BERKLEY W R CORP

Previous wording

W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property and casualty business: Insurance and Reinsurance & Monoline Excess. Our decentralized structure provides us with the flexibility to respond quickly and efficiently to local or specific market conditions and to pursue specialty business niches. It also allows us to be closer to our customers in order to better understand their individual needs and risk characteristics. While providing our business units with certain operating autonomy, our structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment, reinsurance, enterprise risk management, and actuarial, financial and corporate legal staff support. The Company’s primary sources of revenues and earnings are its insurance operations and its investments.

Current wording

W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property and casualty business: Insurance and Reinsurance & Monoline Excess. Our decentralized structure provides us with the flexibility to respond quickly and efficiently to local or specific market conditions and to pursue specialty business niches. It also allows us to be closer to our customers in order to better understand their individual needs and risk characteristics. While providing our operating 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.

Previous wording

On June 12, 2024, the Company announced that its Board of Directors approved a 3-for-2 common stock split which was paid in the form of a stock dividend to holders of record as of June 24, 2024. The additional shares were issued on July 10, 2024. Share and per share amounts in this Form 10-Q reflect such 3-for-2 common stock split.

Current wording

On June 12, 2024, the Company announced that its Board of Directors approved a 3-for-2 common stock split which was paid in the form of a stock dividend to holders of record as of June 24, 2024. The additional shares were issued on July 10, 2024.

Previous wording

Our net reserves for losses and loss expenses of approximately $17.7 billion as of March 31, 2025 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.

Current wording

Our net reserves for losses and loss expenses of approximately $18.2 billion as of June 30, 2025 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.

Previous wording

Approximately $3.3 billion, or 18.8%, of the Company’s net loss reserves as of March 31, 2025 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, which predominantly comprise these 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 loss development factors for these lines of business.

Current wording

Approximately $3.4 billion, or 18.7%, of the Company’s net loss reserves as of June 30, 2025 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, which predominantly comprise these 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 loss development factors for these lines of business.

Previous wording

(1) Reserves for workers’ compensation and Reinsurance & Monoline Excess are net of an aggregate net discount of $413 million and $405 million as of March 31, 2025 and December 31, 2024, respectively.

Current wording

(1) Reserves for workers’ compensation and Reinsurance & Monoline Excess are net of an aggregate net discount of $415 million and $405 million as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

Net prior year development (i.e., the sum of prior year reserve changes and prior year earned premiums changes) for the three months ended March 31, 2025 and 2024 are as follows:

Current wording

Net prior year development (i.e., the sum of prior year reserve changes and prior year earned premiums changes) for the six months ended June 30, 2025 and 2024 are as follows:

Previous wording

During the three months ended March 31, 2024, favorable prior year development (net of additional and return premiums) of $1 million included $9 million for the Reinsurance & Monoline Excess segment largely offset by $8 million for the Insurance segment.

Current wording

During the six months ended June 30, 2025, favorable prior year development (net of additional and return premiums) of $1 million included $20 million of favorable prior year development for the Reinsurance & Monoline Excess segment largely offset by $19 million of adverse prior year development for the Insurance segment.

Previous wording

For the Insurance segment, the adverse development during the first quarter of 2025 was driven primarily by excess other liability, including umbrella, and was partially offset by favorable development for short tail lines of business, including commercial property and commercial auto physical damage. The adverse excess other liability, including umbrella, development was concentrated in accident years 2018 through 2022, and included a significant component stemming from underlying auto exposures. The Company believes that auto-related claims are being particularly impacted by social inflation, which is contributing to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others. The favorable development for short tail property lines of business during the first quarter of 2025 related to the 2024 accident year, and resulted from favorable settlements of both catastrophe and non-catastrophe claims below our expectations.

Current wording

For the Insurance segment, the adverse development during the first half of 2025 was driven by other liability and commercial auto liability and was partially offset by favorable development for short tail lines of business, including commercial property and commercial auto physical damage. The adverse other liability development was driven primarily by umbrella and other claims attaching excess of primary policy limits and included a significant component stemming from underlying auto exposures. A secondary driver of the other liability development related to the Company’s excess and surplus lines casualty business. The other liability development was concentrated in accident years 2017 through 2022. The adverse commercial auto liability development was concentrated in accident years 2021 and 2022. The Company believes that auto-related claims are being particularly impacted by social inflation, which is contributing to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of tactics such as litigation funding by the plaintiffs’ bar, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.

Previous wording

For the Reinsurance & Monoline Excess segment, the favorable development during the first quarter of 2025 was driven mainly by favorable development in non-proportional reinsurance assumed property, partially offset by adverse development in the non-proportional reinsurance assumed liability line of business. Similar to the Insurance segment, the favorable property reinsurance development was driven by favorable claim settlements, below our expectations, related to the 2024 accident year. The unfavorable development for non-proportional reinsurance assumed liability was associated primarily with our U.S. assumed reinsurance businesses, and was concentrated mainly in accident years 2018 through 2021.

Current wording

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

Previous wording

During the three months ended March 31, 2025, favorable prior year development (net of additional and return premiums) of $1 million included $12 million for the Reinsurance & Monoline Excess segment largely offset by $11 million of adverse prior year development for the Insurance segment.

Current wording

During the six months ended June 30, 2024, favorable prior year development (net of additional and return premiums) of $2 million included $7 million for the Reinsurance & Monoline Excess segment partially offset by $5 million of adverse prior year development for the Insurance segment.

Previous wording

For the Insurance segment, the adverse development during the first quarter of 2024 was driven by commercial auto liability and excess other liability, including umbrella, and was partially offset by favorable development for workers’ compensation and professional liability. The adverse commercial auto liability development was concentrated in accident years 2019 through 2023, while the excess other liability, including umbrella, development was focused in accident years 2017 through 2021. A significant portion of the excess other liability, including umbrella, development related to underlying commercial auto exposures. The Company believes that commercial auto-related claims are being particularly impacted by social inflation, which is contributing to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of aggressive actions by the plaintiffs' bar such as litigation funding, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among others.

Current wording

For the Insurance segment, the adverse development during the first half of 2024 was driven by commercial auto liability and other liability (mainly umbrella and excess liability), and was partially offset by favorable development for workers’ compensation and professional liability. The adverse commercial auto liability development was concentrated in accident years 2020 through 2023. The other liability development was mainly driven by umbrella and excess liability claims, and was focused in accident years 2017 through 2021. A significant portion of the umbrella and excess liability development related to underlying commercial auto exposures. The Company believes that commercial auto-related claims were being particularly impacted by social inflation, which contributed to an increase in the frequency of large losses beyond expectations. Social inflation can include higher settlement demands from plaintiffs, use of aggressive actions by the plaintiffs’ bar such as litigation funding, negative public sentiment towards large businesses and corporations, and erosion of tort reforms, among other factors.

Previous wording

The favorable workers’ compensation development for the Insurance segment was mainly related to accident years 2018 through 2023, while the favorable professional liability development was mainly in accident years 2021 and 2022. For workers’ compensation, favorable reported claim frequency, below expectations, continued to drive the favorable reserve development. For professional liability, the reported loss experience for the 2021 and 2022 accident years was better than expected. These accident years also feature business written at peak pricing levels, which the Company believed would result in higher profitability than initially anticipated.

Current wording

The favorable workers’ compensation development for the Insurance segment was mainly related to accident years 2016 through 2023, while the favorable professional liability development was mainly in accident years 2018 through 2022. For workers’ compensation, favorable reported claim frequency, below expectations, continued to be the main driver of the favorable reserve development. For professional liability, reported loss experience for accident years 2018 through 2022 was better than expected, which drove the favorable reserve development. Accident years 2020 through 2022 also feature business written at peak pricing levels, which the Company believes will result in higher profitability than initially anticipated.

Previous wording

For the Reinsurance & Monoline Excess segment, the favorable development was driven mainly by favorable development in excess workers’ compensation, partially offset by adverse development in the non-proportional reinsurance assumed liability line of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to expectations, and to favorable claim settlements spread across many prior accident years. The unfavorable development for non-proportional reinsurance was concentrated mainly in accident years 2017 through 2019 and was associated primarily with our U.S. and U.K. excess general liability reinsurance businesses, including accounts reinsuring construction projects.

Current wording

For the Reinsurance & Monoline Excess segment, the favorable development during the first half of 2024 was driven mainly by favorable development in excess workers’ compensation, partially offset by adverse development in the non-proportional reinsurance assumed liability line of business. The favorable excess workers’ compensation development was driven by continued lower claim frequency and reported losses relative to expectations, and by favorable claim settlements spread across many prior accident years. The unfavorable development for non-proportional reinsurance was concentrated mainly in accident years 2017 through 2019 and was associated primarily with our U.S. and U.K. excess general liability reinsurance businesses, including coverage for cedants insuring construction projects.

Previous wording

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,379 million and $1,358 million at March 31, 2025 and December 31, 2024, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $413 million and $405 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.

Current wording

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,385 million and $1,358 million at June 30, 2025 and December 31, 2024, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $415 million and $405 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 2025, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.6%.

Previous wording

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 $65 million at March 31, 2025 and $51 million at December 31, 2024. 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.

Current wording

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 $58 million at June 30, 2025 and $51 million at December 31, 2024. 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.

Previous wording

Loans Receivable – For loans receivable, the Company estimates an allowance for expected credit losses based on relevant information about past events, including historical loss experience, current conditions and forecasts that affect the expected collectability of the amortized cost of the financial asset. The allowance for expected credit losses is presented as a reduction to amortized cost of the financial asset in the consolidated balance sheet and changes to the estimate for expected credit losses are recognized through net investment gains (losses). Loans receivable are reported net of an allowance for expected credit losses of $1 million as of both March 31, 2025 and December 31, 2024.

Current wording

Loans Receivable – For loans receivable, the Company estimates an allowance for expected credit losses based on relevant information about past events, including historical loss experience, current conditions and forecasts that affect the expected collectability of the amortized cost of the financial asset. The allowance for expected credit losses is presented as a reduction to amortized cost of the financial asset in the consolidated balance sheet and changes to the estimate for expected credit losses are recognized through net investment gains (losses). Loans receivable are reported net of an allowance for expected credit losses of $0.4 million and $1 million as of June 30, 2025 and December 31, 2024, respectively.

Previous wording

Average renewal premium rates (per unit of exposure) for insurance and facultative reinsurance increased 7.3% in 2025 and increased 8.3% excluding workers' compensation.

Current wording

Average renewal premium rates (per unit of exposure) for insurance and facultative reinsurance increased 7.0% in 2025 and increased 7.9% excluding workers' compensation.

Previous wording

•Reinsurance & Monoline Excess - gross premiums increased 6% to $467 million in 2025 from $442 million in 2024. Gross premiums increased $35 million (31%) for property and $1 million (1%) for monoline excess, partially offset by a reduction of $11 million (6%) for casualty.

Current wording

•Reinsurance & Monoline Excess - gross premiums increased 5% to $838 million in 2025 from $799 million in 2024. Gross premiums increased $43 million (18%) for property and $7 million (5%) for monoline excess, partially offset by a decrease of $11 million (3%) for casualty.

Previous wording

Premiums earned increased 9% to $3,012 million in 2025 from $2,764 million in 2024. 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 2025 are related to business written during both 2025 and 2024. Audit premiums were $83 million in 2025 compared with $88 million in 2024.

Current wording

Premiums earned increased 9% to $6,111 million in 2025 from $5,611 million in 2024. 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 2025 are related to business written during both 2025 and 2024. Audit premiums were $168 million in 2025 compared with $184 million in 2024.

Previous wording

Net investment income increased 13% to $360 million in 2025 from $320 million in 2024 due primarily to a $56 million increase in income from investment funds primarily due to transportation funds and financial services funds and a $9 million increase in real estate, partially offset by a $22 million decrease in income from fixed maturity securities mainly due to higher income from the Argentine inflation-linked securities in 2024, a $2 million decrease in equity securities and a $1 million increase in investment expenses. Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 4.9% in 2025 and 5.9% in 2024. The effective duration of the fixed maturity portfolio was 2.7 years at March 31, 2025 and 2.6 years at December 31, 2024. Average invested assets, at cost (including cash and cash equivalents), were $30.5 billion in 2025 up 9.3% from $27.9 billion in 2024.

Current wording

Net investment income increased 7% to $740 million in 2025 from $692 million in 2024 due primarily to a $58 million increase in income from investment funds primarily due to transportation funds and financial services funds, a $9 million improvement in real estate and a $5 million increase in arbitrage trading account, partially offset by a $23 million decrease in income from fixed maturity securities mainly due to higher income from the Argentine inflation-linked securities in 2024 and a $1 million increase in investment expenses. Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 4.9% in 2025 and 5.7% in 2024. The average annualized yield for fixed maturity securities excluding Argentine inflation-linked securities was 4.7% in 2025 and 4.4% in 2024. The effective duration of the fixed maturity portfolio was 2.8 years at June 30, 2025 and 2.6 years at December 31, 2024. Average invested assets, at cost (including cash and cash equivalents), were $30.9 billion in 2025 up 9% from $28.2 billion in 2024.

Previous wording

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. Insurance service fees increased to $29 million in 2025 from $25 million in 2024 mainly due to organic growth within the business.

Current wording

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. Insurance service fees increased to $62 million in 2025 from $53 million in 2024 mainly due to organic growth within the business.

Previous wording

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 $129 million in 2025 and $121 million in 2024. The increase mainly relates to aviation-related business and commercial and residential textile business, partially offset by the reduction in promotional merchandise business.

Current wording

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 $258 million in 2025 and $247 million in 2024. The increase mainly relates to aviation-related business and commercial and residential textile business, partially offset by the reduction in promotional merchandise business.

Previous wording

•Insurance - The loss ratio was 63.9% in 2025 and 61.8% in 2024. Catastrophe losses were $71 million in 2025 compared with $28 million in 2024. Adverse prior year reserve development was $11 million in 2025 and $8 million in 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.5 points to 60.8% in 2025 from 60.3% in 2024.

Current wording

•Insurance - The loss ratio was 63.9% in 2025 and 62.9% in 2024. Catastrophe losses were $148 million in 2025 compared with $114 million in 2024. Adverse prior year reserve development was $19 million in 2025 and $5 million in 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.3 points to 60.7% in 2025 from 60.4% in 2024.

Previous wording

•Reinsurance & Monoline Excess - The loss ratio was 57.7% in 2025 and 49.8% in 2024. Catastrophe losses were $40 million in 2025 and $3 million in 2024. Favorable prior year reserve development was $12 million in 2025 and $9 million in 2024. The loss ratio excluding catastrophe losses and prior year reserve development decreased 1.4 points to 50.0% in 2025 from 51.4% in 2024.

Current wording

•Reinsurance & Monoline Excess - The loss ratio was 57.7% in 2025 and 51.3% in 2024. Catastrophe losses were $62 million in 2025 and $6 million in 2024. Favorable prior year reserve development was $20 million in 2025 and $7 million in 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.6 points to 52.1% in 2025 from 51.5% in 2024.

Previous wording

Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses increased 6.0% and net premiums earned increased 9.0% from 2024. The expense ratio (underwriting expenses expressed as a percentage of net premiums earned) decreased 0.8 points to 27.8% in 2025 from 28.6% in 2024 mainly due to growth in net premiums earned and a non-recurring benefit associated with compensation costs.

Current wording

Policy acquisition and insurance operating expenses are comprised of commissions paid to agents and brokers, premium taxes and other assessments and internal underwriting costs. Policy acquisition and insurance operating expenses increased 7% and net premiums earned increased 9% from 2024. The expense ratio (underwriting expenses expressed as a percentage of net premiums earned) decreased 0.4 points to 28.2% in 2025 from 28.6% in 2024 mainly due to growth in net premiums earned and a non-recurring benefit associated with compensation costs.

Previous wording

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 $19 million in 2025 compared to gains of $13 million in 2024, primarily due to other major currencies strengthening against the U.S. dollar in 2025.

Current wording

Net foreign currency losses (gains) result from transactions denominated in a currency other than a company's operating functional currency. Net foreign currency losses were $75 million in 2025 compared to gains of $23 million in 2024, primarily due to other major currencies strengthening against the U.S. dollar in 2025.

Previous wording

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 were $69 million in both 2025 and 2024.

Current wording

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 $147 million in 2025 from $137 million in 2024, primarily due to the increase in compensation-related costs and higher new start-up operating unit expenses in 2025.

Previous wording

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 $126 million in 2025 compared to $119 million in 2024. The increase mainly relates to aviation-related business and commercial and residential textile business, partially offset by the reduction in promotional merchandise.

Current wording

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 $249 million in 2025 compared to $240 million in 2024. The increase mainly relates to aviation-related business and commercial and residential textile business, partially offset by the reduction in promotional merchandise.

Previous wording

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $506 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed, the Company projects that the incremental tax, if any, will be immaterial.

Current wording

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $537 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed, the Company projects that the incremental tax, if any, will be immaterial.

Previous wording

As part of the Inflation Reduction Act of 2022, a 1% excise tax is imposed on common share repurchases, net of common share issuances, and included in the cost of treasury stock acquired. During the three months ended March 31, 2025, the Company repurchased 850,000 shares of its common stock.

Current wording

As part of the Inflation Reduction Act of 2022, a 1% excise tax is imposed on common share repurchases, net of common share issuances, and included in the cost of treasury stock acquired. During the six months ended June 30, 2025, the Company repurchased 850,000 shares of its common stock.

Previous wording

The Company reported net income to common stockholders of $418 million in 2025 compared to $442 million in 2024. The $24 million reduction of net income was primarily due to an after-tax decrease in underwriting income of $28 million mainly due to California wildfire losses in 2025, an after-tax decrease in foreign currency gains of $25 million due to the weakening U.S. dollar against other major currencies in 2025 and an after-tax decrease in net investment gains of $7 million, partially offset by an after-tax increase of $31 million in income from investment funds primarily due to transportation funds and financial services funds, a $3 million reduction in tax expense due to a change in the effective tax rate and an after-tax increase of $2 million in profit from insurance service businesses. The number of weighted average diluted shares decreased 5.9 million for 2025 compared to 2024, mainly reflecting shares repurchased in 2024.

Current wording

The Company reported net income to common stockholders of $401 million in 2025 compared to $372 million in 2024. The $29 million increase of net income was primarily due to an after-tax increase in net investment gains of $69 million mainly due to change in unrealized gains on equity securities, an after-tax increase of $6 million in net investment income, an after-tax increase in underwriting income of $5 million, a $3 million reduction in tax expense due to a change in the effective tax rate and an after-tax increase of $3 million in profit from insurance service businesses, partially offset by an after-tax increase in foreign currency losses of $50 million due to the weakening U.S. dollar against other major currencies in 2025 and an after-tax increase in corporate expenses of $7 million. The number of weighted average diluted shares decreased 3.4 million for 2025 compared to 2024, mainly reflecting shares repurchased in 2025 and 2024.

Previous wording

Premiums. Gross premiums written were $3,684 million in 2025, an increase of 10% from $3,363 million in 2024. The increase was due to a $296 million increase in the Insurance segment and a $25 million increase in the Reinsurance & Monoline Excess segment. Approximately 81% of premiums expiring in 2025 and 2024 were renewed.

Current wording

Premiums. Gross premiums written were $3,978 million in 2025, an increase of 7% from $3,718 million in 2024. The increase was due to a $246 million increase in the Insurance segment and a $14 million increase in the Reinsurance & Monoline Excess segment. Approximately 80% of premiums expiring in 2025 and 2024 were renewed.

Previous wording

Net premiums written were $3,133 million in 2025, an increase of 10% from $2,851 million in 2024. Ceded reinsurance premiums as a percentage of gross written premiums was 15% in both 2025 and 2024.

Current wording

Net premiums written were $3,351 million in 2025, an increase of 7% from $3,127 million in 2024. Ceded reinsurance premiums as a percentage of gross written premiums was 16% in both 2025 and 2024.

Previous wording

Net Realized and Unrealized Gains on Investments. The Company buys and sells securities and other investment assets on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets are based on management’s view of the underlying fundamentals of specific investments as well as management’s expectations regarding interest rates, credit spreads, currency values and general economic conditions. Net realized and unrealized gains on investments were $16 million in 2025 compared with $12 million in 2024. The gains of $16 million in 2025 reflected an increase in unrealized gains on equity securities of $20 million, partially offset by net realized losses on investments of $4 million. The gains of $12 million in 2024 reflected an increase in unrealized gains on equity securities of $26 million, partially offset by net realized losses on investments of $14 million.

Current wording

Net Realized and Unrealized Gains (Losses) on Investments. The Company buys and sells securities and other investment assets on a regular basis in order to maximize its total return on investments. Decisions to sell securities and other investment assets are based on management’s view of the underlying fundamentals of specific investments as well as management’s expectations regarding interest rates, credit spreads, currency values and general economic conditions. Net realized and unrealized gains on investments were $31 million in 2025 compared with losses of $60 million in 2024. The gains of $31 million in 2025 reflected an increase in unrealized gains on equity securities of $64 million, partially offset by net realized losses on investments of $33 million. The losses of $60 million in 2024 reflected an increase in unrealized losses on equity securities of $66 million, partially offset by net realized gains on investments of $6 million.

Previous wording

Change in Allowance for Expected Credit Losses on Investments. Based on credit factors, the allowance for expected credit losses is increased or decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. The pre-tax change in allowance for expected credit losses on investments, which are reflected in net investment gains, decreased by $0.6 million ($0.5 million after-tax) in 2025 and $14 million ($11 million after-tax) in 2024, primarily due to improved pricing related to fixed maturity securities.

Current wording

Change in Allowance for Expected Credit Losses on Investments. Based on credit factors, the allowance for expected credit losses is increased or decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. The pre-tax change in allowance for expected credit losses on investments, which are reflected in net investment gains, decreased by $0.4 million ($0.3 million after-tax) in 2025 and $2 million ($1.6 million after-tax) in 2024.

Previous wording

Losses and Loss Expenses. Losses and loss expenses increased to $1,901 million in 2025 from $1,664 million in 2024. The consolidated loss ratio was 63.1% in 2025 and 60.2% in 2024. Catastrophe losses, net of reinsurance recoveries, were $111 million in 2025 mainly due to California wildfire losses, up from $31 million in 2024. Favorable prior year reserve development (net of premium offsets) was $1 million in both 2025 and 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.3 points to 59.4% in 2025 from 59.1% in 2024 largely due to a change in business mix.

Current wording

Losses and Loss Expenses. Losses and loss expenses increased to $1,955 million in 2025 from $1,781 million in 2024. The consolidated loss ratio was 63.1% in 2025 and 62.6% in 2024. Catastrophe losses, net of reinsurance recoveries, were $99 million in 2025 driven by frequency of severe storms and $90 million in 2024. Favorable prior year reserve development (net of premium offsets) was $1 million in both 2025 and 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.5 points to 59.9% in 2025 from 59.4% in 2024 largely due to a change in business mix.

Previous wording

Insurance service expenses, which represent the costs associated with the fee-based businesses, were $23 million in 2025 and $21 million in 2024.

Current wording

Insurance service expenses, which represent the costs associated with the fee-based businesses, were $24 million in 2025 and $23 million in 2024.

Previous wording

Income Taxes. The effective income tax rate was 22.5% and 23.0% for the three months ended March 31, 2025 and 2024, respectively. The lower effective income tax rate for the three months ended March 31, 2025, as compared to the earlier period, was primarily due to an improved geographical mix of earnings which are subject to tax at a rate greater than the U.S. statutory rate.

Current wording

Income Taxes. The effective income tax rate was 23.2% and 23.7% for the three months ended June 30, 2025 and 2024, respectively. The lower effective income tax rate for the three months ended June 30, 2025, as compared to the earlier period, was primarily due to the geographical mix of earnings.

Previous wording

The Company also attempts to maintain an appropriate relationship between the average duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The average duration of the fixed maturity portfolio, including cash and cash equivalents, was 2.7 years at March 31, 2025 and 2.6 years at December 31, 2024. The Company’s fixed maturity investment portfolio and investment-related assets as of March 31, 2025 were as follows:

Current wording

The Company also attempts to maintain an appropriate relationship between the average duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The average duration of the fixed maturity portfolio, including cash and cash equivalents, was 2.8 years at June 30, 2025 and 2.6 years at December 31, 2024. The Company’s fixed maturity investment portfolio and investment-related assets as of June 30, 2025 were as follows:

Previous wording

Investment Funds. At March 31, 2025, the carrying value of investment funds was $1.5 billion, including investments in financial services funds of $436 million, other funds of $385 million (which includes a deferred compensation trust asset of $40 million), transportation funds of $281 million, real estate funds of $184 million, infrastructure funds of $155 million and energy funds of $40 million. Investment funds are generally reported on a one-quarter lag.

Current wording

Investment Funds. At June 30, 2025, the carrying value of investment funds was $1.5 billion, including investments in financial services funds of $435 million, other funds of $396 million (which includes a deferred compensation trust asset of $42 million), transportation funds of $277 million, real estate funds of $181 million, infrastructure funds of $161 million and energy funds of $42 million. Investment funds are generally reported on a one-quarter lag.