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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, 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, 2021, 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 24, 2022 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, 2021 were $15,391 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 businesses;
evaluating the Company’s actuarial point estimate by examining the Company actuaries’ process, and certain key assumptions for the remaining businesses;
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 24, 2022

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Year Ended December 31,
(In thousands, except per share data)	2021		2020		2019
REVENUES:
Net premiums written	$	8,862,867	$	7,262,437	$	6,863,499
Change in net unearned premiums	(756,836)		(331,594)		(230,211)
Net premiums earned	8,106,031		6,930,843		6,633,288
Net investment income	671,618		583,821		645,614
Net investment gains:
Net realized and unrealized gains on investments	106,958		73,514		120,703
Change in allowance for expected credit losses on investments	(16,326)		29,486		—
Net investment gains	90,632		103,000		120,703
Revenues from non-insurance businesses	489,151		389,888		406,541
Insurance service fees	93,857		88,777		92,680
Other income	4,177		2,596		3,370
Total revenues	9,455,466		8,098,925		7,902,196
OPERATING COSTS AND EXPENSES:
Losses and loss expenses	4,953,960		4,468,706		4,131,116
Other operating costs and expenses	2,599,270		2,390,392		2,362,082
Expenses from non-insurance businesses	472,151		384,488		402,669
Interest expense	147,180		150,537		153,409
Total operating costs and expenses	8,172,561		7,394,123		7,049,276
Income before income taxes	1,282,905		704,802		852,920
Income tax expense	(251,890)		(171,817)		(168,935)
Net income before noncontrolling interests	1,031,015		532,985		683,985
Noncontrolling interests	(8,525)		(2,315)		(2,041)
Net income to common stockholders	$	1,022,490	$	530,670	$	681,944
NET INCOME PER SHARE:
Basic	$	5.53	$	2.84	$	3.58
Diluted	$	5.48	$	2.81	$	3.52

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Year Ended December 31,
(In thousands)	2021		2020		2019
Net income before noncontrolling interests	$	1,031,015	$	532,985	$	683,985
Other comprehensive (loss) gain.:
Change in unrealized translation adjustments	(20,969)		29,927		37,166
Change in unrealized investment (losses) gains, net of taxes	(198,812)		140,250		215,902

Other comprehensive (loss) gain	(219,781)		170,177		253,068
Comprehensive income	811,234		703,162		937,053
Comprehensive income to the noncontrolling interest	(8,523)		(2,313)		(2,144)
Comprehensive income to common stockholders	$	802,711	$	700,849	$	934,909

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	December 31,
(In thousands, except share data)	2021		2020
Assets
Investments:
Fixed maturity securities (amortized cost of $16,471,304 and $13,755,858; allowance for expected credit losses of $22,625 and $2,580 at December 31, 2021 and 2020)	$	16,602,673	$	14,159,369
Investment funds	1,480,612		1,309,430
Real estate	1,852,508		1,960,914
Arbitrage trading account	1,179,606		341,473
Equity securities	941,243		625,667
Loans receivable (net of allowance for expected credit losses of $1,718 and $5,437 at December 31, 2021 and 2020)	115,172		84,913

Total investments	22,171,814		18,481,766
Cash and cash equivalents	1,568,843		2,372,366
Premiums and fees receivable (net of allowance for expected credit losses of $25,218 and $22,883 at December 31, 2021 and 2020)	2,522,972		2,167,799
Due from reinsurers (net of allowance for expected credit losses of $7,713 and $7,801 at December 31, 2021 and 2020)	2,923,026		2,424,502
Deferred policy acquisition costs	676,145		556,168
Prepaid reinsurance premiums	676,915		648,376
Trading account receivable from brokers and clearing organizations	—		524,727
Property, furniture and equipment	419,883		405,930
Goodwill	169,652		169,652
Accrued investment income	122,938		120,464
Current federal and foreign income taxes	23,570		5,893
Deferred federal and foreign income taxes	57,425		29,055
Other assets	753,231		700,215
Total assets	$	32,086,414	$	28,606,913
Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses	$	15,390,888	$	13,784,430
Unearned premiums	4,847,160		4,073,191
Due to reinsurers	514,980		426,124
Trading account securities sold but not yet purchased	1,169		10,048
Trading account payable to brokers and clearing organizations	53,636		—
Current federal and foreign income taxes	21,068		41,282
Deferred federal and foreign income taxes	17,470		42,161
Senior notes and other debt	2,259,416		1,623,025
Subordinated debentures	1,007,652		1,102,309
Other liabilities	1,305,245		1,178,546
Total liabilities	25,418,684		22,281,116
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 750,000,000 shares, issued and outstanding, net of treasury shares, 176,780,588 and 177,825,150 shares, respectively	70,535		70,535
Additional paid-in capital	1,016,372		1,012,483
Retained earnings	9,015,135		8,348,381
Accumulated other comprehensive loss	(281,955)		(62,172)
Treasury stock, at cost, 175,895,912 and 174,851,350 shares, respectively	(3,167,076)		(3,058,425)
Total common stockholders’ equity	6,653,011		6,310,802
Noncontrolling interests	14,719		14,995
Total equity	6,667,730		6,325,797
Total liabilities and equity	$	32,086,414	$	28,606,913
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)		2021		2020		2019
COMMON STOCK:
Beginning and end of period		$	70,535	$	70,535	$	70,535
ADDITIONAL PAID IN CAPITAL:
Beginning of period		$	1,012,483	$	1,056,042	$	1,039,633
Restricted stock units issued		(44,041)		(38,491)		(32,370)
Restricted stock units expensed		47,930		48,567		48,779
Change in controlling financial interest of a subsidiary		—		(53,635)		—

End of period		$	1,016,372	$	1,012,483	$	1,056,042
RETAINED EARNINGS:
Beginning of period		$	8,348,381	$	7,932,372	$	7,558,619
Cumulative effect adjustment resulting from changes in accounting principles		—		(30,514)		—
Net income to common stockholders		1,022,490		530,670		681,944
Dividends ($2.01, $0.47, and $1.68 per share, respectively)		(355,736)		(84,147)		(308,191)
End of period		$	9,015,135	$	8,348,381	$	7,932,372
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment gains (losses):
Beginning of period		$	289,714	$	124,514	$	(91,491)
Cumulative effect adjustment resulting from changes in accounting principles		—		24,952		—
Change in unrealized (losses) gains on securities without an allowance for expected credit losses		(208,938)		108,244		215,636
Change in unrealized gains on securities with an allowance for expected credit losses		10,124		32,004		369
End of period		90,900		289,714		124,514
Currency translation adjustments:
Beginning of period		(351,886)		(381,813)		(418,979)
Net change in period		(20,969)		29,927		37,166
End of period		(372,855)		(351,886)		(381,813)




Total accumulated other comprehensive loss		$	(281,955)	$	(62,172)	$	(257,299)
TREASURY STOCK:
Beginning of period		$	(3,058,425)	$	(2,726,711)	$	(2,720,466)
Stock exercised/vested		13,264		13,917		11,431
Stock issued		511		726		549
Stock repurchased		(122,426)		(346,357)		(18,225)
End of period		$	(3,167,076)	$	(3,058,425)	$	(2,726,711)
NONCONTROLLING INTERESTS:
Beginning of period		$	14,995	$	43,403	$	41,947
Distributions		(8,799)		(30,721)		(688)
Net income		8,525		2,315		2,041
Other comprehensive (loss) income, net of tax		(2)		(2)		103
End of period		$	14,719	$	14,995	$	43,403

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
(In thousands)	2021		2020		2019
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders	$	1,022,490	$	530,670	$	681,944
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(90,632)		(103,000)		(120,703)
Depreciation and amortization	129,682		135,065		113,387
Noncontrolling interests	8,525		2,315		2,041
Investment funds	(220,015)		(54,253)		(69,194)
Stock incentive plans	46,680		49,658		49,274
Change in:
Arbitrage trading account	(268,649)		(67,943)		(26,553)
Premiums and fees receivable	(364,395)		(173,618)		(189,151)
Reinsurance accounts	(433,644)		(313,525)		(165,898)
Deferred policy acquisition costs	(121,663)		(38,691)		(20,057)
Current income taxes	(43,890)		49,021		(12,530)
Deferred income taxes	7,630		(34,057)		7,130
Reserves for losses and loss expenses	1,635,774		1,176,049		612,254
Unearned premiums	786,627		415,956		301,355
Other	89,467		43,039		(19,506)
Net cash from operating activities	2,183,987		1,616,686		1,143,793
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities	1,842,139		3,832,555		2,093,271
Proceeds from sale of equity securities	126,980		114,763		79,963
Distributions from (contributions to) investment funds	101,050		(3,042)		194,663
Proceeds from maturities and prepayments of fixed maturity securities	6,067,230		3,864,327		2,933,980
Purchase of fixed maturity securities	(10,716,748)		(7,551,591)		(5,352,886)
Purchase of equity securities	(464,645)		(253,031)		(172,978)
Real estate sold (purchased)	166,886		178,934		(146,752)

Change in loans receivable	(27,421)		1,467		3,481
Net additions to property, furniture and equipment	(66,634)		(38,171)		(60,457)
Change in balances due from security brokers	(17,983)		(26,515)		2,844


Net cash (used in) from investing activities	(2,989,146)		119,696		(424,871)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from issuance of debt	1,034,107		741,637		290,974

Repayment and redemption of debt	(504,952)		(652,751)		(456,360)
Cash dividends to common stockholders	(355,736)		(84,147)		(308,191)
Purchase of common treasury shares	(122,426)		(346,357)		(18,225)
Other, net	(45,162)		(56,225)		(21,391)
Net cash from (used in) financing activities	5,831		(397,843)		(513,193)
Net impact on cash due to change in foreign exchange rates	(4,195)		10,117		379
Net (decrease) increase in cash and cash equivalents	(803,523)		1,348,656		206,108
Cash and cash equivalents at beginning of year	2,372,366		1,023,710		817,602
Cash and cash equivalents at end of year	$	1,568,843	$	2,372,366	$	1,023,710

See accompanying notes to consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021, 2020 and 2019

(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 2020 and 2019 financial statements as originally reported to conform to the presentation of the 2021 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 increased (decreased) net premiums written and premiums earned by $10 million, $(27) million and $4 million in 2021, 2020 and 2019, 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 comprehensive income (loss).

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 7,728,466 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 $35 million and $38 million at December 31, 2021 and 2020, 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 $52 million, $53 million and $54 million for 2021, 2020 and 2019, 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, 2021 indicated that there were no material impairment losses related to goodwill and other intangible assets. Intangible assets of $85 million and $93 million are included in other assets as of December 31, 2021 and 2020, 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 $141 million, $155 million and $160 million in 2021, 2020 and 2019, respectively. Income taxes paid were $244 million, $103 million and $125 million in 2021, 2020 and 2019, 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:

All accounting and reporting standards that became effective in 2021 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 (Loss) Income

The following tables present the components of the changes in accumulated other comprehensive (loss) income as of and for the years ended December 31, 2021 and 2020:


(In thousands)
December 31, 2021	Unrealized Investment Gains (Losses)			Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Changes in AOCI
Beginning of period	$	289,714		$	(351,886)	$	(62,172)


Other comprehensive loss before reclassifications	(222,359)			(20,969)		(243,328)
Amounts reclassified from AOCI	23,547			—		23,547
Other comprehensive loss	(198,812)			(20,969)		(219,781)
Unrealized investment loss related to noncontrolling interest	(2)			—		(2)
Ending balance	$	90,900		$	(372,855)	$	(281,955)
Amounts reclassified from AOCI
Pre-tax	$	29,806	(1)	$	—	$	29,806
Tax effect	(6,259)		(2)	—		(6,259)
After-tax amounts reclassified	$	23,547		$	—	$	23,547
Other comprehensive loss
Pre-tax	$	(254,939)		$	(20,969)	$	(275,908)
Tax effect	56,127			—		56,127
Other comprehensive loss	$	(198,812)		$	(20,969)	$	(219,781)


(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 non-controlling 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

(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, 2021 and 2020, 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, 2021
Held to maturity:
State and municipal	$	69,539	$	(387)	$	10,813	$	—	$	79,965	$	69,152
Residential mortgage-backed	4,829		—		632		—		5,461		4,829

Total held to maturity	74,368		(387)		11,445		—		85,426		73,981
Available for sale:
U.S. government and government agency	851,128		—		8,509		(4,294)		855,343		855,343
State and municipal:
Special revenue	2,016,382		—		62,961		(5,706)		2,073,637		2,073,637
State general obligation	388,110		—		23,152		(1,015)		410,247		410,247
Pre-refunded	202,633		—		14,891		(574)		216,950		216,950
Corporate backed	166,943		—		7,191		(1,532)		172,602		172,602
Local general obligation	401,974		—		29,455		(732)		430,697		430,697
Total state and municipal	3,176,042		—		137,650		(9,559)		3,304,133		3,304,133
Mortgage-backed securities:
Residential	940,744		—		9,896		(11,321)		939,319		939,319
Commercial	125,709		—		3,388		(341)		128,756		128,756
Total mortgage-backed securities	1,066,453		—		13,284		(11,662)		1,068,075		1,068,075
Asset-backed securities	4,504,950		—		4,409		(18,794)		4,490,565		4,490,565
Corporate:
Industrial	3,231,520		(16)		62,751		(21,092)		3,273,163		3,273,163
Financial	1,739,282		—		30,709		(6,591)		1,763,400		1,763,400
Utilities	396,242		—		13,262		(3,202)		406,302		406,302
Other	154,210		—		125		(1,525)		152,810		152,810
Total corporate	5,521,254		(16)		106,847		(32,410)		5,595,675		5,595,675
Foreign government	1,277,109		(22,222)		7,508		(47,494)		1,214,901		1,214,901
Total available for sale	16,396,936		(22,238)		278,207		(124,213)		16,528,692		16,528,692
Total investments in fixed maturity securities	$	16,471,304	$	(22,625)	$	289,652	$	(124,213)	$	16,614,118	$	16,602,673


(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.

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the year ended December 31, 2021 and 2020:


	State and Municipal
(In thousands)	2021		2020
Allowance for expected credit losses, beginning of the period	$	798	$	—
Cumulative effect adjustment resulting from changes in accounting principles	—		69
Provision for expected credit losses	(411)		729
Allowance for expected credit losses, end of period	$	387	$	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, 2021 and 2020:


	2021						2020
(In thousands)	Foreign Government		Corporate		Total		Foreign Government		Corporate		Total
Allowance for expected credit losses, beginning of period	$	1,264	$	518	$	1,782	$	—	$	—	$	—
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	19,072		16		19,088		12,590		7,058		19,648
Expected credit losses (gains) on securities for which credit losses were previously recorded	2,438		(513)		1,925		373		(3,841)		(3,468)
Reduction due to disposals	(552)		(5)		(557)		(47,344)		(2,699)		(50,043)
Allowance for expected credit losses, end of period	$	22,222	$	16	$	22,238	$	1,264	$	518	$	1,782

During the year ended December 31, 2021, the Company increased the allowance for expected credit losses utilizing its credit loss assessment process and inputs used in its credit loss model, primarily due to foreign government securities that had no reserve in prior periods. During the year ended December 31, 2020, the Company decreased the allowance for expected credit losses 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, 2021, 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	$	1,589,823	$	1,586,470
Due after one year through five years	7,574,884		7,659,231
Due after five years through ten years	4,148,118		4,184,007
Due after ten years	2,086,810		2,110,874
Mortgage-backed securities	1,071,282		1,073,536
Total	$	16,470,917	$	16,614,118

(1) Amortized cost is reduced by the allowance for expected credit losses of $387 thousand related to held to maturity securities.

At December 31, 2021 and 2020, 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, 2021, investments with a carrying value of $1,853 million were on deposit in custodial or trust accounts, of which $1,213 million was on deposit with insurance regulators, $602 million was on deposit in support of the Company’s underwriting activities at Lloyd’s, $33 million was on deposit as security for reinsurance clients and $5 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, 2021 and 2020, investments in equity securities were as follows:


(In thousands)	Cost			Gross Unrealized				Fair Value		Carrying Value
Gains			Losses
December 31, 2021
Common stocks	$	619,896		$	92,401	$	(16,894)	$	695,403	$	695,403
Preferred stocks	250,149			7,874		(12,183)		245,840		245,840
Total	$	870,045		$	100,275	$	(29,077)	$	941,243	$	941,243

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

(5) Arbitrage Trading Account

At December 31, 2021 and 2020, the fair value and carrying value of the arbitrage trading account were $1,180 million and $341 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, 2021, the fair value of short option contracts outstanding was $574 thousand (notional amount of $30.3 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)	2021		2020		2019
Investment income earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	382,001	$	426,563	$	517,925
Investment funds	220,014		54,253		69,194
Arbitrage trading account	37,676		77,931		34,585
Real estate	7,703		24,027		24,218
Equity securities	32,020		10,172		5,439
Gross investment income	679,414		592,946		651,361
Investment expense	(7,796)		(9,125)		(5,747)
Net investment income	$	671,618	$	583,821	$	645,614

(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 $621 million as of December 31, 2021.

Investment funds consist of the following:


	Carrying Value as of December 31,				Income (Losses)
(In thousands)	2021		2020		2021		2020		2019
Financial services	$	431,818	$	434,437	$	98,893	$	34,763	$	29,005
Real estate	273,690		310,783		29,484		7,543		19,154
Energy	150,224		140,935		22,118		(11,039)		(18,136)
Transportation	336,688		190,125		42,424		(616)		14,193
Other funds	288,192		233,150		27,095		23,602		24,978
Total	$	1,480,612	$	1,309,430	$	220,014	$	54,253	$	69,194

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.

Financial services investment funds include the Company’s minority investment in Lifson Re, a Bermuda reinsurance company. Effective January 1, 2021, Lifson Re participates on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 22.5% share of placed amounts. This pertains to all traditional reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating. For the year ended December 31, 2021, the Company ceded approximately $245 million of written premiums to Lifson Re.

Other funds include deferred compensation trust assets of $34 million and $0 in 2021 and 2020, respectively. These assets support other liabilities reflected in the balance sheet of an equal amount for employees who have elected to defer a portion of their compensation.

(8) Real Estate

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


	As of December 31,
(In thousands)	2021		2020
Properties in operation	$	1,626,826	$	1,738,144
Properties under development	225,682		222,770
Total	$	1,852,508	$	1,960,914

In 2021, properties in operation included a long-term ground lease in Washington, D.C., an office complex in New York City, 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 $57,391,000 and $86,970,000 as of December 31, 2021 and 2020, respectively. Related depreciation expense was $19,688,000 and $27,090,000 for the years ended December 31, 2021 and 2020, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $58,772,835 in 2022, $55,749,048 in 2023, $54,826,385 in 2024, $52,251,635 in 2025, $50,176,066 in 2026 and $630,260,741

thereafter.

During the second quarter of 2021, the Company sold two office buildings in Palm Beach and West Palm Beach, Florida. One of these sales also resulted in a $102 million reduction of the Company's non-recourse debt that was supporting the property.

A mixed-use project in Washington, D.C. has been under development in 2021 and 2020, with the completed portion as noted above reported in properties in operation as of December 31, 2021.

(9) Loans Receivable

At December 31, 2021 and 2020, loans receivable were as follows:


	As of December 31,
(In thousands)	2021		2020
Amortized cost (net of allowance for expected credit losses):
Real estate loans	$	89,431	$	51,910
Commercial loans	25,741		33,003
Total	$	115,172	$	84,913

Fair value:
Real estate loans	$	90,793	$	53,593
Commercial loans	25,741		33,003
Total	$	116,534	$	86,596

The real estate loans are secured by commercial and residential real estate primarily located in New York. These loans generally earn interest at fixed or stepped interest rates and have maturities through 2026. 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 was $0.2 million as of December 31, 2021 and 2020.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the year ended December 31, 2021 and 2020:


	2021						2020
(In thousands)	Real Estate Loans		Commercial Loans		Total		Real Estate Loans		Commercial Loans		Total
Allowance for expected credit losses, beginning of period	$	1,683	$	3,754	$	5,437	$	1,502	$	644	$	2,146
Cumulative effect adjustment resulting from changes in accounting principles	—		—		—		(905)		548		(357)
Provision for expected credit losses	(321)		(3,398)		(3,719)		1,086		2,562		3,648
Allowance for expected credit losses, end of period	$	1,362	$	356	$	1,718	$	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 were as follows:


(In thousands)	2021		2020		2019
Net investment gains:
Fixed maturity securities:
Gains	$	18,981	$	27,819	$	23,900
Losses	(6,975)		(56,096)		(13,636)
Equity securities (1):
Net realized gains on investment sales	16,365		32,647		23,306
Change in unrealized (losses) gains	(38,455)		(25,868)		85,292
Investment funds	44,778		31,481		(2,825)
Real estate	94,911		101,554		5,965
Loans receivable	(881)		—		(970)
Other	(21,766)		(38,023)		(329)
Net realized and unrealized gains on investments in earnings before allowance for expected credit losses	106,958		73,514		120,703
Change in allowance for expected credit losses on investments (2):
Fixed maturity securities	(20,045)		33,134		—
Loans receivable	3,719		(3,648)		—
Change in allowance for expected credit losses on investments	(16,326)		29,486		—
Net investment gains	90,632		103,000		120,703
Income tax expense	(17,710)		(21,630)		(25,348)
After-tax net investment gains	$	72,922	$	81,370	$	95,355


Change in unrealized investment (losses) gains:
Fixed maturity securities without allowance for expected credit losses	$	(262,221)	$	134,129	$	271,825
Fixed maturity securities with allowance for expected credit losses	10,124		32,004		369

Investment funds	(1,270)		2,280		(2,299)
Other	(1,572)		(3,768)		(7,925)
Total change in unrealized investment (losses) gains	(254,939)		164,645		261,970
Income tax benefit (expense)	56,127		(24,395)		(46,068)
Noncontrolling interests	(1)		(2)		103
After-tax change in unrealized investment (losses) gains	$	(198,813)	$	140,248	$	216,005

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

(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, 2021 and 2020 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, 2021
U.S. government and government agency	$	487,712	$	4,026	$	17,021	$	268	$	504,733	$	4,294
State and municipal	502,333		7,403		29,547		2,156		531,880		9,559
Mortgage-backed securities	558,751		6,900		106,130		4,762		664,881		11,662
Asset-backed securities	3,832,944		18,503		75,385		291		3,908,329		18,794
Corporate	2,582,860		29,322		51,095		3,088		2,633,955		32,410
Foreign government	758,975		15,793		82,057		31,701		841,032		47,494
Fixed maturity securities	$	8,723,575	$	81,947	$	361,235	$	42,266	$	9,084,810	$	124,213





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

Substantially all of the securities in an unrealized loss position are rated investment grade, except for the securities in the foreign government classification. 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, 2021 is presented in the table below:


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	38	$	130,621	$	38,849
Corporate	8	26,903		1,644

Mortgage-backed securities	4	210		13
Asset-backed securities	2	154		14
State and municipal	1	14,594		411

Total	53	$	172,482	$	40,931

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, 2021 and 2020 by level:


(In thousands)	Total		Level 1		Level 2		Level 3
December 31, 2021
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	855,343	$	—	$	855,343	$	—
State and municipal	3,304,133		—		3,304,133		—
Mortgage-backed securities	1,068,075		—		1,068,075		—
Asset-backed securities	4,490,565		—		4,490,565		—
Corporate	5,595,675		—		5,595,675
Foreign government	1,214,901		—		1,214,901		—
Total fixed maturity securities available for sale	16,528,692		—		16,528,692		—
Equity securities:
Common stocks	695,403		684,470		1,639		9,294
Preferred stocks	245,840		—		234,544		11,296
Total equity securities	941,243		684,470		236,183		20,590
Arbitrage trading account	1,179,606		1,153,079		26,527		—
Total	$	18,649,541	$	1,837,549	$	16,791,402	$	20,590
Liabilities:
Trading account securities sold but not yet purchased	$	1,169	$	1,137	$	32	$	—

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	$	—	$	—

The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2021 and 2020:


	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, 2021
Assets:
Fixed maturity securities available for sale:

Corporate	$	1,000	$	—	$	—	$	—	$	—	$	(1,000)	$	—	$	—	$	—
Total	1,000		—		—		—		—		(1,000)		—		—		—
Equity securities:
Common stocks	9,215		640		—		—		—		(561)		—		—		9,294
Preferred stocks	9,331		(35)		—		—		2,000		—		—		—		11,296
Total	18,546		605		—		—		2,000		(561)		—		—		20,590
Arbitrage trading account	—		8		—		—		—		(8)		—		—		—
Total	$	19,546	$	613	$	—	$	—	$	2,000	$	(1,569)	$	—	$	—	$	20,590
Liabilities:
Trading account securities sold but not yet purchased	$	—	$	1	$	—	$	—	$	(1)	$	—	$	—	$	—	$	—

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

For the year ended December 31, 2021, there were no fixed maturity security transferred into or out of Level 3. For the year ended December 31, 2020, one fixed maturity security was transferred from Level 2 into Level 3 as a result of observable valuation inputs no longer being available.

(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 business. 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 business.

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 business. 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 businesses 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, a business 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, 2021, 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, 2012 to 2020 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, 2021 exchange rate for all periods.

Insurance

Other Liability

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	692,236	$	700,946	$	701,634	$	707,937	$	711,876	$	722,092	$	716,643	$	714,681	$	712,984	$	708,031	$	16,190	24
2013			750,501		791,016		783,199		783,020		803,974		810,344		804,919		809,119		811,143		29,110		26
2014					847,878		849,690		847,719		852,171		864,965		871,130		866,292		864,787		51,651		28
2015							951,915		987,552		962,470		965,725		967,764		977,944		984,528		64,794		27
2016									1,018,792		1,011,800		1,020,679		1,032,035		1,046,122		1,062,023		117,676		28
2017											1,066,950		1,100,790		1,123,297		1,140,112		1,179,982		171,499		27
2018													1,105,223		1,132,810		1,122,423		1,157,499		264,059		27
2019															1,242,139		1,238,948		1,239,419		440,178		27
2020																	1,341,042		1,214,463		749,747		21
2021																			1,537,062		1,269,718		17
Total																			$	10,758,937


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	57,589	$	157,389	$	298,293	$	416,187	$	511,933	$	579,062	$	621,012	$	651,584	$	667,147	$	673,555
2013			63,322		188,374		331,309		472,142		587,822		648,699		694,234		720,773		741,756
2014					79,008		191,072		338,740		481,002		595,187		681,278		731,588		761,143
2015							82,763		211,030		382,589		538,647		676,714		758,115		816,955
2016									69,532		209,118		390,465		558,896		677,852		767,795
2017											80,127		256,176		453,790		639,775		775,705
2018													86,931		264,541		436,100		616,293
2019															88,369		275,680		471,687
2020																	72,302		225,344
2021																			76,838
Total																			$	5,927,071
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		117,839
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	4,949,705

Workers' Compensation

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	501,681	$	501,810	$	503,956	$	503,863	$	509,167	$	512,707	$	508,169	$	506,730	$	506,827	$	504,409	$	13,830	48
2013			552,570		547,295		546,995		543,238		547,000		542,274		541,926		540,322		538,503		17,768		53
2014					639,436		637,307		627,767		617,242		615,435		604,030		600,194		602,000		29,314		57
2015							712,800		690,525		650,997		641,169		626,432		620,741		617,478		40,553		58
2016									702,716		696,339		684,700		660,520		651,278		657,972		46,447		58
2017											762,093		733,505		689,622		673,216		683,880		54,759		58
2018													778,964		724,697		715,055		724,056		62,856		56
2019															784,281		721,018		732,762		89,294		54
2020																	725,245		716,430		156,496		42
2021																			742,687		340,879		42
Total																			$	6,520,177


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	115,536	$	255,063	$	339,560	$	387,368	$	419,588	$	437,196	$	451,991	$	459,119	$	466,028	$	470,850
2013			117,900		277,538		363,028		414,160		447,894		466,580		479,104		489,075		496,809
2014					148,405		319,743		412,611		471,235		503,915		521,141		531,475		538,914
2015							139,320		323,744		421,734		477,541		512,933		531,512		544,849
2016									142,998		338,835		446,072		504,850		537,861		558,934
2017											153,456		362,299		468,817		525,753		559,198
2018													171,006		397,464		508,546		574,889
2019															184,715		397,376		515,914
2020																	172,478		380,454
2021																			172,730
Total																			$	4,813,541
			Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																229,691
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,936,327

Professional Liability

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	240,363	$	243,987	$	267,284	$	252,531	$	240,785	$	247,348	$	246,116	$	246,731	$	249,539	$	250,231	$	6,098	6
2013			271,758		249,477		245,263		251,249		273,074		281,652		286,875		284,479		284,610		6,488		7
2014					255,364		248,723		261,937		245,768		241,329		260,106		258,937		258,330		13,311		7
2015							261,238		259,868		276,829		277,962		293,558		284,747		285,255		24,656		8
2016									312,109		326,427		363,221		404,271		441,535		470,950		40,227		9
2017											334,509		333,657		339,781		378,640		385,450		70,978		10
2018													336,524		323,759		334,854		360,815		104,215		10
2019															338,217		334,821		347,585		127,500		11
2020																	396,508		377,674		243,075		11
2021																			528,128		447,919		10
Total																			$	3,549,028


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	21,895	$	87,248	$	128,924	$	160,044	$	191,500	$	215,952	$	225,186	$	233,379	$	236,216	$	236,972
2013			24,215		64,245		120,081		178,367		208,123		250,294		259,735		265,007		271,867
2014					19,584		84,141		139,340		176,915		200,319		217,322		228,815		238,121
2015							20,517		85,761		140,253		188,258		217,238		234,207		241,413
2016									28,783		103,108		202,545		256,725		299,198		359,386
2017											36,744		96,818		163,454		244,025		262,273
2018													28,360		100,087		155,836		199,461
2019															31,978		98,260		148,934
2020																	28,357		81,026
2021																			28,854
Total																			$	2,068,307
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		24,145
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,504,866

Commercial Automobile

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	314,309	$	326,831	$	342,588	$	355,609	$	364,237	$	364,483	$	366,704	$	365,971	$	366,128	$	365,910	$	218	41
2013			327,514		349,136		368,894		377,050		367,456		367,027		366,165		365,100		365,338		731		44
2014					363,952		385,302		418,639		416,613		414,105		413,953		409,498		408,640		394		47
2015							389,829		417,771		423,928		432,160		433,227		431,675		428,813		1,371		53
2016									432,214		431,939		443,275		444,322		441,122		440,819		3,145		52
2017											431,059		428,988		430,782		434,717		440,610		6,890		47
2018													442,838		462,821		479,257		494,623		12,573		46
2019															483,259		488,562		505,028		36,513		45
2020																	523,746		428,769		82,221		30
2021																			614,424		279,892		34
Total																			$	4,492,974


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	136,844	$	215,214	$	273,446	$	312,342	$	344,478	$	355,786	$	360,842	$	361,919	$	363,073	$	363,034
2013			142,929		218,596		267,253		322,624		343,742		353,623		362,358		363,118		363,505
2014					155,596		237,723		328,589		365,849		394,562		402,524		405,226		406,228
2015							160,148		265,766		325,697		370,773		398,423		411,898		417,721
2016									185,253		280,373		342,437		391,396		410,843		421,388
2017											181,023		267,859		327,411		372,324		402,422
2018													180,196		281,707		350,368		413,150
2019															185,378		290,306		374,653
2020																	142,822		228,366
2021																			180,863
Total																			$	3,571,330
			Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																1,869
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	923,513

Short-tail lines

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited																				IBNR		Cumulative Number of Reported Claims
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	531,725	$	539,963	$	540,845	$	536,151	$	508,139	$	507,093	$	508,988	$	508,058	$	508,815	$	507,683	$	801	24
2013			579,486		589,447		580,445		554,736		553,233		549,728		547,806		547,066		546,765		1,424		25
2014					710,530		716,253		666,259		664,951		665,820		666,063		668,510		666,738		1,956		30
2015							744,761		733,145		729,326		727,861		719,612		718,104		716,332		4,505		32
2016									774,764		778,059		765,044		759,531		753,991		756,378		5,444		34
2017											754,050		754,300		748,516		747,861		747,453		9,657		42
2018													761,015		750,095		747,393		745,726		16,064		48
2019															722,118		702,271		692,033		27,521		43
2020																	901,702		905,441		56,083		37
2021																			829,194		222,879		31
Total																			$	7,113,743


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	282,573	$	456,559	$	507,382	$	518,135	$	498,826	$	499,978	$	504,243	$	504,973	$	506,095	$	506,144
2013			315,019		490,363		539,588		532,472		539,324		540,583		541,182		542,378		543,806
2014					373,791		602,682		614,832		634,310		649,632		656,913		659,487		660,031
2015							396,128		613,338		669,076		691,093		700,867		706,707		713,522
2016									417,882		671,886		713,506		728,853		733,951		740,703
2017											445,934		690,502		719,434		731,588		735,430
2018													415,578		662,714		709,230		726,169
2019															405,592		616,757		646,287
2020																	460,749		785,227
2021																			405,859
Total																			$	6,463,178
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		2,523
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	653,088

Reinsurance & Monoline Excess

Casualty

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	333,116	$	337,114	$	332,252	$	325,045	$	333,992	$	338,118	$	336,201	$	332,861	$	335,933	$	337,124	$	11,446
2013			320,581		271,557		274,682		284,710		295,143		300,778		305,290		303,563		304,709		14,065
2014					321,644		321,504		320,902		332,730		326,964		326,496		338,190		339,321		20,465
2015							260,768		233,204		231,859		253,982		294,804		304,972		306,358		23,525
2016									242,375		254,415		246,947		269,481		303,385		303,036		29,111
2017											232,886		222,888		240,900		263,476		283,323		48,441
2018													222,959		212,101		232,643		249,019		68,680
2019															238,411		232,709		241,187		104,193
2020																	302,420		295,992		192,023
2021																			364,611		325,434
Total																			$	3,024,680


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	22,419	$	62,289	$	112,036	$	153,349	$	188,208	$	220,821	$	242,644	$	258,404	$	277,926	$	282,363
2013			28,982		63,939		110,735		144,985		178,889		206,595		227,087		243,100		255,948
2014					21,340		69,248		116,424		155,908		199,109		228,728		253,573		273,024
2015							17,894		48,628		91,566		141,855		179,308		206,222		234,736
2016									19,939		61,940		100,578		140,897		172,489		206,266
2017											16,490		40,310		69,844		124,265		148,128
2018													11,144		41,213		77,939		110,082
2019															14,612		39,297		64,306
2020																	20,803		49,871
2021																			10,984
Total																			$	1,635,708
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		385,481
			Reserves for loss and loss adjustment expenses, net of reinsurance																$	1,774,453

Monoline Excess

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	72,366	$	73,230	$	73,670	$	75,274	$	74,061	$	67,878	$	69,361	$	67,205	$	66,269	$	65,686	$	7,617
2013			63,995		50,355		48,143		44,162		38,551		35,120		31,752		29,758		25,701		7,609
2014					63,561		57,650		49,570		45,758		41,671		42,541		42,618		40,652		10,922
2015							69,977		57,897		50,099		45,115		39,682		39,781		36,774		13,941
2016									72,657		70,281		71,404		64,957		65,485		65,222		18,607
2017											76,701		80,508		70,749		71,025		66,795		23,023
2018													77,820		72,505		71,448		66,180		28,214
2019															78,929		77,482		76,242		29,909
2020																	84,354		83,468		43,519
2021																			98,109		75,305
Total																			$	624,829


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	1,127	$	6,097	$	10,815	$	11,167	$	13,234	$	15,738	$	17,982	$	20,004	$	22,528	$	24,365
2013			647		1,897		2,158		3,008		3,396		4,418		5,349		6,476		8,805
2014					377		1,729		3,354		4,175		5,808		7,595		11,154		11,938
2015							2,069		2,481		3,272		4,099		4,416		5,083		5,421
2016									2,498		4,783		5,573		5,928		7,685		9,883
2017											6,282		12,810		15,356		17,327		18,375
2018													6,141		8,230		9,368		10,359
2019															6,241		10,884		12,728
2020																	4,869		8,699
2021																			4,586
Total																			$	115,159
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		716,077
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	1,225,747

Property

(In thousands)


Loss and Loss Expenses Incurred, Net of Reinsurance																					As of December 31, 2021
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		IBNR
2012	$	103,984	$	94,860	$	86,525	$	85,548	$	84,010	$	84,020	$	84,950	$	84,759	$	91,078	$	89,460	$	591
2013			141,705		112,805		114,245		112,054		112,687		112,006		109,814		107,669		106,436		567
2014					113,373		96,894		97,509		100,255		99,508		99,171		99,572		97,640		1,049
2015							127,387		117,724		131,963		130,553		129,668		131,342		130,933		1,157
2016									168,347		174,793		182,026		181,291		186,605		184,600		2,039
2017											206,795		200,656		199,645		198,251		192,014		2,784
2018													108,436		112,243		103,386		105,447		2,904
2019															103,305		77,255		81,994		4,475
2020																	114,807		118,039		6,928
2021																			134,134		86,160
Total																			$	1,240,697


Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
	Unaudited
Accident Year	2012		2013		2014		2015		2016		2017		2018		2019		2020		2021
2012	$	15,690	$	51,802	$	64,282	$	70,725	$	77,604	$	79,166	$	81,874	$	82,745	$	88,932	$	89,461
2013			36,620		74,650		92,728		101,651		104,437		106,157		107,721		104,521		104,506
2014					38,919		67,041		82,380		88,561		91,701		93,409		94,893		95,523
2015							53,508		89,251		109,217		118,733		122,763		125,663		127,086
2016									78,994		133,740		157,734		168,884		176,358		178,508
2017											72,160		141,484		171,880		179,997		182,799
2018													34,116		65,313		82,509		88,050
2019															23,078		54,577		68,557
2020																	26,599		65,718
2021																			15,243
Total																			$	1,015,451
	Reserves for loss and loss adjustment expenses before 2012, net of reinsurance																		2,474
	Reserves for loss and loss adjustment expenses, net of reinsurance																		$	227,720

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, 2021
Undiscounted reserves for loss and loss expenses, net of reinsurance:
	Other liability	$	4,949,705
	Workers' compensation	1,936,327
	Professional liability	1,504,866
	Commercial automobile	923,513
	Short-tail lines	653,088
	Other	105,259
	Insurance	10,072,758
	Casualty	1,774,453
	Monoline excess	1,225,747
	Property	227,720
	Reinsurance & Monoline Excess	3,227,920
Total undiscounted reserves for loss and loss expenses, net of reinsurance		$	13,300,678


(In thousands)		December 31, 2021
Due from reinsurers on unpaid claims:
	Other liability	$	693,801
	Workers' compensation	247,361
	Professional liability	851,485
	Commercial automobile	42,991
	Short-tail lines	426,003
	Other	56,660
	Insurance	2,318,301
	Casualty	107,593
	Monoline excess	40,313
	Property	76,319
	Reinsurance & Monoline Excess	224,225
Total due from reinsurers on unpaid claims		$	2,542,526


(In thousands)		December 31, 2021
Loss reserve discount:
	Other liability	$	—
	Workers' compensation	(12,338)
	Professional liability	—
	Commercial automobile	—
	Short-tail lines	—
	Other	—
	Insurance	(12,338)
	Casualty	(97,202)
	Monoline excess	(342,776)
	Property	—
	Reinsurance & Monoline Excess	(439,978)
Total loss reserve discount		$	(452,316)
Total gross reserves for loss and loss expenses		$	15,390,888

The following is supplementary information regarding average historical claims duration as of December 31, 2021:


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	7.2	%	14.1	%	17.1	%	16.2	%	13.0	%	8.7	%	5.8	%	3.7	%	2.4	%	0.9	%
Workers' compensation	23.2	%	29.5	%	15.9	%	9.2	%	5.6	%	3.2	%	2.3	%	1.5	%	1.4	%	1.0	%
Professional liability	7.8	%	19.1	%	18.1	%	15.5	%	9.3	%	10.0	%	3.5	%	2.9	%	3.1	%	0.3	%
Commercial automobile	37.1	%	21.0	%	15.5	%	11.3	%	6.5	%	2.7	%	1.4	%	0.2	%	0.2	%	—	%
Short-tail lines	55.4	%	33.0	%	6.1	%	1.8	%	0.4	%	0.7	%	0.6	%	0.1	%	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	6.1	%	11.3	%	13.3	%	13.9	%	10.9	%	9.5	%	7.5	%	5.2	%	5.0	%	1.3	%
Monoline excess	5.2	%	4.9	%	2.9	%	1.9	%	2.3	%	3.5	%	4.2	%	3.1	%	6.5	%	2.8	%
Property	30.7	%	33.2	%	15.5	%	6.4	%	3.7	%	1.7	%	1.8	%	1.5	%	1.2	%	0.9	%

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


(In thousands)	2021		2020		2019
Net reserves at beginning of year	$	11,620,393	$	10,697,998	$	10,248,883
Cumulative effect adjustment resulting from changes in accounting principles (1)	—		5,927		—
Restated net reserves at beginning of period	11,620,393		10,703,925		10,248,883
Net provision for losses and loss expenses:
Claims occurring during the current year (2)	4,921,191		4,432,937		4,057,989
Increase in estimates for claims occurring in prior years (3)	863		627		34,079
Loss reserve discount accretion	31,906		35,142		39,048
Total	4,953,960		4,468,706		4,131,116
Net payments for claims:
Current year	887,896		921,054		985,599
Prior year	2,777,798		2,677,595		2,673,803
Total	3,665,694		3,598,649		3,659,402
Foreign currency translation	(60,297)		46,411		(22,599)
Net reserves at end of year	12,848,362		11,620,393		10,697,998
Ceded reserve at end of year	2,542,526		2,164,037		1,885,251
Gross reserves at end of year	$	15,390,888	$	13,784,430	$	12,583,249

Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (3)	$	(863)	$	(627)	$	(34,079)
Retrospective premium adjustments for claims occurring in prior years (4)	7,510		16,807		53,511
Net favorable premium and reserve development on prior years	$	6,647	$	16,180	$	19,432

(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 $21 million, $10 million and $20 million in 2021, 2020, and 2019, 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 $19 million in 2021, decreased by $21 million in 2020, and increased by $19 million in 2019, 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 COVID-19 global pandemic has impacted, and may further impact, the Company’s results through its effect on claim frequency and severity. Loss cost trends have been impacted and may be further impacted by COVID-19-related claims in certain lines of business. Losses incurred from COVID-19-related claims have been offset, to a certain extent, by lower claim frequency in certain lines of our businesses; however, as the economy and legal systems have reopened, the benefit of lower claim frequency has begun to abate. Although as populations have continued to be vaccinated against the virus and the effects of the pandemic have receded in many jurisdictions, most particularly the United States, it remains too early to determine the ultimate net impact of COVID-19 on the Company. New variants of the COVID-19 virus, including the “Omicron” variant, and the slowing of vaccination rates among certain populations continue to create risks with respect to loss costs and the potential for renewed impact of the other effects of COVID-19 associated with economic conditions, inflation, and social distancing and work from home rules.

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 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 are not material 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.

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 continued evolving impact, there remains a high degree of uncertainty around the Company’s COVID-19 reserves. In addition, should the pandemic continue or worsen as a result of new COVID-19 variants or otherwise, governments in the jurisdictions where we operate may renew their efforts to expand policy coverage terms beyond the policy’s intended coverage. Accordingly, losses arising from these actions, and the other factors described above, could exceed the Company’s reserves established for those related policies.

As of December 31, 2021, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $274 million, of which $233 million relates to the Insurance segment and $41 million relates to the Reinsurance & Monoline Excess segment. Such $274 million of COVID-19-related losses included $239 million of reported losses and $35 million of IBNR. For the year ended December 31, 2021, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $58 million, of which $54 million relates to the Insurance segment and $4 million relates to the Reinsurance & Monoline Excess segment.

Favorable prior year development (net of additional and return premiums) was $7 million in 2021.

Insurance – Reserves for the Insurance segment developed favorably by $20 million in 2021 (net of additional and return premiums). The overall favorable development in 2021 was attributable to favorable development on the 2020 accident year, partially offset by adverse development on the 2016 through 2019 accident years.

The favorable development on the 2020 accident year was largely concentrated in the commercial auto liability and other liability lines of business, including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in its budget and in its initial loss ratio selections. The Company also experienced significantly lower reported claim frequency in these lines in 2020 relative to historical averages, and lower reported incurred losses relative to its expectations. We believe that the lower claim frequency and lower reported incurred losses were caused by the impacts of the COVID-19 pandemic, for example, lockdowns, reduced driving and traffic, work from home, and court closures. However, due to the uncertainty regarding the ultimate impacts of the pandemic on accident year 2020 incurred losses, the Company elected not to react to these lower reported trends during 2020. As more information became available and the 2020 accident year continued to mature, during 2021 the Company started to recognize favorable accident year 2020 development in response to the continuing favorable reported loss experience relative to its expectations.

The adverse development on the 2016 through 2019 accident years is concentrated largely in the other liability line of business, including commercial multi-peril liability, but is also seen to a lesser extent in commercial auto liability. The adverse development for these accident years is driven by a higher than expected number of large losses reported, and particularly impacted the directors and officers liability, lawyers professional liability, and excess and surplus lines casualty classes of business. We also believe that increased social inflation is contributing to the increased number of large losses, for example, higher jury awards on cases which go to trial, and the corresponding higher demands from plaintiffs and higher values required to reach settlement on cases which do not go to trial.

Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed unfavorably by $13 million in 2021. The unfavorable development in the segment was driven by the non-proportional reinsurance assumed liability and other liability lines of business, related primarily to accident years 2017 through 2019, and was partially offset by favorable development in excess workers’ compensation business which was spread across many prior accident years. The unfavorable non-proportional reinsurance assumed liability and other liability development was associated with our U.S. and U.K. assumed reinsurance business, and related primarily to accounts insuring construction projects and professional liability exposures.

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 businesses, 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 businesses, 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.

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 $20 million at December 31, 2021 and $19 million at December 31, 2020. 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 $1,387 million and $1,655 million at December 31, 2021 and 2020, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $452 million and $483 million at December 31, 2021 and 2020, respectively. At December 31, 2021, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%.

Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2021) 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, 2021), 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 business, the Company purchases specific additional reinsurance to supplement the above programs.

The following is a summary of reinsurance financial information:


(In thousands)	2021		2020		2019
Written premiums:
Direct	$	9,531,050	$	7,874,050	$	7,386,759
Assumed	1,169,084		973,597		875,459
Ceded	(1,837,267)		(1,585,210)		(1,398,719)
Total net written premiums	$	8,862,867	$	7,262,437	$	6,863,499

Earned premiums:
Direct	$	8,825,568	$	7,489,470	$	7,141,427
Assumed	1,085,804		941,321		820,705
Ceded	(1,805,341)		(1,499,948)		(1,328,844)
Total net earned premiums	$	8,106,031	$	6,930,843	$	6,633,288

Ceded losses and loss expenses incurred	$	1,236,960	$	955,630	$	836,831
Ceded commission earned	$	449,739	$	358,253	$	314,191

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the years ended December 31, 2021 and 2020:


(In thousands)	2021		2020
Allowance for expected credit losses, beginning of period	$	22,883	$	19,823
Cumulative effect adjustment resulting from changes in accounting principles	—		1,270
Provision for expected credit losses	2,335		1,790
Allowance for expected credit losses, end of period	$	25,218	$	22,883

Estimated amounts due from reinsurers are reported net of an allowance for expected credit losses of $7,712,903, $7,800,649 and $690,127 as of December 31, 2021, 2020 and 2019, respectively. The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the years ended December 31, 2021 and 2020:


(In thousands)	2021		2020
Allowance for expected credit losses, beginning of period	$	7,801	$	690
Cumulative effect adjustment resulting from changes in accounting principles	—		5,927
Provision for expected credit losses	(88)		1,184
Allowance for expected credit losses, end of period	$	7,713	$	7,801

The following table presents the amounts due from reinsurers as of December 31, 2021:


(In thousands)

Munich Re	$	313,150
Lloyd’s of London	308,119
Partner Re	231,251
Alleghany Group	204,699
Swiss Re	203,165
Hannover Re Group	167,906
Everest Re	162,432
Renaissance Re	138,408
Berkshire Hathaway	126,806
Axis Capital	88,938
Liberty Mutual	85,367
Lifson Re	64,242
Arch Capital Group	58,156
Korean Re	55,643
Fairfax Financial	43,975
Axa Insurance	40,014
Markel Corp Group	26,737
Sompo Holdings Group	24,220
Helvetia Holdings Group	23,986


Other reinsurers less than $20,000	350,287
Subtotal	2,717,501
Residual market pools (1)	213,238
Allowance for expected credit losses	(7,713)
Total	$	2,923,026

(1)Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide workers' compensation to employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill this residual market obligation by participating in pools where results are shared by the participating companies. The Company acts as a servicing carrier for workers' compensation pools in certain states. As a servicing carrier, the Company writes residual market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier, the Company receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as ceded balances are jointly shared by all the pool members.

(15) Indebtedness

Indebtedness consisted of the following as of December 31, 2021 (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		2021		2020
Senior notes and other debt due on:

January 1, 2022	8.700%	$	76,503	$	76,503	$	76,419
March 15, 2022	4.625%	350,000		349,923		349,505
February 15, 2037	6.250%	250,000		248,336		248,226
August 1, 2044	4.750%	350,000		345,836		345,652
May 12, 2050	4.000%	470,000		491,478		492,236
March 30, 2052 (3)	3.550%	400,000		394,015		—
September 30, 2061 (3)	3.150%	350,000		342,761		—

Subsidiary debt (1) (2)	Various	10,564		10,564		110,987
Total senior notes and other debt		$	2,257,067	$	2,259,416	$	1,623,025
Subordinated debentures due on:

March 1, 2056 (3)	5.900%	$	—	$	—	$	106,365
June 1, 2056 (3)	5.750%	—		—		282,003
March 30, 2058	5.700%	185,000		179,166		179,006
December 30, 2059	5.100%	300,000		290,941		290,702
September 30, 2060	4.250%	250,000		244,378		244,233
March 30, 2061 (3)	4.125%	300,000		293,167		—
Total subordinated debentures		$	1,035,000	$	1,007,652	$	1,102,309

(1) Subsidiary debt is due as follows: $6.1 million in 2024 and $4.5 million in 2025.

(2) In the second quarter of 2021, the Company sold a real estate asset which resulted in a $102 million reduction of the Company's non-recourse debt that was supporting the property. See Note 8, Real Estate, for more details.

(3) In February 2021, the Company issued $300 million aggregate principal amount of 4.125% subordinated debentures due 2061. In March 2021, the Company issued $400 million aggregate principal amount of 3.550% senior notes due 2052 and redeemed its $110 million aggregate principal amount of 5.900% subordinated debentures due 2056. In June 2021, the Company redeemed the $290 million aggregate principal amount of its 5.750% subordinated debentures due 2056. In September 2021, the Company issued $350 million aggregate principal amount of 3.150% senior notes due 2061.

(16) Income Taxes

Income tax expense (benefit) consists of:


(In thousands)	Current Expense		Deferred Expense (Benefit)		Total
December 31, 2021
Domestic	$	239,090	$	2,752	$	241,842
Foreign	—		10,048		10,048
Total expense	$	239,090	$	12,800	$	251,890

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

Income before income taxes from domestic operations was $1,224 million, $831 million and $739 million for the years ended December 31, 2021, 2020 and 2019, respectively. Income (loss) before income taxes from foreign operations was $59 million, ($126) million and $114 million for the years ended December 31, 2021, 2020 and 2019, respectively.

A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate of 21% for 2021, 2020 and 2019 to pre-tax income are as follows:


(In thousands)	2021		2020		2019
Computed “expected” tax expense	$	269,410	$	148,008	$	179,113
Tax-exempt investment income	(11,380)		(12,770)		(14,666)
Change in valuation allowance	2,974		46,238		(1,945)
Impact of foreign tax rates	(2,368)		6,753		7,700
State and local taxes	4,230		2,561		4,842

Other, net	(10,976)		(18,973)		(6,109)
Total expense	$	251,890	$	171,817	$	168,935

At December 31, 2021 and 2020, 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)	2021		2020
Deferred tax asset:
Loss reserve discounting	$	162,636	$	141,877
Unearned premiums	163,143		134,971
Net operating losses & foreign tax credits	88,502		90,601
Other-than-temporary impairments	5,176		5,973
Employee compensation plans	61,301		60,551
Other	54,269		59,230
Gross deferred tax asset	535,027		493,203
Less valuation allowance	(75,230)		(79,488)
Deferred tax asset	459,797		413,715
Deferred tax liability:
Amortization of intangibles	12,787		12,761
Loss reserve discounting - transition rule	19,796		24,747
Deferred policy acquisition costs	137,893		113,084
Unrealized investment gains	36,850		100,241
Property, furniture and equipment	43,186		48,235
Investment funds	101,999		77,783
Other	67,331		49,970
Deferred tax liability	419,842		426,821
Net deferred tax asset (liability)	$	39,955	$	(13,106)

The Company had a current tax net receivable of $2.5 million and net payable of $35.4 million at December 31, 2021 and 2020, respectively. At December 31, 2021, the Company had foreign net operating loss carryforwards of $6.8 million that expire beginning in 2027, and an additional $238.2 million that have no expiration date. At December 31, 2021, the Company had a valuation allowance of $75.2 million, as compared to $79.5 million at December 31, 2020. 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 income tax returns has closed for all years through December 31, 2017.

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 $126.7 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 2022, the maximum amount of dividends that can be paid by BIC without such approval is approximately $966 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)	2021		2020		2019
Net income	$	1,040,342	$	771,990	$	601,564
Statutory capital and surplus	$	6,817,535	$	6,188,121	$	6,013,062

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 $189 million at December 31, 2021*.*

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, 2021, BIC’s Total Adjusted Capital of $6.6 billion was 362% 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)	2021	2020	2019
Basic	184,953	186,924	190,722
Diluted	186,499	188,763	193,521

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 7,728,466 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).


	2021	2020	2019
Balance, beginning of year	177,825,150	183,411,907	182,993,640
Shares issued	708,057	776,544	687,339
Shares repurchased	(1,752,619)	(6,363,301)	(269,072)
Balance, end of year	176,780,588	177,825,150	183,411,907

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, 2021 and 2020:


	2021				2020
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturity securities	$	16,602,673	$	16,614,118	$	14,159,369	$	14,173,629
Equity securities	941,243		941,243		625,667		625,667
Arbitrage trading account	1,179,606		1,179,606		341,473		341,473
Loans receivable	115,172		116,534		84,913		86,596
Cash and cash equivalents	1,568,843		1,568,843		2,372,366		2,372,366
Trading accounts receivable from brokers and clearing organizations	—		—		524,727		524,727
Due from broker	20,448		20,448		2,585		2,585

Liabilities:
Due to broker	53,636		53,636		—		—
Trading account securities sold but not yet purchased	1,169		1,169		10,048		10,048
Senior notes and other debt	2,259,416		2,526,630		1,623,025		1,892,444
Subordinated debentures	1,007,652		1,095,600		1,102,309		1,202,842

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, 2021, the Company had commitments to invest up to $621 million and $139 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)	2021	2020
Leases:
Lease cost		$	44,051	$	44,291
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows		$	45,592	$	45,348
Right-of-use assets obtained in exchange for new lease liabilities		$	38,929	$	8,870


	As of December 31,
($ in thousands)	2021			2020
Right-of-use assets	$	172,180		$	164,476
Lease liabilities	$	208,729		$	203,643
Weighted-average remaining lease term	7.2 years			6.8 years
Weighted-average discount rate	4.83		%	5.94		%

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


(In thousands)	December 31, 2021
Contractual Maturities:
2022	$	44,962
2023	43,674
2024	37,663
2025	28,109
2026	21,486
Thereafter	68,019
Total undiscounted future minimum lease payments	243,913
Less: Discount impact	35,184
Total lease liability	$	208,729

(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, 2021:


	2021	2020	2019
RSUs granted and unvested at beginning of period:	3,804,336	4,124,260	5,062,661
Granted	848,660	962,453	840,796
Vested	(1,015,973)	(1,111,588)	(1,447,522)
Canceled	(207,344)	(170,789)	(331,675)
RSUs granted and unvested at end of period:	3,429,679	3,804,336	4,124,260

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, 2021, 7,475,528 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, 2021:


(In thousands)	2021		2020		2019
Unearned compensation at beginning of year	$	132,310	$	128,390	$	129,669
RSUs granted, net of cancellations	56,711		54,270		53,583
RSUs expensed	(46,441)		(47,108)		(47,329)
RSUs forfeitures	(7,045)		(3,242)		(7,533)
Unearned compensation at end of year	$	135,535	$	132,310	$	128,390

(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 businesses'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 $50 million, $48 million and $47 million in 2021, 2020 and 2019, 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, 2021:


	Units Outstanding	Maximum Value		Inception to date earned through December 31, 2021 on outstanding units
2017 grant	192,750	$	19,275,000	$	18,937,688
2018 grant	197,250	19,725,000		15,103,433
2019 grant	216,500	21,650,000		10,659,096
2020 grant	222,250	22,225,000		7,303,735
2021 grant	227,500	22,750,000		4,905,969

The following table summarizes the LTIP expense for each of the three years ended December 31, 2021:


(In thousands)	2021		2020		2019


2014 grant	$	—	$	—	$	(558)
2015 grant	—		(168)		3,319
2016 grant	(117)		3,176		3,548
2017 grant	6,012		2,914		3,432
2018 grant	5,503		2,776		3,310
2019 grant	5,309		2,490		3,068
2020 grant	5,065		2,276		—
2021 grant	4,906		—		—
Total	$	26,678	$	13,464	$	16,119

(24) Supplemental Financial Statement Data

Other operating costs and expenses consist of the following:


(In thousands)	2021		2020		2019
Amortization of deferred policy acquisition costs	$	961,628	$	904,955	$	1,001,611
Insurance operating expenses	1,345,099		1,206,058		1,088,690
Insurance service expenses	86,003		85,724		101,317
Net foreign currency losses (gains)	(25,725)		363		(30,715)
Debt extinguishment costs	11,521		8,440		—
Other costs and expenses	220,744		184,852		201,179
Total	$	2,599,270	$	2,390,392	$	2,362,082

(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, 2021
Insurance	$	7,077,708	$	468,821	$	32,063	$	7,578,592	$	1,219,798	$	976,184
Reinsurance & Monoline Excess	1,028,323		175,324		—		1,203,647		270,563		215,439
Corporate, other and eliminations (3)	—		27,473		555,122		582,595		(298,088)		(242,055)
Net investment gains	—		—		90,632		90,632		90,632		72,922
Consolidated	$	8,106,031	$	671,618	$	677,817	$	9,455,466	$	1,282,905	$	1,022,490

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


Identifiable Assets
(In thousands)	December 31,
	2021		2020
Insurance	$	24,414,305	$	21,739,360
Reinsurance & Monoline Excess	4,916,894		4,652,074
Corporate, other and eliminations (3)	2,755,215		2,215,479
Consolidated	$	32,086,414	$	28,606,913

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

(2) Revenues for Insurance includes $873 million, $692 million, and $725 million in 2021, 2020, and 2019, respectively, from foreign countries. Revenues for Reinsurance & Monoline Excess includes $380 million, $292 million, and $250 million in 2021, 2020 and 2019, 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 were as follows:


(In thousands)	2021		2020		2019
Insurance
Other liability	$	2,639,601	$	2,237,285	$	2,063,401
Short-tail lines	1,389,068		1,247,908		1,223,902
Workers' compensation	1,131,283		1,127,487		1,301,980
Commercial automobile	990,945		794,171		750,051
Professional liability	926,811		660,818		580,485
Total Insurance	7,077,708		6,067,669		5,919,819
Reinsurance & Monoline Excess
Casualty	643,193		521,559		405,063
Monoline Excess	201,187		171,522		160,071
Property	183,943		170,093		148,335
Total Reinsurance & Monoline Excess	1,028,323		863,174		713,469
Total	$	8,106,031	$	6,930,843	$	6,633,288

(26) Subsequent Event

On February 23, 2022, the Company announced that it has entered into an agreement for the sale of a real estate investment consisting of an office building located at 52 Lime Street, London, U.K. (known as “The Scalpel”) for £718 million, subject to agreed upon adjustments. The transaction is scheduled to close on March 7, 2022. The Company estimates that it will realize a pretax gain of more than $300 million in the first quarter of 2022, subject to adjustment for final transaction expenses and certain items, including the impact of the foreign exchange rate at the date of the close.

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