W.R. Berkley Corp. Reports 96% Increase in Q2 Net Operating Income to $67.6M

July 24, 2003

Connecticut-based W. R. Berkley Corporation reported second quarter net income of $95.8 million, or $1.65 per share, up from $27.4 million, or 52 cents per share, a year ago.

Net operating income for the second quarter of 2003 was $67.6 million, or $1.16 per share, compared with $34.5 million, or 66 cents per share, for the second quarter of 2002. Net operating income is a non-GAAP financial measure defined by the company as net income excluding gains and losses on investments, foreign currencies and discontinued business.

Second quarter highlights include:

*Net operating return on equity was 20.2 percent annualized, or 5.1 percent for the quarter
*Net premiums written were $875.5 million, an increase of 46 percent from the second quarter of 2002
*GAAP combined ratio improved by 5.0 percentage points to 91.6 percent from 96.6 percent in the prior year period
*Cash flow from operations increased 121 percent to $320.6 million compared with $145.3 million in the year-earlier period
*The paid loss ratio decreased to 37.0% from 56.5 percent in the prior year quarter
*Realized investment gains were $43.7 million compared with realized losses of $8.4 million in the second quarter of 2002.

William Berkley, chairman and CEO, noted, “We are very pleased with our second quarter results. The net operating return on equity exceeded 20 percent on an annualized basis. Net premiums written grew 46 percent over last year’s second quarter due to price increases, which averaged over 25 percent on renewed business, and to growth in policy counts.

“We continue to have the ability to raise prices. Given the low inflation environment, even modest price increases can significantly increase our return on equity. We do not foresee a return to the intense price competition of the late 1990’s any time soon, given the current low interest rate environment and the challenges faced by many companies in the industry.

“We have strengthened our capital position and are taking advantage of opportunities to expand our business with a continued focus on casualty lines. We remain confident in our prospects and expect that quarterly results will continue to improve.”

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