Fitch Upgrades W.R. Berkley's IDR to 'A-'; Sr. Debt to 'BBB+' Assigns IFS Ratings to Subsidiaries.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of & CHICAGO -- Fitch upgrades W.R. Berkley Corporation's (NYSE NYSE See: New York Stock Exchange :BER (1) (Basic Encoding Rules) A set of encoding rules for ASN.1 notation, which is a method for defining data structures. See ASN.1. (2) (Bit Error Rate) The average number of bits transmitted in error. See BERT. 1. ) (Berkley's) Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) to 'A-' from 'BBB+' and Berkley's senior debt ratings to 'BBB+' from 'BBB'. Fitch also upgrades the trust preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. rating of Berkley Capital Trust II to 'BBB' from 'BBB-'. Additionally, Fitch expects to assign a rating of 'BBB+' to Berkley's proposed $250 million senior debt offering due 2037. The Rating Outlook is Stable. The upgrades of Berkley's ratings reflects Fitch's belief that overall improvement in the company's capital position is at this point supportive of standard three-gap notching between Berkley's senior debt rating and its operating companies' insurer financial strength (IFS) ratings. The upgrade recognizes that Berkley has reduced financial leverage at the holding company level, improved capital positions at the operating companies operating company A business that engages in transactions with outsiders. , and maintained strong interest coverage in recent years. Previously, relatively higher financial leverage is a primary reason why Berkley's senior debt rating had been notched four levels from its operating companies' IFS ratings. Berkley's equity-credit adjusted financial leverage, which has previously exceeded 30%, was in the low 20%'s as of year-end 2006. While Fitch expects Berkley's reported financial leverage to gradually increase return to levels between 25% and 35%, we do not anticipate that Berkley's equity adjusted financial leverage will exceed 30% for the foreseeable future. Moreover, Berkley's emphasis on casualty lines means that its losses are generally paid out over an extended period of time, in many cases long after the company has collected associated premiums. As a result, Fitch believes that cash-based interest coverage should remain adequate if underwriting margins deteriorate. Fitch has also affirmed its existing IFS ratings of Berkley's major insurance underwriting subsidiaries. In addition, Fitch has assigned 9 IFS ratings to capture various operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. in the W.R. Berkley Insurance Group that Fitch has not previously rated publicly (see the rating list below for all ratings). The Rating Outlook for all ratings is Stable. Strong underwriting results for the 2002-2006 accident years have more than offset persistent prior year loss reserve strengthening that could reflect management creating some reserve cushion prior to the next soft market. While Fitch remains modestly concerned that loss reserves for the 1998-2001 accident years continue to develop unfavorably after being repeatedly strengthened, Fitch recognizes that the magnitude of reserve increases has diminished. Fitch expects Berkley's underwriting and profitability performance to remain strong through 2007. W.R. Berkley Corporation --IDR to 'A-' from 'BBB+'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. to 'BBB+' from 'BBB'. W.R. Berkley Capital Trust II --Trust preferred securities to 'BBB' from 'BBB-'. Berkley Insurance Company --IFS affirmed at 'A'. Berkley Regional Insurance Company --IFS affirmed at 'A+'. Admiral Insurance Set up in 1993, Admiral, part of the Admiral Group, is a car insurance specialist mainly targeting those who traditionally pay higher than average premiums, including drivers under 35 and those living in big cities and in Scotland. Company --IFS affirmed at 'A+'. Fitch also assigns an IFS rating of 'A+' to the following companies: --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 --Union Standard Insurance Co --Union Standard Lloyds Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. 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