Item 1. Financial Statements

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Item 1. Financial Statements

W. R. BERKLEY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	September 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
Assets
Investments:
Fixed maturity securities (amortized cost of $20,232,773 and $18,715,483; allowance for expected credit losses of $46,412 and $37,466 at September 30, 2023 and December 31, 2022, respectively)	$	19,035,305	$	17,587,349
Investment funds	1,600,495		1,608,548
Real estate	1,270,545		1,340,622
Equity securities	1,182,061		1,185,894
Arbitrage trading account	825,049		944,230
Loans receivable (net of allowance for expected credit losses of $4,009 and $1,791 at September 30, 2023 and December 31, 2022, respectively)	177,750		193,002

Total investments	24,091,205		22,859,645
Cash and cash equivalents	1,646,074		1,449,346
Premiums and fees receivable (net of allowance for expected credit losses of $33,602 and $30,660 at September 30, 2023 and December 31, 2022, respectively)	3,104,609		2,779,244
Due from reinsurers (net of allowance for expected credit losses of $9,443 and $8,064 at September 30, 2023 and December 31, 2022, respectively)	3,426,196		3,187,730
Deferred policy acquisition costs	854,374		763,486
Prepaid reinsurance premiums	756,236		696,468
Trading account receivables from brokers and clearing organizations	401,982		233,863
Property, furniture and equipment	423,279		423,232
Goodwill	174,597		185,509
Accrued investment income	201,206		166,784
Current and deferred federal and foreign income taxes	291,363		333,774

Other assets	740,227		736,022
Total assets	$	36,111,348	$	33,815,103

Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses	$	18,273,310	$	17,011,223
Unearned premiums	5,899,738		5,297,654
Due to reinsurers	626,448		523,131
Trading account securities sold but not yet purchased	7,538		—



Other liabilities	1,537,449		1,377,740
Senior notes and other debt	1,828,046		1,828,823
Subordinated debentures	1,008,910		1,008,371
Total liabilities	29,181,439		27,046,942
Equity:
Preferred stock, par value $0.10 per share:
Authorized 5,000,000 shares; issued and outstanding - none	—		—
Common stock, par value $0.20 per share:
Authorized 1,250,000,000 shares; issued and outstanding, net of treasury shares, 258,043,531 and 264,546,100 shares, respectively	105,803		105,803
Additional paid-in capital	1,008,301		997,534
Retained earnings	10,800,697		10,161,005
Accumulated other comprehensive loss	(1,322,819)		(1,264,581)
Treasury stock, at cost, 270,971,091 and 264,468,528 shares, respectively	(3,676,403)		(3,251,429)
Total stockholders’ equity	6,915,579		6,748,332
Noncontrolling interests	14,330		19,829
Total equity	6,929,909		6,768,161
Total liabilities and equity	$	36,111,348	$	33,815,103

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
REVENUES:
Net premiums written	$	2,848,459	$	2,577,274	$	8,234,799	$	7,576,163
Change in net unearned premiums	(206,545)		(135,313)		(548,726)		(527,958)
Net premiums earned	2,641,914		2,441,961		7,686,073		7,048,205
Net investment income	270,944		202,816		739,494		547,902
Net investment (losses) gains:
Net realized and unrealized (losses) gains on investments	(40,855)		(66,282)		50,403		139,664

Change in allowance for expected credit losses on investments	(1,571)		(1,128)		(11,164)		(12,365)
Net investment (losses) gains	(42,426)		(67,410)		39,239		127,299
Revenues from non-insurance businesses	137,116		119,013		375,225		345,210
Insurance service fees	22,962		27,940		81,290		82,284
Other income	128		80		235		1,797
Total revenues	3,030,638		2,724,400		8,921,556		8,152,697


OPERATING COSTS AND EXPENSES:
Losses and loss expenses	1,636,193		1,564,578		4,744,602		4,339,646
Other operating costs and expenses	808,669		725,537		2,457,925		2,139,256
Expenses from non-insurance businesses	133,939		116,240		370,244		334,062
Interest expense	31,888		31,780		95,580		98,473
Total operating costs and expenses	2,610,689		2,438,135		7,668,351		6,911,437
Income before income taxes	419,949		286,265		1,253,205		1,241,260
Income tax expense	(86,519)		(55,791)		(268,322)		(238,290)
Net income before noncontrolling interests	333,430		230,474		984,883		1,002,970
Noncontrolling interests	156		(1,595)		(863)		(4,131)
Net income to common stockholders	$	333,586	$	228,879	$	984,020	$	998,839

NET INCOME PER SHARE:
Basic	$	1.24	$	0.83	$	3.62	$	3.61
Diluted	$	1.23	$	0.82	$	3.59	$	3.57

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In thousands)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
Net income before noncontrolling interests	$	333,430	$	230,474	$	984,883	$	1,002,970
Other comprehensive loss:
Change in unrealized currency translation adjustments	(22,781)		(40,516)		(7,387)		(27,637)
Change in unrealized investment losses, net of taxes	(118,365)		(315,664)		(50,850)		(1,076,217)

Other comprehensive loss	(141,146)		(356,180)		(58,237)		(1,103,854)
Comprehensive income (loss)	192,284		(125,706)		926,646		(100,884)
Noncontrolling interests	156		(1,595)		(862)		(4,130)
Comprehensive income (loss) to common stockholders	$	192,440	$	(127,301)	$	925,784	$	(105,014)

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

	2023		2022		2023		2022
COMMON STOCK:
Beginning and end of period	$	105,803	$	105,803	$	105,803	$	105,803
ADDITIONAL PAID-IN CAPITAL:
Beginning of period	$	1,020,818	$	1,001,093	$	997,534	$	981,104
Restricted stock units issued	(25,226)		(28,381)		(25,228)		(30,751)
Restricted stock units expensed	12,709		12,091		35,995		34,450

End of period	$	1,008,301	$	984,803	$	1,008,301	$	984,803
RETAINED EARNINGS:
Beginning of period	$	10,624,518	$	9,602,948	$	10,161,005	$	9,015,135

Net income to common stockholders	333,586		228,879		984,020		998,839
Dividends ($0.61, $0.10, $1.32 and $0.79 per share, respectively)	(157,407)		(26,590)		(344,328)		(208,737)
End of period	$	10,800,697	$	9,805,237	$	10,800,697	$	9,805,237
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment (loss) gain:
Beginning of period	$	(825,391)	$	(669,654)	$	(892,905)	$	90,900

Change in unrealized (losses) gains on securities without an allowance for expected credit losses	(108,121)		(311,659)		(47,757)		(1,055,628)
Change in unrealized (losses) gains on securities with an allowance for expected credit losses	(10,244)		(4,005)		(3,094)		(20,590)
End of period	(943,756)		(985,318)		(943,756)		(985,318)
Currency translation adjustments:
Beginning of period	(356,282)		(359,976)		(371,676)		(372,855)
Net change in period	(22,781)		(40,516)		(7,387)		(27,637)
End of period	(379,063)		(400,492)		(379,063)		(400,492)




Total accumulated other comprehensive loss	$	(1,322,819)	$	(1,385,810)	$	(1,322,819)	$	(1,385,810)
TREASURY STOCK:
Beginning of period	$	(3,682,281)	$	(3,165,729)	$	(3,251,429)	$	(3,167,076)
Stock exercised/vested	8,469		8,332		9,461		9,679
Stock repurchased	(2,917)		(6,570)		(430,536)		(6,570)
Other	326		—		(3,899)		—
End of period	$	(3,676,403)	$	(3,163,967)	$	(3,676,403)	$	(3,163,967)
NONCONTROLLING INTERESTS:
Beginning of period	$	21,167	$	22,388	$	19,829	$	14,719
(Distributions) contributions	(6,681)		(73)		(6,361)		5,061
Net (loss) income	(156)		1,595		863		4,131
Other comprehensive loss, net of tax	—		—		(1)		(1)
End of period	$	14,330	$	23,910	$	14,330	$	23,910

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	For the Nine Months Ended September 30,

	2023		2022
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders	$	984,020	$	998,839
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(39,239)		(127,299)
Depreciation and amortization	3,294		46,037
Noncontrolling interests	863		4,131
Investment funds	(5,444)		(121,919)
Stock incentive plans	37,796		36,247
Change in:
Arbitrage trading account	(41,399)		(39,389)
Premiums and fees receivable	(340,056)		(247,782)
Reinsurance accounts	(194,610)		(187,453)
Deferred policy acquisition costs	(93,270)		(92,724)
Income taxes	49,722		(111,231)

Reserves for losses and loss expenses	1,288,975		1,225,679
Unearned premiums	608,300		551,894
Other	(27,790)		(161,727)
Net cash from operating activities	2,231,162		1,773,303
CASH USED IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities	877,019		1,638,049
Proceeds from sale of equity securities	161,470		20,057
Distributions from (contributions to) investment funds	8,385		(72,925)
Proceeds from maturities and prepayments of fixed maturity securities	2,654,140		3,916,331
Purchase of fixed maturity securities	(5,091,866)		(7,694,663)
Purchase of equity securities	(63,815)		(340,158)
Real estate additions	(15,158)		(18,670)

Change in loans receivable	12,796		2,066
Net purchases of property, furniture and equipment	(42,127)		(35,270)
Change in balances due to security brokers	8,224		177,457
Cash received in connection with business disposition	94,076		906,789
Payment for business purchased net of cash acquired	—		(49,572)
Other	320		94
Net cash used in investing activities	(1,396,536)		(1,550,415)
CASH USED IN FINANCING ACTIVITIES:
Repayment of senior notes and other debt	(1,954)		(426,503)

Net proceeds from issuance of debt	1,100		2,181
Cash dividends to common stockholders	(186,921)		(182,147)
Purchase of common treasury shares	(430,536)		(6,570)
Other, net	(20,545)		(21,808)
Net cash used in financing activities	(638,856)		(634,847)
Net impact on cash due to change in foreign exchange rates	959		(26,134)
Net change in cash and cash equivalents	196,728		(438,093)
Cash and cash equivalents at beginning of period	1,449,346		1,568,843
Cash and cash equivalents at end of period	$	1,646,074	$	1,130,750

See accompanying notes to interim consolidated financial statements.

W. R. Berkley Corporation and Subsidiaries

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) General

The unaudited 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”) for interim financial information. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements. The unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly the Company’s financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year. All significant intercompany accounts and transactions have been eliminated. Reclassifications have been made in the 2022 financial statements as originally reported to conform to the presentation of the 2023 financial statements. For the for nine months ended September 30, 2022, the Company did not correct the proceeds from sale of fixed maturity securities and purchase of fixed maturity securities lines within the consolidated statements of cash flows for an incremental inter-company elimination as the effects were not material and had no impact on the total amount of investing activities.

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. For further information related to areas of judgment and estimates and other information necessary to understand the Company’s financial position and results of operations, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective income tax rate differs from the federal income tax rate of 21% primarily due to tax benefits related to equity-based compensation and tax-exempt investment income, which was partially offset by state income taxes.

(2) 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 the weighted average number of common shares outstanding during the period (including 11,416,856 and 11,592,699 common shares held in a grantor trust as of September 30, 2023 and 2022, respectively). 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 period 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.

The weighted average number of common shares used in the computation of basic and diluted earnings per share was as follows:


	For the Three Months Ended September 30,		For the Nine Months Ended September 30,

(In thousands)	2023	2022	2023	2022
Basic	269,191	277,192	271,656	276,928
Diluted	271,439	279,642	274,146	279,644

(3) Recent Accounting Pronouncements and Accounting Policies

Recently adopted accounting pronouncements:

All accounting and reporting standards that became effective in 2023 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.

(4) Consolidated Statements of Comprehensive (Loss) Income

The following table presents the components of the changes in accumulated other comprehensive (loss) income ("AOCI"):


(In thousands)	Unrealized Investment (Losses) Gains			Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
As of and for the nine months ended September 30, 2023
Changes in AOCI
Beginning of period	$	(892,905)		$	(371,676)	$	(1,264,581)


Other comprehensive loss before reclassifications	(103,087)			(7,387)		(110,474)
Amounts reclassified from AOCI	52,237			—		52,237
Other comprehensive loss	(50,850)			(7,387)		(58,237)
Unrealized investment loss related to noncontrolling interest	(1)			—		(1)
End of period	$	(943,756)		$	(379,063)	$	(1,322,819)
Amounts reclassified from AOCI
Pre-tax	$	66,123	(1)	$	—	$	66,123
Tax effect	(13,886)		(2)	—		(13,886)
After-tax amounts reclassified	$	52,237		$	—	$	52,237
Other comprehensive loss
Pre-tax	$	(62,476)		$	(7,387)	$	(69,863)
Tax effect	11,626			—		11,626
Other comprehensive loss	$	(50,850)		$	(7,387)	$	(58,237)

As of and for the three months ended September 30, 2023
Changes in AOCI
Beginning of period	$	(825,391)		$	(356,282)	$	(1,181,673)


Other comprehensive loss before reclassifications	(133,018)			(22,781)		(155,799)
Amounts reclassified from AOCI	14,653			—		14,653
Other comprehensive loss	(118,365)			(22,781)		(141,146)
Unrealized investment loss related to noncontrolling interest	—			—		—
Ending balance	$	(943,756)		$	(379,063)	$	(1,322,819)
Amounts reclassified from AOCI
Pre-tax	$	18,548	(1)	$	—	$	18,548
Tax effect	(3,895)		(2)	—		(3,895)
After-tax amounts reclassified	$	14,653		$	—	$	14,653
Other comprehensive loss
Pre-tax	$	(150,455)		$	(22,781)	$	(173,236)
Tax effect	32,090			—		32,090
Other comprehensive loss	$	(118,365)		$	(22,781)	$	(141,146)


(In thousands)	Unrealized Investment (Losses) Gains			Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
As of and for the nine months ended September 30, 2022
Changes in AOCI
Beginning of period	$	90,900		$	(372,855)	$	(281,955)


Other comprehensive loss before reclassifications	(1,134,657)			(27,637)		(1,162,294)
Amounts reclassified from AOCI	58,440			—		58,440
Other comprehensive loss	(1,076,217)			(27,637)		(1,103,854)
Unrealized investment loss related to noncontrolling interest	(1)			—		(1)
End of period	$	(985,318)		$	(400,492)	$	(1,385,810)
Amounts reclassified from AOCI
Pre-tax	$	73,975	(1)	$	—	$	73,975
Tax effect	(15,535)		(2)	—		(15,535)
After-tax amounts reclassified	$	58,440		$	—	$	58,440
Other comprehensive loss
Pre-tax	$	(1,365,064)		$	(27,637)	$	(1,392,701)
Tax effect	288,847			—		288,847
Other comprehensive loss	$	(1,076,217)		$	(27,637)	$	(1,103,854)

As of and for the three months ended September 30, 2022
Changes in AOCI
Beginning of period	$	(669,654)		$	(359,976)	$	(1,029,630)


Other comprehensive loss before reclassifications	(335,034)			(40,516)		(375,550)
Amounts reclassified from AOCI	19,370			—		19,370
Other comprehensive loss	(315,664)			(40,516)		(356,180)
Unrealized investment loss related to noncontrolling interest	—					—
Ending balance	$	(985,318)		$	(400,492)	$	(1,385,810)
Amounts reclassified from AOCI
Pre-tax	$	24,519	(1)	$	—	$	24,519
Tax effect	(5,149)		(2)	—		(5,149)
After-tax amounts reclassified	$	19,370		$	—	$	19,370
Other comprehensive loss
Pre-tax	$	(394,832)		$	(40,516)	$	(435,348)
Tax effect	79,168			—		79,168
Other comprehensive loss	$	(315,664)		$	(40,516)	$	(356,180)

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

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

(5) Statements of Cash Flows

Interest payments were $79,336,000 and $115,756,000 for the nine months ended September 30, 2023 and 2022, respectively. Income taxes paid were $180,000,000 and $263,971,000 for the nine months ended September 30, 2023 and 2022, respectively.

(6) Investments in Fixed Maturity Securities

At September 30, 2023 and December 31, 2022, 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
September 30, 2023
Held to maturity:
State and municipal	$	49,847		$	(48)	$	1,825	$	—	$	51,624	$	49,799
Residential mortgage-backed	3,029			—		19		—		3,048		3,029
Total held to maturity	52,876			(48)		1,844		—		54,672		52,828
Available for sale:
U.S. government and government agency	1,546,889			—		2,077		(81,767)		1,467,199		1,467,199
State and municipal:
Special revenue	1,771,219			—		2,287		(126,585)		1,646,921		1,646,921
State general obligation	378,650			—		1,247		(23,727)		356,170		356,170
Pre-refunded	103,219			—		202		(827)		102,594		102,594
Corporate backed	194,976			(821)		159		(14,341)		179,973		179,973
Local general obligation	401,286			—		1,767		(17,713)		385,340		385,340
Total state and municipal	2,849,350			(821)		5,662		(183,193)		2,670,998		2,670,998
Mortgage-backed:
Residential	1,660,790			(24)		399		(214,381)		1,446,784		1,446,784
Commercial	651,966			(2,076)		11		(20,389)		629,512		629,512
Total mortgage-backed	2,312,756			(2,100)		410		(234,770)		2,076,296		2,076,296
Asset-backed	4,197,235			(1,502)		750		(109,025)		4,087,458		4,087,458
Corporate:
Industrial	3,567,020			—		5,026		(227,479)		3,344,567		3,344,567
Financial	2,813,603			(5,406)		1,362		(130,312)		2,679,247		2,679,247
Utilities	683,468			(364)		164		(39,991)		643,277		643,277
Other	593,466			—		134		(11,877)		581,723		581,723
Total corporate	7,657,557			(5,770)		6,686		(409,659)		7,248,814		7,248,814
Foreign government	1,616,110			(36,171)		1,361		(149,588)		1,431,712		1,431,712
Total available for sale	20,179,897			(46,364)		16,946		(1,168,002)		18,982,477		18,982,477
Total investments in fixed maturity securities	$	20,232,773		$	(46,412)	$	18,790	$	(1,168,002)	$	19,037,149	$	19,035,305

(1) Represents the amount of impairment that has resulted from credit-related factors. The change in the allowance for expected credit losses is recognized in the consolidated statements of income. Amount excludes unrealized losses relating to non-credit factors.


(In thousands)	Amortized Cost		Allowance for Expected Credit Losses (1)		Gross Unrealized				Fair Value		Carrying Value
	Gains		Losses
December 31, 2022
Held to maturity:
State and municipal	$	47,802	$	(114)	$	4,239	$	—	$	51,927	$	47,688
Residential mortgage-backed	3,608		—		38		—		3,646		3,608

Total held to maturity	51,410		(114)		4,277		—		55,573		51,296
Available for sale:
U.S. government and government agency	960,479		—		937		(69,158)		892,258		892,258
State and municipal:
Special revenue	1,837,309		—		3,662		(119,474)		1,721,497		1,721,497
State general obligation	387,709		—		2,651		(21,335)		369,025		369,025
Pre-refunded	156,106		—		2,741		(7)		158,840		158,840
Corporate backed	210,228		—		334		(10,923)		199,639		199,639
Local general obligation	454,983		—		2,967		(16,853)		441,097		441,097
Total state and municipal	3,046,335		—		12,355		(168,592)		2,890,098		2,890,098
Mortgage-backed:
Residential	1,308,019		(18)		395		(171,595)		1,136,801		1,136,801
Commercial	547,757		—		215		(19,363)		528,609		528,609
Total mortgage-backed securities	1,855,776		(18)		610		(190,958)		1,665,410		1,665,410
Asset-backed	4,132,365		—		2,730		(152,322)		3,982,773		3,982,773
Corporate:
Industrial	3,491,645		(1,704)		4,439		(241,381)		3,252,999		3,252,999
Financial	2,585,247		(2,997)		5,505		(117,383)		2,470,372		2,470,372
Utilities	586,066		—		1,307		(36,325)		551,048		551,048
Other	441,230		—		—		(11,657)		429,573		429,573
Total corporate	7,104,188		(4,701)		11,251		(406,746)		6,703,992		6,703,992
Foreign government	1,564,930		(32,633)		4,283		(135,058)		1,401,522		1,401,522
Total available for sale	18,664,073		(37,352)		32,166		(1,122,834)		17,536,053		17,536,053
Total investments in fixed maturity securities	$	18,715,483	$	(37,466)	$	36,443	$	(1,122,834)	$	17,591,626	$	17,587,349

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the nine months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	114	$	387

Provision for expected credit losses	(66)		(266)
Allowance for expected credit losses, end of period	$	48	$	121

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the three months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	53	$	127

Provision for expected credit losses	(5)		(6)
Allowance for expected credit losses, end of period	$	48	$	121

The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the nine months ended September 30, 2023 and 2022:


	2023												2022
(In thousands)	Foreign Government		Corporate		Mortgage-backed		Asset-backed		State and Municipal		Total		Foreign Government		Corporate		Mortgage-backed		Total
Allowance for expected credit losses, beginning of period	$	32,633	$	4,701	$	18	$	—	$	—	$	37,352	$	22,222	$	16	$	—	$	22,238

Expected credit losses on securities for which credit losses were not previously recorded	—		942		1,766		1,444		821		4,973		1,897		1,205		21		3,123
Expected credit losses (gains) on securities for which credit losses were previously recorded	3,538		134		316		58		—		4,046		9,289		(22)		—		9,267
Reduction due to disposals	—		(7)		—		—		—		(7)		(33)		—		—		(33)
Allowance for expected credit losses, end of period	$	36,171	$	5,770	$	2,100	$	1,502	$	821	$	46,364	$	33,375	$	1,199	$	21	$	34,595

During the nine months ended September 30, 2023, the Company increased the allowance for expected credit losses for available for sale securities in part due to changes in economic assumptions utilized in its credit loss model, primarily affecting the financial services and real estate sectors, and an increase in unrealized loss related to the foreign government portfolio. During the nine months ended September 30, 2022, the Company increased the allowance for expected credit losses for available for sale securities mainly due to an increase in unrealized losses primarily associated with foreign government securities.

The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the three months ended September 30, 2023 and 2022:


	2023												2022
(In thousands)	Foreign Government		Corporate		Mortgage-backed		Asset-backed		State and Municipal		Total		Foreign Government		Corporate		Mortgage-backed		Total
Allowance for expected credit losses, beginning of period	$	33,052	$	8,867	$	885	$	1,444	$	—	$	44,248	$	33,096	$	182	$	—	$	33,278

Expected credit losses on securities for which credit losses were not previously recorded	—		756		905		—		821		2,482		—		1,023		21		1,044
Expected credit losses (gains) on securities for which credit losses were previously recorded	3,119		(3,853)		310		58		—		(366)		279		(6)		—		273

Allowance for expected credit losses, end of period	$	36,171	$	5,770	$	2,100	$	1,502	$	821	$	46,364	$	33,375	$	1,199	$	21	$	34,595

The amortized cost and fair value of fixed maturity securities at September 30, 2023, 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	$	1,818,820	$	1,742,384
Due after one year through five years	9,180,726		8,704,308
Due after five years through ten years	4,308,202		4,074,956
Due after ten years	2,609,192		2,436,157
Mortgage-backed securities	2,315,785		2,079,344
Total	$	20,232,725	$	19,037,149

(1) Amortized cost is reduced by the allowance for expected credit losses of $48 thousand related to held to maturity securities.

At September 30, 2023 and December 31, 2022, there were no investments that exceeded 10% of common stockholders' equity, other than investments in United States government and government agency securities.

(7) Investments in Equity Securities

At September 30, 2023 and December 31, 2022, investments in equity securities were as follows:


(In thousands)	Cost			Gross Unrealized				Fair Value		Carrying Value
Gains			Losses
September 30, 2023
Common stocks	$	792,512		$	209,979	$	(41,058)	$	961,433	$	961,433
Preferred stocks	273,376			2,383		(55,131)		220,628		220,628
Total	$	1,065,888		$	212,362	$	(96,189)	$	1,182,061	$	1,182,061

December 31, 2022
Common stocks	$	855,987		$	192,165	$	(65,401)	$	982,751	$	982,751
Preferred stocks	259,341			1,053		(57,251)		203,143		203,143
Total	$	1,115,328		$	193,218	$	(122,652)	$	1,185,894	$	1,185,894

(8) Arbitrage Trading Account

At September 30, 2023 and December 31, 2022, the fair and carrying values of the arbitrage trading account were $825 million and $944 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 September 30, 2023, the fair value of long option contracts outstanding was $256 thousand (notional amount of $50 million) and the fair value of short option contracts was $6 million (notional amount of $50 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives.

(9) Net Investment Income

Net investment income consisted of the following:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(In thousands)	2023		2022		2023		2022
Investment income (loss) earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	239,727	$	146,051	$	653,200	$	371,724
Arbitrage trading account (1)	17,876		10,694		53,168		24,008
Equity securities	12,714		14,650		41,714		38,303
Investment funds	4,450		36,045		5,444		121,919
Real estate	(1,986)		(2,297)		(7,821)		(1,702)

Gross investment income	272,781		205,143		745,705		554,252
Investment expense	(1,837)		(2,327)		(6,211)		(6,350)
Net investment income	$	270,944	$	202,816	$	739,494	$	547,902

(1) Net investment income includes earnings from trading account receivables from brokers and clearing organizations.

(10) 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 investment 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, which were $353 million as of September 30, 2023.

Investment funds consisted of the following:


	Carrying Value as of				Income (Loss) from Investment Funds
	September 30,		December 31,		For the Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Financial services	$	429,889	$	465,683	$	(15,606)	$	27,472
Transportation	336,020		336,753		37,894		48,249
Real Estate	191,445		204,644		(5,062)		42,708
Infrastructure	124,528		115,428		7,813		1,277
Energy	115,349		116,432		3,921		1,966
Other funds	403,264		369,608		(23,516)		247
Total	$	1,600,495	$	1,608,548	$	5,444	$	121,919

The Company's share of the earnings or losses from investment funds is generally 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 minority investment in Lifson Re, a Bermuda reinsurance company. Effective January 1, 2021, Lifson Re participated on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 22.5% share of placed amounts. The percentage increased from 22.5% to 30% effective July 1, 2022. 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 nine months ended September 30, 2023 and 2022, the Company ceded approximately $348 million and $308 million, respectively, of written premiums to Lifson Re.

Other funds include deferred compensation trust assets of $31 million and $30 million as of September 30, 2023 and December 31, 2022, 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. The change in the net asset value of the trust is recorded in other funds within net investment income with an offsetting equal amount within corporate expenses.

(11) Real Estate

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


	Carrying Value
	September 30,		December 31,
(In thousands)	2023		2022
Properties in operation	$	1,043,419	$	1,114,167
Properties under development	227,126		226,455
Total	$	1,270,545	$	1,340,622

As of September 30, 2023, properties in operation included a long-term ground lease in Washington, D.C., an office complex in New York City and the completed portion of a mixed-use project in Washington D.C. Properties in operation are

net of accumulated depreciation and amortization of $31,039,000 and $33,206,000 as of September 30, 2023 and December 31, 2022, respectively. Related depreciation expense was $6,667,000 and $9,934,000 for the nine months ended September 30, 2023 and 2022, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $8,368,709 in 2023, $35,249,642 in 2024, $34,435,718 in 2025, $32,583,382 in 2026, $32,074,240 in 2027, $32,823,410 in 2028 and $505,344,609 thereafter.

The Company recognized impairments on real estate of $21 million and $72 million in the three months and nine months ended September 30, 2023, respectively.

During the first quarter of 2022, the Company sold a real estate investment in London (proceeds from the real estate and related entity is presented on the business disposition line within the Consolidated Statements of Cash Flows).

A mixed-use project in Washington, D.C. had been under development in 2023 and 2022, with the completed portion reported in properties in operation as of September 30, 2023.

(12) Loans Receivable

At September 30, 2023 and December 31, 2022, loans receivable were as follows:


(In thousands)	September 30, 2023		December 31, 2022
Amortized cost (net of allowance for expected credit losses):
Real estate loans	$	159,857	$	173,616
Commercial loans	17,893		19,386
Total	$	177,750	$	193,002

Fair value:
Real estate loans	$	156,407	$	168,595
Commercial loans	17,893		19,386
Total	$	174,300	$	187,981

The real estate loans are secured by commercial and residential real estate primarily located in London and 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 were none as of both September 30, 2023 and December 31, 2022, respectively.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the nine months ended September 30, 2023 and 2022:


	2023						2022
(In thousands)	Real Estate Loans		Commercial Loans		Total		Real Estate Loans		Commercial Loans		Total
Allowance for expected credit losses, beginning of period	$	1,100	$	691	$	1,791	$	1,362	$	356	$	1,718

Change in expected credit losses	2,302		(84)		2,218		(200)		474		274
Allowance for expected credit losses, end of period	$	3,402	$	607	$	4,009	$	1,162	$	830	$	1,992

During the nine months ended September 30, 2023, the Company increased the allowance for expected credit losses due to changes in economic assumptions utilized in its credit loss model. During the nine months ended September 30, 2022, the Company increased the allowance primarily due to an increase in the weighted average life of the loans receivable portfolio.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the three months ended September 30, 2023 and 2022:


	2023						2022
(In thousands)	Real Estate Loans		Commercial Loans		Total		Real Estate Loans		Commercial Loans		Total
Allowance for expected credit losses, beginning of period	$	3,658	$	892	$	4,550	$	1,228	$	947	$	2,175

Change in expected credit losses	(256)		(285)		(541)		(66)		(117)		(183)
Allowance for expected credit losses, end of period	$	3,402	$	607	$	4,009	$	1,162	$	830	$	1,992

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.

(13) Net Investment (Losses) Gains

Net investment (losses) gains were as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands)	2023		2022		2023		2022
Net investment (losses) gains:
Fixed maturity securities:
Gains	$	299	$	1,053	$	1,357	$	3,405
Losses	(2,700)		(2,309)		(24,470)		(8,752)
Equity securities (1):
Net realized gains on investment sales (2)	23,631		—		135,763		946
Change in unrealized (losses) gains	(19,059)		(50,384)		45,605		(88,701)
Investment funds	(3,329)		(1,717)		(3,417)		(6,241)
Real estate (3) (4)	(24,234)		9,026		(68,944)		295,576
Loans receivable	(1,428)		—		(1,428)		(32)
Other	(14,035)		(21,951)		(34,063)		(56,537)
Net realized and unrealized (losses) gains on investments in earnings before allowance for expected credit losses	(40,855)		(66,282)		50,403		139,664
Change in allowance for expected credit losses on investments:
Fixed maturity securities	(2,112)		(1,311)		(8,946)		(12,091)
Loans receivable	541		183		(2,218)		(274)
Change in allowance for expected credit losses on investments	(1,571)		(1,128)		(11,164)		(12,365)
Net investment (losses) gains	(42,426)		(67,410)		39,239		127,299
Income tax benefit (expense)	9,405		14,456		(8,033)		(26,466)
After-tax net investment (losses) gains	$	(33,021)	$	(52,954)	$	31,206	$	100,833


Change in unrealized investment (losses) gains on available for sale securities:
Fixed maturity securities without allowance for expected credit losses	$	(136,388)	$	(385,503)	$	(57,293)	$	(1,335,413)
Fixed maturity securities with allowance for expected credit losses	(10,244)		(4,005)		(3,094)		(20,590)

Investment funds	(3,217)		(5,031)		(818)		(7,863)
Other	(606)		(293)		(1,271)		(1,198)
Total change in unrealized investment losses	(150,455)		(394,832)		(62,476)		(1,365,064)
Income tax benefit	32,090		79,168		11,626		288,847
Noncontrolling interests	—		—		(1)		(1)
After-tax change in unrealized investment losses of available for sale securities	$	(118,365)	$	(315,664)	$	(50,851)	$	(1,076,218)

(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 (losses) 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) In June 2023, the Company completed a sale of the property and casualty insurance services division of Breckenridge IS, Inc. and recognized a pre-tax net realized gain on investment of $88 million on the sale (proceeds from the sale is presented on the business disposition line within the Consolidated Statements of Cash Flows).

(3) The Company recognized impairments on real estate of $21 million and $72 million in the three months and nine months ended September 30, 2023, respectively.

(4) During March 2022, the Company realized a gain on the sale of a real estate investment in London, U.K. of $251 million, net of transaction expenses and the foreign currency impact, including the reversal of the currency translation adjustment.

(14) Fixed Maturity Securities in an Unrealized Loss Position

The following tables summarize all fixed maturity securities in an unrealized loss position at September 30, 2023 and December 31, 2022 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
September 30, 2023
U.S. government and government agency	$	605,944	$	17,390	$	592,215	$	64,377	$	1,198,159	$	81,767
State and municipal	645,642		15,255		1,728,892		167,938		2,374,534		183,193
Mortgage-backed	688,848		17,058		1,296,384		217,712		1,985,232		234,770
Asset-backed	1,025,656		8,774		2,584,224		100,251		3,609,880		109,025
Corporate	2,091,830		46,758		4,695,101		362,901		6,786,931		409,659
Foreign government	563,657		15,038		779,455		134,550		1,343,112		149,588
Fixed maturity securities	$	5,621,577	$	120,273	$	11,676,271	$	1,047,729	$	17,297,848	$	1,168,002





December 31, 2022
U.S. government and government agency	$	285,391	$	10,219	$	453,520	$	58,939	$	738,911	$	69,158
State and municipal	1,720,443		89,272		598,797		79,320		2,319,240		168,592
Mortgage-backed	1,099,549		75,430		473,318		115,528		1,572,867		190,958
Asset-backed	1,569,647		48,390		2,176,638		103,932		3,746,285		152,322
Corporate	3,690,856		150,115		2,349,281		256,631		6,040,137		406,746
Foreign government	477,672		29,815		711,786		105,243		1,189,458		135,058
Fixed maturity securities	$	8,843,558	$	403,241	$	6,763,340	$	719,593	$	15,606,898	$	1,122,834

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.

A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, 2023 is presented in the table below:


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	44	$	88,668	$	91,468
Corporate	26	35,644		3,523
State and municipal	5	22,866		6,374
Mortgage-backed	15	4,328		214
Asset-backed	5	244		107
Total	95	$	151,750	$	101,686

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 (loss).

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.

(15) Fair Value Measurements

The Company’s fixed maturity available for sale securities, equity securities and its arbitrage 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 on a recurring basis as of September 30, 2023 and December 31, 2022 by level:


(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2023
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	1,467,199	$	—	$	1,467,199	$	—
State and municipal	2,670,998		—		2,670,998		—
Mortgage-backed	2,076,296		—		2,076,296		—
Asset-backed	4,087,458		—		4,087,458		—
Corporate	7,248,814		—		7,248,814		—
Foreign government	1,431,712		—		1,431,712		—
Total fixed maturity securities available for sale	18,982,477		—		18,982,477		—
Equity securities:
Common stocks	961,433		958,202		1,060		2,171
Preferred stocks	220,628		—		216,930		3,698
Total equity securities	1,182,061		958,202		217,990		5,869
Arbitrage trading account	825,049		614,995		206,536		3,518
Total	$	20,989,587	$	1,573,197	$	19,407,003	$	9,387
Liabilities:
Trading account securities sold but not yet purchased	$	7,538	$	7,538	$	—	$	—


December 31, 2022
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	892,258	$	—	$	892,258	$	—
State and municipal	2,890,098		—		2,890,098		—
Mortgage-backed	1,665,410		—		1,665,410		—
Asset-backed	3,982,773		—		3,982,773		—
Corporate	6,703,992		—		6,703,992		—
Foreign government	1,401,522		—		1,401,522		—
Total fixed maturity securities available for sale	17,536,053		—		17,536,053		—
Equity securities:
Common stocks	982,751		978,991		1,161		2,599
Preferred stocks	203,143		—		191,844		11,299
Total equity securities	1,185,894		978,991		193,005		13,898
Arbitrage trading account	944,230		822,192		118,448		3,590
Total	$	19,666,177	$	1,801,183	$	17,847,506	$	17,488
Liabilities:
Trading account securities sold but not yet purchased	$	—	$	—	$	—	$	—

The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, 2023 and for the year ended December 31, 2022:


Gains (Losses) Included In:
(In thousands)	Beginning Balance		Earnings (Losses)		Other Comprehensive Income (Losses)		Impairments		Purchases		Sales		Paydowns / Maturities		Transfers In / (Out)		Ending Balance

Nine Months Ended September 30, 2023
Assets:




Equity securities:
Common stocks	$	2,599	$	(428)	$	—	$	—	$	—	$	—	$	—	$	—	$	2,171
Preferred stocks	11,299		—		—		(7,601)		—		—		—		—		3,698
Total	13,898		(428)		—		(7,601)		—		—		—		—		5,869
Arbitrage trading account	3,590		(72)		—		—		—		—		—		—		3,518
Total	$	17,488	$	(500)	$	—	$	(7,601)	$	—	$	—	$	—	$	—	$	9,387



Year Ended December 31, 2022
Assets:




Equity securities:
Common stocks	$	9,294	$	(6,695)	$	—	$	—	$	—	$	—	$	—	$	—	$	2,599
Preferred stocks	11,296		3		—		—		925		(925)		—		—		11,299
Total	20,590		(6,692)		—		—		925		(925)		—		—		13,898
Arbitrage trading account	—		(179)		—		—		4,686		(917)		—		—		3,590
Total	$	20,590	$	(6,871)	$	—	$	—	$	5,611	$	(1,842)	$	—	$	—	$	17,488

For the nine months ended September 30, 2023 and for the year ended December 31, 2022, there were no securities transferred into or out of Level 3.

(16) Reserves for Loss and Loss Expenses

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

Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit.

The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.

The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns.

Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include commercial automobile, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.

The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed.

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


	September 30,
(In thousands)	2023		2022
Net reserves at beginning of period	$	14,248,879	$	12,848,362


Net provision for losses and loss expenses:
Claims occurring during the current year (1)	4,694,554		4,260,179
Increase in estimates for claims occurring in prior years (2) (3)	27,186		54,632
Loss reserve discount accretion	22,862		24,835
Total	4,744,602		4,339,646
Net payments for claims:
Current year	743,416		643,908
Prior years	2,915,979		2,499,319
Total	3,659,395		3,143,227
Foreign currency translation	(48,162)		(193,755)
Net reserves at end of period	15,285,924		13,851,026
Ceded reserves at end of period	2,987,386		2,689,097
Gross reserves at end of period	$	18,273,310	$	16,540,123

(1) Claims occurring during the current year are net of loss reserve discounts of $35 million and $26 million for the nine months ended September 30, 2023 and 2022, respectively.

(2) 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 $12 million and increased by $20 million for the nine months ended September 30, 2023 and 2022, respectively.

(3) For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Adverse development, net of additional and return premiums, was $20 million and $37 million for the nine months ended September 30, 2023 and 2022, respectively.

The COVID-19 global pandemic impacted, and may further impact, the Company’s loss costs. Accordingly, the ultimate net impact of COVID-19 on the Company’s reserves remains uncertain. As of September 30, 2023, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $354 million, of which $299 million relates to the Insurance segment and $55 million relates to the Reinsurance & Monoline Excess segment. Such $354 million of COVID-19-related losses are considered reported losses. For the nine months ended September 30, 2023, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $670 thousand, all of which relates to the Insurance segment.

During the nine months ended September 30, 2023, adverse prior year development (net of additional and return premiums) of $20 million included $26 million of adverse development for the Insurance segment, partially offset by $6 million of favorable development for the Reinsurance & Monoline Excess segment.

Such adverse development during the nine months ended September 30, 2023 was concentrated in the first quarter, with $24 million of adverse development (net of additional and return premiums) in the first quarter, partially offset by favorable development of $4 million in the second and third quarters. This overall adverse development during the first quarter in both business segments was due to property catastrophe losses related to 2022 events which were still being adjusted and settled. In particular, losses related to U.S. winter storms which occurred during the month of December were a significant driver of the development, as information gathering and evaluation of many of these losses was still ongoing into the new year.

For the Insurance segment, in addition to the property prior year adverse development discussed above, the adverse development during the nine months ended September 30, 2023 included adverse prior year development on casualty lines for the 2016 through 2019 accident years, which was largely offset by favorable prior year development on casualty lines for the 2020 through 2022 accident years. The adverse development on the 2016 through 2019 accident years was concentrated in the general liability line of business, and to a lesser degree professional liability, including medical professional, and commercial auto liability. The development, which particularly impacted business attaching excess of primary policy limits, was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.

The favorable prior year development on casualty lines for the 2020 through 2022 accident years in the Insurance segment was concentrated in the professional liability, workers’ compensation, and general liability lines of business. Due to uncertainty regarding incurred loss frequency and severity in light of ongoing social inflation and the impacts of the COVID-19 pandemic, the Company set its initial loss ratios for the 2020 through 2022 accident years prudently, and largely maintained these estimates through the end of each respective accident year. The reported loss experience to date for these lines of business for the 2020 through 2022 accident years has been significantly better than was expected, and the Company has begun to react to this favorable emergence as the accident years mature beyond the age of 12 months. However, commercial auto liability experienced adverse prior year development for the 2020 through 2022 accident years, partially offsetting the favorable development discussed above, which was driven by a larger than expected number of large losses reported.

For the Reinsurance & Monoline Excess segment, the favorable development during the nine months ended September 30, 2023 was driven mainly by favorable development in excess workers’ compensation, partially offset by adverse development in property (discussed above) and non-proportional reinsurance assumed liability lines of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to our expectations, and to favorable claim settlements. The favorable development was spread across many prior accident years. The adverse development on reinsurance assumed liability was associated primarily with our U.S. assumed reinsurance business, and related to accounts reinsuring excess and umbrella business and construction projects. The adverse development was concentrated mainly in accident years 2017 through 2020.

During the nine months ended September 30, 2022, adverse prior year development (net of additional and return premiums) of $37 million included $33 million for the Insurance segment and $4 million for the Reinsurance & Monoline Excess segment.

The adverse development for the Insurance segment primarily related to COVID-19 losses at two businesses. These businesses wrote policies providing coverage for event cancellation and film production delay which were heavily impacted by losses directly caused by the COVID-19 pandemic. Most of this COVID-19-related adverse development emerged during the third quarter as a result of settlements of claims at values higher than our expectations.

The adverse development mentioned above includes favorable prior year development for the Insurance segment primarily attributable to the 2020 and 2021 accident years and adverse development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021 accident years was concentrated in the other liability lines of business, including professional liability, products liability, commercial multi-peril liability and workers’ compensation. The Company experienced lower reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continues to experience lower reported incurred losses relative to our expectations for these accident years as they develop during 2022. These trends began in 2020 and we believe were caused by the impacts of the COVID-19 pandemic, including for example, lockdowns, reduced driving/traffic and increased work from home. Due to the ongoing uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company has been cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years. As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022.

The adverse development on the 2015 through 2019 accident years was concentrated in the other liability and professional liability, including medical professional, lines of business, as well as commercial auto liability. The development was driven by a larger than expected number of large losses reported. The Company believes social inflation is contributing to an increase in the frequency of large losses for these accident years. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.

The overall slight adverse development for the Reinsurance & Monoline Excess segment was driven mainly by adverse development in the professional liability and non-proportional reinsurance assumed property and liability lines of business, substantially offset by favorable development in excess workers’ compensation. The adverse development was spread mainly across accident years 2015 through 2021 and was associated primarily with our U.S. assumed reinsurance business and related to accounts insuring construction projects and professional liability exposures. The favorable excess workers’ compensation development was mainly in 2011 and prior accident years, and was driven by a review of the Company’s claim reporting patterns as well as a number of favorable claim settlements relative to expectations.

(17) Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:


	September 30, 2023				December 31, 2022
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturity securities	$	19,035,305	$	19,037,149	$	17,587,349	$	17,591,626
Equity securities	1,182,061		1,182,061		1,185,894		1,185,894
Arbitrage trading account	825,049		825,049		944,230		944,230
Loans receivable	177,750		174,300		193,002		187,981
Cash and cash equivalents	1,646,074		1,646,074		1,449,346		1,449,346
Trading account receivables from brokers and clearing organizations	401,982		401,982		233,863		233,863
Due from broker	—		—		3,609		3,609
Liabilities:
Due to broker	5,118		5,118		—		—

Trading account securities sold but not yet purchased	7,538		7,538		—		—
Senior notes and other debt	1,828,046		1,321,014		1,828,823		1,439,188
Subordinated debentures	1,008,910		786,798		1,008,371		805,600

The estimated fair values of the Company’s fixed maturity securities, equity securities and arbitrage trading account securities are based on various valuation techniques that rely on fair value measurements as described in Note 15. The fair value of loans receivable are 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.

(18) Premiums and Reinsurance Related Information

The following is a summary of insurance and reinsurance financial information:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(In thousands)	2023		2022		2023		2022
Written premiums:
Direct	$	3,037,932	$	2,775,236	$	8,762,249	$	8,075,311
Assumed	315,273		306,702		977,047		918,864
Ceded	(504,746)		(504,664)		(1,504,497)		(1,418,012)
Total net premiums written	$	2,848,459	$	2,577,274	$	8,234,799	$	7,576,163

Earned premiums:
Direct	$	2,825,176	$	2,617,680	$	8,217,888	$	7,533,856
Assumed	316,134		318,962		913,795		903,882
Ceded	(499,396)		(494,681)		(1,445,610)		(1,389,533)
Total net premiums earned	$	2,641,914	$	2,441,961	$	7,686,073	$	7,048,205

Ceded losses and loss expenses incurred	$	320,995	$	347,439	$	970,267	$	905,667
Ceded commissions earned	$	118,207	$	121,721	$	354,148	$	356,157

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the nine months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	30,660	$	25,218

Change in expected credit losses	2,942		5,360
Allowance for expected credit losses, end of period	$	33,602	$	30,578

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the three months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	32,770	$	30,557

Change in expected credit losses	832		21
Allowance for expected credit losses, end of period	$	33,602	$	30,578

The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and catastrophe losses. The Company also cedes premiums to state assigned risk plans and captive insurance companies. Estimated amounts due from reinsurers are reported net of an allowance for expected credit losses.

The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the nine months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	8,064	$	7,713

Change in expected credit losses	1,379		286
Allowance for expected credit losses, end of period	$	9,443	$	7,999

The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the three months ended September 30, 2023 and 2022:


(In thousands)	2023		2022
Allowance for expected credit losses, beginning of period	$	9,365	$	7,744

Change in expected credit losses	78		255
Allowance for expected credit losses, end of period	$	9,443	$	7,999

(19) Restricted Stock Units

Pursuant to its 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. RSUs are expensed pro-ratably over the vesting period. RSU expenses were $36 million and $34 million for the nine months ended September 30, 2023 and 2022, respectively. A summary of RSUs issued in the nine months ended September 30, 2023 and 2022 follows:


($ in thousands)	Units	Fair Value

2023	1,092,130	$	68,936
2022	1,023,871	$	67,345

(20) 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.

(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 footnote 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 are as follows:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(In thousands)	2023		2022		2023		2022
Leases:
Lease cost	$	10,122	$	11,299	$	30,448	$	33,649
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows	$	11,403	$	11,082	$	33,247	$	33,128
Right-of-use assets obtained in exchange for new lease liabilities	$	6,543	$	1,527	$	14,489	$	21,729


	As of September 30,
($ in thousands)	2023			2022
Right-of-use assets	$	155,662		$	163,940
Lease liabilities	$	188,141		$	199,889
Weighted-average remaining lease term	6.9 years			7.1 years
Weighted-average discount rate	4.55		%	4.50		%

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


(In thousands)	September 30, 2023
Contractual Maturities:
2023	$	12,171
2024	44,531
2025	36,167
2026	28,933
2027	19,144
Thereafter	74,394
Total undiscounted future minimum lease payments	215,340
Less: Discount impact	27,199
Total lease liability	$	188,141

(22) Business 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 Asia, Australia, Canada, Continental Europe, Mexico, Scandinavia, South America and the United Kingdom.
Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States, the 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 tables. Income (loss) 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
Three months ended September 30, 2023
Insurance	$	2,319,435	$	206,792	$	9,143	$	2,535,370	$	415,279	$	329,519
Reinsurance & Monoline Excess	322,479		56,259		—		378,738		106,072		83,314
Corporate, other and eliminations (3)	—		7,893		151,063		158,956		(58,976)		(46,226)
Net investment losses	—		—		(42,426)		(42,426)		(42,426)		(33,021)
Total	$	2,641,914	$	270,944	$	117,780	$	3,030,638	$	419,949	$	333,586
Three months ended September 30, 2022
Insurance	$	2,129,014	$	134,519	$	8,341	$	2,271,874	$	322,312	$	258,521
Reinsurance & Monoline Excess	312,947		55,234		—		368,181		59,561		46,875
Corporate, other and eliminations (3)	—		13,063		138,692		151,755		(28,198)		(23,563)
Net investment losses	—		—		(67,410)		(67,410)		(67,410)		(52,954)
Total	$	2,441,961	$	202,816	$	79,623	$	2,724,400	$	286,265	$	228,879
Nine months ended September 30, 2023
Insurance	$	6,747,704	$	560,182	$	27,570	$	7,335,456	$	1,153,742	$	903,575
Reinsurance & Monoline Excess	938,369		148,525		—		1,086,894		313,290		248,279
Corporate, other and eliminations (3)	—		30,787		429,180		459,967		(253,066)		(199,040)
Net investment gains	—		—		39,239		39,239		39,239		31,206
Total	$	7,686,073	$	739,494	$	495,989	$	8,921,556	$	1,253,205	$	984,020
Nine months ended September 30, 2022
Insurance	$	6,162,005	$	386,297	$	25,354	$	6,573,656	$	1,052,185	$	850,207
Reinsurance & Monoline Excess	886,200		139,768		—		1,025,968		209,366		167,329
Corporate, other and eliminations (3)	—		21,837		403,937		425,774		(147,590)		(119,530)
Net investment gains	—		—		127,299		127,299		127,299		100,833
Total	$	7,048,205	$	547,902	$	556,590	$	8,152,697	$	1,241,260	$	998,839

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

(2) Revenues for Insurance from foreign operations for the three months ended September 30, 2023 and 2022 were $298 million and $252 million, respectively, and for the nine months ended September 30, 2023 and 2022 were $852 million and $750 million, respectively. Revenues for Reinsurance & Monoline Excess from foreign operations for the three months ended September 30, 2023 and 2022 were $124 million and $117 million, respectively, and for the nine months ended September 30, 2023 and 2022 were $333 million and $307 million, respectively.

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

Identifiable Assets


(In thousands)	September 30, 2023		December 31, 2022
Insurance	$	28,862,050	$	27,012,479
Reinsurance & Monoline Excess	5,194,783		5,195,752
Corporate, other and eliminations	2,054,515		1,606,872
Consolidated	$	36,111,348	$	33,815,103

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,

(In thousands)	2023		2022		2023		2022
Insurance:
Other liability	$	918,054	$	824,595	$	2,668,831	$	2,363,349
Short-tail lines (1)	490,598		407,211		1,383,654		1,184,191
Commercial automobile	335,572		307,754		965,416		891,729
Workers' compensation	300,694		307,323		905,405		892,390
Professional liability	274,517		282,131		824,398		830,346
Total Insurance	2,319,435		2,129,014		6,747,704		6,162,005

Reinsurance & Monoline Excess:
Casualty reinsurance	192,071		193,726		574,660		568,507
Monoline excess (2)	60,363		54,675		177,853		161,181
Property reinsurance	70,045		64,546		185,856		156,512
Total Reinsurance & Monoline Excess	322,479		312,947		938,369		886,200

Total	$	2,641,914	$	2,441,961	$	7,686,073	$	7,048,205

(1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.

(2) Monoline excess includes operations that solely retain risk on an excess basis.

SAFE HARBOR STATEMENT

This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2023 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts, including claims for cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing effects of the COVID-19 pandemic, or other epidemics and pandemics; the impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, changing interest rates, and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response, on our results and financial condition; foreign currency and political risks relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; cyber security breaches of our information technology systems and the information technology systems of our vendors and other third parties, or related processes and systems; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

These risks and uncertainties could cause our actual results for the year 2023 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Our future financial performance is dependent upon factors discussed in our Annual Report on Form 10-K, elsewhere in this Form 10-Q and our other SEC filings. Forward-looking statements speak only as of the date on which they are made. Except to the extent required by applicable laws, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

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