Schedule II

W. R. Berkley Corporation

Condensed Financial Information of Registrant

Balance Sheets (Parent Company)



	December 31,
(In thousands)	2013			2012
Assets:
Cash and cash equivalents	$	17,315		$	162,972
Fixed maturity securities available for sale at fair value (cost $61,084 and $281,708 at December 31, 2013 and 2012, respectively)	63,115			286,597
Equity securities available for sale, at fair value (cost $4,668 in 2013 and $0 in 2012)	11,240			25,699
Investment in subsidiaries	6,250,979			5,979,539
Due from subsidiaries	13,648			106,334
Deferred Federal income taxes	51,346			—
Current Federal income taxes	17,540			—
Property, furniture and equipment at cost, less accumulated depreciation	9,028			7,895
Other assets	5,795			10,710
Total assets	$	6,440,006		$	6,579,746
Liabilities and stockholders’ equity
Liabilities:
Due to subsidiaries	$	—		$	—
Other liabilities	148,903			176,416
Current Federal income taxes	—			8,253
Deferred Federal income taxes	—			31,914
Junior subordinated debentures	339,800			243,206
Senior notes	1,615,268			1,813,740
Total liabilities	2,103,971			2,273,529
Stockholders’ equity:
Preferred stock	—			—
Common stock	47,024			47,024
Additional paid-in capital	967,440			945,166
Retained earnings (including accumulated undistributed net income of subsidiaries of $4,393,420 and $4,023,780 at December 31, 2013 and 2012, respectively)	5,265,015			4,817,807
Accumulated other comprehensive income	189,391			465,631
Treasury stock, at cost	(2,132,835		)	(1,969,411		)
Total stockholders’ equity	4,336,035			4,306,217
Total liabilities and stockholders’ equity	$	6,440,006		$	6,579,746

________________

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

Schedule II, Continued

W. R. Berkley Corporation

Condensed Financial Information of Registrant, Continued

Statements of Income (Parent Company)



	Years Ended December 31,
(In thousands)	2013			2012			2011
Management fees and investment income including dividends from subsidiaries of $269,626, $25,968 and $503,227 for the years ended December 31, 2013, 2012 and 2011, respectively	$	277,223		$	29,961		$	514,057
Net investment gains	24,550			71,130			45,962
Other income	223			271			96
Total revenues	301,996			101,362			560,115
Operating costs and expense	122,562			133,326			118,922
Interest expense	120,066			124,298			111,184
Income before federal income taxes	59,368			(156,262		)	330,009
Federal income taxes:
Federal income taxes provided by subsidiaries on a separate return basis	225,845			132,379			79,200
Federal income tax expense on a consolidated return basis	(154,928		)	(160,226		)	(89,144		)
Net expense	70,917			(27,847		)	(9,944		)
Income (loss) before undistributed equity in net income of subsidiaries	130,285			(184,109		)	320,065
Equity in undistributed net income of subsidiaries	369,640			694,701			71,146
Net income	$	499,925		$	510,592		$	391,211

________________

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

Schedule II, Continued

W. R. Berkley Corporation

Condensed Financial Information of Registrant, Continued

Statements of Cash Flows (Parent Company)



	Years Ended December 31,
(In thousands)	2013			2012			2011
Cash flows (used in) from operating activities:
Net income	$	499,925		$	510,592		$	391,211
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(24,550		)	(71,130		)	(45,962		)
Depreciation and amortization	10,397			5,624			4,905
Equity in undistributed earnings of subsidiaries	(369,640		)	(694,701		)	(71,146		)
Tax payments received from subsidiaries	77,305			125,046			139,011
Federal income taxes provided by subsidiaries on a separate return basis	(225,845		)	(132,379		)	(79,200		)
Stock incentive plans	24,594			26,763			27,176
Change in:
Federal income taxes	21,866			44,423			56,542
Other assets	(821		)	911			(542		)
Other liabilities	(16,280		)	28,017			(6,747		)
Accrued investment income	967			97			1,559
Other, net	—			(13		)	277
Net cash (used in) from operating activities	(2,082		)	(156,750		)	417,084
Cash from (used in) investing activities:
Proceeds from sales of fixed maturity securities	230,854			93,354			70,665
Proceeds from maturities and prepayments of fixed maturity securities	68,918			121,191			165,158
Proceeds from sales of equity securities	23,395			72,565			47,735
Cost of purchases of fixed maturity securities	(79,132		)	(255,885		)	(240,536		)
Cost of purchases of equity securities	(4,668		)	—			—
Investments in and advances to subsidiaries, net	(58,454		)	(16,480		)	(3,867		)
Change in balance due to security broker	6,918			(4,767		)	(5,983		)
Net additions to real estate, furniture & equipment	(1,896		)	(1,857		)	(643		)
Net cash from investing activities	185,935			8,121			32,529
Cash from (used in) financing activities:
Net proceeds from issuance of senior notes	339,627			345,823			—
Net proceeds from stock options exercised	53			13,544			21,966
Repayment of senior notes	(450,000		)	—			—
Purchase of common treasury shares	(166,473		)	(134,456		)	(187,163		)
Cash dividends to common stockholders	(52,717		)	(183,947		)	(43,255		)
Net cash from (used in) financing activities	(329,510		)	40,964			(208,452		)
Net increase (decrease) in cash and cash equivalents	(145,657		)	(107,665		)	241,161
Cash and cash equivalents at beginning of year	162,972			270,637			29,476
Cash and cash equivalents at end of year	$	17,315		$	162,972		$	270,637

________________

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

W. R. Berkley Corporation

Condensed Financial Information of Registrant,Continued

December 31, 2013

Note to Condensed Financial Statements (Parent Company)

The accompanying condensed financial statements should be read in conjunction with the notes to consolidated financial statements included elsewhere herein. Reclassifications have been made in the 2012 and 2011 financial statements as originally reported to conform them to the presentation of the 2013 financial statements.

The Company files a consolidated federal tax return with the results of its domestic insurance subsidiaries included on a statutory basis. Under present Company policy, federal income taxes payable by subsidiary companies on a separate-return basis are paid to W. R. Berkley Corporation, and the Company pays the tax due on a consolidated return basis.