Best Assigns ‘bbb’ Rating to Berkley’s Senior Notes

September 11, 2003

A.M. Best Co. announced that it has assigned a “bbb” senior debt rating to W.R. Berkley Corp.’s $150 million 5.125% senior notes maturing in 2010.

“The notes are being issued under the company’s existing $700 million shelf registration statement, of which $174 million of capacity will remain subsequent to this offering,” Best noted. “Proceeds will be used to increase the surplus of the company’s operating subsidiaries to support 2003 growth and for general corporate purposes.”

Best indicated that Berkley’s debt and financial strength ratings take into account the rating agency’s “expectations that management will ensure all of the operating subsidiaries maintain capital levels supportive of their respective ratings. The $150 million senior note issue partially supports A.M. Best’s expectations. The ratings also reflect the company’s significant earnings momentum produced over the past several quarters, fairly conservative operating and investment platform, and limited exposure to asbestos liabilities.

“The company’s financial leverage–debt plus trust preferred securities–is expected to increase to 35.3% subsequent to the note issue, but decline thereafter as capital builds with quality earnings and capital market initiatives,” Best continued.

It also noted “that despite the increase, leverage is being maintained at lower than historical levels and capital has been well structured, particularly with a lack of reliance on short term debt. Holding company cash has been, and is expected to continue to be, variable. Partial proceeds from capital market issues have, over past few years, been maintained at the holding company to fund fixed expenses and shareholder dividends thereby allowing the operating subsidiaries to accumulate capital and support organic growth. A.M. Best expects cash to be sufficient to cover expenses for the remainder of 2003 and through 2004.”

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