Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

W. R. Berkley Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, 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, 2020, and the related notes and financial statement schedules II to VI (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, 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) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 18, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Reserves for losses and loss expenses

As discussed in Notes 1 and 13 to the consolidated financial statements, the Company estimates the reserves for losses and loss expenses (reserves) using a variety of actuarial techniques and methods. The key assumptions used to arrive at the best estimate of recorded reserves are expected loss ratios, rate of loss cost inflation, reported and paid loss emergence patterns, loss frequency and severity, and the loss reporting lag. Such amounts are adjusted for certain qualitative factors. The reserves as of December 31, 2020 were $13,784 million.

We identified the assessment of the estimate of reserves as a critical audit matter because it involved significant measurement uncertainty, which required complex auditor judgement. Specialized actuarial skills and knowledge were required to evaluate the actuarial method or methods and assumptions used. Assumptions included loss development

factors; the weighting of actuarial methods when more than one was used; the impact of qualitative factors; and whether payments are fixed and reliably determinable for certain reserves subject to discounting.

The following are the primary procedures we performed to address the critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s reserving process. This included controls over the Company’s process to develop the Company’s best estimate of reserves based on actuarial methodologies and assumptions employed by the Company’s actuaries. We involved actuarial professionals with specialized skills and knowledge, who assisted in:

examining the Company’s actuarial methodologies for compliance with Actuarial Standards of Practice;
evaluating the Company’s ability to discount certain reserves by comparing the expected payout pattern of claims paid to actual claims paid;
evaluating the Company’s actuarial point estimate by performing independent actuarial analyses for certain of the larger, more complex operating units;
evaluating the Company’s actuarial point estimate by examining the Company actuaries’ process, and certain key assumptions for the remaining operating units;
developing an independent range of reserves based on actuarial methodologies and assumptions and comparing to the Company’s recorded reserves;
evaluating the Company’s recorded reserves and year-over-year movements of the Company’s reserves relative to, and within, the independently developed range of reserves.

/S/ KPMG LLP

We have served as the Company’s auditor since 1972.

New York, New York

February 18, 2021

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Year Ended December 31,
(In thousands, except per share data)	2020		2019		2018
REVENUES:
Net premiums written	$	7,262,437	$	6,863,499	$	6,433,227
Change in net unearned premiums	(331,594)		(230,211)		(61,722)
Net premiums earned	6,930,843		6,633,288		6,371,505
Net investment income	583,821		645,614		674,235
Net investment gains:
Net realized and unrealized gains on investments	73,514		120,703		160,175
Change in allowance for expected credit losses on investments	29,486		—		(5,687)
Net investment gains	103,000		120,703		154,488
Revenues from non-insurance businesses	389,888		406,541		372,985
Insurance service fees	88,777		92,680		117,757
Other income	2,596		3,370		681
Total revenues	8,098,925		7,902,196		7,691,651
OPERATING COSTS AND EXPENSES:
Losses and loss expenses	4,468,706		4,131,116		3,974,702
Other operating costs and expenses	2,390,392		2,362,082		2,383,221
Expenses from non-insurance businesses	384,488		402,669		364,449
Interest expense	150,537		153,409		157,185
Total operating costs and expenses	7,394,123		7,049,276		6,879,557
Income before income taxes	704,802		852,920		812,094
Income tax expense	(171,817)		(168,935)		(163,028)
Net income before noncontrolling interests	532,985		683,985		649,066
Noncontrolling interests	(2,315)		(2,041)		(8,317)
Net income to common stockholders	$	530,670	$	681,944	$	640,749
NET INCOME PER SHARE:
Basic	$	2.84	$	3.58	$	3.37
Diluted	$	2.81	$	3.52	$	3.33

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Year Ended December 31,
(In thousands)	2020		2019		2018
Net income before noncontrolling interests	$	532,985	$	683,985	$	649,066
Other comprehensive gain (loss):
Change in unrealized translation adjustments	29,927		37,166		(112,099)
Change in unrealized investment gains (losses), net of taxes	140,250		215,902		(252,327)

Other comprehensive gain (loss)	170,177		253,068		(364,426)
Comprehensive income	703,162		937,053		284,640
Comprehensive income to the noncontrolling interest	(2,313)		(2,144)		(8,271)
Comprehensive income to common stockholders	$	700,849	$	934,909	$	276,369

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	December 31,
(In thousands, except share data)	2020		2019
Assets
Investments:
Fixed maturity securities (amortized cost of $13,755,858 and $13,976,647; allowance for expected credit losses of $2,580 at December 31, 2020)	$	14,159,369	$	14,180,961
Investment funds	1,309,430		1,213,535
Real estate	1,960,914		2,105,950
Arbitrage trading account	341,473		400,809
Equity securities	625,667		480,620
Loans receivable (net of allowance for expected credit losses of $5,437 at December 31, 2020)	84,913		91,799

Total investments	18,481,766		18,473,674
Cash and cash equivalents	2,372,366		1,023,710
Premiums and fees receivable (net of allowance for expected credit losses of $22,883 at December 31, 2020)	2,167,799		1,997,186
Due from reinsurers (net of allowance for expected credit losses of $7,801 at December 31, 2020)	2,424,502		2,133,683
Deferred policy acquisition costs	556,168		517,364
Prepaid reinsurance premiums	648,376		567,595
Trading account receivable from brokers and clearing organizations	524,727		423,543
Property, furniture and equipment	405,930		422,091
Goodwill	169,652		169,652
Accrued investment income	120,464		138,789
Current federal and foreign income taxes	5,893		23,404
Deferred federal and foreign income taxes	29,055		8,710
Other assets	700,215		762,743
Total assets	$	28,606,913	$	26,662,144
Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses	$	13,784,430	$	12,583,249
Unearned premiums	4,073,191		3,656,507
Due to reinsurers	426,124		360,314
Trading account securities sold but not yet purchased	10,048		36,143
Current federal and foreign income taxes	41,282		10,006
Deferred federal and foreign income taxes	42,161		26,416
Other liabilities	1,178,546		1,244,888
Senior notes and other debt	1,623,025		1,427,575
Subordinated debentures	1,102,309		1,198,704
Total liabilities	22,281,116		20,543,802
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, 177,825,150 and 183,411,907 shares, respectively	70,535		70,535
Additional paid-in capital	1,012,483		1,056,042
Retained earnings	8,348,381		7,932,372
Accumulated other comprehensive loss	(62,172)		(257,299)
Treasury stock, at cost, 174,851,350 and 169,264,857 shares, respectively	(3,058,425)		(2,726,711)
Total common stockholders’ equity	6,310,802		6,074,939
Noncontrolling interests	14,995		43,403
Total equity	6,325,797		6,118,342
Total liabilities and equity	$	28,606,913	$	26,662,144

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


	Year Ended December 31,
(In thousands, except per share data)		2020		2019		2018
COMMON STOCK:
Beginning and end of period		$	70,535	$	70,535	$	70,535
ADDITIONAL PAID IN CAPITAL:
Beginning of period		$	1,056,042	$	1,039,633	$	1,024,772
Restricted stock units issued		(38,491)		(32,370)		(19,547)
Restricted stock units expensed		48,567		48,779		34,408
Change in controlling financial interest of a subsidiary		(53,635)		—		—

End of period		$	1,012,483	$	1,056,042	$	1,039,633
RETAINED EARNINGS:
Beginning of period		$	7,932,372	$	7,558,619	$	6,956,882
Cumulative effect adjustment resulting from changes in accounting principles		(30,514)		—		215,939
Net income to common stockholders		530,670		681,944		640,749
Dividends ($0.47, $1.68, and $1.39 per share, respectively)		(84,147)		(308,191)		(254,951)
End of period		$	8,348,381	$	7,932,372	$	7,558,619
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment gains (losses):
Beginning of period		$	124,514	$	(91,491)	$	375,421
Cumulative effect adjustment resulting from changes in accounting principles		24,952		—		(214,539)
Change in unrealized gains (losses) on securities without an allowance for expected credit losses		108,244		215,636		(252,241)
Change in unrealized gains (losses) on securities with an allowance for expected credit losses		32,004		369		(132)
End of period		289,714		124,514		(91,491)
Currency translation adjustments:
Beginning of period		(381,813)		(418,979)		(306,880)
Net change in period		29,927		37,166		(112,099)
End of period		(351,886)		(381,813)		(418,979)




Total accumulated other comprehensive loss		$	(62,172)	$	(257,299)	$	(510,470)
TREASURY STOCK:
Beginning of period		$	(2,726,711)	$	(2,720,466)	$	(2,709,386)
Stock exercised/vested		13,917		11,431		12,981
Stock issued		726		549		689
Stock repurchased		(346,357)		(18,225)		(24,750)
End of period		$	(3,058,425)	$	(2,726,711)	$	(2,720,466)
NONCONTROLLING INTERESTS:
Beginning of period		$	43,403	$	41,947	$	39,819
Distributions		(30,721)		(688)		(6,143)
Net income		2,315		2,041		8,317
Other comprehensive (loss) income, net of tax		(2)		103		(46)
End of period		$	14,995	$	43,403	$	41,947

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
(In thousands)	2020		2019		2018
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders	$	530,670	$	681,944	$	640,749
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(103,000)		(120,703)		(154,488)
Depreciation and amortization	135,065		113,387		131,108
Noncontrolling interests	2,315		2,041		8,317
Investment funds	(54,253)		(69,194)		(109,349)
Stock incentive plans	49,658		49,274		36,591
Change in:
Arbitrage trading account	(67,943)		(26,553)		(19,093)
Premiums and fees receivable	(173,618)		(189,151)		(43,813)
Reinsurance accounts	(313,525)		(165,898)		(165,287)
Deferred policy acquisition costs	(38,691)		(20,057)		7,788
Current income taxes	49,021		(12,530)		(11,950)
Deferred income taxes	(34,057)		7,130		(74,761)
Reserves for losses and loss expenses	1,176,049		612,254		339,015
Unearned premiums	415,956		301,355		84,142
Other	43,039		(19,506)		(48,770)
Net cash from operating activities	1,616,686		1,143,793		620,199
CASH FLOWS FROM (USED) IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities	3,832,555		2,093,271		3,525,149
Proceeds from sale of equity securities	114,763		79,963		497,989
(Contributions) distributions from investment funds	(3,042)		194,663		(79,635)
Proceeds from maturities and prepayments of fixed maturity securities	3,864,327		2,933,980		2,676,455
Purchase of fixed maturity securities	(7,551,591)		(5,352,886)		(6,677,753)
Purchase of equity securities	(253,031)		(172,978)		(85,610)
Real estate sold (purchased)	178,934		(146,752)		(514,064)

Change in loans receivable	1,467		3,481		(13,204)
Net additions to property, furniture and equipment	(38,171)		(60,457)		(49,860)
Change in balances due from security brokers	(26,515)		2,844		4,262
Cash received in connection with business disposition	—		—		8,664
Payment for business purchased, net of cash acquired	—		—		(6,637)
Net cash from (used) in investing activities	119,696		(424,871)		(714,244)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from issuance of debt	741,637		290,974		294,562

Repayment and redemption of debt	(652,751)		(456,360)		(4,524)
Cash dividends to common stockholders	(84,147)		(308,191)		(254,951)
Purchase of common treasury shares	(346,357)		(18,225)		(24,750)
Other, net	(56,225)		(21,391)		(17,740)
Net cash used in financing activities	(397,843)		(513,193)		(7,403)
Net impact on cash due to change in foreign exchange rates	10,117		379		(31,421)
Net increase (decrease) in cash and cash equivalents	1,348,656		206,108		(132,869)
Cash and cash equivalents at beginning of year	1,023,710		817,602		950,471
Cash and cash equivalents at end of year	$	2,372,366	$	1,023,710	$	817,602

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2020, 2019 and 2018

(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 2019 and 2018 financial statements as originally reported to conform to the presentation of the 2020 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, allowance for expected credit losses on investments, reserves for losses and loss expenses 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. Premiums and fees receivable are reported net of an allowance for expected credit losses, with the allowance being estimated based on current and future expected conditions, historical loss data and specific identification of collectability concerns where applicable. Changes in the allowance are reported within other operating costs and expenses.

Audit premiums are recognized when they are reliably determinable. The change in accruals for earned but unbilled audit premiums (decreased) increased net premiums written and premiums earned by $(27) million, $4 million and $(4) million in 2020, 2019 and 2018, respectively.

Revenues from non-insurance businesses are derived from businesses engaged in the distribution of promotional merchandise, world-wide textile solutions, and aircraft services provided to the general, commercial and military aviation markets. These aircraft 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 products and parts, the delivery of aircraft, the delivery of fuel, and over the completion period 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.

(C) Cash and cash equivalents

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 with readily determinable fair values are measured at fair value, with changes in the fair value recognized in net income within net realized and unrealized gains on investments.

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. The Company's share of the earnings or losses of investment funds is primarily 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 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 12 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.

For available for sale securities in an unrealized loss position where the Company intends to sell, or it is more likely than not that it will be required to sell the security before recovery in value, the amortized cost basis is written down to fair value through net investment gains. For available for sale securities in an unrealized loss position where the Company does not intend to sell, or it is more likely than not that it will not be required to sell the security before recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or all other factors (non-credit factors). In making this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for expected credit losses is recorded for the credit loss through net investment gains, limited by the amount that the fair value is less than the amortized cost basis. The allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment gains. The impairment related to non-credit factors is recognized in other comprehensive income.

For financial assets carried at amortized cost, which includes held to maturity securities and loans receivable, the Company estimates an allowance for expected credit losses based on relevant information about past events, including historical loss experience, current conditions and forecasts that affect the expected collectability of the amortized cost of the financial asset. The allowance for expected credit losses is presented as a reduction to amortized cost of the financial asset in the consolidated balance sheet and changes to the estimate for expected credit losses are recognized through net investment gains.

The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities, as well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic and default scenarios that 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. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if any. In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period. For other inputs, the model in most cases reverts to the baseline long-term assumptions linearly over 5 years beyond the forecast period. The long-term assumptions are based on the historical averages.

The Company reports accrued investment income separately from fixed maturity securities, and has elected not to measure an allowance for expected credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments.

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 (including 7,767,874 common shares held in a grantor trust). The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the weighted average number of basic 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.

(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. 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 13 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 an allowance for expected credit losses for estimated uncollectible reinsurance. The allowance is estimated based on the composition of the recoverable balance, considering reinsurer credit ratings, collateral received from financial institutions and funds withheld arrangements, length of collection periods, probability of default methodology, and specific identification of collectability concerns. Changes in the allowance are reported within losses and loss expenses.

(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 $38 million and $41 million at December 31, 2020 and 2019, respectively.

(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 generally 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 $53 million, $54 million and $54 million for 2020, 2019 and 2018, 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 and unrealized foreign currency translation adjustments.

(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, 2020 indicated that there were no material impairment losses related to goodwill and other intangible assets. Intangible assets of $93 million and $99 million are included in other assets as of December 31, 2020 and 2019, respectively.

(O) Restricted stock units

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 $155 million, $160 million and $155 million in 2020, 2019 and 2018, respectively. Income taxes paid were $103 million, $125 million and $186 million in 2020, 2019 and 2018, respectively. Other non-cash items include unrealized investment gains and losses. (See Note 10 of Notes to Consolidated Financial Statements.)

(Q) Recent accounting pronouncements

Recently adopted accounting pronouncements:

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses, which amended the accounting guidance for credit losses on financial instruments. The updated guidance amended the current other-than-temporary impairment model for available for sale debt securities by requiring the recognition of impairments relating to expected credit losses through an allowance account and limits

the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost, such as reinsurance recoverables. The updated guidance was effective for reporting periods beginning after December 15, 2019. Prior to January 1, 2020, for available for sale securities 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) was recognized in earnings as an other-than-temporary impairment. 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) was recognized in other comprehensive income.

The adoption of this guidance on January 1, 2020 resulted in the recognition of an allowance for expected credit losses in connection with operating assets (premiums and fees receivable and due from reinsurers) of $5.7 million (net of tax) and a corresponding cumulative effect adjustment that decreased common stockholders' equity. Certain investments (primarily fixed maturity securities available for sale) established an allowance for expected credit loss of $24.8 million (net of tax), with a cumulative effect adjustment decreasing retained earnings by $24.8 million (net of tax) and increasing accumulated other comprehensive (loss) income ("AOCI") by $25.0 million (net of tax), resulting in $0.2 million net impact to total common stockholders' equity.

All other accounting and reporting standards that became effective in 2020 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:

All 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.

(2) Consolidated Statements of Comprehensive Income

The following tables present the components of the changes in accumulated other comprehensive loss as of and for the years ended December 31, 2020 and 2019:


(In thousands)
December 31, 2020	Unrealized Investment Gains (Losses)			Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Changes in AOCI
Beginning of period	$	124,514		$	(381,813)	$	(257,299)
Cumulative effect adjustment resulting from changes in accounting principles	24,952			—		24,952
Restated beginning of period	149,466			(381,813)		(232,347)
Other comprehensive income before reclassifications	114,049			29,927		143,976
Amounts reclassified from AOCI	26,201			—		26,201
Other comprehensive income	140,250			29,927		170,177
Unrealized investment loss related to noncontrolling interest	(2)			—		(2)
Ending balance	$	289,714		$	(351,886)	$	(62,172)
Amounts reclassified from AOCI
Pre-tax	$	33,166	(1)	$	—	$	33,166
Tax effect	(6,965)		(2)	—		(6,965)
After-tax amounts reclassified	$	26,201		$	—	$	26,201
Other comprehensive income
Pre-tax	$	164,645		$	29,927	$	194,572
Tax effect	(24,395)			—		(24,395)
Other comprehensive income	$	140,250		$	29,927	$	170,177


(In thousands)
December 31, 2019	Unrealized Investment Gains (Losses)			Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Changes in AOCI
Beginning of period	$	(91,491)		$	(418,979)	$	(510,470)


Other comprehensive income before reclassifications	224,011			37,166		261,177
Amounts reclassified from AOCI	(8,109)			—		(8,109)
Other comprehensive income	215,902			37,166		253,068
Unrealized investment gain related to non-controlling interest	103			—		103
Ending balance	$	124,514		$	(381,813)	$	(257,299)
Amounts reclassified from AOCI
Pre-tax	$	(10,265)	(1)	$	—	$	(10,265)
Tax effect	2,156		(2)	—		2,156
After-tax amounts reclassified	$	(8,109)		$	—	$	(8,109)
Other comprehensive income
Pre-tax	$	261,970		$	37,166	$	299,136
Tax effect	(46,068)			—		(46,068)
Other comprehensive income	$	215,902		$	37,166	$	253,068

(1) Net investment gains in the consolidated statements of income.

(2) Income tax expense in the consolidated statements of income.

(3) Investments in Fixed Maturity Securities

At December 31, 2020 and 2019, investments in fixed maturity securities were as follows:


(In thousands)	Amortized Cost		Allowance for Expected Credit Losses (1)		Gross Unrealized				Fair Value		Carrying Value
	Gains		Losses
December 31, 2020
Held to maturity:
State and municipal	$	67,117	$	(798)	$	13,217	$	—	$	79,536	$	66,319
Residential mortgage-backed	6,455		—		1,043		—		7,498		6,455

Total held to maturity	73,572		(798)		14,260		—		87,034		72,774
Available for sale:
U.S. government and government agency	586,020		—		18,198		(347)		603,871		603,871
State and municipal:
Special revenue	2,137,162		—		96,924		(714)		2,233,372		2,233,372
State general obligation	417,397		—		33,407		—		450,804		450,804
Pre-refunded	250,081		—		21,472		(162)		271,391		271,391
Corporate backed	206,356		—		8,755		(638)		214,473		214,473
Local general obligation	410,583		—		40,596		(555)		450,624		450,624
Total state and municipal	3,421,579		—		201,154		(2,069)		3,620,664		3,620,664
Mortgage-backed securities:
Residential	813,187		—		24,664		(5,238)		832,613		832,613
Commercial	181,105		—		6,725		(113)		187,717		187,717
Total mortgage-backed securities	994,292		—		31,389		(5,351)		1,020,330		1,020,330
Asset-backed securities	3,218,048		—		10,035		(33,497)		3,194,586		3,194,586
Corporate:
Industrial	2,456,516		(518)		115,926		(7,449)		2,564,475		2,564,475
Financial	1,513,943		—		62,947		(987)		1,575,903		1,575,903
Utilities	389,267		—		31,931		(33)		421,165		421,165
Other	109,353		—		696		(11)		110,038		110,038
Total corporate	4,469,079		(518)		211,500		(8,480)		4,671,581		4,671,581
Foreign government	993,268		(1,264)		28,007		(44,448)		975,563		975,563
Total available for sale	13,682,286		(1,782)		500,283		(94,192)		14,086,595		14,086,595
Total investments in fixed maturity securities	$	13,755,858	$	(2,580)	$	514,543	$	(94,192)	$	14,173,629	$	14,159,369

(1) Represents the amount of impairment that has resulted from credit-related factors. The change in the allowance for expected credit losses, excluding the cumulative effect adjustment resulting from changes in accounting principles, is recognized in the consolidated statements of income. Amount excludes unrealized losses relating to non-credit factors.


(In thousands)	Amortized Cost			Gross Unrealized				Fair Value		Carrying Value
Gains			Losses
December 31, 2019
Held to maturity:
State and municipal	$	70,312		$	13,000	$	—	$	83,312	$	70,312
Residential mortgage-backed	8,371			994		—		9,365		8,371

Total held to maturity	78,683			13,994		—		92,677		78,683
Available for sale:
U.S. government and government agency	775,157			13,249		(1,475)		786,931		786,931
State and municipal:
Special revenue	2,343,209			64,586		(4,152)		2,403,643		2,403,643
State general obligation	359,298			22,074		(97)		381,275		381,275
Pre-refunded	364,571			20,342		(128)		384,785		384,785
Corporate backed	255,230			7,232		(903)		261,559		261,559
Local general obligation	432,333			32,684		(647)		464,370		464,370
Total state and municipal	3,754,641			146,918		(5,927)		3,895,632		3,895,632
Mortgage-backed securities:
Residential	1,298,145			23,230		(5,155)		1,316,220		1,316,220
Commercial	304,506			5,214		(346)		309,374		309,374
Total mortgage-backed securities	1,602,651			28,444		(5,501)		1,625,594		1,625,594
Asset-backed securities	2,802,588			9,532		(21,490)		2,790,630		2,790,630
Corporate:
Industrial	2,260,073			72,900		(3,800)		2,329,173		2,329,173
Financial	1,447,589			37,681		(4,118)		1,481,152		1,481,152
Utilities	325,762			15,281		(402)		340,641		340,641
Other	5,219			230		—		5,449		5,449
Total corporate	4,038,643			126,092		(8,320)		4,156,415		4,156,415
Foreign government	924,284			16,465		(93,673)		847,076		847,076
Total available for sale	13,897,964			340,700		(136,386)		14,102,278		14,102,278
Total investments in fixed maturity securities	$	13,976,647		$	354,694	$	(136,386)	$	14,194,955	$	14,180,961

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the year ended December 31, 2020:


	State and Municipal
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	—
Cumulative effect adjustment resulting from changes in accounting principles	69
Provision for expected credit losses	729
Allowance for expected credit losses at December 31, 2020	$	798

The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the year ended December 31, 2020:


	Foreign Government		Corporate		Total
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	—	$	—	$	—
Cumulative effect adjustment resulting from changes in accounting principles	35,645		—		35,645
Expected credit losses on securities for which credit losses were not previously recorded	12,590		7,058		19,648
Expected credit losses (gains) on securities for which credit losses were previously recorded	373		(3,841)		(3,468)
Reduction due to disposals	(47,344)		(2,699)		(50,043)
Allowance for expected credit losses at December 31, 2020	$	1,264	$	518	$	1,782

During the year ended December 31, 2020, the Company decreased the allowance for expected credit losses utilizing its credit loss assessment process and inputs used in its credit loss model, primarily due to the disposition of securities which previously had an allowance recorded.

The amortized cost and fair value of fixed maturity securities at December 31, 2020, 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)	Amortized Cost (1)		Fair Value
Due in one year or less	$	1,618,794	$	1,612,652
Due after one year through five years	5,319,638		5,511,880
Due after five years through ten years	3,382,528		3,550,286
Due after ten years	2,433,353		2,470,983
Mortgage-backed securities	1,000,747		1,027,828
Total	$	13,755,060	$	14,173,629

(1) Amortized cost is reduced by the allowance for expected credit losses of $798 thousand related to held to maturity securities.

At December 31, 2020 and 2019, 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, 2020, investments with a carrying value of $1,838 million were on deposit in custodial or trust accounts, of which $1,223 million was on deposit with insurance regulators, $576 million was on deposit in support of the Company’s underwriting activities at Lloyd’s, $35 million was on deposit as security for reinsurance clients and $4 million was on deposit as security for letters of credit issued in support of the Company’s reinsurance operations.

(4) Investments in Equity Securities

At December 31, 2020 and 2019, investments in equity securities were as follows:


(In thousands)	Cost			Gross Unrealized				Fair Value		Carrying Value
Gains			Losses
December 31, 2020
Common stocks	$	335,617		$	28,742	$	(14,178)	$	350,181	$	350,181
Preferred stocks	180,397			95,581		(492)		275,486		275,486
Total	$	516,014		$	124,323	$	(14,670)	$	625,667	$	625,667

December 31, 2019
Common stocks	$	175,928		$	16,967	$	(26,090)	$	166,805	$	166,805
Preferred stocks	169,171			148,243		(3,599)		313,815		313,815
Total	$	345,099		$	165,210	$	(29,689)	$	480,620	$	480,620

(5) Arbitrage Trading Account

At December 31, 2020 and 2019, the fair value and carrying value of the arbitrage trading account were $341 million and $401 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 and call options in order to mitigate the impact of potential changes in market conditions on the merger arbitrage trading account. These options are reported at fair value. As of December 31, 2020, the fair value of long option contracts outstanding was zero (notional amount of $12.0 million) and the fair value of short option contracts outstanding was $326 thousand (notional amount of $3.2 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives.

(6) Net Investment Income

Net investment income consists of the following:


(In thousands)	2020		2019		2018
Investment income earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	426,563	$	517,925	$	519,269
Investment funds	54,253		69,194		109,349
Arbitrage trading account	77,931		34,585		28,157
Real estate	24,027		24,218		18,591
Equity securities	10,172		5,439		3,230
Gross investment income	592,946		651,361		678,596
Investment expense	(9,125)		(5,747)		(4,361)
Net investment income	$	583,821	$	645,614	$	674,235

(7) Investment Funds

The Company evaluates whether it is an investor in a variable interest entity ("VIE"). Such entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support, or the equity investors, as a group, do not have the characteristics of a controlling financial interest (primary beneficiary). The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary in any of its investment funds, and accordingly, carries its interests in investments funds under the equity method of accounting.

The Company’s maximum exposure to loss with respect to these investments is limited to the carrying amount reported on the Company’s consolidated balance sheet and its unfunded commitments of $124 million as of December 31, 2020.

Investment funds consist of the following:


	Carrying Value as of December 31,				Income (Losses)
(In thousands)	2020		2019		2020		2019		2018
Financial services	$	434,437	$	280,705	$	34,763	$	29,005	$	11,044
Real estate	310,783		412,275		7,543		19,154		61,453
Energy	140,935		156,869		(11,039)		(18,136)		7,084
Transportation	190,125		147,034		(616)		14,193		15,390
Other funds	233,150		216,652		23,602		24,978		14,378
Total	$	1,309,430	$	1,213,535	$	54,253	$	69,194	$	109,349

The Company's share of the earnings or losses of investment funds is primarily reported on a one-quarter lag in order to facilitate the timely completion of the Company's consolidated financial statements.

(8) Real Estate

Investment in real estate represents directly owned property held for investment, as follows:


	As of December 31,
(In thousands)	2020		2019
Properties in operation	$	1,738,144	$	1,351,249
Properties under development	222,770		754,701
Total	$	1,960,914	$	2,105,950

In 2020, properties in operation included a long-term ground lease in Washington, D.C., an office complex in New York City, office buildings in West Palm Beach and Palm Beach, Florida, an office building in London, U.K., and the completed portion of a mixed-use project in Washington D.C. Properties in operation are net of accumulated depreciation and amortization of $86,970,000 and $59,832,000 as of December 31, 2020 and 2019, respectively. Related depreciation expense was $27,090,000 and $15,033,000 for the years ended December 31, 2020 and 2019, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $66,558,703 in 2021, $68,750,145 in 2022, $62,144,246 in 2023, $59,270,828 in 2024, $55,265,048 in 2025 and $643,109,471 thereafter.

The Company borrowed $101,750,000 through a non-recourse loan secured by the West Palm Beach office building in 2018. The loan matures in November 2028 and carries a fixed interest rate of 4.21%. The carrying value does not reflect the outstanding financing, but rather is reflected in subsidiary debt referenced in Note 15, Indebtedness.

A mixed-use project in Washington, D.C. has been under development in 2020 and 2019, with the completed portion as noted above reported in properties in operation as of December 31, 2020.

During the fourth quarter of 2020, the Company sold an office complex in New York City.

(9) Loans Receivable

At December 31, 2020 and December 31, 2019, loans receivable are as follows:


	As of December 31,
(In thousands)	2020		2019
Amortized cost (net of allowance for expected credit losses):
Real estate loans	$	51,910	$	58,541
Commercial loans	33,003		33,258
Total	$	84,913	$	91,799

Fair value:
Real estate loans	$	53,593	$	59,853
Commercial loans	33,003		34,760
Total	$	86,596	$	94,613

The real estate loans are secured by commercial real estate primarily located in New York. 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. Commercial loans primarily earn interest on a fixed basis and have varying maturities generally not exceeding 10 years.

Loans receivable in non-accrual status were $0.2 million as of both December 31, 2020 and 2019.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the year ended December 31, 2020:


	Real Estate Loans		Commercial Loans		Total
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	1,502	$	644	$	2,146
Cumulative effect adjustment resulting from changes in accounting principles	(905)		548		(357)
Provision for expected credit losses	1,086		2,562		3,648
Allowance for expected credit losses at December 31, 2020	$	1,683	$	3,754	$	5,437

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.

In evaluating the real estate loans, the Company considers their 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 position in the capital structure, the overall leverage in the capital structure and other market conditions.

(10) Net Investment Gains

Net investment gains are as follows:


(In thousands)	2020		2019		2018
Net investment gains:
Fixed maturity securities:
Gains	$	27,819	$	23,900	$	26,752
Losses	(56,096)		(13,636)		(13,733)
Equity securities (1):
Net realized gains on investment sales	32,647		23,306		435,150
Change in unrealized (losses) gains	(25,868)		85,292		(320,413)
Investment funds	31,481		(2,825)		(212)
Real estate (2)	101,554		5,965		27,816
Loans receivable	—		(970)		2,838
Other	(38,023)		(329)		1,977
Net realized and unrealized gains on investments in earnings before allowance for expected credit losses	73,514		120,703		160,175
Change in allowance for expected credit losses on investments (3):
Fixed maturity securities	33,134		—		(5,687)
Loans receivable	(3,648)		—		—
Change in allowance for expected credit losses on investments	29,486		—		(5,687)
Net investment gains	103,000		120,703		154,488
Income tax expense	(21,630)		(25,348)		(32,442)
After-tax net investment gains	$	81,370	$	95,355	$	122,046


Change in unrealized investment gains (losses) of available for sales securities:
Fixed maturity securities without allowance for expected credit losses	$	134,129	$	271,825	$	(297,084)
Fixed maturity securities with allowance for expected credit losses	32,004		369		(132)

Investment funds	2,280		(2,299)		(5,672)
Other	(3,768)		(7,925)		151
Total change in unrealized investment gains (losses)	164,645		261,970		(302,737)
Income tax (expense) benefit	(24,395)		(46,068)		50,410
Noncontrolling interests	(2)		103		(46)
After-tax change in unrealized investment gains (losses) of available for sale securities	$	140,248	$	216,005	$	(252,373)

(1) The net realized gains or losses on investment sales represent the total gains or losses from the purchase dates of the equity securities. The change in unrealized gains consists of two components: (i) the reversal of the gain or loss recognized in previous periods on equity securities sold and (ii) the change in unrealized gain or loss resulting from mark-to-market adjustments on equity securities still held.

(2) For 2020, net investment gains on real estate includes an $105 million gain from the sale of a New York City complex that occurred during the fourth quarter.

(3) The inclusion of the allowance for expected credit losses on investments commenced on January 1, 2020 due to the adoption of ASU 2016-13. See Note 1 for more details.

(11) Fixed Maturity Securities in an Unrealized Loss Position

The following tables summarize all fixed maturity securities in an unrealized loss position at December 31, 2020 and 2019 by the length of time those securities have been continuously in an unrealized loss position.


	Less Than 12 Months				12 Months or Greater				Total
(In thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
December 31, 2020
U.S. government and government agency	$	47,649	$	347	$	17	$	—	$	47,666	$	347
State and municipal	147,754		1,165		20,528		904		168,282		2,069
Mortgage-backed securities	212,388		5,121		23,943		230		236,331		5,351
Asset-backed securities	1,389,133		6,563		656,877		26,934		2,046,010		33,497
Corporate	612,177		6,721		39,985		1,759		652,162		8,480
Foreign government	143,729		22,871		6,218		21,577		149,947		44,448
Fixed maturity securities	$	2,552,830	$	42,788	$	747,568	$	51,404	$	3,300,398	$	94,192





December 31, 2019
U.S. government and government agency	$	83,837	$	618	$	53,089	$	857	$	136,926	$	1,475
State and municipal	365,184		4,245		127,210		1,682		492,394		5,927
Mortgage-backed securities	301,358		2,281		180,148		3,220		481,506		5,501
Asset-backed securities	755,259		2,307		774,508		19,183		1,529,767		21,490
Corporate	307,367		3,148		121,470		5,172		428,837		8,320
Foreign government	164,536		32,028		107,266		61,645		271,802		93,673
Fixed maturity securities	$	1,977,541	$	44,627	$	1,363,691	$	91,759	$	3,341,232	$	136,386

Substantially all of the securities in an unrealized loss position are rated investment grade, except for the securities in the foreign government classification. In general, fair value in all classifications were negatively affected by market disruptions caused, in significant part, by COVID-19. A significant amount of the unrealized loss on foreign government securities is the result of changes in currency exchange rates.

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, 2020 is presented in the table below:


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	18	$	75,555	$	44,310
Corporate	11	26,617		3,025

Mortgage-backed securities	7	1,393		31


Total	36	$	103,565	$	47,366

For fixed maturity securities that management does not intend to sell or to be required to sell, the portion of the decline in value that is considered to be due to credit factors is recognized in earnings, and the portion of the decline in value that is considered to be due to non-credit factors is recognized in other comprehensive income.

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 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.

(12) 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.

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 rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate.

The following tables present the assets and liabilities measured at fair value as of December 31, 2020 and 2019 by level:


(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2020
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	603,871	$	—	$	603,871	$	—
State and municipal	3,620,664		—		3,620,664		—
Mortgage-backed securities	1,020,330		—		1,020,330		—
Asset-backed securities	3,194,586		—		3,194,586		—
Corporate	4,671,581		—		4,670,581		1,000
Foreign government	975,563		—		975,563		—
Total fixed maturity securities available for sale	14,086,595		—		14,085,595		1,000
Equity securities:
Common stocks	350,181		340,966		—		9,215
Preferred stocks	275,486		—		266,155		9,331
Total equity securities	625,667		340,966		266,155		18,546
Arbitrage trading account	341,473		298,359		43,114		—
Total	$	15,053,735	$	639,325	$	14,394,864	$	19,546
Liabilities:
Trading account securities sold but not yet purchased	$	10,048	$	10,048	$	—	$	—

December 31, 2019
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	786,931	$	—	$	786,931	$	—
State and municipal	3,895,632		—		3,895,632		—
Mortgage-backed securities	1,625,594		—		1,625,594		—
Asset-backed securities	2,790,630		—		2,790,630		—
Corporate	4,156,415		—		4,156,415		—
Foreign government	847,076		—		847,076		—
Total fixed maturity securities available for sale	14,102,278		—		14,102,278		—
Equity securities:
Common stocks	166,805		157,752		—		9,053
Preferred stocks	313,815		—		307,310		6,505
Total equity securities	480,620		157,752		307,310		15,558
Arbitrage trading account	400,809		381,061		19,748		—
Total	$	14,983,707	$	538,813	$	14,429,336	$	15,558
Liabilities:
Trading account securities sold but not yet purchased	$	36,143	$	36,143	$	—	$	—

The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2020 and 2019:


	Gains (Losses) Included in:
(In thousands)	Beginning Balance		Earnings (Losses)		Other Comprehensive Income (Losses)		Impairments		Purchases		Sales		Paydowns/Maturities		Transfers In / Out		Ending Balance
Year ended December 31, 2020
Assets:
Fixed maturity securities available for sale:

Corporate	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,000	$	1,000
Total	—		—		—		—		—		—		—		1,000		1,000
Equity securities:
Common stocks	9,053		1,228		—		—		—		(1,066)		—		—		9,215
Preferred stocks	6,505		(174)		—		—		3,000		—		—		—		9,331
Total	15,558		1,054		—		—		3,000		(1,066)		—		—		18,546
Arbitrage trading account	—		19		—		—		—		(19)		—		—		—
Total	$	15,558	$	1,073	$	—	$	—	$	3,000	$	(1,085)	$	—	$	1,000	$	19,546



Year ended December 31, 2019
Assets:
Fixed maturity securities available for sale:
Asset-backed securities	$	99	$	(26)	$	61	$	—	$	—	$	(134)	$	—	$	—	$	—

Total	99		(26)		61		—		—		(134)		—		—		—
Equity securities:
Common stocks	8,596		2,005		—		—		—		(1,548)		—		—		9,053
Preferred stocks	3,945		(42)		—		—		2,602		—		—		—		6,505
Total	12,541		1,963		—		—		2,602		(1,548)		—		—		15,558
Arbitrage trading account	17,308		(8,731)		—		—		14,767		(38,233)		—		14,889		—
Total	$	29,948	$	(6,794)	$	61	$	—	$	17,369	$	(39,915)	$	—	$	14,889	$	15,558
Liabilities:
Trading account securities sold but not yet purchased	$	793	$	133	$	—	$	—	$	7,609	$	(8,535)	$	—	$	—	$	—

For the year ended December 31, 2020, a fixed maturity security was transferred from Level 2 into Level 3 as a result of observable valuation inputs no longer being available. For the year ended December 31, 2019, there were two common stocks transferred into Level 3 in the arbitrage trading account where publicly traded prices were no longer available, and both were sold by year end.

(13) Reserves for Losses and Loss Expenses

The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims.

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 may 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. 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” 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 claims handling procedures, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.

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.

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.

A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type (e.g., an event may give rise to two parties, each claiming loss for bodily injury and property damage).

The most commonly used claim count method is by event. Most of the Company's operating units use the number of events to define and quantify the number of claims. However, in certain lines of business, where it is common for multiple parties to claim damages arising from a single event, an operating unit may quantify claims on the basis of the number of separate parties involved in an event. This may be the case with businesses writing substantial automobile or transportation exposure.

Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further variability as respects treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of participation such as quota share or excess of loss contracts. Accordingly, the claim counts have been excluded from the below Reinsurance & Monoline Excess segment tables due to this variability.

The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss payouts by product line.

The following tables present undiscounted incurred and paid claims development as of December 31, 2020, net of reinsurance, as well as cumulative claim frequency and the total of incurred but not reported liabilities (IBNR). The information about incurred and paid claims development for the years ended December 31, 2011 to 2019 is presented as supplementary information. To enhance the comparability of the loss development data, the Company has removed the impact of foreign exchange rate movements by using the December 31, 2020 exchange rate for all periods. Beginning with accident year 2012, the Company's U.K. and European insurance business is included in the Insurance segment's tables for Other Liability, Professional Liability, Commercial Automobile and Short-Tail Lines. Prior to 2012, the actuarial analysis for its U.K. and European insurance business was performed on an underwriting year basis and accident year data is not available for those years.

Insurance

Other Liability

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR		Cumulative Number of Reported Claims
2011	$	665,626	$	671,712	$	657,819	$	657,143	$	652,134	$	647,241	$	643,358	$	632,565	$	643,446	$	644,565	$	16,298	24
2012	—		692,549		701,212		702,022		708,805		712,698		722,946		717,453		715,466		713,714		23,827		24
2013	—		—		750,993		791,768		784,674		784,487		805,447		811,775		806,348		810,500		41,398		26
2014	—		—		—		848,658		851,404		849,440		853,826		866,096		872,150		867,239		66,901		27
2015	—		—		—		—		953,198		988,569		963,451		966,872		968,783		979,014		99,480		27
2016	—		—		—		—		—		1,019,851		1,012,851		1,021,524		1,032,780		1,046,823		171,325		27
2017	—		—		—		—		—		—		1,067,556		1,101,376		1,123,930		1,140,639		253,192		27
2018	—		—		—		—		—		—		—		1,106,108		1,133,601		1,123,121		408,131		26
2019	—		—		—		—		—		—		—		—		1,243,287		1,240,028		662,084		25
2020	—		—		—		—		—		—		—		—		—		1,342,065		1,099,126		17
Total																			$	9,907,708


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	48,846	$	141,216	$	265,109	$	377,836	$	469,123	$	522,488	$	554,278	$	573,364	$	592,637	$	604,657
2012	—		57,599		157,499		298,644		416,561		512,283		579,454		621,454		652,178		667,749
2013	—		—		63,358		188,411		331,779		472,731		588,650		649,657		695,301		721,879
2014	—		—		—		79,111		191,320		339,194		481,706		595,794		681,976		732,313
2015	—		—		—		—		82,817		211,212		382,869		539,242		677,386		758,890
2016	—		—		—		—		—		69,579		209,217		390,664		559,218		678,209
2017	—		—		—		—		—		—		80,163		256,345		453,973		639,977
2018	—		—		—		—		—		—		—		86,958		264,629		436,282
2019	—		—		—		—		—		—		—		—		88,422		275,803
2020	—		—		—		—		—		—		—		—		—		72,274
Total																			$	5,588,033
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		117,290
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	4,436,965

Workers' Compensation

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR		Cumulative Number of Reported Claims
2011	$	413,429	$	444,887	$	457,134	$	470,026	$	472,087	$	474,076	$	475,729	$	471,471	$	473,766	$	472,593	$	14,609	46
2012	—		501,681		501,810		503,956		503,863		509,167		512,707		508,169		506,730		506,827		19,328		48
2013	—		—		552,570		547,295		546,995		543,238		547,000		542,274		541,926		540,322		23,485		53
2014	—		—		—		639,436		637,307		627,767		617,242		615,435		604,030		600,194		36,001		57
2015	—		—		—		—		712,800		690,525		650,997		641,169		626,432		620,741		50,083		58
2016	—		—		—		—		—		702,716		696,339		684,700		660,520		651,278		51,369		58
2017	—		—		—		—		—		—		762,093		733,505		689,622		673,216		64,176		58
2018	—		—		—		—		—		—		—		778,964		724,697		715,055		80,252		56
2019	—		—		—		—		—		—		—		—		784,281		721,018		141,657		53
2020	—		—		—		—		—		—		—		—		—		725,245		319,131		39
Total																			$	6,226,489


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	106,899	$	236,207	$	309,509	$	355,909	$	385,759	$	408,304	$	420,945	$	428,811	$	436,905	$	442,163
2012	—		115,536		255,063		339,560		387,368		419,588		437,196		451,991		459,119		466,028
2013	—		—		117,900		277,538		363,028		414,160		447,894		466,580		479,104		489,075
2014	—		—		—		148,405		319,743		412,611		471,235		503,915		521,141		531,475
2015	—		—		—		—		139,320		323,744		421,734		477,541		512,933		531,512
2016	—		—		—		—		—		142,998		338,835		446,072		504,850		537,861
2017	—		—		—		—		—		—		153,456		362,299		468,817		525,753
2018	—		—		—		—		—		—		—		171,006		397,464		508,546
2019	—		—		—		—		—		—		—		—		184,715		397,376
2020	—		—		—		—		—		—		—		—		—		172,478
Total																			$	4,602,267
			Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																219,529
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,843,751

Professional Liability

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR		Cumulative Number of Reported Claims
2011	$	180,508	$	165,844	$	187,797	$	190,849	$	177,748	$	174,038	$	177,335	$	176,396	$	176,944	$	181,874	$	5,325	4
2012	—		242,530		245,962		268,761		253,146		241,342		247,789		246,478		247,072		249,846		5,919		6
2013	—		—		275,051		251,419		245,984		252,024		273,679		282,150		287,310		284,837		10,867		6
2014	—		—		—		257,442		250,025		263,540		246,983		242,449		261,150		259,892		19,573		7
2015	—		—		—		—		262,459		261,069		278,012		278,868		294,435		285,557		29,712		8
2016	—		—		—		—		—		313,365		327,706		364,312		405,390		442,521		49,740		9
2017	—		—		—		—		—		—		335,565		334,682		340,569		379,408		85,159		10
2018	—		—		—		—		—		—		—		337,865		324,934		335,852		125,091		10
2019	—		—		—		—		—		—		—		—		339,825		336,559		176,941		11
2020	—		—		—		—		—		—		—		—		—		398,429		328,303		10
Total																			$	3,154,775


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	18,803	$	62,560	$	103,263	$	134,862	$	151,135	$	159,309	$	167,595	$	169,191	$	170,873	$	172,294
2012	—		22,269		87,951		129,282		160,243		191,702		216,199		225,442		233,637		236,481
2013	—		—		24,893		64,439		120,224		178,579		208,368		250,507		260,023		265,297
2014	—		—		—		19,773		84,457		139,934		177,575		201,002		218,055		229,615
2015	—		—		—		—		20,565		85,945		140,517		188,608		217,625		234,585
2016	—		—		—		—		—		28,833		103,321		202,906		257,221		299,813
2017	—		—		—		—		—		—		36,839		97,034		163,731		244,396
2018	—		—		—		—		—		—		—		28,432		100,284		156,102
2019	—		—		—		—		—		—		—		—		32,081		98,625
2020	—		—		—		—		—		—		—		—		—		28,474
Total																			$	1,965,682
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		14,011
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,203,104

Commercial Automobile

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR		Cumulative Number of Reported Claims
2011	$	314,028	$	322,516	$	329,917	$	334,816	$	343,421	$	344,174	$	345,044	$	346,619	$	346,490	$	342,581	$	100	37
2012	—		314,309		326,831		342,588		355,609		364,717		364,966		367,216		366,493		366,649		365		41
2013	—		—		327,514		349,136		368,894		377,696		368,106		367,720		366,885		365,820		586		44
2014	—		—		—		363,996		385,329		420,139		418,150		415,727		415,621		411,158		1,506		47
2015	—		—		—		—		390,002		419,663		425,865		434,254		435,438		433,888		3,111		53
2016	—		—		—		—		—		434,582		434,117		445,516		446,521		443,338		8,135		52
2017	—		—		—		—		—		—		431,504		429,372		431,177		435,099		14,298		47
2018	—		—		—		—		—		—		—		443,045		463,057		479,502		29,712		45
2019	—		—		—		—		—		—		—		—		483,483		488,777		74,684		44
2020	—		—		—		—		—		—		—		—		—		523,753		264,630		28
Total																			$	4,290,565


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	135,350	$	211,756	$	262,685	$	296,370	$	321,814	$	333,987	$	338,325	$	340,360	$	340,799	$	341,781
2012	—		136,844		215,214		273,446		312,342		344,952		356,264		361,342		362,426		363,587
2013	—		—		142,929		218,596		267,253		323,227		344,357		354,280		363,038		363,805
2014	—		—		—		155,614		237,765		329,979		367,283		396,089		404,087		406,795
2015	—		—		—		—		160,237		267,420		327,462		372,587		400,304		413,838
2016	—		—		—		—		—		186,867		282,375		344,503		393,509		412,967
2017	—		—		—		—		—		—		181,317		268,201		327,765		372,689
2018	—		—		—		—		—		—		—		180,306		281,888		350,572
2019	—		—		—		—		—		—		—		—		185,488		290,449
2020	—		—		—		—		—		—		—		—		—		142,826
Total																			$	3,459,309
			Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																4,119
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	835,375

Short-tail lines

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR		Cumulative Number of Reported Claims
2011	$	494,704	$	490,235	$	472,041	$	467,989	$	467,205	$	461,629	$	459,369	$	459,557	$	463,053	$	456,106	$	550	22
2012	—		532,843		540,714		542,017		537,142		508,366		507,344		509,216		508,294		509,058		2,406		24
2013	—		—		580,902		591,686		582,666		555,715		554,167		550,604		548,672		547,932		2,160		25
2014	—		—		—		714,360		719,508		667,627		666,246		667,061		667,278		669,729		2,930		30
2015	—		—		—		—		747,683		734,204		730,251		728,720		720,324		718,820		8,958		32
2016	—		—		—		—		—		775,477		778,376		765,311		759,735		754,184		9,360		34
2017	—		—		—		—		—		—		754,135		754,217		748,399		747,739		12,056		42
2018	—		—		—		—		—		—		—		761,177		750,123		747,396		23,631		48
2019	—		—		—		—		—		—		—		—		722,122		702,281		43,842		43
2020	—		—		—		—		—		—		—		—		—		901,698		244,828		34
Total																			$	6,754,943


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	303,049	$	417,792	$	436,787	$	441,025	$	445,323	$	447,016	$	447,619	$	450,432	$	454,991	$	455,702
2012	—		282,703		456,872		508,333		519,093		499,014		500,181		504,451		505,183		506,308
2013	—		—		315,304		491,801		541,563		533,269		540,132		541,400		541,990		543,195
2014	—		—		—		374,757		604,942		615,833		635,415		650,762		658,053		660,640
2015	—		—		—		—		397,261		613,868		669,706		691,705		701,503		707,349
2016	—		—		—		—		—		417,988		672,013		713,634		729,011		734,110
2017	—		—		—		—		—		—		445,835		690,343		719,286		731,440
2018	—		—		—		—		—		—		—		415,529		662,657		709,202
2019	—		—		—		—		—		—		—		—		405,500		616,695
2020	—		—		—		—		—		—		—		—		—		460,656
Total																			$	6,125,297
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		1,571
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	631,217

Reinsurance & Monoline Excess

Casualty

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR
2011	$	293,274	$	312,321	$	306,721	$	301,847	$	309,235	$	307,772	$	299,076	$	295,376	$	301,670	$	298,292	$	13,368
2012	—		335,187		339,236		334,299		326,934		337,777		340,026		337,901		334,461		337,437		14,927
2013	—		—		322,718		273,683		276,688		288,556		297,121		302,768		307,426		305,080		21,094
2014	—		—		—		323,837		323,920		323,130		334,617		328,741		328,289		339,941		25,778
2015	—		—		—		—		262,448		234,862		233,443		255,400		296,297		306,296		35,570
2016	—		—		—		—		—		243,970		256,011		248,367		270,833		304,845		45,117
2017	—		—		—		—		—		—		234,561		224,835		242,603		265,111		58,308
2018	—		—		—		—		—		—		—		224,640		213,665		234,286		88,934
2019	—		—		—		—		—		—		—		—		240,408		234,813		142,399
2020	—		—		—		—		—		—		—		—		—		305,114		255,936
Total																			$	2,931,215


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	17,976	$	52,597	$	98,086	$	134,814	$	170,629	$	194,320	$	210,245	$	222,618	$	234,552	$	246,140
2012	—		22,516		62,563		112,474		153,950		188,955		221,679		243,586		259,429		279,123
2013	—		—		29,122		64,239		111,189		145,508		179,494		207,312		227,884		244,082
2014	—		—		—		21,441		69,568		116,908		156,495		199,846		229,562		254,532
2015	—		—		—		—		17,952		48,833		91,949		142,334		179,884		206,864
2016	—		—		—		—		—		19,998		62,094		100,862		141,301		172,994
2017	—		—		—		—		—		—		16,498		40,440		70,129		124,641
2018	—		—		—		—		—		—		—		11,187		41,382		78,219
2019	—		—		—		—		—		—		—		—		14,641		39,435
2020	—		—		—		—		—		—		—		—		—		20,845
Total																			$	1,666,875
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		380,546
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,644,886

Monoline Excess

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR
2011	$	88,650	$	93,993	$	98,051	$	89,031	$	87,030	$	83,850	$	78,246	$	74,109	$	72,091	$	69,205	$	10,955
2012	—		72,366		73,230		73,670		75,274		72,441		67,878		69,361		67,205		66,269		9,184
2013	—		—		63,995		50,355		48,143		42,419		38,551		35,120		31,752		29,758		11,097
2014	—		—		—		63,561		57,650		49,478		45,758		41,671		42,541		42,618		15,319
2015	—		—		—		—		69,977		57,897		50,099		45,115		39,682		39,781		17,184
2016	—		—		—		—		—		72,657		70,281		71,404		64,957		65,485		20,435
2017	—		—		—		—		—		—		76,701		80,508		70,749		71,025		27,947
2018	—		—		—		—		—		—		—		77,820		72,505		71,448		34,366
2019	—		—		—		—		—		—		—				78,929		77,482		39,832
2020	—		—		—		—		—		—		—		—		—		84,354		59,854
Total																			$	617,425


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	2,593	$	4,848	$	6,395	$	14,042	$	15,684	$	18,638	$	20,164	$	21,463	$	23,686	$	24,842
2012	—		1,127		6,097		10,815		11,167		13,234		15,738		17,982		20,004		22,528
2013	—		—		647		1,897		2,158		3,008		3,396		4,418		5,349		6,476
2014	—		—		—		377		1,729		3,354		4,175		5,808		7,595		11,154
2015	—		—		—		—		2,069		2,481		3,272		4,099		4,416		5,083
2016	—		—		—		—		—		2,498		4,783		5,573		5,928		7,685
2017	—		—		—		—		—		—		6,282		12,810		15,356		17,327
2018	—		—		—		—		—		—		—		6,141		8,230		9,368
2019	—		—		—		—		—		—		—		—		6,241		10,884
2020	—		—		—		—		—		—		—		—		—		4,869
Total																			$	120,216
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		735,818
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,233,027

Property

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2020
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		IBNR
2011	$	95,737	$	88,345	$	85,462	$	86,879	$	85,304	$	85,028	$	84,744	$	85,160	$	84,938	$	84,112	$	366
2012	—		104,336		95,164		86,809		85,846		84,285		84,286		85,222		85,025		91,342		1,429
2013	—		—		142,340		113,201		114,638		112,419		113,053		112,373		110,165		108,017		1,757
2014	—		—		—		113,962		97,411		97,933		100,640		99,892		99,535		99,924		2,185
2015	—		—		—		—		127,852		118,026		132,399		130,888		130,005		131,669		2,404
2016	—		—		—		—		—		168,634		174,935		182,171		181,429		186,786		4,318
2017	—		—		—		—		—		—		207,096		200,917		199,892		198,529		8,040
2018	—		—		—		—		—		—		—		108,829		112,503		103,751		2,423
2019	—		—		—		—		—		—		—		—		103,749		77,618		6,913
2020	—		—		—		—		—		—		—		—		—		115,116		48,509
Total																			$	1,196,864


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2011		2012		2013		2014		2015		2016		2017		2018		2019		2020
2011	$	31,545	$	59,054	$	73,601	$	76,267	$	78,835	$	82,038	$	82,587	$	83,669	$	83,750	$	83,229
2012	—		15,725		51,964		64,489		70,955		77,842		79,407		82,129		83,007		89,194
2013	—		—		36,668		74,806		92,968		101,947		104,756		106,483		108,062		104,863
2014	—		—		—		39,019		67,251		82,646		88,857		92,011		93,723		95,222
2015	—		—		—		—		53,482		89,366		109,378		118,977		123,023		125,939
2016	—		—		—		—		—		78,994		133,805		157,834		169,013		176,509
2017	—		—		—		—		—		—		72,180		141,651		172,100		180,242
2018	—		—		—		—		—		—		—		34,195		65,527		82,815
2019	—		—		—		—		—		—		—		—		23,103		54,864
2020	—		—		—		—		—		—		—		—		—		26,637
Total																			$	1,019,514
	Reserves for loss and loss adjustment expenses before 2011, net of reinsurance																		1,928
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	179,278

The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the consolidated balance sheet is as follows:


(In thousands)		December 31, 2020
Undiscounted reserves for loss and loss expenses, net of reinsurance:
	Other liability	$	4,436,965
	Workers' compensation	1,843,751
	Professional liability	1,203,104
	Commercial automobile	835,375
	Short-tail lines	631,217
	Other	96,257
	Insurance	9,046,669
	Casualty	1,644,886
	Monoline excess	1,233,027
	Property	179,278
	Reinsurance & Monoline Excess	3,057,191
Total undiscounted reserves for loss and loss expenses, net of reinsurance		$	12,103,860


(In thousands)		December 31, 2020
Due from reinsurers on unpaid claims:
	Other liability	$	609,006
	Workers' compensation	267,707
	Professional liability	644,841
	Commercial automobile	32,140
	Short-tail lines	352,168
	Other	36,070
	Insurance	1,941,932
	Casualty	104,372
	Monoline excess	41,598
	Property	76,135
	Reinsurance & Monoline Excess	222,105
Total due from reinsurers on unpaid claims		$	2,164,037


(In thousands)		December 31, 2020
Loss reserve discount:
	Other liability	$	—
	Workers' compensation	(11,700)
	Professional liability	—
	Commercial automobile	—
	Short-tail lines	—
	Other	—
	Insurance	(11,700)
	Casualty	(100,536)
	Monoline excess	(371,231)
	Property	—
	Reinsurance & Monoline Excess	(471,767)
Total loss reserve discount		$	(483,467)
Total gross reserves for loss and loss expenses		$	13,784,430

The following is supplementary information regarding average historical claims duration as of December 31, 2020:


Insurance
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
Other liability	7.5	%	14.4	%	17.7	%	16.6	%	13.4	%	8.7	%	5.6	%	3.5	%	2.6	%	1.9	%
Workers' compensation	23.2	%	29.4	%	15.9	%	9.3	%	5.9	%	3.5	%	2.4	%	1.6	%	1.5	%	1.1	%
Professional liability	8.4	%	20.7	%	19.5	%	16.4	%	10.1	%	8.3	%	4.0	%	2.0	%	2.3	%	0.8	%
Commercial automobile	37.7	%	21.5	%	15.3	%	10.9	%	6.6	%	2.9	%	1.4	%	0.4	%	0.2	%	0.3	%
Short-tail lines	57.0	%	31.7	%	6.0	%	1.6	%	0.4	%	0.5	%	0.4	%	0.3	%	0.6	%	0.2	%

Reinsurance & Monoline Excess
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years	1		2		3		4		5		6		7		8		9		10
Casualty	6.5	%	11.7	%	14.1	%	14.0	%	11.5	%	8.9	%	6.5	%	4.7	%	4.9	%	3.9	%
Monoline excess	4.9	%	4.5	%	2.8	%	3.1	%	2.4	%	3.5	%	4.3	%	2.9	%	3.5	%	1.7	%
Property	33.3	%	33.2	%	15.4	%	6.0	%	3.9	%	2.2	%	1.6	%	1.2	%	0.8	%	0.6	%

The table below provides a reconciliation of the beginning and ending reserve balances:


(In thousands)	2020		2019		2018
Net reserves at beginning of year	$	10,697,998	$	10,248,883	$	10,056,914
Cumulative effect adjustment resulting from changes in accounting principles (1)	5,927		—		—
Restated net reserves at beginning of period	10,703,925		10,248,883		10,056,914
Net provision for losses and loss expenses:
Claims occurring during the current year (2)	4,432,937		4,057,989		3,926,489
Increase in estimates for claims occurring in prior years (3)	627		34,079		6,831
Loss reserve discount accretion	35,142		39,048		41,382
Total	4,468,706		4,131,116		3,974,702
Net payments for claims:
Current year	921,054		985,599		964,808
Prior year	2,677,595		2,673,803		2,700,077
Total	3,598,649		3,659,402		3,664,885
Foreign currency translation	46,411		(22,599)		(117,848)
Net reserves at end of year	11,620,393		10,697,998		10,248,883
Ceded reserve at end of year	2,164,037		1,885,251		1,717,565
Gross reserves at end of year	$	13,784,430	$	12,583,249	$	11,966,448

Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (3)	$	(627)	$	(34,079)	$	(6,831)
Retrospective premium adjustments for claims occurring in prior years (4)	16,807		53,511		45,638
Net favorable premium and reserve development on prior years	$	16,180	$	19,432	$	38,807

(1)The cumulative effect adjustment resulting from changes in accounting principals relates to the allowance for expected credit losses on reinsurance recoverables that commenced on January 1, 2020 due to the adoption of ASU 2016-13. See Note 1 for more details.

(2)Claims occurring during the current year are net of loss reserve discounts of $10 million, $20 million and $24 million in 2020, 2019, and 2018, respectively.

(3)The change 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 $21 million in 2020, increased by $19 million in 2019, and decreased by $4 million in 2018, respectively.

(4)For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years are offset by additional or return premiums.

The ongoing COVID-19 global pandemic has impacted, and will likely continue to impact, the Company’s results through its effect on claim frequency and severity. Loss cost trends have been impacted and will likely be further impacted by COVID-19-related claims in certain lines of business, as well as by other effects of COVID-19 associated with economic conditions, inflation, and social distancing and work from home rules, for example. Although it is still too early to determine the net impact, it appears that the losses incurred due to COVID-19-related claims are being offset, to a certain extent, by lower claim frequency in certain lines of our businesses, including commercial auto, workers’ compensation, and other liability. However, given the continuing nature of the pandemic, the impact of COVID-19 could ultimately increase or decrease overall loss cost trends and is likely to have differing impacts on the Company's different lines of business.

Most of the COVID-19-related claims reported to the Company to date involve certain short-tailed lines of business, including contingency and event cancellation, business interruption, and film production delay. The Company expects additional claims to be reported for these lines of business. The Company has also received COVID-19-related claims for longer-tailed casualty lines of business such as workers’ compensation and other liability; however, the estimated incurred loss impact for these reported claims appears to be modest at this time. Given the continuing uncertainty regarding the pandemic's pervasiveness, the future impact that the pandemic may have on claim frequency and severity remains uncertain at this time. In workers’ compensation, for example, nearly two-thirds of the states have enacted rules, legislation or administrative orders creating a presumption that certain “essential”

workers who contract COVID-19 did so through the course of their employment. Several other states are considering similar actions, including varying the definition of “essential” workers. While the ultimate impact of these presumptions are unknown at this time, the Company believes that such state actions will likely increase workers’ compensation claims with respect to workers deemed “essential,” although this impact may be partially offset by lower workers’ compensation claim frequency with respect to non-essential workers.

The Company has estimated the potential COVID-19 impact to its contingency and event cancellation, workers’ compensation, and other lines of business under a number of possible scenarios; however, due to COVID-19’s evolving impact and the still limited amount of available data, there remains a high degree of uncertainty around the Company’s COVID-19 reserves. In addition, several states (and international jurisdictions), through regulation, legislation and/or judicial action, continue to seek to expand policy coverage terms beyond the policy’s intended coverage, including, for example, but not limited to, property coverages, where there are attempts to extend business interruption coverage where there is no physical damage or loss to property, and attempts to disregard policy exclusions for communicable disease. Accordingly, losses arising from these actions, and the other factors described above, could exceed the Company’s reserves established for those related policies.

For the year ended December 31, 2020, the Company recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $171 million, of which $161 million related to the Insurance segment and $10 million related to the Reinsurance & Monoline Excess segment. Such $171 million of COVID-19-related losses included $95 million of reported losses and $76 million of IBNR.

Favorable prior year development (net of additional and return premiums) was $16 million in 2020.

Insurance – Reserves for the Insurance segment developed favorably by $24 million in 2020 net of additional and return premiums). Continuing the pattern seen in recent years, the overall favorable development in 2020 resulted from more significant favorable development on workers’ compensation business, which was partially offset by unfavorable development on professional liability, including excess professional liability.

For workers’ compensation, the favorable development was spread across almost all prior accident years, including prior to 2011, but was most significant in accident years 2016 through 2019. The favorable workers’ compensation development reflects a continuation of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers’ compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred provider networks and pharmacy benefit managers. Reported workers’ compensation losses in 2020 continued to be below our expectations at most of our operating units, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates for most prior accident years.

For professional liability business, unfavorable development was driven mainly by large losses reported in the directors and officers (“D&O”), lawyers professional and excess hospital professional liability lines of business. For these lines of business, we continue to see an increase in the number of large losses reported and a lengthening of the reporting “tail” beyond historical levels. We believe a contributing cause is rising social inflation in the form of, for example, higher jury awards on cases that go to trial, and the corresponding higher demands from plaintiffs and higher values required to reach settlement on cases that do not go to trial. The unfavorable development for professional liability affected mainly accident years 2016 through 2018.

Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $8 million in 2020. The unfavorable development in the segment was driven by non-proportional assumed liability business written in both the U.S. and U.K., and was partially offset by favorable development on excess workers’ compensation business. The unfavorable non-proportional assumed liability development was concentrated in accident years 2014 through 2018, and related primarily to accounts insuring construction projects and professional liability exposures.

Favorable prior year development (net of additional and return premiums) was $19 million in 2019.

Insurance - Reserves for the Insurance segment developed favorably by $21 million in 2019 (net of additional and return premiums). This overall favorable development resulted from more significant favorable development on workers’ compensation business, which was partially offset by unfavorable development on professional liability and general liability business.

For workers’ compensation, the favorable development was spread across many accident years, including prior to 2010, but was most significant in accident years 2014 through 2018, and particularly 2017 and 2018. The favorable workers’ compensation development reflects a continuation during 2019 of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers’ compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued

investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred provider networks and pharmacy benefit managers. Our initial loss ratio “picks” for this line of business over the past few accident years have contemplated an increase in loss cost trends and reflect decreasing premium rates in the marketplace; reported workers’ compensation losses in 2019 continued to be below our expectations at most of our operating units, and were below the assumptions underlying our initial loss ratio picks and our previous reserve estimates.

For professional liability business, the unfavorable development was driven mainly by an increase in the number of large losses reported in the lawyers professional liability and directors and officers (“D&O”) liability lines of business. Many of the lawyers large losses involved claims made against insured law firms relating to work performed on matters stemming from the 2008 financial crisis. These claims affected mainly accident years 2013 through 2016. In addition, for both of these lines of business, we have seen evidence of social inflation in the form of higher jury awards on cases that go to trial, and corresponding higher demands from plaintiffs and higher values required to reach settlement on cases that do not go to trial. The unfavorable development for D&O affected mainly accident years 2014 through 2017.

For general liability business, most of the unfavorable development emanated from our excess and surplus lines (E&S) businesses, and was driven by an increase in the number of large losses reported. Many of these large losses were from construction and contracting classes of business, which have also been impacted by social inflation. The general liability unfavorable development impacted mainly accident years 2015 through 2018.

Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $2 million in 2019. The unfavorable development in the segment was driven by non-proportional assumed liability business in both the U.S. and U.K., and was largely offset by favorable development on excess workers’ compensation business. The unfavorable non-proportional assumed liability development was concentrated in accident years 2015 through 2018, and included an adjustment for the Ogden discount rate in the U.K.

Favorable prior year development (net of additional and return premiums) was $39 million in 2018.

Insurance - Reserves for the Insurance segment developed favorably by $19 million in 2018. The favorable development was primarily attributable to workers’ compensation business, and was partially offset by unfavorable development for professional liability business.

For workers’ compensation, the favorable development was spread across many accident years, but was most significant in accident years 2015 through 2017. The favorable workers’ compensation development reflects a continuation during 2018 of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The long term trend of declining workers' compensation frequency can be attributable to improved workplace safety. Loss severity trends were also aided by our continued investment in claims handling initiatives such as medical case management services and vendor savings through usage of preferred provider networks. Reported workers’ compensation losses in 2018 continued to be below our expectations at most of our operating units, and were below the assumptions underlying our previous reserve estimates.

For professional liability business, adverse development was primarily related to unexpected large directors and officers (“D&O”) liability losses at one of our U.S. operating units, as well as lawyers professional liability losses at another operating unit. The adverse development stemmed primarily from accident years 2015 and 2016, and was driven by a higher frequency of large losses than we had experienced in previous years.

Reinsurance & Monoline Excess - Reserves for the Reinsurance & Monoline Excess segment developed favorably by $20 million in 2018. The favorable development was primarily due to excess workers’ compensation business, and was spread across many accident years, including years prior to 2009. This favorable excess workers’ compensation development was partially offset by unfavorable development on U.S. casualty facultative assumed business from accident years 2009 and prior related to construction projects.

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 on policies written before adoption of the absolute exclusion was $19 million at December 31, 2020 and $24 million at December 31, 2019. 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 $1,655 million and $1,731 million at December 31, 2020 and 2019, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $483 million and $530 million at December 31, 2020 and 2019, respectively. At December 31, 2020, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.

Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2020) 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 3% of total discounted reserves at December 31, 2020), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.

(14) Premiums and Reinsurance Related Information

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)	2020		2019		2018
Written premiums:
Direct	$	7,874,050	$	7,386,759	$	6,973,216
Assumed	973,597		875,459		729,278
Ceded	(1,585,210)		(1,398,719)		(1,269,267)
Total net written premiums	$	7,262,437	$	6,863,499	$	6,433,227

Earned premiums:
Direct	$	7,489,470	$	7,141,427	$	6,851,795
Assumed	941,321		820,705		755,759
Ceded	(1,499,948)		(1,328,844)		(1,236,049)
Total net earned premiums	$	6,930,843	$	6,633,288	$	6,371,505

Ceded losses and loss expenses incurred	$	955,630	$	836,831	$	829,742
Ceded commission earned	$	358,253	$	314,191	$	268,037

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the year ended December 31, 2020:


(In thousands)
Allowance for expected credit losses at January 1, 2020	$	19,823
Cumulative effect adjustment resulting from changes in accounting principles	1,270
Provision for expected credit losses	1,790
Allowance for expected credit losses at December 31, 2020	$	22,883

Estimated amounts due from reinsurers are reported net of an allowance for expected credit losses of $7,800,649, $690,127 and $946,965 as of December 31, 2020, 2019 and 2018, respectively. The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the year ended December 31, 2020:


(In thousands)
Allowance for expected credit losses at January 1, 2020	$	690
Cumulative effect adjustment resulting from changes in accounting principles	5,927
Provision for expected credit losses	1,184
Allowance for expected credit losses at December 31, 2020	$	7,801

The following table presents the amounts due from reinsurers as of December 31, 2020:


(In thousands)

Munich Re	$	275,841
Lloyd’s of London	255,184
Swiss Re	182,532
Alleghany Group	182,015
Partner Re	164,535
Hannover Re Group	129,752
Berkshire Hathaway	104,775
Everest Re	102,085
Renaissance Re	101,014
Axis Capital	87,948
Liberty Mutual	66,263
Korean Re	56,091
Fairfax Financial	37,310
Axa Insurance	35,012
Validus Holdings Ltd.	29,599
Arch Capital Group	27,739
Qatar Re	20,321
Other reinsurers less than $20,000	330,929
Subtotal	2,188,945
Residual market pools	243,358
Allowance for expected credit losses	(7,801)
Total	$	2,424,502

(15) Indebtedness

Indebtedness consisted of the following as of December 31, 2020 (the difference between the face value and the carrying value is unamortized discount and debt issuance costs):


				Carrying Value
(In thousands)	Interest Rate	Face Value		2020		2019
Senior notes and other debt due on:
September 15, 2020	5.375%	$	—	$	—	$	299,756
January 1, 2022	8.700%	76,503		76,419		76,343
March 15, 2022	4.625%	350,000		349,505		349,088
February 15, 2037	6.250%	250,000		248,226		248,116
August 1, 2044	4.750%	350,000		345,652		345,467
May 12, 2050	4.000%	470,000		492,236		—



Subsidiary debt (1) (2)	Various	110,987		110,987		108,805
Total senior notes and other debt		$	1,607,490	$	1,623,025	$	1,427,575
Subordinated debentures due on:
April 30, 2053	5.625%	$	—	$	—	$	341,356
March 1, 2056 (3)	5.900%	110,000		106,365		106,262
June 1, 2056	5.750%	290,000		282,003		281,777
March 30, 2058	5.700%	185,000		179,006		178,845
December 30, 2059	5.100%	300,000		290,702		290,464
September 30, 2060	4.250%	250,000		244,233		—
Total subordinated debentures		$	1,135,000	$	1,102,309	$	1,198,704

(1) Subsidiary debt is due as follows: $3 million in 2021, $6 million in 2025, and $102 million in 2028.

(2) Includes non-recourse loan in the amount of $102 million secured by an office building. See Note 8, Real Estate, for more details.

(3) In January 2021, the Company called its $110 million aggregate principal amount of 5.900% subordinated debentures for redemption on March 1, 2021. Additionally in February 2021, the Company issued $300 million aggregate principal amount of 4.125% subordinated debentures due 2061.

(16) Income Taxes

Income tax expense (benefit) consists of:


(In thousands)	Current Expense		Deferred Expense (Benefit)		Total
December 31, 2020
Domestic	$	162,305	$	17	$	162,322
Foreign	23,375		(13,880)		9,495
Total expense (benefit)	$	185,680	$	(13,863)	$	171,817

December 31, 2019
Domestic	$	124,231	$	27,616	$	151,847
Foreign	9,030		8,058		17,088
Total expense	$	133,261	$	35,674	$	168,935

December 31, 2018
Domestic	$	188,712	$	(63,134)	$	125,578
Foreign	13,963		23,487		37,450
Total expense (benefit)	$	202,675	$	(39,647)	$	163,028

Income before income taxes from domestic operations was $831 million, $739 million and $755 million for the years ended December 31, 2020, 2019 and 2018, respectively. (Loss) income before income taxes from foreign operations was ($126) million, $114 million and $57 million for the years ended December 31, 2020, 2019 and 2018, respectively.

A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate of 21% for 2020, 2019 and 2018 to pre-tax income are as follows:


(In thousands)	2020		2019		2018
Computed “expected” tax expense	$	148,008	$	179,113	$	170,540
Tax-exempt investment income	(12,770)		(14,666)		(18,833)
Change in valuation allowance	46,238		(1,945)		18,576
Impact of foreign tax rates	6,753		7,700		7,683
State and local taxes	2,561		4,842		3,901
Impact of change in U.S. tax rate	—		—		(10,950)
Other, net	(18,973)		(6,109)		(7,889)
Total expense	$	171,817	$	168,935	$	163,028

At December 31, 2020 and 2019, 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)	2020		2019
Deferred tax asset:
Loss reserve discounting	$	141,877	$	136,100
Unearned premiums	134,971		120,246
Net operating losses	64,494		37,147
Other-than-temporary impairments	5,973		8,049
Employee compensation plans	60,551		60,552
Other	85,327		63,633
Gross deferred tax asset	493,193		425,727
Less valuation allowance	(79,488)		(33,250)
Deferred tax asset	413,705		392,477
Deferred tax liability:
Amortization of intangibles	12,761		12,832
Loss reserve discounting - transition rule	24,747		29,697
Deferred policy acquisition costs	113,084		103,947
Unrealized investment gains	100,241		93,330
Property, furniture and equipment	48,235		47,082
Investment funds	64,944		73,083
Other	62,809		50,212
Deferred tax liability	426,821		410,183
Net deferred tax liability	$	13,116	$	17,706

The Company had a current tax net payable of $35.4 million and net receivable of $13.4 million at December 31, 2020 and 2019, respectively. At December 31, 2020, the Company had foreign net operating loss carryforwards of $7.7 million that expire beginning in 2027, and an additional $305.4 million that have no expiration date. At December 31, 2020, the Company had a valuation allowance of $79.5 million, as compared to $33.3 million at December 31, 2019. The Company has provided a valuation allowance against the utilization of foreign tax credits and the future net operating loss carryforward benefits of certain foreign operations. The statute of limitations for the Company’s U.S. Federal tax returns has closed for calendar year 2016 and all years through December 31, 2013.

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.

The Tax Cuts and Jobs Act of 2017 (the "Tax Act") provided for a reduction of the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. The U.S. tax law requires insurance reserves to be discounted for tax purposes. The Tax Act modified this computation. The IRS issued revised discount factors to be applied to the 2017 reserves, which increased the beginning of year 2018 deferred tax asset for loss reserve discounting. Under the related transition rule, a deferred tax liability was established which will be included in taxable income over the eight year period that began in 2018.

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $111 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.

(17) 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 2021, the maximum amount of dividends that can be paid by BIC without such approval is approximately $721 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)	2020		2019		2018
Net income	$	771,990	$	601,564	$	1,099,953
Statutory capital and surplus	$	6,188,121	$	6,013,062	$	5,587,930

The significant variances between SAP and GAAP are that for statutory purposes bonds are carried at amortized cost, unrealized gains and losses on equity securities are recorded in surplus, 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 recognize a non-tabular discount on certain workers' compensation loss reserves, which is a permitted practice that differs from SAP. The effect of using this permitted practice was an increase to BIC’s statutory capital and surplus by $200 million at December 31, 2020*.*

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, 2020, BIC’s Total Adjusted Capital of $5.989 billion was 388% of its RBC Authorized Control Level.

See Note 3, Investments in Fixed Maturity Securities, for a description of assets held on deposit as security.

(18) Common Stockholders’ Equity

The weighted average number of shares used in the computation of net income per share was as follows:


(In thousands)	2020	2019	2018
Basic	186,924	190,722	190,048
Diluted	188,763	193,521	192,395

Treasury shares have been excluded from average outstanding shares from the date of acquisition. The weighted average number of basic shares outstanding includes the impact of 7,767,874 common shares held in a grantor trust. The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since shares deliverable under vested RSUs were already included in diluted shares outstanding. 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 (including shares held in the grantor trust).


	2020	2019	2018
Balance, beginning of year	183,411,907	182,993,640	182,272,278
Shares issued	776,544	687,339	1,257,762
Shares repurchased	(6,363,301)	(269,072)	(536,400)
Balance, end of year	177,825,150	183,411,907	182,993,640

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.

(19) 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, 2020 and 2019:


	2020				2019
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturity securities	$	14,159,369	$	14,173,629	$	14,180,961	$	14,194,955
Equity securities	625,667		625,667		480,620		480,620
Arbitrage trading account	341,473		341,473		400,809		400,809
Loans receivable	84,913		86,596		91,799		94,613
Cash and cash equivalents	2,372,366		2,372,366		1,023,710		1,023,710
Trading accounts receivable from brokers and clearing organizations	524,727		524,727		423,543		423,543
Due from broker	2,585		2,585		—		—

Liabilities:
Due to broker	—		—		27,116		27,116
Trading account securities sold but not yet purchased	10,048		10,048		36,143		36,143
Senior notes and other debt	1,623,025		1,892,444		1,427,575		1,582,290
Subordinated debentures	1,102,309		1,202,842		1,198,704		1,274,088

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 12 above. The fair value of loans receivable is 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.

(20) 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, 2020, the Company had commitments to invest up to $124 million and $200 million in certain investment funds and real estate construction projects, respectively.

(21) Leases

Lessees are required to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months on the balance sheet. All leases disclosed within this note are classified as operating leases. Recognized right-of-use asset and lease liability are reported within other assets and other liabilities, respectively, in the consolidated balance sheet. Lease expense is reported in other operating costs and expenses in the consolidated statement of income and accounted for on a straight-line basis over the lease term.

To determine the discount rate used to calculate present value of future minimum lease payments, the Company uses its incremental borrowing rate during the lease commencement period in line with the respective lease duration. In certain cases, the Company has the option to renew the lease. Lease renewal future payments are included in the present value of the future minimum lease payments when the Company determines it is reasonably certain to renew.

The main leases entered into by the Company are for office space used by the Company’s operating units across the world. Additionally, the Company, to a lesser extent, has equipment leases mainly for office equipment. Further information relating to operating lease expense and other operating lease information is as follows:


		For the Year Ended December 31,

(In thousands)	2020	2019
Leases:
Lease cost		$	44,291	$	44,107
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows		$	45,348	$	40,083
Right-of-use assets obtained in exchange for new lease liabilities		$	8,870	$	32,881


	As of December 31,
($ in thousands)	2020			2019
Right-of-use assets	$	164,476		$	193,311
Lease liabilities	$	203,643		$	230,338
Weighted-average remaining lease term	6.82 years			7.11 years
Weighted-average discount rate	5.94		%	5.97		%

Contractual maturities of the Company’s future minimum lease payments are as follows:


(In thousands)	December 31, 2020
Contractual Maturities:
2021	$	47,477
2022	41,442
2023	37,843
2024	31,283
2025	22,452
Thereafter	58,124
Total undiscounted future minimum lease payments	238,621
Less: Discount impact	34,978
Total lease liability	$	203,643

(22) Stock Incentive Plan

Pursuant to the Company's 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, 2020:


	2020	2019	2018
RSUs granted and unvested at beginning of period:	4,124,260	5,062,661	5,216,972
Granted	962,453	840,796	1,140,048
Vested	(1,111,588)	(1,447,522)	(900,254)
Canceled	(170,789)	(331,675)	(394,105)
RSUs granted and unvested at end of period:	3,804,336	4,124,260	5,062,661

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, 2020, 7,519,447 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, 2020:


(In thousands)	2020		2019		2018
Unearned compensation at beginning of year	$	128,390	$	129,669	$	122,910
RSUs granted, net of cancellations	54,270		53,583		52,204
RSUs expensed	(47,108)		(47,329)		(34,408)
RSUs forfeitures	(3,242)		(7,533)		(11,037)
Unearned compensation at end of year	$	132,310	$	128,390	$	129,669

(23) Compensation Plans

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 operating unit's profitability. Employees 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 $48 million, $47 million and $42 million in 2020, 2019 and 2018, respectively.

The Company has a long-term incentive compensation plan ("LTIP") that provides for 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, 2020:


	Units Outstanding	Maximum Value	Inception to date earned through December 31, 2020 on outstanding units
2016 grant	190,000	19,000,000	17,732,700
2017 grant	202,750	20,275,000	13,509,233
2018 grant	208,750	20,875,000	10,007,475
2019 grant	224,250	22,425,000	5,497,623
2020 grant	225,500	22,550,000	2,271,701

The following table summarizes the LTIP expense for each of the three years ended December 31, 2020:


(In thousands)	2020		2019		2018

2013 grant	$	—	$	—	$	(1,124)
2014 grant	—		(558)		3,227
2015 grant	(168)		3,319		5,170
2016 grant	3,176		3,548		5,148
2017 grant	2,914		3,432		4,700
2018 grant	2,776		3,310		4,317
2019 grant	2,490		3,068		—
2020 grant	2,276		—		—
Total	$	13,464	$	16,119	$	21,438

(24) Supplemental Financial Statement Data

Other operating costs and expenses consist of the following:


(In thousands)	2020		2019		2018
Amortization of deferred policy acquisition costs	$	904,955	$	1,001,611	$	915,246
Insurance operating expenses	1,206,058		1,088,690		1,183,635
Insurance service expenses	85,724		101,317		118,357
Net foreign currency losses (gains)	363		(30,715)		(27,067)
Debt extinguishment costs	8,440		—		—
Other costs and expenses	184,852		201,179		193,050
Total	$	2,390,392	$	2,362,082	$	2,383,221

(25) Industry Segments

The Company’s reportable segments include the following two business segments, plus a corporate segment:

Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.
Reinsurance & Monoline Excess - 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, as well as operations that solely retain risk on an excess basis.

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 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.


	Revenues
(In thousands)	Earned Premiums (1)		Investment Income		Other		Total (2)		Pre-Tax Income (Loss)		Net Income (Loss) to Common Stockholders
Year ended December 31, 2020
Insurance	$	6,067,669	$	375,554	$	35,611	$	6,478,834	$	668,012	$	487,125
Reinsurance & Monoline Excess	863,174		146,029		—		1,009,203		205,587		164,655
Corporate, other and eliminations (3)	—		62,238		445,650		507,888		(271,797)		(214,291)
Net investment gains	—		—		103,000		103,000		103,000		93,181
Consolidated	$	6,930,843	$	583,821	$	584,261	$	8,098,925	$	704,802	$	530,670

Year ended December 31, 2019
Insurance	$	5,919,819	$	429,405	$	47,850	$	6,397,074	$	814,862	$	650,510
Reinsurance & Monoline Excess	713,469		164,082		—		877,551		189,188		152,046
Corporate, other and eliminations (3)	—		52,127		454,741		506,868		(271,833)		(215,967)
Net investment gains	—		—		120,703		120,703		120,703		95,355
Consolidated	$	6,633,288	$	645,614	$	623,294	$	7,902,196	$	852,920	$	681,944

Year ended December 31, 2018
Insurance	$	5,702,073	$	433,490	$	72,727	$	6,208,290	$	717,154	$	571,381
Reinsurance & Monoline Excess	669,432		179,534		—		848,966		201,001		160,791
Corporate, other and eliminations (3)	—		61,211		418,696		479,907		(260,549)		(213,469)
Net investment gains	—		—		154,488		154,488		154,488		122,046
Consolidated	$	6,371,505	$	674,235	$	645,911	$	7,691,651	$	812,094	$	640,749


Identifiable Assets
(In thousands)	December 31,
	2020		2019
Insurance	$	21,739,360	$	20,020,455
Reinsurance & Monoline Excess	4,652,074		4,710,445
Corporate, other and eliminations (3)	2,215,479		1,931,244
Consolidated	$	28,606,913	$	26,662,144

(1) Certain amounts included in earned premiums of each segment are related to inter-segment transactions.

(2) Revenues for Insurance includes $691.5 million, $725.4 million, and $714.2 million in 2020, 2019, and 2018, respectively, from foreign countries. Revenues for Reinsurance & Monoline Excess includes $291.6 million, $249.6 million, and $228.1 million in 2020, 2019 and 2018, respectively, from foreign countries.

(3) Corporate, other and eliminations represent corporate revenues and expenses and other items that are not allocated to business segments.

Net premiums earned by major line of business are as follows:


(In thousands)	2020		2019		2018
Insurance
Other liability	$	2,237,285	$	2,063,401	$	1,912,071
Short-tail lines	1,247,908		1,223,902		1,184,447
Workers' compensation	1,127,487		1,301,980		1,327,206
Commercial automobile	794,171		750,051		722,236
Professional liability	660,818		580,485		556,113
Total Insurance	6,067,669		5,919,819		5,702,073
Reinsurance & Monoline Excess
Casualty	521,559		405,063		362,886
Monoline Excess	171,522		160,071		162,908
Property	170,093		148,335		143,638
Total Reinsurance & Monoline Excess	863,174		713,469		669,432
Total	$	6,930,843	$	6,633,288	$	6,371,505

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