S&P Affirms W.R. Berkley and Subs Rtgs; Outlook Neg

NEW YORK (Standard & Poor's) Dec. 23, 2003--Standard & Poor's Ratings Services said today that it affirmed its 'BBB+' counterparty credit rating on W. R. Berkley Corp. (NYSE:BER) and its 'A+' counterparty credit and financial strength ratings on BER's operating companies (collectively referred to as Berkley)  
 
Standard & Poor's also said that the outlook on all these companies remains negative.  
 
"The ratings are based on Berkley's strong business position, including its well-diversified revenue profile, conservative investment portfolio that supports strong liquidity, and strong financial flexibility," said Standard & Poor's credit analyst Damien Magarelli. In addition, operating performance has significantly improved in 2002, and 2003 is expected to be another strong year. In contrast, capital adequacy is low for the rating, and Berkley has less flexibility than its peers to withstand underwriting and investment uncertainties. Also, BER has an aggressive corporate strategy that includes managing capital and holding company statistics to their rating limits, and this is expected to continue.  
 
The negative outlook reflects BER's below-rating-level capital adequacy and high premium growth, which is causing a capital strain. "Because of very strong earnings, Standard & Poor's is maintaining the ratings on BER at this time," Mr. Magarelli added. "However, if earnings deviate from their expected levels in 2004, Standard & Poor's would review the BER ratings because of already low capital adequacy." 
 
BER's business position is viewed as strong based on its well-diversified revenue profile, long-standing relationships with producers, economies of scale, and market position. BER has a very diversified business profile, with operations in five segments of the property/casualty market: specialty lines (excess and surplus and commercial transportation), alternative markets (fee-based and workers' compensation), reinsurance, regional (commercial property/casualty), and international. In 2002, BER was the 30th largest property/casualty insurance company in the U.S. based on net premiums written. However, with its recent substantial growth in writings, this position will likely improve in 2003. BER's long-term relationship with brokers and agents has allowed it to compete effectively with larger peers.  
 
BER's very strong operating performance has dramatically improved and is a significant strength to the rating. At year-end 2002, BER realized net income of $175 million, a significant improvement from the net loss of $92 million in 2001. In addition, in 2002, BER had an underwriting profit of $104 million, which followed underwriting losses each year from 1999 through 2001.  
 
Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Credit Ratings Lists. Standard & Poor's ratings appear alphabetically.  
 
Contact: Damien Magarelli, New York (1) 212-438-6975  
 
Robert G Partridge, New York (1) 212-438-7231 william.pargeans@ambest.com