SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

þ       ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004
OR

o       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

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

Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value $.20 per share
Rights to purchase Series A Junior Participating Preferred Stock

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

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 twelve 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 þ No o

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 Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934). Yes þ No o

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 $3,156,900,592.

Number of shares of common stock, $.20 par value, outstanding as of March 3, 2005: 84,272,875.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s 2004 Annual Report to Stockholders for the year ended December 31, 2004 are incorporated herein by reference in Part II, and portions of the registrant’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2004, are incorporated herein by reference in Part III.

W. R. BERKLEY CORPORATION

ANNUAL REPORT ON FORM 10-K

December 31, 2004

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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 herein including statements related to our outlook for the industry and for our performance for the year 2005 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 long-tail and potentially volatile nature of the reinsurance business;
	•	product demand and pricing;
	•	claims development and the process of estimating reserves;
	•	the uncertain nature of damage theories and loss amounts;
	•	natural and man-made catastrophic losses, including as a result of terrorist activities;
	•	the impact of competition;
	•	the availability of reinsurance;
	•	exposure as to coverage for terrorist acts, our retention under The Terrorism Risk Insurance Act of 2002 (“TRIA”) and the potential expiration of TRIA;
	•	the ability of our reinsurers to pay reinsurance recoverables owed to us;
	•	investment results, including those of our portfolio of fixed income securities and investments in equity securities, including merger arbitrage investments;
	•	exchange rates and political risks relating to our international operations;
	•	legislative and regulatory developments, including those related to alleged anti-competitive or other improper sales and practices in the insurance industry;
	•	changes in the ratings assigned to us by rating agencies;
	•	availability of dividends from our insurance company subsidiaries;
	•	our ability to successfully acquire and integrate companies and invest in new insurance ventures;
	•	our ability to attract and retain qualified employees; and
	•	other risks detailed from time to time in this Form 10-K and in our filings with the Securities and Exchange Commission.

We describe these risks and uncertainties in greater detail below under the caption “Certain factors that may affect future results.” These risks and uncertainties could cause our actual results for the year 2005 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our net premiums written and management fees would not necessarily result in commensurate levels of underwriting and operating profits. 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

     The following sections briefly describe our insurance segments. All of the domestic insurance subsidiaries except Admiral Insurance Company have an A.M. Best Company, Inc. (“A.M. Best”) rating of “A (Excellent)” which is the third highest rating out of 15 possible ratings by A. M. Best. Admiral Insurance Company has a rating of “A+ (Superior)” which is A.M. Best’s second highest rating. W. R. Berkley Insurance (Europe), Limited has a rating of “A- (Excellent)” which is A.M. Best’s fourth 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: “While Best’s ratings reflect [its] opinion of a company’s financial strength and ability to meet its ongoing obligations to policyholders, they are not a warranty, nor are they a recommendation of specific policy form, contract, rate or claim practice.” A.M. Best reviews its ratings on a periodic basis, and ratings of the Company’s subsidiaries are therefore subject to change.

SPECIALTY INSURANCE

     Our specialty segment underwrites complex and sophisticated third-party liability risks, principally within excess and surplus lines. Excess and surplus lines differ from standard market lines in that excess and surplus lines are generally free of rate and form regulation and provide coverage for more complex and hard-to-place risks. The primary specialty lines of business are premises operations, professional liability, commercial automobile, products liability and property lines. The specialty business is conducted through nine operating units. The companies within the segment are divided along the different customer bases and product lines that they serve. The specialty units deliver their products through a variety of distribution channels depending on the customer base and particular risks insured. The customers in this segment are highly diverse.

      Admiral Insurance Company (“Admiral”) provides excess and surplus lines coverage that generally involves a moderate to high degrees of risk due to the nature of the class of coverage (e.g., products liability) or insured entity (e.g., fireworks distributors). Admiral concentrates on commercial casualty, professional liability, umbrella and commercial property lines of business produced by wholesale brokers. Admiral’s average annual premiums per policy were approximately $45,000 in 2004.

      Nautilus Insurance Company (“Nautilus”) insures excess and surplus risks that are less complex and involve a lower degree of expected severity than those covered by Admiral. A substantial portion of Nautilus’ business is written on a binding authority basis, subject to certain contractual limitations. Nautilus’ average annual premiums per policy were approximately $4,000 in 2004.

      Carolina Casualty Insurance Company (“Carolina”) specializes in transportation insurance for long-haul trucking and public automobile risks, operating as an admitted carrier in all states.

      Monitor Liability Managers, Inc. (“Monitor”) specializes in professional liability insurance, including directors’ and officers’ liability, employment practices liability, lawyers’ professional liability, management liability and non-profit directors’ and officers’ liability.

      Vela Insurance Services, LLC (“Vela”) provides excess and surplus lines coverage to small and medium size accounts with a primary focus on contractors and products liability. Vela’s average annual premiums per policy were approximately $52,000 in 2004.

      W. R. Berkley Insurance (Europe), Limited (“Berkley UK”) is a United Kingdom authorized insurance company that began operations in July 2003. Berkley UK writes professional indemnity, directors & officers and general liability business.

      Berkley Specialty Underwriting Managers, LLC (“Berkley Specialty”) is an underwriting company formed in 2004 to provide excess and surplus lines general liability coverage to the wholesale market. It also plans to offer commercial property and casualty insurance products to the entertainment and sports industry.

      Clermont Specialty Managers, Ltd. (“Clermont”) writes package insurance programs, including workers’ compensation, for luxury condominium, cooperative and rental apartment buildings and restaurants in the New York City metropolitan area.

      Berkley Medical Excess Underwriters, LLC (“Medical Excess”) provides medical malpractice excess insurance and reinsurance coverage and services to hospitals and hospital associations.

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     The following table sets forth the percentage of gross premiums written by specialty unit:

     The following table sets forth the percentages of gross premiums written, by line, by our specialty insurance operations:

REGIONAL

     Our regional subsidiaries provide commercial insurance products to customers primarily in 27 states. Key clients of this segment are small-to-mid-sized businesses and state and local governmental entities. The regional subsidiaries are organized geographically, which provides them with the flexibility to adapt to local market conditions, while enjoying the superior administrative capabilities and financial strength of W. R. Berkley. The regional operations are conducted through four geographic regions based on markets served: Continental Western Insurance Group (“Continental Western Group”) in the Midwest, Acadia Insurance Company (“Acadia”) in New England, Union Standard Insurance Group (“Union Standard”) in the South (excluding Florida), and Berkley Mid Atlantic Group in the Mid Atlantic region. In addition, surety bonds are offered nationwide through a separate regional company, Monitor Surety Managers, Inc. (“Monitor Surety”).

     The regional subsidiaries primarily sell insurance products through a network of non-exclusive independent agents who are compensated on a commission basis. Our regional companies underwrite all major commercial lines.

     The following table sets forth the percentage of gross premiums written by each region:

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     The following table sets forth the percentages of gross premiums written, by line, by our regional insurance operations:

     The following table sets forth the percentages of direct premiums written, by state, by our regional insurance operations:

ALTERNATIVE MARKETS

     Our alternative markets operations specialize in developing, insuring, reinsuring and administering self-insurance programs and other alternative risk transfer mechanisms. Our clients include employers, employer groups, insurers, and alternative market funds seeking less costly, more efficient ways to manage exposure to risks. In addition to providing insurance, the alternative markets segment also provides a wide variety of fee-based services, including consulting and administrative services.

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     Each of our alternative markets operating units is involved in risk management and is organized according to one of the following product areas: insuring excess workers’ compensation risks; insuring primary workers’ compensation risks; and providing non-risk bearing services.

      Midwest Employers Casualty Company (“MECC”) operates on a nationwide basis and provides excess workers’ compensation coverage and risk management services to self-insured employers and groups above their self-insured or retained limits.

      Preferred Employers Insurance Company (“Preferred Employers”) offers primary workers’ compensation insurance in California. Insurance coverage is provided primarily to owner-managed small employers.

      Key Risk Insurance Company (“Key Risk”) offers primary workers’ compensation insurance principally in North Carolina. Insurance services are also provided through its affiliate, Key Risk Management Services.

      Berkley Risk Administrators Company, LLC (“BRAC”) implements and manages alternative risk management programs and self-insurance pools for business, governmental entities, assigned risk plans, tribal nations and non-profit entities. BRAC also provides administrative and claims services to insurance companies. BRAC’s services include third-party administration, claims adjustment and management, employee benefit consulting, accounting services, insurance and reinsurance risk transfer, loss control and safety consulting, management information systems, regulatory compliance and relations, risk management consulting, alternative markets plan management, statistical analysis, underwriting and rating, and policy issuance. BRAC also underwrites property casualty insurance for self-insured entities.

     The following table sets forth the percentages of gross premiums written by each alternative markets unit:

     The following table sets forth services fees for insurance services business conducted by BRAC and Key Risk (amounts in thousands):

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REINSURANCE

     Our reinsurance operations consist of seven operating units, which specialize in underwriting property casualty reinsurance on both a treaty and a facultative basis on behalf of Berkley Insurance Company. Treaty reinsurance is the reinsurance of all or a specified portion or category of risks underwritten by the ceding company during the term of the agreement. Facultative reinsurance is the reinsurance of individual risks whereby a reinsurer generally has the opportunity to analyze and separately underwrite a risk prior to agreeing to be bound.

      Signet Star Re, LLC (“Signet Star”) focuses on specialty lines of business, including professional liability, umbrella, workers’ compensation, commercial automobile and trucking, where knowledge and expertise in a specific area is valued over the capital scale of the reinsurance provider. Signet Star emphasizes casualty excess of loss treaties and seeks significant participations in order to have greater influence over the terms and conditions of coverage. Signet Star business is produced through reinsurance brokers or intermediaries as opposed to direct relationships with the ceding companies.

      Facultative ReSources, Inc. (“Fac Re”) specializes in individual certificate and program facultative business developed through brokers. Its experienced underwriters seek to offset the underwriting and pricing cycles in the underlying insurance business by working closely with ceding company clients to develop appropriate underwriting criteria and through superior risk selection.

      Lloyd’s of London Reinsurance (“Lloyd’s”) represents quota share reinsurance contracts with MAP Capital Limited and Kiln plc. Map Capital Limited and Kiln PLC underwrite a broad range of mainly short-tail classes of business on a worldwide basis.

      Berkley Underwriting Partners, LLC (“Berkley Underwriting Partners”) writes specialty insurance products through program administrators and managing general underwriters.

      B F Re Underwriting, LLC. (“BF Re”), which commenced operations in 2002, writes facultative reinsurance on a direct basis.

      Fidelity & Surety Reinsurance Managers, LLC (“Fidelity and Surety”) offers reinsurance coverage to a limited number of regional fidelity and surety accounts.

      Berkley Risk Solutions (“Berkley Risk Solutions”) was formed in 2003, and in 2004 began to provide insurance and reinsurance-based financial solutions to insurance companies and self-insured entities.

     The following table sets forth the percentages of gross premiums written by each reinsurance unit:

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

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INTERNATIONAL

     The Company and Northwestern Mutual Life International, Inc. (“NML”), a wholly-owned subsidiary of The Northwestern Mutual Life Insurance Company, jointly own Berkley International, LLC (“Berkley International”).

     Applying the same approach that we take for our domestic businesses, we believe that decentralized control is key to the success of our international efforts. For example, we hire local insurance executives who have specialized knowledge of their customers, markets and products, and we link their compensation to meeting performance objectives.

     International operations are conducted in Argentina and the Philippines. In Argentina, we offer commercial and personal property casualty insurance. Our Argentina subsidiary ceased writing new life insurance business in 2002. In the Philippines, we provide savings and life products to customers.

     The following table set forth the percentages of direct premiums for our international operations:

DISCONTINUED BUSINESS

     In 2001, the Company discontinued its domestic personal lines business, both homeowners and private passenger automobile, and the alternative markets division of its reinsurance segment, by not renewing existing policies or treaties and ceasing to write new business. Although the Company discontinued the alternative market division of its reinsurance segment, it continues to write insurance and reinsurance covering workers’ compensation for self-insured entities within the alternative markets segment .

     The following table set forth the percentages of net premiums written for our discontinued business:

OTHER BUSINESS

     The Company owns a majority interest in Peyton Street Independent Financial Services (“Peyton Street”), a unitary thrift holding company that owns the common stock of InsurBanc. InsurBanc provides banking services principally to independent insurance agencies and their employees.

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     The table below represents summary underwriting ratios, on a GAAP accounting basis for our insurance segments. 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:

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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 have the right to call or prepay obligations.

Loss and Loss Adjustment 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. 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 yet reported 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.

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     In examining reserve adequacy, several factors are considered in addition to the economic value of losses. These factors include 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.

     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 future 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 internal and external events, such as inflation and economic volatility, judicial and litigation trends, reinsurance coverage and legislative changes, 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 assure that its current reserves will prove adequate in light of subsequent events.

     We discount our liabilities for excess workers’ compensation business and the workers’ compensation portion of our reinsurance 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 the liabilities. The expected losses and loss expense payout pattern subject to discounting was derived from the Company’s loss payout experience and is supplemented with data compiled from insurance companies writing similar business. The liabilities for losses and loss expenses have been discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve for non-proportional business, and at the statutory rate for proportional business. The discount rates range from 3.5% to 6.5% with a weighted average rate of 4.8%. The aggregate net discount, after reflecting the effects of ceded reinsurance, is $502,874,000, $393,152,000 and $292,697,000 at December 31, 2004, 2003 and 2002, respectively. The increase in the aggregate discount from 2003 to 2004 and from 2002 to 2003 resulted from the increase in workers’ compensation reserves.

     To date, known asbestos and environmental claims at our insurance company subsidiaries have not had a material impact on our operations. Environmental claims have not materially impacted us because these subsidiaries generally did not insure the larger industrial companies which are subject to significant environmental exposures.

     Our net reserves for losses and loss adjustment expenses relating to asbestos and environmental claims were $38,258,000 and $31,866,000 at December 31, 2004 and 2003, respectively. The Company’s gross reserves for losses and loss adjustment expenses relating to asbestos and environmental claims were $54,971,000 and $49,283,000 at December 31, 2004 and 2003, respectively. Net incurred losses and loss expenses for reported asbestos and environmental claims were approximately $9,194,000, $4,749,000 and $6,652,000 in 2004, 2003 and 2002, respectively. Net paid losses and loss expenses for reported asbestos and environmental claims were approximately $2,802,000, $1,391,000 and $2,938,000 in 2004, 2003 and 2002, respectively. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make a reasonable actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential affect 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 and ending property casualty reserves (amounts in thousands):

     Also, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further information regarding the increase in estimates for claims occurring in prior years.

     A reconciliation between the reserves as of December 31, 2004 as reported in the accompanying consolidated GAAP financial statements and those reported on the basis of statutory accounting principles (“SAP”) is as follows (amounts in thousands):

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     The following table presents the development of net reserves for 1994 through 2004. 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 yet 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 (deficiency)” represents the aggregate change in the estimates over all prior years. For example, the 1994 reserves have developed a $170 million redundancy over ten years. That amount has been reflected in income over the ten 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 1994 is reserved for $2,000 as of December 31, 1994. Assuming this claim estimate was changed in 2004 to $2,300, and was settled for $2,300 in 2004, the $300 deficiency would appear as a deficiency in each year from 1994 through 2003.