W. R. Berkley Corporation Reports Third Quarter Results Net Income Per Share up 7% to 93 Cents

W. R. Berkley Corporation (NYSE: BER) today reported net income for the third quarter of 2007 of 93 cents per share, or $180 million, a 7% increase from 87 cents per share, or $174 million, for the third quarter of 2006. Net operating income for the third quarter of 2007 increased 8% to 93 cents per share, or $180 million, compared with 86 cents per share, or $173 million, for the corresponding quarter of 2006. Net operating income is a non-GAAP financial measure defined by the Company as net income excluding realized investment gains and losses. Summary Financial Data (Amounts in thousands, except per share data)       Third Quarter Nine Months 2007 2006 2007 2006   Gross premiums written $1,244,109 $1,306,190 $3,893,150 $4,058,372 Net premiums written 1,132,489 1,208,906 3,524,025 3,705,422   Income before income taxes 257,703 244,963 796,069 706,214 Net income 180,463 174,308 559,522 501,462 Net income per diluted share 0.93 0.87 2.81 2.49   Net operating income 179,946 172,803 550,792 498,738 Net operating income per diluted share 0.93 0.86 2.76 2.48 Third quarter highlights included: Return on equity was 21.6% on an annualized basis. GAAP combined ratio was 88.5%. Net investment income grew 14% to $166 million. Paid loss ratio was 39.7%. Commenting on the Company’s performance, William R. Berkley, chairman and chief executive officer, said: "We were pleased with our third quarter results, which we achieved in spite of the significant turmoil in the financial markets during the period. We continue to exceed our targeted rate of return, and our operating units are maintaining the appropriate level of underwriting discipline. "Our book value per share continues to increase, despite modest short-term dilution caused by stock repurchases at prices in excess of the then current book value. Cash flow is strong and our paid loss ratio once again dropped below forty percent. Even in today’s competitive environment, opportunities continue to be available to us. We expect to be able to take advantage of them in the future as we have in the past. "As we have previously commented, we believe that in 2007 we will be able to achieve a return on equity in excess of twenty-two percent. We expect modestly lower returns next year in part due to our increasing equity base. "Our continued strong results reflect the outstanding performance and commitment of our people. We remain confident that we will exceed our long-term target of a fifteen percent return for the foreseeable future,” 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 Tuesday, October 23, 2007 at 9:00 a.m. eastern time. 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 2007 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 insurance and reinsurance business, product demand and pricing, claims development and the process of estimating reserves, the uncertain nature of damage theories and loss amounts, natural and man-made catastrophic losses, including as a result of terrorist activities, the impact of competition, the success of our new ventures or acquisitions and the availability of other opportunities, the availability of reinsurance, exposure as to coverage for terrorist acts, our retention under The Terrorism Risk Insurance Act of 2002, as amended ("TRIA”), and the potential expiration of 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 those related to alleged anti-competitive or other improper business practices in the insurance or reinsurance industry, changes in the ratings assigned to us by ratings agencies, the availability of dividends from our insurance company subsidiaries, 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 2007 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. Consolidated Financial Summary (Amounts in thousands, except per share data)         Third Quarter Nine Months 2007 2006 2007 2006 Revenues: Net premiums written $ 1,132,489 $ 1,208,906 $ 3,524,025 $ 3,705,422 Change in unearned premiums 43,075 (15,049) (21,888) (178,508) Premiums earned 1,175,564 1,193,857 3,502,137 3,526,914 Net investment income 165,790 145,784 500,154 422,348 Insurance service fees 23,690 26,622 75,026 80,182 Realized investment gains 812 1,734 13,482 3,736 Revenues from wholly-owned investees 41,739 - 61,227 - Other revenues 437 511 1,610 1,208 Total revenues 1,408,032 1,368,508 4,153,636 4,034,388   Expenses: Losses and loss expenses 706,374 731,941 2,095,190 2,175,249 Operating costs and expenses 382,530 368,311 1,139,755 1,082,891 Expenses from wholly-owned investees 38,718 - 56,515 - Interest expense 22,707 23,293 66,107 70,034 Total expenses 1,150,329 1,123,545 3,357,567 3,328,174   Income before income taxes and minority interest 257,703 244,963 796,069 706,214   Income tax expense (76,344) (70,445) (234,855) (203,251) Minority interest (896) (210) (1,692) (1,501) Net income $ 180,463 $ 174,308 $ 559,522 $ 501,462   Net income per share: Basic $ 0.97 $ 0.91 $ 2.93 $ 2.62 Diluted $ 0.93 $ 0.87 $ 2.81 $ 2.49   Average shares outstanding: Basic 186,601 191,415 190,659 191,130 Diluted 193,719 201,295 199,247 201,276 Operating Results by Segment (Amounts in thousands, except ratios (1))       Third Quarter Nine Months 2007 2006 2007 2006 Specialty: Gross premiums written $ 427,878 $ 454,835 $1,366,404 $1,450,961 Net premiums written 402,332 432,760 1,288,917 1,376,340 Premiums earned 441,944 446,453 1,327,509 1,307,910 Pre-tax income 124,391 119,498 388,946 338,716 Loss ratio 57.8% 59.3% 57.2% 60.0% Expense ratio 26.8% 25.2% 26.4% 25.2% GAAP combined ratio 84.6% 84.5% 83.6% 85.2%   Regional: (2) Gross premiums written $ 355,134 $ 349,353 $1,104,431 $1,086,500 Net premiums written 312,716 309,414 968,146 943,705 Premiums earned 315,358 308,263 929,537 897,838 Pre-tax income 53,507 51,061 160,731 149,621 Loss ratio 58.7% 59.7% 59.1% 59.5% Expense ratio 31.9% 30.6% 31.3% 30.6% GAAP combined ratio 90.6% 90.3% 90.4% 90.1%   Alternative Markets: Gross premiums written $ 214,320 $ 209,674 $ 618,654 $ 606,965 Net premiums written 190,247 190,555 541,578 531,686 Premiums earned 165,686 166,879 487,616 491,648 Pre-tax income 60,006 76,693 191,316 218,335 Loss ratio 60.3% 51.3% 57.9% 52.8% Expense ratio 23.2% 22.6% 23.3% 22.3% GAAP combined ratio 83.5% 73.9% 81.2% 75.1%   Reinsurance: Gross premiums written $ 177,198 $ 233,419 $ 592,433 $ 739,080 Net premiums written 166,555 221,163 548,121 699,929 Premiums earned 190,559 215,028 572,823 666,577 Pre-tax income 44,894 31,191 137,193 95,287 Loss ratio 65.5% 73.3% 66.8% 73.5% Expense ratio 29.9% 27.7% 29.6% 26.7% GAAP combined ratio 95.4% 101.0% 96.4% 100.2%   International: Gross premiums written $ 69,579 $ 58,909 $ 211,228 $ 174,866 Net premiums written 60,639 55,014 177,263 153,762 Premiums earned 62,017 57,234 184,652 162,941 Pre-tax income 11,306 5,039 26,577 21,771 Loss ratio 66.5% 71.0% 65.9% 66.5% Expense ratio 30.0% 32.1% 31.6% 31.9% GAAP combined ratio 96.5% 103.1% 97.5% 98.4% Operating Results by Segment (continued) (Amounts in thousands, except ratios (1))       Third Quarter Nine Months 2007 2006 2007 2006 Corporate and Eliminations: Realized investment gains $ 812 $ 1,734 $ 13,482 $ 3,736 Interest expense (22,707) (23,293) (66,107) (70,034) Other revenues and expenses (3) (14,506) (16,960) (56,069) (51,218) Pre-tax loss (36,401) (38,519) (108,694) (117,516)   Total: Gross premiums written $1,244,109 $1,306,190 $3,893,150 $4,058,372 Net premiums written 1,132,489 1,208,906 3,524,025 3,705,422 Premiums earned 1,175,564 1,193,857 3,502,137 3,526,914 Pre-tax income 257,703 244,963 796,069 706,214 Loss ratio 60.1% 61.3% 59.8% 61.7% Expense ratio 28.4% 27.2% 28.1% 26.9% GAAP combined ratio 88.5% 88.5% 87.9% 88.6% (1) Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated corporate expenses. GAAP combined ratio is the sum of the loss ratio and the expense ratio. (2) For the third quarters of 2007 and 2006, weather-related losses were $8 million and $7 million, respectively. For the first nine months of 2007 and 2006, weather-related losses were $30 million and $32 million, respectively. (3) Other revenues and expenses include corporate investment income, expenses not allocated to the business segments and revenues and expenses from investments in wholly-owned, non-insurance subsidiaries that are consolidated for financial reporting purposes. Selected Balance Sheet Information (Amounts in thousands, except per share data)   September 30, December 31, 2007 2006   Net invested assets (1) $ 12,917,146 $ 12,012,298 Total assets 16,695,839 15,656,489 Reserves for losses and loss expenses 8,442,126 7,784,269 Senior notes and other debt 1,121,678 869,187 Junior subordinated debentures 242,107 241,953 Stockholders’ equity (2) 3,516,730 3,335,159 Shares outstanding 183,275 192,772 Stockholders’ equity per share 19.19 17.30 (1) Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases. (2) Stockholders' equity includes after-tax unrealized gains from investments and currency translation adjustments of $105 million and $126 million as of September 30, 2007 and December 31, 2006, respectively. Supplemental Information (Amounts in thousands)       Third Quarter Nine Months Reconciliation of net operating income to net income: 2007 2006 2007 2006   Net operating income (1) $ 179,946 $ 172,803 $ 550,792 $ 498,738 Realized investment gains, net of taxes 517 1,505 8,730 2,724   Net income $ 180,463 $ 174,308 $ 559,522 $ 501,462 Return on equity:   Net Income (2) 21.6% 27.2% 22.4% 26.0%   Net operating income (2) 21.6% 26.9% 22.0% 25.9% Cash flow:   Cash flow from operations before cash transfers to/from trading account (3) $ 492,837 $ 558,873 $ 1,130,051 $ 1,336,403 Trading account transfers - - - (225,000)   Cash flow from operations $ 492,837 $ 558,873 $ 1,130,051 $ 1,111,403 (1) Net operating income is a non-GAAP financial measure defined by the Company as net income excluding realized investment gains and losses. Management believes that excluding realized investment gains and losses, which result primarily from changes in general economic conditions, provides a useful indicator of trends in the Company’s underlying operations. (2) Return on equity represents net income and net operating income expressed on an annualized basis as a percentage of beginning of year stockholders’ equity. (3) Cash flow before trading account transfers is a non-GAAP financial measure that excludes cash contributions to and withdrawals from the arbitrage trading account. Management believes that cash transfers to and withdrawals from the arbitrage trading account are the result of changes in investment allocations and that excluding such transfers provides a useful measure of the Company’s cash flow. Reclassifications have been made to the 2006 cash flow amounts to conform with the presentation in 2007.