Item 1. Financial Statements

149K characters. Original on sec.gov · Markdown

Item 1. Financial Statements

W. R. BERKLEY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

September 30, 2025December 31, 2024
(Unaudited)(Audited)
Assets
Investments:
Fixed maturity securities (amortized cost of $25,136,312 and $23,010,899; allowance for expected credit losses of $283 and $671 at September 30, 2025 and December 31, 2024, respectively)$24,947,949$22,397,865
Investment funds1,430,9911,468,246
Real estate1,305,2991,291,455
Equity securities1,382,4321,203,788
Arbitrage trading account1,070,3041,122,599
Loans receivable (net of allowance for expected credit losses of $258 and $1,114 at September 30, 2025 and December 31, 2024, respectively)326,855405,453
Total investments30,463,83027,889,406
Cash and cash equivalents2,404,0191,974,747
Premiums and fees receivable (net of allowance for expected credit losses of $39,925 and $39,884 at September 30, 2025 and December 31, 2024, respectively)3,535,3723,266,845
Due from reinsurers (net of allowance for expected credit losses of $6,599 and $8,350 at September 30, 2025 and December 31, 2024, respectively)3,472,0673,557,695
Deferred policy acquisition costs1,030,935951,728
Prepaid reinsurance premiums884,637823,207
Trading account receivables from brokers and clearing organizations113,33060,327
Property, furniture and equipment492,800478,511
Goodwill184,332184,332
Accrued investment income248,860243,772
Current and deferred federal and foreign income taxes—140,966
Other assets885,035877,099
Total assets$43,715,217$40,448,635
Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses$21,757,035$20,368,030
Unearned premiums6,910,0566,375,112
Due to reinsurers626,193668,652
Trading account securities sold but not yet purchased34,50973,358
Current and deferred federal and foreign income taxes23,485—
Other liabilities1,719,0781,715,078
Subordinated debentures1,010,3471,009,808
Senior notes and other debt1,829,5111,831,158
Total liabilities33,910,21432,041,196
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 1,875,000,000 shares; issued and outstanding, net of treasury shares, 379,877,184 and 380,066,070 shares, respectively158,705158,705
Additional paid-in capital981,817984,825
Retained earnings13,306,59712,265,070
Accumulated other comprehensive loss(506,156)(934,269)
Treasury stock, at cost, 413,644,625 and 413,455,739 shares, respectively(4,142,071)(4,079,220)
Total stockholders’ equity9,798,8928,395,111
Noncontrolling interests6,11112,328
Total equity9,805,0038,407,439
Total liabilities and equity$43,715,217$40,448,635

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,
2025202420252024
REVENUES:
Net premiums written$3,226,930$3,057,276$9,711,672$9,035,346
Change in net unearned premiums(70,548)(130,453)(444,724)(497,761)
Net premiums earned3,156,3822,926,8239,266,9488,537,585
Net investment income351,238323,7561,090,8331,015,723
Net investment gains (losses):
Net realized and unrealized gains (losses) on investments78,800(23,362)125,044(72,165)
Change in allowance for expected credit losses on investments16015,2761,24431,347
Net investment gains (losses)78,960(8,086)126,288(40,818)
Revenues from non-insurance businesses150,335128,610408,083375,307
Insurance service fees30,92428,66692,61081,583
Other income3976101,6811,804
Total revenues3,768,2363,400,37910,986,4439,971,184
OPERATING COSTS AND EXPENSES:
Losses and loss expenses1,968,8571,825,9605,825,0735,270,334
Other operating costs and expenses975,333943,3652,964,5502,704,890
Expenses from non-insurance businesses144,176124,885392,976364,612
Interest expense31,76031,72095,26595,156
Total operating costs and expenses3,120,1262,925,9309,277,8648,434,992
Income before income taxes648,110474,4491,708,5791,536,192
Income tax expense(136,141)(109,135)(378,551)(356,958)
Net income before noncontrolling interests511,969365,3141,330,0281,179,234
Noncontrolling interests(937)320(136)780
Net income to common stockholders$511,032$365,634$1,329,892$1,180,014
NET INCOME PER SHARE:
Basic$1.29$0.92$3.35$2.95
Diluted$1.28$0.91$3.32$2.92

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

For the Three Months Ended September 30,For the Nine Months Ended September 30,
2025202420252024
Net income before noncontrolling interests$511,969$365,314$1,330,028$1,179,234
Other comprehensive income:
Change in unrealized currency translation adjustments(5,685)49,50387,66325,160
Change in unrealized investment gains, net of taxes71,913380,993340,451297,533
Other comprehensive income66,228430,496428,114322,693
Comprehensive income578,197795,8101,758,1421,501,927
Noncontrolling interests(937)320(135)779
Comprehensive income to common stockholders$577,260$796,130$1,758,007$1,502,706

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,
2025202420252024
COMMON STOCK:
Beginning and end of period$158,705$158,705$158,705$158,705
ADDITIONAL PAID-IN CAPITAL:
Beginning of period$1,005,428$986,892$984,825$964,789
Restricted stock units issued(36,745)(26,930)(41,630)(30,075)
Restricted stock units expensed13,13413,07038,62238,318
End of period$981,817$973,032$981,817$973,032
RETAINED EARNINGS:
Beginning of period$12,829,755$11,669,567$12,265,070$11,040,908
Net income to common stockholders511,032365,6341,329,8921,180,014
Dividends ($0.09, $0.33, $0.76 and $0.81 per share, respectively)(34,190)(125,793)(288,365)(311,514)
End of period$13,306,597$11,909,408$13,306,597$11,909,408
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment losses:
Beginning of period$(248,633)$(669,813)$(517,170)$(586,354)
Change in unrealized gains on securities without an allowance for expected credit losses95,534369,827364,144293,064
Change in unrealized (losses) gains on securities with an allowance for expected credit losses(23,621)11,166(23,694)4,470
End of period(176,720)(288,820)(176,720)(288,820)
Currency translation adjustments:
Beginning of period(323,751)(363,827)(417,099)(339,484)
Net change in period(5,685)49,50387,66325,160
End of period(329,436)(314,324)(329,436)(314,324)
Total accumulated other comprehensive loss$(506,156)$(603,144)$(506,156)$(603,144)
TREASURY STOCK:
Beginning of period$(4,126,967)$(4,007,742)$(4,079,220)$(3,783,133)
Stock exercised/vested9,1768,16411,0129,488
Stock repurchased(24,627)(12,480)(73,829)(236,243)
Other347321(34)(1,849)
End of period$(4,142,071)$(4,011,737)$(4,142,071)$(4,011,737)
NONCONTROLLING INTERESTS:
Beginning of period$10,271$13,269$12,328$13,806
(Distributions) contributions(5,097)189(6,352)111
Net income (loss)937(320)136(780)
Other comprehensive (loss) income, net of tax——(1)1
End of period$6,111$13,138$6,111$13,138

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,
20252024
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders$1,329,892$1,180,014
Adjustments to reconcile net income to net cash from operating activities:
Net investment (gains) losses(126,288)40,818
Depreciation and (accretion) amortization(32,824)(156,993)
Noncontrolling interests136(780)
Investment funds(59,713)(868)
Stock incentive plans40,62240,319
Change in:
Arbitrage trading account(39,557)36,714
Premiums and fees receivable(247,505)(311,827)
Reinsurance accounts(37,028)85,226
Deferred policy acquisition costs(78,896)(94,393)
Income taxes71,97116,825
Reserves for losses and loss expenses1,321,8121,402,623
Unearned premiums510,644569,416
Other(65,782)61,241
Net cash from operating activities2,587,4842,868,335
CASH USED IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities875,1261,688,623
Proceeds from sale of equity securities303,275288,366
Distributions from investment funds101,90415,533
Proceeds from maturities and prepayments of fixed maturity securities4,020,1293,483,326
Purchase of fixed maturity securities(6,844,620)(7,177,379)
Purchase of equity securities(338,528)(186,382)
Real estate purchased(12,315)(66,813)
Change in loans receivable102,641(173,548)
Net purchases of property, furniture and equipment(53,737)(91,670)
Change in balances due to security brokers59,870122,519
Net cash used in investing activities(1,786,255)(2,097,425)
CASH USED IN FINANCING ACTIVITIES:
Repayment of senior notes and other debt(1,724)(240)
Cash dividends to common stockholders(288,365)(311,514)
Purchase of common treasury shares(73,829)(236,243)
Other, net(44,468)(13,944)
Net cash used in financing activities(408,386)(561,941)
Net impact on cash due to change in foreign exchange rates36,4291,074
Net change in cash and cash equivalents429,272210,043
Cash and cash equivalents at beginning of period1,974,7471,363,195
Cash and cash equivalents at end of period$2,404,019$1,573,238

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.

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, 2024.

For interim periods, the income tax provision is based upon the Company’s estimated annual effective tax rate. This rate is greater than the federal income tax rate of 21%, primarily due to the geographical mix of earnings and amounts being subject to tax at a rate greater than the U.S. statutory rate and state taxes, which are partially offset by tax benefits related to tax-exempt investment income. Tax benefits related to equity-based compensation are recorded discretely in the period in which it occurs.

(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 17,659,297 and 17,495,175 common shares held in a grantor trust as of September 30, 2025 and 2024, respectively). The common shares held in the grantor trust are designated for delivery upon the settlement of restricted stock units ("RSUs") that are vested but mandatorily deferred. Accordingly, such shares deliverable under vested RSUs do not affect diluted shares outstanding since the shares are already included in basic shares outstanding (which includes the shares in the grantor trust referenced above). 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)2025202420252024
Basic397,220398,338397,056400,302
Diluted400,204401,817400,306404,053

(3) Recent Accounting Pronouncements and Accounting Policies

Recently adopted accounting pronouncements:

All accounting and reporting standards that became effective in 2025 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:

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (Topic 740), to enhance the transparency and usefulness of income tax disclosures. The guidance requires additional disclosures primarily related to the rate reconciliation and income taxes paid. This guidance is effective for annual periods beginning after December 15, 2024. The Company will provide these additional disclosures in its financial statements for the year ended December 31, 2025.

All other 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 Income (Loss)

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

(In thousands)Unrealized Investment (Losses) GainsCurrency Translation AdjustmentsAccumulated Other Comprehensive Income (Loss)
As of and for the nine months ended September 30, 2025
Changes in AOCI
Beginning of period$(517,170)$(417,099)$(934,269)
Other comprehensive income before reclassifications311,56687,663399,229
Amounts reclassified from AOCI28,885—28,885
Other comprehensive income340,45187,663428,114
Unrealized investment loss related to noncontrolling interest(1)—(1)
End of period$(176,720)$(329,436)$(506,156)
Amounts reclassified from AOCI
Pre-tax$36,563(1)$—$36,563
Tax effect(7,678)(2)—(7,678)
After-tax amounts reclassified$28,885$—$28,885
Other comprehensive income
Pre-tax$431,462$87,663$519,125
Tax effect(91,011)—(91,011)
Other comprehensive income$340,451$87,663$428,114
As of and for the three months ended September 30, 2025
Changes in AOCI
Beginning of period$(248,633)$(323,751)$(572,384)
Other comprehensive income (loss) before reclassifications68,946(5,685)63,261
Amounts reclassified from AOCI2,967—2,967
Other comprehensive income (loss)71,913(5,685)66,228
Unrealized investment loss related to noncontrolling interest———
End of period$(176,720)$(329,436)$(506,156)
Amounts reclassified from AOCI
Pre-tax$3,755(1)$—$3,755
Tax effect(788)(2)—(788)
After-tax amounts reclassified$2,967$—$2,967
Other comprehensive income (loss)
Pre-tax$87,749$(5,685)$82,064
Tax effect(15,836)—(15,836)
Other comprehensive income (loss)$71,913$(5,685)$66,228
(In thousands)Unrealized Investment (Losses) GainsCurrency Translation AdjustmentsAccumulated Other Comprehensive Income (Loss)
As of and for the nine months ended September 30, 2024
Changes in AOCI
Beginning of period$(586,354)$(339,484)$(925,838)
Other comprehensive income before reclassifications218,08725,160243,247
Amounts reclassified from AOCI79,446—79,446
Other comprehensive income297,53325,160322,693
Unrealized investment gain related to noncontrolling interest1—1
End of period$(288,820)$(314,324)$(603,144)
Amounts reclassified from AOCI
Pre-tax$100,565(1)$—$100,565
Tax effect(21,119)(2)—(21,119)
After-tax amounts reclassified$79,446$—$79,446
Other comprehensive income
Pre-tax$370,831$25,160$395,991
Tax effect(73,298)—(73,298)
Other comprehensive income$297,533$25,160$322,693
As of and for the three months ended September 30, 2024
Changes in AOCI
Beginning of period$(669,813)$(363,827)$(1,033,640)
Other comprehensive income before reclassifications374,11049,503423,613
Amounts reclassified from AOCI6,883—6,883
Other comprehensive income380,99349,503430,496
Unrealized investment gain related to noncontrolling interest———
End of period$(288,820)$(314,324)$(603,144)
Amounts reclassified from AOCI
Pre-tax$8,713(1)$—$8,713
Tax effect(1,830)(2)—(1,830)
After-tax amounts reclassified$6,883$—$6,883
Other comprehensive income
Pre-tax$480,768$49,503$530,271
Tax effect(99,775)—(99,775)
Other comprehensive income$380,993$49,503$430,496

(1) Net investment 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 $104,361,000 and $116,462,000 for the nine months ended September 30, 2025 and 2024, respectively. Income tax payments were $247,260,000 and $271,739,000 for the nine months ended September 30, 2025 and 2024, respectively.

(6) Investments in Fixed Maturity Securities

At September 30, 2025 and December 31, 2024, investments in fixed maturity securities were as follows:

(In thousands)Amortized CostAllowance for Expected Credit Losses (1)Gross UnrealizedFair ValueCarrying Value
GainsLosses
September 30, 2025
Held to maturity:
State and municipal$28,378$(11)$1,068$—$29,435$28,367
Residential mortgage-backed1,953—77—2,0301,953
Total held to maturity30,331(11)1,145—31,46530,320
Available for sale:
U.S. government and government agency3,453,203—44,713(19,679)3,478,2373,478,237
State and municipal:
Special revenue1,284,059—6,182(31,536)1,258,7051,258,705
State general obligation234,610—3,580(4,760)233,430233,430
Pre-refunded74,625—807(113)75,31975,319
Corporate backed183,872—1,945(4,325)181,492181,492
Local general obligation227,061—1,489(3,360)225,190225,190
Total state and municipal2,004,227—14,003(44,094)1,974,1361,974,136
Mortgage-backed:
Residential4,723,950—54,056(140,189)4,637,8174,637,817
Commercial327,655—4,123(149)331,629331,629
Total mortgage-backed5,051,605—58,179(140,338)4,969,4464,969,446
Asset-backed3,829,765—21,637(20,228)3,831,1743,831,174
Corporate:
Industrial3,692,392—56,493(42,887)3,705,9983,705,998
Financial3,497,735—64,506(17,838)3,544,4033,544,403
Utilities1,239,824—21,902(8,995)1,252,7311,252,731
Other236,635—2,562(1,557)237,640237,640
Total corporate8,666,586—145,463(71,277)8,740,7728,740,772
Foreign government2,100,595(272)28,603(205,062)1,923,8641,923,864
Total available for sale25,105,981(272)312,598(500,678)24,917,62924,917,629
Total investments in fixed maturity securities$25,136,312$(283)$313,743$(500,678)$24,949,094$24,947,949

(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 CostAllowance for Expected Credit Losses (1)Gross UnrealizedFair ValueCarrying Value
GainsLosses
December 31, 2024
Held to maturity:
State and municipal$42,145$(25)$1,492$—$43,612$42,120
Residential mortgage-backed2,292—69—2,3612,292
Total held to maturity44,437(25)1,561—45,97344,412
Available for sale:
U.S. government and government agency2,268,596—9,608(42,863)2,235,3412,235,341
State and municipal:
Special revenue1,581,778—3,521(67,591)1,517,7081,517,708
State general obligation272,936—1,439(8,981)265,394265,394
Pre-refunded85,340—599(347)85,59285,592
Corporate backed158,322—1,079(5,827)153,574153,574
Local general obligation278,165—922(6,711)272,376272,376
Total state and municipal2,376,541—7,560(89,457)2,294,6442,294,644
Mortgage-backed:
Residential3,411,796(5)11,047(189,630)3,233,2083,233,208
Commercial534,936(425)1,201(3,430)532,282532,282
Total mortgage-backed3,946,732(430)12,248(193,060)3,765,4903,765,490
Asset-backed3,910,363—16,161(41,512)3,885,0123,885,012
Corporate:
Industrial3,746,501—14,518(93,820)3,667,1993,667,199
Financial3,339,718—18,871(38,076)3,320,5133,320,513
Utilities795,839—2,970(20,115)778,694778,694
Other653,194—2,493(4,452)651,235651,235
Total corporate8,535,252—38,852(156,463)8,417,6418,417,641
Foreign government1,928,978(216)11,936(185,373)1,755,3251,755,325
Total available for sale22,966,462(646)96,365(708,728)22,353,45322,353,453
Total investments in fixed maturity securities$23,010,899$(671)$97,926$(708,728)$22,399,426$22,397,865

(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.

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, 2025 and 2024:

(In thousands)20252024
Balance, beginning of period$25$43
Provision for expected credit losses(14)(13)
Balance, end of period$11$30

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, 2025 and 2024:

(In thousands)20252024
Balance, beginning of period$14$34
Provision for expected credit losses(3)(4)
Balance, end of period$11$30

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, 2025 and 2024:

20252024
(In thousands)Foreign GovernmentMortgage-backedState and MunicipalTotalForeign GovernmentCorporateMortgage-backedAsset-backedState and MunicipalTotal
Balance, beginning of period$216$430$—$646$29,603$5,026$158$1,164$757$36,708
Change on securities for which credit losses were not previously recorded3—1013347—1,701——2,048
Change on securities for which credit losses were previously recorded53(430)(10)(387)(23,216)(5,026)(1,246)(618)(757)(30,863)
Reduction due to disposals————(379)—(561)——(940)
Balance, end of period$272$—$—$272$6,355$—$52$546$—$6,953

During the nine months ended September 30, 2025, the Company decreased the allowance for expected credit losses for available for sale securities primarily due to improved pricing related to mortgage-backed securities. During the nine months ended September 30, 2024, the Company decreased the allowance for expected credit losses for available for sale securities primarily due to improved pricing associated with foreign government securities and corporate 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, 2025 and 2024:

20252024
(In thousands)Foreign GovernmentMortgage-backedState and MunicipalTotalForeign GovernmentMortgage-backedAsset-backedState and MunicipalTotal
Balance, beginning of period$318$—$—$318$19,469$1,140$889$339$21,837
Change on securities for which credit losses were not previously recorded3——347———47
Change on securities for which credit losses were previously recorded(49)——(49)(12,782)(1,088)(343)(339)(14,552)
Reduction due to disposals————(379)———(379)
Balance, end of period$272$—$—$272$6,355$52$546$—$6,953

The amortized cost and fair value of fixed maturity securities at September 30, 2025, 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$1,725,973$1,709,614
Due after one year through five years8,643,4368,513,861
Due after five years through ten years3,941,9773,971,308
Due after ten years5,771,3575,782,835
Mortgage-backed securities5,053,5584,971,476
Total$25,136,301$24,949,094

(1) Amortized cost is reduced by the allowance for expected credit losses of $11 thousand related to held to maturity securities.

At September 30, 2025 and December 31, 2024, 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, 2025 and December 31, 2024, investments in equity securities were as follows:

(In thousands)CostGross UnrealizedFair ValueCarrying Value
GainsLosses
September 30, 2025
Common stocks$571,667$159,201$(8,918)$721,950$721,950
Preferred stocks455,784209,432(4,734)660,482660,482
Total$1,027,451$368,633$(13,652)$1,382,432$1,382,432
December 31, 2024
Common stocks$612,479$223,981$(76,293)$760,167$760,167
Preferred stocks329,495122,716(8,590)443,621443,621
Total$941,974$346,697$(84,883)$1,203,788$1,203,788

(8) Arbitrage Trading Account

At September 30, 2025 and December 31, 2024, the fair and carrying values of the arbitrage trading account were $1,070 million and $1,123 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, 2025, the fair value of long option contracts outstanding was $6 million (notional amount of $156 million) and the fair value of short option contracts was $34 million (notional amount of $163 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)2025202420252024
Investment income (loss) earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable$324,319$295,272$960,625$954,655
Arbitrage trading account (1)16,30917,86956,30952,562
Equity securities11,49712,20334,62335,924
Investment funds5,4214,74159,713868
Real estate(3,373)(3,711)(11,482)(20,579)
Gross investment income354,173326,3741,099,7881,023,430
Investment expense(2,935)(2,618)(8,955)(7,707)
Net investment income$351,238$323,756$1,090,833$1,015,723

(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 $252 million as of September 30, 2025.

Investment funds consisted of the following:

Carrying Value as ofIncome (Loss) from Investment Funds
September 30,December 31,For the Nine Months Ended September 30,
(In thousands)2025202420252024
Financial services$374,134$430,163$9,917$(16,908)
Transportation272,874286,42629,325962
Real Estate177,082178,6852,05411,471
Infrastructure164,911151,56010,27912,730
Energy42,42942,7766679,473
Other funds399,561378,6367,471(16,860)
Total$1,430,991$1,468,246$59,713$868

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 Ltd. ("Lifson Re"), a Bermuda reinsurance company. Lifson Re participated on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 30.0% share of placed amounts in 2024, which percentage was increased to 32.5% effective January 1, 2025. 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, 2025 and 2024, the Company ceded approximately $482 million and $315 million, respectively, of written premiums to Lifson Re.

Other funds include deferred compensation trust assets of $42 million and $38 million as of September 30, 2025 and December 31, 2024, 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)20252024
Properties in operation$1,077,045$1,063,687
Properties under development228,254227,768
Total$1,305,299$1,291,455

As of September 30, 2025, 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 $40,063,000 and $38,671,000 as of September 30, 2025 and December 31, 2024, respectively. Related depreciation expense was $6,997,000 and $6,401,000 for the nine months ended September 30,

2025 and 2024, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $9,091,129 in 2025, $37,664,526 in 2026, $40,023,613 in 2027, $41,331,567 in 2028, $36,367,986 in 2029, $30,658,209 in 2030 and $430,404,988 thereafter.

A mixed-use project in Washington, D.C. had been under development in 2025 and 2024. The completed portion of the project is reported in properties in operation.

(12) Loans Receivable

At September 30, 2025 and December 31, 2024, loans receivable were as follows:

(In thousands)September 30, 2025December 31, 2024
Amortized cost (net of allowance for expected credit losses):
Real estate loans$326,779$402,382
Commercial loans763,071
Total$326,855$405,453
Fair value:
Real estate loans$327,026$402,177
Commercial loans763,071
Total$327,102$405,248

The real estate loans are secured by commercial and residential real estate primarily located in the U.K. and New York. These loans generally earn interest at fixed or stepped interest rates and have maturities through 2028. The commercial loan is with one small business owner who has secured the related financing with the assets of the business. The commercial loan earns interest on a fixed basis and matures in 2026.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the nine months ended September 30, 2025 and 2024:

20252024
(In thousands)Real Estate LoansCommercial LoansTotalReal Estate LoansCommercial LoansTotal
Balance, beginning of period$1,088$26$1,114$2,983$21$3,004
Change in expected credit losses(841)(15)(856)(1,581)2(1,579)
Balance, end of period$247$11$258$1,402$23$1,425

During nine months ended September 30, 2025, the Company decreased the allowance for expected credit losses due to the redemption of one loan and a decrease in the weighted average life of the remaining loan portfolio. During the nine months ended September 30, 2024, the Company decreased the allowance for expected credit losses due to a decrease in the weighted average life of the loan portfolio.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the three months ended September 30, 2025 and 2024:

20252024
(In thousands)Real Estate LoansCommercial LoansTotalReal Estate LoansCommercial LoansTotal
Balance, beginning of period$334$35$369$1,793$20$1,813
Change in expected credit losses(87)(24)(111)(391)3(388)
Balance, end of period$247$11$258$1,402$23$1,425

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 Gains (Losses)

Net investment gains (losses) were as follows:

For the Three Months Ended September 30,For the Nine Months Ended September 30,
(In thousands)2025202420252024
Net investment gains (losses):
Fixed maturity securities:
Gains$6,930$4,799$13,771$11,448
Losses(6,088)(3,884)(14,454)(11,569)
Equity securities (1):
Net realized gains on investment sales53,92040750,225102,205
Change in unrealized gains (losses)9,590(1,537)93,167(42,442)
Investment funds(1,348)(101)(526)1,109
Real estate20,4431,47019,130(2,704)
Other (2)(4,647)(24,516)(36,269)(130,212)
Net realized and unrealized gains (losses) on investments in earnings before allowance for expected credit losses78,800(23,362)125,044(72,165)
Change in allowance for expected credit losses on investments:
Fixed maturity securities4914,88838829,768
Loans receivable1113888561,579
Change in allowance for expected credit losses on investments16015,2761,24431,347
Net investment gains (losses)78,960(8,086)126,288(40,818)
Income tax (expense) benefit(16,973)43(27,186)5,810
After-tax net investment gains (losses)$61,987$(8,043)$99,102$(35,008)
Change in unrealized investment gains (losses) on available for sale securities:
Fixed maturity securities without allowance for expected credit losses$111,755$463,418$447,977$363,430
Fixed maturity securities with allowance for expected credit losses(23,621)11,166(23,694)4,470
Investment funds(266)6,1527,3403,112
Other(119)32(161)(181)
Total change in unrealized investment gains87,749480,768431,462370,831
Income tax expense(15,836)(99,775)(91,011)(73,298)
Noncontrolling interests——(1)1
After-tax change in unrealized investment gains of available for sale securities$71,913$380,993$340,450$297,534

(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 (losses) 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) Primarily relates to realized foreign currency losses upon the disposition of fixed maturity securities.

(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, 2025 and December 31, 2024 by the length of time those securities have been continuously in an unrealized loss position:

Less Than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
September 30, 2025
U.S. government and government agency$797,397$9,950$261,701$9,729$1,059,098$19,679
State and municipal124,3771,7811,129,94642,3131,254,32344,094
Mortgage-backed639,3275,456948,076134,8821,587,403140,338
Asset-backed428,0881,515550,77918,713978,86720,228
Corporate434,5953,3891,841,14367,8882,275,73871,277
Foreign government228,80021,204332,975183,858561,775205,062
Fixed maturity securities$2,652,584$43,295$5,064,620$457,383$7,717,204$500,678
December 31, 2024
U.S. government and government agency$767,515$9,637$560,260$33,226$1,327,775$42,863
State and municipal348,1168,0271,411,76181,4301,759,87789,457
Mortgage-backed1,541,46421,3261,060,823171,7342,602,287193,060
Asset-backed411,7634,613626,23736,8991,038,00041,512
Corporate1,791,97021,3462,951,377135,1174,743,347156,463
Foreign government600,10317,933476,479167,4401,076,582185,373
Fixed maturity securities$5,460,931$82,882$7,086,937$625,846$12,547,868$708,728

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, 2025 is presented in the table below:

($ in thousands)Number of SecuritiesAggregate Fair ValueGross Unrealized Loss
Foreign government75$189,418$194,357
Corporate2851,5081,533
State and municipal628,7951,256
Mortgage-backed152,404191
Asset-backed121
Total125$272,127$197,338

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, 2025 and December 31, 2024 by level:

(In thousands)TotalLevel 1Level 2Level 3
September 30, 2025
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency$3,478,237$—$3,478,237$—
State and municipal1,974,136—1,974,136—
Mortgage-backed4,969,446—4,969,446—
Asset-backed3,831,174—3,831,174—
Corporate8,740,772—8,720,75320,019
Foreign government1,923,864—1,923,864—
Total fixed maturity securities available for sale24,917,629—24,897,61020,019
Equity securities:
Common stocks721,950718,9998422,109
Preferred stocks660,482—651,8088,674
Total equity securities1,382,432718,999652,65010,783
Arbitrage trading account1,070,304881,153189,038113
Total$27,370,365$1,600,152$25,739,298$30,915
Liabilities:
Trading account securities sold but not yet purchased$34,509$34,509$—$—
December 31, 2024
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency$2,235,341$—$2,235,341$—
State and municipal2,294,644—2,294,644—
Mortgage-backed3,765,490—3,765,490—
Asset-backed3,885,012—3,885,012—
Corporate8,417,641—8,397,97419,667
Foreign government1,755,325—1,755,325—
Total fixed maturity securities available for sale22,353,453—22,333,78619,667
Equity securities:
Common stocks760,167757,1151,0112,041
Preferred stocks443,621—439,9473,674
Total equity securities1,203,788757,115440,9585,715
Arbitrage trading account1,122,5991,062,45956,6303,510
Total$24,679,840$1,819,574$22,831,374$28,892
Liabilities:
Trading account securities sold but not yet purchased$73,358$73,358$—$—

The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, 2025 and for the year ended December 31, 2024:

Gains (Losses) Included In:
(In thousands)Beginning Balance(Losses) EarningsOther Comprehensive Income (Losses)ImpairmentsPurchasesSalesPaydowns / MaturitiesTransfers In / (Out)Ending Balance
Nine Months Ended September 30, 2025
Assets:
Fixed maturities securities available for sale:
Corporate$19,667$—$352$—$—$—$—$—$20,019
Total19,667—352—————20,019
Equity securities:
Common stocks2,041194———(126)——2,109
Preferred stocks3,674———6,160(1,160)——8,674
Total5,715194——6,160(1,286)——10,783
Arbitrage trading account3,510(3,398)—————1113
Total$28,892$(3,204)$352$—$6,160$(1,286)$—$1$30,915
Year Ended December 31, 2024
Assets:
Fixed maturities securities available for sale:
Corporate$—$—$(333)$—$—$—$—$20,000$19,667
Total——(333)————20,00019,667
Equity securities:
Common stocks1,558611———(128)——2,041
Preferred stocks3,69536———(57)——3,674
Total5,253647———(185)——5,715
Arbitrage trading account3,772(261)———(38)—373,510
Total$9,025$386$(333)$—$—$(223)$—$20,037$28,892

For the nine months ended September 30, 2025, and the year ended December 31, 2024, one security was transferred into Level 3 from Level 2 given there were no available quoted prices or observable inputs.

(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 business 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)20252024
Net reserves at beginning of period$17,166,641$15,661,820
Net provision for losses and loss expenses:
Claims occurring during the current year (1)5,776,7955,229,468
Increase in estimates for claims occurring in prior years (2) (3)23,12915,279
Loss reserve discount accretion25,14925,587
Total5,825,0735,270,334
Net payments for claims:
Current year857,360795,792
Prior years3,684,4443,164,720
Total4,541,8043,960,512
Foreign currency translation151,82219,659
Net reserves at end of period18,601,73216,991,301
Ceded reserves at end of period3,155,3033,164,009
Gross reserves at end of period$21,757,035$20,155,310

(1) Claims occurring during the current year are net of loss reserve discounts of $42 million and $37 million for the nine months ended September 30, 2025 and 2024, 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 increased by $19 million and $12 million for the nine months ended September 30, 2025 and 2024, respectively.

(3) For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was $2 million and $3 million for the nine months ended September 30, 2025 and 2024, respectively.

During the nine months ended September 30, 2025, favorable prior year development (net of additional and return premiums) of $2 million included $34 million of favorable prior year development for the Reinsurance & Monoline Excess segment largely offset by $32 million of adverse prior year development for the Insurance segment.

For the Insurance segment, the adverse development during the first nine months of 2025 was driven by other liability and auto liability, and was partially offset by favorable development for short tail lines of business, including commercial property and commercial auto physical damage. The adverse other liability development was driven mainly by umbrella and excess liability claims, and to a lesser degree, adverse development from primary surplus lines casualty business. The umbrella and excess liability development included a significant component stemming from underlying auto exposures. The other liability development was concentrated in accident years 2017 through 2022. The adverse auto liability development was concentrated in accident years 2021 and 2022. The Company believes that auto-related claims are being particularly impacted by social inflation, which is contributing to an increase in the frequency of large losses beyond expectations. 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 other factors.

The favorable development for short tail property lines of business during the first nine months of 2025 related to the 2024 accident year, and resulted from favorable settlements of both catastrophe and non-catastrophe claims below our expectations.

For the Reinsurance & Monoline Excess segment, the favorable development during the first nine months of 2025 was driven mainly by favorable development in property reinsurance. Similar to the Insurance segment, the favorable property reinsurance development was driven by favorable claim settlements, below our expectations, related mainly to the 2024 accident year.

During the nine months ended September 30, 2024, favorable prior year development (net of additional and return premiums) of $3 million included $5 million of favorable prior year development for the Reinsurance & Monoline Excess segment partially offset by $2 million of adverse prior year development for the Insurance segment.

For the Insurance segment, the adverse development during the first nine months of 2024 was driven by commercial auto liability and other liability (mainly umbrella and excess liability), which was largely offset by favorable development for workers’ compensation and professional liability. The adverse commercial auto liability development was concentrated in

accident years 2020 through 2023. The other liability development was mainly driven by umbrella and excess liability claims, and was focused in accident years 2017 through 2021. A significant portion of the umbrella and excess liability development related to underlying commercial auto exposures. The Company believes that commercial auto-related claims were particularly impacted by social inflation, which contributed to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of aggressive actions by the plaintiffs’ bar such as litigation funding, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among other factors.

The favorable workers’ compensation development for the Insurance segment was mainly related to accident years 2017 through 2023, while the favorable professional liability development was mainly in accident years 2020 through 2022. For workers' compensation, favorable reported claim frequency, below expectations, continued to be the main driver of the favorable reserve development. For professional liability, reported loss experience for accident years 2020 through 2022 was better than expected, which drove the favorable reserve development. These accident years also feature business written at peak pricing levels, which the Company believes will result in higher profitability than initially anticipated.

For the Reinsurance & Monoline Excess segment, the favorable development during the first nine months of 2024 was driven mainly by favorable development in excess workers’ compensation, partially offset by adverse development in the non-proportional reinsurance assumed liability line of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to expectations and to favorable claim settlements spread across many prior accident years. The unfavorable development for non-proportional reinsurance was concentrated mainly in accident years 2015 through 2019 and was associated primarily with our U.S. and U.K. excess general liability reinsurance businesses, including coverage for cedants insuring construction projects.

(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, 2025December 31, 2024
(In thousands)Carrying ValueFair ValueCarrying ValueFair Value
Assets:
Fixed maturity securities$24,947,949$24,949,094$22,397,865$22,399,426
Equity securities1,382,4321,382,4321,203,7881,203,788
Arbitrage trading account1,070,3041,070,3041,122,5991,122,599
Loans receivable326,855327,102405,453405,248
Cash and cash equivalents2,404,0192,404,0191,974,7471,974,747
Trading account receivables from brokers and clearing organizations113,330113,33060,32760,327
Liabilities:
Due to broker130,723130,72370,48370,483
Trading account securities sold but not yet purchased34,50934,50973,35873,358
Senior notes and other debt1,829,5111,482,6121,831,1581,425,852
Subordinated debentures1,010,347834,8361,009,808805,864

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)2025202420252024
Written premiums:
Direct$3,483,768$3,303,682$10,405,445$9,723,219
Assumed352,488329,5961,092,519990,587
Ceded(609,326)(576,002)(1,786,292)(1,678,460)
Total net premiums written$3,226,930$3,057,276$9,711,672$9,035,346
Earned premiums:
Direct$3,401,897$3,141,883$9,970,992$9,127,399
Assumed352,745346,7801,028,8621,012,804
Ceded(598,260)(561,840)(1,732,906)(1,602,618)
Total net premiums earned$3,156,382$2,926,823$9,266,948$8,537,585
Ceded losses and loss expenses incurred$286,799$319,472$955,974$952,666
Ceded commissions earned$138,091$129,916$413,614$374,618

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, 2025 and 2024:

(In thousands)20252024
Allowance for expected credit losses, beginning of period$39,884$35,110
Change in expected credit losses412,961
Allowance for expected credit losses, end of period$39,925$38,071

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, 2025 and 2024:

(In thousands)20252024
Allowance for expected credit losses, beginning of period$38,960$37,279
Change in expected credit losses965792
Allowance for expected credit losses, end of period$39,925$38,071

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, 2025 and 2024:

(In thousands)20252024
Allowance for expected credit losses, beginning of period$8,350$8,404
Change in expected credit losses(1,751)(72)
Allowance for expected credit losses, end of period$6,599$8,332

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, 2025 and 2024:

(In thousands)20252024
Allowance for expected credit losses, beginning of period$6,954$10,255
Change in expected credit losses(355)(1,923)
Allowance for expected credit losses, end of period$6,599$8,332

(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 $39 million and $38 million for the nine months ended September 30, 2025 and 2024, respectively. A summary of RSUs issued in the nine months ended September 30, 2025 and 2024 follows:

($ in thousands)UnitsFair Value
20251,037,315$73,633
20241,215,623$70,195

(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.

On December 22, 2023, one of the Company’s subsidiaries filed a lawsuit against certain reinsurers to recover in excess of $90 million in respect of certain losses paid to its policyholders under certain event cancellation and related insurance policies. The Company believes its claims against the reinsurers are meritorious and expects a positive resolution to its lawsuit. While an adverse outcome is possible, the Company believes that the outcome, in any case, will not be material to the Company’s financial condition.

(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)2025202420252024
Leases:
Lease cost$13,828$11,230$40,275$33,633
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows11,93512,22237,24936,818
Right-of-use assets obtained in exchange for new lease liabilities5,7643,45850,19837,007
As of September 30,
($ in thousands)20252024
Right-of-use assets$208,334$184,166
Lease liabilities$246,835$224,776
Weighted-average remaining lease term7.2 years7.4 years
Weighted-average discount rate5.85%5.53%

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

(In thousands)September 30, 2025
Contractual Maturities:
2025$12,536
202650,230
202741,778
202840,454
202936,538
Thereafter119,474
Total undiscounted future minimum lease payments301,010
Less: Discount impact54,175
Total lease liability$246,835

(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 and certain program management business.

The Company's chief operating decision maker ("CODM") is the President and Chief Executive Officer. The CODM assesses performance, makes decisions and allocates resources for each of the three reportable segments based on their contribution towards the Company's profitability and balance sheet strength. Certain key metrics such as combined ratio and return on allocated capital for the Insurance and Reinsurance & Monoline Excess segments, as well as Corporate segment expenditures, are examples of key components of the assessment, decision-making and resource-allocation process.

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.

RevenuesExpenses
(In thousands)Earned Premiums (1)Investment IncomeOtherTotal (2)Losses and Loss ExpensesPolicy Acquisition and Insurance Operating ExpensesOtherTotalPre-Tax Income (Loss)Net Income (Loss) to Common Stockholders
Three months ended September 30, 2025
Insurance$2,773,009$260,547$10,037$3,043,593$1,772,377$785,805$10,873$2,569,055$474,538$375,577
Reinsurance & Monoline Excess383,37371,622—454,995196,480114,507—310,987144,008113,061
Corporate, other and eliminations (3)—19,069171,619190,688——240,084240,084(49,396)(39,593)
Net investment gains——78,96078,960————78,96061,987
Total$3,156,382$351,238$260,616$3,768,236$1,968,857$900,312$250,957$3,120,126$648,110$511,032
Three months ended September 30, 2024
Insurance$2,564,490$253,234$9,189$2,826,913$1,619,281$727,910$10,301$2,357,492$469,421$363,026
Reinsurance & Monoline Excess362,33357,037—419,370206,679107,466—314,145105,22582,659
Corporate, other and eliminations (3)—13,485148,697162,182——254,293254,293(92,111)(72,008)
Net investment losses——(8,086)(8,086)————(8,086)(8,043)
Total$2,926,823$323,756$149,800$3,400,379$1,825,960$835,376$264,594$2,925,930$474,449$365,634
Nine months ended September 30, 2025
Insurance$8,144,300$851,271$30,144$9,025,715$5,202,065$2,293,794$33,141$7,529,000$1,496,715$1,162,148
Reinsurance & Monoline Excess1,122,648218,910—1,341,558623,008326,863—949,871391,687308,944
Corporate, other and eliminations (3)—20,652472,230492,882——798,993798,993(306,111)(240,302)
Net investment gains——126,288126,288————126,28899,102
Total$9,266,948$1,090,833$628,662$10,986,443$5,825,073$2,620,657$832,134$9,277,864$1,708,579$1,329,892
Nine months ended September 30, 2024
Insurance$7,447,828$801,573$28,202$8,277,603$4,690,402$2,117,658$31,920$6,839,980$1,437,623$1,102,363
Reinsurance & Monoline Excess1,089,757168,721—1,258,478579,932321,247—901,179357,299282,423
Corporate, other and eliminations (3)—45,429430,492475,921——693,833693,833(217,912)(169,764)
Net investment losses——(40,818)(40,818)————(40,818)(35,008)
Total$8,537,585$1,015,723$417,876$9,971,184$5,270,334$2,438,905$725,753$8,434,992$1,536,192$1,180,014

Identifiable Assets

(In thousands)September 30, 2025December 31, 2024
Insurance$35,721,098$32,911,507
Reinsurance & Monoline Excess6,015,3945,669,729
Corporate, other and eliminations (3)1,978,7251,867,399
Consolidated$43,715,217$40,448,635

(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, 2025 and 2024 were $357 million and $350 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $1,051 million and $1,112 million, respectively. Revenues for Reinsurance & Monoline Excess from foreign operations for the three months ended September 30, 2025 and 2024 were $136 million and $125 million, respectively, and for the nine months ended September 30, 2025 and 2024 were $382 million and $353 million, respectively.

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

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)2025202420252024
Insurance:
Other liability$1,122,591$1,031,087$3,299,651$3,000,335
Short-tail lines (1)636,751563,7361,852,8471,613,342
Auto408,213376,7621,203,7941,092,354
Workers' compensation318,284313,154948,194925,214
Professional liability287,170279,751839,814816,583
Total Insurance2,773,0092,564,4908,144,3007,447,828
Reinsurance & Monoline Excess:
Casualty (2)189,767188,284556,437585,208
Property (2)119,267108,386353,246308,024
Monoline excess (3)74,33965,663212,965196,525
Total Reinsurance & Monoline Excess383,373362,3331,122,6481,089,757
Total$3,156,382$2,926,823$9,266,948$8,537,585

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

(2) Includes reinsurance casualty and property and certain program management business.

(3) 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 2025 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. Forward-looking statements are generally, although not always, identified by words such as "may," "should," "expects," "provides," "anticipates," "assumes," "can," "will," "meets," "could," "likely," "intends," "might," "predicts," "seeks," "would," "believes," "estimates," "plans," "continues," or similar expressions. 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, foreign governmental bonds, 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 impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, the risk of recession, changing interest rates, the impact of tariffs and volatility in the credit and capital markets; the impact of a prolonged U.S. government shutdown on macroeconomic conditions; 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; cyber security breaches of our information technology systems and the information technology systems of our vendors and other third parties; the use of artificial intelligence technologies by us or third-parties on which we rely could expose us to technological, security, legal, and other risks; the risk of future pandemics, as well as continuing effects of the COVID-19 pandemic; 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; 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 2025 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.

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations