<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period. . . . . . . . March 31, 2000
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the Transition Period from to .
Commission File Number 0-7849
W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-1867895
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 Mason Street, Greenwich, Connecticut 06836-2518
(Address of principal executive offices) (Zip Code)
(203) 629-3000
(Registrant's telephone number, including area code)
None
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Number of shares of common stock, $.20 par value, outstanding as of May 3, 2000:
25,616,578.
<PAGE> 2
Part I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
W. R. Berkley Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Dollars in thousands) March 31, December 31,
---------------------- 2000 1999
--------- ------------
<S> <C> <C>
Assets (Unaudited)
Investments:
Invested cash $ 367,478 $ 295,423
Fixed maturity securities:
Held to maturity, at cost (fair value $154,704 and $150,465) 153,778 152,657
Available for sale, at fair value (cost $2,115,824)
And $2,180,509) 2,058,477 2,110,411
Equity securities, at fair value:
Available for sale (cost $71,919 and $54,437) 74,974 61,380
Trading account (cost $293,316 and $236,453) 298,405 253,430
Cash 17,276 20,051
Premiums and fees receivable 406,880 380,887
Due from reinsurers 636,587 620,446
Accrued investment income 31,343 36,925
Prepaid reinsurance premiums 88,701 91,005
Deferred policy acquisition costs 191,582 182,348
Real estate, furniture & equipment at cost, less accumulated depreciation 127,823 128,735
Excess of cost over net assets acquired 75,411 76,523
Trading account receivable from brokers and clearing organizations 208,070 258,454
Deferred Federal income taxes 80,903 81,976
Other assets 39,762 34,140
----------- -----------
$ 4,857,450 $ 4,784,791
=========== ===========
Liabilities, Reserves, Debt and Stockholders' Equity
Liabilities and reserves:
Reserves for losses and loss expenses $ 2,398,711 $ 2,361,238
Unearned premiums 714,080 689,826
Due to reinsurers 149,340 144,712
Short-term debt 45,000 35,000
Trading securities sold but not yet purchased, at market value
(proceeds $135,031 and $137,801) 143,321 155,826
Other liabilities 209,423 183,218
----------- -----------
3,659,875 3,569,820
----------- -----------
Long-term debt 369,888 394,792
Company-obligated mandatorily redeemable capital securities of a
Subsidiary trust holding solely 8.197% junior subordinated
Debentures of the Corporation due December 15, 2045 198,137 198,126
Minority interest 31,202 30,275
Stockholders' equity:
Preferred stock, par value $.10 per share:
Authorized 5,000,000 shares; no shares issued
Common stock, par value $.20 per share:
Authorized 80,000,000 shares, issued and outstanding,
net of treasury shares, 25,616,578 shares 7,281 7,281
Additional paid-in capital 331,640 331,640
Retained earnings 552,418 551,401
Accumulated other comprehensive income (38,947) (44,500)
Treasury stock, at cost, 10,787,489 shares (254,044) (254,044)
----------- -----------
598,348 591,778
----------- -----------
$ 4,857,450 $ 4,784,791
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------
Revenues: 2000 1999
--------- ---------
<S> <C> <C>
Net premiums written $ 385,761 $ 380,584
Change in unearned premiums (27,017) (38,612)
--------- ---------
Premiums earned 358,744 341,972
Net investment income 46,928 45,994
Management fees and commissions 16,526 18,396
Realized gains on investments 468 728
Other income 658 623
--------- ---------
Total revenues 423,324 407,713
Operating costs and expenses:
Losses and loss expenses 261,759 242,839
Other operating costs and expenses 145,357 144,225
Interest expense 12,493 12,805
Restructuring charge 1,850 11,505
--------- ---------
Income (loss) before income taxes and
minority interest 1,865 (3,661)
Federal income tax benefit 2,652 5,173
--------- ---------
Income before minority interest 4,517 1,512
Minority interest (171) 960
--------- ---------
Net income before preferred dividends 4,346 2,472
Preferred dividends -- (497)
--------- ---------
Net income before change in accounting principle 4,346 1,975
Cumulative effect of change in accounting principle
(net of taxes of $1,750) -- (3,250)
--------- ---------
Net income (loss) attributable to common stockholders $ 4,346 $ (1,275)
========= =========
Earnings per share:
Basic
Net income before change in accounting principle $ .17 $ .07
Cumulative effect of change in accounting principle -- (.12)
--------- ---------
Net income (loss) attributable to common stockholders $ .17 $ (.05)
========= =========
Diluted
Net income before change in accounting principle $ .17 $ .07
Cumulative effect of change in accounting principle -- (.12)
--------- ---------
Net income (loss) attributable to common stockholders $ .17 $ (.05)
========= =========
Average shares outstanding
Basic 25,617 26,325
========= =========
Diluted 25,679 26,503
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) before preferred dividends and change in
Accounting principle $ 4,346 $ (778)
Adjustments to reconcile net income to cash
flows from operating activities:
Minority interest 171 (960)
Increase in reserves for losses
and loss expenses, net 25,960 47,179
Depreciation and amortization 5,724 5,910
Change in unearned premiums and
prepaid reinsurance premiums 26,558 38,609
Increase in premiums and fees receivable (25,993) (43,504)
Change in Federal income taxes (2,586) (6,852)
Change in deferred acquisition cost (9,234) (11,647)
Realized gains on investments (468) (728)
Other (14,564) (7,489)
--------- ---------
Net cash flows from operating activities
before trading account sales 9,914 19,740
Net trading account activities 143 2,035
--------- ---------
Net cash flows from operating activities 10,057 21,775
--------- ---------
Cash flows from investing activities:
Proceeds from sales, excluding trading account:
Fixed maturity securities available for sale 638,365 128,550
Proceeds from maturities and prepayments of
fixed maturity securities 51,679 44,564
Cost of purchases, excluding trading account:
Fixed maturity securities available for sale (617,692) (238,123)
Equity securities (26,060) (3,389)
Change in balances due to/from security brokers 33,614 (8,717)
Net additions to real estate, furniture and equipment (3,310) (224)
Other -- (6,878)
--------- ---------
Net cash flows from (used in) investing activities 76,596 (84,217)
--------- ---------
Cash flows from financing activities:
Net proceeds from issuance of short-term debt 10,000 19,500
Repurchase of preferred stock -- (98,093)
Purchase of common treasury shares -- (13,177)
Cash dividends to common stockholders (2,738) (3,180)
Cash dividends to preferred stockholders -- (2,001)
Repayment of long-term debt (25,000) --
Other 365 7,453
--------- ---------
Net cash flows used in financing activities (17,373) (89,498)
--------- ---------
Net increase (decrease) in cash and invested cash 69,280 (151,940)
Cash and invested cash at beginning of year 315,474 386,278
--------- ---------
Cash and invested cash at end of period $ 384,754 $ 234,338
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 7,649 $ 6,454
========= =========
Federal income taxes paid, net $ 167 $ --
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
W. R. Berkley Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2000
(Unaudited)
The accompanying consolidated financial statements should be read in
conjunction with the following notes and with the Notes to Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
1. FEDERAL INCOME TAXES
The Federal income tax provision has been computed based on the
Company's estimated annual effective tax rate which differs from the Federal
income tax rate of 35% principally because of tax-exempt investment income.
2. REINSURANCE CEDED
The amounts of ceded reinsurance included in the statements of
operations are as follows (amounts in thousands):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-----------------------------
2000 1999
-------- --------
<S> <C> <C>
Ceded premiums written $ 76,630 $ 73,483
======== ========
Ceded premiums earned $ 70,040 $ 68,923
======== ========
Ceded losses and loss expenses $ 55,694 $ 43,576
======== ========
</TABLE>
3. COMPREHENSIVE INCOME
The differences between comprehensive income and net income are
unrealized foreign exchange gains (losses) as well as unrealized gains (losses)
on securities. The following is a reconciliation of comprehensive income
(amounts in thousands):
<TABLE>
<CAPTION>
For the three months
Ended March 31,
--------------------------
2000 1999
-------- ---------
<S> <C> <C>
Net income (loss) $ 4,346 $ (1,275)
Other comprehensive income:
Change in unrealized foreign exchange gains (losses) 131 709
Unrealized holding gains (losses) on investment securities
Arising during the period, net of taxes 5,118 (23,400)
Less: Reclassification adjustment for gains included
in net income, net of taxes 304 473
-------- --------
Net change in unrealized gains during the period 5,422 (22,927)
Other comprehensive income (loss) 5,553 (22,218)
-------- --------
Comprehensive income (loss) $ 9,899 $ (23,493)
======= ========
</TABLE>
4
<PAGE> 6
4. INDUSTRY SEGMENTS
The Company's operations are presently conducted through five basic
segments: regional property casualty insurance; reinsurance; specialty lines of
insurance; alternative markets operations and international. The regional
property casualty insurance segment writes standard commercial and personal
lines insurance for such risks as automobiles, homes and businesses. The
Company's reinsurance segment specializes in underwriting property, casualty and
surety reinsurance on both a treaty and facultative basis. The specialty lines
of insurance consist primarily of excess and surplus lines, commercial
transportation, professional liability, directors and officers liability and
surety. The Company's alternative markets segment specializes in insuring,
reinsuring, and administering self-insurance programs and other alternative risk
transfer mechanisms for public entities, private employers and associations.
Finally, the international operations represent the Company's joint venture (65%
owned by the Company) with Northwestern Mutual Life International, Inc., which
writes property and casualty insurance, as well as life insurance, in Argentina
and the Philippines. For the three months ended March 31, 2000 and 1999, the
joint venture wrote life insurance premiums of $8.0 million and $4.0 million,
respectively.
The accounting policies of the segments are the same as those described
in the summary of significant accounting policies in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999. Income tax expense (benefits)
were calculated in accordance with the Company's tax sharing agreements, which
provide for the recognition of tax loss carry-forwards only to the extent of
taxes previously paid. Summary financial information about the Company's
operating segments is presented in the following table. Income before income
taxes by segment consists of revenues less expenses related to the respective
segment's operations. These amounts include realized gains (losses) where
applicable. Intersegment revenues consist primarily of dividends, interest on
inter-company debt and fees paid by subsidiaries for portfolio management and
other services to the Company. Identifiable assets by segment are those assets
used in the operation of each segment.
<TABLE>
<CAPTION>
INCOME
REVENUES (LOSS)
----------------------------------------- BEFORE INCOME TAX
INVESTMENT UNAFFILIATED INTER- INCOME (EXPENSE)
(DOLLARS IN THOUSANDS) INCOME CUSTOMERS SEGMENT TOTAL TAXES BENEFITS
- ---------------------- ---------- ------------ --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the three months
ended March 31, 2000:
Regional $ 13,124 $ 179,792 $ 135 $ 179,927 $ 1,836 $ (1,636)
Reinsurance 11,591 82,987 102 83,089 4,465 (721)
Specialty 11,114 76,520 254 76,774 3,868 (493)
Alternative Markets 9,815 56,832 367 57,199 6,948 (1,773)
International 2,067 26,183 -- 26,183 929 (379)
Corporate and other 62 1,010 32,256 33,266 11,876 3,032
Adjustments and
Eliminations (845) -- (33,114) (33,114) (28,057) 4,622
--------- --------- --------- --------- --------- ---------
Consolidated $ 46,928 $ 423,324 $ -- $ 423,324 $ 1,865 $ 2,652
--------- --------- --------- --------- --------- ---------
For the three months
ended March 31, 1999:
Regional $ 13,068 $ 178,379 $ 295 $ 178,674 $ (6,455) $ 1,582
Reinsurance 11,236 78,387 161 78,548 2,438 (81)
Specialty 11,671 74,110 (1,724) 72,386 10,936 (3,419)
Alternative Markets 8,877 53,802 109 53,911 5,896 (1,475)
International 1,353 21,064 -- 21,064 (1,435) (516)
Corporate and other 503 1,971 4,058 6,029 (16,674) 5,173
Adjustments and
Eliminations (714) -- (2,899) (2,899) 1,633 3,909
--------- --------- --------- --------- --------- ---------
Consolidated $ 45,994 $ 407,713 $ -- $ 407,713 $ (3,661) $ 5,173
--------- --------- --------- --------- --------- ---------
</TABLE>
Interest expense for the reinsurance and alternative market segments was
$717,000 and $703,000 for the three months ended March 31, 2000 and 1999,
respectively. Corporate interest expense (net
5
<PAGE> 7
of intercompany amounts) was $11,776,000 and $12,102,000 for the corresponding
periods. Identifiable assets by segment are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
<S> <C> <C>
Regional $ 1,453,303 $ 1,436,575
Reinsurance 1,168,709 1,022,776
Specialty 1,384,063 1,370,837
Alternative Markets 891,104 878,125
International 193,619 177,675
Corporate and other 1,353,752 1,362,345
Elimination (1,587,100) (1,463,542)
----------- -----------
Consolidated $ 4,857,450 $ 4,784,791
=========== ===========
</TABLE>
5. RESTRUCTURING CHARGE
In the first quarter of 2000, the Company implemented a restructuring
plan. Under the plan, the reinsurance segment is withdrawing from the Latin
American and Caribbean market, and the domestic reinsurance operations are
focusing on specialty reinsurance lines while de-emphasizing certain
commodity-type lines. The Company expects to reduce its workforce by
approximately 37 employees in connection with the plan. The Company recognized
$1,850,000 in expense in its statement of operations to reflect charges related
to the plan. These charges consisted mainly of severance payments and
contractual lease payments related to abandoned facilities. The activities under
the plan are expected to be substantially completed in 2000.
6. OTHER MATTERS
Reclassifications have been made in the 1999 financial statements as
originally reported to conform them to the presentation of the 2000 financial
statements.
In the opinion of management, the summarized financial information
reflects all adjustments which are necessary for a fair presentation of
financial position and results of operations for the interim periods. Seasonal
weather variations affect the severity and frequency of losses sustained by the
insurance and reinsurance subsidiaries. Although the effect on the Company's
business of such natural catastrophes as tornadoes, hurricanes, hailstorms and
earthquakes is mitigated by reinsurance, they nevertheless can have a
significant impact on the results of any one or more reporting periods.
7. SAFE HARBOR STATEMENT
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Any
forward-looking statements contained herein, including those related to the
Company's performance for the year 2000, are based upon the Company's historical
performance and on current plans, estimates and expectations. They are subject
to various risks and uncertainties, including but not limited to the impact of
competition, product demand and pricing, claims development, catastrophe and
storm losses, investment results, legislative and regulatory developments and
other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission. These risks could cause the Company's actual
results for the 2000 fiscal year and beyond to differ materially from those
expressed in any forward-looking statement made by or on behalf of the Company.
Forward-looking statements speak only as of the date on which they are made, and
the Company undertakes no obligation to update publicly or revise any
forward-looking statement, whether as a results of new information, future
developments or otherwise.
6
<PAGE> 8
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Net income attributable to common stockholders was $4.3 million ($.17
per diluted share) for the first quarter of 2000, compared with a net loss of
$1.3 million ($.05 per diluted share) for the 1999 period. Operating income,
which is defined as net income before realized investment gains and changes in
accounting principles, was $4.0 million ($.15 per diluted share) for the first
quarter of 2000 compared with $1.5 million ($.05 per diluted share) in the
corresponding 1999 quarter. Adjusting for the restructuring charge, operating
income was $5.2 million ($.20 per diluted share) for the first quarter of 2000
compared with $8.8 million ($.33 per diluted share) for the corresponding 1999
quarter.
Net premiums written during the first quarter of 2000 increased by 1%
to $386 million from $381 million written in the comparable 1999 period. Net
premiums written by the regional segment decreased by $3 million, or 2%, as
price increases were offset by a decrease in policy count. Specialty net
premiums written decreased by $1 million, or 1%, as increases in the excess and
surplus, general liability and surety lines were offset by a 41% decrease in
Carolina Casualty's commercial transportation business. Net premiums written by
the reinsurance operations decreased by $8 million, or 10%, primarily due to a
decrease in treaty property business, which was partially offset by an increase
in facultative business. Alternative markets net premiums written increased $8
million, or 18%, due to an increase in business written by Signet Star's
alternative markets division. International net premiums written increased $8
million, or 47%, due to growth in both Argentina and the Philippines.
For the three months ended March 31, 2000, net investment income
increased by 2% to $47 million. The increase in investment income was due to a
higher yield on the fixed income portfolio resulting from a decrease in the
portion of the portfolio invested in municipal securities (to 26% at March 31,
2000 from 39% at March 31, 1999). (See "Liquidity and Capital Resources.")
Management fees and commission income ("management fees") consist
primarily of revenues earned by the alternative markets segment. During the
first quarter of 2000, management fees decreased 10% to $17 million due to the
timing of recognition of revenues from certain programs.
Realized gains decreased to $468,000 from $728,000 earned in the
comparable 1999 period. Realized gains on fixed income securities result
primarily from the Company's strategy of maintaining an appropriate balance
between the duration of its fixed income portfolio and the duration of its
liabilities; realized gains on equity securities arise primarily as a result of
a variety of factors which influence the Company's valuation criteria. The
majority of the 2000 and 1999 realized gains resulted from the sale of fixed
income securities.
The combined ratio (on a statutory basis) of the Company's insurance
operations increased to 106.7% for the quarter ended March 31, 2000 from 105.1%
for the comparable 1999 period due to an increase in the consolidated loss
ratio. The consolidated loss ratio (losses and loss expenses incurred expressed
as a percentage of premiums earned) increased to 73.4% in 2000 from 70.9% in
1999 due to increased losses of the transportation unit and to less favorable
reserve development on business written in prior years by the specialty and
alternative markets segments.
Other operating costs and expenses, which consist of the expenses of
the Company's insurance and alternative markets operations as well as the
Company's corporate and investment expenses, increased by 1% to $145 million.
The increase in other operating costs and expenses is primarily due to the
growth in premiums earned which in turn results in an increase in underwriting
expenses. The consolidated expense ratio (underwriting expenses expressed as a
percentage of premiums written) decreased to 33.1% from 33.8% as expense savings
from the restructuring of the regional companies were partially offset by an
decrease in ceded reinsurance commissions.
First quarter 2000 results include an after-tax restructuring charge of
$1.2 million, or 5 cents per diluted share, related to the Company's reinsurance
operations (see Notes to the
7
<PAGE> 9
Consolidated Financial Statements). The restructuring, which should be
substantially completed by the end of 2000, is expected to result in annual
after-tax savings of approximately $2.5 million. The first quarter 1999 results
include an after-tax restructuring charge of $7.3 million, or 28 cents per
diluted share, primarily related to the restructuring of the Company's regional
property casualty business.
The Federal income tax benefit in 2000 was $3 million compared with $5
million for the comparable 1999 period. The effective tax rate differs from the
Federal income tax rate of 35% principally because of tax-exempt investment
income.
Liquidity and Capital Resources
Cash flow from operating activities before trading account activities
was $10 million for the first quarter of 2000 compared with $20 million for the
same period in 1999. The investment portfolio, excluding trading account
securities, on a cost basis, increased by $26 million to $2,709 million at March
31, 2000 from $2,683 million at December 31, 1999.
At March 31, 2000, as compared to December 31, 1999, the investment
portfolio was as follows: state and municipal securities were 26% (36% in 1999);
U.S. Government securities and cash equivalents were 25% (21% in 1999);
mortgage-backed securities were 17% (15% in 1999); corporate fixed maturity
securities were 17% (14% in 1999); and the balance of 15% (14% in 1999) was
invested in equity securities.
The Company had net trading assets (trading account equity securities
plus trading account receivables from brokers and clearing organizations less
trading account securities sold but not yet purchased) of $363 million as of
March 31, 2000, as compared to $356 million as of December 31, 1999. The net
trading account represented approximately 12% of the Company's net invested
assets as of March 31, 2000 and December 31, 1999.
On March 6, 2000, the Company retired $25 million (face amount) of
6.31% senior notes upon maturity. The Company increased its short-term debt
borrowings to $45 million at March 31, 2000 from $35 million at December 31,
1999.
For the first quarter of 2000, stockholders' equity increased by
approximately $7 million to $598 million. At March 31, 2000 the Company's total
capitalization was $1,166 million and the percentage of the Company's capital
attributable to long-term debt was 32%, compared with 33% at December 31, 1999.
For background information concerning discussion of the Company's
Liquidity and Capital Resources, see the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company's market risk generally represents the risk of
gain or loss that may result from the potential change in the fair value of the
Company's investment portfolio as a result of fluctuations in prices, interest
rates and currency exchange rates. The Company attempts to manage its interest
rate risk by maintaining an appropriate relationship between the average
duration of the investment portfolio and the approximate duration of its
liabilities, i.e., policy claims and debt obligations.
The Company has maintained approximately the same duration of its investment
portfolio to its liabilities from December 31, 1999 to March 31, 2000, and the
overall market risk relating to the Company's portfolio has remained similar to
the risk at December 31, 1999.
8
<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number
(4.1) Amendment dated March 9, 2000 to First Amended and Restated
1992 Stock Option Plan.
(b) Reports on Form 8-K
During the quarter ended March 31, 2000, the Company filed the
following Reports on Form 8-K:
1. Report dated January 24, 2000 with respect to a press release
announcing the resignation of the President of the Company
(under Item 5 of Form 8-K).
2. Report dated February 11, 2000 with respect to a press release
announcing certain matters relating to results of operations
of the Company for the year ended December 31, 1999 (under
Item 5 of Form 8-K).
3. Report dated February 24, 2000 with respect to a press release
announcing results of operations of the Company for the year
ended December 31, 1999 and the fourth quarter of 1999 (under
Item 5 of Form 8-K).
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
W. R. BERKLEY CORPORATION
Date: May 9, 2000 /s/ WILLIAM R. BERKLEY
------------------------------
William R. Berkley
Chairman of the Board and
Chief Executive Officer
Date: May 9, 2000 /s/ EUGENE G. BALLARD
------------------------------
Eugene G. Ballard
Senior Vice President,
Chief Financial Officer
and Treasurer
10
<PAGE> 1
EXHIBIT 4.1
AMENDMENT TO THE
FIRST AMENDED AND RESTATED
W. R. BERKLEY CORPORATION 1992 STOCK OPTION PLAN
WHEREAS, W. R. Berkley Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), currently
maintains and sponsors the First Amended and Restated W. R. Berkley Corporation
1992 Stock Option Plan (the "Plan") for the benefit of its eligible employees
and the eligible employees of its affiliates; and
WHEREAS, Article XVII of the Plan provides that the Board of Directors
of the Company (the "Board") may amend the Plan at any time; and
WHEREAS, effective March 9, 2000, the Board resolved to amend the Plan
as hereinafter set forth;
NOW, THEREFORE, pursuant to the authority reserved to the Board, the
Plan is hereby amended as follows, effective March 9, 2000:
The second paragraph of Article VII shall be deleted and the following
shall be inserted in its place:
"If the Committee shall so determine, payment for shares of stock
purchased upon exercise of an option granted hereunder may be made by
delivery of one or more promissory notes or otherwise on an
installment basis, with terms and conditions as provided in the
applicable option agreement; provided, however, that in no event shall
any such promissory note or installment obligation be due and payable
later than five years from the date of purchase. The optionee shall
have full voting rights and shall receive all dividends with respect
to the shares so purchased. Certificates for shares so purchased
shall, immediately upon issue, be delivered to the Company, endorsed
in blank by the optionee or accompanied by a separate stock power so
endorsed, in pledge as security for the payment of the unpaid balance
of the purchase price. The certificates issued to represent paid
<PAGE> 2
shares shall state thereon the total amount of the consideration to be
paid therefor and the amount paid thereon."
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the
Company, has executed this instrument as of the 9th day of March, 2000, on
behalf of the Board.
By: /s/ Cornelius T. Finnegan, III
----------------------------------
Name: Cornelius T. Finnegan, III
Senior Vice President-
General Counsel
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 2,058,477
<DEBT-CARRYING-VALUE> 153,778
<DEBT-MARKET-VALUE> 154,704
<EQUITIES> 373,379
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0
0
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385,761
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</TABLE>
