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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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Delaware
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22-1867895
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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475 Steamboat Road, Greenwich, Connecticut
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06830
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(Address of principal executive offices)
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(Zip Code)
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(203) 629-3000
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(Registrant’s telephone number, including area code)
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None
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Former name, former address and former fiscal year, if changed since last report
.
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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EX-101 DEFINITION LINKBASE DOCUMENT
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Item 1.
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Financial Statements
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|
March 31,
2017 |
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December 31,
2016 |
||||
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(Unaudited)
|
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(Audited)
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities
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$
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13,422,979
|
|
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$
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13,190,668
|
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Investment funds
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1,238,558
|
|
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1,198,146
|
|
||
Real estate
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1,237,738
|
|
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1,184,981
|
|
||
Arbitrage trading account
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753,278
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|
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299,999
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||
Loans receivable
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103,650
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106,798
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Equity securities available for sale
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611,378
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669,200
|
|
||
Total investments
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17,367,581
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|
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16,649,792
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||
Cash and cash equivalents
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608,393
|
|
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795,285
|
|
||
Premiums and fees receivable
|
1,766,478
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|
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1,701,854
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|
||
Due from reinsurers
|
1,640,190
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|
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1,743,980
|
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||
Deferred policy acquisition costs
|
544,914
|
|
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537,890
|
|
||
Prepaid reinsurance premiums
|
451,886
|
|
|
413,140
|
|
||
Trading account receivables from brokers and clearing organizations
|
29,131
|
|
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484,593
|
|
||
Property, furniture and equipment
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356,908
|
|
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349,432
|
|
||
Goodwill
|
144,513
|
|
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144,513
|
|
||
Accrued investment income
|
135,439
|
|
|
127,047
|
|
||
Other assets
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501,981
|
|
|
402,550
|
|
||
Total assets
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$
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23,547,414
|
|
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$
|
23,350,076
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
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|
||||
Liabilities:
|
|
|
|
||||
Reserves for losses and loss expenses
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$
|
11,224,324
|
|
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$
|
11,197,195
|
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Unearned premiums
|
3,402,892
|
|
|
3,283,300
|
|
||
Due to reinsurers
|
218,040
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|
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213,128
|
|
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Trading account securities sold but not yet purchased
|
51,348
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|
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51,179
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|
||
Federal and foreign income taxes
|
169,959
|
|
|
119,597
|
|
||
Other liabilities
|
775,039
|
|
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916,318
|
|
||
Senior notes and other debt
|
1,759,494
|
|
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1,760,595
|
|
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Subordinated debentures
|
727,777
|
|
|
727,630
|
|
||
Total liabilities
|
18,328,873
|
|
|
18,268,942
|
|
||
Equity:
|
|
|
|
||||
Preferred stock, par value $.10 per share:
|
|
|
|
||||
Authorized 5,000,000 shares; issued and outstanding - none
|
—
|
|
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—
|
|
||
Common stock, par value $.20 per share:
|
|
|
|
||||
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 121,218,479 and 121,193,599 shares, respectively
|
47,024
|
|
|
47,024
|
|
||
Additional paid-in capital
|
1,047,589
|
|
|
1,037,446
|
|
||
Retained earnings
|
6,703,675
|
|
|
6,595,987
|
|
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Accumulated other comprehensive income
|
69,491
|
|
|
55,568
|
|
||
Treasury stock, at cost, 113,899,439 and 113,924,319 shares, respectively
|
(2,688,173
|
)
|
|
(2,688,817
|
)
|
||
Total stockholders’ equity
|
5,179,606
|
|
|
5,047,208
|
|
||
Noncontrolling interests
|
38,935
|
|
|
33,926
|
|
||
Total equity
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5,218,541
|
|
|
5,081,134
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|
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Total liabilities and equity
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$
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23,547,414
|
|
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$
|
23,350,076
|
|
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For the Three Months
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||||||
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Ended March 31,
|
||||||
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2017
|
|
2016
|
||||
REVENUES:
|
|
|
|
||||
Net premiums written
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$
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1,646,838
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$
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1,663,722
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Change in net unearned premiums
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(76,796
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)
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(136,387
|
)
|
||
Net premiums earned
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1,570,042
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|
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1,527,335
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|
||
Net investment income
|
148,858
|
|
|
130,133
|
|
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Insurance service fees
|
33,280
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|
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40,362
|
|
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Net realized investment gains
|
52,348
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|
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25,457
|
|
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Other-than-temporary impairments
|
—
|
|
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(18,114
|
)
|
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Revenues from non-insurance businesses
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65,390
|
|
|
101,780
|
|
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Other income
|
500
|
|
|
258
|
|
||
Total revenues
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1,870,418
|
|
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1,807,211
|
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OPERATING COSTS AND EXPENSES:
|
|
|
|
||||
Losses and loss expenses
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979,603
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|
922,321
|
|
||
Other operating costs and expenses
|
603,700
|
|
|
582,459
|
|
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Expenses from non-insurance businesses
|
66,019
|
|
|
95,531
|
|
||
Interest expense
|
36,799
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32,224
|
|
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Total operating costs and expenses
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1,686,121
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|
|
1,632,535
|
|
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Income before income taxes
|
184,297
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|
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174,676
|
|
||
Income tax expense
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(59,623
|
)
|
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(54,428
|
)
|
||
Net income before noncontrolling interests
|
124,674
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|
|
120,248
|
|
||
Noncontrolling interests
|
(1,227
|
)
|
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(737
|
)
|
||
Net income to common stockholders
|
$
|
123,447
|
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$
|
119,511
|
|
|
|
|
|
||||
NET INCOME PER SHARE:
|
|
|
|
||||
Basic
|
$
|
1.01
|
|
|
$
|
0.97
|
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Diluted
|
$
|
0.96
|
|
|
$
|
0.93
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income before noncontrolling interests
|
$
|
124,674
|
|
|
$
|
120,248
|
|
Other comprehensive income:
|
|
|
|
||||
Change in unrealized currency translation adjustments
|
22,735
|
|
|
(2,047
|
)
|
||
Change in unrealized investment gains, net of taxes
|
(8,831
|
)
|
|
76,855
|
|
||
Other comprehensive income
|
13,904
|
|
|
74,808
|
|
||
Comprehensive income
|
138,578
|
|
|
195,056
|
|
||
Noncontrolling interest
|
(1,208
|
)
|
|
(723
|
)
|
||
Comprehensive income to common stockholders
|
$
|
137,370
|
|
|
$
|
194,333
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
COMMON STOCK:
|
|
|
|
||||
Beginning and end of period
|
$
|
47,024
|
|
|
$
|
47,024
|
|
ADDITIONAL PAID-IN CAPITAL:
|
|
|
|
||||
Beginning of period
|
$
|
1,037,446
|
|
|
$
|
1,005,455
|
|
Restricted stock units issued
|
(667
|
)
|
|
(652
|
)
|
||
Restricted stock units expensed
|
10,810
|
|
|
8,769
|
|
||
End of period
|
$
|
1,047,589
|
|
|
$
|
1,013,572
|
|
RETAINED EARNINGS:
|
|
|
|
||||
Beginning of period
|
$
|
6,595,987
|
|
|
$
|
6,178,070
|
|
Net income to common stockholders
|
123,447
|
|
|
119,511
|
|
||
Dividends
|
(15,759
|
)
|
|
(14,711
|
)
|
||
End of period
|
$
|
6,703,675
|
|
|
$
|
6,282,870
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME
|
|
|
|
||||
Unrealized investment gains:
|
|
|
|
||||
Beginning of period
|
$
|
427,154
|
|
|
$
|
180,695
|
|
Unrealized (losses) gains on securities not other-than-temporarily impaired
|
(8,913
|
)
|
|
76,904
|
|
||
Unrealized gains (losses) on other-than-temporarily impaired securities
|
101
|
|
|
(35
|
)
|
||
End of period
|
418,342
|
|
|
257,564
|
|
||
Currency translation adjustments:
|
|
|
|
||||
Beginning of period
|
(371,586
|
)
|
|
(247,393
|
)
|
||
Net change in period
|
22,735
|
|
|
(2,047
|
)
|
||
End of period
|
(348,851
|
)
|
|
(249,440
|
)
|
||
Total accumulated other comprehensive income
|
$
|
69,491
|
|
|
$
|
8,124
|
|
TREASURY STOCK:
|
|
|
|
||||
Beginning of period
|
$
|
(2,688,817
|
)
|
|
$
|
(2,563,605
|
)
|
Stock exercised/vested
|
644
|
|
|
652
|
|
||
Stock repurchased
|
—
|
|
|
(37,424
|
)
|
||
End of period
|
$
|
(2,688,173
|
)
|
|
$
|
(2,600,377
|
)
|
NONCONTROLLING INTERESTS:
|
|
|
|
||||
Beginning of period
|
$
|
33,926
|
|
|
$
|
32,962
|
|
Contributions
|
3,801
|
|
|
3,158
|
|
||
Net income
|
1,227
|
|
|
737
|
|
||
Other comprehensive loss, net of tax
|
(19
|
)
|
|
(14
|
)
|
||
End of period
|
$
|
38,935
|
|
|
$
|
36,843
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income to common stockholders
|
$
|
123,447
|
|
|
$
|
119,511
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Net investment gains
|
(52,348
|
)
|
|
(7,343
|
)
|
||
Depreciation and amortization
|
18,133
|
|
|
30,245
|
|
||
Noncontrolling interests
|
1,227
|
|
|
737
|
|
||
Investment funds
|
(26,649
|
)
|
|
(16,636
|
)
|
||
Stock incentive plans
|
10,780
|
|
|
8,766
|
|
||
Change in:
|
|
|
|
||||
Arbitrage trading account
|
2,350
|
|
|
383
|
|
||
Premiums and fees receivable
|
(59,244
|
)
|
|
(79,531
|
)
|
||
Reinsurance accounts
|
67,205
|
|
|
(26,319
|
)
|
||
Deferred policy acquisition costs
|
(6,126
|
)
|
|
(33,466
|
)
|
||
Income taxes
|
50,595
|
|
|
46,780
|
|
||
Reserves for losses and loss expenses
|
10,424
|
|
|
108,057
|
|
||
Unearned premiums
|
113,483
|
|
|
171,553
|
|
||
Other
|
(177,805
|
)
|
|
(181,969
|
)
|
||
Net cash from operating activities
|
75,472
|
|
|
140,768
|
|
||
CASH USED IN INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from sale of fixed maturity securities
|
719,969
|
|
|
381,732
|
|
||
Proceeds from sale of equity securities
|
51,854
|
|
|
1,880
|
|
||
(Contributions to) distributions from investment funds
|
(11,290
|
)
|
|
15,788
|
|
||
Proceeds from maturities and prepayments of fixed maturity securities
|
888,423
|
|
|
455,463
|
|
||
Purchase of fixed maturity securities
|
(1,767,208
|
)
|
|
(1,032,129
|
)
|
||
Purchase of equity securities
|
(103
|
)
|
|
(1,108
|
)
|
||
Real estate purchased
|
(48,710
|
)
|
|
(53,781
|
)
|
||
Change in loans receivable
|
3,147
|
|
|
123,737
|
|
||
Net additions to property, furniture and equipment
|
(12,457
|
)
|
|
(12,461
|
)
|
||
Change in balances due to security brokers
|
(22,034
|
)
|
|
69,642
|
|
||
Payment for business purchased net of cash aquired
|
(71,346
|
)
|
|
(54,313
|
)
|
||
Net cash used in investing activities
|
(269,755
|
)
|
|
(105,550
|
)
|
||
CASH (USED IN) FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repayment of senior notes and other debt
|
(1,475
|
)
|
|
(33,721
|
)
|
||
Net proceeds from issuance of debt
|
—
|
|
|
110,093
|
|
||
Cash dividends to common stockholders
|
—
|
|
|
(14,711
|
)
|
||
Purchase of common treasury shares
|
—
|
|
|
(37,424
|
)
|
||
Other, net
|
(1,281
|
)
|
|
3,158
|
|
||
Net cash (used in) from financing activities
|
(2,756
|
)
|
|
27,395
|
|
||
Net impact on cash due to change in foreign exchange rates
|
10,147
|
|
|
11,271
|
|
||
Net change in cash and cash equivalents
|
(186,892
|
)
|
|
73,884
|
|
||
Cash and cash equivalents at beginning of year
|
795,285
|
|
|
763,631
|
|
||
Cash and cash equivalents at end of period
|
$
|
608,393
|
|
|
$
|
837,515
|
|
(In thousands)
|
2017
|
||
|
|
||
Cash and cash equivalents
|
$
|
1,154
|
|
Real estate, furniture and equipment
|
6,434
|
|
|
Goodwill and other intangibles assets
|
62,406
|
|
|
Other assets
|
9,417
|
|
|
Total assets acquired
|
79,411
|
|
|
|
|
||
Other liabilities assumed
|
(1,911
|
)
|
|
Noncontrolling interest
|
(5,000
|
)
|
|
Net assets acquired
|
$
|
72,500
|
|
(In thousands)
|
Unrealized Investment Gains (Losses)
|
|
Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
As of and for the three months ended March 31, 2017:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
427,154
|
|
|
$
|
(371,586
|
)
|
|
$
|
55,568
|
|
Other comprehensive income (loss) before reclassifications
|
19,994
|
|
|
22,735
|
|
|
42,729
|
|
|||
Amounts reclassified from AOCI
|
(28,825
|
)
|
|
—
|
|
|
(28,825
|
)
|
|||
Other comprehensive income (loss)
|
(8,831
|
)
|
|
22,735
|
|
|
13,904
|
|
|||
Unrealized investment gain related to non-controlling interest
|
19
|
|
|
—
|
|
|
19
|
|
|||
End of period
|
$
|
418,342
|
|
|
$
|
(348,851
|
)
|
|
$
|
69,491
|
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(44,346
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(44,346
|
)
|
Tax effect
|
15,521
|
|
(2)
|
—
|
|
|
15,521
|
|
|||
After-tax amounts reclassified
|
$
|
(28,825
|
)
|
|
$
|
—
|
|
|
$
|
(28,825
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(9,571
|
)
|
|
$
|
22,735
|
|
|
$
|
13,164
|
|
Tax effect
|
740
|
|
|
—
|
|
|
740
|
|
|||
Other comprehensive income (loss)
|
$
|
(8,831
|
)
|
|
$
|
22,735
|
|
|
$
|
13,904
|
|
|
|
|
|
|
|
||||||
As of and for the three months ended March 31, 2016:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
180,695
|
|
|
$
|
(247,393
|
)
|
|
$
|
(66,698
|
)
|
Other comprehensive income (loss) before reclassifications
|
78,242
|
|
|
(2,047
|
)
|
|
76,195
|
|
|||
Amounts reclassified from AOCI
|
(1,387
|
)
|
|
—
|
|
|
(1,387
|
)
|
|||
Other comprehensive income (loss)
|
76,855
|
|
|
(2,047
|
)
|
|
74,808
|
|
|||
Unrealized investment gain related to non-controlling interest
|
14
|
|
|
|
|
14
|
|
||||
End of period
|
$
|
257,564
|
|
|
$
|
(249,440
|
)
|
|
$
|
8,124
|
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(2,134
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(2,134
|
)
|
Tax effect
|
747
|
|
(2)
|
—
|
|
|
747
|
|
|||
After-tax amounts reclassified
|
$
|
(1,387
|
)
|
|
$
|
—
|
|
|
$
|
(1,387
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
114,390
|
|
|
$
|
(2,047
|
)
|
|
$
|
112,343
|
|
Tax effect
|
(37,535
|
)
|
|
—
|
|
|
(37,535
|
)
|
|||
Other comprehensive income (loss)
|
$
|
76,855
|
|
|
$
|
(2,047
|
)
|
|
$
|
74,808
|
|
|
|
|
|
|
|
(In thousands)
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
73,631
|
|
|
$
|
13,374
|
|
|
$
|
—
|
|
|
$
|
87,005
|
|
|
$
|
73,631
|
|
Residential mortgage-backed
|
15,316
|
|
|
1,651
|
|
|
—
|
|
|
16,967
|
|
|
15,316
|
|
|||||
Total held to maturity
|
88,947
|
|
|
15,025
|
|
|
—
|
|
|
103,972
|
|
|
88,947
|
|
|||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
472,112
|
|
|
16,784
|
|
|
(2,220
|
)
|
|
486,676
|
|
|
486,676
|
|
|||||
State and municipal:
|
|
|
|
|
|
|
|
|
|
||||||||||
Special revenue
|
2,759,063
|
|
|
69,226
|
|
|
(15,887
|
)
|
|
2,812,402
|
|
|
2,812,402
|
|
|||||
State general obligation
|
504,312
|
|
|
18,952
|
|
|
(3,295
|
)
|
|
519,969
|
|
|
519,969
|
|
|||||
Pre-refunded
|
349,697
|
|
|
20,013
|
|
|
(146
|
)
|
|
369,564
|
|
|
369,564
|
|
|||||
Corporate backed
|
376,664
|
|
|
8,290
|
|
|
(5,639
|
)
|
|
379,315
|
|
|
379,315
|
|
|||||
Local general obligation
|
360,941
|
|
|
20,497
|
|
|
(1,602
|
)
|
|
379,836
|
|
|
379,836
|
|
|||||
Total state and municipal
|
4,350,677
|
|
|
136,978
|
|
|
(26,569
|
)
|
|
4,461,086
|
|
|
4,461,086
|
|
|||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential (1)
|
1,067,779
|
|
|
14,081
|
|
|
(13,030
|
)
|
|
1,068,830
|
|
|
1,068,830
|
|
|||||
Commercial
|
144,583
|
|
|
347
|
|
|
(2,126
|
)
|
|
142,804
|
|
|
142,804
|
|
|||||
Total mortgage-backed securities
|
1,212,362
|
|
|
14,428
|
|
|
(15,156
|
)
|
|
1,211,634
|
|
|
1,211,634
|
|
|||||
Asset-backed
|
2,029,812
|
|
|
7,837
|
|
|
(9,480
|
)
|
|
2,028,169
|
|
|
2,028,169
|
|
|||||
Corporate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
2,391,507
|
|
|
70,783
|
|
|
(5,330
|
)
|
|
2,456,960
|
|
|
2,456,960
|
|
|||||
Financial
|
1,445,707
|
|
|
45,431
|
|
|
(6,881
|
)
|
|
1,484,257
|
|
|
1,484,257
|
|
|||||
Utilities
|
238,801
|
|
|
10,578
|
|
|
(2,049
|
)
|
|
247,330
|
|
|
247,330
|
|
|||||
Other
|
55,808
|
|
|
471
|
|
|
(30
|
)
|
|
56,249
|
|
|
56,249
|
|
|||||
Total corporate
|
4,131,823
|
|
|
127,263
|
|
|
(14,290
|
)
|
|
4,244,796
|
|
|
4,244,796
|
|
|||||
Foreign
|
864,556
|
|
|
38,692
|
|
|
(1,577
|
)
|
|
901,671
|
|
|
901,671
|
|
|||||
Total available for sale
|
13,061,342
|
|
|
341,982
|
|
|
(69,292
|
)
|
|
13,334,032
|
|
|
13,334,032
|
|
|||||
Total investments in fixed maturity securities
|
$
|
13,150,289
|
|
|
$
|
357,007
|
|
|
$
|
(69,292
|
)
|
|
$
|
13,438,004
|
|
|
$
|
13,422,979
|
|
(In thousands)
|
Amortized
Cost |
|
Gross Unrealized
|
|
Fair
Value |
|
Carrying
Value |
||||||||||||
Gains
|
|
Losses
|
|||||||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
72,582
|
|
|
$
|
12,453
|
|
|
$
|
—
|
|
|
$
|
85,035
|
|
|
$
|
72,582
|
|
Residential mortgage-backed
|
15,944
|
|
|
1,693
|
|
|
—
|
|
|
17,637
|
|
|
15,944
|
|
|||||
Total held to maturity
|
88,526
|
|
|
14,146
|
|
|
—
|
|
|
102,672
|
|
|
88,526
|
|
|||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
496,187
|
|
|
20,208
|
|
|
(2,593
|
)
|
|
513,802
|
|
|
513,802
|
|
|||||
State and municipal:
|
|
|
|
|
|
|
|
|
|
||||||||||
Special revenue
|
2,791,211
|
|
|
58,559
|
|
|
(26,315
|
)
|
|
2,823,455
|
|
|
2,823,455
|
|
|||||
State general obligation
|
524,682
|
|
|
16,964
|
|
|
(5,139
|
)
|
|
536,507
|
|
|
536,507
|
|
|||||
Pre-refunded
|
356,535
|
|
|
19,181
|
|
|
(165
|
)
|
|
375,551
|
|
|
375,551
|
|
|||||
Corporate backed
|
410,933
|
|
|
6,172
|
|
|
(6,452
|
)
|
|
410,653
|
|
|
410,653
|
|
|||||
Local general obligation
|
360,022
|
|
|
15,682
|
|
|
(2,367
|
)
|
|
373,337
|
|
|
373,337
|
|
|||||
Total state and municipal
|
4,443,383
|
|
|
116,558
|
|
|
(40,438
|
)
|
|
4,519,503
|
|
|
4,519,503
|
|
|||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential (1)
|
1,034,301
|
|
|
15,431
|
|
|
(12,950
|
)
|
|
1,036,782
|
|
|
1,036,782
|
|
|||||
Commercial
|
155,540
|
|
|
304
|
|
|
(2,981
|
)
|
|
152,863
|
|
|
152,863
|
|
|||||
Total mortgage-backed securities
|
1,189,841
|
|
|
15,735
|
|
|
(15,931
|
)
|
|
1,189,645
|
|
|
1,189,645
|
|
|||||
Asset-backed
|
1,913,830
|
|
|
5,971
|
|
|
(11,941
|
)
|
|
1,907,860
|
|
|
1,907,860
|
|
|||||
Corporate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
2,315,567
|
|
|
71,007
|
|
|
(7,174
|
)
|
|
2,379,400
|
|
|
2,379,400
|
|
|||||
Financial
|
1,369,001
|
|
|
39,543
|
|
|
(11,270
|
)
|
|
1,397,274
|
|
|
1,397,274
|
|
|||||
Utilities
|
229,154
|
|
|
10,801
|
|
|
(2,411
|
)
|
|
237,544
|
|
|
237,544
|
|
|||||
Other
|
54,073
|
|
|
299
|
|
|
(63
|
)
|
|
54,309
|
|
|
54,309
|
|
|||||
Total corporate
|
3,967,795
|
|
|
121,650
|
|
|
(20,918
|
)
|
|
4,068,527
|
|
|
4,068,527
|
|
|||||
Foreign
|
858,773
|
|
|
46,794
|
|
|
(2,762
|
)
|
|
902,805
|
|
|
902,805
|
|
|||||
Total available for sale
|
12,869,809
|
|
|
326,916
|
|
|
(94,583
|
)
|
|
13,102,142
|
|
|
13,102,142
|
|
|||||
Total investments in fixed maturity securities
|
$
|
12,958,335
|
|
|
$
|
341,062
|
|
|
$
|
(94,583
|
)
|
|
$
|
13,204,814
|
|
|
$
|
13,190,668
|
|
(1)
|
Gross unrealized losses for residential mortgage-backed securities include
$717,960
and
$818,691
as of
March 31, 2017
and
December 31, 2016
, respectively, related to the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income.
|
(In thousands)
|
Amortized
Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
1,033,358
|
|
|
$
|
1,049,761
|
|
Due after one year through five years
|
5,160,693
|
|
|
5,288,826
|
|
||
Due after five years through ten years
|
3,273,799
|
|
|
3,386,314
|
|
||
Due after ten years
|
2,454,761
|
|
|
2,484,502
|
|
||
Mortgage-backed securities
|
1,227,678
|
|
|
1,228,601
|
|
||
Total
|
$
|
13,150,289
|
|
|
$
|
13,438,004
|
|
(In thousands)
|
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stocks
|
$
|
90,080
|
|
|
$
|
333,397
|
|
|
$
|
(2,148
|
)
|
|
$
|
421,329
|
|
|
$
|
421,329
|
|
Preferred stocks
|
121,360
|
|
|
70,795
|
|
|
(2,106
|
)
|
|
190,049
|
|
|
190,049
|
|
|||||
Total
|
$
|
211,440
|
|
|
$
|
404,192
|
|
|
$
|
(4,254
|
)
|
|
$
|
611,378
|
|
|
$
|
611,378
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stocks
|
$
|
94,998
|
|
|
$
|
351,906
|
|
|
$
|
(1,046
|
)
|
|
$
|
445,858
|
|
|
$
|
445,858
|
|
Preferred stocks
|
125,589
|
|
|
101,392
|
|
|
(3,639
|
)
|
|
223,342
|
|
|
223,342
|
|
|||||
Total
|
$
|
220,587
|
|
|
$
|
453,298
|
|
|
$
|
(4,685
|
)
|
|
$
|
669,200
|
|
|
$
|
669,200
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Investment income earned on:
|
|
|
|
||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
112,346
|
|
|
$
|
108,835
|
|
Investment funds
|
26,649
|
|
|
16,636
|
|
||
Arbitrage trading account
|
6,360
|
|
|
3,190
|
|
||
Real estate
|
4,566
|
|
|
2,717
|
|
||
Equity securities available for sale
|
639
|
|
|
868
|
|
||
Gross investment income
|
150,560
|
|
|
132,246
|
|
||
Investment expense
|
(1,702
|
)
|
|
(2,113
|
)
|
||
Net investment income
|
$
|
148,858
|
|
|
$
|
130,133
|
|
|
Carrying Value as of
|
|
Income (Loss) from Investment Funds
|
||||||||||||
|
March 31,
|
|
December 31,
|
|
For the Three Months Ended March 31,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Real estate
|
$
|
654,501
|
|
|
$
|
641,783
|
|
|
$
|
4,532
|
|
|
$
|
17,037
|
|
Energy
|
96,161
|
|
|
91,448
|
|
|
3,245
|
|
|
(3,924
|
)
|
||||
Hedge equity
|
74,779
|
|
|
73,913
|
|
|
866
|
|
|
(2,852
|
)
|
||||
Other funds
|
413,117
|
|
|
391,002
|
|
|
18,006
|
|
|
6,375
|
|
||||
Total
|
$
|
1,238,558
|
|
|
$
|
1,198,146
|
|
|
$
|
26,649
|
|
|
$
|
16,636
|
|
|
Carrying Value
|
||||||
|
March 31,
|
|
December 31,
|
||||
(In thousands)
|
2017
|
|
2016
|
||||
Properties in operation
|
$
|
448,422
|
|
|
$
|
457,237
|
|
Properties under development
|
789,316
|
|
|
727,744
|
|
||
Total
|
$
|
1,237,738
|
|
|
$
|
1,184,981
|
|
|
For the Three Months Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Realized investment gains (losses):
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Gains
|
$
|
5,605
|
|
|
$
|
23,064
|
|
Losses
|
(3,965
|
)
|
|
(2,940
|
)
|
||
Equity securities available for sale
|
42,707
|
|
|
125
|
|
||
Investment funds
|
1,267
|
|
|
(460
|
)
|
||
Real estate
|
3,300
|
|
|
5,024
|
|
||
Other
|
3,434
|
|
|
644
|
|
||
Net realized gains on investments sales
|
52,348
|
|
|
25,457
|
|
||
Other-than-temporary impairments (1)
|
—
|
|
|
(18,114
|
)
|
||
Net investment gains
|
52,348
|
|
|
7,343
|
|
||
Income tax expense
|
(18,322
|
)
|
|
(2,570
|
)
|
||
After-tax net realized investment gains
|
$
|
34,026
|
|
|
$
|
4,773
|
|
Change in unrealized investment gains (losses)
of available for sale securities:
|
|
|
|
||||
Fixed maturity securities
|
$
|
37,984
|
|
|
$
|
92,428
|
|
Previously impaired fixed maturity securities
|
101
|
|
|
(55
|
)
|
||
Equity securities available for sale
|
(48,862
|
)
|
|
13,137
|
|
||
Investment funds
|
1,206
|
|
|
8,880
|
|
||
Total change in unrealized investment gains (losses)
|
(9,571
|
)
|
|
114,390
|
|
||
Income tax benefit (expense)
|
740
|
|
|
(37,535
|
)
|
||
Noncontrolling interests
|
19
|
|
|
14
|
|
||
After-tax change in unrealized investment gains (losses) of available for sale securities
|
$
|
(8,812
|
)
|
|
$
|
76,869
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
(In thousands)
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
95,253
|
|
|
$
|
954
|
|
|
$
|
33,071
|
|
|
$
|
1,266
|
|
|
$
|
128,324
|
|
|
$
|
2,220
|
|
State and municipal
|
1,111,978
|
|
|
22,836
|
|
|
150,439
|
|
|
3,733
|
|
|
1,262,417
|
|
|
26,569
|
|
||||||
Mortgage-backed securities
|
618,642
|
|
|
10,013
|
|
|
140,791
|
|
|
5,143
|
|
|
759,433
|
|
|
15,156
|
|
||||||
Asset-backed securities
|
1,204,310
|
|
|
4,386
|
|
|
95,421
|
|
|
5,094
|
|
|
1,299,731
|
|
|
9,480
|
|
||||||
Corporate
|
867,293
|
|
|
8,126
|
|
|
61,732
|
|
|
6,164
|
|
|
929,025
|
|
|
14,290
|
|
||||||
Foreign government
|
115,542
|
|
|
1,320
|
|
|
4,495
|
|
|
257
|
|
|
120,037
|
|
|
1,577
|
|
||||||
Fixed maturity securities
|
4,013,018
|
|
|
47,635
|
|
|
485,949
|
|
|
21,657
|
|
|
4,498,967
|
|
|
69,292
|
|
||||||
Common stocks
|
18,875
|
|
|
1,173
|
|
|
8,803
|
|
|
975
|
|
|
27,678
|
|
|
2,148
|
|
||||||
Preferred stocks
|
—
|
|
|
—
|
|
|
23,567
|
|
|
2,106
|
|
|
23,567
|
|
|
2,106
|
|
||||||
Equity securities available for sale
|
18,875
|
|
|
1,173
|
|
|
32,370
|
|
|
3,081
|
|
|
51,245
|
|
|
4,254
|
|
||||||
Total
|
$
|
4,031,893
|
|
|
$
|
48,808
|
|
|
$
|
518,319
|
|
|
$
|
24,738
|
|
|
$
|
4,550,212
|
|
|
$
|
73,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
112,709
|
|
|
$
|
1,252
|
|
|
$
|
35,450
|
|
|
$
|
1,341
|
|
|
$
|
148,159
|
|
|
$
|
2,593
|
|
State and municipal
|
1,562,614
|
|
|
35,553
|
|
|
133,034
|
|
|
4,885
|
|
|
1,695,648
|
|
|
40,438
|
|
||||||
Mortgage-backed securities
|
625,903
|
|
|
11,103
|
|
|
109,066
|
|
|
4,828
|
|
|
734,969
|
|
|
15,931
|
|
||||||
Asset-backed securities
|
1,010,836
|
|
|
5,340
|
|
|
201,693
|
|
|
6,601
|
|
|
1,212,529
|
|
|
11,941
|
|
||||||
Corporate
|
1,035,245
|
|
|
13,448
|
|
|
65,147
|
|
|
7,470
|
|
|
1,100,392
|
|
|
20,918
|
|
||||||
Foreign government
|
213,246
|
|
|
1,985
|
|
|
24,820
|
|
|
777
|
|
|
238,066
|
|
|
2,762
|
|
||||||
Fixed maturity securities
|
4,560,553
|
|
|
68,681
|
|
|
569,210
|
|
|
25,902
|
|
|
5,129,763
|
|
|
94,583
|
|
||||||
Common stocks
|
336
|
|
|
22
|
|
|
8,755
|
|
|
1,024
|
|
|
9,091
|
|
|
1,046
|
|
||||||
Preferred stocks
|
—
|
|
|
—
|
|
|
22,034
|
|
|
3,639
|
|
|
22,034
|
|
|
3,639
|
|
||||||
Equity securities available for sale
|
336
|
|
|
22
|
|
|
30,789
|
|
|
4,663
|
|
|
31,125
|
|
|
4,685
|
|
||||||
Total
|
$
|
4,560,889
|
|
|
$
|
68,703
|
|
|
$
|
599,999
|
|
|
$
|
30,565
|
|
|
$
|
5,160,888
|
|
|
$
|
99,268
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross
Unrealized
Loss
|
|||||
State and municipal
|
1
|
|
|
$
|
5,136
|
|
|
$
|
3,725
|
|
Mortgage-backed securities
|
9
|
|
|
19,647
|
|
|
924
|
|
||
Corporate
|
4
|
|
|
19,990
|
|
|
741
|
|
||
Foreign government
|
11
|
|
|
51,901
|
|
|
681
|
|
||
Asset-backed securities
|
6
|
|
|
9,615
|
|
|
173
|
|
||
Total
|
31
|
|
|
$
|
106,289
|
|
|
$
|
6,244
|
|
(In thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
486,676
|
|
|
$
|
—
|
|
|
$
|
486,676
|
|
|
$
|
—
|
|
State and municipal
|
4,461,086
|
|
|
—
|
|
|
4,461,086
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,211,634
|
|
|
—
|
|
|
1,211,634
|
|
|
—
|
|
||||
Asset-backed securities
|
2,028,169
|
|
|
—
|
|
|
2,027,990
|
|
|
179
|
|
||||
Corporate
|
4,244,796
|
|
|
—
|
|
|
4,244,796
|
|
|
—
|
|
||||
Foreign government
|
901,671
|
|
|
—
|
|
|
901,671
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,334,032
|
|
|
—
|
|
|
13,333,853
|
|
|
179
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
421,329
|
|
|
403,855
|
|
|
8,671
|
|
|
8,803
|
|
||||
Preferred stocks
|
190,049
|
|
|
—
|
|
|
186,387
|
|
|
3,662
|
|
||||
Total equity securities available for sale
|
611,378
|
|
|
403,855
|
|
|
195,058
|
|
|
12,465
|
|
||||
Arbitrage trading account
|
753,278
|
|
|
256,752
|
|
|
496,465
|
|
|
61
|
|
||||
Total
|
$
|
14,698,688
|
|
|
$
|
660,607
|
|
|
$
|
14,025,376
|
|
|
$
|
12,705
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
51,348
|
|
|
$
|
51,348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
513,802
|
|
|
$
|
—
|
|
|
$
|
513,802
|
|
|
$
|
—
|
|
State and municipal
|
4,519,503
|
|
|
—
|
|
|
4,519,503
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,189,645
|
|
|
—
|
|
|
1,189,645
|
|
|
—
|
|
||||
Asset-backed securities
|
1,907,860
|
|
|
—
|
|
|
1,907,677
|
|
|
183
|
|
||||
Corporate
|
4,068,527
|
|
|
—
|
|
|
4,068,527
|
|
|
—
|
|
||||
Foreign government
|
902,805
|
|
|
—
|
|
|
902,805
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,102,142
|
|
|
—
|
|
|
13,101,959
|
|
|
183
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
445,858
|
|
|
429,647
|
|
|
7,457
|
|
|
8,754
|
|
||||
Preferred stocks
|
223,342
|
|
|
—
|
|
|
219,680
|
|
|
3,662
|
|
||||
Total equity securities available for sale
|
669,200
|
|
|
429,647
|
|
|
227,137
|
|
|
12,416
|
|
||||
Arbitrage trading account
|
299,999
|
|
|
224,623
|
|
|
75,376
|
|
|
—
|
|
||||
Total
|
$
|
14,071,341
|
|
|
$
|
654,270
|
|
|
$
|
13,404,472
|
|
|
$
|
12,599
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
51,179
|
|
|
$
|
51,089
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
Gains (Losses) Included in:
|
||||||||||||||||||||||||||||||||||
(In thousands)
|
Beginning
Balance
|
|
Earnings (Losses)
|
|
Other
Comprehensive
Income (Loss)
|
|
Impairments
|
|
Purchases
|
|
(Sales)
|
|
Paydowns / Maturities
|
|
Transfers
|
|
Ending
Balance
|
||||||||||||||||||
In / (Out)
|
|||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
183
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179
|
|
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
183
|
|
|
1
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
179
|
|
|||||||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
8,754
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,803
|
|
|||||||||
Preferred stocks
|
3,662
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
3,662
|
|
|||||||||
Total
|
12,416
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,465
|
|
|||||||||
Arbitrage trading account
|
—
|
|
|
—
|
|
|
61
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
|||||||||
Total
|
$
|
12,599
|
|
|
$
|
1
|
|
|
$
|
120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
199
|
|
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
183
|
|
Corporate
|
154
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
353
|
|
|
180
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
(35
|
)
|
|
—
|
|
|
183
|
|
|||||||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
7,829
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,754
|
|
|||||||||
Preferred stocks
|
3,624
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,662
|
|
|||||||||
Total
|
11,453
|
|
|
38
|
|
|
160
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,416
|
|
|||||||||
Arbitrage trading account
|
176
|
|
|
(176
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|||||||||
Total
|
$
|
11,982
|
|
|
$
|
42
|
|
|
$
|
176
|
|
|
$
|
—
|
|
|
$
|
765
|
|
|
$
|
(331
|
)
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
12,599
|
|
|
March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Net reserves at beginning of year
|
$
|
9,590,265
|
|
|
$
|
9,244,872
|
|
Net provision for losses and loss expenses:
|
|
|
|
||||
Claims occurring during the current year (1)
|
958,684
|
|
|
916,649
|
|
||
Increase (decrease) in estimates for claims occurring in prior years (2) (3)
|
8,727
|
|
|
(5,601
|
)
|
||
Loss reserve discount accretion
|
12,192
|
|
|
11,273
|
|
||
Total
|
979,603
|
|
|
922,321
|
|
||
Net payments for claims:
|
|
|
|
|
|
||
Current year
|
97,461
|
|
|
259,633
|
|
||
Prior year
|
773,571
|
|
|
555,884
|
|
||
Total
|
871,032
|
|
|
815,517
|
|
||
Foreign currency translation
|
23,204
|
|
|
20,760
|
|
||
Net reserves at end of period
|
9,722,040
|
|
|
9,372,436
|
|
||
Ceded reserve at end of period
|
1,502,284
|
|
|
1,415,906
|
|
||
Gross reserves at end of period
|
$
|
11,224,324
|
|
|
$
|
10,788,342
|
|
(1)
|
Claims occurring during the current year are net of loss reserve discounts of $
5,761,000
and $
19,072,000
in 2017 and 2016, respectively.
|
(2)
|
The increase in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years increased by $
4,841,000
and decreased by $
23,559,000
in 2017 and 2016, respectively.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(In thousands)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
$
|
13,422,979
|
|
|
$
|
13,438,004
|
|
|
$
|
13,190,668
|
|
|
$
|
13,204,814
|
|
Equity securities available for sale
|
611,378
|
|
|
611,378
|
|
|
669,200
|
|
|
669,200
|
|
||||
Arbitrage trading account
|
753,278
|
|
|
753,278
|
|
|
299,999
|
|
|
299,999
|
|
||||
Loans receivable
|
103,650
|
|
|
105,153
|
|
|
106,798
|
|
|
108,299
|
|
||||
Cash and cash equivalents
|
608,393
|
|
|
608,393
|
|
|
795,285
|
|
|
795,285
|
|
||||
Trading account receivables from brokers and clearing organizations
|
29,131
|
|
|
29,131
|
|
|
484,593
|
|
|
484,593
|
|
||||
Due from broker
|
3,749
|
|
|
3,749
|
|
|
—
|
|
|
—
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Due to broker
|
—
|
|
|
—
|
|
|
19,416
|
|
|
19,416
|
|
||||
Trading account securities sold but not yet purchased
|
51,348
|
|
|
51,348
|
|
|
51,179
|
|
|
51,179
|
|
||||
Subordinated debentures
|
727,777
|
|
|
750,104
|
|
|
727,630
|
|
|
687,504
|
|
||||
Senior notes and other debt
|
1,759,494
|
|
|
1,927,392
|
|
|
1,760,595
|
|
|
1,914,727
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Written premiums:
|
|
|
|
||||
Direct
|
$
|
1,721,062
|
|
|
$
|
1,709,129
|
|
Assumed
|
215,145
|
|
|
246,568
|
|
||
Ceded
|
(289,369
|
)
|
|
(291,975
|
)
|
||
Total net premiums written
|
$
|
1,646,838
|
|
|
$
|
1,663,722
|
|
|
|
|
|
||||
Earned premiums:
|
|
|
|
||||
Direct
|
$
|
1,613,364
|
|
|
$
|
1,568,067
|
|
Assumed
|
208,626
|
|
|
218,367
|
|
||
Ceded
|
(251,948
|
)
|
|
(259,099
|
)
|
||
Total net premiums earned
|
$
|
1,570,042
|
|
|
$
|
1,527,335
|
|
|
|
|
|
||||
Ceded losses and loss expenses incurred
|
$
|
35,192
|
|
|
$
|
126,929
|
|
Ceded commissions earned
|
$
|
56,550
|
|
|
$
|
47,973
|
|
($ in thousands)
|
Units
|
|
Fair Value
|
|||
2017
|
1,853
|
|
|
$
|
129
|
|
2016
|
5,580
|
|
|
$
|
286
|
|
•
|
Insurance
- primarily commercial insurance business, including excess and surplus lines and admitted lines in the United States, United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia; and
|
•
|
Reinsurance
- reinsurance business on a facultative and treaty basis, primarily in the United States, United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South Africa.
|
|
Revenues
|
|
|
|
|
||||||||||||||||||
(In thousands)
|
Earned
Premiums
|
|
Investment
Income
|
|
Other
|
|
Total (1)
|
|
Pre-Tax
Income
(Loss)
|
|
Net Income
(Loss) to Common Stockholders
|
||||||||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,413,170
|
|
|
$
|
111,909
|
|
|
$
|
18,287
|
|
|
$
|
1,543,366
|
|
|
$
|
199,994
|
|
|
$
|
134,095
|
|
Reinsurance
|
156,872
|
|
|
24,778
|
|
|
—
|
|
|
181,650
|
|
|
4,594
|
|
|
3,099
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
12,171
|
|
|
80,883
|
|
|
93,054
|
|
|
(72,639
|
)
|
|
(47,773
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
52,348
|
|
|
52,348
|
|
|
52,348
|
|
|
34,026
|
|
||||||
Total
|
$
|
1,570,042
|
|
|
$
|
148,858
|
|
|
$
|
151,518
|
|
|
$
|
1,870,418
|
|
|
$
|
184,297
|
|
|
$
|
123,447
|
|
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,366,605
|
|
|
$
|
99,860
|
|
|
$
|
26,793
|
|
|
$
|
1,493,258
|
|
|
$
|
199,651
|
|
|
$
|
134,778
|
|
Reinsurance
|
160,730
|
|
|
23,770
|
|
|
—
|
|
|
184,500
|
|
|
28,061
|
|
|
19,609
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
6,503
|
|
|
115,607
|
|
|
122,110
|
|
|
(60,379
|
)
|
|
(39,649
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
7,343
|
|
|
7,343
|
|
|
7,343
|
|
|
4,773
|
|
||||||
Total
|
$
|
1,527,335
|
|
|
$
|
130,133
|
|
|
$
|
149,743
|
|
|
$
|
1,807,211
|
|
|
$
|
174,676
|
|
|
$
|
119,511
|
|
(In thousands)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Insurance
|
$
|
18,932,563
|
|
|
$
|
19,137,758
|
|
Reinsurance
|
2,750,876
|
|
|
2,524,338
|
|
||
Corporate, other and eliminations
|
1,863,975
|
|
|
1,687,980
|
|
||
Consolidated
|
$
|
23,547,414
|
|
|
$
|
23,350,076
|
|
|
For the Three Months
|
||||||
|
Ended March 31,
|
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Insurance:
|
|
|
|
||||
Other liability
|
$
|
451,830
|
|
|
$
|
413,528
|
|
Workers’ compensation
|
361,136
|
|
|
343,581
|
|
||
Short-tail lines (1)
|
309,234
|
|
|
327,076
|
|
||
Commercial automobile
|
158,126
|
|
|
156,817
|
|
||
Professional liability
|
132,844
|
|
|
125,603
|
|
||
Total Insurance
|
1,413,170
|
|
|
1,366,605
|
|
||
|
|
|
|
||||
Reinsurance:
|
|
|
|
||||
Casualty
|
94,739
|
|
|
104,305
|
|
||
Property
|
62,133
|
|
|
56,425
|
|
||
Total Reinsurance
|
156,872
|
|
|
160,730
|
|
||
|
|
|
|
||||
Total
|
$
|
1,570,042
|
|
|
$
|
1,527,335
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(In thousands)
|
March 31, 2017
|
|
December 31, 2016
|
||||
Insurance
|
$
|
8,028,555
|
|
|
$
|
7,913,074
|
|
Reinsurance
|
1,693,485
|
|
|
1,677,191
|
|
||
Net reserves for losses and loss expenses
|
9,722,040
|
|
|
9,590,265
|
|
||
Ceded reserves for losses and loss expenses
|
1,502,284
|
|
|
1,606,930
|
|
||
Gross reserves for losses and loss expenses
|
$
|
11,224,324
|
|
|
$
|
11,197,195
|
|
(In thousands)
|
Reported Case
Reserves
|
|
Incurred But
Not Reported
|
|
Total
|
||||||
March 31, 2017
|
|
|
|
|
|
||||||
Other liability
|
$
|
1,159,857
|
|
|
$
|
2,106,241
|
|
|
$
|
3,266,098
|
|
Workers’ compensation (1)
|
1,471,650
|
|
|
1,246,543
|
|
|
2,718,193
|
|
|||
Professional liability
|
284,185
|
|
|
554,475
|
|
|
838,660
|
|
|||
Commercial automobile
|
342,220
|
|
|
257,910
|
|
|
600,130
|
|
|||
Short-tail lines (2)
|
320,151
|
|
|
285,323
|
|
|
605,474
|
|
|||
Total Insurance
|
3,578,063
|
|
|
4,450,492
|
|
|
8,028,555
|
|
|||
Reinsurance (1)
|
846,575
|
|
|
846,910
|
|
|
1,693,485
|
|
|||
Total
|
$
|
4,424,638
|
|
|
$
|
5,297,402
|
|
|
$
|
9,722,040
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
||||||
Other liability
|
$
|
1,159,082
|
|
|
$
|
2,061,966
|
|
|
$
|
3,221,048
|
|
Workers’ compensation (1)
|
1,453,318
|
|
|
1,228,774
|
|
|
2,682,092
|
|
|||
Professional liability
|
264,188
|
|
|
542,539
|
|
|
806,727
|
|
|||
Commercial automobile
|
344,143
|
|
|
252,978
|
|
|
597,121
|
|
|||
Short-tail lines (2)
|
322,872
|
|
|
283,214
|
|
|
606,086
|
|
|||
Total Insurance
|
3,543,603
|
|
|
4,369,471
|
|
|
7,913,074
|
|
|||
Reinsurance (1)
|
823,516
|
|
|
853,675
|
|
|
1,677,191
|
|
|||
Total
|
$
|
4,367,119
|
|
|
$
|
5,223,146
|
|
|
$
|
9,590,265
|
|
(In thousands)
|
2017
|
|
2016
|
||||
Net (increase) decrease in prior year loss reserves
|
$
|
(8,727
|
)
|
|
$
|
5,601
|
|
Increase in prior year earned premiums
|
11,173
|
|
|
6,687
|
|
||
Net favorable prior year development
|
$
|
2,446
|
|
|
$
|
12,288
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss
|
|||||
Unrealized loss less than 20% of amortized cost
|
633
|
|
|
$
|
4,493,463
|
|
|
$
|
65,385
|
|
Unrealized loss of 20% or greater of amortized cost:
|
|
|
|
|
|
|||||
Less than twelve months
|
1
|
|
|
5,136
|
|
|
3,725
|
|
||
Twelve months and longer
|
3
|
|
|
368
|
|
|
182
|
|
||
Total
|
637
|
|
|
$
|
4,498,967
|
|
|
$
|
69,292
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss |
|||||
State and municipal
|
1
|
|
|
$
|
5,136
|
|
|
$
|
3,725
|
|
Mortgage-backed securities
|
9
|
|
|
19,647
|
|
|
924
|
|
||
Corporate
|
4
|
|
|
19,990
|
|
|
741
|
|
||
Foreign government
|
11
|
|
|
51,901
|
|
|
681
|
|
||
Asset-backed securities
|
6
|
|
|
9,615
|
|
|
173
|
|
||
Total
|
31
|
|
|
$
|
106,289
|
|
|
$
|
6,244
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Pricing source:
|
|
|
|
|||
Independent pricing services
|
$
|
13,159,581
|
|
|
98.7
|
%
|
Syndicate manager
|
45,931
|
|
|
0.3
|
|
|
Directly by the Company based on:
|
|
|
|
|||
Observable data
|
128,341
|
|
|
1.0
|
|
|
Cash flow model
|
179
|
|
|
—
|
|
|
Total
|
$
|
13,334,032
|
|
|
100.0
|
%
|
($ in thousands)
|
2017
|
|
2016
|
||||
Insurance:
|
|
|
|
||||
Gross premiums written
|
$
|
1,769,405
|
|
|
$
|
1,752,033
|
|
Net premiums written
|
1,494,135
|
|
|
1,479,207
|
|
||
Net premiums earned
|
1,413,170
|
|
|
1,366,605
|
|
||
Loss ratio
|
60.9
|
%
|
|
60.5
|
%
|
||
Expense ratio
|
32.9
|
%
|
|
32.5
|
%
|
||
GAAP combined ratio
|
93.8
|
%
|
|
93.0
|
%
|
||
Reinsurance:
|
|
|
|
||||
Gross premiums written
|
$
|
166,802
|
|
|
$
|
203,664
|
|
Net premiums written
|
152,703
|
|
|
184,515
|
|
||
Net premiums earned
|
156,872
|
|
|
160,730
|
|
||
Loss ratio
|
75.9
|
%
|
|
59.2
|
%
|
||
Expense ratio
|
37.0
|
%
|
|
38.4
|
%
|
||
GAAP combined ratio
|
112.9
|
%
|
|
97.6
|
%
|
||
Consolidated:
|
|
|
|
||||
Gross premiums written
|
$
|
1,936,207
|
|
|
$
|
1,955,697
|
|
Net premiums written
|
1,646,838
|
|
|
1,663,722
|
|
||
Net premiums earned
|
1,570,042
|
|
|
1,527,335
|
|
||
Loss ratio
|
62.4
|
%
|
|
60.4
|
%
|
||
Expense ratio
|
33.3
|
%
|
|
33.1
|
%
|
||
GAAP combined ratio
|
95.7
|
%
|
|
93.5
|
%
|
(In thousands, except per share data)
|
2017
|
|
2016
|
||||
Net income to common stockholders
|
$
|
123,447
|
|
|
$
|
119,511
|
|
Weighted average diluted shares
|
128,453
|
|
|
128,529
|
|
||
Net income per diluted share
|
$
|
0.96
|
|
|
$
|
0.93
|
|
•
|
Insurance
- gross premiums increased 1% to $1,769 million in 2017 from $1,752 million in 2016. Gross premiums increased $16 million (9%) for professional liability, $8 million (5%) for commercial auto and $3 million (1%) for other liability, and decreased $7 million (2%) for short-tail lines and $3 million (less than 1%) for workers' compensation.
|
•
|
Reinsurance
- gross premiums decreased 18% to $167 million in 2017 from $204 million in 2016. Gross premiums decreased $29 million (31%) for property lines and $8 million (7%) for casualty lines.
|
|
Amount
|
|
Average Annualized
Yield
|
||||||||||
($ In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
112,346
|
|
|
$
|
108,835
|
|
|
3.2
|
%
|
|
3.2
|
%
|
Investment funds
|
26,649
|
|
|
16,636
|
|
|
8.5
|
|
|
5.5
|
|
||
Arbitrage trading account
|
6,360
|
|
|
3,190
|
|
|
5.4
|
|
|
3.7
|
|
||
Real estate
|
4,566
|
|
|
2,717
|
|
|
1.5
|
|
|
1.1
|
|
||
Equity securities available for sale
|
639
|
|
|
868
|
|
|
1.2
|
|
|
2.2
|
|
||
Gross investment income
|
150,560
|
|
|
132,246
|
|
|
3.5
|
|
|
3.3
|
|
||
Investment expenses
|
(1,702
|
)
|
|
(2,113
|
)
|
|
|
|
|
||||
Total
|
$
|
148,858
|
|
|
$
|
130,133
|
|
|
3.5
|
%
|
|
3.2
|
%
|
•
|
Insurance
- The loss ratio was 60.9% in 2017 and 60.5% in 2016. Catastrophe losses were $14 million in 2017 compared with $15 million in 2016. Favorable prior year reserve development was $26 million in 2017 and $12 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 1.6 points to 61.8% in 2017 from 60.2% in 2016.
|
•
|
Reinsurance
- The loss ratio of 75.9% in 2017 was 16.7 points higher than the loss ratio of 59.2% in 2016. Catastrophe losses were $0.2 million in 2017 compared with $0.5 million in 2016. Adverse prior year reserve development was $24 million in 2017 (primarily related to the change in the Ogden discount rate) compared with favorable prior year reserve development of $0.7 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 1.4 points to 60.7% in 2017 from 59.3% in 2016.
|
(In thousands)
|
2017
|
|
2016
|
||||
Policy acquisition and operating insurance expenses
|
$
|
523,409
|
|
|
$
|
505,255
|
|
Service expenses
|
29,933
|
|
|
33,798
|
|
||
Net foreign currency losses
|
5,508
|
|
|
3,728
|
|
||
Other costs and expenses
|
44,850
|
|
|
39,678
|
|
||
Total
|
$
|
603,700
|
|
|
$
|
582,459
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Fixed maturity securities:
|
|
|
|
|||
U.S. government and government agencies
|
$
|
486,676
|
|
|
2.7
|
%
|
State and municipal:
|
|
|
|
|||
Special revenue
|
2,836,614
|
|
|
15.8
|
|
|
State general obligation
|
554,643
|
|
|
3.1
|
|
|
Local general obligation
|
393,876
|
|
|
2.2
|
|
|
Corporate backed
|
379,315
|
|
|
2.1
|
|
|
Pre-refunded (1)
|
370,269
|
|
|
2.1
|
|
|
Total state and municipal
|
4,534,717
|
|
|
25.2
|
|
|
Mortgage-backed securities:
|
|
|
|
|||
Agency
|
831,772
|
|
|
4.6
|
|
|
Residential-Prime
|
221,507
|
|
|
1.2
|
|
|
Commercial
|
142,804
|
|
|
0.8
|
|
|
Residential-Alt A
|
30,867
|
|
|
0.2
|
|
|
Total mortgage-backed securities
|
1,226,950
|
|
|
6.8
|
|
|
Asset-backed securities
|
2,028,169
|
|
|
11.3
|
|
|
Corporate:
|
|
|
|
|||
Industrial
|
2,456,960
|
|
|
13.7
|
|
|
Financial
|
1,484,257
|
|
|
8.3
|
|
|
Utilities
|
247,330
|
|
|
1.4
|
|
|
Other
|
56,249
|
|
|
0.3
|
|
|
Total corporate
|
4,244,796
|
|
|
23.7
|
|
|
Foreign government and foreign government agencies
|
901,671
|
|
|
5.0
|
|
|
Total fixed maturity securities
|
13,422,979
|
|
|
74.7
|
|
|
Equity securities available for sale:
|
|
|
|
|||
Common stocks
|
421,329
|
|
|
2.3
|
|
|
Preferred stocks
|
190,049
|
|
|
1.1
|
|
|
Total equity securities available for sale
|
611,378
|
|
|
3.4
|
|
|
Cash and cash equivalents
|
608,393
|
|
|
3.4
|
|
|
Investment funds
|
1,238,558
|
|
|
6.9
|
|
|
Real estate
|
1,237,738
|
|
|
6.9
|
|
|
Arbitrage trading account
|
753,278
|
|
|
4.2
|
|
|
Loans receivable
|
103,650
|
|
|
0.5
|
|
|
Total investments
|
$
|
17,975,974
|
|
|
100.0
|
%
|
(In thousands)
|
Carrying Value
|
||
Argentina
|
$
|
263,374
|
|
Australia
|
217,042
|
|
|
Canada
|
163,023
|
|
|
United Kingdom
|
84,438
|
|
|
Brazil
|
50,378
|
|
|
Germany
|
46,187
|
|
|
Supranational (1)
|
37,081
|
|
|
Norway
|
19,735
|
|
|
Colombia
|
7,873
|
|
|
Uruguay
|
6,340
|
|
|
Singapore
|
6,200
|
|
|
Total
|
$
|
901,671
|
|
Number
|
|
|
|
|
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
|
|
|
|
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
|
|
|
|
|
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
W. R. BERKLEY CORPORATION
|
Date:
|
May 5, 2017
|
/s/ W. Robert Berkley, Jr.
|
|
|
W. Robert Berkley, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
May 5, 2017
|
/s/ Richard M. Baio
|
|
|
Richard M. Baio
|
|
|
Senior Vice President - Chief Financial Officer and Treasurer
|
|
/s/ W. Robert Berkley, Jr.
|
|
W. Robert Berkley, Jr.
|
|
President and
Chief Executive Officer
|
|
/s/ Richard M. Baio
|
|
Richard M. Baio
|
|
Senior Vice President — Chief Financial Officer and Treasurer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ W. Robert Berkley, Jr.
|
W. Robert Berkley, Jr.
|
President and Chief Executive Officer
|
|
/s/ Richard M. Baio
|
Richard M. Baio
|
Senior Vice President — Chief Financial Officer and Treasurer
|