Press Release - MAY 24, 2018

A.M. Best Affirms Credit Ratings of W.R. Berkley Corporation and Its Subsidiaries


CONTACTS:
 Jennifer Marshall
Director —P/C
+1 908 439 2200, ext. 5810
jennifer.marshall@ambest.com

Brian Virostek
Financial Analyst —L/H
+1 908 439 2200, ext. 5531
brian.virostek@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - MAY 24, 2018
A.M. Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of W.R. Berkley Corporation (W.R. Berkley) (Greenwich, CT) [NYSE:WRB] and all associated Long-Term Issue Credit Ratings (Long-Term IRs) and indicative Long-Term IRs for securities issued by W.R. Berkley. At the same time, A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa-” of Berkley Insurance Company (BIC) (Wilmington, DE) and its reinsured subsidiaries and affiliates, collectively referred to as the W.R. Berkley Insurance Group (the Berkley Group). A.M. Best also has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” of Berkley Life and Health Insurance Company (Berkley Life and Health) (Urbandale, IA). The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed list of the companies and ratings).

The ratings of the Berkley Group reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The group’s balance sheet strength is derived from its consistently strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). It also reflects the group’s well-managed and generally conservative investment portfolio. While the group holds an above-average level of high-risk assets, these assets are diversified and represent a relatively small portion of the overall invested asset base. The group’s loss reserves have generally developed favorably in most recent accident years.

The Berkley Group’s underwriting and operating results have consistently outperformed those of its peers, as have returns on revenue and equity. The group has demonstrated an ability to organically grow policyholder surplus through the generation of favorable levels of pre-tax operating income and total returns. The performance is supported by the group’s favorable business profile, ranking among the top 25 U.S. property/casualty organizations and holding a leading position in many of its targeted market niches. The group provides insurance coverages throughout the United States and internationally for a variety of lines of business, producing a beneficial level of diversification. The group managed its exposure to catastrophes, demonstrated by its favorable results in 2017.

W.R. Berkley has implemented an ERM program that is designed appropriately and embedded to address the organization’s risks. A formal framework is in place, and the continual evaluation and monitoring of key risks and tolerances is well-established.

Partially offsetting these positive rating factors are the risks inherent in the group’s growth in top-line premium in recent years (although with a small decline in 2017), and continuing competitive conditions in the group’s key commercial lines and reinsurance segment. The group’s reinsurance writings have been reduced, reflecting pricing conditions that do not meet the group’s return requirements. The costs associated with the group’s growth strategy, which focuses on developing start-up operations rather than growth through acquisition, are also an offsetting factor to the ratings, as they contribute to an above-average underwriting expense ratio. Overall; however, the modestly elevated expense ratio is more than offset by the Berkley Group’s much-better-than-average loss and loss adjustment expense ratio.

At March 31, 2018, W.R. Berkley’s unadjusted debt to total capital ratio measured 32.4%. Adjusting for the equity component of hybrid securities, financial leverage measures 24.7%. In recent years, the group’s financial leverage has been trending downward and, while still modestly elevated relative to peers (particularly unadjusted leverage), the metrics are comfortably within guidelines. The group’s consistent earnings, controlled exposure to catastrophe losses and strong cash flows offset concerns regarding leverage. A.M. Best anticipates the continuation of W.R. Berkley’s strong earnings, with interest coverage and financial leverage levels remaining supportive of the ratings.

The ratings of Berkley Life and Health reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also reflect the financial and operational support of the parent company. Berkley Life and Health continues to strategically expand the organization’s presence in the accident and health market, primarily in the medical stop-loss space. In 2017, however, higher ceded premium slowed net premium growth. In addition, a lower net operating gain was reported from higher incurred benefits due to adverse loss development from prior years, as well as elevated expenses from the ceded premium. A.M. Best will continue to monitor the company’s operating performance for additional volatility.

For a complete listing of FSRs, Long-Term ICRs and Long-Term IRs for W.R. Berkley Corporation and its subsidiaries, please visit W.R. Berkley Corporation.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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