A.M. Best Affirms Ratings of W.R. Berkley Insurance (Europe) Limited.

OLDWICK, N.J -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of "a" of W.R. Berkley Insurance (Europe) Limited (WRBIEL) (United Kingdom). The outlook on both ratings remains stable.

In A.M. Best's opinion, WRBIEL's stand-alone risk-adjusted capitalisation is likely to remain excellent at year end 2006, benefiting from 100% retention of earnings of approximately GBP 4-5 million (compared to GBP 7.6 million during 2005). The ratings also factor explicit support in the form of a net worth maintenance agreement provided by W.R. Berkley Corporation and reinsurance support, with approximately 25% of gross written premiums in 2006 likely to be ceded to W.R. Berkley affiliates.

A.M. Best believes WRBIEL's prospective financial performance is likely to remain very good following the excellent 17.9% return in 2005. The return for 2006 will reflect an anticipated weakening in the company's technical performance (from the 2005 combined ratio of 95.6%) due to softening in market conditions for professional indemnity (PI) business written in the United KingdomCoapproximately 70% of WRBIEL's anticipated 2006 net written premium. However, this factor is likely to be partially offset by WRBIEL's entry into the less competitive medical malpractice and PI markets in Spain. Performance will also continue to benefit from commissions received from participation in a consortium agreement on property reinsurance business with R.J. Kiln and Company Limited (Kiln) and from a solid investment return.

WRBIEL has a good specialist business position as a provider of niche PI products for small to medium-sized enterprises (SMEs) in the London and regional UK markets. By year-end 2006, A.M. Best expects an increase in overall gross written premiums (GWP) of approximately 5% to GBP 100 million, including the Kiln portfolio which is likely to account for approximately 20% of GWP. This growth is mainly attributable to the increased business written through WRBIEL's new Spanish operation (with GWP anticipated by year-end 2006 of GBP 6-8 million), a new personal accident portfolio as well as continuing development of its regional UK account.

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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.