BERKLEY W R CORP

Previous wording

The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed premiums and 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.

Current wording

The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed premiums and allowance for expected credit losses and fair value measurements on investments. Management believes these policies and estimates are the most critical to its operations and require the most difficult, subjective and complex judgments.

Previous wording

Our net reserves for losses and loss expenses of approximately $18.6 billion as of September 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.

Current wording

Our net reserves for losses and loss expenses of approximately $19 billion as of March 31, 2026 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 $3.4 billion, or 18.4%, of the Company’s net loss reserves as of September 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.

Current wording

Approximately $3.4 billion, or 17.6%, of the Company’s net loss reserves as of March 31, 2026 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 $417 million and $405 million as of September 30, 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 $425 million and $420 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

Net prior year development (i.e., the sum of prior year reserve changes and prior year earned premiums changes) for the nine months ended September 30, 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 three months ended March 31, 2026 and 2025 are as follows:

Previous wording

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

Current wording

During the three months ended March 31, 2026, favorable prior year development (net of additional and return premiums) of $1 million included $9 million of favorable prior year development for the Reinsurance & Monoline Excess segment partially offset by $8 million of adverse prior year development for the Insurance segment.

Previous wording

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

Current wording

For the Reinsurance & Monoline Excess segment, the favorable development during the first quarter of 2026 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. Similarly to the Insurance segment, the favorable property reinsurance development was driven by favorable claim settlements, below our expectations, related to the 2025 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 2019 through 2023.

Previous wording

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

Current 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 of for the Reinsurance & Monoline Excess segment largely offset by $11 million of adverse prior year development for the Insurance segment.

Previous wording

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

Current 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.

Previous wording

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

Current 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.

Previous wording

Reserve Discount. The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,394 million and $1,358 million at September 30, 2025 and December 31, 2024, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $417 million and $405 million at September 30, 2025 and December 31, 2024, respectively. At September 30, 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 $1,412 million and $1,400 million at March 31, 2026 and December 31, 2025, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $425 million and $420 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026, 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 $58 million at September 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.

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 $55 million at March 31, 2026 and $54 million at December 31, 2025. 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

The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities, as well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic and default scenarios that involve subjective judgments and estimates by management. Modeling these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any, the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance factors. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if any. In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period. For other inputs, the model in most cases reverts to the baseline long-term assumptions linearly over 5 years beyond the forecast period. The long-term assumptions are based on the historical averages.

Current wording

The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities, as well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic and default scenarios that involve subjective judgments and estimates by management. Modeling these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any, the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance factors. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if any. In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period. For other inputs, the model in most cases reverts to the baseline long-term assumptions linearly over five years beyond the forecast period. The long-term assumptions are based on the historical averages.

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 $0.3 million and $1 million as of September 30, 2025 and December 31, 2024, respectively.

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 $0.1 million and $0.2 million as of March 31, 2026 and December 31, 2025, respectively.

Previous wording

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

Current wording

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

Previous wording

The Company reported net income to common stockholders of $1,330 million in 2025 compared to $1,180 million in 2024. The $150 million increase in net income was primarily due to an after-tax increase in net investment gains of $130 million mainly due to change in unrealized gains on equity securities, an after-tax increase of $59 million in net investment income primarily due to income from transportation and financial services funds, a $17 million reduction in tax expense due to a change in the effective tax rate, an after-tax increase of $6 million in profit from insurance service businesses and an after-tax increase in profits from non-insurance businesses of $3 million, partially offset by an after-tax increase in foreign currency losses of $48 million due to the weakening U.S. dollar against other major currencies in 2025, an after-tax increase in corporate expenses of $10 million, an after-tax decrease in underwriting income of $6 million and an after-tax decrease in income of $1 million related to minority interest. The number of weighted average diluted shares decreased 3.7 million for 2025 compared to 2024, mainly reflecting shares repurchased in 2025 and 2024.

Current wording

The Company reported net income to common stockholders of $515 million in 2026 compared to $418 million in 2025. The $97 million increase in net income was primarily due to an after-tax increase of $37 million in net investment income primarily due to a larger fixed maturity securities portfolio and increased investment income from investment funds, a $33 million decrease in tax expense due to the repeal of undiscounted property-casualty loss deductions and special estimated payments formerly available under Internal Revenue Code Section 847, partially offset by deferred charges in the United Kingdom during the quarter, an after-tax increase in foreign currency gains of $30 million due to the U.S. dollar strengthening against other major currencies in 2026, an after-tax increase in profits from non-insurance businesses of $15 million and an after-tax increase in underwriting income of $14 million, partially offset by an after-tax increase in net investment losses of $27 million mainly due to change in unrealized losses on equity securities, an after-tax increase in corporate expenses of $4 million and an after-tax decrease in income of $1 million related to minority interest. The number of weighted average diluted shares decreased 5.0 million for 2026 compared to 2025, mainly reflecting shares repurchased in 2026 and 2025.

Previous wording

Premiums. Gross premiums written were $3,836 million in 2025, an increase of 6% from $3,633 million in 2024. The increase was due to a $174 million increase in the Insurance segment and a $29 million increase in the Reinsurance & Monoline Excess segment. Approximately 79.6% of premiums expiring in 2025 and 81.1% of premiums expiring in 2024 were renewed.

Current wording

Premiums. Gross premiums written were $3,786 million in 2026, an increase of 3% from $3,684 million in 2025. The increase was due to a $145 million increase in the Insurance segment, partially offset by a $43 million decrease in the Reinsurance & Monoline Excess segment. Approximately 81% of premiums expiring in 2026 and 2025 were renewed.

Previous wording

Average renewal premium rates (per unit of exposure) for insurance and facultative reinsurance increased 6.6% in 2025 and increased 7.6% excluding workers' compensation.

Current wording

Average renewal premium rates (per unit of exposure) for insurance and facultative reinsurance increased 6.6% in 2026 and increased 7.2% excluding workers' compensation.

Previous wording

Net premiums written were $9,712 million in 2025, an increase of 7% from $9,035 million in 2024. Ceded reinsurance premiums as a percentage of gross written premiums was 15.5% and 15.7% in 2025 and 2024, respectively.

Current wording

Net premiums written were $3,174 million in 2026, an increase of 1% from $3,133 million in 2025. Ceded reinsurance premiums as a percentage of gross written premiums was 16% and 15% in 2026 and 2025, respectively.

Previous wording

Premiums earned increased 9% to $9,267 million in 2025 from $8,538 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 $248 million in 2025 compared with $270 million in 2024.

Current wording

Premiums earned increased 3% to $3,115 million in 2026 from $3,012 million in 2025. 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 2026 are related to business written during both 2026 and 2025. Audit premiums were $74 million in 2026 compared with $83 million in 2025.

Previous wording

Net investment income increased 7% to $1,091 million in 2025 from $1,016 million in 2024 due primarily to a $59 million increase in income from investment funds primarily due to transportation funds and financial services funds, a $9 million improvement in real estate, a $6 million increase in income from fixed maturity securities, and a $3 million increase in arbitrage trading account, partially offset by a $1 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 4.8% in 2025 and 5.4% 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 2.9 years at September 30, 2025 up from 2.6 years at December 31, 2024. Average invested assets, at cost (including cash and cash equivalents), were $31.3 billion in 2025, up 9% from $28.6 billion in 2024.

Current wording

Net investment income increased 12% to $404 million in 2026 from $360 million in 2025 due primarily to a $33 million increase in income from fixed maturity securities mainly driven by a larger fixed maturity securities portfolio, a $13 million increase in income from investment funds primarily due to energy funds and real estate funds and a $5 million increase in equity securities, partially offset by a $6 million decrease in arbitrage trading account and a $1 million decrease in real estate. Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 4.9% in both 2026 and 2025. The effective duration of the fixed maturity portfolio was 3.1 years at March 31, 2026 and 3.0 years at December 31, 2025. Average invested assets, at cost (including cash and cash equivalents), were $33.2 billion in 2026, up 9% from $30.5 billion in 2025.

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 $31 million in 2025 from $29 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 were $28 million in 2026 compared to $29 million in 2025.

Previous 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 $125 million in 2025 compared with losses of $72 million in 2024. The gains of $125 million in 2025 reflected an increase in unrealized gains on equity securities of $93 million and net realized gains on investments of $32 million. The losses of $72 million in 2024 reflected an increase in unrealized losses on equity securities of $42 million and net realized losses on investments of $30 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 losses on investments were $16 million in 2026 compared with gains of $16 million in 2025. The losses of $16 million in 2026 reflected net realized losses on investments of $11 million and an increase in unrealized losses on equity securities of $5 million. 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.

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 (losses), decreased by $0.2 million ($0.1 million after-tax) in 2025 and $15 million ($12 million after-tax) in 2024 due to improved pricing associated with foreign government 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 (losses), increased by $0.1 million ($0.1 million after-tax) in 2026 due to a decrease in fair value of one investment in fixed maturity securities, and decreased by $0.6 million ($0.5 million after-tax) in 2025 due to improved pricing related to fixed maturity securities.

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 $150 million in 2025 and $129 million in 2024. The increase mainly relates to aviation-related business, partially offset by the reduction in promotional merchandise and textile businesses.

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 $157 million in 2026 and $129 million in 2025. The increase mainly relates to aviation-related business due to plane sales, partially offset by the reduction in commercial and residential textile business.

Previous wording

Losses and Loss Expenses. Losses and loss expenses increased to $1,969 million in 2025 from $1,826 million in 2024. The consolidated loss ratio was 62.4% in both 2025 and 2024. Catastrophe losses, net of reinsurance recoveries, were $79 million in 2025 and $98 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 0.8 points to 59.9% 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 $1,936 million in 2026 from $1,901 million in 2025. The consolidated loss ratio was 62.1% in 2026 and 63.1% in 2025. Catastrophe losses, net of reinsurance recoveries, were $76 million in 2026 primarily related to winter storms, compared to $111 million in 2025 mainly due to California wildfire losses. Favorable prior year reserve development (net of premium offsets) was $1 million in both 2026 and 2025. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.3 points to 59.7% in 2026 from 59.4% in 2025.

Previous wording

•Insurance - The loss ratio was 63.9% in 2025 and 63.0% in 2024. Catastrophe losses were $218 million in 2025 compared with $191 million in 2024. Adverse prior year reserve development was $32 million in 2025 and $2 million in 2024. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points to 60.8% in 2025 from 60.4% in 2024.

Current wording

•Insurance - The loss ratio was 63.9% in 2026 and in 2025. Catastrophe losses were $75 million in 2026 compared with $71 million in 2025. Adverse prior year reserve development was $8 million in 2026 and $11 million in 2025. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.1 points to 60.9% in 2026 from 60.8% in 2025.

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 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.

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 6% and net premiums earned increased 3% from 2025. The expense ratio (underwriting expenses expressed as a percentage of net premiums earned) increased 0.8 points to 28.6% in 2026 from 27.8% in 2025, mainly due to investments in the business and from the decline in net earned premiums related to the Reinsurance & Monoline Excess segment.

Previous wording

Insurance service expenses, which represent the costs associated with the fee-based businesses, were $23 million in 2025 and $22 million in 2024.

Current wording

Insurance service expenses, which represent the costs associated with the fee-based businesses, were $23 million in both 2026 and in 2025.

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 gains were $12 million in 2025 compared to losses of $25 million in 2024, primarily due to other major currencies strengthening against the U.S. dollar in 2024.

Current wording

Net foreign currency (gains) losses result from transactions denominated in a currency other than a company's operating functional currency. Net foreign currency gains were $17 million in 2026 compared to losses of $19 million in 2025, primarily due to the U.S. dollar strengthening against other major currencies in 2026.

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 increased to $211 million in 2025 from $198 million in 2024, primarily due to the increase in compensation-related costs and higher new start-up operating unit expenses in 2025.

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 $75 million in 2026 from $69 million in 2025, primarily due to higher compensation-related costs and new start-up operating unit expenses in 2026.

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 $393 million in 2025 compared to $365 million in 2024. The increase mainly relates to aviation-related 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 $136 million in 2026 compared to $126 million in 2025. The increase mainly relates to aviation-related business, partially offset by the reduction in commercial and residential textile business.

Previous wording

Interest Expense. Interest expense was $32 million in both 2025 and 2024.

Current wording

Interest Expense. Interest expense was $32 million in both 2026 and in 2025.

Previous wording

Income Taxes. The effective income tax rate was 21.0% and 23.0% for the three months ended September 30, 2025 and 2024, respectively. The lower effective income tax rate for the three months ended September 30, 2025, as compared to the earlier period, was primarily due to an improved geographical mix of earnings and larger benefits attributable to equity-based compensation.

Current wording

Income Taxes. The effective income tax rate was 16.3% and 22.5% for the three months ended March 31, 2026 and 2025, respectively. The lower effective income tax rate for the three months ended March 31, 2026, as compared to the earlier period, was primarily due to the impact of the repeal of undiscounted property-casualty loss deductions and special estimated payments formerly available under Internal Revenue Code Section 847, partially offset by deferred tax charges in the United Kingdom.

Previous wording

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $555 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 not be material.

Current wording

The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $618 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 not be material.

Previous wording

In the United States, on July 4, 2025, the budget reconciliation package known as the “One Big Beautiful Bill” was signed into law. Changes resulting from the tax provisions thereunder are not expected to have a material impact on the Company’s results from operations.

Current wording

In the United States, on July 4, 2025, the budget reconciliation package known as the “One Big Beautiful Bill Act” was signed into law. Changes resulting from the tax provisions thereunder did not have a material impact on the Company’s results from operations.

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 2.9 years at September 30, 2025 up from 2.6 years at December 31, 2024. The Company’s fixed maturity investment portfolio and investment-related assets as of September 30, 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 3.1 years at March 31, 2026 and 3.0 years at December 31, 2025. The Company’s fixed maturity investment portfolio and investment-related assets as of March 31, 2026 were as follows:

Previous wording

Investment Funds. At September 30, 2025, the carrying value of investment funds was $1.4 billion, including investments in other funds of $400 million (which includes a deferred compensation trust asset of $42 million), financial services funds of $374 million, transportation funds of $273 million, real estate funds of $177 million, infrastructure funds of $165 million, and energy funds of $42 million. Investment funds are generally reported on a one-quarter lag.

Current wording

Investment Funds. At March 31, 2026, the carrying value of investment funds was $1.4 billion, including investments in other funds of $380 million (which includes a deferred compensation trust asset of $47 million), financial services funds of $366 million, transportation funds of $276 million, infrastructure funds of $176 million, real estate funds of $157 million, and energy funds of $44 million. Investment funds are generally reported on a one-quarter lag.

Previous wording

Loans Receivable. Loans receivable, which are carried at amortized cost (net of allowance for expected credit losses), had an amortized cost of $327 million and an aggregate fair value of $327 million at September 30, 2025. The amortized cost of loans receivable is net of an allowance for expected credit losses of $0.3 million as of September 30, 2025. Loans receivable include real estate loans of $327 million that are secured by commercial and residential real estate located primarily in the U.K. and New York. Real estate loans generally earn interest at fixed or stepped interest rates and have maturities through 2028. Loans receivable includes a commercial loan of $76 thousand with one small business owner that is secured by business assets, has a fixed interest rate and matures in 2026.

Current wording

Loans Receivable. Loans receivable, net of allowance for expected credit losses, had both an amortized cost and an aggregate fair value of $441 million at March 31, 2026. The amortized cost of loans receivable is net of an allowance for expected credit losses of $75 thousand as of March 31, 2026. Loans receivable include real estate loans of $441 million that are secured by commercial and residential real estate located primarily in the U.K. and New York. Real estate loans generally earn interest at fixed or variable interest rates and have maturities through 2030.

Previous wording

Market Risk. The fair value of the Company’s investments is subject to risks of fluctuations in credit quality and interest rates. The Company uses various models and stress test scenarios to monitor and manage interest rate risk. The Company attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.9 years at September 30, 2025 up from 2.6 years at December 31, 2024.

Current wording

Market Risk. The fair value of the Company’s investments is subject to risks of fluctuations in credit quality and interest rates. The Company uses various models and stress test scenarios to monitor and manage interest rate risk. The Company attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was 3.1 years at March 31, 2026 and 3.0 years at December 31, 2025.