

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

For the Quarterly Period Ended ~~September~~June 30, ~~2017~~2022



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

For the Transition Period from to .

~~Commission File Number~~


Commission File Number			1-15202

W. R. BERKLEY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

22-1867895

(State or other jurisdiction of

~~(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)


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

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

Securities registered pursuant to Section 12(b) of the Act:


Title	Trading Symbol	Name

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


5.700% Subordinated Debentures due 2058	WRB-PE	New York Stock Exchange
5.100% Subordinated Debentures due 2059	WRB-PF	New York Stock Exchange
4.250% Subordinated Debentures due 2060	WRB-PG	New York Stock Exchange
4.125% Subordinated Debentures due 2061	WRB-PH	New York Stock Exchange

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~~

July 27, 2022: 265,272,980

TABLE OF CONTENTS



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-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

Part I — FINANCIAL INFORMATION


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

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	September 30, 2017			December 31, 2016				June 30, 2022		December 31, 2021
	(Unaudited)			(Audited)				(Unaudited)		(Audited)
Assets							Assets
Investments:							Investments:
Fixed maturity securities	$	13,873,690		$	13,190,668
Fixed maturity securities (amortized cost of $17,697,420 and $16,471,304; allowance for expected credit losses of $33,405 and $22,625 at June 30, 2022 and December 31, 2021, respectively)							Fixed maturity securities (amortized cost of $17,697,420 and $16,471,304; allowance for expected credit losses of $33,405 and $22,625 at June 30, 2022 and December 31, 2021, respectively)	$	16,851,514	$	16,602,673
Investment funds	1,119,907			1,198,146			Investment funds	1,702,270		1,480,612
Real estate	1,391,274			1,184,981			Real estate	1,304,094		1,852,508
Equity securities							Equity securities	1,155,326		941,243
Arbitrage trading account	488,238			299,999			Arbitrage trading account	1,142,003		1,179,606
Equity securities available for sale	614,025			669,200
Loans receivable	74,229			106,798
Loans receivable (net of allowance for expected credit losses of $2,175 and $1,718 at June 30, 2022 and December 31, 2021, respectively)							Loans receivable (net of allowance for expected credit losses of $2,175 and $1,718 at June 30, 2022 and December 31, 2021, respectively)	113,483		115,172

Total investments	17,561,363			16,649,792			Total investments	22,268,690		22,171,814
Cash and cash equivalents	773,997			795,285			Cash and cash equivalents	1,316,603		1,568,843
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 $30,557 and $25,218 at June 30, 2022 and December 31, 2021, respectively)							Premiums and fees receivable (net of allowance for expected credit losses of $30,557 and $25,218 at June 30, 2022 and December 31, 2021, respectively)	2,799,805		2,522,972
Due from reinsurers (net of allowance for expected credit losses of $7,744 and $7,713 at June 30, 2022 and December 31, 2021, respectively)							Due from reinsurers (net of allowance for expected credit losses of $7,744 and $7,713 at June 30, 2022 and December 31, 2021, respectively)	3,046,754		2,923,026
Deferred policy acquisition costs	534,091			537,890			Deferred policy acquisition costs	753,185		676,145
Prepaid reinsurance premiums	473,766			413,140			Prepaid reinsurance premiums	694,888		676,915
Trading account receivables from brokers and clearing organizations	297,208			484,593			Trading account receivables from brokers and clearing organizations	9,937		—
Property, furniture and equipment	399,924			349,432			Property, furniture and equipment	415,446		419,883
Goodwill	173,422			144,513			Goodwill	169,652		169,652
Accrued investment income	139,864			127,047			Accrued investment income	133,014		122,938
Current and deferred federal and foreign income taxes							Current and deferred federal and foreign income taxes	296,943		42,457

Other assets	423,770			402,550			Other assets	787,530		753,231
Total assets	$	24,336,076		$	23,350,076		Total assets	$	32,692,447	$	32,047,876

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	$	16,145,821	$	15,390,888
Unearned premiums	3,409,628			3,283,300			Unearned premiums	5,249,543		4,847,160
Due to reinsurers	228,539			213,128			Due to reinsurers	541,689		514,980
Trading account securities sold but not yet purchased	44,937			51,179			Trading account securities sold but not yet purchased	68		1,169
Federal and foreign income taxes	116,608			119,597
Trading account payable to brokers and clearing organizations							Trading account payable to brokers and clearing organizations	—		53,636

Other liabilities	923,369			916,318			Other liabilities	1,378,169		1,305,245
Senior notes and other debt	1,759,929			1,760,595			Senior notes and other debt	1,832,273		2,259,416
Subordinated debentures	728,071			727,630			Subordinated debentures	1,008,011		1,007,652
Total liabilities	18,865,427			18,268,942			Total liabilities	26,155,574		25,380,146
Equity:							Equity:
Preferred stock, par value $.10 per share:
Authorized 5,000,000 shares; issued and outstanding - none	—			—
Common stock, par value $.20 per share:
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 121,769,109 and 121,193,599 shares, respectively	47,024			47,024
Preferred stock, par value $0.10 per share:							Preferred stock, par value $0.10 per share:
Authorized 5,000,000 shares; issued and outstanding - NaN							Authorized 5,000,000 shares; issued and outstanding - NaN	—		—
Common stock, par value $0.20 per share:							Common stock, par value $0.20 per share:
Authorized 1,250,000,000 shares and 750,000,000 shares, respectively; issued and outstanding, net of treasury shares, 265,272,980 and 265,170,882 shares, respectively							Authorized 1,250,000,000 shares and 750,000,000 shares, respectively; issued and outstanding, net of treasury shares, 265,272,980 and 265,170,882 shares, respectively	105,803		105,803
Additional paid-in capital	1,040,575			1,037,446			Additional paid-in capital	1,001,093		981,104
Retained earnings	6,880,062			6,595,987			Retained earnings	9,602,948		9,015,135
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	(1,029,630)		(281,955)
Treasury stock, at cost, 263,741,648 and 263,843,868 shares, respectively							Treasury stock, at cost, 263,741,648 and 263,843,868 shares, respectively	(3,165,729)		(3,167,076)
Total stockholders’ equity	5,430,536			5,047,208			Total stockholders’ equity	6,514,485		6,653,011
Noncontrolling interests	40,113			33,926			Noncontrolling interests	22,388		14,719
Total equity	5,470,649			5,081,134			Total equity	6,536,873		6,667,730
Total liabilities and equity	$	24,336,076		$	23,350,076		Total liabilities and equity	$	32,692,447	$	32,047,876

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

	2022		2021		2022		2021
REVENUES:
Net premiums written	$	2,585,635	$	2,212,181	$	4,998,889	$	4,262,219
Change in net unearned premiums	(228,477)		(240,557)		(392,645)		(440,639)
Net premiums earned	2,357,158		1,971,624		4,606,244		3,821,580
Net investment income	171,574		168,187		345,086		326,764
Net investment (losses) gains:
Net realized and unrealized (losses) gains on investments	(163,935)		20,461		205,947		72,219

Change in allowance for expected credit losses on investments	(7,620)		3,603		(11,237)		(13,316)
Net investment (losses) gains	(171,555)		24,064		194,710		58,903
Revenues from non-insurance businesses	128,421		109,122		226,197		196,552
Insurance service fees	26,393		22,256		54,344		48,064
Other income	896		833		1,716		1,092
Total revenues	2,512,887		2,296,086		5,428,297		4,452,955


OPERATING COSTS AND EXPENSES:
Losses and loss expenses	1,435,817		1,203,647		2,775,069		2,325,238
Other operating costs and expenses	699,819		647,705		1,413,718		1,263,973
Expenses from non-insurance businesses	122,966		106,698		217,822		192,989
Interest expense	31,723		38,096		66,693		74,747
Total operating costs and expenses	2,290,325		1,996,146		4,473,302		3,856,947
Income before income taxes	222,562		299,940		954,995		596,008
Income tax expense	(43,095)		(62,262)		(182,499)		(126,614)
Net income before noncontrolling interests	179,467		237,678		772,496		469,394
Noncontrolling interests	(145)		(440)		(2,536)		(2,631)
Net income to common stockholders	$	179,322	$	237,238	$	769,960	$	466,763

NET INCOME PER SHARE:
Basic	$	0.65	$	0.85	$	2.78	$	1.68
Diluted	$	0.64	$	0.85	$	2.76	$	1.66

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.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(In thousands)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

	2022		2021		2022		2021
Net income before noncontrolling interests	$	179,467	$	237,678	$	772,496	$	469,394
Other comprehensive (loss) income:
Change in unrealized currency translation adjustments	(43,393)		2,537		12,879		6,587
Change in unrealized investment (losses) gains, net of taxes	(337,008)		23,272		(760,553)		(66,858)

Other comprehensive (loss) income	(380,401)		25,809		(747,674)		(60,271)
Comprehensive (loss) income	(200,934)		263,487		24,822		409,123
Noncontrolling interests	(145)		(439)		(2,535)		(2,630)
Comprehensive (loss) income to common stockholders	$	(201,079)	$	263,048	$	22,287	$	406,493

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

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


	For the Nine Months							For the Three Months Ended June 30,				For the Six Months Ended June 30,
	Ended September 30,
	2017			2016				2022		2021		2022		2021
COMMON STOCK:							COMMON STOCK:
Beginning and end of period	$	47,024		$	47,024		Beginning and end of period	$	105,803	$	105,803	$	105,803	$	105,803
ADDITIONAL PAID-IN CAPITAL:							ADDITIONAL PAID-IN CAPITAL:
Beginning of period	$	1,037,446		$	1,005,455		Beginning of period	$	992,012	$	988,288	$	981,104	$	977,215
Restricted stock units issued	(27,047		)	(3,421		)	Restricted stock units issued	(1,840)		597		(2,370)		72
Restricted stock units expensed	30,176			25,431			Restricted stock units expensed	10,921		11,013		22,359		22,611

End of period	$	1,040,575		$	1,027,465		End of period	$	1,001,093	$	999,898	$	1,001,093	$	999,898
RETAINED EARNINGS:							RETAINED EARNINGS:
Beginning of period	$	6,595,987		$	6,178,070		Beginning of period	$	9,582,790	$	8,556,621	$	9,015,135	$	8,348,381

Net income to common stockholders	394,505			449,127			Net income to common stockholders	179,322		237,238		769,960		466,763
Dividends	(110,430		)	(107,661		)
Dividends ($0.60, $0.42, $0.69 and $0.50 per share, respectively)							Dividends ($0.60, $0.42, $0.69 and $0.50 per share, respectively)	(159,164)		(111,771)		(182,147)		(133,056)
End of period	$	6,880,062		$	6,519,536		End of period	$	9,602,948	$	8,682,088	$	9,602,948	$	8,682,088
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized investment gains:
ACCUMULATED OTHER COMPREHENSIVE LOSS:							ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment (loss) gains:							Unrealized investment (loss) gains:
Beginning of period	$	427,154		$	180,695		Beginning of period	$	(332,646)	$	199,584	$	90,900	$	289,714
Unrealized gains on securities not other-than-temporarily impaired	25,712			133,866
Unrealized gains on other-than-temporarily impaired securities	905			413

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	(320,130)		23,340		(743,969)		(77,145)
Change in unrealized (losses) gains on securities with an allowance for expected credit losses							Change in unrealized (losses) gains on securities with an allowance for expected credit losses	(16,878)		(69)		(16,585)		10,286
End of period	453,771			314,974			End of period	(669,654)		222,855		(669,654)		222,855
Currency translation adjustments:							Currency translation adjustments:
Beginning of period	(371,586		)	(247,393		)	Beginning of period	(316,583)		(347,836)		(372,855)		(351,886)
Net change in period	71,574			(77,389		)	Net change in period	(43,393)		2,537		12,879		6,587
End of period	(300,012		)	(324,782		)	End of period	(359,976)		(345,299)		(359,976)		(345,299)
Total accumulated other comprehensive income (loss)	$	153,759		$	(9,808	)

Total accumulated other comprehensive loss							Total accumulated other comprehensive loss	$	(1,029,630)	$	(122,444)	$	(1,029,630)	$	(122,444)
TREASURY STOCK:							TREASURY STOCK:
Beginning of period	$	(2,688,817	)	$	(2,563,605	)	Beginning of period	$	(3,166,873)	$	(3,087,860)	$	(3,167,076)	$	(3,058,425)
Stock exercised/vested	25,584			5,023			Stock exercised/vested	1,144		791		1,347		1,039
Stock repurchased	(28,378		)	(99,870		)	Stock repurchased	—		—		—		(29,683)
Stock incentive plans expensed	727			—

End of period	$	(2,690,884	)	$	(2,658,452	)	End of period	$	(3,165,729)	$	(3,087,069)	$	(3,165,729)	$	(3,087,069)
NONCONTROLLING INTERESTS:							NONCONTROLLING INTERESTS:
Beginning of period	$	33,926		$	32,962		Beginning of period	$	23,296	$	15,684	$	14,719	$	14,995
Contributions	3,646			2,474
(Contributions) distributions							(Contributions) distributions	(1,053)		(6,445)		5,134		(7,947)
Net income	2,560			689			Net income	145		440		2,536		2,631
Other comprehensive loss, net of tax	(19		)	(66		)	Other comprehensive loss, net of tax	—		(1)		(1)		(1)
End of period	$	40,113		$	36,059		End of period	$	22,388	$	9,678	$	22,388	$	9,678

See accompanying notes to interim consolidated financial statements.

W. R. BERKLEY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	For the Nine Months							For the Six Months Ended June 30,
	Ended September 30,
	2017			2016				2022		2021
CASH FROM OPERATING ACTIVITIES:							CASH FROM OPERATING ACTIVITIES:
Net income to common stockholders	$	394,505		$	449,127		Net income to common stockholders	$	769,960	$	466,763
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	(194,710)		(58,903)
Depreciation and amortization	78,137			69,153			Depreciation and amortization	37,238		70,597
Noncontrolling interests	2,560			689			Noncontrolling interests	2,536		2,631
Investment funds	(51,907		)	(60,387		)	Investment funds	(85,874)		(100,246)
Stock incentive plans	31,883			27,033			Stock incentive plans	24,158		23,122
Change in:							Change in:
Arbitrage trading account	(2,835		)	(4,777		)	Arbitrage trading account	(27,071)		(139,520)
Premiums and fees receivable	(112,420		)	(92,372		)	Premiums and fees receivable	(284,092)		(321,718)
Reinsurance accounts	(42,319		)	(154,939		)	Reinsurance accounts	(111,350)		(178,442)
Deferred policy acquisition costs	4,483			(51,795		)	Deferred policy acquisition costs	(77,561)		(72,125)
Income taxes	(15,451		)	89,007			Income taxes	(56,725)		(71,205)

Reserves for losses and loss expenses	422,657			440,486			Reserves for losses and loss expenses	788,211		705,454
Unearned premiums	121,583			269,287			Unearned premiums	409,450		473,395
Other	(32,258		)	(64,608		)	Other	(188,517)		(103,994)
Net cash from operating activities	521,858			726,510			Net cash from operating activities	1,005,653		695,809
CASH USED IN INVESTING ACTIVITIES:							CASH USED IN INVESTING ACTIVITIES:
Proceeds from sale of fixed maturity securities	3,081,619			1,074,630			Proceeds from sale of fixed maturity securities	909,295		1,474,054
Proceeds from sale of equity securities	137,062			123,187			Proceeds from sale of equity securities	19,842		98,765
Distributions from investment funds	265,371			5,630
(Contributions to) distributions from investment funds							(Contributions to) distributions from investment funds	(142,801)		88,363
Proceeds from maturities and prepayments of fixed maturity securities	2,860,678			2,189,365			Proceeds from maturities and prepayments of fixed maturity securities	2,655,789		3,156,861
Purchase of fixed maturity securities	(6,530,466		)	(4,280,457		)	Purchase of fixed maturity securities	(4,860,991)		(6,266,934)
Purchase of equity securities	(17,049		)	(127,303		)	Purchase of equity securities	(271,296)		(143,836)
Real estate purchased	(159,006		)	(207,829		)
Real estate (purchased) sold							Real estate (purchased) sold	(5,974)		202,115

Change in loans receivable	32,574			159,128			Change in loans receivable	1,200		(28,510)
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	(22,028)		(48,273)
Change in balances due to security brokers	39,978			102,981			Change in balances due to security brokers	69,801		65,751
Cash received in connection with business disposition	—			250,216			Cash received in connection with business disposition	906,789		—
Payment for business purchased net of cash aquired	(70,570		)	(53,524		)
Payment for business purchased net of cash acquired							Payment for business purchased net of cash acquired	(49,572)		—
Other							Other	37		2
Net cash used in investing activities	(434,077		)	(801,871		)	Net cash used in investing activities	(789,909)		(1,401,642)
CASH (USED IN) FROM FINANCING ACTIVITIES:							CASH (USED IN) FROM FINANCING ACTIVITIES:
Repayment of senior notes and other debt	(1,788		)	(70,567		)	Repayment of senior notes and other debt	(426,503)		(505,230)

Net proceeds from issuance of debt	—			386,848			Net proceeds from issuance of debt	192		686,893
Cash dividends to common stockholders	(93,371		)	(30,654		)	Cash dividends to common stockholders	(22,983)		(21,285)
Purchase of common treasury shares	(28,378		)	(99,870		)	Purchase of common treasury shares	—		(29,683)
Other, net	(3,835		)	(1,376		)	Other, net	(1,400)		(6,725)
Net cash (used in) from financing activities	(127,372		)	184,381			Net cash (used in) from financing activities	(450,694)		123,970
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	(17,290)		(304)
Net change in cash and cash equivalents	(21,288		)	109,433			Net change in cash and cash equivalents	(252,240)		(582,167)
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	1,568,843		2,372,366
Cash and cash equivalents at end of period	$	773,997		$	873,064		Cash and cash equivalents at end of period	$	1,316,603	$	1,790,199

(4) ~~Acquisitions/Disposition~~Acquisition

In March ~~2017,~~2022, the Company acquired an ~~89.5%~~80.0% ownership interest for ~~$73.3~~$51.1 million in a company engaged in ~~providing textile solutions world-wide.~~residential and commercial textiles. The fair value of the assets acquired and liabilities assumed have been estimated based on a ~~third party~~preliminary valuation. The fair values of the assets and liabilities will be adjusted, as needed, following completion of the final valuation.

The following table summarizes the initial estimated fair value of net assets acquired and liabilities assumed for the business combination completed in ~~2017:~~2022:


(In thousands)	2022


Cash and cash equivalents	$	1,564
Real estate, furniture and equipment	2,527
Intangible assets	48,787

Other assets	11,275
Total assets acquired	64,153

Other liabilities assumed	(5,417)
Noncontrolling interest	(7,600)

Net assets acquired	$	51,136

(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 (Loss) Income

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


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


Other comprehensive (loss) income before reclassifications	(799,623)			12,879		(786,744)
Amounts reclassified from AOCI	39,070			—		39,070
Other comprehensive (loss) income	(760,553)			12,879		(747,674)
Unrealized investment loss related to noncontrolling interest	(1)			—		(1)
End of period	$	(669,654)		$	(359,976)	$	(1,029,630)
Amounts reclassified from AOCI
Pre-tax	$	49,456	(1)	$	—	$	49,456
Tax effect	(10,386)		(2)	—		(10,386)
After-tax amounts reclassified	$	39,070		$	—	$	39,070
Other comprehensive (loss) income
Pre-tax	$	(970,232)		$	12,879	$	(957,353)
Tax effect	209,679			—		209,679
Other comprehensive (loss) income	$	(760,553)		$	12,879	$	(747,674)
As of and for the three months ended June 30, 2022
Changes in AOCI
Beginning of period	$	(332,646)		$	(316,583)	$	(649,229)


Other comprehensive loss before reclassifications	(366,488)			(43,393)		(409,881)
Amounts reclassified from AOCI	29,480			—		29,480
Other comprehensive loss	(337,008)			(43,393)		(380,401)
Unrealized investment loss related to noncontrolling interest	—			—		—
Ending balance	$	(669,654)		$	(359,976)	$	(1,029,630)
Amounts reclassified from AOCI
Pre-tax	$	37,316	(1)	$	—	$	37,316
Tax effect	(7,836)		(2)	—		(7,836)
After-tax amounts reclassified	$	29,480		$	—	$	29,480
Other comprehensive loss
Pre-tax	$	(430,784)		$	(43,393)	$	(474,177)
Tax effect	93,776			—		93,776
Other comprehensive loss	$	(337,008)		$	(43,393)	$	(380,401)


(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 six months ended June 30, 2021											As of and for the six months ended June 30, 2021
Changes in AOCI	Changes in AOCI										Changes in AOCI
Beginning of period	$	427,154			$	(371,586	)	$	55,568		Beginning of period	$	289,714		$	(351,886)	$	(62,172)
Other comprehensive income before reclassifications	109,277				71,574			180,851
Amounts reclassified from AOCI	(82,679		)		—			(82,679		)
Other comprehensive income	26,598				71,574			98,172
Unrealized investment loss related to non-controlling interest	19				—			19
End of period	$	453,771			$	(300,012	)	$	153,759
Amounts reclassified from AOCI
Pre-tax	$	(127,198	)	(1)	$	—		$	(127,198	)
Tax effect	44,519			(2)	—			44,519
After-tax amounts reclassified	$	(82,679	)		$	—		$	(82,679	)
Other comprehensive income
Pre-tax	$	50,148			$	71,574		$	121,722
Tax effect	(23,550		)		—			(23,550		)
Other comprehensive income	$	26,598			$	71,574		$	98,172

As of and for the three months ended September 30, 2017:
Changes in AOCI
Beginning of period	$	461,906			$	(328,604	)	$	133,302
Other comprehensive income before reclassifications	19,968				28,592			48,560

Other comprehensive (loss) income before reclassifications											Other comprehensive (loss) income before reclassifications	(87,168)			6,587		(80,581)
Amounts reclassified from AOCI	(28,136		)		—			(28,136		)	Amounts reclassified from AOCI	20,310			—		20,310
Other comprehensive (loss) income	(8,168		)		28,592			20,424			Other comprehensive (loss) income	(66,858)			6,587		(60,271)
Unrealized investment loss related to non-controlling interest	33				—			33
Unrealized investment loss related to noncontrolling interest											Unrealized investment loss related to noncontrolling interest	(1)			—		(1)
End of period	$	453,771			$	(300,012	)	$	153,759		End of period	$	222,855		$	(345,299)	$	(122,444)
Amounts reclassified from AOCI											Amounts reclassified from AOCI
Pre-tax	$	(43,286	)	(1)	$	—		$	(43,286	)	Pre-tax	$	25,709	(1)	$	—	$	25,709
Tax effect	15,150			(2)	—			15,150			Tax effect	(5,399)		(2)	—		(5,399)
After-tax amounts reclassified	$	(28,136	)		$	—		$	(28,136	)	After-tax amounts reclassified	$	20,310		$	—	$	20,310
Other comprehensive (loss) income											Other comprehensive (loss) income
Pre-tax	$	(8,563	)		$	28,592		$	20,029		Pre-tax	$	(84,931)		$	6,587	$	(78,344)
Tax effect	395				—			395			Tax effect	18,073			—		18,073
Other comprehensive (loss) income	$	(8,168	)		$	28,592		$	20,424		Other comprehensive (loss) income	$	(66,858)		$	6,587	$	(60,271)
As of and for the three months ended June 30, 2021											As of and for the three months ended June 30, 2021
Changes in AOCI											Changes in AOCI
Beginning of period											Beginning of period	$	199,584		$	(347,836)	$	(148,252)


Other comprehensive income before reclassifications											Other comprehensive income before reclassifications	11,823			2,537		14,360
Amounts reclassified from AOCI											Amounts reclassified from AOCI	11,449			—		11,449
Other comprehensive income											Other comprehensive income	23,272			2,537		25,809
Unrealized investment loss related to noncontrolling interest											Unrealized investment loss related to noncontrolling interest	(1)			—		(1)
Ending balance											Ending balance	$	222,855		$	(345,299)	$	(122,444)
Amounts reclassified from AOCI											Amounts reclassified from AOCI
Pre-tax											Pre-tax	$	14,493	(1)	$	—	$	14,493
Tax effect											Tax effect	(3,044)		(2)	—		(3,044)
After-tax amounts reclassified											After-tax amounts reclassified	$	11,449		$	—	$	11,449
Other comprehensive income											Other comprehensive income
Pre-tax											Pre-tax	$	28,804		$	2,537	$	31,341
Tax effect											Tax effect	(5,532)			—		(5,532)
Other comprehensive income											Other comprehensive income	$	23,272		$	2,537	$	25,809

~~_________________________~~

⁽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 (losses) gains in the consolidated statements of income.

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

(6) Statements of Cash ~~Flow~~Flows

Interest payments were ~~$134,291,000~~$74,577,437 and ~~$124,791,000~~$71,781,000 for the six months ended June 30, 2022 and ~~income~~2021, respectively. Income taxes paid were ~~$182,487,000~~$183,000,000 and ~~$99,161,000 in~~$177,000,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021, respectively.

(7) Investments in Fixed Maturity Securities

At ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~,2021, 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


(In thousands)	Amortized Cost		Gross Unrealized					Fair Value		Carrying Value		(In thousands)	Amortized Cost		Allowance for Expected Credit Losses (1)		Gross Unrealized				Fair Value		Carrying Value
			Gains		Losses												Gains		Losses
December 31, 2016
June 30, 2022												June 30, 2022
Held to maturity:												Held to maturity:
State and municipal	$	72,582	$	12,453	$	—		$	85,035	$	72,582	State and municipal	$	46,486	$	(127)	$	5,347	$	—	$	51,706	$	46,359
Residential mortgage-backed	15,944		1,693		—			17,637		15,944		Residential mortgage-backed	4,155		—		170		—		4,325		4,155
Total held to maturity	88,526		14,146		—			102,672		88,526		Total held to maturity	50,641		(127)		5,517		—		56,031		50,514
Available for sale:												Available for sale:
U.S. government and government agency	496,187		20,208		(2,593		)	513,802		513,802		U.S. government and government agency	762,615		—		1,213		(42,914)		720,914		720,914
State and municipal:												State and municipal:
Special revenue	2,791,211		58,559		(26,315		)	2,823,455		2,823,455		Special revenue	1,937,329		—		6,636		(76,329)		1,867,636		1,867,636
State general obligation	524,682		16,964		(5,139		)	536,507		536,507		State general obligation	378,081		—		3,957		(13,458)		368,580		368,580
Pre-refunded	356,535		19,181		(165		)	375,551		375,551		Pre-refunded	200,716		—		3,232		(49)		203,899		203,899
Corporate backed	410,933		6,172		(6,452		)	410,653		410,653		Corporate backed	166,591		—		453		(6,836)		160,208		160,208
Local general obligation	360,022		15,682		(2,367		)	373,337		373,337		Local general obligation	418,962		—		6,593		(8,615)		416,940		416,940
Total state and municipal	4,443,383		116,558		(40,438		)	4,519,503		4,519,503		Total state and municipal	3,101,679		—		20,871		(105,287)		3,017,263		3,017,263
Mortgage-backed securities:
Residential (1)	1,034,301		15,431		(12,950		)	1,036,782		1,036,782
Mortgage-backed:												Mortgage-backed:
Residential												Residential	1,181,482		—		794		(110,774)		1,071,502		1,071,502
Commercial	155,540		304		(2,981		)	152,863		152,863		Commercial	413,090		—		552		(8,045)		405,597		405,597
Total mortgage-backed securities	1,189,841		15,735		(15,931		)	1,189,645		1,189,645
Total mortgage-backed												Total mortgage-backed	1,594,572		—		1,346		(118,819)		1,477,099		1,477,099
Asset-backed	1,913,830		5,971		(11,941		)	1,907,860		1,907,860		Asset-backed	4,421,553		—		484		(129,549)		4,292,488		4,292,488
Corporate:												Corporate:
Industrial	2,315,567		71,007		(7,174		)	2,379,400		2,379,400		Industrial	3,412,383		(164)		2,643		(199,225)		3,215,637		3,215,637
Financial	1,369,001		39,543		(11,270		)	1,397,274		1,397,274		Financial	1,909,682		(18)		341		(98,344)		1,811,661		1,811,661
Utilities	229,154		10,801		(2,411		)	237,544		237,544		Utilities	448,342		—		249		(26,490)		422,101		422,101
Other	54,073		299		(63		)	54,309		54,309		Other	247,531		—		29		(7,834)		239,726		239,726
Total corporate	3,967,795		121,650		(20,918		)	4,068,527		4,068,527		Total corporate	6,017,938		(182)		3,262		(331,893)		5,689,125		5,689,125
Foreign	858,773		46,794		(2,762		)	902,805		902,805
Foreign government												Foreign government	1,748,422		(33,096)		528		(111,743)		1,604,111		1,604,111
Total available for sale	12,869,809		326,916		(94,583		)	13,102,142		13,102,142		Total available for sale	17,646,779		(33,278)		27,704		(840,205)		16,801,000		16,801,000
Total investments in fixed maturity securities	$	12,958,335	$	341,062	$	(94,583	)	$	13,204,814	$	13,190,668	Total investments in fixed maturity securities	$	17,697,420	$	(33,405)	$	33,221	$	(840,205)	$	16,857,031	$	16,851,514

(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.

(15) Fixed Maturity Securities in an Unrealized Loss Position

The following tables summarize all fixed maturity securities in an unrealized loss position at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 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
June 30, 2022
U.S. government and government agency	$	570,441	$	40,355	$	35,683	$	2,559	$	606,124	$	42,914
State and municipal	1,789,266		92,972		95,746		12,315		1,885,012		105,287
Mortgage-backed	1,223,393		97,556		116,005		21,263		1,339,398		118,819
Asset-backed	3,788,329		124,135		193,620		5,414		3,981,949		129,549
Corporate	4,775,827		277,520		499,270		54,373		5,275,097		331,893
Foreign government	1,292,469		59,376		246,041		52,367		1,538,510		111,743
Fixed maturity securities	$	13,439,725	$	691,914	$	1,186,365	$	148,291	$	14,626,090	$	840,205





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

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~~June 30, ~~2017~~2022 is presented in the table below:


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	42	$	124,609	$	52,655
Corporate	12	46,437		5,739
State and municipal	1	13,248		1,756
Mortgage-backed	11	3,513		144
Asset-backed	3	87		24
Total	69	$	187,894	$	60,318

($ 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)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~~June 30, ~~2017~~2022 and December 31, ~~2016~~2021 by level:


(In thousands)	Total		Level 1		Level 2		Level 3
June 30, 2022
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	720,914	$	—	$	720,914	$	—
State and municipal	3,017,263		—		3,017,263		—
Mortgage-backed	1,477,099		—		1,477,099		—
Asset-backed	4,292,488		—		4,292,488		—
Corporate	5,689,125		—		5,689,125		—
Foreign government	1,604,111		—		1,604,111		—
Total fixed maturity securities available for sale	16,801,000		—		16,801,000		—
Equity securities:
Common stocks	932,672		926,865		1,256		4,551
Preferred stocks	222,654		—		211,358		11,296
Total equity securities	1,155,326		926,865		212,614		15,847
Arbitrage trading account	1,142,003		1,121,579		20,424		—
Total	$	19,098,329	$	2,048,444	$	17,034,038	$	15,847
Liabilities:
Trading account securities sold but not yet purchased	$	68	$	68	$	—	$	—


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

(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~~six months ended ~~September~~June 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~~2022 and for the year ended December 31, ~~2016,~~2021:


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

Six Months Ended June 30, 2022
Assets:




Equity securities:
Common stocks	$	9,294	$	(4,743)	$	—	$	—	$	—	$	—	$	—	$	—	$	4,551
Preferred stocks	11,296		—		—		—		925		(925)		—		—		11,296


Total	$	20,590	$	(4,743)	$	—	$	—	$	925	$	(925)	$	—	$	—	$	15,847

Liabilities:
Trading account securities sold but not yet purchased	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Year Ended December 31, 2021
Assets:
Fixed maturities securities available for sale:

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

For the six months ended June 30, 2022 and for the year ended December 31, 2021, there were no t~~ransfers~~0 securities transferred into or out of Level 3.

(17) 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:


	September 30,							June 30,
(In thousands)	2017			2016			(In thousands)	2022		2021
Net reserves at beginning of year	$	9,590,265		$	9,244,872
Net reserves at beginning of period							Net reserves at beginning of period	$	12,848,362	$	11,620,393

Net provision for losses and loss expenses:							Net provision for losses and loss expenses:
Claims occurring during the current year (1)	2,998,687			2,838,777			Claims occurring during the current year (1)	2,748,725		2,308,309
Decrease in estimates for claims occurring in prior years (2) (3)	(7,648		)	(23,518		)
Increase in estimates for claims occurring in prior years (2) (3)							Increase in estimates for claims occurring in prior years (2) (3)	9,765		1,530
Loss reserve discount accretion	34,436			37,080			Loss reserve discount accretion	16,579		15,399
Total	3,025,475			2,852,339			Total	2,775,069		2,325,238
Net payments for claims:							Net payments for claims:
Current year	628,078			612,615			Current year	318,129		279,703
Prior year	1,996,977			1,931,454
Prior years							Prior years	1,688,843		1,485,116
Total	2,625,055			2,544,069			Total	2,006,972		1,764,819
Foreign currency translation	57,789			(6,266		)	Foreign currency translation	(94,526)		(16,153)
Net reserves at end of period	10,048,474			9,546,876			Net reserves at end of period	13,521,933		12,164,659
Ceded reserve at end of period	1,605,872			1,550,954
Ceded reserves at end of period							Ceded reserves at end of period	2,623,888		2,316,288
Gross reserves at end of period	$	11,654,346		$	11,097,830		Gross reserves at end of period	$	16,145,821	$	14,480,947


~~(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 $15 million and $10 million for the six months ended June 30, 2022 and 2021, 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.

(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 $22 million and $16 million for the six months ended June 30, 2022 and 2021, 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 $3 million and $4 million for the six months ended June 30, 2022 and 2021, 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 continued to abate. Although as populations continue to be vaccinated against the virus and the effects of the pandemic have receded in many jurisdictions, most particularly the United States, it remains too early to determine the ultimate net impact of COVID-19 on the Company. New variants of the COVID-19 virus, including the “Omicron” variant, 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.

As of June 30, 2022, the Company had recognized losses for COVID-19-related claims activity, net of reinsurance, of approximately $303 million, of which $255 million relates to the Insurance segment and $48 million relates to the Reinsurance & Monoline Excess segment. Such $303 million of COVID-19-related losses included $292 million of reported losses and $11 million of IBNR. For the six months ended June 30, 2022, the Company recognized current accident year losses for COVID-19-related claims activity, net of reinsurance, of approximately $3 million, of which $1 million relates to the Insurance segment and $2 million relates to the Reinsurance & Monoline Excess segment.

During the six months ended June 30, 2022, favorable prior year development (net of additional and return premiums) of ~~$31~~$3 million included ~~$62~~$3 million of favorable development for the Insurance segment, slightly offset by $0.3 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 the 2020 and 2021 accident years, partially offset by adverse development on the 2015 through 2019 accident years. The favorable development on the 2020 and 2021 accident years was concentrated in the other liability lines of business, including products liability and commercial multi-peril liability, and to a lesser extent professional liability and workers’ compensation. The Company experienced lower reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continues to experience lower reported incurred losses relative to our expectations for these accident years as they develop during 2022. These trends began in 2020 and we believe were caused by the impacts of the COVID-19 pandemic, including for example, lockdowns, reduced driving/traffic and increased work from home. Due to the ongoing uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company has been cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years. As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022.

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

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

During the six months ended June 30, 2021, favorable prior year development (net of additional and return premiums) of $4 million included $12 million of favorable development for the Insurance segment, partially offset by ~~$31~~$8 million of adverse development for the Reinsurance & Monoline Excess segment.

The overall favorable development for the Insurance segment was primarily attributable to ~~workers' compensation business (including excess workers' compensation).~~favorable development on the 2020 accident year, partially offset by adverse development on the 2016 through 2019 accident years. The favorable ~~workers' compensation~~ development on the 2020 accident year was ~~spread across many~~largely concentrated in the commercial auto liability and other liability lines of business. 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, court closures, etc.; however, due to the ongoing uncertainty regarding the ultimate impacts of the pandemic on accident year 2020 incurred losses, the Company did not adjust its reserves due to these lower trends during 2020. However, as the accident year has begun to mature, the Company has recognized some of the favorable accident year 2020 experience in its ultimate loss estimates made as of June 30, 2021. The adverse development on the 2016 through 2019 accident years ~~including prior to 2008, but was most significant~~is concentrated in ~~accident years 2014~~the other liability line of business, and ~~2015.~~is driven by a larger number than expected of large losses reported. The ~~favorable workers' compensation development reflects a continuation~~large losses particularly impacted directors and officers liability and excess and surplus lines casualty classes of ~~the benign loss cost trends experienced during 2016, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure).~~ business.

The overall adverse development for the Reinsurance & Monoline Excess segment was ~~due to reserve strengthening associated with claims impacted by the change~~mainly concentrated in the ~~Ogden discount rate in the U.K., as well as adverse development in the U.S. facultative casualty excess~~non-proportional reinsurance assumed liability and non-proportional reinsurance assumed property lines 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 accident years 2012 through 2016. 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~~2018 through 2020. The 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 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., 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 reported losses on excess of loss treaties written in ~~accident years 2014~~the U.S. and ~~2015, and the~~U.K.

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) Fair Value of Financial Instruments

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


	June 30, 2022				December 31, 2021
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Fixed maturity securities	$	16,851,514	$	16,857,031	$	16,602,673	$	16,614,118
Equity securities	1,155,326		1,155,326		941,243		941,243
Arbitrage trading account	1,142,003		1,142,003		1,179,606		1,179,606
Loans receivable	113,483		112,072		115,172		116,534
Cash and cash equivalents	1,316,603		1,316,603		1,568,843		1,568,843
Trading account receivables from brokers and clearing organizations	9,937		9,937		—		—
Due from broker	—		—		20,448		20,448
Liabilities:
Due to broker	49,178		49,178		—		—
Trading account payable to brokers and clearing organizations	—		—		53,636		53,636
Trading account securities sold but not yet purchased	68		68		1,169		1,169
Senior notes and other debt	1,832,273		1,558,985		2,259,416		2,526,630
Subordinated debentures	1,008,011		810,028		1,007,652		1,095,600

September 30, 2017 December 31, 2016
(In thousands) Carrying Value Fair Value Carrying Value Fair Value
Assets:
Fixed maturity securities $ 13,873,690
$ 13,890,354
$ 13,190,668
$ 13,204,814
Equity securities available for sale 614,025
614,025
669,200
669,200
Arbitrage trading account 488,238
488,238
299,999
299,999
Loans receivable 74,229
76,615
106,798
108,299
Cash and cash equivalents 773,997
773,997
795,285
795,285
Trading account receivables from brokers and clearing organizations 297,208
297,208
484,593
484,593
Liabilities:
Due to broker 58,973
58,973
19,416
19,416
Trading account securities sold but not yet purchased 44,937
44,937
51,179
51,179
Subordinated debentures 728,071
728,291
727,630
687,504
Senior notes and other debt 1,759,929
1,946,700
1,760,595
1,914,727

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.~~16. 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.

(19) Premiums and Reinsurance Related Information

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

(In thousands)	2022		2021		2022		2021
Written premiums:
Direct	$	2,757,739	$	2,395,114	$	5,300,075	$	4,572,276
Assumed	294,662		266,122		612,163		573,672
Ceded	(466,766)		(449,055)		(913,349)		(883,729)
Total net premiums written	$	2,585,635	$	2,212,181	$	4,998,889	$	4,262,219

Earned premiums:
Direct	$	2,511,579	$	2,151,739	$	4,916,177	$	4,154,784
Assumed	292,547		259,166		584,920		518,707
Ceded	(446,968)		(439,281)		(894,853)		(851,911)
Total net premiums earned	$	2,357,158	$	1,971,624	$	4,606,244	$	3,821,580

Ceded losses and loss expenses incurred	$	305,196	$	255,163	$	548,490	$	553,903
Ceded commissions earned	$	116,991	$	106,834	$	234,436	$	208,515

For the Three Months For the Nine Months
Ended September 30, Ended September 30,
(In thousands) 2017 2016 2017 2016
Written premiums:
Direct $ 1,679,389
$ 1,643,870
$ 5,127,465
$ 5,061,646
Assumed 194,769
224,979
570,052
702,265
Ceded (302,975 ) (261,484 ) (915,245 ) (850,255 )
Total net premiums written $ 1,571,183
$ 1,607,365
$ 4,782,272
$ 4,913,656

Earned premiums:
Direct $ 1,692,453
$ 1,647,033
$ 4,972,755
$ 4,824,768
Assumed 202,972
216,758
605,281
635,443
Ceded (313,925 ) (277,847 ) (857,792 ) (787,139 )
Total net premiums earned $ 1,581,500
$ 1,585,944
$ 4,720,244
$ 4,673,072

Ceded losses and loss expenses incurred $ 247,104
$ 213,065
$ 424,905
$ 507,258
Ceded commissions earned $ 63,222
$ 47,315
$ 177,524
$ 143,809
The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the six months ended June 30, 2022 and 2021:


(In thousands)	2022		2021
Allowance for expected credit losses, beginning of period	$	25,218	$	22,883

Provision for expected credit losses	5,339		1,925
Allowance for expected credit losses, end of period	$	30,557	$	24,808

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the three months ended June 30, 2022 and 2021:


(In thousands)	2022		2021
Allowance for expected credit losses, beginning of period	$	28,236	$	24,264

Provision for expected credit losses	2,321		544
Allowance for expected credit losses, end of period	$	30,557	$	24,808

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~~the allowance for expected credit losses associated with due from reinsurers for the six months ended June 30, 2022 and 2021:


(In thousands)	2022		2021
Allowance for expected credit losses, beginning of period	$	7,713	$	7,801

Change in expected credit losses	31		(518)
Allowance for expected credit losses, end of period	$	7,744	$	7,283

The following table presents the rollforward of ~~September~~the allowance for expected credit losses associated with due from reinsurers for the three months ended June 30, ~~2017~~2022 and ~~December 31, 2016~~.2021:


(In thousands)	2022		2021
Allowance for expected credit losses, beginning of period	$	7,655	$	7,373

Change in expected credit losses	89		(90)
Allowance for expected credit losses, end of period	$	7,744	$	7,283

(20) Restricted Stock Units

Pursuant to its stock incentive plan, the Company may issue restricted stock units ~~(RSUs)~~("RSUs") to employees of the Company and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other vesting and forfeiture provisions contained in the award agreement. RSUs are expensed pro-ratably over the vesting period. RSU expenses were ~~$30~~$22 million and ~~$25~~$23 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~,2021 respectively. A summary of RSUs issued in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 follows:


($ in thousands)	Units	Fair Value

2022	6,918	$	450
2021	2,297	$	115

($ in thousands) Units Fair Value
2017 855,051
$ 58,712
2016 990,487
$ 57,959

(21) Litigation and Contingent Liabilities

In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are considered in the establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of insurance claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial

condition. However, adverse outcomes on such matters are possible, from time to time, and could be material to the Company’s results of operations in any particular financial reporting period.

(22) Leases

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

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

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,

(In thousands)	2022		2021		2022		2021
Leases:
Lease cost	$	12,152	$	11,429	$	22,351	$	22,693
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows	$	11,054	$	11,920	$	22,047	$	23,297
Right-of-use assets obtained (reduced) in exchange for new lease liabilities	$	2,933	$	(181)	$	20,202	$	(151)


	As of June 30,
($ in thousands)	2022			2021
Right-of-use assets	$	171,871		$	148,455
Lease liabilities	$	207,959		$	185,738
Weighted-average remaining lease term	7.2 years			6.7 years
Weighted-average discount rate	4.53		%	5.95		%

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


(In thousands)	June 30, 2022
Contractual Maturities:
2022	$	23,209
2023	44,933
2024	39,548
2025	29,704
2026	23,188
Thereafter	78,322
Total undiscounted future minimum lease payments	238,904
Less: Discount impact	30,945
Total lease liability	$	207,959

(23) Business Segments

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~~

Australia.

•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.~~

Africa, as well as operations that solely retain risk on an excess basis.

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															Revenues
(In thousands)	Earned Premiums		Investment Income		Other		Total (1)		Pre-Tax Income (Loss)			Net Income (Loss) to Common Stockholders			(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, 2017
Three months ended June 30, 2022															Three months ended June 30, 2022
Insurance	$	1,433,729	$	105,924	$	—	$	1,539,653	$	171,478		$	123,240		Insurance	$	2,070,157	$	114,124	$	8,335	$	2,192,616	$	347,461	$	276,133
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		)
Reinsurance & Monoline Excess															Reinsurance & Monoline Excess	287,001		57,111		—		344,112		92,177		73,374
Corporate, other and eliminations (3)															Corporate, other and eliminations (3)	—		339		147,375		147,714		(45,521)		(36,149)
Net investment gains	—		—		183,959		183,959		183,959			119,573			Net investment gains	—		—		(171,555)		(171,555)		(171,555)		(134,036)
Total	$	1,581,500	$	142,479	$	307,363	$	2,031,342	$	226,113		$	162,054		Total	$	2,357,158	$	171,574	$	(15,845)	$	2,512,887	$	222,562	$	179,322
Three months ended September 30, 2016
Three months ended June 30, 2021															Three months ended June 30, 2021
Insurance	$	1,423,635	$	111,300	$	—	$	1,534,935	$	210,498		$	140,730		Insurance	$	1,727,202	$	116,703	$	8,212	$	1,852,117	$	291,290	$	230,313
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		)
Reinsurance & Monoline Excess															Reinsurance & Monoline Excess	244,422		46,879		—		291,301		74,794		59,334
Corporate, other and eliminations (3)															Corporate, other and eliminations (3)	—		4,605		124,000		128,604		(90,208)		(71,209)
Net investment gains	—		—		175,738		175,738		175,738			114,230			Net investment gains	—		—		24,064		24,064		24,064		18,800
Total	$	1,585,944	$	145,668	$	288,115	$	2,019,727	$	331,615		$	220,650		Total	$	1,971,624	$	168,187	$	156,276	$	2,296,086	$	299,940	$	237,238
Nine months ended September 30, 2017:
Six months ended June 30, 2022															Six months ended June 30, 2022
Insurance	$	4,262,485	320,552		$	—	$	4,583,037	$	557,605		$	381,736		Insurance	$	4,032,991	$	251,778	$	17,012	$	4,301,781	$	729,873	$	591,685
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		)
Reinsurance & Monoline Excess															Reinsurance & Monoline Excess	573,253		84,534		—		657,787		149,805		120,454
Corporate, other and eliminations (3)															Corporate, other and eliminations (3)	—		8,774		265,245		274,019		(119,393)		(95,966)
Net investment gains	—		—		276,760		276,760		276,760			179,894			Net investment gains	—		—		194,710		194,710		194,710		153,787
Total	$	4,720,244	$	426,601	$	602,963	$	5,749,808	$	571,370		$	394,505		Total	$	4,606,244	$	345,086	$	476,967	$	5,428,297	$	954,995	$	769,960
Nine months ended September 30, 2016:
Six Months Ended June 30, 2021															Six Months Ended June 30, 2021
Insurance	$	4,180,985	$	304,904	$	—	$	4,485,889	$	586,651		$	394,746		Insurance	$	3,332,181	$	221,941	$	16,490	$	3,570,612	$	548,399	$	429,022
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
Reinsurance & Monoline Excess															Reinsurance & Monoline Excess	489,399		84,587		—		573,986		143,443		113,806
Corporate, other and eliminations (3)															Corporate, other and eliminations (3)	—		20,236		229,218		249,454		(154,737)		(123,817)
Net investment losses															Net investment losses	—		—		58,903		58,903		58,903		47,752
Total	$	4,673,072	$	404,850	$	604,618	$	5,682,540	$	664,605		$	449,127		Total	$	3,821,580	$	326,764	$	304,611	$	4,452,955	$	596,008	$	466,763

_________________

(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~~June 30, ~~2017~~2022 and ~~2016~~2021 were ~~$166~~$263 million and ~~$187~~$221 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were ~~$513~~$498 million and ~~$546~~$418 million, respectively. Revenues for Reinsurance & Monoline Excess from foreign countries for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were ~~$49~~$93 million and ~~$48~~$90 million, respectively, and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 were ~~$150~~$189 million and ~~$153~~$178 million, respectively.

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

Identifiable Assets


(In thousands)	September 30, 2017		December 31, 2016		(In thousands)	June 30, 2022		December 31, 2021
Insurance	$	19,136,776	$	19,137,758	Insurance	$	25,671,814	$	24,403,918
Reinsurance	3,243,610		2,524,338
Reinsurance & Monoline Excess					Reinsurance & Monoline Excess	4,924,298		4,917,985
Corporate, other and eliminations	1,955,690		1,687,980		Corporate, other and eliminations	2,096,335		2,725,973
Consolidated	$	24,336,076	$	23,350,076	Consolidated	$	32,692,447	$	32,047,876


~~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~~On February 25, 2022, the ~~third quarter~~Company announced that its Board of ~~2017, catastrophe losses~~Directors approved a 3-for-2 common stock split which was paid in the form of a stock dividend to holders of record as of March 9, 2022. The additional shares were ~~$119~~issued on March 23, 2022. Shares outstanding and per share amounts in this Form 10-Q reflect such 3-for-2 common stock split.

On March 7, 2022, the Company sold a real estate investment consisting of an office building located in London for £718 million. The Company realized a pretax gain of $317 million ~~including $107 million related to Hurricanes Harvey, Irma, and Maria and two earthquakes~~ in ~~Mexico.~~

~~Commencing with~~ the first quarter of ~~2017,~~2022, before transaction expenses and the impact of foreign currency, including the reversal of the currency translation adjustment. The gain was $251 million after such adjustments.

The COVID-19 pandemic, including the related impact on the U.S. and global economies, continued to adversely affect our results of operations. For the six months ended June 30, 2022, the Company ~~reclassified two businesses from~~recorded approximately $3 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 to return to pre-pandemic levels as many economies and legal systems have reopened as a result of higher levels of vaccination). The ultimate impact of COVID-19 on the ~~Reinsurance segment. Reclassifications have been made~~economy and the Company’s results of operations, financial position and liquidity is not within the Company’s control and remains unclear due to, ~~the Company's 2016 financial information to conform~~among other factors, uncertainty in connection with ~~this presentation.~~its claims, reserves and reinsurance recoverables.

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.

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. 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:~~2021:


(In thousands)	Frequency (+/-)
Severity (+/-)	1%		5%		10%
1%	$	98,916	$	297,732	$	546,252
5%	297,732		504,422		762,785
10%	546,252		762,785		1,033,450

(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~~$13.5 billion as of ~~September~~June 30, ~~2017~~2022 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~~$2.9 billion, or ~~17%~~21%, of the Company’s net loss reserves as of ~~September~~June 30, ~~2017~~2022 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)	June 30, 2022		December 31, 2021
Insurance	$	10,657,879	$	10,060,420
Reinsurance & Monoline Excess	2,864,054		2,787,942
Net reserves for losses and loss expenses	13,521,933		12,848,362
Ceded reserves for losses and loss expenses	2,623,888		2,542,526
Gross reserves for losses and loss expenses	$	16,145,821	$	15,390,888

(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
June 30, 2022							June 30, 2022
Other liability	$	1,243,208	$	2,162,031	$	3,405,239	Other liability	$	1,760,193	$	3,590,784	$	5,350,977
Workers’ compensation (1)	1,530,194		1,246,084		2,776,278		Workers’ compensation (1)	1,020,485		924,892		1,945,377
Professional liability	299,418		584,606		884,024		Professional liability	483,342		1,123,842		1,607,184
Commercial automobile	341,998		267,136		609,134		Commercial automobile	559,106		474,334		1,033,440
Short-tail lines (2)	309,692		307,341		617,033		Short-tail lines (2)	320,801		400,100		720,901
Total Insurance	3,724,510		4,567,198		8,291,708		Total Insurance	4,143,927		6,513,952		10,657,879
Reinsurance (1)	909,690		847,076		1,756,766
Reinsurance & Monoline Excess (1) (3)							Reinsurance & Monoline Excess (1) (3)	1,497,475		1,366,579		2,864,054
Total	$	4,634,200	$	5,414,274	$	10,048,474	Total	$	5,641,402	$	7,880,531	$	13,521,933

December 31, 2016
December 31, 2021							December 31, 2021
Other liability	$	1,159,082	$	2,061,966	$	3,221,048	Other liability	$	1,724,907	$	3,319,665	$	5,044,572
Workers’ compensation (1)	1,453,318		1,228,774		2,682,092		Workers’ compensation (1)	1,016,014		903,448		1,919,462
Professional liability	264,188		542,539		806,727		Professional liability	468,680		1,019,344		1,488,024
Commercial automobile	344,143		252,978		597,121		Commercial automobile	504,821		424,382		929,203
Short-tail lines (2)	322,872		283,214		606,086		Short-tail lines (2)	322,917		356,242		679,159
Total Insurance	3,543,603		4,369,471		7,913,074		Total Insurance	4,037,339		6,023,081		10,060,420
Reinsurance (1)	823,516		853,675		1,677,191
Reinsurance & Monoline Excess (1) (3)							Reinsurance & Monoline Excess (1) (3)	1,475,623		1,312,319		2,787,942
Total	$	4,367,119	$	5,223,146	$	9,590,265	Total	$	5,512,962	$	7,335,400	$	12,848,362

___________

(1) Reserves for workers’ compensation and ~~reinsurance~~Reinsurance & Monoline Excess are net of an aggregate net discount of ~~$599~~$420 million and ~~$640~~

$452 million as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, 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~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are as follows:


(In thousands)	2022		2021
Net increase in prior year loss reserves	$	(9,765)	$	(1,530)
Increase in prior year earned premiums	12,412		5,384
Net favorable prior year development	$	2,647	$	3,854

(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 “Omicron” variant, 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.

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

~~the Ogden discount rate~~mainly concentrated in the ~~U.K., as well as adverse development on the U.S. facultative casualty excess~~non-proportional reinsurance assumed liability and non-proportional reinsurance assumed property lines 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 mostlybusiness, related to ~~U.K. motor bodily injury claims which we reinsured on an excess of loss basis in~~ accident years ~~2012~~2018 through ~~2016.~~2020. 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 offset 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., 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 reported losses on excess of loss treaties written in ~~accident years 2014~~the U.S. 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.U.K.

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was ~~$1,849~~$1,280 million and ~~$1,907~~$1,387 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was ~~$599~~$420 million and ~~$640~~$452 million at ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively. At ~~September~~June 30, ~~2017,~~2022, discount rates by year ranged from ~~2.0%~~0.7% to 6.5%, with a weighted average discount rate of ~~3.8%~~3.3%.

Substantially all of the workers’ compensation discount (97% of total discounted reserves at ~~September~~June 30, ~~2017)~~2022) 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~~June 30, ~~2017)~~2022), 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~~$59 million at ~~September~~June 30, ~~2017~~2022 and ~~$68~~$60 million at December 31, ~~2016.~~2021. 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. 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~~June 30, ~~2017~~2022 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


($ in thousands)	Number of Securities	Aggregate Fair Value		Gross Unrealized Loss
Foreign government	42	$	124,609	$	52,655
Corporate	12	46,437		5,739
State and municipal	1	13,248		1,756
Mortgage-backed	11	3,513		144
Asset-backed	3	87		24
Total	69	$	187,894	$	60,318

As of June 30, 2022, the Company has recorded an allowance for expected credit losses on fixed maturity securities of $33 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 September~~as of June 30, ~~2017~~2022 and December 31, ~~2016.~~2021.

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~~June 30, ~~2017:~~

2022:


($ 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	$	16,136,447	96.0	%
Syndicate manager	43,196		0.3		Syndicate manager	62,758		0.4
Directly by the Company based on:					Directly by the Company based on:
Observable data	180,467		1.3		Observable data	601,795		3.6
Cash flow model	174		—

Total	$	13,794,294	100.0	%	Total	$	16,801,000	100.0	%

Results of Operations for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~

2021

Business Segment Results

Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of net premiums earned), expense ratios (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~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016.~~2021. 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)	2022			2021
Insurance:
Gross premiums written	$	5,256,464		$	4,561,859
Net premiums written	4,399,416			3,734,036
Net premiums earned	4,032,991			3,332,181
Loss ratio	60.3		%	61.3		%
Expense ratio	27.9		%	28.9		%
GAAP combined ratio	88.2		%	90.2		%
Reinsurance & Monoline Excess:
Gross premiums written	$	655,773		$	584,089
Net premiums written	599,473			528,183
Net premiums earned	573,253			489,399
Loss ratio	60.2		%	57.4		%
Expense ratio	28.4		%	30.6		%
GAAP combined ratio	88.6		%	88.0		%
Consolidated:
Gross premiums written	$	5,912,237		$	5,145,948
Net premiums written	4,998,889			4,262,219
Net premiums earned	4,606,244			3,821,580
Loss ratio	60.2		%	60.8		%
Expense ratio	28.0		%	29.1		%
GAAP combined ratio	88.2		%	89.9		%

($ 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~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~2021:


(In thousands, except per share data)	2022		2021
Net income to common stockholders	$	769,960	$	466,763
Weighted average diluted shares	279,327		280,478
Net income per diluted share	$	2.76	$	1.66

(In thousands, except per share data) 2017 2016
Net income to common stockholders $ 394,505
$ 449,127
Weighted average diluted shares 129,289
128,501
Net income per diluted share $ 3.05
$ 3.50

The Company reported net income to common stockholders of ~~$395~~$770 million in ~~2017~~2022 compared to ~~$449~~$467 million in ~~2016.~~2021. The ~~12% decrease~~$303 million increase in net income was primarily due to an after-tax ~~decrease~~increase in underwriting income of ~~$97~~$128 million mainly ~~driven by increased catastrophe losses from Hurricanes Harvey, Irma~~due to the growth in premium rates and ~~Maria,~~exposure as well as ~~two earthquakes~~reductions in ~~Mexico,~~loss ratio and expense ratio driven by net earned premium growth outpacing expense growth, an after-tax increase in net investment gains of $110 million primarily due to sale of a real estate investment in London partly offset by the loss from change in market value on equity securities, an after-tax increase in foreign currency ~~losses~~gains of ~~$17~~$30 million ~~and~~as the U.S. dollar strengthened against the majority of other currencies in 2022, an after-tax ~~decrease~~increase in net investment income of $15 million primarily due to rising interest rates on fixed maturity securities, a reduction of $13 million in tax expense due to a change in the effective tax rate, an after-tax reduction on debt extinguishment expense of $9 million for debt redeemed in 2021, an after-tax reduction in interest expense of $6 million due to debt repayments at maturity and refinancings, an after-tax increase in profits from non-insurance businesses of ~~$7 million, partially offset by an increase in after-tax net investment gains of $57~~$4 million and an after-tax increase in ~~investment~~insurance service income of $2 million, partially offset by an after-tax increase in corporate expenses of $14 ~~million.~~million mainly due to increased performance-based compensation costs. The number of weighted average diluted shares ~~remained relatively unchanged~~decreased by 1.2 million for ~~the nine months ended September 30, 2017 and 2016.~~2022 compared to 2021, mainly reflecting shares repurchased in 2021.

Premiums. Gross premiums written were ~~$5,698~~$5,912 million in ~~2017, a decrease~~2022, an increase of 1%15% from ~~$5,764~~$5,146 million in ~~2016.~~2021. The ~~decrease~~increase was due to a ~~decrease in the Reinsurance segment of $116~~$694 million ~~partially offset by an~~ increase in the Insurance segment and a $72 million increase in the Reinsurance & Monoline Excess segment. Approximately 82% of ~~$50 million. Approximately 77.7% of policies~~premiums expiring in ~~2017~~2022 were renewed, ~~compared with a 77.8% renewal retention rate for policies~~and 81% of premiums expiring in ~~2016.~~2021 were renewed.

Average renewal premium rates for insurance and facultative reinsurance increased ~~1.0%~~6.4% in ~~2017~~2022 when adjusted for ~~change~~changes in ~~exposures.~~exposures, and increased 7.5% excluding workers' compensation.

A summary of gross premiums written in ~~2017~~2022 compared with ~~2016~~2021 by line of business within each business segment follows:

•Insurance - gross premiums increased 1%15% to ~~$5,234~~$5,256 million in ~~2017~~2022 from ~~$5,184~~$4,562 million in ~~2016.~~2021. Gross premiums increased ~~$25~~$323 million ~~(5%~~(20%) for other liability, $194 million (19%) for short-tail lines, $88 million (16%) for commercial auto, $57 million (8%) for professional liability ~~$19~~and $32 million ~~(4%) for commercial auto, $8 million (1%~~(5%) for workers' ~~compensation, and $2 million (less than 1%) for short-tail lines and decreased $4 million (less than 1%) for other liability.~~compensation.

•Reinsurance & Monoline Excess - gross premiums ~~decreased 20%~~increased 12% to ~~$464~~$656 million in ~~2017~~2022 from ~~$580~~$584 million in ~~2016.~~2021. Gross premiums ~~decreased $87~~increased $59 million ~~(35%~~(17%) for casualty reinsurance, $8 million (6%) for monoline excess and $5 million (5%) for property ~~lines and $29 million (9%) for casualty lines.~~reinsurance.

Net premiums written were ~~$4,782~~$4,999 million in ~~2017, a decrease~~2022, an increase of 3%17% from ~~$4,914~~$4,262 million in ~~2016.~~2021 due in part to our decision to retain more business. Ceded reinsurance premiums as a percentage of gross written premiums were ~~16% in 2017 and~~ 15% in ~~2016.~~2022, down from 17% in 2021.

Premiums earned increased 1%21% to ~~$4,720~~$4,606 million in ~~2017~~2022 from ~~$4,673~~$3,822 million in ~~2016.~~2021. Insurance premiums (including the impact of rate changes) are generally earned evenly over the policy term, and accordingly, recent rate increases will be earned over the upcoming quarters. Premiums earned in ~~2017~~2022 are related to business written during both ~~2017~~2022 and ~~2016.~~2021. Audit premiums were ~~$137~~$142 million in ~~2017~~2022 compared with ~~$116~~$84 million in ~~2016.~~2021 due to an increase in exposures.

Net ~~investment~~Investment Income. Following is a summary of net investment income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016:~~2021:


	Amount				Average Annualized Yield
($ in thousands)	2022		2021		2022		2021
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	225,673	$	191,673	2.4	%	2.2	%
Investment funds	85,874		100,246		10.9		14.8
Equity securities	23,653		13,392		4.8		4.9
Arbitrage trading account	13,313		22,989		2.3		8.4
Real estate	595		2,032		0.1		0.2
Gross investment income	349,108		330,332		2.9		3.1
Investment expenses	(4,022)		(3,568)		—		—
Total	$	345,086	$	326,764	2.9	%	3.0	%

Amount
Average Annualized
Yield
($ in thousands) 2017 2016 2017 2016
Fixed maturity securities, including cash and cash equivalents and loans receivable $ 347,976
$ 331,448
3.3 % 3.3 %
Investment funds 50,744
60,385
5.5
6.6
Arbitrage trading account 16,235
12,883
4.0
4.4
Real estate 14,894
4,552
1.6
0.6
Equity securities available for sale 1,845
3,217
1.2
2.2
Gross investment income 431,694
412,485
3.3
3.3
Investment expenses (5,093 ) (7,635 )
Total $ 426,601
$ 404,850
3.3 % 3.3 %

Net investment income increased 5%6% to ~~$427~~$345 million in ~~2017~~2022 from ~~$405~~$327 million in ~~2016~~2021 due primarily to a ~~$16~~$34 million increase in income from fixed maturity securities mainly driven by increased investment in bonds and rising interest rates and a $10 million increase from ~~real estate,~~equity securities, partially offset by a $3$14 million ~~increase~~decrease in income from investment funds primarily due to financial services funds, a $10 million decrease from the arbitrage trading account, a $1 million decrease in real estate and a ~~reduction~~$1 million increase in investment expenses. The Company maintained the short duration of its fixed maturity security portfolio, thereby reducing the potential impact of mark-to-market on the portfolio and positioning the Company to react quickly to changes in the current interest rate environment. We expect investment ~~expenses of $3 million, partially offset by a $10 million decrease from investment funds.~~income to increase as interest rates continue to move higher. Average invested assets, at cost (including cash and cash equivalents), were ~~$17.4~~$23.9 billion in ~~2017~~2022 and ~~$16.6~~$21.6 billion in ~~2016.~~2021.

Insurance Service Fees. The Company earns fees from an insurance distribution business, a third-party administrator and as a servicing carrier of workers' compensation assigned risk plans for certain states. ~~Service~~Insurance service fees ~~decreased~~increased to ~~$100~~$54 million in ~~2017~~2022 from ~~$109~~$48 million in ~~2016.~~2021, mainly due to the business recovery from the pandemic.

Net Realized and Unrealized Gains (Losses) on ~~Investment Sales~~Investments. The Company buys and sells securities and other investment assets on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets are based on management’s view of the underlying fundamentals of specific investments as well as management’s expectations regarding interest rates, credit spreads, currency values and general economic conditions. Net realized and unrealized gains on ~~investment sales~~investments were ~~$277~~$206 million in ~~2017~~2022 compared with ~~$208~~$72 million in ~~2016.~~2021. The ~~nine months ended September 30, 2017 include~~gains of $206 million in 2022 reflected net realized gains on investments of $244 million (primarily a $251 million net gain ~~of $124 million~~ from the sale of ana real estate investment in London after transaction expenses and the foreign currency impact, including the reversal of the currency translation adjustment) partially offset by an ~~office building located~~increase in ~~Washington D.C. The nine months ended September 30, 2016 include a gain~~unrealized losses on equity securities of ~~$135~~$38 million. In 2021, the gains of $72 million ~~from the sale~~reflected net realized gains on investments of ~~Aero Precision Industries and certain related aviation services business.~~

~~Other-Than-Temporary Impairments. There were no impairments in 2017. Other-than-temporary impairments of $18.1~~$115 million ~~in 2016 related to common stocks.~~

~~Revenues from Non-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses engaged in the distribution of promotional merchandise, world-wide textile solutions and aviation-related businesses that~~

provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues from non-insurance businesses were $225 million in 2017 and $306 million in 2016. The decrease was primarily related(primarily due to the sale of ~~Aero Precision Industries in August 2016, partially offset by revenues from~~certain real estate assets and the ~~textile business purchased in March 2017.~~

~~Losses and Loss Expenses. Losses and loss expenses increased to $3,025 million in 2017 from $2,852 million in 2016. The consolidated loss ratio was 64.1% in 2017 and 61.0% in 2016. Catastrophe losses, net~~disposition of reinsurance recoveries and reinstatement premiums, were $167 million in 2017 and $68 million in 2016. Hurricanes Harvey, Irma and Maria, along with two earthquakes in Mexico, resulted in catastrophe losses of $107 million. Favorable prior year reserve development (net of premium offsets) was $31 million in 2017 and $42 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.8 points to 61.2% in 2017 from 60.4% in 2016.

~~A summary of loss ratios in 2017 compared with 2016 by business segment follows:~~

Insurance - The loss ratio was 61.7% in 2017 and 61.1% in 2016. Catastrophe losses were $94 million in 2017 compared with $58 million in 2016. Favorable prior year reserve development was $62 million in 2017 and $38 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points to 61.0% in 2017 from 60.6% in 2016.

~~Reinsurance - The loss ratio of 86.1% in 2017 was 25.6 points~~ ~~higher~~ than the loss ratio of 60.5% in 2016. Catastrophe losses were $73 million in 2017 compared with $10 million in 2016. Adverse prior year reserve development was $31 million in 2017 largely due to the impact of the change in the Ogden discount rate in the U.K. and adverse development related to the U.S. facultative casualty excess of loss business, compared with favorable prior year development of $4 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development i~~ncreased 4.1~~ ~~points to 63.3% in 2017 from 59.2% in 2016.~~

~~Other Operating Costs and Expenses. Following is a summary of other operating costs and expenses:~~

($ in thousands) 2017 2016
Policy acquisition and operating insurance expenses $ 1,567,359
$ 1,544,792
Insurance service expenses 97,308
103,868
Net foreign currency (gains) losses 14,255
(11,547 )
Other costs and expenses 142,233
133,337
Total $ 1,821,155
$ 1,770,450

Policy acquisition and operating insurance expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments and internal underwriting costs. Policy acquisition and operating insurance expenses ~~increased 1% compared with~~ an increase in net premiums earned of 1%. The expense ratio (underwriting expenses expressed as a percentage of premiums earned) was 33.2% and 33.1% for the nine months ended September 30, 2017 and 2016, respectively.

~~Service expenses, which represent the costs associated with the fee-based businesses, decreased to $97 million in 2017 from $104 million in 2016.~~

Net foreign currency (gains) losses result from transactions denominated in a currency other than a company's operating functional currency. Net foreign currency losses were $14 million in 2017 compared to gains of $12 million in 2016.

Other costs and expenses represent general and administrative expenses of the parent company and other expenses not allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs and expenses increased to $142 million in 2017 from $133 million in 2016 primarily because of startup costs for new business ventures.

~~Expenses from Non-Insurance Businesses~~. Expenses from non-insurance businesses represent costs associated with businesses engaged in the distribution of promotional merchandise, world-wide textile solutions and aviation-related businesses that include (i) cost of goods sold related to aircraft and products sold and services provided, and (ii) general and administrative expenses. Expenses from non-insurance businesses were $221 million in 2017 compared to $291 million in 2016. The decline mainly relates to the sale of Aero Precision Industries in August 2016, partially offset by the expense from the textile business purchased in March 2017.

~~Interest Expense. Interest expense was $110 million in 2017 compared with $104 million in 2016. During 2017, the~~ Company repaid $2 million of debt compared to $83 million in 2016, mainly in connection with the sale of Aero Precision Industries. In February 2016, the Company issued $110 million of 5.9% subordinated debentures maturing in 2056, and in May 2016, the Company issued $290 million of 5.75% subordinated debentures maturing in 2056.

~~Income Taxes. The effective income tax rate was 31% in 2017 and 32% in 2016. The effective income tax rate differs from the federal income tax rate of 35% primarily because of tax-exempt~~ investment ~~income.~~

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $40 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. However, in the future, if such earnings were distributed to the Company, taxes of approximately $4 million, assuming all tax credits are realized, would be payable on such undistributed earnings and would be reflected in the tax provision for the year in which these earnings are no longer intended to be permanently reinvested in the foreign subsidiary.

~~Results of Operations for the Three Months Ended September 30, 2017 and 2016~~

~~Business Segment Results~~

Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of premiums earned), expense ratios (underwriting expenses expressed as a percentage of premiums earned) and United States Generally Accepted Accounting Principles (“GAAP”) combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the three months ended September 30, 2017 and 2016. 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) 2017 2016
Insurance:
Gross premiums written $ 1,718,552
$ 1,688,712
Net premiums written 1,432,334
1,443,986
Net premiums earned 1,433,729
1,423,635
Loss ratio 63.2 % 60.9 %
Expense ratio 32.4 % 32.3 %
GAAP combined ratio 95.6 % 93.2 %
Reinsurance:
Gross premiums written $ 155,606
$ 180,137
Net premiums written 138,849
163,379
Net premiums earned 147,771
162,309
Loss ratio 118.7 % 61.3 %
Expense ratio 34.9 % 38.9 %
GAAP combined ratio 153.6 % 100.2 %
Consolidated:
Gross premiums written $ 1,874,158
$ 1,868,849
Net premiums written 1,571,183
1,607,365
Net premiums earned 1,581,500
1,585,944
Loss ratio 68.4 % 60.9 %
Expense ratio 32.6 % 33.0 %
GAAP combined ratio 101.0 % 93.9 %

~~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 three months ended September 30, 2017 and 2016:~~

(in thousands, except per share data) 2017 2016
Net income to common stockholders $ 162,054
$ 220,650
Weighted average diluted shares 128,944
128,556
Net income per diluted share $ 1.26
$ 1.72

~~The Company reported net income of $162 million in 2017 compared to~~ ~~$221 million in 2016~~. The 27% decrease in net income was primarily due to an after-tax decrease in underwriting income of $73 million mainly driven by increased catastrophe losses from Hurricanes Harvey, Irma and Maria, as well as two earthquakes in Mexico,fund) partially offset by an ~~$11~~increase in unrealized losses on equity securities of $43 million.

~~million benefit~~Change in Allowance for Expected Credit Losses on Investments. Based on credit factors, the allowance for expected credit losses is increased or decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and adverse conditions specifically related to ~~stock compensation tax benefits being recognized within income tax expense starting~~the security, among other factors. For the six months ended June 30, 2022, the pre-tax change in ~~2017 and an after-tax increase~~allowance for expected credit losses on investments increased by $11 million ($9 million after-tax), which is reflected in net investment gains ~~of $5 million. The number of weighted average diluted shares remained relatively unchanged for~~(losses), primarily due to change in estimate. For the ~~three~~six months ended ~~September~~June 30, ~~2017 and 2016.~~

~~Premiums~~. Gross premiums written were $1,874 million in 2017, an increase of less than 1% from $1,869 million in 2016. Approximately 77.5% of policies expiring in 2017 were renewed, compared with a 77.7% renewal retention rate for policies expiring in 2016.

~~Average renewal premium rates for insurance and facultative reinsurance increased 0.7% in 2017 when adjusted for~~2021, the pre-tax change in ~~exposures.~~

~~A summary of gross premiums written in 2017 compared with 2016~~allowance for expected credit losses on investments increased by ~~line of business within each business segment follows:~~

~~Insurance - gross premiums increased 2% to $1,719 million in 2017 from $1,689 million in 2016. Gross premiums increased~~ $13 million ~~(3%) for short tail lines, $12~~($10 million ~~(3%) for workers' compensation, $6 million (3%) for commercial auto and $4 million (2%) for professional liability and decreased $5 million (1%) for other liability.~~

~~Reinsurance - gross premiums decreased 14% to $156 million~~after-tax), which is reflected in ~~2017 from $180 million in 2016. Gross premiums decreased $26 million (34%) for property lines and increased $2 million (2%) for casualty lines.~~

~~Net premiums written were $1,571 million in 2017, a decrease of 2% from $1,607 million in 2016. Ceded reinsurance premiums as a percentage of gross written premiums were 16% in 2017 and 14% in 2016.~~

Premiums earned decreased less than 1% to $1,582 million in 2017 from $1,586 million in 2016. Insurance premiums (including the impact of rate changes) are generally earned evenly over the policy term. Premiums earned in 2017 arenet investment gains (losses), primarily related to ~~business written during both 2017 and 2016. Audit premiums were $46 million in 2017 compared with $35 million in 2016.~~foreign government securities which did not previously have an allowance.

~~Net Investment Income. Following is a summary of net investment income for the three months ended September 30, 2017 and 2016:~~

Amount
Average Annualized
Yield
($ in thousands) 2017 2016 2017 2016
Fixed maturity securities, including cash and cash equivalents and loans receivable $ 118,834
$ 114,271
3.4 % 3.3 %
Investment funds 15,200
25,293
5.2
8.1
Arbitrage trading account 4,418
6,441
3.5
5.6
Real estate 5,042
585
1.5
0.2
Equity securities available for sale 604
1,069
1.2
2.0
Gross investment income 144,098
147,659
3.3
3.5
Investment expenses (1,619 ) (1,991 )
Total $ 142,479
$ 145,668
3.2 % 3.4 %

Net investment income decreased 2% to $142 million in 2017 from $146 million in 2016 due primarily to a $10 million decrease from investment funds and a $2 million decrease from the arbitrage trading account, partially offset by a $4 million increase from fixed maturity securities and an increase of $4 million in income from real estate. Average invested assets, at cost (including cash and cash equivalents), were $17.6 billion in 2017 up from $17.0 billion in 2016.

~~Insurance Service Fees. The Company earns fees from an insurance distribution business and as a servicing carrier of workers' compensation assigned risk plans for certain states. Service fees increased~~ ~~to $34 million in 2017 from $32 million in 2016.~~

~~Net Realized Gains on Investment Sales~~. The Company buys and sells securities and other investment assets on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets are based on management’s view of the underlying fundamentals of specific investments as well as management’s expectations regarding interest rates, credit spreads, currency values and general economic conditions. Net realized gains on investment sales were $184 million in 2017 compared with $176 million in 2016. The three months ended September 30, 2017 include a gain of $124 million from the sale of an investment in an office building located in Washington D.C. The three months ended

~~September 30, 2016 include a gain of $135 million from the sale of Aero Precision Industries and certain related aviation services business.~~

~~Other-Than-Temporary Impairments. There were no other-than-temporary impairments during the three months ended September 30, 2017 and 2016.~~

Revenues from Non-Insurance Businesses. Revenues from non-insurance businesses were derived from businesses engaged in the distribution of promotional merchandise, world-wide textile solutions and aviation-related businesses that provide services to aviation markets, including (i) the distribution, manufacturing, repair and overhaul of aircraft parts and components, (ii) the sale of new and used aircraft, and (iii) avionics, fuel, maintenance, storage and charter services. Revenues from non-insurance businesses were ~~$90~~$226 million in ~~2017~~2022 and ~~$80~~$197 million in ~~2016.~~2021. The increase ~~was primarily related~~mainly relates to the business recovery from COVID-19 on promotional merchandise and textile business, ~~purchased~~as well as a newly acquired commercial and residential textile business in ~~March 2017.~~2022.

Losses and Loss Expenses. Losses and loss expenses increased to ~~$1,081~~$2,775 million in ~~2017~~2022 from ~~$966~~$2,325 million in ~~2016.~~2021. The consolidated loss ratio was ~~68.4%~~60.2% in ~~2017~~2022 and ~~60.9%~~60.8% in ~~2016.~~2021. Catastrophe losses, net of reinsurance recoveries, ~~and reinstatement premiums,~~ were ~~$119~~$87 million ~~in 2017 and $12 million in 2016. Hurricanes Harvey, Irma and Maria, along with two earthquakes in Mexico, resulted in catastrophe~~(including current accident year losses of ~~$107 million.~~approximately $3 million related to COVID-19) in 2022 and $80 million (including losses of approximately $40 million related to COVID-19) in 2021. Favorable prior year reserve development (net of premium offsets) was $7$3 million in ~~2017~~2022 and ~~$13~~$4 million in ~~2016.~~2021. The loss ratio excluding catastrophe losses and prior year reserve development i~~ncreased 0.4~~ ~~points to 61.3%~~was 58.4% in ~~2017 from 60.9%~~2022 and 58.8% in ~~2016.~~2021.

A summary of loss ratios in ~~2017~~2022 compared with ~~2016~~2021 by business segment follows:

•Insurance - The loss ratio ~~of 63.2%~~was 60.3% in ~~2017 was 2.3 points higher than the loss ratio of 60.9%~~2022 and 61.3% in ~~2016.~~2021. Catastrophe losses were ~~$47~~$51 million in ~~2017 and $9~~2022 compared with $70 million in ~~2016.~~2021. The Company reflected a best estimate (net of reinsurance) based upon available information for current accident year COVID-19-related losses of approximately $1 million. Favorable prior year reserve development was ~~$13~~$3 million in ~~both 2017~~2022 and ~~2016.~~$12 million in 2021. The loss ratio excluding catastrophe losses and prior year reserve development decreased ~~0.4~~0.6 points to ~~60.8%~~59.1% in ~~2017~~2022 from ~~61.2%~~59.7% in ~~2016.~~2021.

•Reinsurance & Monoline Excess - The loss ratio ~~of 118.7%~~was 60.2% in ~~2017 was 57.4 points higher than the loss ratio of 61.3%~~2022 and 57.4% in ~~2016.~~2021. Catastrophe losses were ~~$72~~$36 million in ~~2017~~2022 compared with $3$10 million in ~~2016.~~2021. The Company reflected a best estimate (net of reinsurance) based upon available information for current accident year COVID-19-related losses of approximately $2 million. Adverse prior year reserve development was $6$0.3 million in ~~2017 compared with favorable prior year reserve development of $0.2~~2022 and $8 million in ~~2016.~~2021. The loss ratio excluding catastrophe losses and prior year reserve development increased ~~6.9~~0.3 points to ~~66.1%~~53.8% in ~~2017~~2022 from ~~59.2%~~53.5% in ~~2016 largely due to increased attritional losses.~~2021.

Other Operating Costs and Expenses. Following is a summary of other operating costs and ~~expenses:~~expenses for the six months ended June 30, 2022 and 2021:


(In thousands)	2017		2016
Policy acquisition and operating insurance expenses	$	516,243	$	523,254
($ in thousands)						($ in thousands)	2022		2021
Policy acquisition and insurance operating expenses						Policy acquisition and insurance operating expenses	$	1,288,547	$	1,111,483
Insurance service expenses	32,451		32,441			Insurance service expenses	46,356		42,575
Net foreign currency (gains) losses	1,779		(2,193		)
Net foreign currency gains						Net foreign currency gains	(43,995)		(6,719)
Debt extinguishment costs						Debt extinguishment costs	—		11,520
Other costs and expenses	50,349		52,846			Other costs and expenses	122,810		105,114
Total	$	600,822	$	606,348		Total	$	1,413,718	$	1,263,973


(In thousands)	Amortized Cost		Allowance for Expected Credit Losses (1)		Gross Unrealized				Fair Value		Carrying Value
					Gains		Losses
December 31, 2021
Held to maturity:
State and municipal	$	69,539	$	(387)	$	10,813	$	—	$	79,965	$	69,152
Residential mortgage-backed	4,829		—		632		—		5,461		4,829

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


	2022						2021
(In thousands)	Foreign Government		Corporate		Total		Foreign Government		Corporate		Total
Allowance for expected credit losses, beginning of period	$	22,222	$	16	22,238		$	1,264	$	518	$	1,782

Expected credit losses on securities for which credit losses were not previously recorded	1,897		182		2,079		18,990		16		19,006
Expected credit losses (gains) on securities for which credit losses were previously recorded	9,010		(16)		8,994		(861)		(517)		(1,378)
Reduction due to disposals	(33)		—		(33)		(494)		(5)		(499)
Allowance for expected credit losses, end of period	$	33,096	$	182	$	33,278	$	18,899	$	12	$	18,911



(In thousands)	Amortized Cost (1)		Fair Value
Due in one year or less	$	1,859,431	$	1,829,253
Due after one year through five years	8,188,520		7,879,921
Due after five years through ten years	3,970,551		3,716,098
Due after ten years	2,080,064		1,950,335
Mortgage-backed securities	1,598,727		1,481,424
Total	$	17,697,293	$	16,857,031



(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


	Carrying Value as of				Income (Loss) from Investment Funds
	June 30,		December 31,		For the Six Months Ended June 30,
(In thousands)	2022		2021		2022		2021
Financial services	$	469,474	$	431,818	$	24,135	$	48,990
Transportation	338,555		336,688		25,355		17,177
Real Estate	275,075		273,690		28,243		10,506
Energy	132,728		150,224		3,708		9,492
Infrastructure	110,491		12,314		(133)		699
Other funds	375,947		275,878		4,566		13,382
Total	$	1,702,270	$	1,480,612	$	85,874	$	100,246



	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


~~(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)	Cost		Gross Unrealized					Fair Value		Carrying Value		(In thousands)	Cost		Gross Unrealized				Fair Value		Carrying Value
			Gains		Losses										Gains		Losses
September 30, 2017
June 30, 2022												June 30, 2022
Common stocks	$	83,709	$	339,297	$	(3,486	)	$	419,520	$	419,520	Common stocks	$	863,106	$	111,393	$	(41,827)	$	932,672	$	932,672
Preferred stocks	125,076		71,147		(1,718		)	194,505		194,505		Preferred stocks	259,338		2,652		(39,336)		222,654		222,654
Total	$	208,785	$	410,444	$	(5,204	)	$	614,025	$	614,025	Total	$	1,122,444	$	114,045	$	(81,163)	$	1,155,326	$	1,155,326
December 31, 2016

December 31, 2021												December 31, 2021
Common stocks	$	94,998	$	351,906	$	(1,046	)	$	445,858	$	445,858	Common stocks	$	619,896	$	92,401	$	(16,894)	$	695,403	$	695,403
Preferred stocks	125,589		101,392		(3,639		)	223,342		223,342		Preferred stocks	250,149		7,874		(12,183)		245,840		245,840
Total	$	220,587	$	453,298	$	(4,685	)	$	669,200	$	669,200	Total	$	870,045	$	100,275	$	(29,077)	$	941,243	$	941,243



	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


Change in unrealized investment (losses) gains on available for sale securities:
Fixed maturity securities without allowance for expected credit losses	$	(409,647)	$	28,511	$	(949,910)	$	(94,058)
Fixed maturity securities with allowance for expected credit losses	(16,878)		(69)		(16,585)		10,286

Investment funds	(3,302)		762		(2,833)		(257)
Other	(957)		(400)		(904)		(902)
Total change in unrealized investment (losses) gains	(430,784)		28,804		(970,232)		(84,931)
Income tax benefit (expense)	93,776		(5,532)		209,679		18,073
Noncontrolling interests	—		(1)		(1)		(1)
After-tax change in unrealized investment (losses) gains of available for sale securities	$	(337,008)	$	23,271	$	(760,554)	$	(66,859)



	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 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)	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 2017	—	—		—	6,851,086
August 2017	—	—		—	10,000,000 ⁽¹⁾
September 2017	441,119	$	64.333	441,119	9,558,881


Number
(3.1)						The Company’s Restated Certificate of Incorporation, as amended through May 10, 2004 (incorporated by reference to Exhibits 3.1 and 3.2 of the Company’s Quarterly Report on Form 10-Q (File No. 1-15202) filed with the Commission on August 6, 2003).

~~Number~~
(~~10.1~~3.2)						Amendment, dated May 11, 2004, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly report on Form ~~of 2017 Performance-Based Restricted Stock Unit Agreement Under~~10-Q (File No. 1-15202) filed with the ~~W. R. Berkley Corporation 2012 Stock Incentive Plan~~Commission on August 5, 2004).

(3.3)						Amendment, dated May 16, 2006, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on May 17, 2006).

(3.4)						Amendment, dated June 12, 2020, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on June 16, 2020).

(3.5)						Amendment, dated June 15, 2022, to the Company’s Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 1-15202) filed with the Commission on June 16, 2022).

(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~~August 2, 2022	/s/ W. Robert Berkley, Jr.
		W. Robert Berkley, Jr.
		President and Chief Executive Officer

Date:	~~November 8, 2017~~August 2, 2022	/s/ Richard M. Baio
		Richard M. Baio
		~~Senior~~Executive Vice President - Chief Financial Officer ~~and Treasurer~~