Good day and welcome to W.R. Berkley Corporation’s Second Quarter 2012 earnings conference call. Today’s call is being recorded. The speakers’ remarks may contain forward-looking statements. Some of the forward-looking statements can be identified by the 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 31st, 2011 and other fillings 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 and expressly disclaims any such obligations to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to Mr. William R. Berkley. Please go ahead, sir.

Thank you. Good morning. First, everyone should understand we do not [inaudible] insurance business. We got out of that business in 1986, and haven’t seen it since. Number two, I must be the only person that was happy with our quarterly earnings based on the stock price. We’re pretty pleased with how things are going, we’re pretty pleased with where the business is and the direction we see things. I’ll talk more about the general industry and our position. First, Rob is going to talk about the operating segments and then Gene will talk about the numbers and then I’ll try to pull it all together and take questions. Rob?

Okay. Good morning. Market conditions in the second quarter were a continuation of the trends we observed in Q1. Carriers seem to be increasingly aware of the realities that stem from a weak investment environment, combined with less robust prior year reserve development. Additionally, it is becoming more apparent that the benign loss trends experienced over the past several years may not be a proxy for what we should expect going forward. The reality of these ongoing circumstances continue to apply pressure to the situation, and it consequently is requiring market participants to refocus on achieving and underwriting profit. However, while the need for a change in behavior may be clear, it is equally apparent there is significant tension between the desire to increase underwriting discipline versus the impact these actions may have on production. Having said this, by and large companies seem to be accepting the realities of the industry’s challenges, and are consistently looking for additional rate while simultaneously continuing to show early signs of an introspective examination of their risk appetite. In particular, it is encouraging to see national carriers taking this path, given the meaningful tone they play in setting the stage for the overall market. Generally speaking, the excess market continues to be one of the areas that is the most resistant to change. It would appear as though there is a misperception held by some that the loss activity that is occurring in the primary layers won’t climb up the coverage tower over time. A prime example of this would be excess comp. It is our view that some of the loss activity that the primary comp carriers have been experiencing with time will begin to impact the excess comp market as well. Having said this, perhaps the silver lining is that history would…

Gene, you want to pick up?

Okay, thanks. It was another solid quarter for us, with significant improvement over the prior year for both underwriting profits and investment income. I’ll start by going through the premiums, but I really only have a couple points to add to what Rob already said. First, for the international segment, premiums were up 22.5% to 208 million, with strong growth from both our insurance business and our new reinsurance business in Europe. And also if you adjust for the impact of foreign exchange, international premiums were actually up 30% in constant dollars for the quarter. Our alternative market premiums were up 21% to 148 million, with strong increases for primary Worker’s Compensation business. Our reinsurance premiums were up 14% to 113 million. Specialty premiums were up 12% to 454 million, but if you look at our 20 specialty companies the way Rob looked at the overall business, you’ll see the same focus on growing the profitable business. We had 14 specialty companies that grew by 31% and 6 companies that declined by 17% total. And the regional business was up 3% to 268 million. The overall loss ratio was 63.7% in the quarter, which is a decrease of 2.6 points from a year ago. Catastrophe losses were down significantly to 26 million, from 63 million a year ago. That’s an improvement of 3.9 loss ratio points, as we had fewer cat events in the quarter compared to last year, and a significant decline in the average loss per event. We had favorable reserve development of 30 million in the quarter. That’s 2.6 loss ratio points, and it’s up from 25 million in the first quarter of this year. Most of the favorable reserve development in the quarter was related to the specialty and reinsurance segments, and was primarily for accident…

Thank you, Gene. We were really pretty pleased with the quarter, in spite of what seemingly others weren’t. We run the business, as we said, as owners. That means we count catastrophes. That means we count all kinds of other things. We look at how we’re doing as far as increasing book value per share. We think that’s the real measure. We meet lots of people who say without catastrophe losses? Well, it’s great to say, but that, when you don’t have catastrophe losses, you count the high returns that come from that chicken today, feathers tomorrow business. We also think that people who don’t show realized gains and losses over an extended period of time tend now to show the risks inherent in their portfolio, and you can take greater risk and never be held accountable for it. That aside, I might mention that we do have substantial unrealized gains in our private equity portfolio, which was not in gene’s number of our unrealized gains, which as I mentioned before, we expect some significant portion will be realized before the end of the year. I think the biggest news is we’re not worried about the cyclical change in the market. People that are parsing over 6%, or 6.5%, or 7 instead of 7.5 are really focusing on the wrong thing. The cycle is changing. Clearly the economic activity may well have slowed the pace of rate increases somewhat, but the cyclical change is taking place and rate increases continue to move up a pace. Whether it moves up at 6 or 6.5 is sort of irrelevant. As it continues, though, our view still is really unchanged that by the end of the year we’ll be looking at 8 to 9% rate increases, and nothing has changed that. I was…

(Operator instructions). We have a question from Amit Kumar from Macquarie. Your line is open. Amit Kumar – Macquarie Research Equities: Thanks and congrats on the quarter. Just going back to the discussion on I guess new business pricing versus renewal pricing and how the new businesses above the renewal. I know that in the past you had mentioned that you know, you examined the business makes and you revisit the lost pays every 90 days. Can we just sort of revisit that discussion and maybe tell us how the new business has been, you know, when you’ve gone back and looked at it, has it been performing in line or has it been different?

I guess once again to confirm, yes, it’s – we do review our reserves every 90 days by operating unit and we cut it, slice it and dice it every way that you can image or certainly that we can image. So far, as far as the new business performance from the past several years when we have been having some – some increased growth, we are very comfortable with both the pricing and more specifically the margin that that business is providing us. So there are no early returns that give us reason to pause but in fact, the pricing on that new business that we have been writing over the past couple of years actually has turned out to be something different than what we have suggested. Amit Kumar – Macquarie Research Equities: Okay, that’s helpful. I guess the only other question I have is on capital management. You bought back some stock. I’m sort of stepping back, you know, thinking about the industry, your discussion on economy. You’re expectation for I guess 8 or 9% pricing at year end. If it is softer than that, you know, should one anticipate more capital management for 2012 or is this a one-shot deal in this quarter?

Nothing is every one shot, everything in life is continuous. Yeah, you know, when you get married, how do they say, the ring is continuous, everything in life is the same way. I think that, you know, one of the things we pay attention to is our premiums to surplus and premium surplus continues to go down as our portfolio continues to do better. As I mentioned, we have very substantial unrealized gains in our private equity portfolio that are not reflected, that we expect to occur this year that isn’t something that was in our calculations. So I think that money, that gain is something we may well use to buy back stock or we may instead decide to examine repurchasing our preferred. You know, I think it’s a continuing process. We don’t reach the conclusion until the moment of do we want to sell the stock now, we would probably make that decision this afternoon. But you know, the fact is that it’s opportunistic. As you know well, we try and run the business we think will get the best return to our shareholder and if we found an opportunity, we would take advantage of it. But the reality is, our capital account has grown pretty significantly and our (riding) surplus are going down. So there’s – there’s plenty of opportunity to balance all that out. So this was only $15 million, it was not a, you know, a huge amount. Amit Kumar – Macquarie Research Equities: Got it. Thanks. And don’t buy a crop entity, thanks for answers.

I appreciate your advice, Amit.

Thank you. Our next question is from Gregory Locraft of Morgan Stanley. Your line is open. Gregory W. Locraft – Morgan Stanley: Thank you. I just wanted to, again, on the private equity, I guess harvesting the gains, can you frame maybe how much it is and what is it and then actually relate it on the energy loss for the third quarter? Can you also frame that as well? It sounds like you know…

There was no energy loss. We said we thought it would earn less because it varies. So I don’t think we said it would be an energy loss, I think we had the earnings from the funs related to energy will be lower likely in the third quarter than the second quarter. And you know, we don’t – that would be not in the best interest of our shareholders. But you know, I think in the aggregate, there’s certainly in excess of $100 million of unrealized gains in that private equity portfolio. Gregory W. Locraft – Morgan Stanley: Okay, so 100 million of gains that can be used, obviously, to buy back stock and the preferred by year end? That’s sort of how you think about things?

No, that’s not what I said. I said that that will – that the gains from the private equity portfolio weren’t in our original calculations in examining what we might do, but everything stands alone. It’s our capital account that’s going to be probably somewhere better than we anticipated and therefore we’re evaluating what and how we want to balance it, which includes whether we call – well, we wouldn’t buy it back, we would call the preferred, which would take up 250 million or whatever dollars or buy back stock. You know, it’s a constant balancing act. Gregory W. Locraft – Morgan Stanley: Okay, great. And then the last question is just, I think back in the first quarter on the February timeframe when we did the fourth quarter call, you mentioned that the year was going to be backend loaded. And I’m just wondering are these sort of – is this the ROE we should be thinking about and expecting or how do you stand today versus that comment relative to [inaudible]?

Well what I was trying – the explanation you’re talking about was when I tried to explain to people how earned premium comes in. In other words, an increase in price comes in from an accounting point of view, accountants will probably argue with me, but let’s just say 12.5% in the quarter. You write the business, 25/25/25 and 12.5 in the fourth quarter and so price increases come in later on. So in fact, here’s the second quarter, we’re getting price increases from the second quarter of last year, the third quarter, the fourth quarter, the first quarter and the second quarter. So as you move out, by the fourth quarter you’ll get 100% of the pricing increases from the first, second and the third quarter. You will get 12.5% of those price increases will be earned from the first quarter and 12.5 in the fourth quarter whereas in this quarter, give or take, it’s going to be 4%. And if you said you’ll be at 8% by the fourth quarter, you’ll probably have 7% give or take in the fourth quarter of improvement in the earned premium. So it’s backend loaded assuming price increases are tending as they are. Gregory W. Locraft – Morgan Stanley: Right, okay. And then I guess maybe perhaps just to clarify because I’m – so really, what we should be expecting is material margin improvement on an accident year ex-cap basis starting 3Q, 4Q? I mean, you’re showing it now, it’s just the year over years are going to be looking – we’re going to be getting hundreds of basis points of improvement starting now? I’m sorry, starting third quarter.

Well, you’re choosing hundreds, the answer is I think that we would expect – I couldn’t persuade my accounting people to give me specifics, they were so difficult to deal with then. But the answer is, if you said that you’ll get 2.5 to 3.5% improvement in dollars of our earned premium over loss cost by the fourth quarter, that would be a reasonable assumption. Gregory W. Locraft – Morgan Stanley: That’s very helpful. Thank you.

Thank you. Our next question is from Vinay Misquith of Evercore. Your line is open. Vinay Misquith – Evercore Partners, Inc.: Hi, good morning. Looking at the margins once again this quarter…

I'm sorry, it’s not clear, could you… Vinay Misquith – Evercore Partners, Inc.: Hi, sorry. Yeah, now can you hear me? Okay, great.

Yeah, that’s great. Vinay Misquith – Evercore Partners, Inc.: So this quarter, the earned rate increases are plus 4% and I remind myself that historically you’ve had a 2 to 3% loss cost trend. So just curious why margins were roughly flat this year versus the prior?

Because we had more pessimistic people and they were more overwhelming and I didn’t fight as hard as I should have. So you know, they were more cautious, but the answer is, you’re trying – and I understand why, we’re trying to split hairs on whether it was 3 or 4 and we look at it every quarter, where we think loss cost trends, and honestly, the economy being a little slower than we thought will end up having us review loss cost trends and me may end up saying, hey, well, we’re a little cautious so we may go from 4 to 3 or from 3.75 to 3. Okay? So it’s a continuing process. So that optimism is not just in price increase or the rate of adoption and speed of price, it’s also in expectation of loss costs. Vinay Misquith – Evercore Partners, Inc.: [Inaudible].

So I, you know, I think we were a little more cautious in the second quarter than we may well be in the third, but that’s not a promise, it’s trying to give you an understanding that, you know, this is real-time stuff, we’re not talking about, you know, - I understand you have to invest day to day but we’re looking at this and we look at our numbers and look at developments and we have all these actuaries fighting amongst themselves. You know, one dies every quarter from fights and we have to replace him. So the fact is that it’s not always the one I want to die that dies. I’ve got a few of those in mind. But the fact is that it really is a continuing process and I, you know, and I think that when I say I wasn’t pushing harder, the fact is, how we all feel and how optimistic or pessimistic we are influences that short-term decision and as we get to year end, we’re trying to true it up as much, here it is, as we can and I think that we were a little more cautious in the second quarter than the economy ended up warranting. Vinay Misquith – Evercore Partners, Inc.: Fair enough. And then on the pricing, I mean, on the related comment on pricing, so about 8 to 9% by year end. Just curious as to what your views are for next year and also given the fact that the economy’s weaker?

Well, I have one of those magic eight balls in front of me, coincidentally. I have – they heard your question and I turn it and it says most likely. So I guess that means it’s most likely to continue going up at the same rate. No, I think that – I think that we would expect pricing to continue increasing at sort of the same kind of pace, you know, 8 to 10% rate, 8 to 9% rate, you know, if you used 8% as a target, that would be what we think. And I think at that point, you’re starting to really move into very positive territory. But understand one thing, there’s two issues that the world has to understand; investment income is going to start to really hurt a lot of people, a lot of people. People who are in the auto business and invested short term with a 1.5 or 2-year duration are going to get, you know, virtually no investment income unless they change the duration of their portfolios. We have been good at it, it’s something we’re pretty good at. So… Vinay Misquith – Evercore Partners, Inc.: You mentioned on the call that the investment deal is coming down, correct?

Yes. Vinay Misquith – Evercore Partners, Inc.: Okay. And then one final thing on the alternative. You mentioned that [inaudible] bought 100 million of …

No, I said at least 100 million. Vinay Misquith – Evercore Partners, Inc.: Sure. Do you expect that to be released or sold in the second half of this year or is that just going to remain in sort of unrealized and not appear in the income…

We would expect it’s going to – at least some significant part of that is going to happen this year. Vinay Misquith – Evercore Partners, Inc.: Okay, that’s good. Thank you.

Thank you. Our next question is from Michael Nannizzi of Goldman Sachs. Your line is open. Michael Nannizzi – Goldman Sachs Group Inc.: Thanks, so just first question I guess is trying to understand Bill, your comment in the press release about the economy and the impact on pricing. And obviously the economy and exposures, a direct relationship there, but I just want to understand just a little bit more color on that comment, more follow-up.

I was trying to explain to people that as the economy is under sort of more pressure, this is just not a smooth world. We're not independent of the rest of the world. Prices are still going up. Nothing has fundamentally changed. However, we don’t really see an acceleration quite as quickly as we thought before. We still think by the end of the year, we'll be at that 89%. If you would have asked me where we would have been in the second quarter, I would have said 6.5 to 7. We were at 6, so it was just slower than I thought. The psychology just isn't as powerful as I'd like it to be. But no directional change. You know, it's one month, people get depressed and feel pessimistic. Honestly, I think we're pretty much past that at the moment. And I think you're starting to see a little bit more positive attitude. Michael Nannizzi – Goldman Sachs Group, Inc.: All right, thank you, and just trying to understand a couple things too, and maybe this isn't right. But as I understand it probably the U.S. instead of outside particularly in casualty, and your international business has been growing I'm sure as you added folks and are writing new types of business. But just trying to understand kind of growth in international. And then on the flip side regional, which as I understand is mostly U.S. has been growing slower than the rate change that you've been talking about for the last few quarters. So just trying to understand maybe the dichotomy is not the right word, but just trying to understand maybe the tradeoff between those two. Thanks.

First of all, growth in new businesses in Europe has helped that, and Australia, and Asia, as well as Brazil, and Latin America. Some other parts of Europe have also grown. But it's been driven by a couple of particular things. Our syndicate employees and our re-insurance business in London is at the – I think that the regional business has been terrific with price increases. And they have not grown as much. Their price increases have been more than their growth, which obviously means we've lost some business. That's a segment of the business that is more competitive at the moment. But we're really pleased that in the places where the world is more competitive, the people are more disciplined. So that's why it's sort of not a uniform picture every place. Rob, do you want to add to that?

No, I think that generally speaking, you've covered it. I think there are parts outside of the United States where there are really significant opportunities as there are parts outside of the United States where it's overwhelmingly competitive. Hence the point earlier that we have some operations that are growing. We have some operations that are shrinking into paint with such a broad brush to set such as suggesting. All markets outside of the United States that are more competitive or less competitive I think is a slippery slope. As far as the regional companies go as I had mentioned in my remarks, it has been a little bit surprising to us how that piece of the marketplace has remained a bit more competitive at the same time. As suggested a few moments ago, our underwriting discipline and focus on profitability is such that we are prepared to effectively shed policy count as it was also suggested a moment ago in order to achieve the rate that we think is required. Michael Nannizzi – Goldman Sachs Group, Inc.: Great, thanks, and then just one last one I guess is and Bill kind of your comments before about margins through the rest of the year and earning premiums through. I mean if we were to kind of fast forward to the end of the year, what do you think is going to have a more pronounced impact on margins and earnings? Is it the reduction in the loss ratio or the bigger premium base against which you're spreading your expenses?

I think that the loss ratio will have a bigger impact by the fourth quarter. I think by the time you get to next year, you will start to see a real benefit from the premium. We are also you have to remember the constant balancing of what kinds of re-insurance you buy and how that impacts back to expense ratio. It's pretty significant. So I think there's a lot of moving parts that are in there. Michael Nannizzi – Goldman Sachs Group, Inc.: Great, thank you very much for your answers.

Thank you, next question is from Bob Farnam of KBW. Your line is open. Robert Farnam – Keefe, Bruyette & Woods: Heading back to the European business, I'm just trying to get a feel for with your strong credit rating, is that really giving you a lot of opportunity in the European space?

I think it gives us a lot of opportunity. Every opportunity has its risks. And we emphasize the risk adjusted return. And I think that we see lots of opportunities to grow and enhance our business. And we're cautiously examining those opportunities. Rob spends a fair amount of time over there looking for opportunities. And he's cautiously optimistic that something will come along, but cautious is the by word. When you don’t know how something is going to come out, it's a pretty critical assumption, and there's a lot of leverage in these things. Robert Farnam – Keefe, Bruyette & Woods: Okay, and can you just shifting topics, your liability duration relative to prior years, has your business mix changed and is that coming down or is that staying?

No, our liability ratio is basically unchanged. It's about four years. Our assets are about three and a half give or take. Robert Farnam – Keefe, Bruyette & Woods: Right, okay, thank you.

(Operator Instructions). Our next question if from Meyer Shields of Stifel Nicolaus. Your line is open. Meyer Shields – Stifel Nicolaus & Company, Inc.: Thanks, good morning everyone. Bill, just a question. If you're making a capital allocation decision deciding between a dollar profit in the investment funds and a dollar profit in underwriting, is there any difference in terms of how you would evaluate that?

Well, I think from my point of view, the question is investment allocations, I can look at the same decision every day. Building a better business is always a more attractive thing for me. So I would always invest in expanding my business than an investment in something else. However, the uncertainty of an investment for instance the uncertainty of expanding the business is certainly not the same. The long and the short of it is we always want to build our business. We always want to expand our business. And every opportunity that we see that lets us create long term value, we want to seize it. And the tradeoff you're always making is you want to grab everyone that's really attractive. And we for instance haven't bought back our long term trust preferred even though it's a lot better return than the things we're buying because it suits our capital structure. So that would be a good example of it's always there. I can always buy it back. Don’t use my capital resources for the moment to do that. So that would be a good example. Meyer Shields – Stifel Nicolaus & Company, Inc.: Okay, sounds great. And Gene, if I can turn to the reserves, I guess I was going to ask for the releases by segment. And also in the first quarter, you talked about how maybe the $25 million in reserve releases was not a good run rate. Is the second quarter a better approximation?

First, we don’t give out the reserve releases by segment for any of these calls, but we'll do that in our queue. Second, I don’t think it's any better run rate. I mean, that number fluctuates quite a bit as the year evolves. We get more and more insight into how the current underwriting year is performing as well as the older years and things change. So I wouldn’t assume that's necessarily a run rate either. Meyer Shields – Stifel Nicolaus & Company, Inc.: Okay, thank you.

Thank you, your next question is from Jay Cohen of Bank of America. Your line is open. Jeffrey Cohen – Bank of America/Merrill Lynch: Thanks, my question was answered. Thank you very much though.

Thank you, there are no further questions in the queue right now. I would like to turn the call over to Mr. Berkley for any closing remarks.

Okay, I think the one thing I want to remind people, which I think is so important as times are changing cycles, probably those people that followed our stock for a long time remember me talking about it in 2003, 2004, and on. And that is paid losses are the only thing no one can fool with. Paid losses are a certainty. They can vary quarter to quarter with storms and with other things. But if you look at paid losses to encourage premiums or better yet paid losses to earned premium including loss adjustment expense, that trend is a really good indicator for what our company is doing. I would urge you to keep track of that for all the companies you follow, us included. You can't hide from paid losses. There's no except for. There's no maybes. It's a great comparator to see how companies are doing. Simple number, define number. I thank all of you. We are really excited. We think the business is great right now. And we're very pleased.