W. R. Berkley Corporation Reports Record Net Income of $545 Million for 2005; Fourth Quarter 2005 Net Income Up 44% to $167 Million

Business Wire, Feb 13, 2006

GREENWICH, Conn. -- W. R. Berkley Corporation (NYSE: BER) today reported net income for 2005 of $545 million, or $4.08 per share, a 24% increase from $438 million, or $3.31 cents per share, for 2004. Net operating income for 2005 increased 31% to $534 million, or $4.00 per share, compared with $408 million, or $3.08 per share, for 2004. Net operating income is a non-GAAP financial measure defined by the Company as net income excluding realized investment gains and losses and the effect of a change in accounting principle in 2004. All per share amounts in this release reflect the 3-for-2 common stock split effected on April 8, 2005.

Net income for the fourth quarter of 2005 was $167 million, or $1.25 per share, a 44% increase from $116 million, or $0.88 per share, a year ago. Net operating income for the fourth quarter of 2005 increased 45% to $165 million, or $1.23 per share, compared with $114 million, or $0.86 per share, for the fourth quarter of 2004.

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

                            Fourth Quarter             Full Year
                            --------------             ---------
                           2005        2004        2005        2004
                           ----        ----        ----        ----

Gross premiums written  $1,255,967  $1,202,993  $5,087,983  $4,724,128
Net premiums written     1,150,267   1,104,902   4,604,574   4,266,361

Net income                 167,424     116,121     544,892     438,105
Net income per diluted
 share                        1.25        0.88        4.08        3.31

Net operating income       165,294     113,710     533,889     407,526
Net operating income per
 diluted share          $     1.23  $     0.86  $     4.00  $     3.08

Full year 2005 highlights included:

--Return on equity was 25.8%.

--GAAP combined ratio improved to 89.3% from 90.4% in the prior year.

--Net premiums written rose to $4.6 billion, an increase of 8% compared with 2004.

--Cash flow from operations increased to $1.7 billion.

--Net investment income grew 39% to $404 million.

--The paid loss ratio, at 36.7%, was below 40% for the third consecutive year.

--The Company formed four new operating companies: Berkley Aviation, LLC; Watch Hill Fac Management, LLC; Berkley Accident and Health, LLC; and Berkley Net Underwriters, LLC, as well as expanded its operations into Spain, Brazil and Hong Kong.

Commenting on the Company's activities, William R. Berkley, chairman and chief executive officer, said: "The Company had another outstanding year. Our return on equity was 25.8%, while cash flow, underwriting profits and premium volume all reached record levels. The strength of our balance sheet positions us to take advantage of opportunities and to deal with any uncertainties. Our consistently strong performance is a reflection of the effort and commitment of our people.

"We have started several new units which we expect to have a meaningful impact on our business by the end of 2006. We anticipate the Company's overall growth in 2006 to be 6% - 12%, with our new units gaining further traction in 2007. The current environment is rationally competitive and satisfactory returns are available in most of our lines of business.

"We continue to believe returns in excess of 20% will be obtainable in 2006 and have become more optimistic in our view that returns in the area of 20% will be available in 2007," 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 Monday, February 13, 2006 at 2:00 p.m. ET. 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 2006 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 reinsurance business, product demand and pricing, claims development and the process of estimating reserves, the uncertain nature of damage theories and loss amounts, the increased level of our retention, natural and man-made catastrophic losses, including hurricanes and as a result of terrorist activities, the impact of competition, the availability of reinsurance, exposure as to coverage for terrorist acts, our retention under The Terrorism Risk Insurance Act of 2002, as amended ("TRIA"), 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 merger arbitrage investments, exchange rate and political risks relating to our international operations, legislative and regulatory developments, including these related to alleged anti-competitive or other improper business practices in the insurance industry, changes in the ratings assigned to us by ratings agencies, the availability of dividends from our insurance company subsidiaries, our ability to successfully acquire and integrate companies and invest in new insurance ventures, 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 2006 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.