W. R. Berkley is a holding company with a full basket. The firm offers an assortment of commercial property/casualty insurance across five segments. Its specialty insurance segment underwrites complex third-party liability risks, especially excess and surplus lines, professional liability, and commercial transportation insurance. Its regional segment offers commercial insurance focused on small to midsized business customers and state and local governments through regional subsidiaries. The alternative markets segment develops self-insuring programs aimed at employers and employer groups. Berkley also does a bit of reinsurance and, increasingly, international property/casualty underwriting in about 40 countries.
Each of the company's decentralized units focus on specific niches. Berkley's specialty insurance segment accounts for a little more than 30% of revenues; its high-risk coverage products are sold directly and through brokers to a wide variety of clients. New units created to serve niches include Gemini Transportation Underwriters (2009) to provide excess liability coverage for trucking and railroad operators, and Verus Underwriting Managers (2010), to provide excess and surplus lines.
Its regional products segment accounts for more than 20% of sales. Its product offerings are sold through a network of independent agents. The segment is divided into geographic regions led by Continental Western Group in the Midwest, Acadia Insurance in New England, Union Standard Insurance Group in the South, and Berkley Mid Atlantic Group in the mid-Atlantic region. A fifth regional unit was formed to cover the Northwest in 2009 when Berkley North Pacific Group was split off from Continental Western. The regional division also offers some surety bonds and commercial excess and surplus coverage nationwide through regional offices and contracted agents.
Although international business accounts for a modest portion of Berkley's revenues, it has steadily increased and in 2011 accounted for about 13% of total revenues. The segment's South American business writes both commercial and personal insurance, while its business in the UK and other European countries offers only commercial property/casualty products. In 2009 the company formed a Canadian subsidiary, and it added a Lloyd's of London property/casualty underwriting syndicate to its European division the previous year.
In fiscal 2011 the company's revenues of $5.16 billion represented a more than 9% increase over 2010. Berkley's net income declined by 12% to $394.8 million. The increase in revenues was largely due to new product offerings and expansion into new markets, an 8% increase in premiums earned, increased business in its international and specialty segments, and increased gains on investments, which more than doubled from the previous year. The drop in net income was attributable to decreased underwriting income due to increased catastrophe losses of $72 million and a $52 million decrease in favorable prior-year reserve development.
Strategically, Berkley's decentralized structure promotes the development of specialized expertise in a range of areas and enables the company to adapt to cyclical market conditions and insulate itself from great risk. While the company has made a handful of acquisitions through the years, it prefers to expand by forming new operating units after identifying needs in specific areas. The company also focuses on such growing world markets as South America, Australia, the Asia/Pacific region, and Norway. Additionally, Berkley exercises insightful discretion in exiting insurance lines as demand diminishes.
Chairman and CEO William R. Berkley founded the enterprise in 1967 and owns almost 19% of the company. His son, W. Robert Berkley Jr., is the firm's president and COO. – less