ARCH CAPITAL GROUP LTD

Previous wording

Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “we” or “us”) is a publicly listed Bermuda exempted company with approximately $21.1 billion in capital at December 31, 2023 and is part of the S&P 500 index. Through operations in Bermuda, the United States, United Kingdom, Europe, Canada and Australia, we write specialty lines of property and casualty insurance and reinsurance, as well as mortgage insurance and reinsurance, on a worldwide basis. It is our belief that our underwriting platform, experienced management team and strong capital base enable us to establish a strong presence in the markets where we operate.

Current wording

Arch Capital Group Ltd. (“Arch Capital” and, together with its subsidiaries, “we” or “us”) is a publicly listed Bermuda exempted company with approximately $23.5 billion in capital at December 31, 2024 and is part of the S&P 500 index. Through operations in Bermuda, the United States, United Kingdom, Europe, Canada and Australia, we write specialty lines of property and casualty insurance and reinsurance, as well as mortgage insurance and reinsurance, on a worldwide basis. It is our belief that our underwriting platform, experienced management team and strong capital base enable us to establish a strong presence in the markets where we operate.

Previous wording

At Arch, our primary focus has always been on rate adequacy, regardless of market conditions. Our underwriting culture dictates that we include a meaningful margin of safety in our pricing, especially in softer conditions and take a longer term view of inflation and rates. As underwriting opportunities arise, our reinsurance segment is able to react quickly and significantly when markets pivot. In the reinsurance property market, our overall exposure to property catastrophe risk remains well below our self imposed threshold (see“Catastrophic and Severe Economic Events”) and, because of our diversified portfolio and broad set of opportunities, we retain the flexibility to pursue the most attractive returns across lines and geographies. The hard market conditions remained elevated in several lines during the January 1, 2024 renewal cycle.

Current wording

Our reinsurance segment contributed $1.2 billion of underwriting income in 2024, despite the impact of catastrophic events. At the January 1, 2025 renewals, we selectively increased our writings in property, liability and specialty lines with a focus not only on price adequacy, but also terms and conditions. Our underwriting culture dictates that we include a meaningful margin of safety in our pricing, especially given competitive market conditions, and take a longer term view of inflation and rates. As underwriting opportunities arise, our reinsurance segment reacts quickly and significantly when markets pivot.

Previous wording

Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares and common share equivalents outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $46.94 at December 31, 2023, a 43.9% increase from $32.62 at December 31, 2022. The increase in book value per share in 2023 reflected strong underwriting and investment results and also reflected the establishment of a net deferred income tax asset of $1.18 billion, or $3.16 per share, related to the enactment of Bermuda’s new corporate income tax.

Current wording

Book value per share represents total common shareholders’ equity available to Arch divided by the number of common shares and common share equivalents outstanding. Management uses growth in book value per share as a key measure of the value generated for our common shareholders each period and believes that book value per share is the key driver of Arch Capital’s share price over time. Book value per share is impacted by, among other factors, our underwriting results, investment returns and share repurchase activity, which has an accretive or dilutive impact on book value per share depending on the purchase price. Book value per share was $53.11 at December 31, 2024, a 13.1% increase from $46.94 at December 31, 2023, and an increase of 23.8% when incorporating the impact of the $1.9 billion special dividend paid to common shareholders in December 2024.

Previous wording

Operating return on average common equity (“Operating ROAE”) represents annualized after-tax operating income available to Arch common shareholders divided by average common shareholders’ equity available to Arch during the period. After-tax operating income available to Arch common shareholders, a “non-GAAP measure” as defined in the SEC rules, represents net income available to Arch common shareholders, excluding net realized gains or losses

Current wording

Operating return on average common equity (“Operating ROAE”) represents annualized after-tax operating income available to Arch common shareholders divided by average common shareholders’ equity available to Arch during the period. After-tax operating income available to Arch common shareholders, a “non-GAAP measure” as defined in the SEC rules, represents net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, loss on redemption of preferred shares and income taxes. Management uses Operating ROAE as a key measure of the return generated to Arch common shareholders. See “Comment on Non-GAAP Financial Measures.”

Previous wording

Our annualized net income return on average common equity was 29.7% for 2023, compared to 11.6% for 2022. Our Operating ROAE was 21.6% for 2023, compared to 14.8% for 2022, with the higher return in 2023 primarily resulting from improved underwriting results and growth in net investment income.

Current wording

Our annualized net income return on average common equity was 22.8% for 2024, compared to 29.7% for 2023. Our Operating ROAE was 18.9% for 2024, compared to 21.6% for 2023. Returns for 2024 reflected strong underwriting and investment returns, albeit with an elevated level of catastrophe activity.

Previous wording

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis before investment expenses, excluding amounts reflected in the ‘other’ segment, and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated for Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns. See“Comment on Non-GAAP Financial Measures.”

Current wording

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis before investment expenses and reflects the effect of financial market conditions along with foreign currency fluctuations. Management uses total return on investments as a key measure of the return generated for Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns. See“Comment on Non-GAAP Financial Measures.”

Previous wording

The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality while also matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. Although the estimated duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index except to incorporate changes to the mix of liability currencies and durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. The index is intended solely to provide, unlike many master indices that change based on the size of their constituent indices, a relatively stable basket of investable indices. At December 31, 2023, the benchmark return index had an average credit quality of “A1” by Moody’s, an estimated duration of 2.64 years.

Current wording

The benchmark return index is a customized combination of indices intended to approximate a target portfolio by asset mix and average credit quality with a fixed income component matching the approximate estimated duration and currency mix of our insurance and reinsurance liabilities. It is recalibrated annually. Although the estimated fixed income duration and average credit quality of this index will move as the duration and rating of its constituent securities change, generally we do not adjust the composition of the benchmark return index during the year except to incorporate changes to the mix of liability currencies and durations noted above. The benchmark return index should not be interpreted as expressing a preference for or aversion to any particular sector or sector weight. At December 31, 2024, the fixed income portion of the benchmark had an average credit quality of “A1” by Moody’s and an estimated fixed income duration of 3.18 years.

Previous wording

gains or losses, transaction costs and other, net of income taxes (which for the 2023 fourth quarter includes a one-time deferred income tax benefit related to the enactment of Bermuda’s new corporate income tax), and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under “Results of Operations” below.

Current wording

Throughout this filing, we present our operations in the way we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use our financial information in evaluating the performance of our company. This presentation includes the use of after-tax operating income available to Arch common shareholders, which is defined as net income available to Arch common shareholders, excluding net realized gains or losses (which includes realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains or losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries), equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses, transaction costs and other, net of income taxes (which for the 2023 fourth quarter includes a one-time deferred income tax benefit related to the enactment of Bermuda’s new corporate income tax), and the use of annualized operating return on average common equity. The presentation of after-tax operating income available to Arch common shareholders and annualized operating return on average common equity are non-GAAP financial measures as defined in Regulation G. The reconciliation of such measures to net income available to Arch common shareholders and annualized net income return on average common equity (the most directly comparable GAAP financial measures) in accordance with Regulation G is included under “Results of Operations” below.

Previous wording

We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business. Although net realized gains or losses, equity in net income or loss of investments accounted for using the equity method and net foreign exchange gains or losses are an integral part of our operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization.

Current wording

We believe that net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, net foreign exchange gains or losses and transaction costs and other in any particular period are not indicative of the performance of, or trends in, our business. Although net realized gains or losses, equity in net income or loss of investments accounted for using the equity method and net foreign exchange gains or losses are an integral part of our operations, the decision to realize these items are independent of the insurance underwriting process and result, in large part, from general economic and financial market conditions. Furthermore, certain users of our financial information believe that, for many companies, the timing of the realization of investment gains or losses is largely opportunistic. In addition, changes in the allowance for credit losses and net impairment losses recognized in earnings on the Company’s investments represent other-than-temporary declines in expected recovery values on securities without actual realization. Furthermore, we exclude net realized gains or losses from the acquisition or disposition of subsidiaries, due to their non-recurring nature, such items are not indicative of the performance of, or trends in, our business performance.

Previous wording

Transaction costs and other include advisory, financing, legal, severance, incentive compensation and other transaction costs related to acquisitions. We believe that transaction costs and other, due to their non-recurring nature, are not indicative of the performance of, or trends in, our business performance.

Current wording

Transaction costs and other include integration, advisory, financing, legal, severance, incentive compensation and all other transaction costs directly related to acquisitions. We believe that transaction costs and other, due to their nonrecurring nature, are not indicative of the performance of, or trends in, our business performance.

Previous wording

Our segment information includes the presentation of consolidated underwriting income or loss and a subtotal of underwriting income or loss before the contribution from the ‘other’ segment. Such measures represent the pre-tax profitability of our underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to our individual underwriting operations. Underwriting income or loss does not incorporate items included in our corporate segment. While these measures are presented innote 4, “Segment Information,” to our consolidated financial statements in Item 8, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis and a subtotal before the contribution from the ‘other’ segment, in accordance with Regulation G, is shown innote 4, “Segment Information,” to our consolidated financial statements in Item 8.

Current wording

Our segment information includes the presentation of consolidated underwriting income or loss. Such measures represent the pre-tax profitability of our underwriting operations and include net premiums earned plus other underwriting income, less losses and loss adjustment expenses, acquisition expenses and other operating expenses. Other operating expenses include those operating expenses that are incremental and/or directly attributable to our individual underwriting operations. Underwriting income or loss does not incorporate certain income and expense items which are included in corporate. While these measures are presented innote 4, “Segment Information,” to our consolidated financial statements in Item 8, they are considered non-GAAP financial measures when presented elsewhere on a consolidated basis. The reconciliations of underwriting income or loss to income before income taxes (the most directly comparable GAAP financial measure) on a consolidated basis, in accordance with Regulation G, is shown innote 4, “Segment Information,” to our consolidated financial statements in Item 8.

Previous wording

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, excludes amounts reflected in the ‘other’ segment, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.

Current wording

Total return on investments includes investment income, equity in net income or loss of investments accounted for using the equity method, net realized gains or losses (excluding changes in the allowance for credit losses on non-investment related financial assets) and the change in unrealized gains or losses generated by Arch’s investment portfolio. Total return is calculated on a pre-tax basis and before investment expenses, and reflects the effect of financial market conditions along with foreign currency fluctuations. In addition, total return incorporates the timing of investment returns during the periods. There is no directly comparable GAAP financial measure for total return. Management uses total return on investments as a key measure of the return generated to Arch common shareholders on the capital held in the business, and compares the return generated by our investment portfolio against benchmark returns which we measured our portfolio against during the periods.

Previous wording

(1) Net realized gains or losses include realized and unrealized changes in the fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments and changes in the allowance for credit losses on financial assets.

Current wording

(1) Net realized gains or losses include realized and unrealized changes inthe fair value of equity securities and assets accounted for using the fair value option, realized and unrealized gains and losses on derivative instruments, changes in the allowance for credit losses on financial assets and gains or losses realized from the acquisition or disposition of subsidiaries.

Previous wording

We classify our businesses into three underwriting segments – insurance, reinsurance and mortgage – and two operating segments – corporate and ‘other.’ Our insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers, the Chief Executive Officer of Arch Capital, the Chief Financial Officer and Treasurer of Arch Capital and the President and Chief Underwriting Officer of Arch Capital. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets and accordingly, investment income is not allocated to each underwriting segment.

Current wording

We classify our businesses into three underwriting segments insurance, reinsurance and mortgage. Our insurance, reinsurance and mortgage segments each have managers who are responsible for the overall profitability of their respective segments and who are directly accountable to our chief operating decision makers, the Chief Executive Officer of Arch Capital and the Chief Financial Officer and Treasurer of Arch Capital. The chief operating decision makers do not assess performance, measure return on equity or make resource allocation decisions on a line of business basis. Management measures segment performance for our three underwriting segments based on underwriting income or loss. We do not manage our assets by underwriting segment, with the exception of goodwill and intangible assets and accordingly, investment income is not allocated to each underwriting segment.

Previous wording

Net premiums written by the insurance segment were 16.7% higher in 2023 than in 2022. The increase in net premiums written reflected growth in most lines of business, primarily due to rate increases, new business opportunities and growth in existing accounts.

Current wording

Net premiums written by the insurance segment were 17.3% higher in 2024 than in 2023 (7.0% excluding the MCE Acquisition). Growth in net premiums written reflected the impact of the MCE Acquisition along with an increases in most lines of business due in part to new business opportunities and rate changes.

Previous wording

Net premiums written are primarily earned on a pro rata basis over the terms of the policies for all products, usually 12 months. Net premiums earned by the insurance segment were 19.4% higher in 2023 than in 2022, reflecting changes in net premiums written over the previous five quarters.

Current wording

Net premiums written are primarily earned on a pro rata basis over the terms of the policies for all products, usually 12 months. Net premiums earned by the insurance segment were 21.7% higher in 2024 than in 2023 (10.5% excluding the MCE Acquisition), reflecting changes in net premiums written over the previous five quarters.

Previous wording

The insurance segment’s current year loss ratio was 3.5 points lower in 2023 than in 2022. The 2023 loss ratio included 2.7 points of current year catastrophic event activity, spread across series of global events, compared to 5.2 points in 2022, primarily related to Hurricane Ian and a series of global events. The balance of the change in the 2023 current year loss ratio resulted, in part, from the effect of rate increases, changes in mix of business and the level of attritional losses.

Current wording

The insurance segment’s current year loss ratio was 3.8 points higher in 2024 than in 2023. The 2024 loss ratio included 4.6 points of current year catastrophic event activity, primarily related to Hurricanes Helene and Milton, compared to 2.7 points in 2023. The current year loss ratio for 2024 also reflected the impact of rate increases and changes in mix of business.

Previous wording

The insurance segment’s net favorable development was $42 million, or 0.8 points, for 2023, compared to $25 million, or 0.6 points, for 2022. Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the insurance segment’s prior year reserve development.

Current wording

The insurance segment’s net favorable development was $37 million, or 0.5 points, for 2024, compared to $42 million, or 0.8 points, for 2023. Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the insurance segment’s prior year reserve development.

Previous wording

Net premiums written by the reinsurance segment were 33.1% higher in 2023 than in 2022. The growth in net premiums written reflected increases in all lines of business, primarily due to new business, rate increases and growth in existing accounts.

Current wording

Net premiums written by the reinsurance segment were 18.2% higher in 2024 than in 2023. The growth in net premiums written reflected increases in all lines of business, primarily due to new business, rate increases and growth in existing accounts.

Previous wording

Net premiums earned in 2023 were 47.4% higher than in 2022, reflecting changes in net premiums written over the previous five quarters, including the mix and type of business written.

Current wording

Net premiums earned in 2024 were 24.1% higher than in 2023, reflecting changes in net premiums written over the previous five quarters, including the mix and type of business written.

Previous wording

The reinsurance segment’s current year loss ratio was 11.8 points lower in 2023 than in 2022. The 2023 loss ratio included 6.8 points for current year catastrophic event activity spread across a series of global events, compared to 13.9 points in 2022, primarily related to Hurricane Ian and a series of global events. The balance of the change in the 2023 current year loss ratio resulted, in part, from the effect of rate increases, changes in mix of business and the level of attritional losses.

Current wording

The reinsurance segment’s current year loss ratio was 4.4 points higher in 2024 than in 2023. The 2024 loss ratio included 11.8 points for current year catastrophic event activity related to Hurricanes Milton and Helene, and a series of other global events, compared to 6.8 points in 2023. The current year loss ratio for 2024 also reflected the impact of rate increases and changes in mix of business.

Previous wording

The reinsurance segment’s net favorable development was $152 million, or 2.6 points, for 2023, compared to $190 million, or 4.8 points, for 2022, Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the reinsurance segment’s prior year reserve development.

Current wording

The reinsurance segment’s net favorable development was $188 million, or 2.6 points, for 2024, compared to $152 million, or 2.6 points, for 2023, Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the reinsurance segment’s prior year reserve development.

Previous wording

The underwriting expense ratio for the reinsurance segment was 26.1% in 2023, compared to 27.3% in 2022, with the decrease primarily due to growth in net premiums earned. The 2022 ratio also reflected a lower level of contingent commissions on ceded business, primarily due to Hurricane Ian.

Current wording

The underwriting expense ratio for the reinsurance segment was 23.5% in 2024, compared to 26.1% in 2023, with the decrease primarily due to growth in net premiums earned.

Previous wording

The persistency rate of the U.S. primary portfolio of mortgage loans was 83.6% at December 31, 2023 compared to 79.5% at December 31, 2022, with the increase primarily reflecting a lower level of refinancing activity due to a higher interest rate environment. The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12-month period that remains in force at the end of such period.

Current wording

The persistency rate of the U.S. primary portfolio of mortgage loans was 82.1% at December 31, 2024 compared to 83.6% at December 31, 2023. The persistency rate represents the percentage of mortgage insurance in force at the beginning of a 12-month period that remains in force at the end of such period.

Previous wording

Other underwriting income, which is primarily related to GSE risk-sharing transactions services and our whole mortgage loan purchase and sell program, was $14 million for 2023, compared to $8 million for 2022.

Current wording

Other underwriting income, which is primarily related to GSE risk-sharing transactions services and our whole mortgage loan purchase and sell program, was $17 million for 2024, compared to $14 million for 2023.

Previous wording

The mortgage segment’s current year loss ratio was 1.0 point higher in 2023 compared to 2022. The higher current year loss ratio for 2023 reflected an increase in new delinquencies. The percentage of loans in default on U.S. primary mortgage insurance decreased from 1.77% at December 31, 2022 to 1.74% at December 31, 2023.

Current wording

The mortgage segment’s current year loss ratio was 2.2 points lower in 2024 compared to 2023. The lower current year loss ratio for 2024 reflected a lower average case reserve per default. The percentage of loans in default on U.S. primary mortgage insurance increased from 1.74% at December 31, 2023 to 2.09% at December 31, 2024.

Previous wording

We insure mortgages for homes in areas that have been impacted by catastrophic events. Generally, mortgage insurance losses occur only when a credit event occurs and, following a physical damage event, when the home is restored to pre-storm condition. Our ultimate claims exposure will depend on the number of delinquency notices received and the ultimate claim rate related to such notices. In the event of natural disasters, cure rates are influenced by the adequacy of homeowners and flood insurance carried on a related property, and a borrower's access to aid from government entities and private organizations, in addition to other factors which generally impact cure rates in unaffected areas.

Current wording

We insure mortgages for homes in areas that have been impacted by catastrophic events. Generally, mortgage insurance losses occur only when a credit event occurs and, following a physical damage event, when the home is restored to pre-storm condition. Our ultimate claims exposure will depend on the number of delinquency notices received and the ultimate claim rate related to such notices. In the event of natural disasters, cure rates are influenced by the adequacy of homeowners and flood insurance carried on a related property, and a borrower's access to aid from

Previous wording

The mortgage segment’s net favorable development was $344 million, or 29.7 points, for 2023, compared to $554 million, or 47.8 points, for 2022. Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the mortgage segment’s prior year reserve development.

Current wording

The mortgage segment’s net favorable development was $282 million, or 23.0 points, for 2024, compared to $344 million, or 29.7 points, for 2023. Seenote 5, “Reserve for Losses and Loss Adjustment Expenses,” to our consolidated financial statements in Item 8 for information about the mortgage segment’s prior year reserve development.

Previous wording

The underwriting expense ratio for the mortgage segment was 18.2% for 2023, compared to 20.3% for 2022, with the decrease primarily due to a higher level of profit commissions on ceded U.S. primary mortgage insurance business in 2023.

Current wording

The underwriting expense ratio for the mortgage segment was 17.0% for 2024, compared to 18.2% for 2023. The decrease was primarily due to a lower level of profit commissions on U.S. primary business, along with a higher level of net premiums earned.

Previous wording

The corporate segment results include net investment income, net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes items (which for 2023 reflects the establishment of a net deferred income tax asset related to the enactment of Bermuda’s new corporate income tax), income from operating affiliates and items related to our non-cumulative preferred shares.

Current wording

The corporate results include net investment income, net realized gains or losses, equity in net income or loss of investments accounted for using the equity method, other income (loss), corporate expenses, transaction costs and other, amortization of intangible assets, interest expense, net foreign exchange gains or losses, income taxes items (which for 2023 reflects the establishment of a net deferred income tax asset related to the enactment of Bermuda’s new corporate income tax), income from operating affiliates and items related to our non-cumulative preferred shares.

Previous wording

(2) Investment expenses were approximately 0.26% of average invested assets for 2023, compared to 0.28% for 2022.

Current wording

(2) Investment expenses were approximately 0.26% of average invested assets for 2024, consistent with 0.26% for 2023.

Previous wording

The pre-tax investment income yield was 3.53% for 2023, compared to 1.99% for 2022. The growth in net investment income for 2023 compared to 2022 primarily reflected higher yields available in the financial markets. Net cash flow from operating activities contributed $5.7 billion in 2023, which increased our invested asset base and contributed to the growth in net investment income. The pre-tax investment income yields were calculated based on amortized cost. Yields on future investment income may vary based on financial market conditions, investment allocation decisions and other factors.

Current wording

The pre-tax investment income yield was 4.25% for 2024, compared to 3.53% for 2023. The growth in net investment income for 2024 compared to 2023 primarily reflected higher yields available in the financial markets. The pre-tax investment income yields were calculated based on amortized cost. Net cash flow from operating activities contributed $6.7 billion in 2024, which increased our invested asset base and contributed to the growth in net investment income. Net investment income in 2024 was partially impacted by a $1.9 billion special dividend paid to common shareholders in December which required us to sell certain investments. Yields on future investment income may vary based on financial market conditions, investment allocation decisions and other factors.

Previous wording

We recorded net realized losses of $165 million for 2023, compared to net realized losses of $663 million for 2022. Currently, our portfolio is actively managed to maximize total return within certain guidelines. The effect of financial market movements on the investment portfolio will directly impact net realized gains or losses as the portfolio is rebalanced. Net realized gains or losses from the sale of fixed maturities primarily results from our decisions to reduce credit exposure, to change duration targets, to rebalance our portfolios or due to relative value determinations.

Current wording

We recorded net realized gains of $197 million for 2024, compared to net realized losses of $165 million for 2023. Currently, our portfolio is actively managed to maximize total return within certain guidelines. The effect of financial market movements on the investment portfolio will directly impact net realized gains or losses as the portfolio is rebalanced. Net realized gains or losses from the sale of fixed maturities primarily results from our decisions to reduce credit exposure, to change duration targets, to rebalance our portfolios or due to relative value determinations.

Previous wording

Net realized gains or losses also include realized and unrealized contract gains and losses on our derivative instruments, changes in the fair value of assets accounted for using the fair value option and in the fair value of equities, along with changes in the allowance for credit losses on financial assets and net impairment losses recognized in earnings. Seenote 9, “Investment Information—Net Realized Gains (Losses),” andnote 9, “Investment Information—Allowance for Credit Losses,” to our consolidated financial statements for additional information.

Current wording

Net realized gains or losses also include realized and unrealized contract gains and losses on our derivative instruments, changes in the fair value of assets accounted for using the fair value option and in the fair value of equities, along with changes in the allowance for credit losses on financial assets, net impairment losses recognized in earnings and gains or losses realized from the acquisition or disposition of subsidiaries. Seenote 9, “Investment Information—Net Realized Gains (Losses),” andnote 9, “Investment Information—Allowance for Expected Credit Losses,” to our consolidated financial statements for additional information.

Previous wording

We recorded $278 million of equity in net income related to investments accounted for using the equity method for 2023, compared to $115 million for 2022. Investments accounted for using the equity method totaled $4.6 billion at December 31, 2023, compared to $3.8 billion at December 31, 2022. Seenote 9, “Investment Information—Equity in Net Income (Loss) of Investments Accounted For Using the Equity Method,” to our consolidated financial statements in Item 8 for additional information.

Current wording

We recorded $580 million of equity in net income related to investments accounted for using the equity method for 2024, compared to $278 million for 2023. Investments accounted for using the equity method totaled $6.0 billion at December 31, 2024, compared to $4.6 billion at December 31, 2023. Seenote 9, “Investment Information—Equity in Net Income (Loss) of Investments Accounted For Using the Equity Method,” to our consolidated financial statements in Item 8 for additional information.

Previous wording

Other income for the 2023 period was $27 million, compared to a loss of $27 million for the 2022 period. Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance.

Current wording

Other income for 2024 was $42 million, compared to $27 million for 2023. Amounts in both periods primarily reflect changes in the cash surrender value of our investment in corporate-owned life insurance.

Previous wording

Corporate expenses were $96 million for 2023, compared to $95 million for 2022. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company.

Current wording

Corporate expenses were $119 million for 2024, compared to $96 million for 2023. Such amounts primarily represent certain holding company costs necessary to support our worldwide operations and costs associated with operating as a publicly traded company.

Previous wording

Transaction costs and other were $6 million for 2023, compared to nil for 2022. The 2023 expenses were primarily related to acquisition activity.

Current wording

Transaction costs and other were $81 million for 2024, compared to $6 million for 2023. The 2024 period primarily includes direct costs related to the MCE Acquisition and ongoing integration efforts.

Previous wording

Amortization of intangible assets for 2023 was $95 million, compared to $106 million for 2022. Amounts in 2023 and 2022 primarily related to amortization of finite-lived intangible assets. Seenote 2, “Acquisitions."

Current wording

Amortization of intangible assets for 2024 was $235 million, compared to $95 million for 2023. Amounts in 2024 and 2023 primarily related to amortization of finite-lived intangible assets with the increase in 2024 primarily related to the MCE Acquisition. Seenote 2,“Acquisition.”

Previous wording

Interest expense was $133 million for 2023, compared to $131 million for 2022. Interest expense primarily reflects amounts related to our outstanding senior notes.

Current wording

Interest expense was $141 million for 2024, compared to $133 million for 2023. Interest expense primarily reflects amounts related to our outstanding senior notes.