Schedule II

W. R. Berkley Corporation

Condensed Financial Information of Registrant

Balance Sheets (Parent Company)



	December 31,
(In thousands)	2014			2013
Assets:
Cash and cash equivalents	$	90,693		$	17,315
Fixed maturity securities available for sale at fair value (cost $272,283 and $61,084 at December 31, 2014 and 2013, respectively)	273,773			63,115
Equity securities available for sale, at fair value (cost $3,738 in 2014 and $4,668 in 2013)	3,738			11,240
Investment in subsidiaries	6,693,731			6,250,979
Due from subsidiaries	—			13,648
Deferred Federal income taxes	—			51,346
Current Federal income taxes	62,882			17,540
Property, furniture and equipment at cost, less accumulated depreciation	9,852			9,028
Other assets	6,978			5,795
Total assets	$	7,141,647		$	6,440,006
Liabilities and stockholders’ equity
Liabilities:
Due to subsidiaries	$	87,540		$	—
Other liabilities	162,648			148,903
Deferred Federal income taxes	149			—
Subordinated debentures	340,060			339,800
Senior notes	1,961,305			1,615,268
Total liabilities	2,551,702			2,103,971
Stockholders’ equity:
Preferred stock	—			—
Common stock	47,024			47,024
Additional paid-in capital	991,512			967,440
Retained earnings (including accumulated undistributed net income of subsidiaries of $4,700,821 and $4,393,420 at December 31, 2014 and 2013, respectively)	5,732,410			5,265,015
Accumulated other comprehensive income	183,550			189,391
Treasury stock, at cost	(2,364,551		)	(2,132,835		)
Total stockholders’ equity	4,589,945			4,336,035
Total liabilities and stockholders’ equity	$	7,141,647		$	6,440,006

________________

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)	2014			2013			2012
Management fees and investment income including dividends from subsidiaries of $503,483, $269,626, and $25,968 for the years ended December 31, 2014, 2013 and 2012, respectively	$	515,775		$	277,223		$	29,961
Net investment gains	5,487			24,550			71,130
Other income	450			223			271
Total revenues	521,712			301,996			101,362
Operating costs and expense	148,288			122,562			133,326
Interest expense	125,352			120,066			124,298
Income (loss) before federal income taxes	248,072			59,368			(156,262		)
Federal income taxes:
Federal income taxes provided by subsidiaries on a separate return basis	366,721			225,845			132,379
Federal income tax expense on a consolidated return basis	(273,310		)	(154,928		)	(160,226		)
Net expense	93,411			70,917			(27,847		)
Income (loss) before undistributed equity in net income of subsidiaries	341,483			130,285			(184,109		)
Equity in undistributed net income of subsidiaries	307,401			369,640			694,701
Net income	$	648,884		$	499,925		$	510,592

________________

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)	2014			2013			2012
Cash flows (used in) from operating activities:
Net income	$	648,884		$	499,925		$	510,592
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(5,487		)	(24,550		)	(71,130		)
Depreciation and amortization	2,916			10,397			5,624
Equity in undistributed earnings of subsidiaries	(307,401		)	(369,640		)	(694,701		)
Tax payments received from subsidiaries	462,809			77,305			125,046
Federal income taxes provided by subsidiaries on a separate return basis	(366,721		)	(225,845		)	(132,379		)
Stock incentive plans	28,068			23,784			26,763
Change in:
Federal income taxes	(15,239		)	21,866			44,423
Other assets	(364		)	(821		)	911
Other liabilities	(39,780		)	(15,470		)	28,017
Accrued investment income	(820		)	967			97
Other, net	—			—			(13		)
Net cash (used in) from operating activities	406,865			(2,082		)	(156,750		)
Cash from (used in) investing activities:
Proceeds from sales of fixed maturity securities	289,683			230,854			93,354
Proceeds from maturities and prepayments of fixed maturity securities	103,646			68,918			121,191
Proceeds from sales of equity securities	7,356			23,395			72,565
Cost of purchases of fixed maturity securities	(605,768		)	(79,132		)	(255,885		)
Cost of purchases of equity securities	—			(4,668		)	—
Cost of acquired companies	(82,879		)	—			—
Investments in and advances to subsidiaries, net	34,191			(58,454		)	(16,480		)
Change in balance due to security broker	(2,151		)	6,918			(4,767		)
Net additions to real estate, furniture & equipment	(1,615		)	(1,896		)	(1,857		)
Net cash from (used in) investing activities	(257,537		)	185,935			8,121
Cash from (used in) financing activities:
Net proceeds from issuance of senior notes	344,472			339,627			345,823
Net proceeds from stock options exercised	—			53			13,544
Repayment of senior notes	—			(450,000		)	—
Purchase of common treasury shares	(238,933		)	(166,473		)	(134,456		)
Cash dividends to common stockholders	(181,489		)	(52,717		)	(183,947		)
Net cash from (used in) financing activities	(75,950		)	(329,510		)	40,964
Net increase (decrease) in cash and cash equivalents	73,378			(145,657		)	(107,665		)
Cash and cash equivalents at beginning of year	17,315			162,972			270,637
Cash and cash equivalents at end of year	$	90,693		$	17,315		$	162,972

________________

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, 2014

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 2013 and 2012 financial statements as originally reported to conform them to the presentation of the 2014 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.