W. R. Berk ley Corporati on
2024
ANNUAL REPORT
The Cheese Vendor
by Edouard-Jean Dambourgez
2024
ANNUAL REPORT
W. R . Be rkley C orp orat ion
2
3
Financial Highlights
4
Selected Financial Data
5
Letter to Shareholders
8
W. R. Berkley Corporation Performance vs. S&P 500
9
Cumulative Total Return & Growth in Book Value Per Share
10
A Recipe for Success
14
The Proof is in the Pudding
18
The Magic is in the Mix
22
The Secret is in the Sauce
26
Our Company
27
Our Business
28
Segment Overview and Data
30
Investments
31
Form 10-K
165
Businesses
173
Board of Directors & Officers
175
Corporate Information
Table of Contents
2024 Financial
Highlights
90.3%
Averaged 90.8% over
the past 5 years
COMBINED RATIO
$13.6B
Increased by 72.6% over
the past 5 years
TOTAL REVENUES
$22.09
Grew 86.5% before dividends
and share repurchases over
the past 5 years
BOOK VALUE PER SHARE
23.6%
Averaged 17.9% over
the past 5 years
RETURN ON STOCKHOLDERS' EQUITY
By the Numbers
W. R. Berkley Corporation 2024 Annual Report 3
4
Selected Financial Data
In thousands, except per share data
NET INCOME
PER COMMON SHARE
Basic
$1.26
$2.46
$3.33
$3.40
$4.39
Diluted
1.25
2.44
3.29
3.37
4.36
Return on Equity
8.7%
16.2%
20.8%
20.5%
23.6%
AT YEAR END
Total Assets
$28,606,913
$32,086,414
$33,861,099
$37,202,015
$40,567,268
Total Investments
18,481,767
22,171,814
22,859,646
25,279,504
27,889,406
Reserves for Losses
& Loss Expenses
13,784,430
15,390,888
17,011,223
18,739,652
20,368,030
Common Stockholders’ Equity
6,310,802
6,653,011
6,748,332
7,455,431
8,395,111
Common Shares Outstanding
400,106
397,757
396,819
384,817
380,066
Common Stockholders’
Equity Per Share
15.77
16.73
17.01
19.37
22.09
Per share data and common shares outstanding have been adjusted for the 3-for-2 common stock splits
effected on March 23, 2022 and July 10, 2024.
YEARS
ENDED DECEMBER 31,
2020
2021
2022
2023
2024
Total Revenues
$8,098,932
$9,455,486
$11,166,498
$12,142,938
$13,638,752
Net Premiums Written
7,262,437
8,862,867
10,004,070
10,954,467
11,972,096
Net Investment Income
583,821
671,618
779,185
1,052,835
1,333,161
Net Investment Gains
103,000
90,632
202,397
47,042
117,708
Insurance Service Fees
88,777
93,857
110,544
106,485
108,935
Net Income to Common
Stockholders
530,670
1,022,490
1,381,062
1,381,359
1,756,115
W. R. Berkley Corporation 2024 Annual Report 5
To Our
Shareholders
was the third year in a row
in which our return on
shareholders' equity exceeded 20%. This
achievement was especially remarkable given the
uncertainty of the current economic environment,
in addition to the fact that we have not yet fully
realized the benefits of rising interest rates in
our portfolio. The extraordinary outcome was a
result of both outstanding underwriting profits,
with a combined ratio of approximately 90%,
and investment income in excess of $1.3 billion.
This resulted in record net income of $1.756
billion. The Company achieved these record
results due to the exceptional execution and
efforts of our employees.
The strong results of 2024, in spite of
approximately $300 million of catastrophe
losses, allowed us to return $836 million to our
shareholders in the form of dividends, both
regular and special, equal to $532 million, and
$304 million of stock repurchases. All this was
achieved while growing our premium volume
by nearly 10%. Contributing to this growth were
strong rate increases that set the stage for 2025
to be another outstanding year, because half of
the premiums that will be earned in
2025 are already on the books.
W. ROBERT BERKLEY, JR.
President and
Chief Executive Officer
WILLIAM R. BERKLEY
Executive Chairman
The insurance business is a mathematically-based
analytic enterprise, allowing one to measure and
examine the financial outcomes and the return to
our shareholders. On the other hand, our business
only succeeds when we meet the needs of multiple
constituents - our customers, our agents and brokers,
and the society in which we operate. None of this
happens without employees who are committed to our
success. This success only occurs when we serve all of
these groups while meeting our financial objectives.
The current state of the world has not, in recent
times, seen so much volatility and uncertainty.
Insurance provides society with a way to manage the
impact of unforeseen events. This places insurance
in an extremely important role in today's world.
Our Company, because of its financial strength
and stability, has built a reputation that provides
2024
Dollars in billions
2020
$8.1
2021
$9.5
2022
$11.2
2023
$12.1
2024
$13.6
Total Revenues
6
decisions. The current state of our uncertain world
makes our business more challenging, but also
offers more opportunity.
Every decision we make, whether it is starting
a new business or considering an acquisition, is
more complicated in the current environment.
Whether it is social or economic inflation, every
decision is impacted by the world around us. It is
not just underwriting, but also the building of our
investment portfolio that is affected, both in the
quality of the security portfolio and its duration.
These judgments are the critical issues that the
management of our enterprise has to focus on
to deliver long-term risk-adjusted returns. This
long-term focus is one of the things that allows our
Company to differentiate itself from its competitors.
This year our business grew by nearly 10% in
premiums written. We started one new business in
India, a large potential market with a long-term
attractive future. The insurance industry today is
not as it was in the past. All parts and segments
of the industry do not change simultaneously.
The availability of data causes each segment of
the industry move independently from every
other segment of the industry. We believe we
are effectively managing our enterprise in a way
that each business responds to its own individual
marketplace. Clearly, an economic slowdown
of a significant proportion will challenge the
opportunity for growth. At the moment, however,
any recession ahead appears to be modest.
In spite of the overall economy, our business
continues to offer positive signs for the future. Each
of our businesses operates on its own in its individual
market. This gives our enterprise the benefits of a
large-scale operation while we maintain the flexibility
of small nimble units. It is this flexibility that is one
of the most important differentiators of our enterprise.
In this rapidly changing uncertain environment, this
is a very important competitive advantage. We expect
that the pace of change, due to both technology and
communications, will continue to be a tremendous
competitive advantage for our Company.
$1.8B
RECORD NET INCOME
peace of mind to its customers. People know we
are always available and a dependable partner.
We are in the marketplace every day offering
coverage on a consistent basis. We are always
here day in and day out.
We manage our business with a long-term view,
consistently focused to achieve optimal risk-adjusted
return. That means we understand the risks we
assume and establish prices to reflect those risks
and the economic environment in which we are
operating. The exposures we assume often times
extend many years and our most important decisions
have to do with anticipation of change. The general
view of inflation, societal values, and political
activities must be considered when making these
$1.1B
RECORD UNDERWRITING INCOME
Dollars in billions
2020
$18.5
2021
$22.2
2022
$22.9
2023
$25.3
2024
$27.9
Investments
W. R. Berkley Corporation 2024 Annual Report 7
We continue to establish the Berkley brand as
an important part of our market position. People
know that it stands for trust, financial strength, and
commitment. Ultimately, customers need to be able
to rely on their insurance performing in accordance
with the terms of their policy. Our customers know
WILLIAM R. BERKLEY
Executive Chairman
W. ROBERT BERKLEY, JR.
President and
Chief Executive Officer
People know the Berkley
brand stands for trust, financial
strength, and commitment.
they receive that assurance when they do business
with us. We continue to build our business using
these strengths through internal growth and the
establishment of new businesses.
Our outstanding performance in 2024 once again
demonstrated that our focus on risk-adjusted
return, profitable growth, and low volatility leads to
exceptional financial results. These are the things we
strive for. We could not have achieved these results
without every person within our team contributing.
We are proud of the culture and teamwork that
comes about because of this effort. We are grateful to
our brokers and agents who bring us business, and
we thank them for choosing to do business with a
Berkley company. We work hard to ensure we always
do the right thing, that we contribute to society,
and that we treat our customers appropriately. The
advice and counsel of our Board of Directors creates
immeasurable value to the success of our enterprise.
We continue to be optimistic and expect 2025 to
be an outstanding year.
2020
$13.8
2021
$15.4
2022
$17.0
2023
$18.7
2024
$20.4
Reserves for Losses
& Loss Expenses
Dollars in billions
2020
$6.3
2021
$6.7
2022
$6.7
2023
$7.5
2024
$8.4
Common
Stockholders' Equity
Dollars in billions
8
Cumulative Total Stock Return
(Includes Dividends)
W. R. Berkley Corporation Performance vs. S&P 500®
W. R. Berkley Corporation
S&P 500
Difference
YEAR
(1)
(2)
(1)-(2)
1974
-43.2%
-26.4%
-16.8%
1975
-38.7%
1.0%
-39.7%
1976
0.5%
24.8%
-24.4%
1977
151.5%
15.6%
135.9%
1978
499.1%
23.0%
476.1%
1979
430.4%
45.4%
385.0%
1980
436.8%
92.3%
344.5%
1981
601.6%
82.7%
518.9%
1982
610.8%
121.8%
489.0%
1983
900.1%
171.5%
728.7%
1984
1,010.3%
188.0%
822.3%
1985
2,543.6%
279.0%
2,264.6%
1986
2,940.8%
349.5%
2,591.3%
1987
2,708.1%
372.5%
2,335.6%
1988
3,398.4%
450.9%
2,947.5%
1989
4,727.3%
625.5%
4,101.8%
1990
4,450.5%
603.0%
3,847.4%
1991
5,516.5%
817.4%
4,699.1%
1992
7,896.1%
887.2%
7,008.9%
1993
6,472.1%
986.9%
5,485.2%
1994
7,026.7%
1,001.0%
6,025.7%
1995
10,234.9%
1,415.0%
8,819.9%
1996
9,768.4%
1,763.4%
8,005.0%
1997
12,839.6%
2,385.8%
10,453.8%
1998
10,072.0%
3,096.8%
6,975.2%
1999
6,271.7%
3,768.1%
2,503.6%
2000
14,621.0%
3,416.1%
11,204.9%
2001
16,845.9%
2,997.7%
13,848.3%
2002
18,832.4%
2,313.1%
16,519.3%
2003
25,169.6%
3,005.6%
22,163.9%
2004
34,227.9%
3,344.2%
30,883.7%
2005
52,158.4%
3,512.9%
48,645.5%
2006
56,968.7%
4,083.8%
52,885.0%
2007
49,514.3%
4,313.9%
45,200.4%
2008
51,952.5%
2,680.7%
49,271.7%
2009
41,695.0%
3,417.6%
38,277.4%
2010
46,815.3%
3,948.8%
42,866.5%
2011
59,413.0%
4,033.8%
55,379.2%
2012
67,499.4%
4,695.2%
62,804.2%
2013
78,336.9%
6,248.9%
72,088.0%
2014
95,287.8%
7,118.1%
88,169.7%
2015
102,690.9%
7,217.7%
95,473.2%
2016
128,128.2%
8,095.8%
120,032.5%
2017
141,183.6%
9,884.9%
131,298.6%
2018
149,604.7%
9,447.6%
140,157.1%
2019
215,219.1%
12,454.1%
202,765.0%
2020
208,430.2%
14,764.1%
193,666.1%
2021
265,429.0%
19,030.8%
246,398.2%
2022
355,378.8%
15,566.2%
339,812.6%
2023
356,242.2%
19,692.7%
336,549.5%
2024
453,212.0%
24,644.8%
428,567.2%
Average Annual Gain 1974–2024
23.4%
12.9%
10.5%
Notes: W. R. Berkley Corporation’s book value per share has been adjusted for stock dividends paid from 1975 to 1983. Stock dividends were 6% in each year from 1975 to 1978, 14% in
1979, and 7% in each year from 1980 to 1983. The Company has paid cash dividends each year since 1978, including special dividends paid in 2012, 2014, 2016–2019 and 2021–2024.
W. R. Berkley Corporation 2024 Annual Report 9
Insurance companies are often measured by book value per share. We have grown book value
per share with dividends included by an average of 16.5% since 1973.
Cumulative Total Return
Dividends Compounded
Cumulative Growth
in Book Value Per Share
With Dividends Included
453,212%
24,645%
500,000%
400,000%
300,000%
200,000%
100,000%
0%
W. R. Berkley Corporation
S&P 500®
122,251%
125,000%
100,000%
75,000%
50,000%
25,000%
0%
1973
1979
1985
1991
1997
2003
2009
2015
2021
2024
W. R. Berkley Corporation
1973–2024
1973
1979
1985
1991
1997
2003
2009
2015
2021
2024
10
A
Recipe
for
Success
W. R. Berkley Corporation 2024 Annual Report 11
Our ability to blend the strengths of each of
our specialized businesses, their expertise in
specific areas, and their commitment to offering
outstanding customer service has allowed us
to create an enterprise in which the sum of
the parts exceeds the value of each individual
component. Each business’s contribution is vital,
and together, we create a powerful collaboration
that drives our success both locally and
collectively. For over 55 years, this has been the
cornerstone of W. R. Berkley Corporation.
This annual report “recipe book” highlights how
each of our various businesses is distinctive yet
forms part of a cohesive whole, bound together
through a set of shared values and a culture of
doing the right thing. Our combined success
is built on a long-term perspective that doesn't
only consider return, but the concomitant risk
as well. Just like a well-crafted recipe, each
business brings its own special ingredients and
expertise, contributing to a value proposition
that is far greater than what any individual
company could deliver. Over the years, our
business has continued to develop and change,
much like a family recipe passed down from one
generation to the next evolves. As with a recipe,
small changes might not make a big difference,
but when compounded, they make our
enterprise and each of our businesses unique
and special, always anticipating and adapting
to a changing world to better meet the wants
and needs of our customers and the communities
in which we live and serve. This makes our
Company better in every part and as a whole.
Most importantly, this year’s theme underscores
that our people are the most important ingredient
in our success. Each business is represented by
its own custom recipe card, reflecting the unique
combination of key ingredients that make it
special. These recipe cards showcase how their
distinctive qualities, characteristics, and culture
combined with our common set of values allows
each team to excel. We celebrate the uniqueness
of each business, and at the same time we salute
the strength of those shared values and the
collective benefits that each of these businesses
bring to one another.
Most importantly,
this year’s theme
underscores that our
people are the most
important ingredient
in our success.
How does a collection of
businesses come together to create a
unique + special organization?
The
Berkley
Recipe Box
When our people and
values come together, they
create the foundation for our
collective success.
12
W. R. Berkley Corporation 2024 Annual Report 13
Integrity
Berkley is committed to meeting the needs
of our customers, distribution partners,
employees, and communities with the utmost
integrity. This integrity is key in how we provide
outstanding products and services, how we
settle claims with fairness and according to
policy terms, and in the way that we individually
and collectively engage with others.
14
The
Proof is
in the
Pudding
W. R. Berkley Corporation 2024 Annual Report 15
Long-term success built on
a relentless focus on risk-adjusted
return and value creation.
14.9%
AVERAGE RETURN ON SHAREHOLDERS' EQUITY
When it comes to long-term risk-adjusted
returns, the proof is in the pudding. The true
measure of our success lies not just in our annual
returns, but in how our returns stack up over the
long-term and the way in which we achieve them.
It’s not only about the steps we take forward, but
the steps backward that we avoid. Our focus on
serving our customers and doing the right thing
drives us to carefully consider both potential
rewards and associated risks. As a result, we have
generated more stable and satisfying financial
outcomes, proving that our decentralized structure
in which everyone pulls together toward a
common set of goals while focusing on their own
niche can lead to sweet success.
Our successful insurance enterprise relies
on specialized knowledge, meticulous risk
management, and a culture dedicated to meeting
the needs of customers, distribution partners,
employees, and the communities in which we
work. Each component plays a crucial role in the
final product. Berkley is a decentralized, specialty
property and casualty company composed of 58
distinct businesses, each with deep knowledge
and expertise of their individual niches. Each
business brings skill, passion, and a commitment
to doing the right thing to everything they do.
Our specialized knowledge and customer focus
create a competitive advantage in delivering the
right value to customers in an efficient way that
solves their problems.
We have great people with outstanding expertise
working together in teams with appropriate
discipline. We are always in the market with risk
amelioration products and services, regardless of the
environment. We use our knowledge and expertise
to offer risk-based pricing and fair, prompt claims
handling, balance risk and return, and provide our
insureds with an exceptional product and customer
experience.
Over time, refinements to recipes and businesses
alike can transform the ordinary into the
extraordinary. We continually seek the best way
to meet the evolving needs of our stakeholders,
examine known and unforeseen risks, and maximize
returns. It requires patience, attention to detail,
and a willingness to learn from mistakes. It takes
integrity, skill, experience, and creativity to get it
just right. With each business working together
towards a superior outcome, we achieve financial
stability and profitability. Ultimately, our results
have been exceptional, with a 14.9% average return
on shareholders’ equity and 122,251% cumulative
growth in book value per share before dividends and
repurchases since our IPO in 1973.
16
Responsibility
We have a clear sense of responsibility to
all of our stakeholders, including our
distribution partners, customers, shareholders,
employees, and society at large.
Strategic
Mindset
We make thoughtful decisions every day,
in every aspect of our business, designed to
generate strong risk-adjusted returns that build
value over the long term and prepare us for
whatever challenges and opportunities
the future may hold.
W. R. Berkley Corporation 2024 Annual Report 17
18
The
Magic
is in
the Mix
W. R. Berkley Corporation 2024 Annual Report 19
Our 58 separate specialty (re)insurance
businesses with a common goal and set of core
values allow us to create a "magic mix". Each
of our businesses focuses on a specific market,
offering particular expertise based on geography,
product line, industry, or distribution type, and
is empowered to be responsive to their market.
They adapt their individual approaches as
market conditions vary.
Our experienced professionals bring a deep
understanding of industry-specific risks,
historical data, and advanced analytical tools
to create a bespoke menu of products and
services. Our businesses pay attention to every
detail, so that their policy terms and conditions,
underwriting, claims handling, and services
are perfectly suited to their customers' needs.
In essence, our expertise transforms risk
management into a systematic, data-driven
recipe for success. Moreover, our teams are
leaders in their markets and communities,
striving to offer solutions to problems and
support when and where it is needed.
To drive accountability in our decentralized
organization, each business is responsible for its
individual performance and contribution to our
overall success. Their autonomy enables each
team to respond swiftly to local trends, innovate,
and optimize their performance without being
constrained by a one-size-fits-all corporate
recipe. This diversity benefits the overall
organization, as successful practices are shared
and scaled across the group, enhancing overall
resilience and adaptability. It allows each business
to do what is right for its specific customers,
people and communities, while pulling together
toward a common set of goals.
Our businesses benefit from being part of one
of the largest property and casualty insurance
organizations in the U.S. with operations
worldwide and a common culture where everything
counts and everyone matters. Ultimately, this
approach ensures that each business can achieve its
unique flavor of success while contributing to the
group's collective success.
Autonomy enables each
team to respond swiftly to
local trends, innovate, and
optimize their performance
without being constrained
by a one-size-fits-all
corporate recipe.
Decentralized by design, united
by values—delivering tailored
solutions for collective success.
20
Knowledgeability
We believe that knowledge and expertise
in underwriting, risk management, claims
handling, and investing is the best way to
deliver value to all our stakeholders.
W. R. Berkley Corporation 2024 Annual Report 21
Trust
We understand that insurance is a promise
to be there for our policyholders when
things go wrong and we are committed to doing
the right thing for them, our distribution
partners, employees, and communities.
For more than 55 years, we have earned that
trust from our stakeholders with
strength and expertise.
22
The
Secret is
in the
Sauce
W. R. Berkley Corporation 2024 Annual Report 23
Our people are the secret sauce in our
Company’s recipe for success. Every team
brings their own special blend of knowledge,
expertise, creativity, and dedication that
contributes to the successful culture and
performance of their business and our
collective results. Their ability to collaborate,
innovate, solve problems, build relationships
with customers and distribution partners,
and support their communities is a powerful
combination that leads to positive outcomes
for all stakeholders.
While the culture of each of our businesses is
distinct, they all share a common set of core
values, including integrity, responsibility, a
strategic mindset, knowlegeability, trust, and
caring. Our shared values synchronize with
the contributions of our teams and the unique
cultures of our businesses, creating a cohesive
and dynamic whole. This blend of autonomy
and shared principles drives our success across
the entire organization.
Our teams are given the right tools and
environment to develop innovative solutions
and produce exceptional results. We invest in
the personal and professional development
of our people, as well as in their physical
and mental well-being, fostering a positive
culture with a motivated and engaged
workforce. This, in turn, leads to higher
productivity, better customer service, and
a stronger competitive edge. The collective
effort and passion of our teams transform our
business from good to great.
Together with our guiding principle to
“always do right,” these shared values drive
responsible behaviors. Berkley prides itself on
its long tradition of involvement in the local
communities where it does business. Our teams
are empowered to get involved with charitable
organizations that make an impact. While these
organizations are many and varied, our teams
have generally focused time and resources
in the following three areas: supporting the
next generation, food insecurity, and the
environment. Being a responsible community
member is the pièce de résistance that makes
our secret sauce so special.
Our people are the secret sauce.
Blending talent, values, and purpose
into lasting impact.
Being a responsible
community member is
the pièce de résistance
that makes our secret
sauce so special.
Caring
We achieve success by working together
with shared values for common goals in a
way that allows us to make a positive
contribution to our society.
24
W. R. Berkley Corporation 2024 Annual Report 25
An insurance company that is successful over the
long term is one that is able to balance the needs
of its various constituents.
Shareholders
Insureds
Distribution
Society
Our
Recipe
Employees
Our
Company
Each of the businesses within Berkley
participates in a niche market requiring
specialized knowledge about a territory
or product.
Our competitive advantage lies in our long-
term strategy of decentralized operations,
allowing each of our businesses to identify and
respond quickly and effectively to changing
market conditions and local customer
needs. This decentralized structure provides
financial accountability and incentives to local
management and enables us to attract and
retain the highest-caliber professionals.
We have the expertise and resources to utilize
our strengths in the present environment,
and the flexibility to anticipate, innovate
and respond to whatever opportunities and
challenges the future may hold.
W. R. Berkley Corporation,
founded in 1967, is one
of the nation’s premier
specialty property casualty
insurance providers.
How We're Different
Risk-Adjusted Returns
Management company-wide is focused on
obtaining the best potential returns with a real
understanding of the amount of risk being
assumed. Superior risk-adjusted returns are
generated over the insurance cycle.
Accountability
The business is operated with an ownership
perspective and a clear sense of fiduciary
responsibility to shareholders.
People-Oriented Strategy
New businesses are started when opportunities
are identified and, most importantly, when the
right talent is found to lead a business. Of the
Company’s 58 businesses, 51 were developed
internally and seven were acquired.
Responsible Financial Practices
Risk exposures are managed proactively. A
strong balance sheet, including a high-quality
investment portfolio, ensures ample resources to
grow the business profitably whenever there are
opportunities to do so.
Transparency
Consistent and objective standards are used to
measure performance—and, the same standards
are used regardless of the environment.
26
W. R. Berkley Corporation 2024 Annual Report 27
Our
Business
Today, as with yesterday and
tomorrow, the combined
expertise of underwriting,
risk management, claims
handling and investing will
deliver outstanding risk-
adjusted returns.
$11.2B
Insurance Segment
Record Total Revenues
$1.7B
Reinsurance & Monoline Excess Segment
Record Total Revenues
$1.9B
Insurance Segment
Record Pre-Tax Income
$467M
Reinsurance & Monoline Excess Segment
Record Pre-Tax Income
Insurance
Our Insurance businesses underwrite
predominantly commercial insurance, including
excess and surplus lines, admitted lines, and
specialty personal lines, in the United States,
as well as in the United Kingdom, Continental
Europe, Latin America and the Caribbean,
Canada, Mexico, Scandinavia, Australia, Asia
and India.
Reinsurance & Monoline Excess
Our Reinsurance businesses provide facultative
and treaty reinsurance, primarily in the United
States, the United Kingdom, Continental
Europe, Australia, the Asia-Pacific Region,
Latin America and the Caribbean, and South
Africa. Monoline Excess businesses solely retain
risk on an excess basis.
2024
Segment Results
28
Segment
Overview
Each of our two business segments—Insurance and Reinsurance & Monoline Excess—comprise
individual businesses that serve a market defined by geography, products, services or types of customers.
Our growth is based on meeting the needs of customers, maintaining a high-quality balance sheet and
allocating capital to our best opportunities.
We combine capital with outstanding people and wrap it all in a culture that is focused on optimizing
risk-adjusted returns. It creates a sustainable competitive advantage that can only be acquired over many
years with consistent discipline.
Insurance
$13.9B
RESERVES
$33.0B
ASSETS
Reinsurance & Monoline Excess
$3.3B
RESERVES
$5.7B
ASSETS
2024 Segment Data
ASSETS & NET RESERVES
W. R. Berkley Corporation 2024 Annual Report 29
2024 Net Premiums Written
by Major Line of Business
22%
Short-tail Lines
$10.5B
Insurance Segment
12%
Workers'
Compensation
15%
Auto
11%
Professional
Liability
40%
Other
Liability
$1.4B
Reinsurance & Monoline
Excess Segment
52%
Casualty
29%
Property
19%
Monoline Excess
30
Over the past few years, we have maintained a relatively short duration of our fixed-maturity portfolio, which
extended modestly to approximately 2.6 years at December 31, 2024, while maintaining its high quality with an
average rating of AA-. As a result, there has been less volatility in our book value from mark-to-market accounting
and we are better able to manage the interest rate environment.
We manage our portfolio for total return, including capital gains. As investment income is an important component
of our economic model, we will continue to seek out investment opportunities with above average risk-adjusted
returns and to position our fixed-maturity portfolio to manage the yield curve as well as the impact of inflation.
Our Investments
Investment Data
(dollars in millions)
Corporate Bonds
Asset-backed Securities
Mortgage-backed Securities
State & Municipal Bonds
U.S. Government & Government Agency Bonds
Cash & Cash Equivalents
Foreign Government Bonds
Loans Receivable
2%
8%
9%
7%
15%
9%
16%
34%
Breakdown
of Fixed-Maturity
Securities
Invested Assets
$25,280
$27,889
Cash and Cash Equivalents
$1,363
$1,975
Total
$26,643
$29,864
Net Investment Income
$1,053
$1,333
Net Investment Gains
$47
$118
CASH & INVESTED ASSETS
2023
2024
Form
10-K
W. R . B e r k l e y C o r p o ra t i o n
2024 FINANCIALS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______ to ______.
Commission file number 1-15202
W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
22-1867895
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
475 Steamboat Road
Greenwich,
CT
06830
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (203) 629-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.20 per share
WRB
New York Stock Exchange
5.700% Subordinated Debentures due 2058
WRB-PE
New York Stock Exchange
5.100% Subordinated Debentures due 2059
WRB-PF
New York Stock Exchange
4.250% Subordinated Debentures due 2060
WRB-PG
New York Stock Exchange
4.125% Subordinated Debentures due 2061
WRB-PH
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued
its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant
to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, 2024, the last business day of the registrant’s most recently
completed second fiscal quarter, was $15,700,741,833.
Number of shares of common stock, $.20 par value, outstanding as of February 13, 2025: 379,226,056
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days after December 31,
2024, are incorporated herein by reference in Part III.
2
Page
SAFE HARBOR STATEMENT
PART I
ITEM
1.
BUSINESS
6
ITEM
1A.
RISK FACTORS
25
ITEM
1B.
UNRESOLVED STAFF COMMENTS
36
ITEM
1C.
CYBERSECURITY
36
ITEM
2.
PROPERTIES
37
ITEM
3.
LEGAL PROCEEDINGS
37
ITEM
4.
MINE SAFETY DISCLOSURES
38
PART II
ITEM
5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
39
ITEM
6.
RESERVED
ITEM
7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
41
ITEM
7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
61
ITEM
8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
62
ITEM
9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
114
ITEM
9A.
CONTROLS AND PROCEDURES
114
ITEM
9B.
OTHER INFORMATION
116
ITEM
9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
116
PART III
ITEM
10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
117
ITEM
11.
EXECUTIVE COMPENSATION
117
ITEM
12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
117
ITEM
13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
117
ITEM
14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
117
PART IV
ITEM
15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
118
ITEM
16.
FORM 10-K SUMMARY
122
EX-19.1
INSIDER TRADING POLICY
EX-21
LIST OF COMPANIES AND SUBSIDIARIES
EX-23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EX-31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) /15d-14(a)
EX-32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
EX-101
INSTANCE DOCUMENT
EX-101
SCHEMA DOCUMENT
EX-101
CALCULATION LINKBASE DOCUMENT
EX-101
LABELS LINKBASE DOCUMENT
EX-101
PRESENTATION LINKBASE DOCUMENT
EX-101
DEFINITION LINKBASE DOCUMENT
3
SAFE HARBOR STATEMENT
UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. This document may contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Some of the forward-looking statements can be identified by the use of
forward-looking words such as “believes,” “expects,” “potential,” “continued,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,”
“plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this
report including statements related to our outlook for the industry and for our performance for the year 2025 and beyond, are based upon our historical
performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a
representation by us that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and
uncertainties, including but not limited to:
•
the cyclical nature of the property casualty industry;
•
the 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 cyber security-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, interest rates and volatility in the credit and capital markets;
•
the impact of conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other
initiatives taken in response to it, 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 ("TRIPRA");
•
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 relating 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
4
•
other risks detailed in this Form 10-K and from time to time in our other filings with the Securities and Exchange Commission (“SEC”).
We describe these risks and uncertainties in greater detail in Item 1A, Risk Factors. 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 elsewhere in this
Form 10-K and our other SEC filings. Forward-looking statements speak only as of the date on which they are made.
5
PART I
ITEM 1. BUSINESS
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide
in two segments of the property casualty insurance business:
•
Insurance - Our Insurance businesses underwrite 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 - Our Reinsurance businesses provide facultative and treaty reinsurance in the United States, the Asia Pacific region,
Australia, Continental Europe, South Africa and the United Kingdom, as well as operations that solely retain risk on an excess basis and certain
program management business.
Our two reporting segments are each composed of individual businesses that serve a market defined by geography, products, services or industry served.
Each of our businesses is positioned close to its customer base and participates in a niche market requiring specialized knowledge. This strategy of
decentralized operations allows each of our businesses to identify and respond quickly and effectively to changing market conditions and specific customer
needs, while capitalizing on the benefits of centralized capital, investment and reinsurance management, and corporate actuarial, financial, enterprise risk
management and compliance support.
Our business approach is focused on meeting the needs of our customers, maintaining a high quality balance sheet, and allocating capital to our best
opportunities. New businesses are started when opportunities are identified and when the right talent and expertise are found to lead a business. Of our 58
businesses, 51 have been organized and developed internally and seven have been added through acquisition.
Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for each of our reporting segments for each
of the past three years were as follows:
Year Ended December 31,
(In thousands)
2024
2023
2022
Net premiums written:
Insurance
$
10,549,550
$
9,560,533
$
8,609,028
Reinsurance & Monoline Excess
1,422,546
1,393,934
1,395,042
Total
$
11,972,096
$
10,954,467
$
10,004,070
Percentage of net premiums written:
Insurance
88.1 %
87.3 %
86.1 %
Reinsurance & Monoline Excess
11.9
12.7
13.9
Total
100.0 %
100.0 %
100.0 %
Thirty-three of our insurance company subsidiaries are rated by A.M. Best Company, Inc. ("A.M. Best") and have financial strength ratings of A+
(Superior) (the second highest rating out of 15 possible ratings). A.M. Best's ratings are based upon factors of concern to policyholders, insurance agents and
brokers and are not directed toward the protection of investors. A.M. Best states: “A Best's Financial Strength Rating (FSR) is an independent opinion of an
insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or
contracts and does not address any other risk.” A.M. Best reviews its ratings on a periodic basis, and its ratings of the Company's subsidiaries are therefore
subject to change.
Our twenty-three insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of A+ (the fifth highest rating out
of twenty-seven possible ratings).
Our Moody's financial strength ratings are A1 for Berkley Insurance Company, Berkley Regional Insurance Company and Admiral Insurance Company
(the fifth highest rating out of twenty-one possible ratings).
Our twenty-five insurance company subsidiaries rated by Fitch Ratings ("Fitch") have insurer financial strength ratings of AA- (the fourth highest rating
out of twenty-seven possible ratings).
6
The following sections describe our reporting segments and their businesses in greater detail. These businesses underwrite on behalf of one or more
affiliated insurance companies within the group. The businesses are identified for descriptive purposes only and are not legal entities, but for marketing
purposes may sometimes be referred to individually as "a Berkley company" or collectively as "Berkley companies." Unless otherwise indicated, all references
in this Form 10-K to “Berkley,” “we,” “us,” “our,” the “Company” or similar terms refer to W. R. Berkley Corporation together with its subsidiaries and
businesses. W. R. Berkley Corporation is a Delaware corporation formed in 1970.
Insurance
Our Insurance businesses underwrite predominantly commercial and specialty personal lines insurance business primarily throughout the United States.
Many units offer coverage globally, while others specialize in specific international markets. The Insurance businesses focus on the following general areas:
Excess & Surplus Lines: A number of our businesses are dedicated to the U.S. excess and surplus lines market. They serve a diverse group of customers
that often have complex risk or unique exposures that typically fall outside the underwriting guidelines of the standard insurance market. Lines of business
underwritten by our excess and surplus lines businesses include premises operations, auto, property, products liability, general liability and professional liability
lines. Products are generally distributed through wholesale agents and brokers.
Industry Specialty: Certain other businesses focus on providing specialty coverages to customers within a particular industry that are best served by
underwriters and claims professionals with specialized knowledge of that industry. They offer multiple lines of business with policies tailored to address the
unique exposures of these industries, often with the flexibility of providing coverages on either an admitted or a non-admitted basis in the U.S., as well as
internationally. Each business delivers its products through one or more distribution channels, including retail and wholesale agents, brokers, and managing
general agents (MGAs), depending on the customer and the particular risks insured.
Product Specialty: Other businesses specialize in providing specific lines of insurance coverage, such as workers’ compensation or professional liability,
to a wide range of customers. They offer insurance products, analytical tools and risk management services such as loss control and claims management that
enable clients to manage their risk appropriately. Business is typically written on an admitted basis, although some businesses may offer non-admitted products
in the U.S. and offer products internationally. Independent agents and brokers are the primary means of distribution.
Regional: Certain businesses offer standard insurance products and services focused on meeting the specific needs of a geographically differentiated
customer base. Key clients are small-to-midsized businesses. These regionally focused businesses provide a broad array of commercial insurance products to
customers primarily in 45 states and the District of Columbia and have developed expertise in niches that reflect local economies. They are organized
geographically in order to provide them with the flexibility to adapt quickly to local market conditions and customer needs.
In addition, through our non-U.S. insurance businesses, we have the capability to write business in 87 countries worldwide, with branches or offices in
40 cities outside the United States, in Asia, Australia, Canada, Continental Europe, Mexico, Scandinavia, South America and the United Kingdom. In each
geographic region in which we operate, we have built decentralized structures that allow products and services to be tailored to each regional customer base.
Our businesses are managed by teams of professionals with expertise in local markets and knowledge of regional environments.
In addition to providing insurance products, certain businesses also provide a wide variety of fee-based services, including claims, administrative and
consulting services.
Businesses comprising the Insurance segment are as follows:
Acadia Insurance is a Northeast regional property casualty underwriter offering a broad portfolio of products exclusively through local independent
agents in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. In addition to its general offerings, Acadia has
specialized expertise in insuring regional industries such as construction, service contractors, lumber, and transportation.
Admiral Insurance provides excess and surplus lines coverage for commercial risks that generally consist of hard-to- place, specialized risks that involve
moderate to high degrees of hazard. In both general liability and professional lines, Admiral has a broad line of products to meet the needs of existing as well as
emerging opportunities. The distribution of products is limited solely to wholesale brokers.
Berkley Accident and Health underwrites accident and health insurance and reinsurance products in four primary areas: medical stop loss, managed care,
special risk and group captive. It has a diversified product and service portfolio serving a range of clients from small employers, health care organizations, and
membership groups to Fortune 500 companies.
7
Berkley Agribusiness offers insurance for larger commercial risks across the United States involved in the supply, storage, handling, processing and
distribution of commodities related to the agriculture and food industries.
Berkley Alliance Managers offers tailored insurance coverages and comprehensive risk management solutions designed to enhance profitability and
reduce susceptibility to loss in four target markets - Design Professionals, Construction Professionals, Accounting Professionals and miscellaneous non-
medical Service Professionals.
Berkley Aspire provides excess and surplus lines coverage on a national basis to small to medium-sized insureds with low to moderate insurance risk. Its
product lines include general liability, excess liability and some property and inland marine coverage. It serves a limited distribution channel, including select
agents.
Berkley Asset Protection provides specialized insurance coverages for fine arts and jewelry exposures to commercial and individual clients.
Berkley Canada underwrites specialty, casualty and surety lines of business on behalf of the Canadian branch of Berkley Insurance Company. It
specializes in commercial casualty and professional liability, and offers a broad portfolio of risk products that include commercial general liability, umbrella,
professional liability, directors and officers, commercial property and surety, in addition to niche products for specific industries such as technology, life
sciences and travel.
Berkley Construction Solutions provides excess liability coverage to residential and commercial contractors on a project or practice basis.
Berkley Custom Insurance focuses on the excess casualty insurance market and offers umbrella and excess liability coverages to clients from the
small/middle market to Fortune 1000 companies in target classes of business including construction, manufacturing, retail/wholesale trade, finance, real estate,
public entities and oil & gas.
Berkley Cyber Risk Solutions focuses on insurance and risk management products that respond to the changing cyber security vulnerabilities of
organizations around the world. It offers specialty commercial cyber insurance coverages on a worldwide basis to clients of all sizes.
Berkley Enterprise Risk Solutions provides custom workers' compensation programs to large employers operating in a broad range of industries. Loss
sensitive and/or guaranteed cost programs are offered to employers with exposure predominately in California.
Berkley Entertainment underwrites property casualty insurance products, both on an admitted and non-admitted basis, for clients in the entertainment
industry and sports-related organizations.
Berkley Environmental underwrites casualty and specialty environmental products for environmental customers including contractors, consultants,
property owners and facilities operators.
Berkley Financial Specialists serves the insurance needs of companies predominantly in the financial services sector. Its Berkley Crime division
provides crime and fidelity related insurance products for commercial organizations, financial sector businesses and governmental entities on a primary and
excess basis. Its Financial Services segment provides management liability and fidelity products to financial institutions, insurance companies and asset
management firms.
Berkley Fire & Marine offers a broad range of preferred inland marine and related property risks and services to customers throughout the United States.
Products are distributed through independent agents and brokers.
Berkley Healthcare underwrites customized, comprehensive insurance solutions for the full spectrum of healthcare providers. Through Berkley
Healthcare Medical Professional, it offers a wide range of medical professional coverages. Through Berkley Healthcare Financial Lines, it offers a
comprehensive suite of financial lines coverages.
Berkley Human Services provides property casualty insurance coverages to human services organizations, including nonprofit and for-profit
organizations. Its product offerings include traditional primary and excess coverages.
Berkley Industrial Comp specializes in writing workers' compensation insurance for diverse high hazard industries in select states. Its products are
distributed by a select group of independent retail agents and wholesale brokers.
Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in North Asia and Southeast Asia through offices in Hong
Kong, India, Shanghai and Singapore.
Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity insurance for companies of all sizes.
Berkley Latinoamérica provides property, casualty, auto, surety, group life and workers' compensation products and services in Argentina, Brazil, the
Caribbean, Colombia, Mexico and Uruguay.
8
Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a global basis, including both
primary and excess product liability coverages. It serves pharmaceutical and biotech companies, medical device companies, dietary supplement companies,
medical and research related software developers, contract research and manufacturing organizations, research institutions and organizations, and other related
businesses.
Berkley Luxury Group provides both admitted and non-admitted commercial package insurance solutions for premium real estate business including
high-end cooperatives and condominiums, office buildings and upscale restaurants across major metropolitan markets throughout the continental U.S. It also
offers non-admitted excess property coverage for high-value properties on a shared and layered basis across the U.S.
Berkley Management Protection offers a modular suite of management liability products for small and middle market companies through a bespoke and
easy to use platform tailored to independent agents. The management liability coverages they provide include directors and officers, employment practices,
fiduciary, cyber, crime and miscellaneous professional liability.
Berkley Mid-Atlantic Group provides commercial property casualty coverages to a wide variety of businesses in Delaware, the District of Columbia,
Maryland, Ohio, Pennsylvania, and Virginia. Focusing on small and middle market accounts, it complements its standard writings with specialized products in
areas such as construction.
Berkley Net Underwriters focuses on small and medium-sized commercial risks, using a web-based system to allow producers to quote, bind and service
workers' compensation insurance products on behalf of Berkley member insurance companies.
Berkley North Pacific offers preferred insurance products and services to a broad range of small to medium size commercial entities. It operates through
independent agents in Idaho, Montana, Oregon, Utah and Washington.
Berkley Offshore Underwriting Managers is a specialist global underwriter of energy and marine risks. Its three divisions provide specialty insurance
products in the energy upstream, energy liability and marine sectors.
Berkley Oil & Gas provides property casualty products and risk services to the United States energy sector. Its customer base includes risks that work in
the oil patch, including operators, drillers, geophysical contractors, well-servicing contractors, and manufacturers/distributors of oil field products, as well as
those in the renewable energy sector.
Berkley One provides a customizable suite of personal lines insurance solutions including home, condo/co-op, auto, fine art and collectibles, liability,
collector vehicle and recreational marine. Berkley One targets high net worth individuals and families with sophisticated risk management needs.
Berkley Product Protection offers a broad product suite, including product liability and product recall and contamination, to assist clients in the
manufacturing, wholesale and import space with their risk management and insurance needs.
Berkley Professional Liability specializes in professional liability insurance for publicly-traded and private entities on a worldwide basis. Its liability
coverages include directors and officers, errors and omissions, fiduciary, employment practices, and sponsored insurance agents' errors and omissions. Berkley
Transactional, a division of Berkley Professional Liability, underwrites a full suite of transactional insurance products, including representations and warranties
insurance, and tax opinion insurance.
Berkley Public Entity specializes in providing excess coverage and services to individual governmental and scholastic entities and intergovernmental
risk sharing groups. Products include general liability, auto liability, law enforcement liability, public officials and educator's legal liability, employment
practices liability, incidental medical, property and crime.
Berkley Risk provides at-risk and alternative risk insurance program management services for a broad range of groups and individuals including public
entity pools, professional associations, and self-insured clients. As a third party administrator, it manages workers’ compensation, liability and property claims
nationwide.
Berkley Select specializes in underwriting professional liability insurance for law firms and accounting firms, as well as other professional firms and
their practices. It also offers executive liability products, including directors and officers liability, employment practices and fiduciary liability, to small to
middle market privately held and not-for-profit customers. Berkley Select provides these insurance products on both an admitted and surplus lines basis.
Berkley Small Business Solutions offers commercial insurance products for small businesses through a modern technology platform that leverages data
and analytics. Its initial product offering focuses on preferred risks in the non-fleet transportation market.
Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia, Mississippi, North Carolina, South
Carolina and Tennessee, specializing in small to mid-sized accounts.
9
Berkley Southwest offers preferred commercial property and casualty insurance products and services to a wide range of small to medium size
commercial entities with a focus on the construction, farm/ranch, retail and service industries. It operates through independent agents in Arizona, Arkansas,
New Mexico, Oklahoma and Texas.
Berkley Specialty Excess provides excess and surplus lines coverages for hard-to-place risks involved in moderate to high degrees of hazard. It focuses
on highly specialized risk exposures within specific industry verticals such as the environmental and energy industries. Its predominate focus is on providing
excess insurance; however, in some cases it provides highly specialized environmental primary products tailored to the individual risk. Products are distributed
through a minimal number of insurance brokers and agents that specialize in these industry verticals.
Berkley Surety provides a full spectrum of surety bonds for construction, environmental and commercial surety accounts in the U.S. and Canada, through
an independent agency and broker platform across seven field locations.
Berkley Technology Underwriters provides technology error & omission (TE&O) and first party cyber coverage along with traditional package, umbrella
and worker's compensation products. TE&O and cyber products provide industry specialization for both domestic and foreign technology, government
contracting, telecommunications, digital media, manufacturing and private equity firms.
Carolina Casualty is a national provider of primary commercial insurance products and services to the transportation industry. It underwrites on an
admitted basis in all 50 states and the District of Columbia. Its Berkley Prime Transportation business provides primary auto liability, auto physical damage
and general liability to a broad array of trucking operations.
Continental Western Group is a Midwest regional property and casualty insurance operation providing underwriting and risk management services to a
broad array of regional businesses in thirteen Midwest states. In addition to its generalist portfolio, Continental Western offers specialty underwriting solutions
for diversified agriculture, construction, light manufacturing, transportation, volunteer fire departments, rural utilities and public entities.
Gemini Transportation is a national provider of excess liability insurance for various domestic surface transportation businesses, including the railroad
industry as well as the trucking, busing and other industries that use rubber-wheeled vehicles for over-the-road use.
Intrepid Direct provides commercial insurance coverages through a direct distribution model focused on the franchise market, with specialties including
the restaurant, garage and fitness industries.
Key Risk specializes in writing workers' compensation insurance for diverse industries including healthcare, human services, transportation, temporary
staffing, professional employer organizations and contractors requiring coverage under the United States Longshore and Harbor Workers' Compensation Act
(USL&H). Its products are distributed by a select group of independent retail agents and wholesale brokers located throughout the United States.
Nautilus Insurance Group insures excess and surplus lines risks for small to medium-sized commercial risks with low to moderate susceptibility to loss.
It writes commercial excess and surplus lines business nationwide and admitted lines commercial business in a limited number of states. A substantial portion
of Nautilus' business is written through its close, long-standing network of general agents, who are chosen on a highly selective basis.
Preferred Employers Insurance focuses exclusively on workers' compensation products and services for businesses based in California. It serves a broad
spectrum of industries throughout the state.
Vela Insurance Services specializes in commercial casualty insurance on an excess and surplus lines basis. Its primary focus is on general liability
insurance for construction, manufacturing and general casualty clients as well as products liability and miscellaneous professional liability coverages
distributed through wholesale insurance brokers.
Verus Specialty Insurance offers tailored casualty, professional liability, and garage coverages, specializing in the excess and surplus lines market. It
primarily serves the construction, manufacturing, garage service and professional sectors through a selective wholesale broker network.
W R B Europe is comprised of specialist businesses offering a focused range of insurance products to markets in Continental Europe.
W / R / B Underwriting provides a broad range of insurance products to the Lloyd's marketplace, with a concentration in specialist classes of business
including property, professional indemnity and financial lines.
10
The following table sets forth the percentage of gross premiums written by each Insurance business:
Year Ended December 31,
2024
2023
2022
Acadia Insurance
5.4%
5.4%
5.3%
Admiral Insurance
7.3
7.0
6.3
Berkley Accident and Health
5.9
5.4
5.2
Berkley Agribusiness
0.6
0.8
0.8
Berkley Alliance Managers
2.3
2.4
2.8
Berkley Aspire
1.3
1.2
1.0
Berkley Asset Protection
0.9
0.9
1.0
Berkley Canada
1.0
1.0
1.2
Berkley Construction Solutions
0.7
0.6
0.4
Berkley Custom Insurance
2.9
2.9
3.2
Berkley Cyber Risk Solutions
0.7
0.8
0.9
Berkley Enterprise Risk Solutions
0.2
0.1
—
Berkley Entertainment
1.6
1.7
1.9
Berkley Environmental
7.3
6.7
5.7
Berkley Financial Specialists
0.6
0.6
0.6
Berkley Fire & Marine
0.8
0.9
0.8
Berkley Healthcare
1.2
1.5
1.8
Berkley Human Services
1.4
1.3
1.1
Berkley Industrial Comp
0.8
0.7
0.7
Berkley Insurance Asia
0.7
0.8
0.8
Berkley Insurance Australia
1.4
1.6
1.7
Berkley Latinoamérica
3.3
3.2
3.0
Berkley Life Sciences
0.5
0.5
0.5
Berkley Luxury Group
0.7
0.7
0.8
Berkley Management Protection
0.3
0.2
0.1
Berkley Mid-Atlantic Group
0.7
0.9
1.0
Berkley Net Underwriters
1.9
2.0
2.3
Berkley North Pacific
0.8
0.7
0.7
Berkley Offshore Underwriting Managers
1.4
1.5
1.5
Berkley Oil & Gas
1.8
3.0
3.5
Berkley One
3.7
2.6
1.8
Berkley Product Protection
0.4
0.3
0.3
Berkley Professional Liability
2.7
3.8
5.9
Berkley Public Entity
0.6
0.7
0.7
Berkley Risk
0.3
0.3
0.3
Berkley Select
1.8
1.9
1.8
Berkley Small Business Solutions
0.3
0.2
—
Berkley Southeast
2.2
2.3
2.2
Berkley Southwest
1.1
1.3
1.5
Berkley Specialty Excess
0.6
0.2
—
Berkley Surety
1.1
1.1
1.1
Berkley Technology Underwriters
0.6
0.6
0.6
Carolina Casualty
2.0
2.2
2.1
Continental Western Group
2.8
2.6
2.4
Gemini Transportation
2.8
3.0
3.1
Intrepid Direct
1.4
1.5
1.2
Key Risk
1.9
2.1
2.2
Nautilus Insurance Group
5.2
4.8
4.8
Preferred Employers Insurance
0.9
1.0
1.3
Vela Insurance Services
2.5
2.7
2.6
Verus Specialty Insurance
1.1
1.0
0.8
W R B Europe
1.2
1.1
1.1
W/R/B Underwriting
4.1
3.9
3.7
Other
2.3
1.8
1.9
Total
100.0%
100.0%
100.0%
11
The following table sets forth percentages of gross premiums written, by line, by our Insurance operations:
Year Ended December 31,
2024
2023
2022
Other liability
39.0%
38.7%
37.5%
Short-tail lines (1)
26.1
24.7
22.8
Auto
12.9
12.7
12.0
Professional liability
12.0
13.1
15.8
Workers' compensation
10.0
10.8
11.9
Total
100.0%
100.0%
100.0%
___________________
(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.
Reinsurance & Monoline Excess
We provide other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on either a portfolio basis,
through treaty reinsurance, or on an individual basis, through facultative reinsurance as well as certain program management businesses. Our monoline excess
operations solely retain risk on an excess basis.
Businesses comprising the Reinsurance & Monoline Excess segment are as follows:
Berkley Integrated Solutions offers specialized solutions to clients through facultative reinsurance, turnkey offerings and program management through
the following units: Berkley Re Solutions offers casualty facultative reinsurance products including automatic, semi-automatic and individual risk assumed to
clients on a direct basis through a nationwide network of regional offices. It also provides its customers with turnkey products such as cyber, employment
practices liability insurance, liquor liability insurance and violent events coverage to help enhance its clients' product offerings, along with underwriting,
claims, and actuarial consultation services. Berkley Program Specialists is a program management business offering both admitted and non-admitted insurance
support on a nationwide basis for commercial casualty and property program administrators with specialized insurance expertise.
Berkley Re America provides treaty and facultative reinsurance solutions on a variety of product lines through reinsurance brokers to companies whose
primary operations are within the United States and Canada.
Berkley Re Asia Pacific provides property and casualty reinsurance to the Asia Pacific marketplace. With offices in Brisbane, Sydney, Beijing and
Singapore, each branch focuses on excess of loss reinsurance, targeting both property and casualty treaty and facultative contracts, through multiple distribution
channels.
Berkley Re UK writes international property casualty treaty and property facultative accounts. Its territorial scope includes reinsured clients domiciled in
the United Kingdom, Europe, Africa, the Middle East and the Caribbean.
Lloyd's Syndicate 2791 Participation represents the Company's minority participation in a Lloyd's syndicate that writes a broad range of mainly short-
tail classes of business.
Midwest Employers Casualty offers tailored excess workers' compensation insurance coverage nationwide, as well as customized captive insurance
coverage to U.S. domiciled and offshore captives. It distributes its products through retail and wholesale agencies.
12
The following table sets forth the percentages of gross premiums written by each Reinsurance & Monoline Excess business:
Year Ended December 31,
2024
2023
2022
Berkley Integrated Solutions
14.1%
16.2%
22.5%
Berkley Re America
34.4
31.5
30.9
Berkley Re Asia Pacific
13.8
14.9
13.7
Berkley Re UK
9.9
10.6
11.3
Lloyd's Syndicate 2791 Participation
8.6
8.8
5.4
Midwest Employers Casualty
19.2
18.0
16.2
Total
100.0%
100.0%
100.0%
The following table sets forth the percentages of gross premiums written, by line, by our Reinsurance & Monoline Excess operations:
Year Ended December 31,
2024
2023
2022
Casualty
49.1%
54.1%
61.1%
Property
31.6
27.9
22.7
Monoline Excess
19.3
18.0
16.2
Total
100.0%
100.0%
100.0%
Results by Segment
Summary financial information about our segments is presented on a GAAP basis in the following table:
Year Ended December 31,
(In thousands)
2024
2023
2022
Insurance
Revenue
$
11,181,501
$
9,827,866
$
8,749,019
Income before income taxes
1,942,083
1,629,918
1,445,745
Reinsurance & Monoline Excess
Revenue
1,696,905
1,615,277
1,590,113
Income before income taxes
466,595
449,285
326,440
Other (1)
Revenue
760,346
699,795
827,367
Loss before income taxes
(144,185)
(324,800)
(52,504)
Total
Revenue
$
13,638,752
$
12,142,938
$
11,166,499
Income before income taxes
$
2,264,493
$
1,754,403
$
1,719,681
_______________________________________
(1) Represents corporate revenues and expenses, net investment gains and losses, and revenues and expenses from non-insurance businesses that are
consolidated for financial reporting purposes.
13
The table below represents summary underwriting ratios on a GAAP basis for our segments. Loss ratio is losses and loss expenses incurred expressed as
a percentage of net premiums earned. Expense ratio is policy acquisition and insurance operating expenses expressed as a percentage of net premiums earned.
Policy acquisition and insurance operating expenses do not include expenses related to insurance services or unallocated corporate expenses. Combined ratio is
the sum of the loss ratio and the expense ratio. The combined ratio represents a measure of underwriting profitability, excluding investment income. A number
in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit:
Year Ended December 31,
2024
2023
2022
Insurance
Loss ratio
62.8 %
62.3 %
61.4 %
Expense ratio
28.4
28.3
27.7
Combined ratio
91.2 %
90.6 %
89.1 %
Reinsurance & Monoline Excess
Loss ratio
54.7 %
54.3 %
61.0 %
Expense ratio
29.4
29.4
29.2
Combined ratio
84.1 %
83.7 %
90.2 %
Total
Loss ratio
61.8 %
61.3 %
61.3 %
Expense ratio
28.5
28.4
28.0
Combined ratio
90.3 %
89.7 %
89.3 %
Investments
Investment results, before income taxes, were as follows:
Year Ended December 31,
(In thousands)
2024
2023
2022
Average investments, at cost (1)
$
28,942,819
$
26,444,111
$
24,438,112
Net investment income (1)
$
1,333,161
$
1,052,835
$
779,185
Percent earned on average investments (1)
4.6 %
3.9 %
3.2 %
Net investment gains
$
117,708
$
47,042
$
202,397
Change in unrealized investment gains (losses) (2)
$
84,474
$
392,903
$
(1,248,128)
_______________________________________
(1) Includes investments, cash and cash equivalents, trading accounts receivable (payable) from brokers and clearing organizations, trading account securities
sold but not yet purchased and unsettled purchases.
(2) Represents the pre-tax change in unrealized investment gains (losses) for available for sale securities recognized in stockholders' equity.
For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend returns for the S&P 500 Index:
Year Ended December 31,
2024
2023
2022
Barclays U.S. Aggregate Bond Index
3.4 %
3.3 %
2.7 %
S&P 500 Index
1.7
2.0
1.3
The percentages of the fixed maturity portfolio categorized by contractual maturity, based on fair value, on the dates indicated, are set forth below.
Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay certain obligations.
®
®
14
Year Ended December 31,
2024
2023
2022
1 year or less
7.7%
9.2%
8.7%
Over 1 year through 5 years
40.5
46.2
47.2
Over 5 years through 10 years
17.4
21.2
23.4
Over 10 years
17.6
12.2
11.2
Mortgage-backed securities
16.8
11.2
9.5
Total
100.0%
100.0%
100.0%
At each of December 31, 2024, 2023 and 2022, the fixed maturity portfolio, including cash and cash equivalents, had an effective duration of 2.6
years, 2.4 years and 2.4 years, respectively.
Loss and Loss Expense Reserves
To recognize liabilities for unpaid losses, either known or unknown, insurers establish reserves, which is a balance sheet account representing
estimates of future amounts needed to pay claims and related expenses with respect to insured events which have occurred. Estimates and assumptions relating
to reserves for losses and loss expenses are based on complex and subjective judgments, often including the interplay of specific uncertainties with related
accounting and actuarial measurements. Such estimates are also susceptible to change as significant periods of time may elapse between the occurrence of an
insured loss, the report of the loss to the insurer, the ultimate determination of the cost of the loss and the insurer’s payment of that loss.
In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate payment based upon known
information about the claim at that time. The estimate represents an informed judgment based on general reserving practices and reflects the experience and
knowledge of the claims personnel regarding the nature and value of the specific type of claim. Reserves are also established on an aggregate basis to provide
for losses incurred but not reported (“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims, including legal
and other fees and general expenses of administrating the claims adjustment process. Reserves are established based upon the then current legal interpretation
of coverage provided.
In examining reserve adequacy, several factors are considered in estimating the ultimate economic value of losses. These factors include, among
others, historical data, legal developments, changes in social attitudes and economic conditions, including the effects of inflation. The actuarial process relies
on the basic assumption that past experience, adjusted judgmentally for the effects of current developments and anticipated trends, is an appropriate basis for
predicting future outcomes. Reserve amounts are necessarily based on management’s informed estimates and judgments using currently available data. As
additional experience and other data become available and are reviewed, these estimates and judgments may be revised. This may result in reserve increases or
decreases that would be reflected in our results in periods in which such estimates and assumptions are changed.
The risk and complexity of estimating loss reserves are greater when economic conditions are uncertain. It is especially difficult to estimate the impact
of inflation on loss reserves given the current economic environment and related government actions. Whereas a slowing economy would generally lead to
lower inflation or even deflation, increased government spending would generally lead to higher inflation. A change in our assumptions regarding inflation
would result in reserve increases or decreases that would be reflected in our earnings in periods in which such assumptions are changed.
Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what management expects the ultimate settlement
and claim administration will cost. While the methods for establishing the reserves are well tested over time, some of the major assumptions about anticipated
loss emergence patterns are subject to unanticipated fluctuation. These estimates, which generally involve actuarial projections, are based on management’s
assessment of facts and circumstances then known, as well as estimates of trends in claims severity and frequency, judicial theories of liability and other
factors, including the actions of third parties, which are beyond the Company’s control. These variables are affected by external and internal events, such as
inflation and economic volatility, judicial and litigation trends, reinsurance coverage, legislative changes and claim handling and reserving practices, which
make it more difficult to accurately predict claim costs. The inherent uncertainties of estimating reserves are greater for certain types of liabilities where long
periods of time elapse before a definitive determination of liability is made. Although the loss reserves included in the Company’s financial statements
represent management’s best estimates, setting reserves is inherently uncertain and the Company cannot provide assurance that its current reserves will prove
adequate in light of subsequent events.
15
The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted
was $1,358 million and $1,352 million at December 31, 2024 and 2023, respectively. The aggregate net discount for those reserves, after reflecting the effects
of ceded reinsurance, was $405 million and $390 million at December 31, 2024 and 2023, respectively. At December 31, 2024, discount rates by year ranged
from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.
Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2024) are excess workers’
compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess
workers’ compensation business are discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. These rates are
determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any
increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The
expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total
discounted reserves at December 31, 2024), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease.
These reserves are discounted at statutory rates permitted by the Department of Insurance of the State of Delaware.
To date, known environmental and asbestos claims have not had a material impact on the Company’s operations, because its subsidiaries generally did
not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986 when an absolute exclusion was
incorporated into standard policy language.
The Company’s net reserves for losses and loss expenses relating to environmental and asbestos claims on policies written before adoption of the
absolute exclusion was $16 million and $17 million at December 31, 2024 and 2023, respectively. The estimation of these liabilities is subject to significantly
greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted
actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of
litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are
highly uncertain.
The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the indicated years:
(In thousands)
2024
2023
2022
Net reserves at beginning of year
$
15,661,820
$
14,248,879
$
12,848,362
Net provision for losses and loss expenses:
Claims occurring during the current year (1)
7,083,999
6,311,780
5,774,713
Increase in estimates for claims occurring in prior years (2)
14,350
29,681
54,511
Loss reserve discount accretion
33,246
30,681
32,526
Total
7,131,595
6,372,142
5,861,750
Net payments for claims:
Current year
1,278,585
1,217,078
1,068,577
Prior years
4,205,845
3,764,532
3,279,333
Total
5,484,430
4,981,610
4,347,910
Foreign currency translation
(142,344)
22,409
(113,323)
Net reserves at end of year
17,166,641
15,661,820
14,248,879
Ceded reserves at end of year
3,201,389
3,077,832
2,762,344
Gross reserves at end of year
$
20,368,030
$
18,739,652
$
17,011,223
Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (2)
$
(14,350)
$
(29,681)
$
(54,511)
Retrospective premium adjustments for claims occurring in prior years (3)
18,782
10,782
18,106
Net premium and reserve development on prior years
$
4,432
$
(18,899)
$
(36,405)
____________________________________
16
(1) Claims occurring during the current year are net of loss reserve discounts of $49 million, $47 million and $35 million in 2024, 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 increased by $13 million in 2024, decreased by $13 million in 2023, and increased by $16 million in 2022.
(3) For certain retrospectively rated insurance policies and reinsurance agreements, changes in loss and loss expenses for prior years are offset by additional or
return premiums.
Also, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 13, Reserves for Losses and Loss
Expenses included in our audited consolidated financial statements for further information regarding the changes in estimates for claims occurring in prior
years.
A reconciliation between the reserves as of December 31, 2024 as reported in the accompanying consolidated GAAP financial statements and those
reported on the basis of statutory accounting principles (“SAP”) in the Company’s U.S. regulatory filings is as follows:
(In thousands)
Net reserves reported in U.S. regulatory filings on a SAP basis
$
16,328,835
Reserves for non-U.S. companies
922,868
Loss reserve discounting (1)
(92,921)
Ceded reserves
3,201,389
Allowance for expected credit losses on due from reinsurers
7,859
Gross reserves reported in the consolidated GAAP financial statements
$
20,368,030
_________________________
(1) For statutory purposes, the Company discounts its workers’ compensation reinsurance reserves at 2.5% as prescribed or permitted by the Department of
Insurance of the State of Delaware. In its GAAP financial statements, the Company discounts excess workers’ compensation reserves at the risk-free rate
and assumed workers’ compensation reserves at the statutory rate.
Reinsurance
We follow a common industry practice of reinsuring a portion of our exposures and paying to reinsurers a portion of the premiums received on the
policies that we write. Reinsurance is purchased principally to reduce net liability on individual risks and to protect against catastrophic losses. Although
reinsurance does not legally discharge an insurer from its primary liability for the full amount of the policies, it does make the assuming reinsurer contractually
liable to the insurer to the extent of the reinsurance coverage. We monitor the financial condition of our reinsurers and attempt to place our coverages only with
substantial, financially sound carriers. As a result, generally the reinsurers who reinsure our casualty insurance must have an A.M. Best rating of “A
(Excellent)” or better with at least $1 billion in policyholder surplus and the reinsurers who cover our property insurance must have an A.M. Best rating of “A-
(Excellent)” or better with at least $1 billion in policyholder surplus.
Regulation
U.S. Regulation
Our U.S. insurance subsidiaries are principally regulated by their domiciliary state insurance departments and are subject to varying degrees of
regulation and supervision in the other U.S. jurisdictions in which they do business. As of January 1, 2025, there are six domiciliary states related to our U.S.
insurance subsidiaries.
Overview. Our domestic insurance subsidiaries are subject to statutes which delegate regulatory, supervisory and administrative powers to state
insurance commissioners. This regulation relates to such matters as the standards of solvency which must be met and maintained; the licensing of insurers and
their agents; the nature of and limitations on investments; deposits of securities for the benefit of policyholders; approval of certain policy forms and premium
rates; periodic examination of the affairs of insurance companies; annual and other reports required to be filed on the financial condition of insurers or for other
purposes; establishment and maintenance of reserves for unearned premiums, loss expenses and losses; and requirements regarding numerous other matters.
Our property casualty subsidiaries, other than our excess and surplus lines and reinsurance subsidiaries, must generally file all rates with the insurance
department of each state in which they operate. Our excess and
surplus lines and reinsurance subsidiaries generally operate free of rate and form regulation.
17
Holding Company Statutes. In addition to regulatory supervision of our insurance subsidiaries, we are subject to state statutes governing insurance
holding company systems. Under the terms of applicable state statutes, any person or entity desiring to purchase more than a specified percentage (commonly
10%) of our outstanding voting securities would be required to obtain prior regulatory approval of the purchase. Typically, such statutes require that we
periodically file information with the appropriate domiciliary state insurance commissioner, including information concerning our capital structure, ownership,
financial condition and general business operations.
We are required to submit to the Delaware Department of Insurance, the lead state regulator for our group, an annual “enterprise risk management
report,” which identifies the activities and circumstances of any affiliated company that might have a material adverse effect on the financial condition of our
group or our U.S. licensed insurers. We must also annually submit to the Delaware Department of Insurance an Own Risk and Solvency Assessment Summary
Report (“ORSA Report”), which is a confidential internal assessment of the material and relevant risks associated with an insurer’s current business plan and
the sufficiency of capital resources to support those risks. We are required to, at least annually, conduct an Own Risk and Solvency Assessment regarding the
adequacy of our risk management framework and our current, and estimated projected future, solvency position. We must internally document the process and
results of the assessment.
Under the National Association of Insurance Commissioners (the “NAIC”) model holding company act adopted by the states, U.S. insurance regulators
are authorized to lead or participate in the group-wide supervision of internationally active insurance groups (“IAIG”). In November 2019, the International
Association of Insurance Supervisors (“IAIS”), an international standard setter, adopted a global framework for the supervision of IAIGs, as discussed below
under “International Regulation.” In December 2024, the IAIS adopted a risk-based, group-wide global insurance capital standard (“ICS”) applicable to IAIGs.
IAIS member states, including the U.S., will now update their domestic insurance group capital requirements where necessary to fully reflect the ICS. We
received notice from the Delaware Department of Insurance in 2024 that we are considered an IAIG. As an IAIG, we may be subject to international oversight
coordinated by the Delaware Department of Insurance.
In the United States, the NAIC has developed a group capital calculation tool that uses a risk-based capital aggregation methodology to aggregate the
available capital and the minimum capital of each entity in an insurance group regardless of their structure. The NAIC has indicated that it intends to work
domestically on its approach to the group capital aggregation method with respect to U.S. implementation of the ICS. Delaware has adopted the NAIC
amendments to the model holding company act and regulation that require the ultimate controlling person of an insurer subject to holding company registration
to submit the group capital calculation filing annually with its lead state regulator.
Cybersecurity Regulations. New York’s cybersecurity regulation applies to financial services institutions authorized by the New York State Department
of Financial Services (the “NYDFS”), including our insurance subsidiaries licensed in New York. The regulation requires these entities to assess risks
associated with their information systems and establish and maintain a cybersecurity program reasonably designed to protect consumers’ private data and the
confidentiality, integrity and availability of the licensee’s information systems. The NYDFS has adopted amendments to New York’s cybersecurity regulation,
which require additional reporting, governance and oversight measures, and enhanced cybersecurity safeguards to be implemented. The amendments take
effect in phases that began in 2023 and continue through 2025.
The NAIC has adopted the Insurance Data Security Model Law (the “Cybersecurity Model Law”) for consideration by state legislatures, which
establishes standards for data security, the investigation of cybersecurity events involving the unauthorized access to, or misuse of, certain nonpublic
information, and reporting to insurance commissioners. The Cybersecurity Model Law imposes significant regulatory burdens intended to protect the
confidentiality, integrity and availability of information systems. The Cybersecurity Model Law, or a form thereof, has been adopted by several states,
including three of our U.S. insurance subsidiaries’ domiciliary states. A drafting note in the Cybersecurity Model Law states that a licensee’s compliance with
New York's cybersecurity regulation is intended to constitute compliance with the Cybersecurity Model Law, but compliance remains a state-by-state issue
requiring consideration of any state differences in implementation and enforcement of the Cybersecurity Model Law.
Certain other states have enacted or are considering laws and regulations related to privacy and data security. For example, the California Consumer
Privacy Act (“CCPA”), broadly regulates the collection, processing and disclosure of California residents’ personal information, imposes limits on the “sale” of
personal information and grants California residents certain rights to, among other things, access and delete data about them in certain circumstances. The
CCPA also established a private right of action, with potentially significant statutory damages, whereby businesses that fail to implement reasonable security
measures to protect against breaches of personal information could be liable to affected California consumers. California subsequently enacted the California
Privacy Rights Act (“CPRA”), which imposed additional limitations and obligations with respect to covered businesses’ use and sharing of certain personal
data. Compliance with the CCPA/CPRA may increase the cost of providing our products and services in California. An increasing number of U.S. states have
adopted,
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or are considering legislation similar to the CCPA. Additionally, the NAIC is developing amendments to update the Privacy of Consumer Financial and Health
Information Regulation to reflect the extensive innovations in communications and technology since its adoption. The proposed amendments would expand the
definition of nonpublic personal information; add consumer rights to request access, correction and deletion of nonpublic personal information; and add
requirements for contracts with third-party service providers. The deadline to finalize the amendments was recently extended until December 31, 2025.
We cannot predict the impact, if any, that any current, proposed or future federal or state cybersecurity laws or regulations will have on our business,
financial condition or results of operations.
Innovation and Technology. As a result of increased innovation and use of technology in the insurance sector, the NAIC and insurance regulators have
been focusing on the use of “big data” technologies, such as artificial intelligence, machine learning and automated decision-making. In December 2023, the
NAIC adopted the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers (the “AI Bulletin”). The AI Bulletin may be adopted and issued by
state regulators to licensed insurers. In addition to affirming that the use of artificial intelligence must comply with existing state law, the AI Bulletin sets forth
regulators’ expectations on how insurers will develop, acquire and use artificial intelligence technologies including around the use of third-party data and
models. In 2024, the NAIC formed a new task force to develop and propose a regulatory framework for the oversight of insurers’ use of third-party data and
predictive models, the drafting of which is expected to begin in 2025.
The NAIC and state insurance regulators are also focused on addressing unfair discrimination by insurers in the use of consumer data and technology,
and certain states have passed laws or are considering action targeting unfair discrimination practices. For example, Colorado has enacted a law that prohibits
insurers from using external consumer data and information sources (“ECDIS”), as well as algorithms or predictive models that use ECDIS, in a way that
unfairly discriminates based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity or gender expression. The
Colorado Division of Insurance adopted regulations requiring life insurers to adopt a governance and risk management framework for the use of artificial
intelligence, machine learning and other technologies that utilize “external consumer data.” In December 2024, the Colorado Division of Insurance released a
draft proposed amendment to bring passenger automobile and health benefit plan insurers within its scope. It is expected that Colorado will further adopt
governance and testing regulations for other lines of insurance. Similarly, in July 2024, the NYDFS issued Insurance Circular Letter 7 on the Use of Artificial
Intelligence and External Consumer Data and Information Sources in Insurance Underwriting and Pricing, which applies to our insurance subsidiaries licensed
in New York. Circular Letter 7 sets forth fairness principles, transparency requirements, and governance and risk management responsibilities for insurers
under NYDFS’ jurisdiction that develop and/or use ECDIS, artificial intelligence systems, and other predictive models in underwriting and pricing insurance
policies and annuity contracts.
We cannot predict whether states will adopt the AI Bulletin or a similar regulation, or what, if any, changes to laws or regulations may be enacted with
regard to “big data” or artificial intelligence technologies.
Risk-Based Capital Requirements. The NAIC utilizes a Risk-Based Capital (“RBC”) formula that is designed to measure the adequacy of an insurer's
statutory surplus in relation to the risks inherent in its business. The RBC formula develops a risk adjusted target level of adjusted statutory capital by applying
certain factors to various asset, premium and reserve items. The NAIC RBC Model Law provides for four incremental levels of regulatory attention for insurers
whose surplus is below the calculated RBC target. These levels of attention range in severity from requiring the insurer to submit a plan for corrective action to
actually placing the insurer under regulatory control. The RBC of each of our domestic insurance subsidiaries was above the calculated RBC target level as of
December 31, 2024.
Insurance Regulatory Information System. The NAIC also has developed a set of 13 financial ratios for property and casualty insurers referred to as
the Insurance Regulatory Information System (“IRIS”). On the basis of statutory financial statements filed with state insurance regulators, the NAIC annually
calculates these IRIS ratios to assist state insurance regulators in monitoring the financial condition of insurance companies. The NAIC has established an
acceptable range for each of the IRIS financial ratios.
Guaranty Funds. Our U.S. insurance subsidiaries are also subject to assessment by state guaranty funds in states where we transact admitted business
when an insurer in a particular jurisdiction has been judicially declared insolvent and the insolvent company's available funds are insufficient to pay
policyholders and claimants the amounts to which they are entitled. The protection afforded under a state's guaranty fund to policyholders of the insolvent
insurer varies from state to state. Generally, all licensed property casualty insurers are considered to be members of the fund, and assessments are based upon
their pro rata share of direct written premiums in that state. The NAIC Post-Assessment Property and Liability Insurance Guaranty Association Model Act, a
version of which has been adopted by all states, limits assessments to 2% of an insurer’s subject premiums and permits recoupment of assessments through rate
setting. Likewise, several states (or underwriting organizations of which our insurance subsidiaries are required to be members) have limited assessment
authority with regard to deficits in certain lines of business.
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Additionally, state insurance laws and regulations require us to participate in mandatory property-liability “shared market,” “pooling” or similar
arrangements that provide certain types of insurance coverage to individuals or others who otherwise are unable to purchase coverage voluntarily provided by
private insurers. Shared market mechanisms include assigned risk plans and fair access to insurance requirement or “FAIR” plans. In addition, some states
require insurers to participate in reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling
mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific mechanism in the applicable state.
Dividends. We receive funds from our insurance company subsidiaries in the form of dividends and management fees for certain management
services. Annual dividends in excess of maximum amounts prescribed by state statutes may not be paid without the approval of the insurance commissioner of
the state in which an insurance subsidiary is domiciled. See “Management's Discussion and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources.”
Trade Practices. State insurance laws and regulations include numerous provisions governing trade practices and the marketplace activities of
insurers, including provisions governing marketing and sales practices, policyholder services, claims management and complaint handling. State regulatory
authorities generally enforce these provisions through periodic market conduct examinations.
Investment Regulation. Investments by our domestic insurance companies must comply with applicable laws and regulations which prescribe the kind,
quality and concentration of investments. In general, these laws and regulations permit investments in federal, state and municipal obligations, corporate bonds,
preferred and common equity securities, mortgage loans, real estate and certain other investments, subject to specified limits and certain other qualifications.
Investments that do not comply with these limits and qualifications are deducted in our insurance subsidiaries' calculation of their statutory capital and surplus.
Terrorism Risk Insurance. The Terrorism Risk Insurance Act of 2002 established a Federal program that provides for a system of shared public and
private compensation for insured losses resulting from acts of terrorism. Pursuant to the Terrorism Risk Insurance Program Reauthorization Act of 2019
(“TRIPRA”), the program was extended until December 31, 2027.
TRIPRA provides a federal backstop to all U.S. based property and casualty insurers for insurance related losses resulting from any act of terrorism on
U.S. soil or against certain U.S. air carriers, vessels or foreign missions. TRIPRA is applicable to almost all commercial lines of property and casualty
insurance but excludes auto, burglary and theft, surety, workers' compensation, professional liability and farm owners' multi-peril insurance. Insurers with
direct commercial property and casualty insurance exposure in the United States are required to participate in the program and make available coverage for
certified acts of terrorism. TRIPRA's definition of certified acts includes domestic terrorism. Federal participation will be triggered under TRIPRA when the
Secretary of Treasury certifies an act of terrorism.
Under the program, the federal government will pay 80% of an insurer's covered losses in excess of the insurer's applicable deductible. The insurer's
deductible is calculated as 20% of earned premium for the prior year for covered lines of commercial property and casualty insurance. Based on our 2024
earned premiums, our aggregate deductible under TRIPRA during 2025 will be approximately $1,663 million. The federal program will not pay losses for
certified acts unless such losses exceed $200 million industry-wide for any calendar year. TRIPRA limits the federal government's share of losses at
$100 billion for a program year. In addition, an insurer that has satisfied its deductible is not liable for the payment of losses in excess of the $100 billion cap.
Excess and Surplus Lines. The regulation of our U.S. subsidiaries' excess and surplus lines insurance business differs significantly from the regulation
of our admitted business. Our surplus lines subsidiaries are subject to the surplus lines regulation and reporting requirements of the jurisdictions in which they
are eligible to write surplus lines insurance. Although surplus lines business is generally less regulated than admitted business, principally with respect to rates
and policy forms, strict regulations apply to surplus lines placements in the laws of every state and the regulation of surplus lines insurance may undergo
changes in the future. Federal or state measures may be introduced to increase the oversight of surplus lines insurance in the future.
Climate Change and Financial Risks. The NAIC and state insurance regulators continue to evaluate issues related to the management of climate risk.
In 2022, the NAIC adopted a new standard for insurance companies to report their climate-related risks as part of its annual Climate Risk Disclosure Survey,
which applies to insurers that meet the reporting threshold of $100 million in U.S. direct premium and are licensed in one of the participating jurisdictions. The
NYDFS’s 2020 circular letter, which applies to our insurance subsidiaries licensed in New York, states that regulated insurers are expected to integrate financial
risks related to climate change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their
approach to climate-related financial disclosure. For example, an insurer should designate a board member or board committee, as well as a senior management
function, to oversee the management of financial risks
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associated with climate change. The NYDFS also adopted an amendment to the regulation governing enterprise risk management, which applies to our
insurance subsidiaries licensed in New York, that requires an insurance group's enterprise risk management function to address certain additional risks,
including climate change risk.
In addition, the Federal Insurance Office (the “FIO”) is authorized to monitor the U.S. insurance industry under the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as discussed below under “Federal Regulation.” Pursuant to this statutory authority, the FIO is
assessing how the insurance sector may mitigate climate risks and help achieve national climate-related goals. In June 2023, the FIO released a report urging
insurance regulators to adopt climate-related risk-monitoring guidance in order to enhance their regulation and supervision of insurers.
In 2023, California adopted laws establishing climate disclosure and climate-related financial risk reporting requirements that apply to companies doing
business in California that meet applicable revenue thresholds. The Company may be subject to the disclosure requirements of the Climate Corporate Data
Accountability Act, requiring entities with more than $1.0 billion in annual revenue to annually disclose emissions on a phased timeline.
Diversity and Corporate Governance.The NAIC and state insurance regulators also continue to evaluate issues related to diversity within the
insurance industry, such as the diversity of an insurer’s board of directors and management. In March 2021, the NYDFS issued a circular letter stating that it
expects the insurers it regulates, such as our insurance subsidiaries licensed in New York, to make diversity of their leadership a business priority and a key
element of their corporate governance, and it includes diversity-related questions in its examination process. In addition, the NAIC is examining practices in
the insurance industry in order to determine how barriers are created that disadvantage or discriminate against people of color or historically underrepresented
groups. NAIC goals include improving access to different types of insurance products in minority communities, addressing issues related to affordability, and
providing guidance to regulators on ways to improve insurance access and the understanding of insurance in underserved communities. See “Human Capital
Resources” below.
Federal Regulation. The federal government and its regulatory agencies generally do not directly regulate the business of insurance, although federal
initiatives could have an impact on our business in a variety of ways. The Dodd-Frank Act effected sweeping changes to financial services regulation in the
United States, and created two new federal government bodies, the FIO and the Financial Stability Oversight Council (the “FSOC”). The FIO does not have
general supervisory or regulatory authority over the business of insurance, although it has preemption authority over state insurance laws that conflict with
certain international agreements, as discussed below. The FIO also has authority to represent the United States in international insurance matters and is
authorized to monitor the U.S. insurance industry and identify potential regulatory gaps that could contribute to systemic risk.
The Dodd-Frank Act authorizes the Secretary of the Treasury and U.S. Trade Representative to enter into international agreements of mutual
recognition regarding the prudential regulation of insurance or reinsurance. The U.S. and the European Union ("EU") signed such a covered agreement (the
"EU Covered Agreement") in September 2017, which addresses three areas of prudential supervision: reinsurance, group supervision and the exchange of
information between the U.S. and EU.
In December 2018, the U.S. Department of the Treasury and the Office of the U.S. Trade Representative entered into a covered agreement with the
U.K. (the “U.K. Covered Agreement,” and together with the EU Covered Agreement, the “Covered Agreements”) in anticipation of the U.K.’s exit from the
EU. The U.K. Covered Agreement largely reflects the provisions of the EU Covered Agreement and incorporates the same timeframes within it.
Under the Dodd-Frank Act, the FIO has preemption authority over state insurance laws that conflict with the Covered Agreements as of September 1,
2022, such as state credit for reinsurance laws that result in non-U.S. reinsurers subject to the Covered Agreements being treated less favorably than U.S.
reinsurers. The NAIC amended its Credit for Reinsurance Model Law to satisfy the substantive and timing requirements of the Covered Agreements, which
amendments have been enacted by all states. On September 30, 2023, the FIO reported that it did not recommend taking any preemption action as a result of
inconsistency between the Covered Agreements and state credit for reinsurance laws. Under the Covered Agreements, reinsurance collateral requirements no
longer apply to qualifying EU and U.K. reinsurers. The amended Credit for Reinsurance Model Law also extends the zero reinsurance collateral provisions in
the Covered Agreements to qualified reinsurers domiciled in U.S. jurisdictions that are accredited by the NAIC and to non-U.S. jurisdictions that have not
entered into a covered agreement with the U.S. but which the NAIC has identified as “reciprocal jurisdictions” pursuant to the NAIC Qualified Jurisdiction
Process.
We cannot currently predict the impact of these changes to the law or whether any other covered agreements will be successfully adopted, and cannot
currently estimate the impact of these changes to the law and any such adopted covered agreements on our business, financial condition or operating results.
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The Dodd-Frank Act authorizes the FSOC to designate an insurer as a “systemically important financial institution” or a “non-bank SIFI” if the
insurer’s material financial distress could pose a systemic risk to the financial system or the nature or scale of its activities could pose a threat to U.S. financial
stability. The FIO can recommend that an insurer be designated as a non-bank SIFI, which would subject the company to Federal Reserve supervision and
heightened prudential standards. There are currently no such non-bank SIFIs designated by the FSOC. In November 2023, the FSOC adopted final guidance
that establishes a new process for designating certain financial companies as non-bank SIFIs. The revised process is based on the consideration of risk factors
set forth in a new analytic framework, which describes how the FSOC intends to monitor a broad range of institutions and activities and respond to potential
risks to U.S. financial stability. The financial vulnerabilities that most often contribute to this type of risk include leverage, liquidity risk and maturity
mismatch, inadequate risk management, concentration and destabilizing activities. Under the new guidance, the FSOC is no longer required to conduct a cost-
benefit analysis and an assessment of the likelihood of a non-bank financial company’s material financial distress before considering the designation of the
company. The revised process could have the effect of simplifying and shortening FSOC’s procedures for designating certain financial companies as non-bank
SIFIs.
Based upon our current business model and balance sheet, we do not believe that we will be designated by the FSOC as such an institution. Although
the potential impact of any future amendments to the Dodd-Frank Act on the U.S. insurance industry is not clear, our business could be affected by changes to
the U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as non-bank SIFIs.
International Regulation
Our insurance subsidiaries based in the United Kingdom are regulated by the Prudential Regulation Authority (“PRA”) and/or the Financial Conduct
Authority (“FCA”). The PRA’s primary objectives with regard to insurers are to promote the safety and soundness of insurers and to contribute to the securing
of an appropriate degree of protection for current and future policyholders. The FCA has three operational objectives: (i) to secure an appropriate degree of
protection for consumers, (ii) to protect and enhance the integrity of the United Kingdom’s financial system, and (iii) to promote effective competition in the
interests of consumers in the financial services markets. The PRA and FCA employ a variety of regulatory tools to achieve their objectives, including periodic
auditing and reporting requirements, risk assessment reviews, minimum solvency margins and individual capital assessment requirements, dividend
restrictions, in certain cases, approval requirements governing the appointment of key officers, approval requirements governing controlling ownership
interests and various other requirements.
Our Lloyd’s managing agency is also regulated by Lloyd’s, and the Lloyd’s syndicate business is subject to Lloyd’s supervision. Through Lloyd’s, we
are licensed to write business in various countries throughout the world by virtue of Lloyd’s international licenses. In each such country, we are subject to the
laws and insurance regulation of that country. Our insurance subsidiary based in Liechtenstein is regulated by the Financial Market Authority of Liechtenstein
("FMA"), which has regulatory tools analogous to those of the U.K. regulators noted above.
Additionally, U.K. and Liechtenstein laws and regulations also impact us as “controllers” of our European-regulated subsidiaries, whereby we are
required to notify the appropriate authorities about significant events relating to such regulated subsidiaries’ controllers (i.e. persons or entities which have
certain levels of direct or indirect voting power or economic interests in the regulated entities) as well as changes of control, and to submit annual reports
regarding their controllers. The PRA/FCA’s Senior Managers and Certification Regime and analogous regulation in Liechtenstein further provide regulatory
frameworks for standards of fitness and propriety, conduct and accountability for individuals in positions of responsibility at insurers. In addition, certain
employees are individually registered at Lloyd’s.
Our insurance business throughout the EU and EEA is subject to “Solvency II,” an insurance regulatory regime governing, among other things, capital
adequacy and risk management. Following the U.K.’s withdrawal from the EU, or Brexit, our Lloyd’s managing agency (and the U.K. branch of our
Liechtenstein subsidiary) are now subject to a separate U.K. prudential regime, which derives from Solvency II but has recently begun to diverge from it.
Accordingly, the U.K.’s HM Treasury revoked all U.K. insurance legislation derived from EU law (referred to as Solvency II “assimilated law”) effective
December 31, 2024, and broadly reinstated it via additional rules, which will eventually be known as “Solvency U.K.” Additionally, in December 2023, the
U.K. adopted legislative reforms that amended various parts of the U.K.’s prudential regime, including the risk margin, matching adjustment requirements and
regulatory reporting obligations. The PRA also has amended parts of its Rulebook, to reduce the overall regulatory burden on U.K. authorized insurers and to
make the U.K. market more internationally competitive. The PRA’s amendments took effect throughout 2024.
Similarly, the EU’s legislative bodies have undertaken a review of Solvency II and have adopted revisions to the current Solvency II rules. EU
member states have until the end of January 2027 to implement these amendments into their respective domestic legislation.
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Solvency II provides for the supervision of group solvency. Under Solvency II, it is possible that the U.S. parent of a European Union subsidiary could
be subject to certain Solvency II requirements if the U.S. company is not already subject to regulations deemed “equivalent” to Solvency II. Currently, the U.S.
system of insurance regulation relating to group supervision is not deemed “equivalent” to Solvency II by European Union authorities. The PRA will also
perform separate, but comparable, supervision of group solvency under the U.K.’s own domestic prudential regime where a U.S. holding company is a parent
of a subsidiary U.K. insurer or reinsurer.
The Liechtenstein financial services regulator, the FMA, is the group supervisor for our European-regulated subsidiaries. However, the Covered
Agreements prohibit any EU supervisor or the PRA (as applicable) from exercising group- wide supervision at any level above the highest company organized
in the country of that supervisor.
We must also comply with the EU General Data Protection Regulation (EU) 2016/879) (“GDPR”), including EEA member state legislation
implementing the GDPR. The regulation’s goal is to impose increased individual rights and protections for all personal data located in or originating from the
EU. The Data Protection Act 2018 and the U.K. General Data Protection Regulation, which is the retained EU law version of the GDPR by virtue of the
European Union (Withdrawal) Act 2018 and as amended by the Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit)
Regulations 2019 (together, “U.K. GDPR”), regulate data protection for all individuals within the U.K. Both the GDPR and the U.K. GDPR are extraterritorial
in that they apply to all businesses in the EU and the U.K. respectively, and any business outside the EU and the U.K. that offers services, or monitors the
behavior of individuals, in the EU and/or U.K., and that processes the personal data of individuals in the EU and/or the U.K. Moreover, there are significant
fines associated with non-compliance. In particular, we need to monitor our compliance with all relevant member states’ laws and regulations, including where
permitted derogations from the GDPR and the U.K. GDPR are introduced. The introduction of the GDPR and the U.K. GDPR, and any resultant changes in EU
member states’ or U.K. national laws and regulations, has increased our compliance obligations and has necessitated the review and implementation of policies
and processes relating to our collection and use of data, and has required us to change our business practices regarding these matters.
In addition, we may become subject to or affected by regulatory policies adopted by the IAIS, an international standard setter consisting of supervisors
and regulators from more than 200 jurisdictions. The aim of the IAIS is to develop and assist in the implementation of effective and consistent regulation of
insurer solvency standards and group supervision of insurance groups in response to the increasing globalization of the insurance sector. In November 2019, the
IAIS formally adopted a global framework for the supervision of IAIGs, which is referred to as the Common Framework for the Supervision of Internationally
Active Insurance Groups, or “ComFrame.” ComFrame is intended to provide a framework of basic standards for IAIGs and a process for supervisors to
cooperate in the supervision of IAIGs. Also in November 2019, the IAIS agreed to a version of a risk-based group-wide global insurance capital standard
(“ICS”) that was intended to apply to IAIGs and ultimately form a part of ComFrame. The ICS was adopted by the IAIS in December 2024 as a group-wide
prescribed capital requirement for IAIGs and integrated into the rest of ComFrame. IAIS member states will now update their domestic insurance capital
requirements where necessary to fully reflect the ICS.
The IAIS has also separately concluded that an aggregation method approach to a group capital standard, which forms part of the NAIC’s group
capital calculation, could provide a basis of the implementation of the ICS that would produce comparable outcomes to the ICS. In reaching this determination,
the IAIS also highlighted certain areas where it will be necessary for the U.S. to undertake further work as part of implementing the aggregation method to
ensure convergence with the ICS. The NAIC has indicated that it intends to work domestically on its approach to the aggregation method as the U.S.
implementation of the ICS and will collaborate with the IAIS. Once finalized and implemented, the aggregation method could thereafter be used by US-
headquartered IAIGs as a method of group solvency calculation. We have received notice from Delaware, our lead state insurance regulator, that we are
considered an IAIG. As an IAIG, we may be subject to international oversight coordinated by the Delaware Department of Insurance.
Our international operations are also subject to varying degrees of regulation in Mexico, Australia and Canada and in certain other countries in Europe,
South America, and Southeast Asia. Generally, our subsidiaries must satisfy local regulatory requirements. While each country imposes licensing, solvency,
auditing and financial reporting requirements, the type and extent of the requirements differ substantially. Key areas where country regulations may differ
include: (i) the type of financial reports to be filed; (ii) a requirement to use local intermediaries; (iii) the amount of reinsurance permissible; (iv) the scope of
any regulation of policy forms and rates; and (v) the type and frequency of regulatory examinations.
Our international operations are also subject to increasing regulation governing the management of climate risk. In the United Kingdom, the PRA
recognizes that climate change represents both an underwriting and investment risk, and that losses can be incurred from physical climate change-related
changes and the global adjustment towards a low-carbon economy. Insurers are therefore expected to reflect the consideration of the financial risks from
climate change in their governance arrangements, including allocating responsibility for managing these risks to identified senior management and committees.
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Insurers must also monitor and manage the financial risk posed by climate change as part of their risk management frameworks, which would involve scenario
testing over a range of time horizons and reporting to the board on identified risks. Financial risks from climate change should also form part of insurers’ public
regulatory disclosures.
Similarly, the EU’s latest revisions to Solvency II contain specific regulations relating to the management of climate and environmental risks. When
implemented into EU member states’ legislation, insurers must incorporate these risks into their own risk and solvency assessments and perform stress testing
on the impact of long-term climate change scenarios on their business. Insurers would also need to include information on any material exposure to climate
change-related risks in their public regulatory disclosures. The updated Solvency II text requires the European Insurance and Occupational Pensions Authority,
the supervisory authority for the EU insurance industry, to periodically (and at least every five years) review the scope and calibration of the natural catastrophe
risk module used in the standard formula for calculating insurers’ capital requirements using the latest available climate science.
Competition
The property casualty insurance and reinsurance businesses are highly competitive, with many insurance companies of various sizes, as well as other
entities offering risk alternatives such as self-insured retentions or captive programs, transacting business in the United States and internationally. We compete
directly with a large number of these companies. Competition in our industry is largely measured by the ability to provide insurance and services at a price and
on terms that are reasonable and acceptable to the customer. Our strategy in this highly fragmented industry is to seek specialized areas or geographic regions
where our businesses can gain a competitive advantage by responding quickly to changing market conditions. Our businesses establish their own pricing
practices based upon a Company-wide philosophy to price products with the intent of making an underwriting profit.
Competition for insurance business within the United States comes from other specialty insurers, regional carriers, large national multi-line companies
and reinsurers. Our specialty businesses compete with excess and surplus insurers as well as standard carriers. Our regional businesses compete with mutual
and other regional stock companies as well as national carriers. Additionally, direct writers of property casualty insurance compete with our regional businesses
by writing insurance through their salaried employees, generally at a lower acquisition cost than through independent agents such as those used by the
Company. We compete internationally with native insurance operations both large and small, which in some cases are related to government entities, as well as
with branches or local subsidiaries of multinational companies.
Competition for reinsurance business, which is especially strong, comes from domestic and foreign reinsurers, which produce their business either on a
direct basis or through the broker market. These competitors include Swiss Re, Munich Re, Berkshire Hathaway, Partner Re and others.
In recent years, various institutional investors have increasingly sought to participate in the property and casualty insurance and reinsurance industries.
Well-capitalized new entrants to the property and casualty insurance and reinsurance industries, or existing competitors that receive substantial infusions of
capital, provide increasing competition, which may adversely impact our business and profitability. Further, an expanded supply of reinsurance capital may
lower costs for insurers that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively.
Human Capital Resources
As of January 15, 2025, we employed 8,606 individuals. Of this number, our subsidiaries employed 8,474 individuals and the remaining individuals
were employed at the parent company.
We believe that our people are our greatest asset and that our corporate culture is the most important intangible driver of long-term value creation for our
Company and the highest priority for pursuing long-term risk-adjusted returns and growth in stockholder value.
Human Capital Management: The Company fosters a performance culture. We are focused on creating a respectful, rewarding, diverse, and inclusive
work environment that allows our employees to build meaningful and productive careers. The success of these human capital management objectives is
essential to our strategy, as it is our people who drive our success. We invest in their growth as individuals and professionals through training and engagement,
as well as in their well-being through robust health and wellness programs and a commitment to diversity.
The Company provides developmental opportunities for our employees through formal and informal programs that focus on enabling employees to build
skills and thought leadership in specific facets of our business. Our leadership programs cultivate the talent of our high-potential, strong-performing employees
as we strive to deepen, enhance and diversify the Company’s leadership team.
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We strive to align employee incentives with the risk and performance frameworks of the Company. The Company’s “pay for performance” philosophy
connects individual, business and Company results to employee compensation, providing employees with opportunities to share in the Company’s overall
growth and success. The Company offers employees a comprehensive benefits package, including health and wellness, financial, educational and life
management benefits. In addition, we support employees in making an impact in their local communities and globally through environmental and social efforts
that are meaningful to them.
Our Board of Directors engages with our senior leadership team, including our senior vice president - human resources, on a periodic basis across a
range of human capital management issues, including succession planning and development, compensation, benefits, talent recruiting and retention,
engagement, diversity and inclusion, and employee feedback.
Culture: The Board of Directors has recognized Accountability, People Oriented Strategy, Responsible Financial Practices, Risk-Adjusted Returns and
Transparency as the elements of corporate culture necessary for the Company to achieve success. Our culture unifies our employees across our decentralized
business model, positions us to serve our diverse clients globally and propels the Company’s continuous evolution.
We are committed to fostering a unifying culture and encouraging innovation across our enterprise. Our culture encompasses the beliefs that (i)
specialized knowledge and having a customer-centric focus are competitive advantages and (ii) an environment that promotes integrity, embraces the
commitment to “always do right,” fosters entrepreneurship and innovation, and values making thoughtful decisions for the long-term benefit of our enterprise.
While there is no one “Berkley” way, each of our businesses has its own culture that embodies a shared set of values that define our enterprise. Our structure,
with 58 distinct businesses, facilitates the prompt identification of and appropriate action with respect to addressing individual business or cultural issues
arising within a business, without affecting the larger enterprise. Furthermore, our businesses are overseen by senior corporate business managers and senior
corporate functional managers, including actuarial, claims, compliance, enterprise risk management, finance, insurance risk management and underwriting,
providing a governance oversight structure that makes it easier to identify such issues. Because our Board of Directors diligently exercises its risk management
oversight through, among other activities, regular interactions with employees beyond corporate senior management, our directors have visibility into and
receive timely feedback on cultural issues that may affect our business.
As significant owners of our Company who are required to hold their shares until separation from service, each of our directors and senior executives
have a vested interest in cultivating talent and perpetuating a culture that facilitates the execution of our long-term objectives.
Other Information about the Company's Business
We maintain an interest in evaluating the startup of possible new ventures and the acquisition of complementary businesses on an ongoing basis. In
addition, our businesses develop new coverages or enter lines of business to meet the needs of insureds.
Seasonal weather variations and other events affect the severity and frequency of losses sustained by the insurance and reinsurance businesses. Although
the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms, wildfires, earthquakes and terrorist acts may be mitigated by reinsurance,
they nevertheless can have a significant impact on the results of any one or more reporting periods.
We have no customer that accounts for 10 percent or more of our consolidated revenues.
Compliance by W. R. Berkley and its subsidiaries with federal, state and local provisions that have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to protection of the environment, has not had a material effect upon our capital expenditures, earnings or
competitive position.
The Company's internet address is www.berkley.com. The information on our website is not incorporated by reference in this annual report on Form 10-
K. The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act and other reports filed by us or with respect to our securities by others are accessible free of
charge through this website as soon as reasonably practicable after they have been electronically filed with or furnished to the SEC.
ITEM 1A. RISK FACTORS
Our businesses face significant risks. If any of the events or circumstances described as risks below occur, our businesses, results of operations and/or
financial condition could be materially and adversely affected. In addition to those
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described below, our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we currently consider immaterial.
Risks Relating to Our Industry
Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance industry.
The results of companies in the property casualty insurance industry historically have been subject to significant fluctuations and uncertainties in supply
and demand and pricing, causing cyclical changes in the insurance and reinsurance industry.
The demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often directly related to available
capacity based on the perceived profitability of the business. The adequacy of premium rates is affected mainly by the severity and frequency of claims, which
are influenced by many factors, including natural disasters and other catastrophic events, regulatory measures and court decisions that define and expand the
extent of coverage, and the effects of economic and social inflation on the amount of claims payments due for injuries or losses. In addition, investment rates of
return impact rate adequacy. These factors can have a significant impact on ultimate profitability because a property casualty insurance policy is priced before
its costs are known as premiums usually are determined long before claims are reported. These factors could produce results that would have a negative impact
on our results of operations and financial condition.
The uncertainty of an insurer’s ultimate loss costs, and fluctuating competitive conditions, result in alternating periods of “hard” markets (more
profitable for insurers) and “soft” markets (less profitable for insurers). In recent years, improvement (or deterioration) in various lines of property casualty
insurance has become less uniform in its cyclicality, with changes frequently happening at different rates, and even at times in different directions. Over the
past several years, premium rates have increased for most lines of business, while they have decreased in others, most notably workers' compensation and
certain professional liability lines of business.
We face significant competitive pressures in our businesses, which can pressure premium rates in certain areas and could harm our ability to
maintain or increase our profitability and premium volume in some parts of our business.
We compete with a large number of other companies in our selected lines of business. We compete, and will continue to compete, with major U.S. and
non-U.S. insurers and reinsurers, other regional companies, as well as mutual companies, specialty insurance companies, underwriting agencies, diversified
financial services companies and insurtech companies. Competitiveness in our businesses is based on many factors, including premium charges, ratings
assigned by independent rating agencies, commissions paid to producers, the perceived financial strength of the company, other terms and conditions offered,
services provided, ease of doing business, speed of claims payment and reputation and experience in the lines to be written. Periods of insurance industry
consolidation may further increase competition in some parts of our business and may cause our insurance subsidiaries to incur greater customer retention and
acquisition expenses, affecting the profitability of existing and new business. At times, we have faced significant competition in our business as a result of
existing insurers seeking to gain or maintain market share as well as new entrants and capital providers.
Various types of investors seek to participate in the property and casualty insurance and reinsurance industries. Well-capitalized new entrants to the
property and casualty insurance and reinsurance industries, or existing competitors that receive substantial infusions of capital or access to third-party capital,
provide increasing competition, which may adversely impact our business and profitability. Further, an expanded supply of capital may lower costs for insurers
and, as a consequence, those insurers may be able to price their products more competitively. In addition, technology companies or other third parties have
created, and may in the future create technology-enabled business models, processes, platforms or alternate distribution channels that may adversely impact our
competitive position in some parts of our business.
Some of our competitors, particularly in the reinsurance business, have greater financial and/or marketing resources than we do. These competitors
within the reinsurance market include Swiss Re, Munich Re, Berkshire Hathaway and Partner Re. We expect that perceived financial strength, in particular,
will become more important as customers seek high quality reinsurers.
This intense competition could cause the supply and/or demand for insurance or reinsurance to change, which affect our ability to price our products at
attractive rates and retain existing business or write new products at adequate rates or on terms and conditions acceptable to us. If we are unable to retain
existing business or write new business at adequate rates or on terms and conditions acceptable to us, our results of operations could be materially and
adversely affected.
Recently, insurance prices have generally increased for most lines of business, excluding workers' compensation and certain professional liability lines
of business. However, loss costs have also increased and the duration and magnitude of the improved pricing environment remains uncertain. Despite higher
interest rates, current price levels for certain lines of business
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may remain below the prices required for us to achieve our long-term return objectives. We expect to continue to face strong competition in our business.
Our actual claims losses may exceed our reserves for claims, which may require us to establish additional reserves.
Our gross reserves for losses and loss expenses were approximately $20.4 billion as of December 31, 2024. Our loss reserves reflect our best estimates
of the cost of settling claims and related expenses with respect to insured events that have occurred.
Reserves do not represent an exact calculation of liability. Rather, reserves represent an estimate of what management expects the ultimate settlement
and claims administration will cost for claims that have occurred, whether known or unknown. The major assumptions about anticipated loss emergence
patterns are subject to unanticipated fluctuation. These estimates, which generally involve actuarial projections, are based on management's assessment of facts
and circumstances then known, as well as estimates of future trends in claims severity and frequency, inflation, judicial theories of liability, reinsurance
coverage, legislative changes and other factors, including the actions of third parties, which are beyond our control.
The inherent uncertainties of estimating reserves are greater for certain types of liabilities, where long periods of time elapse before a definitive
determination of liability is made and settlement is reached. In periods with increased economic volatility, it becomes more difficult to accurately estimate
claim costs. It is especially difficult to estimate the impact of inflation on loss reserves given the current economic environment and related government
actions. Both inflation overall and medical cost inflation, which has historically been greater than inflation overall, can have an adverse impact. In addition,
although the Company has estimated the potential COVID-19 impact to its contingency and event cancellation, workers’ compensation, and other lines of
business under a number of possible scenarios, there remains uncertainty around COVID-19's ultimate impact on the Company and its related reserves.
Reserve estimates are continually refined in an ongoing process as experience develops and further claims are reported and settled. Adjustments to
reserves are reflected in the results of the periods in which such estimates are changed. Because setting reserves is inherently uncertain, we cannot assure that
our current reserves will prove adequate in light of subsequent events. Should we need to increase our reserves, our pre-tax income for the reporting period
would decrease by a corresponding amount.
We discount our reserves for excess and assumed workers' compensation business because of the long period of time over which losses are paid.
Discounting is intended to appropriately match losses and loss expenses to income earned on investment securities supporting liabilities. The expected loss and
loss expense payout pattern subject to discounting is derived from our loss payout experience. Changes in the loss and loss expense payout pattern are recorded
in the period they are determined. If the actual loss payout pattern is shorter than anticipated, the discount will be reduced and pre-tax income will decrease by
a corresponding amount.
The effects of emerging claim and coverage issues on our business are uncertain.
As industry practices and economic, legal, judicial, social, technological and other environmental conditions change, unexpected and unintended issues
related to claim and coverage frequently emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent
or by increasing the number or size of claims. Examples of emerging claims and coverage issues include, but are not limited to:
•
judicial expansion of policy coverage and a greater propensity to grant claimants more favorable amounts and the impact of new theories of
liability;
•
plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-handling and other practices;
•
social inflation trends, including higher and more frequent claims, more favorable judgments and legislated increases;
•
medical developments that link health issues to particular causes, resulting in liability claims;
•
claims relating to unanticipated consequences of current or new technologies, including cyber security related risks;
•
claims relating to potentially changing climate conditions; and
•
increased claims due to third party funding of litigation.
In some instances, these emerging issues may not become apparent for some time after we have issued the affected insurance policies. As a result, the
full extent of liability under our insurance policies may not be known until many years after the policies are issued.
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In addition, the potential passage of new legislation designed to expand the right to sue, to remove limitations on recovery, to extend the statutes of
limitations or otherwise to repeal or weaken tort reforms could have an adverse impact on our business.
The effects of these and other unforeseen emerging claim and coverage issues are difficult to predict and could harm our business and materially and
adversely affect our results of operations.
As a property casualty insurer, we face losses from natural and man-made catastrophes.
Property casualty insurers are subject to claims arising out of catastrophes that may have a significant effect on their results of operations, liquidity and
financial condition. Catastrophe losses have had a significant impact on our results. For example, current accident year catastrophe losses net of reinsurance
recoveries were $298 million in 2024, $195 million in 2023, and $212 million in 2022. Similarly, man-made catastrophes can also have a material impact on
our financial results. Depending on market conditions and other factors, we may seek to increase our writing of property casualty insurance, and, accordingly,
our exposure to catastrophic events would be increased.
Catastrophes can be caused by various events, including hurricanes, windstorms, earthquakes, tsunamis, hailstorms, explosions, severe winter weather
and wildfires, pandemics, as well as terrorist and other man-made activities, including drilling, mining and other industrial accidents, the bankruptcy of a major
company, war or other military actions, social unrest,
cyber events or terrorist activities. The incidence and severity of catastrophes are inherently unpredictable, and longer-term natural catastrophe trends may be
changing due to climate change causing increased variability and unpredictability. The extent of losses from a catastrophe is a function of both the total amount
of insured exposure in the area affected by the event and the severity of the event. Some catastrophes are restricted to small geographic areas; however,
hurricanes, earthquakes, tsunamis and other disasters may produce significant damage in large, heavily populated areas. Catastrophes can cause losses in a
variety of our property and casualty lines, and most of our past catastrophe-related claims have resulted from severe storms. Seasonal weather variations or the
impact of climate change may affect the severity and frequency of our losses. Insurance companies are not permitted to reserve for a catastrophe until it has
occurred. It is therefore possible that a catastrophic event or multiple catastrophic events could produce significant losses and have a material adverse effect on
our results of operations and financial condition.
New or emerging pandemics, whether related to COVID-19 or otherwise, may materially and adversely affect our results of operations, financial
position and liquidity in the future.
The COVID-19 pandemic, including the related impact on the U.S. and global economies, materially and adversely affected our results of operations.
New or emerging pandemics, whether related to COVID-19 or otherwise, may materially and adversely affect our results of operations, financial position and
liquidity, including the following:
•
Legislative and regulatory initiatives in response to pandemics may adversely affect us by, for example, retroactively mandating coverage for losses
that our policies were not intended to cover.
•
Although the Company has estimated the potential COVID-19 impact to its contingency and event cancellation, workers’ compensation, and other
lines of business under a number of possible scenarios, there remains uncertainty around COVID-19's ultimate impact on the Company and its related
reserves.
•
Claims and coverage issues may emerge that extend coverage beyond our underwriting intent or increase the number and/or size of claims.
•
Our reinsurers may refuse to pay reinsurance recoverables due to uncertainty regarding reinsurance coverage for losses related to COVID-19 or any
future pandemics. For example, as described in "Item 3. Legal Proceedings," in December 2023, one of our subsidiaries filed a lawsuit against certain
reinsurers to recover in excess of $90 million in respect of certain losses under certain event cancellation insurance policies. In addition, we may be
unable to renew our reinsurance coverages or obtain other appropriate reinsurance covers with respect to pandemic-related exposures.
•
Reduced economic activity relating to potential pandemics is likely to decrease demand for our insurance products.
•
Disruptions in global financial markets due to future pandemics could cause us to incur investment losses.
•
Our operations could be disrupted if our senior management or a significant percentage of our workforce or of our agents, brokers, suppliers or other
service providers are unable to continue to work because of illness, government directives or otherwise.
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Changing climate conditions may alter the frequency and increase the severity of catastrophic events and thereby adversely affect our financial
condition and results.
In recent years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the unpredictability,
frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. There is a scientific consensus that global
warming and other climate change are altering the frequency, severity and peril characteristics of catastrophic weather events, such as hurricanes, windstorms,
floods, wildfires and other natural disasters. Such changes make it more difficult for us to predict and model catastrophic events, reducing our ability to
accurately price our exposure to such events and mitigate our risks. Any increase in the frequency or severity of natural disasters may adversely affect our
financial condition and results.
We, as a primary insurer, may have significant exposure for terrorist acts.
To the extent an act of terrorism, whether a domestic or foreign act, is certified by the Secretary of Treasury, we may be covered under the Terrorism
Risk Insurance Program Reauthorization Act of 2019 (“TRIPRA”), for up to 80% of our covered losses for certain property/casualty lines of insurance.
However, any such coverage would be subject to a mandatory deductible based on 20% of earned premium for the prior year for the covered lines of
commercial property and casualty insurance. Based on our 2024 earned premiums, our aggregate deductible under TRIPRA during 2025 is approximately
$1,663 million. In addition, the coverage provided under TRIPRA does not apply to reinsurance that we write. To the extent that our reinsurers have excluded
coverage for certain terrorist acts or have priced this coverage at rates that make purchasing such coverage economically infeasible, we may not have
reinsurance protection and could be exposed to potential losses as a result of any acts of terrorism.
We are exposed to, and may face adverse developments involving, mass tort claims.
We are exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products
or substances. We face potential exposure to mass tort claims, including claims related to exposure to potentially harmful products or substances, such as lead
paint, polyfluoroalkyl substances, talc and opioids. Establishing loss reserves for mass tort claims is subject to uncertainties because of many factors, including
adverse changes to the tort environment (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories
of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); evolving judicial interpretations, including application of
various theories of joint and several liabilities; disputes concerning medical causation with respect to certain diseases; geographical concentration of the
lawsuits asserting the claims; and the potential for a large rise in the total number of claims without underlying epidemiological developments suggesting an
increase in disease rates. Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current loss reserves. In
addition, our estimate of loss reserves may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from
period to period and could materially and adversely affect our results of operations and/or our financial position.
We are subject to extensive governmental regulation, which increases our costs and could restrict the conduct of our business.
We are subject to extensive governmental regulation and supervision in both the United States and foreign jurisdictions. Most insurance regulations
are designed to protect the interests of policyholders rather than stockholders and other investors. This system of regulation, generally administered in the
United States by a department of insurance in each state in which we do business, relates to, among other things:
•
standards of solvency, including risk-based capital measurements;
•
restrictions on the nature, quality and concentration of investments;
•
limitations on the amount of dividends, tax distributions, intercompany loans and other payments that can be made without prior regulatory
approval;
•
requirements pertaining to certain methods of accounting;
•
evaluating enterprise risk to an insurer;
•
privacy, data protection, cybersecurity and artificial intelligence;
•
rate and form regulation pertaining to certain of our insurance businesses;
•
potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies provided by impaired,
insolvent or failed insurance companies; and
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•
involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.
State insurance departments conduct periodic examinations of the affairs of insurance companies and require the filing of annual and other reports
relating to the financial condition of insurance companies, holding company issues and other matters. Our Insurance business internationally is also generally
subject to a similar regulatory scheme in each of the jurisdictions where we conduct operations outside the United States.
Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be taken in response to conditions in
the financial markets, global insurance supervision and other factors may lead to additional federal regulation of the insurance industry in the coming years.
The Dodd-Frank Act effected sweeping changes to financial services regulation in the United States. The Dodd-Frank Act established the FSOC,
which is authorized to recommend that certain systemically significant non-bank financial companies, including insurance companies, be regulated by the
Board of Governors of the Federal Reserve. The Dodd-Frank Act also established a FIO which is authorized to study, monitor and report to Congress on the
U.S. insurance industry and the significance of global reinsurance to the U.S. insurance market. The FIO also can recommend that the FSOC designate an
insurer as an entity posing risks to the United States financial stability in the event of the insurer's material financial distress or failure. Our business could be
affected by changes, whether as a result of potential changes to the Dodd-Frank Act, to the U.S. system of insurance regulation or our designation or the
designation of insurers or reinsurers with which we do business as systemically significant non-bank financial companies.
The topic of climate risk has come under increased scrutiny by the NAIC and insurance regulators. For instance, in New York, the NYDFS’s circular
letter, which applies to our insurance subsidiaries licensed in New York, states that regulated insurers are expected to integrate financial risks related to climate
change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their approach to climate-related
financial disclosure. The NYDFS also amended the regulation governing enterprise risk management, which applies to our insurance subsidiaries licensed in
New York, that requires an insurance group's enterprise risk management function to address certain additional risks, including climate change risk. In addition,
the FIO is assessing how the insurance sector may help mitigate climate- related risks and achieve national climate-related goals, and it released a report in
June 2023 urging insurance regulators to adopt climate-related risk monitoring guidance. These measures may subject us to increased oversight at the state and
federal level.
State regulation is the primary form of regulation of insurance and reinsurance in the United States, although Congress has considered various proposals
regarding federal regulation of insurance, in addition to the changes brought about by the Dodd-Frank Act, such as proposals for the creation of an optional
federal charter for insurance companies. We may be subject to potentially increased federal oversight as a financial institution. In addition, the new U.S.
administration and the volatile political environment increases the chance of other federal legislative and regulatory changes that could affect us in ways we
cannot predict.
With respect to international measures, Solvency II, the EU regime concerning the capital adequacy, risk management and regulatory reporting for
insurers and reinsurers may affect our insurance businesses. As described in “International Regulation” above, the EU has recently amended certain provisions
in Solvency II, which EU member states will implement in their domestic regulation over the next two years. In addition, despite the waiver of the Solvency II
group capital requirements we received, any changes in the application of Solvency II (or any further amendments to Solvency II itself) may have the effect of
increasing the capital requirements of our EU domiciled insurers. Additionally, our capital requirements and compliance requirements may be adversely
affected if the European Commission does not deem the insurance regulatory regimes of the jurisdictions outside the EU in which we have insurance or
reinsurance companies domiciled to be “equivalent” to Solvency II.
Similar considerations apply to our U.K. subsidiaries, which are now subject to a separate U.K. prudential regime that derives from Solvency II.
However, the two regimes, and their respective requirements, have begun to diverge due to both the EU’s recent amendments to Solvency II described above
and the reforms to the U.K.’s domestic prudential regime (please see “International Regulation” above for more information). We therefore may be required to
utilize additional resources to ensure compliance with the different rules in each regime.
If our compliance with Solvency II, the U.K.’s prudential regime or any other regulatory regime is challenged, we may be subject to monetary or other
penalties. In addition, in order to ensure compliance with applicable regulatory requirements or as a result of any investigation, including remediation efforts,
we could be required to incur significant expenses and undertake additional work, which in turn may divert resources from our business.
We may be unable to maintain all required licenses and approvals and our business may not fully comply with the
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wide variety of applicable laws and regulations or the relevant authority's interpretation of the laws and regulations. Also, some regulatory authorities have
relatively broad discretion to grant, renew or revoke licenses and approvals. If we do not have the requisite licenses and approvals or do not comply with
applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities
or monetarily penalize us. Also, changes in the level of regulation of the insurance industry, whether federal, state or foreign, or changes in laws or regulations
themselves or interpretations thereof by regulatory authorities, may further restrict the conduct of our business.
Risks Relating to Our Business
Our expanding international operations expose us to increased investment, political, legal/regulatory, and economic risks, including foreign
currency and credit risk.
Our expanding international operations in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, the Asia-Pacific
region, South Africa and Australia expose us to increased investment, political, legal/regulatory, and economic risks, including foreign currency and credit risk.
Changes in the value of the U.S. dollar relative to other currencies have had and could in the future have an adverse effect on our results of operations and
financial condition.
Our investments in non-U.S.-denominated assets are subject to fluctuations in non-U.S. securities and currency markets, and those markets can be
volatile. Non-U.S. currency fluctuations also affect the value of any dividends paid by our non-U.S. subsidiaries to their parent companies in the U.S.
We face additional risks as a result of our international operations which could have an adverse effect on our results of operations and financial condition
including: burdens and costs of compliance with a variety of foreign laws and regulations and the associated risk and costs of non-compliance; exposure to
undeveloped or evolving legal systems, which may result in unpredictable or inconsistent application of laws and regulations; exposure to commercial,
political, legal or regulatory corruption; political, economic or other instability in countries in which we conduct business, including possible terrorist acts; the
imposition of tariffs, trade barriers or other protectionist laws or business practices that favor local competition, increased costs and adverse effects on our
business; changes to visa or immigration policies; diminished ability to enforce our contractual rights; potential increased risk of data breaches; differences in
cultural environments; sociopolitical instability; social, political or economic instability resulting from climate change; changes in regulatory requirements,
including changes in regulatory treatment of certain products or services; exposure to local economic conditions and its impact on our clients’ performance and
creditworthiness; and restrictions on the repatriation of non-U.S. investments and earnings.
Our U.K. business could be specifically adversely impacted by trade barriers between the EU and the U.K. following Brexit, which has reduced the level
of trade between the two markets and the U.K.’s overall trade exports, thereby negatively affecting the attractiveness of the U.K. market.
We may be unable to attract and retain key personnel and qualified employees.
We depend on our ability to attract and retain key personnel, including our President and CEO, Executive Chairman, senior executive officers, presidents
of our businesses, experienced underwriters and other skilled employees who are knowledgeable about our business. If the quality of our underwriting team
and other personnel decreases, we may be unable to maintain our current competitive position in the specialized markets in which we operate, and be unable to
expand our operations into new products and markets.
We cannot guarantee that our reinsurers will pay in a timely fashion, if at all, and, as a result, we could experience losses.
We purchase reinsurance by transferring part of the risk that we have assumed, known as ceding, to a reinsurance company in exchange for part of the
premium we receive in connection with the risk. Although reinsurance makes the reinsurer contractually liable to us to the extent the risk is transferred or ceded
to the reinsurer, it does not relieve us, the reinsured, of our liability to our policyholders. Our reinsurers may not pay the reinsurance recoverables that they owe
to us or they may not pay such recoverables on a timely basis. This failure to pay or failure to pay on a timely basis may be due to factors such as whether
reinsurers, their affiliates or certain indemnitors have the financial capacity and willingness to make payments under the terms of a reinsurance treaty or
contract. Accordingly, we bear credit risk with respect to our reinsurers, and if our reinsurers fail to pay us, our financial results would be adversely affected.
Underwriting results and investment returns of some of our reinsurers may affect their future ability to pay claims. As of December 31, 2024, the amount due
from our reinsurers was approximately $3,558 million, including amounts due from state funds and industry pools where it was intended that we would bear no
risk. Certain of these amounts are secured by letters of credit or by funds held in trust on our behalf.
We are subject to credit risk relating to our policyholders, independent agents and brokers.
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In addition to exposure to credit risk related to our reinsurance recoverables and investment portfolio, we are exposed to credit risk in several other areas
of our business, including credit risk relating to policyholders, independent agents and brokers. For example our policyholders, independent agents or brokers
may not pay a part of or the full amount of premiums owed to us or our brokers or other third party claim administrators may not deliver amounts owed on
claims under our insurance and reinsurance contracts for which we have provided funds.
As credit risk is generally a function of the economy, we face a greater credit risk in an economic downturn. While we attempt to manage credit risks
through underwriting guidelines, collateral requirements and other oversight mechanisms, our efforts may not be successful. For example, to reduce such credit
risk, we require certain third parties to post collateral for some or all of their obligations to us. In cases where we receive pledged securities and the applicable
counterparty is unable to honor its obligations, we may be exposed to credit risk on the securities pledged and/or the risk that our access to that collateral may
be stayed as a result of bankruptcy. In cases where we receive letters of credit from banks as collateral and one of our counterparties is unable to honor its
obligations, we are exposed to the credit risk of the banks that issued the letters of credit.
We are rated by A.M. Best, Standard & Poor's, Moody's, and Fitch, and a decline in these ratings could affect our standing in the insurance industry
and cause our sales and earnings to decrease.
Ratings have become an increasingly important factor in establishing the competitive position of insurance companies. Certain of our insurance
company subsidiaries are rated by A.M. Best, Standard & Poor's, Moody's and Fitch. Our ratings are subject to periodic review, and we cannot assure you that
we will be able to retain our current or any future ratings, especially given that rating agencies may change their criteria or increase capital requirements for
various rating levels.
If our ratings are reduced from their current levels by A.M. Best, Standard & Poor's, Moody's or Fitch, our competitive position in the insurance industry
could suffer and it would be more difficult for us to market our products. A ratings downgrade could also adversely limit our access to capital markets, which
may increase the cost of debt. A significant downgrade could result in a substantial loss of business as policyholders move to other companies with higher
financial strength ratings.
If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our
underwriting commitments.
As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk underwritten by our insurance
company subsidiaries, especially catastrophe risks and those risks with relatively high policy limits. We also purchase reinsurance on risks underwritten by
others which we reinsure. Market conditions beyond our control determine the availability and cost of the reinsurance protection we seek to purchase, which
may affect the level of our business and profitability. Our reinsurance contracts are generally subject to annual renewal, and we may be unable to maintain our
current reinsurance contracts or to obtain other reinsurance contracts in adequate amounts and at favorable rates. In addition, we may be unable to obtain
reinsurance on terms acceptable to us relating to certain lines of business that we intend to begin writing. If we are unable to renew our expiring contracts or to
obtain new reinsurance contracts, either our net exposures would increase or, if we are unwilling to bear an increase in net exposures, we would have to reduce
the level of our underwriting commitments, especially catastrophe exposed risks.
Depending on conditions in the financial markets and the general economy, we may be unable to raise debt or equity capital if needed.
If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions, uncertainty or volatility in the capital
and credit markets, we may be unable to access debt or equity capital on acceptable terms if needed, which could have a negative impact on our ability to invest
in our insurance company subsidiaries and/or to take advantage of opportunities to expand our business, such as the creation of new ventures and possible
acquisitions, and inhibit our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.
We may not find suitable new insurance ventures and acquisition candidates and even if we do, we may not successfully invest in such ventures or
successfully integrate any such acquired companies.
As part of our present strategy, we continue to evaluate the possible start-up of complementary businesses and acquisition transactions on an ongoing
basis, and at any given time we may be engaged in discussions with respect to possible new ventures and acquisitions. We cannot assure you that we will be
able to identify suitable insurance ventures or acquisition targets, that such transactions will be financed and completed on acceptable terms or that our future
start-up ventures or acquisitions will be successful. Our financial results could be adversely affected by acquired businesses not performing as projected,
unforeseen liabilities, routine and unanticipated transaction-related charges, diversion of management time and resources to acquisition integration challenges
or growth strategies, loss of key employees, challenges in integrating information technology systems of acquired companies with our own, amortization of
expenses related to intangibles, charges
32
for impairment of long-term assets or goodwill and indemnification. The process of investing in new ventures or integrating any companies we do acquire may
have a material adverse effect on our results of operations and financial condition.
If our information technology, telecommunications or other computer systems become unavailable or unreliable, our ability to conduct our business
could be negatively or severely impacted.
Our business is highly dependent upon our employees' ability to perform necessary business functions in an efficient and uninterrupted fashion. A
shutdown of, or inability to access, one or more of our facilities, a power outage or a failure of one or more of our information technology, telecommunications
or other computer systems could significantly impair our employees' ability to perform such functions on a timely basis. In the event of a disaster such as a
natural catastrophe, terrorist attack or industrial accident, physical or electronic security breaches, such as breaches by computer hackers, the infection of our
systems
by a malicious computer virus, denial of service attack, or other cybersecurity incident, our systems could be inaccessible for an extended period of time. In
addition, because our information technology and telecommunications systems interface with and depend on third-party systems and infrastructure beyond our
control, we could experience service denials or failures of controls if demand for our service exceeds capacity or a third-party system or infrastructure fails or
experiences an interruption. If our business continuity plans or system security does not sufficiently address such a business interruption, system failure or
service denial, our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary
business functions could be significantly impaired and our business could be harmed.
Failure to maintain the security of information technology systems and confidential data may expose us to liability.
Although we have taken steps intended to protect our data and information technology systems and mitigate the risk of harm caused by cybersecurity
incidents or breaches, no safeguards are perfect and any failure of these safeguards could cause a substantial disruption of our business operations, which could
result in service interruptions, data security compromises, regulatory action, and other similar operational and legal issues, as well as substantial remediation
and other costs. Our operations rely on the secure processing, storage and transmission of confidential and other sensitive information, including personal
information, in our computer systems and networks. Cybersecurity breaches, including physical or electronic break-ins, computer viruses, malware, attacks by
hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other similar breaches can create
system disruptions, shutdowns or unauthorized access to, or disclosure of, information maintained in our information technology systems and in the
information technology systems of our vendors and other third parties.
We have in the past experienced cybersecurity incidents affecting our information technology systems as well as the information technology systems of
our vendors and other third parties, but, to our knowledge, we have not experienced any material cybersecurity breaches. We expect cybersecurity threats to
continue to occur in the future and we are constantly managing efforts to infiltrate and compromise our systems and data. Our electronic transmission of
personal, confidential and proprietary information to third parties with whom we have business relationships and our outsourcing of certain technology and
business process functions to third parties may expose us to enhanced risk related to data security. While we have implemented secure data transmission
capabilities with these third-party vendors and others with whom we do business, such capabilities may not function as intended and our vendors and third
parties could still suffer data breaches that could result in the exposure of sensitive data and the infiltration of our computer systems. Our failure to effectively
protect sensitive personal and/or proprietary information, whether owing to breaches of our own systems or those of our vendors and other third parties, could
result in significant monetary and reputational damages, material adverse effects to our financial condition, costly litigation, or other regulatory enforcement
actions. These increased risks, and expanding regulatory requirements regarding data security, including required compliance with applicable privacy and data
protection laws (e.g., the GDPR, CCPA, and other state-specific privacy statutes and regulations), could expose us to data loss, monetary and reputational
damages and significant increases in compliance costs. As a result, our ability to conduct our business could be materially and adversely affected.
Use of artificial intelligence technologies by us or third-parties on which we rely could expose us to technological, security, legal, and other risks.
Products or services offered that develop or adopt artificial intelligence (“AI”) technologies, including generative AI and machine learning, offer
potential benefits (e.g., with respect to efficiency) but likewise may raise technological, security, legal and other risks and challenges that may adversely affect
our operations, business, or reputation. Such risks include the misuse, inadvertent or otherwise, of personal data or other sensitive, confidential or proprietary
information; flaws in our models or training datasets resulting in biased, inaccurate or unanticipated outcomes; ethical considerations regarding the use and
deployment of AI technologies; potential infringement of third-party intellectual property rights or the dilution of our intellectual property; and our ability to
implement appropriate governance controls to ensure the ongoing, safe deployment of AI systems. AI technologies may be misused, and that risk is increased
by the relative newness of the technology, the speed at which it is being adopted, and ongoing uncertainty with respect to the laws, regulations, and standards
governing its
33
development and deployment federally, across states, and internationally. Such misuse, and a realization of the previously mentioned risks, could negatively
impact our reputation, financial condition and results of operations, the demand for our products and services, otherwise cause competitive harm, and/or draw
adverse legal and regulatory scrutiny. Moreover, because some AI technologies are relatively new, such as generative AI, many of the potential risks regarding
their use are currently unknown.
We could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and regulatory standards are not effective.
Our business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting, claim processing and investment
activities, many of which are highly complex. These activities often are subject to internal guidelines and policies, as well as legal and regulatory standards,
including those related to privacy and data security, anti-corruption, anti-bribery and global finance and insurance matters. Our continued expansion into new
international markets has brought about additional requirements. A control system, no matter how well designed and operated, can provide only reasonable
assurance that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated risk exposure (including
underwriting, credit and investment risk), regulatory scrutiny, and/or damage to our reputation.
Limitations in risk management and loss limitation methods may adversely impact our business.
We seek to effectively manage risk and limit our losses in a variety of ways including through effective underwriting, tailoring policy terms, and the use
of reinsurance. However, there are certain limitations in these and similar tactics and as a result, loss levels may be higher than modeled or otherwise expected,
which could have a material adverse effect on our business.
Scrutiny of our social responsibility and the efforts we take to implement related measures, or the failure to take such measures, may adversely
impact our business.
There continues to be scrutiny from regulators and investors of the measures companies take to be socially responsible. Although we have made efforts
to be responsible in this manner, for example through our commitment to fostering a unifying culture and encouraging innovation across our operating units,
these types of pressures may nonetheless present challenges and have an adverse impact on our business. In addition, we may be subject to negative publicity
based on a failure or perceived failure to achieve various social responsibility initiatives and goals relating to diversity, equity and inclusion, and commitment
to long-term sustainability we may announce from time to time, or based on an actual or perceived increase in related risks as a result of our or our industry’s
business activities.
Risks Relating to Our Investments
A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations.
Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2024, our investment in fixed maturity securities was
approximately $22.4 billion, or 75.0% of our total investment portfolio including cash and cash equivalents. As of that date, our portfolio of fixed maturity
securities consisted of the following types of securities: U.S. Government securities (10.0%); state and municipal securities (10.5%); corporate securities
(37.6%); asset-backed securities (17.3%); mortgage-backed securities (16.8%) and foreign government (7.8%).
The fair value of these assets and the investment income from these assets fluctuate depending on general economic and market conditions. The fair
value of fixed maturity securities generally decreases as interest rates rise. If a significant increase in interest rates were to occur, the fair value of our fixed
maturity securities would be negatively impacted, while investment income earned from future investments in fixed maturity securities would be higher.
Conversely, if interest rates decline, the fair value of our fixed maturity securities would be positively impacted, and investment income earned from future
investments in fixed maturity securities will be lower. Some fixed maturity securities, such as mortgage-backed and other asset-backed securities, also carry
prepayment risk as a result of interest rate fluctuations. In low interest rate environments, we may not be able to successfully reinvest the proceeds from
maturing securities at yields commensurate with our target performance goals.
The value of investments in fixed maturity securities is subject to impairment as a result of deterioration in the credit worthiness of the issuer, default by
the issuer (including states and municipalities) in the performance of its obligations in respect of the securities and/or increases in market interest rates. To a
large degree, the credit risk we face is a function of the economy; accordingly, we face a greater risk in an economic downturn or recession. During periods of
market disruption, it may be difficult to value certain of our securities, particularly if trading becomes less frequent and/or market data becomes less
observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid
34
due to the then current financial environment. In such cases, the valuation of a greater number of our securities may require additional subjectivity and
management judgment.
Although the historical rates of default on state and municipal securities have been relatively low, our state and municipal fixed maturity securities could
be subject to a higher risk of default or impairment due to declining municipal tax bases and revenue. Many states and municipalities operate under deficits or
projected deficits, the severity and duration of which could have an adverse impact on both the valuation of our state and municipal fixed maturity securities
and the issuer's ability to perform its obligations thereunder. Additionally, our investments are subject to losses as a result of a general decrease in commercial
and economic activity for an industry sector in which we invest, as well as risks inherent in particular securities.
Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms and by diversifying our portfolio
and emphasizing preservation of principal, our efforts may not be successful. Impairments, defaults and/or rate increases could reduce our net investment
income or realized and unrealized investment gains or result in investment losses. Investment returns are currently, and will likely continue to be, impacted by
economic uncertainty, more generally, and the shape of the yield curve. As a result, our exposure to the risks described above could materially and adversely
affect our results of operations, liquidity and financial condition.
We have invested a portion of our assets in equity securities, merger arbitrage securities, investment funds, private equity, loans and real estate
related assets, which are subject to significant volatility and may decline in value.
We invest a portion of our investment portfolio in equity securities, merger arbitrage securities, investment funds, private equity, loans and real estate
related assets. At December 31, 2024, our investment in these assets was approximately $5.5 billion, or 18.4%, of our investment portfolio, including cash and
cash equivalents.
Merger and arbitrage trading securities were $1.1 billion, or 3.8% of our investment portfolio, including cash and cash equivalents at December 31,
2024. Merger arbitrage involves investing in the securities of publicly held companies that are the targets in announced tender offers and mergers. Merger
arbitrage differs from other types of investments 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. Our merger arbitrage positions are exposed to the risk associated with the completion of announced deals, which are
subject to regulatory as well as political and other risks.
Real estate related investments, including directly owned, investment funds and loans receivable, were $1.9 billion, or 6.3% of our investment portfolio,
including cash and cash equivalents, at December 31, 2024. We also invest in real estate, financial services, energy, transportation and other investment funds.
The values of these investments are subject to fluctuation based on changes in the economy and interest rates in general and the related asset valuations in
particular. In addition, our investments in real estate related assets and other alternative investments are less liquid than our other investments.
These investments are subject to significant volatility as a result of the conditions in the financial and commodity markets and the global economy.
Risks Relating to Limitations on Dividends from Subsidiaries and Anti-Takeover Provisions
We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts.
As an insurance holding company, our principal assets are the shares of capital stock of our insurance company subsidiaries. We have to rely on
dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt obligations, paying dividends
to stockholders and repurchasing our shares and paying corporate expenses. The payment of dividends by our insurance company subsidiaries is subject to
regulatory restrictions and competitive pressures on maintaining financial strength ratings and will depend on the surplus and future earnings of these
subsidiaries. During 2025, the maximum amount of dividends that can be paid without regulatory approval is approximately $1.6 billion. Future regulatory
actions could further restrict our insurance subsidiaries’ ability to pay us dividends. As a result, in the future we may not be able to receive dividends from these
subsidiaries at times and in amounts necessary to meet our obligations, pay dividends or repurchase shares.
Laws and regulations of the jurisdictions in which we conduct business could delay, deter or prevent an attempt to acquire control of us that
stockholders might consider to be desirable, and may restrict a stockholder's ability to purchase our common stock.
Generally, United States insurance holding company laws require that, before a person can acquire control of an insurance company, prior written
approval must be obtained from the insurance regulatory authority in the state in which that insurance company is domiciled. Pursuant to applicable laws and
regulations, “control” over an insurer is generally presumed to exist if any person, directly or indirectly, owns, controls, holds the power to vote, or holds
proxies representing 10% or more of
35
the voting securities of that insurer or any parent company of such insurer. Indirect ownership includes ownership of the shares of our common stock. Thus, the
insurance regulatory authorities of the states in which our insurance subsidiaries are domiciled are likely to apply these restrictions on acquisition of control to
any proposed acquisition of our common stock. Some states require a person seeking to acquire control of an insurer licensed but not domiciled in that state to
make a filing prior to completing an acquisition if the acquirer and its affiliates, on the one hand, and the target insurer and its affiliates, on the other hand, have
specified market shares in the same lines of insurance in that state. Additionally, many foreign jurisdictions where we conduct business impose similar
restrictions and requirements.
These provisions can also lead to the imposition of conditions on an acquisition that could delay or prevent its consummation. These laws may
discourage potential acquisition proposals and may delay, deter or prevent a change in control of us through transactions, and in particular unsolicited
transactions, that some or all of our stockholders might consider to be desirable.
Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third party takeovers and thus may
prevent our stockholders from receiving premium prices for their shares in an unsolicited takeover or make it more difficult for third parties to replace our
current management.
Provisions of our Restated Certificate of Incorporation and By-Laws, as well as state insurance statutes, may hinder, delay or prevent unsolicited
acquisitions or changes of our control. These provisions may also have the effect of making it more difficult for third parties to cause the replacement of our
current management without the concurrence of our Board of Directors.
These provisions include:
•
our classified board of directors and the ability of our board to increase its size and to appoint directors to fill newly created directorships;
•
the requirement that the holders of 80% of our shares must approve mergers and other transactions between us and the holder of 5% or more of our
shares, unless the transaction was approved by our board of directors prior to such holder's acquisition of 5% of our shares; and
•
the need for advance notice in order to raise business or make nominations at stockholders' meetings.
These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of us through transactions, and in
particular unsolicited transactions, that some or all of our stockholders might consider to be desirable.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved written comments that were received from the SEC staff 180 days or more before the end of our fiscal year relating to our
periodic or current reports under the Securities Exchange Act of 1934.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
The Company has a documented information security program (the "Program"), which is integrated into its overall risk management processes, to
identify, assess, monitor and manage potential cybersecurity threats and incidents. The Program is designed to protect the confidentiality, integrity and
availability of our information systems and assets that store, process, or transmit information. The Program is modeled on the global standard for risk
assessment, International Organization for Standardization 27001, and is guided by the six domains of cybersecurity established by the National Institute of
Standards and Technology Cybersecurity Framework (i.e., govern, identify, protect, detect, respond, and recovery). The Program seeks to adhere to applicable
U.S. and international laws and regulations, including New York State’s cybersecurity regulation applicable to financial services institutions authorized by the
New York State Department of Financial Services.
The Program’s security and risk policies and standards, implemented by either the Company or third party assessors or consultants, include:
–
information security management tools, such as firewalls, intrusion prevention and detection systems, anti-malware functionality, and access privilege
controls;
–
vulnerability management, including penetration and control testing and vulnerability scans of information systems;
36
–
incident monitoring, breach notification and escalation, including disaster recovery and incident response plans and resources;
–
risk based assessment of third party service providers; and
–
annual cybersecurity awareness training for employees and contractors.
The Company engages third party consultants with respect to cybersecurity, including to conduct vulnerability assessments and penetration testing of its
information technology systems. The Company has established a regular vendor risk management process to evaluate and address potential risks associated
with the use of such third parties.
The Company has not identified any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company,
including its business strategy, results of operations, or financial condition, for the period covered by this annual report. For a discussion regarding risks
associated with cybersecurity threats, see “Risk Factors – Risks Relating to Our Business – If our information technology, telecommunications or other
computer systems become unavailable or unreliable, our ability to conduct our business could be negatively or severely impacted” and “Failure to maintain the
security of information technology systems and confidential data may expose us to liability”; and “Use of artificial intelligence technologies, by us or third-
parties on whom we rely, could expose us to technological, security, legal, and other risks.”
Board Oversight, Governance and Risk Management
The entire Board of Directors has oversight of risks from cybersecurity threats and receives periodic updates on such risks from the Company’s
management, including from the Company’s President and CEO and its Senior Vice President - Chief Information Security Officer (CISO).
Our CISO, who has over 25 years of information security experience and is licensed as a Certified Information Systems Security Professional, is
principally responsible for assessing and managing all aspects of the Program, including the Company’s Regional Information Security Officers (RISOs), third-
party consultants, development of industry trends and control testing and tracking by risk level. Our CISO meets periodically with senior executives, including
the Company’s President and CEO, to discuss the Company’s cybersecurity strategy, and its monitoring, prevention, detection, mitigation, and remediation of
cybersecurity risks. Regular reporting on the Program is also provided to the Company’s Enterprise Risk Management Committee, which is comprised of the
President and CEO, Senior Vice President – Enterprise Risk Management, Executive Vice President – Investments, Executive Vice President – Chief Financial
Officer, and Executive Vice President – Secretary. Collectively, the CISO and RISOs, along with their teams, in collaboration with the technology and business
owners, implement the Program. Legal, Compliance, and Internal Audit functions also assess the Program’s adherence to regulatory requirements and internal
controls.
In the event of a potentially material cybersecurity incident, the Company’s incident response plans establish escalation protocols for relevant IT leaders
and functional leaders within Legal, Compliance and Internal Audit to engage management as appropriate.
ITEM 2. PROPERTIES
W. R. Berkley Corporation and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At December 31, 2024,
the Company had aggregate office space of 4,177,891 square feet, of which 1,051,681 were owned and 3,126,210 were leased.
Rental expense for the Company's operations was approximately $45,718,000, $44,256,000 and $43,383,000 for 2024, 2023 and 2022, respectively.
Future minimum lease payments, without provision for sublease income, are $48,822,000 in 2025, $41,861,000 in 2026 and $172,679,000 thereafter.
ITEM 3. LEGAL PROCEEDINGS
The Company's subsidiaries are subject to disputes, including litigation and arbitration, arising in the ordinary course of their insurance and reinsurance
businesses. The Company's estimates of the costs of settling such matters are reflected in its aggregate reserves for losses and loss expenses, and the Company
does not believe that the ultimate outcome of such matters will have a material adverse effect on its financial condition or results of operations.
37
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.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
38
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
The common stock of the Company is traded on the New York Stock Exchange under the symbol “WRB”.
In 2024, the Board declared regular quarterly cash dividends of $0.07 per share in the first quarter and $0.08 per share in each of the remaining three
quarters, as well as special dividends of $0.33 per share, $0.25 per share and $0.50 per share in the second, third, and fourth quarters, for a total of $532 million
in aggregate dividends in 2024.
The approximate number of record holders of the common stock on February 13, 2025 was 327.
39
The chart below shows a comparison of 5 year cumulative total return.
Comparison of 5 Year Cumulative Total Return
Assumes initial investment of $100 on January 1, 2019, with dividends reinvested.
As of December 31, 2024, the S&P 500® Property and Casualty Insurance Index consisted of The Allstate Corporation, Arch Capital Group Ltd. (added Nov. 2022),
Chubb Limited, Cincinnati Financial Corporation, The Hartford Financial Services Group, Inc., Loews Corporation (CNA), The Progressive Corporation, The Travelers
Companies, Inc., and W. R. Berkley Corporation.
2019
2020
2021
2022
2023
2024
W. R. Berkley Corporation
Cum $
100.00
96.85
123.32
165.10
165.50
210.49
S&P 500 Index - Total Returns
Cum $
100.00
118.38
152.33
124.65
157.48
196.49
S&P 500 Property and Casualty Insurance Index
Cum $
100.00
106.33
124.95
148.60
164.61
222.06
Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of 2024 and the remaining number of shares
authorized for purchase by the Company during such period.
Total Number of
Shares Purchased
Average Price
Paid per Share
Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs
Maximum Number of Shares that
may yet be Purchased Under the
Plans or Programs
October 2024
715,920
$
57.91
715,920
14,608,875
November 2024
449,947
57.69
449,947
14,158,928
December 2024
—
—
—
14,158,928
40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates
worldwide in two segments of the property and casualty business: Insurance and Reinsurance & Monoline Excess. Our decentralized structure provides us with
the flexibility to respond quickly and efficiently to local or specific market conditions and to pursue specialty business niches. It also allows us to be closer to
our customers in order to better understand their individual needs and risk characteristics. While providing our business units with certain operating autonomy,
our structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment, reinsurance, enterprise risk management, and
actuarial, financial and corporate compliance support. The Company’s primary sources of revenues and earnings are its insurance operations and its
investments.
An important part of our strategy is to form new businesses to capitalize on various opportunities. Over the years, the Company has formed numerous
businesses that are focused on important parts of the economy in the U.S., including healthcare, cyber security, energy and agriculture, and on growing
international markets, including the Asia-Pacific region, South America and Mexico.
The profitability of the Company’s insurance business is affected primarily by the adequacy of premium rates. The ultimate adequacy of premium
rates is not known with certainty at the time an insurance policy is issued because premiums are determined before claims are reported. The ultimate adequacy
of premium rates is affected mainly by the severity and frequency of claims, which are influenced by many factors, including natural and other disasters,
regulatory measures and court decisions that define and change the extent of coverage and the effects of economic or social inflation on the amount of
compensation for injuries or losses. General insurance prices are also influenced by available insurance capacity, i.e., the level of capital employed in the
industry, and the industry’s willingness to deploy that capital.
The Company’s profitability is also affected by its investment income and investment gains. The Company’s invested assets are invested principally in
fixed maturity securities. The return on fixed maturity securities is affected primarily by general interest rates, as well as the credit quality and duration of the
securities.
The Company also invests in equity securities, merger arbitrage securities, investment funds, private equity, loans and real estate related assets. The
Company's investments in investment funds and its other alternative investments have experienced, and the Company expects to continue to experience, greater
fluctuations in investment income. 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.
Commencing with the first quarter of 2024, the Company reclassified a program management business from the Insurance segment to the Reinsurance
& Monoline Excess segment. The reclassified business is a program management business offering support on a nationwide basis for commercial casualty and
property program administrators. Reclassifications have been made to the Company's 2023 and 2022 financial information to conform with this presentation.
On June 12, 2024, the Company announced that its Board of Directors approved a 3-for-2 common stock split which was paid in the form of a stock
dividend to holders of record as of June 24, 2024. The additional shares were issued on July 10, 2024. Shares outstanding and per share amounts in this Form
10-K reflect such 3-for-2 common stock split.
41
Critical Accounting Estimates
The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed reinsurance
premiums and other-than-temporary impairments of investments. Management believes these policies and estimates are the most critical to its operations and
require the most difficult, subjective and complex judgments.
Reserves for Losses and Loss Expenses. To recognize liabilities for unpaid losses, either known or unknown, insurers establish reserves, which is a
balance sheet account representing estimates of future amounts needed to pay claims and related expenses with respect to insured events which have occurred.
Estimates and assumptions relating to reserves for losses and loss expenses are based on complex and subjective judgments, often including the interplay of
specific uncertainties with related accounting and actuarial measurements. Such estimates are also susceptible to change as significant periods of time may
elapse between the occurrence of an insured loss, the report of the loss to the insurer, the ultimate determination of the cost of the loss and the insurer’s
payment of that loss.
In general, when a claim is reported, claims personnel establish a “case reserve” for the estimated amount of the ultimate payment based upon known
information about the claim at that time. The estimate represents an informed judgment based on general reserving practices and reflects the experience and
knowledge of the claims personnel regarding the nature and value of the specific type of claim. Reserves are also established on an aggregate basis to provide
for losses incurred but not reported (“IBNR”) to the insurer, potential inadequacy of case reserves and the estimated expenses of settling claims, including legal
and other fees and general expenses of administrating the claims adjustment process. Reserves are established based upon the then current legal interpretation
of coverage provided.
In examining reserve adequacy, several factors are considered in estimating the ultimate economic value of losses. These factors include, among other
things, historical data, legal developments, changes in social attitudes and economic conditions, including the effects of inflation. The actuarial process relies
on the basic assumption that past experience, adjusted judgmentally for the effects of current developments and anticipated trends, is an appropriate basis for
predicting future outcomes. Reserve amounts are based on management’s informed estimates and judgments using currently available data. As additional
experience and other data become available and are reviewed, these estimates and judgments may be revised. This may result in reserve increases or decreases
that would be reflected in our results in periods in which such estimates and assumptions are changed.
Reserves do not represent a certain calculation of liability. Rather, reserves represent an estimate of what management expects the ultimate settlement
and claim administration will cost. While the methods for establishing reserves are well tested over time, the major assumptions about anticipated loss
emergence patterns are subject to uncertainty. These estimates, which generally involve actuarial projections, are based on management’s assessment of facts
and circumstances then known, as well as estimates of trends in claims severity and frequency, judicial theories of liability and other factors, including the
actions of third parties which are beyond the Company’s control. These variables are affected by external and internal events, such as inflation and economic
volatility, judicial and litigation trends, reinsurance coverage, legislative changes and claim handling and reserving practices, which make it more difficult to
accurately predict claim costs. The inherent uncertainties of estimating reserves are greater for certain types of liabilities where long periods of time elapse
before a definitive determination of liability is made. Because setting reserves is inherently uncertain, the Company cannot provide assurance that its current
reserves will prove adequate in light of subsequent events.
Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate
and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each business. These
methods 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. For example, the paid loss
and incurred loss development methods rely on historical paid and incurred loss data. For new lines of business, where there is insufficient history of paid and
incurred claims data, or in circumstances where there have been significant changes in claim practices, the paid and incurred loss development methods would
be less credible than other actuarial methods. 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” and in areas where the Company’s own
data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each business.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate
losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in the mix of business, changes in distribution
sources and changes in policy terms and conditions. Examples of changes in terms and conditions that can have a significant impact on reserve levels are the
use of aggregate policy limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles and
attachment points.
42
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid
loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual
claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little
paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost
trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each business. Expected loss
cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’
compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss
development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and
industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted
to their estimated present value based upon such estimated payout patterns. Management believes the estimates and assumptions it makes in the reserving
process provide the best estimate of the ultimate cost of settling claims and related expenses with respect to insured events which have occurred; however,
different assumptions and variables could lead to significantly different reserve estimates.
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 auto, 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. If the actual level of loss frequency and severity are higher or lower than
expected, the ultimate losses will be different than management’s estimate. The following table reflects the impact of changes (which could be favorable or
unfavorable) in frequency and severity, relative to our assumptions, on our loss estimate for claims occurring in 2024:
(In thousands)
Frequency (+/-)
Severity (+/-)
1%
5%
10%
1%
$
142,388
$
428,582
$
786,324
5%
428,582
726,110
1,098,020
10%
786,324
1,098,020
1,487,640
Our net reserves for losses and loss expenses of approximately $17.2 billion as of December 31, 2024 relate to multiple accident years. Therefore, the
impact of changes in frequency or severity for more than one accident year could be higher or lower than the amounts reflected above. The impact of such
changes would likely be manifested gradually over the course of many years, as the magnitude of the changes became evident.
Approximately $3.3 billion, or 19.1%, of the Company’s net loss reserves as of December 31, 2024 relate to the Reinsurance & Monoline Excess
segment. There is a higher degree of uncertainty and greater variability regarding estimates of excess workers' compensation and assumed reinsurance loss
reserves. In the case of excess workers’ compensation, our policies generally attach at $1 million or higher. The claims which reach our layer therefore tend to
involve the most serious injuries and many remain open for the lifetime of the claimant, which extends the claim settlement tail. These claims also occur less
frequently but tend to be larger than primary claims, which increases claim variability. In the case of assumed reinsurance our loss reserve estimates are based,
in part, upon information received from ceding companies. If information received from ceding companies is not timely or correct, the Company’s estimate of
ultimate losses may not be accurate. Furthermore, due to
43
delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is also extended. Management considers the
impact of delayed reporting and the extended tail in its selection of loss development factors for these lines of business.
Information received from ceding companies is used to set initial expected loss ratios, to establish case reserves and to estimate reserves for incurred
but not reported losses on assumed reinsurance business. This information, which is generally provided through reinsurance intermediaries, is gathered through
the underwriting process and from periodic claim reports and other correspondence with ceding companies. The Company performs underwriting and claim
audits of selected ceding companies to determine the accuracy and completeness of information provided to the Company. The information received from the
ceding companies is supplemented by the Company’s own loss development experience with similar lines of business as well as industry loss trends and loss
development benchmarks.
Following is a summary of the Company’s reserves for losses and loss expenses by business segment as of December 31, 2024 and 2023:
(In thousands)
2024
2023
Insurance
$
13,881,574
$
12,430,202
Reinsurance & Monoline Excess
3,285,067
3,231,618
Net reserves for losses and loss expenses
17,166,641
15,661,820
Ceded reserves for losses and loss expenses
3,201,389
3,077,832
Gross reserves for losses and loss expenses
$
20,368,030
$
18,739,652
Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business as of December 31, 2024 and 2023:
(In thousands)
Reported Case
Reserves
Incurred But
Not Reported
Total
December 31, 2024
Other liability
$
2,104,721
$
5,164,994
$
7,269,715
Professional liability
613,230
1,503,908
2,117,138
Workers’ compensation (1)
1,054,427
771,367
1,825,794
Auto
729,462
936,319
1,665,781
Short-tail lines (2)
410,138
593,008
1,003,146
Total Insurance
4,911,978
8,969,596
13,881,574
Reinsurance & Monoline Excess (1) (3)
1,622,399
1,662,668
3,285,067
Total
$
6,534,377
$
10,632,264
$
17,166,641
December 31, 2023
Other liability
$
1,912,594
$
4,607,507
$
6,520,101
Professional liability
527,555
1,438,102
1,965,657
Workers’ compensation (1)
1,019,445
790,944
1,810,389
Auto
645,707
700,850
1,346,557
Short-tail lines (2)
375,129
412,369
787,498
Total Insurance
4,480,430
7,949,772
12,430,202
Reinsurance & Monoline Excess (1) (3)
1,673,581
1,558,037
3,231,618
Total
$
6,154,011
$
9,507,809
$
15,661,820
____________________
(1) Reserves for excess and assumed workers’ compensation business are net of an aggregate net discount of $405 million and $390 million as of
December 31, 2024 and 2023, respectively.
(2) 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.
(3) Reinsurance & Monoline Excess includes property and casualty reinsurance as well as certain program management business and operations that solely
retain risk on an excess basis.
44
The Company evaluates reserves for losses and loss expenses on a quarterly basis. Changes in estimates of prior year losses are reported when such
changes are made. The changes in prior year loss reserve estimates are generally the result of ongoing analysis of recent loss development trends. Original
estimates are increased or decreased as additional information becomes known regarding individual claims and aggregate claim trends.
Certain of the Company's insurance and reinsurance contracts are retrospectively rated, whereby the Company collects more or less premiums based
on the level of loss activity. For those contracts, changes in loss and loss expenses for prior years may be fully or partially offset by additional or return
premiums.
Net prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each of the last three years ended
December 31, are as follows:
(In thousands)
2024
2023
2022
Increase in prior year loss reserves
$
(14,350)
$
(29,681)
$
(54,511)
Increase in prior year earned premiums
18,782
10,782
18,106
Net favorable (unfavorable) prior year development
$
4,432
$
(18,899)
$
(36,405)
The ultimate net impact of COVID-19 on the Company's reserves remains uncertain. As of December 31, 2024, the Company had recognized losses
for COVID-19-related claims activity, net of reinsurance, of approximately $381 million, of which $326 million relates to the Insurance segment and $55
million relates to the Reinsurance & Monoline Excess segment. Such $381 million of COVID-19-related losses included $379 million of reported losses and $2
million of IBNR.
Favorable prior year development (net of additional and return premiums) was $4 million in 2024.
Insurance – Reserves for the Insurance segment developed unfavorably by $8 million in 2024 (net of additional and return premiums). The adverse
development was driven by the commercial auto liability and other liability occurrence lines of business, and was largely offset by favorable development for
workers’ compensation, professional liability, products liability, and commercial property lines of business.
The adverse commercial auto liability development was concentrated in accident years 2021 through 2023, while the adverse other liability occurrence
development was focused across accident years 2015 through 2022. The majority of the other liability occurrence development was driven by umbrella and
excess liability claims, of which a significant portion related to underlying commercial auto exposures. The Company believes that commercial 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 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 2016 through 2023, with accident
years 2020 through 2023 contributing the most. For workers’ compensation, favorable reported claim frequency, below expectations, continued to be the main
driver of the favorable reserve development. The favorable development for both the professional liability and products liability lines of business was related
mainly to accident years 2020 through 2023. For both of these lines, reported claim frequency and incurred losses for accident years 2020 through 2023 were
better than expected, which drove the favorable reserve development. Business written in these years also benefitted from significant price increases, which the
Company now believes will result in higher profitability than initially anticipated. The favorable development for commercial property was mainly associated
with the 2023 accident year, and resulted from better than expected settlements for both catastrophe related and non-catastrophe claims.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $12 million in 2024 (net of
additional and return premiums). The favorable development was driven mainly by excess workers’ compensation business, 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.
45
Unfavorable prior year development (net of additional and return premiums) was $19 million in 2023.
Insurance – Reserves for the Insurance segment developed unfavorably by $21 million in 2023 (net of additional and return premiums). The
unfavorable development for the segment was concentrated in the early part of the year. A key driver of the unfavorable development early in 2023 was
property catastrophe losses related to 2022 events which were still being adjusted and settled during the early part of 2023. In particular, losses related to U.S.
winter storms which occurred during the month of December 2022 were a significant contributor to the development, as information gathering and evaluation
of many of these claims were still ongoing into the new year.
In addition to the property prior year development discussed above, during 2023 the Insurance segment also experienced adverse prior year
development on casualty lines of business for the 2016 through 2019 accident years, which was offset by favorable prior year development on casualty lines of
business for the 2020 through 2022 accident years. The unfavorable development on the 2016 through 2019 accident years was concentrated in the general
liability and commercial auto liability lines of business. 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 elevated uncertainty regarding incurred loss frequency and severity
as a result 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 twelve months. It should also be noted that commercial auto liability experienced adverse prior year
development for the 2020 through 2022 accident years, which partially offset the favorable development discussed above; the adverse development was driven
by a larger than expected number of large losses reported.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $2 million in 2023 (net of
additional and return premiums). The overall favorable prior year development for the segment was driven mainly by favorable development in excess
workers’ compensation, substantially offset by unfavorable development in the non-proportional reinsurance assumed liability, excess general liability
(including umbrella), and commercial auto 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 favorable claim settlements. The favorable development was spread across many prior
accident years. The unfavorable development for non-proportional reinsurance assumed liability and excess general 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. The unfavorable development for commercial auto liability was concentrated in the 2022 accident
year and related to commercial auto program business.
Unfavorable prior year development (net of additional and return premiums) was $36 million in 2022.
Insurance – Reserves for the Insurance segment developed unfavorably by $41 million in 2022 (net of additional and return premiums). The
unfavorable development in the 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
unfavorable development emerged during the third quarter as a result of settlements of claims at values higher than our expectations. However, the Company
believes that
as a result of these settlements the remaining level of uncertainty around the ultimate value of its known COVID-19 claims has been significantly reduced.
The unfavorable development mentioned above also includes favorable prior year development for the Insurance segment primarily attributable to the
2020 and 2021 accident years and unfavorable development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021
accident years was concentrated in certain casualty lines of business including general liability, professional 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 continued to
experience lower reported incurred losses relative to its expectations for these accident years as they developed 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 uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company was cautious in reacting
to these lower trends in
46
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 unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including
medical professional, lines of business, as well as 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.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $5 million in 2022 (net of
additional and return premiums). The overall favorable development for the segment was driven mainly by favorable development in excess workers
compensation, substantially offset by unfavorable development in the professional liability, non-proportional reinsurance assumed liability, and commercial
auto liability lines of business. The favorable excess workers’ compensation development was spread across most prior accident years, including 2012 and prior
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. The
unfavorable professional liability and non-proportional reinsurance assumed liability development was concentrated mainly in accident years 2016 through
2018 and was associated primarily with our U.S. assumed reinsurance business and related to accounts insuring construction projects and professional liability
exposures. The unfavorable development for commercial auto liability was concentrated in the 2021 accident year and related to commercial auto program
business.
Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves
that were discounted was $1,358 million and $1,352 million at December 31, 2024 and 2023, respectively. The aggregate net discount for those reserves, after
reflecting the effects of ceded reinsurance, was $405 million and $390 million at December 31, 2024 and 2023, respectively. At December 31, 2024, discount
rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.
Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2024) are excess workers’
compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess
workers’ compensation business are discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. These rates are
determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any
increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The
expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total
discounted reserves at December 31, 2024), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease.
These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.
Assumed Reinsurance Premiums. The Company estimates the amount of assumed reinsurance premiums that it will receive under treaty reinsurance
agreements at the inception of the contracts. These premium estimates are revised as the actual amount of assumed premiums is reported to the Company by
the ceding companies. As estimates of assumed premiums are made or revised, the related amount of earned premiums, commissions and incurred losses
associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $51 million and $65 million at December 31, 2024
and 2023, respectively. The assumed premium estimates are based upon terms set forth in reinsurance agreements, information received from ceding companies
during the underwriting and negotiation of agreements, reports received from ceding companies and discussions and correspondence with reinsurance
intermediaries. The Company also considers its own view of market conditions, economic trends and experience with similar lines of business. These premium
estimates represent management’s best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements.
Allowance for Expected Credit Losses on Investments.
Fixed Maturity Securities – For fixed maturity securities in an unrealized loss position where the Company intends to sell, or it is more likely than not
that it will be required to sell the security before recovery in value, the amortized cost basis is written down to fair value through net investment gains (losses).
For fixed maturity securities in an unrealized loss position where the Company does not intend to sell, or it is more likely than not that it will not be required to
sell the security before recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or all other factors (non-credit
factors). In making this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a
rating agency, and adverse conditions specifically related to the security, among
47
other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the
amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for expected
credit losses is recorded for the credit loss through net investment gains (losses), limited by the amount that the fair value is less than the amortized cost
basis. The allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment gains (losses). The impairment
related to non-credit factors is recognized in other comprehensive income (loss).
The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities, as
well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic
and default scenarios that involve subjective judgments and estimates by management. Modeling these securities involves various factors, such as projected
default rates, the nature and realizable value of the collateral, if any, the ability of the issuer to make scheduled payments, historical performance and other
relevant economic and performance factors. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if
any. In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period.
For other inputs, the model in most cases reverts to the baseline long-term assumptions linearly over 5 years beyond the forecast period. The long-term
assumptions are based on the historical averages.
The Company classifies its fixed maturity securities by credit rating, primarily based on ratings assigned by credit rating agencies. For purposes of
classifying securities with different ratings, the Company uses the average of the credit ratings assigned, unless in limited situations the Company’s own
analysis indicates an internal rating is more appropriate. Securities that are not rated by a rating agency are evaluated and classified by the Company on a case-
by-case basis.
A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at December 31, 2024 is
presented in the table below.
($ in thousands)
Number of
Securities
Aggregate
Fair Value
Unrealized
Loss
Foreign government
50
$
138,388
$
157,424
Corporate
19
50,525
2,922
State and municipal
6
28,150
1,921
Mortgage-backed securities
17
3,684
206
Asset-backed securities
1
9
1
Total
93
$
220,756
$
162,474
As of December 31, 2024, the Company has recorded an allowance for expected credit losses on fixed maturity securities of $0.7 million. The
Company has evaluated the remaining 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.
Loans Receivable – For loans receivable, the Company estimates an allowance for expected credit losses based on relevant information about past
events, including historical loss experience, current conditions and forecasts that affect the expected collectability of the amortized cost of the financial asset.
The allowance for expected credit losses is presented as a reduction to amortized cost of the financial asset in the consolidated balance sheet and changes to the
estimate for expected credit losses are recognized through net investment gains (losses). Loans receivable are reported net of an allowance for expected credit
losses of $1 million and $3 million as of December 31, 2024 and 2023, respectively.
Fair Value Measurements. The Company’s fixed maturity available for sale securities, equity securities, and its trading account securities are carried
at fair value. Fair value is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date". The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for similar assets in active
markets. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs may only be used to measure fair value to the extent that
observable inputs are not available. The fair value of the vast majority of the Company’s portfolio is based on observable data (other than quoted prices) and,
accordingly, is classified as Level 2.
48
In classifying particular financial securities in the fair value hierarchy, the Company uses its judgment to determine whether the market for a security
is active and whether significant pricing inputs are observable. The Company determines the existence of an active market by assessing whether transactions
occur with sufficient frequency and volume to provide reliable pricing information. The Company determines whether inputs are observable based on the use
of such information by pricing services and external investment managers, the uninterrupted availability of such inputs, the need to make significant
adjustments to such inputs and the volatility of such inputs over time. If the market for a security is determined to be inactive or if significant inputs used to
price a security are determined to be unobservable, the security is categorized in Level 3 of the fair value hierarchy.
Because many fixed maturity securities do not trade on a daily basis, the Company utilizes pricing models and processes which may include
benchmark curves, benchmarking of like securities, sector groupings and matrix pricing. Market inputs used to evaluate securities include benchmark yields,
reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. Quoted prices are often
unavailable for recently issued securities that are infrequently traded or securities that are only traded in private transactions. For publicly traded securities for
which quoted prices are unavailable, the Company determines fair value based on independent broker quotations and other observable market data. 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 data, projections and business developments of the issuer and other relevant information.
The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of December 31, 2024:
(In thousands)
Carrying
Value
Percent
of Total
Pricing source:
Independent pricing services
$
21,919,679
98.1 %
Syndicate manager
135,129
0.6
Directly by the Company based on:
Observable data
278,978
1.3
Cash flow model
19,667
—
Total
$
22,353,453
100.0 %
Independent pricing services - Substantially all of the Company’s fixed maturity securities available for sale were priced by independent pricing
services (generally one U.S. pricing service plus additional pricing services with respect to a limited number of foreign securities held by the Company). The
prices provided by the independent pricing services are generally based on observable market data in active markets (e.g., broker quotes and prices observed
for comparable securities). 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 based upon current trading levels for similar securities. If the prices
appear unusual to the Company, they are re-examined and the value is either confirmed or revised. In addition, the Company periodically performs independent
price tests of a sample of securities to ensure proper valuation and to verify our understanding of how securities are priced. As of December 31, 2024, the
Company did not make any adjustments to the prices provided by the pricing services. Based upon the Company’s review of the methodologies used by the
independent pricing services, these securities were classified as Level 2.
Syndicate manager – The Company has a 15% participation in a Lloyd’s syndicate, and the Company’s share of the securities owned by the syndicate
is priced by the syndicate’s manager. The majority of the securities are liquid, short duration fixed maturity securities. The Company reviews the syndicate
manager’s pricing methodology and audited financial statements and holds discussions with the syndicate manager as necessary to confirm its understanding
and agreement with security prices. Based upon the Company’s review of the methodologies used by the syndicate manager, these securities were classified as
Level 2.
Observable data – If independent pricing is not available, the Company prices the securities directly. Prices are based on observable market data where
available, including current trading levels for similar securities and non-binding quotations from brokers. The Company generally requests two or more quotes.
If more than one quote is received, the Company 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 obtained from brokers. Since these securities were priced based on observable
data, they were classified as Level 2.
49
Cash flow model – If the above methodologies are not available, the Company prices securities using a discounted cash flow model based upon
assumptions as to prevailing credit spreads, interest rates and interest rate volatility, time to maturity and subordination levels. Discount rates are adjusted to
reflect illiquidity where appropriate. These securities were classified as Level 3.
50
Results of Operations for the Years Ended December 31, 2024 and 2023
Business Segment Results
Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses incurred expressed as a
percentage of net premiums earned), expense ratios (policy acquisition and insurance operating expenses expressed as a percentage of net premiums earned)
and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the years ended December 31, 2024 and 2023. The
GAAP combined ratio represents a measure of underwriting profitability, excluding investment income. A GAAP combined ratio in excess of 100 indicates an
underwriting loss; a number below 100 indicates an underwriting profit.
(In thousands)
2024
2023
Insurance
Gross premiums written
$
12,662,132
$
11,461,094
Net premiums written
10,549,550
9,560,533
Net premiums earned
10,086,308
9,007,376
Loss ratio
62.8 %
62.3 %
Expense ratio
28.4
28.3
GAAP combined ratio
91.2
90.6
Reinsurance & Monoline Excess
Gross premiums written
$
1,548,958
$
1,510,912
Net premiums written
1,422,546
1,393,934
Net premiums earned
1,462,177
1,393,311
Loss ratio
54.7 %
54.3 %
Expense ratio
29.4
29.4
GAAP combined ratio
84.1
83.7
Consolidated
Gross premiums written
$
14,211,090
$
12,972,006
Net premiums written
11,972,096
10,954,467
Net premiums earned
11,548,485
10,400,687
Loss ratio
61.8 %
61.3 %
Expense ratio
28.5
28.4
GAAP combined ratio
90.3
89.7
Net Income to Common Stockholders. The following table presents the Company’s net income to common stockholders and net income per diluted
share for the years ended December 31, 2024 and 2023.
(In thousands, except per share data)
2024
2023
Net income to common stockholders
$
1,756,115
$
1,381,359
Weighted average diluted shares
403,224
409,948
Net income per diluted share
$
4.36
$
3.37
The Company reported net income of $1,756 million in 2024 and $1,381 million in 2023. The $375 million increase in net income reflected an after-
tax increase in net investment income of $217 million primarily due to higher interest rates, a larger fixed maturity securities portfolio and investment income
associated with our Argentine inflation-linked securities, an after-tax increase in foreign currency gains of $65 million mainly due to strengthening of the U.S.
dollar against other currencies in 2024, an after-tax increase in net investment gains of $55 million due to change in market value of equity securities and
impairment loss recognized on a real estate investment in 2023, an after-tax increase in underwriting income of $37 million mainly due to growth in premium
rates, an after-tax reduction in corporate expenses of $15 million, an after-tax increase of $4 million in noncontrolling interests, an after-tax increase in profits
from non-insurance businesses of $3 million and an after-tax increase in profit from insurance service businesses of $3 million, partially offset by an increase
of $24 million in tax expense due to a change in the effective tax rate. The number of weighted average diluted shares decreased by 6.7 million for 2024
compared to 2023, mainly reflecting shares repurchased in 2024.
Premiums. Gross premiums written were $14,211 million in 2024, an increase of 10% from $12,972 million in 2023. The increase was due to the
growth in the Insurance segment of $1,201 million and in the Reinsurance & Monoline Excess segment of $38 million. Approximately 81% of premiums
expiring in 2024 and 2023 were renewed.
51
Average renewal premium rates (per unit of exposure) for insurance and facultative reinsurance increased 6.9% in 2024 and 7.1% in 2023. Average
renewal premium rates (per unit of exposure) for insurance and facultative reinsurance excluding workers' compensation increased 7.9% in 2024 and 8.1% in
2023.
A summary of gross premiums written in 2024 compared with 2023 by line of business within each business segment follows:
•
Insurance gross premiums increased 10% to $12,662 million in 2024 from $11,461 million in 2023. Gross premiums increased $509 million (11%)
for other liability, $476 million (17%) for short-tail lines, $179 million (12%) for auto, $21 million (1%) for professional liability and $16 million
(1%) for workers' compensation.
•
Reinsurance & Monoline Excess gross premiums increased 3% to $1,549 million in 2024 from $1,511 million in 2023. Gross premiums written
increased $68 million (16%) for property lines and $28 million (10%) for monoline excess, partially offset by a reduction of $58 million (7%) for
casualty lines.
Net premiums written were $11,972 million in 2024, an increase of 9% from $10,954 million in 2023. Ceded reinsurance premiums as a percentage of
gross written premiums were 16% in both 2024 and 2023.
Premiums earned increased 11% to $11,548 million in 2024 from $10,401 million in 2023. Insurance premiums (including the impact of rate changes)
are generally earned evenly over the policy term, and accordingly recent rate increases will be earned over the upcoming quarters. Premiums earned in 2024 are
related to business written during both 2024 and 2023. Audit premiums were $350 million in 2024 compared with $363 million in 2023.
Net Investment Income. Following is a summary of net investment income (loss) for the years ended December 31, 2024 and 2023:
Amount
Average Annualized
Yield
(In thousands)
2024
2023
2024
2023
Fixed maturity securities, including cash and cash equivalents and loans receivable
$
1,260,429
$
929,098
5.3 %
4.4 %
Arbitrage trading account
69,573
69,369
5.8
5.7
Equity securities
48,920
55,726
5.0
5.1
Investment funds
(11,491)
16,743
(0.7)
1.0
Real estate
(23,616)
(11,185)
(1.8)
(0.9)
Gross investment income
1,343,815
1,059,751
4.6
4.0
Investment expenses
(10,654)
(6,916)
—
—
Total
$
1,333,161
$
1,052,835
4.6 %
4.0 %
Net investment income increased 27% to $1,333 million in 2024 from $1,053 million in 2023 due primarily to a $331 million increase in income from
fixed maturity securities mainly driven by higher interest rates, a larger fixed maturity securities portfolio and investment income associated with our Argentine
inflation-linked securities (see below for further discussion), partially offset by a $28 million decrease in income from investment funds primarily due to
financial service funds, a $12 million decrease in real estate, a $7 million decrease from equity securities and a $4 million increase in investment expenses.
Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 5.3% in 2024 and 4.4% in 2023. The
effective duration of the fixed maturity portfolio was 2.6 years at December 31, 2024 and 2.4 years at December 31, 2023. Average invested assets, at cost
(including cash and cash equivalents), were $28.9 billion in 2024 up 9.5% from $26.4 billion in 2023.
Pre-tax net investment income associated with the Argentine inflation-linked securities in 2024 was $204 million. Such investment income increased
as a result of an adjustment to the inflation rate that was made by the Argentine government in late 2023. As certain of our Argentine bonds matured and were
sold throughout 2024 and the inflation rate continued to decline, we do not expect investment income relating to these securities to continue at this level. The
proceeds from the Argentine inflation-linked securities that matured and were sold in 2024 have been reinvested.
Insurance Service Fees. The Company earns fees from an insurance distribution business (part of which was sold in June 2023), a third-party
administrator, and as a servicing carrier of workers' compensation assigned risk plans for certain states. Insurance service fees increased to $109 million in
2024 from $106 million in 2023 due to an acquisition in the insurance distribution business in late 2023.
Net Realized and Unrealized Gains (Losses) on Investments. The Company buys and sells securities and other investment assets on a regular basis in
order to maximize its total return on investments. Decisions to sell securities and other
52
investment assets are based on management’s view of the underlying fundamentals of specific investments as well as management’s expectations regarding
interest rates, credit spreads, currency values and general economic conditions. Net realized and unrealized gains on investments were $80 million in 2024
compared with $48 million in 2023. In 2024, the gains reflected a change in unrealized gains on equity securities of $121 million, partially offset by net
realized losses on investments of $41 million. In 2023, the gains reflected a change in unrealized gains on equity securities of $71 million, partially offset by
net realized losses on investments of $23 million.
Change in Allowance for Expected Credit Losses on Investments. Based on credit factors, the allowance for expected credit losses is increased or
decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and
adverse conditions specifically related to the security, among other factors. The pre-tax change in allowance for expected credit losses on investments reflected
in net investment gains, decreased by $38 million ($30 million after-tax) in 2024 due to improved pricing associated with foreign government securities and
corporate securities, and increased by $498 thousand ($393 thousand after-tax) in 2023.
Revenues from Non-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses engaged in the distribution of
promotional merchandise, world-wide textile solutions, and aviation-related businesses that provide services to aviation markets, including (i) the distribution,
manufacturing, repair and overhaul of aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and
charter services. Revenues from non-insurance businesses decreased to $528 million in 2024 from $536 million in 2023 mainly due to the aviation-related
business and the promotional merchandise business.
Losses and Loss Expenses. Losses and loss expenses increased to $7,132 million in 2024 from $6,372 million in 2023. The consolidated loss ratio was
61.8% in 2024 and 61.3% in 2023. Catastrophe losses, net of reinsurance recoveries, were $298 million in 2024 driven by heightened frequency of severe
catastrophe events, with Hurricanes Helene and Milton having the largest impacts, and $195 million in 2023. Favorable prior year reserve development (net of
premium offsets) was $4 million in 2024 and adverse prior year reserve development was $19 million in 2023 (refer to Note 13 of our consolidated financial
statements for more detail). The loss ratio excluding catastrophe losses and prior year reserve development were 59.2% in both 2024 and 2023.
A summary of loss ratios in 2024 compared with 2023 by business segment follows:
•
Insurance - The loss ratio was 62.8% in 2024 and 62.3% in 2023. Catastrophe losses were $227 million in 2024 compared with $160 million in
2023. Adverse prior year reserve development was $8 million in 2024 and $21 million in 2023, principally from property catastrophe losses for
2023. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.2 points to 60.5% in 2024 from 60.3% in 2023.
•
Reinsurance & Monoline Excess - The loss ratio was 54.7% in 2024 and 54.3% in 2023. Catastrophe losses were $71 million in 2024 compared
with $35 million in 2023. Favorable prior year reserve development was $12 million in 2024 and $2 million in 2023. The loss ratio excluding
catastrophe losses and prior year reserve development decreased 1.3 points to 50.6% in 2024 from 51.9% in 2023.
Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:
(In thousands)
2024
2023
Policy acquisition and insurance operating expenses
$
3,294,902
$
2,954,686
Insurance service expenses
90,640
91,714
Net foreign currency (gains) losses
(52,376)
31,799
Other costs and expenses
269,140
285,737
Total
$
3,602,306
$
3,363,936
Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments
and internal underwriting costs. Policy acquisition and insurance operating expenses increased 12% and net premiums earned increased 11% from 2023. The
expense ratio (policy acquisition and insurance operating expenses expressed as a percentage of net premiums earned) increased by 0.1 points to 28.5% in 2024
from 28.4% in 2023.
Service expenses, which represent the costs associated with the fee-based businesses, was $91 million in 2024 compared to $92 million in 2023.
53
Net foreign currency (gains) losses result from transactions denominated in a currency other than a businesses’ functional currency. Net foreign
currency gains were $52 million in 2024 compared to losses of $32 million in 2023, primarily due to the U.S. dollar strengthening against other major
currencies in 2024.
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not allocated to business segments,
including the cost of certain long-term incentive plans and new business ventures. Other costs and expenses decreased to $269 million in 2024 from $286
million in 2023, primarily due to lower new start-up operating unit expenses in 2024.
Expenses from Non-Insurance Businesses. Expenses from non-insurance businesses represent costs associated with businesses engaged in the
distribution of promotional merchandise, world-wide textile solutions, and aviation-related businesses that include (i) cost of goods sold related to aircraft and
products sold and services provided and (ii) general and administrative expenses. Expenses from non-insurance businesses decreased to $513 million in 2024
from $525 million in 2023, primarily due to the aviation-related business and promotional merchandise business.
Interest Expense. Interest expense was $127 million in both 2024 and 2023.
Income Taxes. The effective income tax rate was 22.5% in 2024 and 21.1% in 2023. The higher effective income tax rate for the year, as compared to
2023, was primarily due to the geographical mix of earnings and larger amounts being subject to tax at a rate greater than the U.S. statutory rate, which was
partially offset by tax benefits related to tax-exempt investment income and equity-based compensation. See Note 16 of the Consolidated Financial Statements
for a reconciliation of the income tax expense and the amounts computed by applying the Federal income tax rate of 21%.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $481 million of its non-U.S. subsidiaries
since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed, the Company
projects that the incremental tax, if any, will be immaterial.
For years beginning after December 31, 2025, certain U.S. tax rates applied to international business will change. Specifically, increases to the Global
Intangible Low Taxed Income and the Base Erosion and Anti-Abuse Tax rates will take effect. We do not expect this to have a meaningful impact to tax
expense. We are actively monitoring legislative developments and will continue to assess the potential financial implications in 2025.
On August 16, 2022, the Inflation Reduction Act of 2022 was enacted. Among other things, the legislation introduced a corporate alternative minimum
tax on certain corporations. The tax is applicable for taxable years beginning after December 31, 2022 and imposes a 15% minimum tax on a corporation’s
applicable financial statement income. While we are not subject to this tax in 2024, we continue to evaluate the overall impact of this tax legislation on our
operations and U.S. federal income tax position. In addition, a 1% excise tax is now imposed on the value of corporate share repurchases, net of common share
issuances. The tax is included in the cost of treasury stock acquired and was not material for 2024.
Further, the Company is monitoring the impact of the implementation of a global minimum tax rate of 15%, also known as Pillar Two, as introduced
by the Organization for Economic Co-operation and Development, which applies in some countries commencing in 2024. The 2024 impact was not material, as
the Company mainly operates in jurisdictions with a statutory tax rate above 15%. We continue to evaluate this tax legislation as it will apply to other countries
commencing in 2025, as well as possible interactions between Pillar Two measures and recent and potential future actions by the new U.S. administration. Our
initial assessment is that the 2025 impact will not be significant.
The “Bermuda Corporate Income Tax Act 2023” was passed into law December 27, 2023. The income tax will be based on a statutory tax rate of 15%
on Bermuda businesses, subject to reductions for foreign tax credits, and will be effective for fiscal years beginning on or after January 1, 2025. The legislation
does not have a material impact on our income tax position. We will continue to evaluate tax legislation developments during 2025.
Results of Operations for the Years Ended December 31, 2023 and 2022
For a comparison of the Company’s results of operations for the year ended December 31, 2023 to the year ended December 31, 2022, see Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2023, which was filed with the Securities and Exchange Commission on February 23, 2024.
54
Investments
As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-term securities that, combined
with expected cash flow, it believes is adequate to meet its payment obligations. In addition to fixed maturity securities, the Company invests in equity
securities, merger arbitrage securities, investment funds, private equity, loans and real estate related assets. The Company's investments in investment funds and
its other alternative investments have experienced, and the Company expects to continue to experience, greater fluctuations in investment income.
The Company also attempts to maintain an appropriate relationship between the effective duration of the investment portfolio and the approximate
duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the investment portfolio was 2.6 years and 2.4 years at
December 31, 2024 and 2023, respectively. The Company’s investment portfolio and investment-related assets as of December 31, 2024 were as follows:
($ in thousands)
Carrying
Value
Percent
of Total
Fixed maturity securities:
U.S. government and government agencies
$
2,235,341
7.5 %
State and municipal:
Special revenue
1,517,708
5.1
State general obligation
307,514
1.0
Local general obligation
272,376
0.9
Corporate backed
153,574
0.5
Pre-refunded (1)
85,592
0.3
Total state and municipal
2,336,764
7.8
Mortgage-backed securities:
Agency
3,045,639
10.2
Commercial
532,282
1.8
Residential-Prime
187,806
0.6
Residential-Alt A
2,055
—
Total mortgage-backed securities
3,767,782
12.6
Asset-backed securities
3,885,012
13.0
Corporate:
Industrial
3,667,199
12.3
Financial
3,320,513
11.1
Utilities
778,694
2.6
Other
651,235
2.2
Total corporate
8,417,641
28.2
Foreign government
1,755,325
5.9
Total fixed maturity securities
22,397,865
75.0
Equity securities available for sale:
Common stocks
760,167
2.5
Preferred stocks
443,621
1.5
Total equity securities available for sale
1,203,788
4.0
Cash and cash equivalents
1,974,747
6.6
Investment funds
1,468,246
4.9
Real estate
1,291,455
4.3
Arbitrage trading account
1,122,599
3.8
Loans receivable
405,453
1.4
Total investments
$
29,864,153
100.0 %
______________
(1) Pre-refunded securities are securities for which an escrow account has been established to fund the remaining payments of principal and interest through
maturity. Such escrow accounts are funded almost exclusively with U.S. Treasury and U.S. government agency securities.
Fixed Maturity Securities. The Company’s investment policy with respect to fixed maturity securities is generally to purchase instruments with the
expectation of holding them to their maturity. However, management of the available for sale
55
portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio as a result of changes in
financial market conditions and tax considerations.
The Company’s philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing total return. The key factors
that management considers in its investment decisions as to whether to hold or sell fixed maturity securities are its view of the underlying fundamentals of
specific securities as well as its expectations regarding interest rates, credit spreads and currency values. In a period in which management expects interest rates
to rise, the Company may sell longer duration securities in order to mitigate the impact of an interest rate rise on the fair value of the portfolio. Similarly, in a
period in which management expects credit spreads to widen, the Company may sell lower quality securities, and in a period in which management expects
certain foreign currencies to decline in value, the Company may sell securities denominated in those foreign currencies. The sale of fixed maturity securities in
order to achieve the objective of maximizing total return may result in realized gains (losses); however, there is no reason to expect these gains (losses) to
continue in future periods.
Equity Securities. Equity securities primarily represent investments in common and preferred stocks in companies with potential growth opportunities in
different sectors, mainly in the financial institutions and energy sectors.
Investment Funds. At December 31, 2024, the carrying value of investment funds was $1,468 million, including investments in financial services funds
of $430 million, other funds of $379 million (which includes a deferred compensation trust asset of $38 million), transportation funds of $286 million, real
estate funds of $179 million, infrastructure funds of $151 million and energy funds of $43 million. Investment funds are primarily reported on a one-quarter
lag.
Real Estate. Real estate is directly owned property held for investment. At December 31, 2024, real estate 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. In addition, part
of the previously mentioned mixed-use project in Washington D.C. is under development. The Company expects to fund further development costs for the
project with a combination of its own funds and external financing.
Arbitrage Trading Account. The arbitrage trading account is comprised of direct investments in arbitrage securities. Merger arbitrage is the business of
investing in the securities of publicly held companies that are the targets in announced tender offers and mergers.
Loans Receivable. Loans receivable, net of allowance for expected credit losses, had both an amortized cost and an aggregate fair value of $405 million
at December 31, 2024. The amortized cost of loans receivable is net of an allowance for expected credit losses of $1 million as of December 31, 2024. Loans
receivable include real estate loans of $402 million that are secured by commercial and residential real estate located primarily in the U.K. and New York. Real
estate loans generally earn interest at fixed or stepped interest rates and have maturities through 2028. Loans receivable include commercial loans of $3 million
that are secured by business assets and have fixed interest rates with varying maturities not exceeding 5 years.
56
Liquidity and Capital Resources
Cash Flow. Cash flow provided from operating activities increased to $3,678 million in 2024 from $2,929 million in 2023, primarily due to an increase
in premium receipts partially offset by increased loss and loss expense payments.
The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and proceeds from sales and maturities
of portfolio investments. The principal uses of cash are payments for claims, taxes, operating expenses and dividends. The Company expects its insurance
subsidiaries to fund the payment of losses with cash received from premiums, investment income and fees. The Company generally targets an average duration
for its investment portfolio that is within 1.5 years of the average number of years held for its liabilities so that portions of its investment portfolio mature
throughout the claim cycle and are available for the payment of claims if necessary. In the event operating cash flow and proceeds from maturities and
prepayments of fixed maturity securities are not sufficient to fund claim payments and other cash requirements, the remainder of the Company's cash and
investments is available to pay claims and other obligations as they become due. The Company's investment portfolio is highly liquid, with approximately 82%
invested in cash, cash equivalents and marketable fixed maturity securities as of December 31, 2024. If the sale of fixed maturity securities were to become
necessary, a realized gain or loss equal to the difference between the cost and sales price of securities sold would be recognized.
Debt. At December 31, 2024, the Company had senior notes, subordinated debentures and other debt outstanding with a carrying value of $2,841
million and a face amount of $2,864 million. The maturities of the outstanding debt are $9 million in 2025, $250 million in 2037, $350 million in 2044, $470
million in 2050, $400 million in 2052, $185 million in 2058, $300 million in 2059, $250 million in 2060, and $650 million in 2061.
On April 1, 2022, the Company entered into a senior unsecured revolving credit facility that provides for revolving, unsecured borrowings up to an
aggregate of $300 million with a $50 million sublimit for letters of credit. The Company may increase the amount available under the facility to a maximum of
$500 million subject to obtaining lender commitments for the increase and other customary conditions. Borrowings under the facility may be used for working
capital and other general corporate purposes. All borrowings under the facility must be repaid by April 1, 2027, except that letters of credit outstanding on that
date may remain outstanding until April 1, 2028 (or such later date approved by all lenders). Our ability to utilize the facility is conditioned on the satisfaction
of representations, warranties and covenants that are customary for facilities of this type. As of December 31, 2024, there were no borrowings outstanding
under the facility.
Equity. At December 31, 2024, total common stockholders’ equity was $8.4 billion, common shares outstanding were 380,066,070 and stockholders’
equity per outstanding share was $22.09. The Company repurchased 5,702,996 and 13,061,514 shares of its common stock in 2024 and 2023, respectively. The
aggregate cost of the repurchases was $304 million in 2024 and $537 million in 2023. In 2024, the Board declared regular quarterly cash dividends of $0.07 per
share in the first quarter and $0.08 per share in each of the remaining three quarters, as well as special dividends of $0.33 per share, $0.25 per share and $0.50
per share in the second, third, and fourth quarters, respectively, for a total of $532 million in aggregate dividends in 2024.
Total Capital. Total capitalization (equity, debt and subordinated debentures) was $11.2 billion at December 31, 2024. The percentage of the Company’s
capital attributable to senior notes, subordinated debentures and other debt was 25% and 28% at December 31, 2024 and 2023, respectively.
Federal and Foreign Income Taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in each of the countries in which it has overseas operations. At
December 31, 2024, the Company had a gross deferred tax asset of $715 million (which primarily relates to, loss and loss expense reserves, unearned premium
reserves, employee compensation plans and unrealized losses on investments). The Company also has a $36 million valuation allowance against the gross
deferred tax asset and a gross deferred tax liability of $524 million (which primarily relates to deferred policy acquisition costs, and various investment funds)
resulting in a net deferred tax asset of $155 million. The realization of this asset is dependent upon the Company's ability to generate sufficient taxable income
in future periods. Based on historical results and the prospects for future operations, management anticipates that it is more likely than not that future taxable
income will be sufficient for the realization of this asset.
57
Reinsurance
The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying reinsurers a part of the premiums
received on the policies it writes. Reinsurance is purchased by the Company principally to reduce its net liability on individual risks and to protect against
catastrophic losses. Although reinsurance does not legally discharge an insurer from its primary liability for the full amount of the policies, it does make the
assuming reinsurer liable to the insurer to the extent of the reinsurance coverage. The Company monitors the financial condition of its reinsurers and attempts
to place its coverages with only financially sound carriers. Reinsurance coverage and retentions vary depending on the line of business, location of the risk and
nature of loss. The Company’s reinsurance purchases include the following:
•
Property reinsurance treaties - The Company purchases property reinsurance to reduce its exposure to large individual property losses and catastrophe
events. Following is a summary of significant property reinsurance treaties in effect as of January 1, 2025:
◦
The Company’s property per risk reinsurance generally covers losses between $2.5 million and $85 million.
◦
The Company’s property catastrophe excess of loss reinsurance program provides protection for business written by its Insurance segments
and U.S. and non-U.S. business written by Lloyd's Syndicate, excluding offshore energy. For 2025, some of our property catastrophe
reinsurance is placed via industry loss warranty (ILW) covers and the equivalent W. R. Berkley limit and retention (and resulting net position)
are estimated based on our market share and modeled outcome when applying the ILW layering. Retentions by territory and peril range
between $46.3 million and $74.0 million. Limits purchased are the difference between the corresponding retentions and $700 million.
•
Casualty reinsurance treaties - The Company purchases casualty reinsurance to reduce its exposure to large individual casualty losses and workers’
compensation catastrophe losses for the majority of business written by its U.S. companies. A casualty contingency treaty, in effect as of January 1,
2025, provides protection for bad faith and runaway loss adjustment expense losses in excess of $10 million and up to $75 million. For losses
involving two or more claimants for primary workers’ compensation business, coverage is generally in place for losses between $10 million and $500
million. For excess workers’ compensation business, such coverage is generally in place for losses between $25 million and $500 million. Our
workers’ compensation catastrophe reinsurance program is a shared cover for both excess and primary workers’ compensation business.
•
Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that are in excess of treaty
reinsurance capacity.
•
Other reinsurance - Depending on the business, the Company purchases specific additional reinsurance to supplement the above programs.
•
Lifson Re is expected to continue to be a participant on the majority of the Company’s reinsurance placements. Effective January 1, 2025, Lifson Re
participates in a 32.5% share of the placed amounts, increased from 30.0% in the prior year. This pertains to all traditional treaty
reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating.
Lifson Re is currently capitalized with $418 million of equity from a small group of sophisticated global investors with long-term investment
horizons, including a minority participation by the Company. Lifson Re participates on a fully collateralized basis.
The Company places a number of its casualty treaties on a “risk attaching” basis. Under risk attaching treaties, all claims from policies incepting during
the period of the reinsurance contract are covered even if they occur after the expiration date of the reinsurance contract. If the Company is unable to renew or
replace its existing reinsurance coverage, protection for unexpired policies would remain in place until their expiration. In such case, the Company could revise
its underwriting strategy for new business to reflect the absence of reinsurance protection. The casualty contingency treaty highlighted above is purchased on a
“losses discovered” basis. Property catastrophe and workers’ compensation catastrophe reinsurance is generally placed on a “losses occurring basis,” whereby
only claims occurring during the period are covered. If the Company is unable to renew or replace these reinsurance coverages, unexpired policies would not
be protected, though we generally have the option to purchase run-off coverage in our treaties.
Following is a summary of earned premiums and loss and loss expenses ceded to reinsurers for each of the three years ended December 31, 2024:
Year Ended December 31,
(In thousands)
2024
2023
2022
Earned premiums
$
2,163,213
$
1,958,581
$
1,883,263
Losses and loss expenses
1,368,279
1,376,144
1,269,338
58
Ceded earned premiums increased 10% in 2024 to $2,163 million. The ceded losses and loss expenses ratio decreased 7.0 points to 63% in 2024 from
70% in 2023.
The following table presents the credit quality of amounts due from reinsurers as of December 31, 2024.
(In thousands)
Reinsurer
Rating
(1)
Amount
Amounts due in excess of $20 million:
Lloyd’s of London
A+
$
356,338
Partner Re
A+
314,891
Munich Re
AA-
287,864
Berkshire Hathaway
AA+
274,182
Hannover Re Group
AA-
222,719
Renaissance Re
A+
215,300
Swiss Re
AA-
159,462
Liberty Mutual
A
120,381
Everest Re
A+
93,223
Axis Capital
A+
83,756
Arch Capital Group
A+
67,357
Sompo Holdings Group
A+
59,074
Fairfax Financial
A
58,585
Nationwide Group
A+
52,111
Korean Re
A
51,233
Axa Insurance
AA-
50,002
TOA RE
A
47,501
Markel Corp Group
A
42,982
MS & AD Insurance Group
A
34,680
Helvetia Holdings Group
A+
29,490
Chubb Group
AA
26,708
Other reinsurers:
Rated A- or better
124,699
Secured (2)
636,207
All Others
36,378
Subtotal
$
3,445,123
Residual market pools (3)
120,922
Allowance for expected credit losses
(8,350)
Total
$
3,557,695
(1) S&P rating, or if not rated by S&P, A.M. Best rating.
(2) Secured by letters of credit or other forms of collateral.
(3) Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide workers' compensation to
employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill this residual market obligation by participating in pools
where results are shared by the participating companies. The Company acts as a servicing carrier for workers' compensation pools in certain states. As a
servicing carrier, the Company writes residual market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier,
the Company receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as ceded balances are jointly
shared by all the pool members.
59
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a
company has (1) made guarantees, (2) a retained or contingent interest in transferred assets, (3) an obligation under derivative instruments classified as equity
or (4) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to
the Company, or that engages in leasing, hedging or research and development arrangements with the Company. The Company has no arrangements of these
types that management believes may have a material current or future effect on our financial condition, liquidity or results of operations.
60
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk. The fair value of the Company’s investments is subject to risks of fluctuations in credit quality and interest rates. The Company uses
various models and stress test scenarios to monitor and manage interest rate risk. The Company attempts to manage its interest rate risk by maintaining an
appropriate relationship between the effective duration of the investment portfolio and the average number of years held for its liabilities (i.e., policy claims
and debt obligations). The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.6 years and 2.4 years at December 31,
2024 and 2023, respectively.
In addition, the fair value of the Company’s international investments is subject to currency risk. The Company attempts to manage its currency risk by
matching its foreign currency assets and liabilities where considered appropriate.
The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2024:
Effective
Duration
($ in thousands)
(Years)
Fair Value
Mortgage-backed securities
4.3
$
3,767,851
U.S. government and government agencies
3.7
2,235,341
State and municipal
2.7
2,338,256
Foreign government
2.7
1,755,325
Corporate
2.6
8,417,641
Loans receivable
2.4
405,248
Asset-backed securities
1.4
3,885,012
Cash and cash equivalents
0.0
1,404,931
Total
2.6
$
24,209,605
Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates. The Company determines the estimated
change in fair value of the fixed maturity securities, assuming parallel shifts in the yield curve for treasury securities while keeping spreads between individual
securities and treasury securities static. The estimated fair value at specified levels at December 31, 2024 would be as follows:
(In thousands)
Estimated Fair Value
Change in Fair Value
Change in interest rates:
300 basis point rise
$
22,258,604
$
(1,951,001)
200 basis point rise
22,898,254
(1,311,351)
100 basis point rise
23,555,609
(653,996)
Base scenario
24,209,605
—
100 basis point decline
24,827,143
617,538
200 basis point decline
25,393,892
1,184,287
300 basis point decline
25,928,699
1,719,094
Arbitrage investing differs from other types of investments in that its focus is 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 believes that this makes arbitrage investments less vulnerable to changes in
general stock market conditions. Potential changes in market conditions are also mitigated by the implementation of hedging strategies, including short sales.
Additionally, the arbitrage positions are generally hedged against market declines by purchasing put options, selling call options or entering into swap
contracts. The Company's merger arbitrage securities are primarily exposed to the risk of completion of announced deals, which are subject to regulatory as
well as transactional and other risks.
61
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
W. R. Berkley Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of W. R. Berkley Corporation and subsidiaries (the Company) as of December 31, 2024 and
2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three‑year period
ended December 31, 2024, and the related notes and financial statement schedules II to VI (collectively, the consolidated financial statements). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the
results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2025 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Reserves for losses and loss expenses
As discussed in Notes 1 and 13 to the consolidated financial statements, the Company estimates the reserves for losses and loss expenses (reserves) using
a variety of actuarial techniques and methods. The key assumptions used to arrive at the best estimate of recorded reserves are expected loss ratios, rate of
loss cost inflation, reported and paid loss emergence patterns, loss frequency and severity, and the loss reporting lag. Such amounts are adjusted for
certain qualitative factors. The reserves as of December 31, 2024 were $20.4 billion.
We identified the assessment of the estimate of reserves as a critical audit matter because it involved significant measurement uncertainty, which required
complex auditor judgement. Specialized actuarial skills and knowledge were required to evaluate the actuarial method or methods and assumptions used.
Assumptions included loss development
62
factors; the weighting of actuarial methods when more than one was used; the impact of qualitative factors; and whether payments are fixed and reliably
determinable for certain reserves subject to discounting.
The following are the primary procedures we performed to address the critical audit matter. With the assistance of actuarial professionals, when
appropriate, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s reserving process. This
included controls over the Company’s process to develop the Company’s best estimate of reserves based on actuarial methodologies and assumptions
employed by the Company’s actuaries. We involved actuarial professionals with specialized skills and knowledge, who assisted in:
•
examining the Company’s actuarial methodologies for compliance with Actuarial Standards of Practice
•
evaluating the Company’s ability to discount certain reserves by comparing the expected payout pattern of claims paid to actual claims paid
•
evaluating the Company’s actuarial point estimate by performing independent actuarial analyses for certain of the larger, more complex businesses
•
evaluating the Company’s actuarial point estimate by examining the Company actuaries’ process, and key assumptions for certain of the remaining
businesses
•
developing an independent range of reserves based on actuarial methodologies and assumptions and comparing to the Company’s recorded reserves
•
evaluating the Company’s recorded reserves and year-over-year movements of the Company’s reserves relative to, and within, the independently
developed range of reserves.
/S/ KPMG LLP
We have served as the Company’s auditor since 1972.
New York, New York
February 24, 2025
63
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
(In thousands, except per share data)
2024
2023
2022
REVENUES:
Net premiums written
$
11,972,096
$
10,954,467
$
10,004,070
Change in net unearned premiums
(423,611)
(553,780)
(442,641)
Net premiums earned
11,548,485
10,400,687
9,561,429
Net investment income
1,333,161
1,052,835
779,185
Net investment gains:
Net realized and unrealized gains on investments
79,738
47,540
217,311
Change in allowance for expected credit losses on investments
37,970
(498)
(14,914)
Net investment gains
117,708
47,042
202,397
Revenues from non-insurance businesses
528,012
535,508
509,548
Insurance service fees
108,935
106,485
110,544
Other income
2,451
381
3,396
Total revenues
13,638,752
12,142,938
11,166,499
OPERATING COSTS AND EXPENSES:
Losses and loss expenses
7,131,595
6,372,142
5,861,750
Other operating costs and expenses
3,602,306
3,363,936
2,961,505
Expenses from non-insurance businesses
513,451
524,998
493,189
Interest expense
126,907
127,459
130,374
Total operating costs and expenses
11,374,259
10,388,535
9,446,818
Income before income taxes
2,264,493
1,754,403
1,719,681
Income tax expense
(509,916)
(370,557)
(334,727)
Net income before noncontrolling interests
1,754,577
1,383,846
1,384,954
Noncontrolling interests
1,538
(2,487)
(3,892)
Net income to common stockholders
$
1,756,115
$
1,381,359
$
1,381,062
NET INCOME PER SHARE:
Basic
$
4.39
$
3.40
$
3.33
Diluted
$
4.36
$
3.37
$
3.29
See accompanying notes to consolidated financial statements.
64
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year Ended December 31,
(In thousands)
2024
2023
2022
Net income before noncontrolling interests
$
1,754,577
$
1,383,846
$
1,384,954
Other comprehensive (loss) gain:
Change in unrealized translation adjustments
(77,615)
32,192
1,179
Change in unrealized investment gains (losses), net of taxes
69,182
306,553
(983,803)
Other comprehensive (loss) gain
(8,433)
338,745
(982,624)
Comprehensive income
1,746,144
1,722,591
402,330
Noncontrolling interests
1,536
(2,485)
(3,890)
Comprehensive income to common stockholders
$
1,747,680
$
1,720,106
$
398,440
See accompanying notes to consolidated financial statements.
65
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(In thousands, except share data)
2024
2023
Assets
Investments:
Fixed maturity securities (amortized cost of $23,010,899 and $20,915,245; allowance for expected credit losses of $671 and $36,751 at
December 31, 2024 and 2023)
$
22,397,865
$
20,178,308
Investment funds
1,468,246
1,621,655
Real estate
1,291,455
1,249,874
Arbitrage trading account
1,122,599
938,049
Equity securities
1,203,788
1,090,347
Loans receivable (net of allowance for expected credit losses of $1,114 and $3,004 at December 31, 2024 and 2023)
405,453
201,271
Total investments
27,889,406
25,279,504
Cash and cash equivalents
1,974,747
1,363,195
Premiums and fees receivable (net of allowance for expected credit losses of $39,884 and $35,110 at December 31, 2024 and 2023)
3,266,845
3,109,334
Due from reinsurers (net of allowance for expected credit losses of $8,350 and $8,404 at December 31, 2024 and 2023)
3,557,695
3,534,527
Deferred policy acquisition costs
951,728
861,609
Prepaid reinsurance premiums
823,207
758,927
Trading account receivable from brokers and clearing organizations
60,327
303,614
Property, furniture and equipment
478,511
426,803
Goodwill
184,332
174,597
Accrued investment income
243,772
213,408
Current federal and foreign income taxes
39,382
1,318
Deferred federal and foreign income taxes
220,217
309,623
Other assets
877,099
865,556
Total assets
$
40,567,268
$
37,202,015
Liabilities and Equity
Liabilities:
Reserves for losses and loss expenses
$
20,368,030
$
18,739,652
Unearned premiums
6,375,112
5,922,326
Due to reinsurers
668,652
631,164
Trading account securities sold but not yet purchased
73,358
9,357
Current federal and foreign income taxes
53,482
47,525
Deferred federal and foreign income taxes
65,151
42,660
Senior notes and other debt
1,831,158
1,827,951
Subordinated debentures
1,009,808
1,009,090
Other liabilities
1,715,078
1,503,053
Total liabilities
32,159,829
29,732,778
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 1,250,000,000 shares; issued and outstanding, net of treasury shares, 380,066,070 and 384,817,136 shares, respectively
158,705
158,705
Additional paid-in capital
984,825
964,789
Retained earnings
12,265,070
11,040,908
Accumulated other comprehensive loss
(934,269)
(925,838)
Treasury stock, at cost, 413,455,739 and 408,704,807 shares, respectively
(4,079,220)
(3,783,133)
Total common stockholders’ equity
8,395,111
7,455,431
Noncontrolling interests
12,328
13,806
Total equity
8,407,439
7,469,237
Total liabilities and equity
$
40,567,268
$
37,202,015
See accompanying notes to consolidated financial statements.
66
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Year Ended December 31,
(In thousands, except per share data)
2024
2023
2022
COMMON STOCK:
Beginning and end of period
$
158,705
$
158,705
$
158,705
ADDITIONAL PAID IN CAPITAL:
Beginning of period
$
964,789
$
944,632
$
928,202
Restricted stock units issued
(32,344)
(29,043)
(32,622)
Restricted stock units expensed
52,380
49,200
49,052
End of period
$
984,825
$
964,789
$
944,632
RETAINED EARNINGS:
Beginning of period
$
11,040,908
$
10,161,005
$
9,015,135
Net income to common stockholders
1,756,115
1,381,359
1,381,062
Dividends ($1.40, $1.29, and $0.59 per share, respectively)
(531,953)
(501,456)
(235,192)
End of period
$
12,265,070
$
11,040,908
$
10,161,005
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment (losses) gains:
Beginning of period
$
(586,354)
$
(892,905)
$
90,900
Change in unrealized gains (losses) on securities without an allowance for expected
credit losses
64,756
305,908
(955,435)
Change in unrealized gains (losses) on securities with an allowance for expected credit losses
4,428
643
(28,370)
End of period
(517,170)
(586,354)
(892,905)
Currency translation adjustments:
Beginning of period
(339,484)
(371,676)
(372,855)
Net change in period
(77,615)
32,192
1,179
End of period
(417,099)
(339,484)
(371,676)
Total accumulated other comprehensive loss
$
(934,269)
$
(925,838)
$
(1,264,581)
TREASURY STOCK:
Beginning of period
$
(3,783,133)
$
(3,251,429)
$
(3,167,076)
Stock exercised/vested
10,066
10,381
9,787
Stock repurchased
(303,655)
(537,163)
(94,140)
Other
(2,498)
(4,922)
—
End of period
$
(4,079,220)
$
(3,783,133)
$
(3,251,429)
NONCONTROLLING INTERESTS:
Beginning of period
$
13,806
$
19,829
$
14,719
Contributions (distributions)
58
(8,508)
1,220
Net (loss) income
(1,538)
2,487
3,892
Other comprehensive income (loss), net of tax
2
(2)
(2)
End of period
$
12,328
$
13,806
$
19,829
See accompanying notes to consolidated financial statements.
67
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(In thousands)
2024
2023
2022
CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders
$
1,756,115
$
1,381,359
$
1,381,062
Adjustments to reconcile net income to net cash from operating activities:
Net investment gains
(117,708)
(47,042)
(202,397)
Depreciation and (accretion) amortization
(170,638)
(20,861)
55,872
Noncontrolling interests
(1,538)
2,487
3,892
Investment funds
11,491
(16,743)
(145,099)
Stock incentive plans
54,381
51,000
49,411
Change in:
Arbitrage trading account
122,738
(54,213)
(53,291)
Premiums and fees receivable
(184,431)
(334,178)
(268,171)
Reinsurance accounts
(31,738)
(306,017)
(266,307)
Deferred policy acquisition costs
(91,150)
(99,387)
(88,844)
Current income taxes
(28,526)
52,451
(3,534)
Deferred income taxes
95,311
(26,691)
(64,712)
Reserves for losses and loss expenses
1,707,722
1,715,076
1,684,254
Unearned premiums
485,488
617,535
466,590
Other
70,851
14,462
19,878
Net cash from operating activities
3,678,368
2,929,238
2,568,604
CASH FLOWS USED IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities
2,310,746
1,011,195
797,948
Proceeds from sale of equity securities
331,291
318,852
82,319
Distributions from (contributions to) investment funds
134,853
(19,904)
24,623
Proceeds from maturities and prepayments of fixed maturity securities
4,890,572
3,506,903
4,891,179
Purchase of fixed maturity securities
(9,368,703)
(6,664,763)
(8,036,680)
Purchase of equity securities
(207,457)
(80,454)
(340,482)
Real estate purchased
(66,632)
(2,074)
(45,920)
Change in loans receivable
(210,816)
(29,719)
(83,212)
Net additions to property, furniture and equipment
(105,623)
(53,080)
(52,684)
Change in balances due from security brokers
107,280
(33,929)
14,337
Cash received in connection with business disposition
—
96,567
906,789
Payment for business purchased, net of cash acquired
—
(11,558)
(49,572)
Net cash used in investing activities
(2,184,489)
(1,961,964)
(1,891,355)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net proceeds from issuance of debt
3,105
980
—
Repayment of senior notes and other debt
—
(1,954)
(429,812)
Cash dividends to common stockholders
(531,953)
(501,456)
(235,192)
Purchase of common treasury shares
(303,655)
(537,163)
(94,140)
Other, net
(19,984)
(22,902)
(12,848)
Net cash used in financing activities
(852,487)
(1,062,495)
(771,992)
Net impact on cash due to change in foreign exchange rates
(29,840)
9,070
(24,754)
Net increase (decrease) in cash and cash equivalents
611,552
(86,151)
(119,497)
Cash and cash equivalents at beginning of year
1,363,195
1,449,346
1,568,843
Cash and cash equivalents at end of year
$
1,974,747
$
1,363,195
$
1,449,346
See accompanying notes to consolidated financial statements.
68
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2024, 2023 and 2022
(1) Summary of Significant Accounting Policies
(A) Principles of consolidation and basis of presentation
The consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the "Company"), have been
prepared on the basis of U.S. generally accepted accounting principles ("GAAP"). All significant intercompany transactions and balances have been eliminated.
Shares outstanding and per share amounts have been adjusted to reflect the 3-for-2 common stock split effected on July 10, 2024. Additionally, commencing
with the first quarter of 2024, the Company reclassified a program management business from the Insurance segment to the Reinsurance & Monoline Excess
segment. The reclassified business is a program management business offering support on a nationwide basis for commercial casualty and property program
administrators. Reclassifications have been made in the 2023 and 2022 financial statements as originally reported to conform to the presentation of the 2024
financial statements.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses
reflected during the reporting period. The most significant items on our balance sheet that involve a greater degree of accounting estimates that are subject to
change in the future are the valuation of investments, allowance for expected credit losses on investments, reserves for losses and loss expenses and premium
estimates. Actual results could differ from those estimates.
(B) Revenue recognition
Insurance premiums are recognized as written at the inception of the policy. Reinsurance premiums are estimated based upon information received
from ceding companies, and subsequent differences from such estimates are recorded in the period they are determined. Insurance and reinsurance premiums
are primarily earned on a pro rata basis over the policy term. Fees for services are earned over the period that the services are provided. Premiums and fees
receivable are reported net of an allowance for expected credit losses, with the allowance being estimated based on current and future expected conditions,
historical loss data and specific identification of collectability concerns where applicable. Changes in the allowance are reported within other operating costs
and expenses.
Audit premiums are recognized when they are reliably determinable. The change in accruals for earned but unbilled audit premiums increased net
premiums written and premiums earned by $19 million, $19 million and $25 million in 2024, 2023 and 2022, respectively.
Revenues from non-insurance businesses are derived from businesses engaged in the distribution of promotional merchandise, world-wide textile
solutions, and aircraft services provided to the general, commercial and military aviation markets. These aircraft services include (i) the distribution,
manufacturing, repair and overhaul of aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and
charter services. Revenue is recognized upon the shipment of products and parts, the delivery of aircraft, the delivery of fuel, and over the completion period of
services.
Insurance service fee revenue represents servicing fees for program administration and claims management services provided by the Company,
including workers' compensation assigned risk plans, as well as insurance brokerage and risk management services. Fees for program administration, claims
management and risk management services are primarily recognized ratably over the related contract period for which the underlying services are rendered.
(C) Cash and cash equivalents
Cash equivalents consist of funds invested in money market accounts and investments with an effective maturity of three months or less when
purchased.
(D) Investments
Fixed maturity securities classified as available for sale are carried at estimated fair value, with unrealized gains and losses, net of applicable income
taxes, excluded from earnings and reported as a component of comprehensive income and a separate component of stockholders' equity. Fixed maturity
securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity and reported at amortized cost. Investment
income from fixed maturity
69
securities is recognized based on the constant effective yield method. Premiums and discounts on mortgage-backed securities are adjusted for the effects of
actual and anticipated prepayments on a retrospective basis.
Equity securities with readily determinable fair values are measured at fair value, with changes in the fair value recognized in net income within net
realized and unrealized gains on investments.
Fixed maturity securities that the Company purchased with the intent to sell in the near-term are classified as trading account securities and are
reported at estimated fair value. Realized and unrealized gains and losses from trading activity are reported as net investment income and are recorded at the
trade date. Short sales and short call options are presented as trading securities sold but not yet purchased. Unsettled trades and the net margin balances held by
the clearing broker are presented as a trading account receivable from brokers and clearing organizations.
Investment funds are carried under the equity method of accounting. The Company's share of the earnings or losses of investment funds is primarily
reported on a one-quarter lag in order to facilitate the timely completion of the Company's consolidated financial statements.
Loans receivable primarily represent commercial and real estate loans and are carried at amortized cost. The accrual of interest on loans receivable is
discontinued if the loan is 90 days past due based on the contractual terms of the loan unless the loan is adequately secured and in process of collection. In
general, loans are placed on non-accrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest on these
loans is accounted for on a cash basis until qualifying for return to accrual status. Loans are returned to accrual status when all principal and interest amounts
contractually due are brought current and future payments are reasonably assured.
Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date.” Fair value of investments is determined based on a fair value hierarchy that prioritizes the use of observable inputs over
the use of unobservable inputs and requires the use of observable inputs when available. (See Note 12 of the Notes to Consolidated Financial Statements.)
Realized gains or losses represent the difference between the cost of securities sold and the proceeds realized upon sale and are recorded at the trade
date. The Company uses primarily the first-in, first-out method to determine the cost of securities sold.
For available for sale securities in an unrealized loss position where the Company intends to sell, or it is more likely than not that it will be required to
sell the security before recovery in value, the amortized cost basis is written down to fair value through net investment gains. For available for sale securities in
an unrealized loss position where the Company does not intend to sell, or it is more likely than not that it will not be required to sell the security before
recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or all other factors (non-credit factors). In making
this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a rating agency, and
adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows
expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is
less than the amortized cost basis, an allowance for expected credit losses is recorded for the credit loss through net investment gains, limited by the amount
that the fair value is less than the amortized cost basis. The allowance is adjusted for any change in expected credit losses and subsequent recoveries through
net investment gains. The impairment related to non-credit factors is recognized in comprehensive income (loss).
For financial assets carried at amortized cost, which includes held to maturity securities and loans receivable, the Company estimates an allowance for
expected credit losses based on relevant information about past events, including historical loss experience, current conditions and forecasts that affect the
expected collectability of the amortized cost of the financial asset. The allowance for expected credit losses is presented as a reduction to amortized cost of the
financial asset in the consolidated balance sheet and changes to the estimate for expected credit losses are recognized through net investment gains.
The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities,
as well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic
and default scenarios that involve subjective judgments and estimates by management. Modeling these securities involves various factors, such as projected
default rates, the nature and realizable value of the collateral, if any, the ability of the issuer to make scheduled payments, historical performance and other
relevant economic and performance factors. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if any.
In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period. For
other inputs, the model in most cases reverts to the baseline long-
70
term assumptions linearly over 5 years beyond the forecast period. The long-term assumptions are based on the historical averages.
The Company reports accrued investment income separately from fixed maturity securities, and has elected not to measure an allowance for expected
credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults
or is expected to default on payments.
Real estate held for investment purposes is initially recorded at the purchase price, which is generally fair value, and is subsequently reported at cost
less accumulated depreciation. Real estate taxes, interest and other costs incurred during development and construction are capitalized. Buildings are
depreciated on a straight-line basis over the estimated useful lives of the building. Minimum rental income is recognized on a straight-line basis over the lease
term. Income and expenses from real estate are reported as net investment income. The carrying value of real estate is reviewed for impairment and an
impairment loss is recognized if the estimated undiscounted cash flows from the use and disposition of the property are less than the carrying value of the
property.
(E) Per share data
The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by weighted
average number of common shares outstanding during the year (including 17,659,297 common shares held in a grantor trust). The common shares held in the
grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect
diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the
weighted average number of basic and common equivalent shares outstanding during the year and is calculated using the treasury stock method for stock
incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect.
(F) Deferred policy acquisition costs
Acquisition costs associated with the successful acquisition of new and renewed insurance and reinsurance contracts are deferred and amortized
ratably over the terms of the related contracts. Ceding commissions received on reinsurance contracts are netted against acquisition costs and are recognized
ratably over the life of the contract. Deferred policy acquisition costs are presented net of unearned ceding commissions. Deferred policy acquisition costs are
comprised primarily of commissions, as well as employment-related underwriting costs and premium taxes. Deferred policy acquisition costs are reviewed to
determine if they are recoverable from future income and, if not, are charged to expense. The recoverability of deferred policy acquisition costs is evaluated
separately by each of our operating units. Future investment income is taken into account in measuring the recoverability of deferred policy acquisition costs.
(G) Reserves for losses and loss expenses
Reserves for losses and loss expenses are an accumulation of amounts determined on the basis of (1) evaluation of claims for business written directly
by the Company; (2) estimates received from other companies for reinsurance assumed by the Company; and (3) estimates for losses incurred but not reported
(based on Company and industry experience). These estimates are periodically reviewed and, as experience develops and new information becomes known, the
reserves are adjusted as necessary. Such adjustments are reflected in the statements of income in the period in which they are determined. The Company
discounts its reserves for excess and assumed workers' compensation claims using a risk-free or statutory rate. (See Note 13 of Notes to Consolidated Financial
Statements.)
(H) Reinsurance ceded
The unearned portion of premiums ceded to reinsurers is reported as prepaid reinsurance premiums and earned ratably over the policy term. The
estimated amounts of reinsurance recoverable on unpaid losses are reported as due from reinsurers. To the extent any reinsurer does not meet its obligations
under reinsurance agreements, the Company must discharge its liability. Amounts due from reinsurers are reflected net of funds held where the right of offset is
present. The Company has provided an allowance for expected credit losses for estimated uncollectible reinsurance. The allowance is estimated based on the
composition of the recoverable balance, considering reinsurer credit ratings, collateral received from financial institutions and funds withheld arrangements,
length of collection periods, probability of default methodology, and specific identification of collectability concerns. Changes in the allowance are reported
within losses and loss expenses.
(I) Deposit accounting
71
Contracts that do not meet the risk transfer requirements of GAAP are accounted for using the deposit accounting method. Under this method, an asset
or liability is recognized at the inception of the contract based on consideration paid or received. The amount of the deposit asset or liability is adjusted at
subsequent reporting dates using the interest method with a corresponding credit or charge to interest income or expense. Deposit liabilities for assumed
reinsurance contracts were $29 million and $31 million at December 31, 2024 and 2023, respectively.
(J) Federal and foreign income taxes
The Company files a consolidated income tax return in the U.S. and foreign tax returns in countries where it has overseas operations. The Company's
method of accounting for income taxes is the asset and liability method. Under this method, deferred tax assets and liabilities are measured using tax rates
currently in effect or expected to apply in the years in which those temporary differences are expected to reverse. Interest and penalties, if any, are reported as
income tax expense. The Company believes there are no uncertain tax positions that would require disclosure under GAAP. Deferred tax assets are reduced by
a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized.
(K) Foreign currency
Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity's functional currency) are
reported on the statements of income as other operating costs and expenses. Unrealized gains or losses resulting from translating the results of non-U.S. dollar
denominated operations are reported in accumulated other comprehensive income. Revenues and expenses denominated in currencies other than U.S. dollars
are generally translated at the weighted average exchange rate during the year. Assets and liabilities are translated at the rate of exchange in effect at the balance
sheet date.
(L) Property, furniture and equipment
Property, furniture and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the estimated useful lives of the
respective assets. Depreciation expense was $55 million, $51 million and $52 million for 2024, 2023 and 2022, respectively.
(M) Comprehensive income
Comprehensive income encompasses all changes in stockholders' equity (except those arising from transactions with stockholders) and includes net
income, net unrealized holding gains or losses on available for sale securities and unrealized foreign currency translation adjustments.
(N) Goodwill and other intangible assets
Goodwill and other intangible assets are tested for impairment on an annual basis and at interim periods where circumstances require. The Company's
impairment test as of December 31, 2024 indicated that there were no material impairment losses related to goodwill and other intangible assets. Intangible
assets of $97 million and $119 million are included in other assets as of December 31, 2024 and 2023, respectively.
(O) Restricted stock units
The costs resulting from all share-based payment transactions with employees are recognized in the consolidated financial statements using a fair-
value-based measurement method. Compensation cost is recognized for financial reporting purposes over the period in which the employee is required to
provide service in exchange for the award (generally the vesting period).
(P) Statements of cash flows
Interest payments were $138 million, $114 million and $138 million in 2024, 2023 and 2022, respectively. Income taxes paid were $410 million, $332
million and $295 million in 2024, 2023 and 2022, respectively. Other non-cash items include unrealized investment gains and losses. (See Note 10 of Notes to
Consolidated Financial Statements.)
(Q) Recent accounting pronouncements
Recently adopted accounting pronouncements:
72
In November 2023, the Financial Accounting Standards Board issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which
enhances current segment disclosures and requires additional disclosures of significant segment expenses. When applying this disclosure requirement, an entity
identifies the significant expenses for each reportable segment that are regularly provided to its chief operating decision maker and included in the reported
measures of a segment’s profit or loss. The guidance was effective for public business entities for annual reporting periods beginning after December 15, 2023,
and interim reporting periods beginning after December 15, 2024. The Company adopted this guidance for the year ended December 31, 2024.
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.
73
(2) Consolidated Statements of Comprehensive Income
The following tables present the components of the changes in accumulated other comprehensive income (AOCI) as of and for the years ended
December 31, 2024 and 2023:
(In thousands)
December 31, 2024
Unrealized Investment
Gains (Losses)
Currency Translation
Adjustments
Accumulated Other
Comprehensive Income
(Loss)
Changes in AOCI
Beginning of period
$
(586,354)
$
(339,484)
$
(925,838)
Other comprehensive income (loss) before reclassifications
(26,128)
(77,615)
(103,743)
Amounts reclassified from AOCI
95,310
—
95,310
Other comprehensive income (loss)
69,182
(77,615)
(8,433)
Unrealized investment gain related to noncontrolling interest
2
—
2
Ending balance
$
(517,170)
$
(417,099)
$
(934,269)
Amounts reclassified from AOCI
Pre-tax
$
120,646
(1)
$
—
$
120,646
Tax effect
(25,336)
(2)
—
(25,336)
After-tax amounts reclassified
$
95,310
$
—
$
95,310
Other comprehensive income (loss)
Pre-tax
$
84,474
$
(77,615)
$
6,859
Tax effect
(15,292)
—
(15,292)
Other comprehensive income (loss)
$
69,182
$
(77,615)
$
(8,433)
(In thousands)
December 31, 2023
Unrealized Investment
Gains (Losses)
Currency Translation
Adjustments
Accumulated Other
Comprehensive Income
(Loss)
Changes in AOCI
Beginning of period
$
(892,905)
$
(371,676)
$
(1,264,581)
Other comprehensive income before reclassifications
252,782
32,192
284,974
Amounts reclassified from AOCI
53,771
—
53,771
Other comprehensive income
306,553
32,192
338,745
Unrealized investment loss related to non-controlling interest
(2)
—
(2)
Ending balance
$
(586,354)
$
(339,484)
$
(925,838)
Amounts reclassified from AOCI
Pre-tax
$
68,065
(1)
$
—
$
68,065
Tax effect
(14,294)
(2)
—
(14,294)
After-tax amounts reclassified
$
53,771
$
—
$
53,771
Other comprehensive income
Pre-tax
$
392,903
$
32,192
$
425,095
Tax effect
(86,350)
—
(86,350)
Other comprehensive income
$
306,553
$
32,192
$
338,745
_______________
(1) Net investment gains in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.
74
(3) Investments in Fixed Maturity Securities
At December 31, 2024 and 2023, investments in fixed maturity securities were as follows:
(In thousands)
Amortized
Cost
Allowance for
Expected Credit
Losses (1)
Gross Unrealized
Fair
Value
Carrying
Value
Gains
Losses
December 31, 2024
Held to maturity:
State and municipal
$
42,145
$
(25)
$
1,492
$
—
$
43,612
$
42,120
Residential mortgage-backed
2,292
—
69
—
2,361
2,292
Total held to maturity
44,437
(25)
1,561
—
45,973
44,412
Available for sale:
U.S. government and government agency
2,268,596
—
9,608
(42,863)
2,235,341
2,235,341
State and municipal:
Special revenue
1,581,778
—
3,521
(67,591)
1,517,708
1,517,708
State general obligation
272,936
—
1,439
(8,981)
265,394
265,394
Pre-refunded
85,340
—
599
(347)
85,592
85,592
Corporate backed
158,322
—
1,079
(5,827)
153,574
153,574
Local general obligation
278,165
—
922
(6,711)
272,376
272,376
Total state and municipal
2,376,541
—
7,560
(89,457)
2,294,644
2,294,644
Mortgage-backed securities:
Residential
3,411,796
(5)
11,047
(189,630)
3,233,208
3,233,208
Commercial
534,936
(425)
1,201
(3,430)
532,282
532,282
Total mortgage-backed securities
3,946,732
(430)
12,248
(193,060)
3,765,490
3,765,490
Asset-backed securities
3,910,363
—
16,161
(41,512)
3,885,012
3,885,012
Corporate:
Industrial
3,746,501
—
14,518
(93,820)
3,667,199
3,667,199
Financial
3,339,718
—
18,871
(38,076)
3,320,513
3,320,513
Utilities
795,839
—
2,970
(20,115)
778,694
778,694
Other
653,194
—
2,493
(4,452)
651,235
651,235
Total corporate
8,535,252
—
38,852
(156,463)
8,417,641
8,417,641
Foreign government
1,928,978
(216)
11,936
(185,373)
1,755,325
1,755,325
Total available for sale
22,966,462
(646)
96,365
(708,728)
22,353,453
22,353,453
Total investments in fixed maturity securities
$
23,010,899
$
(671)
$
97,926
$
(708,728)
$
22,399,426
$
22,397,865
75
(In thousands)
Amortized
Cost
Allowance for
Expected Credit
Losses (1)
Gross Unrealized
Fair
Value
Carrying
Value
Gains
Losses
December 31, 2023
Held to maturity:
State and municipal
$
50,547
$
(43)
$
3,132
$
—
$
53,636
$
50,504
Residential mortgage-backed
2,868
—
107
—
2,975
2,868
Total held to maturity
53,415
(43)
3,239
—
56,611
53,372
Available for sale:
U.S. government and government agency
1,762,997
—
11,403
(57,669)
1,716,731
1,716,731
State and municipal:
Special revenue
1,682,550
—
5,651
(82,006)
1,606,195
1,606,195
State general obligation
394,429
—
3,550
(16,405)
381,574
381,574
Pre-refunded
103,029
—
1,634
(185)
104,478
104,478
Corporate backed
166,873
(757)
696
(11,973)
154,839
154,839
Local general obligation
396,041
—
3,188
(11,893)
387,336
387,336
Total state and municipal
2,742,922
(757)
14,719
(122,462)
2,634,422
2,634,422
Mortgage-backed securities:
Residential
1,773,206
—
12,780
(163,844)
1,622,142
1,622,142
Commercial
657,157
(158)
626
(13,312)
644,313
644,313
Total mortgage-backed securities
2,430,363
(158)
13,406
(177,156)
2,266,455
2,266,455
Asset-backed securities
4,252,883
(1,164)
8,527
(73,206)
4,187,040
4,187,040
Corporate:
Industrial
3,679,219
(40)
24,312
(143,936)
3,559,555
3,559,555
Financial
2,838,220
(4,986)
14,681
(68,681)
2,779,234
2,779,234
Utilities
701,865
—
6,471
(23,412)
684,924
684,924
Other
635,975
—
1,605
(7,234)
630,346
630,346
Total corporate
7,855,279
(5,026)
47,069
(243,263)
7,654,059
7,654,059
Foreign government
1,817,386
(29,603)
15,865
(137,419)
1,666,229
1,666,229
Total available for sale
20,861,830
(36,708)
110,989
(811,175)
20,124,936
20,124,936
Total investments in fixed maturity securities
$
20,915,245
$
(36,751)
$
114,228
$
(811,175)
$
20,181,547
$
20,178,308
——————————
(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 years ended
December 31, 2024 and 2023:
State and Municipal
(In thousands)
2024
2023
Allowance for expected credit losses, beginning of period
$
43
$
114
Change in allowance for expected credit losses
(18)
(71)
Allowance for expected credit losses, end of period
$
25
$
43
The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the years ended
December 31, 2024 and 2023:
76
2024
2023
(In thousands)
Foreign
Government
Corporate
Mortgage-
Backed
Asset-
backed
State and
Municipal
Total
Foreign
Government
Corporate
Mortgage-
Backed
Asset-
backed
State and
Municipal
Total
Balance,
beginning of
period
$
29,603
$
5,026
$
158
$
1,164
$
757
$
36,708
$
32,633
$
4,701
$
18
$
—
$
—
$
37,352
Change on
securities for
which credit
losses were not
previously
recorded
347
—
1,706
—
—
2,053
—
982
1,766
1,444
821
5,013
Change on
securities for
which credit
losses were
previously
recorded
(29,355)
(5,026)
(831)
(1,164)
(757)
(37,133)
(3,030)
(650)
(1,624)
(280)
(64)
(5,648)
Reduction due
to disposals
(379)
—
(603)
—
—
(982)
—
(7)
(2)
—
—
(9)
Balance, end of
period
$
216
$
—
$
430
$
—
$
—
$
646
$
29,603
$
5,026
$
158
$
1,164
$
757
$
36,708
During the year ended December 31, 2024, the Company decreased the allowance for expected credit losses for available for sale securities utilizing
its credit loss assessment process and inputs used in its credit loss model, primarily due to improved pricing associated with foreign government securities and
corporate securities. During the year ended December 31, 2023, the Company decreased the allowance for expected credit losses for available for sale
securities utilizing its credit loss assessment process and inputs used in its credit loss model due to a reduction in unrealized losses primarily associated with
foreign government securities.
The amortized cost and fair value of fixed maturity securities at December 31, 2024, 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
$
1,744,361
$
1,719,948
Due after one year through five years
9,337,291
9,059,599
Due after five years through ten years
3,966,371
3,902,808
Due after ten years
4,013,827
3,949,220
Mortgage-backed securities
3,949,024
3,767,851
Total
$
23,010,874
$
22,399,426
________________
(1) Amortized cost is reduced by the allowance for expected credit losses of $25 thousand related to held to maturity securities.
At December 31, 2024 and 2023, there were no investments, other than investments in United States government and government agency securities,
which exceeded 10% of common stockholders’ equity. At December 31, 2024, investments with a carrying value of $2,167 million were on deposit in custodial
or trust accounts, of which $1,223 million was on deposit with insurance regulators, $884 million was on deposit in support of the Company’s underwriting
activities at Lloyd’s, $33 million was on deposit as security for reinsurance clients and $27 million was on deposit as security for letters of credit issued in
support of the Company’s reinsurance operations.
77
(4) Investments in Equity Securities
At December 31, 2024 and 2023, investments in equity securities were as follows:
(In thousands)
Cost
Gross Unrealized
Fair
Value
Carrying
Value
Gains
Losses
December 31, 2024
Common stocks
$
612,479
$
223,981
$
(76,293)
$
760,167
$
760,167
Preferred stocks
329,495
122,716
(8,590)
443,621
443,621
Total
$
941,974
$
346,697
$
(84,883)
$
1,203,788
$
1,203,788
December 31, 2023
Common stocks
$
664,997
$
191,806
$
(18,749)
$
838,054
$
838,054
Preferred stocks
284,335
3,075
(35,117)
252,293
252,293
Total
$
949,332
$
194,881
$
(53,866)
$
1,090,347
$
1,090,347
(5) Arbitrage Trading Account
At December 31, 2024 and 2023, the fair value and carrying value of the arbitrage trading account were $1,123 million and $938 million, respectively.
The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of investing in the securities of publicly held companies which
are the targets in announced tender offers and mergers. Arbitrage investing differs from other types of investing in its focus on transactions and events believed
likely to bring about a change in value over a relatively short time period (usually four months or less).
The Company uses put options and call options in order to mitigate the impact of potential changes in market conditions on the merger arbitrage
trading account. These options are reported at fair value. As of December 31, 2024, the fair value of long option contracts outstanding was $26 million
(notional amount of $582 million) and the fair value of short option contracts outstanding was $73 million (notional amount of $582 million). Other than with
respect to the use of these trading account securities, the Company does not make use of derivatives.
(6) Net Investment Income
Net investment income consists of the following:
(In thousands)
2024
2023
2022
Investment income (loss) earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable
$
1,260,429
$
929,098
$
549,281
Arbitrage trading account (1)
69,573
69,369
45,213
Equity securities
48,920
55,726
52,600
Investment funds
(11,491)
16,743
145,099
Real estate
(23,616)
(11,185)
(3,087)
Gross investment income
1,343,815
1,059,751
789,106
Investment expense
(10,654)
(6,916)
(9,921)
Net investment income
$
1,333,161
$
1,052,835
$
779,185
(1) Net investment income includes earnings from trading account receivables from brokers and clearing organizations.
78
(7) Investment Funds
The Company evaluates whether it is an investor in a variable interest entity ("VIE"). Such entities do not have sufficient equity at risk to finance
their activities without additional subordinated financial support, or the equity investors, as a group, do not have the characteristics of a controlling financial
interest (primary beneficiary). The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative
assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks
of the VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary in any of its investment
funds, and accordingly, carries its interests in investments funds under the equity method of accounting.
The Company’s maximum exposure to loss with respect to these investments is limited to the carrying amount reported on the Company’s
consolidated balance sheet and its unfunded commitments of $279 million as of December 31, 2024.
Investment funds consist of the following:
Carrying Value
as of December 31,
(Loss) Income From Investment Funds For the Year Ended
(In thousands)
2024
2023
2024
2023
2022
Financial services
$
430,163
$
433,407
$
(39,418)
$
(10,911)
$
34,030
Transportation
286,426
344,278
13,335
40,607
53,180
Real estate
178,685
201,625
12,195
(6,676)
48,723
Infrastructure
151,560
130,589
17,071
13,049
4,603
Energy
42,776
114,794
14,501
5,058
1,425
Other funds
378,636
396,962
(29,175)
(24,384)
3,138
Total
$
1,468,246
$
1,621,655
$
(11,491)
$
16,743
$
145,099
The Company's share of the earnings or losses of investment funds is primarily reported on a one-quarter lag in order to facilitate the timely
completion of the Company's consolidated financial statements.
Financial services investment funds include the Company’s minority investment in Lifson Re, a Bermuda reinsurance company. Effective January 1,
2021, Lifson Re participated on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 22.5% share of placed amounts. The
share was increased to 30% on July 1, 2022 and 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 years ended December 31, 2024
and 2023, the Company ceded approximately $417 million and $437 million, respectively, of written premiums to Lifson Re.
Other funds include deferred compensation trust assets of $38 million and $36 million in 2024 and 2023, 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.
(8) Real Estate
Investment in real estate represents directly owned property held for investment, as follows:
As of December 31,
(In thousands)
2024
2023
Properties in operation
$
1,063,687
$
1,022,654
Properties under development
227,768
227,220
Total
$
1,291,455
$
1,249,874
In 2024, properties in operation primarily 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
79
accumulated depreciation and amortization of $38,671,000 and $32,745,000 as of December 31, 2024 and 2023, respectively. Related depreciation expense
was $8,633,000 and $8,935,000 for the years ended December 31, 2024 and 2023, respectively. Future minimum rental income expected on operating leases
relating to properties in operation is $35,394,421 in 2025, $34,739,030 in 2026, $34,191,439 in 2027, $35,009,348 in 2028, $30,586,197 in 2029 and
$426,838,709 thereafter.
A mixed-use project in Washington, D.C. had been under development in 2024 and 2023, with the completed portion as noted above reported in
properties in operation as of December 31, 2024.
The Company had commitments to invest up to $48 million in certain real estate investment projects as of December 31, 2024.
(9) Loans Receivable
At December 31, 2024 and 2023, loans receivable were as follows:
As of December 31,
(In thousands)
2024
2023
Amortized cost (net of allowance for expected credit losses):
Real estate loans
$
402,382
$
200,381
Commercial loans
3,071
890
Total
$
405,453
$
201,271
Fair value:
Real estate loans
$
402,177
$
197,354
Commercial loans
3,071
890
Total
$
405,248
$
198,244
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 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 5
years.
The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the years ended December 31, 2024
and 2023:
2024
2023
(In thousands)
Real Estate
Loans
Commercial
Loans
Total
Real Estate
Loans
Commercial
Loans
Total
Allowance for expected credit losses, beginning of period
$
2,983
$
21
$
3,004
$
1,100
$
691
$
1,791
Reduction due to write-offs
—
—
—
—
(569)
(569)
Change in allowance for expected credit losses
(1,895)
5
(1,890)
1,883
(101)
1,782
Allowance for expected credit losses, end of period
$
1,088
$
26
$
1,114
$
2,983
$
21
$
3,004
During the year ended December 31, 2024, the Company decreased the allowance for expected credit losses due to a decrease in the weighted average
life of the loan portfolio. During the year ended December 31, 2023, the Company increased the allowance for expected credit losses due to changes in
economic assumptions utilized in its credit loss model.
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.
80
(10) Net Investment Gains
Net investment gains were as follows:
(In thousands)
2024
2023
2022
Net investment gains:
Fixed maturity securities:
Gains
$
15,486
$
2,003
$
4,224
Losses
(32,866)
(25,429)
(11,654)
Equity securities (1):
Net realized gains (losses) on investment sales (2)
116,475
161,271
(12,879)
Change in unrealized gains (losses)
120,799
70,448
(632)
Investment funds
1,835
(25,625)
12,407
Real estate (3) (4)
(2,647)
(70,934)
293,525
Loans receivable
—
(18,841)
(32)
Other (5)
(139,344)
(45,353)
(67,648)
Net realized and unrealized gains on investments in earnings before allowance for expected credit losses
79,738
47,540
217,311
Change in allowance for expected credit losses on investments:
Fixed maturity securities
36,080
715
(14,841)
Loans receivable
1,890
(1,213)
(73)
Change in allowance for expected credit losses on investments
37,970
(498)
(14,914)
Net investment gains
117,708
47,042
202,397
Income tax expense
(29,205)
(10,250)
(42,670)
After-tax net investment gains
$
88,503
$
36,792
$
159,727
Change in unrealized investment gains (losses):
Fixed maturity securities without allowance for expected credit losses
$
83,395
$
389,839
$
(1,216,292)
Fixed maturity securities with allowance for expected credit losses
4,428
643
(28,370)
Investment funds
(3,217)
3,989
(2,019)
Other
(132)
(1,568)
(1,447)
Total change in unrealized investment gains (losses)
84,474
392,903
(1,248,128)
Income tax (expense) benefit
(15,292)
(86,350)
264,325
Noncontrolling interests
2
(2)
(2)
After-tax change in unrealized investment gains (losses)
$
69,184
$
306,551
$
(983,805)
____________________
(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) In 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 $89 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 $72 million in 2023.
(4) In 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 (proceeds from the real estate and related entity are presented on the business
disposition line within the Consolidated Statements of Cash Flows).
(5) Primarily relates to realized foreign currency losses upon the disposition of fixed maturity securities.
81
(11) Fixed Maturity Securities in an Unrealized Loss Position
The following tables summarize all fixed maturity securities in an unrealized loss position at December 31, 2024 and 2023 by the length of time those
securities have been continuously in an unrealized loss position.
Less Than 12 Months
12 Months or Greater
Total
(In thousands)
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
December 31, 2024
U.S. government and government agency
$
767,515
$
9,637
$
560,260
$
33,226
$
1,327,775
$
42,863
State and municipal
348,116
8,027
1,411,761
81,430
1,759,877
89,457
Mortgage-backed securities
1,541,464
21,326
1,060,823
171,734
2,602,287
193,060
Asset-backed securities
411,763
4,613
626,237
36,899
1,038,000
41,512
Corporate
1,791,970
21,346
2,951,377
135,117
4,743,347
156,463
Foreign government
600,103
17,933
476,479
167,440
1,076,582
185,373
Fixed maturity securities
$
5,460,931
$
82,882
$
7,086,937
$
625,846
$
12,547,868
$
708,728
December 31, 2023
U.S. government and government agency
$
384,392
$
6,655
$
614,623
$
51,014
$
999,015
$
57,669
State and municipal
264,273
3,013
1,680,034
119,449
1,944,307
122,462
Mortgage-backed securities
278,819
2,025
1,360,748
175,131
1,639,567
177,156
Asset-backed securities
413,511
2,070
2,176,035
71,136
2,589,546
73,206
Corporate
874,754
11,975
4,418,309
231,288
5,293,063
243,263
Foreign government
204,908
1,758
794,174
135,661
999,082
137,419
Fixed maturity securities
$
2,420,657
$
27,496
$
11,043,923
$
783,679
$
13,464,580
$
811,175
Substantially all of the securities in an unrealized loss position are rated investment grade, except for the securities in the foreign government
classification. A significant amount of the unrealized loss on foreign government securities is the result of changes in currency exchange rates.
Fixed Maturity Securities — A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at
December 31, 2024 is presented in the table below:
($ in thousands)
Number of
Securities
Aggregate
Fair Value
Gross
Unrealized
Loss
Foreign government
50
$
138,388
$
157,424
Corporate
19
50,525
2,922
State and municipal
6
28,150
1,921
Mortgage-backed securities
17
3,684
206
Asset-backed securities
1
9
1
Total
93
$
220,756
$
162,474
For fixed maturity securities that management does not intend to sell or to be required to sell, the portion of the decline in value that is considered to
be due to credit factors is recognized in earnings, and the portion of the decline in value that is considered to be due to non-credit factors is recognized in other
comprehensive income.
The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses are due primarily to
temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are delinquent or in default under financial covenants.
Based on its assessment of these issuers, the Company expects them to continue to meet their contractual payment obligations as they become due.
82
(12) Fair Value Measurements
The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are carried at fair value. Fair value
is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date”. The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad
levels, as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement
date.
Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.
Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs are only used to measure
fair value to the extent that observable inputs are not available.
Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices provided by the independent
pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields,
reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data.
The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each
security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if
objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a
particular asset class. The Company reviews the prices provided by pricing services for reasonableness and periodically performs independent price tests of a
sample of securities to ensure proper valuation.
If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair value. For Level 2 securities,
the Company utilizes pricing models and processes which may include benchmark yields, sector groupings, matrix pricing, reported trades, broker/dealer
quotes, issuer spreads, two-sided markets, bids, offers and reference data. Where broker quotes are used, the Company generally requests two or more quotes
and sets a price within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company
generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company determines fair value based primarily
on the cost of such securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial projections, credit quality and
business developments of the issuer and other relevant information.
For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed maturity securities. The cash flow
models are based upon assumptions as to prevailing credit spreads, interest rate and interest rate volatility, time to maturity and subordination levels. Projected
cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate.
83
The following tables present the assets and liabilities measured at fair value as of December 31, 2024 and 2023 by level:
(In thousands)
Total
Level 1
Level 2
Level 3
December 31, 2024
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
$
2,235,341
$
—
$
2,235,341
$
—
State and municipal
2,294,644
—
2,294,644
—
Mortgage-backed securities
3,765,490
—
3,765,490
—
Asset-backed securities
3,885,012
—
3,885,012
—
Corporate
8,417,641
—
8,397,974
19,667
Foreign government
1,755,325
—
1,755,325
—
Total fixed maturity securities available for sale
22,353,453
—
22,333,786
19,667
Equity securities:
Common stocks
760,167
757,115
1,011
2,041
Preferred stocks
443,621
—
439,947
3,674
Total equity securities
1,203,788
757,115
440,958
5,715
Arbitrage trading account
1,122,599
1,062,459
56,630
3,510
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
$
—
$
—
December 31, 2023
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency
$
1,716,731
$
—
$
1,716,731
$
—
State and municipal
2,634,422
—
2,634,422
—
Mortgage-backed securities
2,266,455
—
2,266,455
—
Asset-backed securities
4,187,040
—
4,187,040
—
Corporate
7,654,059
—
7,654,059
—
Foreign government
1,666,229
—
1,666,229
—
Total fixed maturity securities available for sale
20,124,936
—
20,124,936
—
Equity securities:
Common stocks
838,054
835,338
1,158
1,558
Preferred stocks
252,293
—
248,598
3,695
Total equity securities
1,090,347
835,338
249,756
5,253
Arbitrage trading account
938,049
546,110
388,167
3,772
Total
$
22,153,332
$
1,381,448
$
20,762,859
$
9,025
Liabilities:
Trading account securities sold but not yet purchased
$
9,357
$
9,357
$
—
$
—
84
The following tables summarize changes in Level 3 assets and liabilities for the years ended December 31, 2024 and 2023:
Gains (Losses) Included in:
(In thousands)
Beginning
Balance
Earnings
(Losses)
Other
Comprehensive
Losses
Impairments
Purchases
Sales
Paydowns/Maturities
Transfers In
/ Out
Ending
Balance
Year ended December 31, 2024
Assets:
Fixed maturity securities available
for sale:
Corporate
$
—
$
—
$
(333)
$
—
$
—
$
—
$
—
$
20,000
$
19,667
Total
—
—
(333)
—
—
—
—
20,000
19,667
Equity securities:
Common stocks
1,558
611
—
—
—
(128)
—
—
2,041
Preferred stocks
3,695
36
—
—
—
(57)
—
—
3,674
Total
5,253
647
—
—
—
(185)
—
—
5,715
Arbitrage trading account
3,772
(261)
—
—
—
(38)
—
37
3,510
Total
$
9,025
$
386
$
(333)
$
—
$
—
$
(223)
$
—
$
20,037
$
28,892
Year ended December 31, 2023
Assets:
Fixed maturity securities available
for sale:
Corporate
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Total
—
—
—
—
—
—
—
—
—
Equity securities:
Common stocks
2,599
(1,041)
—
—
—
—
—
—
1,558
Preferred stocks
11,299
(3)
—
(7,601)
—
—
—
3,695
Total
13,898
(1,044)
—
(7,601)
—
—
—
—
5,253
Arbitrage trading account
3,590
117
—
—
—
—
—
65
3,772
Total
$
17,488
$
(927)
$
—
$
(7,601)
$
—
$
—
$
—
$
65
$
9,025
For the year ended December 31, 2024, one corporate security was transferred into level 3 from level 2 given there were no quoted prices or
observable inputs available. For the years ended December 31, 2024 and 2023, one security in each year within the arbitrage trading account portfolio that no
longer had a publicly traded price was transferred into Level 3.
85
(13) Reserves for Losses and Loss Expenses
The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is
reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim
becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR
liabilities and expected loss reserve development on reported claims.
Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate
and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each business. These
methods may include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods.
In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point
estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to
supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of
business, coverage and accident or policy year, as appropriate, for each business.
The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate
losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in claims handling procedures, changes in the
mix of business, changes in distribution sources and changes in policy terms and conditions.
The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid
loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual
claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little
paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost
trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each business. Expected loss
cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’
compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss
development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and
industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted
to their estimated present value based upon such estimated payout patterns.
Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss
and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure
of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the
effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in
policy limits, retentions, rate of inflation and judicial interpretations.
Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss
and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are
more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for
lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines
with short reporting lags, which include auto, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the
loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which
include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio
since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines
of businesses with short reporting lags than for lines of business with long reporting lags.
The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary,
to reflect the latest reported loss data, current trends and other factors observed.
A claim may be defined as an event, as a claimant (number of parties claiming damages from an event) or by exposure type (e.g., an event may give
rise to two parties, each claiming loss for bodily injury and property damage).
86
The most commonly used claim count method is by event. Most of the Company's businesses use the number of events to define and quantify the
number of claims. However, in certain lines of business, where it is common for multiple parties to claim damages arising from a single event, a business may
quantify claims on the basis of the number of separate parties involved in an event. This may be the case with businesses writing substantial auto or
transportation exposure.
Claim counts for assumed reinsurance will vary based on whether the business is written on a facultative or treaty basis. Further variability as respects
treaty claim counts may be reflective of the nature of the treaty, line of business coverage, and type of participation such as quota share or excess of loss
contracts. Accordingly, the claim counts have been excluded from the below Reinsurance & Monoline Excess segment tables due to this variability.
The claim count information set forth in the tables presented below may not provide an accurate reflection of ultimate loss payouts by product line.
The following tables present undiscounted incurred and paid claims development as of December 31, 2024, net of reinsurance, as well as cumulative
claim frequency and the total of incurred but not reported liabilities (IBNR). The information about incurred and paid claims development for the years ended
December 31, 2014 to 2023 is presented as supplementary information. To enhance the comparability of the loss development data, the Company has removed
the impact of foreign exchange rate movements by using the December 31, 2024 exchange rate for all periods.
87
Insurance
Other Liability
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
IBNR
Cumulative
Number of
Reported
Claims
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
934,138 $
969,246 $
944,351 $
948,706 $
951,981 $
963,118 $
969,789 $
999,316 $
1,005,801 $
1,019,173
$
32,718
28
2016
1,003,192
995,148
1,005,560
1,018,025
1,032,281
1,048,121
1,079,436
1,121,260
1,122,233
59,052
29
2017
1,055,253
1,088,787
1,111,550
1,129,392
1,169,138
1,238,759
1,256,832
1,289,349
79,218
28
2018
1,095,529
1,123,152
1,113,675
1,148,972
1,225,588
1,291,745
1,374,348
98,378
28
2019
1,232,661
1,228,679
1,230,016
1,286,835
1,362,171
1,396,012
139,046
30
2020
1,330,660
1,204,248
1,148,852
1,157,392
1,187,560
181,892
24
2021
1,522,682
1,378,751
1,332,486
1,352,616
285,076
26
2022
1,810,560
1,815,653
1,798,403
688,730
28
2023
2,111,178
2,075,065
1,312,841
25
2024
2,379,621
2,070,647
18
Total
$
14,994,380
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
80,079 $
205,207 $
374,666 $
528,935 $
665,272 $
745,994 $
804,340 $
862,557 $
916,787 $
948,434
2016
67,290
203,890
383,909
550,589
667,761
757,110
860,423
944,014
996,649
2017
77,719
251,172
447,743
632,721
767,665
922,090
1,038,695
1,119,123
2018
85,148
261,789
432,148
611,323
801,409
979,311
1,122,768
2019
86,531
271,854
467,267
699,906
902,686
1,073,894
2020
70,540
222,274
417,860
614,351
812,453
2021
75,101
265,080
484,588
794,392
2022
92,248
352,886
704,307
2023
91,733
366,496
2024
95,137
Total
$
8,033,653
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
178,312
Reserves for loss and loss adjustment expenses, net of reinsurance $
7,139,039
88
Workers' Compensation
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
IBNR
Cumulative
Number of
Reported
Claims
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
712,800 $
690,525 $
650,997 $
641,169 $
626,432 $
620,741 $
617,477 $
612,687 $
603,731 $
604,806
$
14,681
58
2016
702,716
696,339
684,700
660,520
651,278
657,972
654,385
641,549
639,412
15,340
58
2017
762,093
733,505
689,622
673,216
683,880
682,153
675,871
669,988
15,800
58
2018
778,964
724,697
715,055
724,056
721,170
715,018
708,336
14,769
56
2019
784,281
721,018
732,762
734,034
722,456
714,086
18,751
54
2020
725,245
716,430
704,008
668,222
652,424
12,026
42
2021
742,687
701,703
667,517
649,222
22,916
46
2022
772,620
745,218
715,578
56,385
46
2023
784,906
758,657
146,880
45
2024
811,614
378,116
46
Total
$
6,924,123
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
139,320 $
323,744 $
421,734 $
477,541 $
512,933 $
531,512 $
544,849 $
557,215 $
564,658 $
570,125
2016
142,998
338,835
446,072
504,850
537,861
558,934
572,669
584,330
591,005
2017
153,456
362,299
468,817
525,753
559,198
583,258
603,006
617,243
2018
171,006
397,464
508,546
574,889
613,675
642,292
660,237
2019
184,715
397,376
515,914
581,003
618,324
644,772
2020
172,478
380,454
485,203
548,585
579,332
2021
172,729
384,867
490,648
547,863
2022
180,982
408,929
527,145
2023
195,204
418,788
2024
196,104
Total
$
5,352,614
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
246,975
Reserves for loss and loss adjustment expenses, net of reinsurance $
1,818,484
89
Professional Liability
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
IBNR
Cumulative
Number of
Reported
Claims
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
256,877 $
255,638 $
272,360 $
274,229 $
289,722 $
281,461 $
281,906 $
286,203 $
285,591 $
285,252
$
11,809
8
2016
307,902
322,107
359,228
400,178
437,690
467,183
462,868
449,033
452,769
15,280
10
2017
331,362
330,753
337,256
376,096
383,246
392,447
401,170
401,789
26,447
11
2018
333,254
320,784
332,201
358,676
381,613
397,102
393,029
59,723
11
2019
334,137
330,146
344,036
353,131
362,333
364,231
62,324
12
2020
391,532
373,550
336,231
312,169
299,806
56,121
11
2021
521,744
468,567
444,060
408,536
119,166
12
2022
644,950
582,764
553,174
307,294
12
2023
642,582
634,269
404,820
13
2024
648,064
499,645
13
Total
$
4,440,919
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
20,271 $
85,061 $
139,244 $
186,834 $
215,640 $
232,187 $
239,162 $
246,160 $
258,640 $
265,643
2016
28,432
102,079
200,949
254,694
296,742
356,717
404,669
412,243
421,639
2017
36,381
96,025
162,469
242,696
260,764
306,270
329,021
349,406
2018
28,072
99,433
154,953
198,351
243,813
283,349
315,361
2019
31,563
97,082
147,500
199,942
234,789
270,623
2020
27,895
79,968
128,579
168,670
196,332
2021
28,465
85,661
152,764
219,932
2022
33,336
90,416
160,965
2023
40,973
121,991
2024
40,200
Total
$
2,362,092
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
49,908
Reserves for loss and loss adjustment expenses, net of reinsurance $
2,128,735
90
Auto
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
IBNR
Cumulative
Number of
Reported
Claims
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
374,801 $
398,090 $
403,449 $
411,886 $
412,416 $
410,762 $
407,874 $
409,797 $
409,329 $
410,218
$
784
50
2016
414,205
415,208
425,808
426,365
423,216
423,171
425,063
426,814
425,280
1,648
48
2017
412,917
410,409
412,760
417,010
423,180
427,474
428,064
429,646
2,931
44
2018
423,120
443,203
459,826
474,469
502,221
511,283
513,458
5,358
43
2019
462,866
465,817
483,438
508,501
525,110
532,292
9,383
43
2020
493,527
396,616
407,515
433,980
440,625
5,170
29
2021
552,002
517,233
552,219
583,693
26,200
35
2022
723,266
740,688
763,806
83,225
41
2023
890,682
907,503
226,458
43
2024
1,062,427
569,636
41
Total
$
6,068,948
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
155,699 $
255,990 $
310,923 $
353,772 $
379,779 $
392,093 $
397,747 $
401,130 $
402,938 $
405,009
2016
178,350
270,304
330,222
375,891
394,720
404,241
412,624
418,672
421,309
2017
173,668
256,952
314,336
356,864
385,822
403,421
414,033
421,898
2018
173,779
272,020
337,599
397,517
445,527
479,144
493,942
2019
179,847
279,858
360,921
423,225
473,940
499,996
2020
136,899
213,638
285,875
346,892
402,177
2021
168,497
289,016
379,966
476,462
2022
237,885
394,136
531,324
2023
271,552
467,227
2024
295,450
Total
$
4,414,794
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
2,295
Reserves for loss and loss adjustment expenses, net of reinsurance $
1,656,449
91
Short-tail lines
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
IBNR
Cumulative
Number of
Reported
Claims
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
718,877 $
708,711 $
705,938 $
704,501 $
697,123 $
695,584 $
693,963 $
694,284 $
699,018 $
697,949
$
1,485
29
2016
752,238
756,684
744,208
738,577
732,853
735,299
733,993
734,306
732,544
1,814
31
2017
730,239
729,675
723,989
722,967
722,697
723,925
722,551
722,138
2,262
39
2018
741,002
731,643
728,426
726,956
724,399
723,401
718,987
4,803
46
2019
703,177
684,671
674,717
668,632
668,628
658,367
4,744
41
2020
882,508
887,821
905,858
909,800
912,987
3,715
36
2021
805,048
809,924
793,394
790,478
11,207
33
2022
904,554
889,173
880,040
25,611
31
2023
1,035,378
997,176
66,732
28
2024
1,254,576
450,792
24
Total
$
8,365,242
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
380,892 $
592,871 $
647,710 $
669,556 $
678,891 $
684,679 $
691,365 $
691,545 $
700,792 $
702,432
2016
403,529
652,336
693,535
708,340
713,193
719,883
720,716
725,721
727,943
2017
429,132
667,750
695,566
707,472
710,624
717,788
723,111
725,516
2018
401,547
645,228
691,499
708,449
707,471
712,526
715,238
2019
392,083
600,257
629,427
641,809
649,886
651,960
2020
447,105
768,617
829,586
884,460
888,746
2021
388,917
677,015
732,996
755,877
2022
440,856
761,924
827,552
2023
531,838
846,828
2024
559,186
Total
$
7,401,278
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
5,937
Reserves for loss and loss adjustment expenses, net of reinsurance $
969,901
92
Reinsurance & Monoline Excess
Casualty
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
IBNR
2015
$
285,491 $
261,479 $
260,696 $
281,470 $
321,934 $
331,370 $
333,368 $
335,541 $
336,653 $
346,178
$
9,461
2016
265,059
277,255
269,643
292,188
325,777
325,590
332,538
328,079
332,140
12,449
2017
255,303
245,631
263,327
285,053
304,542
320,518
334,003
344,072
19,683
2018
245,491
235,054
254,696
270,699
282,547
310,129
327,489
26,167
2019
260,178
257,452
264,664
265,001
294,105
315,025
35,101
2020
333,743
329,319
327,257
346,355
345,540
62,760
2021
425,922
428,105
421,190
423,874
118,203
2022
488,982
501,517
474,466
208,624
2023
472,810
466,192
305,158
2024
429,455
382,444
Total
$
3,804,431
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
24,672 $
61,106 $
110,230 $
163,728 $
203,940 $
232,001 $
260,577 $
278,540 $
295,608 $
308,837
2016
26,599
73,546
115,017
159,651
193,167
228,163
249,017
267,375
279,490
2017
25,295
54,395
86,509
143,838
169,379
198,517
233,096
269,239
2018
18,921
52,668
93,211
128,691
163,823
207,435
245,037
2019
21,506
52,609
81,222
116,579
170,169
219,777
2020
28,291
66,937
109,396
171,527
217,958
2021
24,649
76,977
145,859
211,884
2022
28,029
83,590
159,100
2023
17,622
66,568
2024
16,794
Total
$
1,994,684
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
357,939
Reserves for loss and loss adjustment expenses, net of reinsurance $
2,167,686
93
Monoline Excess
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
IBNR
2015
$
69,977 $
57,897 $
50,099 $
45,115 $
39,682 $
39,781 $
36,774 $
32,604 $
33,590 $
28,220
$
5,749
2016
72,657
70,281
71,404
64,957
65,485
65,222
63,932
59,804
55,371
5,800
2017
76,701
80,508
70,749
71,025
66,795
65,147
62,213
57,073
8,242
2018
77,820
72,505
71,448
66,180
60,347
58,244
54,784
14,257
2019
78,929
77,482
76,242
76,478
73,571
70,929
13,613
2020
84,354
83,468
82,952
80,946
70,219
23,018
2021
98,110
90,980
89,220
84,681
27,325
2022
128,923
101,725
100,612
26,481
2023
110,446
86,901
41,059
2024
120,046
98,632
Total
$
728,836
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
2,069 $
2,481 $
3,272 $
4,099 $
4,416 $
5,083 $
5,421 $
6,457 $
6,844 $
7,402
2016
2,498
4,783
5,573
5,928
7,685
9,883
11,819
13,569
16,872
2017
6,282
12,810
15,356
17,327
18,375
19,275
21,275
23,523
2018
6,141
8,230
9,368
10,359
12,414
13,583
14,952
2019
6,241
10,884
12,728
15,436
18,836
21,094
2020
4,869
8,699
10,471
12,869
15,427
2021
4,586
6,026
8,872
11,412
2022
5,898
10,564
17,778
2023
6,390
12,471
2024
5,723
Total
$
146,654
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
577,639
Reserves for loss and loss adjustment expenses, net of reinsurance $
1,159,821
94
Property
(In thousands)
Loss and Loss Expenses Incurred, Net of Reinsurance
As of December 31, 2024
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
IBNR
2015
$
141,484 $
132,570 $
146,437 $
145,422 $
144,486 $
146,140 $
145,697 $
146,346 $
146,893 $
146,485
$
444
2016
185,533
191,947
198,909
198,523
204,004
201,996
203,070
204,190
203,198
781
2017
227,950
223,315
222,463
221,413
215,295
215,723
216,854
215,714
347
2018
125,574
128,611
120,284
121,985
120,254
118,633
117,569
918
2019
119,838
93,038
97,748
96,681
96,575
95,708
1,282
2020
131,649
133,897
132,670
137,504
136,155
844
2021
156,046
168,265
165,760
161,699
2,766
2022
205,886
205,569
202,600
24,379
2023
176,457
172,995
37,096
2024
255,770
137,881
Total
$
1,707,893
Cumulative Paid Claims and Claim Adjustment Expenses, Net of Reinsurance
For the Year Ended December 31,
Unaudited
Accident
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2015
$
64,495 $
103,634 $
123,995 $
133,605 $
137,708 $
140,564 $
141,963 $
143,103 $
143,999 $
144,369
2016
91,514
150,326
174,449
185,937
193,595
195,736
200,070
201,985
202,409
2017
87,892
162,814
194,150
202,436
206,018
209,232
211,837
212,577
2018
46,892
80,976
98,416
103,833
112,061
113,418
114,035
2019
35,563
69,694
83,990
86,633
88,628
90,550
2020
39,652
81,238
102,593
111,508
118,503
2021
31,624
92,579
130,371
145,315
2022
56,483
128,640
152,174
2023
58,316
110,095
2024
69,379
Total
$
1,359,406
Reserves for loss and loss adjustment expenses before 2015, net of reinsurance
1,971
Reserves for loss and loss adjustment expenses, net of reinsurance $
350,458
95
The reconciliation of the net incurred and paid claims development tables to the reserves for losses and loss expenses in the consolidated balance sheet
is as follows:
(In thousands)
December 31, 2024
Undiscounted reserves for loss and loss expenses, net of reinsurance:
Other liability
$
7,139,039
Workers' compensation
1,818,484
Professional liability
2,128,735
Auto
1,656,449
Short-tail lines
969,901
Other
180,628
Insurance
13,893,236
Casualty
2,167,686
Monoline excess
1,159,821
Property
350,458
Reinsurance & Monoline Excess
3,677,965
Total undiscounted reserves for loss and loss expenses, net of reinsurance
$
17,571,201
(In thousands)
December 31, 2024
Due from reinsurers on unpaid claims:
Other liability
$
1,044,974
Workers' compensation
175,244
Professional liability
1,148,320
Auto
82,331
Short-tail lines
434,368
Other
121,010
Insurance
3,006,247
Casualty
104,928
Monoline excess
36,042
Property
54,172
Reinsurance & Monoline Excess
195,142
Total due from reinsurers on unpaid claims
$
3,201,389
96
(In thousands)
December 31, 2024
Loss reserve discount:
Other liability
$
—
Workers' compensation
(11,662)
Professional liability
—
Auto
—
Short-tail lines
—
Other
—
Insurance
(11,662)
Casualty
(68,788)
Monoline excess
(324,110)
Property
—
Reinsurance & Monoline Excess
(392,898)
Total loss reserve discount
$
(404,560)
Total gross reserves for loss and loss expenses
$
20,368,030
The following is supplementary information regarding average historical claims duration as of December 31, 2024:
Insurance
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years
1
2
3
4
5
6
7
8
9
10
Other liability
5.7 %
13.2 %
15.8 %
16.2 %
13.2 %
10.6 %
8.6 %
6.5 %
5.0 %
3.1 %
Workers' compensation
24.7 %
31.1 %
16.3 %
9.1 %
5.2 %
3.5 %
2.5 %
2.0 %
1.1 %
0.9 %
Professional liability
7.3 %
16.0 %
16.3 %
14.8 %
9.0 %
10.1 %
6.7 %
3.1 %
3.2 %
2.5 %
Auto
33.7 %
20.4 %
14.8 %
12.1 %
8.2 %
4.2 %
2.2 %
1.4 %
0.5 %
0.5 %
Short-tail lines
53.1 %
33.6 %
6.2 %
2.8 %
0.7 %
0.8 %
0.5 %
0.3 %
0.8 %
0.2 %
Reinsurance & Monoline Excess
Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
Years
1
2
3
4
5
6
7
8
9
10
Casualty
6.3 %
11.0 %
12.7 %
14.5 %
11.7 %
11.2 %
9.0 %
7.1 %
4.3 %
3.8 %
Monoline excess
7.3 %
5.1 %
3.3 %
2.7 %
3.1 %
2.6 %
2.7 %
3.6 %
3.7 %
2.0 %
Property
34.4 %
32.1 %
15.1 %
5.6 %
3.7 %
1.5 %
1.2 %
0.7 %
0.4 %
0.3 %
97
The table below provides a reconciliation of the beginning and ending reserve balances:
(In thousands)
2024
2023
2022
Net reserves at beginning of year
$
15,661,820
$
14,248,879
$
12,848,362
Net provision for losses and loss expenses:
Claims occurring during the current year (1)
7,083,999
6,311,780
5,774,713
Increase in estimates for claims occurring in prior years (2)
14,350
29,681
54,511
Loss reserve discount accretion
33,246
30,681
32,526
Total
7,131,595
6,372,142
5,861,750
Net payments for claims:
Current year
1,278,585
1,217,078
1,068,577
Prior year
4,205,845
3,764,532
3,279,333
Total
5,484,430
4,981,610
4,347,910
Foreign currency translation
(142,344)
22,409
(113,323)
Net reserves at end of year
17,166,641
15,661,820
14,248,879
Ceded reserve at end of year
3,201,389
3,077,832
2,762,344
Gross reserves at end of year
$
20,368,030
$
18,739,652
$
17,011,223
Net change in premiums and losses occurring in prior years:
Increase in estimates for claims occurring in prior years (2)
$
(14,350)
$
(29,681)
$
(54,511)
Retrospective premium adjustments for claims occurring in prior years (3)
18,782
10,782
18,106
Net premium and reserve development on prior years
$
4,432
$
(18,899)
$
(36,405)
_______________________________________
(1) Claims occurring during the current year are net of loss reserve discounts of $49 million, $47 million and $35 million in 2024, 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 increased by $13 million in 2024, decreased by $13 million in 2023, and increased by $16 million in 2022.
(3) For certain retrospectively rated insurance polices and reinsurance agreements, changes in loss and loss expenses for prior years are offset by additional or
return premiums.
The ultimate net impact of COVID-19 on the Company’s reserves remains uncertain. As of December 31, 2024, the Company had recognized losses
for COVID-19-related claims activity, net of reinsurance, of approximately $381 million, of which $326 million relates to the Insurance segment and
$55 million relates to the Reinsurance & Monoline Excess segment. Such $381 million of COVID-19-related losses included $379 million of reported losses
and $2 million of IBNR.
Favorable prior year development (net of additional and return premiums) was $4 million in 2024.
Insurance – Reserves for the Insurance segment developed unfavorably by $8 million in 2024 (net of additional and return premiums). The adverse
development was driven by the commercial auto liability and other liability occurrence lines of business, and was largely offset by favorable development for
workers’ compensation, professional liability, products liability, and commercial property lines of business.
The adverse commercial auto liability development was concentrated in accident years 2021 through 2023, while the adverse other liability occurrence
development was focused across accident years 2015 through 2022. The majority of the other liability occurrence development was driven by umbrella and
excess liability claims, of which a significant portion related to underlying commercial auto exposures. The Company believes that commercial 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 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 2016 through 2023, with accident
years 2020 through 2023 contributing the most. For workers’ compensation, favorable reported claim frequency, below expectations, continued to be the main
driver of the favorable reserve development. The
98
favorable development for both the professional liability and products liability lines of business was related mainly to accident years 2020 through 2023. For
both of these lines, reported claim frequency and incurred losses for accident years 2020 through 2023 were better than expected, which drove the favorable
reserve development. Business written in these years also benefitted from significant price increases, which the Company now believes will result in higher
profitability than initially anticipated. The favorable development for commercial property was mainly associated with the 2023 accident year, and resulted
from better than expected settlements for both catastrophe related and non-catastrophe claims.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $12 million in 2024 (net of
additional and return premiums). The favorable development was driven mainly by excess workers’ compensation business, 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 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.
Unfavorable prior year development (net of additional and return premiums) was $19 million in 2023.
Insurance – Reserves for the Insurance segment developed unfavorably by $21 million in 2023 (net of additional and return premiums). The unfavorable
development for the segment was concentrated in the early part of the year. A key driver of the unfavorable development early in 2023 was property
catastrophe losses related to 2022 events which were still being adjusted and settled during the early part of 2023. In particular, losses related to U.S. winter
storms which occurred during the month of December 2022 were a significant contributor to the development, as information gathering and evaluation of many
of these claims were still ongoing into the new year.
In addition to the property prior year development discussed above, during 2023 the Insurance segment also experienced adverse prior year
development on casualty lines of business for the 2016 through 2019 accident years, which was offset by favorable prior year development on casualty lines of
business for the 2020 through 2022 accident years. The unfavorable development on the 2016 through 2019 accident years was concentrated in the general
liability and commercial auto liability lines of business. 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 elevated uncertainty regarding incurred loss frequency and severity
as a result 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 twelve months. It should also be noted that commercial auto liability experienced adverse prior year
development for the 2020 through 2022 accident years, which partially offset the favorable development discussed above; the adverse development was driven
by a larger than expected number of large losses reported.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $2 million in 2023 (net of
additional and return premiums). The overall favorable prior year development for the segment was driven mainly by favorable development in excess
workers’ compensation, substantially offset by unfavorable development in the non-proportional reinsurance assumed liability, excess general liability
(including umbrella), and commercial auto 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 unfavorable development for non-proportional reinsurance assumed liability and excess general 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. The unfavorable development for commercial auto liability was concentrated in the 2022 accident
year and related to commercial auto program business.
Unfavorable prior year development (net of additional and return premiums) was $36 million in 2022.
99
Insurance – Reserves for the Insurance segment developed unfavorably by $41 million in 2022 (net of additional and return premiums). The unfavorable
development in the 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 unfavorable
development emerged during the third quarter as a result of settlements of claims at values higher than our expectations. However, the Company believes that
as a result of these settlements the remaining level of uncertainty around the ultimate value of its known COVID-19 claims has been significantly reduced.
The unfavorable development mentioned above also includes favorable prior year development for the Insurance segment primarily attributable to the
2020 and 2021 accident years and unfavorable development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021
accident years was concentrated in certain casualty lines of business including general liability, professional 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 continued to
experience lower reported incurred losses relative to its expectations for these accident years as they developed 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 uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company was 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 unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including
medical professional, lines of business, as well as 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.
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $5 million in 2022 (net of
additional and return premiums). The overall favorable development for the segment was driven mainly by favorable development in excess workers
compensation, substantially offset by unfavorable development in the professional liability, non-proportional reinsurance assumed liability, and commercial
auto liability lines of business. The favorable excess workers’ compensation development was spread across most prior accident years, including 2012 and prior
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. The
unfavorable professional liability and non-proportional reinsurance assumed liability development was concentrated mainly in accident years 2016 through
2018 and was associated primarily with our U.S. assumed reinsurance business and related to accounts insuring construction projects and professional liability
exposures. The unfavorable development for commercial auto liability was concentrated in the 2021 accident year and related to commercial auto program
business.
Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the Company’s operations,
because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986
when an absolute exclusion was incorporated into standard policy language.
The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written before adoption of the
absolute exclusion was $16 million and $17 million at December 31, 2024 and 2023, respectively. The estimation of these liabilities is subject to significantly
greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted
actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of
litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are
highly uncertain.
Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that
were discounted was $1,358 million and $1,352 million at December 31, 2024 and 2023, respectively. The aggregate net discount for those reserves, after
reflecting the effects of ceded reinsurance, was $405 million and $390 million at December 31, 2024 and 2023, respectively. At December 31, 2024, discount
rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.
Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2024) are excess workers’ compensation
reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess workers’
compensation business are discounted using risk-free discount
100
rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for the period. Once
established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss reserves in subsequent years are discounted at
the same rate, without regard to when any such adjustments are recognized. The expected loss and loss expense payout patterns subject to discounting are
derived from the Company’s loss payout experience.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total
discounted reserves at December 31, 2024), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease.
These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.
(14) Premiums and Reinsurance Related Information
The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and catastrophe losses. Reinsurance
coverage and retentions vary depending on the line of business, location of the risk and nature of loss. The Company’s reinsurance purchases include the
following: property reinsurance treaties that reduce exposure to large individual property losses and catastrophe events; casualty reinsurance treaties that reduce
its exposure to large individual casualty losses, workers’ compensation catastrophe losses and casualty losses involving multiple claimants or insureds; and
facultative reinsurance that reduces exposure on individual policies or risks for losses that exceed treaty reinsurance capacity. Depending on the business, the
Company purchases specific additional reinsurance to supplement the above programs.
The following is a summary of reinsurance financial information:
(In thousands)
2024
2023
2022
Written premiums:
Direct
$
12,904,893
$
11,676,743
$
10,695,138
Assumed
1,306,198
1,295,263
1,213,914
Ceded
(2,238,995)
(2,017,539)
(1,904,982)
Total net written premiums
$
11,972,096
$
10,954,467
$
10,004,070
Earned premiums:
Direct
$
12,346,924
$
11,112,980
$
10,217,891
Assumed
1,364,774
1,246,288
1,226,801
Ceded
(2,163,213)
(1,958,581)
(1,883,263)
Total net earned premiums
$
11,548,485
$
10,400,687
$
9,561,429
Ceded losses and loss expenses incurred
$
1,368,279
$
1,376,144
$
1,269,338
Ceded commission earned
$
505,753
$
471,841
$
477,437
The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the years ended
December 31, 2024 and 2023:
(In thousands)
2024
2023
Allowance for expected credit losses, beginning of period
$
35,110
$
30,660
Change in allowance for expected credit losses
4,774
4,450
Allowance for expected credit losses, end of period
$
39,884
$
35,110
The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the years ended
December 31, 2024 and 2023:
101
(In thousands)
2024
2023
Allowance for expected credit losses, beginning of period
$
8,404
$
8,064
Change in allowance for expected credit losses
(54)
340
Allowance for expected credit losses, end of period
$
8,350
$
8,404
The following table presents the amounts due from reinsurers as of December 31, 2024:
(In thousands)
Lifson Re
$
416,509
Lloyd’s of London
356,338
Partner Re
314,891
Munich Re
287,864
Berkshire Hathaway
274,182
Hannover Re Group
222,719
Renaissance Re
215,300
Swiss Re
159,462
Liberty Mutual
120,381
Everest Re
93,223
Axis Capital
83,756
Arch Capital Group
67,357
Sompo Holdings Group
59,074
Fairfax Financial
58,585
Nationwide Group
52,111
Korean Re
51,233
Axa Insurance
50,002
TOA RE
47,501
Markel Corp Group
42,982
MS & AD Insurance Group
34,680
Helvetia Holdings Group
29,490
Chubb Group
26,708
Other reinsurers less than $20,000
380,775
Subtotal
3,445,123
Residual market pools (1)
120,922
Allowance for expected credit losses
(8,350)
Total
$
3,557,695
(1) Many states require licensed insurers that provide workers' compensation insurance to participate in programs that provide workers' compensation to
employers that cannot procure coverage from an insurer on a voluntary basis. Insurers can fulfill this residual market obligation by participating in pools
where results are shared by the participating companies. The Company acts as a servicing carrier for workers' compensation pools in certain states. As a
servicing carrier, the Company writes residual market business directly and then cedes 100% of this business to the respective pool. As a servicing carrier,
the Company receives fee income for its services. The Company does not retain underwriting risk, and credit risk is limited as ceded balances are jointly
shared by all the pool members.
102
(15) Indebtedness
Indebtedness consisted of the following as of December 31, 2024 (the difference between the face value and the carrying value is unamortized
discount and debt issuance costs):
Carrying Value
(In thousands)
Interest Rate
Face Value
2024
2023
Senior notes and other debt due on:
February 15, 2037
6.250%
$
250,000
$
248,666
$
248,556
August 1, 2044
4.750%
350,000
346,389
346,205
May 12, 2050
4.000%
470,000
489,207
489,964
March 30, 2052
3.550%
400,000
394,609
394,411
September 30, 2061
3.150%
350,000
343,314
343,129
Subsidiary debt and other (1)
Various
8,973
8,973
5,686
Total senior notes and other debt
$
1,828,973
$
1,831,158
$
1,827,951
Subordinated debentures due on:
March 30, 2058
5.700%
$
185,000
$
179,650
$
179,489
December 30, 2059
5.100%
300,000
291,656
291,418
September 30, 2060
4.250%
250,000
244,813
244,668
March 30, 2061
4.125%
300,000
293,689
293,515
Total subordinated debentures
$
1,035,000
$
1,009,808
$
1,009,090
________________
(1) Subsidiary debt of $9.4 million is due in 2025, partially offset by the unamortized cost of $0.4 million due to entering into the $300 million senior
unsecured revolving credit facility.
On April 1, 2022, the Company entered into a senior unsecured revolving credit facility that provides for revolving, unsecured borrowings up to an
aggregate of $300 million with a $50 million sublimit for letters of credit. The Company may increase the amount available under the facility to a maximum of
$500 million subject to obtaining lender commitments for the increase and other customary conditions. Borrowings under the facility may be used for working
capital and other general corporate purposes. All borrowings under the facility must be repaid by April 1, 2027, except that letters of credit outstanding on that
date may remain outstanding until April 1, 2028 (or such later date approved by all lenders). Our ability to utilize the facility is conditioned on the satisfaction
of representations, warranties and covenants that are customary for facilities of this type. As of December 31, 2024, there were no borrowings outstanding
under the facility.
103
(16) Income Taxes
Income tax expense (benefit) consists of:
(In thousands)
Current
Expense
Deferred Expense
(Benefit)
Total
December 31, 2024
Domestic
$
344,210
$
51,754
$
395,964
Foreign
69,312
44,640
113,952
Total expense
$
413,522
$
96,394
$
509,916
December 31, 2023
Domestic
$
352,891
$
(43,456)
$
309,435
Foreign
44,372
16,750
61,122
Total expense (benefit)
$
397,263
$
(26,706)
$
370,557
December 31, 2022
Domestic
$
295,849
$
(27,544)
$
268,305
Foreign
42,890
23,532
66,422
Total expense (benefit)
$
338,739
$
(4,012)
$
334,727
Income before income taxes from domestic operations was $1,840 million, $1,430 million and $1,240 million for the years ended December 31, 2024,
2023 and 2022, respectively. Income before income taxes from foreign operations was $424 million, $324 million and $480 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate of 21% for 2024, 2023 and
2022 to pre-tax income are as follows:
(In thousands)
2024
2023
2022
Computed “expected” tax expense
$
475,543
$
368,425
$
361,133
Tax-exempt investment income
(7,110)
(8,361)
(10,815)
Change in valuation allowance
(220)
(10,883)
(28,064)
Impact of foreign operations and related tax rates
19,317
(1,896)
(3,444)
State and local taxes, net of federal benefit
12,329
12,271
8,976
Other, net
10,057
11,001
6,941
Total expense
$
509,916
$
370,557
$
334,727
104
At December 31, 2024 and 2023, the tax effects of differences that give rise to significant portions of the deferred tax asset and deferred tax liability
are as follows:
(In thousands)
2024
2023
Deferred tax asset:
Loss reserve discounting
$
218,222
$
230,956
Unearned premiums
216,721
200,938
Unrealized investment losses
58,701
126,693
Net operating losses & foreign tax credits
62,159
59,154
Other-than-temporary impairments
7,149
12,691
Employee compensation plans
70,529
68,062
Other
81,915
78,025
Gross deferred tax asset
715,396
776,519
Less valuation allowance
(36,063)
(36,283)
Deferred tax asset
679,333
740,236
Deferred tax liability:
Amortization of intangibles
15,124
15,205
Loss reserve discounting - transition rule
4,944
9,894
Deferred policy acquisition costs
195,150
176,281
Property, furniture and equipment
45,276
43,501
Investment funds
184,899
161,867
Other
78,874
66,525
Deferred tax liability
524,267
473,273
Net deferred tax asset
$
155,066
$
266,963
The Company had a net current tax payable of $14 million and $46 million at December 31, 2024 and 2023, respectively. At December 31, 2024, the
Company had foreign net operating loss carryforwards of $196 million that have no expiration date. At both December 31, 2024 and 2023, the Company had a
valuation allowance of $36 million. The Company has provided a valuation allowance against the utilization of $13 million of foreign tax credits and the future
net operating loss carryforward benefits of $23 million for certain foreign operations. The statute of limitations for the Company’s U.S. Federal income tax
returns has closed for all years through December 31, 2020.
The realization of the deferred tax asset is dependent upon the Company’s ability to generate sufficient taxable income in future periods. Based on
historical results and the prospects for future current operations, management anticipates that it is more likely than not that future taxable income will be
sufficient for the realization of this asset.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $481 million of its non-U.S. subsidiaries
since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed the Company
projects that the incremental tax, if any, will be immaterial.
105
(17) Dividends from Subsidiaries and Statutory Financial Information
The Company’s insurance subsidiaries are restricted by law as to the amount of dividends they may pay without the approval of regulatory authorities.
The Company’s lead insurer, Berkley Insurance Company ("BIC"), directly or indirectly owns all of the Company’s other insurance companies. During 2025,
the maximum amount of dividends that can be paid by BIC without such approval is approximately $1.6 billion.
BIC’s combined net income and statutory capital and surplus, as determined in accordance with statutory accounting practices ("SAP"), are as follows:
(In thousands)
2024
2023
2022
Net income
$
1,624,686
$
1,176,255
$
1,358,813
Statutory capital and surplus
$
9,421,874
$
8,776,138
$
8,330,587
The significant variances between SAP and GAAP are that for statutory purposes bonds are carried at amortized cost, unrealized gains and losses on equity
securities are recorded in surplus, acquisition costs are charged to income as incurred, deferred Federal income taxes are subject to limitations, excess and
assumed workers’ compensation reserves are discounted at different discount rates and certain assets designated as “non-admitted assets” are charged against
surplus. The Commissioner of Insurance of the State of Delaware has allowed BIC to recognize a non-tabular discount on certain workers' compensation loss
reserves, which is a permitted practice that differs from SAP. The effect of using this permitted practice was an increase to BIC’s statutory capital and surplus
by $163 million at December 31, 2024.
The National Association of Insurance Commissioners (“NAIC”) has risk-based capital (“RBC”) requirements that require insurance companies to
calculate and report information under a risk-based formula which measures statutory capital and surplus needs based on a regulatory definition of risk in a
company’s mix of products and its balance sheet. This guidance is used to calculate two capital measurements: Total Adjusted Capital and RBC Authorized
Control Level. Total Adjusted Capital is equal to the Company’s statutory capital and surplus excluding capital and surplus derived from the use of permitted
practices that differ from statutory accounting practices. RBC Authorized Control Level is the capital level used by regulatory authorities to determine whether
remedial action is required. Generally, no remedial action is required if Total Adjusted Capital is 200% or more of the RBC Authorized Control Level. At
December 31, 2024, BIC’s Total Adjusted Capital of $9.3 billion was 411% of its RBC Authorized Control Level.
See Note 3, Investments in Fixed Maturity Securities, for a description of assets held on deposit as security.
106
(18) Common Stockholders’ Equity
The weighted average number of shares used in the computation of net income per share was as follows:
(In thousands)
2024
2023
2022
Basic
399,734
406,500
415,278
Diluted
403,224
409,948
419,192
Treasury shares have been excluded from average outstanding shares from the date of acquisition. The weighted average number of basic shares
outstanding includes the impact of 17,659,297 common shares held in a grantor trust. The common shares held in the grantor trust are for delivery upon
settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since
shares deliverable under vested RSUs were already included in diluted shares outstanding. The difference in calculating basic and diluted net income per share
is attributable entirely to the dilutive effect of stock-based compensation plans. Changes in shares of common stock outstanding, net of treasury shares, are
presented below. Shares of common stock issued and outstanding do not include shares related to unissued restricted stock units (including shares held in the
grantor trust).
2024
2023
2022
Balance, beginning of year
384,817,136
396,819,150
397,756,323
Shares issued
951,930
1,059,500
1,118,418
Shares repurchased
(5,702,996)
(13,061,514)
(2,055,591)
Balance, end of year
380,066,070
384,817,136
396,819,150
The amount of dividends paid is dependent upon factors such as the receipt of dividends from our subsidiaries, our results of operations, cash flow,
financial condition and business needs, the capital and surplus requirements of our subsidiaries, and applicable insurance regulations that limit the amount of
dividends that may be paid by our regulated insurance subsidiaries.
107
(19) Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments as of December 31, 2024 and
2023:
2024
2023
(In thousands)
Carrying Value
Fair Value
Carrying Value
Fair Value
Assets:
Fixed maturity securities
$
22,397,865
$
22,399,426
$
20,178,308
$
20,181,547
Equity securities
1,203,788
1,203,788
1,090,347
1,090,347
Arbitrage trading account
1,122,599
1,122,599
938,049
938,049
Loans receivable
405,453
405,248
201,271
198,244
Cash and cash equivalents
1,974,747
1,974,747
1,363,195
1,363,195
Trading accounts receivable from brokers and clearing organizations
60,327
60,327
303,614
303,614
Due from broker
—
—
36,747
36,747
Liabilities:
Due to broker
70,483
70,483
—
—
Trading account securities sold but not yet purchased
73,358
73,358
9,357
9,357
Senior notes and other debt
1,831,158
1,425,852
1,827,951
1,480,076
Subordinated debentures
1,009,808
805,864
1,009,090
929,598
The estimated fair values of the Company’s fixed maturity securities, equity securities available for sale and arbitrage trading account securities are
based on various valuation techniques that rely on fair value measurements as described in Note 12 above. The fair value of loans receivable is estimated by
using current institutional purchaser yield requirements for loans with similar credit characteristics, which is considered a Level 2 input. The fair value of the
senior notes and other debt and the subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input.
(20) Commitments, Litigation and Contingent Liabilities
In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance and reinsurance businesses.
These matters are generally related to insurance and reinsurance claims and are considered in the establishment of loss and loss expense reserves. In addition,
the Company may also become involved in legal actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad
faith in handling of insurance claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial condition.
However, adverse outcomes on such matters are possible, from time to time, and could be material to the Company’s results of operations in any particular
financial reporting period.
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.
At December 31, 2024, the Company had commitments to invest up to $279 million and $48 million in certain investment funds and real estate
construction projects, respectively.
(21) Leases
Lessees are required to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months on the balance sheet. All leases
disclosed within this note are classified as operating leases. Recognized right-of-use asset and lease liability are reported within other assets and other
liabilities, respectively, in the consolidated balance sheet. Lease expense is reported in other operating costs and expenses in the consolidated statement of
income and accounted for on a straight-line basis over the lease term.
To determine the discount rate used to calculate present value of future minimum lease payments, the Company uses its incremental borrowing rate during
the lease commencement period in line with the respective lease duration. In certain
108
cases, the Company has the option to renew the lease. Lease renewal future payments are included in the present value of the future minimum lease payments
when the Company determines it is reasonably certain to renew.
The main leases entered into by the Company are for office space used by the Company’s operating units across the world. Additionally, the Company, to a
lesser extent, has equipment leases mainly for office equipment. Further information relating to operating lease expense and other operating lease information
is as follows:
For the Year Ended December 31,
(In thousands)
2024
2023
Leases:
Lease cost
$
45,718
$
44,256
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows
$
49,441
$
49,910
Right-of-use assets obtained in exchange for new lease liabilities
$
43,624
$
53,753
As of December 31,
($ in thousands)
2024
2023
Right-of-use assets
$
180,035
$
176,496
Lease liabilities
$
218,397
$
218,621
Weighted-average remaining lease term
7.2 years
7.3 years
Weighted-average discount rate
5.59 %
5.10 %
Contractual maturities of the Company’s future minimum lease payments are as follows:
(In thousands)
December 31, 2024
Contractual Maturities:
2025
$
48,822
2026
41,861
2027
32,775
2028
30,550
2029
27,374
Thereafter
81,980
Total undiscounted future minimum lease payments
263,362
Less: Discount impact
44,965
Total lease liability
$
218,397
109
(22) Stock Incentive Plan
Pursuant to the Company's stock incentive plan, the Company may issue restricted stock units ("RSUs") to employees of the Company and its
subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other vesting and forfeiture provisions contained in the award
agreement. The following table summarizes RSU information for the three years ended December 31, 2024:
2024
2023
2022
RSUs granted and unvested at beginning of period:
6,435,267
6,927,639
7,716,779
Granted
1,217,056
1,647,690
1,537,440
Vested
(1,594,183)
(1,726,956)
(1,888,020)
Canceled
(323,743)
(413,106)
(438,560)
RSUs granted and unvested at end of period:
5,734,397
6,435,267
6,927,639
Upon vesting, shares of the Company’s common stock equal to the number of vested RSUs are issued or deferred to a later date, depending on the
terms of the specific award agreement. As of December 31, 2024, 17,589,942 RSUs had been deferred. RSUs that have not yet vested and vested RSUs that
have been deferred are not considered to be issued and outstanding shares.
The fair value of RSUs at the date of grant are recorded as unearned compensation, a component of stockholders’ equity, and expensed over the
vesting period. Following is a summary of changes in unearned compensation for the three years ended December 31, 2024:
(In thousands)
2024
2023
2022
Unearned compensation at beginning of year
$
148,080
$
142,060
$
135,535
RSUs granted, net of cancellations
63,347
62,418
60,628
RSUs expensed
(52,380)
(49,200)
(47,611)
RSUs forfeitures
(5,718)
(7,198)
(6,492)
Unearned compensation at end of year
$
153,329
$
148,080
$
142,060
(23) Compensation Plans
The Company and its subsidiaries have profit sharing plans in which substantially all employees participate. The plans provide for minimum annual
contributions of 5% of eligible compensation; contributions above the minimum are discretionary and vary with each participating businesses's profitability.
Employees become eligible to participate in the plan on the first day of the calendar quarter following the first full calendar quarter after the employee's date of
hire provided the employee has completed 250 hours of service during the calendar quarter. The plans provide that 40% of the contributions vest immediately
and that the remaining 60% vest at varying percentages based upon years of service. Profit sharing expense was $72 million, $75 million and $62 million in
2024, 2023 and 2022, respectively.
The Company has a long-term incentive compensation plan ("LTIP") that provides for compensation to key executives based on the growth in the
Company's book value per share over a five year period.
The following table summarizes the outstanding LTIP awards as of December 31, 2024:
Units Outstanding
Maximum Value
Inception to date earned through
December 31, 2024 on outstanding units
2020 grant
196,500 $
19,650,000 $
19,650,000
2021 grant
206,000
20,600,000
20,600,000
2022 grant
227,750
22,775,000
20,169,540
2023 grant
241,000
24,100,000
12,466,473
2024 grant
253,750
25,375,000
6,476,304
110
The following table summarizes the LTIP expense for each of the three years ended December 31, 2024:
(In thousands)
2024
2023
2022
2018 grant
$
—
$
(125)
$
4,299
2019 grant
—
3,366
6,904
2020 grant
135
7,047
6,653
2021 grant
3,543
6,561
6,574
2022 grant
8,167
6,155
6,232
2023 grant
7,076
5,424
—
2024 grant
6,476
—
—
Total
$
25,397
$
28,428
$
30,662
(24) Supplemental Financial Statement Data
Other operating costs and expenses consist of the following:
(In thousands)
2024
2023
2022
Amortization of deferred policy acquisition costs
$
1,219,849
$
1,038,975
$
1,038,903
Insurance operating expenses
2,075,053
1,915,711
1,635,000
Insurance service expenses
90,640
91,714
96,419
Net foreign currency (gains) losses
(52,376)
31,799
(50,930)
Other costs and expenses
269,140
285,737
242,113
Total
$
3,602,306
$
3,363,936
$
2,961,505
(25) Industry Segments
The Company’s reportable segments include the following two business segments, plus a corporate segment:
• Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty personal lines throughout the
United States, as well as insurance business in 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, 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 table. Income before income taxes by segment
includes allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.
111
Revenues
Expenses
(In thousands)
Earned
Premiums (1)
Investment
Income
Other
Total (2)
Losses and
Loss Expenses
Policy
Acquisition
and Insurance
Operating
Expenses
Other
Total
Pre-Tax
Income
(Loss)
Net
Income
(Loss)
to Common
Stockholders
Year ended December
31, 2024
Insurance
$
10,086,308
$
1,057,738
$
37,455
$
11,181,501
$
6,332,490
$
2,863,697
$
43,231
$
9,239,418
$
1,942,083
$
1,503,875
Reinsurance &
Monoline Excess
1,462,177
234,728
—
1,696,905
799,105
431,205
—
1,230,310
466,595
367,569
Corporate, other and
eliminations (3)
—
40,695
601,943
642,638
—
—
904,531
904,531
(261,893)
(203,832)
Net investment gains
—
—
117,708
117,708
—
—
—
—
117,708
88,503
Consolidated
$
11,548,485
$
1,333,161
$
757,106
$
13,638,752
$
7,131,595
$
3,294,902
$
947,762
$
11,374,259
$
2,264,493
$
1,756,115
Year ended December
31, 2023
Insurance
$
9,007,376
$
783,660
$
36,830
$
9,827,866
$
5,615,526
$
2,545,310
$
37,112
$
8,197,948
$
1,629,918
$
1,283,281
Reinsurance &
Monoline Excess
1,393,311
221,966
—
1,615,277
756,616
409,376
—
1,165,992
449,285
355,155
Corporate, other and
eliminations (3)
—
47,209
605,544
652,753
—
—
1,024,595
1,024,595
(371,842)
(293,869)
Net investment gains
—
—
47,042
47,042
—
—
—
—
47,042
36,792
Consolidated
$
10,400,687
$
1,052,835
$
689,416
$
12,142,938
$
6,372,142
$
2,954,686
$
1,061,707
$
10,388,535
$
1,754,403
$
1,381,359
Year ended December
31, 2022
Insurance
$
8,171,828
$
543,844
$
33,347
$
8,749,019
$
5,013,614
$
2,268,649
$
31,294
$
7,313,557
$
1,435,462
$
1,153,231
Reinsurance &
Monoline Excess
1,389,601
200,512
—
1,590,113
848,136
405,254
—
1,253,390
336,723
271,580
Corporate, other and
eliminations (3)
—
34,829
590,141
624,970
—
—
879,871
879,871
(254,901)
(203,476)
Net investment gains
—
—
202,397
202,397
—
—
—
—
202,397
159,727
Consolidated
$
9,561,429
$
779,185
$
825,885
$
11,166,499
$
5,861,750
$
2,673,903
$
911,165
$
9,446,818
$
1,719,681
$
1,381,062
Identifiable Assets
(In thousands)
December 31,
2024
2023
Insurance
$
33,030,140
$
29,976,619
Reinsurance & Monoline Excess
5,669,729
5,545,249
Corporate, other and eliminations (3)
1,867,399
1,680,147
Consolidated
$
40,567,268
$
37,202,015
_______________________________________
(1) Certain amounts included in earned premiums of each segment are related to inter-segment transactions.
(2) Revenues for Insurance includes $1,471 million, $1,171 million, and $1,029 million in 2024, 2023 and 2022, respectively, from foreign countries. Revenues
for Reinsurance & Monoline Excess includes $485 million, $463 million, and $412 million in 2024, 2023 and 2022, respectively, from foreign countries.
(3) Corporate, other and eliminations represent corporate revenues and expenses and certain other items that are not allocated to business segments.
112
Net premiums earned by major line of business were as follows:
(In thousands)
2024
2023
2022
Insurance
Other liability
$
4,068,662
$
3,605,298
$
3,188,399
Short-tail lines (1)
2,201,661
1,825,027
1,562,122
Auto
1,481,569
1,270,907
1,097,704
Workers' compensation
1,237,888
1,212,294
1,197,810
Professional liability
1,096,528
1,093,850
1,125,793
Total Insurance
10,086,308
9,007,376
8,171,828
Reinsurance & Monoline Excess
Casualty (2)
771,329
821,826
893,777
Property (2)
424,296
330,359
278,807
Monoline Excess (3)
266,552
241,126
217,017
Total Reinsurance & Monoline Excess
1,462,177
1,393,311
1,389,601
Total
$
11,548,485
$
10,400,687
$
9,561,429
(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.
113
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this annual report. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company has in place effective controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act and the rules thereunder, is recorded,
processed, summarized and reported within the time periods specified in the Commission's rules and forms.
During the quarter ended December 31, 2024, there were no changes in our internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial reporting.
Management's Report On Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the
participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of December 31, 2024.
114
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors
W. R. Berkley Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited W. R. Berkley Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2024, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity,
and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules II to VI
(collectively, the consolidated financial statements), and our report dated February 24, 2025 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management's Report On Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/S/ KPMG LLP
New York, New York
February 24, 2025
115
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
116
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
(a) Security ownership of certain beneficial owners
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
(b) Security ownership of management
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
(c) Changes in control
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
(d) Equity compensation plan information
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, New York, NY, Auditor Firm ID: 185.
Reference is made to the registrant's definitive proxy statement, which will be filed with the Securities and Exchange Commission within 120 days
after December 31, 2024, and which is incorporated herein by reference.
117
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Index to Financial Statements
The schedules to the consolidated financial statements listed below should be read in conjunction with the consolidated financial statements included in
this Annual Report on Form 10-K. Financial statement schedules not included in this Annual Report on Form 10-K have been omitted because they are not
applicable or required information is shown in the financial statements or notes thereto.
Index to Financial Statement Schedules
Page
Schedule II — Condensed Financial Information of Registrant
125
Schedule III — Supplementary Insurance Information
129
Schedule IV — Reinsurance
130
Schedule V — Valuation and Qualifying Accounts
131
Schedule VI — Supplementary Information Concerning Property — Casualty Insurance Operations
132
118
(b) Exhibits
EXHIBITS
Number
(3.1)
The Company’s Restated Certificate of Incorporation, as amended through May 10, 2004 (incorporated by reference to Exhibits 3.1 and 3.2 of the Company’s
Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on August 6, 2003).
(3.2)
Amendment, dated May 11, 2004, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.2 of the Company’s
Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on August 5, 2004).
(3.3)
Amendment, dated May 16, 2006, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.2 of the Company’s
Current Report on Form 8-K (File No. 1-15202) filed with the Commission on May 17, 2006).
(3.4)
Amendment, dated June 12, 2020, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s
Current Report on Form 8-K (File No. 1-15202) filed with the Commission on June 16, 2020).
(3.5)
Amendment, dated June 15, 2022, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s
Current Report on Form 8-K (File No. 1-15202) filed with the Commission on June 16, 2022).
(3.6)
Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-15202)
filed with the Commission on March 1, 2023).
(4.1)
Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 of the
Company’s Annual Report on Form 10-K (File No. 1-15202) filed with the Commission on February 24, 2023).
(4.2)
Indenture, dated as of February 14, 2003, between the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 of the
Company’s Annual Report on Form 10-K (File No. 1-15202) filed with the Commission on March 31, 2003).
(4.3)
Fifth Supplemental Indenture, dated as of February 9, 2007, between the Company and The Bank of New York, as Trustee, relating to $250,000,000 principal
amount of the Company’s 6.250% Senior Notes due 2037, including the form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.7 of the Company’s
Annual Report on Form 10-K (File No. 1-15202) filed with the Commission on March 1, 2007).
(4.4)
Ninth Supplemental Indenture, dated as of August 6, 2014, between the Company and The Bank of New York Mellon, as Trustee, relating to $350,000,000
principal amount of the Company’s 4.750% Senior Notes due 2044, including the form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the
Company's Current Report on Form 8-K (File No. 1-15202) filed with the Commission on August 6, 2014).
(4.5)
Indenture, dated as of May 12, 2020, between the Company and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 of the
Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on May 12, 2020).
(4.6)
First Supplemental Indenture, dated as of May 12, 2020, between the Company and The Bank of New York Mellon, as Trustee, relating to $470,000,000 principal
amount of the Company’s 4.000% Senior Notes due 2050, including the form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the Company’s
Current Report on Form 8-K (File No. 1-15202) filed with the Commission on May 12, 2020).
(4.7)
Second Supplemental Indenture, dated as of March 16, 2021, between the Company and The Bank of New York Mellon, as Trustee, relating to $400,000,000
principal amount of the Company’s 3.550% Senior Notes due 2052, including the form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the
Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on March 16, 2021).
(4.8)
Third Supplemental Indenture, dated as of September 15, 2021, between the Company and The Bank of New York Mellon, as Trustee, relating to $350,000,000
principal amount of the Company’s 3.150% Senior Notes due 2061, including the form of the Notes as Exhibit A (incorporated by reference to Exhibit 4.2 of the
Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on September 15, 2021).
119
(4.9)
Subordinated Indenture, dated as of March 26, 2018, between the Company and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit
4.1 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on March 26, 2018).
(4.10)
First Supplemental Indenture, dated as of March 26, 2018, between the Company and The Bank of New York Mellon, as Trustee, relating to $185,000,000
principal amount of the Company’s 5.700% Subordinated Debentures due 2058, including the form of the Securities as Exhibit A (incorporated by reference to
Exhibit 4.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on March 26, 2018).
(4.11)
Second Supplemental Indenture, dated as of December 16, 2019, between the Company and the Bank of New York Mellon, as Trustee, relating to $300,000,000
principal amount of the Company's 5.100% Subordinated Debentures due 2059, including the form of the Securities as Exhibit A (incorporated by reference to
Exhibit 4.2 of the Company's Current Report on Form 8-K (File No. 1-15202) filed with the Commission on December 16, 2019).
(4.12)
Third Supplemental Indenture, dated as of September 21, 2020, between the Company and The Bank of New York Mellon, as Trustee, relating to $250,000,000
principal amount of the Company’s 4.250% Subordinated Debentures due 2060, including the form of the Securities as Exhibit A (incorporated by reference to
Exhibit 4.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on September 21, 2020).
(4.13)
Fourth Supplemental Indenture, dated as of February 10, 2021, between the Company and The Bank of New York Mellon, as Trustee, relating to $300,000,000
principal amount of the Company’s 4.125% Subordinated Debentures due 2061, including the form of the Securities as Exhibit A (incorporated by reference to
Exhibit 4.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on February 10, 2021).
(4.14)
The instruments defining the rights of holders of the other long term debt securities of the Company are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of
Regulation S-K. The Company agrees to furnish supplementally copies of these instruments to the Commission upon request.
(10.1)
Credit Agreement, dated as of April 1, 2022, by and among W. R. Berkley Corporation, as borrower, each lender from time to time party thereto, Credit Suisse AG,
New York Branch, JPMorgan Chase Bank, N.A. and Morgan Stanley Senior Funding, Inc. as Syndication Agents, and Bank of America, N.A., as Administrative
Agent, Several L/C Agent and Fronting L/C Issuer (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No. 1-15202)
filed with the Commission on April 4, 2022).
(10.2)
W. R. Berkley Corporation 2018 Stock Incentive Plan (incorporated by reference to Annex B of the Company’s 2018 Proxy Statement (File No. 1-15202) filed
with the Commission on April 19, 2018).
(10.3)
Form of Restricted Stock Unit Agreement for grant of April 4, 2003 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q
(File No. 1-15202) filed with the Commission on August 6, 2003).
(10.4)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of the
Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on May 3, 2005).
(10.5)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on August 6, 2010).
(10.6)
Form of Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 8, 2012).
(10.7)
Form of 2014 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 7, 2014).
(10.8)
Form of 2015 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 9, 2015).
120
(10.9)
Form of 2017 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2012 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 8, 2017).
(10.10)
Form of 2018 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2018 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 7, 2018).
(10.11)
Form of 2020 Performance-Based Restricted Stock Unit Agreement under the W. R. Berkley Corporation 2018 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 5, 2020).
(10.12)
Form of 2023 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2018 Stock Incentive Plan (incorporated by reference to
Exhibit 10.12 of the Company's Annual Report on Form 10-K (File No. 1-15202) filed with the Commission on February 23, 2024).
(10.13)
Form of 2024 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2018 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 4, 2024).
(10.14)
W. R. Berkley Corporation Deferred Compensation Plan for Officers as amended and restated effective December 1, 2021 (incorporated by reference to Exhibit
10.1 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on November 12, 2021).
(10.15)
W. R. Berkley Corporation Deferred Compensation Plan for Directors as amended and restated effective December 1, 2021 (incorporated by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on November 12, 2021).
(10.16)
W. R. Berkley Corporation Amended and Restated Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company's Current
Report on Form 8-K (File No. 1-15202) filed with the Commission on February 25, 2019).
(10.17)
W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Company's current Report on Form 8-K (File No. 1-
15202) filed with the Commission on February 25, 2019).
(10.18)
Form of 2021 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on November 4, 2021).
(10.19)
Form of 2022 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on May 3, 2022).
(10.20)
Form of 2023 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on May 4, 2023).
(10.21)
Form of 2024 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.1 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on May 3, 2024).
(10.22)
W. R. Berkley Corporation 2009 Directors Stock Plan (incorporated by reference to Annex B of the Company’s 2021 Proxy Statement (File No. 1-15202) filed
with the Commission on April 27, 2021).
(10.23)
Supplemental Benefits Agreement between William R. Berkley and the Company as amended and restated as of December 21, 2011 (incorporated by reference to
Exhibit 10.14 of the Company's Annual Report on Form 10-K (File No. 1-15202) filed with the Commission on February 28, 2012).
(14)
Code of Ethics for Senior Financial Officers (incorporated by reference to Exhibit 14 of the Company’s Annual Report on Form 10-K (File No. 1-15202) filed
with the Commission on March 14, 2005).
(19.1)
Insider Trading Policy
121
(21)
List of the Company’s subsidiaries.
(23)
Consent of Independent Registered Public Accounting Firm.
(31.1)
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
(31.2)
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
(32.1)
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(97)
W. R. Berkley Corporation Clawback Policy (incorporated by reference to Exhibit 97 of the Company's Annual Report on Form 10-K (File No. 1-15202) filed
with the Commission on February 23, 2024).
ITEM 16. FORM 10-K Summary
None.
122
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
W. R. BERKLEY CORPORATION
By
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
President and Chief Executive Officer
February 24, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
123
Signature
Title
Date
/s/ William R. Berkley
Executive Chairman
February 24, 2025
William R. Berkley
of the Board of Directors
/s/ W. Robert Berkley, Jr.
President
February 24, 2025
W. Robert Berkley, Jr.
Chief Executive Officer and Director
(Principal executive officer)
/s/ Christopher L. Augostini
Director
February 24, 2025
Christopher L. Augostini
/s/ Ronald E. Blaylock
Director
February 24, 2025
Ronald E. Blaylock
/s/ Mary C. Farrell
Director
February 24, 2025
Mary C. Farrell
/s/ María Luisa Ferré
Director
February 24, 2025
María Luisa Ferré
/s/ Marie A. Mattson
Director
February 24, 2025
Marie A. Mattson
/s/ Daniel L. Mosley
Director
February 24, 2025
Daniel L. Mosley
/s/ Mark L. Shapiro
Director
February 24, 2025
Mark L. Shapiro
/s/ Jonathan Talisman
Director
February 24, 2025
Jonathan Talisman
/s/ Richard M. Baio
Executive Vice President
February 24, 2025
Richard M. Baio
and Chief Financial Officer
(Principal financial officer
and principal accounting officer)
124
Schedule II
W. R. Berkley Corporation
Condensed Financial Information of Registrant
Balance Sheets (Parent Company)
December 31,
(In thousands)
2024
2023
Assets:
Cash and cash equivalents
$
112,931
$
128,434
Fixed maturity securities available for sale at fair value (cost $251,938 and $190,708 at December 31, 2024 and 2023, respectively)
251,800
189,189
Loans receivable (net of allowance for expected credit losses of $591 and $1,146 at December 31, 2024 and 2023, respectively)
27,659
91,304
Equity securities, at fair value (cost $3,430 at both December 31, 2024 and 2023)
3,430
3,430
Investment in subsidiaries
10,770,734
9,887,117
Current federal income taxes
36,417
—
Deferred federal income taxes
228,329
278,946
Property, furniture and equipment at cost, less accumulated depreciation
9,320
10,382
Other assets
126,799
44,186
Total assets
$
11,567,419
$
10,632,988
Liabilities and stockholders’ equity:
Liabilities:
Due to subsidiaries
$
182,445
$
178,676
Other liabilities
158,281
166,399
Current federal income taxes
—
1,721
Subordinated debentures
1,009,808
1,009,090
Senior notes
1,821,774
1,821,671
Total liabilities
3,172,308
3,177,557
Stockholders’ equity:
Preferred stock
—
—
Common stock
158,705
158,705
Additional paid-in capital
984,825
964,789
Retained earnings (including accumulated undistributed net income of subsidiaries of $9,216,210 and $8,497,674 at December 31, 2024 and
2023, respectively)
12,265,070
11,040,908
Accumulated other comprehensive loss
(934,269)
(925,838)
Treasury stock, at cost
(4,079,220)
(3,783,133)
Total stockholders’ equity
8,395,111
7,455,431
Total liabilities and stockholders’ equity
$
11,567,419
$
10,632,988
________________
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
125
Schedule II, Continued
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Income (Parent Company)
Year Ended December 31,
(In thousands)
2024
2023
2022
Management fees and investment income including dividends from subsidiaries of $1,196,538, $1,261,166, and
$22,807 for the years ended December 31, 2024, 2023 and 2022, respectively
$
1,252,194
$
1,325,997
$
32,585
Net investment gains (losses)
90,284
(5,895)
1,007
Other income
853
368
1,916
Total revenues
1,343,331
1,320,470
35,508
Operating costs and expense
277,679
272,750
192,175
Interest expense
126,400
126,397
129,633
Income (loss) before federal income taxes
939,252
921,323
(286,300)
Federal income taxes:
Federal income taxes provided by subsidiaries on a separate return basis
424,456
253,292
414,660
Federal income tax expense on a consolidated return basis
(356,943)
(284,757)
(258,776)
Net federal income tax benefit (expense)
67,513
(31,465)
155,884
Income (loss) before undistributed equity in net income of subsidiaries
1,006,765
889,858
(130,416)
Equity in undistributed net income of subsidiaries
749,350
491,501
1,511,478
Net income
$
1,756,115
$
1,381,359
$
1,381,062
________________
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
126
Schedule II, Continued
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
Statements of Cash Flows (Parent Company)
Year Ended December 31,
(In thousands)
2024
2023
2022
Cash flow from (used in) operating activities:
Net income
$
1,756,115
$
1,381,359
$
1,381,062
Adjustments to reconcile net income to net cash from operating activities:
Net investment (gains) losses
(90,284)
5,895
(1,007)
Depreciation and (accretion) amortization
(5,120)
(6,753)
4,281
Equity in undistributed earnings of subsidiaries
(749,350)
(491,501)
(1,511,478)
Tax payments received from subsidiaries
432,402
373,504
321,682
Federal income taxes provided by subsidiaries on a separate return basis
(424,456)
(253,292)
(414,660)
Stock incentive plans
54,381
51,000
49,411
Change in:
Federal income taxes
(9,346)
(15,793)
(40,746)
Equity in undistributed earnings of other investments
(10,444)
—
—
Other assets
(9,888)
(5,647)
3,163
Other liabilities
114,418
(88,954)
87,100
Accrued investment income
(1,740)
1,200
890
Net cash from (used in) operating activities
1,056,688
951,018
(120,302)
Cash (used in) from investing activities:
Proceeds from sales of fixed maturity securities
598,915
748,825
543,549
Proceeds from maturities and prepayments of fixed maturity securities
260,999
82,075
83,134
Cost of purchases of fixed maturity securities
(824,476)
(732,685)
(109,289)
Change in loans receivable
64,200
17,843
(16,249)
Investments in and advances to subsidiaries, net
(238,337)
21,605
(171,062)
Change in balance due to security broker
(71,143)
(38)
(10,289)
Net additions to real estate, furniture & equipment
(37)
(18)
(432)
Other, net
73
290
368
Net cash (used in) from investing activities
(209,806)
137,897
319,730
Cash used in financing activities:
Net proceeds from issuance of senior notes
—
—
(914)
Repayment and redemption of debt
—
—
(426,503)
Purchase of common treasury shares
(303,655)
(537,163)
(94,140)
Cash dividends to common stockholders
(531,953)
(501,456)
(235,192)
Other, net
(26,777)
(25,384)
(23,194)
Net cash used in from financing activities
(862,385)
(1,064,003)
(779,943)
Net (decrease) increase in cash and cash equivalents
(15,503)
24,912
(580,515)
Cash and cash equivalents at beginning of year
128,434
103,522
684,037
Cash and cash equivalents at end of year
$
112,931
$
128,434
$
103,522
________________
See Report of Independent Registered Public Accounting Firm and note to condensed financial information.
127
W. R. Berkley Corporation
Condensed Financial Information of Registrant, Continued
December 31, 2024
Note to Condensed Financial Information (Parent Company)
The accompanying condensed financial information should be read in conjunction with the notes to consolidated financial statements included elsewhere
herein. Reclassifications have been made in the 2023 and 2022 financial statements as originally reported to conform them to the presentation of the 2024
financial statements.
The Company files a consolidated federal income tax return with the results of its domestic insurance subsidiaries included on a statutory basis. Under
present Company policy, federal income taxes payable by subsidiary companies on a separate-return basis are paid to W. R. Berkley Corporation, and the
Company pays the tax due on a consolidated return basis.
128
Schedule III
W. R. Berkley Corporation and Subsidiaries
Supplementary Insurance Information
December 31, 2024, 2023 and 2022
(In thousands)
Deferred
Policy
Acquisition
Cost
Reserve for
Losses and
Loss
Expenses
Unearned
Premiums
Net
Premiums
Earned
Net
Investment
Income
Loss and
Loss
Expenses
Amortization
of
Deferred
Policy
Acquisition
Cost
Other
Operating
Costs
and Expenses
Net
Premiums
Written
December 31, 2024
Insurance
$
840,917
$ 16,887,821
$
5,836,435
$ 10,086,308
$
1,057,738
$
6,332,490
$
1,081,170
$
1,825,758
$ 10,549,550
Reinsurance & Monoline Excess
110,811
3,480,209
538,677
1,462,177
234,728
799,105
138,679
292,526
1,422,546
Corporate, other and eliminations
—
—
—
—
40,695
—
—
264,173
—
Total
$
951,728
$ 20,368,030
$
6,375,112
$ 11,548,485
$
1,333,161
$
7,131,595
$
1,219,849
$
2,382,457
$ 11,972,096
December 31, 2023
Insurance
$
736,348
$ 15,298,372
$
5,322,869
$
9,007,376
$
783,660
$
5,615,526
$
897,908
$
1,684,514
$
9,560,533
Reinsurance & Monoline Excess
125,261
3,441,280
599,457
1,393,311
221,966
756,616
141,067
268,309
1,393,934
Corporate, other and eliminations
—
—
—
—
47,209
—
—
372,138
—
Total
$
861,609
$ 18,739,652
$
5,922,326
$ 10,400,687
$
1,052,835
$
6,372,142
$
1,038,975
$
2,324,961
$ 10,954,467
December 31, 2022
Insurance
$
633,493
$ 13,655,613
$
4,708,586
$
8,171,828
$
543,844
$
5,013,614
$
881,567
$
1,418,374
$
8,609,028
Reinsurance & Monoline Excess
129,993
3,355,610
589,068
1,389,601
200,512
848,136
157,336
247,918
1,395,042
Corporate, other and eliminations
—
—
—
—
34,829
—
—
256,310
—
Total
$
763,486
$ 17,011,223
$
5,297,654
$
9,561,429
$
779,185
$
5,861,750
$
1,038,903
$
1,922,602
$ 10,004,070
__________________________
See Report of Independent Registered Public Accounting Firm.
129
Schedule IV
W. R. Berkley Corporation and Subsidiaries
Reinsurance
Years ended December 31, 2024, 2023 and 2022
Premiums Written
(In thousands, other than percentages)
Direct
Amount
Ceded
to Other
Companies
Assumed
from Other
Companies
Net
Amount
Percentage
of Amount
Assumed
to Net
Year ended December 31, 2024
Insurance
$
12,417,129
$
2,112,582
$
245,003
$
10,549,550
2.3 %
Reinsurance & Monoline Excess
487,764
126,413
1,061,195
1,422,546
74.6 %
Total
$
12,904,893
$
2,238,995
$
1,306,198
$
11,972,096
10.9 %
Year ended December 31, 2023
Insurance
$
11,209,325
$
1,900,560
$
251,768
$
9,560,533
2.6 %
Reinsurance & Monoline Excess
467,418
116,979
1,043,495
1,393,934
74.9 %
Total
$
11,676,743
$
2,017,539
$
1,295,263
$
10,954,467
11.8 %
Year ended December 31, 2022
Insurance
$
10,193,154
$
1,796,845
$
212,719
$
8,609,028
2.5 %
Reinsurance & Monoline Excess
501,984
108,137
1,001,195
1,395,042
71.8 %
Total
$
10,695,138
$
1,904,982
$
1,213,914
$
10,004,070
12.1 %
___________________________
See Report of Independent Registered Public Accounting Firm.
130
Schedule V
W. R. Berkley Corporation and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2024, 2023 and 2022
(In thousands)
Opening Allowance
Balance
Additions-
Charged to
Expense
Deduction-
Amounts
Written Off
Ending Allowance
Balance
Year ended December 31, 2024
Premiums, fees and other receivables
$
42,325
$
15,743
$
(8,587)
$
49,481
Due from reinsurers
8,404
568
(622)
8,350
Deferred federal and foreign income taxes
36,283
9,219
(9,439)
36,063
Fixed maturity securities
36,751
2,053
(38,133)
671
Loan loss reserves
3,004
5
(1,895)
1,114
Total
$
126,767
$
27,588
$
(58,676)
$
95,679
Year ended December 31, 2023
Premiums, fees and other receivables
$
36,931
$
13,637
$
(8,243)
$
42,325
Due from reinsurers
8,064
340
—
8,404
Deferred federal and foreign income taxes
47,166
3,864
(14,747)
36,283
Fixed maturity securities
37,466
5,013
(5,728)
36,751
Loan loss reserves
1,791
1,782
(569)
3,004
Total
$
131,418
$
24,636
$
(29,287)
$
126,767
Year ended December 31, 2022
Premiums, fees and other receivables
$
30,860
$
13,734
$
(7,663)
$
36,931
Due from reinsurers
7,713
352
(1)
8,064
Deferred federal and foreign income taxes
75,230
1,046
(29,110)
47,166
Fixed maturity securities
22,625
15,152
(311)
37,466
Loan loss reserves
1,718
73
—
1,791
Total
$
138,146
$
30,357
$
(37,085)
$
131,418
_______________________
See Report of Independent Registered Public Accounting Firm.
131
Schedule VI
W. R. Berkley Corporation and Subsidiaries
Supplementary Information Concerning Property-Casualty Insurance Operations
Years Ended December 31, 2024, 2023 and 2022
(In thousands)
2024
2023
2022
Deferred policy acquisition costs
$
951,728
$
861,609
$
763,486
Reserves for losses and loss expenses
20,368,030
18,739,652
17,011,223
Unearned premiums
6,375,112
5,922,326
5,297,654
Net premiums earned
11,548,485
10,400,687
9,561,429
Net investment income
1,333,161
1,052,835
779,185
Losses and loss expenses incurred:
Current year
7,083,999
6,311,780
5,774,713
Prior years
14,350
29,681
54,511
Loss reserve discount accretion
33,246
30,681
32,526
Amortization of deferred policy acquisition costs
1,219,849
1,038,975
1,038,903
Paid losses and loss expenses
5,484,430
4,981,610
4,347,910
Net premiums written
11,972,096
10,954,467
10,004,070
___________________
See Report of Independent Registered Public Accounting Firm.
132
Global Restrictions on
W. R. Berkley Corporation
Insider Trading Policy
February 2025
Introduction
The securities laws of the United States and the various states impose important restrictions on officers, directors and employees (“Covered
Persons”) of W. R. Berkley Corporation and its subsidiaries (together, the “Company”) with respect to sales, purchases and other transactions
involving securities. This Insider Trading Policy (this “Policy”) reviews these restrictions concerning securities transactions by Covered Persons.
Note that, while the following provides a useful overview, it is not a comprehensive attempt to deal with all potential restrictions; it is designed to
help you identify potential problems and be aware of areas where caution is warranted and you should seek further advice.
This Policy also establishes specific procedures, designed to ensure compliance with the securities laws and regulations, to be followed by the
Company and Covered Persons engaging in transactions in the Company’s securities and, in certain circumstances, securities of third parties.
Compliance with this Policy is necessary to protect the Company’s business and reputation, to prevent violations of law by you and by the
Company and to avoid the appearance of impropriety.
If you encounter a problem or have any doubts about your transactions in securities, you should consult with the Company’s General Counsel, so
that the proper advice can be given and the proper actions can be taken.
General Restrictions and Policies
Insider Trading
It is unlawful for an “insider” (as defined below) to trade in securities on the basis of material information known to that individual but not to the
public (“Material Non-Public Information”), or to transmit Material Non-Public Information to any other person who may trade on the basis of
such information. Violation of this prohibition is a serious federal offense and the penalties can include a prison term and disgorgement of any
profits. The fact that the insider did not intend to defraud anyone may not insulate the insider from liability. It is the Company’s policy that its
Covered Persons strictly comply with this prohibition. In particular, Covered Persons are prohibited from using Material Non-Public Information in
connection with:
•
the purchase or sale of securities for their own accounts or for the accounts in which they have a direct or indirect beneficial interest or
over which they have the power, directly or indirectly, to make investment decisions;
•
the solicitation of orders to purchase or sell securities; or
•
the issuance of research reports, recommendations or comments that could be construed as recommendations.
In addition, when a Covered Person is in possession of Material Non-Public Information about the Company, the Covered Person may not pass (or
“tip”) that information to others or recommend to anyone the purchase or sale of the relevant securities.
The foregoing restrictions apply to securities and information of the Company as well as to the securities and information of another company
(e.g., a proposed acquisition target) to the extent a Covered Person, in the course of working for the Company, learns of Material Non-Public
Information about a company (1) with which the Company does business, including, for example, the Company’s customers, reinsurers and
suppliers (“business partners”), or
746977981.3
(2) that is involved in a potential transaction or business relationship with the Company (“Other Securities”). See “Applicability of Policy to
Material Non-Public Information Regarding Other Companies” below.
An “insider” is any person who has access to Material Non-Public Information. Insiders include all individuals who have access to such
information, including, among others, legal, accounting, investor relations and financial personnel, administrative assistants and any person (a
“tippee”) to whom they relay such insider information. Additionally, an “immediate family member,” defined as a child, stepchild, child away at
college, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and any
person (other than a tenant or employee) sharing the household of the specified person, may also be deemed to be an insider.
Trading on the basis of Material Non-Public Information is forbidden. Material Non-Public Information includes any non-public information which
a reasonable investor is likely to consider important in determining whether to buy, sell or hold securities, or the information, if disclosed, could be
viewed by a reasonable investor as having significantly altered the total mix of information available in the marketplace about a company or
security. Moreover, the fact that an insider (or a tippee of an insider) has traded on the basis of particular information which has not been made
public may itself be regarded as evidence that the information is material. Both positive and negative information could be material.
Examples of information that the courts have found to be material, depending upon the circumstances, include:
•
projections of future premiums or earnings or losses, or other earnings guidance;
•
earnings and other financial results, especially if inconsistent with the consensus expectations of the investment community;
•
a pending or proposed merger, acquisition, financing or tender offer;
•
a pending or proposed acquisition or disposition of a significant asset;
•
a significant expansion or curtailment of operations;
•
a material change in dividend policy or an offering of additional securities;
•
a material change in senior management;
•
the existence or occurrence of a significant cyber security event;
•
significant litigation or regulatory proceedings or investigations and significant developments related thereto; and
•
the gain or loss of a significant contract or business relationship.
If you are unsure whether information is material, you should assume that it is material rather than risk violating the securities laws by trading
while possessing such information.
Securities transactions by insiders in possession of material information, provided they are otherwise consistent with the procedures set forth in this
Policy, should be made only when the insider is certain that such information has been sufficiently publicized by official announcements.
Information is not public merely because it is reflected by rumors or other unofficial statements in the marketplace. Moreover, the insider may not
attempt to “beat the market” by trading simultaneously with, or shortly after, the official release of such information. Information is considered to
be available to the public only
(1) after it has been released to the public through appropriate channels (e.g., by means of a widely disseminated press release or Securities
and Exchange Commission (“SEC”) filing); and
(2) enough time has elapsed to permit the investment market to absorb and evaluate the information.
Information will not be considered disseminated if the information is disclosed solely by means of (a) speeches or meetings open to the public, (b)
television interviews or other media events, (c) social medial channels, or (d) industry publications. Depending on the circumstances, information
normally should not be regarded as public until at least one trading day after it has been broadly disseminated to the public in a press release, a
public filing with the
2
SEC, a pre-announced public webcast or another broad, non-exclusionary form of public communication. If you are unsure whether information
has been appropriately disseminated, you should consult with the Company’s General Counsel.
Exceptions to this Policy
Except where otherwise indicated, this Policy does not apply under the following circumstances:
•
Securities transactions by a Covered Person’s immediate family member made in connection with his or her principal occupation and that
are not for the benefit of the Covered Person or any member of his or her immediate family or any of their relatives, so long as the
Covered Person has not shared Material Non-Public Information about the issuer of the securities in question with the immediate family
member making the transaction. For the purpose of this exclusion, the fact that the immediate family member may earn a fee or
commission in connection with the transaction does not render the transaction as being one for the benefit of the immediate family
member.
•
Securities transactions if the counterparty is the issuer of the securities. Forfeitures of stock to the Company to pay the tax withholding
obligations for vesting/settlement of restricted stock units are included in this exception.
•
Purchases of the Company's stock in the Company’s Profit Sharing/401(k) plan or Employee Stock Purchase Plan resulting from a
periodic contribution of money to the plan pursuant to an employee's payroll deduction election (but not transactions pursuant to a
change in an election or other elections by the employee).
•
Purchase or sales of securities pursuant to a Rule 10b5-1 trading plan (“10b5-1 Plan”) approved by the Company. Rule 10b5-1 under the
Securities Exchange Act provides an affirmative defense against a claim of insider trading for transactions made pursuant to a pre-
existing 10b5-1 Plan that meets certain conditions. Covered Persons interested in establishing a 10b5-1 Plan should discuss such a plan
with the Company’s General Counsel. Any 10b5-1 Plan must be reviewed and approved in writing by the Company’s General Counsel
prior to entry into such Plan (or if revised or amended, such revisions or amendments have been reviewed and approved in advance by
the Company’s General Counsel).
Questions
Whenever you have any doubt as to the materiality or non-public nature of any information known to you, you should consult with the Company’s
General Counsel before trading in such securities for your own account, or disclosing the information to others.
Trading Restrictions
General Restrictions
In order to prevent the misuse of Material Non-Public Information and to avoid potential liability to the Company and its officers, directors, and
employees under the federal securities laws, the Company has imposed following restrictions on trading in Company stock and other securities:
•
Covered Persons may not buy or sell stock or conduct any other transaction in the Company’s securities for personal or “related”
accounts while in possession of Material Non-Public Information. Examples of personal and related accounts include retail brokerage,
IRA, 401(k), Keogh and similar accounts and accounts of an immediate family member that you have the ability to control. The
restrictions described above also apply to Other Securities.
3
•
All presidents and chief financial officers of the Company’s businesses, the Company’s senior officers and directors, and employees in
the Company’s finance and legal departments who regularly come into possession of Material Non-Public Information (“Reporting
Persons”) must pre clear with the Company’s General Counsel all Company security transactions (including gifts and including
transactions by others where the Reporting Person has a beneficial interest in the security involved). The Company’s General Counsel
may from time to time designate additional employees as Reporting Persons. Transactions subject to this restriction include sales of
Company common stock acquired upon vesting of restricted stock units and elections to purchase or sell Company stock in the
Company’s Profit Sharing Plan/401(k) and Employee Stock Purchase Plan (including your initial election to invest in Company stock
through the Company’s Profit Sharing Plan/401(k) or Employee Stock Purchase Plan and any subsequent elections you make to increase
or decrease the amount you invest in Company stock). Once a transaction is pre-cleared by the Company’s General Counsel, the
transaction must be effected within 48 hours of such pre-clearance. If more than 48 hours elapse before you complete your transaction,
you must pre-clear your transaction again.
The foregoing restrictions are subject to the exceptions set forth express in “General Restrictions and Policy – Exceptions to this Policy.”
Limits on Trades in the Company’s Securities — “Blackout” Periods
A “blackout” period is a period during which a Reporting Person may not execute transactions in the Company’s securities, including in related
accounts, other than as provided in “General Restrictions and Policy – Exceptions to this Policy.” Even if a blackout period is not then in effect, a
Reporting Person may not trade in the Company’s securities if the Reporting Person is aware of Material Non-Public Information about the
Company, other than as provided in “General Restrictions and Policy – Exceptions to this Policy.” For example, if the Company issues a quarterly
earnings press release and a Reporting Person is aware of other Material Non-Public Information concerning the Company not disclosed in the
earnings press release, the Reporting Person may not trade in the Company’s securities. The prohibition on trading while being aware of Material
Non-Public Information about the Company extends to sales of shares issued upon vesting of restricted stock units granted under the Company’s
Stock Incentive Plan.
•
Quarterly Earnings Blackout Periods. Reporting Persons may not buy or sell Company securities during the period beginning with the
opening of business on the last business day of each fiscal quarter (i.e., March 31, June 30, September 30 and December 31) and ending
one full trading day following the public release of the financial results for the fiscal quarter or year (for example, by means of a press
release or an SEC filing). In accordance with this Policy, the Company may from time to time advise interested parties of the expected
timing of its earnings press releases.
•
Event-Specific Blackout Periods. The Company reserves the right to impose trading blackout periods from time to time when, in its
judgment, a blackout period is warranted. A blackout period may be imposed for any reason, including the Company’s involvement in a
material transaction or other material event. The existence of an event-specific blackout period may not be announced, or may be
announced only to those who are aware of the transaction or event giving rise to the blackout period. Individuals that are subject to
event-specific blackout periods may be contacted when these periods are instituted from time to time. If a Covered Person is made aware
of the existence of an event-specific blackout period, that Covered Person should not disclose the existence of such blackout period to
any other person.
For purposes of this Policy, the Company’s senior officers are W. R. Berkley Corporation’s Executive Chairman, Chief Executive Officer, President, Executive Vice
Presidents, Senior Vice Presidents and Vice Presidents.
1
1
4
Other Trading Restrictions Applicable to Company Securities
The Company considers it improper and inappropriate for Covered Persons to engage in short-term or speculative transactions in the Company’s
securities or in other transactions in the Company’s securities that may lead to inadvertent violations of insider trading laws. Accordingly,
transactions in Company securities by Covered Persons are subject to the following.
•
Short Sales. Covered Persons may not engage in short sales of Company securities (sales of securities that are not then owned), including
a “sale against the box” (a sale with delayed delivery).
•
Publicly Traded Options. Covered Persons may not engage in transactions in publicly traded options on Company securities (such as
puts, calls, and other derivative securities) on an exchange or in any other organized market.
•
Hedging. In addition to Short Sales and Publicly Traded Options discussed above, certain forms of hedging or monetization transactions,
such as zero cost collars and forward sale contracts, allow a Covered Person to lock in much of the value of his or her holdings in
Company securities, often in exchange for all or part of the potential for upside appreciation. These transactions would allow a Covered
Person to continue to own the covered Company securities, but without the full risks and rewards of ownership. When that occurs, their
interests and the interests of the Company and its shareholders may be misaligned and may signal a message to the trading market that
may not be in the best interests of the Company and its stockholders at the time it is conveyed. Accordingly, unless otherwise specifically
addressed in this Policy, hedging transactions and all other similar forms of monetization transactions are prohibited. For purposes of this
Policy, hedging includes the purchase of financial instruments (including prepaid variable forward contracts, equity swaps, collars and
exchange funds), or engaging in any other transaction, that hedge or offset, or are designed to hedge or offset, any decrease in the market
value of Company securities.
•
Standing Orders. Standing orders (other than stock option limit orders or orders pursuant to a pre-approved trading plan that complies
with SEC Rule 10b5-1) should be used only for a brief period of time. A standing order placed with a broker to sell or purchase stock at a
specified price leaves the seller with no control over the timing of the transaction. A standing order transaction executed by the broker
when a Covered Person is aware of Material Non-Public Information may result in unlawful insider trading even if the standing order
was placed at a time when the Covered Person did not possess Material Non-Public Information.
•
Margin Accounts and Pledges. Securities held in a margin account or pledged as collateral for a loan may be sold by the broker if a
Covered Person fails to meet a margin call or by the lender in foreclosure if the Covered Person defaults on the loan. Covered Persons
may not have control over these transactions as the securities may be sold at certain times without the Covered Person’s consent. A
margin or foreclosure sale that occurs when a Covered Person is aware of Material Non-Public Information may, under some
circumstances, result in unlawful insider trading. Accordingly, unless otherwise approved by the General Counsel, Covered Persons are
prohibited from holding the Company’s securities in a margin account or pledging the Company’s securities as collateral for a loan.
•
Discretionary Trading Accounts. If a Covered Person has established a discretionary trading account for which the Covered Person has
ceded to another person the authority to engage in trades for the benefit of the Covered Person absent specific instructions from the
Covered Person, the Covered Person must direct any such person with discretionary trading authority not to engage in any trades in the
Company’s securities without the Covered Person’s prior express consent.
Press Inquiries and Press Releases
5
In order to guard against the release of non-public information and ensure the accuracy and consistency of public information, all press releases or
similar planned public announcements and all inquiries about the Company, its subsidiaries or affiliates from financial analysts, stockholders,
reporters and others should be referred to the Company’s Executive Chairman, President and Chief Executive Officer, Chief Financial Officer,
Secretary, General Counsel, or Vice President – Investor Relations. No director or employee should issue a press release or respond to any such
inquiries absent specific authorization to do so.
Applicability of Policy to Material Non-Public Information Regarding Other Companies
As discussed above, it is the policy of the Company that any Covered Person who, in the course of working for the Company, learns of Material
Non-Public Information about a company (1) with which the Company does business, including the Company’s business partners, and (2) that is
involved in a potential transaction or business relationship with the Company, may not engage in transactions in that company’s securities until the
information becomes public or is no longer material. The consequences for violations discussed below may result from trading on Material Non-
Public Information regarding the Company’s business partners. All Covered Persons should treat Material Non-Public Information about the
Company’s business partners with the same care required with respect to information related directly to the Company. In addition to information
regarding other companies that has not been publicly disclosed, non-public information that may be considered material can include confidential
analyses, financial information, business data and plans and other information received from a third party with the expectation that it will be kept
confidential and used solely for business purposes.
Additional Restrictions for Certain Persons
Certain executive officers and the directors of the Company are subject to additional restrictions, including reporting requirements, short-swing
trading restrictions and other provisions of the securities laws. Please contact the Company’s General Counsel for information concerning those
restrictions.
Consequences for Violations
Upon determining that a violation or possible insider trading violation has occurred, appropriate sanctions against the Covered Person may be
imposed.
Internal Sanctions for Violations
Appropriate sanctions imposed by the Company may include, without limitation:
•
immediate unwinding of the transaction;
•
forfeiture of any profit from the transaction;
•
termination of employment; and/or
•
for insider trading violations, notification by the Company to the SEC or other local authority, if deemed appropriate, of the alleged
violation and cooperation with the SEC or other local authority in any enforcement action and/or prosecution of the individual(s)
involved.
Regulatory Sanctions
If a Covered Person trades in the Company securities or in Other Securities while in possession of Material Non-Public Information, it could
subject the Covered Person to potential criminal and civil liability under applicable securities laws.
6
In addition, liability may also be imposed for improper transactions by any person (commonly referred to as a “tippee”) to whom a Covered Person
has disclosed Material Non-Public Information or to whom a Covered Person has made recommendations or expressed opinions on the basis of
such information as to trading in securities of the Company or one of its business partners. Both the disclosing person (i.e., the “tipper”) and the
tippee can be held liable for violations of this nature.
Post-Employment Transactions
If a Covered Person is aware of Material Non-Public Information concerning the Company when the Covered Person’s employment or service
relationship terminates, the Covered Person may not trade in the Company’s securities until that information has been publicly released,
notwithstanding the termination of the Covered Person’s employment or service relationship.
7
Exhibit 21
Subsidiaries of the Registrant (as of December 31, 2024). Ownership is 100% unless otherwise indicated.
Entity Name
Domicile
52 Lime Street Management Limited
United Kingdom
Acadia Insurance Company
Iowa
Acadia Insurance Group, LLC
Delaware
Admiral Indemnity Company
Delaware
Admiral Insurance Company
Delaware
Admiral Insurance Group, LLC
Delaware
American Mining Insurance Group, LLC
Delaware
Armada Insurance Services, Inc.
California
BerkDel Investors Limited
Bermuda
Berkley Accident and Health, LLC
Delaware
Berkley Administrators of Connecticut, Inc.
Delaware
Berkley Alliance Managers, LLC
Delaware
Berkley Alternative Markets Insurance Services, LLC
Delaware
Berkley Argentina de Reaseguros S.A.
Argentina
Berkley Asset Protection Underwriters, LLC
Delaware
Berkley Assurance Company
Iowa
Berkley Aviation, LLC
Delaware
Berkley Capital Investors, L.P.
Delaware
Berkley Capital, LLC
Delaware
Berkley Casualty Company
Iowa
Berkley Claims Solutions LLC
Delaware
Berkley Connect Insurance Solutions, LLC
Delaware
Berkley Custom Insurance Managers, LLC
Delaware
Berkley Dean & Company, Inc.
Delaware
Berkley European Brokers AS
Norway
Berkley European Underwriters AS
Norway
Berkley Facultative Reinsurance Services, LLC
Delaware
Berkley FinSecure, LLC
Delaware
Berkley Global Underwriters, LLC
Delaware
Berkley Healthcare Professional Insurance Services, LLC
Delaware
Berkley Insurance Company
Delaware
Berkley Insurance Company – Escritorio De Representacao do Brasil Ltda.
Brazil
Berkley Insurance Services, LLC
Delaware
Berkley International Aseguradora de Riesgos del Trabajo S. A.
Argentina
Berkley International Brasil Participacoes Ltda
Brazil
Berkley International Compañía de Garantias México S.A. de C.V.
Mexico
Berkley International Compañia de Servicios Mexico, S. A de C. V.
Mexico
Berkley International Compañia de Servicios Uruguay, S.A.
Uruguay
Berkley International do Brasil Seguros S. A.
Brazil
Berkley International Holdings, LLC
Delaware
Berkley International Investments Spain, S.L.
Spain
Berkley International Latinoamerica S. A.
Argentina
1
Berkley International Puerto Rico, LLC
Puerto Rico
Berkley International Seguros Colombia S.A.
Colombia
Berkley International Seguros Mexico S.A. de C.V.
Mexico
Berkley International Seguros, S. A. (99.59% ownership)
Argentina
Berkley International Seguros, S. A. (Uruguay)
Uruguay
Berkley International Services, LLC
Puerto Rico
Berkley International, LLC
New York
Berkley Latin America and Caribbean Managers, LLC
Delaware
Berkley Life and Health Insurance Company
Iowa
Berkley Life Sciences, LLC
Delaware
Berkley London Holdings, Inc.
Delaware
Berkley LS Insurance Solutions, LLC
Delaware
Berkley Luxury Insurance Company
Iowa
Berkley Managers Insurance Services, LLC
Delaware
Berkley Mid-Atlantic Group, LLC
Delaware
Berkley National Insurance Company
Iowa
Berkley Net Underwriters, LLC
Delaware
Berkley North Pacific Group, LLC
Delaware
Berkley Offshore Underwriting Managers UK, Limited
United Kingdom
Berkley Offshore Underwriting Managers, LLC
Delaware
Berkley Oil & Gas Specialty Services, LLC
Delaware
Berkley Prestige Insurance Company
Iowa
Berkley Product Recall Insurance Agency, LLC
Delaware
Berkley Professional Liability UK Limited
United Kingdom
Berkley Professional Liability, LLC
Delaware
Berkley Program Specialists, LLC
Delaware
Berkley Public Entity Managers, LLC
Delaware
Berkley Re America, LLC
Delaware
Berkley Re Direct, LLC
Delaware
Berkley Re UK Limited
United Kingdom
Berkley Regional Insurance Company
Iowa
Berkley Regional Insurance Services, LLC
Delaware
Berkley Regional Specialty, LLC
Delaware
Berkley Risk Administrators Company, LLC
Minnesota
Berkley Risk Administrators of Texas, Inc.
Texas
Berkley Risk Services of Vermont, Inc.
Delaware
Berkley Risk Solutions, LLC
Delaware
Berkley Select, LLC
Delaware
Berkley Southeast Insurance Group, LLC
Delaware
Berkley Specialty Insurance Company
Delaware
Berkley Specialty Insurance Services, LLC
Delaware
Berkley Specialty Underwriting Managers, LLC
Delaware
Berkley Surety Group, LLC
Delaware
Berkley Technology Services LLC
Delaware
Berkley Technology Underwriters, LLC
Delaware
Berkley Ventures, LLC
Delaware
BI China, Limited
Hong Kong
2
BIA Japan Services GK
Japan
BIL Advisors, LLC
Delaware
Birchwood Real Estate Capital Limited
England
Birchwood Real Estate Capital UK Limited
England
BREC 1 UK Limited
United Kingdom
BREC Fund 1 CIP GP Limited
Jersey
BREC Fund 1 CIP LP
Jersey
BREC Fund 1 GP Limited
Jersey
BREC Fund 1 Jersey Limited
Jersey
BREC Fund 1 LP
Jersey
BXM Insurance Services, Inc.
Delaware
Capitol Crossing I LLC
Delaware
Capitol Crossing II LLC
Delaware
Capitol Crossing III LLC
Delaware
Capitol Crossing IV LLC
Delaware
Capitol Crossing V LLC
Delaware
Capitol Crossing Advisors, LLC
Delaware
Carolina Casualty Insurance Company
Iowa
Carolina Casualty Insurance Group, LLC
Delaware
CC Equity Holdings, LLC
Delaware
CC Investors, LLC
Delaware
CC SPE I LLC
Delaware
CC SPE II LLC
Delaware
CC SPE III LLC
Delaware
CC SPE IV LLC
Delaware
CC SPE V LLC
Delaware
CC SPE Member LLC
Delaware
Center Place Holdings LLC
Delaware
CGH Claims Service, Inc.
Pennsylvania
CGH Insurance Group, LLC
Alabama
Chilewich SL
New York
Chilewich Sultan LLC
New York
Citrus Insurance Services LLC
Delaware
Clermont Insurance Company
Iowa
Clermont Specialty Managers, Ltd.
New Jersey
Continental Western Group, LLC
Delaware
Continental Western Insurance Company
Iowa
Corporate Imaging Concepts, LLC (82.06% ownership)
Delaware
Cotasy Corporation S. A.
Uruguay
Crypton Belgium BVBA
Delaware
Crypton Investment Holdings LLC (89.5% ownership)
Delaware
Crypton LLC
Michigan
Crypton Real Estate, LLC
Delaware
Crypton Mills, LLC
Delaware
East Isles Reinsurance, Ltd.
Bermuda
1
1
1
1
1
2
2
2
2
2
3
4
eCompanyStore, LLC
Delaware
Facultative Resources, Inc.
Connecticut
3
Fayston Farms Shipping Ltd.
Bermuda
Firemen's Insurance Company of Washington, D.C.
Delaware
Franchise Credit, LLC
Delaware
Gemini Insurance Company
Delaware
Gemini Transportation Underwriters, LLC
Delaware
Global Agency Holdings, LLC
Delaware
Great Divide Insurance Company
North Dakota
Greenwich AeroGroup, Inc.
Delaware
GRG Investment Holdings, Ltd.
Cayman Islands
Guangzhou Meridian Chemical Limited
China
Insurance Auction Solutions, LLC
Delaware
Insurance Networks Alliance, LLC
Delaware
Interlaken Capital Aviation Holdings, Inc.
Delaware
Interlaken Capital Aviation Services, Inc.
Delaware
Intrepid Casualty Company
Iowa
Intrepid Direct Insurance Agency, LLC
Kansas
Intrepid Insurance Company
Iowa
Intrepid Specialty Insurance Company
Iowa
Jersey International Brokerage Corporation
New Jersey
Kauai Shipping Ltd.
Bermuda
Kekona Shipping Ltd.
Bermuda
Key Care, LLC
North Carolina
Key Risk Insurance Company
Iowa
Key Risk Management Services, LLC
Delaware
Key Risk Underwriting Managers, LLC
Delaware
Kilauea Holdings Ltd.
Bermuda
Kimmei Shipping Ltd.
Bermuda
Kohala Shipping Ltd.
Bermuda
Lady Jane Shipping Ltd.
Bermuda
Lavalier Insurance Services, LLC
Delaware
LDS CPH LLC (80% ownership)
Delaware
LDS CPH II LLC (80% ownership)
Delaware
Lex NY Equities LLC
Delaware
Mad River Shipping Ltd.
Bermuda
MADA Reciprocal Services, Inc.
Minnesota
Magaverse Limited
Hong Kong
Masterclass Limited
Hong Kong
MedCall Healthcare Advisors, LLC
Delaware
Middle Patent Capital, LLC
Delaware
Midwest Employers Casualty Company
Delaware
Midwest Employers Casualty Group, LLC
Delaware
Midwest Employers Services, LLC
Delaware
Monitor Liability Managers, LLC
Delaware
MPC Memphis HI LLC
Delaware
Nano-Tex Asia Limited
Hong Kong
Nano-Tex LLC
Michigan
Nautilus Excess Insurance Agency, LLC
Delaware
4
Nautilus Insurance Company
Arizona
Nautilus Insurance Group, LLC
Delaware
Number 9 Shipping Ltd.
Bermuda
Oak Harbor Reinsurance Company
North Carolina
Overby-Seawell Company
Georgia
PGIS, LLC
Texas
Platinum Program Managers & Insurance Services, Inc.
California
Preferred Employers Group, LLC
Delaware
Preferred Employers Insurance Company
California
Professional Aircraft Accessories, Inc.
Delaware
Professional Aviation Associates, Inc.
Georgia
Queen's Island Insurance Company, Ltd.
Bermuda
Rasmussen Agency, Inc.
New Jersey
Regional Excess Underwriters, LLC
Delaware
Reinserco, Inc.
New Jersey
Riverport Insurance Company
Iowa
Riverport Insurance Services, LLC
Delaware
Ross Diversified Insurance Services, Inc.
California
Select Marketing Insurance Services, LLC
California
Signet Star Holdings, Inc.
Delaware
SilverCap-Greenwich, LLC (98.8% ownership)
Delaware
Southeastern Underwriters, Inc.
Virginia
StarNet Insurance Company
Iowa
Starnet Insurance Services, LLC
Delaware
Steamboat Asset Management, LLC
Delaware
Steamboat Development Advisors, LLC
Delaware
Steamboat IS, Inc.
Delaware
Steamboat Opportunity Partners, LLC
Delaware
Summit Aviation, Inc.
Delaware
Target Markets, LLC
Delaware
Target Programs, LLC
Delaware
Tri-State Insurance Company of Minnesota
Iowa
Union Insurance Company
Iowa
Union Standard Insurance Group, LLC
Delaware
Union Standard Management Company, Inc.
Texas
Vela Insurance Services, LLC
Delaware
Verus Underwriting Managers, LLC
Delaware
W. R. Berkley Europe AG
Liechtenstein
W. R. Berkley European Holdings AG
Switzerland
W. R. Berkley European Services GmbH
Switzerland
W. R. Berkley London Holdings, Limited
United Kingdom
W. R. Berkley London Staff, Limited
United Kingdom
W. R. Berkley Mexico, S. A. de C. V.
Mexico
W. R. Berkley Spain, S. L. U.
Spain
W. R. Berkley Syndicate Holdings Limited
United Kingdom
W. R. Berkley Syndicate Limited
United Kingdom
W. R. Berkley Syndicate Management Limited
United Kingdom
5
W. R. Berkley UK Limited
United Kingdom
Western Aircraft, Inc.
Nevada
Western Pinnacle Insurance Services, Inc.
California
WRBC Aviation Leasing, LLC
Delaware
WRBC Corporate Member Limited
United Kingdom
WRBC Development UK Limited
United Kingdom
WRBC REF Holdings Limited
Bermuda
WRBC Services, Limited
United Kingdom
WRBC Support Services, LLC
Delaware
WRBC Transportation, Inc.
Delaware
(1). The following W. R. Berkley subsidiaries own Capitol Crossing I LLC, Capitol Crossing II LLC, Capitol Crossing III LLC, Capitol Crossing IV LLC,
Capitol Crossing V LLC: CC SPE I LLC, CC SPE II LLC, CC SPE III LLC, CC SPE IV LLC, CC SPE V LLC respectively at 100%
(2). The following W. R. Berkley subsidiaries own CC SPE I LLC, CC SPE II LLC, CC SPE III LLC, CC SPE IV LLC, CC SPE V LLC: Center Place
Holdings LLC 99.9%; CC SPE Member LLC 0.1%
(3). CC SPE Member LLC is 100% owned by Center Place Holdings LLC
(4). The following W. R. Berkley subsidiaries own Center Place Holdings LLC: CC Equity Holdings, LLC 99.94%; LDS CPH II LLC 0.06%
6
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statement (No. 333-275308) on Form S-3 and the registration statements (No. 333-225579 and
No. 33-88640) on Form S-8 of our reports dated February 24, 2025, with respect to the consolidated financial statements of W. R. Berkley Corporation and the
effectiveness of internal control over financial reporting.
/S/ KPMG LLP
New York, New York
February 24, 2025
Exhibit 31.1
CERTIFICATIONS
I, W. Robert Berkley, Jr., President and Chief Executive Officer of W. R. Berkley Corporation (the “registrant”), certify that:
1. I have reviewed this annual report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 24, 2025
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
President and Chief Executive Officer
Exhibit 31.2
CERTIFICATIONS
I, Richard M. Baio, Executive Vice President - Chief Financial Officer and Treasurer of W. R. Berkley Corporation (the “registrant”), certify that:
1. I have reviewed this annual report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
Date: February 24, 2025
/s/ Richard M. Baio
Richard M. Baio
Executive Vice President,
Chief Financial Officer and Treasurer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of W. R. Berkley Corporation (the “Company”) on Form 10-K for the fiscal year ended December 31, 2024 as filed with
the Securities and Exchange Commission on the date hereof (the “Report”), we, W. Robert Berkley, Jr., President and Chief Executive Officer of the Company,
and Richard M. Baio, Executive Vice President-Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted
pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ W. Robert Berkley, Jr.
W. Robert Berkley, Jr.
President and Chief Executive Officer
/s/ Richard M. Baio
Richard M. Baio
Executive Vice President — Chief Financial Officer and Treasurer
February 24, 2025
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to
the Securities and Exchange Commission or its staff upon request.
The Cheese Vendor
by Edouard-Jean Dambourgez
W. R. Berk l ey C o r p o rat i o n
W. R. Berkley Corporation 2024 Annual Report 165
Berkley Insurance Company
475 Steamboat Road
Greenwich, Connecticut 06830
(203) 542 3800
William R. Berkley, Chairman
W. Robert Berkley, Jr., President and Chief Executive Officer
INSURANCE
Acadia Insurance
One Acadia Commons
Westbrook, Maine 04092
(800) 773 4300
acadiainsurance.com
David J. LeBlanc, President
Albany, New York
(800) 773 4300
Bedford, New Hampshire
(800) 224 8850
Marlborough, Massachusetts
(888) 665 1170
Rocky Hill, Connecticut
(860) 331 2400
Syracuse, New York
(866) 811 7722
Admiral Insurance Group
232 Strawbridge Drive, Suite 300
Moorestown, New Jersey 08057
(856) 429 9200
admiralins.com
Daniel Smyrl, President and Chief Executive Officer
Atlanta, Georgia
(770) 476 1561
Austin, Texas
(512) 795 0766
Chicago, Illinois
(312) 368 1107
Glendale, California
(213) 443 1981
Seattle, Washington
(206) 467 6511
Berkley Accident and Health
100 American Metro Boulevard, Suite 201
Hamilton, New Jersey 08619
berkleyah.com
(609) 584 6990
Brad N. Nieland, President and Chief Executive Officer
Kulpsville, Pennsylvania
(866) 723 4452
Marlborough, Massachusetts
(866) 723 4452
West Hartford, Connecticut
(866) 723 4452
Berkley Agribusiness
11201 Douglas Avenue
Urbandale, Iowa 50322
(866) 382 7314
berkleyag.com
Bradley T. London, President
Berkley Alliance Managers
180 Glastonbury Blvd, Suite 402
Glastonbury, Connecticut 06033
(518) 407 0088
Stephen L. Porcelli, President
Berkley Alliance Professional
berkleyallpro.com
(405) 805 6635
Berkley Construction Professional
berkleycp.com
(650) 779 9205
Berkley Design Professional
berkleydp.com
(650) 779 9205
Berkley Service Professionals
Berkley Managers Insurance Services, LLC
berkleysp.com
(650) 779 9205
Berkley Aspire
14902 North 73rd Street
Scottsdale, Arizona 85260
(866) 412 7742
berkleyaspire.com
Brian R. Griffith, President
Scottsdale, Arizona
(480) 444 5950
Glen Allen, Virginia
(804) 237 5177
West Chester, Ohio
(513) 341 4843
Berkley Asset Protection
757 Third Avenue, 10th Floor
New York, New York 10017
(212) 497 3700
berkleyassetpro.com
Joseph P. Dowd, President
Berkley Canada
145 King Street West, Suite 1000
Toronto, Ontario M5H 1J8
(416) 304 1178
berkleycanada.com
Andrew Steen, President
1002, Rue Sherbrooke Ouest
Bureau 2120
Montreal, Quebec H3A 3L6
(514) 842 5587
Berkley Construction Solutions
412 Mount Kemble Avenue, Suite 310N
Morristown, New Jersey 07960
(866) 223 7006
berkleycs.com
Andrew Robinson, President
Businesses
166
Berkley Custom Insurance
One Metro Center
1 Station Place, Suite 600
Stamford, Connecticut 06902
(203) 658 1500
berkleycustom.com
Michael P. Fujii, President and Chief Executive Officer
Berkley Custom Insurance Services, LLC
Los Angeles, California
(213) 417 5431
BXM Insurance Services, Inc.
Chicago, Illinois
(312) 605 4648
Los Angeles, California
(213) 417 5431
Berkley Cyber Risk Solutions
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
(973) 775 7494
berkleycyberrisk.com
Tracey Vispoli, President
Berkley Embedded Solutions
475 Steamboat Road
Greenwich, CT 06830
(203) 629-3000
Stephanie Lloyd, President
Berkley Enterprise Risk Solutions
4 Hutton Centre Drive, Suite 640
Santa Ana, California 92707
(714) 559 6444
berkleyenterpriserisk.com
Wayne W. Bryan, President
Berkley Entertainment
600 Las Colinas Boulevard, Suite 1400
Irving, Texas 75039
(972) 819 8980
berkleyentertainment.com
Mark Schuermann, President
Berkley Environmental
101 Hudson Street, Suite 2550
Jersey City, New Jersey 07302
(201) 748 3121
berkleyenvironmental.com
Kenneth J. Berger, President
Atlanta, Georgia
(404) 443 2117
Boston, Massachusetts
(857) 265 7479
Chicago, Illinois
(312) 727 0302
Irving, Texas
(972) 819 8863
Jersey City, New Jersey
(201) 748 3047
Philadelphia, Pennsylvania
(215) 533 7360
Berkley Managers Insurance Services, LLC
Walnut Creek, California
(925) 472 8201
Berkley Financial Specialists
757 Third Avenue, 10th Floor
New York, New York 10017
(866) 539 3995
berkleyfs.com
Michael G. Connor, President
Berkley Crime
433 South Main Street, Suite 200
West Hartford, Connecticut 06110
(844) 44 CRIME
berkleycrime.com
Towson, Maryland
(866) 539 3995
Berkley Fire & Marine Underwriters
425 North Martingale Road, Suite 1520
Schaumburg, Illinois 60173
(847) 466 9371
berkleymarine.com
David A. Higley, President
Berkley Healthcare
16253 Swingley Ridge Road, Suite 375
Chesterfield, Missouri 63017
(860) 380 4931
berkleyhealthcare.com
Gregg A. Piltch, President
Berkley Human Services
550 West Jackson Boulevard, Suite 500
Chicago, Illinois 60661
(612) 766 3000
berkleyhumanservices.com
Lucas M. Prahl, President
Minneapolis, Minnesota
(612) 766 3000
Businesses
W. R. Berkley Corporation 2024 Annual Report 167
Berkley Industrial Comp
One Metroplex Drive, Suite 500
Birmingham, Alabama 35209
(800) 448 5621
berkindcomp.com
Michael Marcus, President
Las Vegas, Nevada
(855) 425 5800
Lexington, Kentucky
(888) 886 9006
Berkley Insurance Asia
Room 4407, 44/F Hopewell Centre
183 Queen’s Road East
Wanchai, Hong Kong
(852) 3708 5000
Unit 09-03, Cross Street Exchange
18 Cross Street
Singapore 048423
(65) 6902 0601
30th Floor, Shanghai Tower
501 Middle Yincheng Road
Pudong, Shanghai 200120, China
86 (21) 6162 8122
berkleyasia.com
Shasi Nair, Chief Executive Officer
Berkley Insurance Company, IFSC Branch
Shilp Incubation Centre
Block 11, Plot T3 & T5, GIFT City, GIFT SEZ
Gandhinagar, Gujarat—382355, India
Berkley Insurance Australia
Level 7, 321 Kent Street
Sydney NSW 2000, Australia
61 (2) 9275 8500
berkleyinaus.com.au
Tony Wheatley, Chief Executive Officer
Adelaide SA, Australia
61 (8) 8470 9020
Brisbane QLD, Australia
61 (7) 3220 9900
Melbourne VIC, Australia
61 (3) 8622 2000
Perth WA, Australia
61 (8) 6488 0900
Berkley International Latinoamérica
Berkley International Seguros S.A.
Berkley International Aseguradora De Riesgos
del Trabajo S.A.
Berkley Argentina de Reaseguros S.A.
Carlos Pellegrini 1023, Piso 8
C1009ABU Buenos Aires, Argentina
berkley.com.ar
54 (11) 4378 8100
Bartolomé Mitre 699
S2000COM Rosario, Argentina
54 (341) 410 4200
Eduardo I. Llobet,
President and Chief Executive Officer
Berkley International do Brasil Seguros S.A.
Avenida Presidente Juscelino Kubitschek, 1455
15º andar - cj. 151 Vila Nova Conceição
04543-011 São Paulo, Brazil
berkley.com.br
55 (11) 3848 8622
Edson Morikazu Toguchi, Chief Executive Officer
Berkley International Compañía de
Garantias México S.A. de C.V.
Avenida Santa Fe 495, Piso 19, Oficina 1901
Cruz Manca, Cuajimalpa de Morelos, 05349, México
berkleymex.com
52 (55) 1037 5300
Guillermo Espinosa Barragán,
President and Chief Executive Officer
Berkley International Puerto Rico, LLC
Metro Office Park
Edificio 17 Calle 2, Suite 500
Guaynabo, Puerto Rico 00968
(787) 466 7466
Eduardo I. Llobet, President
Berkley International Seguros Colombia S.A.
Calle 75 No. 5-88, Piso 3
110231 Bogotá, Colombia
57 (601) 357 2727
berkley.com.co
María Yolanda Ardila Guarin,
President and Chief Executive Officer
Berkley International Seguros México, S.A. de C.V.
Avenida Santa Fe 495, Piso 19, Oficina 1901
Cruz Manca, Cuajimalpa de Morelos, 05349, México
berkleymex.com
52 (55) 1037 5300
Javier García Ortíz de Zárate,
President and Chief Executive Officer
Berkley International Seguros S.A. (Uruguay)
Rincón 391, Piso 5
11100 Montevideo, Uruguay
(598) 2916 6998
berkley.com.uy
Eduardo I. Llobet, President
Berkley Latin America and Caribbean Managers
600 Brickell Avenue, Suite 3900
Miami, Florida 33131
(305) 921 6200
Eduardo I. Llobet,
President and Chief Executive Officer
Berkley Insurance Company
Representative Office In Colombia
Carrera 7 No. 80-49, Oficina 303
Edificio Centro de Negocios El Nogal
Bogotá, Colombia
57 (601) 744 4015
Jaime Aramburo, Director
168
Representative Office in México
Avenida Santa Fe 495, Piso 19, Oficina 1901
Cruz Manca, Cuajimalpa de Morelos, 05349, México
berkleymex.com
52 (55) 1037 5300
Obdulia Margarita Vela Lopez, Director
Berkley Life Sciences
200 Princeton South Corporate Center, Suite 250
Ewing, New Jersey 08628
berkleyls.com
(609) 844 7800
Emily J. Urban, President
Naperville, Illinois
(609) 844 7800
Berkley LS Insurance Solutions, LLC
Walnut Creek, California
Berkley Luxury Group
301 Route 17 North, Suite 900
Rutherford, New Jersey 07070
(201) 518 2500
berkleyluxurygroup.com
Michael G. MacMullin, President
Chicago, Illinois
(800) 504 7012
Berkley Management Protection
433 S. Main Street, Suite 200
West Hartford, Connecticut 06110
(959) 205 5001
berkleymp.com
Charles E. Thompson, President
Berkley Medical Management Solutions
berkleymms.com
(855) 444 2667
Eric-Jason Smith, Chief Executive Officer
Berkley Mid-Atlantic Insurance Group
4820 Lake Brook Drive, Suite 300
Glen Allen, Virginia 23060
(804) 285 2700
wrbmag.com
Anotonio Rhodes, JD, President
Glen Allen, Virginia
(800) 283 1153
Pittsburgh, Pennsylvania
(800) 283 1153
Berkley Net Underwriters
9301 Innovation Drive, Suite 200
Manassas, Virginia 20110
(877) 497 2637
berkleynet.com
Brian P. Douglas, President
Scottsdale, Arizona
(877) 497 2637
Berkley North Pacific Group
2760 W. Excursion Lane, Suite 300
Meridan, Idaho 83642
(800) 480 2942
berkleynpac.com
Carrie H. Cheshier, President
Berkley Offshore Underwriting Managers
757 Third Avenue, 10th Floor
New York, New York 10017
(212) 618 2950
berkleyoffshore.com
Frank A. Costa, President
Houston, Texas
(832) 547 2900
Berkley Offshore
Underwriting Managers UK, Limited
Level 13, 52 Lime Street
London EC3M 7AF, United Kingdom 44 (0) 20 3943 1400
R. Christian Walker, Executive Vice President
Berkley Oil & Gas
2107 CityWest Boulevard, 8th Floor
Houston, Texas 77042
(877) 972 2264
berkleyoil-gas.com
Linda A. Eppolito, President
Englewood, Colorado
(720) 320 4855
Berkley Renewable Energy
(832) 308 6900
Englewood, Colorado
(720) 320 4855
berkleyrenewable.com
Berkley One
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
(973) 355 8210
berkleyone.com
Kathleen M. Tierney, President
Chicago, Illinois
(312) 596 4298
Wilmington, Delaware
(855) 663 8551
Businesses
W. R. Berkley Corporation 2024 Annual Report 169
Berkley Product Protection
80 Broad Street, Suite 3200
New York, New York 10004
(212) 413 2499
berkleyproductprotection.com
Luis Rivera, President
Dallas, Texas
(972) 552 6110
London, United Kingdom
44 (0) 20 3943 1900
New York, New York
(212) 413 2474
West Hartford, Connecticut
(959) 900 5431
Berkley Managers Insurance Services, LLC
San Francisco, California
(415) 417 5950
Berkley Professional Liability
757 Third Avenue, 10th Floor
New York, New York 10017
(212) 618 2900
berkleypro.com
John R. Benedetto, President
London, United Kingdom
44 (0) 20 7088 1916
Schaumburg, Illinois
(630) 237 3650
Toronto, Ontario
(416) 594 4816
Berkley Transactional
412 Mount Kemble Avenue, Suite G50
Morristown, New Jersey 07960
(973) 775 7499
berkleytransactional.com
Randolph Hein, President
Berkley Public Entity
200 Princeton South Corporate Center, Suite 280
Ewing, New Jersey 08628
(844) 972 2736
berkleypublicentity.com
John J. Forte, President
Ewing, New Jersey
(844) 972 2736
Morristown, New Jersey
(973) 775 7461
Berkley Risk
222 South Ninth Street, Suite 2700
Minneapolis, Minnesota 55402
(612) 766 3000
berkleyrisk.com
John M. Goodwin, President
Denver, Colorado
(612) 766 3000
Nashville, Tennessee
(612) 766 3000
Scottsdale, Arizona
(612) 766 3000
St. Paul, Minnesota
(612) 766 3000
Berkley Select
550 West Jackson Boulevard, Suite 500
Chicago, Illinois 60661
(312) 800 6200
berkleyselect.com
Daniel R. Spragg, President
Berkley Small Business Solutions
433 South Main Street, Suite 200
West Hartford, Connecticut 06110
(855) 272 7555
berkleysmallbusiness.com
Jeanne R. Fenster, President
Berkley Southeast Insurance Group
1745 North Brown Road, Suite 400
Lawrenceville, Georgia 30043
(678) 533 3400
berkleysig.com
Jay Weber, President
Birmingham, Alabama
(855) 610 4545
Charlotte, North Carolina
(855) 610 4545
Lawrenceville, Georgia
(855) 610 4545
Meridian, Mississippi
(855) 610 4545
Nashville, Tennessee
(855) 610 4545
Berkley Southwest
222 Las Colinas Boulevard W, Suite 1300
Irving, Texas 75039
(972) 719 2400
berkleysouthwest.com
John Henle, President
Albuquerque, New Mexico
(800) 955 0325
Dallas, Texas
(800) 955 0325
Little Rock, Arkansas
(800) 955 0325
Oklahoma City, Oklahoma
(800) 955 0325
Phoenix, Arizona
(800) 955 0325
San Antonio, Texas
(800) 955 0325
Berkley Specialty Excess
4820 Lake Brook Drive, Suite 150
Glen Allen, Virginia 23060
(888) 417 9935
berkleyse.com
John Termini, President
170
Berkley Surety
412 Mount Kemble Avenue, Suite 310N
Morristown, New Jersey 07960
(973) 775 5029
berkleysurety.com
Andrew M. Tuma, President
Atlanta, Georgia
(973) 775 5089
Blue Bell, Pennsylvania
(610) 729 7606
Centennial, Colorado
(206) 830 2565
Charlotte, North Carolina
(973) 775 5089
Chicago, Illinois
(630) 210 0451
Dallas, Texas
(469) 458 8372
Danvers, Massachusetts
(978) 539 3303
Fulton, Maryland
(975) 775 5078
Morristown, New Jersey
(973) 775 5029
Naperville, Illinois
(630) 210 0454
Nashville, Tennessee
(615) 514 8078
New York, New York
(212) 882 6397
Orlando, Florida
(407) 867 4595
Santa Ana, California
(657) 356 2892
Seattle, Washington
(206) 830 2566
Toronto, Ontario
(416) 594 4802
Urbandale, Iowa
(515) 473 3183
Westbrook, Maine
(207) 228 1922
Berkley Technology Underwriters
222 South Ninth Street, Suite 2600
Minneapolis, Minnesota 55402
(877) 999 1346
berkley-tech.com
Christopher H. Balch, President
Carolina Casualty
4800 Deerwood Campus Parkway
Building 400, 4th Floor
Jacksonville, Florida 32246
(904) 363 0900
carolinacas.com
David R. Lockhart, President
Berkley Prime Transportation
(833) 79 PRIME
berkleyprimetrans.com
(77463)
Continental Western Group
11201 Douglas Avenue
Urbandale, Iowa 50322
(515) 473 3000
cwgins.com
J. Daniel Asahl, President
Lincoln, Nebraska
(402) 423 7688
Luverne, Minnesota
(507) 283 9561
Gemini Transportation Underwriters
99 Summer Street, Suite 1800
Boston, Massachusetts 02110
(617) 310 8200
geminiunderwriters.com
Jason R. Lewis, President
Intrepid Direct Insurance
5400 West 110th Street, Suite 400
Overland Park, Kansas 66211
(877) 249 7181
intrepiddirect.com
William Strout, President
Key Risk Insurance
275 North Elm Street, Suite 300
High Point, North Carolina 27262
(800) 942 0225
keyrisk.com
Scott A. Holbrook, President
Nautilus Insurance Group
7233 East Butherus Drive
Scottsdale, Arizona 85260
(800) 842 8972
nautilusinsgroup.com
Thomas Joyce, President
Preferred Employers Insurance
1615 Murray Canyon Road, Suite 600
San Diego, California 92108
(888) 472 9001
peiwc.com
S. Akbar Khan, President
Vela Insurance Services
550 West Jackson Boulevard, Suite 500
Chicago, Illinois 60661
(877) 835 2467
vela-ins.com
Arthur G. Davis, President
Atlanta, Georgia
(877) 835 2467
Chicago, Illinois
(877) 835 2467
Los Angeles, California
(877) 835 2467
New York, New York
(877) 835 2467
Omaha, Nebraska
(877) 835 2467
Scottsdale, Arizona
(877) 835 2467
Businesses
W. R. Berkley Corporation 2024 Annual Report 171
Verus Specialty Insurance
4820 Lake Brook Drive, Suite 200
Glen Allen, Virginia 23060
(804) 525 1360
verusins.com
Marlo M. Morrison, President
Englewood, Colorado
(303) 357 2640
Scottsdale, Arizona
(877) 598 3787
W. R. Berkley European Holdings AG
Gartenstrasse 14
8002 Zürich, Switzerland
berkleyeurope.com
Mark Talbot, Managing Director
W. R. Berkley Europe AG
Städtle 35A, P.O. Box 835
9490 Vaduz, Liechtenstein
423 237 27 47
Barbara Hirzel, General Manager
Rådhusgata 17
N-0158 Oslo, Norway
47 (0) 23 27 24 00
Hollӓndargatan, 17, 5 tr
111 60 Stockholm, Sweden
46 (8) 410 337 00
Christophstrasse 19
50670 Cologne, Germany
49 (0) 22199386 0
Gartenstrasse 14
8002 Zürich, Switzerland
41 43 210 70 99
Torre Emperador
Paseo de la Castellana, 259D, Planta 42
28046 Madrid, Spain
34 (0) 914492646
Level 17, 52 Lime Street
London EC3M 7AF, United Kingdom
44 (0) 2039431000
Berkley European Underwriters AS
Rådhusgata 17
N-0158 Oslo, Norway
47 (0) 23272400
Karolina Lundgren, Chief Executive Officer
W/R/B Underwriting
Syndicate 1967 at Lloyd’s
W. R. Berkley UK Limited
Level 14, 52 Lime Street
London EC3M 7AF, United Kingdom
wrbunderwriting.com
44 (0) 20 3943 1900
James Hastings, President and Chief Executive Officer
W/R/B Specialty
757 Third Avenue, 10th Floor
New York, NY 10017
(212) 822 3303
wrbspecialty.com
Atlanta, Georgia
(770) 855 1919
New York, New York
(212) 822 3303
Walnut Creek, California
(925) 472 8202
REINSURANCE &
MONOLINE EXCESS
Berkley Program Specialists
1250 East Diehl Road, Suite 200
Naperville, Illinois 60563
(630) 210 0360
berkley-ps.com
Gregory A. Douglas, President
Berkley Equine & Cattle Division
250 West Main Street, Suite 2600
Lexington, Kentucky 40507
(859) 300 8035
berkleyequine.com
John Egan, Vice President and Manager
Berkley Re
berkleyre.com
Berkley Re America
One Metro Center
1 Station Place, Suite 702
Stamford, Connecticut 06902
(203) 905 4444
Daniel R. Westcott, President
Berkley Re Australia
Level 7, 321 Kent Street
Sydney NSW 2000, Australia
61 (2) 8117 2100
Level 10, 340 Adelaide Street
Brisbane QLD 4000, Australia
61 (7) 3175 0200
Glen Riddell,
Chief Executive Officer, Australia and New Zealand
Berkley Re Asia
Unit 09-03, Cross Street Exchange
18 Cross Street
Singapore 048423
(65) 6671 2070
Glen Riddell, Chief Executive Officer, Asia
Room 4901, ChinaWorld Tower B
No. 1 Jian Guo MenWai Avenue
Beijing 100004, China
(86) 108 526 4826
172
Berkley Re Solutions
1250 East Diehl Road, Suite 200
Naperville, Illinois 60563
(630) 210 0360
berkleyre.com/solutions
Gregory A. Douglas, President
Atlanta, Georgia
(800) 348 4229
Philadelphia, Pennsylvania
(800) 519 6341
Stamford, Connecticut
(800) 974 5714
Berkley Re Turnkey Solutions
1250 East Diehl Road, Suite 200
Naperville, Illinois 60563
(613) 210 0360
berkleyre-turnkey.com
Christopher Ellis, Senior Vice President
Berkley Re UK Limited
Level 17, 52 Lime Street
London EC3M 7AF, United Kingdom
44 (0) 20 3943 1000
Clare Himmer, Chief Executive Officer
Midwest Employers Casualty
14755 North Outer Forty Drive, Suite 300
Chesterfield, Missouri 63017
(636) 449 7000
mecasualty.com
Scott M. McDonough, President
SERVICE OPERATIONS
Berkley Capital, LLC
600 Brickell Avenue, 39th Floor
Miami, Florida 33131
(786) 450 5510
Frank T. Medici, President
Berkley Dean & Company, Inc.
475 Steamboat Road
Greenwich, Connecticut 06830
(203) 629 3000
James G. Shiel, President
Berkley Technology Services, LLC
101 Bellevue Parkway
Wilmington, Delaware 19809
(302) 439 2000
Selvam Ratinasabapati, President
Des Moines, Iowa
(515) 564 2300
W. R. Berkley Corporation’s businesses conduct business through the
following insurance entities: Acadia Insurance Company; Admiral
Indemnity Company; Admiral Insurance Company; Berkley
Argentina de Reaseguros S.A.; Berkley Assurance Company;
Berkley Casualty Company; Berkley Insurance Company; Berkley
International Aseguradora de Riesgos del Trabajo S.A.; Berkley
International do Brasil Seguros S.A.; Berkley International
Compañía de Garantias México S.A. de C.V.; Berkley International
Seguros Colombia S.A.; Berkley International Seguros México, S.A.
de C.V.; Berkley International Seguros S.A.; Berkley International
Seguros S.A. (Uruguay); Berkley Life and Health Insurance
Company; Berkley Luxury Insurance Company, Berkley National
Insurance Company; Berkley Prestige Insurance Company;
Berkley Regional Insurance Company; Berkley Specialty Insurance
Company; Carolina Casualty Insurance Company; Clermont
Insurance Company; Continental Western Insurance Company;
East Isles Reinsurance, Ltd.; Firemen’s Insurance Company of
Washington, D.C.; Gemini Insurance Company; Great Divide
Insurance Company; Intrepid Casualty Company; Intrepid
Insurance Company; Intrepid Specialty Insurance Company; Key
Risk Insurance Company; Midwest Employers Casualty Company;
Nautilus Insurance Company; Preferred Employers Insurance
Company; Oak Harbor Reinsurance Company; Queen’s Island
Insurance Company, Ltd.; Riverport Insurance Company; StarNet
Insurance Company; Syndicate 1967 at Lloyd’s; Tri-State Insurance
Company of Minnesota; Union Insurance Company; Union
Standard Lloyds; W. R. Berkley Europe AG.
Businesses
W. R. Berkley Corporation 2024 Annual Report 173
William R. Berkley
Executive Chairman
W. Robert Berkley, Jr.
President and Chief Executive Officer
Christopher L. Augostini
Executive Vice President — Business and Administration
Chief Financial Officer
EMORY UNIVERSITY
Ronald E. Blaylock
Managing Partner
GENNX360 CAPITAL PARTNERS
Mary C. Farrell
Chairman
THE HOWARD GILMAN FOUNDATION
Retired Managing Director Chief Investment Strategist
UBS WEALTH MANAGEMENT USA
María Luisa Ferré
Chief Executive Officer
FRG, LLC
Marie A. Mattson
Secretary of the University
GEORGETOWN UNIVERSITY
Daniel L. Mosley
Partner and Head of Family Advisory Services
BDT & MSD PARTNERS
Former Partner
CRAVATH, SWAINE & MOORE LLP
Mark L. Shapiro
Private Investor
Jonathan Talisman
Managing Partner
CAPITOL TAX PARTNERS
Board of Directors
174
William R. Berkley
Executive Chairman
W. Robert Berkley, Jr.
President and Chief Executive Officer
Richard M. Baio
Executive Vice President — Chief Financial Officer
Lucille T. Sgaglione
Executive Vice President
James G. Shiel
Executive Vice President — Investments
Philip S. Welt
Executive Vice President and Secretary
Jared E. Abbey
Executive Vice President
James P. Bronner
Executive Vice President
James B. Gilbert
Executive Vice President
Jeffrey M. Hafter
Executive Vice President
Robert C. Hewitt
Executive Vice President
Heath J. Kidd
Executive Vice President
Michael J. Maloney
Executive Vice President
William M. Rohde, Jr.
Executive Vice President
Robert W. Standen
Executive Vice President
Robert D. Stone
Executive Vice President
Joseph L. Sullivan
Executive Vice President
Nelson Tavares
Executive Vice President —Enterprise Technology
Kathleen M. Tierney
Executive Vice President
Trish Conway
Senior Vice President —Enterprise Risk Management
Melissa M. Emmendorfer
Senior Vice President — Insurance Risk Management
Michele L. Fleckenstein
Senior Vice President
Paul J. Hancock
Senior Vice President — Chief Corporate Actuary
Lee Iannarone
Senior Vice President —General Counsel and Assistant Secretary
Carol J. LaPunzina
Senior Vice President — Human Resources
Edward F. Linekin
Senior Vice President — Investments
A. Scott Mansolillo
Senior Vice President — Chief Compliance Officer
Lynn S. Neville
Senior Vice President — Claims
Christoph Ritterson
Senior Vice President - Innovation
Keith D. Wilson
Senior Vice President — Chief Information Security Officer
Officers
W. R. Berkley Corporation 2024 Annual Report 175
Annual Meeting
The Annual Meeting of Stockholders of W. R. Berkley Corporation
will be held at 1:30 p.m. on June 11, 2025 at its offices at
475 Steamboat Road, Greenwich, Connecticut 06830
Shares Traded
Common Stock of W. R. Berkley Corporation is traded
on the New York Stock Exchange. Symbol: WRB
Transfer Agent and Registrar
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, Minnesota 55120-4100
(800) 468 9716
shareowneronline.com
Website
For additional information, including press releases, visit our website at:
berkley.com
Follow us on X @WRBerkleyCorp and LinkedIn.
Auditors
KPMG LLP, New York, New York
Outside Counsel
Willkie Farr & Gallagher LLP, New York, New York
Corporate Information
W. R. Be rk l ey C o r p o rat i o n
The W. R. Berkley Corporation 2024 Annual Report editorial sections are printed on recycled
paper made from fiber sourced from well-managed forests and other controlled wood sources and
are independently certified to the Forest Stewardship Council® (FSC®) standards.
© Copyright 2025 W. R. Berkley Corporation. All rights reserved.
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