W. R. Berkley Annual Report 2015

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W. R. Berkley Corporation
2015 Annual Report

Always do right.

This will gratify some people

and astonish the rest.

Mark Twain

On the Cover:

Norfolk & Western: “The Pocahontas”

Alderson MaGee

W. R. Berkley Corporation

475 Steamboat Road Greenwich, CT 06830

203.629.3000 www.wrberkley.com

@WRBerkleyCorp

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The Annual Meeting of Stockholders of W. R. Berkley Corporation

will be held at 1:00 p.m. on May 25, 2016 at the offices of

W. R. Berkley Corporation, 475 Steamboat Road, Greenwich,

Annual Meeting

Common Stock of W. R. Berkley Corporation is traded on the

Connecticut 06830.

Shares Traded

New York Stock Exchange.

Symbol: WRB

Transfer Agent and Registrar

Wells Fargo Bank, N.A.

Shareowner Services

1110 Centre Pointe Curve, Suite 101

Mendota Heights, MN 55120-4100

Tel: (800) 468 9716

www.shareowneronline.com

For additional information, including press releases, visit our

internet site at: http://www.wrberkley.com

Website

Auditors

KPMG LLP, New York, New York

Willkie Farr & Gallagher LLP, New York, New York

Outside Counsel

The W. R. Berkley Corporation 2015 Annual Report editorial sections are printed on

recycled paper made from fiber sourced from well-managed forests and other controlled

wood sources and is independently certified to the Forest Stewardship Council® (FSC®)

standards.

2015 Financial Highlights

By taking advantage of challenging opportunities and
bringing together talented people and capital, we feel
confident we will be able to continue to deliver
outstanding returns.

over the past 5 years.

39 .7Combined ratio averaged 95.7%
39.7Combined ratio averaged 95.7%
%
%
%
%
119.0
119.0
$37. 31
$37. 31
billion 7.
billion7.
$ 2
$2

Table of Contents
03

Five year cumulative total return –
stock price plus dividends.

Book value per share grew
44% over the past 5 years.

Total revenues increased
49% over the past 5 years.

Board of Directors and Officers

Segment Overview

Chairman’s Letter

Operating Units

Our Business

Investments

Form 10-K

125

133

125

133

Corporate Information

IBC

Annual Meeting

The Annual Meeting of Stockholders of W. R. Berkley Corporation

will be held at 1:00 p.m. on May 25, 2016 at the offices of

W. R. Berkley Corporation, 475 Steamboat Road, Greenwich,

Common Stock of W. R. Berkley Corporation is traded on the

Connecticut 06830.

Shares Traded

New York Stock Exchange.

Symbol: WRB

Transfer Agent and Registrar

Wells Fargo Bank, N.A.

Shareowner Services

1110 Centre Pointe Curve, Suite 101

Mendota Heights, MN 55120-4100

Tel: (800) 468 9716

www.shareowneronline.com

Website

For additional information, including press releases, visit our

internet site at: http://www.wrberkley.com

Auditors

KPMG LLP, New York, New York

Outside Counsel

Willkie Farr & Gallagher LLP, New York, New York

The W. R. Berkley Corporation 2015 Annual Report editorial sections are printed on

recycled paper made from fiber sourced from well-managed forests and other controlled

wood sources and is independently certified to the Forest Stewardship Council® (FSC®)

standards.

4/8/16 12:25 PM

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Relative

Stock Price Performance

W. R. Berkley Corporation
S&P 500®

Cumulative
Growth:
6,266%

1,122%

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

In thousands, except per share data

Years ended December 31,

Total revenues

Net premiums written

Net investment income

Insurance service fees

Net income to common stockholders

Net income per common share:

2015

2014

2013

2012

2011

$ 7,206,457 $ 7,128,928 $ 6,408,534 $ 5,823,554 $ 5,155,984

6,189,515

5,996,947

5,500,173 4,898,539 4,357,368

512,645

139,440

503,694

600,885

117,443

648,884

544,291

586,763

526,351

107,513

103,133

92,843

499,925

510,592

391,211

Basic 4.06

Diluted 3.87

5.07

4.86

3.69

3.55

3.72

3.56

2.80

2.69

Return on common stockholders’ equity

11.0%

15.0%

11.6%

12.9%

10.7%

At Year End

Total assets $ 21,730,967 $ 21,716,691 $ 20,551,796 $ 20,155,896 $ 18,403,873

Total investments 15,351,467 15,591,824 14,548,630 14,467,440 13,439,518
Reserves for losses and loss expenses 10,669,150 10,369,701 10,080,941 9,751,086 9,337,134
Common stockholders’ equity 4,600,246

4,336,035 4,306,217 3,953,356

4,589,945

Common shares outstanding 123,308

126,749

132,233

136,018

137,520

Common stockholders’ equity per share

37.31 36.21 32.79 31.66 28.75

W. R. Berkley Corporation 2015 Annual Report

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At A

Glance

Total Revenues
(Dollars in billions)

Investments
(Market Value –
Dollars in billions)

Reserves for Losses
and Loss Expenses
(Dollars in billions)

Common
Stockholders’ Equity*
(Dollars in billions)

7.1

7.2

6.4

5.8

5.2

15.6 15.4

9.3

14.5 14.5

13.4

10.7

10.4

10.1

9.8

4.6

4.3

4.0

*Net of $1.0 billion in shares repurchased from 2011-2015

W. R. Berkley Corporation, founded in 1967, is
one of the nation’s premier commercial lines
property casualty insurance providers. Each
of the operating units in the W. R. Berkley
Insurance Group participates in a niche market
requiring specialized knowledge about a territory
or product.

Our competitive advantage lies in our long-term
strategy of decentralized operations, allowing
each of our units to identify and respond quickly
and effectively to changing market conditions and
local customer needs. This decentralized structure
provides financial accountability and incentives to
local management and enables us to attract and
retain the highest caliber professionals. We have
the expertise and resources to utilize our
strengths in the present environment, and the
flexibility to anticipate, innovate and respond to
whatever opportunities and challenges the future
may hold.

How we are different:

Accountability
The business is operated with an ownership
perspective and a clear sense of fiduciary
responsibility to shareholders.

People-Oriented Strategy
New businesses are started when opportunities
are identified and, most importantly, when the
right talent is found to lead a business. Of the
Company’s 51 operating units, 44 were developed
internally and seven were acquired.

Responsible Financial
Practices
Risk exposures are managed proactively.
A strong balance sheet, including a high-quality
investment portfolio, ensures ample resources to
grow the business profitably whenever there are
opportunities to do so.

Risk-Adjusted Returns
Management company-wide is focused on
obtaining the best potential returns with a real
understanding of the amount of risk being
assumed. Superior risk-adjusted returns are
generated over the insurance cycle.

Transparency
Consistent and objective standards are used to
measure performance — and, the same standards
are used regardless of the environment.

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Our

Business

Today, as yesterday and tomorrow, the combined
expertise of underwriting, risk management, claims
handling and investing will deliver outstanding
risk-adjusted returns.

Insurance-Domestic
The Insurance-Domestic units underwrite commercial insurance business, including excess and surplus lines and
admitted lines, primarily throughout the United States.

2015 Results: Total revenues were $5.1 billion. Pre-tax income was $725 million.

Insurance-International
The Insurance-International units underwrite insurance business primarily in the United Kingdom, Continental
Europe, South America, Canada, Scandinavia and Australia.

2015 Results: Total revenues were $824 million. Pre-tax income was $52 million.

Reinsurance-Global
The Reinsurance-Global units write reinsurance business on a facultative and treaty basis, primarily in the United
States, United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South Africa.

2015 Results: Total revenues were $683 million. Pre-tax income was $95 million.

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W. R. Berkley Corporation 2015 Annual Report

W. R. Berkley Corporation’s
Performance vs. the S&P 500 ®

Annual Percentage Change

In Per-Share Book Value of
W. R. Berkley Corporation
with Dividends Included
(1)

In S&P 500® with
Dividends Included
(2)

Relative
Results
(1)-(2)
Year
50.0% -26.4% 76.4%
1974
12.5% 37.2% -24.7%
1975
29.6% 23.6% 6.0%
1976
28.6% -7.4% 36.0%
1977
24.4% 6.4% 18.0%
1978
18.2% 18.2% 0.0%
1979
9.4% 32.3% -22.9%
1980
-5.0% 19.5%
14.5%
1981
1982
-9.0% 21.4% -30.4%
1983 -11.6% 22.4% -34.0%
1984 -16.9% 6.1% -23.0%
1985
59.6% 31.6% 28.0%
1986 106.8% 18.6% 88.2%
23.5% 5.1% 18.4%
1987
22.5% 16.6% 5.9%
1988
13.2% 31.7% -18.5%
1989
7.8% -3.1% 10.9%
1990
20.8% 30.5% -9.7%
1991
13.5% 7.6% 5.9%
1992
1993
16.7% 10.1% 6.6%
1994 -10.8% 1.3% -12.1%
34.5% 37.6% -3.1%
1995
7.9% 23.0% -15.1%
1996
15.9% 33.4% -17.5%
1997
1998
1.9% 28.6% -26.7%
1999 -18.1% 21.0% -39.1%
17.1% -9.1% 26.2%
2000
7.6% -11.9% 19.5%
2001
31.2% -22.1% 53.3%
2002
26.7% 28.7% -2.0%
2003
25.6% 10.9% 14.7%
2004
21.9% 4.9% 17.0%
2005
30.1% 15.8% 14.3%
2006
16.3% 5.5% 10.8%
2007
-4.1% -37.0% 32.9%
2008
23.3% 26.5% -3.2%
2009
15.4% 15.1% 0.3%
2010
12.2% 2.1% 10.1%
2011
14.8% 16.0% -1.2%
2012
4.8% 32.4% -27.6%
2013
14.8% 13.7% 1.1%
2014
4.3% 1.4% 3.0%
2015

Average Annual Gain — 1974–2015

17.3% 10.8% 6.6%

Overall Gain — 1973–2015 45,208% 7,218%

Overall gain 1973–2015 with dividends compounded = 51,681%

W. R. Berkley Corporation S&P 500®

60,000%

40,000%

20,000%

51,681%

1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2015

Notes: W. R. Berkley Corporation’s book value per share has been adjusted for stock dividends paid from 1975 to 1983.
Stock dividends were 6% in each year from 1975 to 1978, 14% in 1979, and 7% in each year from 1980 to 1983. The
Company has paid cash dividends each year since 1978.

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Chair man’s
Letter

Left to Right: W. Robert Berkley, Jr., President and Chief Executive Officer
William R. Berkley, Executive Chairman

To Our Shareholders:
2015 was a good year by almost every measure. We reported an 11% after-tax
return on equity, driven by a 93.7% combined ratio and positive investment
returns. We started six new businesses or divisions and added some outstanding
people to our team. After 49 years, we successfully completed a seamless CEO
transition.

However, in a year with such a great list of accomplishments, we still did not
achieve our targeted return, in part because the realization of investment gains
is not consistent from year to year. The timing of realized gains will cause the
annual variability of returns to continue, but the amount of gains is likely to
enhance results and assist us in meeting our long-term targets.

Our business model is designed to achieve long-term risk-adjusted returns of
15% after-tax. We are constantly adjusting our model to adapt to the ever-
changing environment and maintain an optimal balance of leverage,
underwriting profitability and investment returns.

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W. R. Berkley Corporation 2015 Annual Report

% 1410 Year Average Return

on Shareholders’ Equity

Underwriting profitability remains
the core focus of our Company, and
today, it is the driving force in our
success. With a targeted combined
ratio in the low 90s, we are able to
generate excellent underwriting
results. The challenge in the
current environment is attaining
satisfactory investment returns.

As interest rates declined in recent
years, it became difficult to maintain
a high-quality portfolio with a
duration that reflects the average life

of our liabilities, and still obtain adequate yields. The variables under our
control are the quality, duration and liquidity of the fixed-income portfolio.
We were neither prepared to reduce the quality of our portfolio, nor were we
willing to extend the duration since that could exacerbate our potential
exposure to inflation. Thus we felt we had two alternatives. The first was to
marginally reduce short-term liquidity by buying securities that might not
provide immediate liquidity, but were of the highest quality. The second was to
expand our investments in private equity, limited partnerships and real estate to
improve returns. We have experience in all of these areas, and they have
delivered excellent returns over many years.

Investments in these areas now represent an amount equal to approximately
half of our shareholders’ equity. So far, this strategy has proven to be
rewarding. Although the income is not reported in as consistent a manner as
income from bonds, the internal rate of return is well above the 3-4% we
would have received from fixed-income securities, and we have not sacrificed
quality or increased risk. In addition, because accounting rules require us to
carry many of these investments under the equity method, there is a significant
amount of unrealized gains embedded in our portfolio that is not recognized
on our balance sheet. The single most visible investment of this type is Health
Equity (HQY), which we took public in 2014. If we were to sell our interest in
any of these projects in any given year, our ROE would be positively impacted.

In general, 2015 benefited from a lack of catastrophic losses and a continued
low level of inflation. The domestic property casualty industry had one of its
best years in the past twenty. Yet, several large insurers recorded meaningful
reserve charges, while consolidation continued among both midsize and small
companies. Additionally, several global players continued rearranging the deck

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chairs to find their optimal position. This type of environment provides
tremendous opportunities for a stable enterprise – and it is the type of
environment in which the Company has excelled.

Much of the Company’s long-term success is a reflection of our recognition
that the property casualty business is a long-term business. Short-term
profitability can be misleading, and at times, may even be inaccurate, especially
in an environment with less predictability than usual. We are required to price
our product before we know the actual cost, so the quality of our earnings is a
reflection of the accuracy of our loss cost estimates. Implicit in these estimates
are assumptions about inflation and other variables. We have a rigorous process
for establishing accurate reserves.

In managing our business each day, we attempt to examine not just the
profitability, but also the inherent risk and volatility or predictability of the
business we underwrite. All returns are not created equal, and one needs to
be conscious of the risk embedded in achieving those returns. We believe
increased risk, including volatility, requires us to obtain higher returns.
We avoid entering businesses where the return might be extremely attractive
for one year and negative in the subsequent year. Our preference is to expand
where the marginal returns are equal to or greater than our existing return.

As such, we recognize that growth is a desirable goal, but not axiomatic with
success. As responsible stewards of our shareholders’ capital, we are diligent in
evaluating the best times and places to grow. This drives decisions regarding
whether to use capital or return it to shareholders in the form of stock buybacks
or dividends. We do not believe the size of an enterprise in and of itself should
be the driving force in measuring success.

Our strategy seems quite simple; however, it is based on real economics, not
necessarily on accounting. Thus, as we grow our business, the choice is often to

Our focus on long-term risk-adjusted
returns has enabled us to deliver on our
fundamental objective of building book value
per share and creating shareholder value for
49 years.

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W. R. Berkley Corporation 2015 Annual Report

We will still succeed by differentiating
ourselves with the best underwriters, claims
professionals and policies that meet the real or
perceived needs of our customers.

build from within. Acquisitions often times have a more immediate impact on
reported earnings, but inherently bring about questions of balance sheet
risk and cultural fit. We are constantly on the lookout for new specialty
opportunities that allow us to decommoditize the product. Projects that require
expertise and attract customers who are willing to pay a premium to the
commodity-based price in order to obtain a better designed product or a better
quality of service are particularly attractive. Having more satisfied customers
leads to a more profitable business. When you build such an enterprise, costs
generally result in modest losses for the first few years of the start-up. But the
real economic return is far greater than would be achieved from an acquisition.
Of our 51 operating units, we started all but seven.

We continue to invest in such start-up ventures and the current year was no
exception. We started six new companies or divisions and we have several new
ventures on the horizon. While building in a controlled way drives up our
expenses in the short run, it creates internal growth for the future and long-
term value.

Our focus on long-term risk-adjusted returns has enabled us to deliver on our
fundamental objective of building book value per share and creating
shareholder value for 49 years. In 2015, we executed a smooth CEO transition.
The board implemented a plan over five years ago to create a seamless transition
for shareholders, employees and customers. Over that time, Rob has taken on
increasing responsibilities for our operations and will continue to do so for
virtually the entire Company. As executive chairman, I will remain fully
engaged in the Company’s activities, focusing however on its strategy and
investment activities.

As we look to the future, Rob and I see structural changes on the horizon
that present challenges to the fundamental methodology of delivering risk
amelioration products to the ultimate customer. In addition, expertise

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continues to be in short supply in all areas of the property casualty business.
As an industry, the property casualty business has not attracted its share of
talented young people. This continues to be a challenge in part because the
very nature of the industry is not exciting for young people who want to be
given responsibility at a rapid pace. In the parts of the business where we
participate, it takes time to gain experience and develop expertise. We continue
to actively support insurance education.

In the context of this environment, rating agencies and regulators work to
protect insurance buyers. They have attempted to keep up with changing times
by paying attention to evolving capital models and implementing more robust
evaluation frameworks. However, as the nature and source of capital evolves
from permanent, dedicated capital owned and controlled by the insurance
company to more temporary third-party capital, we are faced with new and
greater uncertainties. Insurers not only need to be able to pay their claims, but
they need to be willing to pay them. The unforeseen event that no one
expected or modeled could call that willingness into serious question, as the
separation of the insurer and capital could present unanticipated challenges.

At the same time, the distribution system is evolving. Customers are gradually
relying more on automated systems to select the company they use and the
coverages they buy. However, the property casualty industry, which is a
cornerstone to financial stability in our economy, has historically been a slow
moving business. Change comes slowly. Even in the most commoditized and
easily understood parts of our industry, customers have been very slow to
accept online policy origination and issuance. As technology becomes second
nature to our customers, the pace of this change will accelerate, and a greater
number of economic decisions will be based on numerical analysis.
Unfortunately, although the numerical analysis may give us the best price for a

44Five Year Growth in

Book Value Per Share

specific coverage, it doesn’t
always give us the best type of
coverage. There are times when
the subtleties of knowledge
provided by an agent or broker
– a human being – can add
substantial value.

The combination of these
changing forms of capital and
new entrants into the business
with lower-cost automated
distribution might result in less
satisfied customers. But the
cornerstone issues of providing
protection against loss and peace
of mind will remain.

W. R. Berkley Corporation 2015 Annual Report

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We continue to believe that expertise
combined with capital, delivered with good
advice, is the best way to deliver value to
most customers.

Even as these changes occur, we will still succeed by differentiating ourselves
with the best underwriters, claims professionals and policies that meet the real
or perceived needs of our customers. We have been successful in doing this for
nearly five decades. We have the skills and foresight to adapt our competitive
advantages to the changing world in a way that is most relevant to our
customers and creates the most value for our shareholders.

The more uncertainty that exists and the more financial concerns that arise, the
more valuable it is to have a dependable insurance company at your side. We
provide that service through our distribution partners and our employees.
We continue to believe that expertise combined with capital, delivered with
good advice, is the best way to deliver value to most customers.

Our Company has been built to last with a culture and focus that ensures we
will fully meet our responsibilities to all of our constituencies. The past 49
years have been extraordinary. Ultimately, the support of a large number of
people – investors, mentors, colleagues, customers and even regulators – has
helped us get from the starting line to where we are today. We tell people we
are a large, publicly-owned, “family” Company. We take our values seriously.
We try to do what is right based on our judgment and our assessment of the
facts and the truth as we perceive it. We expect the future to be even brighter
and believe that it offers more opportunities today than ever before. We hope
you continue with us on our journey. On a personal basis, I would like to
especially thank our board of directors and the many long-term shareholders
that have entrusted us with their capital. Our success would not have been
possible without the commitment and dedication of our employees, and I
sincerely thank all of them.

William R. Berkley
Executive Chairman

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Investments

Over the past few years, we have shortened the
duration of our fixed-income portfolio to 3.3 years
to manage the yield curve as well as the impact of
potential inflation. These changes have reduced the
potential impact of mark-to-market on our portfolio
and positioned us to take advantage of rising interest
rates when they occur. In addition, due to the
prolonged low interest rate environment, we have
allocated a portion of our portfolio to investments
designed to generate capital gains.

Breakdown of Fixed Maturity Securitie s
(Including cash)

U.S. Government and
Government Agency Bonds

Cash and
Cash Equivalents

Foreign Bonds

Mortgage-backed
Securities

Asset-backed
Securities

6%
9%
13%

State
and
Municipal
Bonds

35%

26%

Investment Data
(Dollars in millions)

Cash and invested assets:

Invested assets

Cash and cash equivalents

Total

Net investment income

Net realized gains on investment sales

Corporate Bonds

2015

$15,351

2014

$15,592

$ 764 $

674

$16,115

$16,266

$ 513 $

$ 126 $

601

255

W. R. Berkley Corporation 2015 Annual Report

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Segment
Overview

Each of our three business segments — Insurance-
Domestic, Insurance-International and Reinsurance-
Global — comprises individual operating units that serve
a market defined by geography, products, services, or
types of customers. Our growth is based on meeting the
needs of customers, maintaining a high-quality balance
sheet, and allocating capital to our best opportunities.

We combine capital with outstanding people and wrap
it all in a culture that is focused on optimizing risk-
adjusted returns. It creates a permanent competitive
advantage that can only be acquired over many years
with consistent discipline.

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2015

Segment Data

2015 Assets and Reserves
(Dollars in Billions)

Insurance-Domestic

Assets
Reserves

$7.2

$16.4

Insurance-International

Assets
Reserves

$1.7

$0.7

Reinsurance-Global

Assets
Reserves

$2.4

$1.4

2015 Revenues

2015 Pre-tax Income

Insurance-
International

Reinsurance-
Global

10 %

13%

Insurance-
International

Reinsurance-
Global

6%
11 %

77%

Insurance-
Domestic

83%

Insurance-
Domestic

W. R. Berkley Corporation 2015 Annual Report

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Comparison of
Cumulative Total Returns

W. R. Berkley Corporation

S&P 500® Index

S&P 500® Property & Casualty Insurance Index

Assumes initial investment of $100 on January 01, 2011, 2006, and 2001, respectively, with dividends reinvested

$250

$200

$150

$100

$50

5 Year

2010

2011

2012

2013

2014

2015

W. R. Berkley Corporation

S&P 500® Index

S&P 500® Property & Casualty Insurance Index

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

$100.00 $126.85 $144.09 $167.19 $203.32 $219.10

$100.00 $102.11 $118.45 $156.82 $178.28 $180.75

$100.00

$99.74 $119.80 $165.67 $191.75 $210.03

10 Year

$250

$200

$150

$100

$50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

W. R. Berkley Corporation $100.00 $109.21 $94.94 $99.61 $79.98 $89.78 $113.88 $129.36 $150.10 $182.53 $196.10

S&P 500® Index $100.00 $115.79 $122.16 $76.96

$97.33 $111.99 $114.35 $132.65 $175.62 $199.66 $202.42

S&P 500® Property & Casualty Insurance Index

$100.00

$112.83

$97.94

$69.11

$77.55 $84.70 $84.48 $101.47 $140.32

$162.41

$177.89

Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

$800

$700

$600

$500

15 Year

$400

$300

$200

$100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

W. R. Berkley Corporation

S&P 500® Index

$100.00 $115.13 $128.61 $171.66 $233.21 $355.04 $387.72 $337.08 $353.64 $283.95 $318.74 $404.33 $459.27 $532.90 $648.06 $698.36

$100.00 $88.11 $68.64 $88.33 $97.94 $102.75 $118.98 $125.52 $79.08 $100.01 $115.07 $117.50 $136.31 $180.45 $205.15 $207.99

S&P 500® Property & Casualty Insurance Index $100.00 $91.95 $81.81 $103.41 $114.21 $131.46 $148.33 $128.75 $90.86 $101.95 $111.35 $111.06 $133.39 $184.47 $213.51 $233.86

Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

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

80793in_txt.indd 14

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT

[x] OF 1934

For the fiscal year ended December 31, 2015
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 1-15202

W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 22-1867895
(I.R.S. Employer
Identification Number)

(State or other jurisdiction

of incorporation or organization)

475 Steamboat Road, Greenwich, CT 06830

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (203) 629-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered

Common Stock, par value $.20 per share New York Stock Exchange
5.625% Subordinated Debentures due 2053 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes No x
Indicate by check mark whether the registrant (1) has 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 (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No
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. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x Accelerated filer

Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company

80793in_10k.indd 1

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No x

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 $5,048,029,512.

Number of shares of common stock, $.20 par value, outstanding as of February 17, 2016: 122,586,752

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within
120 days after December 31, 2015, are incorporated herein by reference in Part III.

80793in_10k.indd 2

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SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT
SAFE HARBOR STATEMENT

PART I
PART I
PART I
PART I
PART I
PART I
SAFE HARBOR STATEMENT
ITEM 1. BUSINESS
ITEM 1. BUSINESS
ITEM 1. BUSINESS
ITEM 1. BUSINESS
ITEM 1. BUSINESS
ITEM 1. BUSINESS

ITEM
ITEM
ITEM
ITEM
ITEM
ITEM

1A. RISK FACTORS
1A. RISK FACTORS
1A. RISK FACTORS
1A. RISK FACTORS
1A. RISK FACTORS
1A. RISK FACTORS
PART I

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1. BUSINESS

ITEM
I T E M 2 . PROPERTIES
I T E M 2 . PROPERTIES
I T E M 2 . PROPERTIES
I T E M 2 . PROPERTIES
I T E M 2 . PROPERTIES
I T E M 2 . PROPERTIES

1A. RISK FACTORS

ITEM
3. LEGAL PROCEEDINGS
3. LEGAL PROCEEDINGS
ITEM
3. LEGAL PROCEEDINGS
ITEM
3. LEGAL PROCEEDINGS
ITEM
3. LEGAL PROCEEDINGS
ITEM
3. LEGAL PROCEEDINGS
ITEM
ITEM 1B. UNRESOLVED STAFF COMMENTS

I T E M 2 . PROPERTIES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. MINE SAFETY DISCLOSURES
ITEM

3. LEGAL PROCEEDINGS
PART II
PART II
PART II
PART II
PART II
PART II

ITEM 4. MINE SAFETY DISCLOSURES
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
PURCHASES OF EQUITY SECURITIES
PURCHASES OF EQUITY SECURITIES
PURCHASES OF EQUITY SECURITIES
PURCHASES OF EQUITY SECURITIES
PURCHASES OF EQUITY SECURITIES

PART II

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
PURCHASES OF EQUITY SECURITIES
OPERATIONS
OPERATIONS
OPERATIONS
OPERATIONS
OPERATIONS
OPERATIONS
ITEM 6. SELECTED FINANCIAL DATA
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
OPERATIONS

7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM
DISCLOSURE
DISCLOSURE
DISCLOSURE
DISCLOSURE
DISCLOSURE
DISCLOSURE
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION

ITEM 9A. CONTROLS AND PROCEDURES

PART III
PART III
PART III
PART III
PART III
PART III

ITEM 9B. OTHER INFORMATION
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

PART III
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
STOCKHOLDER MATTERS
STOCKHOLDER MATTERS
STOCKHOLDER MATTERS
STOCKHOLDER MATTERS
STOCKHOLDER MATTERS
STOCKHOLDER MATTERS
ITEM 11. EXECUTIVE COMPENSATION
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
ITEM
STOCKHOLDER MATTERS
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

ITEM

13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
PART IV
PART IV
PART IV
PART IV
PART IV
PART IV

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)

EX-23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)

EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)

EX-31.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)

TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
OF 2002
OF 2002
OF 2002
OF 2002
OF 2002

EX-32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
EX-101 INSTANCE DOCUMENT
EX-101 INSTANCE DOCUMENT
EX-101 INSTANCE DOCUMENT
EX-101 INSTANCE DOCUMENT
EX-101 INSTANCE DOCUMENT
EX-101 INSTANCE DOCUMENT

TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
EX-101 SCHEMA DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 SCHEMA DOCUMENT

P a g e
P a g e
P a g e
P a g e
P a g e
P a g e

P a g e

1
1
1
1
1
1

2 0
2 0
2 0
2 0
2 0
2 0

2 7
2 7
2 7
2 7
2 7
2 7
1

2 8
2 8
2 8
2 8
2 8
2 8
2 0

2 8
2 8
2 8
2 8
2 8
2 8
2 7

2 8
2 8
2 8
2 8
2 8
2 8
2 8

2 8

2 8
2 9
2 9
2 9
2 9
2 9
2 9

3 0
3 0
3 0
3 0
3 0
3 0
2 9
3 1
3 1
3 1
3 1
3 1
3 1

3 0
5 4
5 4
5 4
5 4
5 4
5 4
3 1
5 5
5 5
5 5
5 5
5 5
5 5

8 9
8 9
8 9
8 9
8 9
8 9
5 4

5 5
9 0
9 0
9 0
9 0
9 0
9 0
8 9
9 3
9 3
9 3
9 3
9 3
9 3

9 0

9 3
9 3
9 3
9 3
9 3
9 3
9 3

9 3
9 3
9 3
9 3
9 3
9 3

9 3
9 3
9 3
9 3
9 3
9 3
9 3

9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3
9 3

9 3

9 3
9 3
9 3
9 3
9 3
9 3
9 3

9 3

EX-101 INSTANCE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 SCHEMA DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 LABELS LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

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SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

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 2016 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:

•

the cyclical nature of the property casualty industry;

the impact of significant competition, including new alternative entrants to the industry;

the long-tail and potentially volatile nature of the insurance and reinsurance business;

product demand and pricing;

claims development and the process of estimating reserves;

investment risks, including those of our portfolio of fixed maturity securities and investments in equity
securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans
receivable, investment funds, including real estate, merger arbitrage, energy related and private equity
investments;

the effects of emerging claim and coverage issues;

the uncertain nature of damage theories and loss amounts;

natural and man-made catastrophic losses, including as a result of terrorist activities;

general economic and market activities, including inflation, interest rates and volatility in the credit and
capital markets;

the impact of conditions in the financial markets and the global economy, and the potential effect of
legislative, regulatory, accounting or other initiatives taken in response to it, on our results and
financial condition;

foreign currency and political risks relating to our international operations;

our ability to attract and retain key personnel and qualified employees;

continued availability of capital and financing;

the success of our new ventures or acquisitions and the availability of other opportunities;

the availability of reinsurance;

our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2015 ("TRIPRA");

the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us;

other legislative and regulatory developments, including those related to business practices in the insurance
industry;

credit risk relating to our policyholders, independent agents and brokers;

changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies;

the availability of dividends from our insurance company subsidiaries;

potential difficulties with technology and/or data security;

the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory
standards; and

80793in_10k.indd 4

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•

other risks detailed in this Form 10-K and from time to time in our other filings with the Securities and
Exchange Commission (“SEC”).

We describe these risks and uncertainties in greater detail in Item 1A, Risk Factors. These risks and uncertainties could
cause our actual results for the year 2016 and beyond to differ materially from those expressed in any forward-looking
statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of
earnings. Our future financial performance is dependent upon factors discussed elsewhere in this Form 10-K and our other
SEC filings. Forward-looking statements speak only as of the date on which they are made.

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PART I
PART I
ITEM 1. BUSINESS
ITEM 1. BUSINESS

PART I
ITEM 1. BUSINESS

W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in

W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in

the United States. It operates in the following segments of the property casualty insurance business:
the United States. It operates in the following segments of the property casualty insurance business:

the United States. It operates in the following segments of the property casualty insurance business:

• Insurance-Domestic - commercial insurance business, including excess and surplus lines and admitted lines,
• Insurance-Domestic - commercial insurance business, including excess and surplus lines and admitted lines,

• Insurance-Domestic - commercial insurance business, including excess and surplus lines and admitted lines,

primarily throughout the United States;
primarily throughout the United States;

primarily throughout the United States;

• Insurance-International - insurance business primarily in the United Kingdom, Continental Europe, South
• Insurance-International - insurance business primarily in the United Kingdom, Continental Europe, South

• Insurance-International - insurance business primarily in the United Kingdom, Continental Europe, South

America, Canada, Scandinavia, Asia, and Australia; and
America, Canada, Scandinavia, Asia, and Australia; and

America, Canada, Scandinavia, Asia, and Australia; and

• Reinsurance-Global - reinsurance business on a facultative and treaty basis, primarily in the United States,
• Reinsurance-Global - reinsurance business on a facultative and treaty basis, primarily in the United States,

• Reinsurance-Global - reinsurance business on a facultative and treaty basis, primarily in the United States,

United Kingdom, Continental Europe, Australia, the Asia-Pacific Region, and South Africa.
United Kingdom, Continental Europe, Australia, the Asia-Pacific Region, and South Africa.

United Kingdom, Continental Europe, Australia, the Asia-Pacific Region, and South Africa.

Each of our three business segments is composed of individual operating units that serve a market defined by

Each of our three business segments is composed of individual operating units that serve a market defined by
Each of our three business segments is composed of individual operating units that serve a market defined by
geography, products, services or types of customers. Each of our operating units is positioned close to its customer base and
geography, products, services or types of customers. Each of our operating units is positioned close to its customer base and
geography, products, services or types of customers. Each of our operating units is positioned close to its customer base and
participates in a niche market requiring specialized knowledge about a territory or product. This strategy of decentralized
participates in a niche market requiring specialized knowledge about a territory or product. This strategy of decentralized
participates in a niche market requiring specialized knowledge about a territory or product. This strategy of decentralized
operations allows each of our units to identify and respond quickly and effectively to changing market conditions and local
operations allows each of our units to identify and respond quickly and effectively to changing market conditions and local
operations allows each of our units to identify and respond quickly and effectively to changing market conditions and local
customer needs, while capitalizing on the benefits of centralized capital, investment and reinsurance management, and
customer needs, while capitalizing on the benefits of centralized capital, investment and reinsurance management, and
customer needs, while capitalizing on the benefits of centralized capital, investment and reinsurance management, and
corporate actuarial, financial, enterprise risk management and legal staff support.
corporate actuarial, financial, enterprise risk management and legal staff support.
corporate actuarial, financial, enterprise risk management and legal staff support.

Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet,

Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet,
Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet,
and allocating capital to our best opportunities. New businesses are started when opportunities are identified and when the
and allocating capital to our best opportunities. New businesses are started when opportunities are identified and when the
and allocating capital to our best opportunities. New businesses are started when opportunities are identified and when the
right talent and expertise are found to lead a business. Of our 51 operating units, 44 have been organized and developed
right talent and expertise are found to lead a business. Of our 51 operating units, 44 have been organized and developed
right talent and expertise are found to lead a business. Of our 51 operating units, 44 have been organized and developed
internally and seven have been added through acquisition.
internally and seven have been added through acquisition.
internally and seven have been added through acquisition.

Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for
Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for

Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for

each of our operating segments for each of the past five years were as follows:
each of our operating segments for each of the past five years were as follows:

each of our operating segments for each of the past five years were as follows:

(In thousands) 2015 2014 2013 2012 2011
(In thousands) 2015 2014 2013 2012 2011

(In thousands) 2015 2014 2013 2012 2011

Year Ended December 31,
Year Ended December 31,

Year Ended December 31,

Net premiums written:
Net premiums written:
Net premiums written:
Insurance-Domestic
Insurance-Domestic
Insurance-Domestic

Insurance-International
Insurance-International
Insurance-International
Reinsurance-Global
Reinsurance-Global
Reinsurance-Global

Total
Total

Total

$ 4,812,830 $ 4,517,587 $ 3,994,387 $ 3,569,883 $ 3,238,120
$ 4,812,830 $ 4,517,587 $ 3,994,387 $ 3,569,883 $ 3,238,120

$ 4,812,830 $ 4,517,587 $ 3,994,387 $ 3,569,883 $ 3,238,120

778,567
778,567
598,118
598,118

778,567
598,118

828,076
828,076
651,284
651,284

828,076
651,284

756,185
756,185
749,601
749,601

756,185
749,601

664,459
664,459
664,197
664,197

664,459
664,197

551,910
551,910
567,338
567,338

551,910
567,338

$ 6,189,515 $ 5,996,947 $ 5,500,173 $ 4,898,539 $ 4,357,368
$ 6,189,515 $ 5,996,947 $ 5,500,173 $ 4,898,539 $ 4,357,368

$ 6,189,515 $ 5,996,947 $ 5,500,173 $ 4,898,539 $ 4,357,368

2015
2015

2015

Year Ended December 31,
Year Ended December 31,

Year Ended December 31,
2013
2013

2013

2014
2014

2014

2012
2012

2012

2011
2011

2011

Percentage of net premiums written:
Percentage of net premiums written:
Percentage of net premiums written:
Insurance-Domestic
Insurance-Domestic
Insurance-Domestic
Insurance-International
Insurance-International
Insurance-International
Reinsurance-Global Total
Reinsurance-Global Total
Reinsurance-Global Total

Total
Total

Total

77.7%
77.7%

77.7%

75.3%
75.3%

75.3%

72.6%
72.6%

72.6%

72.8%
72.8%

72.8%

74.3%
74.3%

74.3%

12.6
12.6
12.6
9.7
9.7
9.7

13.8
13.8
10.9
10.9

13.8
10.9

13.8
13.8
13.6
13.6

13.8
13.6

13.6
13.6
13.6
13.6

13.6
13.6

12.7
12.7
13.0
13.0

12.7
13.0

100.0%
100.0%

100.0%

100.0%
100.0%

100.0%

100.0%
100.0%

100.0%

100.0%
100.0%

100.0%

100.0%
100.0%

100.0%

Twenty-seven of our twenty-eight insurance company subsidiaries rated by A.M. Best Company, Inc. (“A.M. Best”)

Twenty-seven of our twenty-eight insurance company subsidiaries rated by A.M. Best Company, Inc. (“A.M. Best”)
Twenty-seven of our twenty-eight insurance company subsidiaries rated by A.M. Best Company, Inc. (“A.M. Best”)
have ratings of A+ (Superior) (the second highest rating out of 15 possible ratings), and one is rated A (Excellent) (the third
have ratings of A+ (Superior) (the second highest rating out of 15 possible ratings), and one is rated A (Excellent) (the third
have ratings of A+ (Superior) (the second highest rating out of 15 possible ratings), and one is rated A (Excellent) (the third
highest rating). A.M. Best's ratings are based upon factors of concern to policyholders, insurance agents and brokers and are not
highest rating). A.M. Best's ratings are based upon factors of concern to policyholders, insurance agents and brokers and are not
highest rating). A.M. Best's ratings are based upon factors of concern to policyholders, insurance agents and brokers and are not
directed toward the protection of investors. A.M. Best states: “The Financial Strength Rating opinion addresses the relative
directed toward the protection of investors. A.M. Best states: “The Financial Strength Rating opinion addresses the relative
directed toward the protection of investors. A.M. Best states: “The Financial Strength Rating opinion addresses the relative
ability of an insurer to meet its ongoing insurance obligations. The ratings are not assigned to specific insurance policies or
ability of an insurer to meet its ongoing insurance obligations. The ratings are not assigned to specific insurance policies or
ability of an insurer to meet its ongoing insurance obligations. The ratings are not assigned to specific insurance policies or
contracts and do not address any other risk.” A.M. Best reviews its ratings on a periodic basis, and its ratings of the Company's
contracts and do not address any other risk.” A.M. Best reviews its ratings on a periodic basis, and its ratings of the Company's
contracts and do not address any other risk.” A.M. Best reviews its ratings on a periodic basis, and its ratings of the Company's
subsidiaries are therefore subject to change.
subsidiaries are therefore subject to change.
subsidiaries are therefore subject to change.

The twenty-four insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of
The twenty-four insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of

The twenty-four insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of

A+ (the seventh highest rating out of twenty-seven possible ratings).
A+ (the seventh highest rating out of twenty-seven possible ratings).

A+ (the seventh highest rating out of twenty-seven possible ratings).

Our Moody's ratings are A2 for Berkley Insurance Company, Berkley Regional Insurance Company and Admiral
Our Moody's ratings are A2 for Berkley Insurance Company, Berkley Regional Insurance Company and Admiral

Our Moody's ratings are A2 for Berkley Insurance Company, Berkley Regional Insurance Company and Admiral

Insurance Company (the sixth highest rating out of twenty-one possible ratings).
Insurance Company (the sixth highest rating out of twenty-one possible ratings).

Insurance Company (the sixth highest rating out of twenty-one possible ratings).

1
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The following sections describe our reporting segments and their operating units in greater detail. These operating

units underwrite on behalf of one or more affiliated insurance companies within the group. Certain operating units are
identified by us herein for descriptive purposes only and are not legal entities. Unless otherwise indicated, all references in this
Form 10-K to “W. R. Berkley,” “we,” “us,” “our,” the “Company” or similar terms refer to W. R. Berkley Corporation together
with its subsidiaries and operating units. W. R. Berkley Corporation is a Delaware corporation formed in 1970.

Insurance-Domestic

The Insurance-Domestic operating units underwrite commercial insurance business primarily throughout the United

States, although many units offer coverage globally, focusing on the following general areas:

Excess & Surplus Lines: A number of our Insurance-Domestic operating units are dedicated to the excess and surplus

lines market. They serve a highly diverse group of customers that often have complex risk or unique exposures that typically
fall outside the underwriting guidelines of the standard insurance market. Lines of business underwritten by our excess and
surplus lines operating units include premises operations, commercial automobile, property, products liability and professional
liability lines. Products are generally distributed through wholesale agents and brokers.

Industry Specialty: Certain other operating units focus on providing specialty coverages to customers within a

particular industry that are best served by underwriters and claims professionals with specialized knowledge of that industry.
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. 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.

Product Specialty: Other operating units in this segment specialize in providing specific lines of insurance coverage,

such as workers’ compensation or professional liability, to a wide range of customers. They offer insurance products, analytical
tools and risk management services such as loss control and claims management that enable clients to manage their risk
appropriately. Business is typically written on an admitted basis, although some units may offer non-admitted products.
Independent agents and brokers are the primary means of distribution.

Regional: Certain Insurance-Domestic operating units offer standard insurance products and services through

operating units focused on meeting the specific needs of a regionally differentiated customer base. Key clients of these units
are small-to-midsized businesses. These regionally focused operating units provide a broad array of commercial insurance
products to customers primarily in 45 states and the District of Columbia and have developed expertise in niches that drive
local communities. They are organized geographically in order to provide them with the flexibility to adapt quickly to local
market conditions and customer needs. Business is sold through non-exclusive independent agents who are compensated on a
commission basis.

In addition to providing insurance products, certain operating units also provide a wide variety of fee-based services,

including claims, administrative and consulting services.

Operating units comprising the Insurance-Domestic segment are as follows:

Acadia Insurance is a Northeast regional property casualty underwriter offering a broad portfolio of products
exclusively through local independent agents in Connecticut, Maine, Massachusetts, New Hampshire, New York and Vermont.
In addition to its general offerings, Acadia has specialized expertise in insuring regional businesses and industries such as
construction, lumber and fishing.

Admiral Insurance provides excess and surplus lines coverage for commercial risks that generally consist of hard-to-

place, specialized risks that involve moderate to high degrees of hazard. Its lines of business include general liability,
professional liability, property, and excess and umbrella coverage. Admiral's professional liability and program operations
include special coverages for technology, ambulatory surgery centers, chiropractors and concierge physicians. Its products are
distributed exclusively by wholesale brokers.

American Mining Insurance offers workers' compensation insurance as well as general liability, automobile, and

excess liability coverages to a broad range of firms within the mining and aggregate industries in the United States.

Berkley Accident and Health underwrites accident and health insurance and reinsurance products in four primary areas:
medical stop loss, managed care, special risk and group captive. It has a diversified product and service portfolio serving a range
of clients from small employers, health care organizations, and membership groups to Fortune 500 companies.

Berkley Agribusiness Risk Specialists offers insurance for larger commercial risks across the United States involved in

the supply, storage, handling, processing and distribution of commodities related to the agriculture and food industries.

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Berkley Alliance Managers specializes in professional liability for the design professional, construction professional

and certified public accounting industries. The Berkley Design Professional division specializes in architects, engineers and
consultants. In addition to professional liability, the Berkley Construction Professional division provides pollution liability and
protective coverages to contractors and owners across all forms of non-environmental construction.

Berkley Aviation offers a wide range of aviation insurance products on a global basis, including coverage for airlines,

airplanes, helicopters, miscellaneous general aviation operations, non-owned aircraft, fixed-base operations, control towers,
airports and other specialized niche programs. In the U.S., it places its business on an admitted and non-admitted basis
nationwide.

Berkley Custom Insurance focuses on the excess casualty insurance market and offers umbrella liability, pollution

liability, excess liability, construction wrap-ups and completed operations coverages to wholesalers, retailers, manufacturers,
insurance companies, financial institutions and construction companies.

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 Fire & Marine offers a broad range of preferred inland marine and related property risks and services to

customers throughout the United States, both regionally and nationwide. Products are distributed through independent agents
and brokers.

Berkley Global Product Recall Management provides worldwide insurance protection and technical assistance to

help clients with the prevention, management and indemnification of product recall and contamination events.

Berkley Healthcare Professional provides customized, comprehensive professional liability solutions for the full

spectrum of healthcare providers.

Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a
global basis, including primary and excess liability coverage and commercial insurance. It serves pharmaceutical and biologic/
biotech companies, medical device companies, dietary supplement manufacturers, medical and research software developers,
contract service organizations, research institutions and organizations, and other related businesses.

Berkley Medical Excess insures healthcare organizations such as hospitals and clinics that retain a portion of their risk

exposure through a self-funded mechanism and seek to maximize the effectiveness and efficiency of their excess risk
financing program.

Berkley Mid-Atlantic Group provides commercial property casualty coverages to a wide variety of businesses in
Delaware, the District of Columbia, Maryland, Ohio, Pennsylvania, and Virginia. Focusing on middle market accounts, it
complements its standard writings with specialized products in areas such as construction.

Berkley Net Underwriters focuses on small and medium-sized commercial risks, using a web-based system to allow

producers to quote, bind and service workers' compensation insurance products on behalf of W. R. Berkley Corporation
member companies.

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. 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 construction.

Berkley Offshore Underwriting Managers is a specialist global underwriter of energy and marine risks. Its three

divisions provide specialty insurance products in the energy upstream, energy liability and marine sectors.

Berkley Oil & Gas provides property casualty products and risk services to the United States energy sector. Its

customer base includes risks of any size that work in the oil patch, including operators, drillers, geophysical contractors, well-
servicing contractors, and manufacturers/distributors of oil field products, as well as those in the renewable energy sector.

Berkley Professional Liability specializes in professional liability insurance for publicly-traded and private entities

based on a worldwide basis. Its liability coverages include directors and officers, fiduciary, employment practices, and
sponsored insurance agents.

Berkley Program Specialists is a program management company offering both admitted and non-admitted insurance
support on a nationwide basis for commercial casualty and inland marine program administrators with specialized insurance
expertise. Its book is built around blocks of homogeneous business, or programs, allowing for efficient processes, effective
oversight of existing programs and sound implementation of new programs.

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Berkley Public Entity specializes in providing excess coverage and services to individual governmental and scholastic

entities and intergovernmental risk sharing groups. Products include general liability, automobile liability, law enforcement
liability, public officials and educator's legal liability, employment practices liability, incidental medical, property and crime.

Berkley Regional Specialty provides excess and surplus lines coverage on a national basis to small to medium-sized
insureds with low to moderate insurance risk. Its product lines include general liability, liquor liability and some property and
inland marine coverage. It serves a limited distribution channel consisting of select W. R. Berkley Corporation member
company agents.

Berkley Risk Administrators provides insurance program management services to a variety of organizations,
including self-insureds, captives, governmental entities, risk retention groups, and insurance companies. It is also a nationwide
third-party claims administrator and is the nation's third largest servicing carrier for workers' compensation assigned risk
plans, serving plans in 20 states.

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 Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia,

Mississippi, North Carolina, South Carolina and Tennessee.

Berkley Specialty Underwriting Managers has two underwriting divisions. Its entertainment and sports division

underwrites property casualty insurance products, both on an admitted and non-admitted basis, for the entertainment industry
and sports-related organizations. The environmental division 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 16 field offices.

Berkley Technology Underwriters provides a broad range of first and third-party insurance programs for technology

exposures and technology industries on both a local and global basis.

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. It
underwrites on an admitted basis in all 50 states and the District of Columbia.

Clermont Specialty Managers provides 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.

Continental Western Group is a Midwest regional property and casualty insurance operation based in Des Moines, Iowa,

providing underwriting and risk management services to a broad array of regional businesses in thirteen Midwest states. In
addition to its generalist portfolio, Continental Western offers specialty underwriting solutions for diversified agriculture,
construction, light manufacturing, transportation, volunteer fire departments, rural utilities, public entity and implement dealers.

Gemini Transportation is a national provider of excess liability insurance for various domestic surface transportation

businesses. It underwrites liability insurance policies for the railroad industry as well as excess liability policies for the
trucking, busing and other industries that use rubber-wheeled vehicles for over-the-road use.

Key Risk Insurance is a provider of workers' compensation insurance products and services for employers in the public

and private sectors in select Eastern and Southeastern states. It focuses on middle-market accounts in specialty niches and on
larger self-insured entities, with a special emphasis on expert claims and managed-care services. Additionally, Key Risk's
affiliate, Key Risk Management Services, provides third party administration of self-insured workers' compensation programs.

Midwest Employers Casualty provides excess workers' compensation insurance products to individual employers,
groups and workers' compensation insurance companies across the United States. Its workers' compensation excess of loss
products include self-insured excess of loss coverages, large deductible policies and reinsurance. Through its relationship with
Berkley Net Underwriters, Midwest Employers Casualty also offers multi-state coverage for group self-insureds. It has
developed sophisticated, proprietary analytical tools and risk management services that help its insureds lower their total cost
of risk.

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.

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Nautilus Insurance Group insures excess and surplus lines risks for small to medium-sized commercial risks with low

to moderate susceptibility to loss. It writes commercial excess and surplus lines business nationwide and admitted lines
commercial business in a limited number of states. A substantial portion of Nautilus' business is written through its close, long-
standing network of general agents, who are chosen on a highly selective basis.

Preferred Employers Insurance focuses exclusively on workers' compensation products and services for businesses in

California. It serves over 12,000 customers covering a broad spectrum of industries throughout the state.

Riverport Insurance Services provides property casualty insurance coverages to human services organizations,
including nonprofit and for-profit organizations, public schools and sports and recreational organizations. Riverport also
insures 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 own risk.

Union Standard offers preferred commercial property and casualty insurance products and services to a wide range of

small to medium size commercial entities through independent agents in Arizona, Arkansas, New Mexico, Oklahoma and
Texas. Union Standard's strategy is built around relationships and service.

Vela Insurance Services specializes in commercial casualty insurance on an excess and surplus lines basis. Its primary

focus is on general liability insurance for construction, manufacturing and general casualty clients as well as products liability
and miscellaneous professional liability coverages distributed through wholesale insurance brokers.

Verus Underwriting Managers offers general liability, professional liability and property coverages for small to mid-
sized commercial risks in the excess and surplus lines insurance market through a select group of appointed wholesale brokers
and agents.

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The following table sets forth the percentage of gross premiums written by each Insurance-Domestic operating unit:

Year Ended December 31,

2015

2014

2013

2012

2011

Acadia Insurance
Admiral Insurance
American Mining Insurance
Berkley Accident and Health
Berkley Agribusiness Risk Specialists

Berkley Alliance Managers
Berkley Aviation
Berkley Custom Insurance
Berkley FinSecure
Berkley Fire and Marine
Berkley Global Product Recall Managers
Berkley Healthcare Professional
Berkley Life Sciences
Berkley Medical Excess

Berkley Mid-Atlantic Group
Berkley Net Underwriters
Berkley North Pacific

Berkley Offshore Underwriting Managers
Berkley Oil & Gas
Berkley Professional Liability
Berkley Program Specialists
Berkley Public Entity
Berkley Regional Specialty

Berkley Risk Administrators
Berkley Select
Berkley Southeast
Berkley Specialty Underwriting Managers
Berkley Surety
Berkley Technology Underwriters
Carolina Casualty Insurance
Clermont Specialty Managers
Continental Western Group

Gemini Transportation
Key Risk Insurance
Midwest Employers Casualty

Monitor Liability Managers
Nautilus Insurance Group
Preferred Employers Insurance
Riverport Insurances Services
Union Standard
Vela Insurance Services

Verus Underwriting Managers
Other

Total

8.4%
6.2
0.8
3.4

1.1
0.1

1.0
2.8
0.8
0.2
—
0.2

1.1
0.8
2.8
4.3

1.9
2.0

4.1
2.1
1.4
0.4

0.4
4.6

2.1
3.0
6.2
1.4

0.5
2.2

1.5
4.5
1.1
3.5

2.9
2.6

5.5
2.5
0.7
3.1

3.7
0.9

8.2%
5.9
0.8
3.0
—
—
1.0
2.8
0.9
—
—
—
1.1
0.9
4.4
4.0

1.8
2.3

3.9
1.3
1.5
0.4

0.4
4.9

2.7
—
6.6
1.3

0.3
2.4

1.5
5.9
1.0
3.3

2.9
3.1

5.8
2.1
0.8
5.2

3.5
1.0

8.6%
6.1
0.9
3.6
—
—
1.5
0.7
0.8
—
—
—
0.8
0.9
4.9
3.5

1.8
2.2

3.2
1.2
1.8
0.2

0.4
4.8

2.9
—
7.9
1.3

0.1
2.3

1.6
6.4
1.1
3.2

3.4
3.1

6.2
2.0
1.4
5.3

2.2
0.7

9.0%
6.8
1.0
3.3
—
—
1.7

0.8
—
—
—
0.6
1.0
5.4
2.5

1.5
2.0

2.2
1.1
3.1
—
0.4
4.0

2.6
—
7.0
1.6
—
2.3

1.7
7.0
1.0
3.1

4.4
3.9

6.6
1.9
1.7
5.5

2.1
0.4

1.2
100.0%

1.1
100.0%

1.0
100.0%

0.8
100.0%

7.8%

5.7

0.9

4.3

1.0

0.8

1.4

3.3

1.2

0.4
—
0.2

0.9

2.1

4.6

1.9

1.6

3.7

2.0

1.4

0.5

0.4

4.6

1.8

2.7

6.6

1.4

0.6

1.4

1.5

4.6

1.3

3.3

2.8

5.5

2.8

0.7

3.0

3.9

1.0

0.7

100.0%

6
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The following table sets forth percentages of gross premiums written, by line, by our Insurance-Domestic operations:
The following table sets forth percentages of gross premiums written, by line, by our Insurance-Domestic operations:
The following table sets forth percentages of gross premiums written, by line, by our Insurance-Domestic operations:

Other liability
Other liability
Other liability

Workers' compensation
Workers' compensation
Workers' compensation

Short-tail lines (1)
Short-tail lines (1)
Short-tail lines (1)
Commercial auto
Commercial auto
Commercial auto

Professional liability
Professional liability
Professional liability

Total
Total
Total

Year Ended December 31,
Year Ended December 31,
Year Ended December 31,

2015
2015
2015

31.8%
31.8%
31.8%
27.9
27.9
27.9
21.2
21.2
21.2

9.7
9.7
9.7
9.4
9.4
9.4

2014
2014
2014
31.9%
31.9%
31.9%

2013
2013
2013
32.4%
32.4%
32.4%

2012
2012
2012
30.7%
30.7%
30.7%

2011
2011
2011
31.2%
31.2%
31.2%

27.2
27.2
27.2

21.8
21.8
21.8
10.4
10.4
10.4

8.7
8.7
8.7

27.0
27.0
27.0

22.0
22.0
22.0
10.7
10.7
10.7

7.9
7.9
7.9

26.8
26.8
26.8

23.5
23.5
23.5
11.2
11.2
11.2

7.8
7.8
7.8

25.3
25.3
25.3

23.5
23.5
23.5
12.1
12.1
12.1

7.9
7.9
7.9

100.0% 100.0%
100.0% 100.0%
100.0% 100.0%

100.0%
100.0%
100.0%

(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety,
(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety,
(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety,

boiler and machinery and other lines.
boiler and machinery and other lines.
boiler and machinery and other lines.

Insurance-International
Insurance-International
Insurance-International

Through our Insurance-International operating units, we write business in more than 60 countries worldwide, with
Through our Insurance-International operating units, we write business in more than 60 countries worldwide, with
Through our Insurance-International operating units, we write business in more than 60 countries worldwide, with

branches or offices in 19 locations outside the United States, including the United Kingdom, Continental Europe, South
branches or offices in 19 locations outside the United States, including the United Kingdom, Continental Europe, South
branches or offices in 19 locations outside the United States, including the United Kingdom, Continental Europe, South
America, Canada, Scandinavia, Asia, and Australia. In each of our operating territories, we have built decentralized structures
America, Canada, Scandinavia, Asia, and Australia. In each of our operating territories, we have built decentralized structures
America, Canada, Scandinavia, Asia, and Australia. In each of our operating territories, we have built decentralized structures
that allow products and services to be tailored to each regional customer base. Our businesses are managed by teams of
that allow products and services to be tailored to each regional customer base. Our businesses are managed by teams of
that allow products and services to be tailored to each regional customer base. Our businesses are managed by teams of
professionals with expertise in local markets and knowledge of regional environments.
professionals with expertise in local markets and knowledge of regional environments.
professionals with expertise in local markets and knowledge of regional environments.

Operating units comprising the Insurance-International Segment are as follows:
Operating units comprising the Insurance-International Segment are as follows:
Operating units comprising the Insurance-International Segment are as follows:

Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of
Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of
Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of

Berkley Insurance Company. It specializes in commercial casualty and professional liability, and offers a broad portfolio of
Berkley Insurance Company. It specializes in commercial casualty and professional liability, and offers a broad portfolio of
Berkley Insurance Company. It specializes in commercial casualty and professional liability, and offers a broad portfolio of
risk products that include commercial general liability, umbrella, professional liability, directors and officers, commercial
risk products that include commercial general liability, umbrella, professional liability, directors and officers, commercial
risk products that include commercial general liability, umbrella, professional liability, directors and officers, commercial
property and surety, in addition to niche products for specific industries such as technology and life sciences.
property and surety, in addition to niche products for specific industries such as technology and life sciences.
property and surety, in addition to niche products for specific industries such as technology and life sciences.

Berkley Latinoamérica is a leading provider of property, casualty, automobile, surety, group life and health and workers'
Berkley Latinoamérica is a leading provider of property, casualty, automobile, surety, group life and health and workers'
Berkley Latinoamérica is a leading provider of property, casualty, automobile, surety, group life and health and workers'
compensation products and services in its operating territories of Argentina, Brazil, Colombia and Uruguay. Its largest operation,
compensation products and services in its operating territories of Argentina, Brazil, Colombia and Uruguay. Its largest operation,
compensation products and services in its operating territories of Argentina, Brazil, Colombia and Uruguay. Its largest operation,
Berkley International Seguros, offers a wide range of property casualty products in Argentina, where it is a leading provider of
Berkley International Seguros, offers a wide range of property casualty products in Argentina, where it is a leading provider of
Berkley International Seguros, offers a wide range of property casualty products in Argentina, where it is a leading provider of
surety, engineering, cargo and personal accident coverages. Berkley International ART, Berkley Latinoamérica's workers'
surety, engineering, cargo and personal accident coverages. Berkley International ART, Berkley Latinoamérica's workers'
surety, engineering, cargo and personal accident coverages. Berkley International ART, Berkley Latinoamérica's workers'
compensation carrier in Argentina, is focused on small to medium-sized risks in its operating territories. Berkley International
compensation carrier in Argentina, is focused on small to medium-sized risks in its operating territories. Berkley International
compensation carrier in Argentina, is focused on small to medium-sized risks in its operating territories. Berkley International
Seguros do Brasil provides surety products to small and medium-sized risks throughout Brazil. Berkley International Seguros
Seguros do Brasil provides surety products to small and medium-sized risks throughout Brazil. Berkley International Seguros
Seguros do Brasil provides surety products to small and medium-sized risks throughout Brazil. Berkley International Seguros
Uruguay and Berkley International Seguros Colombia are providers of customized property casualty insurance products and
Uruguay and Berkley International Seguros Colombia are providers of customized property casualty insurance products and
Uruguay and Berkley International Seguros Colombia are providers of customized property casualty insurance products and
services to small and medium-sized businesses in Uruguay and Colombia, respectively.
services to small and medium-sized businesses in Uruguay and Colombia, respectively.
services to small and medium-sized businesses in Uruguay and Colombia, respectively.

Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that
Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that
Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that

writes a broad range of mainly short-tail classes of business.
writes a broad range of mainly short-tail classes of business.
writes a broad range of mainly short-tail classes of business.

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

W. R. Berkley Insurance Asia is expected to commence operations in 2016 and intends to underwrite general insurance
W. R. Berkley Insurance Asia is expected to commence operations in 2016 and intends to underwrite general insurance
W. R. Berkley Insurance Asia is expected to commence operations in 2016 and intends to underwrite general insurance

business in Asia, including professional liability, specialty casualty, accident and marine business for companies of all sizes.
business in Asia, including professional liability, specialty casualty, accident and marine business for companies of all sizes.
business in Asia, including professional liability, specialty casualty, accident and marine business for companies of all sizes.

W. R. Berkley Insurance Australia underwrites general insurance business in Australia, including
W. R. Berkley Insurance Australia underwrites general insurance business in Australia, including
W. R. Berkley Insurance Australia underwrites general insurance business in Australia, including

professional indemnity insurance for companies of all sizes.
professional indemnity insurance for companies of all sizes.
professional indemnity insurance for companies of all sizes.

W / R / B Underwriting provides a broad range of leading insurance products to the European marketplace, with a
W / R / B Underwriting provides a broad range of leading insurance products to the European marketplace, with a
W / R / B Underwriting provides a broad range of leading insurance products to the European marketplace, with a

concentration in specialist classes of business including property, marine, professional indemnity, crisis management, aviation,
concentration in specialist classes of business including property, marine, professional indemnity, crisis management, aviation,
concentration in specialist classes of business including property, marine, professional indemnity, crisis management, aviation,
personal accident and asset protection. The unit was established in 2015 by combining W. R. Berkley Syndicate 1967 with the
personal accident and asset protection. The unit was established in 2015 by combining W. R. Berkley Syndicate 1967 with the
personal accident and asset protection. The unit was established in 2015 by combining W. R. Berkley Syndicate 1967 with the
U.K. and Irish branches of W. R. Berkley Insurance (Europe) Limited under a single brand.
U.K. and Irish branches of W. R. Berkley Insurance (Europe) Limited under a single brand.
U.K. and Irish branches of W. R. Berkley Insurance (Europe) Limited under a single brand.

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The following table sets forth the percentages of gross premiums written by our Insurance-International operating

units:

Berkley Canada
Berkley Latinoamérica
W. R. Berkley Europe
W. R. Berkley Insurance Australia

W / R / B Underwriting
Lloyd's Syndicate 2791 Participation

Total

2015

4.5%
33.6
13.5
5.7
38.9

3.8

Year Ended December 31,
2013
2014
2012
4.4%
3.4%

4.6%

29.5
15.4
8.3

39.4
4.0

32.6
15.9
8.6

38.5
—

34.8
15.5
5.3

39.7
0.1

2011

4.9%

38.3
13.1
4.1

39.6
—

100.0% 100.0%

100.0%

The following table sets forth percentages of gross premiums written, by line, by our Insurance-International

operations:

Short-tail lines (1)
Commercial auto

Professional liability
Other liability

Workers' compensation

Total

2015

Year Ended December 31,
2012

2013

2014

50.1%
15.0
9.5

15.2
10.2

55.1%
13.1
12.8

11.7
7.3

51.8%
15.5
12.9

10.4
9.4

49.4%
18.0
15.1

7.2
10.3

2011

41.4%
19.8
17.6

10.3
10.9

100.0% 100.0%

100.0%

(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety,

boiler and machinery and other lines.

Reinsurance-Global

We provide other insurance companies and self-insureds with assistance in managing their net risk through reinsurance

on either a portfolio basis, through treaty reinsurance, or on an individual basis, through facultative reinsurance.

Operating units comprising the Reinsurance-Global Segment are as follows:

Berkley Re America provides treaty and facultative reinsurance solutions on a variety of product lines through

reinsurance brokers to companies whose primary operations are within the United States and Canada.

Berkley Re Asia Pacific provides property and casualty reinsurance to the Asia Pacific marketplace. With offices in

Brisbane, Sydney, Hong Kong and Singapore, each branch focuses on excess of loss reinsurance, targeting both property
and casualty treaty and facultative contracts, through multiple distribution channels.

Berkley Re Direct is a direct casualty facultative reinsurance underwriter serving clients through a nationwide network

of regional offices. Its facultative reinsurance products include automatic, semi-automatic and individual risk assumed
reinsurance. Berkley Re Direct also provides its customers value-added services across its lines, including underwriting, claims
and actuarial consultation.

Berkley Re UK writes international property casualty treaty accounts. Its territorial scope includes reinsured clients

domiciled in the United Kingdom, Europe, Africa, the Middle East and the Caribbean.

8
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The following table sets forth the percentages of gross premiums written by each Reinsurance-Global operating unit:

Berkley Re America
Berkley Re Asia Pacific
Berkley Re Direct
Berkley Re UK
Other
Total

2015

64.2%
16.4
8.6
10.8
—

100.0%

Year Ended December 31,

2014
60.4%
21.2
7.2
11.2
—
100.0%

2013
52.2%
24.9
6.5
9.1
7.3
100.0%

2012
54.3%
22.1
6.2
6.9
10.5
100.0%

2011
57.8%
24.4
7.2
0.2
10.4
100.0%

The following table sets forth the percentages of gross premiums written, by property versus casualty business, by our

Reinsurance-Global operations:

Casualty
Property

Total

Results by Industry Segment

Year Ended December 31,

2015

2014

2013

2012

2011

66.7%
33.3

66.9%
33.1

65.6%
34.4

66.9%
33.1

70.7%
29.3

100.0%

Summary financial information about our segments is presented on a GAAP basis in the following table:

(In thousands)

Year Ended December 31,

2015

2014

2013

2012

2011

Insurance-Domestic
Revenue

Income before income taxes
Insurance-International

Revenue
Income before income taxes

Reinsurance-Global

Revenue

Income before income taxes
Other (1)

Revenue

Income (loss) before income taxes

Total
Revenue

Income before income taxes

$ 5,114,781 $ 4,807,418 $ 4,294,213 $ 3,944,942 $ 3,586,181

724,667

796,309

648,740

578,500

467,126

823,663
51,926

857,782
29,779

770,190
56,922

677,637
51,639

545,467
36,912

683,335

94,852

758,931

115,677

810,060

110,425

731,585

103,690

628,872

85,271

584,678
(139,415)

704,797
10,431

534,071
(117,199)

469,390
(31,901)

395,464
(76,223)

7,206,457

5,155,984
$ 732,030 $ 952,196 $ 698,888 $ 701,928 $ 513,086

6,408,534

7,128,928

5,823,554

(1) Represents corporate revenues, corporate expenses, net investment gains and losses, and revenues and expenses from
investments in wholly-owned, non-insurance subsidiaries that are consolidated for financial reporting purposes

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The table below represents summary underwriting ratios on a GAAP basis for our segments. Loss ratio is losses and loss
expenses incurred expressed as a percentage of net premiums earned. Expense ratio is underwriting expenses expressed as a
percentage of net premiums earned. Underwriting expenses do not include expenses related to insurance services or unallocated
corporate expenses. Combined ratio is the sum of the loss ratio and the expense ratio. The combined ratio represents a measure
of underwriting profitability, excluding investment income. A number in excess of 100 indicates an underwriting loss; a
number below 100 indicates an underwriting profit:

Insurance Domestic
Loss ratio
Expense ratio

Combined ratio

Insurance-International
Loss ratio

Expense ratio

Combined ratio

Reinsurance-Global
Loss ratio
Expense ratio

Combined ratio

Total
Loss ratio
Expense ratio

Combined ratio

Year Ended December 31,

2015

2014

2013

2012

2011

61.2%

31.2

60.2%
31.6

61.3%
32.7

63.5%
32.5

64.9%
32.6

92.4%

91.8%

94.0%

96.0%

97.5%

58.2%

41.4

62.8%

59.4%

59.7%

57.4%

40.0

39.0

40.2

42.7

99.6%

102.8%

98.4%

99.9% 100.1%

58.4%

38.2

96.6%

60.5%

33.2

62.0%
34.0

96.0%

62.2%
34.8

64.3%
36.3

64.3%
38.0

97.0%

100.6% 102.3%

60.8%
33.0

61.2%
33.9

63.1%
34.1

63.9%
34.6

93.7%

93.8%

95.1%

97.2%

98.5%

Investments

Investment results, before income taxes, were as follows:

(In thousands)
Average investments, at cost(1)

2015

2014

2013

2012

2011

$ 15,970,931 $ 15,560,335

$ 14,848,386 $ 14,545,371 $ 13,631,552

Year Ended December 31,

Net investment income(1)
Percent earned on average investments(1)
Net investment gains (2)
Change in unrealized investment gains (losses) (3)

$
$

512,645 $ 600,885
3.9%
254,852
72,889

3.2%
92,324 $
(192,186) $

544,291
3.7%
121,544 $
$

$
$ (399,122)

586,763 $ 526,351

4.0%

3.9%

10,465 $ 125,481
135,282 $ 147,998

__________________________
(1) Includes investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations,

trading account securities sold but not yet purchased and unsettled purchases.
(2) Represents realized gains on investments not classified as trading account securities.
(3) Represents the change in unrealized investment gains (losses) for available for sale securities.

For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend returns

for the S&P 500® Index:

Barclays U.S. Aggregate Bond Index
S&P 500® Index

10
10

Year Ended December 31,

2015
3.0%
2.1

2014
3.2%
2.1

2013
3.1%
2.4

2012
3.5%
2.5

2011
4.0%
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The percentages of the fixed maturity portfolio categorized by contractual maturity, based on fair value, on the
dates indicated, are set forth below. Actual maturities may differ from contractual maturities because certain issuers may
have the right to call or prepay certain obligations.

1 year or less
Over 1 year through 5 years
Over 5 years through 10 years
Over 10 years
Mortgage-backed securities

2015

5.8%
33.6
30.5
20.3
9.8

32.4
29.8
20.4
10.4

Year Ended December 31,
2014
7.0%

2013
8.0%

2012
5.8%

30.5
27.5
22.3
11.7
100.0%

30.7
23.4
25.5
14.6

2011
6.6%

28.3
25.3
25.5
14.3

Total

100.0% 100.0%

At December 31, 2015, the fixed maturity portfolio had an effective duration of 3.3 years including cash and cash

equivalents.

Loss and Loss Expense Reserves

To recognize liabilities for unpaid losses, either known or unknown, insurers establish reserves, which is a balance
sheet account representing estimates of future amounts needed to pay claims and related expenses with respect to insured
events which have occurred. Estimates and assumptions relating to reserves for losses and loss expenses are based on
complex and subjective judgments, often including the interplay of specific uncertainties with related accounting and
actuarial measurements. Such estimates are also susceptible to change as significant periods of time may elapse between the
occurrence of an insured loss, the report of the loss to the insurer, the ultimate determination of the cost of the loss and the
insurer’s payment of that loss.

In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate

payment based upon known information about the claim at that time. The estimate represents an informed judgment based on
general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature and value of
the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but not reported
(“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims, including legal and
other fees and general expenses of administrating the claims adjustment process. Reserves are established based upon the then
current legal interpretation of coverage provided.

In examining reserve adequacy, several factors are considered in estimating the ultimate economic value of losses.
These factors include, among others, historical data, legal developments, changes in social attitudes and economic conditions,
including the effects of inflation. The actuarial process relies on the basic assumption that past experience, adjusted
judgmentally for the effects of current developments and anticipated trends, is an appropriate basis for predicting future
outcomes. Reserve amounts are necessarily based on management’s informed estimates and judgments using currently
available data. As additional experience and other data become available and are reviewed, these estimates and judgments
may be revised. This may result in reserve increases or decreases that would be reflected in our results in periods in which
such estimates and assumptions are changed.

The risk and complexity of estimating loss reserves are greater when economic conditions are uncertain. It is especially

difficult to estimate the impact of inflation on loss reserves given the current economic environment and related government
actions. Whereas a slowing economy would generally lead to lower inflation or even deflation, increased government spending
would generally lead to higher inflation. A change in our assumptions regarding inflation would result in reserve increases or
decreases that would be reflected in our earnings in periods in which such assumptions are changed.

Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what management

expects the ultimate settlement and claim administration will cost. While the methods for establishing the reserves are well
tested over time, some of the major assumptions about anticipated loss emergence patterns are subject to unanticipated
fluctuation. These estimates, which generally involve actuarial projections, are based on management’s assessment of facts and
circumstances then known, as well as estimates of trends in claims severity and frequency, judicial theories of liability and
other factors, including the actions of third parties, which are beyond the Company’s control. These variables are affected by
external and internal events, such as inflation and economic volatility, judicial and litigation trends, reinsurance coverage,
legislative changes and claim handling and reserving practices, which make it more difficult to accurately predict claim costs.
The inherent uncertainties of estimating reserves are greater for certain types of liabilities where long periods of time elapse

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before a definitive determination of liability is made. Although the loss reserves included in the Company’s financial
statements represent management’s best estimates, setting reserves is inherently uncertain and the Company cannot provide
assurance that its current reserves will prove adequate in light of subsequent events.

The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation

reserves that were discounted was $2,308 million and $2,187 million at December 31, 2015 and 2014, respectively. The
aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $699 million and $746 million at
December 31, 2015 and 2014, respectively. At December 31, 2015, discount rates by year ranged from 2.0% to 6.5%, with a
weighted average discount rate of 3.9%.

Substantially all of discounted workers’ compensation reserves (98% of total discounted reserves at December 31, 2015)

are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment
securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted
average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or
decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are
recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss
payout experience.

The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing

approximately 2% of total discounted reserves at December 31, 2015), including reserves for quota share reinsurance and
reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates permitted by the
Department of Insurance of the State of Delaware.

To date, known environmental and asbestos claims have not had a material impact on the Company’s operations,
because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or
asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.

The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims was $33 million at
December 31, 2015 and $36 million at December 31, 2014. The Company’s gross reserves for losses and loss expenses relating
to asbestos and environmental claims were $51 million and $56 million at December 31, 2015 and 2014, respectively. Net
incurred losses and loss expenses for reported asbestos and environmental claims decreased approximately $2 million in 2015
and increased by approximately $4 million and $5 million in 2014 and 2013, respectively. Net paid losses and loss expenses for
asbestos and environmental claims were approximately $2 million in 2015, $3 million in 2014 and $3 million in 2013. The
estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to
make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these
exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of
litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to
financially responsible parties are highly uncertain.

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The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the

indicated years:

(In thousands)
Net reserves at beginning of year
Net provision for losses and loss expenses:

Claims occurring during the current year (1)
Decrease in estimates for claims occurring in prior years (2)(3)

Loss reserve discount amortization (4)

Total

Net payments for claims:

Current year

Prior years

Total

Foreign currency translation

Net reserves at end of year
Ceded reserves at end of year

Gross reserves at end of year

2015
8,970,641 $ 8,683,797 $ 8,411,851

2014

2013

3,653,561
(46,713)

3,495,825
(75,764)

3,221,393
(78,810)

49,422

70,506

54,441

3,656,270

3,490,567

3,197,024

914,637

898,944

822,787

2,342,378

2,216,283

2,055,284

3,257,015
(125,024)

9,244,872
1,424,278

3,115,227
(88,496)

8,970,641
1,399,060

2,878,071
(47,007)

8,683,797
1,397,144

$ 10,669,150 $10,369,701 $10,080,941

Net change in premiums and losses occurring in prior years:

Decrease in estimates for claims occurring in prior years (2)

Retrospective premium adjustments for claims occurring in prior years (3)

Net favorable premium and reserve development on prior years

46,713 $
16,730

75,764 $
9,088

78,810
19,046

63,443 $

84,852 $

97,856

(1) Claims occurring during the current year are net of discounts of $20,357,000, $21,306,000 and $22,680,000 in 2015,

2014 and 2013, respectively.

(2) The decrease in estimates for claims occurring in prior years is net of discounts. On an undiscounted basis, the estimates

for claims occurring in prior years decreased by $64,971,000 in 2015, $116,866,000 in 2014 and $77,430,000 in 2013.
(3) For certain retrospectively rated insurance policies and reinsurance agreements, changes in loss and loss expenses for

prior years are offset by additional or return premiums.

(4) In 2014, the Company entered into a commutation agreement that resulted in a reduction in prior year workers'

compensation reserves of $30 million on an undiscounted basis and $12 million on a discounted basis.

Also, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further

information regarding the decrease in estimates for claims occurring in prior years.

A reconciliation between the reserves as of December 31, 2015 as reported in the accompanying consolidated GAAP

financial statements and those reported on the basis of statutory accounting principles (“SAP”) in the Company’s
U.S. regulatory filings is as follows:

(In thousands)
Net reserves reported in U.S. regulatory filings on a SAP basis

Reserves for non-U.S. companies
Loss reserve discounting(1)

Ceded reserves

$ 8,760,986

649,117
(165,231)

1,424,278

Gross reserves reported in the consolidated GAAP financial statements

$ 10,669,150

(1) For statutory purposes, the Company discounts its workers’ compensation reinsurance reserves at 2.7% as permitted by the
Department of Insurance of the State of Delaware. In its GAAP financial statements, the Company discounts excess workers’
compensation reserves at the risk-free rate and assumed workers’ compensation reserves at the statutory rate.

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The following table presents the development of net reserves for 2005 through 2015. The top line of the table shows the
estimated reserves for unpaid losses and loss expenses recorded at the balance sheet date for each of the indicated years. This
represents the estimated amount of losses and loss expenses for claims arising in all prior years that are unpaid at the balance
sheet date, including losses that had been incurred but not reported to us. The upper portion of the table shows the re-estimated
amount of the previously recorded reserves based on experience as of the end of each succeeding year. The estimate changes as
more information becomes known about the frequency and severity of claims for individual years.

The “cumulative redundancy” represents the aggregate change in the estimates over all prior years. The impact on the

results of operations of the past three years of changes in reserve estimates is shown in the reconciliation tables above. It should
be noted that the table presents a “run off” of balance sheet reserves, rather than accident or policy year loss development.
Therefore, each amount in the table includes the effects of changes in reserves for all prior years. For example, assume a claim
that occurred in 2005 is reserved for $2,000 million as of December 31, 2005. Assuming this claim estimate was changed in
2015 to $2,300 million, and was settled for $2,300 million in 2015, the $300 million deficiency would appear as a deficiency in
each year from 2005 through 2015.

(In millions)

Year Ended December 31,

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Net reserves, discounted
Reserve discount
Net Reserves, undiscounted
Net Reserves re-estimated as of:
One year later

Two years later

Three years later

Four years later

Five years later

Six years later

Seven years later

Eight years later

Nine years later
Ten years later

Cumulative redundancy (deficiency),
undiscounted

Cumulative amount of net liability
paid through:

One year later

Two years later

Three years later

Four years later

Five years later

Six years later

Seven years later

Eight years later

Nine years later

Ten years later

$ 5,867
575

$ 6,948

$ 7,823

$ 8,123

$ 8,148

$ 8,000

$ 8,172

$ 8,412

$ 8,684

$ 8,971 $ 9,245

700

788

846

877

898

892

867

837

746

699

$ 6,442

$ 7,648

$ 8,611

$ 8,969

$ 9,025

$ 8,898 $ 9,064

$ 9,279 $ 9,521 $ 9,717 $ 9,944

9,652

$ 9,202
9,140
9,085

9,404
9,345

$ 7,560
7,494

$ 8,431
8,239

$ 8,737
8,560

$ 8,778
8,596

$ 8,715
8,624

$ 8,963
8,866

8,772

8,722

8,504

8,400

8,356

8,543

8,460

8,388

8,355

8,420

8,433

8,373

8,343

8,326

8,192

8,137

8,195

8,144

8,135

8,120

7,363

7,370

7,376

7,437

7,421

7,428
7,418

$ 6,499

6,578

6,592

6,556

6,636

6,677

6,755

6,762

6,780

6,763

$ (321) $

230 $

491 $

643 $

670 $

542 $

342 $

194 $

176 $

65 $ —

$ 1,341 $ 1,437

$ 1,663

$ 1,751

$ 1,812

$ 1,722

$ 2,010

$ 2,055

$ 2,216

$ 2,342

3,778

3,598
4,702

2,363

2,636

2,935

3,106

3,052

3,118

3,409

4,495
5,298

3,219

3,558

3,956

4,039

4,066

4,105

4,896
5,478

3,856

4,279

4,616

4,786

4,802

5,413
5,874

4,327

4,733

5,152

5,337

5,815
6,183

4,649

5,116

5,565

5,943
6,241

4,937

5,424

5,719
5,962

5,163

5,392
5,576

For certain retrospectively rated insurance policies and reinsurance agreements, changes in loss and loss expenses

for prior years are offset by additional or return premiums. Such premiums are not reflected in the above table.

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The following table presents the development of gross reserves for 2005 through 2015.

(In millions)

Year Ended December 31,
Net reserves, discounted
Ceded reserves
Gross reserves, undiscounted
Reserve discount

Gross reserves, undiscounted

Gross reserves re-estimated as of:

One year later

Two years later

Three years later

Four years later

Five years later

Six years later

Seven years later

Eight years later

Nine years later

Ten Years later

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

$ 5,867 $ 6,947
837

845

$ 7,823
855

$ 8,123
877

$ 8,148
924

$ 8,000
1,017

$ 8,172
1,165

$ 8,412 $
1,339

8,684
1,397

$ 8,971
1,399

$ 9,245
1,424

6,712

7,784

8,678

9,000

9,072

9,017

9,337

9,751

10,081

10,370

10,669

654

761

867

944

968

953

924

888

811

759

$ 7,366 $ 8,545

$ 9,545

$ 9,944 $10,016

$ 9,985 $10,290 $10,675

$ 10,969 $11,181 $11,428

$ 10,823 $11,081
10,732

$ 7,406 $ 8,509

$ 9,396

$ 9,696

$ 9,810

$ 9,879 $10,179 $10,673

10,573
10,479

9,749

10,141

10,029
9,947

9,681

9,540
9,477

9,662

9,580

9,539

9,433
9,384

9,566

9,445

9,427

9,386

9,310
9,267

9,178

9,163

9,081

9,109

9,082

9,029
8,988

7,529

8,454

7,561

8,300

8,335

8,316

8,360

8,358

8,315
8,275

7,508

7,617

7,635

7,699

7,716

7,694
7,652

Gross cumulative redundancy
(deficiency)

(286) $

270 $

557 $

677 $

632 $

508 $

343 $

196 $

237

100

—

For certain retrospectively rated insurance policies and reinsurance agreements, changes in loss and loss expenses for

prior years are offset by additional or return premiums. Such premiums are not reflected in the above table.

Reinsurance

We follow a common industry practice of reinsuring a portion of our exposures and paying to reinsurers a portion of the

premiums received on the policies that we write. Reinsurance is purchased principally to reduce net liability on individual risks
and to protect against catastrophic losses. Although reinsurance does not legally discharge an insurer from its primary liability
for the full amount of the policies, it does make the assuming reinsurer contractually liable to the insurer to the extent of the
reinsurance coverage. We monitor the financial condition of our reinsurers and attempt to place our coverages only with
substantial, financially sound carriers. As a result, generally the reinsurers who reinsure our casualty insurance must have an
A.M. Best rating of “A (Excellent)” or better with at least $1 billion in policyholder surplus and the reinsurers who cover our
property insurance must have an A.M. Best rating of “A- (Excellent)” or better with at least $1 billion in policyholder surplus.

Regulation

U.S. Regulation

Our U.S. insurance subsidiaries are subject to varying degrees of regulation and supervision in the jurisdictions in which

they do business.

Overview. Our domestic insurance subsidiaries are subject to statutes which delegate regulatory, supervisory and
administrative powers to state insurance commissioners. This regulation relates to such matters as the standards of solvency
which must be met and maintained; the licensing of insurers and their agents; the nature of and limitations on investments;
deposits of securities for the benefit of policyholders; approval of certain policy forms and premium rates; periodic examination
of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of insurers or for
other purposes; establishment and maintenance of reserves for unearned premiums, loss expenses and losses; and requirements
regarding numerous other matters. Our property casualty subsidiaries, other than excess and surplus and reinsurance
subsidiaries, must generally file all rates with the insurance department of each state in which they operate. Our excess and
surplus and reinsurance subsidiaries generally operate free of rate and form regulation.

Holding Company Statutes. In addition to regulatory supervision of our insurance subsidiaries, we are subject to state

statutes governing insurance holding company systems. Under the terms of applicable state statutes, any person or entity
desiring to purchase more than a specified percentage (commonly 10%) of our outstanding voting securities would be required
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to obtain prior regulatory approval of the purchase. Typically, such statutes require that we periodically file information with
the appropriate state insurance commissioner, including information concerning our capital structure, ownership, financial
condition and general business operations.

In addition, effective 2015, we must annually submit to our lead state regulator an “enterprise risk management report”

which identifies the activities and circumstances of any affiliated company that might have a material adverse effect on the
financial condition of our group or our U.S. licensed insurers.

States have also adopted changes to the holding company act that authorize U.S. insurance regulators to lead or participate in

the group-wide supervision of certain international insurance groups. National standard setters, such as the International
Association of Insurance Supervisors, are developing capital standards for international groups, and U.S. insurance regulators are
currently working on U.S. group capital standards for insurance groups. It is unclear how the development of group capital
measures will interact with existing capital requirements for insurance companies in the United States and with international
capital standards. It is possible that we may be required to hold additional capital as a result of these developments.

The National Association of Insurance Commissioners (“NAIC”) adopted the Risk Management and Own Risk Solvency
Assessment Model Act (the “ORSA Model Act”). Most states have adopted the ORSA Model Act, which requires an insurance
holding company system’s chief risk officer to submit annually to its lead state insurance regulator an Own Risk and Solvency
Assessment Summary Report (“ORSA”). The ORSA is a confidential internal assessment of the material and relevant risks
associated with an insurer’s current business plan and the sufficiency of capital resources to support those risks. Under ORSA,
we are required to:

•

regularly, no less than annually, conduct an ORSA to assess the adequacy of our risk management framework, and
current and estimated projected future solvency position;

internally document the process and results of the assessment; and

provide a confidential high-level ORSA Summary Report annually to the lead state commissioner if the insurer is a
member of an insurance group and, upon request, by the domiciliary state regulator.

We cannot predict the impact, if any, that these holding company statutes and compliance with the ORSA Model Act will

have on our business, financial condition or results of operations.

Risk Based Capital Requirements. The NAIC utilizes a Risk Based Capital (“RBC”) formula that is designed to

measure the adequacy of an insurer's statutory surplus in relation to the risks inherent in its business. The RBC formula
develops a risk adjusted target level of adjusted statutory capital by applying certain factors to various asset, premium and
reserve items. The NAIC RBC Model Law provides for four incremental levels of regulatory attention for insurers whose
surplus is below the calculated RBC target. These levels of attention range in severity from requiring the insurer to submit a
plan for corrective action to actually placing the insurer under regulatory control. The RBC of each of our domestic insurance
subsidiaries was above any RBC action level as of December 31, 2015.

Insurance Regulatory Information System. The NAIC also has developed a set of 13 financial ratios referred to as the
Insurance Regulatory Information System (“IRIS”). On the basis of statutory financial statements filed with state insurance
regulators, the NAIC annually calculates these IRIS ratios to assist state insurance regulators in monitoring the financial
condition of insurance companies. The NAIC has established an acceptable range for each of the IRIS financial ratios.

Guaranty Funds. Our U.S. insurance subsidiaries are also subject to assessment by state guaranty funds when an insurer

in a particular jurisdiction has been judicially declared insolvent and the liquidated company's available funds are insufficient to
pay policyholders and claimants the amounts to which they are entitled. The protection afforded under a state's guaranty fund to
policyholders of the insolvent insurer varies from state to state. Generally, all licensed property casualty insurers are considered
to be members of the fund, and assessments are based upon their pro rata share of direct written premiums in that state. The
NAIC Model Post-Assessment Guaranty Fund Act, which many states have adopted, limits assessments to an insurer to 2% of
its subject premium and permits recoupment of assessments through rate setting. Likewise, several states (or underwriting
organizations of which our insurance subsidiaries are required to be members) have limited assessment authority with regard to
deficits in certain lines of business.

Additionally, state insurance laws and regulations require us to participate in mandatory property-liability “shared
market,” “pooling” or similar arrangements that provide certain types of insurance coverage to individuals or others who
otherwise are unable to purchase coverage voluntarily provided by private insurers. Shared market mechanisms include
assigned risk plans and fair access to insurance requirement or “FAIR” plans. In addition, some states require insurers to
participate in reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market
or pooling mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific
arrangement in the applicable state.

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Dividends. We receive funds from our insurance company subsidiaries in the form of dividends and management fees
for certain management services. Annual dividends in excess of maximum amounts prescribed by state statutes may not be
paid without the approval of the insurance commissioner of the state in which an insurance subsidiary is domiciled. See
“Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.”

Trade Practices. State insurance laws and regulations include numerous provisions governing trade practices and the

marketplace activities of insurers, including provisions governing marketing and sales practices, policyholder services, claims
management and complaint handling. State regulatory authorities generally enforce these provisions through periodic market
conduct examinations.

Investment Regulation. Investments by our domestic insurance companies must comply with applicable laws and
regulations which prescribe the kind, quality and concentration of investments. In general, these laws and regulations permit
investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage
loans, real estate and certain other investments, subject to specified limits and certain other qualifications. Investments that do
not comply with these limits and qualifications are deducted in our insurance subsidiaries' calculation of their statutory capital
and surplus.

Terrorism Risk Insurance. The Terrorism Risk Insurance Act of 2002 established a Federal program that provides for a

system of shared public and private compensation for insured losses resulting from acts of terrorism. Pursuant to the Terrorism
Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”), the program has been extended for a six year period ending
on December 31, 2020. TRIPRA provides a federal backstop to all U.S. based property and casualty insurers for insurance
related losses resulting from any act of terrorism on U.S. soil or against certain U.S. air carriers, vessels or foreign missions.
TRIPRA is applicable to almost all commercial lines of property and casualty insurance but excludes commercial auto,
burglary and theft, surety, professional liability and farm owners' multi-peril insurance. Insurers with direct commercial
property and casualty insurance exposure in the United States are required to participate in the program and make available
coverage for certified acts of terrorism. TRIPRA's definition of certified acts includes domestic terrorism. Federal participation
will be triggered under TRIPRA when the Secretary of Treasury certifies an act of terrorism. Under the program, the federal
government will currently pay 84% of an insurer's covered losses in excess of the insurer's applicable deductible. This amount
will decrease to 80% on a pro-rata basis over five years, beginning in 2016. The insurer's deductible is based on 20% percent of
earned premium for the prior year for covered lines of commercial property and casualty insurance. Based on our 2015 earned
premiums, our aggregate deductible under TRIPRA during 2016 will be approximately $850 million. The federal program will
not pay losses for certified acts unless such losses exceed $100 million industry-wide. This threshold will increase to $200
million on a pro-rata basis over five years beginning in 2016. TRIPRA limits the federal government's share of losses at $100
billion for a program year. In addition, an insurer that has satisfied its deductible is not liable for the payment of losses in
excess of the $100 billion cap.

Excess and Surplus Lines. The regulation of our U.S. subsidiaries' excess and surplus lines insurance business differs

significantly from the regulation of our admitted business. Our surplus lines subsidiaries are subject to the surplus lines
regulation and reporting requirements of the jurisdictions in which they are eligible to write surplus lines insurance. Although
the surplus lines business is generally less regulated than admitted business, principally with respect to rates and policy forms,
strict regulations apply to surplus lines placements in the laws of every state and the regulation of surplus lines insurance may
undergo changes in the future. Federal or state measures may be introduced to increase the oversight of surplus lines insurance
in the future.

Federal Regulation. Although the federal government and its regulatory agencies generally do not directly regulate the

business of insurance, federal initiatives could have an impact on our business in a variety of ways. In July 2010, President
Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which
effected sweeping changes to financial services regulation in the United States. The Dodd-Frank Act created two new federal
government bodies, the Federal Insurance Office (the “FIO”) and the Financial Stability Oversight Council (the “FSOC”),
which may impact the regulation of insurance. Although the FIO has preemption authority over state insurance laws that
conflict with certain international agreements, it does not have general supervisory or regulatory authority over the business of
insurance. The FIO has authority to represent the United States in international insurance matters and is authorized to monitor
the U.S. insurance industry and identify potential regulatory gaps that could contribute to systemic risk.

The FIO has a particular role in connection with international insurance matters. The FIO represents the U.S. at the

International Association of Insurance Supervisors (“IAIS”); in 2012, the FIO participated in IAIS’s Financial Stability
Committee and joined IAIS’s Executive Committee. The Dodd-Frank Act authorizes the Secretary of the Treasury and U.S.
Trade Representative to enter into international agreements of mutual recognition regarding the prudential regulation of
insurance or reinsurance (a “Covered Agreement”). On November 20, 2015, the FIO and the U.S. Trade Representative
advised Congress that they intend to initiate negotiations to enter into a Covered Agreement with the European Union. We are
monitoring public reports on these negotiations which may affect our U.S. and EU domiciled insurance and reinsurance

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business. Significantly, the FIO is authorized to preempt state measures that (i) are inconsistent with a Covered Agreement and
(ii) disfavor non-U.S. insurers subject to a Covered Agreement.

The FIO is required to report to Congress annually on the insurance industry and any preemption actions regarding any

Covered Agreement.

On December 12, 2013, the FIO delivered a report to Congress on how to modernize and improve the system of

insurance regulation in the U.S. The report recommended that, in the short term, the U.S. system of insurance regulation can be
modernized through state-based improvements combined with certain federal actions. The report identified areas for direct
federal involvement in international standard setting, the FIO participation in supervisory colleges which monitor the regulation
of large national and internationally active insurance groups and federal pursuit of international covered agreements to afford
nationally uniform treatment of reinsurance collateral requirements. The report also made several recommendations for state
reform of insurance regulation including changes to the state regulation of insurance company solvency, group supervision and
corporate governance. The FIO report stated that the system of U.S. insurance regulation can be modernized and improved in
the short-term, while warning that if the states do not act in the near term to effectively regulate matters on a consistent and
cooperative basis, in the FIO’s view there will be a greater role for federal regulation of insurance.

The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United States
financial stability in the event of the insurer's material financial distress or failure, i.e., a "systemically important financial
institution." An insurer so designated by FSOC will be subject to Federal Reserve supervision and heightened prudential
standards. As of December 31, 2015, three insurance groups had been so designated. Based upon our current business model
and balance sheet, we do not believe that we will be designated by the FSOC as such an institution. Although the potential
impacts of the Dodd-Frank Act on the U. S. insurance industry is not clear, our business could be affected by changes to the
U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as
systemically significant non-bank financial companies.

International Regulation

Our insurance subsidiaries based in the United Kingdom are regulated by the Prudential Regulation Authority ("PRA")
and the Financial Conduct Authority ("FCA"). The PRA's primary objectives with regard to insurers are to promote the safety
and soundness of insurers and to contribute to the securing of an appropriate degree of protection for current and future
policyholders, while the FCA has three operational objectives: (i) to secure an appropriate degree of protection for consumers,
(ii) to protect and enhance the integrity of the United Kingdom financial system, and (iii) to promote effective competition in
the interests of consumers in the financial services markets. The PRA and FCA employ a variety of regulatory tools to achieve
their objectives, including periodic auditing and reporting requirements, risk assessment reviews, minimum solvency margins
and individual capital assessment requirements, dividend restrictions, in certain cases, approval requirements governing the
appointment of key officers, approval requirements governing controlling ownership interests and various other requirements.
Our Lloyd's managing agency is also regulated by the PRA, FCA and Lloyd's, and the Lloyd's syndicate business is subject to
Lloyd's supervision. Through Lloyd's, we are licensed to write business in various countries throughout the world by virtue of
Lloyd's international licenses. In each such country, we are subject to the laws and insurance regulation of that country.
Additionally, PRA and FCA regulations also impact us as “controller” (a PRA/FCA defined term) of our U.K.-regulated
subsidiaries, whereby we are required to notify the PRA/FCA about significant events relating to the U.K.-regulated
subsidiaries' controllers (i.e. persons or entities which have certain levels of direct or indirect voting power or economic
interests in the regulated entities) as well as changes of control, and to submit an annual report regarding their controllers. As
well, the PRA/FCA's Senior Insurance Managers Regime provides a regulatory framework for standards of fitness and
propriety, conduct and accountability to be applied to individuals in positions of responsibility at insurers. In addition, certain
employees are individually registered at Lloyd's.

In the European Union, a new insurance regulatory regime governing, among other things, capital adequacy and risk

management called “Solvency II” became effective on January 1, 2016. Lloyd’s applies a capital adequacy test to all Lloyd’s
syndicates, including our syndicate, that is based on Solvency II principles. Solvency II provides for the supervision of group
solvency. Under Solvency II, it is possible that the U.S. parent of a European Union subsidiary could be subject to certain
Solvency II requirements if the U.S. company is not already subject to regulations deemed “equivalent” to Solvency II.
Currently, the U.S. system of insurance regulation relating to group supervision is not deemed "equivalent" to Solvency II by
European Union authorities. However, we have received a one-year waiver from the PRA, subject to conditions, with respect to
the PRA's supervision of our group, which waives the requirement on us to maintain a group solvency capital requirement as
calculated under Solvency II rules.

Our international underwriting subsidiaries are also subject to varying degrees of regulation in certain countries in

Scandinavia, Continental Europe, South America, Australia, Southeast Asia and Canada. Generally, our subsidiaries must
satisfy local regulatory requirements. While each country imposes licensing, solvency, auditing and financial reporting
requirements, the type and extent of the requirements differ substantially. Key areas where country regulations may differ

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include: (i) the type of financial reports to be filed; (ii) a requirement to use local intermediaries; (iii) the amount of
reinsurance permissible; (iv) the scope of any regulation of policy forms and rates; and (v) the type and frequency of
regulatory examinations.

Competition

The property casualty insurance and reinsurance businesses are highly competitive, with many insurance companies of
various sizes, as well as other entities offering risk alternatives such as self-insured retentions or captive programs, transacting
business in the United States and internationally. We compete directly with a large number of these companies. Competition in
our industry is largely measured by the ability to provide insurance and services at a price and on terms that are reasonable and
acceptable to the customer. Our strategy in this highly fragmented industry is to seek specialized areas or geographic regions
where our insurance subsidiaries can gain a competitive advantage by responding quickly to changing market conditions. Our
subsidiaries establish their own pricing practices based upon a Company-wide philosophy to price products with the intent of
making an underwriting profit. Although insurance prices have generally increased for most lines of business since 2011, the
rate of increase has declined in more recent years. 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.

Competition for Insurance-Domestic business comes from other specialty insurers, regional carriers, large national multi-

line companies and reinsurers. Our specialty operating units compete with excess and surplus insurers as well as standard
carriers. Other regional units compete with mutual and other regional stock companies as well as national carriers. Additionally,
direct writers of property casualty insurance compete with our regional units by writing insurance through their salaried
employees, generally at a lower acquisition cost than through independent agents such as those used by the Company.

Our Insurance-International operations compete with native insurance operations both large and small, which in some

cases are related to government entities, as well as with branches or local subsidiaries of multinational companies.

Competition for the Reinsurance-Global business, which is especially strong, comes from domestic and foreign

reinsurers, which produce their business either on a direct basis or through the broker market. These competitors include Swiss
Re, Munich Re, Berkshire Hathaway, Transatlantic Reinsurance, Partner Re and others.

In recent years, various institutional investors have increasingly sought to participate in the property and casualty

insurance and reinsurance industries. Well-capitalized new entrants to the property and casualty insurance and reinsurance
industries, or existing competitors that receive substantial infusions of capital, provide increasing competition, which may
adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may lower costs for insurers
that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively.

Additionally, competition from insurers and reinsurers based in tax-advantaged jurisdictions continues to increase,

including from domestic based subsidiaries of foreign-based entities in the excess and surplus lines businesses.

Employees

As of January 30, 2016, we employed 7,621 individuals. Of this number, our subsidiaries employed 7,481 persons and

the remaining persons were employed at the parent company.

Other Information about the Company's Business

We maintain an interest in the acquisition and startup of complementary businesses and continue to evaluate possible
acquisitions and new ventures on an ongoing basis. In addition, our insurance subsidiaries develop new coverages or lines of
business to meet the needs of insureds.

Seasonal weather variations and other events affect the severity and frequency of losses sustained by the insurance and

reinsurance subsidiaries. Although the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms,
earthquakes and terrorist acts may be mitigated by reinsurance, they nevertheless can have a significant impact on the results of
any one or more reporting periods.

We have no customer which accounts for 10 percent or more of our consolidated revenues.

Compliance by W. R. Berkley and its subsidiaries with federal, state and local provisions that have been enacted or
adopted regulating the discharge of materials into the environment, or otherwise relating to protection of the environment, has
not had a material effect upon our capital expenditures, earnings or competitive position.

The Company's internet address is www.wrberkley.com. The information on our website is not incorporated by reference

in this annual report on Form 10-K. The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities

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Exchange Act and other reports filed by us or with respect to our securities by others are accessible free of charge through this
website as soon as reasonably practicable after they have been electronically filed with or furnished to the SEC.

ITEM 1A. RISK FACTORS

Our businesses face significant risks. If any of the events or circumstances described as risks below occur, our businesses,
results of operations and/or financial condition could be materially and adversely affected. In addition to those described below,
our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we currently consider
immaterial.

Risks Relating to Our Industry

Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance

industry.

The results of companies in the property casualty insurance industry historically have been subject to significant

fluctuations and uncertainties in demand and pricing, causing cyclical changes in the insurance and reinsurance industry.
The demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often
directly related to available capacity or the perceived profitability of the business. In recent years, we have faced increased
competition in our business, as a result of new entrants and existing insurers seeking to gain market share, resulting in
decreased premium rates and less favorable contract terms and conditions for certain lines of business. The adequacy of
premium rates is affected mainly by the severity and frequency of claims, which are influenced by many factors, including
natural disasters, regulatory measures and court decisions that define and expand the extent of coverage and the effects of
economic inflation on the amount of compensation due for injuries or losses. In addition, investment rates of return have
impacted rate adequacy, with interest rates remaining at historic lows. These factors can have a significant impact on
ultimate profitability because a property casualty insurance policy is priced before its costs are known as premiums usually
are determined long before claims are reported. These factors could produce results that would have a negative impact on
our results of operations and financial condition.

We face significant competitive pressures in our businesses, which have reduced premium rates in certain areas and

could harm our ability to maintain or increase our profitability and premium volume.

We compete with a large number of other companies in our selected lines of business. We compete, and will continue

to compete, with major U.S. and non-U.S. insurers and reinsurers, other regional companies, as well as mutual companies,
specialty insurance companies, underwriting agencies and diversified financial services companies. Competitiveness in our
businesses is based on many factors, including premium charges, ratings assigned by independent rating agencies,
commissions paid to producers, the perceived financial strength of the company, other terms and conditions offered, services
provided (including ease of doing business over the internet), speed of claims payment and reputation and experience in the
lines to be written. In recent years, the insurance industry has undergone increasing consolidation, which may further
increase competition.

Some of our competitors, particularly in the Reinsurance-Global business, have greater financial and/or marketing
resources than we do. These competitors within the reinsurance segment include Swiss Re, Munich Re, Berkshire Hathaway,
Transatlantic Reinsurance, and Partner Re. We expect that perceived financial strength, in particular, will become more
important as customers seek high quality reinsurers. 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.

Over the past several years, we have faced increased competition in our business, as increased supply has led to reduced
prices and, at times, less favorable terms and conditions. Our specialty operating units have also encountered competition from
admitted companies seeking to increase market share. Although insurance prices have generally increased for most lines of
business since 2011, the rate of increase has declined in more recent years. 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 us to achieve our long-term return objectives. We expect to continue to face strong competition in these and our
other lines of business and as a result could experience renewed pressure on pricing and policy terms and conditions.

In recent years, various institutional investors have increasingly sought to participate in the property and casualty

This intense competition could cause the supply and/or demand for insurance or reinsurance to change, which could affect

our ability to price our products at attractive rates and retain existing business or write new products at adequate rates or on

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terms and conditions acceptable to us. If we are unable to retain existing business or write new business at adequate rates or on
terms and conditions acceptable to us, our results of operations could be materially and adversely affected.

Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves.

Our gross reserves for losses and loss expenses were approximately $10.7 billion as of December 31, 2015. Our loss
reserves reflect our best estimates of the cost of settling claims and related expenses with respect to insured events that have
occurred.

Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what management

expects the ultimate settlement and claims administration will cost for claims that have occurred, whether known or unknown.
The major assumptions about anticipated loss emergence patterns are subject to unanticipated fluctuation. These estimates,
which generally involve actuarial projections, are based on management's assessment of facts and circumstances then known, as
well as estimates of future trends in claims severity and frequency, inflation, judicial theories of liability, reinsurance coverage,
legislative changes and other factors, including the actions of third parties, which are beyond our control.

The inherent uncertainties of estimating reserves are greater for certain types of liabilities, where long periods of time

elapse before a definitive determination of liability is made and settlement is reached. In periods with increased economic
volatility, it becomes more difficult to accurately predict claim costs. It is especially difficult to estimate the impact of inflation
on loss reserves given the current economic environment and related government actions. Both inflation overall and medical
cost inflation, which has historically been greater than inflation overall, can have an adverse impact.

Reserve estimates are continually refined in an ongoing process as experience develops and further claims are reported

and settled. Adjustments to reserves are reflected in the results of the periods in which such estimates are changed. Because
setting reserves is inherently uncertain, we cannot assure that our current reserves will prove adequate in light of subsequent
events. Should we need to increase our reserves, our pre-tax income for the reporting period would decrease by a
corresponding amount.

We discount our reserves for excess and assumed workers' compensation business because of the long period of time

over which losses are paid. Discounting is intended to appropriately match losses and loss expenses to income earned on
investment securities supporting liabilities. The expected loss and loss expense payout pattern subject to discounting is derived
from our loss payout experience. Changes in the loss and loss expense payout pattern are recorded in the period they are
determined. If the actual loss payout pattern is shorter than anticipated, the discount will be reduced and pre-tax income will
decrease by a corresponding amount.

The effects of emerging claim and coverage issues on our business are uncertain.

As industry practices and economic, legal, judicial, social and other environmental conditions change, unexpected and

unintended issues related to claim and coverage may emerge. These issues may adversely affect our business by either
extending coverage beyond our underwriting intent or by increasing the number or size of claims. Examples of emerging
claims and coverage issues include, but are not limited to:

•

judicial expansion of policy coverage and the impact of new theories of liability;

plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-
handling and other practices;

• medical developments that link health issues to particular causes, resulting in liability claims;

•

claims relating to unanticipated consequences of current or new technologies, including cyber security related risks; and

claims relating to potentially changing climate conditions.

In some instances, these emerging issues may not become apparent for some time after we have issued the affected
insurance policies. As a result, the full extent of liability under our insurance policies may not be known until many years after
the policies are issued.

In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on

recovery, to extend the statutes of limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on our
business.

The effects of these and other unforeseen emerging claim and coverage issues are difficult to predict and could harm our

business and materially and adversely affect our results of operations.

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As a property casualty insurer, we face losses from natural and man-made catastrophes.

Property casualty insurers are subject to claims arising out of catastrophes that may have a significant effect on their
results of operations, liquidity and financial condition. Catastrophe losses have had a significant impact on our results. For
example, catastrophe losses were $58 million in 2015, $87 million in 2014, $65 million in 2013, $80 million in 2012 and
$153 million in 2011. Similarly, man-made catastrophes can also have a material impact on our financial results.

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 accidents or terrorist activities. The incidence and severity of catastrophes are inherently unpredictable. The
extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event
and the severity of the event. Some catastrophes are restricted to small geographic areas; however, hurricanes, earthquakes,
tsunamis and other disasters may produce significant damage in large, heavily populated areas. Catastrophes can cause losses in
a variety of our property and casualty lines, and most of our past catastrophe-related claims have resulted from severe storms.
Seasonal weather variations or the impact of climate change may affect the severity and frequency of our losses. Insurance
companies are not permitted to reserve for a catastrophe until it has occurred. It is therefore possible that a catastrophic event or
multiple catastrophic events could produce significant losses and have a material adverse effect on our results of operations and
financial condition.

Changing climate conditions may adversely affect our financial condition or profitability.

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 commercial property 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, particularly if such conditions continue.

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.

We, as a primary insurer, may have significant exposure for terrorist acts.

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 84% of our losses for
certain property/casualty lines of insurance. However, any such coverage would be subject to a mandatory deductible based on
20% of earned premium for the prior year for the covered lines of commercial property and casualty insurance. Based on our
2015 earned premiums, our aggregate deductible under TRIPRA during 2016 is approximately $850 million. TRIPRA is
currently in effect through December 31, 2020. In addition, the coverage provided under TRIPRA does not apply to reinsurance
that we write.

We are subject to extensive governmental regulation, which increases our costs and could restrict the conduct of

our business.

We are subject to extensive governmental regulation and supervision in both the United States and foreign
jurisdictions. Most insurance regulations are designed to protect the interests of policyholders rather than stockholders and
other investors. This system of regulation, generally administered in the United States by a department of insurance in each
state in which we do business, relates to, among other things:

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•

standards of solvency, including risk-based capital measurements;

restrictions on the nature, quality and concentration of investments;

requirements pertaining to certain methods of accounting;

evaluating enterprise risk to an insurer;

rate and form regulation pertaining to certain of our insurance businesses;

potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies
provided by impaired, insolvent or failed insurance companies; and

involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.

State insurance departments conduct periodic examinations of the affairs of insurance companies and require the filing of

annual and other reports relating to the financial condition of insurance companies, holding company issues and other matters.
Our Insurance-International business is also generally subject to a similar regulatory scheme in each of the jurisdictions where
we conduct operations.

Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be taken

in response to the current conditions in the financial markets and the recent economic downturn may lead to additional federal
regulation of the insurance industry in the coming years.

In July 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the

“Dodd-Frank Act”), which effected sweeping changes to financial services regulation in the United States. The Dodd-Frank Act
established the Financial Stability Oversight Council (“FSOC”), which is authorized to recommend that certain systemically
significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors of the
Federal Reserve. The Dodd-Frank Act also established a Federal Insurance Office (“FIO”) which is authorized to study,
monitor and report to Congress on the U.S. insurance industry and the significance of global reinsurance to the U.S. insurance
market. The FIO also can recommend to the FSOC that it designate an insurer as an entity posing risks to the United States
financial stability in the event of the insured's material financial distress or failure. The potential impact of the Dodd-Frank Act
on the U.S. insurance business is not clear. Our business could be affected by changes, whether as a result of the Dodd-Frank
Act or otherwise, to the U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with
which we do business as systemically significant non-bank financial companies.

FSOC has designated four non-bank financial companies, including three insurance groups, as systematically significant.

Although state regulation is the primary form of regulation of insurance and reinsurance in the United States, in addition
to the changes brought about by the Dodd-Frank Act, Congress has considered over the past years various proposals relating to
the creation of an optional federal charter, repeal of the insurance company antitrust exemption from the McCarran-Ferguson
Act, and tax law changes. We may be subject to potentially increased federal oversight as a financial institution.

With respect to international measures, Solvency II, the EU directive 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 may require us to utilize a significant amount of resources to ensure
compliance. In addition, despite the one-year waiver of the Solvency II group capital requirements we received, Solvency II
may have the effect of increasing the capital requirements of our EU domiciled insurers. Additionally, our capital requirements
and compliance requirements may be adversely affected if the EU commission finds that the insurance regulatory regimes of
the jurisdictions outside the EU in which we have insurance or reinsurance companies domiciled are not "equivalent" to the
requirements of Solvency II.

We may be unable to maintain all required licenses and approvals and our business may not fully comply with the wide

variety of applicable laws and regulations or the relevant authority's interpretation of the laws and regulations. Also, some
regulatory authorities have relatively broad discretion to grant, renew or revoke licenses and approvals. If we do not have the
requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities
could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us. Also,
changes in the level of regulation of the insurance industry, whether federal, state or foreign, or changes in laws or regulations
themselves or interpretations by regulatory authorities, may further restrict the conduct of our business.

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Risks Relating to Our Business

Our international operations expose us to investment, political and economic risks, including foreign currency and

credit risk.

Our expanding international operations in the United Kingdom, Continental Europe, South America, Canada,
Scandinavia, the Asia-Pacific region, Africa and Australia expose us to increased investment, political and economic risks,
including foreign currency and credit risk. Changes in the value of the U.S. dollar relative to other currencies could have an
adverse effect on our results of operations and financial condition.

Our investments in non-U.S.-denominated securities are subject to fluctuations in non-U.S. securities and currency
markets, and those markets can be volatile. Non-U.S. currency fluctuations also affect the value of any dividends paid by our
non-U.S. subsidiaries to their parent companies in the U.S.

We may be unable to attract and retain key personnel and qualified employees.

We depend on our ability to attract and retain key personnel, including our Executive Chairman, our President and CEO,

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 markets.

We cannot guarantee that our reinsurers will pay in a timely fashion, if at all, and, as a result, we could experience

losses.

We purchase reinsurance by transferring part of the risk that we have assumed, known as ceding, to a reinsurance company

in exchange for part of the premium we receive in connection with the risk. Although reinsurance makes the reinsurer
contractually liable to us to the extent the risk is transferred or ceded to the reinsurer, it does not relieve us, the reinsured, of our
liability to our policyholders. Our reinsurers may not pay the reinsurance recoverables that they owe to us or they may not pay
such recoverables on a timely basis. Accordingly, we bear credit risk with respect to our reinsurers, and if our reinsurers fail to
pay us, our financial results would be adversely affected. Underwriting results and investment returns of some of our reinsurers
may affect their future ability to pay claims. As of December 31, 2015, the amount due from our reinsurers was approximately
$1,533 million, including amounts due from state funds and industry pools where it was intended that we would bear no risk.
Certain of these amounts due from reinsurers are secured by letters of credit or by funds held in trust on our behalf.

We are subject to credit risk relating to our policyholders, independent agents and brokers.

In addition to exposure to credit risk related to our reinsurance recoverables and investment portfolio, we are exposed to
credit risk in several other areas of our business, including credit risk relating to policyholders, independent agents and brokers.
For example our policyholders, independent agents or brokers may not pay a part of or the full amount of premiums owed to us
or our brokers or other third party claim administrators may not deliver amounts owed on claims under our insurance and
reinsurance contracts for which we have provided funds.

As credit risk is generally a function of the economy, we face a greater credit risk in an economic downturn. While we
attempt to manage credit risks through underwriting guidelines, collateral requirements and other oversight mechanisms, our
efforts may not be successful. For example, to reduce such credit risk, we require certain third parties to post collateral for some
or all of their obligations to us. In cases where we receive pledged securities and the applicable counterparty is unable to honor its
obligations, we may be exposed to credit risk on the securities pledged and/or the risk that our access to that collateral may be
stayed as a result of bankruptcy. In cases where we receive letters of credit from banks as collateral and one of our counterparties
is unable to honor its obligations, we are exposed to the credit risk of the banks that issued the letters of credit.

We are rated by A.M. Best, Standard & Poor's, and Moody's, and a decline in these ratings could affect our standing

in the insurance industry and cause our sales and earnings to decrease.

Ratings have become an increasingly important factor in establishing the competitive position of insurance companies.

Certain of our insurance company subsidiaries are rated by A.M. Best, Standard & Poor's and Moody's. Our ratings are subject
to periodic review, and we cannot assure you that we will be able to retain our current or any future ratings.

If our ratings are reduced from their current levels by A.M. Best, Standard & Poor's or Moody's, our competitive

position in the insurance industry could suffer and it would be more difficult for us to market our products. A ratings
downgrade could also adversely limit our access to capital markets, which may increase the cost of debt. A significant
downgrade could result in a substantial loss of business as policyholders move to other companies with higher claims-paying
and financial strength ratings.

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If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or

reduce the level of our underwriting commitments.

As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk

underwritten by our insurance company subsidiaries, especially catastrophe risks and those risks with relatively high policy
limits. We also purchase reinsurance on risks underwritten by others which we reinsure. Market conditions beyond our control
determine the availability and cost of the reinsurance protection we seek to purchase, which may affect the level of our business
and profitability. Our reinsurance contracts are generally subject to annual renewal, and we may be unable to maintain our
current reinsurance contracts or to obtain other reinsurance contracts in adequate amounts and at favorable rates. In addition, we
may be unable to obtain reinsurance on terms acceptable to us relating to certain lines of business that we intend to begin writing.
If we are unable to renew our expiring contracts or to obtain new reinsurance contracts, either our net exposures would
increase or, if we are unwilling to bear an increase in net exposures, we would have to reduce the level of our underwriting
commitments, especially catastrophe exposed risks.

Depending on conditions in the financial markets and the general economy, we may be unable to raise debt or equity

capital if needed.

If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions,
uncertainty or volatility in the capital and credit markets, we may be unable to access debt or equity capital on acceptable terms
if needed, which could have a negative impact on our ability to invest in our insurance company subsidiaries and/or to take
advantage of opportunities to expand our business, such as possible acquisitions and the creation of new ventures, and inhibit
our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.

We may not find suitable acquisition candidates or new insurance ventures and even if we do, we may not successfully

integrate any such acquired companies or successfully invest in such ventures.

As part of our present strategy, we continue to evaluate possible acquisition transactions and the start-up of
complementary businesses on an ongoing basis, and at any given time we may be engaged in discussions with respect to
possible acquisitions and new ventures. We cannot assure you that we will be able to identify suitable acquisition targets or
insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or
start-up ventures will be successful. The process of integrating any companies we do acquire or investing in new ventures may
have a material adverse effect on our results of operations and financial condition.

If we experience difficulties with our information technology, telecommunications or other computer systems, our

ability to conduct our business could be negatively or severely impacted.

Our business is highly dependent upon our employees' ability to perform necessary business functions in an efficient and
uninterrupted fashion. A shut-down of, or inability to access, one or more of our facilities, a power outage or a failure of one or
more of our information technology, telecommunications or other computer systems could significantly impair our employees'
ability to perform such functions on a timely basis. In the event of a disaster such as a natural catastrophe, terrorist attack or
industrial accident, or the infection of our systems by a malicious computer virus, our systems could be inaccessible for an
extended period of time. In addition, because our information technology and telecommunications systems interface with and
depend on third-party systems, we could experience service denials or failures of controls if demand for our service exceeds
capacity or a third-party system fails or experiences an interruption. If our business continuity plans or system security does not
sufficiently address such a business interruption, system failure or service denial, our ability to write and process new and
renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions could
be significantly impaired and our business could be harmed.

Failure to maintain the security of our networks and confidential data may expose us to liability.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our
computer systems and networks. Computer viruses, hackers, employee misconduct and other external hazards could expose our
data systems to security breaches. In addition, we routinely transmit and receive personal, confidential and proprietary
information by email and other electronic means. 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, we may be unable to put in place such secure
capabilities with all of such vendors and third parties and, in addition, these third parties may not have appropriate controls in
place to protect the confidentiality of the sensitive information being transferred. Our failure to protect sensitive personal and
our proprietary information, whether owing to breaches of our own systems or those of our vendors, could result in significant
monetary and reputational damages. These increased risks, and expanding regulatory requirements regarding data security,
could expose us to data loss, monetary and reputational damages and significant increases in compliance costs. As a result, our
ability to conduct our business could be materially and adversely affected.

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We could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and

regulatory standards are not effective.

Our business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting,

claim processing and investment activities, many of which are highly complex. 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. Our continued expansion into new international markets has brought about
additional requirements. A control system, no matter how well designed and operated, can provide only reasonable assurance
that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated
risk exposure (including underwriting, credit and investment risk) or damage to our reputation.

Risks Relating to Our Investments

A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations.

Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2015, our investment in
fixed maturity securities was approximately $12.4 billion, or 77.3% 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 (5.4%); state and municipal securities (36.5%); corporate securities (27.9%); asset-backed
securities (13.7%); mortgage-backed securities (9.8%) and foreign government (6.7%).

The fair value of these assets and the investment income from these assets fluctuate depending on general economic and

market conditions. The fair value of fixed maturity securities generally decreases as interest rates rise. If significant inflation or
an increase in interest rates were to occur, the fair value of our fixed maturity securities would be negatively impacted.
Conversely, if interest rates decline, investment income earned from future investments in fixed maturity securities will be
lower. Some fixed maturity securities, such as mortgage-backed and other asset-backed securities, also carry prepayment risk
as a result of interest rate fluctuations. Additionally, given the 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.

The value of investments in fixed maturity securities is subject to impairment as a result of deterioration in the credit
worthiness of the issuer, default by the issuer (including states and municipalities) in the performance of its obligations in
respect of the securities and/or increases in market interest rates. To a large degree, the credit risk we face is a function of the
economy; accordingly, we face a greater risk in an economic downturn or recession. During periods of market disruption, it
may be difficult to value certain of our securities, particularly if trading becomes less frequent and/or market data becomes less
observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid
due to the current financial environment. In such cases, more securities may require additional subjectivity and management
judgment.

Although the historical rates of default on state and municipal securities have been relatively low, our state and municipal

fixed maturity securities could be subject to a higher risk of default or impairment due to declining municipal tax bases and
revenue. The economic downturn has resulted in many states and municipalities operating 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. Additionally, our investments are subject to
losses as a result of a general decrease in commercial and economic activity for an industry sector in which we invest, as well
as risks inherent in particular securities.

Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms and

by diversifying our portfolio and emphasizing preservation of principal, our efforts may not be successful. Impairments,
defaults and/or rate increases could reduce our net investment income and net realized investment gains or result in investment
losses. Investment returns are currently, and will likely continue to remain, under pressure due to the significant volatility
experienced in the financial markets, 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 operations.

We have invested a portion of our assets in equity securities, merger arbitrage securities, investment funds, private

equity, loans and real estate related assets, which are subject to significant volatility and may decline in value.

We invest a portion of our investment portfolio in equity securities, merger arbitrage securities, investment funds, private

equity, loans and real estate related assets. At December 31, 2015, our investment in these assets was approximately $2.9
billion, or 18.0%, of our investment portfolio, including cash and cash equivalents.

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Merger and arbitrage trading securities were $376.7 million, or 2.3% of our investment portfolio, including cash and cash
equivalents at December 31, 2015. Merger arbitrage involves investing in the securities of publicly held companies that are the
targets in announced tender offers and mergers. Merger arbitrage differs from other types of investments in its focus on
transactions and events believed likely to bring about a change in value over a relatively short time period, usually four months
or less. Our merger arbitrage positions are exposed to the risk associated with the completion of announced deals, which are
subject to regulatory as well as political and other risks.

Real estate related investments, including directly owned, investment funds and loans receivable, were $2.4 billion, or

14.8% of our investment portfolio, including cash and cash equivalents at December 31, 2015. We also invest in aviation and
rail equipment funds, hedged equity and energy and other investment funds. The values of these investments are subject to
fluctuations based on changes in the economy and interest rates in general and the related asset valuations in particular. In
addition, our investments in real estate related assets and other alternative investments are less liquid than our other
investments.

These investments are subject to significant volatility as a result of the conditions in the financial and commodity markets

and the global economy.

Risks Relating to Purchasing Our Securities

We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts.

As an insurance holding company, our principal assets are the shares of capital stock of our insurance company

subsidiaries. We have to rely on dividends from our insurance company subsidiaries to meet our obligations for paying
principal and interest on outstanding debt obligations, paying dividends to stockholders and repurchasing our shares and
paying corporate expenses. The payment of dividends by our insurance company subsidiaries is subject to regulatory
restrictions and will depend on the surplus and future earnings of these subsidiaries. During 2016, the maximum amount of
dividends that can be paid without regulatory approval is approximately $684 million. As a result, in the future we may not
be able to receive dividends from these subsidiaries at times and in amounts necessary to meet our obligations, pay dividends
or repurchase shares.

Laws and regulations of the jurisdictions in which we conduct business could delay, deter or prevent an attempt to

acquire control of us that stockholders might consider to be desirable, and may restrict a stockholder's ability to
purchase our common stock.

Generally, United States insurance holding company laws require that, before a person can acquire control of an

insurance company, prior written approval must be obtained from the insurance regulatory authorities in the state in which that
insurance company is domiciled. Pursuant to applicable laws and regulations, “control” over an insurer is generally presumed
to exist if any person, directly or indirectly, owns, controls, holds the power to vote, or holds proxies representing 10% or more
of the voting securities of that insurer. Indirect ownership includes ownership of the shares of our common stock. Thus, the
insurance regulatory authorities of the states in which our insurance operating units are domiciled are likely to apply these
restrictions on acquisition of control to any proposed acquisition of our common stock. Some states require a person seeking to
acquire control of an insurer licensed but not domiciled in that state to make a filing prior to completing an acquisition if the
acquirer and its affiliates, on the one hand, and the target insurer and its affiliates, on the other hand, have specified market
shares in the same lines of insurance in that state. Additionally, many foreign jurisdictions where we conduct business impose
similar restrictions and requirements.

While these provisions may not require acquisition approval, they can lead to the imposition of conditions on an

acquisition that could delay or prevent its consummation. These laws may discourage potential acquisition proposals and may
delay, deter or prevent a change in control of us through transactions, and in particular unsolicited transactions, that some or all
of our stockholders might consider to be desirable.

Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third
party takeovers and thus may prevent our stockholders from receiving premium prices for their shares in an unsolicited
takeover or make it more difficult for third parties to replace our current management.

Provisions of our Restated Certificate of Incorporation and By-Laws, as well as state insurance statutes, may hinder, delay or

prevent unsolicited acquisitions or changes of our control. These provisions may also have the effect of making it more difficult
for third parties to cause the replacement of our current management without the concurrence of our board of directors.

These provisions include:

• our classified board of directors and the ability of our board to increase its size and to appoint directors to fill newly

created directorships;

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•

the requirement that 80% of our stockholders must approve mergers and other transactions between us and the holder
of 5% or more of our shares, unless the transaction was approved by our board of directors prior to such holder's
acquisition of 5% of our shares; and

the need for advance notice in order to raise business or make nominations at stockholders' meetings.

These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of

us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be
desirable.

ITEM 1B. UNRESOLVED STAFF COMMENTS

There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of

our fiscal year relating to our periodic or current reports under the Securities Exchange Act of 1934.

ITEM 2. PROPERTIES

W. R. Berkley and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At

December 31, 2015, the Company had aggregate office space of 3,892,994 square feet, of which 1,066,705 were owned and
2,826,288 were leased.

Rental expense for the Company's operations was approximately $46,271,000, $45,198,000 and $44,752,000 for

2015, 2014 and 2013, respectively. Future minimum lease payments, without provision for sublease income, are $42,470,000
in 2016, $39,443,000 in 2017 and $200,636,000 thereafter.

ITEM 3. LEGAL PROCEEDINGS

The Company's subsidiaries are subject to disputes, including litigation and arbitration, arising in the ordinary course
of their insurance and reinsurance businesses. The Company's estimates of the costs of settling such matters are reflected in its
aggregate reserves for losses and loss expenses, and the Company does not believe that the ultimate outcome of such matters
will have a material adverse effect on its financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

The common stock of the Company is traded on the New York Stock Exchange under the symbol “WRB”.

2015:
Fourth Quarter
Third Quarter

Second Quarter
First Quarter

2014:
Fourth Quarter

Third Quarter
Second Quarter

First Quarter
__________________________

Price Range

High

Low

Dividends
Declared Per
Share

$ 57.27 $ 52.36
51.91

58.46

53.40

51.78

48.72
47.45

$0.12
0.12
0.12
0.11

$ 54.14

$ 46.79

8.94

46.36

43.35

44.30
40.56

37.82

$1.11 (1)
0.11
0.11
0.10

(1) Includes a special dividend of $1.00 per share paid in December 2014.

The closing price of the common stock on February 18, 2016 as reported on the New York Stock Exchange was $52.17

per share. The approximate number of record holders of the common stock on February 17, 2016 was 364.

The Company did not repurchase any of its shares during the fourth quarter of 2015. The maximum number of shares

the Company is authorized to repurchase as of December 31, 2015 under its current share repurchase program is 9,246,978.

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ITEM 6. SELECTED FINANCIAL DATA

(In thousands, except per share data)

2015

2014

2013

2012

2011

Year Ended December 31,

Net premiums written
Net premiums earned

Net investment income
Insurance service fees

Net investment gains
Revenues from wholly-owned investees

Total revenues
Interest expense

Income before income taxes
Income tax expense

Noncontrolling interests
Net income to common stockholders

Data per common share:
Net income per basic share

Net income per diluted share
Common stockholders’ equity

Cash dividends declared
Weighted average shares outstanding:

$6,189,515
6,040,609

$5,996,947
5,744,418

$5,500,173
5,226,537

$4,898,539
4,673,516

$4,357,368
4,160,867

512,645
139,440

92,324
421,102

7,206,457
130,946

732,030
(227,923)

(413)
503,694

4.06

3.87
37.31

0.47

600,885
117,443

254,852
410,022

7,128,928
128,174

952,196
(302,593)

(719)

648,884

5.07

4.86
36.21

1.43

544,291
107,513

121,544
407,623

6,408,534
123,177

698,888
(193,587)

(5,376)

499,925

3.69

3.55
32.79

0.39

586,763
103,133

210,465
247,113

5,823,554
126,302

701,928
(191,285)
(51)

510,592

3.72

3.56
31.66

1.35

526,351
92,843

125,481
248,678

5,155,984
112,512

513,086
(121,945)

70
391,211

2.80

2.69
28.75

0.31

Basic
Diluted

Investments
Total assets

124,040
130,189

127,874
133,652

135,305
140,743

137,097
143,315

139,688
145,672

$15,351,467
21,730,967

$15,591,824
21,716,691

$14,548,630
20,551,796

$14,467,440
20,155,896

$13,439,518
18,403,873

Reserves for losses and loss expenses
Senior notes and other debt

Subordinated debentures
Common stockholders’ equity

10,669,150
1,844,621

340,320
4,600,246

10,369,701
2,115,527

340,060
4,589,945

10,080,941
1,692,442

339,800
4,336,035

9,751,086
1,871,535

243,206
4,306,217

9,337,134
1,500,503

242,997
3,953,356

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview

W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the

United States and operates in three business segments: Insurance-Domestic, Insurance-International and Reinsurance-Global.
Our decentralized structure provides us with the flexibility to respond quickly and efficiently to local or specific market
conditions and to pursue specialty business niches. It also allows us to be closer to our customers in order to better understand
their individual needs and risk characteristics. While providing our business units with certain operating autonomy, our
structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment, reinsurance and
enterprise risk management, and actuarial, financial and corporate legal staff support. Our primary sources of revenues and
earnings are its insurance operations and its investments.

An important part of our strategy is to form new operating units to capitalize on various business opportunities. 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, energy and agriculture, and on growing international markets, including Scandinavia, Australia, the Asia-
Pacific region and South America.

The profitability of the Company’s insurance business is affected primarily by the adequacy of premium rates. The
ultimate adequacy of premium rates is not known with certainty at the time an insurance policy is issued because premiums are
determined before claims are reported. The ultimate adequacy of premium rates is affected mainly by the severity and
frequency of claims, which are influenced by many factors, including natural and other disasters, regulatory measures and court
decisions that define and change the extent of coverage and the effects of economic inflation on the amount of compensation for
injuries or losses. General insurance prices are also influenced by available insurance capacity, i.e., the level of statutory capital
and surplus employed in the industry, and the industry’s willingness to deploy that capital.

Although insurance prices have generally increased for most lines of business since 2011, the rate of increase has

declined in more recent years. 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 profitability is also affected by its investment income and investment gains. The Company’s invested

assets are invested principally in fixed maturity securities. The return on fixed maturity securities is affected primarily by
general interest rates, as well as the credit quality and duration of the securities. Returns available on fixed maturity
investments are at historically low levels. 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.

The Company invests in equity securities, merger arbitrage securities, investment funds (including energy related funds),

private equity, loans and real estate related assets. The Company's investments in investment funds and its other alternative
investments have experienced, and the Company expects to continue to experience, greater fluctuations in investment income.

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Critical Accounting Estimates

The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss

expenses, assumed premiums and other-than-temporary impairments of investments. Management believes these policies and
estimates are the most critical to its operations and require the most difficult, subjective and complex judgments.

Reserves for Losses and Loss Expenses. To recognize liabilities for unpaid losses, either known or unknown, insurers

establish reserves, which is a balance sheet account representing estimates of future amounts needed to pay claims and related
expenses with respect to insured events which have occurred. Estimates and assumptions relating to reserves for losses and loss
expenses are based on complex and subjective judgments, often including the interplay of specific uncertainties with related
accounting and actuarial measurements. Such estimates are also susceptible to change as significant periods of time may elapse
between the occurrence of an insured loss, the report of the loss to the insurer, the ultimate determination of the cost of the loss
and the insurer’s payment of that loss.

In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the

ultimate payment based upon known information about the claim at that time. The estimate represents an informed judgment
based on general reserving practices and reflects the experience and knowledge of the claims personnel regarding the nature
and value of the specific type of claim. Reserves are also established on an aggregate basis to provide for losses incurred but
not reported (“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims,
including legal and other fees and general expenses of administrating the claims adjustment process. Reserves are established
based upon the then current legal interpretation of coverage provided.

In examining reserve adequacy, several factors are considered in estimating the ultimate economic value of losses.

These factors include, among other things, historical data, legal developments, changes in social attitudes and economic
conditions, including the effects of inflation. The actuarial process relies on the basic assumption that past experience, adjusted
judgmentally for the effects of current developments and anticipated trends, is an appropriate basis for predicting future
outcomes. Reserve amounts are based on management’s informed estimates and judgments using currently available data. As
additional experience and other data become available and are reviewed, these estimates and judgments may be revised. This
may result in reserve increases or decreases that would be reflected in our results in periods in which such estimates and
assumptions are changed.

Reserves do not represent a certain calculation of liability. Rather, reserves represent an estimate of what management

expects the ultimate settlement and claim administration will cost. While the methods for establishing reserves are well tested
over time, the major assumptions about anticipated loss emergence patterns are subject to uncertainty. These estimates, which
generally involve actuarial projections, are based on management’s assessment of facts and circumstances then known, as well
as estimates of trends in claims severity and frequency, judicial theories of liability and other factors, including the actions of
third parties which are beyond the Company’s control. These variables are affected by external and internal events, such as
inflation and economic volatility, judicial and litigation trends, reinsurance coverage, legislative changes and claim handling and
reserving practices, which make it more difficult to accurately predict claim costs. The inherent uncertainties of estimating
reserves are greater for certain types of liabilities where long periods of time elapse before a definitive determination of liability
is made. Because setting reserves is inherently uncertain, the Company cannot provide assurance that its current reserves will
prove adequate in light of subsequent events.

Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an

actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to
derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss
development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where
one actuarial method is considered more credible than the others, that method is used to set the point estimate. For example, the
paid loss and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where
there is insufficient history of paid and incurred claims data, or in circumstances where there have been significant changes in
claim practices, the paid and incurred loss development methods would be less credible than other actuarial methods. The
actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods
considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” and in areas
where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy
year, as appropriate, for each operating unit.

The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative

factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-
underwriting initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and
conditions. Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of
aggregate policy limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and
changes in deductibles and attachment points.

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The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost

inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at
the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant
determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to
consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost
trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business
within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty,
and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are
used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on
the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and
industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves
because those reserves are discounted to their estimated present value based upon such estimated payout patterns. Management
believes the estimates and assumptions it makes in the reserving process provide the best estimate of the ultimate cost of
settling claims and related expenses with respect to insured events which have occurred; however, different assumptions and
variables could lead to significantly different reserve estimates.

Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions
described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and
reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured
exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the
effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting
loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time

between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our
ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the
amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a
result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with
short reporting lags, which include commercial automobile, primary workers’ compensation, other liability (claims-made) and
property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid
or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability,
excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid
or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines
of businesses with short reporting lags than for lines of business with long reporting lags.

The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and

adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed. If the actual
level of loss frequency and severity are higher or lower than expected, the ultimate losses will be different than
management’s estimate. 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 2015:

(In thousands)
Severity (+/-)
1%

5%
10%

$ 73,437

221,040
405,545

Frequency (+/-)
5%
$ 221,040

374,490
566,302

10%
$ 405,545

566,302
767,248

Our net reserves for losses and loss expenses of approximately $9.2 billion as of December 31, 2015 relate to multiple

accident years. Therefore, the impact of changes in frequency or severity for more than one accident year could be higher or
lower than the amounts reflected above. The impact of such changes would likely be manifested gradually over the course of
many years, as the magnitude of the changes became evident.

Approximately $1.4 billion, or 15%, of the Company’s net loss reserves as of December 31, 2015 relate to the

Reinsurance-Global segment. There is a higher degree of uncertainty and greater variability regarding estimates of assumed
loss reserves because those estimates are based, in part, upon information received from ceding companies. If information
received from ceding companies is not timely or correct, the Company’s estimate of ultimate losses may not be accurate.
Furthermore, due to delayed reporting of claim information by ceding companies, the claim settlement tail for assumed
reinsurance is extended. Management considers the impact of delayed reporting in its selection of assumed loss
development factors.

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Information received from ceding companies is used to set initial expected loss ratios, to establish case reserves and to

estimate reserves for incurred but not reported losses on assumed reinsurance business. This information, which is generally
provided through reinsurance intermediaries, is gathered through the underwriting process and from periodic claim reports and
other correspondence with ceding companies. The Company performs underwriting and claim audits of selected ceding
companies to determine the accuracy and completeness of information provided to the Company. The information received
from the ceding companies is supplemented by the Company’s own loss development experience with similar lines of business
as well as industry loss trends and loss development benchmarks.

Following is a summary of the Company’s reserves for losses and loss expenses by business segment as of December

31, 2015 and 2014:

(In thousands)
Insurance-Domestic
Insurance-International
Reinsurance-Global

Net reserves for losses and loss expenses

Ceded reserves for losses and loss expenses

Gross reserves for losses and loss expenses

2015

2014

$ 7,169,640 $

706,553

1,368,679

9,244,872
1,424,278

6,767,374
750,613

1,452,654

8,970,641
1,399,060

$ 10,669,150 $

10,369,701

Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of

December 31, 2015 and 2014:

(In thousands)
December 31, 2015
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total primary
Reinsurance (1)
Total

December 31, 2014
Other liability
Workers’ compensation (1)
Professional liability
Commercial automobile
Short-tail lines (2)
Total primary
Reinsurance (1)
Total

Reported Case
Reserve

Incurred But
Not Reported

$ 1,079,641
1,655,726
256,783
352,208
317,375
3,661,733
631,666
$ 4,293,399

$ 1,035,442
1,603,310
308,887
319,700
330,010
3,597,349
603,851
$ 4,201,200

1,947,637
1,263,508
478,796
242,071
282,448
4,214,460
737,013
4,951,473

1,785,598
1,201,117
453,557
203,085
277,281
3,920,638
848,803
4,769,441

Total

3,027,278
2,919,234
735,579
594,279
599,823
7,876,193
1,368,679
9,244,872

2,821,040
2,804,427
762,444
522,785
607,291
7,517,987
1,452,654
8,970,641

(1) Reserves for excess and assumed workers’ compensation business are net of an aggregate net discount of $699 million and

$746 million as of December 31, 2015 and 2014, respectively.

(2) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety,

boiler and machinery and other lines.

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The Company evaluates reserves for losses and loss expenses on a quarterly basis. Changes in estimates of prior year

losses are reported when such changes are made. The changes in prior year loss reserve estimates are generally the result of
ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information
becomes known regarding individual claims and aggregate claim trends.

Certain of the Company's insurance and reinsurance contracts are retrospectively rated, whereby the Company collects
more or less premiums based on the level of loss activity. For those contracts, changes in loss and loss expenses for prior years
may be fully or partially offset by additional or return premiums.

Net prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each

of the three years ended December 31, 2015 are as follows:

(In thousands)
Decrease in prior year loss reserves
Increase in prior year earned premiums

Net favorable prior year development

2014

2013

2015
$ 46,713 $

16,730

75,764 $
9,088

$ 63,443 $

84,852 $

78,810
19,046

97,856

Favorable prior year development (net of additional and return premiums) was $63 million in 2015.

Insurance-Domestic - Reserves for the Insurance-Domestic segment developed favorably by $47 million in 2015.

The favorable development was primarily related to workers' compensation and other liability business, and was partially offset
by unfavorable development for commercial automobile liability business.

For workers' compensation, the favorable development was related to both primary and excess business and to many
accident years, including those prior to 2006. In 2015, reported workers' compensation losses were below our expectations for
many of our operating units. In addition, overall loss frequency and severity trends emerged better than the assumptions
underlying our previous reserve estimates. The long term trend of declining workers' compensation claim frequency continued
in 2015. The improvement is attributable to better workplace safety and to benign medical severity trends as we continue to
invest in medical case management services and higher usage of preferred provider networks.

For other liability business, favorable development was concentrated in accident years 2007 through 2013. The
favorable development was primarily related to our excess and surplus lines casualty business that has benefited from a
persistent improvement in claim frequency trends over the past several years.

For commercial automobile business, adverse development was primarily related to large losses for long-haul
trucking business and to accident years 2011 through 2014. The higher loss cost trends for the commercial automobile
industry are attributable, in part, to the increase in miles driven as the economy has improved and fuel prices have declined
over the past several years.

Reinsurance-Global - Reserves for the Reinsurance-Global segment developed favorably by $11 million in 2015. The

favorable development was primarily related to direct facultative reinsurance business and to accident years 2005 through
2013. Loss reserves developed favorably for umbrella business and for other liability coverage for contractors.

Insurance-International - Reserves for the Insurance-International segment developed favorably by $5 million in

2015. The favorable development was related primarily to commercial property. The favorable commercial property
development was attributable to accident years 2012 through 2014 and was driven by favorable frequency and severity trends
on property business written in Lloyd's. The favorable property development was partially offset by unfavorable development
for professional indemnity business in the U.K., primarily for accident years 2006 through 2013.

Favorable prior year development (net of additional and return premiums) was $85 million in 2014.

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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.

For the Reinsurance-Global 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.

For the Insurance-International segment, adverse reserve development in 2014 of $23 million was driven primarily by

unexpected large losses from accident years 2009-2012 in the professional indemnity line of business in the United Kingdom.

Favorable prior year reserve development (net of additional and return premiums) was $98 million in 2013.

Favorable development in 2013 was primarily attributable to accident years 2006 through 2012 and included favorable

development of $39 million for other liability business, $32 million for reinsurance assumed liability business, $22 million for
workers’ compensation, $18 million for commercial property and $24 million for other lines of business. The favorable
development in 2013 was largely driven by loss cost trends, which were more favorable than originally anticipated. In
particular, loss frequency trends have been more favorable than expected for excess & surplus lines casualty business, workers'
compensation and excess of loss professional and other liability business.

The 2013 favorable development was partially offset by unfavorable development of $23 million for commercial

automobile business and $14 million for products liability business. Commercial automobile development was driven by large
losses for long-haul trucking business in 2011 and 2012. Product liability development stemmed from completed operations
losses associated with construction projects in accident years prior to 2009.

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of
workers’ compensation reserves that were discounted was $2,308 million and $2,187 million at December 31, 2015 and 2014,
respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $699 million
and $746 million at December 31, 2015 and 2014, respectively. At December 31, 2015, discount rates by year ranged from
2.0% to 6.5%, with a weighted average discount rate of 3.9%.

Substantially all of discounted workers’ compensation reserves (98% of total discounted reserves at December 31,

2015) are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment
securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted
average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or
decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are
recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss
payout experience.

The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing

Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will

receive under treaty reinsurance agreements at the inception of the contracts. These premium estimates are revised as the actual
amount of assumed premiums is reported to the Company by the ceding companies. As estimates of assumed premiums are made
or revised, the related amount of earned premiums, commissions and incurred losses associated with those premiums are
recorded. Estimated assumed premiums receivable were approximately $62 million and $85 million at December 31, 2015 and
December 31, 2014, respectively. The assumed premium estimates are based upon terms set forth in reinsurance agreements,
information received from ceding companies during the underwriting and negotiation of agreements, reports received from
ceding companies and discussions and correspondence with reinsurance intermediaries. The Company also considers its own
view of market conditions, economic trends and experience with similar lines of business. These premium estimates represent
management’s best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.

Other-Than-Temporary Impairments (OTTI) of Investments. The cost of securities is adjusted where appropriate to

include a provision for decline in value which is considered to be other-than-temporary. An other-than-temporary decline is
considered to occur in investments where there has been a sustained reduction in fair value and where the Company does not
expect the fair value to recover prior to the time of sale or maturity. Since equity securities do not have a contractual cash flow

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or maturity, the Company considers whether the price of an equity security is expected to recover within a reasonable period of
time.

The Company classifies its fixed maturity securities and preferred stocks by credit rating, primarily based on ratings
The Company classifies its fixed maturity securities and preferred stocks by credit rating, primarily based on ratings
assigned by credit rating agencies. For purposes of classifying securities with different ratings, the Company uses the lower
assigned by credit rating agencies. For purposes of classifying securities with different ratings, the Company uses the lower
rating if two ratings were assigned and the middle rating if three ratings were assigned, unless the Company’s own analysis
rating if two ratings were assigned and the middle rating if three ratings were assigned, unless the Company’s own analysis
indicates that the lower rating is more appropriate. Securities that are not rated by a rating agency are evaluated and classified
indicates that the lower rating is more appropriate. Securities that are not rated by a rating agency are evaluated and classified
by the Company on a case-by-case basis.
by the Company on a case-by-case basis.

Fixed Maturity Securities – For securities that we intend to sell or, more likely than not, would be required to sell, a

Fixed Maturity Securities – For securities that we intend to sell or, more likely than not, would be required to sell, a
decline in value below amortized cost is considered to be OTTI. The amount of OTTI is equal to the difference between
amortized cost and fair value at the balance sheet date. For securities that we do not intend to sell or expect to be required to
sell, a decline in value below amortized cost is considered to be an OTTI if we do not expect to recover the entire amortized
cost basis of a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the
security).

decline in value below amortized cost is considered to be OTTI. The amount of OTTI is equal to the difference between
amortized cost and fair value at the balance sheet date. For securities that we do not intend to sell or expect to be required to
sell, a decline in value below amortized cost is considered to be an OTTI if we do not expect to recover the entire amortized
cost basis of a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the
security).

The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash

The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash
flows expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline
in value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.

flows expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline
in value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.

Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.
impairment.

The following table provides a summary of fixed maturity securities in an unrealized loss position as of December 31,

2015:

(Dollars in thousands)
Unrealized loss less than 20% of amortized cost
Unrealized loss of 20% or greater of amortized cost:

Less than twelve months
Twelve months and longer

Total

Number of
Securities

543 $

Aggregate
Fair Value

Aggregate
Fair Value
4,015,415 $

4,015,415 $

Unrealized
Loss

Unrealized
Loss
58,570

58,570

10
15

56,158
50,013

568 $

4,121,586 $

17,144
15,692

91,406

A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at
December 31, 2015 is presented in the table below.

(Dollars in thousands)
(Dollars in thousands)
Mortgage-backed securities
Mortgage-backed securities
Asset-backed securities
Asset-backed securities
Corporate
Corporate
Foreign government
Foreign government
Total

Total

Number of
Securities

Number of
Securities
8 $
7
12
1
28 $

8 $
7
12
1
28 $

Aggregate
Fair Value
23,370 $
19,535
128,716
13,956
185,577 $

Unrealized
Loss
1,790
264
6,717
3,766
12,537

1,790
264
6,717
3,766
12,537

Unrealized
Loss

The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized loss
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized loss
is due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are
is due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are
delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to
delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to
continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be
continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be
OTTI. For the year ended December 31, 2015, OTTI for fixed maturities recognized in earnings were $9.0 million, all of
OTTI. For the year ended December 31, 2015, OTTI for fixed maturities recognized in earnings were $9.0 million, all of

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which were considered due to credit factors. There were no OTTI of fixed maturity securities for the year ended December 31,
2014.

Preferred Stocks – At December 31, 2015, there was 1 preferred stock in an unrealized loss position, with an aggregate

fair value of $22.3 million and a gross unrealized loss of $3.4 million. The preferred stock is rated investment grade.
Management believes the unrealized loss is due primarily to market and sector related factors and does not consider it to be
OTTI. For the year ended December 31, 2015, OTTI for preferred stocks were $13.4 million. There were no OTTI for
preferred stocks for the year ended December 31, 2014.

Common Stocks – At December 31, 2015, there were two common stocks in an unrealized loss position with an
aggregate fair value of $26.5 million and a gross unrealized loss of $19.2 million. Based on management's view of the
underlying securities, the Company does not consider the common stocks to be OTTI. For the year ended December 31, 2015,
OTTI for common stocks were $10.9 million. There were no OTTI for common stocks for the year ended December 31, 2014.

Loans Receivable – The Company monitors the performance of its loans receivable, including current market conditions

for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the
contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge to
earnings. Loans receivable are reported net of a valuation reserve of $2 million and $3 million at December 31, 2015 and 2014,
respectively.

The Company monitors the performance of its loans receivable and assesses the ability of each borrower to pay principal
and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of
the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash
flow analysis and comparable cost and sales methodologies, if appropriate.

Fair Value Measurements. The Company’s fixed maturity and equity securities available for sale and its trading

account securities are carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date.” The Company utilizes a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for
similar assets in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs may only be
used to measure fair value to the extent that observable inputs are not available. The fair value of the vast majority of the
Company’s portfolio is based on observable data (other than quoted prices) and, accordingly, is classified as Level 2.

In classifying particular financial securities in the fair value hierarchy, the Company uses its judgment to determine
whether the market for a security is active and whether significant pricing inputs are observable. The Company determines the
existence of an active market by assessing whether transactions occur with sufficient frequency and volume to provide reliable
pricing information. The Company determines whether inputs are observable based on the use of such information by pricing
services and external investment managers, the uninterrupted availability of such inputs, the need to make significant
adjustments to such inputs and the volatility of such inputs over time. If the market for a security is determined to be inactive or
if significant inputs used to price a security are determined to be unobservable, the security is categorized in Level 3 of the fair
value hierarchy.

Because many fixed maturity securities do not trade on a daily basis, the Company utilizes pricing models and processes
which may include benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Market inputs used
to evaluate securities include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets,
benchmark securities, bids, offers and reference data. Quoted prices are often unavailable for recently issued securities that are
infrequently traded or securities that are only traded in private transactions. For publicly traded securities for which quoted
prices are unavailable, the Company determines fair value based on independent broker quotations and other observable market
data. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such
securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial data, projections and
business developments of the issuer and other relevant information.

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The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of

December 31, 2015:

(In thousands)
Pricing source:
Independent pricing services
Syndicate manager
Directly by the Company based on:

Observable data

Cash flow model

Total

Carrying Value

Percent
of Total

$ 12,132,829
64,758

150,187
353
$ 12,348,127

98.3%
0.5

1.2

—
100.0%

Independent pricing services - Substantially all of the Company’s fixed maturity securities available for sale were priced

by independent pricing services (generally one U.S. pricing service plus additional pricing services with respect to a limited
number of foreign securities held by the Company). The prices provided by the independent pricing services are generally
based on observable market data in active markets (e.g., broker quotes and prices observed for comparable securities). The
determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset
class. The Company reviews the prices provided by pricing services for reasonableness based upon current trading levels for
similar securities. If the prices appear unusual to the Company, they are re-examined and the value is either confirmed or
revised. In addition, the Company periodically performs independent price tests of a sample of securities to ensure proper
valuation and to verify our understanding of how securities are priced. As of December 31, 2015, the Company did not make
any adjustments to the prices provided by the pricing services. Based upon the Company’s review of the methodologies used by
the independent pricing services, these securities were classified as Level 2.

Syndicate manager – The Company has a 15% participation in a Lloyd’s syndicate, and the Company’s share of the
securities owned by the syndicate is priced by the syndicate’s manager. The majority of the securities are liquid, short duration
fixed maturity securities. The Company reviews the syndicate manager’s pricing methodology and audited financial statements
and holds discussions with the syndicate manager as necessary to confirm its understanding and agreement with security prices.
Based upon the Company’s review of the methodologies used by the syndicate manager, these securities were classified as
Level 2.

Observable data – If independent pricing is not available, the Company prices the securities directly. Prices are based on
observable market data where available, including current trading levels for similar securities and non-binding quotations from
brokers. The Company generally requests two or more quotes. If more than one quote is received, the Company sets a price
within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security.
The Company generally does not adjust quotes obtained from brokers. Since these securities were priced based on observable
data, they were classified as Level 2.

Cash flow model – If the above methodologies are not available, the Company prices securities using a discounted cash

flow model based upon assumptions as to prevailing credit spreads, interest rates and interest rate volatility, time to maturity
and subordination levels. Discount rates are adjusted to reflect illiquidity where appropriate. These securities were classified as
Level 3.

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Results of Operations for the Years Ended December 31, 2015 and 2014
Business Segment Results

Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2015 and 2014. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.

(In thousands)

Insurance-Domestic

Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio

Insurance-International

Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio

Reinsurance-Global

Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio
Consolidated
Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio

2015

2014

$ 5,684,188 $
4,812,830
4,659,359
61.2%
31.2
92.4

5,383,679
4,517,587
4,271,933

60.2%
31.6
91.8

$ 923,304 $
778,567
772,141
58.2%
41.4
99.6

$ 642,501 $
598,118
609,109
58.4%
38.2
96.6

984,271
828,076
802,375

62.8%
40.0
102.8

694,888
651,284
670,110

62.0%
34.0
96.0

$ 7,249,993 $
6,189,515
6,040,609
60.5%
33.2
93.7

7,062,838
5,996,947
5,744,418

60.8%
33.0
93.8

Net Income to Common Stockholders. The following table presents the Company’s net income to common

stockholders and net income per diluted share for the years ended December 31, 2015 and 2014.

(In thousands, except per share data)
Net income to common stockholders
Weighted average diluted shares
Net income per diluted share

2015

2014

503,694 $
130,189

3.87 $

648,884
133,652
4.86

The Company reported net income of $504 million in 2015 compared to $649 million in 2014. The 22% decrease in net
income was primarily due to decreases in after-tax net investment gains of $106 million and after-tax net investment income of
$60 million partially offset by an increase in after-tax underwriting income of $14 million. The number of weighted average
diluted shares decreased as a result of the Company’s repurchases of its common stock in 2015 and 2014.

Premiums. Gross premiums written were $7,250 million in 2015, an increase of 3% from $7,063 million in 2014. The
growth was due to a combination of increased exposures and higher rates. Approximately 77% of policies expiring in 2015
were renewed, compared with a 79% renewal retention rate for policies expiring in 2014.

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Average renewal premium rates (adjusted for change in exposures) increased 6.5% in 2013, 3.4% in 2014 and 1.2% in

2015. However, overall loss costs are also increasing, and current market price levels for certain lines of business remain
below the prices required for the Company to achieve its long-term return objectives.

A summary of gross premiums written in 2015 compared with 2014 by line of business within each business segment

follows:

•

Insurance-Domestic gross premiums increased 6% to $5,684 million in 2015 from $5,384 million in 2014. Gross
premiums increased $120 million (8%) for workers' compensation, $86 million (5%) for other liability, $70 million
(15%) for professional liability and $29 million (2%) for short-tail lines and decreased $5 million (1%) for commercial
auto.

Insurance-International gross premiums decreased 6% to $923 million in 2015 from $984 million in 2014. Gross
premiums decreased $81 million (15%) for short-tail lines and $38 million (30%) for professional liability and
increased $26 million (23%) for other liability, $22 million (31%) for workers' compensation and $10 million (7%) for
commercial auto. In local currency terms, gross premiums increased 4%.

• Reinsurance-Global gross premiums decreased 8% to $643 million in 2015 from $695 million in 2014. Gross
premiums written decreased $36 million (8%) for casualty lines and $16 million (7%) for property lines.

Net premiums written were $6,190 million in 2015, an increase of 3% from $5,997 million in 2014. Ceded reinsurance

premiums as a percentage of gross written premiums were 15% in 2015 and 2014.

Premiums earned increased 5% to $6,041 million in 2015 from $5,744 million in 2014. Insurance premiums (including

the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be
earned over the upcoming quarters. Premiums earned in 2015 are related to business written during both 2015 and 2014. Audit
premiums were $153 million in 2015 compared with $118 million in 2014.

Net Investment Income. Following is a summary of net investment income for the years ended December 31, 2015 and

2014:

(In thousands)

Fixed maturity securities, including cash and cash
equivalents and loans receivable
Investment funds
Arbitrage trading account

Real estate
Equity securities available for sale

Gross investment income
Investment expenses

Total

Amount

Average Annualized
Yield

2015

2014

2015

2014

$ 428,325 $

439,489

3.2%

3.4%

62,228

16,891
11,294
4,624
523,362
(10,717)
$ 512,645 $

131,649

22,438
10,228
6,726
610,530
(9,645)
600,885

5.2

3.3
1.4
2.7
3.3

12.7

3.9
1.5
3.7
3.9

3.2%

3.9%

Net investment income decreased 15% to $513 million in 2015 from $601 million in 2014 primarily due to a decrease in

income from energy investment funds. Investment funds are reported on a one quarter lag. The average annualized yield for
fixed maturity securities declined to 3.2% from 3.4% due to lower long-term reinvestment yields available in the market. The
effective duration of the fixed maturity portfolio was 3.3 years at December 31, 2015 compared with 3.2 years at December
31, 2014. Average invested assets, at cost (including cash and cash equivalents), were $16.0 billion in 2015 and $15.6 billion
in 2014.

Insurance Service Fees. The Company earns fees from an insurance distribution business and as a servicing carrier of
workers' compensation assigned risk plans for certain states. Service fees increased 19% to $139 million in 2015 from $117
million in 2014 primarily as a result of an increase in fees from assigned risk plans.

Net Realized Gains on Investment Sales. The Company buys and sells securities on a regular basis in order to maximize
its total return on investments. Decisions to sell securities are based on management’s view of the underlying fundamentals of
specific securities as well as management’s expectations regarding interest rates, credit spreads, currency values and general
economic conditions. Net realized gains on investment sales were $126 million in 2015 compared with $255 million in 2014. In
2015, realized gains were primarily related to sales of some shares of a publicly traded common stock held by one of the

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Company's investment funds. In 2014, realized gains included an $86 million gain from the sale of a commercial office
building in London, England and a $39 million gain resulting from the initial public offering by the above public company.

Other-Than-Temporary Impairments. The cost of securities is adjusted where appropriate to include a provision for a

decline in value that is considered to be other-than-temporary. Other-than-temporary impairments of $33 million in 2015 were
primarily related to equity securities. There were no other-than-temporary impairments in 2014.

Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were derived from aviation-related

businesses that provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of
aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter
services. Revenues from wholly-owned investees increased to $421 million in 2015 from $410 million in 2014.

Losses and Loss Expenses. Losses and loss expenses increased to $3,656 million in 2015 from $3,491 million in 2014.

The consolidated loss ratio was 60.5% in 2015 and 60.8% in 2014. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $58 million in 2015 compared with $87 million in 2014, a decrease of 0.4 loss ratio points.
Favorable prior year reserve development (net of premium offsets) was $63 million in 2015 compared with $85 million in
2014, a difference of 0.3 loss ratio points (see "- Critical Accounting Estimates - Reserves for Losses and Loss Expenses").
The loss ratio excluding catastrophe losses and prior year reserve development decreased 0.2 points to 60.6% in 2015 from
60.8% in 2014. A summary of loss ratios in 2015 compared with 2014 by business segment follows:

•

Insurance-Domestic - The loss ratio of 61.2% in 2015 was 1.0 point higher than the loss ratio of 60.2% in 2014.
Catastrophe losses were $50 million in 2015 compared with $65 million in 2014, a decrease of 0.4 loss ratio points.
Favorable prior year reserve development was $47 million in 2015 compared with $92 million in 2014, a difference of
1.1 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.3
points to 61.1% in 2015 from 60.8% in 2014.

Insurance-International - The loss ratio of 58.2% in 2015 was 4.6 points lower than the loss ratio of 62.8% in 2014.
Catastrophe losses were $5 million in 2015 compared with $20 million in 2014, a decrease of 1.9 loss ratio points.
Favorable prior year reserve development was $5 million in 2015 compared with adverse development of $23 million
in 2014, a difference of 3.7 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve
development increased 1.0 points to 58.4% in 2015 from 57.4% in 2014.

• Reinsurance-Global - The loss ratio of 58.4% in 2015 was 3.6 points lower than the loss ratio of 62.0.% in 2014.
Catastrophe losses were $3 million in 2015 compared with $2 million in 2014, an increase of 0.2 loss ratio points.
Favorable prior year reserve development was $11 million in 2015 compared with $16 million in 2014, a difference of
0.6 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 4.4
points to 59.7% in 2015 from 64.1% in 2014.

Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:

(In thousands)
Underwriting expenses
Service expenses
Net foreign currency losses (gains)
Other costs and expenses
Total

2015

$ 2,005,498 $

127,365
400
156,487

$ 2,289,750 $

2014
1,896,530
102,726
(27)
158,227
2,157,456

Underwriting expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments

and internal underwriting costs. Underwriting expenses increased 6%, compared with an increase in net premiums earned of
5%. The expense ratio (underwriting expenses expressed as a percentage of premiums earned) increased to 33.2% in 2015
from 33.0% in 2014 due primarily to lower earned premiums for the Insurance-International and Reinsurance-Global business
segments.

Service expenses, which represent the costs associated with the fee-based businesses, increased 24% to $127 million, as a

result of the acquisition of a specialty property and casualty insurance distribution company in late 2014.

Net foreign currency losses (gains) result from transactions denominated in a currencies other than an operating unit’s

functional currency.

Other costs and expenses represent general and administrative expenses of the parent company and other expenses not
allocated to business segments, including the cost of certain long-term incentive plans. Other costs and expenses decreased to
$156 million in 2015 from $158 million in 2014.

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Expenses from Wholly-Owned Investees. Expenses from wholly-owned investees represent costs associated with
aviation-related businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and
(ii) general and administrative expenses. Expenses from wholly-owned investees were $397 million in 2015 compared to $401
million in 2014.

Interest Expense. Interest expense was $131 million in 2015 compared with $128 million in 2014. In August 2014, the
Company issued $350 million of 4.75% senior notes due 2044. A portion of the proceeds was used to repay $200 million of
5.60% senior notes on May 15, 2015.

Income Taxes. The effective income tax rate was 31% in 2015 compared to 32% in 2014. The lower tax rate in 2015 was

due, in part, to the utilization of foreign tax credits. The effective income tax rate differs from the federal income tax rate of
35% primarily because of tax-exempt investment income.

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $79 million of
its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. However,
in the future, if such earnings were distributed to the Company, taxes of approximately $9.8 million, assuming all tax credits
are realized, would be payable on such undistributed earnings and would be reflected in the tax provision for the year in which
these earnings are no longer intended to be permanently reinvested in the foreign subsidiary.

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Results of Operations for the Years Ended December 31, 2014 and 2013
Business Segment Results

Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses
incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage
of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for
the years ended December 31, 2014 and 2013. The GAAP combined ratio represents a measure of underwriting profitability,
excluding investment income. A GAAP combined ratio in excess of 100 indicates an underwriting loss; a number below 100
indicates an underwriting profit.

(In thousands)

Insurance-Domestic

Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio

Insurance-International

Gross premiums written
Net premiums written
Net premiums earned
Loss ratio
Expense ratio
GAAP combined ratio

Reinsurance-Global

2014

2013

$ 5,383,679 $

4,517,587
4,271,933
60.2%

31.6
91.8

$ 984,271 $

828,076
802,375
62.8%
40.0
102.8

$ 694,888 $

651,284
670,110
62.0%
34.0
96.0

4,803,753
3,994,387
3,782,416
61.3%
32.7
94.0

898,776
756,185
723,151

59.4%
39.0
98.4

808,562
749,601
720,970
62.2%
34.8
97.0

$ 7,062,838
5,996,947
5,744,418
60.8%
33.0
93.8

6,511,091
5,500,173
5,226,537
61.2%
33.9
95.1

Net Income to Common Stockholders. The following table presents the Company’s net income to common

stockholders and net income per diluted share for the years ended December 31, 2014 and 2013.

(In thousands, except per share data)
Net income to common stockholders
Weighted average diluted shares
Net income per diluted share

2014

2013

648,884 $
133,652

4.86 $

499,925
140,743
3.55

The Company reported net income of $649 million in 2014 compared to $500 million in 2013. The 30% increase in net
income was primarily due to increases in after-tax net investment gains of $92 million, after-tax underwriting income of $64
million and after-tax net investment income of $16 million. The number of weighted average diluted shares decreased as a
result of the Company’s repurchases of its common stock in 2014 and 2013.

Premiums. Gross premiums written were $7,063 million in 2014, an increase of 8% from $6,511 million in 2013. The
growth was due to a combination of rate increases and increased exposures. Approximately 79% of policies expiring in 2014
were renewed, compared with a 76% renewal retention rate for policies expiring in 2013.

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Average renewal premium rates (adjusted for change in exposures) increased 6.8% in 2012, 6.5% in 2013 and 3.4% in

2014. However, overall loss costs are also increasing, and current market price levels for certain lines of business remain
below the prices required for the Company to achieve its long-term return objectives.

A summary of gross premiums written in 2014 compared with 2013 by line of business within each business segment

follows:

•

Insurance-Domestic gross premiums increased 12% to $5,384 million in 2014 from $4,804 million in 2013. Gross
premiums increased $169 million (13%) for workers' compensation, $160 million (10%) for other liability, $120
million (11%) for short-tail lines, $85 million (22%) for professional liability and $46 million (9%) for commercial
auto.

Insurance-International gross premiums increased 10% to $984 million in 2014 from $899 million in 2013. Gross
premiums increased $77 million (16%) for short-tail lines, $21 million (23%) for other liability and $10 million (9%)
for professional liability and decreased $13 million (15%) for workers' compensation and $10 million (8%) for
commercial auto. In local currency terms, gross premiums increased 17%.

• Reinsurance-Global gross premiums decreased 14% to $695 million in 2014 from $809 million in 2013. Gross
premiums written decreased $66 million (12%) for casualty lines and $48 million (17%) for property lines.

Net premiums written were $5,997 million in 2014, an increase of 9% from $5,500 million in 2013. Ceded reinsurance
premiums as a percentage of gross written premiums were 15% in 2014 and 16% in 2013. The decrease in the percentage of
business ceded was due to changes in the reinsurance terms and costs.

Premiums earned increased 10% to $5,744 million in 2014 from $5,227 million in 2013. Insurance premiums (including
the impact of rate changes) are generally earned evenly over the policy term, and accordingly we expect recent rate increases
will be earned over the upcoming quarters. Premiums earned in 2014 are related to business written during both 2014 and
2013. Audit premiums were $118 million in 2014 compared with $120 million in 2013.

Net Investment Income. Following is a summary of net investment income for the years ended December 31, 2014 and

2013:

(In thousands)
Fixed maturity securities, including cash and cash
equivalents and loans receivable
Investment funds

Arbitrage trading account

Real estate
Equity securities available for sale

Gross investment income
Investment expenses

Total

Amount

Average Annualized
Yield

2014

2013

2014

2013

$ 439,489

442,287

3.4%

3.5%

131,649

22,438
10,228
6,726
610,530
(9,645)
$ 600,885

67,712

20,431
12,498
11,380
554,308
(10,017)
544,291

12.7

3.9
1.5
3.7
3.9

8.0

4.2
2.0
3.8
3.7

3.9%

3.7%

Net investment income increased 10% to $601 million in 2014 from $544 million in 2013 primarily due to an increase in

income from investment funds, including aviation and rail equipment funds, real estate funds and energy funds. Investment
funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities declined to 3.4% from 3.5%
due to lower long-term reinvestment yields available in the market. The effective duration of the fixed maturity portfolio was
3.2 years at December 31, 2014 compared with 3.3 years at December 31, 2013. Average invested assets, at cost (including
cash and cash equivalents), were $15.6 billion in 2014 and $14.8 billion in 2013.

Insurance Service Fees. The Company earns fees from an insurance distribution business and as a servicing carrier of
workers' compensation assigned risk plans for certain states. Service fees increased to $117 million in 2014 from $108 million
in 2013 primarily as a result of an increase in fees from assigned risk plans.

Net Realized Gains on Investment Sales. The Company buys and sells securities on a regular basis in order to maximize its

total return on investments. Decisions to sell securities are based on management’s view of the underlying fundamentals of
specific securities as well as management’s expectations regarding interest rates, credit spreads, currency values and general
economic conditions. Net realized gains on investment sales were $255 million in 2014 compared with $128 million in 2013.
Realized gains in 2014 were related primarily to the sale of real estate, investment funds and fixed income and equity securities

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and included an $86 million gain from the sale of a commercial office building in London, England and a gain of $39 million
and included an $86 million gain from the sale of a commercial office building in London, England and a gain of $39 million
resulting from an initial public offering by one of the Company's private equity investees.
resulting from an initial public offering by one of the Company's private equity investees.

and included an $86 million gain from the sale of a commercial office building in London, England and a gain of $39 million
resulting from an initial public offering by one of the Company's private equity investees.

Other-Than-Temporary Impairments. The cost of securities is adjusted where appropriate to include a provision for a

Other-Than-Temporary Impairments. The cost of securities is adjusted where appropriate to include a provision for a
Other-Than-Temporary Impairments. The cost of securities is adjusted where appropriate to include a provision for a
decline in value that is considered to be other-than-temporary. There were no other-than-temporary impairments in 2014
compared with $6 million in 2013.

decline in value that is considered to be other-than-temporary. There were no other-than-temporary impairments in 2014
decline in value that is considered to be other-than-temporary. There were no other-than-temporary impairments in 2014
compared with $6 million in 2013.
compared with $6 million in 2013.

Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were derived from aviation-related

Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were derived from aviation-related
Revenues from Wholly-Owned Investees. Revenues from wholly-owned investees were derived from aviation-related
businesses that provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of
businesses that provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of
businesses that provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of
aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter
aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter
aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter
services. Revenues from wholly-owned investees increased to $410 million in 2014 from $408 million in 2013.
services. Revenues from wholly-owned investees increased to $410 million in 2014 from $408 million in 2013.
services. Revenues from wholly-owned investees increased to $410 million in 2014 from $408 million in 2013.

Losses and Loss Expenses. Losses and loss expenses increased to $3,491 million in 2014 from $3,197 million in 2013.

Losses and Loss Expenses. Losses and loss expenses increased to $3,491 million in 2014 from $3,197 million in 2013.
Losses and Loss Expenses. Losses and loss expenses increased to $3,491 million in 2014 from $3,197 million in 2013.
The consolidated loss ratio was 60.8% in 2014 and 61.2% in 2013. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $87 million in 2014 compared with $65 million in 2013, an increase of 0.3 loss ratio points.
Favorable prior year reserve development (net of premium offsets) was $85 million in 2014 compared with $98 million in
2013, a difference of 0.3 loss ratio points (see "- Critical Accounting Estimates - Reserves for Losses and Loss Expenses").
The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.0 points to 60.8% in 2014 from
61.8% in 2013. A summary of loss ratios in 2014 compared with 2013 by business segment follows:

The consolidated loss ratio was 60.8% in 2014 and 61.2% in 2013. Catastrophe losses, net of reinsurance recoveries and
The consolidated loss ratio was 60.8% in 2014 and 61.2% in 2013. Catastrophe losses, net of reinsurance recoveries and
reinstatement premiums, were $87 million in 2014 compared with $65 million in 2013, an increase of 0.3 loss ratio points.
reinstatement premiums, were $87 million in 2014 compared with $65 million in 2013, an increase of 0.3 loss ratio points.
Favorable prior year reserve development (net of premium offsets) was $85 million in 2014 compared with $98 million in
Favorable prior year reserve development (net of premium offsets) was $85 million in 2014 compared with $98 million in
2013, a difference of 0.3 loss ratio points (see "- Critical Accounting Estimates - Reserves for Losses and Loss Expenses").
2013, a difference of 0.3 loss ratio points (see "- Critical Accounting Estimates - Reserves for Losses and Loss Expenses").
The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.0 points to 60.8% in 2014 from
The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.0 points to 60.8% in 2014 from
61.8% in 2013. A summary of loss ratios in 2014 compared with 2013 by business segment follows:
61.8% in 2013. A summary of loss ratios in 2014 compared with 2013 by business segment follows:

•
•

•

Insurance-Domestic - The loss ratio of 60.2% in 2014 was 1.1 points lower than the loss ratio of 61.3% in 2013.
Insurance-Domestic - The loss ratio of 60.2% in 2014 was 1.1 points lower than the loss ratio of 61.3% in 2013.
Catastrophe losses were $65 million in 2014 compared with $38 million in 2013, an increase of 0.5 loss ratio points.
Catastrophe losses were $65 million in 2014 compared with $38 million in 2013, an increase of 0.5 loss ratio points.
Favorable prior year reserve development was $92 million in 2014 compared with $71 million in 2013, a difference of
Favorable prior year reserve development was $92 million in 2014 compared with $71 million in 2013, a difference of
0.3 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.4
0.3 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.4
points to 60.8% in 2014 from 62.2% in 2013.
points to 60.8% in 2014 from 62.2% in 2013.

Insurance-Domestic - The loss ratio of 60.2% in 2014 was 1.1 points lower than the loss ratio of 61.3% in 2013.
Catastrophe losses were $65 million in 2014 compared with $38 million in 2013, an increase of 0.5 loss ratio points.
Favorable prior year reserve development was $92 million in 2014 compared with $71 million in 2013, a difference of
0.3 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.4
points to 60.8% in 2014 from 62.2% in 2013.

•

Insurance-International - The loss ratio of 62.8% in 2014 was 3.4 points higher than the loss ratio of 59.4% in 2013.
Insurance-International - The loss ratio of 62.8% in 2014 was 3.4 points higher than the loss ratio of 59.4% in 2013.
Catastrophe losses were $20 million in 2014 compared with $11 million in 2013, an increase of 0.9 loss ratio points.
Catastrophe losses were $20 million in 2014 compared with $11 million in 2013, an increase of 0.9 loss ratio points.
Adverse prior year reserve development was $23 million in 2014 compared with $12 million in 2013, a difference of
Adverse prior year reserve development was $23 million in 2014 compared with $12 million in 2013, a difference of
1.2 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development increased 1.3
1.2 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development increased 1.3
points to 57.4% in 2014 from 56.1% in 2013.
points to 57.4% in 2014 from 56.1% in 2013.

Insurance-International - The loss ratio of 62.8% in 2014 was 3.4 points higher than the loss ratio of 59.4% in 2013.
Catastrophe losses were $20 million in 2014 compared with $11 million in 2013, an increase of 0.9 loss ratio points.
Adverse prior year reserve development was $23 million in 2014 compared with $12 million in 2013, a difference of
1.2 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development increased 1.3
points to 57.4% in 2014 from 56.1% in 2013.

• Reinsurance-Global - The loss ratio of 62.0% in 2014 was 0.2 points lower than the loss ratio of 62.2% in 2013.
• Reinsurance-Global - The loss ratio of 62.0% in 2014 was 0.2 points lower than the loss ratio of 62.2% in 2013.

• Reinsurance-Global - The loss ratio of 62.0% in 2014 was 0.2 points lower than the loss ratio of 62.2% in 2013.

Catastrophe losses were $2 million in 2014 compared with $16 million in 2013, a decrease of 1.9 loss ratio points.
Catastrophe losses were $2 million in 2014 compared with $16 million in 2013, a decrease of 1.9 loss ratio points.
Favorable prior year reserve development was $16 million in 2014 compared with $39 million in 2013, a difference of
Favorable prior year reserve development was $16 million in 2014 compared with $39 million in 2013, a difference of
3.0 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.3
3.0 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.3
points to 64.1% in 2014 from 65.4% in 2013.
points to 64.1% in 2014 from 65.4% in 2013.

Catastrophe losses were $2 million in 2014 compared with $16 million in 2013, a decrease of 1.9 loss ratio points.
Favorable prior year reserve development was $16 million in 2014 compared with $39 million in 2013, a difference of
3.0 loss ratio points. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.3
points to 64.1% in 2014 from 65.4% in 2013.

Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:

Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:

(In thousands)
(In thousands)
(In thousands)
Underwriting expenses
Underwriting expenses
Underwriting expenses
Service expenses
Service expenses
Service expenses
Net foreign currency gains
Net foreign currency gains
Net foreign currency gains
Debt extinguishment costs
Debt extinguishment costs
Debt extinguishment costs
Other costs and expenses
Other costs and expenses
Other costs and expenses
Total
Total

Total

2014
2014
$ 1,896,530 $

$ 1,896,530 $
$ 1,896,530 $

2014

102,726
102,726
102,726
(27)
(27)
(27)
—
—
—
158,227
158,227
158,227

$ 2,157,456 $
$ 2,157,456 $

$ 2,157,456 $

2013
2013
2013
1,771,128
1,771,128
1,771,128
88,662
88,662
88,662
(10,120)
(10,120)
(10,120)
6,709
6,709
6,709
144,305
144,305
144,305
2,000,684
2,000,684
2,000,684

Underwriting expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments

Underwriting expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments
Underwriting expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments
and internal underwriting costs. Underwriting expenses increased 7% compared with an increase in net premiums earned of
10%. The expense ratio (underwriting expenses expressed as a percentage of premiums earned) was 33.0% in 2014, down from
33.9% in 2013, primarily due to higher earned premiums and to the impact of expense reduction initiatives.

and internal underwriting costs. Underwriting expenses increased 7% compared with an increase in net premiums earned of
and internal underwriting costs. Underwriting expenses increased 7% compared with an increase in net premiums earned of
10%. The expense ratio (underwriting expenses expressed as a percentage of premiums earned) was 33.0% in 2014, down from
10%. The expense ratio (underwriting expenses expressed as a percentage of premiums earned) was 33.0% in 2014, down from
33.9% in 2013, primarily due to higher earned premiums and to the impact of expense reduction initiatives.
33.9% in 2013, primarily due to higher earned premiums and to the impact of expense reduction initiatives.

Service expenses, which represent the costs associated with the fee-based businesses, increased 16% to $103 million. The

Service expenses, which represent the costs associated with the fee-based businesses, increased 16% to $103 million. The
Service expenses, which represent the costs associated with the fee-based businesses, increased 16% to $103 million. The
increase was due to an increase in general and administrative expenses and to additional costs associated with new programs.

increase was due to an increase in general and administrative expenses and to additional costs associated with new programs.
increase was due to an increase in general and administrative expenses and to additional costs associated with new programs.

Net foreign currency gains of $27,000 in 2014 (compared with $10 million in 2013) resulted from transactions

Net foreign currency gains of $27,000 in 2014 (compared with $10 million in 2013) resulted from transactions
Net foreign currency gains of $27,000 in 2014 (compared with $10 million in 2013) resulted from transactions
denominated in a currencies other than an operating unit’s functional currency.

denominated in a currencies other than an operating unit’s functional currency.
denominated in a currencies other than an operating unit’s functional currency.

Debt extinguishment costs of $7 million in 2013 related to the prepayment of subordinated debentures that were due in

Debt extinguishment costs of $7 million in 2013 related to the prepayment of subordinated debentures that were due in
Debt extinguishment costs of $7 million in 2013 related to the prepayment of subordinated debentures that were due in
2045 and were prepaid in May 2013.

2045 and were prepaid in May 2013.
2045 and were prepaid in May 2013.

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Other costs and expenses represent general and administrative expenses of the parent company and other expenses not

allocated to business segments, including the cost of certain long-term incentive plans. Other costs and expenses increased to
$158 million in 2014 from $144 million in 2013 due primarily to an increase in general and administrative expenses, including
employment costs and benefits.

Expenses from Wholly-Owned Investees. Expenses from wholly-owned investees represent costs associated with
aviation-related businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and
(ii) general and administrative expenses. Expenses from wholly-owned investees were $401 million in 2014 compared to $389
million in 2013, primarily due to start-up costs from a new business operation.

Interest Expense. Interest expense was $128 million in 2014 compared with $123 million in 2013. In May 2013, the
Company issued $350 million of 5.625% subordinated debentures due 2053 and prepaid $250 million of 6.750% subordinated
debentures that were due in 2045. In August 2014, the Company issued $350 million of 4.75% senior notes due 2044. A
portion of the proceeds was used to repay $200 million of 5.60% senior notes on May 15, 2015. In addition, the Company
assumed $71 million of debt in conjunction with the acquisition of an office building in West Palm Beach, Florida, that
matured in August 2015.

Income Taxes. The effective income tax rate was 32% in 2014 compared to 28% in 2013. The lower tax rate in 2013

was due, in part, to the utilization of foreign tax credits. The effective income tax rate differs from the federal income tax rate
of 35% primarily because of tax-exempt investment income. Tax exempt investment income comprised a lower portion of the
2014 pre-tax income and as such had a lesser impact on the effective tax rate for 2014 compared with 2013.

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $58

million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries.
However, in the future, if such earnings were distributed to the Company, taxes of approximately $3.1 million, assuming all
tax credits are realized, would be payable on such undistributed earnings and would be reflected in the tax provision for the
year in which these earnings are no longer intended to be permanently reinvested in the foreign subsidiary.

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Investments

As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and

intermediate-term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations.
Due to the historically low fixed maturity investment returns, the Company invests in equity securities, merger arbitrage
securities, investment funds, private equity, loans and real estate related assets. The Company's investments in investment
funds and its other alternative investments have experienced, and the Company expects to continue to experience, greater
fluctuations in investment income.

The Company also attempts to maintain an appropriate relationship between the effective duration of the investment

portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the
investment portfolio was 3.3 years and 3.2 years at December 31, 2015 and 2014, respectively. The Company’s investment
portfolio and investment-related assets as of December 31, 2015 were as follows:

($ in thousands)
Fixed maturity securities:

U.S. government and government agencies
State and municipal:
Special revenue
State general obligation
Pre-refunded (1)
Corporate backed
Local general obligation

Total state and municipal
Mortgage-backed securities:

Agency
Residential-Prime
Commercial
Residential-Alt A

Total mortgage-backed securities

Asset-backed securities

Corporate:

Industrial
Financial
Utilities
Other

Total corporate

Foreign government

Total fixed maturity securities

Equity securities available for sale:

Preferred stocks
Common stocks

Total equity securities available for sale

Cash and cash equivalents
Investment funds
Real estate
Arbitrage trading account
Loans receivable

Total investments

Carrying

Value

Percent
of Total

$ 670,419

4.2%

2,632,626
641,790
472,697
402,541
387,654
4,537,308

855,195
245,611
65,722
52,469
1,218,997
1,705,172

2,021,534
1,173,021
198,651
81,832
3,475,038
837,460
12,444,394

113,593
37,273
150,866
763,631
1,170,040
936,367
376,697
273,103
$ 16,115,098

16.4
4.0
2.9
2.5
2.4
28.2

5.4
1.5
0.4
0.3
7.6
10.6

12.5
7.3
1.2
0.5
21.5
5.2
77.3

0.7
0.2
0.9
4.7
7.3
5.8
2.3
1.7
100.0%

(1) Pre-refunded securities are securities for which an escrow account has been established to fund the remaining

payments of principal and interest through maturity. Such escrow accounts are funded almost exclusively with U.S.
Treasury and U.S. government agency securities.

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Fixed Maturity Securities. The Company’s investment policy with respect to fixed maturity securities is generally to

purchase instruments with the expectation of holding them to their maturity. However, management of the available for sale
portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio
as a result of changes in financial market conditions and tax considerations.

The Company’s philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing
total return. The key factors that management considers in its investment decisions as to whether to hold or sell fixed maturity
securities are its view of the underlying fundamentals of specific securities as well as its expectations regarding interest rates,
credit spreads and currency values. In a period in which management expects interest rates to rise, the Company may sell longer
duration securities in order to mitigate the impact of an interest rate rise on the fair value of the portfolio. Similarly, in a period
in which management expects credit spreads to widen, the Company may sell lower quality securities, and in a period in which
management expects certain foreign currencies to decline in value, the Company may sell securities denominated in those
foreign currencies. The sale of fixed maturity securities in order to achieve the objective of maximizing total return may result
in realized gains; however, there is no reason to expect these gains to continue in future periods.

At December 31, 2015, investments in foreign government fixed maturity securities were as follows:

(In thousands)
Australia
United Kingdom
Canada
Argentina
Germany
Brazil
Supranational (1)
Norway
Singapore
Colombia
Uruguay
Total

Carrying Value

$ 230,036
165,114
150,501
105,428
51,759
51,405
36,090
31,656
6,101
5,502
3,868
$ 837,460

(1) Supranational represents investments in the North American Development Bank, European Investment Bank and
International Bank for Reconstruction & Development.

Equity Securities Available for Sale. Equity securities available for sale primarily represent investments in high-dividend

yielding common and preferred stocks issued by large market capitalization companies.

Investment Funds. At December 31, 2015, the carrying value of investment funds was $1,170 million, including
investments in real estate funds of $581 million, energy funds of $94 million and hedged equity funds of $71 million.
Investment funds are primarily reported on a one-quarter lag.

Real Estate. Real estate is directly owned property held for investment. At December 31, 2015, real estate properties in

operation included a long-term ground lease in Washington D.C. and office buildings in West Palm Beach and Palm Beach,
Florida. In addition, there are three properties under development: an office building in London, a mixed-use project in
Washington D.C. and an office complex in New York City. The Company expects to fund further development costs for
these projects with a combination of its own funds and external financing.

Arbitrage Trading Account. The arbitrage trading account is comprised of direct investments in arbitrage securities.
Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced
tender offers and mergers.

Loans Receivable. Loans receivable, which are carried at amortized cost, had an amortized cost of $273 million and an

aggregate fair value of $276 million at December 31, 2015. The amortized cost of loans receivable is net of a valuation
allowance of $2 million as of December 31, 2015. Loans receivable include real estate loans of $200 million that are secured by
commercial real estate located primarily in Arizona, Maryland, New York, and Tennessee. Real estate loans receivable generally
earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025.
Loans receivable include commercial loans of $73 million that are secured by business assets. Commercial loans have fixed
interest rates and varying maturities not exceeding 10 years.

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Liquidity and Capital Resources

Cash Flow. Cash flow provided from operating activities increased to $881 million in 2015 from $735 million in 2014.

The increase in cash flow was due primarily to an increase in cash flow from underwriting activities and a decrease in income
taxes paid. Paid losses as a percent of earned premiums were 54% in both 2015 and 2014.

As a holding company, the Company derives cash from its subsidiaries in the form of dividends, tax payments and
management fees. Maximum amounts of dividends that our insurance companies can pay without regulatory approval are prescribed
by statute. During 2016, the maximum amount of dividends which can be paid without regulatory approval is approximately $684
million. The ability of the holding company to service its debt obligations is limited by the ability of its insurance subsidiaries to pay
dividends. In the event dividends, tax payments and management fees available to the holding company were inadequate to service its
debt obligations, the Company would need to raise capital, sell assets or restructure its debt obligations.

The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and

proceeds from sales and maturities of portfolio investments. The principal uses of cash are payments for claims, taxes, operating
expenses and dividends. The Company expects its insurance subsidiaries to fund the payment of losses with cash received from
premiums, investment income and fees. The Company generally has targeted an effective duration for its investment portfolio that
is within one year of the average duration of its liabilities so that portions of its investment portfolio mature throughout the claim
cycle and are available for the payment of claims if necessary. In the event operating cash flow and proceeds from maturities and
prepayments of fixed income securities are not sufficient to fund claim payments and other cash requirements, the remainder of the
Company's cash and investments is available to pay claims and other obligations as they become due. The Company's investment
portfolio is highly liquid, with approximately 80% invested in cash, cash equivalents and marketable fixed income securities as of
December 31, 2015. If the sale of fixed maturity securities were to become necessary, a realized gain or loss equal to the difference
between the cost and sales price of securities sold would be recognized.

Debt. At December 31, 2015, the Company had senior notes, subordinated debentures and other debt outstanding with a

carrying value of $2,185 million and a face amount of $2,208 million. The maturities of the outstanding debt are $43 million in
2016, $37 million in 2017, $450 million in 2019, $300 million in 2020, $426 million in 2022, $2 million in 2029, $250 million in
2037, $350 million in 2044 and $350 million in 2053.

In August 2014, the Company issued $350 million of 4.75% senior notes due 2044. A portion of the proceeds was used to

repay $200 million of 5.60% senior notes on May 15, 2015.

Equity. The Company repurchased 4,502,025, 5,816,468, and 3,924,355 shares of its common stock in 2015, 2014 and 2013,
respectively. The aggregate cost of the repurchases was $224 million in 2015, $239 million in 2014, and $166 million in 2013. At
December 31, 2015, total common stockholders’ equity was $4.6 billion, common shares outstanding were 123,307,837 and
stockholders’ equity per outstanding share was $37.31.

Total Capital. Total capitalization (equity, senior notes and other debt and subordinated debentures) was $6.8 billion at
December 31, 2015. The percentage of the Company’s capital attributable to senior notes, subordinated debentures and other
debt was 32% at December 31, 2015 and 35% at December 31, 2014.

Federal and Foreign Income Taxes

The Company files a consolidated income tax return in the U.S. and foreign tax returns in each of the countries in which it

has overseas operations. At December 31, 2015, the Company had a deferred gross tax asset (net of valuation allowance) of $452
million (which primarily relates to loss and loss expense reserves and unearned premium reserves) and a gross deferred tax liability
of $459 million (which primarily relates to deferred policy acquisition costs and unrealized investment gains). The realization of the
deferred tax asset is dependent upon the Company's ability to generate sufficient taxable income in future periods. Based on
historical results and the prospects for future operations, management anticipates that it is more likely than not that future taxable
income will be sufficient for the realization of this asset.

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $79 million of

its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. However, in
the future, if such earnings were distributed to the Company, taxes of approximately $9.8 million, assuming all tax credits are
realized, would be payable on such undistributed earnings and would be reflected in the tax provision for the year in which these
earnings are no longer intended to be permanently reinvested in the foreign subsidiary.

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Reinsurance

The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying
reinsurers a part of the premiums received on the policies it writes. Reinsurance is purchased by the Company principally to reduce
its net liability on individual risks and to protect it against catastrophic losses. Although reinsurance does not legally discharge an
insurer from its primary liability for the full amount of the policies, it does make the assuming reinsurer liable to the insurer to the
extent of the reinsurance coverage. The Company monitors the financial condition of its reinsurers and attempts to place its
coverages only with substantial and financially sound carriers. Reinsurance coverage and retentions vary depending on the line of
business, location of the risk and nature of loss. The Company’s reinsurance purchases include the following:

• Property reinsurance treaties - The Company purchases property reinsurance to reduce its exposure to large individual

property losses and catastrophe events. Following is a summary of significant property reinsurance treaties in effect as of
January 1, 2016: The Company’s property per risk reinsurance generally covers losses between $2.5 million and $50
million. The Company’s catastrophe excess of loss reinsurance program provides protection for net losses between $30
million and $305 million for the majority of business written by its U.S. companies. The Company has separate
catastrophe excess of loss reinsurance for business written through its Lloyd’s Syndicate that provides protection for losses
between $15 million and $55 million for events in North America. For North American losses greater than $55 million, the
business written through the company's Lloyd's Syndicate is protected within the U.S. program up to $305 million. The
Company’s catastrophe reinsurance agreements are subject to certain limits, exclusions and reinstatement premiums.

• Casualty reinsurance treaties - The Company purchases casualty reinsurance to reduce its exposure to large individual

casualty losses, workers’ compensation catastrophe losses and casualty losses involving multiple claimants or insureds for
the majority of business written by its U.S. companies. A significant casualty treaty in effect as of January 1, 2016
provides protection for losses between $2.5 million and $70 million from single events with claims involving two or more
claimants or insureds. The treaty also covers casualty contingency losses in excess of $5 million and up to $70 million. For
losses involving two or more claimants for primary workers’ compensation business, coverage is generally in place for
losses between $5 million and $170 million. For excess workers’ compensation business, such coverage is generally in
place for losses between $25 million and $245 million.

• Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that

are in excess of treaty reinsurance capacity.

• Other reinsurance - Depending on the operating unit, the Company purchases specific additional reinsurance to

supplement the above programs.

The Company places most of its significant casualty treaties on a “risk attaching” basis. Under risk attaching treaties, all

claims from policies incepting during the period of the reinsurance contract are covered even if they occur after the expiration date
of the reinsurance contract. If the Company is unable to renew or replace its existing reinsurance coverage, protection for unexpired
policies would remain in place until their expiration. In such case, the Company could revise its underwriting strategy for new
business to reflect the absence of reinsurance protection. Property catastrophe and workers’ compensation catastrophe reinsurance
is generally placed on a “losses occurring basis,” whereby only claims occurring during the period are covered. If the Company is
unable to renew or replace this reinsurance coverage, unexpired policies would not be protected.

Following is a summary of earned premiums and loss and loss expenses ceded to reinsurers for each of the three years

ended December 31, 2015:

(In thousands)
Earned premiums $ 1,050,840 $ 1,030,666 $ 959,537
556,108
Losses and loss expenses

501,999

475,802

2015

2013

Years Ended December 31,
2014

Ceded earned premiums increased 2% in 2015 to $1,051 million, less than the increase in direct and assumed earned

premiums of 5%. The ceded losses and loss expenses ratio increased 2 points to 48% in 2015 from 46% in 2014.

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The following table presents the credit quality of amounts due from reinsurers as of December 31, 2015. Amounts due

from reinsurers are net of reserves for uncollectible reinsurance of $1 million in the aggregate.

(In thousands) Reinsurer

Amounts due in excess of $20 million:
Alleghany Group
Munich Re
Swiss Re
Lloyd's of London
Axis Capital
Partner Re
Hannover Re Group
Everest Re
Berkshire Hathaway
Chubb Limited (2)
Arch Capital Group
Other reinsurers:
Rated A- or better
Secured (3)

All others
Subtotal
Residual market pools (4)
Total

Rating (1)

Amount

A+
AA-
AA-
A+
A+
A+
AA-
A+
AA+
AA
A+

$ 138,163
121,661
115,215
92,635
69,840
65,793
48,675
47,945
47,309
45,645
23,273

140,608
48,399
24,162
1,029,323
503,506
$ 1,532,829

(1) S&P rating, or if not rated by S&P, A.M. Best rating.

(2) Includes the aggregate recoverables from Ace Group and Chubb Group.

(3) Secured by letters of credit or other forms of collateral.

(4) Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide
workers' compensation to employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill
this residual market obligation by participating in pools where results are shared by the participating companies. The
Company acts as a servicing carrier for workers' compensation pools in certain states. As a servicing carrier, the Company
writes residual market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier, the
Company receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as
ceded balances are jointly shared by all the pool members.

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Contractual Obligations

Following is a summary of the Company's contractual obligations as of December 31, 2015:

(In thousands)
(In thousands)
Estimated Payments By Periods
Estimated Payments By Periods
Gross reserves for losses
Gross reserves for losses
Operating lease obligations
Operating lease obligations
Purchase obligations
Purchase obligations

Subordinated debentures
Subordinated debentures
Debt maturities
Debt maturities

Interest payments
Interest payments
Other long-term liabilities
Other long-term liabilities

Total

2018

2016
$
2,749,845 $
42,470
152,857

2016
2017
2,749,845 $
1,920,659
42,470
39,443
152,857
76,819

2017
1,920,659
39,443
76,819

2019
2019
2020
1,017,821 $
$ 1,407,275 $
1,017,821 $
743,291
30,941
35,286
30,941
28,584
39,124
47,362
39,124
38,600

$ 1,407,275 $
35,286
47,362

2018

2020
743,291
28,584
38,600

Thereafter
$ 3,589,395
105,825
12,000

—
42,794

—
36,908
122,988

—
42,794

124,409
4,807

3,117,182

4,377
$ 2,201,194

4,377
$ 2,201,194
$ 1,616,335 $

4,033

—
—

—
450,000

—
—
450,000
300,000

—
350,000
300,000
1,028,553

350,000
1,028,553

122,379

112,466
3,678

86,326
3,387

2,034,162
29,170

$ 1,616,335 $

1,654,030

$1,200,188

$ 7,149,105

The estimated payments for reserves for losses and loss expenses in the above table represent the projected (undiscounted)

The estimated payments for reserves for losses and loss expenses in the above table represent the projected (undiscounted)
payments for gross loss and loss expense reserves related to losses incurred as of December 31, 2015. The estimated payments in
the above table do not consider payments for losses to be incurred in future periods. These amounts include reserves for reported
losses and reserves for incurred but not reported losses. Estimated amounts recoverable from reinsurers are not reflected. The
estimated payments by year are based on historical loss payment patterns. The actual payments may differ from the estimated
amounts due to changes in ultimate loss reserves and in the timing of the settlement of those reserves. In addition, at December 31,
2015, the Company had commitments to invest up to $117 million and $485 million in certain investment funds and real estate
construction projects, respectively. These amounts are not included in the above table.

payments for gross loss and loss expense reserves related to losses incurred as of December 31, 2015. The estimated payments in
the above table do not consider payments for losses to be incurred in future periods. These amounts include reserves for reported
losses and reserves for incurred but not reported losses. Estimated amounts recoverable from reinsurers are not reflected. The
estimated payments by year are based on historical loss payment patterns. The actual payments may differ from the estimated
amounts due to changes in ultimate loss reserves and in the timing of the settlement of those reserves. In addition, at December 31,
2015, the Company had commitments to invest up to $117 million and $485 million in certain investment funds and real estate
construction projects, respectively. These amounts are not included in the above table.

The Company utilizes letters of credit to back certain reinsurance payments and obligations. Outstanding letters of credit
The Company utilizes letters of credit to back certain reinsurance payments and obligations. Outstanding letters of credit
were $15 million as of December 31, 2015. The Company has made certain guarantees to state regulators that the statutory capital
were $15 million as of December 31, 2015. The Company has made certain guarantees to state regulators that the statutory capital
of certain subsidiaries will be maintained above certain minimum levels.
of certain subsidiaries will be maintained above certain minimum levels.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an
unconsolidated entity under which a company has (1) made guarantees, (2) a retained or contingent interest in transferred assets, (3)
an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an
unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company, or that engages in leasing,
hedging or research and development arrangements with the Company. The Company has no arrangements of these types that
management believes may have a material current or future effect on our financial condition, liquidity or results of operations.

unconsolidated entity under which a company has (1) made guarantees, (2) a retained or contingent interest in transferred assets, (3)
an obligation under derivative instruments classified as equity or (4) any obligation arising out of a material variable interest in an
unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company, or that engages in leasing,
hedging or research and development arrangements with the Company. The Company has no arrangements of these types that
management believes may have a material current or future effect on our financial condition, liquidity or results of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk. The fair value of the Company’s investments is subject to risks of fluctuations in credit quality and interest

rates. The Company uses various models and stress test scenarios to monitor and manage interest rate risk. The Company
attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the
investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective
duration for the fixed maturity portfolio (including cash and cash equivalents) was 3.3 years and 3.2 years at December 31,
2015 and 2014, respectively.

In addition, the fair value of the Company’s international investments is subject to currency risk. The Company attempts

to manage its currency risk by matching its foreign currency assets and liabilities where considered appropriate.

The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2015:

(Dollars in thousands)
Cash and cash equivalents
U. S. government and governmental agencies
State and municipal
Asset-backed securities
Corporate
Foreign government
Mortgage-backed securities
Loans receivable
Total

Effective
Duration
(Years)
—

3.0
4.5
1.1
3.7
2.7
3.2
2.1
3.3

Fair Value
763,631
670,419
4,553,554
1,705,172
3,475,038
837,460
1,221,204
275,747
13,502,225

Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates. The
Company determines the estimated change in fair value of the fixed maturity securities, assuming parallel shifts in the yield
curve for treasury securities while keeping spreads between individual securities and treasury securities static. The
estimated fair value at specified levels at December 31, 2015 would be as follows:

(In thousands)

Change in interest rates:
300 basis point rise
200 basis point rise
100 basis point rise
Base scenario
100 basis point decline
200 basis point decline
300 basis point decline

Estimated
Fair Value
$12,360,508
12,719,858
13,100,237
13,502,225
13,925,214
14,364,165
14,824,542

Change in
Fair Value
$ (1,141,717)
(782,367)
(401,988)
—
422,989
861,940
1,322,317

Arbitrage investing differs from other types of investments in that its focus is on transactions and events believed

likely to bring about a change in value over a relatively short time period (usually four months or less). The Company believes
that this makes arbitrage investments less vulnerable to changes in general stock market conditions. Potential changes in
market conditions are also mitigated by the implementation of hedging strategies, including short sales.

Additionally, the arbitrage positions are generally hedged against market declines by purchasing put options,

selling call options or entering into swap contracts. The Company's merger arbitrage securities are primarily exposed to the
risk of completion of announced deals, which are subject to regulatory as well as transactional and other risks.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
W. R. Berkley Corporation:

We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and subsidiaries as of
December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income,
stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2015. These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of W. R. Berkley Corporation and subsidiaries as of December 31, 2015 and 2014, and the results
of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015, 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 States), W. R. Berkley Corporation's internal control over financial reporting as of December 31, 2015,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 22, 2016 expressed
an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

New York, New York
February 22, 2016

/S/ KPMG LLP

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

REVENUES:

Net premiums written

Change in net unearned premiums
Net premiums earned

Net investment income
Insurance service fees

Net investment gains:
Net realized gains on investment sales

Other-than-temporary impairments
Net investment gains

Revenues from wholly-owned investees
Other income

Total revenues

OPERATING COSTS AND EXPENSES:

Losses and loss expenses
Other operating costs and expenses

Expenses from wholly-owned investees
Interest expense

Total operating costs and expenses
Income before income taxes

Income tax expense

Net income before noncontrolling interests

Noncontrolling interests
Net income to common stockholders

NET INCOME PER SHARE:
Basic

Diluted

Years Ended December 31,

2015

2014

2013

$ 6,189,515
(148,906)

6,040,609

512,645
139,440

125,633
(33,309)
92,324

421,102
337

$ 5,996,947
(252,529)

$ 5,500,173
(273,636)

5,744,418

5,226,537

600,885
117,443

544,291
107,513

254,852

—
254,852

410,022
1,308

127,586

(6,042)

121,544

407,623
1,026

7,206,457

7,128,928

6,408,534

3,656,270
2,289,750

397,461
130,946

6,474,427
732,030

(227,923)

504,107
(413)

3,490,567
2,157,456

400,535
128,174

6,176,732
952,196

3,197,024
2,000,684

388,761
123,177

5,709,646
698,888

(302,593)

(193,587)

649,603
(719)

505,301

(5,376)

$ 503,694

648,884 $

499,925

$ 4.06 $ 5.07 $

$ 3.87

4.86 $

3.69

3.55

See accompanying notes to consolidated financial statements.

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Net income before noncontrolling interests

Other comprehensive income:

Change in unrealized translation adjustments

Change in unrealized investment gains (losses), net of taxes

Change in unrecognized pension obligation, net of taxes

Other comprehensive loss

Comprehensive income

Comprehensive income to the noncontrolling interest

Comprehensive income to common shareholders

Years Ended December 31,

2015

2014

2013

$ 504,107

$649,603

$ 505,301

(124,744)

(125,542)

(62,125)

(23,848)

49,666

(261,064)

—

6,651

8,700

(250,286)

(5,808)

(276,212)

253,821
(375)

643,795
(752)

229,089

(5,404)

$ 253,446

$643,043

$ 223,685

See accompanying notes to consolidated financial statements.

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

Assets
Investments:
Fixed maturity securities
Investment funds
Real estate
Arbitrage trading account
Loans receivable
Equity securities available for sale

Total investments
Cash and cash equivalents
Premiums and fees receivable
Due from reinsurers
Deferred policy acquisition costs
Prepaid reinsurance premiums
Trading account receivable from brokers and clearing organizations
Property, furniture and equipment
Goodwill
Accrued investment income
Current federal and foreign income taxes
Other assets

Total assets
Liability and Equity
Liabilities:
Reserves for losses and loss expenses
Unearned premiums
Due to reinsurers
Trading account securities sold but not yet purchased
Deferred federal and foreign income taxes
Other liabilities
Senior notes and other debt
Subordinated debentures
Total liabilities

Equity:
Preferred stock, par value $.10 per share:

Authorized 5,000,000 shares; issued and outstanding — none

Common stock, par value $.20 per share:

Authorized 500,000,000 shares, issued and outstanding, net of treasury shares,
123,307,837 and 126,748,836 shares, respectively

Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, at cost, 111,810,081 and 108,369,082 shares, respectively

Total common stockholders’ equity

Noncontrolling interests

Total equity

Total liabilities and equity

See accompanying notes to consolidated financial statements.

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5 8

December 31,

2015

2014

1,170,040
936,367
376,697
273,103
150,866

$12,444,394 $12,705,160
1,211,401
731,612
450,648
322,012
170,991
15,351,467 15,591,824
674,441
1,651,088
1,503,441
488,525
395,748
371,034
332,098
150,944
120,367
67,623
369,558
$21,730,967 $21,716,691

763,631
1,669,186
1,532,829
513,128
394,387
383,115
348,224
153,291
123,164
55,763
442,782

$10,669,150 $10,369,701
3,026,732
237,270
106,079
37,452
859,736
2,115,527
340,060
17,097,759 17,092,557

3,137,133
224,752
37,035
6,811
837,937
1,844,621
340,320

—

47,024
1,005,455
6,178,070
(66,698)
(2,563,605)
4,600,246
32,962
4,633,208

47,024
991,512
5,732,410
183,550
(2,364,551)
4,589,945
34,189
4,624,134
$21,730,967 $21,716,691

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

COMMON STOCK:

Beginning and end of period

ADDITIONAL PAID IN CAPITAL:

Beginning of period

Stock options exercised and restricted units issued including tax benefit
Restricted stock units expensed

Stock issued

End of period

RETAINED EARNINGS:

Beginning of period

Net income to common stockholders
Dividends

End of period

ACCUMULATED OTHER COMPREHENSIVE INCOME:

Unrealized investment gains (losses):

Beginning of period

Years Ended December 31,
2014

2015

2013

$ 47,024 $

47,024 $

47,024

$ 991,512 $

967,440 $

945,166

(17,456)
30,691

708

(4,485)
27,966

591

(1,143)
22,881

536

$ 1,005,455 $

991,512 $

967,440

$ 5,732,410

$ 5,265,015

$ 4,817,807

503,694
(58,034)

648,884
(181,489)

499,925
(52,717)

$ 6,178,070

$ 5,732,410

$ 5,265,015

$ 306,199 $

256,566 $

517,658

Unrealized gains (losses) on securities not other-than-temporarily impaired

(113)

49,071

(261,791)

Unrealized gains (losses) on other-than-temporarily impaired securities

(125,391)

562

699

End of period

Currency translation adjustments:

Beginning of period

Net change in period

End of period

Net pension asset:

Beginning of period
Net change in period

End of period

180,695

306,199

256,566

(122,649)

(124,744)

(60,524)

(62,125)

(247,393)

(122,649)

(36,676)

(23,848)

(60,524)

—
—

—

(6,651)
6,651

(15,351)
8,700

—

(6,651)

Total accumulated other comprehensive income (loss)

(66,698) $

183,550 $

189,391

TREASURY STOCK:

Beginning of period

Stock exercised/vested

Stock issued

Stock repurchased

End of period

NONCONTROLLING INTERESTS:

Beginning of period

Acquisition (sale) of noncontrolling interest
Net income

Other comprehensive income, net of tax

End of period

$ (2,364,551) $ (2,132,835) $ (1,969,411)

23,975

623

6,623

594

2,452

597

(223,652)

(238,933)

(166,473)

$ (2,563,605) $ (2,364,551) $ (2,132,835)

$ 34,189 $

33,359 $

(1,602)
413

(38)

78
719

29,249

(1,294)
5,376

$ 32,962 $

34,189 $

33,359

See accompanying notes to consolidated financial statements.

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains
Depreciation and amortization
Noncontrolling interests
Investment funds

Stock incentive plans
Change in:

Arbitrage trading account
Premiums and fees receivable
Reinsurance accounts
Deferred policy acquisition costs
Current income taxes
Deferred income taxes
Reserves for losses and loss expenses
Unearned premiums

Other

Net cash from operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities
Proceeds from sale of equity securities
Distributions from (contributions to) investment funds
Proceeds from maturities and prepayments of fixed maturity securities
Purchase of fixed maturity securities

Purchase of equity securities
Real estate purchased
Proceeds from sale of real estate
Change in loans receivable
Net additions to property, furniture and equipment
Change in balances due from security brokers
Cash distributed in connection with business
Payment for business purchased, net of cash acquired

Net cash used in investing activities
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from issuance of debt
Net proceeds from stock options exercised

Repayment of senior notes and other debt
Cash dividends to common stockholders
Purchase of common treasury shares
Other
Net cash used in financing activities
Net impact on cash due to change in foreign exchange rates

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Years Ended December 31,
2014

2013

2015

$ 503,694 $

648,884 $

499,925

(92,324)
85,139
413
(62,228)

32,123

(7,173)
(60,942)
(31,930)
(29,860)
20,428
47,260
397,685
142,699

(63,680)
881,304

(254,852)
88,836
719
(131,649)

28,068

(50,817)
(104,174)
(33,445)
(42,789)
(40,935)
30,812
376,617
277,826

(58,254)
734,847

(121,544)
103,090
5,376
(67,712)

23,784

(10,324)
(138,027)
(171,263)
(52,124)
(45,613)
56,281
372,002
323,160

42,787
819,798

1,388,680
15,833
177,424
2,999,339
(4,455,223)

633,459
113,251
69,319
2,605,839
(4,292,165)

1,344,707
267,554
(236,580)
2,718,156
(4,198,135)

(29,526)
(222,659)
—
48,909
(63,562)
(22,666)
—
(7,312)

(170,763)

9,056
—

(281,086)
(58,034)
(223,652)
(1,602)
(555,318)
(66,033)

89,190
674,441

$ 763,631 $

(31,207)
(213,159)
343,723
21,608
(41,958)
32,617
15,783
(65,421)

(808,311)

354,012
—

(3,700)
(181,489)
(238,933)
337
(69,773)
(22,060)

(165,297)
839,738
674,441 $

(156,557)
(107,352)
—
(30,974)
(63,150)
(26,155)
—
(56,878)

(545,364)

346,822
53

(465,389)
(52,717)
(166,473)
7,442
(330,262)
(10,104)

(65,932)
905,670
839,738

See accompanying notes to consolidated financial statements.

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W. R. BERKLEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015, 2014 and 2013

(1)

Summary of Significant Accounting Policies

(A) Principles of consolidation and basis of presentation

The consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries
(the "Company"), have been prepared on the basis of U.S. generally accepted accounting principles ("GAAP"). All significant
intercompany transactions and balances have been eliminated. Reclassifications have been made in the 2014 and 2013 financial
statements to conform to the presentation of the 2015 financial statements. The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and
expenses reflected during the reporting period. The most significant items on our balance sheet that involve a greater degree of
accounting estimates that are subject to change in the future are the valuation of investments, other-than-temporary
impairments, loss and loss expense reserves and premium estimates. Actual results could differ from those estimates.

(B) Revenue recognition

Insurance premiums are recognized as written at the inception of the policy. Reinsurance premiums are estimated

based upon information received from ceding companies, and subsequent differences from such estimates are recorded in the
period they are determined. Insurance and reinsurance premiums are primarily earned on a pro rata basis over the policy term.
Fees for services are earned over the period that the services are provided.

Audit premiums are recognized when they are reliably determinable. The change in accruals for earned but unbilled

audit premiums increased net premiums written and premiums earned by $3 million, $9 million and $12 million in 2015, 2014
and 2013, respectively.

Revenues from wholly-owned investees are derived from aircraft services provided to the general, commercial and
military aviation markets. These services include (i) the distribution, manufacturing, repair and overhaul of aircraft parts and
components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenue is
recognized upon the shipment of parts, the delivery of aircraft, the delivery of fuel, and upon completion of services.

Insurance service fee revenue represents servicing fees for program administration and claims management services

provided by the Company, including workers compensation assigned risk plans, as well as insurance brokerage and risk
management services. Fees for program administration, claims management and risk management services are primarily
recognized ratably over the related contract period for which the underlying services are rendered. Commissions for insurance
brokerage are generally recognized when the underlying insurance policy is effective.

Cash equivalents consist of funds invested in money market accounts and investments with an effective maturity of

three months or less when purchased.

(D) Investments

Fixed maturity securities classified as available for sale are carried at estimated fair value, with unrealized gains and
losses, net of applicable income taxes, excluded from earnings and reported as a component of comprehensive income and a
separate component of stockholders' equity. Fixed maturity securities that the Company has the positive intent and ability to
hold to maturity are classified as held to maturity and reported at amortized cost. Investment income from fixed maturity
securities is recognized based on the constant effective yield method. Premiums and discounts on mortgage-backed securities
are adjusted for the effects of actual and anticipated prepayments on a retrospective basis.

Equity securities classified as available for sale are carried at estimated fair value, with unrealized gains and losses,

net of applicable income taxes, excluded from earnings and reported as a component of comprehensive income and a separate
component of stockholders' equity.

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Equity and fixed maturity securities that the Company purchased with the intent to sell in the near-term are classified

as trading account securities and are reported at estimated fair value. Realized and unrealized gains and losses from trading
activity are reported as net investment income and are recorded at the trade date. Short sales and short call options are
presented as trading securities sold but not yet purchased. Unsettled trades and the net margin balances held by the clearing
broker are presented as a trading account receivable from brokers and clearing organizations.

Investment funds are carried under the equity method of accounting. For certain investment funds, the Company's
share of the earnings or losses is reported on a one-quarter lag in order to facilitate the timely completion of the Company's
consolidated financial statements.

Loans receivable primarily represent commercial real estate mortgage loans and bank loans and are carried at
amortized cost. The Company monitors the performance of its loans receivable and establishes an allowance for loan losses for
loans where the Company determines it is probable that the contractual terms will not be met, with a corresponding charge to
earnings. For loans that are evaluated individually and deemed to be impaired, the Company establishes a specific allowance
based on a discounted cash flow analysis and comparable cost and sales methodologies, if appropriate. Individual loans that are
not considered impaired and smaller-balance homogeneous loans are evaluated collectively and a general allowance is
established if it is considered probable that a loss has been incurred.

The accrual of interest on loans receivable is discontinued if the loan is 90 days past due based on the contractual

terms of the loan unless the loan is adequately secured and in process of collection. In general, loans are placed on non-accrual
status or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest on these loans is
accounted for on a cash basis until qualifying for return to accrual status. Loans are returned to accrual status when all principal
and interest amounts contractually due are brought current and future payments are reasonably assured.

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.” Fair value of investments is determined based on a fair value
hierarchy that prioritizes the use of observable inputs over the use of unobservable inputs and requires the use of observable
inputs when available. (See Note 13 of the Notes to Consolidated Financial Statements.)

Realized gains or losses represent the difference between the cost of securities sold and the proceeds realized upon

sale and are recorded at the trade date. The Company uses primarily the first-in, first-out method to determine the cost of
securities sold.

The cost of securities is adjusted where appropriate to include a provision for a decline in value which is considered to

be other than temporary. An other-than-temporary decline is considered to occur in investments where there has been a
sustained reduction in fair value and where the Company does not expect to recover the cost basis of the investment prior to the
time of sale or maturity. Since equity securities do not have a contractual cash flow or a maturity, the Company considers
whether the price of an equity security is expected to recover within a reasonable period of time.

For fixed maturity securities that the Company intends to sell or, more likely than not, would be required to sell, a

decline in value below amortized cost is considered to be an other-than-temporary impairment (“OTTI”). The amount of OTTI
is equal to the difference between amortized cost and fair value at the balance sheet date. For fixed maturity securities that the
Company does not intend to sell or believes that it is more likely than not it would not be required to sell, a decline in value
below amortized cost is considered to be an OTTI if the Company does not expect to recover the entire amortized cost basis of
a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the security). The
portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash flows
expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline in
value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the
fair value of the security) is recognized in other comprehensive income.

Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities,

collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral
under various economic and default scenarios that may involve subjective judgments and estimates by management. Modeling
these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any,
the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance
factors. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit
impairment.

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Real estate held for investment purposes is initially recorded at the purchase price, which is generally fair value, and is

subsequently reported at cost less accumulated depreciation. Real estate taxes, interest and other costs incurred during
development and construction are capitalized. Buildings are depreciated on a straight-line basis over the estimated useful lives
of the building. Minimum rental income is recognized on a straight-line basis over the lease term. Income and expenses from
real estate are reported as net investment income. The carrying value of real estate is reviewed for impairment and an
impairment loss is recognized if the estimated undiscounted cash flows from the use and disposition of the property are less
than the carrying value of the property.

(E) Per share data

The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by

dividing net income by weighted average number of common shares outstanding during the year. Diluted EPS is based upon the
weighted average number of common and common equivalent shares outstanding during the year and is calculated using the
treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in
which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the
period have an anti-dilutive effect on EPS and, accordingly, are excluded from the calculation.

(F) Deferred policy acquisition costs

Acquisition costs associated with the successful acquisition of new and renewed insurance and reinsurance contracts

are deferred and amortized ratably over the terms of the related contracts. Ceding commissions received on reinsurance
contracts are netted against acquisition costs and are recognized ratably over the life of the contract. Deferred policy acquisition
costs are presented net of unearned ceding commissions. Deferred policy acquisition costs are comprised primarily of
commissions, as well as employment-related underwriting costs and premium taxes. Deferred policy acquisition costs are
reviewed to determine if they are recoverable from future income and, if not, are charged to expense. The recoverability of
deferred policy acquisition costs is evaluated separately by each of our operating companies for each of their major lines of
business. Future investment income is taken into account in measuring the recoverability of deferred policy acquisition costs.

(G) Reserves for losses and loss expenses

Reserves for losses and loss expenses are an accumulation of amounts determined on the basis of (1) evaluation of

claims for business written directly by the Company; (2) estimates received from other companies for reinsurance assumed by
the Company; and (3) estimates for losses incurred but not reported (based on Company and industry experience). These
estimates are periodically reviewed and, as experience develops and new information becomes known, the reserves are adjusted
as necessary. Such adjustments are reflected in the statements of income in the period in which they are determined. The
Company discounts its reserves for excess and assumed workers' compensation claims using a risk-free or statutory rate. (See
Note 14 of Notes to Consolidated Financial Statements.)

(H) Reinsurance ceded

The unearned portion of premiums ceded to reinsurers is reported as prepaid reinsurance premiums and earned ratably

over the policy term. The estimated amounts of reinsurance recoverable on unpaid losses are reported as due from reinsurers.
To the extent any reinsurer does not meet its obligations under reinsurance agreements, the Company must discharge its
liability. Amounts due from reinsurers are reflected net of funds held where the right of offset is present. The Company has
provided reserves for estimated uncollectible reinsurance.

(I) Deposit accounting

Contracts that do not meet the risk transfer requirements of GAAP are accounted for using the deposit accounting
method. Under this method, an asset or liability is recognized at the inception of the contract based on consideration paid or
received. The amount of the deposit asset or liability is adjusted at subsequent reporting dates using the interest method with a
corresponding credit or charge to interest income or expense. Deposit liabilities for assumed reinsurance contracts were $54
million and $68 million at December 31, 2015 and 2014, respectively.

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(J) Federal and foreign income taxes

The Company files a consolidated income tax return in the U.S. and foreign tax returns in countries where it has
overseas operations. The Company's method of accounting for income taxes is the asset and liability method. Under this
method, deferred tax assets and liabilities are measured using tax rates currently in effect or expected to apply in the years in
which those temporary differences are expected to reverse. Interest and penalties, if any, are reported as income tax expense.
The Company believes there are no tax positions that would require disclosure under GAAP. Deferred tax assets are reduced
by a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized.

(K) Foreign currency

Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the
entity's functional currency) are reported on the statements of income as other operating costs and expenses. Unrealized gains
or losses resulting from translating the results of non-U.S. dollar denominated operations are reported in accumulated other
comprehensive income. Revenues and expenses denominated in currencies other than U.S. dollars are translated at the
weighted average exchange rate during the year. Assets and liabilities are translated at the rate of exchange in effect at the
balance sheet date.

(L) Property, furniture and equipment

Property, furniture and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using

the estimated useful lives of the respective assets. Depreciation expense was $45 million, $44 million and $38 million for
2015, 2014 and 2013, respectively.

(M) Comprehensive income

Comprehensive income encompasses all changes in stockholders' equity (except those arising from transactions with

stockholders) and includes net income, net unrealized holding gains or losses on available for sale securities, unrealized foreign
currency translation adjustments and changes in unrecognized pension obligations.

(N) Goodwill and other intangible assets

Goodwill and other intangible assets are tested for impairment on an annual basis and at interim periods where
circumstances require. The Company's impairment test as of December 31, 2015 indicated that there were no impairment losses
related to goodwill and other intangible assets. Intangible assets of $94 million and $96 million are included in other assets as of
December 31, 2015 and 2014, respectively.

(O) Stock options

The costs resulting from all share-based payment transactions with employees are recognized in the consolidated financial
statements using a fair-value-based measurement method. Compensation cost is recognized for financial reporting purposes over the
period in which the employee is required to provide service in exchange for the award (generally the vesting period).

(P) Statements of cash flows

Interest payments were $130 million, $120 million and $125 million in 2015, 2014 and 2013, respectively. Income

taxes paid were $165 million, $314 million and $186 million in 2015, 2014 and 2013, respectively. Other non-cash items
include acquisitions, unrealized investment gains and losses and pension expense. (See Note 2, Note 11 and Note 25 of Notes
to Consolidated Financial Statements.)

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(Q) Recent accounting pronouncements

The accounting and reporting standards that became effective in 2015 were either not applicable to the Company or

their adoption did not have a material impact on the Company.

Accounting and reporting standards that are not yet effective:

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-

09, Revenue from Customers. ASU 2014-09 clarifies the principles for recognizing revenue. While insurance contracts are not
within the scope of this updated guidance, the Company’s insurance service fee revenue will be subject to this updated
guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect
the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to
receive for those goods or services. The updated guidance, as amended by ASU 2015-14, is effective for public business
entities for annual and interim reporting periods beginning after December 15, 2017. The adoption of this guidance is not
expected to have a material effect on the Company’s financial condition or results of operations.

In February 2015, the FASB issued ASU 2015-02, Consolidation. 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. The updated guidance is effective for annual
and interim reporting periods beginning after December 15, 2015. The adoption of this guidance is not expected to have a
material effect on the Company’s financial condition or results of operations, but will result in additional disclosures.

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

companies that issue short duration insurance contracts to disclose additional information, including: (i) incurred and paid
claims development tables; (ii) frequency and severity of claims; and (iii) information about material changes in judgments
made in calculating the liability for unpaid claim adjustment expenses, including reasons for the change and the effects on the
financial statements. ASU 2015-09 is effective for annual periods beginning after December 15, 2015, and interim periods
within annual periods beginning after December 15, 2016. The amendments in ASU 2015-09 should be applied retrospectively
by providing comparative disclosures for each period presented, except for those requirements that apply only to the current
period. As the requirements of this literature are disclosure only, the adoption of this guidance will not impact our financial
condition or results of operations.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 amends the accounting

guidance for financial instruments to require all equity investments to be measured at fair value with changes in the fair value
recognized through net income (other than those accounted for under equity method of accounting or those that result in
consolidation of the investee). The updated guidance is effective for public business entities for annual reporting periods
beginning after December 15, 2017 and interim periods within those years. The adoption of this guidance is not expected to
have a material effect on the Company’s financial condition upon adoption, but will impact results of operations after adoption
of this guidance as unrealized gains and losses on equity securities will no longer be reported directly in AOCI, but will instead
be reported in net income.

All other recently issued but not yet effective accounting and reporting standards are either not applicable to the

Company or are not expected to have a material impact on the Company.

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(2) Acquisitions / Dispositions

In 2015, the Company acquired an aviation systems company for $8 million.

In 2014, the Company acquired a specialty property and casualty insurance distribution company for $83 million. The

fair values of the assets acquired and liabilities assumed have been estimated based on a valuation prepared by a third party.
The estimated useful lives of the intangible assets acquired range from 7 years to 15 years, with approximately $10 million
having an indefinite life.

In 2014, the Company sold an aviation-related business for $16 million. The business had a net carrying value of $15
million, comprised of $7 million of goodwill, $6 million of other assets, $4 million of furniture and equipment and $2 million
of liabilities.

The following table summarizes the estimated fair value of net assets acquired and liabilities assumed for the business

combination completed in 2014:

(In thousands)
Cash and cash equivalents
Real estate, furniture and equipment

Goodwill and other intangibles assets

Premium and service fee receivable

Other assets

Total assets acquired

Deferred federal income tax

Debt

Other liabilities assumed

Net assets acquired

2014

$ 17,457
669

79,646

24,432

2,590

124,794

(7,107)

(34,809)

$ 82,878

(3) Consolidated Statement of Comprehensive Income (Loss)

The following table presents the components of the changes in accumulated other comprehensive income (loss)

(AOCI) as of and for the year ended December 31, 2015:

(In thousands)
Changes in AOCI
Beginning of period
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from AOCI
Other comprehensive income (loss)
Unrealized investment gain related to non-
controlling interest
Ending balance
Amounts reclassified from AOCI
Pre-tax
Tax effect
After-tax amounts reclassified

Other comprehensive income (loss)
Pre-tax
Tax effect
Other comprehensive income (loss)

Unrealized
investment
gains (losses)

Currency
translation
adjustments

Net pension
asset

Accumulated
other
comprehensive
income (loss)

$ 306,199

(122,649) $

—

$ 183,550

(119,994)
(5,548)
(125,542)

(124,744)
—
(124,744)

—
—
—

(244,738)
(5,548)
(250,286)

38
$ 180,695

—

(247,393) $

—
—

38
$ (66,698)

$ (8,535) (1) $
2,987 (2)

(5,548)

— $

—
— —
$ — $ —

$
(8,535)
2,987
(5,548)

$ (192,186)
66,644

$ (124,744) $
—
— —

$ (125,542)

(124,744) $

—

$
(316,930)
66,644
(250,286)
$

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The following table presents the components of the changes in accumulated other comprehensive income (loss) (AOCI)
as of and for the year ended December 31, 2014:

(In thousands)

Changes in AOCI

Unrealized
investment
gains (losses)

Currency
translation
adjustments

Net pension
asset

Accumulated
other
comprehensive
income (loss)

Beginning of period
Beginning of period
$
Other comprehensive income (loss) before
Other comprehensive income (loss) before
reclassifications
reclassifications
Amounts reclassified from AOCI
Amounts reclassified from AOCI
Other comprehensive income (loss)
Other comprehensive income (loss)

Unrealized investment gain related to non-
controlling interest
Ending balance

Amounts reclassified from AOCI
Amounts reclassified from AOCI
Pre-tax
Pre-tax
Tax effect
Tax effect
After-tax amounts reclassified
After-tax amounts reclassified

Other comprehensive income (loss)
Pre-tax
Tax effect
Other comprehensive income (loss)

256,566
$

(60,524) $

(6,651)
(60,524) $

(6,651)
$

$
189,391

189,391

98,294
(48,628)
49,666

(33)
$
306,199

98,294
(48,628)
49,666

(62,125)
—
(62,125)

—
6,651
6,651

(33)
—
306,199
$

—
$

—
(122,649) $
—

(122,649) $

—
6,651
6,651

—
—
$

(74,812) (1)
26,184 (2)

(74,812) (1)
$
26,184 (2)
—
(48,628)
$

$
—
$

$
— $ 10,232 (3)
— $ 10,232 (3)
(3,581) (2)
(3,581) (2)
6,651
$
— $
6,651

— $

36,169
(41,977)
(5,808)

(33)
$
183,550

(33)
183,550

$
(64,580)
22,603
$
(41,977)

(64,580)
22,603
(41,977)

(62,125) $

72,889
$
(23,223)
—
49,666
$

$
—
$

10,232
(62,125) $
(3,581)
(62,125) $
6,651

(62,125) $

10,232
$
(3,581)
6,651
$

$
20,996
(26,804)
$
(5,808)

20,996
(26,804)
(5,808)

(48,628)

72,889
$
(23,223)
$
49,666

(1) Net investment gains in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.
(3) Other operating costs and expenses in the consolidated statements of income.

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(4) Investments in Fixed Maturity Securities

At December 31, 2015 and 2014, investments in fixed maturity securities were as follows:

(In thousands)
December 31, 2015

Held to maturity:

State and municipal
Residential mortgage-backed
Corporate

Total held to maturity

Available for sale:

Amortized
Cost

Gross Unrealized_____
Losses

Gains

Fair
Value

Carrying
Value

77,129 $
19,138
—
96,267

16,246
2,207

18,453

—

$ —
—
— —
—

114,720

93,375 $ 77,129
19,138
21,345

—

96,267

U.S. government and government agency
State and municipal:

Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation

Total state and municipal
Mortgage-backed securities:

Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities

645,092

27,660

(2,333)

670,419

2,510,816
583,456
439,772
388,904

342,158

4,265,106

1,126,382
64,975
1,191,357
1,706,694

102,909
28,068
32,056
14,039

24,270

201,342

(3,737)
(2,070)
(31)
(402)

2,609,988
609,454
471,797
402,541

(29)

366,399

(6,269)

4,460,179

875

18,935 (11,180)
(128)
19,810 (11,308)
12,892 (14,414)

1,134,137
65,722
1,199,859
1,705,172

2,609,988
609,454
471,797
402,541

366,399

4,460,179

1,134,137
65,722
1,199,859
1,705,172

Corporate:

Industrial
Financial
Utilities
Other
Total corporate

Foreign
Total available for sale
Total investments in fixed maturity securities

75,168
31,744
8,321
245
115,478

1,976,393
1,153,096
192,857
81,607
3,403,953

2,021,534
2,021,534
1,173,021
1,173,021
198,651
198,651
81,832
81,832
3,475,038
3,475,038
837,460
799,839 50,310 (12,689) 837,460
12,012,041 427,492 (91,406) 12,348,127 12,348,127
$ (91,406) $12,462,847 $ 12,444,394
$ 12,108,308 $ 445,945

(30,027)
(11,819)
(2,527)
(20)
(44,393)

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(In thousands)
December 31, 2014
Held to maturity:

State and municipal

Residential mortgage-backed

Corporate

Total held to maturity
Available for sale:

U.S. government and government agency
State and municipal:

Special revenue
State general obligation
Pre-refunded
Corporate backed
Local general obligation

Total state and municipal
Mortgage-backed securities:

Residential (1)
Commercial
Total mortgage-backed securities
Asset-backed securities

Corporate:

Industrial
Financial
Utilities
Other

Total corporate
Foreign
Total available for sale
Total investments in fixed maturity
securities

______________________

Amortized
Cost

Gross Unrealized
Losses
Gains

Fair
Value

Carrying
Value

72,901
23,278
4,998
101,177

— $

17,501 $
2,854
291
20,646

—
—
—

90,402 $
26,132
5,289
121,823

72,901
23,278
4,998
101,177

773,192

33,353

(3,157)

803,388

2,264,210
674,022
504,778
413,234
281,622
4,137,866

1,201,924
74,479
1,276,403
2,019,032

111,841
37,615
35,619
18,976
25,099
229,150

(2,084)
(787)
(289)
(855)
(5)
(4,020)

2,373,967
710,850
540,108
431,355
306,716
4,362,996

27,124
1,610
28,734
18,868

(9,449)
(52)
(9,501)
(11,974)

1,219,599
76,037
1,295,636
2,025,926

1,606,724
1,140,801
184,107
86,294
3,017,926

117,206
38,080
12,436

(5,131)
(7,673)

1,718,799
1,171,208
(2) 196,542

1,370

(1) 87,662
(12,807)

3,174,211
897,668 62,223 (18,065) 941,826
12,122,087 541,420 (59,524) 12,603,983

169,092

1,718,799
1,171,208
196,542
87,662
3,174,211
941,826
12,603,983

$ 12,223,264

562,066

(59,524) $12,725,806 $ 12,705,160

(1) Gross unrealized losses for mortgage-backed securities include $1,269,491 and $1,095,671, as of December 31,
2015 and 2014, respectively, related to the non-credit portion of OTTI recognized in other comprehensive income.

The amortized cost and fair value of fixed maturity securities at December 31, 2015, by contractual maturity, are shown

below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay
obligations.

(In thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Total

Amortized
Cost
$ 711,642 $
4,056,450
3,653,308
2,476,413
1,210,495
$ 12,108,308 $

Fair Value

717,075
4,185,436
3,795,614
2,543,518
1,221,204
12,462,847

At December 31, 2015 and 2014, there were no investments, other than investments in United States government and
government agency securities, which exceeded 10% of common stockholders’ equity. At December 31, 2015, investments with
a carrying value of $1,201 million were on deposit in custodial or trust accounts, of which $963 million was on deposit with
state insurance departments, $182 million was on deposit in support of the Company’s underwriting activities at Lloyd’s, $41
million was on deposit as security for reinsurance clients and $15 million was on deposit as security for letters of credit issued in
support of the Company’s reinsurance operations.

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(5) Investments in Equity Securities Available for Sale

At December 31, 2015 and 2014, investments in equity securities available for sale were as follows:

(In thousands)

December 31, 2015

Common stocks

Preferred stocks

Total

December 31, 2014

Common stocks

Preferred stocks

Total

(6) Arbitrage Trading Account

Unrealized Unrealized

Gross

Gains

Gross

Losses

Cost

Fair
Value

Carrying
Value

$ 56,462 $

— $ (19,189) $ 37,273 $

37,273

108,730 8,216

(3,353)

113,593

$ 165,192 $

8,216 $ (22,542) $ 150,866 $ 150,866

$ 69,870 $

11,929 $

(5,453) $

76,346 $

76,346

90,425 8,385

(4,165)

94,645

$ 160,295 $

20,314 $

(9,618) $ 170,991 $ 170,991

At December 31, 2015 and 2014, the fair value and carrying value of the arbitrage trading account were $377 million and

$451 million, respectively. The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of
investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Arbitrage
investing differs from other types of investing in its focus on transactions and events believed likely to bring about a change in
value over a relatively short time period (usually four months or less).

The Company uses put options, call options and swap contracts in order to mitigate the impact of potential changes in

market conditions on the merger arbitrage trading account. These options and contracts are reported at fair value. As of
December 31, 2015, the fair value of long option contracts outstanding was $3 million (notional amount of $52 million) and
the fair value of short option contracts outstanding was $1 million (notional amount of $62 million). Other than with respect to
the use of these trading account securities, the Company does not make use of derivatives.

(7) Net Investment Income

Net investment income consists of the following:

(In thousands)

Investment income earned

Fixed maturity securities, including cash and cash equivalents and loans
receivable
Equity securities available for sale
Investment funds

Arbitrage trading account
Real estate

Gross investment income

Investment expense

Net investment income

2015

2014

2013

428,325 $

439,489 $

442,287

4,624
62,228

16,891
11,294

523,362
(10,717)

6,726
131,649

22,438
10,228

610,530
(9,645)

11,380
67,712

20,431
12,498

554,308
(10,017)

512,645 $

600,885 $

544,291

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(8)

Investment Funds

Investment funds consist of the following:

(In thousands)

Real estate
Energy

Hedged equity
Other funds

Total

Carrying Value
as of December 31,
2014
2015
466,703 $
580,830 $
152,056
93,719

70,580
424,911

282,335
310,307

Income (Losses)
2014

2015

58,032 $

(37,373)
(2,762)
44,331

26,233 $
12,797

10,760
81,859

2013

9,315
29,739

7,655
21,003

$ 1,170,040 $ 1,211,401 $

62,228 $

131,649 $

67,712

Other funds include private equity investments carried on the equity method of accounting, which includes a publicly

traded common stock investment in HealthEquity, Inc. (HQY). Our ownership interest in HQY as of December 31, 2015 is
approximately 21% with a fair value of $300.1 million and a carrying value of $45.4 million.

(9) Real Estate

Investment in real estate represents directly owned property held for investment, as follows:

(In thousands)

Properties in operation

Properties under development

Total

As of December 31,

2015

2014

$ 226,055

710,312

$ 936,367

196,980

534,632

731,612

In 2015, properties in operation included a long-term ground lease in Washington, D.C. and office buildings in West

Palm Beach and Palm Beach, Florida. Properties in operation are net of accumulated depreciation and amortization of
$9,073,000 and $1,609,000 as of December 31, 2015 and 2014, respectively. Related depreciation expense was $7,425,000 and
$4,808,000 for the years ended December 31, 2015 and 2014, respectively. Future minimum rental income expected on
operating leases relating to properties in operation is $13,141,756 in 2016, $15,483,248 in 2017, $14,623,307 in 2018,
$11,967,190 in 2019, $9,584,128 in 2020 and $352,328,662 thereafter.

Properties under development represent the following: an office building in London, a mixed-use project in

Washington D.C. and an office complex in New York City.

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(10) Loans Receivable

Loans receivable are as follows:

(In thousands)
Amortized cost:
Real estate loans
Commercial loans
Total

Fair value:
Real estate loans
Commercial loans
Total

As of December 31,

2015

2014

$ 200,499 $

72,604

$ 273,103 $

243,407
78,605
322,012

$ 201,641 $

74,106

$ 275,747 $

245,112
80,107
325,219

Valuation allowance:
Specific $
General
Total

— $

2,094
2,094 $

115
2,371
2,486

For the Year Ended December 31,

2015 2014

(Decrease) increase in valuation allowance $ (392) $ 398

Loans receivable in non-accrual status were $3.1 million and $14.2 million as of December 31, 2015 and 2014,

respectively, primarily resulting from the sale of such loans.

The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay
principal and interest based upon loan structure, underlying property values, cash flow and related financial and operating
performance of the property and market conditions. Loans receivable with a potential for default are further assessed using
discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.

The real estate loans are secured by commercial real estate primarily located in Arizona, Maryland, New York and

Tennessee. These loans generally earn interest at floating LIBOR-based interest rates and have maturities (inclusive of
extension options) through August 2025. The commercial loans are with small business owners who have secured the related
financing with the assets of the business. These loans generally earn interest on a fixed basis and have varying maturities not
exceeding 10 years.

The Company utilizes a risk rating system to assign a risk to each of its real estate loans. The loan rating system takes

into consideration credit quality indicators including loan to value ratios, which compare the outstanding loan amount to the
estimated value of the property, the borrower’s financial condition and performance with respect to loan terms, the Company’s
position in the capital structure, and the overall leverage in the capital structure. Based on this rating system, none of the real
estate loans were considered to be impaired at December 31, 2015, and accordingly, the Company determined that a specific
valuation allowance was not required.

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(11) Realized and Unrealized Investment Gains and Losses

Realized and unrealized investment gains and losses are as follows:

(In thousands)

Realized investment gains and losses:

Fixed maturity securities:

Gains

Losses

Equity securities available for sale

Investment funds

Real estate

Other gains

2015

2014

2013

$ 23,755 $

39,113 $

48,860

(4,065)

9,639

93,529

—

2,775

(4,420)

(14,670)

38,296

96,204

85,659

—

70,235

10,976

—
12,185

Net realized gains on investments sales

125,633

254,852

127,586

Net other-than-temporary impairments:

Other-than-temporary impairments

Net other-than-temporary impairments

Total net investment gains

Income tax expense

After-tax realized investment gain and losses

Change in unrealized gains and losses of available for sales securities:

Fixed maturity securities

Previously impaired fixed maturity securities

Equity securities available for sale

Investment funds

Total change in unrealized gains

Income tax benefit (expense)

Noncontrolling interests

(33,309) —
(33,309) —
254,852

92,324

(32,313)

(89,198)

(6,042)

121,544

(47,426)

$ 60,011

165,654 $

74,118

(144,445) $

155,765 $

(401,812)

(174)

865

(27,809)

(69,016)

1,076

11,864

(19,758)

(14,725)

(10,250)

(192,186)

72,889

(399,122)

66,644

(23,223)

138,058

(33)

(28)

After-tax change in unrealized investment gain and losses of available for sale
securities

(125,504) $

49,633 $

(261,092)

OTTI recognized in earnings were $33.3 million and $6 million for the years ended December 31, 2015 and December 31,
2013, respectively. There were no OTTI for the year ended December 31, 2014. For the year ended December 31, 2015, OTTI
related to equity securities were $24.3 million and related to fixed maturity securities were $9 million. For the year ended
December 31, 2013, OTTI related to equity securities.

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(12) Securities in an Unrealized Loss Position

The following table summarizes all securities in an unrealized loss position at December 31, 2015 and 2014 by the length

of time those securities have been continuously in an unrealized loss position.

(In thousands)

Less Than 12 Months
Gross
Unrealized
Losses

Fair
Value

12 Months or Greater

Fair
Value

Gross
Unrealized
Losses

Total
Gross

Fair

Value

Unrealized
Losses

December 31, 2015
U.S. government and government agency $
State and municipal

101,660 $
501,952

Mortgage-backed securities
Asset-backed securities

Corporate
Foreign government

Fixed maturity securities
Common stocks

Preferred stocks
Equity securities available for sale

381,986
1,091,078

1,232,940
169,190

3,478,806
18,641

—
18,641

487 $

64,500 $

4,404

3,639
7,703

35,406
8,822

60,461
18,005

—
18,005

106,681

184,807
190,467

76,797
19,528

642,780
7,829

22,320
30,149

1,846 $
1,865

166,160 $
608,633

7,669
6,711

8,987
3,867

30,945
1,184

3,353
4,537

566,793
1,281,545

1,309,737
188,718

4,121,586
26,470

22,320
48,790

2,333
6,269

11,308
14,414

44,393
12,689

91,406
19,189

3,353
22,542

Total

$3,497,447 $

78,466 $

672,929 $

35,482 $ 4,170,376 $

113,948

December 31, 2014
U.S. government and government agency $

State and municipal
Mortgage-backed securities

Asset-backed securities
Corporate

Foreign government

Fixed maturity securities
Common stocks
Preferred stocks

Equity securities available for sale

84,750 $

522 $

84,850 $

2,635 $

169,600 $

158,594
75,739

1,186,097
400,141

76,471

1,981,792
15,929
27,126

43,055

631
332

6,217
2,480

3,907

14,089
5,453
1,139

6,592

150,284
312,922

30,818
183,810

85,025

847,709
—
22,648

22,648

3,389
9,169

5,757
10,327

14,158

45,435
—
3,026

3,026

308,878
388,661

1,216,915
583,951

161,496

2,829,501
15,929
49,774

65,703

3,157

4,020
9,501

11,974
12,807

18,065

59,524
5,453
4,165

9,618

Total

$ 2,024,847 $

20,681 $

870,357 $

48,461 $ 2,895,204 $

69,142

Fixed Maturity Securities — A summary of the Company’s non-investment grade fixed maturity securities that were in

an unrealized loss position at December 31, 2015 is presented in the table below:

(Dollars in thousands)

Mortgage-backed securities
Asset-backed securities

Corporate
Foreign government

Total

Number of
Securities

Aggregate
Fair Value

Gross
Unrealized
Loss

8 $
7

23,370 $
19,535

12
1

128,716
13,956

1,790
264

6,717
3,766

28 $

185,577 $

12,537

For OTTI of fixed maturity securities that management does not intend to sell or, more likely than not, would not be

required to sell, the portion of the decline in value considered to be due to credit factors is recognized in earnings and the
portion of the decline in value considered to be due to non-credit factors is recognized in other comprehensive income.

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For the year ended December 31, 2015, OTTI for fixed maturities recognized in earnings were $9.0 million, all of which
was considered due to credit factors. There were no OTTI of fixed maturity securities for the year ended December 31, 2014.

The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses
are due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities
are delinquent or in default on financial covenants. Based on its assessment of these issuers, the Company expects them to
continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be
OTTI.

Preferred Stocks – At December 31, 2015, there was one preferred stock in an unrealized loss position, with an aggregate

fair value of $22.3 million and a gross unrealized loss of $3.4 million. The preferred stock is rated investment grade.
Management believes the unrealized loss is due primarily to market and sector related factors and does not consider it to be
OTTI. For the year ended December 31, 2015, OTTI for preferred stocks were $13.4 million. There were no OTTI of
preferred stocks for the year ended December 31, 2014.

Common Stocks – At December 31, 2015, there were two common stocks in an unrealized loss position, with an aggregate

fair value of $26.5 million and a gross unrealized loss of $19.2 million. Based on management's view on the underlying
securities, the Company does not consider the common stocks to be OTTI. For the year ended December 31, 2015, OTTI for
common stocks were $10.9 million. There were no OTTI of common stocks for the year ended December 31, 2014.

Loans Receivable – The Company monitors the performance of its loans receivable, including current market conditions
for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the
contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge
to earnings. Loans receivable are reported net of a valuation reserve of $2 million and $3 million at December 31, 2015 and
2014, respectively.

(13) Fair Value Measurements

The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are
carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date.” The Company utilizes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to
access at the measurement date.

Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.

Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs
are only used to measure fair value to the extent that observable inputs are not available.

Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices
provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing
models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may
prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for
each security evaluation on any given day. The pricing services used by the Company have indicated that they will only
produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are
active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices
provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to
ensure proper valuation.

If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair
value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector
groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference
data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of
quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company
generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company
determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of
securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant
information.

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For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed
For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed
maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest
maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest
rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect
rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect
illiquidity, where appropriate.
illiquidity, where appropriate.

The following tables present the assets and liabilities measured at fair value on a recurring basis as of December 31, 2015

and 2014 by level:

(In thousands)
(In thousands)
December 31, 2015
December 31, 2015
Assets:
Assets:
Fixed maturity securities available for sale:
Fixed maturity securities available for sale:
U.S. government and government agency
U.S. government and government agency
State and municipal
State and municipal
Mortgage-backed securities
Mortgage-backed securities
Asset-backed securities
Asset-backed securities
Corporate
Corporate
Foreign government
Foreign government
Total fixed maturity securities available for sale

Total fixed maturity securities available for sale

Equity securities available for sale:
Equity securities available for sale:
Common stocks
Common stocks
Preferred stocks
Preferred stocks
Total equity securities available for sale

Total equity securities available for sale

Arbitrage trading account

Total
Total
Liabilities:
Liabilities:
Trading account securities sold but not yet purchased
Trading account securities sold but not yet purchased

December 31, 2014
December 31, 2014
Assets:
Assets:
Fixed maturity securities available for sale:
Fixed maturity securities available for sale:
U.S. government and government agency
U.S. government and government agency
State and municipal
State and municipal
Mortgage-backed securities
Mortgage-backed securities
Asset-backed securities
Asset-backed securities
Corporate
Corporate
Foreign government
Foreign government
Total fixed maturity securities available for sale

Total fixed maturity securities available for sale

Equity securities available for sale:
Equity securities available for sale:
Common stocks
Common stocks
Preferred stocks
Preferred stocks
Total equity securities available for sale

Total equity securities available for sale

Arbitrage trading account

Total
Total
Liabilities:
Liabilities:
Trading account securities sold but not yet purchased
Trading account securities sold but not yet purchased

Total

Level 1

Level 2

Level 3

670,419 $ —
—
4,460,179
4,460,179
—
1,199,859
1,199,859
—
1,705,172
1,705,172
—
3,475,038
3,475,038
—
837,460
837,460
—
12,348,127
12,348,127

670,419 $ —
—
—
—
—
—
—

670,419 $ —
—
—

670,419 $ —
4,460,179
4,460,179
—
1,199,859
1,199,859
—
1,704,973
1,704,973
3,474,884
3,474,884
837,460
837,460
12,347,774
12,347,774

—

199
154

353

37,273
37,273
113,593
113,593
150,866
150,866
376,697
376,697
$ 12,875,690 $

$ 12,875,690 $

37,035 $

—
—
29,444
29,444
—
—
109,969
109,969
109,969
29,444
109,969
29,444
256,914
119,607
256,914
119,607
286,358 $ 12,577,350
286,358 $ 12,577,350

7,829
7,829
3,624
3,624
11,453
11,453
176
176
11,982
11,982

35,559

1,476 $ —

803,388 $ —
—
4,362,996
4,362,996
—
1,295,636
1,295,636
—
2,025,926
2,025,926
—
3,174,211
3,174,211
—
941,826
941,826
—
12,603,983
12,603,983

803,388 $ —
—
—
—
—
—
—

803,388 $ —
803,388 $ —
—
—
4,362,996
4,362,996
—
—
1,295,636
1,295,636
20,611
2,005,315
20,611
2,005,315
154
3,174,057
3,174,057
154
941,826
941,826
12,583,218
12,583,218

—

20,765

76,346
76,346
94,645
94,645
170,991
170,991
450,648
450,648
$ 13,225,622 $

$ 13,225,622 $

—
—
65,605
65,605
—
—
90,932
90,932
90,932
65,605
65,605
90,932
295,047
154,881
295,047
154,881
360,652 $ 12,829,031 $
360,652 $ 12,829,031 $

106,079 $

106,074

5 $ —

—
20,765
—
—
10,741
10,741
—
3,713
3,713
—
14,454
14,454
720
720
35,939
35,939

There were no significant transfers between Levels 1 and 2 for the years ended December 31, 2015 and 2014.

7 6

76
7 6

80793in_10k.indd 76

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The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2015 and

2014:

Gains (Losses) Included in:

Beginning
Balance

Other
Other
Comprehensive
Comprehensive
Income (Losses)
Income (Losses)

Earnings
(Losses)

Impairements

Purchases

Paydowns/
Maturities

Transfers
In/Out

Ending Balance

Sales

20,611
$
154
20,765
$

$
19
$
19
$
20,611
191
-
-
154
-
$
191
$
19
$
19
20,765

$
-
$
-
-
$
$
-
-
$
$
191
-
$
$
-
-
-
-
-
-
-
$
$
-
$
$
-
$
$
-
$
-
-
-
$
191

(1,820)
$
-
(1,820)
$

$
(1,820)
-
$
(1,820)

(18,802)
$
-
(18,802)
$

$
(18,802)
-
$
(18,802)

199
154
353

10,741
$
3,713
$
14,454
720
35,939
$

10,741
3,713
$
14,454
720
$
35,939

(273)
$
$
(273)
$
-
$
-
$
-
-
(89)
(89)
$
(273)
$
(273)
$
$
(89)
(89)
-
(799)
-
(799)
$
$
(82)
(869)
$
$
(82)
(869)

(2,331)
$
-
(2,331)
$
-
(2,331)
$

$
-
$
-
$
(2,331)
-
-
-
$
$
$
-
-
(2,331)
-
72,640
72,640
$
72,640
$
72,640
(2,331)

(308)
$
-
$
(308)
(71,921)
(72,229)
$

$
-
$
-
-
$
$
(308)
-
$
-
-
-
-
-
$
$
$
$
-
$
-
-
-
(308)
(464)
-
(71,921)
(464)
-
$
$
(19,266)
$
$
(1,820)
$
(19,266)
(1,820)
(72,229)

7,829
$
3,624
$
11,453
176
11,982
$

7,829
3,624
11,453
176
11,982

$
-
-
$
-
$
-
-
$
$
-
-
$
$
-
-
$
$
-
-
$
$
-
-
$
$
-
-
$
$
-
-
$
$
-
$

(In thousands)
Year Ended December 31, 2015
Assets:
Fixed maturity securities available for sale

Asset-backed securities
Corporate
Total

Equity securities available for sale:

Common stocks
Preferred stocks

Common stocks
Preferred stocks
Total

Total

Arbitrage trading account

Total
Total
Liabilities:
Liabilities:
Trading account securities sold but
Trading account securities sold but
not yet purchased
not yet purchased
Year ended December 31, 2014
Year ended December 31, 2014
Assets:
Assets:
Fixed maturity securities available for sale
Fixed maturity securities available for sale

Asset-backed securities
Asset-backed securities
2014:
Corporate
Corporate
Total
Total

The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2015 and
$
$
20,611
$
-
$
-
(3,711)
-
-
154.00
-
20,765
$
$
$
-
$
-
(3,711)

$
$
47
$
47
42,710
-
154
-
$
$
47
$
47
42,864

$
$
-
$
-
(3,429)
-
-
-
$
$
-
$
-
(3,429)

(3,711)
$
-
(3,711)
$

$
238
-
238
$

$
(15,244)
-
(15,244)
$

$
(15,244)
-
$
(15,244)

$
42,710
154
42,864
$

$
238
-
$
238

$
(3,429)
-
(3,429)
$

20,611
154.00
20,765

Equity securities available for sale:

Total

Arbitrage trading account

Common stocks
Preferred stocks

Common stocks
Preferred stocks
Total
(In thousands)
Total
Total
Year Ended December 31, 2015
Assets:
Liabilities
Liabilities
Fixed maturity securities available for sale
Trading account securities sold but
Trading account securities sold but
not yet purchased
not yet purchased
Asset-backed securities
Corporate
Total

$
1,238
3,752
4,990
$
1,780
49,634
$

1,238
3,752
4,990
Beginning
1,780
Balance
49,634

-
$
-
$
$
(17)
(17)
$
(17)
(17)
$
Earnings
2,274
2,274
(Losses)
$ 2,304
$ 2,304
$

$
(911)
$
(911)
$
$
-
$
-
$
11,343
11,343
$
(929)
Gains (Losses) Included in:
-
-
-
-
$
3,430
3,430
$
(3,452)
Other
(911)
$
$
$
-
$
(911)
$
-
14,773
$
14,773
(4,381)
$
Comprehensive
(14,073)
4942
-
-
4942
-
-
Purchases
Impairements
Income (Losses)
$
$
$
$
(33,698)
$
-
19,953
-
$
(4,622)
$
(4,622)
19,953

$
$
$
-
$
-
-
$
(929)
-
-
-
-
-
(3,452)
$
$
$
-
$
-
$
-
-
(4,381)
Paydowns/
5,797
-
5,797
-
(14,073)
Sales
Maturities
$
$
$
5,797
$
(33,698)
(3,429)
5,797
(3,429)

$
10,741
3713.00
14,454
$
Transfers
720
In/Out
$
35,939

10,741
3713.00
14,454
720
Ending Balance
35,939

$
-
$
191
$
19
$
20,611
$
-
$
31
$
-
-
-
$
$
(20)
-
$
(20)
$
$
$
-
$
-
-
-
154
$
-
$
191
$
19
20,765

$
-
$
(11)
$
31
-
$
-

$
(18,802)
$
(1,820)
$
-
$
$
-
$
-
$
-
-
-
$
(11)
-
$
-
-
-
(18,802)
(1,820)
$
-

199
154
353

Equity securities available for sale:
During the year ended December 31, 2015, five securities were transferred out of Level 3 as an observable price was
During the year ended December 31, 2015, five securities were transferred out of Level 3 as an observable price was
$
-
$
-
Common stocks
available. During the year ended December 31, 2014, two securities were transferred into Level 3 as quoted prices were no
available. During the year ended December 31, 2014, two securities were transferred into Level 3 as quoted prices were no
-
(89)
Preferred stocks
longer available.
longer available.
-
(89)
$
Total
(464)
(799)
(19,266)
(869)

(273)
-
(273)
-
$
(82)

$
-
-
-
$
72,640
72,640

$
-
-
-
$
-
(1,820)

(308)
-
(308)
(71,921)
(72,229)

(2,331)
-
(2,331)
-
(2,331)

10,741
3,713
14,454
720
35,939

Arbitrage trading account

7,829
3,624
11,453
176
11,982

Total
Liabilities:
Trading account securities sold but not yet purchased

$
-

Year ended December 31, 2014
Assets:
Fixed maturity securities available for sale

Asset-backed securities
Corporate
Total

Equity securities available for sale:

Common stocks
Preferred stocks

Total

Arbitrage trading account

Total
Liabilities
Trading account securities sold but not yet purchased

42,710
154
42,864

47
$
-
$
47

1,238
3,752
4,990
1,780
49,634

-
$
(17)
(17)
7 7
2,274
$ 2,304

$
77
7 7

(3,711)
-
(3,711)

(911)
-
(911)
-
(4,622)

-
$
-
$
-

-
$
-
$
-
-
$
-

238
-
238

(15,244)
-
(15,244)

(3,429)
-
(3,429)

-
$
-
$
-

20,611
154.00
20,765

11,343
3,430
14,773
4942
19,953

$
$
$

(929)
(3,452)
(4,381)
(14,073)
(33,698)

-
$
-
$
-
-
(3,429)

-
$
-
$
-
5,797
5,797

10,741
3713.00
14,454
720
35,939

$
-

(20)

$
-

(11)

$
-

80793in_10k.indd 77

During the year ended December 31, 2015, five securities were transferred out of Level 3 as an observable price was
available. During the year ended December 31, 2014, two securities were transferred into Level 3 as quoted prices were no

3/16/16 4:35 PM

longer available.

7 7

(14) Reserves for Losses and Loss Expenses

The table below provides a reconciliation of the beginning and ending reserve balances:

(In thousands)

2015

2014

2013

Net reserves at beginning of year

Net provision for losses and loss expenses:
Claims occuring during the current year(1)

Decrease in estimates for claims occurring in prior years(2)(3)

Loss reserve discount accretion(4)

Total

Net payments for claims:

Current year

Prior year

Total

Foreign currency translation

Net reserves at end of year
Ceded reserve at end of year

Gross reserves at end of year

$ 8,970,641 $

8,683,797 $ 8,411,851

3,653,561

3,495,825

3,221,393

(46,713)

(75,764)

(78,810)

49,422

70,506

54,441

3,656,270

3,490,567

3,197,024

914,637

898,944

822,787

2,342,378

2,216,283

2,055,284

3,257,015
(125,024)

9,244,872
1,424,278

3,115,227
(88,496)

8,970,641
1,399,060

2,878,071
(47,007)

8,683,797
1,397,144

$ 10,669,150 $ 10,369,701 $ 10,080,941

(1) Claims occurring during the current year are net of loss reserve discounts of $20,357,000, $21,306,000, and

$22,680,000 in 2015, 2014 and 2013, respectively.

(2) The decrease in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the
estimates for claims occurring in prior years decreased by $64,971,000, $116,866,000 and $77,430,000 in 2015, 2014 and
2013, respectively.

(3) For certain retrospectively rated insurance polices and reinsurance agreements, reserve development is offset by

additional or return premiums. Favorable reserve development, net of additional and return premiums, was $63 million,
$85 million and $98 million in 2015, 2014 and 2013, respectively.

(4) In 2014, the Company entered into a commutation agreement that resulted in a reduction in prior year workers'

compensation reserves of $30 million on an undiscounted basis and $12 million on a discounted basis.

Favorable prior year development (net of additional and return premiums) was $63 million in 2015.

Insurance-Domestic - Reserves for the Insurance-Domestic segment developed favorably by $47 million in 2015.

78
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Reinsurance-Global - Reserves for the Reinsurance-Global segment developed favorably by $11 million in 2015. The

favorable development was primarily related to direct facultative reinsurance business and to accident years 2005 through 2013.
Loss reserves developed favorably for umbrella business and for other liability coverage for contractors.

Insurance-International - Reserves for the Insurance-International segment developed favorably by $5 million in 2015.
The favorable development was related primarily to commercial property. The favorable commercial property development was
attributable to accident years 2012 through 2014 and was driven by favorable frequency and severity trends on property
business written in Lloyd's. The favorable property development was partially offset by unfavorable development for
professional indemnity business in the U.K., primarily for accident years 2006 through 2013.

Favorable prior year development (net of additional and return premiums) was $85 million in 2014.

For the Insurance-Domestic segment, favorable development in 2014 of $92 million was driven primarily 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.

For the Reinsurance-Global segment, favorable reserve development in 2014 of $16 million was driven primarily by

For the Insurance-International segment, adverse reserve development in 2014 of $23 million was driven primarily by

unexpected large losses from accident years 2009-2012 in the professional indemnity line of business in the United Kingdom.

Favorable prior year reserve development (net of additional and return premiums) was $98 million in 2013.

Favorable development in 2013 was primarily attributable to accident years 2006 through 2012 and included favorable

The 2013 favorable development was partially offset by unfavorable development of $23 million for commercial

Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the
Company’s operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant
environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.

The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims was $33 million

at December 31, 2015 and $36 million at December 31, 2014. The Company’s gross reserves for losses and loss expenses
relating to asbestos and environmental claims were $51 million and $56 million at December 31, 2015 and 2014, respectively.
Net incurred losses and loss expenses for reported asbestos and environmental claims decreased approximately $2 million in
2015 and increased by approximately $4 million and $5 million in 2014 and 2013, respectively. Net paid losses and loss
expenses for asbestos and environmental claims were approximately $2 million in 2015, $3 million in 2014 and $3 million in
2013. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is
difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for
these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of
litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to
financially responsible parties are highly uncertain.

Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of
workers’ compensation reserves that were discounted was $2,308 million and $2,187 million at December 31, 2015 and

79
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December 31, 2014, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded
reinsurance, was $699 million and $746 million at December 31, 2015 and December 31, 2014, respectively. At December 31,
2015, discount rates by year ranged from 2.0% to 6.5%, with a weighted average discount rate of 3.9%.

Substantially all of discounted workers’ compensation reserves (98% of total discounted reserves at December 31,

The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing

(15) Reinsurance

The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and
catastrophe losses. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and nature of
loss. The Company’s reinsurance purchases include the following: property reinsurance treaties that reduce exposure to large
individual property losses and catastrophe events; casualty reinsurance treaties that reduce its exposure to large individual
casualty losses, workers’ compensation catastrophe losses and casualty losses involving multiple claimants or insureds; and
facultative reinsurance that reduces exposure on individual policies or risks for losses that exceed treaty reinsurance capacity.
Depending on the operating unit, the Company purchases specific additional reinsurance to supplement the above programs.

The following is a summary of reinsurance financial information:

(In thousands)

Written premiums:
Direct

Assumed
Ceded

Total net written premiums

Earned premiums:
Direct

Assumed
Ceded

Total net earned premiums

Ceded losses and loss expenses incurred

Ceded commission earned

2015

2014

2013

$ 6,412,533 $ 6,185,242 $ 5,626,172

837,460
(1,060,478)

877,596
(1,065,891)

884,919
(1,010,918)

$ 6,189,515 $ 5,996,947 $ 5,500,173

$ 6,245,714 $ 5,889,021 $ 5,328,955

845,735
(1,050,840)

886,063
(1,030,666)

857,119
(959,537)

$ 6,040,609 $ 5,744,418 $ 5,226,537

$ 501,999 $

475,802 $

556,108

$ 129,766 $

160,215 $

137,449

The Company reinsures a portion of its exposures principally to reduce its net liability on individual risks and to protect

against catastrophic losses. Estimated amounts due from reinsurers are reported net of reserves for uncollectible reinsurance of
$1,020,000, $1,144,000 and $1,385,000 as of December 31, 2015, 2014 and 2013, respectively.

80
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The following table presents the amounts due from reinsurers as of December 31, 2015:

(In thousands)

Allegany Group
Munich Re
Swiss Re

Lloyd’s of London
Axis Capital

Partner Re
Hannover Re Group

Everest Re
Berkshire Hathaway

Chubb Limited (1)
Arch Capital Group

Other reinsurers less than $20,000

Subtotal
Residual market pools

Total

138,163

121,661
115,215

92,635
69,840

65,793
48,675

47,945
47,309

45,645
23,273

213,169

1,029,323
503,506

1,532,829

(1) Includes the aggregate recoverables from Ace Group and Chubb Group.

(16) Indebtedness

Indebtedness consisted of the following as of December 31, 2015 (the difference between the face value and the carrying

value is unamortized discount):

(In thousands)

Senior notes due on:
May 15, 2015

August 15, 2019
September 15, 2019

September 15, 2020
January 1, 2022

March 15, 2022
February 15, 2037

August 1, 2044
Subsidiary debt (1)

Interest
Rate

Face Value

2015
Carrying
Value

2014
Carrying
Value

5.6%

— $

199,930

6.15%
7.375%

5.375%
8.7%

4.625%
6.25%

4.75%
Various

150,000
300,000

300,000
76,503

350,000
250,000

350,000
81,752

149,484
299,054

298,411
76,097

347,417
247,676

344,730
81,752

149,342
298,800

298,074
76,048

346,999
247,566

344,545
154,223

Total senior notes and other debt
Subordinated debentures, due on April, 30, 2053

1,858,255 $

1,844,621 $

2,115,527

350,000 $

340,320 $

340,060

(1) Subsidiary debt is due as follows: $43 million in 2016, $37 million in 2017 and $2 million thereafter.

81
81

80793in_10k.indd 81

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(17) Income Taxes

Income tax expense consists of:

(In thousands)

December 31, 2015
Domestic

Foreign
Total expense

December 31, 2014
Domestic

Foreign
Total expense

December 31, 2013
Domestic

Foreign
Total expense

Current
Expense

Deferred
Expense

Total

$ 179,150 $

31,145 $

210,295

(2,318)

19,946

17,628

$ 176,832 $

51,091 $

227,923

$ 258,337 $

28,029 $

286,366

12,969

3,258

16,227

$ 271,306 $

31,287 $

302,593

$ 116,802 $

47,370 $

164,172

22,362

7,053

29,415

$ 139,164 $

54,423 $

193,587

Income before income taxes from domestic operations was $689 million, $910 million and $598 million for the years
ended December 31, 2015, 2014 and 2013, respectively. Income before income taxes from foreign operations was $43 million,
$42 million and $101 million for the years ended December 31, 2015, 2014 and 2013, respectively.

A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax

rate of 35% to pre-tax income are as follows:

(In thousands)

Computed “expected” tax expense
Tax-exempt investment income

Change in valuation allowance
Impact of foreign tax rates

State and local taxes
Other, net

Total expense

2015

2014

2013

$ 256,210 $

(39,283)

333,269 $
(38,757)

244,611
(40,679)
—
(4,851)

2,906
(8,400)

2,702
4,447

940
2,907

1,335
6,239

2,375
(1,868)

$ 227,923 $

302,593 $

193,587

82
8 2

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At December 31, 2015 and 2014, the tax effects of differences that give rise to significant portions of the deferred tax asset

and deferred tax liability are as follows:

(In thousands)

Deferred tax asset:
Loss reserve discounting

Unearned premiums
Other-than-temporary impairments

Restricted stock units
Other

Gross deferred tax asset
Less valuation allowance

Deferred tax asset
Deferred tax liability:

Amortization of intangibles
Deferred policy acquisition costs

Unrealized investment gains
Other

Deferred tax liability
Net deferred tax asset (liability)

2015

2014

$ 100,806 $

77,216

176,465
26,509

62,442
89,761

455,983
(4,037)

451,946

20,316
162,344

115,499
160,598

165,075
45,367

60,061
101,131

448,850
(1,335)

447,515

22,747
152,001

175,111
135,108

458,757
$ (6,811) $

484,967
(37,452)

The Company had current tax receivables of $55,763,000 and $67,623,000 at December 31, 2015 and 2014, respectively.

At December 31, 2015, the Company had foreign net operating loss carryforwards $6.1 million that expire beginning in 2031,
and an additional $43.2 million that have no expiration date. At December 31, 2015, the Company had a valuation allowance of
$4.0 million, as compared to $1.3 million at December 31, 2014. The Company has provided a valuation allowance against
future tax benefits of certain foreign operations. The statute of limitations has closed for the Company’s tax returns through
December 31, 2011.

The realization of the deferred tax asset is dependent upon the Company’s ability to generate sufficient taxable income
in future periods. Based on historical results and the prospects for future current operations, management anticipates that it is
more likely than not that future taxable income will be sufficient for the realization of this asset.

(18) Dividends from Subsidiaries and Statutory Financial Information

The Company’s insurance subsidiaries are restricted by law as to the amount of dividends they may pay without the

approval of regulatory authorities. The Company’s lead insurer, Berkley Insurance Company (BIC), directly or indirectly owns
all of the Company’s other insurance companies. During 2016, the maximum amount of dividends that can be paid by BIC
without such approval is approximately $684 million.

BIC’s combined net income and statutory capital and surplus, as determined in accordance with statutory accounting

practices (SAP), are as follows:

(In thousands)
Net income

Statutory capital and surplus

2015
$ 813,303 $
468,850
$ 5,296,435 $ 5,438,063 $ 4,908,010

2014
757,010 $

2013

The significant variances between SAP and GAAP are that for statutory purposes bonds are carried at amortized cost,

acquisition costs are charged to income as incurred, deferred Federal income taxes are subject to limitations, excess and
assumed workers’ compensation reserves are discounted at different discount rates and certain assets designated as “non-
admitted assets” are charged against surplus. The Commissioner of Insurance of the State of Delaware has allowed BIC to
discount non-tabular workers' compensation loss reserves, which is a permitted practice that differs from SAP. The effect of
using this permitted practice was to increase BIC’s statutory capital and surplus by $294 million at December 31, 2015.

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The National Association of Insurance Commissioners (“NAIC”) has risk-based capital (“RBC”) requirements that
require insurance companies to calculate and report information under a risk-based formula which measures statutory capital
and surplus needs based on a regulatory definition of risk in a company’s mix of products and its balance sheet. This guidance
is used to calculate two capital measurements: Total Adjusted Capital and RBC Authorized Control Level. Total Adjusted
Capital is equal to the Company’s statutory capital and surplus excluding capital and surplus derived from the use of permitted
practices that differ from statutory accounting practices. RBC Authorized Control Level is the capital level used by regulatory
authorities to determine whether remedial action is required. Generally, no remedial action is required if Total Adjusted Capital
is 200% or more of the RBC Authorized Control Level. At December 31, 2015, BIC’s Total Adjusted Capital of $5.002 billion
was 456% of its RBC Authorized Control Level.

See Note 4, Investments in Fixed Maturity Securities, for a description of assets held on deposit as security.

(19) Common Stockholders’ Equity

The weighted average number of shares used in the computation of net income per share was as follows:

Basic
Diluted

2015
124,040,313
130,188,866

2014
127,873,708
133,651,855

2013
135,304,752
140,742,922

Treasury shares have been excluded from average outstanding shares from the date of acquisition. The difference in
calculating basic and diluted net income per share is attributable entirely to the dilutive effect of stock-based compensation
plans.

Changes in shares of common stock outstanding, net of treasury shares, are presented below. Shares of common stock

issued and outstanding do not include shares related to unissued restricted stock units and unexercised stock options.

Balance, beginning of year
Shares issued

Shares repurchased

Balance, end of year

2015

2014

2013

126,748,836
1,061,026

132,233,167
332,137

136,017,732
139,790

(4,502,025)

(5,816,468)

(3,924,355)

123,307,837

126,748,836

132,233,167

The amount of dividends paid is dependent upon factors such as the receipt of dividends from our subsidiaries, our

results of operations, cash flow, financial condition and business needs, the capital and surplus requirements of our
subsidiaries, and applicable insurance regulations that limit the amount of dividends that may be paid by our regulated
insurance subsidiaries.

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(20) Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments as of

December 31, 2015 and 2014:

(In thousands)
Assets:
Fixed maturity securities
Equity securities available for sale
Arbitrage trading account
Loans receivable
Cash and cash equivalents
Trading accounts receivable from brokers and clearing
organizations
Due from broker

Liabilities:
Due to broker
Trading account securities sold but not yet purchased
Subordinated debentures
Senior notes and other debt

2015

2014

Carrying
Value

Fair Value

Carrying
Value

Fair Value

$ 12,444,394 $ 12,462,847 $ 12,705,160 $ 12,725,806
170,991
450,648
325,219
674,441

170,991
450,648
322,012
674,441

150,866
376,697
273,103
763,631

150,866
376,697
275,747
763,631

383,115
1,713

371,034

—

371,034
—

—
37,035
340,320
1,844,621

—
37,035
355,880
2,029,572

23,133
106,079
340,060
2,115,527

23,133
106,079
332,640
2,344,292

The estimated fair values of the Company’s fixed maturity securities, equity securities available for sale and arbitrage

trading account securities are based on various valuation techniques that rely on fair value measurements as described in Note 13
above. The fair value of loans receivable are estimated by using current institutional purchaser yield requirements for loans with
similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the
subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input.

(21) Lease Obligations

The Company and its subsidiaries use office space and equipment under leases expiring at various dates. These leases
are considered operating leases for financial reporting purposes. Some of these leases have options to extend the length of the
leases and contain clauses for cost of living, operating expense and real estate tax adjustments. Future minimum lease
payments, without provision for sublease income, are: $42,470,000 in 2016; $39,443,000 in 2017; $35,286,000 in 2018;
$30,941,000 in 2019; $28,584,000 in 2020 and $105,825,000 thereafter. Rental expense was $46,271,000, $45,198,000 and
$44,752,000 for 2015, 2014 and 2013, respectively.

(22) Commitments, Litigation and Contingent Liabilities

In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its

insurance and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are
considered in the establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal
actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of
insurance claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial
condition. However, adverse outcomes on such matters are possible, from time to time, and could be material to the Company’s
results of operations in any particular financial reporting period.

At December 31, 2015, the Company had commitments to invest up to $117 million and $485 million in certain

investment funds and real estate construction projects, respectively.

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(23) Stock Incentive Plan

The Company has not issued any stock options under its stock incentive plans since 2004, and there were no outstanding

options at December 31, 2015 and December 31, 2014.

Pursuant to the stock incentive plan, the Company may issue restricted stock units (RSUs) to employees of the Company

and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other vesting and
forfeiture provisions contained in the award agreement. The following table summarizes RSU information for the three years
ended December 31, 2015:

RSUs granted and unvested at beginning of period:

Granted

Vested
Canceled

RSUs granted and unvested at end of period:

2015

2014

2013

5,330,445

4,491,520

4,701,120

997,522

1,154,950

108,400

(1,938,000)
(231,642)

(81,500)
(234,525)

(146,250)
(171,750)

4,158,325

5,330,445

4,491,520

Upon vesting, shares of the Company’s common stock equal to the number of vested RSUs are issued or deferred to a

later date, depending on the terms of the specific award agreement. As of December 31, 2015, 4,275,474 RSUs had been
deferred. RSUs that have not yet vested and vested RSUs that have been deferred are not considered to be issued and
outstanding shares.

The fair value of RSUs at the date of grant are recorded as unearned compensation, a component of stockholders’ equity,
and expensed over the vesting period. Following is a summary of changes in unearned compensation for the three years ended
December 31, 2015:

(In thousands)
Unearned compensation at beginning of year

RSUs granted, net of cancellations
RSUs expensed

RSUs forfeitures

Unearned compensation at end of year

(24) Compensation Plans

2015

2014

2013

$ 88,015 $

50,442

(30,691)
(4,228)

73,205 $
51,575

93,653
4,406

(27,966)
(8,799)

(22,881)
(1,973)

$ 103,538 $

88,015 $

73,205

The Company and its subsidiaries have profit sharing plans in which substantially all employees participate. The plans

provide for minimum annual contributions of 5% of eligible compensation; contributions above the minimum are discretionary
and vary with each participating subsidiary’s profitability. Employees will become eligible to participate in the plan on the first
day of the calendar quarter following the first full calendar quarter after the employee's date of hire provided the employee has
completed 250 hours of service during the calendar quarter. The plans provide that 40% of the contributions vest immediately
and that the remaining 60% vest at varying percentages based upon years of service. Profit sharing expense was $42 million,
$38 million, and $34 million in 2015, 2014 and 2013, respectively.

The Company has a long-term incentive compensation plan ("LTIP") that provides for incentive compensation to key

executives based on the growth in the company's book value per share over a five year period.

The following table summarizes the outstanding LTIP awards as of December 31, 2015:

2011 grant
2013 grant

2014 grant
2015 grant

Units Outstanding

Maximum Value

Inception to date earned
through December 31, 2015
on outstanding units

172,850 $ 43,212,500
204,500

51,125,000

216,750
213,250

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21,675,000
21,325,000

$ 34,331,000
23,804,000

6,559,000
3,205,000

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The following table summarizes the LTIP expense for each of the three years ended December 31, 2015:

(In thousands)

2011 grant
2013 grant

2014 grant
2015 grant

Total

(25) Retirement Benefits

2015

2014

2013

$ 7,397 $

7,336

2,935
3,205

$ 20,873 $

9,855 $
9,493

3,663

6,939
7,231
—
— —
14,170

23,011 $

The Company and its executive chairman of the board entered into an unfunded supplemental benefit agreement (SBA)

in 2004. On March 28, 2013, the Company agreed to terminate and distribute the retirement benefit of the SBA. As a result, the
Company distributed retirement benefits of $0.3 million and $4.6 million in 2013 and 2014, respectively. The final retirement
benefit of $59.4 million, which was fully accrued at December 31, 2014, was distributed in 2015. Net retirement benefit
expense was $13,357,000, $9,994,000 and none in 2013, 2014, and 2015 respectively.

(26) Supplemental Financial Statement Data

Other operating costs and expenses consist of the following:

(In thousands)
Amortization of deferred policy acquisition costs
Other underwriting expenses

Service company expenses
Net foreign currency losses (gains)

Other costs and expenses
Total

(27) Industry Segments

2015
$ 1,102,492
903,006

127,365
400

2014

$ 1,053,397 $
843,133

102,726
(27)

2013
991,070
780,058

88,662
(10,120)

156,487
$ 2,289,750

158,227

151,014
$ 2,157,456 $ 2,000,684

The Company’s reportable segments include the following three business segments, plus a corporate segment:
•

Insurance-Domestic - commercial insurance business, including excess and surplus lines and admitted lines, primarily
throughout the United States;

•

Insurance-International - insurance business primarily in the United Kingdom, Continental Europe, South America,
Canada, Scandinavia, Asia, and Australia;

• Reinsurance-Global - reinsurance business on a facultative and treaty basis, primarily in the United States, United

Kingdom, Continental Europe, Australia, the Asia-Pacific Region, and South Africa.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

Income tax expense and benefits are calculated based upon the Company’s overall effective tax rate.

Summary financial information about the Company’s reporting segments is presented in the following table. Income (loss)
before income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or
allocated to the operation of each segment.

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(In thousands)

December 31, 2015:
Insurance-Domestic

Insurance-International
Reinsurance-Global

Corporate, other and eliminations(1)

Net investment gains

Consolidated

December 31, 2014:
Insurance-Domestic

Insurance-International
Reinsurance-Global

Corporate, other and eliminations(1)

Net investment gains

Consolidated

December 31, 2013:
Insurance-Domestic

Insurance-International
Reinsurance-Global

Corporate, other and eliminations (1)

Net investment gains
Consolidated

(In thousands)

Insurance-Domestic
Insurance-International

Reinsurance-Global
Corporate, other and eliminations(1)

Consolidated

Revenues

Earned
Premiums

Investment
Income

Other

Total

Pre-Tax
Income
(Loss)

Net
Income
(Loss)

$ 4,659,359 $

358,935 $

96,487 $ 5,114,781 $

724,667 $

495,082

772,141
609,109
—
—

51,522
74,226

27,962

—

—
—

464,392

92,324

823,663
683,335

492,354

92,324

51,926
94,852

37,204
66,627

(231,739)

(155,230)

92,324

60,011

$ 6,040,609 $

512,645 $

653,203 $ 7,206,457 $

732,030 $

503,694

$ 4,271,933 $

428,632 $

106,853 $ 4,807,418 $

796,309 $

539,461

802,375
670,110
—

—

55,407
88,821

28,025

—

—
—

421,920

254,852

857,782
758,931

449,945

254,852

29,779
115,677

22,182
79,720

(244,421)

(158,133)

254,852

165,654

$ 5,744,418 $

600,885 $

783,625 $ 7,128,928 $

952,196 $

648,884

$ 3,782,416 $

404,280 $

107,517 $ 4,294,213 $

648,740 $

449,981

723,151
720,970
—
—

47,039
89,090

3,882
—

—
—

408,645
121,544

770,190
810,060

412,527
121,544

56,922
110,425

(238,743)
121,544

40,292
78,013

(142,479)
74,118

$ 5,226,537 $

544,291 $

637,706 $ 6,408,534 $

698,888 $

499,925

Identifiable Assets

December 31,
2015

December 31,
2014

$ 16,351,737 $

1,711,993

2,441,340
1,225,897

16,065,409
1,879,438

2,713,554
1,058,290

$ 21,730,967 $ 21,716,691

(1) Corporate, other and eliminations represent corporate revenues and expenses and other items that are not allocated to

business segments.

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Net premiums earned by major line of business are as follows:

(In thousands)

Insurance-Domestic
Other liability

Workers' compensation
Short-tail lines

Commercial automobile

Professional liability
Total Insurance-Domestic

Insurance-International
Other liability

Workers' compensation

Short-tail lines
Commercial automobile

Professional liability

Total Insurance-International

Reinsurance-Global
Casualty

Property

Total Reinsurance-Global
Total

2015

2014

2013

$ 1,546,157 $ 1,449,425 $ 1,259,376

1,269,785
925,468

1,126,704
875,898

548,450

369,499

526,344

293,562

995,047
774,809

486,759

266,425

4,659,359

4,271,933

3,782,416

103,974

93,728

373,415
125,628

75,396

772,141

92,411

71,997

415,123
116,369

106,475

802,375

65,528

84,637

336,814
130,020

106,152

723,151

421,811

187,298
609,109

487,264

182,846
670,110

507,790

213,180
720,970

$ 6,040,609 $ 5,744,418 $ 5,226,537

(28) Quarterly Financial Information (Unaudited)

The following is a summary of quarterly financial data:

(In thousands. except per share data)
Three months ended

Revenues
Net income

Net income per share(1)
Basic

Diluted

Three months ended
Revenues
Net income

Net income per share(1)
Basic

Diluted

2015

March 31

June 30

September 30

December 31

$ 1,744,679 $

118,307

1,789,765 $
123,035

1,860,957 $
152,607

1,811,056
109,745

0.94

0.89

0.99

0.95

2014

1.24

1.18

0.89

0.85

March 31

June 30

September 30

December 31

$ 1,706,906 $

169,673

1,796,989 $
179,961

1,840,605 $
188,539

1,784,428
110,711

1.31

1.25

1.41

1.35

1.48

1.42

0.87

0.83

(1) Net income per share (“EPS”) in each quarter is computed using the weighted-average number of shares outstanding
during that quarter, while EPS for the full year is computed using the weighted-average number of shares outstanding
during the year. Thus, the sum of the four quarters EPS does not necessarily equal the full-year EPS.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
No ne.

ITEM 9A. CONTROLS AND PROCEDURES

The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an

evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b)
as of the end of the period covered by this annual report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company has in place effective controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports it files or submits under the Exchange Act and the rules
thereunder, is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and
forms.

During the quarter ended December 31, 2015, there have been no changes in our internal control over financial

reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.

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Management's Report On Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
Treadway Commission. 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, 2015.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
W. R. Berkley Corporation:

We have audited W. R. Berkley Corporation's internal control over financial reporting as of December 31, 2015
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). W. R. Berkley Corporation'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 Management's Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
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. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

In our opinion, W. R. Berkley Corporation maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2015, 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 States), the consolidated balance sheets of W. R. Berkley Corporation as of December 31, 2015 and 2014,
and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows
for each of the years in the three-year period ended December 31, 2015, and our report dated February 22, 2016
expressed an unqualified opinion on those consolidated financial statements.

New York, New York
February 22, 2016

/S/ KPMG LLP

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ITEM 9B. OTHER INFORMATION

None.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

PART III

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED

STOCKHOLDER MATTERS

(a) Security ownership of certain beneficial owners

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

(b) Security ownership of management

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange

Commission within 120 days after December 31, 2015, and which is incorporated herein by reference.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

Index to Financial Statements

PART IV

The schedules to the consolidated financial statements listed below should be read in conjunction with the consolidated
financial statements included in this Annual Report on Form 10-K. Financial statement schedules not included in this Annual
Report on Form 10-K have been omitted because they are not applicable or required information is shown in the financial
statements or notes thereto.

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Index to Financial Statement Schedules

Independent Registered Public Accountants’ Report on Schedules

Schedule II — Condensed Financial Information of Registrant

Schedule III — Supplementary Insurance Information

Schedule IV — Reinsurance

Schedule V — Valuation and Qualifying Accounts

Schedule VI — Supplementary Information Concerning Property — Casualty Insurance Operations

( b ) Exhib its

The exhibits filed as part of this report are listed on pages 96 - 99 hereof.

Page

100

101

105

106

107

108

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Pursuant to the requirements of Section 13 or 15(d) 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.

SIGNATURES

W. R. BERKLEY CORPORATION

By /s/ W. Robert Berkley, Jr.

W. Robert Berkley, Jr., President and Chief

Executive Officer

February 22, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ William R. Berkley
William R. Berkley

Executive Chairman
of the Board of Directors

February 22, 2016

/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.

President, Chief Executive Officer
and Director
(Principal executive officer)

/s/ Christopher L. Augostini
Christopher L. Augostini

/s/ Ronald E. Blaylock
Ronald E. Blaylock

/s/ Mark E. Brockbank
Mark E. Brockbank

/s/ George G. Daly
George G. Daly

/s/ Mary C. Farrell
Mary C. Farrell

/s/ Jack H. Nusbaum
Jack H. Nusbaum

/s/ Mark L. Shapiro
Mark L. Shapiro

/s/ Eugene G. Ballard
Eugene G. Ballard

Director

Executive Vice President and
Chief Financial Officer
(Principal financial officer
and principal accounting officer)

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ITEM 15. (b) EXHIBITS

N u mb e r

(3.1)

(3.2)

(3.3)

The Company’s Restated Certificate of Incorporation, as amended through May 10, 2004 (incorporated by reference
to Exhibits 3.1 and 3.2 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the
Commission on August 6, 2003).

Amendment, dated May 11, 2004, to the Company’s Restated Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.2 of the Company’s Quarterly report on Form 10-Q (File No. 1-15202) filed with the
Commission on August 5, 2004).

Amendment, dated May 16, 2006, to the Company’s Restated Certificate of Incorporation, as amended (incorporated
by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the
Commission on May 17, 2006).

(3.4)

Amended and Restated By-Laws (incorporated by reference to Exhibit 3 (ii) of the Company’s Current Report on
Form 8-K (File No. 1-15202) filed with the Commission on August 5, 2015).

(4.1)

(4.2)

(4.3)

(4.4)

(4.5)

(4.6)

(4.7)

Indenture, dated as of February 14, 2003, between the Company and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K (File No. 1-15202) filed
with the Commission of March 31, 2003).

Third Supplemental Indenture, dated as of August 24, 2004, between the Company and The Bank of New York, as
Trustee, relating to $150,000,000 principal amount of the Company’s 6.150% Senior Notes due 2019, including
form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.4 of the Company’s Annual Report on Form
10-K (File No. 1-15202) filed with the Commission on March 14, 2005).

Fifth Supplemental Indenture, dated as of February 9, 2007, between the Company and The Bank of New York, as
Trustee, relating to $250,000,000 principal amount of the Company’s 6.25% Senior Notes due 2037, including form
of the Notes as Exhibit A (incorporated by reference to Exhibit 4.7 of the Company’s Annual Report on Form 10-K
(File No. 1-15202) filed with the Commission on March 1, 2007).

Sixth Supplemental Indenture, dated as of September 14, 2009, between the Company and The Bank of New York
Mellon, as Trustee, relating to $300,000,000 principal amount of the Company’s 7.375% Senior Notes due 2019,
including form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.7 of the Company’s Annual Report
on Form 10-K (File No. 1-15202) filed with the Commission on February 26, 2010).

Seventh Supplemental Indenture, dated as of September 16, 2010, between the Company and The Bank of New
York Mellon, as Trustee, relating to $300,000,000 principal amount of the Company’s 5.375% Senior Notes due
2020, including form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company’s Current
Report on Form 8-K (File No. 1-15202) filed with the Commission on September 16, 2010).

Eighth Supplemental Indenture, dated as of March 16, 2012, between the Company and The Bank of New York
Mellon, as Trustee, relating to $350,000,000 principal amount of the Company’s 4.625% Senior Notes due 2022,
including form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report
on Form 8-K (File No. 1-15202) filed with the Commission on March 16, 2012).

Ninth Supplemental Indenture, dated as of August 6, 2014, between the Company and The Bank of New York
Mellon, as Trustee, relating to $350,000,000 principal amount of the Company’s 4.75% Senior Notes due 2044,
including form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current Report
on Form 8-K (File No. 1-15202) filed with the Commission on August 6, 2014).

(4.8)

Subordinated Indenture, dated as of May 2, 2013, between the Company and The Bank of New York Mellon, as
Trustee (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K (File No. 1-15202)
filed with the Commission on May 2, 2013).

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(4.90) First Supplemental Indenture, dated as of May 2, 2013, between the Company and The Bank of New York Mellon, as

Trustee, relating to $350,000,000 principal amount of the Company's 5.625% Subordinated Debentures due 2053,
including the form of the Securities as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company's Current
Report on Form 8-K (File No. 1-15202) filed with the Commission on May 2, 2013).

(4.10) The instruments defining the rights of holders of the other long term debt securities of the Company are omitted
pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Company agrees to furnish supplementally
copies of these instruments to the Commission upon request.

(10.1) W. R. Berkley Corporation 2003 Stock Incentive Plan (incorporated by reference to Annex A of the Company’s 2003

Proxy Statement (File No. 1-15202) filed with the Commission on April 14, 2003).

(10.2) W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by reference to Annex A of the Company’s 2015

Proxy Statement (File No. 1-15202) filed with the Commission on April 20, 2015).

(10.3) Form of 2014 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012

Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
(File No. 1-15202) filed with the Commission on November 7, 2014).

(10.4) Form of 2015 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012

Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
(File No. 1-15202) filed with the Commission on November 9, 2015).

(10.5) Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan

(incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File No. 1-15202)
filed with the Commission on November 8, 2012).

(10.6) Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan

(incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202)
filed with the Commission on May 3, 2005).

(10.7) Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan

(incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202)
filed with the Commission on August 6, 2010).

(10.8) Form of Restricted Stock Unit Agreement for grant of April 4, 2003 (incorporated by reference to Exhibit 10.2 of the
Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on August 6, 2003).

(10.9) W. R. Berkley Corporation Deferred Compensation Plan for Officers as amended and restated effective December 3,

2007 (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K (File No. 1-15202)
filed with the Commission on December 19, 2007).

(10.10) W. R. Berkley Corporation Deferred Compensation Plan for Directors as amended and restated effective December
3, 2007 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No.
1-15202) filed with the Commission on December 19, 2007).

(10.11) W. R. Berkley Corporation 2007 Annual Incentive Compensation Plan (incorporated by reference to Annex A of the

Company’s 2006 Proxy Statement (File No. 1-15202) filed with the Commission on April 18, 2006).

(10.12) W. R. Berkley Corporation 2009 Long-Term Incentive Plan (incorporated by reference to Annex A of the Company’s

2009 Proxy Statement (File No. 1-15202) filed with the Commission on April 17, 2009).

(10.13) Form of 2011 Performance Unit Award Agreement under the W. R. Berkley Corporation 2009 Long-Term Incentive
Plan (incorporated by reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K (File No. 1-15202)
filed with the Commission on February 28, 2012).

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(10.14) W. R. Berkley Corporation 2014 Long-Term Incentive Plan (incorporated by reference to Annex A of the Company’s

2014 Proxy Statement (File No. 1-15202) filed with the Commission on April 7, 2014).

(10.15) Form of 2014 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-
15202) filed with the Commission on May 12, 2014).

(10.16) Form of 2015 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-
15202) filed with the Commission on May 4, 2015).

(10.17) W. R. Berkley Corporation 2009 Directors Stock Plan (incorporated by reference to Annex B of the Company’s

2015 Proxy Statement (File No. 1-15202) filed with the Commission on April 20, 2015).

(10.18) Supplemental Benefits Agreement between William R. Berkley and the Company as amended and restated as of
December 21, 2011 (incorporated by reference to Exhibit 10.14 of the Company's Annual Report on Form 10-K
(File No. 1-15202) filed with the Commission on February 28, 2012).

(10.19) Form of Dividend Equivalent Rights Award Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive
Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No.
1-15202) filed with the Commission on August 7, 2015).

(14)

Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14 of the Company’s Annual
Report on Form 10-K (File No. 1-15202) filed with the Commission on March 14, 2005).

(21)

Following is a list of the Company’s significant subsidiaries and other operating entities. Subsidiaries of subsidiaries
are indented and the parent of each such corporation owns 100% of the outstanding voting securities of such
corporation except as noted below.

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Berkley International, LLC (2)
Queen's Island Insurance Company, Ltd.
Signet Star Holdings, Inc.
Berkley Insurance Company
Admiral Insurance Company

Admiral Indemnity Company
Carolina Casualty Insurance Company
Clermont Insurance Company
Nautilus Insurance Company

Berkley Assurance Company

Berkley Life and Health Insurance Company

Berkley London Holdings, Inc.

W. R. Berkley London Holdings, Limited

W. R. Berkley Insurance (Europe), Limited
W. R. Berkley Europe AG
Berkley National Insurance Company
Berkley Regional Insurance Company
Acadia Insurance Company
American Mining Insurance Company
Berkley Regional Specialty Insurance Company
Continental Western Insurance Company
Firemen’s Insurance Company of Washington, D.C.
Tri-State Insurance Company of Minnesota
Union Insurance Company
Gemini Insurance Company
Great Divide Insurance Company
Key Risk Insurance Company
Midwest Employers Casualty Company
Preferred Employers Casualty Company
Riverport Insurance Company
StarNet Insurance Company

Jurisdiction of
Incorporation
New York
Bermuda
Delaware
Delaware
Delaware
Delaware
Iowa
Iowa
Arizona
Iowa
Iowa
Delaware
United Kingdom
United Kingdom
Liechtenstein
Iowa
Delaware
New Hampshire
Iowa
Delaware
Iowa
Delaware
Iowa
Iowa
Delaware
North Dakota
North Carolina
Delaware
California
Iowa
Delaware

Percentage
owned by the
Company (1)

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

(1) W. R. Berkley Corporation is the ultimate parent. The subsidiary of a direct parent is indicated by an indentation, and

its percentage ownership is as indicated in this column.

(2) Berkley International, LLC is held by W. R. Berkley Corporation and its subsidiaries as follows: W. R. Berkley
Corporation (2%), Berkley Regional Insurance Company (14%) and Berkley Insurance Company (84%).

(23)

Consent of Independent Registered Public Accounting Firm.

(31.1)

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a).

(31.2)

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a).

(32.1)

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 2002.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
W. R. Berkley Corporation:

Under date of February 22, 2016, we reported on the consolidated balance sheets of W. R. Berkley Corporation and
subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of income, comprehensive
income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2015,
which are included in the Annual Report on Form 10-K for the year ended December 31, 2015. In connection with our
audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial
statement schedules II through VI. These financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/S/ KPMG LLP

New York, New York
February 22, 2016

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W. R. Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)

(In thousands)
Assets:
Cash and cash equivalents

Fixed maturity securities available for sale at fair value (cost $201,256 and $272,283 at

December 31, 2015 and 2014, respectively)

Equity securities available for sale, at fair value (cost $3,430 in 2015 and $3,738 in 2014)

Investment in subsidiaries
Deferred Federal income taxes

Current Federal income taxes
Property, furniture and equipment at cost, less accumulated depreciation

Other assets
Total assets
Liabilities and stockholders’ equity
Liabilities:

Due to subsidiaries
Other liabilities

Deferred Federal income taxes
Subordinated debentures

Senior notes

Total liabilities
Stockholders’ equity:

Preferred stock
Common stock
Additional paid-in capital

Retained earnings (including accumulated undistributed net income of subsidiaries of

$4,746,934 and $4,700,821 at December 31, 2015 and 2014, respectively)

Accumulated other comprehensive income (loss)
Treasury stock, at cost
Total stockholders’ equity

Total liabilities and stockholders’ equity

Schedule II

December 31,

2015

2014

$ 195,658 $

90,693

201,738
3,430

6,454,065
37,135

51,512
13,150

6,153

$ 6,962,841 $

273,773
3,738

6,693,731
—
62,882
9,852

6,978
7,141,647

$ 143,669 $

115,737
—
340,320

87,540
162,648

149
340,060

1,762,869

1,961,305

2,362,595

2,551,702

—
47,024
1,005,455

—
47,024
991,512

6,178,070
(66,698)
(2,563,605)

5,732,410
183,550
(2,364,551)

4,600,246

4,589,945

$ 6,962,841 $

7,141,647

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

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W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Income (Parent Company)

Schedule II, Continued

(In thousands)
Management fees and investment income including dividends from
subsidiaries of $642,421, $503,483, and $269,626 for the years ended
December 31, 2015, 2014 and 2013, respectively
Net investment gains

Years Ended December 31,

2015

2014

2013

655,318 $
696

515,775 $
5,487

277,223
24,550

Other income

Total revenues
Operating costs and expense
Interest expense
Income before federal income taxes

Federal income taxes:

348

656,362
143,391
128,248
384,723

450

521,712
148,288
125,352
248,072

Federal income taxes provided by subsidiaries on a separate return basis
Federal income tax expense on a consolidated return basis

Net expense
Income before undistributed equity in net income of subsidiaries

Equity in undistributed net income of subsidiaries
Net income

272,180
(199,322)

72,858
457,581

366,721
(273,310)

93,411
341,483

46,113
503,694 $

307,401
648,884 $

223

301,996
122,562
120,066
59,368

225,845
(154,928)

70,917
130,285

369,640
499,925

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

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W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Cash Flows (Parent Company)

Schedule II, Continued

(In thousands)
Cash flows from (used in) from operating activities:
Net income

Adjustments to reconcile net income to net cash from operating activities:
Net investment gains
Depreciation and amortization
Equity in undistributed earnings of subsidiaries
Tax payments received from subsidiaries
Federal income taxes provided by subsidiaries on a separate return basis
Stock incentive plans
Change in:

Federal income taxes
Other assets
Other liabilities
Accrued investment income
Net cash from (used in) operating activities
Cash from (used in) investing activities:

Proceeds from sales of fixed maturity securities
Proceeds from maturities and prepayments of fixed maturity securities
Proceeds from sales of equity securities

Cost of purchases of fixed maturity securities
Cost of purchases of equity securities
Cost of acquired companies
Investments in and advances to subsidiaries, net
Change in balance due to security broker
Net additions to real estate, furniture & equipment

Net cash from (used in) investing activities
Cash from (used in) financing activities:

Net proceeds from issuance of senior notes
Net proceeds from stock options exercised
Repayment of senior notes
Purchase of common treasury shares

Cash dividends to common stockholders

Net cash from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Years Ended December 31,

2015

2014

2013

503,694 $

648,884 $

499,925

(696)
2,693
(46,113)
311,482
(272,180)
29,725

51,772
301
(92,752)
524
488,450

(5,487)
2,916
(307,401)
462,809
(366,721)
28,068

(15,239)
(364)
(39,780)
(820)
406,865

(24,550)
10,397
(369,640)
77,305
(225,845)
23,784

21,866
(821)
(15,470)
967
(2,082)

380,986
123,639
308

289,683
103,646
7,356
(605,768)

230,854
68,918
23,395
(79,132)
(4,668)
— (82,879) —
(58,454)
6,918

(432,645)
—

34,191
(2,151)

—

30,338
—
(4,425)

(1,615)

(1,896)

98,201

(257,537)

185,935

—
—
(200,000)
(223,652)
(58,034)
(481,686)
104,965

344,472
—
—
(238,933)
(181,489)
(75,950)
73,378

339,627
53
(450,000)
(166,473)
(52,717)
(329,510)
(145,657)

90,693

17,315

162,972

195,658 $

90,693 $

17,315

See accompanying Report of Independent Registered Public Accounting Firm and note to condensed financial statements.

103
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W. R. Berkley Corporation

Condensed Financial Information of Registrant, Continued

December 31, 2015

Note to Condensed Financial Statements (Parent Company)

The accompanying condensed financial statements should be read in conjunction with the notes to consolidated financial
statements included elsewhere herein. Reclassifications have been made in the 2014 and 2013 financial statements as
originally reported to conform them to the presentation of the 2015 financial statements.

The Company files a consolidated federal tax return with the results of its domestic insurance subsidiaries included on a

statutory basis. Under present Company policy, federal income taxes payable by subsidiary companies on a separate-return
basis are paid to W. R. Berkley Corporation, and the Company pays the tax due on a consolidated return basis.

104
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80793in_10k.indd 105

3/14/16 5:48 PM

W. R. Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2015, 2014 and 2013

Schedule IV

(In thousands, other than percentages)

Year ended December 31, 2015:

Insurance-Domestic

Insurance-International
Reinsurance-Global

Total

Year ended December 31, 2014:

Insurance-Domestic
Insurance-International

Reinsurance-Global

Total

Year ended December 31, 2013:
Insurance-Domestic

Insurance-International

Reinsurance-Global

Total

Premiums Written

Direct
Amount

Ceded
to Other
Companies

Assumed
from Other
Companies

Net
Amount

Percentage
of Amount
Assumed
to Net

5,521,447 $

871,358 $

162,741 $

4,812,830

874,359

16,727

144,737

44,383

48,945

625,774

778,567

598,118

6,412,533 $

1,060,478 $

837,460 $

6,189,515

5,214,849 $
927,799

866,092 $
156,195

168,830 $
56,472

4,517,587
828,076

42,594

43,604

652,294

651,284

$ 6,185,242 $

1,065,891 $

877,596 $

5,996,947

4,699,348 $

809,368 $ 104,407

$ 3,994,387

887,027

39,797

142,591

58,959

11,749

768,763

756,185

749,601

5,626,172 $

1,010,918 $

884,919 $

5,500,173

3.4%

6.3%

104.6%

13.5%

3.7%
6.8%

100.2%

14.6%

2.6%

1.6%

102.6%

16.1%

See accompanying Report of Independent Registered Public Accounting Firm.

106
106

80793in_10k.indd 106

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W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2015, 2014 and 2013

Schedule V

(In thousands)
Year ended December 31, 2015:
Premiums and fees receivable
Due from reinsurers

Opening
Balance

Additions-
Charged to
Expense

Deduction-
Amounts
Written Off

Ending
Schedule V
Balance

W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2015, 2014 and 2013
1,144

$ 21,446 $

6,281 $
(24)

(5,203) $
(100)

22,524
1,020

Deferred federal and foreign income taxes
Loan loss reserves

Total
(In thousands)
Year ended December 31, 2014:
Year ended December 31, 2015:
Premiums and fees receivable
Premiums and fees receivable
Due from reinsurers
Due from reinsurers

Deferred federal and foreign income taxes
Deferred federal and foreign income taxes
Loan loss reserves
Loan loss reserves

Total
Total
Year ended December 31, 2013:
Year ended December 31, 2014:
Premiums and fees receivable
Premiums and fees receivable
Due from reinsurers
Due from reinsurers

Loan loss reserves
Deferred federal and foreign income taxes
Loan loss reserves
Total

Year ended December 31, 2013:
Premiums and fees receivable
Due from reinsurers

Loan loss reserves
Total

1,335
2,486

2,702
Additions-
(392)
Charged to
8,567 $
Expense

—
Deduction-
Amounts
Written Off

(5,303) $

4,037
2,094

Ending
Balance

29,675

Opening
Balance

$ 26,411 $

$ 20,951 $
$ 21,446 $

1,385
1,144

—
1,335
2,087
2,486

$ 24,423 $
$ 26,411 $

$ 22,919 $
$ 20,951 $

1,680
1,385

5,620
—
2,087

$ 30,219 $

5,944 $
6,281 $
301
(24)

1,335
2,702
399
(392)
7,979 $
8,567 $

3,133 $
5,944 $
186
301

308
1,335
399
3,627 $

(5,449) $
(5,203) $
(542)
(100)

—
—
—

21,446
22,524
1,144
1,020

1,335
4,037
2,486
2,094

(5,991) $
(5,303) $

26,411
29,675

(5,101) $
(5,449) $
(481)
(542)

(3,841)
—
—
(9,423) $

20,951
21,446
1,385
1,144

2,087
1,335
2,486
24,423

7,979 $

(5,991) $

26,411

$ 22,919 $

1,680

5,620

$ 30,219 $

3,133 $
186

308
3,627 $

(5,101) $
(481)

(3,841)
(9,423) $

20,951
1,385

2,087
24,423

Total
See accompanying Report of Independent Registered Public Accounting Firm.

$ 24,423 $

See accompanying Report of Independent Registered Public Accounting Firm.

107

107
107

80793in_10k.indd 107

3/14/16 5:48 PM

W. R. Berkley Corporation and Subsidiaries
Supplementary Information Concerning Property-Casualty Insurance Operations
Years Ended December 31, 2015, 2014 and 2013

Schedule VI

(In thousands)
Deferred policy acquisition costs
Reserves for losses and loss expenses

Unearned premium
Net premiums earned

Net investment income
Losses and loss expenses incurred:

Current year
Prior years

Loss reserve discount accretion
Amortization of deferred policy acquisition costs

Paid losses and loss expenses
Net premiums written

2015 2014 2013

$ 513,128 $
10,669,150

3,137,133
6,040,609

488,525 $

10,369,701

3,026,732
5,744,418

452,101
10,080,941

2,781,437
5,226,537

512,645

600,885

544,291

3,653,561
(46,713)

49,422
1,102,492

3,257,015
6,189,515

3,495,825
(75,764)

70,506
1,053,397

3,115,227
5,996,947

3,221,393
(78,810)

54,441
991,070

2,878,071
5,500,173

See accompanying Report of Independent Registered Public Accounting Firm.

108
108

80793in_10k.indd 108

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This Page Intentionally Left Blank

80793in_10k.indd 109

4/7/16 9:07 PM

Operating Units

125

Berkley Insurance Company
475 Steamboat Road
Greenwich, Connecticut 06830
Tel: (203) 542 3800

William R. Berkley, Chairman
W. Robert Berkley, Jr., President

Insurance-Domestic

Acadia Insurance Group
One Acadia Commons
Westbrook, Maine 04092
Tel: (207) 772 4300
www.acadiainsurance.com

Douglas M. Nelson, President

Albany, New York
Bedford, New Hampshire
Marlborough, Massachusetts
Rocky Hill, Connecticut
South Burlington, Vermont
Syracuse, New York

Tel: (800) 773 4300
Tel: (800) 224 8850
Tel: (888) 665 1170
Tel: (866) 382 0036
Tel: (800) 224 8847
Tel: (866) 811 7722

Admiral Insurance Company
1000 Howard Boulevard, Suite 300
P. O. Box 5430
Mount Laurel, New Jersey 08054
Tel: (856) 429 9200
www.admiralins.com

Steven Zeitman, President and Chief Executive Officer

Atlanta, Georgia
Austin, Texas
Chicago, Illinois
Seattle, Washington

Tel: (770) 476 1561
Tel: (512) 795 0766
Tel: (312) 368 1124
Tel: (206) 467 6511

American Mining Insurance Group
3490 Independence Drive
Birmingham, Alabama 35209
Tel: (205) 870 3535
www.americanmining.com

Chandler F. Cox, Jr., President and Chief Executive Officer

Bettendorf, Iowa
Johnstown, Pennsylvania
Las Vegas, Nevada
Lexington, Kentucky

Tel: (563) 345 6311
Tel: (814) 255 0200
Tel: (702) 754 5800
Tel: (859) 971 1955

Berkley Accident and Health
2445 Kuser Road, Suite 201
Hamilton Square, New Jersey 08690
Tel: (609) 584 6990
www.berkleyah.com

Christopher C. Brown, President and Chief
Executive Officer

Accident Special Risk Division

757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 822 3333

Susan M. Clark, President

Atlanta, Georgia
Charlotte, North Carolina
Chicago, Illinois
Cleveland, Ohio
Dallas, Texas
Denver, Colorado
Hamilton Square, New Jersey
Kansas City, Kansas
Marlborough, Massachusetts
Minneapolis, Minnesota
Philadelphia, Pennsylvania
Seattle, Washington
Walnut Creek, California

Tel: (678) 387 1823
Tel: (980) 214 1353
Tel: (312) 485 9249
Tel: (440) 728 1805
Tel: (972) 849 7406
Tel: (303) 667 5198
Tel: (973) 616 0685
Tel: (913) 515 7374
Tel: (508) 573 6102
Tel: (303) 667 5198
Tel: (908) 415 2711
Tel: (425) 401 4246
Tel: (480) 529 6787

Berkley Agribusiness Risk Specialists
11201 Douglas Avenue
Urbandale, Iowa 50322
Tel: (800) 382 7314
www.berkleyag.com

Michael Ekiss, President

Berkley Alliance Managers
30 South Pearl Street, 6th Floor
Albany, New York 12138
Tel: (518) 407 0088

Stephen L. Porcelli, President

Berkley Construction Professional Underwriters

Tel: (678) 387 1816
www.berkleycp.com

Berkley Design Professional Underwriters

Tel: (405) 805 6635
www.berkleydp.com

80793in_txt.indd 125

4/7/16 9:17 PM

W. R. Berkley Corporation 2015 Annual Report

126

Berkley Aviation
1101 Anacapa Street, Suite 200
Santa Barbara, California 93101
Tel: (805) 898 7640
www.berkleyaviation.com

Peter Jarrett, President, Global Aviation Practice Leader

Atlanta, Georgia
Boston, Massachusetts
London, England

Tel: (678) 987 1754
Tel: (617) 310 8227
Tel: (44) 207 088 1967

Berkley Custom Insurance
Three Stamford Plaza
301 Tresser Boulevard, 8th Floor
Stamford, Connectcut 06901
Tel: (203) 905 7561
www.berkleycustom.com

Michael P. Fujii, President and Chief Executive Officer

Berkley Custom Insurance Services, LLC

Los Angeles, California

Tel: (213) 417 5430

BXM Insurance Services, Inc.

Chicago, Illinois
Los Angeles, California

Tel: (312) 368 1107
Tel: (213) 891 9259

Berkley FinSecure
849 Fairmount Avenue, Suite 301
Towson, Maryland 21286
Tel: (866) 539 3995
www.berkleyfinsecure.com

Michael P. Dandini, President

Niles, Michigan
Ext. 6325

Tel: (866) 539 3995

Berkley Crime

Tel: (844) 44 CRIME
www.berkleycrime.com

Berkley Fire & Marine Underwriters
425 North Martingale Road, Suite 1520
Schaumburg, Illinois 60173
Tel: (972) 719 2406
www.berkleymarine.com

John T. Geary, President

Berkley Global Product Recall Management
80 Broad Street, 32nd Floor
New York, New York 10004
Tel: (212) 413 2450

Louis Lubrano, President

Dallas, Texas
Los Angeles, California
San Francisco, California
London, England

Tel: (972) 552 6100
Tel: (213) 372 1727
Tel: (415) 417 5950
Tel: (44) 207 088 1900

Berkley Healthcare Professional Underwriters
Berkley Healthcare Professional Insurance Services, LLC

220 Petaluma Avenue, Suite A
Sebastopol, California 95472
Tel: (707) 829 4740
www.berkleyhpl.com

Collin J. Suttie, President

Berkley Latin America and
Caribbean Managers
600 Brickell Avenue, Suite 3900
Miami, Florida 33131
Tel: (305) 921 6200

Eduardo I. Llobet, President and Chief Executive Officer

Berkley Insurance Company (representative
office in Colombia)

Carrera 11 No 77ª-49/65, Oficina 202
110231 Bogotá
Tel: (57) 1 744 4015

Jaime Aramburo, Director

Berkley Life Sciences
200 PrincetonSouth, Corporate Center, Suite 250
Ewing, New Jersey 08628
Tel: (609) 844 7800
www.berkleyls.com

Jill E. Wadlund, President

Naperville, Illinois

Tel: (630) 210 0369

Berkley LS Insurance Solutions, LLC

Walnut Creek, California

Tel: (925) 472 8190

BerkleyMed
16305 Swingley Ridge Road, Suite 450
Chesterfield, Missouri 63017
Tel: (800) 523 3815
www.berkleymed.com

Collin J. Suttie, President

Berkley Mid-Atlantic Group
4820 Lake Brook Drive, Suite 300
Glen Allen, Virginia 23060
Tel: (804) 285 2700
www.wrbmag.com

Susan N. Grady, President

80793in_txt.indd 126

4/7/16 9:17 PM

127

Columbus, Ohio
Glen Allen, Virginia
Harrisburg, Pennsylvania
Pittsburgh, Pennsylvania

Tel: (800) 283 1153
Tel: (800) 283 1153
Tel: (800) 283 1153
Tel: (800) 283 1153

BerkleyNet
12701 Marblestone Drive, Suite 250
Woodbridge, Virginia 22192
Tel: (703) 586 6300
www.berkleynet.com

James B. Gilbert, President

Berkley North Pacific Group
13920 SE Eastgate Way, Suite 120
Bellevue, Washington 98005
Tel: (877) 316 9038
www.berkleynpac.com

Jeffrey R. Dehn, President

Meridian, Idaho
Portland, Oregon
Salt Lake City, Utah

Tel: (800) 480 2942
Tel: (800) 480 2942
Tel: (800) 480 2942

Berkley Offshore Underwriting Managers
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 618 2950
www.berkleyoffshore.com

Frank A. Costa, President

Houston, Texas

Tel: (832) 547 2900

Berkley Offshore Underwriting Managers UK, Limited

40 Lime Street, 7th Floor
London EC3M 7AW
Tel: (44) 207 337 1400

R. Christian Walker, Executive Vice President

Berkley Oil & Gas
10375 Richmond Avenue, Suite 1900
Houston, Texas 77042
Tel: (877) 972 2264
www.berkleyoil-gas.com

Carol A. Randall, President

Berkley Renewable Energy

230 W Monroe, Suite 220
Chicago, Illinois 60606
Tel: (312) 752 7222
www.berkleyrenewable.com

Marie Gwin, Vice President

Berkley Professional Liability
757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 618 2900
www.berkleypro.com

John R. Benedetto, President

London, England
Schaumburg, Illinois
Toronto, Ontario

Tel: (44) 207 088 1960
Tel: (630) 237 3650
Tel: (416) 304 1178

Berkley Program Specialists
1250 East Diehl Road, Suite 200
Naperville, Illinois 60563
Tel: (630) 210 0360
www.berkley-ps.com

Wayne H. Carter, III, President

Berkley Equine & Cattle Division

3655 North Point Parkway, Suite 625
Alpharetta, Georgia 30005
Tel: (866) 298 5525
www.berkleyequine.com

Berkley Classics Division

P.O. Box 500
Luverne, Minnesota 56156
Tel: (800) 603 3330
www.berkleyclassics.com

Berkley Recreational Marine Division

3655 North Point Parkway, Suite 625
Alpharetta, Georgia 30005
Tel: (855) 558 3843
www.berkleyrecmarine.com

Berkley Public Entity Managers
30 South 17th Street, Suite 820
Philadelphia, Pennsylvania 19103
Tel: (215) 553 7384
www.bpem.com

Richard B. Vincelette, President

Minneapolis, Minnesota
New York, New York

Tel: (612) 766 3827
Tel: (212) 922 9458

Berkley Regional Specialty Insurance Company
14902 North 73rd Street
Scottsdale, Arizona 85260
Tel: (480) 444 5950
www.brsic.com

Paul S. McAuliffe, President

W. R. Berkley Corporation 2015 Annual Report

80793in_txt.indd 127

4/7/16 9:17 PM

128

Charlotte, North Carolina
Denver, Colorado
Des Moines, Iowa
Glen Allen, Virginia
Lawrenceville, Georgia
Meridian, Idaho
Naperville, Illinois
Scottsdale, Arizona

Tel: (704) 759 7016
Tel: (303) 357 2631
Tel: (515) 473 3464
Tel: (804) 237 5273
Tel: (678) 533 3459
Tel: (208) 898 5168
Tel: (630) 210 0363
Tel: (866) 412 7742

BerkleyRisk
222 South Ninth Street, Suite 1300
Minneapolis, Minnesota 55402
Tel: (612) 766 3300
www.berkleyrisk.com

John M. Goodwin, President

Bedford, New Hampshire
Boise, Idaho
Charlotte, North Carolina
Columbia, South Carolina
Council Bluffs, Iowa
Indianapolis, Indiana
Las Vegas, Nevada
Little Rock, Arkansas
Minneapolis, Minnesota
Nashville, Tennessee
Overland Park, Kansas
Pierre, South Dakota
Rocky Hill, Connecticut
Rolling Meadows, Illinois
St. Paul, Minnesota
Scottsdale, Arizona
Wauwatosa, Wisconsin

Tel: (800) 611 8535
Tel: (800) 449 7707
Tel: (800) 611 8535
Tel: (800) 611 8535
Tel: (800) 832 0137
Tel: (317) 585 2799
Tel: (702) 415 2970
Tel: (913) 385 4961
Tel: (800) 449 7707
Tel: (615) 493 7777
Tel: (913) 385 4960
Tel: (605) 945 2144
Tel: (800) 611 8535
Tel: (866) 738 3243
Tel: (651) 281 1200
Tel: (602) 992 8844
Tel: (262) 784 3568

Berkley Risk Services of Colorado
Denver, Colorado

Tel: (303) 357 2600

Southwest Risk Services
Scottsdale, Arizona

Berkley Select
250 South Wacker Drive, Suite 700
Chicago, Illinois 60606
Tel: (312) 881 1330
www.berkleyselect.com

Joseph G. Shores, President

Berkley Southeast Insurance Group
1745 North Brown Road, Suite 400
Lawrenceville, Georgia 30043
Tel: (678) 533 3400
www.berkleysig.com

Dennis L. Barger, President

Birmingham, Alabama
Charlotte, North Carolina

Tel: (855) 610 4545
Tel: (855) 610 4545

Lawrenceville, Georgia
Meridian, Mississippi
Brentwood, Tennessee

Tel: (855) 610 4545
Tel: (855) 610 4545
Tel: (855) 610 4545

Berkley Specialty Underwriting Managers
Two Ravinia Drive, Suite 1100
Atlanta, Georgia 30346
Tel: (404) 443 2040
www.berkleysum.com

Kenneth J. Berger, President

Entertainment and Sports Division
600 East Colinas Boulevard, Suite 1400
Irving, Texas 75039
Tel: (972) 819 8863

Cindy Broschart, President

Environmental Division
101 Hudson Street, Suite 2550
Jersey City, New Jersey 07302
Tel: (201) 748 3100

Kenneth J. Berger, President

Atlanta, Georgia
Boston, Massachusetts
Chicago, Illinois
Philadelphia, Pennsylvania

Tel: (404) 443 2117
Tel: (857) 265 7495
Tel: (404) 443 2082
Tel: (215) 533 7360

Berkley Managers Insurance Services, LLC
Walnut Creek, California

Tel: (925) 472 8210

Berkley Surety Group
412 Mt. Kemble Avenue, Suite 310N
Morristown, New Jersey 07960
Tel: (973) 775 5024
www.berkleysurety.com

Tel: (973) 775 5086
Arlington, Virginia
Tel: (678) 624 1818
Atlanta, Georgia
Tel: (972) 385 1140
Dallas, Texas
Tel: (973) 775 5082
Danvers, Massachusetts
Tel: (303) 357 2616
Denver, Colorado
Tel: (973) 775 5021
Morristown, New Jersey
Tel: (630) 210 0360
Naperville, Illinois
Tel: (629) 999 4010
Nashville, Tennessee
Tel: (212) 867 2650
New York, New York
Tel: (407) 867 4595
Orlando, Florida
Tel: (973) 775 5096
Radnor, Pennsylvania
Tel: (714) 338 0860
Santa Ana, California
Tel: (206) 223 5842
Seattle, Washington
Tel: (813) 870 2077
Tampa, Florida
Tel: (416) 304 1178
Toronto, Ontario
Urbandale, Iowa
Tel: (800) 456 5486
Westbrook, Maine Tel: (207) 228 1922

Tel: (602) 996 8810

Andrew M. Tuma, President

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129

Berkley Technology Underwriters
222 South Ninth Street, Suite 2550
Minneapolis, Minnesota 55402
Tel: (612) 344 4550
www.berkley-tech.com

Matthew A. Mueller, President

San Francisco, California
Irvine, California

Tel: (415) 216 2207
Tel: (714) 243 6522

Carolina Casualty
5011 Gate Parkway
Building 200, Suite 200
Jacksonville, Florida 32256
Tel: (904) 363 0900
www.carolinacas.com

Jeffrey M. Hafter

Berkley Fleet Services
11907 Kingston Pike, Suite 101
Knoxville, Tennessee 37934
Tel: (844) 237 5669
www.berkleyfleetservices.com

Clermont Specialty Managers
301 Route 17 North, Suite 900
Rutherford, New Jersey 07070
Tel: (201) 518 2500
www.clermont.wrberkley.com

William J. Johnston, President

Chicago, Illinois

Tel: (312) 881 1456

Continental Western Group
11201 Douglas Avenue
Urbandale, Iowa 50322
Tel: (515) 473 3000
www.cwgins.com

Michael G. Connor, President

Denver, Colorado
Lincoln, Nebraska
Luverne, Minnesota
Columbus, Ohio

Tel: (800) 533 9013
Tel: (800) 456 7688
Tel: (800) 533 0303
Tel: (855) 327 5906

Gemini Transportation Underwriters
99 Summer Street, Suite 1800
Boston, Massachusetts 02110
Tel: (617) 310 8200
www.geminiunderwriters.com

Rocco P. Modafferi, President

Key Risk
P.O. Box 49129
Greensboro, North Carolina 27419
Tel: (336) 668 9050
www.keyrisk.com

Robert W. Standen, President

Alpharetta, Georgia
Baltimore, Maryland
Charlotte, North Carolina
Columbia, South Carolina
Harrisburg, Pennsylvania
Nashville, Tennessee
Richmond, Virginia

Tel: (770) 751 8901
Tel: (410) 864 2600
Tel: (704) 329 9550
Tel: (803) 252 1777
Tel: (800) 942 0225
Tel: (800) 942 0225
Tel: (804) 288 2660

Midwest Employers Casualty Group
14755 North Outer Forty Drive, Suite 300
Chesterfield, Missouri 63017
Tel: (636) 449 7000
www.mwecc.com

Timothy F. Galvin, President

Monitor Liability Managers
233 South Wacker Drive, Suite 3900
Chicago, Illinois 60606
Tel: (312) 800 6200
www.monitorliability.com

Joseph G. Shores, President

Nautilus Insurance Group
7233 East Butherus Drive
Scottsdale, Arizona 85260
Tel: (480) 951 0905
www.nautilusinsgroup.com

Thomas M. Kuzma, President and Chief Executive Officer

Duluth, Georgia

Tel: (480) 951 0905

Nautilus Excess Insurance Agency, LLC
Corona, California

Tel: (480) 951 0905

Preferred Employers Insurance
9797 Aero Drive, Suite 200
San Diego, California 92123
Tel: (888) 472 9001
www.peiwc.com

Steven A. Gallacher, President

Riverport Insurance Services
222 South Ninth Street, Suite 2500
Minneapolis, Minnesota 55402
Tel: (612) 766 3100
www.riverportinsurance.com

Roger M. Nulton, President

W. R. Berkley Corporation 2015 Annual Report

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130

Union Standard Insurance Group
222 Las Colinas Boulevard W, Suite 1300
Irving, Texas 75039
Tel: (972) 719 2400
www.usic.com

B. Keith Mitchell, President

Tel: (480) 281 3949
Albuquerque, New Mexico
Dallas, Texas
Tel: (972) 719 2431
Little Rock, Arkansas Tel: (501) 707 6543
Oklahoma City, Oklahoma
Tel: (501) 707 6543
Phoenix, Arizona Tel: (480) 281 3949
Tel: (972) 719 2431
San Antonio, Texas

Vela Insurance Services
311 South Wacker Drive, Suite 3600
Chicago, Illinois 60606
Tel: (312) 553 4413
www.vela-ins.com

David A. Jordan, President

Atlanta, Georgia Tel: (678) 987 1701
Tel: (312) 553 4413
Chicago, Illinois
Denver, Colorado Tel: (720) 360 3517
Glastonbury, Connecticut Tel: (860) 652 9291
Hamilton Square, New Jersey
Tel: (609) 584 4605
Tel: (213) 417 5452
Los Angeles, California
Marlborough, Massachusetts Tel: (312) 725 7676
Tel: (212) 822 3377
New York, New York
Omaha, Nebraska
Tel: (402) 492 8352
Radnor, Pennsylvania Tel: (610) 688 4275
Tel: (805) 693 0839
Solvang, California
St. Paul, Minnesota
Tel: (651) 406 5630
Walnut Creek, California Tel: (925) 472 8220

Verus Underwriting Managers
4820 Lake Brook Drive, Suite 100
Glen Allen, Virginia 23060
Tel: (804) 525 1360
www.verusins.com

Dale H. Pilkington, President

Reinsurance-Global

Berkley Re America
Three Stamford Plaza
301 Tresser Boulevard, 7th Floor
Stamford, Connecticut 06901
Tel: (203) 905 4444
www.berkleyreamerica.com

Joseph L. Sullivan, President

Berkley Re Asia Pacific

K. Grant Robson, President and Chief Executive Officer

Berkley Re Asia (Hong Kong)
Suite 6708, Central Plaza
18 Harbour Road
Wan Chai, Hong Kong
Tel: (852) 3120 7000

Berkley Re Asia (Singapore)
China Square Central, Unit 09-04, 9th Floor
18 Cross Street
Singapore 048423
Tel: (65) 6671 2070

Berkley Re Australia
Level 27, Australia Square
264 George Street
Sydney, NSW, 2000, Australia
Tel: 61 (2) 8117 2100

Level 21, 12 Creek Street
Brisbane, QLD, 4000, Australia Tel: 61 (7) 3175 0200

Level 40, 140 Williams Street
Melbourne, VIC, 3000, Australia Tel: 61 (3) 9607 8404

Berkley Re Direct
Three Stamford Plaza
301 Tresser Boulevard, 9th Floor
Stamford, Connecticut 06901
Tel: (203) 975 7739
www.berkleyredirect.com

Gregory A. Douglas, President

Tel: (312) 553 4707
Chicago, Illinois
Tel: (614) 766 4316
Dublin, Ohio
Irving, Texas
Tel: (972) 580 9950
Johns Creek, Georgia Tel: (770) 814 7531
Philadelphia, Pennsylvania Tel: (215) 568 3570
Walnut Creek, California Tel: (925) 472 8030

Berkley Re UK Limited
37-39 Lime Street, 2nd Floor
London EC3M 7AY, England
Tel: (44) 20 7398 1000
www.berkleyreuk.com

Richard Fothergill, Chief Executive Officer

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131

Insurance-International

Tel: 54 (11) 4378 8100
www.berkley.com.ar

Berkley International, LLC
475 Steamboat Road
Greenwich, Connecticut 06830
Tel: (203) 629 3000

William R. Berkley, Chairman and Chief Executive Officer
W. Robert Berkley, Jr., Vice Chairman and President

Berkley Canada
145 King Street West, Suite 1000
Toronto, Ontario M5H 1J8
Tel: (416) 304 1178
www.berkleycanada.com

1002, Rue Sherbrooke Ouest, Bureau 2220
Montreal, Quebec H3A 3L6
Tel: (514) 842 5587

885 West Georgia Street
Vancouver, British Colombia V6C 3E8
Tel: (604) 235 1080

Andrew Steen, President

Berkley Insurance Asia
China Square Central, Unit 09-04, 9th Floor
18 Cross Street
Singapore 048423
Tel: (65) 6671 2070

Shasi Gangadharan, Chief Executive Officer

Berkley Insurance Australia
Level 23, 31 Market Street
Sydney, NSW 2000, Australia
Tel: (61) 2 9275 8500
www.berkleyinaus.com.au

Tony Wheatley, Chief Executive Officer

Level 7, 300 Ann Street
Brisbane, QLD, 4000, Australia

Tel: (61) 7 3220 9900

Level 6, 114 Williams Street
Melbourne, VIC, 3000, Australia

Tel: (61) 3 8622 2000

Suite 5, 531 Hay Street
Subiaco, WA, 6080, Australia

Tel: (61) 8 9380 8327

24 Divett Place
Adelaide, SA, 5000, Australia

Tel (61) 8 8232 2767

Berkley International Latinoamérica S.A.
Carlos Pellegrini 1023, 8th Floor
C1009ABU Buenos Aires, Argentina

Eduardo I. Llobet, President and Chief Executive Officer

Berkley International Seguros S.A.

Bartolomé Mitre 699
S2000COM Rosario, Argentina
Tel: 54 (34) 1410 4200

Carlos Pellegrini 1023, 2nd Floor
C1009ABU Buenos Aires, Argentina Tel: 54 (11) 4378 8100

Berkley Argentina De Reaseguros S.A.

Carlos Pellegrini 1023, 8th Floor
C1009ABU Buenos Aires, Argentina

Berkley International Aseguradora De Riesgos Del Trabajo S.A.

Carlos Pellegrini 1023, 3rd Floor
C1009ABU Buenos Aires, Argentina

Berkley International Do Brasil Seguros S.A.

Rua Olimpíadas 242, 7th Floor
04551-000 Vila Olímpia, São Paulo, Brazil
Tel: 55 (11) 3848 8622
www.berkley.com.br

José Marcelino Risden, President

Berkley International Seguros Colombia S.A.

Carrera 7 # 71 – 21 Torre B Oficina 1002
110231 Bogotá, Colombia
Tel: (571) 357 2727
www.berkley.com.co

Sylvia Luz Rincón, President and Chief Executive Officer

Berkley International Seguros S.A. (Uruguay)

Rincón 391, 5th Floor
11100 Montevideo, Uruguay
Tel: (598) 2916 6998
www.berkley.com.uy

Eduardo I. Llobet, President

W. R. Berkley Europe AG
Städtle 35A, P.O. Box 835
9490 Vaduz, Liechtenstein
Tel: (423) 237 27 41

Hans-Peter Naef, General Manager

Berkley Insurance Norway NUF

Henrik Ibsens Gate 100
N-0230 Oslo, Norway
Tel: 47 (23) 27 24 00

Jan Tinus Larsen, Managing Director — Nordic

W. R. Berkley Corporation 2015 Annual Report

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132

Berkley Insurance Sweden, Svensk Filial

Birger Jarlsgatan 22
Stockholm, Sweden
Tel: (46) 8 463 1042

Martin Spangenberg, Branch Manager - Sweden

W. R. Berkley Europe AG, Niederlassung für Deutschland

Kaiser-Wilhelm-Ring 27-29
50672 Köln, Germany
Tel: 49 (2)1 99386-102

Michael Grassée, Managing Director — Germany

W. R. Berkley Europe AG, Sucursal En España

Paseo de la Castellana, 149
28046 Madrid, Spain
Tel: 34 (9)1 449 2646

Leonardo Liguès, Branch Manager — Spain

W / R / B Underwriting
www.wrbunderwriting.com

Alastair Blades, Chief Executive Officer

W. R. Berkley Syndicate Management Limited
Syndicate 1967 At Lloyd’s

W. R. Berkley UK Limited

4th Floor, 34 Lime Street
London EC3M 7AT, England
Tel: (44) 207 088 1900

W. R. Berkley Insurance (Europe), Limited

2nd Floor, 40 Lime Street
London, EC3M 7AW, England
Tel: (44) 207 088 1900

3rd Floor, 55 King Street
Manchester, M2 4LQ, England Tel: (44) 161 817 3440

Berkley Asset Protection

757 Third Avenue, 10th Floor
New York, New York 10017
Tel: (212) 497 3700
www.berkleyassetpro.com

Joseph P. Dowd, President

Service Operations

Berkley Capital, LLC
600 Brickell Avenue, 39th Floor
Miami, Florida 33131
Tel: (786) 450 5510

Frank T. Medici, President

Berkley Dean & Company, Inc.
475 Steamboat Road
Greenwich, Connecticut 06830
Tel: (203) 629 3000

James G. Shiel, President

Berkley Technology Services LLC
101 Bellevue Parkway
Wilmington, Delaware 19809
Tel: (302) 439 2000

Mike P. Sciole, Executive Vice President

Des Moines, Iowa Tel: (515) 564 2300

W. R. Berkley Corporation’s operating units conduct business
through the following insurance entities:

Acadia Insurance Company; Admiral Indemnity Company;
Admiral Insurance Company; American Mining Insurance
Company; Berkley Argentina de Reaseguros S.A.; Berkley
Assurance Company; Berkley Insurance Company; Berkley
International Aseguradora de Riesgos del Trabajo S.A.; Berkley
International do Brasil Seguros S.A.; Berkley International
Seguros S.A.; Berkley International Seguros S.A. (Uruguay);
Berkley Life and Health Insurance Company; Berkley National
Insurance Company; Berkley Regional Insurance Company;
Berkley Regional Specialty Insurance Company; Carolina
Casualty Insurance Company; Clermont Insurance Company;
Continental Western Insurance Company; East Isles
Reinsurance, Ltd.; Firemen’s Insurance Company of
Washington, D.C.; Gemini Insurance Company; Great Divide
Insurance Company; Greenwich Knight Insurance Company,
Ltd.; Key Risk Insurance Company; Midwest Employers
Casualty Company; Nautilus Insurance Company; Preferred
Employers Insurance Company; Queen’s Island Insurance
Company, Ltd.; Riverport Insurance Company; StarNet
Insurance Company; Syndicate 1967 at Lloyd’s; Tri-State
Insurance Company of Minnesota; Union Insurance Company;
Union Standard Lloyds; W. R. Berkley Europe AG;
W. R. Berkley Insurance (Europe), Limited

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133

Directors

William R. Berkley
Executive Chairman

W. Robert Berkley, Jr.
President and Chief Executive Officer

Christopher L. Augostini
Senior Vice President and Chief Operating Officer
Georgetown University

Ronald E. Blaylock
Managing Partner
GenNx360 Capital Partners

Mark E. Brockbank
Retired Chief Executive
XL Brockbank Ltd.

George G. Daly
Professor and Former Dean
McDonough School of Business
Georgetown University

Mary C. Farrell
President, The Howard Gilman Foundation
Retired Managing Director, Chief Investment Strategist
UBS Wealth Management USA

Jack H. Nusbaum
Senior Partner
Willkie Farr & Gallagher LLP

Mark L. Shapiro
Private Investor

Officers

William R. Berkley
Executive Chairman

W. Robert Berkley, Jr.
President and Chief Executive Officer

Eugene G. Ballard
Executive Vice President – Chief Financial Officer

Ira S. Lederman
Executive Vice President – Secretary

Lucille T. Sgaglione
Executive Vice President

James G. Shiel
Executive Vice President – Investments

James P. Bronner
Senior Vice President

Kevin H. Ebers
Senior Vice President – Business Shared Services

J. Michael Foley
Senior Vice President – Information Technology

John K. Goldwater
Senior Vice President

Robert W. Gosselink
Senior Vice President

Jeffrey M. Hafter
Senior Vice President

Paul J. Hancock
Senior Vice President – Chief Corporate Actuary

Robert C. Hewitt
Senior Vice President

Gillian James
Senior Vice President – Enterprise Risk Management

Peter L. Kamford
Senior Vice President

Carol J. LaPunzina
Senior Vice President – Human Resources

C. Fred Madsen
Senior Vice President

Matthew M. Ricciardi
Senior Vice President – General Counsel

William M. Rohde, Jr.
Senior Vice President

Kenneth P. Sroka
Senior Vice President

Robert D. Stone
Senior Vice President

Nelson Tavares
Senior Vice President – Claims

Steven W. Taylor
Senior Vice President

Kathleen M. Tierney
Senior Vice President

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W. R. Berkley Corporation 2015 Annual Report

134

Philip S. Welt
Senior Vice President

Richard K. Altorelli
Vice President – Investment Controller

Richard M. Baio
Vice President – Treasurer

Harry J. Berkley
Vice President – Information Technology

Thomas P. Boyle
Vice President – Corporate Actuarial

Trish Conway
Vice President – Enterprise Risk Management

Michele Fleckenstein
Vice President – Internal Audit

Dana R. Frantz
Vice President – Corporate Actuary

Josephine A. Raimondi
Vice President – Senior Counsel and Assistant Secretary

Robert E. Sabio
Vice President – Corporate Catastrophe Analysis

Scott A. Siegel
Vice President – Taxes

Jessica L. Somerfeld
Vice President – Corporate Actuary

David S. Atkinson
Assistant Vice President – Corporate Actuary

Tatiana Connolly
Assistant Vice President – Counsel

Arthur Gurevitch
Assistant Vice President – Analytics

David D. Hudson
Assistant Vice President – Corporate Data Manager

Laura Goodall
Vice President – Insurance Risk Management

Naomi B. Kinderman
Assistant Vice President – Counsel

Karen A. Horvath
Vice President – External Financial Communications

Suzette A. Lemson
Assistant Vice President – Office of the Executive Chairman

Joan E. Kapfer
Vice President

Andrea C. Kanefsky
Vice President – Corporate Controller

Jonathan M. Levine
Vice President – Chief Marketing Officer

Edward F. Linekin
Vice President – Investments

John M. Littzi
Vice President – Senior Counsel

Robert L. McPherson
Vice President – Analytics

Steven J. Malawer
Vice President – Senior Counsel

Jamie L. Martin
Assistant Vice President – Finance

Nancy Micale
Assistant Vice President – Human Resources

Raymond J. O’Brien
Assistant Vice President – Director of Internal Audit

Srinivas R. Somayajula
Assistant Vice President – Corporate Actuary

Bryan V. Spero
Assistant Vice President – Corporate Actuary

Laura A. Stevens
Assistant Vice President – Corporate Actuary

Craig D. Stevens
Assistant Vice President – International Controller

A. Scott Mansolillo
Vice President – Chief Compliance Officer

Bruce I. Weiser
Assistant Vice President – Counsel

Jane B. Parker
Vice President – Senior Counsel

Clement P. Patafio
Vice President

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2015 Financial Highlights

By taking advantage of challenging opportunities and

bringing together talented people and capital, we feel

confident we will be able to continue to deliver

By taking advantage of challenging opportunities and

Annual Meeting

The Annual Meeting of Stockholders of W. R. Berkley Corporation

bringing together talented people and capital, we feel

W. R. Berkley Corporation, 475 Steamboat Road, Greenwich,

will be held at 1:00 p.m. on May 25, 2016 at the offices of

Connecticut 06830.

confident we will be able to continue to deliver

outstanding returns.

39 .7Combined ratio averaged 95.7%

over the past 5 years.

$37. 31

Book value per share grew

44% over the past 5 years.

Table of Contents

Our Business

Chairman’s Letter

Investments

Segment Overview

Form 10-K

125

Operating Units

133

Board of Directors and Officers

IBC

Corporate Information

119.0

Five year cumulative total return –

stock price plus dividends.

billion7.

$ 2

49% over the past 5 years.

Total revenues increased

Shares Traded

outstanding returns.

New York Stock Exchange.

Common Stock of W. R. Berkley Corporation is traded on the

Symbol: WRB

Tel: (800) 468 9716

Shareowner Services

Wells Fargo Bank, N.A.

www.shareowneronline.com

Mendota Heights, MN 55120-4100

1110 Centre Pointe Curve, Suite 101

Transfer Agent and Registrar

39 .7Combined ratio averaged 95.7%

For additional information, including press releases, visit our

Willkie Farr & Gallagher LLP, New York, New York

internet site at: http://www.wrberkley.com

KPMG LLP, New York, New York

Outside Counsel

over the past 5 years.

Auditors

Website

$37. 31

Book value per share grew

44% over the past 5 years.

Table of Contents

Our Business

Segment Overview

standards.

Form 10-K

125

Operating Units

133

Board of Directors and Officers

IBC

Corporate Information

119.0

Five year cumulative total return –

stock price plus dividends.

billion7.

$ 2

49% over the past 5 years.

Total revenues increased

Annual Meeting
The Annual Meeting of Stockholders of W. R. Berkley Corporation
will be held at 1:00 p.m. on May 25, 2016 at the offices of
W. R. Berkley Corporation, 475 Steamboat Road, Greenwich,
Connecticut 06830.

Shares Traded
Common Stock of W. R. Berkley Corporation is traded on the
New York Stock Exchange.
Symbol: WRB

Transfer Agent and Registrar
Wells Fargo Bank, N.A.
Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
Tel: (800) 468 9716
www.shareowneronline.com

Website
For additional information, including press releases, visit our
internet site at: http://www.wrberkley.com
Follow us on Twitter @WRBerkleyCorp

Auditors
KPMG LLP, New York, New York

Outside Counsel
Willkie Farr & Gallagher LLP, New York, New York

Chairman’s Letter

The W. R. Berkley Corporation 2015 Annual Report editorial sections are printed on

Investments

recycled paper made from fiber sourced from well-managed forests and other controlled

wood sources and is independently certified to the Forest Stewardship Council® (FSC®)

The W. R. Berkley Corporation 2015 Annual Report editorial sections are printed on
recycled paper made from fiber sourced from well-managed forests and other controlled
wood sources and is independently certified to the Forest Stewardship Council® (FSC®)
standards.

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W. R. Berkley Corporation

2015 Annual Report

Always do right.
This will gratify some people
and astonish the rest.

Mark Twain

On the Cover:

Norfolk & Western: “The Pocahontas”
Alderson MaGee

W. R. Berkley Corporation

475 Steamboat Road Greenwich, CT 06830
203.629.3000 www.wrberkley.com

@WRBerkleyCorp

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