W.R. Berkley Estimates $41M Storm, $143M Investment Losses for Q3

October 20, 2008

W. R. Berkley Corp. estimates that it will report after-tax storm losses of $41 million, or $0.24 per share, from Hurricanes Ike, Gustav and Dolly as well as an unusually high number of wind and hail storms in the Midwest.

The insurance company’s third quarter estimate also includes after-tax net realized investment losses of $143 million, or $0.85 per share. The estimated investment loss relates primarily to write downs for other-than-temporary declines in fair value of preferred equity holdings in Fannie Mae and Freddie Mac.

It expects its third quarter operating income per share, including storm losses, to be in the range of $0.70 to $0.75 and its GAAP net loss per share to be in the range of $0.15 to $0.20.

The company said it does not invest in collateralized debt obligations (CDOs), collateralized loan obligations (CLOs) or similar financial products. It also has never been a party to any credit default swap and does not engage in securities lending.

The company holds approximately $4 million of fixed maturity securities issued by insurance operating subsidiaries of AIG and has no exposure to securities issued by Lehman Brothers Holdings Inc. The company’s fixed maturity portfolio has an average credit rating of AA without consideration of any credit enhancement.

The company estimates its stockholders’ equity per share to be in the range of $18.80 to $18.90 at September 30, 2008.

The company said it continues to be well-capitalized and has no need to raise capital to support its current operations. Rating agencies has affirmed the company’s ratings in the past several weeks.

The company said it will release its third quarter 2008 earnings as scheduled after market close on Oct. 28, 2008.

Source: W. R. Berkley Corp.

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