W. R. Berkley (WRB) 10-K/A 2002 FY Annual report (amended)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002
OR

[  ] 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 0-7849

W. R. BERKLEY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	22-1867895 (I.R.S. Employer Identification Number)
475 Steamboat Road, Greenwich, CT (Address of principal executive offices)	06830 (Zip Code)
Registrant’s telephone number, including area code:	(203) 629-3000

Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value $.20 per share
Rights to purchase Series A Junior Participating Preferred Stock

Securities registered pursuant to Section 12(g) of the Act: None

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 twelve 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 [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934). Yes [X] No [  ]

The aggregate market value of the voting and non-voting common stock held by non-affiliates (computed by reference to the price at which the common stock was last sold) as of the last business day of the Registrant’s most recently completed second fiscal quarter was $1,797,979,869.

Number of shares of common stock, $.20 par value, outstanding as of March 25, 2003: 55,277,226.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s 2002 Annual Report to Stockholders for the year ended December 31, 2002 are incorporated herein by reference in Part II, and portions of the registrant’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2002, are incorporated herein by reference in Part III.

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K/A is being filed solely to delete an incomplete sentence inadvertently contained in the section captioned "As a property casualty insurer, we face losses from natural and man-made catastrophes" appearing on page 21 included in the initial filing of the Form 10-K. Item 1 is hereby amended and restated in its entirety as follows:

PART I

ITEM  1.     BUSINESS

               W. R. Berkley Corporation, a Delaware corporation, is an insurance holding company which, through its subsidiaries, operates in five segments of the property casualty insurance business:

• Specialty lines of insurance, including excess and surplus lines and commercial transportation

• Alternative markets, including the management of alternative insurance market mechanisms

• Reinsurance

• Regional commercial property casualty insurance

• International

          Our holding company structure provides us with the flexibility to respond to local or specific market conditions and to pursue specialty business niches. It also allows us to be closer to our customers in order to better understand their individual needs and risk characteristics. Our structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment and reinsurance management and actuarial, financial and legal staff support.

          Unless otherwise indicated, all references in this Form 10-K to “W. R. Berkley,” “we,” “us,” “our,” the “Company” or similar terms refer to W. R. Berkley Corporation together with its subsidiaries.

          Our specialty insurance, alternative markets and reinsurance operations are conducted nationwide. Regional insurance operations are conducted primarily in the Midwest, New England, Southern (excluding Florida) and Mid Atlantic regions of the United States. International operations are conducted primarily in Argentina and the Philippines.

          During 2001, the Company discontinued its regional personal lines and alternative markets reinsurance business. These discontinued businesses, which were previously reported in the regional and reinsurance segments, are now reported as a separate discontinued business segment. Segment information for the prior period has been restated to reflect these changes.

          Net premiums written as reported, based on accounting principles generally accepted in the United States of America (“GAAP”), for each of the past five years were as follows:

			Year Ended December 31,
			2002			2001			2000			1999			1998
			(Amounts in thousands)
Net premiums written:
	Specialty insurance		$	861,693		$	527,502		$	285,525		$	260,380		$	253,472
	Alternative markets			305,357			151,942			98,001			73,089			66,418
	Reinsurance			680,205			236,784			276,640			309,180			269,635
	Regional			776,577			598,149			499,526			497,041			486,213
	International			79,313			150,090			118,981			86,172			75,106
	Discontinued business			7,345			193,629			227,571			201,857			195,410
		Total	$	2,710,490		$	1,858,096		$	1,506,244		$	1,427,719		$	1,346,254
Percentage of net premiums written:
	Specialty insurance			31.7	%		28.4	%		19.0	%		18.2	%		18.8	%
	Alternative markets			11.3			8.2			6.5			5.1			4.9
	Reinsurance			25.1			12.7			18.4			21.7			20.0
	Regional			28.7			32.2			33.1			34.9			36.2
	International			2.9			8.1			7.9			6.0			5.6
	Discontinued business			0.3			10.4			15.1			14.1			14.5
Total				100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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          The following sections briefly describe our insurance segments. All of the domestic insurance subsidiaries have an A.M. Best Company, Inc. (“A.M. Best”) rating of “A (Excellent)”, other than Admiral Insurance Company, which has a rating of “A+ (Superior).” A.M. Best’s ratings are based upon factors of concern to policyholders, insurance agents and brokers and are not directed toward the protection of investors. A.M. Best states: “Best’s Ratings reflect [its] opinion based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile. Ratings may be changed, suspended or withdrawn at any time for any reason at the discretion of A.M. Best Company. These ratings are not a warranty of an insurer’s current or future ability to meet its contractual obligations, nor are they a recommendation to buy, sell or hold any security.” A.M. Best reviews its ratings on a periodic basis, and ratings of the Company’s subsidiaries are therefore subject to change.

SPECIALTY INSURANCE

          Our specialty segment underwrites complex and sophisticated third-party liability risks, principally within the excess and surplus (“E&S”) lines, professional liability, commercial transportation and surety markets. The specialty business is conducted through seven operating units. The companies within the segment are divided along the different customer bases and product lines which 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.

          Admiral Insurance Company (“Admiral”) provides E&S coverages to medium and large-sized commercial risks that generally involve moderate to high degrees of risk. Admiral concentrates on commercial casualty, professional liability and commercial property lines of business produced by wholesale brokers.

          Carolina Casualty Insurance Company (“Carolina”) specializes in transportation insurance for long-haul trucking and public automobile risks, operating as an admitted carrier in all states.

          Nautilus Insurance Company (“Nautilus”) insures E&S risks which involve a lower degree of expected severity than those covered by Admiral. A substantial portion of Nautilus’ business is written on a binding authority basis, subject to certain contractual limitations.

          Monitor Liability Managers, Inc. (“Monitor”) specializes in professional liability insurance, including directors’ and officers’ liability, employment practices liability lawyers’ professional liability, management liability, and non-profit directors’ and officers’ liability coverages.

          Clermont Specialty Managers, Ltd. (“Clermont”) writes package insurance programs for luxury condominium, cooperative and rental apartment buildings and restaurants in the New York City metropolitan area.

          Monitor Surety Managers, Inc. (“Surety”) writes contract bonds, court and fiduciary bonds, license and permit bonds, and public official bonds, with a primary focus on providing surety bonds to mid-sized contractors.

          Berkley Medical Excess Underwriters, LLC (“Medical Excess”) was established at the end of 2001 to provide medical malpractice excess insurance and reinsurance coverage and services to hospitals and hospital associations.

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          The following table sets forth the percentage of direct premiums written by each specialty unit:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Admiral			39.8	%		40.7	%		39.5	%		36.6	%		37.7	%
Carolina			18.9			19.5			10.9			18.1			20.5
Nautilus			18.7			17.9			24.8			24.7			23.0
Monitor			16.1			16.4			17.8			14.2			12.9
Clermont			4.4			3.7			4.5			4.2			4.0
Surety			1.2			1.8			2.5			2.2			1.9
Medical Excess			0.9			—			—			—			—
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

          The following table sets forth the percentages of direct premiums written, by line, by our specialty insurance operations:

		Year Ended December 31,
		2002			2001			2000			1999			1998
General Liability			39.5	%		42.4	%		40.5	%		30.5	%		28.2	%
Automobile Liability			13.6			15.2			10.6			18.3			19.0
Professional Liability			16.0			11.3			14.5			16.5			16.9
Fire and Allied Lines			10.1			9.1			9.2			7.7			7.1
Directors’ and Officers’ Liability			7.0			6.6			7.0			6.6			7.7
Commercial Multi-Peril			3.4			4.4			4.6			3.3			3.1
Automobile Physical Damage			2.8			3.8			4.3			6.4			6.1
Medical Malpractice			4.0			2.9			3.7			6.0			6.1
Surety			1.2			1.6			2.5			2.1			2.0
Inland Marine			1.8			2.0			1.6			1.9			1.8
Workers’ Compensation			0.5			0.5			0.7			0.6			1.9
Other			0.1			0.2			0.8			0.1			0.1
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

ALTERNATIVE MARKETS

          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.

          Each of our alternative markets operating units is involved in risk management and is organized according to one of the following product areas: insuring excess workers’ compensation risks; insuring primary workers’ compensation risks; and providing non-risk bearing administrative services nationwide.

          Midwest Employers Casualty Company (“MECC”) provides excess workers’ compensation coverage to self-insured employers and groups above their self-insured or retained limits.

          Key Risk Insurance Company (“Key Risk”) offers primary workers’ compensation insurance in North Carolina. Insurance services are also provided through its affiliate, Key Risk Management Services.

          Preferred Employers Insurance Company (“Preferred Employers”) offers primary workers’ compensation insurance in California. Insurance coverage is provided primarily to owner-managed small employers.

          Berkley Risk Administrators Company (“BRAC”) implements and manages alternative risk management programs and self-insurance pools for business, governments, educational institutions, tribal nations and non-profit entities. BRAC also provides administrative and claims services to insurance companies. BRAC’s services include third-party administration,

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claims adjustment and management, employee benefit consulting, accounting services, insurance and reinsurance risk transfer, loss control and safety consulting, management information systems, regulatory compliance and relations, risk management consulting, alternative markets plan management, statistical analysis, underwriting and rating, and policy issuance.

          The following table sets forth the percentage gross premiums written by each alternative markets unit:

		Year Ended December 31,
		2002			2001			2000			1999			1998
MECC			51.6	%		53.6	%		63.4	%		68.7	%		86.2	%
Key Risk			19.6			24.3			26.4			27.4			13.8
Preferred Employers			24.3			20.6			9.7			3.9			—
BRAC			4.5			1.5			0.5			—			—
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

          The following table sets forth the percentage of revenues from the risk bearing and insurance services business:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Risk-bearing			76.2	%		68.1	%		65.1	%		60.7	%		58.4	%
Insurance services			23.8			31.9			34.9			39.3			41.6
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

REINSURANCE OPERATIONS

          Our reinsurance operations consist of seven operating units, which specialize in underwriting property casualty reinsurance on both a treaty and a facultative basis.

          Signet Star Re, LLC (“Signet Star”) functions as a traditional reinsurer that focuses on specialty lines of business where knowledge and expertise in a specific area is valued over the capital scale of the reinsurance provider. Signet Star emphasizes casualty excess of loss treaties and prefers to take significant participations in order to have greater influence over the terms and conditions of coverage. Signet Star is committed exclusively to the broker market segment of the treaty reinsurance industry.

          Lloyd’s Reinsurance represents quota share reinsurance contracts with MAP Capital Limited, a Lloyd’s corporate member, and two Lloyd’s syndicates managed by Kiln plc. Map Capital Limited and the Lloyd’s syndicates underwrite a broad range of mainly short-tail classes of business on a worldwide basis.

          Facultative ReSources, Inc. (“Fac Re”) specializes in individual certificate and program facultative business developed through brokers. Its highly experienced underwriters seek to offset the underwriting and pricing cycles in the underlying insurance business by developing risk management solutions and through superior risk selection. Casualty facultative business is written on a direct basis by Fac Re’s affiliate, BF Re Underwriting, LLC.

          Vela Insurance Services, LLC (“Vela”) is an excess and surplus lines underwriting manager that specializes in providing general liability and product liability coverages to small and medium size accounts.

          Berkley Underwriting Partners, LLC (“Berkley Underwriting Partners”) oversees managing general underwriting (MGU) program business.

          Berkley Capital Underwriters, LLC (“Berkley Capital Underwriters”) offers quota share reinsurance to insurance companies where capital constraint is the primary obstacle to increasing their underwriting activities.

          Fidelity & Surety Reinsurance Managers, LLC (“Fidelity and Surety”) offers reinsurance coverage to a limited number of small fidelity and surety accounts.

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          The following table sets forth the percentages of gross premiums written by each reinsurance unit:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Signet Star			28.0	%		46.5	%		63.8	%		73.2	%		78.4	%
Lloyd’s Reinsurance			24.9			—			—			—			—
Fac Re			21.8			23.9			14.4			12.4			12.8
Vela			10.3			14.6			5.1			2.5			2.0
Berkley Underwriting Partners			9.8			9.1			9.2			4.2			—
Berkley Capital Underwriters			3.8			—			—			—			—
Fidelity and Surety			1.4			5.9			7.5			7.7			6.8
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

          The following table sets forth the percentage of gross premiums written, by property versus casualty business, by our reinsurance operations:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Property			24.8	%		8.4	%		14.4	%		20.6	%		31.4	%
Casualty			75.2			91.6			85.6			79.4			68.6
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

REGIONAL INSURANCE OPERATIONS

          Our regional subsidiaries provide commercial insurance products to customers primarily in 32 states. Key clients of this segment are small-to-mid-sized businesses and governmental entities. The regional subsidiaries are organized geographically, which provides them with the flexibility to adapt to local market conditions, while enjoying the superior administrative capabilities and financial strength of W. R. Berkley. The regional operations are conducted through four geographic regions based on markets served: Midwest, New England, Southern (excluding Florida) and Mid Atlantic.

          The regional subsidiaries primarily sell our insurance products through a network of non-exclusive independent agents who are compensated on a commission basis. Our regional companies underwrite all major commercial lines.

          The following table sets forth the percentage of direct premiums written by each region:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Midwest			39.8	%		42.3	%		42.9	%		45.1	%		45.9	%
New England			28.7			26.7			24.7			21.5			20.3
Southern			16.7			15.8			16.4			14.4			14.3
Mid Atlantic			14.8			15.2			16.0			19.0			19.5
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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          The following table sets forth the percentages of direct premiums written, by line, by our regional insurance operations:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Commercial Multi-Peril			36.2	%		29.9	%		28.9	%		28.1	%		26.9	%
Workers’ Compensation			24.9			24.3			22.7			22.8			24.2
Auto Liability			17.4			17.9			18.9			18.7			18.6
Auto Physical Damage			7.9			8.3			9.0			9.0			8.5
General Liability			6.1			8.3			8.7			8.7			8.8
Fire and Allied Lines			2.2			4.3			4.3			4.9			5.2
Inland Marine			2.6			3.9			4.1			4.4			4.2
Surety			0.8			1.0			1.0			0.9			0.9
Ocean Marine			0.7			0.9			1.0			0.9			0.8
Other			1.2			1.2			1.4			1.6			1.9
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

          The following table sets forth the percentages of direct premiums written, by state, by our regional insurance operations:

Year Ended December 31,		2002			2001			2000			1999			1998
State
Kansas			8.3	%		7.9	%		5.0	%		4.8	%		5.0	%
Maine			7.5			7.9			8.0			6.8			8.0
New Hampshire			6.9			7.8			7.2			6.5			6.3
Massachusetts			7.2			7.2			5.8			4.6			2.9
Texas			6.2			6.3			6.0			5.3			5.3
Iowa			4.6			5.5			6.5			6.4			6.8
Nebraska			4.8			5.4			5.3			5.1			4.8
North Carolina			4.0			4.9			5.4			6.0			6.1
Minnesota			3.5			3.7			4.1			5.5			6.2
Vermont			4.1			3.7			3.2			3.0			3.2
Colorado			3.3			3.6			4.4			3.7			3.5
Missouri			3.2			3.5			3.7			4.4			4.4
South Dakota			3.6			3.4			2.9			3.0			3.1
Virginia			2.7			3.4			3.5			3.6			4.1
Wisconsin			2.7			2.9			2.7			3.0			3.0
Mississippi			2.1			2.5			3.1			3.1			4.0
Pennsylvania			3.9			2.4			2.1			3.7			3.3
Arkansas			1.9			2.3			2.7			2.2			2.3
Illinois			2.2			2.3			2.7			3.0			3.4
South Carolina			1.3			1.6			2.0			1.9			2.0
Tennessee			1.8			1.6			2.0			2.0			1.7
Oklahoma			1.5			1.5			1.3			1.0			0.8
Idaho			1.5			1.3			1.2			1.5			1.9
Other			11.2			7.4			9.2			9.9			7.9
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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INTERNATIONAL OPERATIONS

          In 1995, the Company and Northwestern Mutual Life International, Inc. (“NML”), a wholly-owned subsidiary of The Northwestern Mutual Life Insurance Company, entered into a joint venture to form Berkley International, LLC (“Berkley International”), a limited liability company. We agreed to contribute up to $65 million to Berkley International in exchange for a 65% membership interest and NML agreed to contribute up to $35 million to Berkley International in exchange for a 35% membership interest.

          Applying the same approach that we take for our domestic businesses, we believe that decentralized control is key to the success of our international effort. For example, we hire local insurance executives who have specialized knowledge of their customers, markets and products, and we link their compensation to meeting performance objectives.

          International operations are conducted in Argentina and the Philippines. In Argentina, we currently offer commercial and personal property casualty insurance. Our Argentine subsidiary ceased writing life insurance business in 2002 and began a process of liquidating its life insurance in-force. In the Philippines, we provide savings and life products to customers, including endowment policies to pre-fund education costs and retirement income.

          The following table set forth the percentages of direct premiums for our international operations:

			Year Ended December 31,
			2002			2001			2000			1999			1998
Property casualty				72.3	%		77.9	%		72.3	%		72.3	%		85.5	%
Life				10.0			12.4			14.7			16.5			10.9
	Total Argentina			82.3			90.3			87.0			88.8			96.4
Philippines - Life				17.7			9.7			13.0			11.2			3.6
		Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

DISCONTINUED BUSINESS

          In the third quarter of 2001, the Company discontinued its personal lines business, both homeowners and private passenger automobile, and the alternative markets division of its reinsurance segment, by not renewing existing policies or treaties and ceasing to write new business.

     The following table set forth the percentages of premiums for our discontinued business:

		Year Ended December 31,
		2002			2001			2000			1999			1998
Personal lines			68.3	%		61.8	%		61.8	%		74.3	%		77.7	%
Alternative markets reinsurance			31.7			38.2			38.2			25.7			22.3
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

RECENT DEVELOPMENTS

          In March 2003, the Company announced that it intends to form a United Kingdom authorized insurance company. It is expected that the enterprise will be London-based and will specialize in principally U.K. domestic casualty risks. It is anticipated that the company will commence operation in the third quarter of 2003, subject to regulatory and other approvals.

          During the first quarter of 2003, the Company issued $200 million (face amount) of ten year 5.875% senior notes and repaid $61 million of maturing debt.

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Results by Industry Segment

               Summary financial information about our operating segments is presented on a GAAP basis in the following table (all amounts include realized capital gains and losses):

	Year Ended December 31,
	2002			2001			2000			1999			1998
				(Amounts in thousands)
Specialty Insurance
Total revenues	$	773,187		$	440,650		$	324,859		$	309,068		$	311,955
Income before income taxes		130,477			28,806			31,836			39,261			85,889
Alternative Markets
Total revenues		362,147			234,121			189,795			169,221			162,682
Income before income taxes		65,612			32,971			35,315			20,593			34,241
Reinsurance
Total revenues		514,253			281,490			349,164			341,940			297,144
Income (loss) before income taxes		39,299			(54,502	)		27,760			14,091			33,858
Regional
Total revenues		757,473			614,924			565,327			541,368			526,099
Income (loss) before income taxes		111,807			44,403			8,761			(78,895	)		(3,736	)
International
Total revenues		104,076			137,683			118,234			93,878			80,287
Income (loss) before income taxes		7,710			(6,082	)		6,853			3,535			(7,017	)
Discontinued business
Total revenues		55,774			232,403			232,392			213,816			199,673
Loss before income taxes		(10,682	)		(133,480	)		(9,936	)		(14,141	)		(18,528	)

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          The table below represents summary underwriting ratios, on a GAAP accounting basis for our insurance companies and the insurance industry. The combined ratio represents a measure of underwriting profitability, excluding investment income. A number in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit:

	Year Ended December 31,
	2002			2001			2000			1999			1998
Specialty Insurance
Loss ratio		64.0	%		71.4	%		73.2	%		68.0	%		61.9	%
Expense ratio		26.3			31.1			33.6			35.2			31.5
Combined ratio		90.3	%		102.5	%		106.8	%		103.2	%		93.4	%
Alternative Markets
Loss ratio		66.7	%		76.5	%		70.2	%		65.8	%		61.4	%
Expense ratio		29.6			32.9			38.7			41.5			43.4
Combined ratio		96.3	%		109.4	%		108.9	%		107.3	%		104.8	%
Reinsurance
Loss ratio		73.0	%		104.4	%		73.2	%		76.0	%		74.3	%
Expense ratio		29.9			36.8			33.2			33.4			31.6
Combined ratio		102.9	%		141.2	%		106.4	%		109.4	%		105.9	%
Regional
Loss ratio		59.1	%		67.2	%		75.5	%		87.1	%		76.4	%
Expense ratio		32.4	%		35.0			35.1			37.5			36.7
Combined ratio		91.5	%		102.2	%		110.6	%		124.6	%		113.1	%
International
Loss ratio		54.2	%		61.4	%		62.1	%		55.4	%		59.7	%
Expense ratio		51.3			40.6			41.7			47.5			59.9
Combined ratio		105.5	%		102.0	%		103.8	%		102.9	%		119.6	%
Discontinued Business
Loss ratio		98.7	%		131.4	%		75.9	%		77.0	%		76.0	%
Expense ratio		30.8			33.0			32.8			34.0			37.4
Combined ratio		129.5	%		164.4	%		108.7	%		111.0	%		113.4	%
Total
Loss ratio		65.0	%		82.1	%		73.4	%		76.8	%		71.6	%
Expense ratio		30.4			34.4			34.8			36.5			36.5
Combined ratio		95.4	%		116.5	%		108.2	%		113.3	%		108.1	%

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Investments

          Investment results before income tax effects were as follows:

	Year Ended December 31,
	2002			2001			2000			1999			1998
	(Amounts in thousands)
Average investments, at cost	$	3,881,121		$	3,279,830		$	3,046,364		$	3,068,324		$	3,013,612
Investment income, before expenses	$	210,900		$	206,656		$	219,955		$	198,556		$	206,065
Percent earned on average investments		5.4	%		6.3	%		7.2	%		6.5	%		6.8	%
Realized gains (losses)	$	15,214		$	(12,252	)	$	7,535		$	(5,683	)	$	23,857
Change in unrealized investment gains (losses) (1)	$	124,188		$	31,277		$	109,273		$	(167,020	)	$	(3,253	)

(1) The change in unrealized investment gains (losses) represents the difference between fair value and cost of investments at the beginning and end of the calendar year, including investments carried at cost.

          The percentages of the fixed maturity portfolio categorized by contractual maturity, based on fair value, on the dates indicated, are set forth below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations.

		2002			2001			2000			1999			1998
1 year or less			3.1	%		3.2	%		3.5	%		3.0	%		1.7	%
Over 1 year through 5 years			16.9			20.5			22.1			16.4			16.0
Over 5 years through 10 years			25.4			23.2			21.8			26.0			24.4
Over 10 years			27.8			26.2			27.7			34.6			37.2
Mortgage-backed securities			26.8			26.9			24.9			20.0			20.7
	Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Loss and Loss Adjustment Expense Reserves

               In the property casualty insurance industry, it is not unusual for significant periods of time to elapse between the occurrence of an insured loss, the report of the loss to the insurer and the insurer’s payment of that loss. To recognize liabilities for unpaid losses, 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. Our loss reserves reflect current estimates of the ultimate cost of closing outstanding claims. Other than our excess workers’ compensation business and the workers’ compensation portion of our reinsurance business, as discussed below, we do not discount our reserves for financial reporting purposes.

               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 which provide for losses incurred but not yet reported to the insurer, potential inadequacy of case reserves, the estimated expenses of settling claims, including legal and other fees and general expenses of administering the claims adjustment process (“LAE”), and a provision for potentially uncollectible reinsurance.

          In examining reserve adequacy, several factors are considered, including 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 events. Reserve amounts are necessarily based on management’s informed estimates and judgments using data currently available. As additional experience and other data become available and are reviewed, these estimates and judgments are revised. This may result in increases or decreases to reserves for insured

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events of prior years. The reserving process implicitly recognizes the impact of inflation and other factors affecting loss costs by taking into account changes in historical claim patterns and perceived trends. There is no precise method to evaluate the impact of any specific factor on the adequacy of reserves, because the ultimate cost of closing claims is influenced by numerous factors.

          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 fluctuation. In particular, high levels of jury verdicts against insurers, as well as judicial decisions which “re-formulate” policies to expand coverage to include previously unforeseen theories of liability, e.g., those regarding pollution, other environmental exposures or man-made catastrophes, have produced unanticipated claims and increased the difficulty of estimating the loss and loss adjustment expense reserves.

          We discount our liabilities for excess workers’ compensation business and the workers’ compensation portion of our reinsurance business because of the long period of time over which losses are paid. Discounting is intended to appropriately match losses and loss expenses to income earned on investment securities supporting the liabilities. The expected losses and loss expense payout pattern subject to discounting was derived from the Company’s loss payout experience and is supplemented with data compiled from insurance companies writing similar business. The liabilities for losses and loss expenses have been discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve for non-proportional business, and at the statutory rate for proportional business. The discount rates range from 3.9% to 6.5% with a weighted average rate of 5.3%. The aggregate net discount, after reflecting the effects of ceded reinsurance, is $293,000,000, $243,000,000 and $223,000,000 at December 31, 2002, 2001 and 2000, respectively.

          To date, known asbestos and environmental claims at our insurance company subsidiaries have not had a material impact on our operations. Environmental claims have not materially impacted us because these subsidiaries generally did not insure the larger industrial companies which are subject to significant environmental exposures.

          Our net reserves for losses and loss adjustment expenses relating to asbestos and environmental claims were $28,509,000 and $24,794,000 at December 31, 2002 and 2001, respectively. The Company’s gross reserves for losses and loss adjustment expenses relating to asbestos and environmental claims were $47,637,000 and $43,405,000 at December 31, 2002 and 2001, respectively. Net incurred losses and loss expenses (recoveries) for reported asbestos and environmental claims were approximately $6,652,000, ($4,503,000) and $1,602,000 in 2002, 2001 and 2000, respectively. Net paid losses and loss expenses (receivables) for reported asbestos and environmental claims were approximately $2,938,000, $125,000 and $3,123,000 in 2002, 2001 and 2000, respectively. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make a reasonable actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential affect of significant unresolved legal matters, including coverage issues as well as the cost of litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are highly uncertain.

          The following table sets forth the components of our gross loss reserves and net provision for losses and loss expense (amounts in thousands):

			2002		2001		2000
Gross Reserves:
	Property casualty		$	3,167,925	$	2,763,850	$	2,475,805
	Life			42,707		53,832		58,112
		Total	$	3,210,632	$	2,817,682	$	2,533,917
Net provision for losses and loss expense:
	Property casualty		$	1,457,254	$	1,360,683	$	1,072,632
	Life			6,717		19,817		21,779
		Total	$	1,463,971	$	1,380,500	$	1,094,411

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          The table below provides a reconciliation of the beginning and ending property casualty reserves, on a gross of reinsurance basis (amounts in thousands) (1):

			2002			2001		2000
Net reserves at beginning of year			$	2,033,293		$	1,818,049	$	1,723,865
Net provision for losses and loss expenses:
		Claims occurring during the current year		1,288,071			1,140,622		1,047,060
		Increase in estimates for claims occurring in prior years		173,732			211,344		14,042
		Net decrease (increase) in discount for prior years		(4,549	)		8,717		11,530
				1,457,254			1,360,683		1,072,632
	Net payments for claims:
		Current year		373,541			443,802		394,401
		Prior years		793,765			701,637		584,047
				1,167,306			1,145,439		978,448
Net reserves at end of year				2,323,241			2,033,293		1,818,049
Ceded reserves at end of year				844,684			730,557		657,756
Gross reserves at end of year			$	3,167,925		$	2,763,850	$	2,475,805

     A reconciliation, as of December 31, 2002, between the reserves reported in the accompanying consolidated financial statements which have been prepared in accordance with GAAP and those reported on the basis of statutory accounting principles (“SAP”) is as follows (amounts in thousands):

Net reserves reported on a SAP basis		$	2,353,263
Additions (deductions) to statutory reserves:
	International property & casualty reserves		19,538
	Loss reserve discounting (2)		(49,560	)
Net reserves reported on a GAAP basis			2,323,241
	Ceded reserves reclassified as assets		844,684
Gross reserves reported on a GAAP basis		$	3,167,925

(1)	Claims occurring during the current year is net of discount of $38,939,000, $24,781,000 and $39,990,000 for the years ended December 31, 2002, 2001 and 2000, respectively.
(2)	For statutory purposes, we use a discount rate of 3.9% as permitted by the Department of Insurance of the State of Delaware.

     The following table presents the development of net reserves for 1992 through 2002. The top line of the table shows the estimated reserves for unpaid losses and loss expenses recorded at the balance sheet date for each of the indicated years. This represents the estimated amount of losses and loss expenses for claims arising in all prior years that are unpaid at the balance sheet date, including losses that had been incurred but not yet reported to us. The upper portion of the table shows the re-estimated amount of the previously recorded reserves based on experience as of the end of each succeeding year. The estimate changes as more information becomes known about the frequency and severity of claims for individual years.

          The “cumulative redundancy (deficiency)” represents the aggregate change in the estimates over all prior years. For example, the 1992 reserves have developed a $162 million redundancy over ten years. That amount has been reflected in income over the ten years. The impact on the results of operations of the past three years of changes in reserve estimates is shown in the reconciliation tables above. It should be noted that the table presents a “run off” of balance sheet reserves, rather than accident or policy year loss development. Therefore, each amount in the table includes the effects of changes in reserves for all prior years. For example, assume a claim that occurred in 1992 is reserved for $2,000 as of December 31, 1992. Assuming this claim estimate was changed in 2002 to $2,300, and was settled for $2,300 in 2002, the $300 deficiency would appear as a deficiency in each year from 1992 through 2001.

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		(Amounts in millions)
Year Ended December 31,		1992		1993		1994		1995		1996		1997		1998			1999			2000			2001			2002
Discounted net reserves for losses and loss expenses		$	710	$	783	$	895	$	1,209	$	1,333	$	1,433	$	1,583		$	1,724		$	1,818		$	2,033		$	2,323
Reserve discounting			—		—		—		152		172		190		187			196			223			243			293
Undiscounted net reserve			710		783		895		1,361		1,505		1,623		1,770			1,920			2,041			2,276			2,616
Net Re-estimated as of:
One year later			704		776		885		1,346		1,481		1,580		1,798			1,934			2,252			2,450
Two years later			694		755		872		1,305		1,406		1,566		1,735			2,082			2,397
Three years later			665		744		833		1,236		1,356		1,446		1,805			2,203
Four years later			655		708		789		1,195		1,239		1,463		1,856
Five years later			630		672		764		1,112		1,248		1,494
Six years later			600		649		706		1,118		1,271
Seven years later			579		599		712		1,135
Eight years later			541		605		723
Nine years later			547		610
Ten years later			548
Cumulative redundancy (deficiency) undiscounted		$	162	$	173	$	172	$	226	$	234	$	129	$	(86	)	$	(283	)	$	(356	)	$	(174	)
Cumulative amount of net liability paid through:
One year later		$	169	$	186	$	221	$	265	$	332	$	365		496			584			702			794
Two years later			275		221		355		434		523		574		795			1,011			1,255
Three years later			306		291		445		550		635		737		1,032			1,426
Four years later			344		334		501		616		714		852		1,306
Five years later			362		363		528		655		782		1,033
Six years later			375		373		543		701		903
Seven years later			376		373		577		785
Eight years later			370		393		634
Nine years later			384		421
Ten years later			397
Discounted net reserves					783		895		1,209		1,333		1,433		1,583			1,724			1,818			2,033			2,323
Ceded Reserves					1,233		1,176		451		450		477		538			617			658			731			845
Discounted gross reserves					2,016		2,071		1,660		1,783		1,910		2,121			2,341			2,476			2,764			3,168
Reserve discounting					—		—		192		216		241		248			250			286			324			384
Gross reserve				$	2,016	$	2,071	$	1,852	$	1,999	$	2,151	$	2,369		$	2,591		$	2,762		$	3,088		$	3,552
Gross Re-estimated as of:
	One year later				2,010		2,043		1,827		1,965		2,132		2,390			2,653			2,827			3,153
	Two years later				1,966		2,026		1,789		1,959		2,096		2,389			2,556			2,730
	Three years later				1,955		1,983		1,754		1,909		2,010		2,218			2,385
	Four years later				1,913		1,951		1,733		1,823		1,871		2,079
	Five years later				1,855		1,928		1,681		1,739		1,787
	Six years later				1,815		1,899		1,630		1,688
	Seven years later				1,788		1,858		1,589
	Eight years later				1,757		1,827
	Nine years later				1,737
Gross cumulative redundancy (deficiency) undiscounted				$	279	$	244	$	263	$	311	$	364	$	290		$	206		$	32		$	(65	)

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Reinsurance

          We follow the customary industry practice of reinsuring a portion of our exposures and paying to reinsurers a part of the premiums received on the policies that we write. Reinsurance is purchased principally to reduce net liability on individual risks and to protect against catastrophic losses. Although reinsurance does not legally discharge an insurer from its primary liability for the full amount of the policies, it does make the assuming reinsurer liable to the insurer to the extent of the reinsurance coverage. We monitor the financial condition of our reinsurers and attempt to place our coverages only with substantial, financially sound carriers. As a result, generally the reinsurers who reinsure our casualty insurance must have an A.M. Best rating of “A (Excellent)” or better with $500 million in policyholder surplus and the reinsurers who cover our property insurance must have an A.M. Best rating of “A-(Excellent)” or better with $250 million in policyholder surplus. As a result of the attacks of September 11, many reinsurers have significantly changed their underwriting guidelines, and limit or no longer provide terrorism coverage. See “Management’s Discussion and Analysis of Financial Condition and Result of Operations” and Note 10 of “Notes to Consolidated Financial Statements.”

Regulation

          Our insurance subsidiaries are subject to varying degrees of regulation and supervision in the jurisdictions in which they do business. They are subject to statutes which delegate regulatory, supervisory and administrative powers to state insurance commissioners. This regulation relates to such matters as the standards of solvency which must be met and maintained; the licensing of insurers and their agents; the nature of and limitations on investments; deposits of securities for the benefit of policyholders; approval of policy forms and premium rates; periodic examination of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of insurers or for other purposes; establishment and maintenance of reserves for unearned premiums and losses; and requirements regarding numerous other matters. Our property casualty subsidiaries, other than E&S and reinsurance subsidiaries, must file all rates for personal and commercial insurance with the insurance department of each state in which they operate. Our E&S and reinsurance subsidiaries generally operate free of rate and form regulation.

          In addition to regulatory supervision of our insurance subsidiaries, we are subject to state statutes governing insurance holding company systems. Typically, such statutes require that we periodically file information with the state insurance commissioner, including information concerning our capital structure, ownership, financial condition and general business operations. Under the terms of applicable state statutes, any person or entity desiring to purchase more than a specified percentage (commonly 10%) of our outstanding voting securities would be required to obtain regulatory approval of the purchase. Under Florida law, which is applicable to us due to our ownership of Carolina Casualty Insurance Company, a Florida domiciled insurer, the acquisition of more than 5% of our capital stock must receive regulatory approval. Further, state insurance statutes typically place limitations on the amount of dividends or other distributions payable by insurance companies in order to protect their solvency. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.”

          Various state and federal organizations, including Congressional committees and the National Association of Insurance Commissioners (“NAIC”), have been conducting reviews into various aspects of the insurance business. The NAIC codified statutory accounting practices for certain insurance enterprises effective January 1, 2001. No assurance can be given that future legislative or regulatory changes resulting from such activity will not adversely affect our insurance subsidiaries.

          The NAIC utilizes a Risk Based Capital (RBC) formula which is designed to measure the adequacy of an insurer’s statutory surplus in relation to the risks inherent in its business. The RBC formula develops a risk adjusted target level of adjusted statutory capital by applying certain factors to various asset, premium and reserve items. The RBC Model Law provides for four incremental levels of regulatory attention for insurers whose surplus is below the calculated RBC target. These levels of attention range in severity from requiring the insurer to submit a plan for corrective action to actually placing the insurer under regulatory control. The RBC of each of our domestic insurance subsidiaries was above the authorized control level RBC as of December 31, 2002.

15

          The Gramm-Leach-Bliley Act, or Financial Services Modernization Act of 1999 (the “Act”), was enacted in 1999 and significantly affects the financial services industry, including insurance companies, banks and securities firms. The Act modifies federal law to permit the creation of financial holding companies (“FHCs”), which, as regulated by the Act, can maintain cross-holdings in insurance companies, banks and securities firms to an extent not previously allowed. The Act also permits or facilitates certain types of combinations or affiliations for FHCs. The Act establishes a functional regulatory scheme under which state insurance departments will maintain primary regulation over insurance activities, subject to provisions for certain federal preemptions. It is not anticipated that the insurance regulatory aspects of the Act will have a material effect on our operations.

          Our insurance subsidiaries are also subject to assessment by state guaranty funds when an insurer in that jurisdiction has been judicially declared insolvent and insufficient funds are available from the liquidated company to pay policyholders and claimants. The protection afforded under a state’s guaranty fund to policyholders of the insolvent insurer varies from state to state. Generally, all licensed property casualty insurers are considered to be members of the fund, and assessments are based upon their pro rata share of direct written premiums. The NAIC Model Post-Assessment Guaranty Fund Act, which many states have adopted, limits assessments to an insurer to 2% of its subject premium and permits recoupment of assessments through rate setting. Likewise, several states (or underwriting organizations of which our insurance subsidiaries are required to be members) have limited assessment authority with regard to deficits in certain lines of business.

          We receive funds from our insurance subsidiaries in the form of dividends and fees for certain management services. Annual dividends in excess of maximum amounts prescribed by state statutes may not be paid without the approval of the insurance commissioner of the state in which an insurance subsidiary is domiciled.

          The Terrorism Risk Insurance Act of 2002 (“TRIA”) became effective November 26, 2002. TRIA establishes a temporary Federal program that provides for a system of shared public and private compensation for insured losses resulting from acts of terrorism. The program terminates on December 31, 2005. TRIA is applicable to almost all commercial lines of property and casualty insurance. Insurers with direct commercial property and casualty insurance exposure in the United States are required to participate in the program and make available coverage for certified acts of terrorism. Federal participation will be triggered under TRIA when the Secretary of Treasury certifies an act of terrorism. Under the program the federal government will pay 90% of an insurer’s losses in excess of the insurer’s applicable deductible. The insurer’s deductible is based on a percent of earned premium for covered lines of commercial property and casualty insurance: for 2003 the deductible is 7% of 2002 premium, for 2004 it is 10% of 2003 premium and for 2005 it is 15% of 2004 premium. TRIA limits the federal governments share of losses at $100 billion for a program year. In addition, an insurer that has satisfied its deductible is not liable for the payment of losses in excess of the $100 billion cap.

Competition

          The property casualty insurance and reinsurance businesses are competitive, with over 2,000 insurance companies transacting business in the United States. We compete directly with a large number of these companies. Our strategy in this highly fragmented industry is to seek specialized areas or geographic regions where our insurance subsidiaries can gain a competitive advantage by responding quickly to changing market conditions. Each of our subsidiaries establishes its own pricing practices. Such practices are based upon a Company-wide philosophy to price products with the general intent of making an underwriting profit. Competition in the industry generally changes with profitability.

          Competition for specialty and alternative markets business comes from other specialty insurers, regional carriers, large national multi-line companies and reinsurers. Under certain market conditions, standard carriers also compete for E&S business.

          Competition for the reinsurance business comes from domestic and foreign reinsurers, which produce their business either on a direct basis or through the broker market. These competitors include Berkshire Hathaway, Employers Reinsurance, Transatlantic Reinsurance and

16

Everest Reinsurance, which collectively comprise a majority of the property casualty reinsurance market in the United States.

          The regional property casualty subsidiaries compete with mutual and other regional stock companies as well as national carriers. Direct writers of property casualty insurance compete with the regional subsidiaries by writing insurance through their salaried employees, generally at a lower cost than through independent agents such as those used by the Company.

          The international operations compete with native insurance operations both large and small, which may be related to government entities, as well as with branch or local subsidiaries of multinational companies.

Employees

          As of March 8, 2003, we employed 4,359 persons. Of this number, our subsidiaries employed 4,305 persons, of whom 2,012 were executive and administrative personnel and 2,293 were clerical personnel. We employed the remaining 54 persons at the parent company and in investment operations, of whom 42 were executive and administrative personnel and 12 were clerical personnel.

Other Information about the Company’s business

          We maintain an interest in the acquisition or start up of complementary businesses and continue to evaluate possible acquisitions and new ventures on an ongoing basis. In addition, the insurance subsidiaries develop new coverages or lines of business to meet the needs of insureds.

          Seasonal weather variations and other events affect the severity and frequency of losses sustained by the insurance and reinsurance subsidiaries. Although the effect on our business of such catastrophes as tornadoes, hurricanes, hailstorms, earthquakes and terrorist acts may be mitigated by reinsurance, they nevertheless can have a significant impact on the results of any one or more reporting periods.

          We have no customer which accounts for 10 percent or more of our consolidated revenues.

          Compliance by W. R. Berkley and its subsidiaries with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to protection of the environment has not had a material effect upon our capital expenditures, earnings or competitive position.

          The Company’s internet address is www.wrberkley.com. The information on our website is not incorporated by reference in this annual report on Form 10-K. The Corporation’s annual report on Form 10-K, annual reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are accessible free of charge through this website as soon as reasonably practicable after they have been electronically filed with or furnished to the Securities and Exchange Commission.

17

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     Our business faces significant risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described as risks below actually occurs, our business, results of operations or financial condition could be materially and adversely affected.

Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance industry.

          The results of companies in the property casualty insurance industry historically have been subject to significant fluctuations and uncertainties. The demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is directly related to available capacity. The adequacy of premium rates is affected mainly by the severity and frequency of claims, which are influenced by many factors, including natural disasters, regulatory measures and court decisions that define and expand the extent of coverage and the effects of economic inflation on the amount of compensation due for injuries or losses. In addition, investment rates of return may impact policy rates. These factors can have a significant impact on ultimate profitability because a property casualty insurance policy is priced before its costs are known, as premiums usually are determined long before claims are reported. These factors could produce results that would have a negative impact on our results of operations and financial condition.

Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves.

          We maintain loss reserves to cover our estimated liability for unpaid losses and loss adjustment expenses, including legal and other fees as well as a portion of our general expenses, for reported and unreported claims incurred as of the end of each accounting period. Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what we expect the ultimate settlement and administration of claims will cost. These estimates, which generally involve actuarial projections, are based on our assessment of facts and circumstances then known, as well as estimates of future trends in claims severity, frequency, judicial theories of liability and other factors. In some cases, long-tail lines of business such as excess workers’ compensation and the workers’ compensation portion of our reinsurance business are reserved on a discounted basis. The variables described above are affected by both internal and external events, such as changes in claims handling procedures, inflation, judicial and litigation trends and legislative changes.

          The risk of the occurrence of such events is especially present in our specialty and reinsurance businesses as well as our discontinued alternative markets reinsurance business. Many of these items are not directly quantifiable in advance. In some areas of our business, the level of reserves we establish is dependent in part upon the actions of third parties that are beyond our control. In our reinsurance and excess workers’ compensation businesses, we may not establish sufficient reserves if third parties do not give us advance notice or provide us with appropriate information regarding certain matters. Additionally, there may be a significant delay between the occurrence of the insured event and the time it is reported to us.

          The inherent uncertainties of estimating reserves are greater for certain types of liabilities, where the various considerations affecting these types of claims are subject to change and long periods of time may elapse before a definitive determination of liability is made. For example, there are greater uncertainties involved with establishing reserves relating to the World Trade Center attack, the Enron bankruptcy and asbestos and environmental claims. Reserve estimates are continually refined in an ongoing process as experience develops and further claims are reported and settled. Adjustments to reserves are reflected in the results of the periods in which such estimates are changed. Because setting reserves is inherently uncertain, we cannot assure you that our current reserves will prove adequate in light of subsequent events. Should we need to increase our reserves, our net income for the period will decrease by a corresponding amount.

Our earnings could be more volatile, especially since we have increased and may further increase our level of retention in our business.

          We increased our retention levels in 2001 and 2002 due to changes in market conditions and the pricing environment. We purchased less reinsurance, the process by which we transfer, or cede, part of the risk we have assumed to a reinsurance company, thereby retaining more risk. We may further increase our retention levels in the future. As a result, our earnings

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could be more volatile and increased severities are more likely to have a material adverse effect on our results of operations and financial condition. A significant change in our retention levels could also cause our historical financial results, including compound annual growth rates, to be inaccurate indicators of our future performance on a segment or consolidated basis.

As a property casualty insurer, we face losses from natural and man-made catastrophes.

          Property casualty insurers are subject to claims arising out of catastrophes that may have a significant effect on their results of operations, liquidity and financial condition. Catastrophe losses have had a significant impact on our results. Catastrophes can be caused by various events, including hurricanes, windstorms, earthquakes, hailstorms, explosions, severe winter weather and fires, as well as terrorist activities. The incidence and severity of catastrophes are inherently unpredictable. The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes and earthquakes may produce significant damage in large, heavily populated areas. Catastrophes can cause losses in a variety of our property casualty lines, and most of our past catastrophe-related claims have resulted from severe storms. Seasonal weather variations may affect the severity and frequency of our losses. Insurance companies are not permitted to reserve for a catastrophe until it has occurred. It is therefore possible that a catastrophic event or multiple catastrophic events could produce unforeseen losses and have a material adverse effect on our results of operations and financial condition.

We face significant competitive pressures in our businesses, which may reduce premium rates and prevent us from pricing our products at attractive rates.

          We compete with a large number of other companies in our selected lines of business. We compete, and will continue to compete, with major U.S. and non-U.S. insurers and reinsurers, other regional companies, as well as mutual companies, specialty insurance companies, underwriting agencies and diversified financial services companies. Competition in our businesses is based on many factors, including the perceived financial strength of the company, premium charges, other terms and conditions offered, services provided, ratings assigned by independent rating agencies, speed of claims payment and reputation and experience in the lines to be written.

          Some of our competitors, particularly in the reinsurance business, have greater financial and marketing resources than we do. These competitors within the reinsurance segment include Employers Reinsurance, Berkshire Hathaway and American Reinsurance, which collectively comprise a majority of the property casualty reinsurance market. We expect that perceived financial strength, in particular, will become more important as customers seek high quality reinsurers.

          New competition could cause the supply and/or demand for insurance or reinsurance to change, which could affect our ability to price our products at attractive rates and thereby adversely affect our underwriting results.

If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments.

          As part of our overall risk and capacity management strategy, we purchase reinsurance for significant amounts of risk underwritten by our insurance company subsidiaries, especially catastrophe risks. We also purchase reinsurance on risks underwritten by others which we reinsure. Market conditions beyond our control determine the availability and cost of the reinsurance protection we purchase, which may affect the level of our business and profitability. Our reinsurance facilities are generally subject to annual renewal. We may be unable to maintain our current reinsurance facilities or to obtain other reinsurance facilities in adequate amounts and at favorable rates. If we are unable to renew our expiring facilities or to obtain new reinsurance facilities, either our net exposures would increase or, if we are unwilling to bear an increase in net exposures, we would have to reduce the level of our underwriting commitments, especially catastrophe exposed risks.

We, as a primary insurer, may have significant exposure for terrorist acts.

          To the extent that reinsurers have excluded coverage for terrorist acts or have priced such coverage at rates that we believe are not practical, we, in our capacity as a primary insurer, do not have reinsurance protection and are exposed for potential losses as a result

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of any terrorist acts. To the extent an act of terrorism certified by the Secretary of the Treasury under The Terrorism Risk Insurance Act of 2002(“TRIA”), our mandatory deductible under TRIA could be a material amount.

We cannot guarantee that our reinsurers will pay in a timely fashion, if at all, and, as a result, we could experience losses.

          We purchase reinsurance by transferring part of the risk that we have assumed, known as ceding, to a reinsurance company in exchange for part of the premium we receive in connection with the risk. Although reinsurance makes the reinsurer liable to us to the extent the risk is transferred or ceded to the reinsurer, it does not relieve us, the reinsured, of our liability to our policyholders or, in cases where we are a reinsurer, to our reinsureds. Our reinsurers may not pay the reinsurance recoverables that they owe to us or they may not pay such recoverables on a timely basis. Accordingly, we bear credit risk with respect to our reinsurers, and if our reinsurers fail to pay us, our financial results would be adversely affected. Underwriting results and investment returns of some of our reinsurers may affect their future ability to pay claims.

We invest some of our assets in alternative investments, which is subject to certain risks.

          We invest a portion of our investment portfolio in alternative investments which is primarily merger arbitrage. Merger arbitrage is the business of investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Merger arbitrage differs from other types of investments in its focus on transactions and events believed likely to bring about a change in value over a relatively short time period, usually four months or less. While our merger arbitrage positions are generally hedged against market declines, these equity investments are exposed primarily to the risk associated with the completion of announced deals, which are subject to regulatory as well as political and other risks. As a result of the reduced activity in the merger and acquisitions area, we may not be able achieve the returns that we have enjoyed in the past. Alternative investments also include investments in high-yield bonds and real estate investment trusts.

A significant amount of our assets is invested in fixed income securities and is subject to market fluctuations.

          Our investment portfolio consists substantially of fixed income securities. The fair market value of these assets and the investment income from these assets fluctuate depending on general economic and market conditions. With respect to our investments in fixed income securities, the fair market value of these investments generally increases or decreases in an inverse relationship with fluctuations in interest rates, while net investment income realized by us from future investments in fixed income securities will generally increase or decrease with interest rates. In addition, actual net investment income and/or cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations. Further, the value of any particular fixed income security is subject to impairment based on the credit worthiness of a given issuer. Because substantially all of our fixed income securities are classified as available for sale, changes in the market value of our securities are reflected in our balance sheet. Similar treatment is not available for liabilities. Therefore, interest rate fluctuations affect the value of our investments and could adversely affect our results of operations and financial condition.

Our operations in Argentina and the Philippines expose us to investment, political and economic risks.

          Our operations in Argentina and the Philippines expose us to investment, political and economic risks, including foreign currency and credit risk. Changes in the exchange rate between the U.S. dollar and either the Argentine or Philippine peso could have an adverse effect on our results of operations and financial condition. Argentina has experienced substantial political and economic problems it is likely that there will be further changes to Argentine economic and monetary policies in the future. These changes may result in further impairment in value of Argentine bonds and a decline in investment income as a result of lower interest on bonds

We are subject to extensive governmental regulation, which increases our costs and could restrict the conduct of our business.

          We are subject to extensive governmental regulation and supervision. Most insurance regulations are designed to protect the interests of policyholders rather than stockholders

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and other investors. This system of regulation, generally administered by a department of insurance in each state in which we do business, relates to, among other things:

• standards of solvency, including risk-based capital measurements;

• restrictions on the nature, quality and concentration of investments;

• requiring certain methods of accounting;

• requiring reserves for unearned premium, losses and other purposes; and

• potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies provided by impaired, insolvent or failed insurance companies.

          State insurance departments conduct periodic examinations of the affairs of insurance companies and require the filing of annual and other reports relating to the financial condition of insurance companies, holding company issues and other matters. Recently adopted federal financial services modernization legislation is expected to lead to additional federal regulation of the insurance industry in the coming years. Also, foreign governments regulate our international operations.

          We may be unable to maintain all required licenses and approvals and our business may not fully comply with the wide variety of applicable laws and regulations or the relevant authority’s interpretation of the laws and regulations. Also, some regulatory authorities have relatively broad discretion to grant, renew or revoke licenses and approvals. If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us. Also, changes in the level of regulation of the insurance industry, whether federal, state or foreign, or changes in laws or regulations themselves or interpretations by regulatory authorities, restrict the conduct of our business. The growing number of insolvencies in the insurance industry increases the possibility that we will be assessed pursuant to various state guaranty fund requirements.

We are rated by A.M. Best and Standard & Poor’s, and a decline in these ratings could affect our standing in the insurance industry and cause our sales and earnings to decrease.

          Ratings have become an increasingly important factor in establishing the competitive position of insurance companies. Our insurance company subsidiaries are rated by A.M. Best, and certain of our insurance company subsidiaries are rated for their claims-paying ability by Standard & Poor’s Corporation, or Standard & Poor’s. A.M. Best and Standard & Poor’s ratings reflect their opinions of an insurance company’s financial strength, operating performance, strategic position and ability to meet its obligations to policyholders, are not evaluations directed to investors and are not recommendations to buy, sell or hold our securities. Our ratings are subject to periodic review by A.M. Best and Standard & Poor’s, and we cannot assure you that we will be able to retain those ratings. Our A.M. Best rating is A+ (Superior) for Admiral Insurance Company and A (Excellent) for our other insurance companies rated by A. M. Best. The Standard & Poor’s financial strength rating for our insurance subsidiaries is A+/negative. If our ratings are reduced from their current levels by A.M. Best and/or Standard & Poor’s, our competitive position in the insurance industry could suffer and it would be more difficult for us to market our products. A significant downgrade could result in a substantial loss of business as policyholders move to other companies with higher claims-paying and financial strength ratings.

We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts.

          Our principal assets are the shares of capital stock of our insurance company subsidiaries. We have to rely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt obligations and for paying dividends to stockholders and corporate expenses. The payment of dividends by our insurance company subsidiaries is subject to regulatory restrictions and will depend on the surplus and future earnings of these subsidiaries, as well as the regulatory restrictions. As a result, we may not be able to receive dividends from these subsidiaries at times and in amounts necessary to meet our obligations or pay dividends.

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We may not find suitable acquisition candidates or new insurance ventures and even if we do, we may not successfully integrate any such acquired companies or successfully invest in such ventures.

          As part of our present strategy, we continue to evaluate possible acquisition transactions and the start-up of complementary businesses on an ongoing basis, and at any given time, we may be engaged in discussions with respect to possible acquisitions and new ventures. We cannot assure you that we will be able to identify suitable acquisition transactions or insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or ventures will be successful. The process of integrating any companies we do acquire or investing in new ventures may have a material adverse effect on our results of operations and financial condition.

We may be unable to attract and retain qualified employees.

          We depend on our ability to attract and retain experienced underwriting talent and other skilled employees who are knowledgeable about our business. If the quality of our underwriting team and other personnel decreases, we may be unable to maintain our current competitive position in the specialized markets in which we operate, and be unable to expand our operations into new markets.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

W. R. BERKLEY CORPORATION
By	/s/ Eugene G. Ballard
	Eugene G. Ballard, Senior Vice President, Chief Financial Officer and Treasurer

April 4, 2003

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CERTIFICATIONS

I, William R. Berkley, Chairman of the Board and Chief Executive Officer of W. R. Berkley Corporation (the “registrant”), certify that:

1.      I have reviewed this annual report on Form 10-K as amended by Amendment No. 1 thereto on Form 10-K/A (the "annual report") of the registrant;

2.      Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.      Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.      The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)      evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)      presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.      The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.      The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 4, 2003

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

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CERTIFICATIONS

I, Eugene G. Ballard, Senior Vice President, Chief Financial Officer and Treasurer of W. R. Berkley Corporation (the “registrant”), certify that:

1.      I have reviewed this annual report on Form 10-K as amended by Amendment No. 1 thereto on Form 10-K/A (the "annual report") of the registrant;

2.      Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.      Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.      The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)      designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)      evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c)      presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.      The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)      all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)      any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.      The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 4, 2003

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

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