousands) | Opening Balance | Additions- Charged to Expense | Deduction- Amounts Written Off | Ending Balance | |||||||||||
| Year ended December 31, 2016: | |||||||||||||||
| Premiums and fees receivable | $ | 22,524 | $ | 10,006 | $ | (5,961 | ) | $ | 26,569 | ||||||
| Due from reinsurers | 1,020 | 20 | 9 | 1,049 | |||||||||||
| Deferred federal and foreign income taxes | 4,037 | 1,420 | — | 5,457 | |||||||||||
| Loan loss reserves | 2,094 | 1,303 | — | 3,397 | |||||||||||
| Total | $ | 29,675 | $ | 12,749 | $ | (5,952 | ) | $ | 36,472 | ||||||
| Year ended December 31, 2015: | |||||||||||||||
| Premiums and fees receivable | $ | 21,446 | $ | 6,281 | $ | (5,203 | ) | $ | 22,524 | ||||||
| Due from reinsurers | 1,144 | (24 | ) | (100 | ) | 1,020 | |||||||||
| Deferred federal and foreign income taxes | 1,335 | 2,702 | — | 4,037 | |||||||||||
| Loan loss reserves | 2,486 | (392 | ) | — | 2,094 | ||||||||||
| Total | $ | 26,411 | $ | 8,567 | $ | (5,303 | ) | $ | 29,675 | ||||||
| Year ended December 31, 2014: | |||||||||||||||
| Premiums and fees receivable | $ | 20,951 | $ | 5,944 | $ | (5,449 | ) | $ | 21,446 | ||||||
| Due from reinsurers | 1,385 | 301 | (542 | ) | 1,144 | ||||||||||
| Deferred federal and foreign income taxes | — | 1,335 | — | 1,335 | |||||||||||
| Loan loss reserves | 2,087 | 399 | — | 2,486 | |||||||||||
| Total | $ | 24,423 | $ | 7,979 | $ | (5,991 | ) | $ | 26,411 |
See accompanying Report of Independent Registered Public Accounting Firm.
Schedule VI
W. R. Berkley Corporation and Subsidiaries
Supplementary Information Concerning Property-Casualty Insurance Operations
Years Ended December 31, 2016, 2015 and 2014
| (In thousands) | 2016 | 2015 | 2014 | ||||||||
| Deferred policy acquisition costs | $ | 537,890 | $ | 513,128 | $ | 488,525 | |||||
| Reserves for losses and loss expenses | 11,197,195 | 10,669,150 | 10,369,701 | ||||||||
| Unearned premiums | 3,283,300 | 3,137,133 | 3,026,732 | ||||||||
| Net premiums earned | 6,293,348 | 6,040,609 | 5,744,418 | ||||||||
| Net investment income | 564,163 | 512,645 | 600,885 | ||||||||
| Losses and loss expenses incurred: | |||||||||||
| Current year | 3,826,620 | 3,653,561 | 3,495,825 | ||||||||
| Prior years | (29,904 | ) | (46,713 | ) | (75,764 | ) | |||||
| Loss reserve discount accretion | 49,084 | 49,422 | 70,506 | ||||||||
| Amortization of deferred policy acquisition costs | 1,155,954 | 1,102,492 | 1,053,397 | ||||||||
| Paid losses and loss expenses | 3,454,174 | 3,257,015 | 3,115,227 | ||||||||
| Net premiums written | 6,423,913 | 6,189,515 | 5,996,947 |
See accompanying Report of Independent Registered Public Accounting Firm.
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