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CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has affirmed all ratings for W.R. Berkley Corporation (Berkley) and related property/casualty operating subsidiaries. These ratings include Berkley's 'A-' Issuer Default Rating (IDR), as well as its senior debt, subordinated debt, and Insurer Financial Strength (IFS) ratings. A complete list of ratings follows at the end of this release. The Rating Outlook is Stable.

Fitch's rating affirmation reflects Berkley's favorable long-term financial results, modest exposure to catastrophe losses, and its strong underwriting culture and niche market positions in several lines, partially offset by average capitalization and relatively high financial leverage.

Berkley continues to generate solid underwriting results with a 97.4% GAAP combined ratio through June 30, 2012 compared to 98.9% for the same period in 2011 and 98.3% for the full year 2011. Results improved due to lower catastrophe losses of $31 million for the first half of 2012 versus $88 million in the first half of 2011 offset by slightly lower favorable reserve development from increased loss-cost trends observed by the company. Although the company has experienced modest premium rate increases, Fitch believes underwriting profits are likely to improve only slightly for the remainder of 2012 due to continued competitive insurance market conditions and recognizing the lag time between premiums written and earned.

Fitch believes that Berkley is positioned to grow opportunistically during the remainder of the year and in 2013 following increased premium growth reported year-to-date and rate increases in certain lines. Statutory operating leverage (net premiums written to surplus) remained under 1.0 times (x) (0.9x in 2011) reflecting Berkley's willingness to shrink its top line when prices do not support its underwriting guidelines, which Fitch views favorably.

Over the past four years, Berkley's shareholders' equity has increased by over 31%, including 8% in 2011, to $4.0 billion despite share repurchases, reflecting solid earnings and improved investment performance. Fitch believes the company remains modestly capitalized when examined against traditional measures on an absolute basis and relative to peers due in part to the inherent uncertainty surrounding its long-tail loss reserves for which ultimate liabilities are difficult to estimate.

Berkley's debt-to-total capital ratio of 33.4% as of June 30, 2012 is above peer averages and is up from 32% at year-end 2011 due to its $350 million senior debt issuance in early 2012 which prefunded the refinancing of maturing debt in 2013. Fitch views the spike in leverage as temporary and reasonable for the rating category. Fitch expects run-rate leverage to remain near 30% and earnings-based interest coverage to remain in the mid-upper single digits in the near term.

Key rating triggers that could lead to a positive rating action include: 1) a sustained material reduction in financial leverage to low double-digits; 2) a material increase in risk-adjusted capitalization; and 3) continued profitable operating performance including maintenance of loss reserve adequacy and solid underwriting performance on an absolute basis and relative to peers.

Key rating triggers that could lead to a negative rating action include: 1) a material reduction in capitalization due to higher than expected losses in its investment portfolio, material adverse reserve development, or poor underwriting results; 2) a sustained deterioration of operating performance on an absolute basis or relative to peers.

Additionally, a material increase in Berkley's run-rate debt-to-total capital ratio to 35% could lead to Fitch expanding the notching between Berkley's issuer default rating and its debt rating, resulting in a one-notch downgrade to the company's senior and subordinated debt ratings.

Fitch has affirmed the following ratings:

W.R. Berkley Corporation
--IDR at 'A-';
--$200 million 5.875% senior debt due 2013 at 'BBB+';
--$200 million 5.6% senior debt due 2015 at 'BBB+';
--$150 million 6.15% senior debt due 2019 at 'BBB+';
--$300 million 7.375% senior debt due 2019 at 'BBB+';
--$300 million 5.375% senior debt due 2020 at 'BBB+';
--$76 million 8.7% senior debt due 2022 at 'BBB+';
--$350 million 4.625% senior debt due 2022 at 'BBB+';
--$250 million 6.25% senior debt due 2037 at 'BBB+'.

W.R. Berkley Capital Trust II
--Trust preferred securities at 'BBB-'.

Berkley Regional Insurance Company
Admiral Insurance Company
Carolina Casualty Insurance Co.
Nautilus Insurance Company
Acadia Insurance Company
Firemens Ins Co of Washington DC
Berkley Regional Specialty Insurance Co.
Continental Western Insurance Co.
Tri State Insurance Co. of Minnesota
Union Insurance Company
Berkley National Insurance Co.
Union Standard Lloyds
--IFS at 'A+'.

Berkley Insurance Company
--IFS at 'A'.

The Rating Outlook is Stable.

Additional information is available at [ www.fitchratings.com ]. The ratings above were unsolicited and have been provided by Fitch as a service to investors.

The issuer did not participate in the rating process, or provide additional information, beyond the issuer's available public disclosure.

Applicable Criteria & Related Research:
--'Insurance Rating Methodology' (Sept. 22, 2011).

Applicable Criteria and Related Research:
Insurance Rating Methodology
[ http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018 ]

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