Schedule II

W. R. Berkley Corporation

Condensed Financial Information of Registrant

Balance Sheets (Parent Company)



	December 31,
(In thousands)	2017			2016
Assets:
Cash and cash equivalents	$	45,062		$	124,803
Fixed maturity securities available for sale at fair value (cost $1,059,834 and $899,206 at December 31, 2017 and 2016, respectively)	1,052,240			894,748
Loans receivable	53,019			23,419
Equity securities available for sale, at fair value (cost $3,430 in 2017 and 2016)	3,430			3,430
Investment in subsidiaries	7,140,108			6,891,246
Current federal income taxes	—			15,455
Property, furniture and equipment at cost, less accumulated depreciation	14,421			14,798
Other assets	10,819			7,122
Total assets	$	8,319,099		$	7,975,021
Liabilities and stockholders’ equity
Liabilities:
Due to subsidiaries	$	232,756		$	234,014
Other liabilities	128,002			120,160
Current federal income taxes	10,486			—
Deferred federal income taxes	51,757			90,966
Subordinated debentures	728,218			727,630
Senior notes	1,756,536			1,755,043
Total liabilities	2,907,755			2,927,813
Stockholders’ equity:
Preferred stock	—			—
Common stock	47,024			47,024
Additional paid-in capital	1,048,283			1,037,446
Retained earnings (including accumulated undistributed net income of subsidiaries of $5,073,268 and $4,850,878 at December 31, 2017 and 2016, respectively)	6,956,882			6,595,987
Accumulated other comprehensive income	68,541			55,568
Treasury stock, at cost	(2,709,386		)	(2,688,817		)
Total stockholders’ equity	5,411,344			5,047,208
Total liabilities and stockholders’ equity	$	8,319,099		$	7,975,021

________________

See 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)	2017			2016			2015
Management fees and investment income including dividends from subsidiaries of $694,462, $700,664 and $642,421 for the years ended December 31, 2017, 2016 and 2015, respectively	$	738,923		$	726,742		$	655,318
Net investment (losses) gains	(4,286		)	909			696
Other income	805			376			348
Total revenues	735,442			728,027			656,362
Operating costs and expense	182,145			171,967			143,391
Interest expense	146,929			139,216			128,248
Income before federal income taxes	406,368			416,844			384,723
Federal income taxes:
Federal income taxes provided by subsidiaries on a separate return basis	115,597			327,520			272,180
Federal income tax expense on a consolidated return basis	(195,261		)	(246,389		)	(199,322		)
Net expense	(79,664		)	81,131			72,858
Income before undistributed equity in net income of subsidiaries	326,704			497,975			457,581
Equity in undistributed net income of subsidiaries	222,390			103,941			46,113
Net income	$	549,094		$	601,916		$	503,694

________________

See 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)	2017			2016			2015
Cash flows from operating activities:
Net income	$	549,094		$	601,916		$	503,694
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains (losses)	4,286			3,649			(696		)
Depreciation and amortization	2,039			2,744			2,693
Equity in undistributed earnings of subsidiaries	(222,390		)	(103,941		)	(46,113		)
Tax payments received from subsidiaries	98,313			414,386			311,482
Federal income taxes provided by subsidiaries on a separate return basis	(115,597		)	(327,520		)	(272,180		)
Stock incentive plans	38,075			37,174			29,725
Change in:
Federal income taxes	2,711			44,839			51,772
Other assets	(877		)	1,772			301
Other liabilities	18,661			(88,282		)	(92,752		)
Accrued investment income	(2,818		)	(2,743		)	524
Net cash from operating activities	371,497			583,994			488,450
Cash (used in) from investing activities:
Proceeds from sales of fixed maturity securities	849,330			373,252			380,986
Proceeds from maturities and prepayments of fixed maturity securities	316,611			210,904			123,639
Proceeds from sales of equity securities	—			—			308
Cost of purchases of fixed maturity securities	(1,329,379		)	(1,285,101		)	(432,645		)
Change in loans receivable	(29,600		)	(23,419		)	—
Investments in and advances to subsidiaries, net	(21,139		)	11,471			30,338
Net additions to real estate, furniture & equipment	(1,055		)	(3,042		)	(4,425		)
Net cash (used in) from investing activities	(215,232		)	(715,935		)	98,201
Cash (used in) from financing activities:
Net proceeds from issuance of senior notes	—			386,830			—
Repayment of senior notes	—			(9,353		)	(200,000		)
Purchase of common treasury shares	(47,807		)	(132,392		)	(223,652		)
Cash dividends to common stockholders	(188,199		)	(183,999		)	(58,034		)
Net cash (used in) from financing activities	(236,006		)	61,086			(481,686		)
Net (decrease) increase in cash and cash equivalents	(79,741		)	(70,855		)	104,965
Cash and cash equivalents at beginning of year	124,803			195,658			90,693
Cash and cash equivalents at end of year	$	45,062		$	124,803		$	195,658

________________

See 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, 2017

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 2016 and 2015 financial statements as originally reported to conform them to the presentation of the 2017 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.