10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2007


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Transition Period from to .

Commission File Number 1-15202

W. R. BERKLEY CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		22-1867895

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

475 Steamboat Road, Greenwich, Connecticut		06830

(Address of principal executive offices)		(Zip Code)

(203) 629-3000

(Registrant’s telephone number, including area code)

None

Former name, former address and former fiscal year,

if changed since last report.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one)

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

Number of shares of common stock, $.20 par value, outstanding as of October 31, 2007: 183,100,069

TABLE OF CONTENTS


Part I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure About Market Risk
	Item 4. Controls and Procedures
PART II — OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 1A. Risk Factors
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 6. Exhibits
SIGNATURES
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION

Part I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

W. R. Berkley Corporation and Subsidiaries
Consolidated Balance Sheets
(dollars in thousands)


	September 30,			December 31,
	2007			2006
	(Unaudited)
Assets
Investments:
Fixed maturity securities	$	10,024,635		$	9,158,607
Equity securities available for sale		955,340			866,422
Equity securities trading account		714,017			639,481
Partnerships and affiliates		525,549			449,854

Total investments		12,219,541			11,114,364

Cash and cash equivalents		591,279			754,247
Premiums and fees receivable		1,295,121			1,245,661
Due from reinsurers		905,716			928,258
Accrued investment income		128,756			118,045
Prepaid reinsurance premiums		186,323			169,965
Deferred policy acquisition costs		475,414			489,243
Real estate, furniture and equipment		200,432			183,249
Deferred Federal and foreign income taxes		141,353			142,634
Goodwill		103,345			67,962
Trading account receivable from brokers and clearing organizations		275,914			312,220
Other assets		172,645			130,641

Total assets	$	16,695,839		$	15,656,489


Liabilities and Stockholders’ Equity
Liabilities:
Reserves for losses and loss expenses	$	8,442,126		$	7,784,269
Unearned premiums		2,355,935			2,314,282
Due to reinsurers		126,187			149,427
Trading account securities sold but not yet purchased		146,151			170,075
Policyholders’ account balances		—			106,926
Other liabilities		710,541			654,596
Junior subordinated debentures		242,107			241,953
Senior notes and other debt		1,121,678			869,187

Total liabilities		13,144,725			12,290,715


Minority interest		34,384			30,615

Stockholders’ equity:
Preferred stock, par value $.10 per share:
Authorized 5,000,000 shares; issued and outstanding — none		—			—
Common stock, par value $.20 per share:
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 183,274,658 and 192,771,889 shares		47,024			47,024
Additional paid-in capital		901,788			859,787
Retained earnings		3,073,652			2,542,744
Accumulated other comprehensive income		91,481			111,613
Treasury stock, at cost, 51,843,260 and 42,346,029 shares		(597,215	)		(226,009	)

Total stockholders’ equity		3,516,730			3,335,159

Total liabilities and stockholders’ equity	$	16,695,839		$	15,656,489

See accompanying notes to interim consolidated financial statements.

W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share data)


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	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
Revenues from wholly-owned investees		41,739			—			61,227			—
Realized investment gains		812			1,734			13,482			3,736
Other income		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
Other operating 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


Earnings per share:
Basic	$	.97		$	.91		$	2.93		$	2.62


Diluted	$	.93		$	.87		$	2.81		$	2.49

See accompanying notes to interim consolidated financial statements.

W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(Unaudited)
(dollars in thousands)


	For The Nine Months
	Ended September 30,
	2007			2006
Common stock:
Beginning and end of period	$	47,024		$	47,024


Additional paid in capital:
Beginning of period	$	859,787		$	821,050
Stock options exercised, including tax benefits		26,929			9,696
Restricted stock units expensed		14,092			10,834
Stock options expensed		596			1,316
Stock issued to directors		384			692

End of period	$	901,788		$	843,588


Retained earnings:
Beginning of period	$	2,542,744		$	1,873,953
Net income		559,522			501,462
Dividends		(28,614	)		(23,057	)

End of period	$	3,073,652		$	2,352,358


Accumulated other comprehensive income:
Unrealized investment gains (losses):
Beginning of period	$	121,961		$	40,746
Net change in period		(38,845	)		52,253

End of period		83,116			92,999


Currency translation adjustments:
Beginning of period	$	3,748		$	(15,843	)
Net change in period		17,787			11,862

End of period		21,535			(3,981	)


Net pension asset:
Beginning of period	$	(14,096	)		—
Net change in period		926			—

End of period		(13,170	)		—


Total accumulated other comprehensive income:	$	91,481		$	89,018


Treasury stock:
Beginning of period	$	(226,009	)	$	(199,853	)
Stock options exercised		24,654			10,422
Stock issued to directors		117			89
Purchase of common stock		(395,977	)		(45,059	)

End of period	$	(597,215	)	$	(234,401	)

See accompanying notes to interim consolidated financial statements.

W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)


	For the Nine Months
	Ended September 30,
	2007			2006
Cash flows provided by operating activities:
Net income	$	559,522		$	501,462
Adjustments to reconcile net income to net cash flows provided by operating activities:
Realized investment gains		(13,482	)		(3,736	)
Depreciation and amortization		61,848			50,481
Minority interest		1,692			1,501
Equity in undistributed earnings of partnerships and affiliates		(23,043	)		(21,081	)
Stock incentive plans		15,421			12,931
Change in:
Trading account securities and related accounts		(71,191	)		(200,128	)
Premiums and fees receivable		(47,158	)		(122,413	)
Due from reinsurers		23,472			13,663
Accrued investment income		(12,468	)		(12,970	)
Prepaid reinsurance premiums		(13,837	)		(1,014	)
Deferred policy acquisition costs		(12,070	)		(32,174	)
Deferred income taxes		9,040			(39,368	)
Trading account receivables from broker and clearing organizations		36,306			(108,276	)
Other assets		(22,670	)		(7,698	)
Reserves for losses and loss expenses		648,043			851,170
Unearned premiums		36,375			179,615
Due to reinsurers		(25,352	)		5,602
Trading account securities sold but not yet purchased		(23,924	)		38,465
Policyholders’ account balances		(303	)		(1,565	)
Other liabilities		3,828			6,936

Net cash flows provided by operating activities		1,130,049			1,111,403

Cash flows used in investing activities:
Proceeds from sales, excluding trading account:
Fixed maturity securities		1,372,540			844,118
Equity securities		321,257			149,926
Maturities and prepayments of fixed maturities securities		984,504			651,489
Distributions from partnerships and affiliates		81,437			48,545
Cost of purchases, excluding trading account:
Fixed maturity securities		(3,299,106	)		(2,202,753	)
Equity securities		(469,428	)		(312,842	)
Investments in partnerships and affiliates		(92,649	)		(102,013	)
Change in balances due to/from security brokers		24,979			(44,199	)
Net additions to real estate, furniture and equipment		(21,388	)		(33,178	)
Payment for business purchased, net of cash acquired		(61,851	)		(2,463	)
Proceeds from sale of business, net of cash divested		(2,061	)		62
Other		—			618

Net cash flows used in investing activities		(1,161,766	)		(1,002,690	)

Cash flows used in financing activities:
Net proceeds from issuance of senior notes		246,644			—
Receipts credited to policyholders’ account balances		3,489			13,106
Return of policyholders’ account balances		(58	)		(287	)
Bank deposits received		10,215			10,462
Repayments to federal home loan bank		(2,075	)		(7,875	)
Net proceeds from stock options exercised		23,702			11,239
Repayment of senior notes		(704	)		(100,000	)
Cash dividends		(27,104	)		(21,769	)
Stock repurchases		(395,977	)		(45,059	)
Proceeds from (purchase of) minority shares		(33	)		2,218

Net cash used in financing activities		(141,901	)		(137,965	)

Change in cash due to foreign exchange rates		10,650			15,221

Net decrease in cash and cash equivalents		(162,968	)		(14,031	)
Cash and cash equivalents at beginning of year		754,247			672,941

Cash and cash equivalents at end of period	$	591,279		$	658,910


Supplemental disclosure of cash flow information:
Interest paid	$	62,530		$	65,847

Federal income taxes paid, net	$	202,933		$	218,616

See accompanying notes to consolidated financial statements.

W. R. Berkley Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements
(unaudited)

1. GENERAL

The accompanying consolidated financial statements should be read in conjunction with the following notes and with the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Reclassifications have been made in the 2006 financial statements as originally reported to conform them to the presentation of the 2007 financial statements.

The income tax provision has been computed based on the Company’s estimated annual effective tax rate, which differs from the federal income tax rate of 35% principally because of tax-exempt investment income.

The Company presents both basic and diluted earnings per share (EPS) amounts. Basic EPS is calculated by dividing net income by weighted average number of common shares outstanding during the year. Diluted EPS is based upon the weighted average number of common and common equivalent shares outstanding during the year and is calculated using the treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on EPS and, accordingly, are excluded from the calculation.

In the opinion of management, the financial information reflects all adjustments that are necessary for a fair presentation of financial position and results of operations for the interim periods. Seasonal weather variations and natural and man-made catastrophes can have a significant impact on the results of any one or more reporting periods.

The Company adopted FASB Interpretation 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes” effective January 1, 2007. The adoption of FIN 48 did not have an impact on the Company’s financial condition or results of operations. The Company believes there are no tax positions that would require disclosure under FIN 48. The federal tax returns for 2003 through 2006 are currently open and subject to examination. Statutes of limitations have not been extended in any significant tax jurisdiction. Tax years remain open in accordance with federal, foreign and local tax statutes.

2. COMPREHENSIVE INCOME

The following is a reconciliation of comprehensive income (dollars in thousands):


	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2007			2006			2007			2006
Net income	$	180,463		$	174,308		$	559,522		$	501,462
Other comprehensive income (loss):
Change in unrealized foreign exchange gains		5,244			5,150			17,787			11,862
Unrealized holding gains (losses) on investment securities arising during the period, net of taxes		53,501			118,400			(30,115	)		54,977
Reclassification adjustment for realized gains included in net income, net of taxes		(517	)		(1,505	)		(8,730	)		(2,724	)

Other comprehensive income (loss)		58,228			122,045			(21,058	)		64,115

Comprehensive income	$	238,691		$	296,353		$	538,464		$	565,577

3. INVESTMENTS

The cost, fair value and carrying value of fixed maturity securities and equity securities are as follows (dollars in thousands):


	Amortized		Fair		Carrying
	Cost		Value		Value
September 30, 2007
Fixed maturity securities:
Held to maturity	$	134,058	$	145,249	$	134,058
Available for sale		9,847,331		9,890,577		9,890,577

Total	$	9,981,389	$	10,035,826	$	10,024,635


Equity securities available for sale	$	891,000	$	955,340	$	955,340
Arbitrage trading account	$	714,017	$	714,017	$	714,017


	Amortized		Fair		Carrying
	Cost		Value		Value
December 31, 2006
Fixed maturity securities:
Held to maturity	$	147,028	$	160,875	$	147,028
Available for sale		8,967,036		9,011,579		9,011,579

Total	$	9,114,064	$	9,172,454	$	9,158,607


Equity securities available for sale	$	747,584	$	866,422	$	866,422
Arbitrage trading account	$	639,481	$	639,481	$	639,481

4. REINSURANCE CEDED

The Company reinsures a portion of its exposures principally to reduce its net liability on individual risks and to protect against catastrophic losses. Estimated amounts recoverable from reinsurers are net of reserves for uncollectible reinsurance of $2.7 million and $2.5 million as of September 30, 2007 and December 31, 2006, respectively. The following amounts arising under reinsurance ceded contracts have been deducted in arriving at the amounts reflected in the statement of income (dollars in thousands):


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2007		2006		2007		2006
Ceded premiums earned	$	123,597	$	117,224	$	355,654	$	353,891
Ceded losses incurred	$	71,631	$	71,558	$	207,755	$	216,645

5. ACQUISITIONS AND DISPOSITIONS

On January 31, 2007, the Company acquired Atlantic Aero Holdings, Inc., a fixed base operator located in Greensboro, North Carolina, and on July 17, 2007, the Company acquired Western Acquisition Corp., a fixed base operator located in Boise, Idaho. The aggregate purchase price for both of the companies was approximately $58 million. The companies each provide a full range of services to the general aviation market, including fuel and line service, aircraft sales and maintenance, avionics and engineering services and parts fabrication.

In September 2007, the Company purchased all the shares of outstanding common stock of Investors Guaranty Life Insurance Company, an inactive, widely licensed life insurance company, for approximately $10 million.

In March 2007, the Company sold its interest in Berkley International Philippines, Inc. and its subsidiaries (BIPI) for $25 million. The Company reported a pre-tax realized gain of $2 million from the sale of BIPI. For the year ended December 31, 2006, the Company reported revenues of $21 million and pre-tax earnings of $4.5 million from the operations of BIPI.

6. INDUSTRY SEGMENTS

The Company’s operations are presently conducted in five segments of the insurance business: specialty lines of insurance, regional property casualty insurance, alternative markets, reinsurance and international.

Our specialty segment underwrites complex and sophisticated third-party liability risks, principally within the excess and surplus lines. The primary lines of business are premises operations, products liability, commercial automobile, professional liability and property lines. The companies within the segment are divided along the different customer bases and product lines that they serve. The specialty units deliver their products through a variety of distribution channels depending on the customer base and particular risks insured. The customers in this segment are highly diverse.

Our regional segment provides commercial insurance products to customers primarily in 42 states and the District of Columbia. Key clients of this segment are small-to-mid-sized businesses and state and local governmental entities. The regional subsidiaries are organized geographically, which provides them with the flexibility to adapt quickly to local market conditions. The regional operations are conducted through four geographic regions based on markets served: Midwest, New England, Southern (excluding Florida) and Mid Atlantic.

Our alternative markets operations specialize in developing, insuring, reinsuring and administering self-insurance programs and other alternative risk transfer mechanisms. Our clients include employers, employer groups, insurers, and alternative market funds seeking less costly, more efficient ways to manage exposure to risks. In addition to providing insurance, the alternative markets segment also provides a wide variety of fee-based services, including consulting and administrative services.

Our reinsurance operations specialize in underwriting property casualty reinsurance on both a treaty and a facultative basis. The principal reinsurance units are facultative reinsurance, which writes individual certificates and program facultative business, treaty reinsurance, which functions as a traditional reinsurer in specialty and standard reinsurance lines, and Lloyd’s reinsurance, which writes property and casualty reinsurance through Lloyd’s.

Our international segment offers professional indemnity and other lines in the U.K. and Spain and commercial and personal property casualty insurance in Argentina and Brazil.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Income tax expense and benefits are calculated based upon the Company’s effective tax rate.

6. INDUSTRY SEGMENTS (continued)

Summary financial information about the Company’s operating segments is presented in the following table. Net income by segment consists of revenues less expenses related to the respective segment’s operations, including allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.


									Income
									Before
	Revenues								Taxes and
	Earned		Investment						Minority			Net
(dollars in thousands)	Premiums		Income		Other		Total		Interest			Income
For the three months ended September 30, 2007:
Specialty	$	441,944	$	56,392	$	—	$	498,336	$	124,391		$	86,620
Regional		315,358		23,939		—		339,297		53,507			37,226
Alternative Markets		165,686		31,096		23,690		220,472		60,006			42,182
Reinsurance		190,559		36,067		—		226,626		44,894			32,876
International		62,017		9,445		—		71,462		11,306			7,868
Corporate and eliminations		—		8,851		42,176		51,027		(37,213	)		(26,826	)
Realized investment gains		—		—		812		812		812			517

Consolidated	$	1,175,564	$	165,790	$	66,678	$	1,408,032	$	257,703		$	180,463


For the three months ended September 30, 2006:
Specialty	$	446,453	$	50,272	$	—	$	496,725	$	119,498		$	82,758
Regional		308,263		21,117		—		329,380		51,061			35,326
Alternative Markets		166,879		28,244		26,622		221,745		76,693			52,705
Reinsurance		215,028		33,194		—		248,222		31,191			23,630
International		57,234		8,474		—		65,708		5,039			4,077
Corporate and eliminations		—		4,483		511		4,994		(40,253	)		(25,693	)
Realized investment gains		—		—		1,734		1,734		1,734			1,505

Consolidated	$	1,193,857	$	145,784	$	28,867	$	1,368,508	$	244,963		$	174,308

6. INDUSTRY SEGMENTS (continued)


									Income
									Before
	Revenues								Taxes and
	Earned		Investment						Minority			Net
(dollars in thousands)	Premiums		Income		Other		Total		Interest			Income
For the nine months ended September 30, 2007:
Specialty	$	1,327,509	$	170,868	$	—	$	1,498,377	$	388,946		$	269,902
Regional		929,537		71,849		—		1,001,386		160,731			111,660
Alternative Markets		487,616		93,624		75,026		656,266		191,316			133,718
Reinsurance		572,823		116,625		—		689,448		137,193			100,838
International		184,652		26,045		—		210,697		26,577			18,170
Corporate and eliminations		—		21,143		62,837		83,980		(122,176	)		(83,496	)
Realized investment gains		—		—		13,482		13,482		13,482			8,730

Consolidated	$	3,502,137	$	500,154	$	151,345	$	4,153,636	$	796,069		$	559,522


For the nine months ended September 30, 2006:
Specialty	$	1,307,910	$	144,260	$	—	$	1,452,170	$	338,716		$	235,024
Regional		897,838		60,370		—		958,208		149,621			103,472
Alternative Markets		491,648		82,675		80,182		654,505		218,335			150,433
Reinsurance		666,577		96,625		—		763,202		95,287			71,889
International		162,941		23,562		—		186,503		21,771			15,221
Corporate and eliminations		—		14,856		1,208		16,064		(121,252	)		(77,301	)
Realized investment gains		—		—		3,736		3,736		3,736			2,724

Consolidated	$	3,526,914	$	422,348	$	85,126	$	4,034,388	$	706,214		$	501,462

Identifiable assets by segment are as follows (dollars in thousands):


	September 30,			December 31,
	2007			2006
Specialty	$	5,644,679		$	5,387,934
Regional		2,777,454			2,796,225
Alternative Markets		3,230,060			2,700,782
Reinsurance		5,153,444			5,231,317
International		786,166			811,662
Corporate, other and eliminations		(895,964	)		(1,271,431	)

Consolidated	$	16,695,839		$	15,656,489

5. INDUSTRY SEGMENTS (continued)

Net premiums earned by major line of business are as follows (dollars in thousands):


	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2007		2006		2007		2006
Premises operations	$	180,607	$	192,563	$	550,431	$	560,502
Automobile		70,608		67,752		208,672		198,226
Products liability		55,471		63,787		173,603		194,550
Property		54,875		42,706		155,263		118,212
Professional liability		38,812		39,748		116,311		118,410
Other		41,571		39,897		123,229		118,010

Specialty		441,944		446,453		1,327,509		1,307,910


Commercial multiple peril		118,576		118,301		353,669		350,419
Automobile		93,323		88,769		271,132		259,350
Workers’ compensation		62,552		64,330		187,724		184,187
Other		40,907		36,863		117,012		103,882

Regional		315,358		308,263		929,537		897,838


Excess workers’ compensation		79,838		77,890		233,390		227,604
Primary workers’ compensation		62,647		67,891		188,311		204,540
Other		23,201		21,098		65,915		59,504

Alternative Markets		165,686		166,879		487,616		491,648


Casualty		155,599		185,874		479,946		592,066
Property		34,960		29,154		92,877		74,511

Reinsurance		190,559		215,028		572,823		666,577


International		62,017		57,234		184,652		162,941

Total	$	1,175,564	$	1,193,857	$	3,502,137	$	3,526,914

7. COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES

The Company’s subsidiaries are subject to disputes, including litigation and arbitration, arising in the ordinary course of their insurance and reinsurance businesses. The Company’s estimates of the costs of settling such matters are reflected in its aggregate reserves for losses and loss expenses, and the Company does not believe that the ultimate outcome of such matters will have a material adverse effect on its financial condition or results of operations. However, adverse outcomes are possible and could negatively impact the Company’s financial condition and results of operations.

8. SUBSEQUENT EVENT

In October 2007, the Company acquired all the shares of outstanding stock of CGH Insurance Group, Inc., the owner of American Mining Insurance Company, for approximately $30 million.

In November 2007, the Company announced that it has agreed to repurchase the 20% minority interest in W. R. Berkley Insurance (Europe), Limited held by Kiln Ltd for approximately $50 million.

SAFE HARBOR STATEMENT

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 increasing level of competition and pricing pressure that we are currently facing, 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 maturity 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 service 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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

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 business segments: specialty insurance, regional property casualty insurance, alternative markets, reinsurance and international. The Company’s primary sources of revenues and earnings are insurance and investments.

The profitability of the Company’s insurance business is affected primarily by the adequacy of premium rates. The ultimate adequacy of premium rates is not known with certainty at the time a property casualty insurance policy is issued because premiums are determined before claims are reported. The ultimate adequacy of premium rates is affected mainly by the severity and frequency of claims, which are influenced by many factors, including natural and other disasters, regulatory measures and court decisions that define and change the extent of coverage and the effects of economic inflation on the amount of compensation due for injuries or losses. General insurance prices are also influenced by available insurance capacity, i.e., the level of policyholders’ surplus employed in the industry, and the industry’s willingness to deploy that capital. Recently, pricing and other terms have been affected by increasing competition.

The Company’s profitability is also affected by its investment income. The Company’s invested assets, which are derived from its own capital and cash flow from its insurance business, are invested principally in fixed maturity securities. The return on fixed maturity securities is affected primarily by general interest rates and the credit quality and duration of the securities. The Company also invests in equity securities, including equity securities related to merger arbitrage and convertible arbitrage strategies, as well as private equity securities.

Critical Accounting Estimates

The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses and assumed premiums. Management believes these policies and estimates are the most critical to its operations and require the most difficult, subjective and complex judgments.

Reserves for Losses and Loss Expenses. To recognize liabilities for unpaid losses, either known or unknown, insurers establish reserves, which is a balance sheet account representing estimates of future amounts needed to pay claims and related expenses with respect to insured events which have occurred. Estimates and assumptions relating to reserves for losses and loss expenses are based on complex and subjective judgments, often including the interplay of specific uncertainties with related accounting and actuarial measurements. Such estimates are also susceptible to change as significant periods of time may elapse between the occurrence of an insured loss, the report of the loss to the insurer, the ultimate determination of the cost of the loss and the insurer’s payment of that loss.

In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate payment. The estimate represents an informed judgment based on general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature and value of the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported (“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims, including legal and other fees and general expenses of administrating the claims adjustment process. Reserves are established based upon the then current legal interpretation of coverage provided.

In examining reserve adequacy, several factors are considered in addition to the economic value of losses. These factors include historical data, legal developments, changes in social attitudes and economic conditions, including the effects of inflation. The actuarial process relies on the basic assumption that past experience, adjusted judgmentally for the effects of current developments and anticipated trends, is an appropriate basis for predicting future outcomes. Reserve amounts are necessarily based on management’s informed estimates and judgments using currently available data. As additional experience and other data become available and are reviewed, these estimates and judgments may be revised. This may result in reserve increases or decreases that would be reflected in our results in periods in which such estimates and assumptions are changed.

Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what management expects the ultimate settlement and claim administration will cost. While the methods for establishing the reserves are well tested over time, some of the major assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. These estimates, which generally involve actuarial projections, are based on management’s assessment of facts and circumstances then known, as well as estimates of future trends in claims severity and frequency, judicial theories of liability and other factors, including the actions of third parties which are beyond the Company’s control. These variables are affected by internal and external events, such as inflation and economic volatility, judicial and litigation trends, reinsurance coverage and legislative changes, which make it more difficult to accurately predict claim costs. The inherent uncertainties of estimating reserves are greater for certain types of liabilities where long periods of time elapse before a definitive determination of liability is made. Because setting reserves is inherently uncertain, the Company cannot assure that its current reserves will prove adequate in light of subsequent events.

Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. For example, the paid loss and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” and in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit.

The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions. Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of aggregate policy limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles and attachment points.

The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line

of business within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns. Management believes the estimates and assumptions it makes in the reserving process provide the best estimate of the ultimate cost of settling claims and related expenses with respect to insured events which have occurred; however, different assumptions and variables could lead to significantly different reserve estimates.

Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include commercial automobile, primary workers’ compensation, commercial multi-peril business, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is little paid or incurred loss data to consider.

Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags. For example, as of December 31, 2006, initial loss estimates for accident years 1997 through 2005 were increased by an average of 5% for lines with short reporting lags and by an average of 20% for lines with long reporting lags. For the latest accident year ended December 31, 2006, initial loss estimates were $1.6 billion for lines with short reporting lags and $1.3 billion for lines with long reporting lags.

The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect historical changes, current trends and other factors observed. For example, in 2006 loss reserves for our commercial automobile business were increased to reflect an observed trend of higher severity losses, and in 2006 loss reserves for our California workers’ compensation business were decreased to reflect an observed trend of lower severity losses following the enactment of legislative reforms.

If the actual level of loss frequency or severity is higher or lower than expected, the ultimate losses will be different than management’s estimate. The following table reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity on our loss estimate for claims occurring in 2006 (dollars in thousands):


	Frequency (+/–)
Severity (+/–)	1%		5%		10%

1%	$	56,109	$	168,886	$	309,857
5%		168,886		286,129		432,683
10%		309,857		432,683		586,215

Our net reserves for losses and loss expenses of $7.6 billion as of September 30, 2007 relate to multiple accident years. Therefore, the impact of changes in frequency or severity for more than one accident year could be higher or lower than the amounts reflected above.

Approximately $1.9 billion, or 25%, of the Company’s net loss reserves as of September 30, 2007 relate to assumed reinsurance business. There is a higher degree of uncertainty and greater variability regarding estimates of assumed reinsurance loss reserves because those estimates are based, in part, upon information received from ceding companies. If information received from ceding companies is not timely or correct, the Company’s estimate of ultimate losses may not be accurate. Furthermore, due to delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is extended. Management considers the impact of delayed reporting in its selection of assumed loss development factors.

Information received from ceding companies is used to set initial expected loss ratios, to establish case reserves and to estimate reserves for incurred but not reported losses on assumed reinsurance business. This information, which is generally provided through reinsurance intermediaries, is gathered through the underwriting process and from periodic claim reports and other correspondence with ceding companies. The Company performs underwriting and claim audits of selected ceding companies to determine the accuracy and completeness of information provided to the Company. The information received from the ceding companies is supplemented by the Company’s own loss development experience with similar lines of business as well as industry loss trends and loss development benchmarks.

The following is a summary of the Company’s reserves for losses and loss expenses by business segment as of September 30, 2007 and December 31, 2006 (dollars in thousands):


	September 30,		December 31,
	2007		2006

Specialty	$	2,722,240	$	2,498,030
Regional		1,178,236		1,071,607
Alternative Markets		1,517,155		1,372,517
Reinsurance		1,882,295		1,764,767
International		301,967		240,676

Net reserves for losses and loss expenses		7,601,893		6,947,597

Ceded reserves for losses and loss expenses		840,233		836,672

Gross reserves for losses and loss expenses	$	8,442,126	$	7,784,269

The following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of September 30, 2007 and December 31, 2006 (dollars in thousands):


	Reported Case		Incurred But
	Reserves		Not Reported		Total

September 30, 2007
General liability	$	750,450	$	2,002,459	$	2,752,909
Workers’ compensation		794,357		943,207		1,737,564
Automobile		368,621		219,209		587,830
International		107,371		194,596		301,967
Other		119,318		220,010		339,328

Total primary		2,140,117		3,579,481		5,719,598
Reinsurance		715,376		1,166,919		1,882,295

Total	$	2,855,493	$	4,746,400	$	7,601,893


December 31, 2006
General liability	$	696,074	$	1,824,395	$	2,520,469
Workers’ compensation		687,127		909,076		1,596,203
Automobile		354,841		193,995		548,836
International		78,489		162,187		240,676
Other		98,368		178,278		276,646

Total primary		1,914,899		3,267,931		5,182,830
Reinsurance		680,272		1,084,495		1,764,767

Total	$	2,595,171	$	4,352,426	$	6,947,597

For the nine months ended September 30, 2007, the Company reported losses and loss expenses of $2.1 billion, of which $71 million represented a decrease in estimates for claims occurring in prior years. The estimates for claims occurring in prior years were decreased by $106 million for primary business and increased by $35 million for assumed reinsurance business. On an accident year basis, the change in prior year reserves is comprised of an increase in estimates of $123 million for claims occurring in accident years 2003 and prior, and a decrease in estimates of $194 million for claims occurring in accident years 2004 through 2006.

Case reserves for primary business increased 12% to $2.1 billion at September 30, 2007 from $1.9 billion at December 31, 2006 as a result of a 4% increase in the number of outstanding claims and a 10% increase in the average case reserve per claim. Reserves for incurred but not reported losses for primary business increased 10% to $3.6 billion at September 30, 2007 from $3.3 billion at December 31, 2006. Prior year reserves decreased by $58 million for the specialty segment, $24 million for the alternative market segment and $24 million for the regional segment. By line of business, prior year reserves decreased by $69 million, $22 million, $9 million and $6 million for general liability, workers’ compensation, property and commercial automobile, respectively.

Case reserves for reinsurance business increased 5% to $715 million at September 30, 2007 from $680 million at December 31, 2006. Reserves for incurred but not reported losses for reinsurance business increased 8% to $1,167 million at September 30, 2007 from $1,084 million at December 31, 2006. Prior year reserves increased $35 million as losses reported by ceding companies for those years were higher than expected. The Company sets its initial loss estimates based principally upon information obtained during the underwriting process and adjusts these estimates as losses are reported by ceding companies and additional information becomes available.

Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are made or revised, the related amount of earned premium, commissions and incurred losses associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $97 million and $139 million at September 30, 2007 and December 31, 2006, respectively. The assumed premium estimates are based upon terms set forth in the reinsurance agreements, information received from ceding companies during the underwriting and negotiation of the agreement, reports received from ceding companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own view of market conditions, economic trends and experience with similar lines of business. These premium estimates represent management’s best estimate of the ultimate premiums to be received under its assumed reinsurance agreements.

Results of Operations for the Nine Months Ended September 30, 2007 and 2006

Business Segment Results

The following is a summary of gross and net premiums written, premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of premiums earned), expense ratios (underwriting expenses expressed as a percentage of premiums earned) and combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the nine months ended September 30, 2007 and 2006. The combined ratio represents a measure of underwriting profitability, excluding investment income. A combined ratio in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit.


	For the Nine Months
	Ended September 30,
(Dollars in thousands)	2007			2006

Specialty
Gross premiums written	$	1,366,404		$	1,450,961
Net premiums written		1,288,917			1,376,340
Premiums earned		1,327,509			1,307,910
Loss ratio		57.2	%		60.0	%
Expense ratio		26.4	%		25.2	%
Combined ratio		83.6	%		85.2	%

Regional
Gross premiums written	$	1,104,431		$	1,086,500
Net premiums written		968,146			943,705
Premiums earned		929,537			897,838
Loss ratio		59.1	%		59.5	%
Expense ratio		31.3	%		30.6	%
Combined ratio		90.4	%		90.1	%

Alternative Markets
Gross premiums written	$	618,654		$	606,965
Net premiums written		541,578			531,686
Premiums earned		487,616			491,648
Loss ratio		57.9	%		52.8	%
Expense ratio		23.3	%		22.3	%
Combined ratio		81.2	%		75.1	%

Reinsurance
Gross premiums written	$	592,433		$	739,080
Net premiums written		548,121			699,929
Premiums earned		572,823			666,577
Loss ratio		66.8	%		73.5	%
Expense ratio		29.6	%		26.7	%
Combined ratio		96.4	%		100.2	%

International
Gross premiums written	$	211,228		$	174,866
Net premiums written		177,263			153,762
Premiums earned		184,652			162,941
Loss ratio		65.9	%		66.5	%
Expense ratio		31.6	%		31.9	%
Combined ratio		97.5	%		98.4	%

Consolidated
Gross premiums written	$	3,893,150		$	4,058,372
Net premiums written		3,524,025			3,705,422
Premiums earned		3,502,137			3,526,914
Loss ratio		59.8	%		61.7	%
Expense ratio		28.1	%		26.9	%
Combined ratio		87.9	%		88.6	%

The following table presents the Company’s net income and net income per share for the nine months ended September 30, 2007 and 2006 (amounts in thousands, except per share data):


	2007		2006

Net income	$	559,522	$	501,462
Weighted average diluted shares		199,247		201,276
Net income per diluted share	$	2.81	$	2.49

The increase in net income in 2007 compared with 2006 is primarily attributable to an 18% increase in investment income as a result of an increase in average invested assets. Underwriting results also improved due to a 1.9 percentage point decrease in the loss ratio (losses and loss expenses incurred expressed as percentage of premiums earned), which was partially offset by a 1.2 percentage point increase in the expense ratio (underwriting expenses experienced as a percentage of premiums earned).

Gross Premiums Written. Gross premiums written were $3,893 million in 2007, down 4% from 2006. The Company has experienced an increased level of price competition that began in 2004. This trend continued in 2007 with price levels for renewal business declining approximately 5% from the prior year period. A summary of gross premiums written in 2007 compared with 2006 by business segment follows:

	•		Specialty gross premiums decreased 6% to $1.4 billion in 2007 from $1.5 billion in 2006. The number of specialty policies issued in 2007 decreased 1%, and the average premium per policy decreased 5%. Average prices for renewal policies, adjusted for changes in exposure, decreased 5%. Gross premiums written decreased 17% for premises operations lines and 11% for products liability. Gross premiums written increased 16% for property lines, 3% for commercial automobile and 1% for professional liability.

	•		Regional gross premiums increased 2% to $1,104 million in 2007 from $1,087 million in 2006. The number of policies issued in 2007 increased 1%, and the average premium per policy increased 2%. Average prices for renewal policies, adjusted for changes in exposure, decreased 3%. Gross premiums written increased by 4% for commercial automobile and 1% for workers’ compensation. Gross premiums written for commercial multi-peril were unchanged. Gross premiums included assigned risk plan premiums, which are fully reinsured, of $70 million in 2007 and $84 million in 2006.

	•		Alternative markets gross premiums increased 2% to $619 million in 2007 from $607 million in 2006. The number of policies issued in 2007 increased 12%, and the average premium per policy decreased 9%. The increase in the number of policies issued and decrease in average premium per policy is primarily due to the number of smaller premium policies issued by a web-based workers’ compensation company that was formed in January 2006. Average prices for renewal policies, adjusted for changes in exposure, decreased 5%. Gross premiums written increased by 3% for excess workers’ compensation and decreased by 3% for primary workers’ compensation. Gross premiums included assigned risk plan premiums, which are fully reinsured, of $46 million in 2007 and $49 million in 2006.

	•		Reinsurance gross premiums decreased 20% to $592 million in 2007 from $739 million in 2006. Reinsurance premiums have been impacted by increasing competition and by customers retaining a greater amount of their exposure. Average prices for renewal business, adjusted for changes in exposure decreased by 4%. Casualty gross premiums written decreased 25% to $456 million, and property gross premiums written increased 7% to $136 million. The 2006 premiums included $98 million related to a reinsurance agreement that was not renewed in 2007.

	•		International gross premiums increased 21% to $211 million in 2007 from $175 million in 2006. The increase is due to growth in both Europe and South America and the effects of changes in foreign exchange rates, which were partially offset by the sale of Berkley International Philippines, Inc. in March 2007.

Premiums Earned. Premiums earned decreased 1% to $3,502 million from $3,527 million in 2006. Insurance premiums are earned ratably over the policy term, and therefore premiums earned in 2007 are related to policies bound during both 2007 and 2006. The 1% decrease in 2007 earned premiums reflects the underlying change in net premiums written in those periods.

Net Investment Income. Following is a summary of net investment income for the nine months ended September 30, 2007 and 2006 (dollars in thousands):


							Average Annualized
	Amount						Yield
	2007			2006			2007			2006
Fixed maturity securities, including cash	$	371,105		$	321,339			4.8	%		4.6	%
Arbitrage trading account		65,917			51,785			10.8			9.9
Equity securities available for sale		33,094			23,128			5.5			6.5
Investments in partnerships and affiliates		31,402			27,947			9.1			9.8
Other		8,510			2,962

Gross investment income		510,028			427,161			5.5			5.2
Investment expenses and interest on funds held		(9,874	)		(4,813	)

Total	$	500,154		$	422,348			5.4	%		5.2	%

Net investment income increased 18% to $500 million in 2007 from $422 million in 2006. Average invested assets (including cash and cash equivalents) increased 15% to $12.4 billion in 2007 compared with $10.9 billion in 2006. The increase was primarily a result of cash flow from operations. The average annualized gross yield on investments increased to 5.4% in 2007 from 5.2% in 2006 due primarily to higher yields on fixed maturity securities, including cash.

Insurance Service Fees. The alternative markets segment offers fee-based services to help clients develop and administer self-insurance programs, primarily for workers’ compensation coverage. Service fees were $75 million in 2007, down from $80 million in 2006, primarily as a result of a decline in fees for managing assigned risk plans.

Realized Investment Gains. Realized investment gains result primarily from sales of securities, as well as from provisions for other than temporary impairment in securities. Realized investment gains were $13 million in 2007 compared with $4 million in 2006. Realized gains in 2007 include a gain of $2 million from the sale of the Company’s business in the Philippines.

The Company buys and sells securities on a regular basis in order to maximize the total return on investments. Decisions to sell securities are based on management’s view of the underlying fundamentals of specific securities as well as management’s expectations regarding interest rates, credit spreads, currency values and general economic conditions.

Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were $61 million in 2007. These revenues were derived from a fixed base operator located in Greensboro, North Carolina, that the Company acquired in January 2007 and a fixed base operator located in Boise, Idaho, that the Company acquired in July 2007. These companies provide services to the general aviation market, including fuel and line service, aircraft sales and maintenance, avionics and engineering services and parts fabrication.

Losses and Loss Expenses. Losses and loss expenses decreased 4% to $2,095 million in 2007 from $2,175 million in 2006. The consolidated loss ratio decreased to 59.8% in 2007 from 61.7% in 2006 primarily as a result of favorable loss reserve development of $71 million in 2007 compared with unfavorable loss reserve development of $20 million in 2006. On an accident year basis, the estimated loss ratio for the first nine months of 2007 was approximately four points higher than the developed loss ratio for all of 2006 due to the effects of lower premium rates and estimated loss cost inflation.

A summary of loss ratios in 2007 compared with 2006 by business segment follows:

	•		Specialty’s loss ratio was 57.2% in 2007 compared with 60.0% in 2006 principally due to the impact of prior year reserve changes (favorable development was $58 million in 2007 compared to unfavorable development of $1 million in 2006).

	•		The regional loss ratio was 59.1% in 2007 compared with 59.5% in 2006. The decrease reflects the impact of prior year reserve changes (favorable development was $24 million in 2007 compared to unfavorable development of $14 million in 2006). Weather-related losses were $30 million in 2007 compared with $32 million in 2006.

	•		Alternative markets’ loss ratio was 57.9% in 2007 compared with 52.8% in 2006. The increase reflects the impact of prior year reserve changes (favorable development was $24 million in 2007 compared to $41 million in 2006) and higher costs related to the amortization of the discount on excess workers’ compensation reserves.

	•		The reinsurance loss ratio decreased to 66.8% in 2007 from 73.5% in 2006 due to improved underwriting results from the Company’s participation in business underwritten at Lloyd’s. Prior year reserves increased $35 million in 2007 compared to $46 million in 2006).

	•		The international loss ratio was 65.9% in 2007 compared with 66.5% in 2006.

Other Operating Expenses. Following is a summary of other operating costs and expenses for the nine months ended September 30, 2007 and 2006 (dollars in thousands):


	2007		2006
Underwriting expenses	$	984,508	$	948,099
Service company		68,656		66,818
Other costs and expenses		86,591		67,974

Total	$	1,139,755	$	1,082,891

Underwriting expenses are primarily comprised of commissions paid to agents and brokers, premium taxes and other assessments and internal underwriting costs. The consolidated expense ratio (underwriting expenses expressed as a percentage of premiums earned) increased to 28.1% in 2007 from 26.9% in 2006 as a result of a 4% increase in both commissions and internal costs.

Service company expenses, which represent the costs associated with the alternative markets’ fee-based business, increased 3% to $69 million primarily as a result of an increase in costs associated with the servicing of assigned risk plan business.

Other costs and expenses, which represent primarily general and administrative expenses for the parent company, increased 27% to $87 million as a result of higher compensation costs, including costs for restricted stock units and other long-term incentive plans, and other general expenses.

Expenses from Wholly-Owned Investees. Expenses from wholly-owned investees of $57 million in 2007 represent costs associated with revenues from wholly-owned investees described above.

Interest Expense. Interest expense decreased 6% to $66 million as a result of the redemption of $210 million 8.197% junior subordinated debentures in December 2006, which was partially offset by the issuance of $250 million 6.25% senior notes in February 2007.

Income Tax Expense. The effective income tax rate was 30% in 2007 and 29% in 2006. The effective tax rate differs from the federal income tax rate of 35% primarily because of tax-exempt investment income.

Results of Operations for The Three Months Ended September 30, 2007 and 2006

Business Segment Results

The following is a summary of gross and net premiums written, premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of premiums earned), expense ratios (underwriting expenses expressed as a percentage of premiums earned) and combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the three months ended September 30, 2007 and 2006. The combined ratio represents a measure of underwriting profitability, excluding investment income. A combined ratio in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit.


	For the Three Months
	Ended September 30,
(Dollars in thousands)	2007			2006

Specialty
Gross premiums written	$	427,878		$	454,835
Net premiums written		402,332			432,760
Premiums earned		441,944			446,453
Loss ratio		57.8	%		59.3	%
Expense ratio		26.8	%		25.2	%
Combined ratio		84.6	%		84.5	%

Regional
Gross premiums written	$	355,134		$	349,353
Net premiums written		312,716			309,414
Premiums earned		315,358			308,263
Loss ratio		58.7	%		59.7	%
Expense ratio		31.9	%		30.6	%
Combined ratio		90.6	%		90.3	%

Alternative Markets
Gross premiums written	$	214,320		$	209,674
Net premiums written		190,247			190,555
Premiums earned		165,686			166,879
Loss ratio		60.3	%		51.3	%
Expense ratio		23.2	%		22.6	%
Combined ratio		83.5	%		73.9	%

Reinsurance
Gross premiums written	$	177,198		$	233,419
Net premiums written		166,555			221,163
Premiums earned		190,559			215,028
Loss ratio		65.5	%		73.3	%
Expense ratio		29.9	%		27.7	%
Combined ratio		95.4	%		101.0	%

International
Gross premiums written	$	69,579		$	58,909
Net premiums written		60,639			55,014
Premiums earned		62,017			57,234
Loss ratio		66.5	%		71.0	%
Expense ratio		30.0	%		32.1	%
Combined ratio		96.5	%		103.1	%

Consolidated
Gross premiums written	$	1,244,109		$	1,306,190
Net premiums written		1,132,489			1,208,906
Premiums earned		1,175,564			1,193,857
Loss ratio		60.1	%		61.3	%
Expense ratio		28.4	%		27.2	%
Combined ratio		88.5	%		88.5	%

The following table presents the Company’s net income and net income per share for the three months ended September 30, 2007 and 2006 (amounts in thousands, except per share data):


	2007		2006

Net income	$	180,463	$	174,308
Weighted average diluted shares		193,719		201,295
Net income per diluted share	$	.93	$	.87

The increase in net income in 2007 compared with 2006 is primarily attributable to higher investment income as a result of an increase in average invested assets.

Gross Premiums Written. Gross premiums written were $1,244 million in 2007, down 5% from 2006. The Company has experienced an increased level of price competition that began in 2004. This trend continued in 2007 with price levels for renewal business declining approximately 5% from the prior year period. A summary of gross premiums written in 2007 compared with 2006 by business segment follows:

	•		Specialty gross premiums decreased 6% to $428 million in 2007 from $455 million in 2006. The number of specialty policies issued in 2007 increased 2%, and the average premium per policy decreased 7%. Average prices for renewal policies, adjusted for changes in exposure, decreased 6%. Gross premiums written decreased 14% for premises operations, 10% for commercial automobile and 9% for products liability. Gross premiums written increased 11% for property and 6% for professional liability.

	•		Regional gross premiums increased 2% to $355 million in 2007 from $349 million in 2006. The number of policies issued in 2007 increased 1%, and the average premium per policy was unchanged. Average prices for renewal policies, adjusted for changes in exposure, decreased 4%. Gross premiums written increased by 6% for commercial automobile. Gross premiums written decreased 3% for commercial multiple peril and 2% for workers’ compensation. Gross premiums also included assigned risk plan premiums, which are fully reinsured, of $21 million in 2007 and $20 million in 2006.

	•		Alternative markets gross premiums increased to 2% to $214 million in 2007 from $210 million in 2006. The number of policies issued in 2007 increased 22%, and the average premium per policy decreased 16%. The increase in the number of policies issued and decrease in average premium per policy is primarily due to the number of smaller premium policies issued by a web-based workers’ compensation company that was formed in January 2006. Average prices for renewal policies, adjusted for changes in exposure, decreased 5%. Gross premiums written increased 4% for excess workers’ compensation and decreased 3% for primary workers’ compensation. Gross premiums also included assigned risk plan premiums, which are fully reinsured, of $11 million in 2007 and $10 million in 2006.

	•		Reinsurance gross premiums decreased 24% to $177 million in 2007 from $233 million in 2006. Average prices for renewal business, adjusted for changes in exposure decreased by 6%. Casualty gross premiums written decreased 26% to $143 million, and property gross premiums written decreased 15% to $34 million. The 2006 premiums included $25 million related to a reinsurance agreement that was not renewed in 2007.

	•		International gross premiums increased 18% to $70 million in 2007 from $59 million in 2006. The increase is due to growth in both Europe and South America and the effects of changes in foreign exchange rates, which were partially offset by the sale of Berkley International Philippines, Inc. in March 2007.

Premiums Earned. Premiums earned decreased 2% to $1,176 million from $1,194 million in 2006. Insurance premiums are earned ratably over the policy term, and therefore premiums earned in 2007 are related to policies bound during both 2007 and 2006. The 2% decrease in 2007 earned premiums reflects the underlying change in net premiums written in those periods.

Net Investment Income. The following is a summary of net investment income for the three months ended September 30, 2007 and 2006 (dollars in thousands):


							Average Annualized
	Amount						Yield
	2007			2006			2007			2006
Fixed maturity securities, including cash	$	128,197		$	112,700			4.9	%		4.7	%
Arbitrage trading account		21,121			14,510			10.2			7.7
Equity securities available for sale		12,334			10,982			5.9			11.3
Investments in partnerships and affiliates		6,752			8,682			5.7			6.5
Other		2,839			662

Gross investment income		171,243			147,536			5.4			5.2
Investment expenses and interest on funds held		(5,453	)		(1,752	)

Total	$	165,790		$	145,784			5.2	%		5.2	%

Net investment income increased 14% to $166 million in 2007 from $146 million in 2006. Average invested assets (including cash and cash equivalents) increased 13% to $12.7 billion in 2007 compared with $11.3 billion in 2006. The increase was primarily a result of cash flow from operations. The average annualized gross yield on investments was 5.2% in 2007 and 2006 as higher yields on fixed maturity securities, including cash, was offset by an increase in interest expense on funds held under reinsurance agreements.

Insurance Service Fees. The alternative markets segment offers fee-based services to help clients develop and administer self-insurance programs, primarily for workers’ compensation coverage. Service fees were $24 million in 2007, down from $27 million in 2006, primarily as a result of a decline in fees for managing assigned risk plans.

Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were $42 million in 2007. The revenues from wholly-owned investees were derived from aviation businesses that the Company acquired in January and July 2007 as further described above.

Losses and Loss Expenses. Losses and loss expenses decreased 3% to $706 million in 2007 from $732 million in 2006. The consolidated loss ratio decreased to 60.1% in 2007 from 61.3% in 2006 primarily as a result of favorable loss reserve development of $18 million in 2007 compared with unfavorable loss reserve development of $6 million in 2006.

A summary of loss ratios in 2007 compared with 2006 by business segment follows:

	•		Specialty’s loss ratio was 57.8% in 2007 compared with 59.3% in 2006 principally due to favorable prior year loss reserve development.

	•		The regional loss ratio was 58.7% in 2007 compared with 59.7% in 2006. Weather-related losses were $8 million in 2007 compared with $7 million in 2006.

	•		Alternative markets’ loss ratio was 60.3% in 2007 compared with 51.3% in 2006. The increase reflects the impact of prior year reserve changes (favorable development was $6 million in 2007 compared to $16 million in 2006) and higher costs related to the amortization of the discount on excess workers’ compensation reserves.

	•		The reinsurance loss ratio was 65.5% in 2007 compared with 73.3% in 2006. The decrease was primarily due to improved underwriting results from the Company’s participation in business underwritten at Lloyd’s.

	•		The international loss ratio was 66.5% in 2007 compared with 71.0% in 2006 primarily due to lower estimated loss costs for accident year 2007 in Argentina.

Other Operating Expenses. Following is a summary of other operating costs and expenses for the three months ended September 30, 2007 and 2006 (dollars in thousands):


	2007		2006

Underwriting expenses	$	333,414	$	324,166
Service company		22,014		21,816
Other costs and expenses		27,102		22,329

Total	$	382,530	$	368,311

Underwriting expenses are primarily comprised of commissions paid to agents and brokers, premium taxes and other assessments and internal underwriting costs. The consolidated expense ratio (underwriting expenses expressed as a percentage of premiums earned) increased to 28.4% in 2007 from 27.2% in 2006 primarily a result of a 3% increase in commissions and internal costs.

Service company expenses, which represent the costs associated with the alternative markets’ fee-based business, increased 1% to $22 million primarily as a result of an increase in costs associated with the servicing of assigned risk plan business.

Other costs and expenses, which represent primarily general and administrative expenses for the parent company, increased 21% to $27 million primarily as a result of higher compensation costs, including costs for restricted stock units and other long-term incentive plans, and other general expenses.

Expenses from Wholly-Owned Investees. Expenses from wholly-owned investees of $39 million in 2007 represent costs associated with revenues from wholly-owned investees described above.

Interest Expense. Interest expense decreased 3% to $23 million as a result of the redemption of $210 million 8.197% junior subordinated debentures in December 2006, which was partially offset by the issuance of $250 million 6.25% senior notes in February 2007.

Investments

As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-term securities that, combined with expected cash flow, it believes adequate to meet payment obligations. The Company also attempts to maintain an appropriate relationship between the average duration of the investment portfolio and the approximate duration of its liabilities, i.e., policy claims and debt obligations.

The carrying value of the Company’s investment portfolio and investment-related assets were as follows (dollars in thousands):


	September 30,			December 31,
	2007			2006
Fixed maturity securities	$	10,024,635		$	9,158,607
Equity securities available for sale		955,340			866,422
Arbitrage securities trading account		714,017			639,481
Partnerships and affiliates		525,549			449,854

Total investments		12,219,541			11,114,364


Cash and cash equivalents		591,279			754,247

Trading account receivable from brokers and clearing organization		275,914			312,220

Trading account securities sold but not yet purchased		(146,151	)		(170,075	)

Unsettled purchases and sales		(23,437	)		1,542

Total	$	12,917,146		$	12,012,298

Fixed Maturities. The Company’s investment policy with respect to fixed maturity securities is generally to purchase instruments with the expectation of holding them to their maturity. However, management of the available for sale portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio as a result of changes in financial market conditions and tax considerations. At September 30, 2007 (as compared to December 31, 2006), the fixed maturities portfolio mix was as follows: U.S. Government securities were 11% (15% in 2006); state and municipal securities were 51% (50% in 2006); corporate securities were 10% (9% in 2006); mortgage-backed securities were 26% (22% in 2006); and foreign bonds were 2% (4% in 2006).

The Company’s philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing total return. The key factors that management considers in its investment decisions as to whether to hold or sell fixed maturity securities are its view of the underlying fundamentals of specific securities as well as its expectations regarding interest rates, credit spreads and currency values. In a period in which management expects interest rates to rise, the Company may sell longer duration securities in order to mitigate the impact of an interest rate rise on the market value of the portfolio. Similarly, in a period in which management expects credit spreads to widen, the Company may sell lower quality securities, and in a period in which management expects certain foreign currencies to decline in value, the Company may sell securities denominated in those foreign currencies. The sale of fixed maturity securities in order to achieve the objective of maximizing total return may result in realized gains; however, there is no reason to expect these gains to continue in future periods.

At September 30, 2007, the carrying value of residential mortgage securities was $1,587 million, of which $1,214 million was issued by or guaranteed by the U.S. government or a government sponsored entity. The remainder of the residential mortgage securities consists of prime ($254 million) and Alt A ($119 million) securities. The Company defines Alt A securities as securities issued by dedicated Alt A shelves and backed by loans made to borrowers with credit ratings that fall below prime (the highest rated borrowers) but above sub-prime. The Company’s Alt A securities are backed by fixed rate loans that were issued in 2003 and 2004 and have demonstrated good payment history and solid credit support characteristics to date. In addition, external funds that the Company invests in contain residential mortgage-backed securities, including securities with sub-prime loans. The Company’s proportionate share of those fund’s sub-prime securities is not significant.

Equity Securities Available for Sale. Equity securities available for sale primarily represent investments in common and preferred stocks of publicly traded real estate investment trusts, banks and utilities.

Arbitrage Trading Account. The trading account is comprised of direct investments in arbitrage securities and investments in arbitrage-related limited partnerships that specialize in merger arbitrage and convertible arbitrage strategies. Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced tender offers and mergers. Convertible arbitrage is the business of investing in convertible securities with the goal of capitalizing on price differentials between these securities and their underlying equities.

Partnerships and Affiliates. At September 30, 2007 (as compared to December 31, 2006), investments in partnerships and affiliates were as follows: equity in Kiln Ltd was $109 million ($96 million in 2006); real estate funds were $287 million ($275 million in 2006); and other investments were $130 million ($79 million in 2006).

Securities in an Unrealized Loss Position. The following table summarizes all securities in an unrealized loss position at September 30, 2007 and December 31, 2006 by the length of time those securities have been continuously in an unrealized loss position:


					Gross
	Number of		Aggregate		Unrealized
(Dollars in thousands)	Securities		Fair Value		Loss

September 30, 2007
Fixed maturities:
0– 6 months		85	$	1,205,794	$	11,082
7– 12 months		53		555,982		6,713
Over 12 months		241		2,098,580		30,294

Total		379	$	3,860,356	$	48,089

Equity securities available for sale:
0– 6 months		100	$	398,693	$	17,431
7– 12 months		15		45,748		1,384
Over 12 months		9		22,174		2,289

Total		124	$	466,615	$	21,104


December 31, 2006
Fixed maturities:
0– 6 months		100	$	802,595	$	2,309
7– 12 months		62		645,331		4,445
Over 12 months		269		2,843,721		44,389

Total		431	$	4,291,647	$	51,143

Equity securities available for sale:
0– 6 months		8	$	75,568	$	320
7– 12 months		9		60,853		250
Over 12 months		16		105,085		1,583

Total		33	$	241,506	$	2,153

At September 30, 2007, gross unrealized gains were $209 million, or 2% of total investments, and gross unrealized losses were $69 million, or 0.5% of total investments. There were 318 securities that have been continuously in an unrealized loss position for more than six months. Those securities had an aggregate fair value of $2.7 billion and an aggregate unrealized loss of $41 million. The decline in market value for these securities is primarily due to an increase in market interest rates.

Management regularly reviews all securities that have a fair value less than cost to determine whether an other than temporary impairment has occurred. In determining whether a decline in fair value is other than temporary, management assesses whether the fair value is expected to recover and whether the Company has the intent to hold the investment until it recovers. The Company’s assessment of its intent to hold an investment until it recovers is based on conditions at the time the assessment is made, including general market conditions, the Company’s overall investment strategy and management’s view of the underlying value of an investment relative to its current price. If a decline in value is considered other than temporary, the Company reduces the carrying value of the security and reports a realized loss on its statement of income.

The following table shows the composition by Standard & Poor’s (“S&P”) and Moody’s ratings of the fixed maturity securities in our portfolio with gross unrealized losses at September 30, 2007. Not all of the securities are rated by S&P and/or Moody’s (dollars in thousands).


		Unrealized Loss					Fair Value
									Percent to
S&P Rating	Moody’s Rating	Amount		Percent to Total			Amount		Total

AAA/AA/A	Aaa/Aa/A	$	44,155		91.9	%	$	3,589,314		93.0	%
BBB	Baa		3,528		7.3			230,406		6.0
BB	Bb		406		0.8			40,636		1.0

	Total	$	48,089		100.0	%	$	3,860,356		100.0	%

The scheduled maturity dates for fixed maturity securities in an unrealized loss position at September 30, 2007 are shown in the following table (dollars in thousands):


	Unrealized Loss					Fair Value
			Percent to					Percent to
Maturity	Amount		Total			Amount		Total

Less than one year	$	1,459		3.0	%	$	137,711		3.6	%
One year through five years		10,438		21.7			799,528		20.7
Five years through ten years		8,480		17.6			982,883		25.5
After ten years		12,312		25.6			780,649		20.2
Mortgage and asset-backed securities		15,400		32.1			1,159,585		30.0

Total fixed income securities	$	48,089		100.0	%	$	3,860,356		100.0	%

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Due to the periodic repayment of principal, the mortgage and asset-backed securities are estimated to have an effective maturity of approximately two years.

Liquidity and Capital Resources

Cash Flow. Cash flow provided from operating activities was $1,130 million during the nine months ended September 30, 2007 and $1,111 million in the comparable period of 2006. The levels of cash flow provided by operating activities in these periods, which are high by historical measures in relation to both earned premiums and net income, are a result of an increase in investment income and relatively low paid losses. Cash flow provided by operating activities in 2006 is net of cash transfers to the arbitrage trading account of $225 million.

The Company’s insurance subsidiaries’ principal sources of cash are premiums, investment income, service fees and proceeds from sales and maturities of portfolio investments. The principal uses of cash are payments for claims, taxes, operating expenses and dividends. The Company expects its insurance subsidiaries to fund the payment of losses with cash received from premiums, investment income and fees. The Company targets an average duration for its investment portfolio that is within one year of the average duration of its liabilities so that portions of its investment portfolio mature throughout the claim cycle and are available for the payment of claims if necessary. In the event operating cash flow and proceeds from maturities and prepayments of fixed income securities are not sufficient to fund claim payments and other cash requirements, the remainder of the Company’s cash and investments is available to pay claims and other obligations as they become due. The Company’s investment portfolio is highly liquid, with approximately 82% invested in cash, cash equivalents and marketable fixed income securities as of September 30, 2007. If the sale of fixed income securities were to become necessary, a realized gain or loss equal to the difference between the cost and sales price of securities sold would be recognized.

In February 2007, the Company issued $250 million of 6.25% senior notes due on February 15, 2037. During the first nine months of 2007, the Company repurchased 12,922,387 shares of its common stock for $396 million.

At September 30, 2007, the Company had senior notes, junior subordinated debentures and other debt outstanding with a carrying value of $1,364 million and a face amount of $1,382 million. The maturities of the outstanding debt are $90 million in 2008, $2 million in 2009, $150 million in 2010, $2 million in 2012, $200 million in 2013, $200 million in 2015, $150 million in 2019, $76 million in 2022, $12 million in 2023, $250 million in 2037 and $250 million in 2045 (prepayable in 2010).

At September 30, 2007, stockholders’ equity was $3.5 billion and total capitalization (stockholders’ equity, senior notes, junior subordinated debentures and other debt) was $4.9 billion. The percentage of the Company’s capital attributable to senior notes and other debt and junior subordinated debentures was 28% at September 30, 2007, compared with 25% at December 31, 2006.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company’s market risk generally represents the risk of loss that may result from the potential change in the fair value of the Company’s investment portfolio as a result of fluctuations in prices, interest rates and currency exchange rates. The Company attempts to manage its interest rate risk by maintaining an appropriate relationship between the average duration of its investment portfolio and the approximate duration of its liabilities, i.e., policy claims and debt obligations.

The duration of the investment portfolio was 3.6 years at September 30, 2007 and 3.3 years at December 31, 2006. The overall market risk relating to the Company’s portfolio has remained similar to the risk at December 31, 2006.

Item 4. Controls and Procedures

Disclosure Controls and Procedures. The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-14 as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company has in place effective controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act and the rules there under, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

Changes in Internal Control over Financial Reporting. During the quarter ended September 30, 2007, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Set forth below is a summary of the shares repurchased by the Company during the quarter and the number of shares remaining authorized for purchase by the Company.


							Maximum number of
	Total				Total number of shares		shares that may
	number of		Average price		purchased as part of		yet be purchased
	shares		paid per		publicly announced plans		under the plans
	purchased		share		or programs		or programs (1)

July 2007		5,620,000	$	31.05		5,620,000		14,740,488
August 2007		3,740,100	$	28.47		3,740,100		11,000,388
September 2007		341,000	$	28.92		341,000		10,659,388

Total		9,701,100	$	29.98		9,701,100


(1)		Remaining shares available for repurchase under the Company’s repurchase authorization of 20,000,000 shares approved by the Board of Directors on November 1, 2006.

On November 6, 2007, the Board of Directors increased the Company’s repurchase authorization to 20,000,000 shares.

Item 6. Exhibits

Number

	(31.1)		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a).

	(31.2)		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a).

	(32.1)		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


		W. R. BERKLEY CORPORATION

Date: November 9, 2007		/s/ William R. Berkley
		William R. Berkley
		Chairman of the Board and Chief Executive Officer

Date: November 9, 2007		/s/ Eugene G. Ballard

		Eugene G. Ballard
		Senior Vice President, Chief Financial Officer and Treasurer


/s/ William R. Berkley
William R. Berkley
Chairman of the Board and Chief Executive Officer

/s/ Eugene G. Ballard
Eugene G. Ballard
Senior Vice President — Chief Financial Officer and Treasurer

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	(1)		The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(2)		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.