UNITED STATES SECURITIES AND EXCHANGE COMMISSION



þ☒			QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the Transition Period from to .

Delaware

22-1867895

(State or other jurisdiction of

~~(I.R.S. Employer~~

incorporation or organization)

(I.R.S. Employer Identification No.)

475 Steamboat Road ~~Greenwich, Connecticut~~

Greenwich

Connecticut

06830

(Address of principal executive offices)

(Zip Code)



(203)			~~(203)~~ 629-3000

(Registrant’s telephone number, including area code)

Former name, former address and former fiscal year, if changed since last report.


Title	Trading Symbol	Name

Common Stock, par value $.20 per share	WRB	New York Stock Exchange


5.70% Subordinated Debentures due 2058	WRB-PE	New York Stock Exchange
5.10% Subordinated Debentures due 2059	WRB-PF	New York Stock Exchange
4.25% Subordinated Debentures due 2060	WRB-PG	New York Stock Exchange
4.125% Subordinated Debentures due 2061	WRB-PH	New York Stock Exchange

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 þ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ☒ No o☐

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 filerþ

☒

Accelerated filero

☐

Non-accelerated filero

☐

Smaller reporting companyo

☐

~~(Do not check if a smaller reporting company)~~

Emerging growth companyo

☐

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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☒

Number of shares of common stock, $.20 par value, outstanding as of ~~November 6, 2017: 121,794,758~~

October 28, 2021: 176,640,439

CONSOLIDATED BALANCE SHEETS

Equity securities available for sale

See accompanying notes to interim consolidated financial statements.

(In thousands, except per share data)

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
REVENUES:
Net premiums written $ 1,571,183
$ 1,607,365
$ 4,782,272
$ 4,913,656
Change in net unearned premiums 10,317
(21,421 ) (62,028 ) (240,584 )
Net premiums earned 1,581,500
1,585,944
4,720,244
4,673,072
Net investment income 142,479
145,668
426,601
404,850
Net realized investment gains 183,959
175,738
276,760
207,508
Other-than-temporary impairments —
—
—
(18,114 )
Revenues from non-insurance businesses 89,786
80,242
225,033
305,787
Insurance service fees 33,612
32,135
100,475
109,437
Other income 6
—
695
—
Total revenues 2,031,342
2,019,727
5,749,808
5,682,540
OPERATING COSTS AND EXPENSES:
Losses and loss expenses 1,081,174
965,856
3,025,475
2,852,339
Other operating costs and expenses 600,822
606,348
1,821,155
1,770,450
Expenses from non-insurance businesses 86,412
78,865
221,389
291,127
Interest expense 36,821
37,043
110,419
104,019
Total operating costs and expenses 1,805,229
1,688,112
5,178,438
5,017,935
Income before income taxes 226,113
331,615
571,370
664,605
Income tax expense (63,295 ) (110,952 ) (174,305 ) (214,789 )
Net income before noncontrolling interests 162,818
220,663
397,065
449,816
Noncontrolling interests (764 ) (13 ) (2,560 ) (689 )
Net income to common stockholders $ 162,054
$ 220,650
$ 394,505
$ 449,127

NET INCOME PER SHARE:
Basic $ 1.29
$ 1.80
$ 3.17
$ 3.66
Diluted $ 1.26
$ 1.72
$ 3.05
$ 3.50

See accompanying notes to interim consolidated financial statements.

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
Net income before noncontrolling interests $ 162,818
$ 220,663
$ 397,065
$ 449,816
Other comprehensive income (loss):
Change in unrealized currency translation adjustments 28,592
(19,470 ) 71,574
(77,389 )
Change in unrealized investment gains (losses), net of taxes (8,168 ) (47,676 ) 26,598
134,213
Other comprehensive income (loss): 20,424
(67,146 ) 98,172
56,824
Comprehensive income 183,242
153,517
495,237
506,640
Noncontrolling interests (731 ) 44
(2,541 ) (623 )
Comprehensive income to common stockholders $ 182,511
$ 153,561
$ 492,696
$ 506,017

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

(In ~~thousands)~~thousands, except per share data)

See accompanying notes to interim consolidated financial statements.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The unaudited consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the “Company”), have been prepared on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements. The unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly the Company’s financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year. All significant intercompany accounts and transactions have been eliminated. Reclassifications have been made in the 2020 financial statements as originally reported to conform to the presentation of the 2021 financial statements. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses reflected during the reporting period. For further information related to ~~a description of~~ areas of judgment and estimates and other information necessary to understand the Company’s financial position and results of operations, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016. Reclassifications have been made in the 2016 financial statements as originally reported to conform to the presentation of the 2017 financial statements.~~2020.

The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective income tax rate ~~for the quarter~~ differs from the federal income tax rate of ~~35%~~21% principally because of tax-exempt investment income ~~as well as the new requirement in 2017 to recognize~~and tax benefits ~~for stock~~related to equity-based compensation, inwhich was partially offset by state and foreign income ~~tax expense.~~taxes.

The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the period (including ~~4,087,731~~7,767,874 and 7,575,168 common shares held in a grantor trust ~~established in March 2017)~~as of September 30, 2021 and 2020, respectively). The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the weighted average number of basic and common equivalent shares outstanding during the period and is calculated using the treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect.

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


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

(In thousands)	2021	2020	2021	2020
Basic	185,031	185,765	185,127	187,338
Diluted	186,742	187,717	187,060	189,515

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
(In thousands) 2017 2016 2017 2016
Basic 125,818
122,562
124,363
122,652
Diluted 128,944
128,556
129,289
128,501

and Accounting Policies

Recently adopted accounting pronouncements:

In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-09, Disclosures about Short-Duration Contracts. ASU 2015-09 requires companies that issue short duration insurance contracts to disclose additional information, including: (i) incurred and paid claims development tables; (ii) frequency and severity of claims; and (iii) information about material changes in judgments made in calculating the liability for unpaid claim adjustment expenses, including reasons for the change and the effects on the financial statements. The Company adopted this updated guidance on January 1, 2016 with regard to the annual requirements and on January 1, 2017 with regard to the interim requirements. The amendments in ASU 2015-09 are applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. As the requirements are disclosure only, the adoption of this guidance did not impact our financial condition or results of operations, but did result in additional disclosures.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 includes provisions intended to simplify various previous provisions related to how share-based payments are accounted for and presented in the financial statements. Under the new guidance, excess tax benefits (deductions for share based payment awards for tax purposes that exceed the compensation cost recognized for financial reporting purposes) are reported within the income tax expense financial statement line item. Previously, excess tax benefits were reported within additional paid in capital. The Company adopted this updated guidance on January 1, 2017 prospectively. The adoption of this guidance did not have a material impact on the Company's financial condition or results of operations.

All ~~other~~ accounting and reporting standards that ~~became~~have become effective in ~~2017~~2021 were either not applicable to the Company or their adoption did not have a material impact on the Company.

Accounting and reporting standards that are not yet effective:

In May 2014, the FASB issued ASU 2014-09, Revenue from Customers. ASU 2014-09 clarifies the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s insurance service fee revenue and non-insurance business revenue will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The updated guidance, as amended by ASU 2015-14, is effective for public business entities for annual and interim reporting periods beginning after December 15, 2017. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition or results of operations.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 amends the accounting guidance for financial instruments to require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The updated guidance is effective for public business entities for annual reporting periods beginning after December 15, 2017 and interim periods within those years. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition upon adoption, but will impact results of operations after adoption of this guidance as unrealized gains and losses on equity securities will no longer be reported directly in accumulated other comprehensive income (AOCI), but will instead be reported in net income.

In February 2016, the FASB issued ASU 2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications of a lease, as either an operating or finance lease, both of which will require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability will be determined based upon the present value of cash flows. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not significantly changed by the updated guidance. The updated guidance is effective for reporting periods beginning after December 15, 2018, and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied. The Company is currently evaluating the impact that the adoption of this guidance will have on its results of operations, financial position and liquidity.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost. The updated guidance is effective for reporting periods beginning after December 15, 2019. The Company will not be able to determine the impact the adoption of this guidance will have on its results of operations, financial position or liquidity until the year the guidance becomes effective.

All ~~other~~ recently issued but not yet effective accounting and reporting standards are either not applicable to the Company or are not expected to have a material impact on the Company.

(4) ~~Acquisitions/Disposition~~

In March 2017, the Company acquired an 89.5% ownership interest for $73.3 million in a company engaged in providing textile solutions world-wide. The fair value of the assets acquired and liabilities assumed have been estimated based on a third party valuation.

~~The following table summarizes the estimated fair value of net assets acquired and liabilities assumed for the business combination completed in 2017:~~

(In thousands) 2017

Cash and cash equivalents $ 2,721
Real estate, furniture and equipment 7,042
Goodwill 28,522
Intangible assets 32,395
Other assets 9,862
Total assets acquired 80,542

Other liabilities assumed (2,251 )
Noncontrolling interest (5,000 )
Net assets acquired $ 73,291

~~In February 2016, the Company acquired an 85% ownership interest for $42.3 million in a company engaged in the distribution of promotional merchandise.~~

~~(5)~~ Consolidated ~~Statement~~Statements of Comprehensive Income

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


(In thousands)	Unrealized Investment Gains (Losses)			Currency Translation Adjustments		Accumulated Other Comprehensive (Loss) Income
As of and for the nine months ended September 30, 2021
Changes in AOCI
Beginning of period	$	289,714		$	(351,886)	$	(62,172)


Other comprehensive (loss) income before reclassifications	(120,695)			(26,235)		(146,930)
Amounts reclassified from AOCI	18,241			—		18,241
Other comprehensive (loss) income	(102,454)			(26,235)		(128,689)
Unrealized investment gain related to noncontrolling interest	(1)			—		(1)
End of period	$	187,259		$	(378,121)	$	(190,862)
Amounts reclassified from AOCI
Pre-tax	$	23,091	(1)	$	—	$	23,091
Tax effect	(4,850)		(2)	—		(4,850)
After-tax amounts reclassified	$	18,241		$	—	$	18,241
Other comprehensive (loss) income
Pre-tax	$	(130,201)		$	(26,235)	$	(156,436)
Tax effect	27,747			—		27,747
Other comprehensive (loss) income	$	(102,454)		$	(26,235)	$	(128,689)
As of and for the three months ended September 30, 2021
Changes in AOCI
Beginning of period	$	222,855		$	(345,299)	$	(122,444)


Other comprehensive (loss) income before reclassifications	(36,249)			(32,822)		(69,071)
Amounts reclassified from AOCI	653			—		653
Other comprehensive (loss) income	(35,596)			(32,822)		(68,418)
Unrealized investment gain related to noncontrolling interest	—			—		—
Ending balance	$	187,259		$	(378,121)	$	(190,862)
Amounts reclassified from AOCI
Pre-tax	$	827	(1)	$	—	$	827
Tax effect	(174)		(2)	—		(174)
After-tax amounts reclassified	$	653		$	—	$	653
Other comprehensive (loss) income
Pre-tax	$	(45,270)		$	(32,822)	$	(78,092)
Tax effect	9,674			—		9,674
Other comprehensive (loss) income	$	(35,596)		$	(32,822)	$	(68,418)


(In thousands)	Unrealized Investment Gains (Losses)				Currency Translation Adjustments			Accumulated Other Comprehensive Income
As of and for the nine months ended September 30, 2017:
As of and for the nine months ended September 30, 2020											As of and for the nine months ended September 30, 2020
Changes in AOCI	Changes in AOCI										Changes in AOCI
Beginning of period	$	427,154			$	(371,586	)	$	55,568		Beginning of period	$	124,514		$	(381,813)	$	(257,299)
Other comprehensive income before reclassifications	109,277				71,574			180,851
Cumulative effect adjustment resulting from changes in accounting principles											Cumulative effect adjustment resulting from changes in accounting principles	24,952			—		24,952
Restated beginning of period											Restated beginning of period	149,466			(381,813)		(232,347)
Other comprehensive income (loss) before reclassifications											Other comprehensive income (loss) before reclassifications	76,474			(36,553)		39,921
Amounts reclassified from AOCI	(82,679		)		—			(82,679		)	Amounts reclassified from AOCI	21,542			—		21,542
Other comprehensive income	26,598				71,574			98,172
Unrealized investment loss related to non-controlling interest	19				—			19
Other comprehensive income (loss)											Other comprehensive income (loss)	98,016			(36,553)		61,463
Unrealized investment gain related to noncontrolling interest											Unrealized investment gain related to noncontrolling interest	(2)			—		(2)
End of period	$	453,771			$	(300,012	)	$	153,759		End of period	$	247,480		$	(418,366)	$	(170,886)
Amounts reclassified from AOCI											Amounts reclassified from AOCI
Pre-tax	$	(127,198	)	(1)	$	—		$	(127,198	)	Pre-tax	$	27,268	(1)	$	—	$	27,268
Tax effect	44,519			(2)	—			44,519			Tax effect	(5,726)		(2)	—		(5,726)
After-tax amounts reclassified	$	(82,679	)		$	—		$	(82,679	)	After-tax amounts reclassified	$	21,542		$	—	$	21,542
Other comprehensive income
Other comprehensive income (loss)											Other comprehensive income (loss)
Pre-tax	$	50,148			$	71,574		$	121,722		Pre-tax	$	111,756		$	(36,553)	$	75,203
Tax effect	(23,550		)		—			(23,550		)	Tax effect	(13,740)			—		(13,740)
Other comprehensive income	$	26,598			$	71,574		$	98,172

As of and for the three months ended September 30, 2017:
Other comprehensive income (loss)											Other comprehensive income (loss)	$	98,016		$	(36,553)	$	61,463
As of and for the three months ended September 30, 2020											As of and for the three months ended September 30, 2020
Changes in AOCI	Changes in AOCI										Changes in AOCI
Beginning of period	$	461,906			$	(328,604	)	$	133,302		Beginning of period	$	209,210		$	(458,560)	$	(249,350)
Other comprehensive income before reclassifications	19,968				28,592			48,560

Other comprehensive income (loss) before reclassifications											Other comprehensive income (loss) before reclassifications	39,488			40,194		79,682
Amounts reclassified from AOCI	(28,136		)		—			(28,136		)	Amounts reclassified from AOCI	(1,215)			—		(1,215)
Other comprehensive (loss) income	(8,168		)		28,592			20,424
Unrealized investment loss related to non-controlling interest	33				—			33
End of period	$	453,771			$	(300,012	)	$	153,759
Other comprehensive income (loss)											Other comprehensive income (loss)	38,273			40,194		78,467
Unrealized investment gain related to noncontrolling interest											Unrealized investment gain related to noncontrolling interest	(3)			—		(3)
Ending balance											Ending balance	$	247,480		$	(418,366)	$	(170,886)
Amounts reclassified from AOCI											Amounts reclassified from AOCI
Pre-tax	$	(43,286	)	(1)	$	—		$	(43,286	)	Pre-tax	$	(1,538)	(1)	$	—	$	(1,538)
Tax effect	15,150			(2)	—			15,150			Tax effect	323		(2)	—		323
After-tax amounts reclassified	$	(28,136	)		$	—		$	(28,136	)	After-tax amounts reclassified	$	(1,215)		$	—	$	(1,215)
Other comprehensive (loss) income
Other comprehensive income (loss)											Other comprehensive income (loss)
Pre-tax	$	(8,563	)		$	28,592		$	20,029		Pre-tax	$	48,980		$	40,194	$	89,174
Tax effect	395				—			395			Tax effect	(10,707)			—		(10,707)
Other comprehensive (loss) income	$	(8,168	)		$	28,592		$	20,424

Other comprehensive income (loss)											Other comprehensive income (loss)	$	38,273		$	40,194	$	78,467

~~_________________________~~

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

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

(In thousands) Unrealized Investment Gains (Losses) Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss)
As of and for the nine months ended September 30, 2016:
Changes in AOCI
Beginning of period $ 180,695
$ (247,393 ) $ (66,698 )
Other comprehensive income (loss) before reclassifications 170,824
(77,389 ) 93,435
Amounts reclassified from AOCI (36,611 ) —
(36,611 )
Other comprehensive income (loss) 134,213
(77,389 ) 56,824
Unrealized investment loss related to non-controlling interest 66
—
66
End of period $ 314,974
$ (324,782 ) $ (9,808 )
Amounts reclassified from AOCI
Pre-tax $ (56,325 ) (1) $ —
$ (56,325 )
Tax effect 19,714
(2) —
19,714
After-tax amounts reclassified $ (36,611 ) $ —
$ (36,611 )
Other comprehensive income (loss)
Pre-tax $ 198,808
$ (77,389 ) $ 121,419
Tax effect (64,595 ) —
(64,595 )
Other comprehensive income (loss) $ 134,213
$ (77,389 ) $ 56,824

As of and for the three months ended September 30, 2016:
Changes in AOCI
Beginning of period $ 362,593
$ (305,312 ) $ 57,281
Other comprehensive loss before reclassifications (20,968 ) (19,470 ) (40,438 )
Amounts reclassified from AOCI (26,708 ) —
(26,708 )
Other comprehensive loss (47,676 ) (19,470 ) (67,146 )
Unrealized investment loss related to non-controlling interest 57
—
57
End of period $ 314,974
$ (324,782 ) $ (9,808 )
Amounts reclassified from AOCI
Pre-tax $ (41,090 ) (1) $ —
$ (41,090 )
Tax effect 14,382
(2) —
14,382
After-tax amounts reclassified $ (26,708 ) $ —
$ (26,708 )
Other comprehensive loss
Pre-tax $ (72,188 ) $ (19,470 ) $ (91,658 )
Tax effect 24,512
—
24,512
Other comprehensive loss $ (47,676 ) $ (19,470 ) $ (67,146 )

~~_______________~~____________

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

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

Interest payments were ~~$134,291,000~~$119,381,000 and ~~$124,791,000 and income taxes paid were $182,487,000 and $99,161,000 in~~$126,932,000 for the nine months ended September 30, ~~2017~~2021 and ~~2016~~,2020, respectively. Income taxes were $244,029,000 and $96,000,000 for the nine months ended September 30, 2021 and 2020, respectively.

At September 30, ~~2017~~2021 and December 31, ~~2016~~,2020, investments in fixed maturity securities were as follows:

(In thousands)
Amortized
Cost
Gross Unrealized
Fair
Value

Carrying
Value
Gains Losses
September 30, 2017
Held to maturity:
State and municipal $ 65,372
$ 15,212
$ —
$ 80,584
$ 65,372
Residential mortgage-backed 14,024
1,452
—
15,476
14,024
Total held to maturity 79,396
16,664
—
96,060
79,396
Available for sale:
U.S. government and government agency 402,901
10,828
(2,124 ) 411,605
411,605
State and municipal:
Special revenue 2,730,653
80,144
(5,469 ) 2,805,328
2,805,328
State general obligation 481,070
21,377
(565 ) 501,882
501,882
Pre-refunded 282,488
21,052
(173 ) 303,367
303,367
Corporate backed 380,351
11,775
(499 ) 391,627
391,627
Local general obligation 384,930
26,566
(531 ) 410,965
410,965
Total state and municipal 4,259,492
160,914
(7,237 ) 4,413,169
4,413,169
Mortgage-backed securities:
Residential (1) 1,064,705
12,696
(8,860 ) 1,068,541
1,068,541
Commercial 251,387
1,641
(1,450 ) 251,578
251,578
Total mortgage-backed securities 1,316,092
14,337
(10,310 ) 1,320,119
1,320,119
Asset-backed 2,389,187
9,836
(10,405 ) 2,388,618
2,388,618
Corporate:
Industrial 2,569,673
70,054
(2,842 ) 2,636,885
2,636,885
Financial 1,335,101
43,636
(4,716 ) 1,374,021
1,374,021
Utilities 255,478
12,760
(907 ) 267,331
267,331
Other 42,183
2
(48 ) 42,137
42,137
Total corporate 4,202,435
126,452
(8,513 ) 4,320,374
4,320,374
Foreign 909,608
32,889
(2,088 ) 940,409
940,409
Total available for sale 13,479,715
355,256
(40,677 ) 13,794,294
13,794,294
Total investments in fixed maturity securities $ 13,559,111
$ 371,920
$ (40,677 ) $ 13,890,354
$ 13,873,690

~~Gross unrealized gains and (losses) for residential mortgage-backed securities include $85,907 and $(818,691) as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively, related to securities with the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income.~~

(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.

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

The following table presents the rollforward of the allowance for expected credit losses for state and municipal held to maturity securities for the nine months ended September 30, 2021 and 2020:

The following table presents the rollforward of the allowance for expected credit losses for state and municipal held to maturity securities for the three months ended September 30, 2021 and 2020:


(In thousands)	2021		2020
Allowance for expected credit losses, beginning of period	$	453	$	948
Provision for expected credit losses	(57)		(77)
Allowance for expected credit losses, end of period	$	396	$	871

The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the nine months ended September 30, 2021 and 2020:


	2021						2020
(In thousands)	Foreign Government		Corporate		Total		Foreign Government		Corporate		Total
Allowance for expected credit losses, beginning of period	$	1,264	$	518	$	1,782	$	—	$	—	$	—
Cumulative effect adjustment resulting from changes in accounting principles	—		—		—		35,645		—		35,645
Expected credit losses on securities for which credit losses were not previously recorded	19,072		16		19,088		12,494		7,058		19,552
Expected credit losses on securities for which credit losses were previously recorded	(2,967)		(517)		(3,484)		295		(3,767)		(3,472)
Reduction due to disposals	(494)		(5)		(499)		(47,344)		(2,685)		(50,029)
Allowance for expected credit losses, end of period	$	16,875	$	12	$	16,887	$	1,090	$	606	$	1,696

The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the three months ended September 30, 2021 and 2020:


	2021						2020
(In thousands)	Foreign Government		Corporate		Total		Foreign Government		Corporate		Total
Allowance for expected credit losses, beginning of period	$	18,899	$	12	$	18,911	$	44,769	$	724	$	45,493
Expected credit losses on securities for which credit losses were not previously recorded	82		—		82		—		261		261
Expected credit losses on securities for which credit losses were previously recorded	(2,106)		—		(2,106)		(252)		(9)		(261)
Reduction due to disposals	—		—		—		(43,427)		(370)		(43,797)
Allowance for expected credit losses, end of period	$	16,875	$	12	$	16,887	$	1,090	$	606	$	1,696

During the nine months ended September 30, 2021, the Company increased 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 foreign government securities that had no reserve in prior periods. During the nine months ended September 30, 2020, the Company decreased the allowance for expected credit losses for available for sale securities primarily due to the disposition of securities which previously had an allowance recorded.

The amortized cost and fair value of fixed maturity securities at September 30, ~~2017~~,2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations.



(In thousands)	Amortized Cost (1)		Fair Value
Due in one year or less	$	1,620,333	$	1,622,938
Due after one year through five years	6,835,525		6,974,341
Due after five years through ten years	4,183,230		4,263,746
Due after ten years	2,202,797		2,244,071
Mortgage-backed securities	966,747		979,361
Total	$	15,808,632	$	16,084,457

(In thousands)
Amortized
Cost
Fair Value
Due in one year or less $ 745,010
$ 750,479
Due after one year through five years 5,089,768
5,210,268
Due after five years through ten years 3,248,254
3,396,461
Due after ten years 3,145,963
3,197,551
Mortgage-backed securities 1,330,116
1,335,595
Total $ 13,559,111
$ 13,890,354
(1) Amortized cost is reduced by the allowance for expected credit losses of $396 thousand related to held to maturity securities.

At September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, there were no investments that exceeded 10% of common stockholders' equity, other than investments in United States government and government agency securities.

At September 30, ~~2017~~2021 and December 31, ~~2016~~,2020, investments in equity securities were as follows:

At September 30, ~~2017~~2021 and December 31, ~~2016~~,2020, the fair and carrying values of the arbitrage trading account were ~~$488~~$860 million and ~~$300~~$341 million, respectively. The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Arbitrage investing differs from other types of investing in its focus on transactions and events believed likely to bring about a change in value over a relatively short time period (usually four months or less).

The Company uses put options and call options ~~and swap contracts~~ in order to mitigate the impact of potential changes in market conditions on the merger arbitrage trading account. These options ~~and contracts~~ are reported at fair value. As of September 30, ~~2017, the fair value of long option contracts outstanding was $1 million (notional amount of $33 million) and~~2021, the fair value of short option contracts outstanding was ~~$1 million~~$(273) thousand (notional amount of ~~$54~~$11.3 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives.

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
(In thousands) 2017 2016 2017 2016
Investment income earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable $ 118,834
$ 114,271
$ 347,976
$ 331,448
Investment funds 15,200
25,293
50,744
60,385
Arbitrage trading account 4,418
6,441
16,235
12,883
Real estate 5,042
585
14,894
4,552
Equity securities available for sale 604
1,069
1,845
3,217
Gross investment income 144,098
147,659
431,694
412,485
Investment expense (1,619 ) (1,991 ) (5,093 ) (7,635 )
Net investment income $ 142,479
$ 145,668
$ 426,601
$ 404,850

~~(11)~~(10) Investment Funds

The Company evaluates whether it is an investor in a variable interest entity ~~(VIE)~~("VIE"). Such entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support, or the equity investors, as a group, do not have the characteristics of a controlling financial interest (primary beneficiary). The Company determines whether it is the

primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary in any of its investment funds, and accordingly, carries its interests in investment funds under the equity method of accounting.

The Company’s maximum exposure to loss with respect to these investments is limited to the carrying amount reported on the Company’s consolidated balance sheet and its unfunded commitments, which were ~~$442~~$458 million as of September 30, ~~2017.~~2021.

Investment funds consisted of the following:


	Carrying Value as of				Income (Loss) from Investment Funds
	September 30,		December 31,		For the Nine Months Ended September 30,
(In thousands)	2021		2020		2021		2020
Financial services	408,630		$	434,437	$	83,455	$	3,303
Transportation	340,721		190,125		31,805		(3,521)
Real Estate	263,079		310,783		18,497		2,140
Energy	150,414		140,935		14,065		(13,689)
Other funds	238,088		233,150		21,716		13,027
Total	$	1,400,932	$	1,309,430	$	169,538	$	1,260

Carrying Value as of Income (Loss) from Investment Funds
September 30, December 31, For the Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Real estate $ 614,508
$ 641,783
$ 30,661
$ 33,028
Energy 85,817
91,448
(12,763 ) 7,174
Hedge equity —
73,913
(1,164 ) 791
Other funds 419,582
391,002
34,010
19,392
Total $ 1,119,907
$ 1,198,146
$ 50,744

$ 60,385

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

Financial services investment funds include the Company’s minority investment in Lifson Re, a Bermuda reinsurance company. Effective January 1, 2021, Lifson Re participates on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 22.5% share of placed amounts. This pertains to all traditional reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating. For the nine months ended September 30, 2021, the Company has ceded approximately $182 million of written premiums to Lifson Re.

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

Carrying Value
September 30, December 31,
(In thousands) 2017 2016
Properties in operation $ 451,669
$ 457,237
Properties under development 939,605
727,744
Total $ 1,391,274
$ 1,184,981

~~In 2017,~~ As of September 30, 2021, properties in operation included a long-term ground lease in Washington, D.C., ~~a hotel in Memphis, Tennessee,~~ an office complex in New York City, an office building in London, U.K., and ~~office buildings~~the completed portion of a mixed-use project in ~~West Palm Beach and Palm Beach, Florida.~~Washington D.C. Properties in operation are net of accumulated depreciation and amortization of ~~$20,378,000~~$68,026,000 and ~~$14,996,000~~$86,970,000 as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. Related depreciation expense was ~~$5,382,000~~$14,412,000 and ~~$4,117,000~~$19,818,000 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. Future minimum rental income expected on operating leases relating to properties in operation is ~~$4,966,133 in 2017, $28,251,980 in 2018, $30,174,146 in 2019, $29,415,103 in 2020, $30,054,813~~$14,397,620 in 2021, ~~$29,966,679~~$59,304,963 in 2022, $53,608,253 in 2023, $52,738,386 in 2024, $50,218,665 in 2025, $47,171,116 in 2026 and ~~$467,192,215~~$596,395,513 thereafter.

During the second quarter of 2021, the Company sold 2 office buildings in Palm Beach and West Palm Beach, Florida. One of these sales also resulted in a $102 million reduction of the Company's non-recourse debt that was supporting the property.

~~Properties under development include an office building in London and a~~ A mixed-use project in Washington, D.C. has been under development in 2021 and 2020, with the completed portion reported in properties in operation as of September 30, 2021.

At September 30, 2021 and December 31, 2020, loans receivable ~~are~~were as follows:

The real estate loans are secured by commercial and residential real estate primarily located in New York. These loans generally earn interest at fixed or stepped interest rates and have maturities through 2026. The commercial loans are with small business owners who have secured the related financing with the assets of the business. Commercial loans primarily earn interest on a fixed basis and have varying maturities generally not exceeding 10 years.

Loans receivable in non-accrual status were ~~$4.5 million and $5.4~~both $0.2 million as of September 30, ~~2017~~2021 and December 31, ~~2016, respectively.~~2020.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the nine months ended September 30, 2021 and 2020:

During the nine months ended September 30, 2021, the Company reduced the allowance primarily due to the disposal of certain loans.

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the three months ended September 30, 2021 and 2020:


	2021						2020
(In thousands)	Real Estate Loans		Commercial Loans		Total		Real Estate Loans		Commercial Loans		Total
Allowance for expected credit losses, beginning of period	$	1,501	$	469	$	1,970	$	4,318	$	4,401	$	8,719
Provision for expected credit losses	(72)		(161)		(233)		(2,559)		(317)		(2,876)
Allowance for expected credit losses, end of period	$	1,429	$	308	$	1,737	$	1,759	$	4,084	$	5,843

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. ~~Loans receivable with a potential for default are further assessed using discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.~~

The real estate loans are secured by commercial real estate primarily located in New York. These loans generally earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025. The commercial loans are with small business owners who have secured the related financing with the assets of the business. Commercial loans primarily earn interest on a fixed basis and have varying maturities generally not exceeding 10 years.

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. Based on these considerations, none of the real estate loans were considered to be impaired at September 30, 2017, and accordingly, the Company determined that a specific valuation allowance was not required.

~~(14) Realized and Unrealized~~

~~Realized and unrealized~~ Net investment gains (losses) ~~are~~were as follows:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
(In thousands) 2017 2016 2017 2016
Realized investment gains (losses):

Fixed maturity securities:

Gains $ 8,763
$ 33,798
$ 21,795
$ 66,972
Losses (197 ) (1,150 ) (4,162 ) (5,570 )
Equity securities available for sale 34,720
8,441
109,566
13,037
Investment funds (1) 124,228
(3,788 ) 125,383
(9,041 )
Real estate 1,956
687
4,892
5,247
Other (2)

14,489
137,750
19,286
136,863
Net realized gains on investments sales 183,959
175,738
276,760
207,508
Other-than-temporary impairments (3) —
—
—
(18,114 )
Net investment gains 183,959
175,738
276,760
189,394
Income tax expense (64,386 ) (61,508 ) (96,866 ) (66,288 )
After-tax net realized investment gains $ 119,573
$ 114,230
$ 179,894
$ 123,106


Change in unrealized investment (losses) gains on available for sale securities:
Fixed maturity securities without allowance for expected credit losses	$	(41,041)	$	46,164	$	(135,099)	$	89,363
Fixed maturity securities with allowance for expected credit losses	111		5,036		10,397		30,027

Investment funds	(4,098)		(198)		(4,355)		(3,632)
Other	(242)		(2,022)		(1,144)		(4,002)
Total change in unrealized investment (losses) gains	(45,270)		48,980		(130,201)		111,756
Income tax benefit (expense)	9,674		(10,707)		27,747		(13,740)
Noncontrolling interests	—		(3)		(1)		(2)
After-tax change in unrealized investment (losses) gains of available for sale securities	$	(35,596)	$	38,270	$	(102,455)	$	98,014

Change in unrealized investment gains of available for sale securities:

Fixed maturity securities $ (10,627 ) $ (45,388 ) $ 84,214
$ 169,933
Previously impaired fixed maturity securities 61
(1,406 ) 905
413
Equity securities available for sale (2,126 ) (28,517 ) (44,812 ) 12,433
Investment funds 4,129
3,143
9,841
16,028
Total change in unrealized investment gains (8,563 ) (72,168 ) 50,148
198,807
Income tax benefit (expense) 423
24,493
(23,550 ) (64,594 )
Noncontrolling interests 5
57
19
66
After-tax change in unrealized investment gains of available for sale securities $ (8,135 ) $ (47,618 ) $ 26,617
$ 134,279

______________________

(1) ~~Investment funds includes a gain of $124.3 million~~The net realized gains or losses on investment sales represent the total gains or losses from the ~~sale~~purchase dates of ~~an investment~~the equity securities. The change in ~~an office building located~~unrealized (losses) gains consists of two components: (i) the reversal of the gain or loss recognized in ~~Washington, D.C. for~~previous periods on equity securities sold and (ii) the ~~three and nine months ended September 30, 2017.~~change in unrealized gain or loss resulting from mark-to-market adjustments on equity securities still held.

~~(2) Other includes a gain of $134.9 million from the sale of Aero Precision Industries and certain related aviation services business for the three and nine months ended September 30, 2016.~~

(3) There were no other than temporary impairments (OTTI) for the three and nine months ended September 30, 2017, or for the three months ended September 30, 2016. OTTI for the nine months ended September 30, 2016 of $18.1 million were related to common stock.

The following tables summarize all fixed maturity securities in an unrealized loss position at September 30, ~~2017~~2021 and December 31, ~~2016~~2020 by the length of time those securities have been continuously in an unrealized loss position:

Less Than 12 Months 12 Months or Greater Total
(In thousands) Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
September 30, 2017
U.S. government and government agency $ 118,066
$ 1,048
$ 48,880
$ 1,076
$ 166,946
$ 2,124
State and municipal 650,353
5,797
119,087
1,440
769,440
7,237
Mortgage-backed securities 527,034
5,000
221,923
5,310
748,957
10,310
Asset-backed securities 1,116,878
8,033
130,734
2,372
1,247,612
10,405
Corporate 651,373
5,395
57,557
3,118
708,930
8,513
Foreign government 220,860
2,072
1,599
16
222,459
2,088
Fixed maturity securities 3,284,564
27,345
579,780
13,332
3,864,344
40,677
Common stocks 4,678
3,095
9,387
391
14,065
3,486
Preferred stocks —
—
23,957
1,718
23,957
1,718
Equity securities available for sale 4,678
3,095
33,344
2,109
38,022
5,204
Total $ 3,289,242
$ 30,440
$ 613,124
$ 15,441
$ 3,902,366
$ 45,881

December 31, 2016
U.S. government and government agency $ 112,709
$ 1,252
$ 35,450
$ 1,341
$ 148,159
$ 2,593
State and municipal 1,562,614
35,553
133,034
4,885
1,695,648
40,438
Mortgage-backed securities 625,903
11,103
109,066
4,828
734,969
15,931
Asset-backed securities 1,010,836
5,340
201,693
6,601
1,212,529
11,941
Corporate 1,035,245
13,448
65,147
7,470
1,100,392
20,918
Foreign government 213,246
1,985
24,820
777
238,066
2,762
Fixed maturity securities 4,560,553
68,681
569,210
25,902
5,129,763
94,583
Common stocks 336
22
8,755
1,024
9,091
1,046
Preferred stocks —
—
22,034
3,639
22,034
3,639
Equity securities available for sale 336
22
30,789
4,663
31,125
4,685
Total $ 4,560,889
$ 68,703
$ 599,999
$ 30,565
$ 5,160,888
$ 99,268


	Less Than 12 Months				12 Months or Greater				Total
(In thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
September 30, 2021
U.S. government and government agency	$	61,386	$	394	$	17,342	$	113	$	78,728	$	507
State and municipal	353,630		4,345		28,562		1,990		382,192		6,335
Mortgage-backed	318,897		4,502		84,883		2,793		403,780		7,295
Asset-backed	3,373,100		12,389		105,823		1,812		3,478,923		14,201
Corporate	1,465,027		11,044		54,678		2,618		1,519,705		13,662
Foreign government	371,164		7,249		47,331		27,362		418,495		34,611
Fixed maturity securities	$	5,943,204	$	39,923	$	338,619	$	36,688	$	6,281,823	$	76,611





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

Substantially all of the securities in an unrealized loss position are rated investment grade, except for the securities in the foreign government classification. A significant amount of the unrealized loss on foreign government securities is the result of changes in currency exchange rates.

~~Fixed Maturity Securities~~ – A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, ~~2017~~2021 is presented in the table below:

($ in thousands)
Number of
Securities

Aggregate
Fair Value

Gross Unrealized
Loss
Foreign government 9
$ 55,292
$ 462
Mortgage-backed securities 6
5,975
150
Corporate 3
2,852
211
Asset-backed securities 3
1,331
115
Total 21
$ 65,450
$ 938

For ~~OTTI of~~ 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 and does not consider any of these securities to be OTTI.~~due.

~~Preferred Stocks~~ – At September 30, 2017, there was one preferred stock in an unrealized loss position, with a fair value of $24.0 million and a gross unrealized loss of $1.7 million. Based upon management’s view of the underlying value of the security, the Company does not consider the equity security to be OTTI. For the nine months ended September 30, 2017 and 2016, there was no OTTI for preferred stocks.

~~Common Stocks~~ ~~– At September 30, 2017, there were three~~common stocks in an unrealized loss position, with an aggregate fair value of $14.1 million and a gross unrealized loss of $3.5 million. Based upon management's view of the underlying value of these securities, the Company does not consider these equity securities to be OTTI. There was no OTTI of common stocks for the nine months ended September 30, 2017. For the nine months ended September 30, 2016, OTTI for common stocks was $18.1 million.

~~(16)~~(15)Fair Value Measurements

The Company’s fixed maturity ~~and equity securities classified as~~ available for sale securities, equity securities and its arbitrage trading account securities are carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.

Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available.

Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to ensure proper valuation.

If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant information.

For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate.

The following tables present the assets and liabilities measured at fair value on a recurring basis as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020 by level:

(In thousands) Total Level 1 Level 2 Level 3
September 30, 2017
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency $ 411,605
$ —
$ 411,605
$ —
State and municipal 4,413,169
—
4,413,169
—
Mortgage-backed securities 1,320,119
—
1,320,119
—
Asset-backed securities 2,388,618
—
2,388,444
174
Corporate 4,320,374
—
4,320,374
—
Foreign government 940,409
—
940,409
—
Total fixed maturity securities available for sale 13,794,294
—
13,794,120
174
Equity securities available for sale:
Common stocks 419,520
410,133
—
9,387
Preferred stocks 194,505
—
190,649
3,856
Total equity securities available for sale 614,025
410,133
190,649
13,243
Arbitrage trading account 488,238
275,818
212,420
—
Total $ 14,896,557
$ 685,951
$ 14,197,189
$ 13,417
Liabilities:
Trading account securities sold but not yet purchased $ 44,937
$ 44,851
$ 86
$ —

December 31, 2016
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency $ 513,802
$ —
$ 513,802
$ —
State and municipal 4,519,503
—
4,519,503
—
Mortgage-backed securities 1,189,645
—
1,189,645
—
Asset-backed securities 1,907,860
—
1,907,677
183
Corporate 4,068,527
—
4,068,527
—
Foreign government 902,805
—
902,805
—
Total fixed maturity securities available for sale 13,102,142
—
13,101,959
183
Equity securities available for sale:
Common stocks 445,858
429,647
7,457
8,754
Preferred stocks 223,342
—
219,680
3,662
Total equity securities available for sale 669,200
429,647
227,137
12,416
Arbitrage trading account 299,999
224,623
75,376
—
Total $ 14,071,341
$ 654,270
$ 13,404,472
$ 12,599
Liabilities:
Trading account securities sold but not yet purchased $ 51,179
$ 51,089
$ 90
$ —

~~There were no significant transfers between Levels 1 and 2 during the nine months ended~~ ~~September 30, 2017~~ ~~or during the year ended~~ ~~December 31, 2016~~.

The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, ~~2017~~ ~~and for the year ended~~ ~~December 31, 2016~~:

Gains (Losses) Included in:
(In thousands)
Beginning
Balance
Earnings (Losses)
Other
Comprehensive
Income (Loss)
Impairments Purchases (Sales) Paydowns / Maturities Transfers
Ending
Balance
In / (Out)
Nine months ended September 30, 2017:
Assets:
Fixed maturities securities available for sale:
Asset-backed securities $ 183
$ 2
$ 32
$ —
$ —
$ (43 ) $ —
$ —
$ 174
Corporate —
—
—
—
—
—
—
—
—
Total 183
2
32
—
—
(43 ) —
—
174
Equity securities available for sale:
Common stocks 8,754
—
633
—
—
—
—
—
9,387
Preferred stocks 3,662
19
—
—
175
—
—
—
3,856
Total 12,416
19
633
—
175
—
—
—
13,243
Arbitrage trading account —
8
—
—
—
(8 ) —
—
—
Total $ 12,599
$ 29
$ 665
$ —
$ 175
$ (51 ) $ —
$ —
$ 13,417

Year ended December 31, 2016:
Assets:
Fixed maturities securities available for sale:
Asset-backed securities $ 199
$ 3
$ 16
$ —
$ —
$ —
$ (35 ) $ —
$ 183
Corporate 154
177
—
—
��
(331 ) —
—
—
Total 353
180
16
—
—
(331 ) (35 ) —
183
Equity securities available for sale:
Common stocks 7,829
—
160
—
765
—
—
—
8,754
Preferred stocks 3,624
38
—
—
—
—
—
—
3,662
Total 11,453
38
160
—
765
—
—
—
12,416
Arbitrage trading account 176
(176 ) —
—
—
—
—
—
—
Total $ 11,982
$ 42
$ 176
$ —
$ 765
$ (331 ) $ (35 ) $ —
$ 12,599

~~During the nine months ended September 30, 2017~~2021 and for the year ended December 31, ~~2016,~~2020:

Gains (Losses) Included in:

For the nine months ended September 30, 2021, there were no t~~ransfers~~securities transferred into or out of Level 3. For the year ended December 31, 2020, a fixed maturity security was transferred from Level 2 into Level 3 as a result of observable valuation inputs no longer being available.

~~(17)~~(16) Reserves for Loss and Loss Expenses

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

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

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

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

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

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

(1) Claims occurring during the current year are net of loss reserve discounts of $16 million and $8 million for the nine months ended September 30, 2021 and 2020, respectively.

(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $13 million and $19 million for the nine months ended September 30, 2021 and 2020, respectively.

(3) For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was $5 million and $12 million for the nine months ended September 30, 2021 and 2020, respectively.

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

Most of the COVID-19-related claims reported to the Company to date involve certain short-tailed lines of business, including contingency and event cancellation, business interruption, and film production delay. The Company has also received COVID-19-related claims for longer-tailed casualty lines of business such as workers’ compensation and other liability; however, the estimated incurred loss impact for these reported claims are not material at this time. Given the continuing uncertainty regarding the pandemic's pervasiveness, the future impact that the pandemic may have on claim frequency and severity remains uncertain at this time.

The Company has estimated the potential COVID-19 impact to its contingency and event cancellation, workers’ compensation, and other lines of business under a number of possible scenarios; however, due to COVID-19’s continued evolving impact, there remains a high degree of uncertainty around the Company’s COVID-19 reserves. In ~~2017,~~addition, should the pandemic continue or worsen as a result of new COVID-19 variants or otherwise, governments in the jurisdictions where we operate may renew their efforts to expand policy coverage terms beyond the policy’s intended coverage. Accordingly, losses arising from these actions, and the other factors described above, could exceed the Company’s reserves established for those related policies.

the Reinsurance & Monoline Excess segment. Such $256 million of COVID-19-related losses included $219 million of reported losses and $37 million of IBNR. For the nine months ended September 30, 2021, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $46 million, of which $43 million relates to the Insurance segment and $3 million relates to the Reinsurance & Monoline Excess segment.

During the nine months ended September 30, 2021, favorable prior year development (net of additional and return premiums) of ~~$31~~$5 million included ~~$62~~$8 million of favorable development for the Insurance segment, partially offset by ~~$31~~$3 million of adverse development for the Reinsurance & Monoline Excess segment.

The overall favorable development for the Insurance segment was primarily attributable to ~~workers'~~favorable development on the 2020 accident year, partially offset by adverse development on the 2016 through 2019 accident years. The favorable development on the 2020 accident year was largely concentrated in the commercial auto liability and other liability lines of business including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in our budget and in our initial loss ratio selections. The Company also experienced significantly lower reported claim frequency in these lines in 2020 relative to historical averages, and lower reported incurred losses relative to our expectations. We believe that the lower claim frequency and lower reported incurred losses were caused by the impacts of the COVID-19 pandemic, for example, lockdowns, reduced driving and traffic, work from home, and court closures. However, due to the uncertainty regarding the ultimate impacts of the pandemic on accident year 2020 incurred losses, the Company elected not to react to these lower reported trends during 2020. As more information becomes available and the 2020 accident year continues to mature, during 2021 we have started to recognize favorable accident year 2020 development in response to the continuing favorable reported loss experience relative to our expectations. The adverse development on the 2016 through 2019 accident years is concentrated largely in the other liability line of business including commercial multi-peril liability, but is also seen to a lesser extent in commercial auto liability. The adverse development on these years is driven by a higher than expected number of large losses reported, and particularly impacted the directors and officers liability and excess and surplus lines casualty classes of business. We also believe that increased social inflation is contributing to the increased number of large losses.

The overall adverse development for the Reinsurance & Monoline Excess segment was driven by adverse development in the other liability and non-proportional reinsurance assumed liability lines of business, related primarily to accident years 2017 through 2019, partially offset by favorable development in excess workers’ compensation which was spread across many prior accident years. The adverse development was driven by higher than expected reported losses on excess of loss treaties written in the U.S. and U.K.

During the nine months ended September 30, 2020, favorable prior year development (net of additional and return premiums) of $12 million included $19 million of favorable development for the Insurance segment, partially offset by $7 million of adverse development for the Reinsurance & Monoline Excess segment.

The overall favorable development for the Insurance segment was primarily attributable to favorable development on workers’ compensation business, ~~(including excess workers' compensation).~~partially offset by adverse development on professional liability business. The favorable ~~workers'~~workers’ compensation development was spread across many prior accident years, including prior to ~~2008,~~2010, but was ~~most~~especially significant in accident ~~years 2014 and 2015.~~year 2019. The favorable ~~workers'~~workers’ compensation development reflects a continuation of the benign loss cost trends experienced during ~~2016,~~recent years, particularly the favorable claim frequency ~~trends (i.e., number~~trends. Our ongoing workers’ compensation claims management efforts, including active medical case management and use of networks and specialty vendors to control medical and pharmaceutical benefit costs, have also added to the favorable workers’ compensation prior year development. The adverse professional liability development was mainly concentrated in accident years 2016 through 2018 and was largely driven by higher than expected large losses being reported ~~claims per unit~~in the directors and officers and lawyers professional liability lines of ~~exposure).~~ business.

The adverse development for the Reinsurance & Monoline Excess segment was ~~due to reserve strengthening associated with claims impacted~~mainly driven by ~~the change in the Ogden discount rate~~non-proportional reinsurance assumed liability business written in the U.K., as well as adverse development in the U.S. facultative casualty excess of loss business. The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced by the U.K. Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury claims which we reinsured on an excess of loss basis in for accident years ~~2012~~2016 through ~~2016.~~2018, partially offset by favorable development on excess workers’ compensation business. The adverse development ~~on U.S. facultative casualty business related to construction-related risks in accident years 2008 and prior.~~

In 2016, favorable prior year development (net of additional and return premiums) of $42 million included $38 million for the Insurance segment and $4 million for the Reinsurance segment. The favorable development for the Insurance segment was ~~primarily attributable to workers' compensation business, partially offset~~driven by adverse development for commercial auto liability and medical and other professional liability. The favorable development for workers' compensation stems from accident years 2003 through 2015, but is concentrated in accident years 2014 and 2015; it reflects claims frequency trends (i.e.,a greater than expected number of reported ~~claims per unit of exposure) that continue to be better than we expected. The unfavorable development for commercial auto liability was driven by higher~~ large ~~loss activity than expected in accident years 2014 and 2015, and the~~losses.

unfavorable development for medical professional liability was primarily in accident years prior to 2013 and stemmed from a class of medical professional liability business that we discontinued writing in 2013.

~~(18)~~(17) Fair Value of Financial Instruments

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

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 ~~16 above.~~15. The fair value of loans receivable are estimated by using current institutional purchaser yield requirements for loans with similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input.

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


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

(In thousands)	2021		2020		2021		2020
Written premiums:
Direct	$	2,490,875	$	2,018,530	$	7,063,151	$	5,875,379
Assumed	296,623		244,015		870,295		750,784
Ceded	(462,360)		(383,229)		(1,346,089)		(1,161,183)
Total net premiums written	$	2,325,138	$	1,879,316	$	6,587,357	$	5,464,980

Earned premiums:
Direct	$	2,276,173	$	1,877,234	$	6,430,957	$	5,511,791
Assumed	273,808		237,815		792,515		699,025
Ceded	(468,963)		(366,128)		(1,320,874)		(1,093,563)
Total net premiums earned	$	2,081,018	$	1,748,921	$	5,902,598	$	5,117,253

Ceded losses and loss expenses incurred	$	318,283	$	209,706	$	872,186	$	677,761
Ceded commissions earned	$	113,523	$	89,104	$	322,037	$	255,742

The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and catastrophe losses. The Company also cedes premiums to state assigned risk plans and captive insurance companies. Estimated

amounts due from reinsurers are reported net of ~~reserves~~an allowance for ~~uncollectible reinsurance~~expected credit losses.

The following table presents the rollforward of ~~$1 million as of~~ the allowance for expected credit losses associated with due from reinsurers for the nine months ended September 30, ~~2017~~2021 and ~~December 31, 2016~~.2020:


(In thousands)	2021		2020
Allowance for expected credit losses, beginning of period	$	7,801	$	690
Cumulative effect adjustment resulting from changes in accounting principles	—		5,927
Provision for expected credit losses	(524)		1,124
Allowance for expected credit losses, end of period	$	7,277	$	7,741

The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the three months ended September 30, 2021 and 2020:


(In thousands)	2021		2020
Allowance for expected credit losses, beginning of period	$	7,283	$	7,175
Provision for expected credit losses	(6)		566
Allowance for expected credit losses, end of period	$	7,277	$	7,741

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.

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

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

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


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

(In thousands)	2021		2020		2021		2020
Leases:
Lease cost	$	11,741	$	11,016	$	34,434	$	33,130
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows	$	11,212	$	11,560	$	34,509	$	33,869
Right-of-use assets obtained in exchange for new lease liabilities	$	31,249	$	1,344	$	31,098	$	5,639


	As of September 30,
($ in thousands)	2021			2020
Right-of-use assets	$	170,729		$	172,473
Lease liabilities	$	207,636		$	211,808
Weighted-average remaining lease term	7.3 years			6.7 years
Weighted-average discount rate	4.96		%	5.93		%


(In thousands)	September 30, 2021
Contractual Maturities:
2021	$	11,387
2022	42,708
2023	41,574
2024	35,935
2025	26,941
Thereafter	86,940
Total undiscounted future minimum lease payments	245,485
Less: Discount impact	(37,849)
Total lease liability	$	207,636

The Company’s reportable segments include the following ~~two~~2 business segments, plus a corporate segment:

•Insurance - ~~primarily~~predominantly commercial insurance business, including excess and surplus lines, ~~and~~ admitted lines inand specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and ~~Australia; and~~

•Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States, the United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South ~~Africa.~~

Commencing with the first quarter of 2017, the Company reclassified two businesses from the Insurance Segment to the Reinsurance segment. Reclassifications have been made to the Company's 2016 financial information to conform with this presentation.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Income tax expense and benefits are calculated based upon the Company's overall effective tax rate.

Summary financial information about the Company's reporting segments is presented in the following tables. Income (loss) before income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.

Revenues
(In thousands)
Earned
Premiums

Investment
Income
Other Total (1)
Pre-Tax
Income
(Loss)

Net Income
(Loss) to Common Stockholders
Three months ended September 30, 2017
Insurance $ 1,433,729
$ 105,924
$ —
$ 1,539,653
$ 171,478
$ 123,240
Reinsurance 147,771
21,528
—
169,299
(57,643 ) (35,074 )
Corporate, other and eliminations (2) —
15,027
123,404
138,431
(71,681 ) (45,685 )
Net investment gains —
—
183,959
183,959
183,959
119,573
  Total $ 1,581,500
$ 142,479
$ 307,363
$ 2,031,342
$ 226,113
$ 162,054
Three months ended September 30, 2016
Insurance $ 1,423,635
$ 111,300
$ —
$ 1,534,935
$ 210,498
$ 140,730
Reinsurance 162,309
27,567
—
189,876
27,321
18,725
Corporate, other and eliminations (2) —
6,801
112,377
119,178
(81,942 ) (53,035 )
Net investment gains —
—
175,738
175,738
175,738
114,230
  Total $ 1,585,944
$ 145,668
$ 288,115
$ 2,019,727
$ 331,615
$ 220,650
Nine months ended September 30, 2017:
Insurance $ 4,262,485
320,552
$ —
$ 4,583,037
$ 557,605
$ 381,736
Reinsurance 457,759
67,798
—
525,557
(38,279 ) (20,801 )
Corporate, other and eliminations (2) —
38,251
326,203
364,454
(224,716 ) (146,324 )
Net investment gains —
—
276,760
276,760
276,760
179,894
  Total $ 4,720,244
$ 426,601
$ 602,963
$ 5,749,808
$ 571,370
$ 394,505
Nine months ended September 30, 2016:
Insurance $ 4,180,985
$ 304,904
$ —
$ 4,485,889
$ 586,651
$ 394,746
Reinsurance 492,087
77,119
—
569,206
79,215
54,885
Corporate, other and eliminations (2) —
22,827
415,224
438,051
(190,655 ) (123,610 )
Net investment gains —
—
189,394
189,394
189,394
123,106
  Total $ 4,673,072
$ 404,850
$ 604,618
$ 5,682,540
$ 664,605
$ 449,127

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

(2) Revenues for Insurance from foreign countries for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020 were ~~$166~~$220 million and ~~$187~~$183 million, respectively, and for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 were ~~$513~~$638 million and ~~$546~~$500 million, respectively. Revenues for Reinsurance & Monoline Excess from foreign countries for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020 were ~~$49~~$100 million and ~~$48~~$77 million, respectively, and for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 were ~~$150~~$278 million and ~~$153~~$212 million, respectively.

~~(2)~~(3) Corporate, other and eliminations represent corporate revenues and expenses that are not allocated to business segments.


(In thousands)	September 30, 2021		December 31, 2020
Insurance	$	23,745,201	$	21,702,328
Reinsurance & Monoline Excess	4,857,288		4,654,158
Corporate, other and eliminations	2,941,799		2,215,479
Consolidated	$	31,544,288	$	28,571,965

(In thousands) September 30, 2017 December 31, 2016
Insurance $ 19,136,776
$ 19,137,758
Reinsurance 3,243,610
2,524,338
Corporate, other and eliminations 1,955,690
1,687,980
Consolidated $ 24,336,076
$ 23,350,076

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

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

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

SAFE HARBOR STATEMENT

This is a “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year ~~2017~~2021 and beyond, are based upon the Company’s historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new ~~alternative~~ 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;~~amounts, including claims for cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing COVID-19 pandemic; 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 the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response, on our results and financial condition; foreign currency and political risks (including those associated with the United Kingdom's ~~expected~~ withdrawal from the European Union, or "Brexit") 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 ~~2015;~~2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; potential difficulties with technology and/or ~~data security;~~cyber security issues; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.

These risks and uncertainties could cause our actual results for the year ~~2017~~2021 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Our future financial performance is dependent upon factors discussed in our Annual Report on Form 10-K, elsewhere in this Form 10-Q and our other SEC filings. Forward-looking statements speak only as of the date on which they are made. Except to the extent required by applicable laws, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.


~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. 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 ~~business segments:~~segments of the property and casualty business: Insurance and ~~Reinsurance.~~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 legal staff 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 operating units to capitalize on various business opportunities. Over the years, the Company has formed numerous operating units 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 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 ~~statutory~~ capital ~~and surplus~~ 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. Returns available on fixed maturity investments ~~are~~have been at ~~historically~~ low ~~levels.~~levels for an extended period.

The Company also invests in equity securities, merger arbitrage securities, investment funds, ~~(including energy related 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.

~~During~~The COVID-19 pandemic, including the ~~third quarter~~related impact on the U.S. and global economies, has adversely affected our results of ~~2017, catastrophe losses were $119 million, including $107 million related to Hurricanes Harvey, Irma, and Maria and two earthquakes in Mexico.~~

~~Commencing with~~operations. For the ~~first quarter of 2017,~~nine months ended September 30, 2021, the Company ~~reclassified two businesses from~~recorded approximately $46 million for current accident year COVID-19-related losses, net of reinsurance. At the ~~Insurance segment~~same time, COVID-19 has led to reduced loss frequency in certain lines of business (which has begun a return to pre-pandemic levels as many economies and legal systems have reopened as a result of populations becoming vaccinated). The ultimate impact of COVID-19 on the economy and the Company’s results of operations, financial position and liquidity is not within the Company’s control and unclear due to, among other factors, uncertainty in connection with its claims, reserves and reinsurance recoverables.

The scope, duration and magnitude of the direct and indirect effects of COVID-19 continue to evolve in ways that are difficult or impossible to anticipate. While many of the potential impacts on the Company have receded as populations have begun to become vaccinated, new variants of the COVID-19 virus, including the “Delta” variant, and the slowing of vaccination rates among certain populations, continue to create risks to the ~~Reinsurance segment. Reclassifications have been made~~Company. As a result, the impact of COVID-19 on the Company’s results of operations for the nine months of 2021 is not necessarily indicative of its impact for the remainder of 2021 or beyond. Despite the effects of COVID-19 to date, the ~~Company's 2016~~Company’s financial ~~information to conform with this presentation.~~position and liquidity improved for the nine months ended September 30, 2021.

Critical Accounting Estimates

The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed premiums and ~~other-than-temporary impairments of~~allowance for expected credit losses on 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 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 reserves are well tested over time, some of 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 operating unit. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. 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 operating unit.

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

changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns. 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.

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.

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 ~~2016:~~2020:


(In thousands)	Frequency (+/-)
Severity (+/-)	1%		5%		10%
1%	$	89,102	$	268,193	$	492,056
5%	268,193		454,376		687,105
10%	492,056		687,105		930,917

(In thousands) Frequency (+/-)
Severity (+/-) 1% 5% 10%
1% $ 76,915
$ 231,511
$ 424,755
5% 231,511
392,229
593,126
10% 424,755
593,126
803,590

Our net reserves for losses and loss expenses of approximately ~~$10.0~~$12.5 billion as of September 30, ~~2017~~2021 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 ~~$1.8~~$2.7 billion, or ~~17%~~22%, of the Company’s net loss reserves as of September 30, ~~2017~~2021 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 because those~~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 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 ~~assumed~~ loss development ~~factors.~~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:


(In thousands)	September 30, 2021		December 31, 2020
Insurance	$	9,758,754	$	9,034,969
Reinsurance & Monoline Excess	2,722,375		2,585,424
Net reserves for losses and loss expenses	12,481,129		11,620,393
Ceded reserves for losses and loss expenses	2,438,447		2,164,037
Gross reserves for losses and loss expenses	$	14,919,576	$	13,784,430

(In thousands) September 30, 2017 December 31, 2016
Insurance $ 8,291,708
$ 7,913,074
Reinsurance 1,756,766
1,677,191
Net reserves for losses and loss expenses 10,048,474
9,590,265
Ceded reserves for losses and loss expenses 1,605,872
1,606,930
Gross reserves for losses and loss expenses $ 11,654,346
$ 11,197,195

Following is a summary of the Company’s net reserves for losses and loss expenses by major line of business:


(In thousands)	Reported Case Reserves		Incurred But Not Reported		Total		(In thousands)	Reported Case Reserves		Incurred But Not Reported		Total
September 30, 2017
September 30, 2021							September 30, 2021
Other liability	$	1,243,208	$	2,162,031	$	3,405,239	Other liability	$	1,692,098	$	3,079,753	$	4,771,851
Workers’ compensation (1)	1,530,194		1,246,084		2,776,278		Workers’ compensation (1)	1,001,955		918,438		1,920,393
Professional liability	299,418		584,606		884,024		Professional liability	450,592		1,049,223		1,499,815
Commercial automobile	341,998		267,136		609,134		Commercial automobile	473,821		416,273		890,094
Short-tail lines (2)	309,692		307,341		617,033		Short-tail lines (2)	317,863		358,738		676,601
Total Insurance	3,724,510		4,567,198		8,291,708		Total Insurance	3,936,329		5,822,425		9,758,754
Reinsurance (1)	909,690		847,076		1,756,766
Reinsurance & Monoline Excess (1) (3)							Reinsurance & Monoline Excess (1) (3)	1,490,320		1,232,055		2,722,375
Total	$	4,634,200	$	5,414,274	$	10,048,474	Total	$	5,426,649	$	7,054,480	$	12,481,129

December 31, 2016
December 31, 2020							December 31, 2020
Other liability	$	1,159,082	$	2,061,966	$	3,221,048	Other liability	$	1,534,514	$	2,864,760	$	4,399,274
Workers’ compensation (1)	1,453,318		1,228,774		2,682,092		Workers’ compensation (1)	977,035		873,072		1,850,107
Professional liability	264,188		542,539		806,727		Professional liability	414,104		875,163		1,289,267
Commercial automobile	344,143		252,978		597,121		Commercial automobile	442,975		398,688		841,663
Short-tail lines (2)	322,872		283,214		606,086		Short-tail lines (2)	295,313		359,345		654,658
Total Insurance	3,543,603		4,369,471		7,913,074		Total Insurance	3,663,941		5,371,028		9,034,969
Reinsurance (1)	823,516		853,675		1,677,191
Reinsurance & Monoline Excess (1) (3)							Reinsurance & Monoline Excess (1) (3)	1,442,099		1,143,325		2,585,424
Total	$	4,367,119	$	5,223,146	$	9,590,265	Total	$	5,106,040	$	6,514,353	$	11,620,393

___________

(1) Reserves for workers’ compensation and ~~reinsurance~~Reinsurance & Monoline Excess are net of an aggregate net discount of ~~$599~~$462 million and ~~$640~~

$483 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

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

(3) Reinsurance & Monoline Excess includes property and casualty reinsurance, as well as operations that solely retain risk on an excess basis.

The Company evaluates reserves for losses and loss adjustment 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 adjustment 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 the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 are as follows:


(In thousands)	2021		2020
Net increase in prior year loss reserves	$	(1,552)	$	(849)
Increase in prior year earned premiums	6,918		12,869
Net favorable prior year development	$	5,366	$	12,020

(In thousands) 2017 2016
Net decrease in prior year loss reserves $ 7,648
$ 23,518
Increase in prior year earned premiums 22,940
18,039
Net favorable prior year development $ 30,588
$ 41,557
The COVID-19 global pandemic has impacted, and may further impact, the Company’s results through its effect on claim frequency and severity. Loss cost trends have been impacted and may be further impacted by COVID-19-related claims in certain lines of business. Losses incurred from COVID-19-related claims have been offset, to a certain extent, by lower claim frequency in certain lines of our businesses; however, as the economy and legal systems have reopened, the benefit of lower claim frequency has begun to abate. Although as populations have continued to be vaccinated against the virus and the effects of the pandemic have receded in many jurisdictions, most particularly the United States, it remains too early to determine the ultimate net impact of COVID-19 on the Company. New variants of the COVID-19 virus, including the “Delta” variant, and the slowing of vaccination rates among certain populations continue to create risks with respect to loss costs and the potential for renewed impact of the other effects of COVID-19 associated with economic conditions, inflation, and social distancing and work from home rules.

As of September 30, 2021, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $256 million, of which $220 million relates to the Insurance segment and $36 million relates to the Reinsurance & Monoline Excess segment. Such $256 million of COVID-19-related losses included $219 million of reported losses and $37 million of IBNR. For the nine months ended September 30, 2021, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $46 million, of which $43 million relates to the Insurance segment and $3 million relates to the Reinsurance & Monoline Excess segment.

liability, but is also seen to a lesser extent in commercial auto liability. The adverse development on these years is driven by a higher than expected number of large losses reported, and particularly impacted the directors and officers liability and excess and surplus lines casualty classes of business. We also believe that increased social inflation is contributing to the increased number of large losses.

The adverse development for the Reinsurance & Monoline Excess segment was ~~due to reserve strengthening associated with claims impacted~~mainly driven by ~~the change in~~

~~the Ogden discount rate~~non-proportional reinsurance assumed liability business written in the U.K.~~, as well as adverse~~ for accident years 2016 through 2018, partially offset by favorable development on ~~the U.S. facultative casualty~~ excess ~~of loss~~workers’ compensation business. The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced by the U.K. Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury claims which we reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development ~~on U.S. facultative casualty business~~ was ~~due to construction-related risks in accident years 2008 and prior.~~

In 2016, favorable prior year development (net of additional and return premiums) of $42 million included $38 million for the Insurance segment and $4 million for the Reinsurance segment. The favorable development for the Insurance segment was primarily attributable to workers' compensation business, partially offsetdriven by adverse development for commercial auto liability and medical and other professional liability. The favorable development for workers' compensation stems from accident years 2003 through 2015, but is concentrated in accident years 2014 and 2015; it reflects claims frequency trends (i.e.,a greater than expected number of reported ~~claims per unit of exposure) that continue to be better than we expected. The unfavorable development for commercial auto liability was driven by higher~~ large loss activity than expected in accident years 2014 and 2015, and the unfavorable development for medical professional liability was primarily in accident years prior to 2013 and stemmed from a class of medical professional liability business that we discontinued writing in 2013.losses.

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was ~~$1,849~~$1,395 million and ~~$1,907~~$1,655 million at September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was ~~$599~~$462 million and ~~$640~~$483 million at September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. At September 30, ~~2017,~~2021, discount rates by year ranged from ~~2.0%~~0.7% to 6.5%, with a weighted average discount rate of ~~3.8%~~3.4%.

Substantially all of the workers’ compensation discount (97% of total discounted reserves at September 30, ~~2017)~~2021) relates to 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 September 30, ~~2017)~~2021), 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.

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 ~~$56~~$61 million at September 30, ~~2017~~2021 and ~~$68~~$44 million at December 31, ~~2016.~~2020. 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.

~~Other-Than-Temporary Impairments (OTTI) of~~

Allowance for Expected Credit Losses on Investments. ~~The cost of~~

Fixed Maturity Securities – For fixed maturity securities in an unrealized loss position where the Company intends to sell, or it is ~~adjusted where appropriate~~more likely than not that it will be required to ~~include a provision for decline~~sell the security before recovery in value, ~~which~~the amortized cost basis is ~~considered~~written down to ~~be other-than-temporary. An other-than-temporary decline is considered to occur in investments where there has been a sustained reduction in~~ fair value ~~and~~through net investment gains (losses). For fixed maturity securities in an unrealized loss position where the Company does not ~~expect~~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 (losses), limited by the amount that the fair value is less than the amortized cost basis. Effective January 1, 2020, the allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment gains (losses). The impairment related to ~~recover prior~~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 ~~time~~rating-level long-term average marginal default rates based on 10 years of ~~sale or maturity. Since equity securities do not have a contractual cash flow or maturity,~~historical data, beyond the ~~Company considers whether~~forecast period. For other inputs, the ~~price of an equity security is expected~~model in most cases reverts to ~~recover within a reasonable period of time.~~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 ~~and preferred stocks~~ 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.

~~Fixed Maturity Securities~~ – For securities that we intend to sell or, more likely than not, would be required to sell, a decline in value below amortized cost is considered to be OTTI. The amount of OTTI is equal to the difference between amortized cost and fair value at the balance sheet date. For securities that we do not intend to sell or expect to be required to sell, a decline in value below amortized cost is considered to be an OTTI if we do not expect to recover the entire amortized cost basis of a security (i.e., the present value of cash flows expected to be collected is less than the amortized cost basis of the security).

The portion of the decline in value considered to be a credit loss (i.e., the difference between the present value of cash flows expected to be collected and the amortized cost basis of the security) is recognized in earnings. The portion of the decline in value not considered to be a credit loss (i.e., the difference in the present value of cash flows expected to be collected and the fair value of the security) is recognized in other comprehensive income.

Impairment assessments for structured securities, including mortgage-backed securities and asset-backed securities, collateralized debt obligations and corporate debt, are generally evaluated based on the performance of the underlying collateral under various economic and default scenarios that may 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. If an OTTI determination is made, a discounted cash flow analysis is used to ascertain the amount of the credit impairment.

~~The following table provides a summary of fixed maturity securities in an unrealized loss position as of September 30, 2017:~~

($ in thousands)
Number of
Securities

Aggregate
Fair Value

Gross Unrealized
Loss
Unrealized loss less than 20% of amortized cost 592
$ 3,864,164
$ 40,565
Unrealized loss of 20% or greater of amortized cost:
Twelve months and longer 3
180
112
Total 595
$ 3,864,344
$ 40,677

A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, ~~2017~~2021 is presented in the table below:


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss		($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	9	$	55,292	$	462	Foreign government	31	$	119,141	$	32,048
Mortgage-backed securities	6	5,975		150
Corporate	3	2,852		211		Corporate	13	49,623		1,879
Asset-backed securities	3	1,331		115
State and municipal						State and municipal	2	39,693		335
Mortgage-backed						Mortgage-backed	4	249		16
Asset-backed						Asset-backed	1	94		3
Total	21	$	65,450	$	938	Total	51	$	208,800	$	34,281

As of September 30, 2021, the Company has recorded an allowance for expected credit losses on fixed maturity securities of $17 million. The Company has evaluated ~~its~~the remaining fixed maturity securities in an unrealized loss position and believes the unrealized ~~loss is~~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~~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 ~~does not consider any of these securities to be OTTI.~~

~~Preferred Stocks~~ ~~– At September 30, 2017, there was one preferred stock in an unrealized loss position, with a fair value of $24.0 million and a gross unrealized loss of $1.7 million. Based upon management's view~~forecasts that affect the expected collectability of the ~~underlying value~~amortized cost of the ~~security, the Company does not consider the equity security~~financial asset. The allowance for expected credit losses is presented as a reduction to ~~be OTTI. For the nine months ended September 30, 2017 and 2016, there was no OTTI for preferred stocks.~~

~~Common Stocks~~ – At September 30, 2017, there were three common stocks in an unrealized loss position, with an aggregate fair value of $14.1 million and a gross unrealized loss of $3.5 million. Based upon management’s viewamortized cost of the ~~underlying value of these securities,~~financial asset in the ~~Company does not consider these equity securities~~consolidated balance sheet and changes to ~~be OTTI. There was no OTTI of common stocks~~the estimate for ~~the nine months ended September 30, 2017. For the nine months ended September 30, 2016, OTTI for common stocks was $18.1 million.~~

~~Loans Receivable~~ – The Company monitors the performance of its loans receivable, including current market conditions for each loan and the ability to collect principal and interest. For loans where the Company determines it is probable that the contractual terms will not be met, an analysis is performed and a valuation reserve is established, if necessary, with a charge to earnings.expected credit losses are recognized through net investment gains (losses). Loans receivable are reported net of ~~a valuation reserve~~an allowance for expected credit losses of $3$2 million ~~at both~~and $5 million as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020, respectively.

The Company monitors the performance of its loans receivable and assesses the ability of each 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. Loans receivable with a potential for default are further assessed using discounted cash flow analysis and comparable cost and sales methodologies, if appropriate.

Fair Value Measurements.The Company’s fixed maturity ~~and equity securities~~ available for sale securities, equity securities, and its arbitrage trading account securities are carried at fair value. Fair value is defined as “the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. 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.

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 September 30, ~~2017:~~

2021:


($ in thousands)	Carrying Value		Percent of Total		($ in thousands)	Carrying Value		Percent of Total
Pricing source:					Pricing source:
Independent pricing services	$	13,570,457	98.4	%	Independent pricing services	$	15,680,757	98.0	%
Syndicate manager	43,196		0.3		Syndicate manager	49,600		0.3
Directly by the Company based on:					Directly by the Company based on:
Observable data	180,467		1.3		Observable data	269,004		1.7
Cash flow model	174		—

Total	$	13,794,294	100.0	%	Total	$	15,999,361	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 September 30, ~~2017,~~2021, 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.

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.

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 (underwriting expenses expressed as a percentage of net premiums earned) and ~~United States Generally Accepted Accounting Principles (“GAAP”)~~GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020. 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)	2021			2020
Insurance:
Gross premiums written	$	7,008,617		$	5,841,328
Net premiums written	5,741,229			4,754,791
Net premiums earned	5,151,253			4,481,092
Loss ratio	61.4		%	65.5		%
Expense ratio	28.5		%	30.6		%
GAAP combined ratio	89.9		%	96.1		%
Reinsurance & Monoline Excess:
Gross premiums written	$	924,829		$	784,835
Net premiums written	846,128			710,189
Net premiums earned	751,345			636,161
Loss ratio	61.5		%	66.5		%
Expense ratio	30.1		%	32.1		%
GAAP combined ratio	91.6		%	98.6		%
Consolidated:
Gross premiums written	$	7,933,446		$	6,626,163
Net premiums written	6,587,357			5,464,980
Net premiums earned	5,902,598			5,117,253
Loss ratio	61.4		%	65.6		%
Expense ratio	28.7		%	30.8		%
GAAP combined ratio	90.1		%	96.4		%

($ in thousands) 2017 2016
Insurance:
Gross premiums written $ 5,233,692
$ 5,184,033
Net premiums written 4,364,638
4,386,944
Net premiums earned 4,262,485
4,180,985
Loss ratio 61.7 % 61.1 %
Expense ratio 32.8 % 32.3 %
GAAP combined ratio 94.5 % 93.4 %
Reinsurance:
Gross premiums written $ 463,825
$ 579,878
Net premiums written 417,634
526,712
Net premiums earned 457,759
492,087
Loss ratio 86.1 % 60.5 %
Expense ratio 37.1 % 39.1 %
GAAP combined ratio 123.2 % 99.6 %
Consolidated:
Gross premiums written $ 5,697,517
$ 5,763,911
Net premiums written 4,782,272
4,913,656
Net premiums earned 4,720,244
4,673,072
Loss ratio 64.1 % 61.0 %
Expense ratio 33.2 % 33.1 %
GAAP combined ratio 97.3 % 94.1 %

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 nine months ended September 30, ~~2017~~2021 and ~~2016:~~2020:


(In thousands, except per share data)	2021		2020
Net income to common stockholders	$	728,060	$	218,520
Weighted average diluted shares	187,060		189,515
Net income per diluted share	$	3.89	$	1.15



Part I — FINANCIAL INFORMATION
			Item 1. Financial Statements
			Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
			Item 3. Quantitative and Qualitative Disclosure About Market Risk
			Item 4. Controls and Procedures
PART II — OTHER INFORMATION
			Item 1. Legal Proceedings
			Item 1A. Risk Factors
			Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
			Item 6. Exhibits
SIGNATURES
~~EX-10.1~~
~~EX-31.1~~ EX-10.1
~~EX-31.2~~ EX-31.1
~~EX-32.1~~ EX-31.2
EX-32.1
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


	September 30, 2017			December 31, 2016				September 30, 2021		December 31, 2020
	(Unaudited)			(Audited)				(Unaudited)		(Audited)
Assets							Assets
Investments:							Investments:
Fixed maturity securities	$	13,873,690		$	13,190,668
Fixed maturity securities (amortized cost of $15,809,028 and $13,755,858; allowance for expected credit losses of $17,283 and $2,580 at September 30, 2021 and December 31, 2020, respectively)							Fixed maturity securities (amortized cost of $15,809,028 and $13,755,858; allowance for expected credit losses of $17,283 and $2,580 at September 30, 2021 and December 31, 2020, respectively)	$	16,073,135	$	14,159,369
Real estate							Real estate	1,842,400		1,960,914
Investment funds	1,119,907			1,198,146			Investment funds	1,400,932		1,309,430
Real estate	1,391,274			1,184,981
Arbitrage trading account	488,238			299,999			Arbitrage trading account	860,339		341,473
Equity securities available for sale	614,025			669,200
Loans receivable	74,229			106,798
Equity securities							Equity securities	818,738		625,667
Loans receivable (net of allowance for expected credit losses of $1,737 and $5,437 at September 30, 2021 and December 31, 2020, respectively)							Loans receivable (net of allowance for expected credit losses of $1,737 and $5,437 at September 30, 2021 and December 31, 2020, respectively)	115,495		84,913

Total investments	17,561,363			16,649,792			Total investments	21,111,039		18,481,766
Cash and cash equivalents	773,997			795,285			Cash and cash equivalents	2,069,029		2,372,366
Premiums and fees receivable	1,818,836			1,701,854
Due from reinsurers	1,739,835			1,743,980
Premiums and fees receivable (net of allowance for expected credit losses of $23,676 and $22,883 at September 30, 2021 and December 31, 2020, respectively)							Premiums and fees receivable (net of allowance for expected credit losses of $23,676 and $22,883 at September 30, 2021 and December 31, 2020, respectively)	2,524,109		2,167,799
Due from reinsurers (net of allowance for expected credit losses of $7,277 and $7,801 at September 30, 2021 and December 31, 2020, respectively)							Due from reinsurers (net of allowance for expected credit losses of $7,277 and $7,801 at September 30, 2021 and December 31, 2020, respectively)	2,792,811		2,424,502
Deferred policy acquisition costs	534,091			537,890			Deferred policy acquisition costs	662,636		556,168
Prepaid reinsurance premiums	473,766			413,140			Prepaid reinsurance premiums	670,913		648,376
Trading account receivables from brokers and clearing organizations	297,208			484,593			Trading account receivables from brokers and clearing organizations	221,165		524,727
Property, furniture and equipment	399,924			349,432			Property, furniture and equipment	419,941		405,930
Goodwill	173,422			144,513			Goodwill	169,652		169,652
Accrued investment income	139,864			127,047			Accrued investment income	126,245		120,464
Current and deferred federal and foreign income taxes							Current and deferred federal and foreign income taxes	63,654		—

Other assets	423,770			402,550			Other assets	713,094		700,215
Total assets	$	24,336,076		$	23,350,076		Total assets	$	31,544,288	$	28,571,965

Liabilities and Equity							Liabilities and Equity
Liabilities:							Liabilities:
Reserves for losses and loss expenses	$	11,654,346		$	11,197,195		Reserves for losses and loss expenses	$	14,919,576	$	13,784,430
Unearned premiums	3,409,628			3,283,300			Unearned premiums	4,769,313		4,073,191
Due to reinsurers	228,539			213,128			Due to reinsurers	557,478		426,124
Trading account securities sold but not yet purchased	44,937			51,179			Trading account securities sold but not yet purchased	739		10,048
Federal and foreign income taxes	116,608			119,597

Current and deferred federal and foreign income taxes							Current and deferred federal and foreign income taxes	—		48,495
Other liabilities	923,369			916,318			Other liabilities	1,367,353		1,178,546
Senior notes and other debt	1,759,929			1,760,595			Senior notes and other debt	2,258,646		1,623,025
Subordinated debentures	728,071			727,630			Subordinated debentures	1,007,472		1,102,309
Total liabilities	18,865,427			18,268,942			Total liabilities	24,880,577		22,246,168
Equity:							Equity:
Preferred stock, par value $.10 per share:
Preferred stock, par value $0.10 per share:							Preferred stock, par value $0.10 per share:
Authorized 5,000,000 shares; issued and outstanding - none	—			—			Authorized 5,000,000 shares; issued and outstanding - none	—		—
Common stock, par value $.20 per share:
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 121,769,109 and 121,193,599 shares, respectively	47,024			47,024
Common stock, par value $0.20 per share:							Common stock, par value $0.20 per share:
Authorized 750,000,000 shares, issued and outstanding, net of treasury shares, 176,638,884 and 177,825,150 shares, respectively							Authorized 750,000,000 shares, issued and outstanding, net of treasury shares, 176,638,884 and 177,825,150 shares, respectively	70,535		70,535
Additional paid-in capital	1,040,575			1,037,446			Additional paid-in capital	1,018,300		1,012,483
Retained earnings	6,880,062			6,595,987			Retained earnings	8,920,334		8,348,381
Accumulated other comprehensive income	153,759			55,568
Treasury stock, at cost, 113,348,809 and 113,924,319 shares, respectively	(2,690,884		)	(2,688,817		)
Accumulated other comprehensive loss							Accumulated other comprehensive loss	(190,862)		(62,172)
Treasury stock, at cost, 176,037,616 and 174,851,350 shares, respectively							Treasury stock, at cost, 176,037,616 and 174,851,350 shares, respectively	(3,169,866)		(3,058,425)
Total stockholders’ equity	5,430,536			5,047,208			Total stockholders’ equity	6,648,441		6,310,802
Noncontrolling interests	40,113			33,926			Noncontrolling interests	15,270		14,995
Total equity	5,470,649			5,081,134			Total equity	6,663,711		6,325,797
Total liabilities and equity	$	24,336,076		$	23,350,076		Total liabilities and equity	$	31,544,288	$	28,571,965


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

	2021		2020		2021		2020
REVENUES:
Net premiums written	$	2,325,138	$	1,879,316	$	6,587,357	$	5,464,980
Change in net unearned premiums	(244,120)		(130,395)		(684,759)		(347,727)
Net premiums earned	2,081,018		1,748,921		5,902,598		5,117,253
Net investment income	179,851		142,650		506,615		402,844
Net investment gains (losses):
Net realized and unrealized gains (losses) on investments	17,187		(7,772)		89,407		(89,404)

Change in allowance for expected credit losses on investments	2,314		46,750		(11,003)		29,093
Net investment gains (losses)	19,501		38,978		78,404		(60,311)
Revenues from non-insurance businesses	120,374		87,495		316,927		256,966
Insurance service fees	21,467		21,635		69,531		67,256
Other income	2,072		140		3,163		2,446
Total revenues	2,424,283		2,039,819		6,877,238		5,786,454


OPERATING COSTS AND EXPENSES:
Losses and loss expenses	1,298,392		1,114,632		3,623,630		3,357,011
Other operating costs and expenses	643,045		593,969		1,907,020		1,753,142
Expenses from non-insurance businesses	115,465		85,036		308,453		256,032
Interest expense	35,100		39,768		109,846		114,874
Total operating costs and expenses	2,092,002		1,833,405		5,948,949		5,481,059
Income before income taxes	332,281		206,414		928,289		305,395
Income tax expense	(64,963)		(54,048)		(191,577)		(84,900)
Net income before noncontrolling interests	267,318		152,366		736,712		220,495
Noncontrolling interests	(6,021)		(688)		(8,652)		(1,975)
Net income to common stockholders	$	261,297	$	151,678	$	728,060	$	218,520

NET INCOME PER SHARE:
Basic	$	1.41	$	0.82	$	3.93	$	1.17
Diluted	$	1.40	$	0.81	$	3.89	$	1.15


	For the Nine Months							For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	Ended September 30,
	2017			2016				2021		2020		2021		2020
COMMON STOCK:							COMMON STOCK:
Beginning and end of period	$	47,024		$	47,024		Beginning and end of period	$	70,535	$	70,535	$	70,535	$	70,535
ADDITIONAL PAID-IN CAPITAL:							ADDITIONAL PAID-IN CAPITAL:
Beginning of period	$	1,037,446		$	1,005,455		Beginning of period	$	1,035,166	$	1,076,043	$	1,012,482	$	1,056,042
Restricted stock units issued	(27,047		)	(3,421		)	Restricted stock units issued	(28,741)		(23,387)		(28,668)		(26,773)
Restricted stock units expensed	30,176			25,431			Restricted stock units expensed	11,875		12,063		34,486		35,450

End of period	$	1,040,575		$	1,027,465		End of period	$	1,018,300	$	1,064,719	$	1,018,300	$	1,064,719
RETAINED EARNINGS:							RETAINED EARNINGS:
Beginning of period	$	6,595,987		$	6,178,070		Beginning of period	$	8,682,088	$	7,927,280	$	8,348,381	$	7,932,372
Cumulative effect adjustment resulting from changes in accounting principles							Cumulative effect adjustment resulting from changes in accounting principles	—		—		—		(30,514)
Net income to common stockholders	394,505			449,127			Net income to common stockholders	261,297		151,678		728,060		218,520
Dividends	(110,430		)	(107,661		)
Dividends ( $0.13, $0.12, $0.88 and $0.35 per share, respectively)							Dividends ( $0.13, $0.12, $0.88 and $0.35 per share, respectively)	(23,051)		(21,402)		(156,107)		(62,822)
End of period	$	6,880,062		$	6,519,536		End of period	$	8,920,334	$	8,057,556	$	8,920,334	$	8,057,556
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized investment gains:
ACCUMULATED OTHER COMPREHENSIVE LOSS:							ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment gains (losses):							Unrealized investment gains (losses):
Beginning of period	$	427,154		$	180,695		Beginning of period	$	222,855	$	209,210	$	289,714	$	124,514
Unrealized gains on securities not other-than-temporarily impaired	25,712			133,866
Unrealized gains on other-than-temporarily impaired securities	905			413
Cumulative effect adjustment resulting from changes in accounting principles							Cumulative effect adjustment resulting from changes in accounting principles	—		—		—		24,952
Change in unrealized (losses) gains on securities without an allowance for expected credit losses							Change in unrealized (losses) gains on securities without an allowance for expected credit losses	(35,707)		35,111		(112,852)		77,537
Change in unrealized gains on securities with an allowance for expected credit losses							Change in unrealized gains on securities with an allowance for expected credit losses	111		3,159		10,397		20,477
End of period	453,771			314,974			End of period	187,259		247,480		187,259		247,480
Currency translation adjustments:							Currency translation adjustments:
Beginning of period	(371,586		)	(247,393		)	Beginning of period	(345,299)		(458,560)		(351,886)		(381,813)
Net change in period	71,574			(77,389		)	Net change in period	(32,822)		40,194		(26,235)		(36,553)
End of period	(300,012		)	(324,782		)	End of period	(378,121)		(418,366)		(378,121)		(418,366)
Total accumulated other comprehensive income (loss)	$	153,759		$	(9,808	)

Total accumulated other comprehensive loss							Total accumulated other comprehensive loss	$	(190,862)	$	(170,886)	$	(190,862)	$	(170,886)
TREASURY STOCK:							TREASURY STOCK:
Beginning of period	$	(2,688,817	)	$	(2,563,605	)	Beginning of period	$	(3,087,069)	$	(3,023,392)	$	(3,058,425)	$	(2,726,711)
Stock exercised/vested	25,584			5,023			Stock exercised/vested	9,946		9,537		10,985		11,758
Stock repurchased	(28,378		)	(99,870		)	Stock repurchased	(92,743)		(12,957)		(122,426)		(311,859)
Stock incentive plans expensed	727			—

End of period	$	(2,690,884	)	$	(2,658,452	)	End of period	$	(3,169,866)	$	(3,026,812)	$	(3,169,866)	$	(3,026,812)
NONCONTROLLING INTERESTS:							NONCONTROLLING INTERESTS:
Beginning of period	$	33,926		$	32,962		Beginning of period	$	9,678	$	44,275	$	14,995	$	43,403
Contributions	3,646			2,474
Distributions							Distributions	(429)		(400)		(8,376)		(816)
Net income	2,560			689			Net income	6,021		688		8,652		1,975
Other comprehensive loss, net of tax	(19		)	(66		)
Other comprehensive income (loss), net of tax							Other comprehensive income (loss), net of tax	—		(3)		(1)		(2)
End of period	$	40,113		$	36,059		End of period	$	15,270	$	44,560	$	15,270	$	44,560


	For the Nine Months							For the Nine Months Ended September 30,
	Ended September 30,
	2017			2016				2021		2020
CASH FROM OPERATING ACTIVITIES:							CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders	$	394,505		$	449,127		Net income to common stockholders	$	728,060	$	218,520
Adjustments to reconcile net income to net cash from operating activities:							Adjustments to reconcile net income to net cash from operating activities:
Net investment gains	(276,760		)	(189,394		)
Net investment (gains) losses							Net investment (gains) losses	(78,404)		60,311
Depreciation and amortization	78,137			69,153			Depreciation and amortization	101,330		96,195
Noncontrolling interests	2,560			689			Noncontrolling interests	8,652		1,975
Investment funds	(51,907		)	(60,387		)	Investment funds	(169,538)		(1,260)
Stock incentive plans	31,883			27,033			Stock incentive plans	36,486		37,842
Change in:							Change in:
Arbitrage trading account	(2,835		)	(4,777		)	Arbitrage trading account	(224,613)		(40,487)
Premiums and fees receivable	(112,420		)	(92,372		)	Premiums and fees receivable	(365,092)		(175,636)
Reinsurance accounts	(42,319		)	(154,939		)	Reinsurance accounts	(255,126)		(204,396)
Deferred policy acquisition costs	4,483			(51,795		)	Deferred policy acquisition costs	(108,131)		(43,955)
Income taxes	(15,451		)	89,007			Income taxes	(81,574)		(56,955)

Reserves for losses and loss expenses	422,657			440,486			Reserves for losses and loss expenses	1,164,594		879,277
Unearned premiums	121,583			269,287			Unearned premiums	707,658		407,227
Other	(32,258		)	(64,608		)	Other	60,092		(41,713)
Net cash from operating activities	521,858			726,510			Net cash from operating activities	1,524,394		1,136,945
CASH USED IN INVESTING ACTIVITIES:
CASH (USED IN) FROM INVESTING ACTIVITIES:							CASH (USED IN) FROM INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities	3,081,619			1,074,630			Proceeds from sale of fixed maturity securities	1,631,849		3,525,926
Proceeds from sale of equity securities	137,062			123,187			Proceeds from sale of equity securities	100,366		66,850
Distributions from investment funds	265,371			5,630			Distributions from investment funds	124,892		83,935
Proceeds from maturities and prepayments of fixed maturity securities	2,860,678			2,189,365			Proceeds from maturities and prepayments of fixed maturity securities	4,672,562		2,876,642
Purchase of fixed maturity securities	(6,530,466		)	(4,280,457		)	Purchase of fixed maturity securities	(8,442,260)		(6,074,429)
Purchase of equity securities	(17,049		)	(127,303		)	Purchase of equity securities	(340,424)		(77,840)
Real estate purchased	(159,006		)	(207,829		)
Real estate sold (purchased)							Real estate sold (purchased)	182,998		(42,405)

Change in loans receivable	32,574			159,128			Change in loans receivable	(27,764)		1,202
Net additions to property, furniture and equipment	(74,268		)	(37,895		)
Net purchases of property, furniture and equipment							Net purchases of property, furniture and equipment	(53,558)		(31,047)
Change in balances due to security brokers	39,978			102,981			Change in balances due to security brokers	110,752		36,561
Cash received in connection with business disposition	—			250,216
Payment for business purchased net of cash aquired	(70,570		)	(53,524		)
Net cash used in investing activities	(434,077		)	(801,871		)
CASH (USED IN) FROM FINANCING ACTIVITIES:

Other							Other	14		65
Net cash (used in) from investing activities							Net cash (used in) from investing activities	(2,040,573)		365,460
CASH FROM FINANCING ACTIVITIES:							CASH FROM FINANCING ACTIVITIES:
Repayment of senior notes and other debt	(1,788		)	(70,567		)	Repayment of senior notes and other debt	(503,914)		(302,453)

Net proceeds from issuance of debt	—			386,848			Net proceeds from issuance of debt	1,032,404		747,399
Cash dividends to common stockholders	(93,371		)	(30,654		)	Cash dividends to common stockholders	(156,107)		(62,822)
Purchase of common treasury shares	(28,378		)	(99,870		)	Purchase of common treasury shares	(122,426)		(311,859)
Other, net	(3,835		)	(1,376		)	Other, net	(27,941)		(18,465)
Net cash (used in) from financing activities	(127,372		)	184,381
Net cash from financing activities							Net cash from financing activities	222,016		51,800
Net impact on cash due to change in foreign exchange rates	18,303			413			Net impact on cash due to change in foreign exchange rates	(9,174)		(6,468)
Net change in cash and cash equivalents	(21,288		)	109,433			Net change in cash and cash equivalents	(303,337)		1,547,737
Cash and cash equivalents at beginning of year	795,285			763,631
Cash and cash equivalents at beginning of period							Cash and cash equivalents at beginning of period	2,372,366		1,023,710
Cash and cash equivalents at end of period	$	773,997		$	873,064		Cash and cash equivalents at end of period	$	2,069,029	$	2,571,447


		~~(Registrant’s telephone number, including area code)~~None

	~~None~~
Former name, former address and former fiscal year, if changed since last report.


Item 1. Financial Statements ~~Item 1.~~	~~Financial Statements~~



	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2017			2016			2017			2016
REVENUES:
Net premiums written	$	1,571,183		$	1,607,365		$	4,782,272		$	4,913,656
Change in net unearned premiums	10,317			(21,421		)	(62,028		)	(240,584		)
Net premiums earned	1,581,500			1,585,944			4,720,244			4,673,072
Net investment income	142,479			145,668			426,601			404,850
Net realized investment gains	183,959			175,738			276,760			207,508
Other-than-temporary impairments	—			—			—			(18,114		)
Revenues from non-insurance businesses	89,786			80,242			225,033			305,787
Insurance service fees	33,612			32,135			100,475			109,437
Other income	6			—			695			—
Total revenues	2,031,342			2,019,727			5,749,808			5,682,540
OPERATING COSTS AND EXPENSES:
Losses and loss expenses	1,081,174			965,856			3,025,475			2,852,339
Other operating costs and expenses	600,822			606,348			1,821,155			1,770,450
Expenses from non-insurance businesses	86,412			78,865			221,389			291,127
Interest expense	36,821			37,043			110,419			104,019
Total operating costs and expenses	1,805,229			1,688,112			5,178,438			5,017,935
Income before income taxes	226,113			331,615			571,370			664,605
Income tax expense	(63,295		)	(110,952		)	(174,305		)	(214,789		)
Net income before noncontrolling interests	162,818			220,663			397,065			449,816
Noncontrolling interests	(764		)	(13		)	(2,560		)	(689		)
Net income to common stockholders	$	162,054		$	220,650		$	394,505		$	449,127

NET INCOME PER SHARE:
Basic	$	1.29		$	1.80		$	3.17		$	3.66
Diluted	$	1.26		$	1.72		$	3.05		$	3.50



(In thousands)	Amortized Cost		Gross Unrealized					Fair Value		Carrying Value
			Gains		Losses
September 30, 2017
Held to maturity:
State and municipal	$	65,372	$	15,212	$	—		$	80,584	$	65,372
Residential mortgage-backed	14,024		1,452		—			15,476		14,024
Total held to maturity	79,396		16,664		—			96,060		79,396
Available for sale:
U.S. government and government agency	402,901		10,828		(2,124		)	411,605		411,605
State and municipal:
Special revenue	2,730,653		80,144		(5,469		)	2,805,328		2,805,328
State general obligation	481,070		21,377		(565		)	501,882		501,882
Pre-refunded	282,488		21,052		(173		)	303,367		303,367
Corporate backed	380,351		11,775		(499		)	391,627		391,627
Local general obligation	384,930		26,566		(531		)	410,965		410,965
Total state and municipal	4,259,492		160,914		(7,237		)	4,413,169		4,413,169
Mortgage-backed securities:
Residential (1)	1,064,705		12,696		(8,860		)	1,068,541		1,068,541
Commercial	251,387		1,641		(1,450		)	251,578		251,578
Total mortgage-backed securities	1,316,092		14,337		(10,310		)	1,320,119		1,320,119
Asset-backed	2,389,187		9,836		(10,405		)	2,388,618		2,388,618
Corporate:
Industrial	2,569,673		70,054		(2,842		)	2,636,885		2,636,885
Financial	1,335,101		43,636		(4,716		)	1,374,021		1,374,021
Utilities	255,478		12,760		(907		)	267,331		267,331
Other	42,183		2		(48		)	42,137		42,137
Total corporate	4,202,435		126,452		(8,513		)	4,320,374		4,320,374
Foreign	909,608		32,889		(2,088		)	940,409		940,409
Total available for sale	13,479,715		355,256		(40,677		)	13,794,294		13,794,294
Total investments in fixed maturity securities	$	13,559,111	$	371,920	$	(40,677	)	$	13,890,354	$	13,873,690


~~(1)~~	~~Gross unrealized gains and (losses) for residential mortgage-backed securities include $85,907 and $(818,691) as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively, related to securities with the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income.~~


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

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



(In thousands)	Amortized Cost		Fair Value
Due in one year or less	$	745,010	$	750,479
Due after one year through five years	5,089,768		5,210,268
Due after five years through ten years	3,248,254		3,396,461
Due after ten years	3,145,963		3,197,551
Mortgage-backed securities	1,330,116		1,335,595
Total	$	13,559,111	$	13,890,354


(In thousands)	Cost		Gross Unrealized				Fair Value		Carrying Value
			Gains		Losses
September 30, 2021
Common stocks	$	549,015	$	73,087	$	(12,163)	$	609,939	$	609,939
Preferred stocks	221,887		8,702		(21,790)		208,799		208,799
Total	$	770,902	$	81,789	$	(33,953)	$	818,738	$	818,738

December 31, 2020
Common stocks	$	335,617	$	28,742	$	(14,178)	$	350,181	$	350,181
Preferred stocks	180,397		95,581		(492)		275,486		275,486
Total	$	516,014	$	124,323	$	(14,670)	$	625,667	$	625,667



	Carrying Value as of				Income (Loss) from Investment Funds
	September 30,		December 31,		For the Nine Months Ended September 30,
(In thousands)	2017		2016		2017			2016
Real estate	$	614,508	$	641,783	$	30,661		$	33,028
Energy	85,817		91,448		(12,763		)	7,174
Hedge equity	—		73,913		(1,164		)	791
Other funds	419,582		391,002		34,010			19,392
Total	$	1,119,907	$	1,198,146	$	50,744		$	60,385


	Carrying Value
	September 30,		December 31,
(In thousands)	2021		2020
Properties in operation	$	1,617,524	$	1,738,144
Properties under development	224,876		222,770
Total	$	1,842,400	$	1,960,914


Commission File Number			1-15202



Change in unrealized investment gains of available for sale securities:
Fixed maturity securities	$	(10,627	)	$	(45,388	)	$	84,214		$	169,933
Previously impaired fixed maturity securities	61			(1,406		)	905			413
Equity securities available for sale	(2,126		)	(28,517		)	(44,812		)	12,433
Investment funds	4,129			3,143			9,841			16,028
Total change in unrealized investment gains	(8,563		)	(72,168		)	50,148			198,807
Income tax benefit (expense)	423			24,493			(23,550		)	(64,594		)
Noncontrolling interests	5			57			19			66
After-tax change in unrealized investment gains of available for sale securities	$	(8,135	)	$	(47,618	)	$	26,617		$	134,279


(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2021
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	518,333	$	—	$	518,333	$	—
State and municipal	3,329,345		—		3,329,345		—
Mortgage-backed	973,337		—		973,337		—
Asset-backed	4,655,555		—		4,655,555		—
Corporate	5,424,064		—		5,424,064		—
Foreign government	1,098,727		—		1,098,727		—
Total fixed maturity securities available for sale	15,999,361		—		15,999,361		—
Equity securities:
Common stocks	609,939		600,672		—		9,267
Preferred stocks	208,799		—		199,466		9,333
Total equity securities	818,738		600,672		199,466		18,600
Arbitrage trading account	860,339		837,237		23,102		—
Total	$	17,678,438	$	1,437,909	$	16,221,929	$	18,600
Liabilities:
Trading account securities sold but not yet purchased	$	739	$	739	$	—	$	—


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



	Gains (Losses) Included in:
(In thousands)	Beginning Balance		Earnings (Losses)			Other Comprehensive Income (Loss)		Impairments		Purchases		(Sales)			Paydowns / Maturities			Transfers		Ending Balance
																		In / (Out)
Nine months ended September 30, 2017:
Assets:
Fixed maturities securities available for sale:
Asset-backed securities	$	183	$	2		$	32	$	—	$	—	$	(43	)	$	—		$	—	$	174
Corporate	—		—			—		—		—		—			—			—		—
Total	183		2			32		—		—		(43		)	—			—		174
Equity securities available for sale:
Common stocks	8,754		—			633		—		—		—			—			—		9,387
Preferred stocks	3,662		19			—		—		175		—			—			—		3,856
Total	12,416		19			633		—		175		—			—			—		13,243
Arbitrage trading account	—		8			—		—		—		(8		)	—			—		—
Total	$	12,599	$	29		$	665	$	—	$	175	$	(51	)	$	—		$	—	$	13,417


Year ended December 31, 2016:
Assets:
Fixed maturities securities available for sale:
Asset-backed securities	$	199	$	3		$	16	$	—	$	—	$	—		$	(35	)	$	—	$	183
Corporate	154		177			—		—		��		(331		)	—			—		—
Total	353		180			16		—		—		(331		)	(35		)	—		183
Equity securities available for sale:
Common stocks	7,829		—			160		—		765		—			—			—		8,754
Preferred stocks	3,624		38			—		—		—		—			—			—		3,662
Total	11,453		38			160		—		765		—			—			—		12,416
Arbitrage trading account	176		(176		)	—		—		—		—			—			—		—
Total	$	11,982	$	42		$	176	$	—	$	765	$	(331	)	$	(35	)	$	—	$	12,599


~~(1)~~	~~Claims occurring during the current year are net of loss reserve discounts of $16,787,000 and $12,085,000 for the nine months ended September 30, 2017 and 2016,~~ (1) Claims occurring during the current year are net of loss reserve discounts of $16 million and $8 million for the nine months ended September 30, 2021 and 2020, respectively.


~~(2)~~	The decrease in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $30,609,000 and $45,813,000 for the nine months ended September 30, 2017 and 2016, respectively.


~~(3)~~	For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was $31 million and $42 million for the nine months ended September 30, 2017 and 2016, respectively.


($ in thousands)	Units	Fair Value

2021	847,119	$	62,981
2020	953,519	$	59,683



	Revenues
(In thousands)	Earned Premiums		Investment Income		Other		Total (1)		Pre-Tax Income (Loss)			Net Income (Loss) to Common Stockholders
Three months ended September 30, 2017
Insurance	$	1,433,729	$	105,924	$	—	$	1,539,653	$	171,478		$	123,240
Reinsurance	147,771		21,528		—		169,299		(57,643		)	(35,074		)
Corporate, other and eliminations (2)	—		15,027		123,404		138,431		(71,681		)	(45,685		)
Net investment gains	—		—		183,959		183,959		183,959			119,573
Total	$	1,581,500	$	142,479	$	307,363	$	2,031,342	$	226,113		$	162,054
Three months ended September 30, 2016
Insurance	$	1,423,635	$	111,300	$	—	$	1,534,935	$	210,498		$	140,730
Reinsurance	162,309		27,567		—		189,876		27,321			18,725
Corporate, other and eliminations (2)	—		6,801		112,377		119,178		(81,942		)	(53,035		)
Net investment gains	—		—		175,738		175,738		175,738			114,230
Total	$	1,585,944	$	145,668	$	288,115	$	2,019,727	$	331,615		$	220,650
Nine months ended September 30, 2017:
Insurance	$	4,262,485	320,552		$	—	$	4,583,037	$	557,605		$	381,736
Reinsurance	457,759		67,798		—		525,557		(38,279		)	(20,801		)
Corporate, other and eliminations (2)	—		38,251		326,203		364,454		(224,716		)	(146,324		)
Net investment gains	—		—		276,760		276,760		276,760			179,894
Total	$	4,720,244	$	426,601	$	602,963	$	5,749,808	$	571,370		$	394,505
Nine months ended September 30, 2016:
Insurance	$	4,180,985	$	304,904	$	—	$	4,485,889	$	586,651		$	394,746
Reinsurance	492,087		77,119		—		569,206		79,215			54,885
Corporate, other and eliminations (2)	—		22,827		415,224		438,051		(190,655		)	(123,610		)
Net investment gains	—		—		189,394		189,394		189,394			123,106
Total	$	4,673,072	$	404,850	$	604,618	$	5,682,540	$	664,605		$	449,127


	Revenues
(In thousands)	Earned Premiums (1)		Investment Income		Other		Total (2)		Pre-Tax Income (Loss)		Net Income (Loss) to Common Stockholders
Three months ended September 30, 2021
Insurance	$	1,819,071	$	118,770	$	7,289	$	1,945,130	$	314,000	$	252,333
Reinsurance & Monoline Excess	261,947		48,504		—		310,451		52,742		41,964
Corporate, other and eliminations (3)	—		12,577		136,624		149,201		(53,962)		(48,235)
Net investment gains	—		—		19,501		19,501		19,501		15,235
Total	$	2,081,018	$	179,851	$	163,414	$	2,424,283	$	332,281	$	261,297
Three months ended September 30, 2020
Insurance	$	1,531,093	$	87,828	$	9,463	$	1,628,384	$	178,971	$	130,266
Reinsurance & Monoline Excess	217,828		40,306		—		258,134		61,532		49,070
Corporate, other and eliminations (3)	—		14,516		99,807		114,323		(73,067)		(57,781)
Net investment gains	—		—		38,978		38,978		38,978		30,123
Total	$	1,748,921	$	142,650	$	148,248	$	2,039,819	$	206,414	$	151,678
Nine months ended September 30, 2021
Insurance	$	5,151,253	$	340,710	$	23,780	$	5,515,743	$	862,399	$	681,354
Reinsurance & Monoline Excess	751,345		133,092		—		884,437		196,185		155,770
Corporate, other and eliminations (3)	—		32,813		365,841		398,654		(208,699)		(172,051)
Net investment gains	—		—		78,404		78,404		78,404		62,987
Total	$	5,902,598	$	506,615	$	468,025	$	6,877,238	$	928,289	$	728,060
Nine months ended September 30, 2020
Insurance	$	4,481,092	$	255,392	$	25,953	$	4,762,437	$	431,464	$	315,733
Reinsurance & Monoline Excess	636,161		101,477		—		737,638		110,611		88,947
Corporate, other and eliminations (3)	—		45,975		300,715		346,690		(176,369)		(139,471)
Net investment losses	—		—		(60,311)		(60,311)		(60,311)		(46,689)
Total	$	5,117,253	$	402,844	$	266,357	$	5,786,454	$	305,395	$	218,520


	Amount				Average Annualized Yield
($ in thousands)	2021		2020		2021		2020
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	284,704	$	330,941	2.2	%	2.9	%
Investment funds	169,538		1,260		16.5		0.1
Arbitrage trading account	30,176		51,985		6.5		12.4
Equity securities	21,854		6,194		5.0		2.4
Real estate	5,517		18,807		0.4		1.2
Gross investment income	511,789		409,187		3.1		2.8
Investment expenses	(5,174)		(6,343)		—		—
Total	$	506,615	$	402,844	3.1	%	2.7	%



(In thousands)	Carrying Value
Argentina	$	259,720
Australia	217,397
Canada	175,816
United Kingdom	84,894
Brazil	53,547
Germany	48,794
Supranational (1)	40,591
Singapore	25,326
Norway	9,930
Mexico	9,490
Colombia	7,696
Uruguay	7,208
Total	$	940,409


	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



July 2021	50,985	$	73.02	50,985	6,218,674
August 2021	496,171	$	72.16	496,171	5,722,503
September 2021	740,400	$	71.73	740,400	4,982,103


Number
(10.1)		Form of 2021 Performance Unit Award Agreement under the W. R. Berkley Corporation 2019 Long-Term Incentive Plan.


~~Number~~


(~~10.1~~31.1)		~~Form of 2017 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive Plan~~

(~~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.



		W. R. BERKLEY CORPORATION
Date:	November ~~8, 2017~~4, 2021	/s/ W. Robert Berkley, Jr.
		W. Robert Berkley, Jr.
		President and Chief Executive Officer

Date:	November ~~8, 2017~~4, 2021	/s/ Richard M. Baio
		Richard M. Baio
		~~Senior~~Executive Vice President - Chief Financial Officer ~~and Treasurer~~