Good day everyone and welcome to the W.R. Berkley Corporation fourth quarter 2008 earnings conference call. (Operator Instructions) The speaker's remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by use of forward-looking words including without limitation, believes, expects, or estimates. We caution you that such forward-looking statements should not be regarded as a representation by us that the future plans, estimates, or expectations, contemplated by us will in fact be achieved. Please refer to our Annual Report on Form 10-K for the year ended December 31, 2007 and our other filings made with the SEC for a description of the business environment in which we operate and the important factors that may materially affect our results. W.R. Berkley Corporation is not under any obligation or expressly disclaims any such obligation to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise. I'd now like to turn the conference over to your host, Mr. William R. Berkley; please go ahead, sir.

Good morning, it would seem the appropriate comment, these are the best of times, the worst of times. When I look at our numbers, at first glance, it was upsetting to me to consider that is all part of our investment portfolio would have such an impact onto what I think was really a pretty terrific year. We were really pleased with our operating results, with the discipline of our underwriters and where we stand in the market. We are especially excited about all of the new ventures that we have started and how we have expanded and positioned ourselves going forward. On the other hand, roughly $300 million of our portfolio cost us tremendous amount in our investment income and other than temporary impairment that one investment made our results look even worse. The good news is, even if they go to zero, it won't have a material impact on our financial statements. The bad news is you don't feel very good, when you don't report great results. We are excited about where things are, we are excited for several reasons, and that's the dilemma you feel when you look at those results. Why are we excited? Number one, the biggest player in the industry, AIG, is at best in a difficult position and at worst, we don't know where it's going to be. They have been very aggressive in their pricing, which is what we anticipated and we expect that will continue because they're trying to hold their market position, when their future is unknown. At least three or four other major players have questions about their own capacity to be aggressive competitors and in some cases these people are out there pricing their products at losses. That only he can continue for so long. If you look…

Thank you William, a the start as usual this morning with underwriting results and then go through some of the details on our investments and investment income, but first, with regard to underwriting, our results were quite good in the quarter, and generally in line with our expectations. Our combined ratio was 92.6%, which is an increase of about four percentage points from a year ago. The expense ratio was up two percentage points to 31.6, most of that as a result of an 11% decline in earned premiums. Our loss ratio was also up two points to 61.0. We had favorable reserve development of $41 million in the quarter, and that represents four points on the combined ratio. It gives us an [accident] combined ratio, that is a combined ratio excluding reserve releases of 96.6% for the quarter. And William touched upon this, but when you look at accident year combined ratios and loss ratios, reported by a number of other companies this quarter, it does look like our loss picks might be a bit conservative. As you know, I say that because initial accident year loss picks are normally based on loss ratios from the last couple of years, which are then adjusted for price changes and expected loss cost trends. For us the 2008 loss picks are actually five to six points higher than our current estimate of the 2007 accident year loss ratio and that is quite a bit wider than we are seeing from a number of other companies. We think you do need to be cautious in setting these initial loss picks, especially at this point in the other earnings cycle and with the risk inflation that William talked about earlier. Moving on to other underwriting areas, weather related losses were light in the…

Thank you Gene, I think that there are a couple of things that I'd like to just be sure I got in before anyone got a chance to ask questions. Number one in the current environment, if you're trying to be conservative and you tell your accountants you want to be conservative, the mark to market issues are really interesting and that is. We come to mark our securities to market and then the accountants do an independent mark to market. They check and compare a list out of our entire portfolio that were maybe 100 odd things that were different, 35 of which may have been of some consequence different and then what ends up happening, you basically take whoever's position is lower. You do that, because it's not worth the arguments, and there may be one or two arguments, where you disagree, but for the most part. We would come up with a value of 49 and they would come back with a value of 24, and they agreed it should be 24. We would come up with a value of 65, they would come up with a value of 95, they would agree we were right it should be 65. So because of that we think we have quite a conservative mark to market portfolio. There are all kinds of issues that that creates, but we feel like being cautious and conservative is a better approach. We certainly unlike any other downturn in the market, we don't see an answer. We don't see a change, so being cautious and conservative we think is the right approach. There are a number of things that are not here and there are a number of things that accounting creates. We still have what we would guess is several hundred million…

(Operator Instructions) Your first question comes from the line of Dan Johnson – Citadel Dan Johnson – Citadel : Can you talk about, you mentioned the conservative marks, can you talk about where the muni’s were marked at the end of the year?

They were marked to wherever the market value was. There was very little difference in our market or KPMG’s market.

Our muni portfolio is all level 1.

It's all very totally marketable stuff and very high rated. Dan Johnson – Citadel : So are we talking sort of upper 90s, lower 90s?

We mark each security to market. I can't give you an answer to that. Dan Johnson – Citadel : Do you have the paids for the quarter?

The losses were 685.3. Dan Johnson – Citadel : Just to comment on the ROE, just to set it to you look at that on an average or on a beginning basis?

We do it on a beginning basis. Some years like this year, it didn't work it so well. Dan Johnson – Citadel : and if we're counting on pricing to realistically look like a later in the year event and just given the sort of lag between when you write something and when you earn it, if pricing improves a later in the year, why would ROEs sort of move up concurrently, or are you talking about, as it's being written as opposed to being earned.

First of all, I think we said we expect our combined ratio to be reflective of this. I think we're expecting that the investment portfolio will be impacted as in the fourth quarter in the first quarter this year and we think those issues will be disappearing as we get into the year, because you can't mark things down less than zero. Dan Johnson – Citadel : Okay, so that's more, the ROE is more of an investment comment in the short term than a pricing comment?

Yes sir.

Your next question comes from the line of Meyer Shields – Stifel Nicolaus Meyer Shields – Stifel Nicolaus: Do you have the same expectations for the timing of any turn in reinsurance as you do on the primary side?

Actually, we think reinsurance is going to turn sooner. We think that there is capacity constraints. Reinsurance pricing was down less than 5% in January for our business and we think that reinsurance pricing is going to start to get better on the 401 renewals. So, in fact, we think our reinsurance is going to get better sooner than we are optimistic about that business. Meyer Shields – Stifel Nicolaus: Within alternative a risk transfer is there any way of breaking out the impact from rates versus the impact from lower exposure units?

First of all that's a mixture of businesses on Workers’ Compensation that has to be looked at in sort of two pieces. Part of it is fee business, and part of it is just simply Workers’ Compensation. I think that our prices are down a little bit, but I think that we would say prices are down probably again less than 5% and in January in fact that prices are down substantially less. We would estimate prices are flat to down 2.5%. We think that that it's the best information I can give you. And obviously I can only measure that based on renewal prices. Meyer Shields – Stifel Nicolaus: I understand the [Nemi] transaction didn't work out for various reasons, are there a lots of distressed sellers as opposed to distressed competitors out there now?

I think you have to look at the market in several ways. First of all you have distressed enterprises, some of whom know they are distressed and some of whom don't know there are distressed. You have to try and figure out what they are and they have to figure out what they are, because some of the distressed competitors are in denial. Then you have distressed competitors, because they simply have capital problems for example, because with half of the world in dollars and the dollar being so much stronger you have some overseas participants who have currency issues that they didn't face before, as well as when you combine that with portfolio declines their cushions that they left are not adequate. And then you have teams of people at those places that see the problem where the management doesn't and then you have a number of small to middle size companies that are distressed and trying to downplay it and come out of the woodwork and we chat with and then some who just don't know what their future is and who are worried about where they are going to go and what they are going to do. In the case of [Nemi] we thought it was a great opportunity, they were owned by an Icelandic company and we thought it was a great opportunity. We were sorry that we were unable to get together as you may have seen, and the people who came after us were also unable to get together. The problem with acquiring insurance companies, which is why we has to, why we choose to start them, is that someone has to be there to represents and warranty the liabilities that you are assuming and that always creates uncertainty and concern. We have always viewed that risk as to be something that we weren't willing to take without confidence that somebody would be there to perform. That is frequently the problem with all of the acquisitions that are out there. So I think that you have to be confident of that. The biggest problem, these smaller companies have is, how can you be confident of their liabilities and very frankly, its some of the larger companies that are trying to sell pieces or sell themselves have that same issue. How do you ensure their liabilities are going to be paid for.

Your next question comes from the line of Jay Cohen – Banc of America Jay Cohen – Banc of America: What role the currency play as far as the premium growth, certainly on the international side?

It's not that significant. I think our decline in premiums overall, would have been better by a point if you adjusted for currency changes. Jay Cohen – Banc of America: It looks like there were some unrealized gains in the quarter, can you quantify that.

You may be thinking about the issue on, we made comments that they SEC came out in favor of us being able to have an accounting restatement on our real estate that we refinanced and that accounted for somewhat of a gain and increase in book value.

The other thing I mentioned was that the net unrealized loss position improved by $12 million. So there was a decline in the unrealized loss position, but that's not an unrealized gain.

The unrealized loss declined also. Jay Cohen – Banc of America: So the first quarter it was apparent that the investment funds will continue to have a negative impact, given that it's reported on a lag, do you have any sense of what that could be?

When I commented on earlier is that we expect for the year to do at least our 15% targeted return. It will have, our results will be substantially better than that in the latter half of the year. We don't have a significant number that we can say with definition, but it'll be there, it'll be in the first quarter. If we knew exact numbers, we probably would have discussed the accounts putting it in, we just don't have exact numbers. The reason we are trying to be as accurate as we can is we've looked at what we is one is the worst-case and said how are we going to do for the year and try to get people some guidance for the year. So no one would be particularly concerned about it, but we don't have an exact number and obviously whenever you put a number up for a short period of time, it tends to be more precise. We think it will be there, and it will probably be in the first quarter, may have a little drag the second quarter, but not consequential. We are very confident. Even looking at it from as pessimistic a point of view as we can at the moment and taking a view that we will probably meet or exceed our 15% targeted return and certainly we expect to exceed it by the fourth quarter. Jay Cohen – Banc of America: Are there any lines of business, where you are seeing price increases at this point?

We are seeing in several places. I think that I'd like not to go into them, because I'm not anxious to attract new competitors. But yes, we have probably three or four lines of business, where we actually have seen price increases at the end of the fourth quarter and the beginning of this quarter. There are a couple of areas where clearly the most competitive long-haul trucking and contractors business have gotten more competitive as volume is down a lot as we use our disciplined underwriting approach, we have lost a lot of volume. Commercial transportation is one of those most interesting lines, because it's the line that has relatively big volume, it was down the first, and it was the first to turn in October of 2000, prices went up 30%, and it was the leading change in prices going back up. I might add, when they went up 30%, they were still in adequate. But it was one of the leading changes and its leading us down. And it's why are volume is down so much in that area and construction, everybody knows construction has dramatically slowed down and some people are cutting price, which we are not doing, a significant reason that our volume is down in a couple of areas.

Your next question comes from the line of Vinay Misquith – Credit Suisse Vinay Misquith – Credit Suisse : How much of top line do you think you could generate from the new segments, and especially from the new people you hired in 2008 and 2009?

I don't think I can tell you the answer to that, because we don't tell them how much business they are supposed to do. I would tell you that when they were at their prior employers, they accounted for something over $1 billion of business, but we are writing with tighter parameters, lower targeted loss ratios. So we are not going to have anything approaching that but we expect that by 2010, they'll be significant business for us. Vinay Misquith – Credit Suisse : In terms of the sheer repurchases, if I read the numbers correctly, I think you did a small amount of that this quarter, maybe around 700,000. Just curious about your view on share repurchases, and you are capital and growth opportunities in 2009.

We bought back one million shares of stock in the fourth quarter at about $18.50 per share, at a price that’s book value or less. We probably consider it, because we think that that’s an aberration. If you look at the history of the company, there have been a very short term opportunities to buy the stock at that kind of price and we think we will generate capital. And we always have had opportunities to raise capital, publicly or privately at premiums to book value. So if there is a short-term aberration that's great. We don't think we are going to grow tremendously, next year or this year in 2009. We think we will grow, but not tremendously. So given that we think we have adequate to more than adequate capital. So if the opportunity came about we would consider it. But that's a decision you make at the moment and look at everything else. Most of the things we've seen that are of quality that we would be interested in, we can't buy at particularly attractive prices. Vinay Misquith – Credit Suisse : On the margin, you have been pretty conservative, 2008 versus 2007, taking up at your loss ratio by about five points, do you think that 2009 you would not need to do that just because you have been a more conservative and therefore margins should be flatter then 2009 versus 2008, even though pricing has been coming down in 2008.

We think that we have probably been, what we do is we look at our pricing and we look at inflation and we look at the cushions that always anticipated inflation. So we think for the past three or four years. We have probably anticipated too high a rate of inflation in our pricing models. And that's the issue that we are going to have to sit and talk about, and it's first on our list. We have a group of people here led by the huge number of actuaries, in fact, excessive number of actuaries, that we have that we are talking about that number. Because I think that one of the things that happens is our volume is down by say around numbers 20%, and our reserves are up by 20% during that same period of time. That is a discontinuity that you look at and you measure your reserves, and you measure, I think we want to be conservative, but we don't want to be stupid. And my concern is that as we look at this we may be getting to be more cautious then is appropriate in setting our accident your reserves, because it builds on each other. Each year, you are a little cautious, and then you get cautious the next year, so you are more than making up for that shortfall. So we are going to try and look at that, I don't have an answer for you, but I would say that I think we probably have been more cautious than even a cautious balance sheet would find appropriate.

Your next question comes from the line of Larry Greenberg – Langen McAlenney Larry Greenberg – Langen McAlenney: On inflationary trends, can you say that you are actually seeing [inaudible] loss growth or other metrics you look at with reserving coming in lower than you are thinking or are you kind of taking a more macro view of the economy.

I would say that we are, our paid losses are coming in slightly better than we thought, but they are not trending in the same direction of it as our reserves, so it's not, the reserving process is the case basis, and then bulk reserves, and then IBNR, all of which anticipate where you are going and what I am really trying to say is we tried to build in what we see is the directly trends of inflation and loss settlement and at this moment we think that those directional trends have not been as severe as we anticipated when we set our aggregate reserves by company. Larry Greenberg – Langen McAlenney: Want order of magnitude might we be talking about, high single digits to a low single digits, is there any—

You see, you could have saved your self the worry, because she knew I was not going to answer it anyway. Larry Greenberg – Langen McAlenney: I assume that the new line in the income statement for the investment funds, that's just comparable to what you had in the Q and prior periods for partnerships and affiliates?

Exactly.

It really is just funds basically. Larry Greenberg – Langen McAlenney: Have you done anything to reposition the investment portfolio in any way?

We cut in half our exposure to one, we've moved out of some but basically it's a small piece of our portfolio. It's really $300 million-odd, so it comes about because of two funds that were fundamentally invested in the leverage real estate and one fund that had oil, oil prices and the reserves and all of that get marked to market. Our general, generally speaking, our loyal enterprises produce oil at around $18 a barrel so it's profitable, even at this level and we never marked it up to $147. But we did market up above the current prices, I think we marked it up to about $60 or $70, and now we had to mark it down some. So that's one and then the other two particular assets were leveraged real estate and we don't know what happened there. They are marked to market. Larry Greenberg – Langen McAlenney: But even beyond this stuff just in terms of equities and bonds, any changes in the mix there?

No, but I think we have, we never had particular exposure there. I think we have the quality of our portfolio is up a little bit, the duration is down a little bit. We have a high quality mortgage portfolio that's getting repaid, at least it was for a short time, when you could refinance it, less than 5%, it's starting to get refinanced out very quickly and then— Larry Greenberg – Langen McAlenney: And you still had some equity in what ever you owned.

In those direct [words] they were 2004, 2003 , 2005 and they were par mortgages, they were no issue there. They were trading at par, and there was no issue.

Your next question is a follow-up from the line of Dan Johnson – Citadel Dan Johnson – Citadel: Can you run through the positive or adverse development, and then on the paids, the paid due incurred, it looks like about 110%, if that number is right, can you just break out some unusual items if there are any.

We had hurricane losses in excess of $100 million for the third quarter and a fair amount of that is going to be coming through the fourth quarter. But your number is close, we have 108%.

But it was mainly hurricane losses that got paid in the fourth quarter. Dan Johnson – Citadel: And then on the development?

We generally don't do that on the call if you would like to talk to Gene, please give him a call.

Your next question comes is a follow-up the line of Meyer Shields – Stifel Nicolaus Meyer Shields – Stifel Nicolaus: If you are concerned about inflation in the longer term, is there anything in that you can do in terms of speeding up claims settlement?

We in fact have done that. We have gotten a process to do that. We are out there actively, it is one of the things that made us recognize the issue of our reserve settlement. We have at almost all of our companies, we have processes to move our claim settlements further along and we set up various panels and other things to try to settle claims, go to various locales, meet with lawyers, try to get things settled and we've had extremely good results. So, in fact, we are doing that. Meyer Shields – Stifel Nicolaus: I guess a piece of conventional wisdom is that insured’s in general are looking to diversify counterparty credit risk by using multiple insurers, are you seeing any of that?

We don't write jumbo risks for the most part. We are the beneficiary in some of our lines of business, where some of those various uncertain and troubled insurers have big [inaudible] slips and we are getting bigger participation. We are the tortoise, slow and steady and we are now being recognized for being there for a long time with steady [ratings] and consistent performance and we are getting offer participations now in a lot of things. And we are trying to position ourselves as a good alternative. I think that it's happening and I think it is probably going to happen more, especially on what I would call the large medium-size company risks, not the jumbo risks. But where people buy insurance as an option, but where people buy insurance that they need, but they don't want to be too concentrated in any one company. I think that several of the companies that would be on the uncertain list are in that category. So I think that will inure to our benefit. And in fact, it is inuring to our benefit would be more appropriate to say. Meyer Shields – Stifel Nicolaus: Do you see any investment opportunities outside of insurance that you consider to be attractive or are you going to be focusing whatever excess cash you have now within insurance.

We really don't expect to do anything of any consequence outside of insurance. We think that the property casualty business is going to offer us a fabulous returns over the next three years. I can't imagine anything that's going to offer us better returns. Are there, little bits of the property casualty business that we are not in and that we might like to go in? Yes, but we don't, we think that we are going to become a lot larger companies over the next three to five years and we think that there are just enormous opportunities. We don't think we have to look astray.

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

First thank you for listening. We believe that this is going to be a very unique market. We are excited and we see all the positive developments. Will they be here by the third quarter of 2009 were the first quarter of 2010? I can't tell you with accuracy. I can tell you that in a financial environment. Many companies are going to be held to a higher standard, so the ability of companies to avoid facing up to their problems will be greatly diminished. We thank that's going to really work to our benefit. We think we are well positioned to take advantage of it. We expect that we will make some additional advances in finding people to join us. We have high standards, but we are consistent and people know we in fact do what we say. We look ahead and see a terrific 2010 with substantially higher returns, adequate returns in 2009 above our benchmark and very possibly really spectacular returns going forward, with no negative tail which we had to carry, past adverse development as we went into the last turn of the cycle. We think the returns can really be outstanding. So thank you all and have a great day.