A.M. Best Affirms Ratings of W.R. Berkley Corporation and Upgrades Ratings of Nautilus Insurance Group.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of Admiral Insurance Group (Wilmington, DE) and its property/casualty members. In addition, A.M. Best has affirmed the FSRs of A (Excellent) and the ICRs of "a" of Berkley Insurance Group (Wilmington, DE), Berkley Regional Group (Greenwich, CT) and their respective members, as well as for Carolina Casualty Insurance Company (Jacksonville, FL).

Concurrently, A.M. Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the ICRs to "aa-" from "a" for Nautilus Insurance Group (Scottsdale, AZ) and its members. All companies are subsidiaries of W.R. Berkley Corporation (NYSE:BER) (Greenwich, CT).

Additionally, A.M. Best has affirmed the debt ratings of "bbb" on senior debt and "bb+" on trust preferred securities for W.R. Berkley Corporation. The outlook for all ratings is stable. (See link below for a detailed list of the ratings.)

The affirmation of the ratings of Admiral Insurance Group reflects its excellent underwriting and operating performance, solid capitalization, strong operating cash flows and market position in excess and surplus lines. These rating actions also consider management's underwriting expertise in providing customized insurance coverage for unique risks and a disciplined underwriting posture. These strengths are partially offset by the group's significant historical adverse prior year loss reserve development, albeit having declined to a modest level in 2005.

Berkley Insurance Group's rating affirmations reflect its adequate capitalization for its current ratings, strong operating cash flows and the excellent underwriting and operating performance of its sub-group, Berkley Regional Group. The underwriting, operating performance and reserve history of Berkley Insurance Group's lead company, Berkley Insurance Company, has been more variable.

The rating affirmations for Berkley Regional Group reflect its excellent underwriting and operating performance, as well as strong capitalization and operating cash flows. While premium rate increases slowed in 2004 and 2005, disciplined underwriting resulted in the group reporting continued excellent overall earnings, despite the inclusion of adverse--albeit declining--loss reserve development.

Carolina Casualty Company's rating affirmations reflect its market position within the transportation industry insurance sector and just adequate capitalization for its current ratings, which has been supported by significant capital contributions from its parent. Consequently, the ratings reflect the financial and operational support of W.R. Berkley Corporation. The rating affirmations also consider the recent necessary management changes within Carolina Casualty Company. The capital contributions the company has received in recent years have been needed to support rapid premium growth, as well as offset significant prior year loss reserve development and operating losses in 2005.

The upgrade of Nautilus Insurance Group's FSR and ICRs reflects its historically excellent underwriting and operating performance, solid capitalization, modest risk exposure and market position in excess and surplus lines. Partially offsetting these positive factors have been the group's 50% compound annual growth rate in net premiums written over the past five years and the inherent risks associated with such growth. However, increasing rates were a significant driver of this growth. In addition, a significant portion of the group's nearly 40% growth in both 2004 and 2005 is attributed to renewal rights business in the sports and entertainment industries, purchased in June 2004. The stable rating outlook reflects A.M. Best's viewpoint that the group will continue to consistently generate an above average operating performance and the expectation that the group's capitalization will continue to support its ratings.

W.R. Berkley Corporation has historically embraced above average financial leverage, which has been tempered by a quality capital structure and demonstrated financial flexibility in the capital markets. Taking into consideration significant cash balances held at year-end 2005 earmarked for debt repayment, the company's debt-to-total capital was overstated at 36% at year-end 2005. This ratio is expected to decline to well below 30% by year-end 2006, which would be its lowest level of financial leverage in the past decade. A.M. Best anticipates the company's leverage will be maintained in its targeted range of 25% to 35%.

For a complete list of W.R. Berkley Corporation's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/081502wrberkley.pdf.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.