Berkley Says Second Quarter Shows Progress

July 28, 2004

W. R. Berkley Corporation (NYSE: BER) in Greenwich, Conn. reported net income for the second quarter of 2004 of $109 million, or $1.25 per share, a 14 percent increase from $96 million, or $1.10 per share, a year ago.

Second quarter 2004 net operating income increased 53% to $103 million, or $1.18 per share, compared with $68 million, or $0.78 per share, for the second quarter of 2003.

The company said its second quarter highlights included:
• Net premiums written rose to $1.016 billion, an increase of 16 percent from the comparable quarter of 2003.

• GAAP combined ratio improved by 1.8 percentage points to 89.8 percent from 91.6 percent in the prior year period.

• The paid loss ratio decreased to 31.0% from 37.0 percent in the prior year quarter.

• Investment income increased 36 percent to $69 million.

• Cash flow from operations increased 34 percent

Commenting on the company’s performance, William R. Berkley, chairman and chief executive officer, said the results show progress in absolute terms as well as in relation to the rest of the industry.

“We continue to adjust our business mix, focusing strategically on areas that offer us the best opportunity for improved pricing and more favorable terms and conditions,” he added.

He said that prices for casualty business, which represents more than 80 percent of the company’s premiums, are generally increasing at rates greater than loss cost inflation. However, there are areas, such as director’s and officer’s liability and treaty reinsurance, where pricing has become more competitive. “As a result of our disciplined underwriting, premiums for those areas decreased slightly in the second quarter,” he said, adding that net premiums written for all other lines of business grew by 21 percent from a year ago.

The CEO said Berkley anticipates exceeding its original forecast of a 22 percent after-tax operating return on equity this year and achieving a similar level of performance in 2005.

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

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