8-K

    As filed with the Securities and Exchange Commission on February 28, 2001



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



       Date of Report (Date of earliest event reported): February 6, 2001



                            W. R. BERKLEY CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


   Delaware                          0-7849                       22-1867895
- ---------------                 ----------------             -------------------
(State or other                 (Commission File                (IRS Employer
jurisdiction of                      Number)                 Identification No.)
incorporation)


            165 Mason Street, P.O. Box 2518, Greenwich, CT 06836-2518
            ---------------------------------------------- ----------
               (Address of principal executive offices)    (Zip Code)



       Registrant's telephone number, including area code: (203) 629-3000
                                                           --------------



                                 Not Applicable
          (Former name or former address, if changed since last report)






Item 5. Other Events

     On February 5, 2001, W. R. Berkley Corporation (the "Company") issued a
press release announcing its results of operations for the fourth quarter and
full year 2000. On February 6, 2001, the Company held a conference call (which
was webcasted) to discuss such results. A copy of the edited transcript of the
call is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by
reference. For a copy of the press release which includes the results of
operations discussed on the call, see Exhibit 99.1 to the Company's Current
Report on Form 8-K dated February 5, 2001, previously filed with the Securities
and Exchange Commission.

     In addition, reference is made to Exhibit 99.2 attached hereto and
incorporated herein by reference, which describes certain risk factors that may
affect the Company's business, results of operations, prospects and financial
condition.

Item 7. Financial Statements and Exhibits

     (a) Financial statements of businesses acquired:

          None.

     (b) Pro forma financial information:

          None.

     (c) Exhibits:

          99.1    Edited Transcript of Conference Call held on February 6, 2001

          99.2    Risk Factors






                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        W. R. BERKLEY CORPORATION


                                        By: /s/ Ira S. Lederman
                                            ------------------------------
                                            Name:  Ira S. Lederman
                                            Title: Senior Vice President,
                                                   General Counsel-Insurance
                                                   Operations and Assistant
                                                   Secretary

Date: February 28, 2001






                                  EXHIBIT INDEX

Exhibit:
- --------

99.1              Edited Transcript of Conference Call held on February 6, 2001

99.2              Risk Factors

EX-99.1

                    W. R. Berkley Corporation Conference Call

DATE:               February 6, 2001

SPEAKERS:           W. R. Berkley, Chairman/CEO

E.                  G. Ballard, Sr. VP/CFO/Treasurer

TOPIC:              Quarterly Conference Call

     OPERATOR: Good morning and welcome, ladies and gentlemen, to the W. R.
Berkley Corporation Quarterly Conference Call. At this time, I would like to
inform you that this conference is being recorded for rebroadcast and that all
participants are in a "listen-only" mode. At the request of the company, we will
open up the conference for questions and answers after the presentation.

     I will now turn the conference over to Mr. William Berkley, chairman and
chief executive officer. Please go ahead, sir.

     WILLIAM BERKLEY: Okay. Before we start, we just want to read our normal
warning to everyone that we're only guessing what the future may hold.

     IRA LEDERMAN: This is the "Safe Harbor" Statement made under the Private
Securities Litigation Reform Act of 1995. Any forward-looking statements made
during this Webcast, including those related to the Company's performance for
the year 2001 and beyond, are based upon the Company's historical performance
and on our current plans, estimates and expectations. They are subject to
various risks and uncertainties including but not limited to the cyclical nature
of the property casualty industry, the long-term and potentially volatile nature
of the reinsurance business, the impact of competition, product demand and
pricing, claims development and the process of estimating reserves, the level of
the Company's retention, catastrophe and storm losses, legislative and
regulatory developments, changes in the ratings assigned to the Company by
rating agencies, investment results, availability of reinsurance and other risks
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.

     These risks could cause the company's actual results for the year 2001 and
beyond to differ materially from those expressed in any forward-looking
statement made by or on behalf of the company. Forward-looking statements speak
only as of the date on which they were made, and the company undertakes no
obligation to update them publicly or revise any forward-looking statement,
whether as a result of new information, future developments or otherwise.

     WILLIAM BERKLEY: First of all, I'd like to just start by explaining that we
announced our earnings substantially earlier than we expected for several
reasons. First of all, there were a






number of rumors abounding about people suggesting we were going to have
charge-offs or something else. Second of all, there are various discussions
going on about both financings and acquisitions - and having a delayed earning
release would have an adverse impact. While none of those things are here and
now at this moment, they've all been under various discussions, and we can't say
exactly when they may or may not arise.

     First of all, we were satisfied with our results for the year and the
fourth quarter. They were generally in line with our expectation. We think that
the results speak well for what we would anticipate for 2001.

     I think, in general, a few comments about our results. Generally 1999 and
prior results were worse than most people anticipated in the industry and for
us, which had an adverse impact on this year's results. This year, our GAAP
combined ratio was 107.2. We had expected it to be a little bit better, but, in
fact, we still were able to hit our targets because of other things working out
better than anticipated, primarily investment income being a little better than
we thought and our expenses being a little lower than we thought.

     When we look at the year, the same improvements that we saw in 2000, we
expect to continue into 2001, but we think there'll be some other things
happening. The biggest change was no charge-off on our reserves, and that really
made the biggest difference. Gene is going to talk about some of the operating
results. The improvement was driven by the regional business. We would expect
that in 2001 we'll start to see more across-the-board improvements in the
specialty lines, as well as in the alternative markets.

     We are enthusiastic about where pricing is going. We would expect
double-digit price increases through this year, and we would expect that to
continue for some time in the future. At this point, we would think that the
2001 year will be substantially better than last year, and we're extremely
enthusiastic about next year. Volume is generally strong. Our retention levels
are keeping up with historic levels, and we're currently seeing price increases
of a higher magnitude than we might have anticipated.

     I'm going to let Gene talk now about our financial statements. Then I'll
try and talk a little bit about each operating unit briefly, and then open for
questions.

     GENE BALLARD: Thanks, Bill. I'm going to review the financial information
on pages four, five and six of the earnings release. To begin with, operating
income for the fourth quarter of 2000 was $.53 per fully diluted share. That
compares with a fourth quarter 1999 operating loss of $.11 per share before the
effect of the regional reserve strengthening. The 1999 operating loss per share
after the regional reserve strengthening was $1.50. The earnings improvement in
2000 reflects the impact of price increases, higher investment income and lower
operating expenses.

     Net premiums written increased 15 percent to $394 million for the fourth
quarter of 2000, from $342 million for 1999. The increase was due to significant
growth in the specialty, alternative markets and international segments as a
result of both price increases and new business. Regional and reinsurance
premiums each decreased by one percent as price increases


                                      -2-




were more than offset by a decline in policy counts. Premiums for the
Facultative Reinsurance Division, which has experienced some of the largest
price increases in the company, increased by 32 percent in the fourth quarter.
Insurance prices continue to increase in all of our business segments, and the
average price increase for renewal policies exceeded 10 percent again in the
fourth quarter.

     Net investment income increased 27 percent to $57 million for the fourth
quarter of 2000, from $45 million for 1999. The increase was due to a change in
asset allocation and an increase in the average yields. We increased our
allocation to the merger arbitrage account during the year by approximately $90
million, and we also shifted a portion of our fixed income portfolio from
tax-exempt securities to taxable securities.

     The average annualized pre-tax return on the equity portfolio was almost 13
percent during the fourth quarter of 2000, compared with 7 percent in 1999 due
to better returns from the merger arbitrage account.

     The average pre-tax yield on the fixed income portfolio was 7 percent in
2000, compared to 6 percent in 1999, due to the shift from tax-exempt to taxable
bonds.

     Realized gains were approximately $7 million for the fourth quarter of
2000, compared with realized losses of $4 million in 1999. The gains in 2000
were a result of common stock transactions.

     Management fee revenues were approximately $17 million for the fourth
quarter of both years. For the full year, management fees decreased
approximately $4 million. This decrease was the result of the sale of an agency
business in the second quarter of 2000. Continuing fees for the other businesses
were up slightly.

     Consolidated revenues increased 14 percent for the fourth quarter of 2000
to $480 million.

     Loss and loss adjustment expenses decreased 9 percent to $291 million, and
the statutory loss ratio decreased by 16 points. Of this, 15 points was
attributable to the regional reserve strengthening in 1999.

     Pre-tax storm losses were approximately $5 million for both 2000 and 1999
and added a little over a point to the loss ratio for both years in the fourth
quarter. On an after-tax basis, storm losses reduced operating income by 13
cents per share for the fourth quarter of 2000, compared to 14 cents per share
for 1999. During the year net loss reserves increased by $114 million, and the
paid-to-incurred loss ratio was approximately 90 percent.

     Other operating costs and expenses decreased three percent to $152 million
in the fourth quarter of 2000. The decrease reflects lower expenses for the
service companies, in part, due to the sale of the agency business, as well as
lower expenses for the insurance companies. The statutory expense ratio
decreased to 31.6 percent in the fourth quarter as a result of higher premium
volume and lower expense accruals. For the full year, the statutory expense
ratio


                                      -3-




decreased two points to 33-1/2 percent, primarily due to the expense savings
resulting from the regional restructuring.

     Interest expense decreased approximately $1 million to $11.6 million in the
fourth quarter of 2000, due primarily to the repayment of about $50 million of
long-term and short-term debt during the year.

     After deducting taxes and minority interest, net income was $0.68 per share
for the fourth quarter, compared with a loss of $1.59 per share for 1999.
Operating income, which excludes realized gains and other nonrecurring items,
was $14 million, or $0.53 per share, for the fourth quarter 2000.

     The operating results by segment are presented on page five of the earnings
release. Overall, the insurance segments reported pre-tax operating income of
$36 million for the fourth quarter of 2000, compared with a loss of $47 million
for 1999.

     Operating income improved in every segment. Regional income improved by $65
million, including $55 million attributable to the reserve strengthening in '99.
Reinsurance improved by $8 million, Specialty by $7 million, Alternative markets
by $2 million and International by $1 million. The improvement reflects the
positive effect of price increases across all segments, as well as the
additional investment income and lower operating expenses.

     The overall statutory combined ratio was 104.2 for the fourth quarter and
107.0 for the full year.

     Finally, the year-end balance sheet information is presented on page six.

     Common stockholders' equity increased $89 million during the year to $681
million at December 31, 2000. The increase reflects unrealized investment gains
of approximately $64 million after tax, plus net income of approximately $36
million for the year. There were 25.7 million shares outstanding at December 31,
2000, and the book value per share was $26.54.

     WILLIAM BERKLEY: Let me try to quickly go through our operating units.

     I'll start with International. We are pleased with where our International
units are operating. In Argentina, we've made great progress. We're delivering
returns well over 15 percent. All our businesses are growing. We're one of the
top 15 companies in the country on a consolidated life and P&C basis, and we
expect to move up. The Argentine economy to date has not had an adverse impact
on us and, in fact, the increasing yields have helped our investment income.
Clearly, Argentina has proved to be a good investment, and we're very happy with
our management there.

     In the Philippines, we offer endowment life insurance products for
education. The company is now wholly owned by our joint venture with
Northwestern Mutual. We've bought out our local partner. That business continues
to improve. We'll get, for the first time, satisfactory returns, we expect, this
year and we're looking at other opportunities to expand it.


                                      -4-




     Overall, International business is still a relatively small investment,
although it is delivering returns now that are - that are quite satisfactory.

     Our reinsurance business, Signet Star, is cutting back, as we've said, on
its pro rata and property business. Keep in mind, it takes eight quarters for
that business from the time you write it until the time it runs off. That is,
you sign up for a piece of business that runs for the calendar year. The last
business that you've reinsured is written on December 31. Then it takes a year
for that business to run through. So it will take through the end of 2001 for
that change to be fully implemented. It doesn't happen as quickly or -- as
standard business. So you'll see that business come down.

     Our Facultative team, which is outstanding, has reported excellent results
and continues to see a very strong market, and we are quite pleased with their
results. Their volume was up for the year and it has been very strong in this
year.

     Our Surety division is an outstanding team, also, and while they didn't
have nearly as good a year as they had historically, compared to the industry,
it was excellent; it was still profitable.

     Our new President in our Treaty business, Craig Johnson, is working on
plans, and we expect to move forward. Our goal is to have a Treaty team that's
of a caliber of our Facultative team, and we think that we're well on the way to
that.

     We're excited about the reinsurance business and where we are and what we
see. That doesn't mean we' re going to have fabulous results tomorrow. That's
going to be a little slower turn. Although in the Facultative area, there are
dramatic increases in prices and volume. That's been visible through the second
half of last year and in January of this year.

     Our Alternative market business, which really specializes not only in
service businesses but in worker's compensation-related entities, had improving
results. We're seeing volume up substantially and improved underwriting results.
Service fee income is up about 10 percent. We think that that will start to
accelerate because there's a lead time from the time people start to be unhappy
with their renewal prices and when they seek assistance in the alternative
market. We think that's going to be a good opportunity for us, and we think the
pricing in the worker's comp area will result in a good year. 2000 was an
improvement over 1999; we expect that will continue.

     The Regional business is a story of determined price increases. Price
increases started to be implemented 18 months ago. They were implemented
unevenly; we didn't get them in at every company and every spot. Some of the
companies didn't really start implementing them until 2000 in a very serious
way. We now have a price-monitoring unit where we're overseeing not only price,
but terms and conditions changes. We're very optimistic that we'll have a
continued improvement in the regional business. In fact, we're starting to see
volume up more than price increases, so that means policy counts going up
slightly. It's the year where we expect pretty good returns from the Regional
business and as we continue to focus on the middle market commercial lines, we
think those results will continue to improve.


                                      -5-




     Our Specialty business is really where the opportunity is best in a
tightening market. Volume is up; pricing is up. You still have some people who
aren't out there charging as much as they need to, but slowly those are going by
the wayside. Several have already disappeared, and there are others that will
have no choice but to adjust their pricing levels. But we saw in the fourth
quarter significant opportunities to increase our business and take advantage of
the marketplace, and that's continued in January. I think that we would expect
that as we move through 2001, the Specialty business will return to historic
underwriting profitability, at least well on the way to that. So overall, we're
pretty happy. We expect this year to be a good year. We're thinking that we can
get a return that's approaching double digits. Volume in January and pricing was
good. A month doesn't determine a year, but it's surely better to start with a
good month than a bad one, and January seems to be indicative of a better start.
We haven't gotten all our numbers in for January, so I'm basing it on the
numbers we've seen to date.

     With that, Frank, do you want to turn it over to questions?

     OPERATOR: Yes, sir. Thank you. The question-and-answer session will begin
now. If you are using a speakerphone, please pick up the handset before pressing
any numbers. Should you have a question, please press one, followed by four, on
your pushbutton telephone. Should you wish to withdraw your question, please
press one, followed by three. Your questions will be taken in the order they are
received. Please stand by for your first questions, gentlemen.

     Our first question in queue comes from Mr. Charles Gates. Please state your
affiliation, followed by your question, sir.

     CHARLES GATES: Good morning. I work for Credit Suisse First Boston. My
question: Specific to the Specialty business, you said, "That's where the
opportunity is best. Slowly, the market is changing." Would you elaborate on
that answer, sir?

     WILLIAM BERKLEY: Sure, Charlie. I think that if you look back at what
happened in 1985 to `87 was the best example. Specialty business grew from round
numbers $50-60 million to over $200 million. I think as the market tightens up,
what happens is more business that is marginal from the standard markets moves
to the Specialty business, and real Specialty business gets priced substantially
better as people who really don't understand the Specialty business abandon it.
And, therefore, what generally happens is the number of units going into the
Specialty market goes up, and at the same time, pricing in the Specialty market
goes up. So you get a double benefit -- substantially increased prices and much
more volume that has to find a home. So we would expect that we will get better
margin in the Specialty business and substantially more volume. In fact, one of
our concerns is how much volume is going to come in in the Specialty area. And
almost the same thing is true of our Casualty Fac business. It's run by a guy
named Jim McCleary, who's stayed the course and understands the business and, as
he said, "This is the time you make all your money as this market tightens up
and the volume increases, and you all of a sudden can get rational prices that
make sense and give you the opportunity to make money."

     CHARLES GATES: Thank you.


                                      -6-




     OPERATOR: Once again, should anyone have a question, please press one,
followed by four, on your pushbutton telephones. At this time, gentlemen, there
are no further questions in queue.

     WILLIAM BERKLEY: All right, let me just sort of sum it up. I think that
we're extremely enthusiastic about where things are in the business. There's no
question about the price increases. There's a lot of leverage in our operating
statement. Effectively, depending on how you measure it, every one-percent
improvement in combined ratio comes out to be between 40 and 43 or 44 cents per
share, and we think there's a lot of improvement there available for us, in
addition to which that doesn't consider the benefits of the increased volume and
investment income.

     We've gone a long time where we hoped to be optimistic. Now, we have reason
to be optimistic. We think that 2001 will be a, as I say, a good year to a very
good year, and we're highly confident that 2002 can be an extraordinary year. So
with that, thank you all very much. Have a good day.

     OPERATOR: Ladies and gentlemen, that concludes the conference call for
today. Thank you all for participating, and have a nice day. All parties may
disconnect at this time.

                                  (End of Call)


                                      -7-

EX-99.2

     Our statements and filings with the Securities and Exchange Commission and
other statements may contain or incorporate by reference certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Some of these forward-looking statements can be identified by the use of
forward-looking words such as "believes", "expects", "potential", "continued",
"may", "will" , "should", "seeks", "approximately", "predicts", "intends",
"plans", "estimates", "anticipates" or the negative version of those words or
other comparable words. Any forward-looking statements contained or incorporated
by reference in such filings or statements, including statements related to our
performance for the year 2000 and beyond, are based upon our historical
performance and on current plans, estimates and expectations. Such
forward-looking statements are subject to various risks and uncertainties,
including but not limited to those described below. These risks could cause our
actual results for the year 2000 and beyond to differ materially from those
expressed in any forward-looking statement we make. Forward-looking statements
speak only as of the date on which they are made, and we undertake no obligation
to update publicly or revise any forward-looking statement, whether as a result
of new information, future developments or otherwise.

                                  RISK FACTORS

     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. In such case, the trading price of our common stock or other
securities could decline, and any purchaser of our common stock or other
securities may lose part or all of their investment. You should carefully
consider and evaluate all of the information contained or incorporated by
reference in our filings with the Securities and Exchange Commission, including
the risk factors listed below, before deciding whether to invest in our common
stock or other securities.

Insurance Industry Related Risks

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 industry's profitability can be affected significantly by

     o    rising levels of actual costs that are not known by companies at the
          time they price their products;

     o    volatile and unpredictable developments (including weather-related and
          other natural catastrophes);






     o    changes in reserves resulting from the general claims and legal
          environments as different types of claims arise and judicial
          interpretations relating to the scope of insurers' liability develop;

     o    fluctuations in interest rates, inflationary pressures and other
          changes in the investment environment, which affect returns on
          invested capital and may impact the ultimate payout of loss amounts;
          and

     o    the long-tail and volatile nature of the reinsurance business, which
          may impact our operating results and limit opportunities for adequate
          returns.

     The demand for property casualty insurance can also vary significantly,
rising as the overall level of economic activity increases and falling as such
activity decreases. The property casualty insurance industry historically has a
cyclical nature. Recently, the property casualty insurance industry and
especially the commercial lines business have been very competitive. These
fluctuations in demand and competition could produce underwriting results that
would have a negative impact on our results of operations and financial
condition.

We face significant competitive pressures in our businesses.

     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. Some of our competitors, particularly in the reinsurance
business, have greater financial and marketing resources than we do.

     A number of new, proposed or potential legislative or industry developments
could further increase competition in our industry. These developments include:

     o    the enactment of the Gramm-Leach-Bliley Act of 1999, which could
          result in increased competition from new entrants to our markets;

     o    the implementation of commercial lines deregulation in several states,
          which could increase competition from standard carriers for our excess
          and surplus lines of insurance business;

     o    programs in which state-sponsored entities provide property insurance
          in catastrophe prone areas or other alternative markets types of
          coverage; and

     o    changing practices caused by the Internet, which have led to greater
          competition in the insurance business.

     New competition from these developments could cause the supply and/or
demand for insurance or reinsurance to change, which could adversely affect our
results of operations and financial condition.


                                      -2-




     In addition to competition in the operation of our businesses, we face
competition from a variety of sources in attracting and retaining qualified
employees. We cannot assure you that we will maintain our current competitive
position in the markets in which we operate, or that we will be able to expand
our operations into new markets. If we fail to do so, our businesses could be
materially adversely affected.

Our actual claims losses may exceed our reserves for claims.

     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
lines and reinsurance businesses. 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. 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.

We anticipate increasing our level of retention in our business.

     We anticipate increasing our retention levels in 2001 for our operations
generally due to changes in market conditions and the pricing environment. We
expect to purchase 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. As a result, our earnings could be more volatile, and increased
severities could have a material adverse effect upon 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.


                                      -3-




As a property casualty insurer, we face losses from 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. 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 have a material adverse
effect upon our results of operations and financial condition.

We are subject to extensive governmental regulation.

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

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

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

     o    requiring certain methods of accounting;

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

     o    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 cannot assure you that we have or can maintain all required licenses and
approvals or that our business fully complies 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


                                      -4-




requirements, the insurance regulatory authorities could preclude or temporarily
suspend us from carrying on some or all of our activities or monetarily penalize
us. That type of action could have a material adverse effect on our business.
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, could have a material adverse effect
on our business.

We are rated by A.M. Best and Standard & Poor's, and a decline in these ratings
could adversely affect our operations.

     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 the continued retention of those ratings cannot be
assured. The Standard & Poor's 2001 outlook for the U.S. property casualty
insurance industry and the Standard & Poor's mid-year 2000 outlook for the U.S.
reinsurance industry were negative. Since March 2000, Standard & Poor's has
given us a negative rating outlook. While Standard & Poor's recently affirmed
our rating of "A+", as long as we remain on negative rating outlook, a downgrade
in our rating is possible. If our ratings are reduced from their current levels
by A.M. Best and/or Standard & Poor's, our results of operations could be
adversely affected.

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. 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 could adversely affect our results of operations and financial
condition.

We invest some of our assets in merger arbitrage, which is subject to certain
risks.

     We invest a portion of our investment portfolio in merger arbitrage. As of
September 30, 2000, our investment in merger arbitrage securities represented
approximately 15% of our total


                                      -5-




investment portfolio. 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.

Our premium writings and profitability are affected by the availability of
reinsurance.

     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 (a retrocession).
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 cannot assure you that we can maintain our current reinsurance
facilities or that we can 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. Either of these potential developments could have a
material adverse effect on our business.

We do not yet know all the effects of the recent restructuring of certain of our
subsidiaries.

     In 2000, we implemented a restructuring plan, pursuant to which we
refocused our domestic reinsurance operations. While this restructuring is
substantially complete, all of its operating effects are not yet known, and any
difficulties caused by such restructuring could adversely affect our results of
operations and financial condition.

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.

We may not find suitable acquisition candidates and even if we do, we may not
successfully integrate any such acquired companies.

     As part of our present strategy, we continue to evaluate possible
acquisition transactions on an ongoing basis, and at any given time, we may be
engaged in discussions with respect to possible acquisitions. We cannot assure
you that we will be able to identify suitable acquisition transactions, that
such transactions will be financed and completed on acceptable terms or that


                                      -6-




our future acquisitions will be successful. The process of integrating any
companies we do acquire may have a material adverse effect on our results of
operations and financial condition.

If we do not invest substantial amounts in our information systems and
technology, our business may be harmed.

     Integrated management information and processing systems are vital to our
ability to monitor costs, collect receivables and achieve operating
efficiencies. As we continue our growth, the need for sophisticated information
systems and technology will increase significantly. The cost of implementing
such systems has been, and is expected to continue to be, substantial. The
failure of our information or processing systems, or our failure to upgrade
systems as necessary, could have a material adverse effect on our results of
operations and financial condition.

We cannot guarantee that our reinsurers will pay in a timely fashion, if at all.

     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.
Accordingly, we bear credit risk with respect to our reinsurers. We cannot
assure you that our reinsurers will pay the reinsurance recoverables owed to us
or that they will pay such recoverables on a timely basis.

Our international operations expose us to risks.

     Certain assets held by our foreign subsidiaries are subject to foreign
currency risk. Our principal area of exposure relates to fluctuations in
exchange rates between each of the Argentinean and Philippine peso and the U.S.
dollar. Consequently, a change in the exchange rate between the U.S. dollar and
either the Argentinean or Philippine peso could have an adverse effect on our
results of operations and financial condition. We are additionally subject to
political and economic risks in these countries.

Investment Related Risks

Our charter documents, Delaware law and stockholders rights plan, as well as
state insurance statutes, will make it more difficult to acquire us and may
discourage takeover attempts and thus depress the market price of our common
stock or other securities.

     Certain provisions of Delaware law, our certificate of incorporation and
our by-laws have the effect of making more difficult or discouraging unsolicited
takeover bids from third parties. While these provisions have the effect of
encouraging persons seeking to acquire control of us to negotiate with our board
of directors, they could also limit our stockholders' opportunity to dispose of
their shares at the premium prices typically associated with such takeover
attempts.

     For example, our certificate of incorporation and by-laws provide for a
board of directors divided into three classes, with one class being elected each
year to serve for a three-year term. As a result, at least two annual meetings
of stockholders may be required for stockholders to change a majority of our
board of directors. Pursuant to our share purchase rights plan, holders of


                                      -7-




our common stock will receive rights to purchase shares of preferred stock that
have the same dividend, liquidation and voting rights as shares of our common
stock upon the occurrence of certain events that could lead to a person or group
acquiring 15% or more of our outstanding common stock. In addition to being
subject to Section 203 of the Delaware General Corporation Law, which generally
prohibits a publicly held Delaware corporation from engaging in business
combinations with certain stockholders, our certificate of incorporation
requires the affirmative vote of 80% of our stockholders to approve mergers and
other similar transactions between us and certain stockholders.

     We are subject to state statutes governing insurance holding company
systems which would commonly require that any person or entity desiring to
purchase more than 10% of our outstanding voting securities must 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 state regulatory approval. Applicable state insurance company laws and
regulations could delay or impede a change of control of W. R. Berkley.

Certain of our institutional stockholders and management may influence actions
requiring stockholder approval.

     Based on public filings as of September 30, 2000, Franklin Resources, Inc.
and Neuberger & Berman Pension Management (with their respective affiliates)
held 4,533,940 and 1,521,542 shares of common stock, respectively, representing
approximately 17.7% and 5.9%, respectively, of our outstanding common stock as
of December 31, 2000. In addition, as of December 31, 2000, William R. Berkley,
our founder, chairman and president, held 4,038,569 shares of common stock
(including currently exercisable options), representing approximately 15.7% of
our outstanding common stock as of such date. As a result, these stockholders,
acting alone or together, may be able to influence matters requiring approval by
our stockholders.


                                      -8-