Fitch Ratings Affirms W.R. Berkley.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the fixed income ratings on W.R. Berkley Corporation (Berkley). In addition, the insurer financial strength ratings of Berkley's major insurance underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. subsidiaries were also affirmed. A full rating list is shown below. The Rating Outlook is Stable. The rating action is based on Berkley's performance and credit position aligning with Fitch's expectations. Berkley's strengths include a diverse source of operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , strong niche market A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. positions in several lines, flexible operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. which allows for quick market entrance and exit, good long-term financial results and niche underwriting focus. In recent favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, Berkley has recorded very strong operating results. This follows a five-year period ending in 2001 during which Berkley's aggregated earnings were just slightly above break-even. Recent results indicate that Berkley's operating results are above average in favorable market conditions and below average in soft market conditions. Berkley maintains above average leverage risk - financial and operational - on its balance sheet. Further, continued reserve strengthening indicates reported financial and operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. ratios have been understated in recent periods. The leverage concerns are compounded by Berkley's modest capitalization of its insurance subsidiaries. The largest domestic insurance subsidiary's statutory capitalization is often near regulatory minimums as defined by the NAIC NAIC See National Association of Investors Corporation (NAIC). risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. . Along with Fitch's opinion that operating results and balance sheet measures will fluctuate, Berkley is also expected to generate very strong earnings in favorable markets. As such, the company's underwriting and profitability performance is expected to report very strong results during the remainder of 2004 and into 2005. Reported financial leverage will remain in the 25%-35% range long-term and subsidiary surplus and regulatory capital ratio levels are not expected to weaken. Note: These ratings were initiated by Fitch as a service to users of Fitch ratings. The ratings are based primarily on public information. Entity/Issue/Type Action Rating/Outlook W.R. Berkley Corporation --Long-term issuer Affirm 'BBB'/Stable; --$40 million 6.375% notes due 2005 --$100 million 6.25% notes due 2006 --$89 million 9.875% notes due 2008 --$150 million 5.125% notes due 2010 --$200 million 5.875% notes due 2013 --$150 million 6.15% notes due 2019 --$77 million 8.7% notes due 2022 --$12 million 7.65% notes due 2023 --Senior debt Affirm 'BBB'/Stable. W.R. Berkley Capital Trust --Trust preferred securities Affirm 'BBB-'/Stable. Berkley Insurance Company --Insurer financial strength Affirm 'A+'/Stable. Berkley Regional Insurance Company --Insurer financial strength Affirm 'A+'/Stable. Admiral Insurance Company --Insurer financial strength Affirm 'A+'/Stable. |
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