W. R. Berkley Corporation Reports Second Quarter Results

Net Income $80 Million / Operating Return on Equity 15%
GREENWICH, Conn.--(Business Wire)--
W. R. Berkley Corporation (NYSE: WRB) today reported operating
income for the second quarter of 2008 of 77 cents per share, or $134
million, compared with 92 cents per share, or $187 million, for the
corresponding quarter of 2007. Net income for the second quarter of
2008 was 46 cents per share, or $80 million, compared with 93 cents
per share, or $191 million, for the second quarter of 2007. Operating
income is a non-GAAP financial measure defined by the Company as net
income excluding realized investment gains and losses.

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Summary Financial Data
(Amounts in thousands, except per share data)

Second Quarter Six Months
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------

Gross premiums written $1,114,810 $1,265,679 $2,399,983 $2,649,041
Net premiums written 991,549 1,136,764 2,149,114 2,391,536

Net income 80,257 190,633 268,695 379,059
Net income per diluted
share 0.46 0.93 1.50 1.86

Operating income 133,677 187,216 287,003 370,846
Operating income per
diluted share 0.77 0.92 1.61 1.82
*T

Second quarter highlights included:

-- Operating return on equity was 15.0% on an annualized basis.

-- GAAP combined ratio was 93.2%, inclusive of abnormal
weather-related losses.

-- Paid loss ratio was 52.8%.

-- The Company repurchased 7 million shares of its common stock.

Commenting on the Company's activities, William R. Berkley,
chairman and chief executive officer, said: "The Company had
acceptable second quarter results with a 15% after tax return on
equity and a combined ratio of 93.2%. Continued underwriting
discipline along with further price deterioration resulted in our
writing less premiums. Furthermore, our underwriting margins were
compressed as a consequence of the more competitive environment and
the impact of storm losses which were $15 million more than the prior
year period.

"Our investment income and yield both improved from the first
quarter of 2008 despite substantial share repurchases and lower
returns from one of our limited partnership investments. In addition,
we recognized an "other than temporary" market decline for preferred
stocks of certain financial institutions resulting in a realized
investment loss for the quarter.

"We continue to buy back stock and invest in new opportunities to
better position ourselves for the inevitable turn in the insurance
cycle. We would not expect this to take place for at least eighteen
months. We continue to anticipate achieving returns in excess of 15%
after tax, although the accelerating deterioration in margins may make
2009 more challenging than even a few months ago," Mr. Berkley
concluded.

Webcast Conference Call

The Company will hold its quarterly conference call with analysts
and investors to discuss its earnings and other information on
Thursday, July 24, 2008 at 8:30 a.m. eastern time. The conference call
will be webcast live on the Company's website at www.wrberkley.com. A
recording of the call will be available on the Company's website
approximately two hours after the end of the conference call.

About W. R. Berkley Corporation

Founded in 1967, W. R. Berkley Corporation is an insurance holding
company that is among the largest commercial lines writers in the
United States and operates in five segments of the property casualty
insurance business: specialty insurance, regional property casualty
insurance, alternative markets, reinsurance and international.

Forward Looking Information

This is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995. Any forward-looking statements
contained herein, including statements related to our outlook for the
industry and for our performance for the year 2008 and beyond, are
based upon the Company's historical performance and on current plans,
estimates and expectations. The inclusion of this forward-looking
information should not be regarded as a representation by us or any
other person that the future plans, estimates or expectations
contemplated by us will be achieved. They are subject to various risks
and uncertainties, including but not limited to, the cyclical nature
of the property casualty industry, the long-tail and potentially
volatile nature of the insurance and reinsurance business, product
demand and pricing, claims development and the process of estimating
reserves, the uncertain nature of damage theories and loss amounts,
natural and man-made catastrophic losses, including as a result of
terrorist activities, the impact of significant and increasing
competition, the success of our new ventures or acquisitions and the
availability of other opportunities, the availability of reinsurance,
exposure as to coverage for terrorist acts, our retention under the
Terrorism Risk Insurance Program Reauthorization Act of 2007
("TRIPRA"), the ability of our reinsurers to pay reinsurance
recoverables owed to us, investment risks, including those of our
portfolio of fixed income securities and investments in equity
securities, including investments in financial institutions, merger
arbitrage investments, exchange rate and political risks relating to
our international operations, legislative and regulatory developments,
including those related to alleged anti-competitive or other improper
business practices in the insurance or reinsurance industry, changes
in the ratings assigned to us by ratings agencies, the availability of
dividends from our insurance company subsidiaries, our ability to
attract and retain qualified employees, and other risks detailed from
time to time in the Company's filings with the Securities and Exchange
Commission. These risks could cause actual results of the industry or
our actual results for the year 2008 and beyond to differ materially
from those expressed in any forward-looking statement made by or on
behalf of the Company. Any projections of growth in the Company's net
premiums written and management fees would not necessarily result in
commensurate levels of underwriting and operating profits.
Forward-looking statements speak only as of the date on which they are
made, and the Company undertakes no obligation to update publicly or
revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.

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Consolidated Financial Summary
(Amounts in thousands, except per share data)

Second Quarter Six Months
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Revenues:
Net premiums written $ 991,549 $1,136,764 $2,149,114 $2,391,536
Change in unearned
premiums 83,162 34,876 49,906 (64,963)
----------- ----------- ----------- -----------
Net premiums
earned 1,074,711 1,171,640 2,199,020 2,326,573
Net investment
income 153,939 168,943 298,436 334,364
Insurance service
fees 24,761 25,343 51,873 51,336
Realized investment
gains (losses) (82,163) 5,280 (28,137) 12,670
Revenues from
wholly-owned
investees 27,131 14,684 52,019 19,488
Other income 760 693 1,132 1,173
----------- ----------- ----------- -----------
Total revenues 1,199,139 1,386,583 2,574,343 2,745,604
----------- ----------- ----------- -----------

Operating costs and
expenses:
Losses and loss
expenses 679,703 703,669 1,362,744 1,388,816
Other operating
costs and expenses 376,249 376,604 756,422 757,225
Expenses from
wholly-owned
investees 26,343 13,187 51,278 17,797
Interest expense 21,396 22,700 44,140 43,400
----------- ----------- ----------- -----------
Total expenses 1,103,691 1,116,160 2,214,584 2,207,238
----------- ----------- ----------- -----------

Income before
income taxes
and minority
interest 95,448 270,423 359,759 538,366

Income tax expense (15,173) (79,376) (90,879) (158,511)
Minority interest (18) (414) (185) (796)
----------- ----------- ----------- -----------
Net income $ 80,257 $ 190,633 $ 268,695 $ 379,059
=========== =========== =========== ===========

Earnings per share:
Basic $ 0.48 $ 0.98 $ 1.56 $ 1.96
=========== =========== =========== ===========
Diluted $ 0.46 $ 0.93 $ 1.50 $ 1.86
=========== =========== =========== ===========

Average shares
outstanding:
Basic 167,172 194,345 171,935 193,775
Diluted 173,684 203,922 178,723 203,930
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Operating Results by Segment
(Amounts in thousands, except ratios (1))

Second Quarter Six Months
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Specialty:
Gross premiums written $406,580 $480,674 $834,722 $938,526
Net premiums written 375,939 452,610 773,726 886,585
Premiums earned 409,417 442,110 838,753 885,565
Pre-tax income 108,729 136,843 221,515 264,555
Loss ratio 58.8% 55.7% 58.4% 56.9%
Expense ratio 28.3% 26.4% 27.9% 26.2%
GAAP combined ratio 87.1% 82.1% 86.3% 83.1%

Regional (2):
Gross premiums written $361,633 $371,879 $734,628 $749,297
Net premiums written 315,288 330,057 638,864 655,430
Premiums earned 309,424 309,812 620,693 614,179
Pre-tax income 25,275 51,903 63,079 107,224
Loss ratio 67.6% 60.1% 65.6% 59.3%
Expense ratio 31.9% 31.0% 31.5% 31.0%
GAAP combined ratio 99.5% 91.1% 97.1% 90.3%

Alternative Markets:
Gross premiums written $121,161 $123,906 $389,245 $404,334
Net premiums written 100,776 100,808 338,813 351,331
Premiums earned 155,885 159,266 311,094 321,930
Pre-tax income 52,698 63,592 113,680 131,310
Loss ratio 64.1% 57.2% 60.8% 56.7%
Expense ratio 23.3% 24.2% 23.5% 23.4%
GAAP combined ratio 87.4% 81.4% 84.3% 80.1%

Reinsurance:
Gross premiums written $126,583 $210,053 $263,048 $415,235
Net premiums written 118,946 190,705 248,592 381,566
Premiums earned 131,767 196,986 284,201 382,264
Pre-tax income 33,644 45,892 66,933 92,299
Loss ratio 65.7% 70.2% 64.8% 67.5%
Expense ratio 34.7% 26.9% 34.7% 29.5%
GAAP combined ratio 100.4% 97.1% 99.5% 97.0%

International:
Gross premiums written $ 98,853 $ 79,167 $178,340 $141,649
Net premiums written 80,600 62,584 149,119 116,624
Premiums earned 68,218 63,466 144,279 122,635
Pre-tax income 7,279 7,900 17,925 15,271
Loss ratio 63.5% 65.8% 63.8% 65.5%
Expense ratio 37.7% 33.3% 35.8% 32.5%
GAAP combined ratio 101.2% 99.1% 99.6% 98.0%
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Operating Results by Segment (continued)
(Amounts in thousands, except ratios (1))

Second Quarter Six Months
----------------------- -----------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Corporate and
Eliminations:
Realized investment
gains (losses) $ (82,163) $ 5,280 $ (28,137) $ 12,670
Interest expense (21,396) (22,700) (44,140) (43,400)
Other revenues and
expenses (3) (28,618) (18,287) (51,096) (41,563)
Pre-tax loss (132,177) (35,707) (123,373) (72,293)

Total:
Gross premiums
written $1,114,810 $1,265,679 $2,399,983 $2,649,041
Net premiums written 991,549 1,136,764 2,149,114 2,391,536
Premiums earned 1,074,711 1,171,640 2,199,020 2,326,573
Pre-tax income 95,448 270,423 359,759 538,366
Loss ratio 63.2% 60.1% 62.0% 59.7%
Expense ratio 30.0% 27.8% 29.7% 28.0%
GAAP combined ratio 93.2% 87.9% 91.7% 87.7%
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(1) Loss ratio is losses and loss expenses incurred expressed as a
percentage of premiums earned. Expense ratio is underwriting
expenses expressed as a percentage of premiums earned.
Underwriting expenses do not include expenses related to
insurance services or unallocated corporate expenses. GAAP
combined ratio is the sum of the loss ratio and the expense
ratio.

(2) For the second quarters of 2008 and 2007, weather-related losses
for the regional segment were $31 million and $16 million,
respectively. For the first six months of 2008 and 2007, weather-
related losses for the regional segment were $45 million and $22
million, respectively.

(3) Other revenues and expenses include corporate investment income,
expenses not allocated to the business segments and revenues and
expenses from investments in wholly-owned, non-insurance
subsidiaries that are consolidated for financial reporting
purposes.
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Selected Balance Sheet Information
(Amounts in thousands, except per share data)

June 30, December 31,
2008 2007
----------- ------------

Net invested assets (1) $12,726,268 $ 13,188,302
Total assets 16,547,507 16,832,170
Reserves for losses and loss expenses 8,910,469 8,678,034
Senior notes and other debt 1,021,668 1,121,793
Junior subordinated debentures 249,482 249,375
Stockholders' equity (2) 3,276,738 3,569,775
Shares outstanding 163,869 180,321
Stockholders' equity per share (3) 20.00 19.80
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(1) Net invested assets include investments, cash investments and cash
equivalents, trading accounts receivable from brokers and
clearing organizations, trading account securities sold but not
yet purchased and unsettled purchases.

(2) Stockholders' equity includes after-tax unrealized loss from
investments and currency translation adjustments of $13 million
as of June 30, 2008 and after-tax unrealized gains from
investments and currency translation adjustments of $67 million
as of December 31, 2007, respectively.

(3) During the first six months of 2008, the Company repurchased 18
million shares of its common stock for $484 million. Share
repurchases in the first six months of 2008 resulted in a
reduction of stockholder's equity per share of 73 cents.
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Supplemental Information
(Amounts in thousands)

Second Quarter Six Months
----------------------- --------------------
Reconciliation of net
operating income to net
income: 2008 2007 2008 2007
----------- ----------- ---------- ---------

Net operating income
(1) $ 133,677 $ 187,216 $ 287,003 $370,846
Realized investment
gains (losses),
net of taxes (2) (53,420) 3,417 (18,308) 8,213
----------- ----------- ---------- ---------

Net income $ 80,257 $ 190,633 $ 268,695 $379,059
=========== =========== ========== =========

Return on equity:

Net income (3) 9.0% 22.9% 15.1% 22.7%

Net operating income
(3) 15.0% 22.5% 16.1% 22.2%

Cash flow:

Cash flow from
operations before cash
transfers
to/from trading
account (4) $ 141,380 $ 279,993 $ 355,327 $637,214

Trading account
transfers 50,000 - 50,000 -
----------- ----------- ---------- ---------

Cash flow from
operations $ 191,380 $ 279,993 $ 405,327 $637,214
=========== =========== ========== =========

June 30, 2008
----------------------------------

Investments in Fannie Mae Amortized Market Unrealized
and Freddie Mac Cost Value Gain
securities (Loss)
----------- ----------- ----------

Preferred stock $ 224,913 $ 216,607 $ (8,306)
Issuer obligations 154,915 155,090 175
Securitized bonds 911,995 927,985 15,990
----------- ----------- ----------

Total $1,291,823 $1,299,682 $ 7,859
=========== =========== ==========
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(1) Net operating income is a non-GAAP financial measure defined by
the Company as net income excluding realized investment gains and
losses. Management believes that excluding realized investment
gains and losses, which result primarily from changes in general
economic conditions, provides a useful indicator of trends in the
Company's underlying operations.

(2) Realized losses include after-tax write-downs of securities
determined to have other-than-temporary declines in fair value of
$54 million and $66 million for the second quarter and first six
months of 2008, respectively. The write-downs in the second
quarter of 2008 related to preferred stocks of financial
institutions, including approximately $33 million (after-tax) of
preferred stocks issued by Fannie Mae and Freddie Mac.

(3) Return on equity represents net income and net operating income
expressed on an annualized basis as a percentage of beginning of
year stockholders' equity.

(4) Cash flow from operations before cash transfers to/from trading
account is a non-GAAP financial measure that excludes cash
contributions to and withdrawals from the arbitrage trading
account. Management believes that cash transfers to and
withdrawals from the arbitrage trading account are the result of
changes in investments allocations and that excluding such
transfers provides a useful measure of the Company's cash flow.
*T

W. R. Berkley Corporation
Karen A. Horvath, 203-629-3000
Vice President - External Financial Communications

Copyright Business Wire 2008