W. R. Berkley (WRB) 10-K risk factor changes: FY2017 vs FY2016

In addition, investment rates of return have impacted rate adequacy, with interest rates remaining at [added: or near] historic lows.

Our [removed: specialty] [added: E&S] operating units have also encountered competition from admitted companies seeking to increase market share.

Our gross reserves for losses and loss expenses were approximately [removed: $11.2] [added: $11.7] billion as of December 31, [removed: 2016.][added: 2017.]

[removed: -] [added: | • |] judicial expansion of policy coverage and the impact of new theories of liability; [added: |]

[removed: -] [added: | • |] plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to [removed: claims-][added: claims-handling and other practices; |]

[removed: -] [added: | • |] medical developments that link health issues to particular causes, resulting in liability claims; [added: and |]

[removed: -] [added: | • |] claims relating to unanticipated consequences of current or new technologies, including cyber security related risks; [added: and claims relating to potentially changing climate conditions. |]

[added: For] example, catastrophe losses net of reinsurance recoveries were [added: $184 million in 2017,] $105 million in 2016, $58 million in 2015, $87 million in [removed: 2014, $65 million in 2013] [added: 2014] and [removed: $80] [added: $65] million in [removed: 2012.][added: 2013.]

Catastrophes can be caused by various events, including hurricanes, windstorms, earthquakes, tsunamis, hailstorms, explosions, severe winter weather and fires, as well as terrorist and other man-made activities, including drilling, mining and other industrial [removed: accidents] [added: accidents, cyber events] or terrorist activities.

Changing climate conditions may [added: increase the frequency and severity of catastrophic events and thereby] adversely affect our financial condition [removed: or profitability.][added: and results.]

To the extent an act of terrorism, whether a domestic or foreign act, is certified by the Secretary of Treasury, we may be covered under the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), for up to [removed: 84%] [added: 83%] of our losses for certain property/casualty lines of insurance.

Based on our [removed: 2016] [added: 2017] earned premiums, our aggregate deductible under TRIPRA during [removed: 2017] [added: 2018] is approximately [removed: $915] [added: $948] million.

Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be taken in response to [removed: the current] conditions in the financial [removed: markets] [added: markets, global insurance supervision] and [removed: the recent economic downturn] [added: other factors] may lead to additional federal regulation of the insurance industry in the coming years.

The Dodd-Frank Act established the Financial Stability Oversight Council (“FSOC”), which is authorized to recommend that certain [removed: systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors of the Federal Reserve.]

[removed: Three non-bank financial companies, including two] [added: One] insurance [removed: groups, are] [added: group is] subject to Federal Reserve supervision and heightened prudential [removed: standards,] [added: standards] as [added: a] systematically significant financial [removed: institutions.][added: institution.]

We are not able to predict whether any such proposal to [removed: roll back] [added: amend or repeal certain sections of] the Dodd-Frank Act would have a material effect on our business operations and cannot identify the risks, if any, that may be posed to our businesses as a result of changes to, or legislative replacements for, the Dodd-Frank Act.

In addition, the [removed: results of the recent U.S. presidential] [added: current administration] and [removed: congressional elections] [added: the volatile political environment] may increase the chance of other federal legislative and regulatory changes that could affect us in ways we cannot predict.

With respect to international measures, Solvency II, the EU [removed: directive] [added: regime] concerning the capital adequacy, risk management and regulatory reporting for insurers and reinsurers may affect our insurance businesses.

Implementation of Solvency II in EU member states occurred on January 1, 2016, and [added: as the Solvency II regime evolves over time, we] may [removed: require us] [added: be required] to utilize a significant amount of resources to ensure compliance.

Additionally, our capital requirements and compliance requirements may be adversely affected if the EU commission [removed: finds that] [added: does not deem] the insurance regulatory regimes of the jurisdictions outside the EU in which we have insurance or reinsurance companies domiciled [removed: are not] [added: to be] "equivalent" to [removed: the requirements of] Solvency II.

The [removed: vote by the] United Kingdom [removed: to leave] [added: leaving] the European Union ("EU") could adversely affect our business.

The 2016 U.K. referendum on its membership in the EU resulted in a majority of U.K. voters voting in favor of the U.K. [removed: exiting] [added: leaving] the EU (“Brexit”).

[removed: As a result, we] [added: We also] face risks associated with the potential uncertainty and consequences related to [removed: the vote and] Brexit, including with respect to volatility in financial markets, exchange rates and interest rates.

We depend on our ability to attract and retain key personnel, including our [removed: Executive Chairman, our] President and CEO, [added: Executive Chairman,] senior executive officers, presidents of our operating units, experienced underwriters and other skilled employees who are knowledgeable about our business.

If the quality of our underwriting team and other personnel decreases, we may be unable to maintain our current competitive position in the specialized markets in which we operate, and be unable to expand our operations into new [added: products and] markets.

As of December 31, [removed: 2016,] [added: 2017,] the amount due from our reinsurers was approximately [removed: $1,744] [added: $1,783] million, including amounts due from state funds and industry pools where it was intended that we would bear no risk.

Our [added: electronic transmission of personal, confidential and proprietary information to third parties with whom we have business relationships and our] outsourcing of certain technology and business process functions to third parties may expose us to enhanced risk related to data security.

While we attempt to develop secure data transmission capabilities with these third-party vendors and others with whom we do business, [removed: we may be unable to put in place such secure capabilities with all of such] [added: our] vendors and third parties [removed: and, in addition, these third parties may not have appropriate controls] [added: could still suffer data breaches that could result] in [removed: place to protect] the [removed: confidentiality] [added: exposure] of [removed: the] sensitive [removed: information being transferred.][added: data and the infiltration of our computer systems.]

[removed: These activities often are subject to internal] guidelines and policies, as well as legal and regulatory standards, including those related to privacy, anti-corruption, anti-bribery and global finance and insurance matters.

As of December 31, [removed: 2016,] [added: 2017,] our investment in fixed maturity securities was approximately [removed: $13.2] [added: $13.6] billion, or [removed: 75.6%] [added: 73.6%] of our total investment portfolio, including cash and cash equivalents.

As of that date, our portfolio of fixed maturity securities consisted of the following types of securities: U.S. Government securities [removed: (3.9%);] [added: (2.8%);] state and municipal securities [removed: (34.8%);] [added: (33.2%);] corporate securities [removed: (30.8%);] [added: (32.4%);] asset-backed securities [removed: (14.5%);] [added: (15.6%);] mortgage-backed securities [removed: (9.1%)] [added: (9.7%)] and foreign government [removed: (6.9%).][added: (6.3%).]

Additionally, given the [added: near] historically low interest rate environment, we may not be able to successfully reinvest the proceeds from maturing securities at yields commensurate with our target performance goals.

[removed: The economic downturn has resulted in many] [added: Many] states and municipalities [removed: operating] [added: operate] under deficits or projected deficits, the severity and duration of which could have an adverse impact on both the valuation of our state and municipal fixed maturity securities and the issuer's ability to perform its obligations thereunder.

Investment returns are currently, and will likely continue to remain, under pressure due to the [removed: significant volatility experienced in] [added: continued low inflation, actions by] the [removed: financial markets,] [added: Federal Reserve,] economic uncertainty, more generally, and the shape of the yield curve.

As a result, our exposure to the risks described above could materially and adversely affect our results of [removed: operations.][added: operations, liquidity and financial condition.]

At December 31, [removed: 2016,] [added: 2017,] our investment in these assets was approximately [removed: $3.5] [added: $3.9] billion, or [removed: 19.8%,] [added: 21.2%,] of our investment portfolio, including cash and cash equivalents.

Merger and arbitrage trading securities were [removed: $300] [added: $618] million, or [removed: 1.7%] [added: 3.4%] of our investment portfolio, including cash and cash equivalents at December 31, [removed: 2016.][added: 2017.]

Real estate related investments, including directly owned, investment funds and loans receivable, were [removed: $1.9] [added: $2.2] billion, or [removed: 11.1%] [added: 11.7%] of our investment portfolio, including cash and cash equivalents, at December 31, [removed: 2016.][added: 2017.]

We also invest in aviation and rail equipment funds, [removed: hedged equity] [added: credit-related funds] and energy and other investment funds.

During [removed: 2017,] [added: 2018,] the maximum amount of dividends that can be paid without regulatory approval is approximately [removed: $580] [added: $699] million.

In addition, technology companies or other third parties have created, and may in the future create, digitally-enabled business models, platforms or alternate distribution channels that may adversely impact our competitive position.

Over the past several years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures.

There is a growing scientific consensus that global warming and other climate change are increasing the frequency and severity of catastrophic weather events, such as hurricanes, tornadoes, windstorms, floods and other natural disasters.

Such changes make it more difficult for us to predict and model catastrophic events, reducing our ability to accurately price our exposure to such events and mitigate our risks.

Any increase in the frequency or severity of natural disasters may adversely affect our financial condition and results.

| | |

| --- | --- |

systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors of the Federal Reserve.

The current administration and the Republican party have expressed their desire to amend the Dodd-Frank Act.

On June 8, 2017, the U.S. House of Representatives passed the Financial CHOICE Act of 2017, which proposes to amend or repeal various sections of the Dodd-Frank Act.

This proposed legislation is under consideration by the U.S. Senate.

On March 29, 2017, the U.K. government formally notified the European Council of the U.K.’s intention to withdraw from the EU.

The member withdrawal provisions in the EU treaty provide that the U.K. and the EU will negotiate a withdrawal agreement during a maximum two-year period (unless such period is extended by unanimous vote of the

EU member states).

As part of the sequenced approach to the talks set out by the EU, sufficient progress needs to be made on the withdrawal arrangements before any talks on a future trade deal between the EU and the U.K. can begin.

Depending on the terms of the withdrawal agreement, the U.K. could lose access to the single EU market and to free trade deals with several countries that already have agreements with the EU.

Such a decline in trade could affect the attractiveness of the U.K. and impact our U.K. business.

These activities often are subject to internal

We could be adversely affected by recent and future changes in U.S. Federal income tax laws.

Recent tax legislation commonly referred to as the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, fundamentally overhauls the U.S. tax system by, among other things, reducing the U.S. corporate income tax rate to 21%, repealing the corporate alternative minimum tax, limiting the deductibility of business interest expense, introducing a base erosion and anti-avoidance tax aimed at cross-border deductible payments to related foreign persons, moving closer to a territorial system of taxing earnings generated through foreign subsidiaries and imposing a one-time deemed repatriation tax on certain post-1986 undistributed earnings of foreign subsidiaries.

In the context of the taxation of U.S. property/casualty insurance companies such as the Company, the Act would also modify the loss reserve discounting rules and the proration rules that apply to reduce reserve deductions to reflect the lower corporate income tax rate.

Although we believe that the changes introduced by the Act should generally benefit us, we are unable to predict the ultimate impact of the Act and its implementing regulations.

In addition, it is possible that other legislation could be introduced and enacted by the current Congress or future Congresses that could have an adverse impact on us.

New regulations or pronouncements interpreting or clarifying provisions of the Act may be forthcoming.

We cannot predict if, when or in what form such regulations or pronouncements may be provided, whether such guidance will have a retroactive effect or their potential impact on us.

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| --- | --- |

| | |

| --- | --- |

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| --- | --- |

Certain of our competitors operate from Bermuda or other tax advantaged or less regulated jurisdictions that may provide them with additional competitive and pricing advantages.

That decline accelerated in 2016.

handling and other practices;

and

- claims relating to potentially changing climate conditions.

For

There is an emerging scientific view that the earth is getting warmer.

Climate change, to the extent it produces rising temperatures and changes in weather patterns, may affect the frequency and severity of storms and other weather events as well as the affordability, availability and underwriting results of various types of commercial insurance, and, if frequency and severity patterns increase, could negatively affect our financial results.

Conditions in the financial markets and the global economy have had and may continue to have a negative impact on our results of operations and financial condition.

The significant volatility and uncertainty experienced in financial markets around the world during the past several years and the effect of the economic downturn have continued.

Although the U.S. and various foreign governments have taken various actions to try to stabilize the financial markets, the ultimate effectiveness of such actions remains unclear.

Therefore, volatility and uncertainty in the financial markets and the resulting negative economic impact may continue for some time.

For example, financial markets have been affected by concerns over U.S. fiscal policy as well as the related concern regarding the need to reduce the federal deficit.

These issues, together with the slowing of the global economy generally, could send the U.S. into a new recession, further exacerbate concerns over sovereign debt of other countries and disrupt economic activity in the U.S. and elsewhere.

Similarly, concerns about the solvency of certain European Union member states, and of financial institutions that have significant direct or indirect exposure to debt issued by them, has created market volatility that continues to affect the performance of various asset classes, and likely will continue until there is an ultimate resolution of these sovereign debt related concerns.

While we monitor conditions in the financial markets, we cannot predict future conditions or their impact on our results of operations and financial condition.

Depending on conditions in the financial markets, we could incur additional realized and unrealized losses in our investment portfolio in future periods, and financial market volatility and uncertainty and an economic downturn could have a significant negative impact on third parties that we do business with, including insureds and reinsurers.

The new U.S. administration and the majority party have expressed the desire to dismantle or roll back the Dodd-Frank Act, which may present risks to our business.

For example, in 2016, the U.S. House of Representatives passed the Financial CHOICE Act of 2016, which proposed to roll back provisions of the Dodd-Frank Act affecting insurance.

While the Financial CHOICE Act was not passed by the Senate, it is likely that the Act or another Dodd-Frank “roll back” bill affecting the insurance business will be introduced.

As a result of this vote, negotiations are commencing to determine the terms of the U.K.’s withdrawal from the EU and its future relationship with the EU.

In addition, we routinely transmit and receive personal, confidential and proprietary information by email and other electronic means.

[removed: Our] [added: The Company's] primary sources of revenues and earnings are its insurance operations and its investments.

Over the years, the Company has formed numerous new operating units that are focused on important parts of the economy in the U.S., including healthcare, cyber security, energy and agriculture, and on growing international markets, including [removed: Scandinavia, Australia,] the Asia-Pacific region, South America and Mexico.

Returns available on fixed maturity investments [removed: are] [added: have been] at historically low [removed: levels.][added: levels in recent years.]

The following table reflects the impact of changes (which could be favorable or unfavorable) in frequency and severity, relative to our assumptions, on our loss estimate for claims occurring in [removed: 2016:][added: 2017:]

Our net reserves for losses and loss expenses of approximately [removed: $9.6] [added: $10.1] billion as of December 31, [removed: 2016] [added: 2017] relate to multiple accident years.

Approximately [removed: $1.4] [added: $1.7] billion, or [removed: 14%,] [added: 17%,] of the Company’s net loss reserves as of December 31, [removed: 2016] [added: 2017] relate to the Reinsurance segment.

Following is a summary of the Company’s reserves for losses and loss expenses by business segment as of December 31, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

| (In thousands) | [added: 2017 | | | |] 2016 | | | | 2015 | | |

| Net reserves for losses and loss expenses | [removed: 9,590,265] [added: 10,056,914] | | | | [removed: 9,244,872] [added: 9,590,265] | | |

| Ceded reserves for losses and loss expenses | [removed: 1,606,930] [added: 1,613,494] | | | | [removed: 1,424,278] [added: 1,606,930] | | |

| Gross reserves for losses and loss expenses | $ | [removed: 11,197,195] [added: 11,670,408] | | | $ | [removed: 10,669,150] [added: 11,197,195] | |

Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of December 31, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

| Total | $ | [removed: 4,367,120] [added: 4,367,119] | | | $ | [removed: 5,223,145] [added: 5,223,146] | | | $ | 9,590,265 | |

[added: |] (1) [added: |] Reserves for excess and assumed workers’ compensation business are net of an aggregate net discount of [removed: $640] [added: $591] million and [removed: $699] [added: $640] million as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively. [added: |]

[added: |] (2) [added: |] Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines. [added: |]

| (In thousands) | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Decrease in prior year loss reserves | $ | [removed: 29,904] [added: 5,165] | | | $ | [removed: 46,713] [added: 29,904] | | | $ | [removed: 75,764] [added: 46,713] | |

| Increase in prior year earned premiums | [removed: 29,000] [added: 32,162] | | | | [removed: 16,730] [added: 29,000] | | | | [removed: 9,088] [added: 16,730] | | |

| Net favorable prior year development | $ | [removed: 58,904] [added: 37,327] | | | $ | [removed: 63,443] [added: 58,904] | | | $ | [removed: 84,852] [added: 63,443] | |

For workers' compensation, the favorable development was related to both primary and excess business and to many accident years, including those prior to [removed: 2006.][added: 2007.]

Reinsurance [removed: -] [added: \-] Reserves for the Reinsurance segment developed favorably by $11 million in 2015.

Favorable prior year development (net of additional and return premiums) was [removed: $85] [added: $37] million in [removed: 2014.][added: 2017.]

The amount of workers’ compensation reserves that were discounted was [removed: $1,907] [added: $1,855] million and [removed: $2,308] [added: $1,907] million at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: December 31, 2016,] respectively.

The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was [removed: $640] [added: $591] million and [removed: $699] [added: $640] million at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

At December 31, [removed: 2016,] [added: 2017,] discount rates by year ranged from 2.0% to 6.5%, with a weighted average discount rate of [removed: 3.9%.][added: 3.8%.]

Substantially all [removed: of] discounted workers’ compensation reserves (97% of total discounted reserves at December 31, [removed: 2016)] [added: 2017)] are excess workers’ compensation reserves.

The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, [removed: 2016),] [added: 2017),] including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease.

Estimated assumed premiums receivable were approximately [removed: $68] [added: $56] million and [removed: $62] [added: $68] million at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

For purposes of classifying securities with different ratings, the Company uses the [removed: lower rating if two ratings were assigned and] [added: average of] the [removed: middle rating if three] [added: credit] ratings [removed: were] assigned, unless [added: in limited situations] the [removed: Company’s] [added: Company's] own analysis indicates [removed: that the lower] [added: an internal] rating is more appropriate.

The following table provides a summary of fixed maturity securities in an unrealized loss position as of December 31, [removed: 2016:][added: 2017:]

| Unrealized loss less than 20% of amortized cost | [removed: 739] [added: 789] | | | $ | [removed: 5,123,665] [added: 4,939,452] | | | $ | [removed: 90,505] [added: 60,118] | |

| Twelve months and longer | 3 | | | [removed: 774] [added: 177] | | | | [removed: 302] [added: 111] | | |

A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at December 31, [removed: 2016] [added: 2017] is presented in the table below.

| State and municipal | 1 | | | [removed: $] [added: 3,662] | [removed: 5,136] | | | [removed: $] [added: 1] | [removed: 3,725] | |

| Mortgage-backed securities | [removed: 11] [added: 6] | | | [removed: 22,987] [added: 5,368] | | | | [removed: 1,106] [added: 138] | | |

| Asset-backed securities | [removed: 4] [added: 3] | | | [removed: 1,256] [added: 441] | | | | [removed: 362] [added: 116] | | |

For the [removed: year] [added: years] ended December 31, [added: 2017 and] 2016, there were no OTTI for fixed maturity securities recognized in earnings.

OTTI for [removed: fixed maturity securities] [added: common stocks] for the year ended December 31, [removed: 2015] [added: 2016] were [removed: $9.0] [added: $18.1] million.

Preferred Stocks – At December 31, [removed: 2016,] [added: 2017,] there was one preferred stock in an unrealized loss position, with an aggregate fair value of [removed: $22.0] [added: $23.1] million and a gross unrealized loss of [removed: $3.6] [added: $2.6] million.

For the [removed: year] [added: years] ended December 31, [added: 2017 and] 2016, there were no OTTI for preferred stocks.

During 2017, catastrophe losses were $184 million, mainly related to hurricanes Harvey, Irma, and Maria, two earthquakes in Mexico, and wildfires in California.

The Tax Cuts and Jobs Act of 2017 (the Tax Act) was enacted on December 22, 2017.

The Tax Act provides for a reduction of the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018.

The Tax Act also provides for a mandatory repatriation of foreign earnings, which requires companies to pay a one-time tax on the unremitted accumulated earnings of their foreign subsidiaries.

The Company has calculated the effects of the Tax Act as of December 31, 2017 and has included in its financial statements provisional estimates of its impact.

The Company anticipates further guidance will be forthcoming and will continue to review and refine its calculations as guidance is provided and additional analysis of the Company's information is completed.

In 2017, the Company reported a net tax benefit related to the Tax Act in the amount of $20.7 million.

This included a tax benefit due to the reduction of the tax rate as applied to the net U.S. deferred tax liability in the amount of $30.5 million.

Offsetting this tax benefit, the Company recorded a provisional charge of $9.8 million on the deemed repatriation of earnings and related impact of utilization of foreign losses.

The charge may be adjusted as the applicable earnings related to the foreign subsidiaries are finalized for the purpose of the mandatory repatriation inclusion computation.

Commencing with the first quarter 2017, the Company reclassified two businesses from the Insurance segment to the Reinsurance segment.

Reclassifications have been made to the Company's 2016 and earlier presented financial information to conform with this presentation.

| 1% | $ | 79,667 | | | $ | 239,794 | | | $ | 439,953 | |

| 5% | 239,794 | | | | 406,263 | | | | 614,349 | | |

| 10% | 439,953 | | | | 614,349 | | | | 832,344 | | |

| Insurance | $ | 8,341,622 | | | $ | 7,913,074 | |

| Reinsurance | 1,715,292 | | | | 1,677,191 | | |

| December 31, 2017 | | | | | | | | | | | |

| Other liability | $ | 1,261,957 | | | $ | 2,189,596 | | | $ | 3,451,553 | |

| Workers’ compensation (1) | 1,543,379 | | | | 1,242,501 | | | | 2,785,880 | | |

| Professional liability | 295,269 | | | | 618,107 | | | | 913,376 | | |

| Commercial automobile | 347,669 | | | | 263,411 | | | | 611,080 | | |

| Short-tail lines (2) | 315,008 | | | | 264,725 | | | | 579,733 | | |

| Total primary | 3,763,282 | | | | 4,578,340 | | | | 8,341,622 | | |

| Reinsurance (1) | 919,497 | | | | 795,795 | | | | 1,715,292 | | |

| Total | $ | 4,682,779 | | | $ | 5,374,135 | | | $ | 10,056,914 | |

| Other liability | $ | 1,159,082 | | | $ | 2,061,966 | | | $ | 3,221,048 | |

| Workers’ compensation (1) | 1,453,318 | | | | 1,228,774 | | | | 2,682,092 | | |

| Professional liability | 264,188 | | | | 542,539 | | | | 806,727 | | |

| Short-tail lines (2) | 322,872 | | | | 283,214 | | | | 606,086 | | |

| Total primary | 3,543,603 | | | | 4,369,471 | | | | 7,913,074 | | |

| Reinsurance (1) | 823,516 | | | | 853,675 | | | | 1,677,191 | | |

Insurance - Reserves for the Insurance segment developed favorably by $68 million in 2017.

The favorable development was primarily attributable to workers' compensation business, and was partially offset by unfavorable development for professional liability business.

For workers' compensation, the favorable development was related to both primary and excess business and was spread across many accident years, including those prior to 2008, but was most significant in accident years 2014 through 2016.

The favorable workers' compensation development reflects a continuation during 2017 of the generally benign loss cost trends experienced in recent years, particularly the favorable claim frequency trends (i.e. number of reported claims per unit of exposure).

Reported workers' compensation losses in 2017 continued to be below our expectations at most of our operating units, and were below the assumptions underlying our previous reserve estimates.

The favorable severity trends were also impacted by our continued investment in medical case management services and the higher usage of preferred provider networks.

For professional liability business, adverse development was primarily related to unexpected large directors & officers ("D&O") liability losses at one of our U.S. operating units, and large professional indemnity and D&O losses in the U.K. The adverse development stemmed mainly from accident years 2013 through 2016 in the U.S. and 2011 through 2016 in the U.K.

Reinsurance - Reserves for the Reinsurance segment developed unfavorably by $31 million in 2017.

Although insurance prices have generally increased for most lines of business since 2011, the rate of increase has declined in more recent years.

That decline accelerated in 2016.

Loss costs have also increased over that period of time.

With the low level of interest rates available, current price levels for certain lines of business remain below the prices required for the Company to achieve its long-term return objectives.

Part of the Company's strategy is to selectively reduce its business in areas where it believes returns are not adequate.

Price changes are reflected in the Company’s results over time as premiums are earned.

The Company's investment income has been negatively impacted by the low fixed maturity investment returns, and will be further impacted if investment returns remain at this level.

| 1% | $ | 76,915 | | | $ | 231,511 | | | $ | 424,755 | |

| 5% | 231,511 | | | | 392,229 | | | | 593,126 | | |

| 10% | 424,755 | | | | 593,126 | | | | 803,590 | | |

| Insurance | $ | 8,215,798 | | | $ | 7,876,193 | |

| Reinsurance | 1,374,467 | | | | 1,368,679 | | |

| Other liability | $ | 1,186,425 | | | $ | 2,136,189 | | | $ | 3,322,614 | |

| Workers’ compensation (1) | 1,596,079 | | | | 1,326,469 | | | | 2,922,548 | | |

| Professional liability | 255,971 | | | | 492,985 | | | | 748,956 | | |

| Short-tail lines (2) | 330,887 | | | | 293,672 | | | | 624,559 | | |

| Total primary | 3,713,505 | | | | 4,502,293 | | | | 8,215,798 | | |

| Reinsurance (1) | 653,615 | | | | 720,852 | | | | 1,374,467 | | |

| December 31, 2015 | | | | | | | | | | | |

| Other liability | $ | 1,079,641 | | | $ | 1,947,637 | | | $ | 3,027,278 | |

| Workers’ compensation (1) | 1,655,726 | | | | 1,263,508 | | | | 2,919,234 | | |

| Professional liability | 256,783 | | | | 478,796 | | | | 735,579 | | |

| Commercial automobile | 352,208 | | | | 242,071 | | | | 594,279 | | |

| Short-tail lines (2) | 317,375 | | | | 282,448 | | | | 599,823 | | |

| Total primary | 3,661,733 | | | | 4,214,460 | | | | 7,876,193 | | |

| Reinsurance (1) | 631,666 | | | | 737,013 | | | | 1,368,679 | | |

| Total | $ | 4,293,399 | | | $ | 4,951,473 | | | $ | 9,244,872 | |

Insurance - For the Insurance segment, favorable development in 2014 of $69 million was driven principally by other liability business for accident years 2006 through 2010, primarily related to our excess and surplus lines casualty business.

Reported losses during these years continued to be below our initial expectations at the time the business was written, largely as a result of persistent improvement in claim frequency trends (i.e., number of reported claims per unit of exposure).

As these accident years have matured, the weighting of actuarial methods has shifted from methods based on initial expected losses to methods based on actual reported losses.

We believe the favorable claim frequency trends we have seen during this time period are due to changes in the mix of business written and to the general slowdown in the economy.

Commercial automobile reported unfavorable development primarily as a result of large losses for long-haul trucking business in 2012 and 2013.

The favorable development was also offset by adverse reserve development driven primarily by unexpected large losses from accident years 2009-2012 in the professional indemnity line of business in the United Kingdom.

Reinsurance - For the Reinsurance segment, favorable reserve development in 2014 of $16 million was driven primarily by assumed professional liability excess of loss and umbrella treaty business, as well as direct facultative business.

This was partially offset by adverse development on brokerage facultative business caused by completed operations losses associated with construction projects in accident years prior to 2009.

| Less than twelve months | 2 | | | 5,324 | | | | 3,776 | | |

| Total | 744 | | | $ | 5,129,763 | | | $ | 94,583 | |

| Corporate | 10 | | | 78,462 | | | | 1,370 | | |

| Foreign government | 15 | | | 112,985 | | | | 341 | | |

| Total | 41 | | | $ | 220,826 | | | $ | 6,904 | |

The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was [removed: 3.1] [added: 3.0] years and [removed: 3.3] [added: 3.1] years at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

The following table outlines the groups of fixed maturity securities and their effective duration at December 31, [removed: 2016:][added: 2017:]

| | Effective | | | | | [removed: |]

| | Duration | | | | | [removed: |]

| ($ in thousands) | (Years) | | [removed: |] Fair Value | | |

| Cash and cash equivalents | — | | [removed: | $] [added: 950,471] | [removed: 795,285] | |

| [removed: U. S.] [added: U.S.] government and [removed: governmental] [added: government] agencies | 3.0 | | [removed: | 513,802] [added: 377,740] | | |

The estimated fair value at specified levels at December 31, [removed: 2016] [added: 2017] would be as follows:

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| State and municipal | 4.1 | | $ | 4,525,475 | |

| Corporate | 3.7 | | 4,389,112 | | |

| Mortgage-backed securities | 3.7 | | 1,314,608 | | |

| Foreign government | 2.1 | | 848,497 | | |

| Loans receivable | 1.5 | | 82,047 | | |

| Asset-backed securities | 0.8 | | 2,111,544 | | |

| Total | 3.0 | | $ | 14,599,494 | |

| 300 basis point rise | $ | 13,215,440 | | | $ | (1,384,054 | ) |

| 200 basis point rise | 13,677,051 | | | | (922,443 | | ) |

| 100 basis point rise | 14,138,717 | | | | (460,777 | | ) |

| Base scenario | 14,599,494 | | | | — | | |

| 100 basis point decline | 15,059,429 | | | | 459,935 | | |

| 200 basis point decline | 15,505,364 | | | | 905,870 | | |

| 300 basis point decline | 15,903,135 | | | | 1,303,641 | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| State and municipal | 4.3 | | | 4,604,538 | | |

| Asset-backed securities | 0.6 | | | 1,907,860 | | |

| Corporate | 3.5 | | | 4,068,527 | | |

| Foreign government | 2.4 | | | 902,805 | | |

| Mortgage-backed securities | 4.0 | | | 1,207,282 | | |

| Loans receivable | 3.7 | | | 108,299 | | |

| Total | 3.1 | | | $ | 14,108,398 | |

| 300 basis point rise | $ | 12,779,442 | | | $ | (1,328,956 | ) |

| 200 basis point rise | 13,215,239 | | | | (893,159 | | ) |

| 100 basis point rise | 13,657,217 | | | | (451,181 | | ) |

| Base scenario | 14,108,398 | | | | — | | |

| 100 basis point decline | 14,563,631 | | | | 455,233 | | |

| 200 basis point decline | 14,988,978 | | | | 880,580 | | |

| 300 basis point decline | 15,400,344 | | | | 1,291,946 | | |

| • | Insurance - [added: predominantly] commercial insurance business, including excess and surplus [added: lines, admitted] lines and [removed: admitted lines,] [added: specialty personal lines] throughout the United States, as well as insurance business in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and [removed: Australia; and] [added: Australia.] |

| (In thousands) | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Total | $ | [removed: 6,423,913] [added: 6,260,508] | | | $ | [removed: 6,189,515] [added: 6,423,913] | | | $ | [removed: 5,996,947] [added: 6,189,515] | | | $ | [removed: 5,500,173] [added: 5,996,947] | | | $ | [removed: 4,898,539] [added: 5,500,173] | |

| | Year Ended December 31, | | | | | | | | | [removed: | | | | |]

| | [added: 2017 | | |] 2016 | | | 2015 | | | 2014 | | | 2013 | | [removed: | 2012 | |]

[removed: Twenty-eight] [added: Twenty-nine] of our [removed: twenty-nine] insurance company subsidiaries [added: are] rated by A.M. Best Company, Inc. ("A.M. Best") [added: and] have ratings of A+ (Superior) (the second highest rating out of 15 possible [removed: ratings), and one is rated A (Excellent) (the third highest rating).][added: ratings).]

[removed: Certain] [added: The] operating units are identified by us [removed: herein] for descriptive purposes only and are not legal entities.

Our U.S.-based operating units [added: predominantly] underwrite commercial insurance business primarily throughout the United States, although many units offer coverage globally, focusing on the following general areas:

[removed: They offer multiple lines of business with policies tailored to address these unique exposures, often with the flexibility of providing coverages on either an admitted or a non-admitted basis in the U.S.] Each operating unit delivers its products through one or more distribution channels, including retail and wholesale agents, brokers, and managing general agents (MGAs), depending on the customer and the particular risks insured.

In addition to its general offerings, Acadia has specialized expertise in insuring regional industries such as construction, [removed: lumber] [added: lumber, fishing] and [removed: fishing.][added: transportation.]

American Mining Insurance Group specializes in mono-line workers’ compensation coverage for mining and mining related [removed: industries throughout the United States] and [removed: for] high hazard [removed: risks] [added: industries] in select states.

It operates with a select group of agents in Idaho, Montana, Oregon, Utah and Washington to sell and service property and casualty policies for larger middle-market standard businesses and specialty lines, such as [removed: construction.][added: construction, restaurants and manufacturing.]

Berkley Program Specialists is a program management company offering both admitted and non-admitted insurance support on a nationwide basis for commercial casualty and [removed: inland marine] [added: property] program administrators with specialized insurance expertise.

Berkley [removed: Regional Specialty] [added: Aspire] provides excess and surplus lines coverage on a national basis to small to medium-sized insureds with low to moderate insurance risk.

Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia, Mississippi, North Carolina, South Carolina and [removed: Tennessee.][added: Tennessee, specializing in small to mid-sized accounts.]

[removed: Its entertainment and sports division] [added: Berkley Entertainment] underwrites property casualty insurance products, both on an admitted and non-admitted basis, for the entertainment industry and sports-related organizations.

[removed: The environmental division] [added: Berkley Environmental] underwrites specialty insurance products for environmental customers such as contractors, consultants and owners of sites and facilities.

Berkley Surety provides a broad array of surety products for contract and commercial surety risks in the U.S. and Canada, including specialty niches such as environmental and secured credit for small contractors, through an independent agency and broker platform across a network of [removed: 16] [added: 18] field offices.

[removed: Clermont Specialty Managers] [added: Berkley Luxury Group] provides [added: commercial] package insurance programs for high-end cooperative, condominium, and quality rental apartment buildings and upscale restaurants in the New York, New Jersey, Chicago and Washington, D.C. metropolitan markets, as well as other select markets.

It focuses on middle market [removed: and national] accounts in several niches that appreciate expertise and exceptional service.

Its workers' compensation excess of loss products include self-insured excess of loss [removed: coverages,] [added: coverages and] large deductible [removed: policies and reinsurance.][added: policies.]

[removed: Riverport Insurance] [added: Berkley Human] Services provides property casualty insurance coverages to human services organizations, including nonprofit and for-profit organizations, public [removed: schools and] [added: schools,] sports and recreational [removed: organizations.][added: organizations, and special events.]

Its product offerings include traditional primary coverages and risk purchasing groups, as well as alternative market solutions for clients who wish to retain a larger share of their [removed: own risk.][added: risks.]

[removed: W. R.] Berkley Europe is comprised of specialist operating units offering a focused range of insurance products to markets in Continental Europe and Nordic countries.

[removed: W. R.] Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in North Asia and Southeast Asia through offices in Hong Kong and Singapore.

[removed: W. R.] Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity insurance for companies of all sizes.

W / R / B Underwriting provides a broad range of leading insurance products to the [removed: European] [added: Lloyd's] marketplace, with a concentration in specialist classes of business including property, professional indemnity, crisis management, aviation, personal accident and asset protection.

| | [added: 2017 | | |] 2016 | | | 2015 | | | 2014 | | | 2013 | | [removed: | 2012 | |]

| Admiral Insurance | [removed: 5.5] [added: 5.7] | | | [removed: 4.9] [added: 5.5] | | | [removed: 5.3] [added: 4.9] | | | [removed: 4.9] [added: 5.3] | | | [removed: 5.1] [added: 5.0] | |

| American Mining Insurance Group | [removed: 0.7] [added: 0.8] | | | [removed: 0.8] [added: 0.7] | | | [removed: 0.7] [added: 0.8] | | | 0.7 | | | 0.7 | |

| Berkley Accident and Health | [removed: 4.4] [added: 4.7] | | | [removed: 3.7] [added: 4.4] | | | [removed: 2.9] [added: 3.7] | | | [removed: 2.5] [added: 2.9] | | | [removed: 3.0] [added: 2.6] | |

| Berkley Agribusiness Risk Specialists | [removed: 1.1] [added: 1.2] | | | [removed: 0.9] [added: 1.1] | | | 0.9 | | | 0.9 | | | 0.9 | |

| Berkley Alliance Managers | [removed: 1.5] [added: 1.9] | | | [removed: 0.7] [added: 1.5] | | | [removed: 0.1] [added: 0.7] | | | [removed: —] [added: 0.1] | | | — | |

| Berkley Aviation | [removed: 1.0] [added: 1.1] | | | [removed: 1.2] [added: 1.0] | | | [removed: 0.8] [added: 1.2] | | | [removed: 0.8] [added: 0.9] | | | [removed: 1.2] [added: 0.8] | |

| Berkley Canada | [removed: 0.8] [added: 0.9] | | | [removed: 0.6] [added: 0.8] | | | [removed: 0.5] [added: 0.6] | | | [removed: 0.7] [added: 0.5] | | | 0.7 | |

| Berkley Custom Insurance | [removed: 2.7] [added: 2.5] | | | [removed: 2.8] [added: 2.7] | | | [removed: 2.4] [added: 2.9] | | | [removed: 2.3] [added: 2.4] | | | [removed: 0.6] [added: 2.4] | |

| Berkley Cyber Risk Solutions | [removed: —] [added: 0.1] | | | — | | | — | | | — | | | — | |

| Berkley FinSecure | [removed: 0.9] [added: 1.0] | | | [removed: 1.0] [added: 0.9] | | | [removed: 0.7] [added: 1.0] | | | 0.7 | | | 0.7 | |

| Berkley Fire & Marine | [removed: 0.4] [added: 0.5] | | | [removed: 0.3] [added: 0.4] | | | [removed: 0.2] [added: 0.3] | | | [removed: —] [added: 0.2] | | | — | |

| Berkley Global Product Recall Management | [removed: 0.2] [added: 0.3] | | | [removed: —] [added: 0.2] | | | — | | | — | | | — | |

Commencing with the first quarter of 2017, the Company reclassified two businesses from the Insurance segment to the Reinsurance segment.

Reclassifications have been made to the Company's prior periods financial information to conform with the presentation.

| Insurance | $ | 5,715,871 | | | $ | 5,743,620 | | | $ | 5,555,437 | | | $ | 5,302,436 | | | $ | 4,734,670 | |

| Reinsurance | 544,637 | | | | 680,293 | | | | 634,078 | | | | 694,511 | | | | 765,503 | | |

| Insurance | 91.3 | % | | 89.4 | % | | 89.8 | % | | 88.4 | % | | 86.1 | % |

| Reinsurance | 8.7 | | | 10.6 | | | 10.2 | | | 11.6 | | | 13.9 | |

They offer multiple lines of business with policies tailored to address these unique exposures, often with the flexibility of providing coverages on either an admitted or a non-admitted basis in the U.S., as well as internationally.

Berkley FinSecure serves the insurance needs of companies in the financial services industry.

It offers a comprehensive range of property, casualty, professional liability, and specialty lines insurance products.

Its Berkley crime division provides crime-related insurance products for commercial organizations, financial institutions and governmental entities.

Berkley North Pacific provides local underwriting, claims and risk management services for businesses in the Northwest.

Berkley One provides a customizable suite of personal lines insurance solutions including home, condo/co-op, auto, liability and collectibles.

Berkley One targets high net worth individuals and families with sophisticated risk management needs.

Berkley Select specializes in underwriting professional liability insurance on a surplus lines basis for large law and accounting firms through a limited number of brokers and also offers executive and professional liability products to small to middle market customers on both an admitted and surplus lines basis.

Carolina Casualty is a national provider of primary commercial insurance products and services to the transportation industry.

| Acadia Insurance | 6.8% | | | 6.8% | | | 6.7% | | | 7.2% | | | 7.0% | |

| Berkley Aspire | 0.3 | | | 0.3 | | | 0.3 | | | 0.4 | | | 0.3 | |

| Berkley Entertainment | 2.1 | | | 2.0 | | | 1.9 | | | 1.8 | | | 2.1 | |

| Berkley Environmental | 4.7 | | | 4.1 | | | 3.8 | | | 3.5 | | | 3.4 | |

| Berkley Human Services | 0.6 | | | 0.7 | | | 0.6 | | | 0.6 | | | 0.6 | |

| Berkley Luxury Group | 1.3 | | | 1.3 | | | 1.3 | | | 1.3 | | | 1.3 | |

| Berkley Select | 3.4 | | | 3.9 | | | 4.0 | | | 4.0 | | | 4.9 | |

| W/R/B Underwriting | 3.1 | | | 4.0 | | | 5.5 | | | 7.2 | | | 7.0 | |

| Other | 0.9 | | | 0.9 | | | 1.0 | | | — | | | 0.2 | |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Other liability | 30.6% | | 30.9% | | 28.9% | | 28.3% | | 28.6% |

| Workers' compensation | 24.6 | | 25.1 | | 25.5 | | 24.2 | | 24.0 |

| Short-tail lines (1) | 23.6 | | 23.7 | | 25.0 | | 26.8 | | 26.7 |

| Professional liability | 11.0 | | 10.5 | | 10.0 | | 9.9 | | 9.2 |

| Commercial auto | 10.2 | | 9.8 | | 10.6 | | 10.8 | | 11.5 |

| Total | 100.0% | | 100.0% | | 100.0% | | 100.0% | | 100.0% |

It also provides its customers with turnkey products such as cyber, employment practices liability insurance ("EPLI"), and liquor liability insurance to help enhance their clients' product offerings, along with underwriting, claims, and actuarial consultation.

| Berkley Re America | 52.0 | % | | 64.0 | % | | 60.3 | % | | 56.2 | % | | 51.3 | % |

| Berkley Re Asia Pacific | 12.8 | | | 9.2 | | | 8.0 | | | 6.7 | | | 6.4 | |

| Berkley Re Solutions | 15.8 | | | 10.8 | | | 10.1 | | | 10.4 | | | 8.9 | |

| Berkley Re UK | 12.6 | | | 10.0 | | | 15.4 | | | 19.9 | | | 24.4 | |

| Lloyd's Syndicate 2791 Participation | 5.5 | | | 4.4 | | | 5.2 | | | 5.3 | | | 7.0 | |

| Other | 1.3 | | | 1.6 | | | 1.0 | | | 1.5 | | | 2.0 | |

Commencing with the first quarter of 2016, the Company changed the aggregation of its reported segments.

Operating units in the Insurance-Domestic segment and Insurance-International segment, previously reported separately, were combined into the Insurance segment.

The segment disclosures for prior periods have been revised to be consistent with the new reportable business segment presentation.

| Insurance | $ | 5,775,913 | | | $ | 5,591,397 | | | $ | 5,345,663 | | | $ | 4,750,572 | | | $ | 4,234,342 | |

| Reinsurance | 648,000 | | | | 598,118 | | | | 651,284 | | | | 749,601 | | | | 664,197 | | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| Insurance | 89.9 | % | | 90.3 | % | | 89.1 | % | | 86.4 | % | | 86.4 | % |

| Reinsurance | 10.1 | | | 9.7 | | | 10.9 | | | 13.6 | | | 13.6 | |

| Total | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |

Berkley FinSecure serves the insurance needs of financial institutions, credit unions, mortgage lenders, mortgage servicers and trust managers.

It offers a comprehensive range of property, casualty, professional liability, and specialty lines insurance products and loss control services, including financial institution-specific commercial package policies, workers' compensation, umbrella, commercial auto, management liability and crime coverages, and financial institution bonds.

Berkley North Pacific provides local underwriting, claims and risk management services from its home office in Seattle, Washington and branch offices in Boise, Idaho, Spokane, Washington and Salt Lake City, Utah.

Berkley One is expected to launch its products in the latter half of 2017 and will offer specialty personal insurance to sophisticated individuals and families, supported by world class risk and claim management.

Berkley Select specializes in underwriting professional liability insurance with a particular emphasis on large law firms, accounting firms and medical institution facilities.

Its products are distributed nationwide through a limited number of brokers.

Berkley Specialty Underwriting Managers has two underwriting divisions.

Carolina Casualty Insurance provides commercial insurance products and services to the transportation industry with an emphasis on intermediate and long-haul trucking and various classes of business and public automobile coverage.

Monitor Liability Managers provides executive and professional liability insurance to small to middle-market risks on a nationwide basis.

Its primary professional liability products are management liability, employment practices and fiduciary coverages for private companies and nonprofit organizations, and errors and omissions policies for accounting and law firms.

Riverport also insures special events.

Union Standard's strategy is built around relationships and service.

| Acadia Insurance | 6.7 | % | | 6.7 | % | | 7.1 | % | | 6.9 | % | | 7.1 | % |

| Berkley Regional Specialty | 0.3 | | | 0.3 | | | 0.3 | | | 0.3 | | | 0.3 | |

| Berkley Select | 1.6 | | | 1.6 | | | 1.8 | | | 2.3 | | | 2.4 | |

| Berkley Specialty Underwriting Managers | 6.1 | | | 5.7 | | | 5.3 | | | 5.5 | | | 6.5 | |

| Clermont Specialty Managers | 1.3 | | | 1.3 | | | 1.3 | | | 1.3 | | | 1.3 | |

| Lloyd's Syndicate 2791 Participation | 0.5 | | | 0.5 | | | 0.6 | | | 1.0 | | | 1.5 | |

| Monitor Liability Managers | 2.3 | | | 2.4 | | | 2.2 | | | 2.6 | | | 2.6 | |

| Riverport Insurances Services | 0.7 | | | 0.6 | | | 0.6 | | | 0.6 | | | 1.2 | |

| W/R/B Underwriting | 3.9 | | | 5.4 | | | 6.1 | | | 6.0 | | | 6.2 | |

| Other | 0.9 | | | 0.9 | | | 0.8 | | | 1.2 | | | 0.9 | |

| Other liability | 31.3 | % | | 31.8 | % | | 31.9 | % | | 32.4 | % | | 30.7 | % |

| Workers' compensation | 25.1 | | | 27.9 | | | 27.2 | | | 27.0 | | | 26.8 | |

| Short-tail lines (1) | 23.9 | | | 21.2 | | | 21.8 | | | 22.0 | | | 23.5 | |

| Professional liability | 10.0 | | | 9.4 | | | 8.7 | | | 7.9 | | | 7.8 | |

| Commercial auto | 9.7 | | | 9.7 | | | 10.4 | | | 10.7 | | | 11.2 | |

Berkley Re Direct also provides its customers value-added services across its lines, including underwriting, claims and actuarial consultation.

| Berkley Re America | 67.6 | % | | 64.2 | % | | 60.4 | % | | 52.2 | % | | 54.3 | % |

For the fiscal year ended December 31, [removed: 2016][added: 2017]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Annual Report on Form 10-K or any amendment to this Annual Report on Form 10-K. [added: o]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer”,] “smaller reporting company” [added: and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

The aggregate market value of the voting and non-voting common stock held by non-affiliates (computed by reference to the price at which the common stock was last sold) as of the last business day of the registrant’s most recently completed second fiscal quarter was [removed: $5,857,187,550.][added: $6,663,402,098.]

Number of shares of common stock, $.20 par value, outstanding as of February [removed: 22, 2017: 121,213,179][added: 20, 2018: 121,542,004]

Portions of the Company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2016,] [added: 2017,] are incorporated herein by reference in Part III.

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| ITEM | 3. | [LEGAL [removed: PROCEEDINGS](#sDB82D84CB2645FAE8AFE3A2DD503E9F6)] [added: PROCEEDINGS](#s56A969183D245BD8850AAB440B3A3F92)] | [removed: [26](#sDB82D84CB2645FAE8AFE3A2DD503E9F6)] [added: [26](#s56A969183D245BD8850AAB440B3A3F92)] |

| ITEM | 4. | [MINE SAFETY [removed: DISCLOSURES](#s707B1D38E1D451AAA49FBC7DD41F40B1)] [added: DISCLOSURES](#sC010E722084854ACB05D5E9FF2CF29D2)] | [removed: [26](#s707B1D38E1D451AAA49FBC7DD41F40B1)] [added: [26](#sC010E722084854ACB05D5E9FF2CF29D2)] |

| ITEM | 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#sDAC87295777755618EB6BD1029B30228)] [added: SECURITIES](#s7E2E2241ACA65FE5894022F14D3E531B)] | [removed: [27](#sDAC87295777755618EB6BD1029B30228)] [added: [27](#s7E2E2241ACA65FE5894022F14D3E531B)] |

| ITEM | 6. | [SELECTED FINANCIAL [removed: DATA](#s2CDF9EE7C79C5DB785CC05791550E30A)] [added: DATA](#s371640390CCF5440BB8A93AAACE59285)] | [removed: [28](#s2CDF9EE7C79C5DB785CC05791550E30A)] [added: [29](#s371640390CCF5440BB8A93AAACE59285)] |

| ITEM | 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#s4EA8A3E287A75F57B2A5839FF51ABBA3)] [added: OPERATIONS](#s8C9B8C876F725300904EF6D4802EF3EA)] | [removed: [29](#s4EA8A3E287A75F57B2A5839FF51ABBA3)] [added: [30](#s8C9B8C876F725300904EF6D4802EF3EA)] |

| ITEM | 7A. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s1D10546710C35472830A339501E04A1F)] [added: RISK](#s22D2164B29FE5EBFA392AFDF40D0B97C)] | [removed: [50](#s1D10546710C35472830A339501E04A1F)] [added: [53](#s22D2164B29FE5EBFA392AFDF40D0B97C)] |

| ITEM | 8. | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#sC16CA45B83425C90B2699AE1B971FA01)] [added: DATA](#sA7EB1984A1CB50B5B67AD0FA23A791A5)] | [removed: [51](#sC16CA45B83425C90B2699AE1B971FA01)] [added: [54](#sA7EB1984A1CB50B5B67AD0FA23A791A5)] |

| ITEM | 9. | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#s84D70E689B0857AB86C6B52D11B3C040)] [added: DISCLOSURE](#s807B725773735BC185C4398BD69628FC)] | [removed: [98](#s84D70E689B0857AB86C6B52D11B3C040)] [added: [103](#s807B725773735BC185C4398BD69628FC)] |

| ITEM | 9A. | [CONTROLS AND [removed: PROCEDURES](#s387F60C0730B54E0A25256E70CFDDB08)] [added: PROCEDURES](#s651CD03864F55CF8BB9DF926620264FA)] | [removed: [98](#s387F60C0730B54E0A25256E70CFDDB08)] [added: [103](#s651CD03864F55CF8BB9DF926620264FA)] |

| ITEM | 9B. | [OTHER [removed: INFORMATION](#s12030E5EEF765A698EEA5FA9F96AB96D)] [added: INFORMATION](#s4EBD046CBC335D17897E0C95493E94D0)] | [removed: [101](#s12030E5EEF765A698EEA5FA9F96AB96D)] [added: [105](#s4EBD046CBC335D17897E0C95493E94D0)] |

| ITEM | 10. | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s0B66C122DA515EAB8500669E3D67C293)] [added: GOVERNANCE](#s994968111F6C57CBB56B77B0E0AF8A6F)] | [removed: [101](#s0B66C122DA515EAB8500669E3D67C293)] [added: [106](#s994968111F6C57CBB56B77B0E0AF8A6F)] |

| ITEM | 11. | [EXECUTIVE [removed: COMPENSATION](#s7809F98AE5F85B54A024B4D35A505D8B)] [added: COMPENSATION](#sCDE14EB271395008948F5677D3FCD8E7)] | [removed: [101](#s7809F98AE5F85B54A024B4D35A505D8B)] [added: [106](#sCDE14EB271395008948F5677D3FCD8E7)] |

| ITEM | 12. | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#s8C6C101728C05E8DA860C2D48F6CE931)] [added: MATTERS](#s69F003DE133F53E79D2479CA30865670)] | [removed: [101](#s8C6C101728C05E8DA860C2D48F6CE931)] [added: [106](#s69F003DE133F53E79D2479CA30865670)] |

| ITEM | 13. | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#sC4855D0AF1095B429F6DCD2B71E15D2B)] [added: INDEPENDENCE](#sB4BA631CC2CE5BDAA8B111D9E69FADA1)] | [removed: [101](#sC4855D0AF1095B429F6DCD2B71E15D2B)] [added: [106](#sB4BA631CC2CE5BDAA8B111D9E69FADA1)] |

| ITEM | 14. | [PRINCIPAL ACCOUNTING FEES AND [removed: SERVICES](#sD3FA244AF4BD58919850EA9A35D45E79)] [added: SERVICES](#s20F4114D768E5009A0E7A8AA0092158E)] | [removed: [101](#sD3FA244AF4BD58919850EA9A35D45E79)] [added: [106](#s20F4114D768E5009A0E7A8AA0092158E)] |

| ITEM | 15. | [EXHIBITS, FINANCIAL STATEMENT [removed: SCHEDULES](#s7BC68C525A125960A1639B946751C0A1)] [added: SCHEDULES](#sCE4A2695C60B5D48B607C3B87B92B19E)] | [removed: [101](#s7BC68C525A125960A1639B946751C0A1)] [added: [107](#sCE4A2695C60B5D48B607C3B87B92B19E)] |

| ITEM | 16. | [FORM 10-K [removed: SUMMARY](#s915298BD714F5A32BBBD301AADE6784C)] [added: SUMMARY](#s2983042602465BAAAB1A4E7A23F46205)] | [removed: [107](#s14c835e2617543c0825ccf680ec55b03)] [added: [110](#sF468C1056AD1596291175ED66C7DEDC5)] |

| EX-23 | | [removed: CONSENT] [added: [CONSENT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM] [added: FIRM](https://www.sec.gov/Archives/edgar/data/11544/000001154418000012/wrb1231201710kex23.htm)] | |

| EX-31.1 | | [removed: CERTIFICATION] [added: [CERTIFICATION] OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) [removed: /15d-14(a)] [added: /15d-14(a)](https://www.sec.gov/Archives/edgar/data/11544/000001154418000012/wrb1231201710kex311.htm)] | |

| EX-31.2 | | [removed: CERTIFICATION] [added: [CERTIFICATION] OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) [removed: /15d-14(a)] [added: /15d-14(a)](https://www.sec.gov/Archives/edgar/data/11544/000001154418000012/wrb1231201710kex312.htm)] | |

| EX-32.1 | | [removed: CERTIFICATION] [added: [CERTIFICATION] OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF [removed: 2002] [added: 2002](https://www.sec.gov/Archives/edgar/data/11544/000001154418000012/wrb1231201710kex321.htm)] | |

| | This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the 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 in this report including statements related to our outlook for the industry and for our performance for the year [removed: 2017] [added: 2018] and beyond, are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: |

| • | foreign currency and political risks (including those associated with the United Kingdom's [removed: expected] withdrawal from the European Union, or "Brexit") relating to our international operations; |

These risks and uncertainties could cause our actual results for the year [removed: 2017] [added: 2018] and beyond to differ materially from those expressed in any forward-looking statement we make.

10-K 1 wrb1231201710k.htm FORM 10-K

| | | | Emerging growth company o |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| | | | |

| EX-21 | | [LIST OF COMPANIES AND SUBSIDIARIES](https://www.sec.gov/Archives/edgar/data/11544/000001154418000012/wrb1231201710kex21.htm) | |

10-K 1 wrb1231201610k.htm FORM 10-K

(Check one):

| EX-21 | | LIST OF COMPANIES AND SUBSIDIARIES | |

At December 31, [removed: 2016,] [added: 2017,] the Company had aggregate office space of [removed: 3,840,380] [added: 3,816,471] square feet, of which [removed: 1,096,329] [added: 1,096,493] were owned and [removed: 2,744,051] [added: 2,719,979] were leased.

Rental expense for the Company's operations was approximately [added: $52,925,000,] $47,453,000 [removed: $46,271,000] and [removed: $45,189,000] [added: $46,271,000] for [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

Future minimum lease payments, without provision for sublease income, are [removed: $45,305,000] [added: $50,117,000] in [removed: 2017, $40,634,000] [added: 2018, $41,326,000] in [removed: 2018] [added: 2019] and [removed: $199,459,000] [added: $195,509,000] thereafter.

| [removed: 2016:] [added: 2016] | | | | | | | | | | | | |

| Fourth Quarter | $ | 66.91 | | | $ | 55.55 | | | $ | 0.63 | | [removed: (1)] [added: (3)] |

| Third Quarter | 60.08 | | | | 56.12 | | | | 0.63 | | | [removed: (2)] [added: (4)] |

[removed: (1)] [added: | (3) |] Includes a special dividend of $0.50 per share paid in November 2016. [added: |]

[removed: (2)] [added: | (4) |] Includes a special dividend of $0.50 per share paid in October 2016. [added: |]

The closing price of the common stock on February [removed: 22, 2017] [added: 20, 2018] as reported on the New York Stock Exchange was [removed: $71.15] [added: $68.73] per share.

The approximate number of record holders of the common stock on February [removed: 22, 2017] [added: 20, 2018] was [removed: 355.][added: 333.]

Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of [removed: 2016] [added: 2017] and the remaining number of shares authorized for purchase by the Company during such period.

| 2017 | | | | | | | | | | | | |

| Fourth Quarter | $ | 71.91 | | | $ | 65.92 | | | $ | 0.64 | | (1) |

| Third Quarter | 72.33 | | | | 62.00 | | | | 0.14 | | | |

| Second Quarter | 70.96 | | | | 65.70 | | | | 0.64 | | | (2) |

| First Quarter | 73.17 | | | | 65.91 | | | | 0.13 | | | |

| | |

| --- | --- |

| (1) | Includes a special dividend of $0.50 per share paid in December 2017. |

| | |

| --- | --- |

| (2) | Includes a special dividend of $0.50 per share paid in July 2017. |

| | |

| --- | --- |

| | |

| --- | --- |

The chart below shows a comparison of 5 year cumulative total return.

Comparison of 5 Year Cumulative Total Return

Assumes initial investment of $100 on January 1, 2013, with dividends reinvested.


The S&P 500® Property and Casualty Insurance Index consists of Allstate Corporation, Chubb, Ltd., Cincinnati Financial Corporation, Progressive Corporation, The Travelers Companies, Inc., and XL Group Ltd.

Prepared by Zacks Investment Research, Inc. Used with permission.

All rights reserved.

Copyright 1980-2018.

Index Data: Copyright Standard and Poor's Inc. Used with permission.

All rights reserved.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| | | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |

| W. R. Berkley Corporation | Cum $ | 100.00 | 116.03 | 141.11 | 152.06 | 189.69 | 209.00 |

| S&P 500 Index | Cum $ | 100.00 | 132.39 | 150.01 | 152.59 | 170.84 | 208.14 |

| S&P 500 Property and Casualty Insurance Index | Cum $ | 100.00 | 138.29 | 160.06 | 175.32 | 202.85 | 248.26 |

| October 2017 | — | | | — | | | — | | | 9,558,881 | |

| November 2017 | 289,884 | | | 67.02 | | | 289,884 | | | 9,268,997 | |

| December 2017 | — | | | — | | | — | | | 9,268,997 | |

| 2015: | | | | | | | | | | | | |

| Fourth Quarter | $ | 57.27 | | | $ | 52.36 | | | $ | 0.12 | | |

| Third Quarter | 58.46 | | | | 51.91 | | | | 0.12 | | | |

| Second Quarter | 53.40 | | | | 48.72 | | | | 0.12 | | | |

| First Quarter | 51.78 | | | | 47.45 | | | | 0.11 | | | |

| October 2016 | 204,326 | | | 57.30 | | | 204,326 | | | 7,221,312 | |

| November 2016 | 370,226 | | | 56.22 | | | 370,226 | | | 6,851,086 | |

| December 2016 | — | | | — | | | — | | | 6,851,086 | |

| (In thousands, except per share data) | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net premiums written | $ | [removed: 6,423,913] [added: 6,260,508] | | | $ | [removed: 6,189,515] [added: 6,423,913] | | | $ | [removed: 5,996,947] [added: 6,189,515] | | | $ | [removed: 5,500,173] [added: 5,996,947] | | | $ | [removed: 4,898,539] [added: 5,500,173] | |

| Net premiums earned | [removed: 6,293,348] [added: 6,311,419] | | | | [removed: 6,040,609] [added: 6,293,348] | | | | [removed: 5,744,418] [added: 6,040,609] | | | | [removed: 5,226,537] [added: 5,744,418] | | | | [removed: 4,673,516] [added: 5,226,537] | | |

| Net investment income | [removed: 564,163] [added: 575,788] | | | | [removed: 512,645] [added: 564,163] | | | | [removed: 600,885] [added: 512,645] | | | | [removed: 544,291] [added: 600,885] | | | | [removed: 586,763] [added: 544,291] | | |

| Insurance service fees | [removed: 138,944] [added: 134,729] | | | | [removed: 139,440] [added: 138,944] | | | | [removed: 117,443] [added: 139,440] | | | | [removed: 107,513] [added: 117,443] | | | | [removed: 103,133] [added: 107,513] | | |

| Net investment gains | [removed: 267,005] [added: 335,858] | | | | [removed: 92,324] [added: 267,005] | | | | [removed: 254,852] [added: 92,324] | | | | [removed: 121,544] [added: 254,852] | | | | [removed: 210,465] [added: 121,544] | | |

| Revenues from non-insurance businesses | [removed: 390,348] [added: 326,165] | | | | [removed: 421,102] [added: 390,348] | | | | [removed: 410,022] [added: 421,102] | | | | [removed: 407,623] [added: 410,022] | | | | [removed: 247,113] [added: 407,623] | | |

| Total revenues | [removed: 7,654,184] [added: 7,684,764] | | | | [removed: 7,206,457] [added: 7,654,184] | | | | [removed: 7,128,928] [added: 7,206,457] | | | | [removed: 6,408,534] [added: 7,128,928] | | | | [removed: 5,823,554] [added: 6,408,534] | | |

| Interest expense | [removed: 140,896] [added: 147,297] | | | | [removed: 130,946] [added: 140,896] | | | | [removed: 128,174] [added: 130,946] | | | | [removed: 123,177] [added: 128,174] | | | | [removed: 126,302] [added: 123,177] | | |

| Income before income taxes | [removed: 896,438] [added: 772,770] | | | | [removed: 732,030] [added: 896,438] | | | | [removed: 952,196] [added: 732,030] | | | | [removed: 698,888] [added: 952,196] | | | | [removed: 701,928] [added: 698,888] | | |

| Income tax expense | [removed: (292,953] [added: (219,433] | | ) | | [removed: (227,923] [added: (292,953] | | ) | | [removed: (302,593] [added: (227,923] | | ) | | [removed: (193,587] [added: (302,593] | | ) | | [removed: (191,285] [added: (193,587] | | ) |

| Noncontrolling interests | [removed: (1,569] [added: (4,243] | | ) | | [removed: (413] [added: (1,569] | | ) | | [removed: (719] [added: (413] | | ) | | [removed: (5,376] [added: (719] | | ) | | [removed: (51] [added: (5,376] | | ) |

| Net income to common stockholders | [removed: 601,916] [added: 549,094] | | | | [removed: 503,694] [added: 601,916] | | | | [removed: 648,884] [added: 503,694] | | | | [removed: 499,925] [added: 648,884] | | | | [removed: 510,592] [added: 499,925] | | |

| Net income per basic share | [removed: 4.91] [added: 4.40] | | | | [removed: 4.06] [added: 4.91] | | | | [removed: 5.07] [added: 4.06] | | | | [removed: 3.69] [added: 5.07] | | | | [removed: 3.72] [added: 3.69] | | |

| Net income per diluted share | [removed: 4.68] [added: 4.26] | | | | [removed: 3.87] [added: 4.68] | | | | [removed: 4.86] [added: 3.87] | | | | [removed: 3.55] [added: 4.86] | | | | [removed: 3.56] [added: 3.55] | | |

| Common stockholders’ equity | [removed: 41.65] [added: 44.53] | | | | [removed: 37.31] [added: 41.65] | | | | [removed: 36.21] [added: 37.31] | | | | [removed: 32.79] [added: 36.21] | | | | [removed: 31.66] [added: 32.79] | | |

| Cash dividends declared | [removed: 1.51] [added: 1.55] | | | | [removed: 0.47] [added: 1.51] | | | | [removed: 1.43] [added: 0.47] | | | | [removed: 0.39] [added: 1.43] | | | | [removed: 1.35] [added: 0.39] | | |

| Basic | [removed: 122,651] [added: 124,843] | | | | [removed: 124,040] [added: 122,651] | | | | [removed: 127,874] [added: 124,040] | | | | [removed: 135,305] [added: 127,874] | | | | [removed: 137,097] [added: 135,305] | | |

| Diluted | [removed: 128,553] [added: 129,018] | | | | [removed: 130,189] [added: 128,553] | | | | [removed: 133,652] [added: 130,189] | | | | [removed: 140,743] [added: 133,652] | | | | [removed: 143,315] [added: 140,743] | | |

| Investments | $ | [removed: 16,649,792] [added: 17,450,508] | | | $ | [removed: 15,351,467] [added: 16,649,792] | | | $ | [removed: 15,591,824] [added: 15,351,467] | | | $ | [removed: 14,548,630] [added: 15,591,824] | | | $ | [removed: 14,467,440] [added: 14,548,630] | |

| Total assets | [removed: 23,364,844] [added: 24,299,917] | | | | [removed: 21,730,967] [added: 23,364,844] | | | | [removed: 21,716,691] [added: 21,730,967] | | | | [removed: 20,155,896] [added: 21,716,691] | | | | [removed: 20,155,896] [added: 20,551,796] | | |

| Reserves for losses and loss expenses | [removed: 11,197,195] [added: 11,670,408] | | | | [removed: 10,669,150] [added: 11,197,195] | | | | [removed: 10,369,701] [added: 10,669,150] | | | | [removed: 10,080,941] [added: 10,369,701] | | | | [removed: 9,751,086] [added: 10,080,941] | | |

| Senior notes and other debt | [removed: 1,760,595] [added: 1,769,052] | | | | [removed: 1,844,621] [added: 1,760,595] | | | | [removed: 2,115,527] [added: 1,844,621] | | | | [removed: 1,692,442] [added: 2,115,527] | | | | [removed: 1,871,535] [added: 1,692,442] | | |

| Subordinated debentures | [removed: 727,630] [added: 728,218] | | | | [removed: 340,320] [added: 727,630] | | | | [removed: 340,060] [added: 340,320] | | | | [removed: 339,800] [added: 340,060] | | | | [removed: 243,206] [added: 339,800] | | |

| Common stockholders’ equity | [removed: 5,047,208] [added: 5,411,344] | | | | [removed: 4,600,246] [added: 5,047,208] | | | | [removed: 4,589,945] [added: 4,600,246] | | | | [removed: 4,336,035] [added: 4,589,945] | | | | [removed: 4,306,217] [added: 4,336,035] | | |

[removed: The] [added: To the Stockholders and] Board of Directors [removed: and Stockholders]

We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and [removed: subsidiaries] [added: Subsidiaries (the “Company”)] as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of income, comprehensive income, [removed: stockholders'] [added: stockholders’] equity, and cash flows for each of the years in the [removed: three-year] [added: three‑year] period ended December 31, [removed: 2016.][added: 2017, and the related notes and financial statement schedules II to VI (collectively, the “consolidated financial statements”).]

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the [added: consolidated] financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

In our opinion, the consolidated financial statements [removed: referred to above] present fairly, in all material respects, the financial position of [removed: W. R. Berkley Corporation and subsidiaries] [added: the Company] as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the years in the [removed: three-year] [added: three‑year] period ended December 31, [removed: 2016,] [added: 2017,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States), W. R. Berkley Corporation's] [added: States) (“PCAOB”), the Company’s] internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (COSO),] [added: Commission,] and our report dated February [removed: 27, 2017] [added: 23, 2018] expressed an unqualified opinion on the effectiveness of the [removed: Company's] [added: Company’s] internal control over financial reporting.

| (In thousands, except per share data) | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net premiums written | $ | [removed: 6,423,913] [added: 6,260,508] | | | $ | [removed: 6,189,515] [added: 6,423,913] | | | $ | [removed: 5,996,947] [added: 6,189,515] | |

| Change in net unearned premiums | [removed: (130,565] [added: 50,911] | | [removed: )] | | [removed: (148,906] [added: (130,565] | | ) | | [removed: (252,529] [added: (148,906] | | ) |

| Net premiums earned | [removed: 6,293,348] [added: 6,311,419] | | | | [removed: 6,040,609] [added: 6,293,348] | | | | [removed: 5,744,418] [added: 6,040,609] | | |

| Net investment income | [removed: 564,163] [added: 575,788] | | | | [removed: 512,645] [added: 564,163] | | | | [removed: 600,885] [added: 512,645] | | |

| Insurance service fees | [removed: 138,944] [added: 134,729] | | | | [removed: 139,440] [added: 138,944] | | | | [removed: 117,443] [added: 139,440] | | |

| Net realized gains on investment sales | [removed: 285,119] [added: 335,858] | | | | [removed: 125,633] [added: 285,119] | | | | [removed: 254,852] [added: 125,633] | | |

| Other-than-temporary impairments | [removed: (18,114] [added: —] | | [removed: )] | | [removed: (33,309] [added: (18,114] | | ) | | [removed: —] [added: (33,309] | | [added: )] |

| Net investment gains | [removed: 267,005] [added: 335,858] | | | | [removed: 92,324] [added: 267,005] | | | | [removed: 254,852] [added: 92,324] | | |

| Revenues from non-insurance businesses | [removed: 390,348] [added: 326,165] | | | | [removed: 421,102] [added: 390,348] | | | | [removed: 410,022] [added: 421,102] | | |

| Other income | [removed: 376] [added: 805] | | | | [removed: 337] [added: 376] | | | | [removed: 1,308] [added: 337] | | |

| Total revenues | [removed: 7,654,184] [added: 7,684,764] | | | | [removed: 7,206,457] [added: 7,654,184] | | | | [removed: 7,128,928] [added: 7,206,457] | | |

| Losses and loss expenses | [removed: 3,845,800] [added: 4,002,348] | | | | [removed: 3,656,270] [added: 3,845,800] | | | | [removed: 3,490,567] [added: 3,656,270] | | |

| Other operating costs and expenses | [removed: 2,395,619] [added: 2,436,932] | | | | [removed: 2,289,750] [added: 2,395,619] | | | | [removed: 2,157,456] [added: 2,289,750] | | |

| Expenses from non-insurance businesses | [removed: 375,431] [added: 325,417] | | | | [removed: 397,461] [added: 375,431] | | | | [removed: 400,535] [added: 397,461] | | |

| Interest expense | [removed: 140,896] [added: 147,297] | | | | [removed: 130,946] [added: 140,896] | | | | [removed: 128,174] [added: 130,946] | | |

| Total operating costs and expenses | [removed: 6,757,746] [added: 6,911,994] | | | | [removed: 6,474,427] [added: 6,757,746] | | | | [removed: 6,176,732] [added: 6,474,427] | | |

| Income before income taxes | [removed: 896,438] [added: 772,770] | | | | [removed: 732,030] [added: 896,438] | | | | [removed: 952,196] [added: 732,030] | | |

| Income tax expense | [removed: (292,953] [added: (219,433] | | ) | | [removed: (227,923] [added: (292,953] | | ) | | [removed: (302,593] [added: (227,923] | | ) |

| Net income before noncontrolling interests | [removed: 603,485] [added: 553,337] | | | | [removed: 504,107] [added: 603,485] | | | | [removed: 649,603] [added: 504,107] | | |

| Noncontrolling interests | [removed: (1,569] [added: (4,243] | | ) | | [removed: (413] [added: (1,569] | | ) | | [removed: (719] [added: (413] | | ) |

| Net income to common stockholders | $ | [removed: 601,916] [added: 549,094] | | | $ | [removed: 503,694] [added: 601,916] | | | $ | [removed: 648,884] [added: 503,694] | |

| Basic | $ | [removed: 4.91] [added: 4.40] | | | $ | [removed: 4.06] [added: 4.91] | | | $ | [removed: 5.07] [added: 4.06] | |

| Diluted | $ | [removed: 4.68] [added: 4.26] | | | $ | [removed: 3.87] [added: 4.68] | | | $ | [removed: 4.86] [added: 3.87] | |

| (In thousands) | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net income before noncontrolling interests | $ | [removed: 603,485] [added: 553,337] | | | $ | [removed: 504,107] [added: 603,485] | | | $ | [removed: 649,603] [added: 504,107] | |

| Change in unrealized translation adjustments | [removed: (124,193] [added: 64,706] | | [removed: )] | | [removed: (124,744] [added: (124,193] | | ) | | [removed: (62,125] [added: (124,744] | | ) |

| Change in unrealized investment [removed: gains (losses),] [added: (losses) gains,] net of taxes | [removed: 246,518] [added: (51,752] | | [added: )] | | [removed: (125,542] [added: 246,518] | | [removed: )] | | [removed: 49,666] [added: (125,542] | | [added: )] |

| Other comprehensive gain (loss) | [removed: 122,325] [added: 12,954] | | | | [removed: (250,286] [added: 122,325] | | [removed: )] | | [removed: (5,808] [added: (250,286] | | ) |

| Comprehensive income | [removed: 725,810] [added: 566,291] | | | | [removed: 253,821] [added: 725,810] | | | | [removed: 643,795] [added: 253,821] | | |

| Comprehensive loss (income) to the noncontrolling interest | [removed: 1,510] [added: 4,262] | | | | [removed: (375] [added: 1,510] | | [removed: )] | | [removed: (752] [added: (375] | | ) |

| Comprehensive income to common shareholders | $ | [removed: 727,320] [added: 570,553] | | | $ | [removed: 253,446] [added: 727,320] | | | $ | [removed: 643,043] [added: 253,446] | |

Opinion on the Consolidated Financial Statements

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We have served as the Company’s auditor since 1972.

February 23, 2018

| Current federal and foreign income taxes | 11,327 | | | | — | | |

of the building.

The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs").

Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.

ASU 2016-09 includes provisions intended to simplify various previous provisions related to how share-based payments are accounted for and presented in the financial statements.

Under the new guidance, excess tax benefits (deductions for share

based payment awards for tax purposes that exceed the compensation cost recognized for financial reporting purposes) are reported within the income tax expense financial statement line item.

Previously, excess tax benefits were reported within additional paid in capital.

In February 2018, the FASB issued ASU 2018-02, Reporting Comprehensive Income, which amends previous guidance to allow a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017 (the “Tax Act”).

The amount of the reclassification would include the effect of the change in the U.S. federal corporate income tax rate on the gross deferred tax amounts and related valuation allowances, if any, at the date of the enactment of the Tax Act related to items in AOCI.

The updated guidance is effective for reporting periods beginning after December 15, 2018, and is eligible for early adoption.

The Company expects to adopt the updated guidance in 2018, which should not impact its results of operations or financial position.

In March 2017, the Company acquired an 89.5% ownership interest for $73.3 million in a company engaged in providing textile solutions world-wide.

| (In thousands) | 2017 | | |

| Goodwill | 28,522 | | |

| Intangible Assets | 32,395 | | |

| (In thousands) | | | | | | | | | | | |

| Beginning of period | $ | 427,154 | | | $ | (371,586 | ) | | $ | 55,568 | |

| Other comprehensive income before reclassifications | 63,567 | | | | 64,706 | | | | 128,273 | | |

| Other comprehensive income (loss) | (51,752 | | ) | | 64,706 | | | | 12,954 | | |

| Ending balance | $ | 375,421 | | | $ | (306,880 | ) | | $ | 68,541 | |

| Pre-tax | $ | (69,425 | ) | | $ | 64,706 | | | $ | (4,719 | ) |

| Other comprehensive income (loss) | $ | (51,752 | ) | | $ | 64,706 | | | $ | 12,954 | |

| (In thousands) | | | | | | | | | | | |

| December 31, 2017 | | | | | | | | | | | | | | | | | | | |

| State and municipal | $ | 65,882 | | | $ | 14,499 | | | $ | — | | | $ | 80,381 | | | $ | 65,882 | |

| Residential mortgage-backed | 13,450 | | | | 1,227 | | | | — | | | | 14,677 | | | | 13,450 | | |

| Total held to maturity | 79,332 | | | | 15,726 | | | | — | | | | 95,058 | | | | 79,332 | | |

| U.S. government and government agency | 372,748 | | | | 8,824 | | | | (3,832 | | ) | | 377,740 | | | | 377,740 | | |

| Special revenue | 2,663,245 | | | | 53,512 | | | | (10,027 | | ) | | 2,706,730 | | | | 2,706,730 | | |

| State general obligation | 439,358 | | | | 16,087 | | | | (711 | | ) | | 454,734 | | | | 454,734 | | |

| Pre-refunded | 436,241 | | | | 22,701 | | | | (9 | | ) | | 458,933 | | | | 458,933 | | |

| Corporate backed | 375,268 | | | | 10,059 | | | | (860 | | ) | | 384,467 | | | | 384,467 | | |

February 27, 2017

| Change in unrecognized pension obligation, net of taxes | — | | | | — | | | | 6,651 | | |

| Net pension asset: | | | | | | | | | | | |

| Beginning of period | — | | | | — | | | | (6,651 | | ) |

| Net change in period | — | | | | — | | | | 6,651 | | |

| End of period | $ | 33,926 | | | $ | 32,962 | | | $ | 34,189 | |

| Proceeds from sale of real estate | — | | | | — | | | | 343,723 | | |

| Cash and cash equivalents at beginning of year | 763,631 | | | | 674,441 | | | | 839,738 | | |

factors.

(O) Stock options

ASU 2015-02 makes targeted amendments to the current consolidation accounting guidance, in response to accounting complexity concerns.

The guidance simplifies consolidation accounting by reducing the number of

approaches to consolidation.

In May 2015, the FASB issued ASU 2015-09, Disclosures about Short-Duration Contracts.

In July 2016, the Company acquired a specialty property and casualty insurance company for $15.5 million.

| Investments | $ | 6,764 | |

| Goodwill | 12,281 | | |

| Premium and service fee receivable | 4,399 | | |

_____________________

(1) Other assets includes $31.8 million of intangible assets.

In July 2016, the Company sold Aero Precision Industries, an aviation-related business, for $253.1 million.

The business had a net carrying value of $118.2 million.

| Beginning of period | $ | 306,199 | | | $ | (122,649 | ) | | $ | 183,550 | |

| Other comprehensive income (loss) before reclassifications | (119,994 | | ) | | (124,744 | | ) | | (244,738 | | ) |

| Other comprehensive income (loss) | (125,542 | | ) | | (124,744 | | ) | | (250,286 | | ) |

| Ending balance | $ | 180,695 | | | $ | (247,393 | ) | | $ | (66,698 | ) |

| Pre-tax | $ | (192,186 | ) | | $ | (124,744 | ) | | $ | (316,930 | ) |

| Other comprehensive income (loss) | $ | (125,542 | ) | | $ | (124,744 | ) | | $ | (250,286 | ) |

| December 31, 2015 | | | | | | | | | | | | | | | | | | | |

| Residential mortgage-backed | 19,138 | | | | 2,207 | | | | — | | | | 21,345 | | | | 19,138 | | |

| Total held to maturity | 96,267 | | | | 18,453 | | | | — | | | | 114,720 | | | | 96,267 | | |

| U.S. government and government agency | 645,092 | | | | 27,660 | | | | (2,333 | | ) | | 670,419 | | | | 670,419 | | |

| Special revenue | 2,510,816 | | | | 102,909 | | | | (3,737 | | ) | | 2,609,988 | | | | 2,609,988 | | |

| State general obligation | 583,456 | | | | 28,068 | | | | (2,070 | | ) | | 609,454 | | | | 609,454 | | |

| Pre-refunded | 439,772 | | | | 32,056 | | | | (31 | | ) | | 471,797 | | | | 471,797 | | |

| Corporate backed | 388,904 | | | | 14,039 | | | | (402 | | ) | | 402,541 | | | | 402,541 | | |

| Local general obligation | 342,158 | | | | 24,270 | | | | (29 | | ) | | 366,399 | | | | 366,399 | | |

| Total state and municipal | 4,265,106 | | | | 201,342 | | | | (6,269 | | ) | | 4,460,179 | | | | 4,460,179 | | |

| Residential (1) | 1,126,382 | | | | 18,935 | | | | (11,180 | | ) | | 1,134,137 | | | | 1,134,137 | | |

| Commercial | 64,975 | | | | 875 | | | | (128 | | ) | | 65,722 | | | | 65,722 | | |

During the quarter ended December 31, [removed: 2016,] [added: 2017,] there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

[removed: The] [added: To the Stockholders and] Board of Directors [removed: and Stockholders]

We have audited W. R. Berkley [removed: Corporation's] [added: Corporation and Subsidiaries’ (the “Company”)] internal control over financial reporting as of December 31, [removed: 2016] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (COSO).][added: Commission.]

[removed: W. R. Berkley Corporation's] [added: The Company’s] management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying [removed: Management's] [added: Managements’s] Report on Internal Control over Financial Reporting.

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Our audit [added: of internal control over financial reporting] included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

In our opinion, [removed: W. R. Berkley Corporation] [added: the Company] maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] the consolidated balance sheets of [removed: W. R. Berkley Corporation and Subsidiaries] [added: the Company] as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of income, comprehensive income, [removed: stockholders'] [added: stockholders’] equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2016,] [added: 2017,] and [added: the related notes and financial statement schedules II to VI (collectively, the "consolidated financial statements”), and] our report dated February [removed: 27, 2017] [added: 23, 2018] expressed an unqualified opinion on those consolidated financial statements.