Schedule II

W. R. Berkley Corporation

Condensed Financial Information of Registrant

Balance Sheets (Parent Company)



	December 31,
(In thousands)	2016			2015
Assets:
Cash and cash equivalents	$	124,803		$	195,658
Fixed maturity securities available for sale at fair value (cost $899,206 and $201,256 at December 31, 2016 and 2015, respectively)	894,748			201,738
Loans receivable	23,419			—
Equity securities available for sale, at fair value (cost $3,430 in 2016 and 2015)	3,430			3,430
Investment in subsidiaries	6,891,246			6,454,065
Deferred federal income taxes	—			37,135
Current federal income taxes	15,455			51,512
Property, furniture and equipment at cost, less accumulated depreciation	14,798			13,150
Other assets	7,122			6,153
Total assets	$	7,975,021		$	6,962,841
Liabilities and stockholders’ equity
Liabilities:
Due to subsidiaries	$	234,014		$	143,669
Other liabilities	120,160			115,737
Deferred federal income taxes	90,966			—
Subordinated debentures	727,630			340,320
Senior notes	1,755,043			1,762,869
Total liabilities	2,927,813			2,362,595
Stockholders’ equity:
Preferred stock	—			—
Common stock	47,024			47,024
Additional paid-in capital	1,037,446			1,005,455
Retained earnings (including accumulated undistributed net income of subsidiaries of $4,850,878 and $4,746,934 at December 31, 2016 and 2015, respectively)	6,595,987			6,178,070
Accumulated other comprehensive income (loss)	55,568			(66,698		)
Treasury stock, at cost	(2,688,817		)	(2,563,605		)
Total stockholders’ equity	5,047,208			4,600,246
Total liabilities and stockholders’ equity	$	7,975,021		$	6,962,841

________________

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)



	Year Ended December 31,
(In thousands)	2016			2015			2014
Management fees and investment income including dividends from subsidiaries of $700,664, $642,421 and $503,483 for the years ended December 31, 2016, 2015 and 2014, respectively	$	726,742		$	655,318		$	515,775
Net investment gains	909			696			5,487
Other income	376			348			450
Total revenues	728,027			656,362			521,712
Operating costs and expense	171,967			143,391			148,288
Interest expense	139,216			128,248			125,352
Income before federal income taxes	416,844			384,723			248,072
Federal income taxes:
Federal income taxes provided by subsidiaries on a separate return basis	327,520			272,180			366,721
Federal income tax expense on a consolidated return basis	(246,389		)	(199,322		)	(273,310		)
Net expense	81,131			72,858			93,411
Income before undistributed equity in net income of subsidiaries	497,975			457,581			341,483
Equity in undistributed net income of subsidiaries	103,941			46,113			307,401
Net income	$	601,916		$	503,694		$	648,884

________________

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)



	Year Ended December 31,
(In thousands)	2016			2015			2014
Cash flows from operating activities:
Net income	$	601,919		$	503,694		$	648,884
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	3,649			(696		)	(5,487		)
Depreciation and amortization	2,744			2,693			2,916
Equity in undistributed earnings of subsidiaries	(103,944		)	(46,113		)	(307,401		)
Tax payments received from subsidiaries	414,386			311,482			462,809
Federal income taxes provided by subsidiaries on a separate return basis	(327,520		)	(272,180		)	(366,721		)
Stock incentive plans	37,174			29,725			28,068
Change in:
Federal income taxes	44,839			51,772			(15,239		)
Other assets	1,772			301			(364		)
Other liabilities	(88,282		)	(92,752		)	(39,780		)
Accrued investment income	(2,743		)	524			(820		)
Net cash from operating activities	583,994			488,450			406,865
Cash from (used in) investing activities:
Proceeds from sales of fixed maturity securities	373,252			380,986			289,683
Proceeds from maturities and prepayments of fixed maturity securities	210,904			123,639			103,646
Proceeds from sales of equity securities	—			308			7,356
Cost of purchases of fixed maturity securities	(1,285,101		)	(432,645		)	(605,768		)
Change in loans receivable	(23,419		)	—			—
Cost of acquired companies	—			—			(82,879		)
Investments in and advances to subsidiaries, net	11,471			30,338			34,191
Change in balance due to security broker	—			—			(2,151		)
Net additions to real estate, furniture & equipment	(3,042		)	(4,425		)	(1,615		)
Net cash from (used in) investing activities	(715,935		)	98,201			(257,537		)
Cash from (used in) financing activities:
Net proceeds from issuance of senior notes	386,830			—			344,472
Repayment of senior notes	(9,353		)	(200,000		)	—
Purchase of common treasury shares	(132,392		)	(223,652		)	(238,933		)
Cash dividends to common stockholders	(183,999		)	(58,034		)	(181,489		)
Net cash from (used in) financing activities	61,086			(481,686		)	(75,950		)
Net increase (decrease) in cash and cash equivalents	(70,855		)	104,965			73,378
Cash and cash equivalents at beginning of year	195,658			90,693			17,315
Cash and cash equivalents at end of year	$	124,803		$	195,658		$	90,693

________________

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, 2016

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 2015 and 2014 financial statements as originally reported to conform them to the presentation of the 2016 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.