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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-10.1
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EX-31.1
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EX-31.2
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EX-32.1
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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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|
September 30,
2017 |
|
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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13,873,690
|
|
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$
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13,190,668
|
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Investment funds
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1,119,907
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|
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1,198,146
|
|
||
Real estate
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1,391,274
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1,184,981
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||
Arbitrage trading account
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488,238
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299,999
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||
Equity securities available for sale
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614,025
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669,200
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Loans receivable
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74,229
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106,798
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||
Total investments
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17,561,363
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|
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16,649,792
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||
Cash and cash equivalents
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773,997
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|
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795,285
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||
Premiums and fees receivable
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1,818,836
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1,701,854
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|
||
Due from reinsurers
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1,739,835
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|
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1,743,980
|
|
||
Deferred policy acquisition costs
|
534,091
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|
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537,890
|
|
||
Prepaid reinsurance premiums
|
473,766
|
|
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413,140
|
|
||
Trading account receivables from brokers and clearing organizations
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297,208
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|
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484,593
|
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||
Property, furniture and equipment
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399,924
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|
|
349,432
|
|
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Goodwill
|
173,422
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|
|
144,513
|
|
||
Accrued investment income
|
139,864
|
|
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127,047
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|
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Other assets
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423,770
|
|
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402,550
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|
||
Total assets
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$
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24,336,076
|
|
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$
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23,350,076
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|
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|
||||
Liabilities and Equity
|
|
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|
||||
Liabilities:
|
|
|
|
||||
Reserves for losses and loss expenses
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$
|
11,654,346
|
|
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$
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11,197,195
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Unearned premiums
|
3,409,628
|
|
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3,283,300
|
|
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Due to reinsurers
|
228,539
|
|
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213,128
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Trading account securities sold but not yet purchased
|
44,937
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|
|
51,179
|
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||
Federal and foreign income taxes
|
116,608
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|
|
119,597
|
|
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Other liabilities
|
923,369
|
|
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916,318
|
|
||
Senior notes and other debt
|
1,759,929
|
|
|
1,760,595
|
|
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Subordinated debentures
|
728,071
|
|
|
727,630
|
|
||
Total liabilities
|
18,865,427
|
|
|
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, 121,769,109 and 121,193,599 shares, respectively
|
47,024
|
|
|
47,024
|
|
||
Additional paid-in capital
|
1,040,575
|
|
|
1,037,446
|
|
||
Retained earnings
|
6,880,062
|
|
|
6,595,987
|
|
||
Accumulated other comprehensive income
|
153,759
|
|
|
55,568
|
|
||
Treasury stock, at cost, 113,348,809 and 113,924,319 shares, respectively
|
(2,690,884
|
)
|
|
(2,688,817
|
)
|
||
Total stockholders’ equity
|
5,430,536
|
|
|
5,047,208
|
|
||
Noncontrolling interests
|
40,113
|
|
|
33,926
|
|
||
Total equity
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5,470,649
|
|
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5,081,134
|
|
||
Total liabilities and equity
|
$
|
24,336,076
|
|
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$
|
23,350,076
|
|
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For the Three Months
|
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For the Nine Months
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||||||||||||
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Ended September 30,
|
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Ended September 30,
|
||||||||||||
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2017
|
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2016
|
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2017
|
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2016
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||||||||
REVENUES:
|
|
|
|
|
|
|
|
||||||||
Net premiums written
|
$
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1,571,183
|
|
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$
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1,607,365
|
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$
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4,782,272
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|
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$
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4,913,656
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Change in net unearned premiums
|
10,317
|
|
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(21,421
|
)
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(62,028
|
)
|
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(240,584
|
)
|
||||
Net premiums earned
|
1,581,500
|
|
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1,585,944
|
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4,720,244
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4,673,072
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|
||||
Net investment income
|
142,479
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|
|
145,668
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|
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426,601
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|
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404,850
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|
||||
Net realized investment gains
|
183,959
|
|
|
175,738
|
|
|
276,760
|
|
|
207,508
|
|
||||
Other-than-temporary impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,114
|
)
|
||||
Revenues from non-insurance businesses
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89,786
|
|
|
80,242
|
|
|
225,033
|
|
|
305,787
|
|
||||
Insurance service fees
|
33,612
|
|
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32,135
|
|
|
100,475
|
|
|
109,437
|
|
||||
Other income
|
6
|
|
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—
|
|
|
695
|
|
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—
|
|
||||
Total revenues
|
2,031,342
|
|
|
2,019,727
|
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5,749,808
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5,682,540
|
|
||||
OPERATING COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
1,081,174
|
|
|
965,856
|
|
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3,025,475
|
|
|
2,852,339
|
|
||||
Other operating costs and expenses
|
600,822
|
|
|
606,348
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|
|
1,821,155
|
|
|
1,770,450
|
|
||||
Expenses from non-insurance businesses
|
86,412
|
|
|
78,865
|
|
|
221,389
|
|
|
291,127
|
|
||||
Interest expense
|
36,821
|
|
|
37,043
|
|
|
110,419
|
|
|
104,019
|
|
||||
Total operating costs and expenses
|
1,805,229
|
|
|
1,688,112
|
|
|
5,178,438
|
|
|
5,017,935
|
|
||||
Income before income taxes
|
226,113
|
|
|
331,615
|
|
|
571,370
|
|
|
664,605
|
|
||||
Income tax expense
|
(63,295
|
)
|
|
(110,952
|
)
|
|
(174,305
|
)
|
|
(214,789
|
)
|
||||
Net income before noncontrolling interests
|
162,818
|
|
|
220,663
|
|
|
397,065
|
|
|
449,816
|
|
||||
Noncontrolling interests
|
(764
|
)
|
|
(13
|
)
|
|
(2,560
|
)
|
|
(689
|
)
|
||||
Net income to common stockholders
|
$
|
162,054
|
|
|
$
|
220,650
|
|
|
$
|
394,505
|
|
|
$
|
449,127
|
|
|
|
|
|
|
|
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|
||||||||
NET INCOME PER SHARE:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.29
|
|
|
$
|
1.80
|
|
|
$
|
3.17
|
|
|
$
|
3.66
|
|
Diluted
|
$
|
1.26
|
|
|
$
|
1.72
|
|
|
$
|
3.05
|
|
|
$
|
3.50
|
|
|
For the Three Months
|
|
For the Nine Months
|
||||||||||||
|
Ended September 30,
|
|
Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income before noncontrolling interests
|
$
|
162,818
|
|
|
$
|
220,663
|
|
|
$
|
397,065
|
|
|
$
|
449,816
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Change in unrealized currency translation adjustments
|
28,592
|
|
|
(19,470
|
)
|
|
71,574
|
|
|
(77,389
|
)
|
||||
Change in unrealized investment gains (losses), net of taxes
|
(8,168
|
)
|
|
(47,676
|
)
|
|
26,598
|
|
|
134,213
|
|
||||
Other comprehensive income (loss):
|
20,424
|
|
|
(67,146
|
)
|
|
98,172
|
|
|
56,824
|
|
||||
Comprehensive income
|
183,242
|
|
|
153,517
|
|
|
495,237
|
|
|
506,640
|
|
||||
Noncontrolling interests
|
(731
|
)
|
|
44
|
|
|
(2,541
|
)
|
|
(623
|
)
|
||||
Comprehensive income to common stockholders
|
$
|
182,511
|
|
|
$
|
153,561
|
|
|
$
|
492,696
|
|
|
$
|
506,017
|
|
|
For the Nine Months
|
||||||
|
Ended September 30,
|
||||||
|
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
|
(27,047
|
)
|
|
(3,421
|
)
|
||
Restricted stock units expensed
|
30,176
|
|
|
25,431
|
|
||
End of period
|
$
|
1,040,575
|
|
|
$
|
1,027,465
|
|
RETAINED EARNINGS:
|
|
|
|
||||
Beginning of period
|
$
|
6,595,987
|
|
|
$
|
6,178,070
|
|
Net income to common stockholders
|
394,505
|
|
|
449,127
|
|
||
Dividends
|
(110,430
|
)
|
|
(107,661
|
)
|
||
End of period
|
$
|
6,880,062
|
|
|
$
|
6,519,536
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
||||
Unrealized investment gains:
|
|
|
|
||||
Beginning of period
|
$
|
427,154
|
|
|
$
|
180,695
|
|
Unrealized gains on securities not other-than-temporarily impaired
|
25,712
|
|
|
133,866
|
|
||
Unrealized gains on other-than-temporarily impaired securities
|
905
|
|
|
413
|
|
||
End of period
|
453,771
|
|
|
314,974
|
|
||
Currency translation adjustments:
|
|
|
|
||||
Beginning of period
|
(371,586
|
)
|
|
(247,393
|
)
|
||
Net change in period
|
71,574
|
|
|
(77,389
|
)
|
||
End of period
|
(300,012
|
)
|
|
(324,782
|
)
|
||
Total accumulated other comprehensive income (loss)
|
$
|
153,759
|
|
|
$
|
(9,808
|
)
|
TREASURY STOCK:
|
|
|
|
||||
Beginning of period
|
$
|
(2,688,817
|
)
|
|
$
|
(2,563,605
|
)
|
Stock exercised/vested
|
25,584
|
|
|
5,023
|
|
||
Stock repurchased
|
(28,378
|
)
|
|
(99,870
|
)
|
||
Stock incentive plans expensed
|
727
|
|
|
—
|
|
||
End of period
|
$
|
(2,690,884
|
)
|
|
$
|
(2,658,452
|
)
|
NONCONTROLLING INTERESTS:
|
|
|
|
||||
Beginning of period
|
$
|
33,926
|
|
|
$
|
32,962
|
|
Contributions
|
3,646
|
|
|
2,474
|
|
||
Net income
|
2,560
|
|
|
689
|
|
||
Other comprehensive loss, net of tax
|
(19
|
)
|
|
(66
|
)
|
||
End of period
|
$
|
40,113
|
|
|
$
|
36,059
|
|
|
For the Nine Months
|
||||||
|
Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
CASH FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income to common stockholders
|
$
|
394,505
|
|
|
$
|
449,127
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Net investment gains
|
(276,760
|
)
|
|
(189,394
|
)
|
||
Depreciation and amortization
|
78,137
|
|
|
69,153
|
|
||
Noncontrolling interests
|
2,560
|
|
|
689
|
|
||
Investment funds
|
(51,907
|
)
|
|
(60,387
|
)
|
||
Stock incentive plans
|
31,883
|
|
|
27,033
|
|
||
Change in:
|
|
|
|
||||
Arbitrage trading account
|
(2,835
|
)
|
|
(4,777
|
)
|
||
Premiums and fees receivable
|
(112,420
|
)
|
|
(92,372
|
)
|
||
Reinsurance accounts
|
(42,319
|
)
|
|
(154,939
|
)
|
||
Deferred policy acquisition costs
|
4,483
|
|
|
(51,795
|
)
|
||
Income taxes
|
(15,451
|
)
|
|
89,007
|
|
||
Reserves for losses and loss expenses
|
422,657
|
|
|
440,486
|
|
||
Unearned premiums
|
121,583
|
|
|
269,287
|
|
||
Other
|
(32,258
|
)
|
|
(64,608
|
)
|
||
Net cash from operating activities
|
521,858
|
|
|
726,510
|
|
||
CASH USED IN INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from sale of fixed maturity securities
|
3,081,619
|
|
|
1,074,630
|
|
||
Proceeds from sale of equity securities
|
137,062
|
|
|
123,187
|
|
||
Distributions from investment funds
|
265,371
|
|
|
5,630
|
|
||
Proceeds from maturities and prepayments of fixed maturity securities
|
2,860,678
|
|
|
2,189,365
|
|
||
Purchase of fixed maturity securities
|
(6,530,466
|
)
|
|
(4,280,457
|
)
|
||
Purchase of equity securities
|
(17,049
|
)
|
|
(127,303
|
)
|
||
Real estate purchased
|
(159,006
|
)
|
|
(207,829
|
)
|
||
Change in loans receivable
|
32,574
|
|
|
159,128
|
|
||
Net additions to property, furniture and equipment
|
(74,268
|
)
|
|
(37,895
|
)
|
||
Change in balances due to security brokers
|
39,978
|
|
|
102,981
|
|
||
Cash received in connection with business disposition
|
—
|
|
|
250,216
|
|
||
Payment for business purchased net of cash aquired
|
(70,570
|
)
|
|
(53,524
|
)
|
||
Net cash used in investing activities
|
(434,077
|
)
|
|
(801,871
|
)
|
||
CASH (USED IN) FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Repayment of senior notes and other debt
|
(1,788
|
)
|
|
(70,567
|
)
|
||
Net proceeds from issuance of debt
|
—
|
|
|
386,848
|
|
||
Cash dividends to common stockholders
|
(93,371
|
)
|
|
(30,654
|
)
|
||
Purchase of common treasury shares
|
(28,378
|
)
|
|
(99,870
|
)
|
||
Other, net
|
(3,835
|
)
|
|
(1,376
|
)
|
||
Net cash (used in) from financing activities
|
(127,372
|
)
|
|
184,381
|
|
||
Net impact on cash due to change in foreign exchange rates
|
18,303
|
|
|
413
|
|
||
Net change in cash and cash equivalents
|
(21,288
|
)
|
|
109,433
|
|
||
Cash and cash equivalents at beginning of year
|
795,285
|
|
|
763,631
|
|
||
Cash and cash equivalents at end of period
|
$
|
773,997
|
|
|
$
|
873,064
|
|
|
For the Three Months
|
|
For the Nine Months
|
||||||||
|
Ended September 30,
|
|
Ended September 30,
|
||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Basic
|
125,818
|
|
|
122,562
|
|
|
124,363
|
|
|
122,652
|
|
Diluted
|
128,944
|
|
|
128,556
|
|
|
129,289
|
|
|
128,501
|
|
(In thousands)
|
2017
|
||
|
|
||
Cash and cash equivalents
|
$
|
2,721
|
|
Real estate, furniture and equipment
|
7,042
|
|
|
Goodwill
|
28,522
|
|
|
Intangible assets
|
32,395
|
|
|
Other assets
|
9,862
|
|
|
Total assets acquired
|
80,542
|
|
|
|
|
||
Other liabilities assumed
|
(2,251
|
)
|
|
Noncontrolling interest
|
(5,000
|
)
|
|
Net assets acquired
|
$
|
73,291
|
|
(In thousands)
|
Unrealized Investment Gains (Losses)
|
|
Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income
|
||||||
As of and for the nine months ended September 30, 2017:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
427,154
|
|
|
$
|
(371,586
|
)
|
|
$
|
55,568
|
|
Other comprehensive income before reclassifications
|
109,277
|
|
|
71,574
|
|
|
180,851
|
|
|||
Amounts reclassified from AOCI
|
(82,679
|
)
|
|
—
|
|
|
(82,679
|
)
|
|||
Other comprehensive income
|
26,598
|
|
|
71,574
|
|
|
98,172
|
|
|||
Unrealized investment loss related to non-controlling interest
|
19
|
|
|
—
|
|
|
19
|
|
|||
End of period
|
$
|
453,771
|
|
|
$
|
(300,012
|
)
|
|
$
|
153,759
|
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(127,198
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(127,198
|
)
|
Tax effect
|
44,519
|
|
(2)
|
—
|
|
|
44,519
|
|
|||
After-tax amounts reclassified
|
$
|
(82,679
|
)
|
|
$
|
—
|
|
|
$
|
(82,679
|
)
|
Other comprehensive income
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
50,148
|
|
|
$
|
71,574
|
|
|
$
|
121,722
|
|
Tax effect
|
(23,550
|
)
|
|
—
|
|
|
(23,550
|
)
|
|||
Other comprehensive income
|
$
|
26,598
|
|
|
$
|
71,574
|
|
|
$
|
98,172
|
|
|
|
|
|
|
|
||||||
As of and for the three months ended September 30, 2017:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
461,906
|
|
|
$
|
(328,604
|
)
|
|
$
|
133,302
|
|
Other comprehensive income before reclassifications
|
19,968
|
|
|
28,592
|
|
|
48,560
|
|
|||
Amounts reclassified from AOCI
|
(28,136
|
)
|
|
—
|
|
|
(28,136
|
)
|
|||
Other comprehensive (loss) income
|
(8,168
|
)
|
|
28,592
|
|
|
20,424
|
|
|||
Unrealized investment loss related to non-controlling interest
|
33
|
|
|
—
|
|
|
33
|
|
|||
End of period
|
$
|
453,771
|
|
|
$
|
(300,012
|
)
|
|
$
|
153,759
|
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(43,286
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(43,286
|
)
|
Tax effect
|
15,150
|
|
(2)
|
—
|
|
|
15,150
|
|
|||
After-tax amounts reclassified
|
$
|
(28,136
|
)
|
|
$
|
—
|
|
|
$
|
(28,136
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(8,563
|
)
|
|
$
|
28,592
|
|
|
$
|
20,029
|
|
Tax effect
|
395
|
|
|
—
|
|
|
395
|
|
|||
Other comprehensive (loss) income
|
$
|
(8,168
|
)
|
|
$
|
28,592
|
|
|
$
|
20,424
|
|
|
|
|
|
|
|
(In thousands)
|
Unrealized Investment Gains (Losses)
|
|
Currency Translation Adjustments
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
As of and for the nine months ended September 30, 2016:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
180,695
|
|
|
$
|
(247,393
|
)
|
|
$
|
(66,698
|
)
|
Other comprehensive income (loss) before reclassifications
|
170,824
|
|
|
(77,389
|
)
|
|
93,435
|
|
|||
Amounts reclassified from AOCI
|
(36,611
|
)
|
|
—
|
|
|
(36,611
|
)
|
|||
Other comprehensive income (loss)
|
134,213
|
|
|
(77,389
|
)
|
|
56,824
|
|
|||
Unrealized investment loss related to non-controlling interest
|
66
|
|
|
—
|
|
|
66
|
|
|||
End of period
|
$
|
314,974
|
|
|
$
|
(324,782
|
)
|
|
$
|
(9,808
|
)
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(56,325
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(56,325
|
)
|
Tax effect
|
19,714
|
|
(2)
|
—
|
|
|
19,714
|
|
|||
After-tax amounts reclassified
|
$
|
(36,611
|
)
|
|
$
|
—
|
|
|
$
|
(36,611
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
198,808
|
|
|
$
|
(77,389
|
)
|
|
$
|
121,419
|
|
Tax effect
|
(64,595
|
)
|
|
—
|
|
|
(64,595
|
)
|
|||
Other comprehensive income (loss)
|
$
|
134,213
|
|
|
$
|
(77,389
|
)
|
|
$
|
56,824
|
|
|
|
|
|
|
|
||||||
As of and for the three months ended September 30, 2016:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
362,593
|
|
|
$
|
(305,312
|
)
|
|
$
|
57,281
|
|
Other comprehensive loss before reclassifications
|
(20,968
|
)
|
|
(19,470
|
)
|
|
(40,438
|
)
|
|||
Amounts reclassified from AOCI
|
(26,708
|
)
|
|
—
|
|
|
(26,708
|
)
|
|||
Other comprehensive loss
|
(47,676
|
)
|
|
(19,470
|
)
|
|
(67,146
|
)
|
|||
Unrealized investment loss related to non-controlling interest
|
57
|
|
|
—
|
|
|
57
|
|
|||
End of period
|
$
|
314,974
|
|
|
$
|
(324,782
|
)
|
|
$
|
(9,808
|
)
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(41,090
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(41,090
|
)
|
Tax effect
|
14,382
|
|
(2)
|
—
|
|
|
14,382
|
|
|||
After-tax amounts reclassified
|
$
|
(26,708
|
)
|
|
$
|
—
|
|
|
$
|
(26,708
|
)
|
Other comprehensive loss
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(72,188
|
)
|
|
$
|
(19,470
|
)
|
|
$
|
(91,658
|
)
|
Tax effect
|
24,512
|
|
|
—
|
|
|
24,512
|
|
|||
Other comprehensive loss
|
$
|
(47,676
|
)
|
|
$
|
(19,470
|
)
|
|
$
|
(67,146
|
)
|
|
|
|
|
|
|
(In thousands)
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
65,372
|
|
|
$
|
15,212
|
|
|
$
|
—
|
|
|
$
|
80,584
|
|
|
$
|
65,372
|
|
Residential mortgage-backed
|
14,024
|
|
|
1,452
|
|
|
—
|
|
|
15,476
|
|
|
14,024
|
|
|||||
Total held to maturity
|
79,396
|
|
|
16,664
|
|
|
—
|
|
|
96,060
|
|
|
79,396
|
|
|||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
402,901
|
|
|
10,828
|
|
|
(2,124
|
)
|
|
411,605
|
|
|
411,605
|
|
|||||
State and municipal:
|
|
|
|
|
|
|
|
|
|
||||||||||
Special revenue
|
2,730,653
|
|
|
80,144
|
|
|
(5,469
|
)
|
|
2,805,328
|
|
|
2,805,328
|
|
|||||
State general obligation
|
481,070
|
|
|
21,377
|
|
|
(565
|
)
|
|
501,882
|
|
|
501,882
|
|
|||||
Pre-refunded
|
282,488
|
|
|
21,052
|
|
|
(173
|
)
|
|
303,367
|
|
|
303,367
|
|
|||||
Corporate backed
|
380,351
|
|
|
11,775
|
|
|
(499
|
)
|
|
391,627
|
|
|
391,627
|
|
|||||
Local general obligation
|
384,930
|
|
|
26,566
|
|
|
(531
|
)
|
|
410,965
|
|
|
410,965
|
|
|||||
Total state and municipal
|
4,259,492
|
|
|
160,914
|
|
|
(7,237
|
)
|
|
4,413,169
|
|
|
4,413,169
|
|
|||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential (1)
|
1,064,705
|
|
|
12,696
|
|
|
(8,860
|
)
|
|
1,068,541
|
|
|
1,068,541
|
|
|||||
Commercial
|
251,387
|
|
|
1,641
|
|
|
(1,450
|
)
|
|
251,578
|
|
|
251,578
|
|
|||||
Total mortgage-backed securities
|
1,316,092
|
|
|
14,337
|
|
|
(10,310
|
)
|
|
1,320,119
|
|
|
1,320,119
|
|
|||||
Asset-backed
|
2,389,187
|
|
|
9,836
|
|
|
(10,405
|
)
|
|
2,388,618
|
|
|
2,388,618
|
|
|||||
Corporate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
2,569,673
|
|
|
70,054
|
|
|
(2,842
|
)
|
|
2,636,885
|
|
|
2,636,885
|
|
|||||
Financial
|
1,335,101
|
|
|
43,636
|
|
|
(4,716
|
)
|
|
1,374,021
|
|
|
1,374,021
|
|
|||||
Utilities
|
255,478
|
|
|
12,760
|
|
|
(907
|
)
|
|
267,331
|
|
|
267,331
|
|
|||||
Other
|
42,183
|
|
|
2
|
|
|
(48
|
)
|
|
42,137
|
|
|
42,137
|
|
|||||
Total corporate
|
4,202,435
|
|
|
126,452
|
|
|
(8,513
|
)
|
|
4,320,374
|
|
|
4,320,374
|
|
|||||
Foreign
|
909,608
|
|
|
32,889
|
|
|
(2,088
|
)
|
|
940,409
|
|
|
940,409
|
|
|||||
Total available for sale
|
13,479,715
|
|
|
355,256
|
|
|
(40,677
|
)
|
|
13,794,294
|
|
|
13,794,294
|
|
|||||
Total investments in fixed maturity securities
|
$
|
13,559,111
|
|
|
$
|
371,920
|
|
|
$
|
(40,677
|
)
|
|
$
|
13,890,354
|
|
|
$
|
13,873,690
|
|
(In thousands)
|
Amortized
Cost |
|
Gross Unrealized
|
|
Fair
Value |
|
Carrying
Value |
||||||||||||
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 gains and (losses) for residential mortgage-backed securities include
$85,907
and
$(818,691)
as of
September 30, 2017
and
December 31, 2016
, respectively, related to securities with the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income.
|
(In thousands)
|
Amortized
Cost
|
|
Fair Value
|
||||
Due in one year or less
|
$
|
745,010
|
|
|
$
|
750,479
|
|
Due after one year through five years
|
5,089,768
|
|
|
5,210,268
|
|
||
Due after five years through ten years
|
3,248,254
|
|
|
3,396,461
|
|
||
Due after ten years
|
3,145,963
|
|
|
3,197,551
|
|
||
Mortgage-backed securities
|
1,330,116
|
|
|
1,335,595
|
|
||
Total
|
$
|
13,559,111
|
|
|
$
|
13,890,354
|
|
(In thousands)
|
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stocks
|
$
|
83,709
|
|
|
$
|
339,297
|
|
|
$
|
(3,486
|
)
|
|
$
|
419,520
|
|
|
$
|
419,520
|
|
Preferred stocks
|
125,076
|
|
|
71,147
|
|
|
(1,718
|
)
|
|
194,505
|
|
|
194,505
|
|
|||||
Total
|
$
|
208,785
|
|
|
$
|
410,444
|
|
|
$
|
(5,204
|
)
|
|
$
|
614,025
|
|
|
$
|
614,025
|
|
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
|
|
For the Nine Months
|
||||||||||||
|
Ended September 30,
|
|
Ended September 30,
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Investment income earned on:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
118,834
|
|
|
$
|
114,271
|
|
|
$
|
347,976
|
|
|
$
|
331,448
|
|
Investment funds
|
15,200
|
|
|
25,293
|
|
|
50,744
|
|
|
60,385
|
|
||||
Arbitrage trading account
|
4,418
|
|
|
6,441
|
|
|
16,235
|
|
|
12,883
|
|
||||
Real estate
|
5,042
|
|
|
585
|
|
|
14,894
|
|
|
4,552
|
|
||||
Equity securities available for sale
|
604
|
|
|
1,069
|
|
|
1,845
|
|
|
3,217
|
|
||||
Gross investment income
|
144,098
|
|
|
147,659
|
|
|
431,694
|
|
|
412,485
|
|
||||
Investment expense
|
(1,619
|
)
|
|
(1,991
|
)
|
|
(5,093
|
)
|
|
(7,635
|
)
|
||||
Net investment income
|
$
|
142,479
|
|
|
$
|
145,668
|
|
|
$
|
426,601
|
|
|
$
|
404,850
|
|
|
Carrying Value as of
|
|
Income (Loss) from Investment Funds
|
||||||||||||
|
September 30,
|
|
December 31,
|
|
For the Nine Months Ended September 30,
|
||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Real estate
|
$
|
614,508
|
|
|
$
|
641,783
|
|
|
$
|
30,661
|
|
|
$
|
33,028
|
|
Energy
|
85,817
|
|
|
91,448
|
|
|
(12,763
|
)
|
|
7,174
|
|
||||
Hedge equity
|
—
|
|
|
73,913
|
|
|
(1,164
|
)
|
|
791
|
|
||||
Other funds
|
419,582
|
|
|
391,002
|
|
|
34,010
|
|
|
19,392
|
|
||||
Total
|
$
|
1,119,907
|
|
|
$
|
1,198,146
|
|
|
$
|
50,744
|
|
|
$
|
60,385
|
|
|
Carrying Value
|
||||||
|
September 30,
|
|
December 31,
|
||||
(In thousands)
|
2017
|
|
2016
|
||||
Properties in operation
|
$
|
451,669
|
|
|
$
|
457,237
|
|
Properties under development
|
939,605
|
|
|
727,744
|
|
||
Total
|
$
|
1,391,274
|
|
|
$
|
1,184,981
|
|
(In thousands)
|
September 30, 2017
|
|
December 31, 2016
|
||||
Amortized cost (net of valuation allowance):
|
|
|
|
||||
Real estate loans
|
$
|
59,487
|
|
|
$
|
92,415
|
|
Commercial loans
|
14,742
|
|
|
14,383
|
|
||
Total
|
$
|
74,229
|
|
|
$
|
106,798
|
|
|
|
|
|
||||
Fair value:
|
|
|
|
||||
Real estate loans
|
$
|
60,372
|
|
|
$
|
92,415
|
|
Commercial loans
|
16,243
|
|
|
15,884
|
|
||
Total
|
$
|
76,615
|
|
|
$
|
108,299
|
|
|
|
|
|
||||
Valuation allowance:
|
|
|
|
||||
Specific
|
$
|
1,200
|
|
|
$
|
1,200
|
|
General
|
2,183
|
|
|
2,197
|
|
||
Total
|
$
|
3,383
|
|
|
$
|
3,397
|
|
|
|
|
|
||||
|
For the Three Months Ended September 30,
|
||||||
|
|||||||
|
2017
|
|
2016
|
||||
Increase in valuation allowance
|
$
|
—
|
|
|
$
|
467
|
|
|
|
|
|
||||
|
For the Nine Months Ended September 30,
|
||||||
|
|||||||
|
2017
|
|
2016
|
||||
(Decrease) increase in valuation allowance
|
$
|
(14
|
)
|
|
$
|
1,128
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Realized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
||||||
Gains
|
$
|
8,763
|
|
|
$
|
33,798
|
|
|
$
|
21,795
|
|
|
$
|
66,972
|
|
Losses
|
(197
|
)
|
|
(1,150
|
)
|
|
(4,162
|
)
|
|
(5,570
|
)
|
||||
Equity securities available for sale
|
34,720
|
|
|
8,441
|
|
|
109,566
|
|
|
13,037
|
|
||||
Investment funds (1)
|
124,228
|
|
|
(3,788
|
)
|
|
125,383
|
|
|
(9,041
|
)
|
||||
Real estate
|
1,956
|
|
|
687
|
|
|
4,892
|
|
|
5,247
|
|
||||
Other (2)
|
14,489
|
|
|
137,750
|
|
|
19,286
|
|
|
136,863
|
|
||||
Net realized gains on investments sales
|
183,959
|
|
|
175,738
|
|
|
276,760
|
|
|
207,508
|
|
||||
Other-than-temporary impairments (3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,114
|
)
|
||||
Net investment gains
|
183,959
|
|
|
175,738
|
|
|
276,760
|
|
|
189,394
|
|
||||
Income tax expense
|
(64,386
|
)
|
|
(61,508
|
)
|
|
(96,866
|
)
|
|
(66,288
|
)
|
||||
After-tax net realized investment gains
|
$
|
119,573
|
|
|
$
|
114,230
|
|
|
$
|
179,894
|
|
|
$
|
123,106
|
|
Change in unrealized investment gains of available for sale securities:
|
|
|
|
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
(10,627
|
)
|
|
$
|
(45,388
|
)
|
|
$
|
84,214
|
|
|
$
|
169,933
|
|
Previously impaired fixed maturity securities
|
61
|
|
|
(1,406
|
)
|
|
905
|
|
|
413
|
|
||||
Equity securities available for sale
|
(2,126
|
)
|
|
(28,517
|
)
|
|
(44,812
|
)
|
|
12,433
|
|
||||
Investment funds
|
4,129
|
|
|
3,143
|
|
|
9,841
|
|
|
16,028
|
|
||||
Total change in unrealized investment gains
|
(8,563
|
)
|
|
(72,168
|
)
|
|
50,148
|
|
|
198,807
|
|
||||
Income tax benefit (expense)
|
423
|
|
|
24,493
|
|
|
(23,550
|
)
|
|
(64,594
|
)
|
||||
Noncontrolling interests
|
5
|
|
|
57
|
|
|
19
|
|
|
66
|
|
||||
After-tax change in unrealized investment gains of available for sale securities
|
$
|
(8,135
|
)
|
|
$
|
(47,618
|
)
|
|
$
|
26,617
|
|
|
$
|
134,279
|
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
(In thousands)
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
118,066
|
|
|
$
|
1,048
|
|
|
$
|
48,880
|
|
|
$
|
1,076
|
|
|
$
|
166,946
|
|
|
$
|
2,124
|
|
State and municipal
|
650,353
|
|
|
5,797
|
|
|
119,087
|
|
|
1,440
|
|
|
769,440
|
|
|
7,237
|
|
||||||
Mortgage-backed securities
|
527,034
|
|
|
5,000
|
|
|
221,923
|
|
|
5,310
|
|
|
748,957
|
|
|
10,310
|
|
||||||
Asset-backed securities
|
1,116,878
|
|
|
8,033
|
|
|
130,734
|
|
|
2,372
|
|
|
1,247,612
|
|
|
10,405
|
|
||||||
Corporate
|
651,373
|
|
|
5,395
|
|
|
57,557
|
|
|
3,118
|
|
|
708,930
|
|
|
8,513
|
|
||||||
Foreign government
|
220,860
|
|
|
2,072
|
|
|
1,599
|
|
|
16
|
|
|
222,459
|
|
|
2,088
|
|
||||||
Fixed maturity securities
|
3,284,564
|
|
|
27,345
|
|
|
579,780
|
|
|
13,332
|
|
|
3,864,344
|
|
|
40,677
|
|
||||||
Common stocks
|
4,678
|
|
|
3,095
|
|
|
9,387
|
|
|
391
|
|
|
14,065
|
|
|
3,486
|
|
||||||
Preferred stocks
|
—
|
|
|
—
|
|
|
23,957
|
|
|
1,718
|
|
|
23,957
|
|
|
1,718
|
|
||||||
Equity securities available for sale
|
4,678
|
|
|
3,095
|
|
|
33,344
|
|
|
2,109
|
|
|
38,022
|
|
|
5,204
|
|
||||||
Total
|
$
|
3,289,242
|
|
|
$
|
30,440
|
|
|
$
|
613,124
|
|
|
$
|
15,441
|
|
|
$
|
3,902,366
|
|
|
$
|
45,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
112,709
|
|
|
$
|
1,252
|
|
|
$
|
35,450
|
|
|
$
|
1,341
|
|
|
$
|
148,159
|
|
|
$
|
2,593
|
|
State and municipal
|
1,562,614
|
|
|
35,553
|
|
|
133,034
|
|
|
4,885
|
|
|
1,695,648
|
|
|
40,438
|
|
||||||
Mortgage-backed securities
|
625,903
|
|
|
11,103
|
|
|
109,066
|
|
|
4,828
|
|
|
734,969
|
|
|
15,931
|
|
||||||
Asset-backed securities
|
1,010,836
|
|
|
5,340
|
|
|
201,693
|
|
|
6,601
|
|
|
1,212,529
|
|
|
11,941
|
|
||||||
Corporate
|
1,035,245
|
|
|
13,448
|
|
|
65,147
|
|
|
7,470
|
|
|
1,100,392
|
|
|
20,918
|
|
||||||
Foreign government
|
213,246
|
|
|
1,985
|
|
|
24,820
|
|
|
777
|
|
|
238,066
|
|
|
2,762
|
|
||||||
Fixed maturity securities
|
4,560,553
|
|
|
68,681
|
|
|
569,210
|
|
|
25,902
|
|
|
5,129,763
|
|
|
94,583
|
|
||||||
Common stocks
|
336
|
|
|
22
|
|
|
8,755
|
|
|
1,024
|
|
|
9,091
|
|
|
1,046
|
|
||||||
Preferred stocks
|
—
|
|
|
—
|
|
|
22,034
|
|
|
3,639
|
|
|
22,034
|
|
|
3,639
|
|
||||||
Equity securities available for sale
|
336
|
|
|
22
|
|
|
30,789
|
|
|
4,663
|
|
|
31,125
|
|
|
4,685
|
|
||||||
Total
|
$
|
4,560,889
|
|
|
$
|
68,703
|
|
|
$
|
599,999
|
|
|
$
|
30,565
|
|
|
$
|
5,160,888
|
|
|
$
|
99,268
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss
|
|||||
Foreign government
|
9
|
|
|
$
|
55,292
|
|
|
$
|
462
|
|
Mortgage-backed securities
|
6
|
|
|
5,975
|
|
|
150
|
|
||
Corporate
|
3
|
|
|
2,852
|
|
|
211
|
|
||
Asset-backed securities
|
3
|
|
|
1,331
|
|
|
115
|
|
||
Total
|
21
|
|
|
$
|
65,450
|
|
|
$
|
938
|
|
(In thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
411,605
|
|
|
$
|
—
|
|
|
$
|
411,605
|
|
|
$
|
—
|
|
State and municipal
|
4,413,169
|
|
|
—
|
|
|
4,413,169
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,320,119
|
|
|
—
|
|
|
1,320,119
|
|
|
—
|
|
||||
Asset-backed securities
|
2,388,618
|
|
|
—
|
|
|
2,388,444
|
|
|
174
|
|
||||
Corporate
|
4,320,374
|
|
|
—
|
|
|
4,320,374
|
|
|
—
|
|
||||
Foreign government
|
940,409
|
|
|
—
|
|
|
940,409
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,794,294
|
|
|
—
|
|
|
13,794,120
|
|
|
174
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
419,520
|
|
|
410,133
|
|
|
—
|
|
|
9,387
|
|
||||
Preferred stocks
|
194,505
|
|
|
—
|
|
|
190,649
|
|
|
3,856
|
|
||||
Total equity securities available for sale
|
614,025
|
|
|
410,133
|
|
|
190,649
|
|
|
13,243
|
|
||||
Arbitrage trading account
|
488,238
|
|
|
275,818
|
|
|
212,420
|
|
|
—
|
|
||||
Total
|
$
|
14,896,557
|
|
|
$
|
685,951
|
|
|
$
|
14,197,189
|
|
|
$
|
13,417
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
44,937
|
|
|
$
|
44,851
|
|
|
$
|
86
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
513,802
|
|
|
$
|
—
|
|
|
$
|
513,802
|
|
|
$
|
—
|
|
State and municipal
|
4,519,503
|
|
|
—
|
|
|
4,519,503
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,189,645
|
|
|
—
|
|
|
1,189,645
|
|
|
—
|
|
||||
Asset-backed securities
|
1,907,860
|
|
|
—
|
|
|
1,907,677
|
|
|
183
|
|
||||
Corporate
|
4,068,527
|
|
|
—
|
|
|
4,068,527
|
|
|
—
|
|
||||
Foreign government
|
902,805
|
|
|
—
|
|
|
902,805
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,102,142
|
|
|
—
|
|
|
13,101,959
|
|
|
183
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
445,858
|
|
|
429,647
|
|
|
7,457
|
|
|
8,754
|
|
||||
Preferred stocks
|
223,342
|
|
|
—
|
|
|
219,680
|
|
|
3,662
|
|
||||
Total equity securities available for sale
|
669,200
|
|
|
429,647
|
|
|
227,137
|
|
|
12,416
|
|
||||
Arbitrage trading account
|
299,999
|
|
|
224,623
|
|
|
75,376
|
|
|
—
|
|
||||
Total
|
$
|
14,071,341
|
|
|
$
|
654,270
|
|
|
$
|
13,404,472
|
|
|
$
|
12,599
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
51,179
|
|
|
$
|
51,089
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
Gains (Losses) Included in:
|
||||||||||||||||||||||||||||||||||
(In thousands)
|
Beginning
Balance
|
|
Earnings (Losses)
|
|
Other
Comprehensive
Income (Loss)
|
|
Impairments
|
|
Purchases
|
|
(Sales)
|
|
Paydowns / Maturities
|
|
Transfers
|
|
Ending
Balance
|
||||||||||||||||||
In / (Out)
|
|||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
183
|
|
|
$
|
2
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(43
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
174
|
|
Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
183
|
|
|
2
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
174
|
|
|||||||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
8,754
|
|
|
—
|
|
|
633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,387
|
|
|||||||||
Preferred stocks
|
3,662
|
|
|
19
|
|
|
—
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,856
|
|
|||||||||
Total
|
12,416
|
|
|
19
|
|
|
633
|
|
|
—
|
|
|
175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,243
|
|
|||||||||
Arbitrage trading account
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
$
|
12,599
|
|
|
$
|
29
|
|
|
$
|
665
|
|
|
$
|
—
|
|
|
$
|
175
|
|
|
$
|
(51
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
199
|
|
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
183
|
|
Corporate
|
154
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
353
|
|
|
180
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
(331
|
)
|
|
(35
|
)
|
|
—
|
|
|
183
|
|
|||||||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
7,829
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,754
|
|
|||||||||
Preferred stocks
|
3,624
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,662
|
|
|||||||||
Total
|
11,453
|
|
|
38
|
|
|
160
|
|
|
—
|
|
|
765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,416
|
|
|||||||||
Arbitrage trading account
|
176
|
|
|
(176
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
$
|
11,982
|
|
|
$
|
42
|
|
|
$
|
176
|
|
|
$
|
—
|
|
|
$
|
765
|
|
|
$
|
(331
|
)
|
|
$
|
(35
|
)
|
|
$
|
—
|
|
|
$
|
12,599
|
|
|
September 30,
|
||||||
(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)
|
2,998,687
|
|
|
2,838,777
|
|
||
Decrease in estimates for claims occurring in prior years (2) (3)
|
(7,648
|
)
|
|
(23,518
|
)
|
||
Loss reserve discount accretion
|
34,436
|
|
|
37,080
|
|
||
Total
|
3,025,475
|
|
|
2,852,339
|
|
||
Net payments for claims:
|
|
|
|
|
|
||
Current year
|
628,078
|
|
|
612,615
|
|
||
Prior year
|
1,996,977
|
|
|
1,931,454
|
|
||
Total
|
2,625,055
|
|
|
2,544,069
|
|
||
Foreign currency translation
|
57,789
|
|
|
(6,266
|
)
|
||
Net reserves at end of period
|
10,048,474
|
|
|
9,546,876
|
|
||
Ceded reserve at end of period
|
1,605,872
|
|
|
1,550,954
|
|
||
Gross reserves at end of period
|
$
|
11,654,346
|
|
|
$
|
11,097,830
|
|
(1)
|
Claims occurring during the current year are net of loss reserve discounts of $
16,787,000
and $
12,085,000
for the nine months ended September 30, 2017 and 2016, respectively.
|
(2)
|
The decrease in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $
30,609,000
and $
45,813,000
for the nine months ended September 30, 2017 and 2016, respectively.
|
(3)
|
For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was
$31 million
and
$42 million
for the nine months ended September 30, 2017 and 2016, respectively.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
(In thousands)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
$
|
13,873,690
|
|
|
$
|
13,890,354
|
|
|
$
|
13,190,668
|
|
|
$
|
13,204,814
|
|
Equity securities available for sale
|
614,025
|
|
|
614,025
|
|
|
669,200
|
|
|
669,200
|
|
||||
Arbitrage trading account
|
488,238
|
|
|
488,238
|
|
|
299,999
|
|
|
299,999
|
|
||||
Loans receivable
|
74,229
|
|
|
76,615
|
|
|
106,798
|
|
|
108,299
|
|
||||
Cash and cash equivalents
|
773,997
|
|
|
773,997
|
|
|
795,285
|
|
|
795,285
|
|
||||
Trading account receivables from brokers and clearing organizations
|
297,208
|
|
|
297,208
|
|
|
484,593
|
|
|
484,593
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Due to broker
|
58,973
|
|
|
58,973
|
|
|
19,416
|
|
|
19,416
|
|
||||
Trading account securities sold but not yet purchased
|
44,937
|
|
|
44,937
|
|
|
51,179
|
|
|
51,179
|
|
||||
Subordinated debentures
|
728,071
|
|
|
728,291
|
|
|
727,630
|
|
|
687,504
|
|
||||
Senior notes and other debt
|
1,759,929
|
|
|
1,946,700
|
|
|
1,760,595
|
|
|
1,914,727
|
|
|
For the Three Months
|
|
For the Nine Months
|
||||||||||||
|
Ended September 30,
|
|
Ended September 30,
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Written premiums:
|
|
|
|
|
|
|
|
||||||||
Direct
|
$
|
1,679,389
|
|
|
$
|
1,643,870
|
|
|
$
|
5,127,465
|
|
|
$
|
5,061,646
|
|
Assumed
|
194,769
|
|
|
224,979
|
|
|
570,052
|
|
|
702,265
|
|
||||
Ceded
|
(302,975
|
)
|
|
(261,484
|
)
|
|
(915,245
|
)
|
|
(850,255
|
)
|
||||
Total net premiums written
|
$
|
1,571,183
|
|
|
$
|
1,607,365
|
|
|
$
|
4,782,272
|
|
|
$
|
4,913,656
|
|
|
|
|
|
|
|
|
|
||||||||
Earned premiums:
|
|
|
|
|
|
|
|
||||||||
Direct
|
$
|
1,692,453
|
|
|
$
|
1,647,033
|
|
|
$
|
4,972,755
|
|
|
$
|
4,824,768
|
|
Assumed
|
202,972
|
|
|
216,758
|
|
|
605,281
|
|
|
635,443
|
|
||||
Ceded
|
(313,925
|
)
|
|
(277,847
|
)
|
|
(857,792
|
)
|
|
(787,139
|
)
|
||||
Total net premiums earned
|
$
|
1,581,500
|
|
|
$
|
1,585,944
|
|
|
$
|
4,720,244
|
|
|
$
|
4,673,072
|
|
|
|
|
|
|
|
|
|
||||||||
Ceded losses and loss expenses incurred
|
$
|
247,104
|
|
|
$
|
213,065
|
|
|
$
|
424,905
|
|
|
$
|
507,258
|
|
Ceded commissions earned
|
$
|
63,222
|
|
|
$
|
47,315
|
|
|
$
|
177,524
|
|
|
$
|
143,809
|
|
($ in thousands)
|
Units
|
|
Fair Value
|
|||
2017
|
855,051
|
|
|
$
|
58,712
|
|
2016
|
990,487
|
|
|
$
|
57,959
|
|
•
|
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 September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,433,729
|
|
|
$
|
105,924
|
|
|
$
|
—
|
|
|
$
|
1,539,653
|
|
|
$
|
171,478
|
|
|
$
|
123,240
|
|
Reinsurance
|
147,771
|
|
|
21,528
|
|
|
—
|
|
|
169,299
|
|
|
(57,643
|
)
|
|
(35,074
|
)
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
15,027
|
|
|
123,404
|
|
|
138,431
|
|
|
(71,681
|
)
|
|
(45,685
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
183,959
|
|
|
183,959
|
|
|
183,959
|
|
|
119,573
|
|
||||||
Total
|
$
|
1,581,500
|
|
|
$
|
142,479
|
|
|
$
|
307,363
|
|
|
$
|
2,031,342
|
|
|
$
|
226,113
|
|
|
$
|
162,054
|
|
Three months ended September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,423,635
|
|
|
$
|
111,300
|
|
|
$
|
—
|
|
|
$
|
1,534,935
|
|
|
$
|
210,498
|
|
|
$
|
140,730
|
|
Reinsurance
|
162,309
|
|
|
27,567
|
|
|
—
|
|
|
189,876
|
|
|
27,321
|
|
|
18,725
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
6,801
|
|
|
112,377
|
|
|
119,178
|
|
|
(81,942
|
)
|
|
(53,035
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
175,738
|
|
|
175,738
|
|
|
175,738
|
|
|
114,230
|
|
||||||
Total
|
$
|
1,585,944
|
|
|
$
|
145,668
|
|
|
$
|
288,115
|
|
|
$
|
2,019,727
|
|
|
$
|
331,615
|
|
|
$
|
220,650
|
|
Nine months ended September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
4,262,485
|
|
|
320,552
|
|
|
$
|
—
|
|
|
$
|
4,583,037
|
|
|
$
|
557,605
|
|
|
$
|
381,736
|
|
|
Reinsurance
|
457,759
|
|
|
67,798
|
|
|
—
|
|
|
525,557
|
|
|
(38,279
|
)
|
|
(20,801
|
)
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
38,251
|
|
|
326,203
|
|
|
364,454
|
|
|
(224,716
|
)
|
|
(146,324
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
276,760
|
|
|
276,760
|
|
|
276,760
|
|
|
179,894
|
|
||||||
Total
|
$
|
4,720,244
|
|
|
$
|
426,601
|
|
|
$
|
602,963
|
|
|
$
|
5,749,808
|
|
|
$
|
571,370
|
|
|
$
|
394,505
|
|
Nine months ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
4,180,985
|
|
|
$
|
304,904
|
|
|
$
|
—
|
|
|
$
|
4,485,889
|
|
|
$
|
586,651
|
|
|
$
|
394,746
|
|
Reinsurance
|
492,087
|
|
|
77,119
|
|
|
—
|
|
|
569,206
|
|
|
79,215
|
|
|
54,885
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
22,827
|
|
|
415,224
|
|
|
438,051
|
|
|
(190,655
|
)
|
|
(123,610
|
)
|
||||||
Net investment gains
|
—
|
|
|
—
|
|
|
189,394
|
|
|
189,394
|
|
|
189,394
|
|
|
123,106
|
|
||||||
Total
|
$
|
4,673,072
|
|
|
$
|
404,850
|
|
|
$
|
604,618
|
|
|
$
|
5,682,540
|
|
|
$
|
664,605
|
|
|
$
|
449,127
|
|
(In thousands)
|
September 30, 2017
|
|
December 31, 2016
|
||||
Insurance
|
$
|
19,136,776
|
|
|
$
|
19,137,758
|
|
Reinsurance
|
3,243,610
|
|
|
2,524,338
|
|
||
Corporate, other and eliminations
|
1,955,690
|
|
|
1,687,980
|
|
||
Consolidated
|
$
|
24,336,076
|
|
|
$
|
23,350,076
|
|
|
For the Three Months
|
|
For the Nine Months
|
||||||||||||
|
Ended September 30,
|
|
Ended September 30,
|
||||||||||||
(In thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Insurance:
|
|
|
|
|
|
|
|
||||||||
Other liability
|
$
|
466,616
|
|
|
$
|
455,841
|
|
|
$
|
1,378,505
|
|
|
$
|
1,302,841
|
|
Workers’ compensation
|
378,529
|
|
|
354,185
|
|
|
1,106,616
|
|
|
1,042,503
|
|
||||
Short-tail lines (1)
|
287,860
|
|
|
312,865
|
|
|
887,791
|
|
|
962,435
|
|
||||
Commercial automobile
|
163,277
|
|
|
164,540
|
|
|
482,929
|
|
|
481,249
|
|
||||
Professional liability
|
137,447
|
|
|
136,204
|
|
|
406,644
|
|
|
391,957
|
|
||||
Total Insurance
|
1,433,729
|
|
|
1,423,635
|
|
|
4,262,485
|
|
|
4,180,985
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Reinsurance:
|
|
|
|
|
|
|
|
||||||||
Casualty
|
94,478
|
|
|
97,153
|
|
|
282,430
|
|
|
301,571
|
|
||||
Property
|
53,293
|
|
|
65,156
|
|
|
175,329
|
|
|
190,516
|
|
||||
Total Reinsurance
|
147,771
|
|
|
162,309
|
|
|
457,759
|
|
|
492,087
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
1,581,500
|
|
|
$
|
1,585,944
|
|
|
$
|
4,720,244
|
|
|
$
|
4,673,072
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(In thousands)
|
September 30, 2017
|
|
December 31, 2016
|
||||
Insurance
|
$
|
8,291,708
|
|
|
$
|
7,913,074
|
|
Reinsurance
|
1,756,766
|
|
|
1,677,191
|
|
||
Net reserves for losses and loss expenses
|
10,048,474
|
|
|
9,590,265
|
|
||
Ceded reserves for losses and loss expenses
|
1,605,872
|
|
|
1,606,930
|
|
||
Gross reserves for losses and loss expenses
|
$
|
11,654,346
|
|
|
$
|
11,197,195
|
|
(In thousands)
|
Reported Case
Reserves
|
|
Incurred But
Not Reported
|
|
Total
|
||||||
September 30, 2017
|
|
|
|
|
|
||||||
Other liability
|
$
|
1,243,208
|
|
|
$
|
2,162,031
|
|
|
$
|
3,405,239
|
|
Workers’ compensation (1)
|
1,530,194
|
|
|
1,246,084
|
|
|
2,776,278
|
|
|||
Professional liability
|
299,418
|
|
|
584,606
|
|
|
884,024
|
|
|||
Commercial automobile
|
341,998
|
|
|
267,136
|
|
|
609,134
|
|
|||
Short-tail lines (2)
|
309,692
|
|
|
307,341
|
|
|
617,033
|
|
|||
Total Insurance
|
3,724,510
|
|
|
4,567,198
|
|
|
8,291,708
|
|
|||
Reinsurance (1)
|
909,690
|
|
|
847,076
|
|
|
1,756,766
|
|
|||
Total
|
$
|
4,634,200
|
|
|
$
|
5,414,274
|
|
|
$
|
10,048,474
|
|
|
|
|
|
|
|
||||||
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 decrease in prior year loss reserves
|
$
|
7,648
|
|
|
$
|
23,518
|
|
Increase in prior year earned premiums
|
22,940
|
|
|
18,039
|
|
||
Net favorable prior year development
|
$
|
30,588
|
|
|
$
|
41,557
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss
|
|||||
Unrealized loss less than 20% of amortized cost
|
592
|
|
|
$
|
3,864,164
|
|
|
$
|
40,565
|
|
Unrealized loss of 20% or greater of amortized cost:
|
|
|
|
|
|
|||||
Twelve months and longer
|
3
|
|
|
180
|
|
|
112
|
|
||
Total
|
595
|
|
|
$
|
3,864,344
|
|
|
$
|
40,677
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss |
|||||
Foreign government
|
9
|
|
|
$
|
55,292
|
|
|
$
|
462
|
|
Mortgage-backed securities
|
6
|
|
|
5,975
|
|
|
150
|
|
||
Corporate
|
3
|
|
|
2,852
|
|
|
211
|
|
||
Asset-backed securities
|
3
|
|
|
1,331
|
|
|
115
|
|
||
Total
|
21
|
|
|
$
|
65,450
|
|
|
$
|
938
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Pricing source:
|
|
|
|
|||
Independent pricing services
|
$
|
13,570,457
|
|
|
98.4
|
%
|
Syndicate manager
|
43,196
|
|
|
0.3
|
|
|
Directly by the Company based on:
|
|
|
|
|||
Observable data
|
180,467
|
|
|
1.3
|
|
|
Cash flow model
|
174
|
|
|
—
|
|
|
Total
|
$
|
13,794,294
|
|
|
100.0
|
%
|
($ in thousands)
|
2017
|
|
2016
|
||||
Insurance:
|
|
|
|
||||
Gross premiums written
|
$
|
5,233,692
|
|
|
$
|
5,184,033
|
|
Net premiums written
|
4,364,638
|
|
|
4,386,944
|
|
||
Net premiums earned
|
4,262,485
|
|
|
4,180,985
|
|
||
Loss ratio
|
61.7
|
%
|
|
61.1
|
%
|
||
Expense ratio
|
32.8
|
%
|
|
32.3
|
%
|
||
GAAP combined ratio
|
94.5
|
%
|
|
93.4
|
%
|
||
Reinsurance:
|
|
|
|
||||
Gross premiums written
|
$
|
463,825
|
|
|
$
|
579,878
|
|
Net premiums written
|
417,634
|
|
|
526,712
|
|
||
Net premiums earned
|
457,759
|
|
|
492,087
|
|
||
Loss ratio
|
86.1
|
%
|
|
60.5
|
%
|
||
Expense ratio
|
37.1
|
%
|
|
39.1
|
%
|
||
GAAP combined ratio
|
123.2
|
%
|
|
99.6
|
%
|
||
Consolidated:
|
|
|
|
||||
Gross premiums written
|
$
|
5,697,517
|
|
|
$
|
5,763,911
|
|
Net premiums written
|
4,782,272
|
|
|
4,913,656
|
|
||
Net premiums earned
|
4,720,244
|
|
|
4,673,072
|
|
||
Loss ratio
|
64.1
|
%
|
|
61.0
|
%
|
||
Expense ratio
|
33.2
|
%
|
|
33.1
|
%
|
||
GAAP combined ratio
|
97.3
|
%
|
|
94.1
|
%
|
(In thousands, except per share data)
|
2017
|
|
2016
|
||||
Net income to common stockholders
|
$
|
394,505
|
|
|
$
|
449,127
|
|
Weighted average diluted shares
|
129,289
|
|
|
128,501
|
|
||
Net income per diluted share
|
$
|
3.05
|
|
|
$
|
3.50
|
|
•
|
Insurance - gross premiums increased 1% to $5,234 million in 2017 from $5,184 million in 2016. Gross premiums increased $25 million (5%) for professional liability, $19 million (4%) for commercial auto, $8 million (1%) for workers' compensation, and $2 million (less than 1%) for short-tail lines and decreased $4 million (less than 1%) for other liability.
|
•
|
Reinsurance - gross premiums decreased 20% to $464 million in 2017 from $580 million in 2016. Gross premiums decreased $87 million (35%) for property lines and $29 million (9%) for casualty lines.
|
|
Amount
|
|
Average Annualized
Yield
|
||||||||||
($ in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
347,976
|
|
|
$
|
331,448
|
|
|
3.3
|
%
|
|
3.3
|
%
|
Investment funds
|
50,744
|
|
|
60,385
|
|
|
5.5
|
|
|
6.6
|
|
||
Arbitrage trading account
|
16,235
|
|
|
12,883
|
|
|
4.0
|
|
|
4.4
|
|
||
Real estate
|
14,894
|
|
|
4,552
|
|
|
1.6
|
|
|
0.6
|
|
||
Equity securities available for sale
|
1,845
|
|
|
3,217
|
|
|
1.2
|
|
|
2.2
|
|
||
Gross investment income
|
431,694
|
|
|
412,485
|
|
|
3.3
|
|
|
3.3
|
|
||
Investment expenses
|
(5,093
|
)
|
|
(7,635
|
)
|
|
|
|
|
||||
Total
|
$
|
426,601
|
|
|
$
|
404,850
|
|
|
3.3
|
%
|
|
3.3
|
%
|
•
|
Insurance - The loss ratio was 61.7% in 2017 and 61.1% in 2016. Catastrophe losses were $94 million in 2017 compared with $58 million in 2016. Favorable prior year reserve development was $62 million in 2017 and $38 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points to 61.0% in 2017 from 60.6% in 2016.
|
•
|
Reinsurance - The loss ratio of 86.1% in 2017 was 25.6 points
higher
than the loss ratio of 60.5% in 2016. Catastrophe losses were $73 million in 2017 compared with $10 million in 2016. Adverse prior year reserve development was $31 million in 2017 largely due to the impact of the change in the Ogden discount rate in the U.K. and adverse development related to the U.S. facultative casualty excess of loss business, compared with favorable prior year development of $4 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development i
ncreased 4.1
points to 63.3% in 2017 from 59.2% in 2016.
|
($ in thousands)
|
2017
|
|
2016
|
||||
Policy acquisition and operating insurance expenses
|
$
|
1,567,359
|
|
|
$
|
1,544,792
|
|
Insurance service expenses
|
97,308
|
|
|
103,868
|
|
||
Net foreign currency (gains) losses
|
14,255
|
|
|
(11,547
|
)
|
||
Other costs and expenses
|
142,233
|
|
|
133,337
|
|
||
Total
|
$
|
1,821,155
|
|
|
$
|
1,770,450
|
|
($ in thousands)
|
2017
|
|
2016
|
||||
Insurance:
|
|
|
|
||||
Gross premiums written
|
$
|
1,718,552
|
|
|
$
|
1,688,712
|
|
Net premiums written
|
1,432,334
|
|
|
1,443,986
|
|
||
Net premiums earned
|
1,433,729
|
|
|
1,423,635
|
|
||
Loss ratio
|
63.2
|
%
|
|
60.9
|
%
|
||
Expense ratio
|
32.4
|
%
|
|
32.3
|
%
|
||
GAAP combined ratio
|
95.6
|
%
|
|
93.2
|
%
|
||
Reinsurance:
|
|
|
|
||||
Gross premiums written
|
$
|
155,606
|
|
|
$
|
180,137
|
|
Net premiums written
|
138,849
|
|
|
163,379
|
|
||
Net premiums earned
|
147,771
|
|
|
162,309
|
|
||
Loss ratio
|
118.7
|
%
|
|
61.3
|
%
|
||
Expense ratio
|
34.9
|
%
|
|
38.9
|
%
|
||
GAAP combined ratio
|
153.6
|
%
|
|
100.2
|
%
|
||
Consolidated:
|
|
|
|
||||
Gross premiums written
|
$
|
1,874,158
|
|
|
$
|
1,868,849
|
|
Net premiums written
|
1,571,183
|
|
|
1,607,365
|
|
||
Net premiums earned
|
1,581,500
|
|
|
1,585,944
|
|
||
Loss ratio
|
68.4
|
%
|
|
60.9
|
%
|
||
Expense ratio
|
32.6
|
%
|
|
33.0
|
%
|
||
GAAP combined ratio
|
101.0
|
%
|
|
93.9
|
%
|
(in thousands, except per share data)
|
2017
|
|
2016
|
||||
Net income to common stockholders
|
$
|
162,054
|
|
|
$
|
220,650
|
|
Weighted average diluted shares
|
128,944
|
|
|
128,556
|
|
||
Net income per diluted share
|
$
|
1.26
|
|
|
$
|
1.72
|
|
•
|
Insurance - gross premiums increased 2% to $1,719 million in 2017 from $1,689 million in 2016. Gross premiums increased $13 million (3%) for short tail lines, $12 million (3%) for workers' compensation, $6 million (3%) for commercial auto and $4 million (2%) for professional liability and decreased $5 million (1%) for other liability.
|
•
|
Reinsurance - gross premiums decreased 14% to $156 million in 2017 from $180 million in 2016. Gross premiums decreased $26 million (34%) for property lines and increased $2 million (2%) for casualty lines.
|
|
Amount
|
|
Average Annualized
Yield
|
||||||||||
($ in thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
118,834
|
|
|
$
|
114,271
|
|
|
3.4
|
%
|
|
3.3
|
%
|
Investment funds
|
15,200
|
|
|
25,293
|
|
|
5.2
|
|
|
8.1
|
|
||
Arbitrage trading account
|
4,418
|
|
|
6,441
|
|
|
3.5
|
|
|
5.6
|
|
||
Real estate
|
5,042
|
|
|
585
|
|
|
1.5
|
|
|
0.2
|
|
||
Equity securities available for sale
|
604
|
|
|
1,069
|
|
|
1.2
|
|
|
2.0
|
|
||
Gross investment income
|
144,098
|
|
|
147,659
|
|
|
3.3
|
|
|
3.5
|
|
||
Investment expenses
|
(1,619
|
)
|
|
(1,991
|
)
|
|
|
|
|
||||
Total
|
$
|
142,479
|
|
|
$
|
145,668
|
|
|
3.2
|
%
|
|
3.4
|
%
|
•
|
Insurance - The loss ratio of 63.2% in 2017 was 2.3 points higher than the loss ratio of 60.9% in 2016. Catastrophe losses were $47 million in 2017 and $9 million in 2016. Favorable prior year reserve development was $13 million in both 2017 and 2016. The loss ratio, excluding catastrophe losses and prior year reserve development, decreased 0.4 points to 60.8% in 2017 from 61.2% in 2016.
|
•
|
Reinsurance - The loss ratio of 118.7% in 2017 was 57.4 points higher than the loss ratio of 61.3% in 2016. Catastrophe losses were $72 million in 2017 compared with $3 million in 2016. Adverse prior year reserve development was $6 million in 2017 compared with favorable prior year reserve development of $0.2 million in 2016. The loss ratio, excluding catastrophe losses and prior year reserve development, increased 6.9 points to 66.1% in 2017 from 59.2% in 2016 largely due to increased attritional losses.
|
(In thousands)
|
2017
|
|
2016
|
||||
Policy acquisition and operating insurance expenses
|
$
|
516,243
|
|
|
$
|
523,254
|
|
Insurance service expenses
|
32,451
|
|
|
32,441
|
|
||
Net foreign currency (gains) losses
|
1,779
|
|
|
(2,193
|
)
|
||
Other costs and expenses
|
50,349
|
|
|
52,846
|
|
||
Total
|
$
|
600,822
|
|
|
$
|
606,348
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Fixed maturity securities:
|
|
|
|
|||
U.S. government and government agency
|
$
|
411,605
|
|
|
2.2
|
%
|
State and municipal:
|
|
|
|
|||
Special revenue
|
2,829,795
|
|
|
15.4
|
|
|
State general obligation
|
537,537
|
|
|
2.9
|
|
|
Local general obligation
|
415,635
|
|
|
2.3
|
|
|
Corporate backed
|
391,627
|
|
|
2.1
|
|
|
Pre-refunded (1)
|
303,947
|
|
|
1.8
|
|
|
Total state and municipal
|
4,478,541
|
|
|
24.4
|
|
|
Mortgage-backed securities:
|
|
|
|
|||
Agency
|
832,993
|
|
|
4.5
|
|
|
Commercial
|
251,578
|
|
|
1.4
|
|
|
Residential-Prime
|
226,274
|
|
|
1.2
|
|
|
Residential-Alt A
|
23,298
|
|
|
0.2
|
|
|
Total mortgage-backed securities
|
1,334,143
|
|
|
7.2
|
|
|
Asset-backed securities
|
2,388,618
|
|
|
13.0
|
|
|
Corporate:
|
|
|
|
|||
Industrial
|
2,636,885
|
|
|
14.4
|
|
|
Financial
|
1,374,021
|
|
|
7.5
|
|
|
Utilities
|
267,331
|
|
|
1.5
|
|
|
Other
|
42,137
|
|
|
0.2
|
|
|
Total corporate
|
4,320,374
|
|
|
23.6
|
|
|
Foreign government and foreign government agencies
|
940,409
|
|
|
5.1
|
|
|
Total fixed maturity securities
|
13,873,690
|
|
|
75.7
|
|
|
Equity securities available for sale:
|
|
|
|
|||
Common stocks
|
419,520
|
|
|
2.3
|
|
|
Preferred stocks
|
194,505
|
|
|
1.1
|
|
|
Total equity securities available for sale
|
614,025
|
|
|
3.4
|
|
|
Real estate
|
1,391,274
|
|
|
7.5
|
|
|
Investment funds
|
1,119,907
|
|
|
6.0
|
|
|
Cash and cash equivalents
|
773,997
|
|
|
4.2
|
|
|
Arbitrage trading account
|
488,238
|
|
|
2.7
|
|
|
Loans receivable
|
74,229
|
|
|
0.5
|
|
|
Total investments
|
$
|
18,335,360
|
|
|
100.0
|
%
|
(In thousands)
|
Carrying Value
|
||
Argentina
|
$
|
259,720
|
|
Australia
|
217,397
|
|
|
Canada
|
175,816
|
|
|
United Kingdom
|
84,894
|
|
|
Brazil
|
53,547
|
|
|
Germany
|
48,794
|
|
|
Supranational (1)
|
40,591
|
|
|
Singapore
|
25,326
|
|
|
Norway
|
9,930
|
|
|
Mexico
|
9,490
|
|
|
Colombia
|
7,696
|
|
|
Uruguay
|
7,208
|
|
|
Total
|
$
|
940,409
|
|
Number
|
|
|
(
10.1
)
|
|
Form of 2017 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive Plan
|
|
|
|
(
31.1
)
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
|
|
|
|
(
31.2
)
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a).
|
|
|
|
(
32.1
)
|
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
W. R. BERKLEY CORPORATION
|
Date:
|
November 8, 2017
|
/s/ W. Robert Berkley, Jr.
|
|
|
W. Robert Berkley, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
November 8, 2017
|
/s/ Richard M. Baio
|
|
|
Richard M. Baio
|
|
|
Senior Vice President - Chief Financial Officer and Treasurer
|
a.
|
In the event that the Committee determines that the Grantee, prior to the Vesting Date during Grantee’s employment, has engaged in a Competitive Action or enters into, or has entered into, an agreement (written, oral or otherwise) to engage in a Competitive Action or has engaged in Misconduct, all of the unvested Restricted Stock Units granted hereunder shall be immediately forfeited, and the Grantee shall have no further rights with respect to such Restricted Stock Units.
|
b.
|
In the event that the Committee determines that the Grantee, (1) on or after the Vesting Date during Grantee’s employment or within one year following Grantee’s termination of employment for any reason, has engaged in a Competitive Action or has entered into an agreement (written, oral or otherwise) to engage in a Competitive Action, or (2) on or after the Vesting Date, has engaged in Misconduct, or prior to the Vesting Date Grantee has engaged in Misconduct that is not discovered or acted upon by the Company until on or after the Vesting Date, (x) the Grantee shall immediately forfeit all shares of Stock not yet delivered to Grantee with respect to the Restricted Stock Units and all rights to future payments of Dividend Equivalents (as defined below), and (y) the Grantee shall pay to the Company, upon demand by the Company, an amount equal to (i) the value, as of the Settlement Date (as defined below), of the number of shares of Stock delivered to the Grantee with respect to the Restricted Stock Units, (ii) all amounts paid to Grantee on or at any time prior to the Settlement Date in respect of Dividend Equivalents, and (iii) the value of all dividends, if any, paid to the Grantee in respect of the shares of Stock delivered to the Grantee on the Settlement Date. The Grantee
|
C.
|
Grantee acknowledges that engaging in (1) a Competitive Action during the Restricted Period within the geographic areas set forth in Section 3(e) below or (2) Misconduct is contrary to the interests of the Company and would result in irreparable injuries to the Company and would cause loss in an amount that cannot be readily quantified. Grantee acknowledges that retaining the amounts required to be paid to the Company pursuant to this Section 3(d) once Grantee has (x) chosen to engage in or to agree to engage in a Competitive Action or (y) engaged in Misconduct is contrary to the interests of the Company. The amounts forfeited or paid to the Company hereunder do not and are not intended to constitute actual or liquidated damages. Any action or inaction by the Company with respect to enforcing the forfeiture or recapture provisions set forth herein shall not reduce, eliminate or in any way affect the Company’s right to enforce the forfeiture or recapture provisions in any other agreement with Grantee.
|
D.
|
The term “
Restricted Period
” as used herein shall mean the period beginning on the date hereof and ending one year following Grantee’s termination of employment for any reason.
|
E.
|
Furthermore, if the Grantee engages in Misconduct or a Competitive Action or has entered into an agreement (written, oral or otherwise) to engage in a Competitive Action during the Restricted Period, then the Company shall be entitled to, and reserves the right to, pursue any other legal or equitable remedies in addition to the right to receive forfeitures and/or payments pursuant to this Section 3(d), including, but not limited to, the recovery of monetary damages resulting from such action set forth in Section 3(e) and injunctive relief.
|
(1)
|
underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission;
|
(2)
|
operating unit or other business projections and forecasts;
|
(3)
|
Client lists, brokers lists and price sensitive information;
|
(4)
|
technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets;
|
(5)
|
remuneration and personnel details;
|
(6)
|
planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels;
|
(7)
|
computer passwords, the contents of any databases, tables, know how documents or materials;
|
(8)
|
commissions, commission charges, pricing policies and all information about research and development; and
|
ROE Relative Performance*
|
ROE Relative Performance
Vesting Percentage (% of Target)* |
+
|
0%
|
+
|
80.0%
|
≥+633 basis points
|
90.0%
|
≥+766 basis points
|
100.0% (target)
|
+
|
110.0%
|
*
|
In the event that the ROE Relative Performance falls between any two values listed in the table above, the ROE Relative Performance Vesting Percentage shall be determined using a straight line interpolation between such two values. For the avoidance of doubt if the ROE Relative Performance is less than +500 basis points (
i.e.
, the Average Return on Equity is less than 6.89%), the ROE Relative Vesting Percentage shall be 0% (
i.e.
, no linear interpolation between 0% and 80%) and if the ROE Relative Performance is equal to or greater than +900 basis points (
i.e.
, the Average Return on Equity at least 10.89%), the ROE Relative Vesting Percentage shall be 110%.
|
(ii)
|
This Agreement shall not be effective unless the Grantee physically signs an original Agreement.
|
(i)
|
Section 19 shall be deleted in its entirety and replaced with the following:
|
(ii)
|
The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable.
|
(i)
|
A new Section 24 shall be added as follows:
|
(ii)
|
The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable.
|
(i)
|
Section 2 shall be deleted in its entirety and replaced with the following:
|
(ii)
|
Section 23 is amended to add the following two paragraphs at the end thereof:
|
(iii)
|
In addition to the grant of the Restricted Stock Units, the Company shall pay the Grantee a further cash payment of HK$700 to be made on a regular pay date as soon as administratively practicable after Grantee accepts such grant as further consideration for the agreement contained in the last sentence of Section 18.
|
(iv)
|
The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable.
|
(i)
|
In the third recital under WITNESSETH the words “or Solicitation” shall be added after the word “Misconduct”;
|
(ii)
|
In Section 3(d)A., the words “or Solicitation” shall be added after the word “Misconduct”;
|
(iii)
|
In Section 3(d)B., the phrase, “or (3) on or after the Vesting Date or within one year following Grantee’s termination of employment, has engaged in Solicitation,” shall be added after the phrase “until on or after the Vesting Date” in subsection (2) of Section 3(d)B;
|
(iv)
|
In Section 3(d)C., the phrase, “or (3) Solicitation” shall be added after the phrase “(2) Misconduct”;
|
(v)
|
In Section 3(d)C., the phrase, “or (z) engaged in Solicitation” shall be added after the phrase “(y) engaged in Misconduct,”;
|
(vi)
|
In Section 3(d)E., the words “or Solicitation” shall be added after the words “Misconduct,”;
|
(vii)
|
In Section 3(e), subsections (iv) and (v) shall be deleted and subsection (vi) shall be renumbered as subsection (iv); and
|
(viii)
|
In Section 3, the following new subsections shall be added after subsection (g):
|
(i)
|
In Section 3(d)B., the phrase “that, in the Committee’s sole and absolute discretion, reflects the seriousness of the Competitive Action and/or the Misconduct. The maximum amount that the Company may demand from the Grantee is” shall be added after the words “an amount” in subsection (2) of Section 3(d)B;
|
(ii)
|
In Section 3(d)B, the last sentence shall be deleted and replaced with the following sentence:
|
(iii)
|
In Section 3(d)C., the following sentence shall be deleted:
|
(iv)
|
In Section 3(g), the last sentence shall be deleted;
|
(v)
|
Section 19 shall be deleted in its entirety and replaced with the following:
|
(vi)
|
The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable.
|
|
With effect from the earlier of the date of termination of the Grantee’s employment or the date that the Grantee gives or receives notice of termination of the Grantee’s employment for any reason, any unvested Restricted Stock Units shall lapse and be forfeited (except for those that vest immediately upon termination as set out in Section 3(a) of this Agreement and subject to the forfeiture provisions in paragraph 3 below) and the Grantee shall have no further rights with respect to any such unvested Restricted Stock Units.
|
2.
|
RESTRICTIVE COVENANTS
|
2.1
|
The Grantee covenants with the Company and the Group that the Grantee will not, save with the prior written consent of the Committee (in its absolute discretion):
|
2.1.1.
|
during the Restricted Period directly or indirectly be employed, engaged or retained by or otherwise concerned or interested in any Competing Business. For this purpose, the Grantee is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if:
|
(b)
|
the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business;
|
(c)
|
the Grantee has any direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business; and/or
|
(d)
|
the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who has a direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business,
|
2.1.2
|
during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, have any business dealings with any Client or Prospective Client in relation to or for the benefit of a Competing Business;
|
2.1.3
|
during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, canvass or solicit business or custom from or seek to entice away any Client
|
2.1.4
|
during the Restricted Period, directly or indirectly, solicit or endeavour to solicit the employment or engagement of any Key Employee (whether or not such person would thereby breach their contract of employment or engagement);
|
2.1.5
|
at any time after the Termination Date represent himself as being in any way connected with (other than as a former employee) or interested in the business of the Company or any Group Company or use any registered names, domain names or trading names the same as or that could reasonably be expected to be confused with any such names used by the Company or any Group Company.
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2.1.6
|
before or after the Termination Date, and except in the proper performance of his or her duties of employment by the Company or any Group Company, directly or indirectly use for his or her own purposes or those of a third party or disclose to any third party any Confidential Information. The Grantee will use his or her best endeavours to prevent any unauthorised use or disclosure of Confidential Information. The obligations contained in this clause 2.1.6 will not apply to any disclosures required by law or to any information or documents which after the Termination Date are in the public domain other than by way of unauthorised disclosure.
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2.2
|
The Grantee gives the covenants above to the Company as trustee for itself (and any company forming part of the Group).
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2.3
|
Each restriction contained in this clause 2 is an entirely separate and independent restriction, despite the fact that they may be contained in the same phrase, and if any part is found to be unenforceable the remainder will remain valid and enforceable.
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2.4
|
While the restrictions in this clause 2 are considered by the parties to be fair and reasonable in the circumstances, it is agreed that if any such restriction should be held to be void or ineffective for any reason but would be treated as valid and effective if some part of parts of the restriction were deleted, the restriction in question will apply with such deletion as may be necessary to make it valid and effective.
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2.5
|
If, during the Grantee’s employment or any period during which these restrictions apply, any person, firm, company or entity offers the Grantee any employment, engagement, arrangement or contract which might or would cause him or her to breach any of the restrictions, he or she will notify that person, firm, company or entity of the terms of these restrictions.
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2.6
|
The period of any restraint on the Grantee’s activities after the Termination Date imposed pursuant to clauses 2.1.1 to 2.1.4 shall be reduced pro rata by any period of garden leave served by the Grantee pursuant to his or her service agreement with the Company or any Group Company.
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2.7
|
If the Grantee breaches any of the covenants contained in clauses 2.1.1 to 2.1.6, then any unvested Restricted Stock Units will lapse with immediate effect and the Grantee will be obliged to return all shares of Company stock issued or issuable in respect of Restricted Stock Units which have vested within the three years immediately preceding the breach or their equivalent value (determined by reference to the date of vesting) granted under this Agreement or any Prior Agreement to the Company within 14 days of being notified by the Company of its discovery of the breach.
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2.8
|
In this clause, the following definitions shall apply:
|
“Client”
|
means any person, firm, company or other business entity whom or which during the Relevant Period:
(a) to whom the Company or any Group Company provided insurance or reinsurance; or
(b) was an insurance intermediary which introduced such insurance or reinsurance business to the Company or any Group Company,
and in each case with whom or which during the Relevant Period:
i)
the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Grantee has had Confidential Information during the course of his or her employment.
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“Competing Business”
|
means any business which at any time is in or which intends to be in competition with any Relevant Business.
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“Confidential Information”
|
means any and all information which is of a confidential nature or which the Company reasonably regards as being confidential or a trade secret concerning the business, business performance or prospective business, financial information or arrangements, plans or internal affairs of the Company, any Group Company or any of their respective Clients or Prospective Clients including without prejudice to the generality of the foregoing all information, records and materials relating to:
(1)
underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission;
(2)
syndicate or other business projections and forecasts;
(3)
Client lists, brokers lists and price sensitive information;
(4)
technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets;
(5)
remuneration and personnel details;
(6)
planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels;
(7)
computer passwords, the contents of any databases, tables, know how documents or materials;
(8)
commissions, commission charges, pricing policies and all information about research and development; and
(9)
the Company’s or any Group Company’s suppliers’, Clients’ or Prospective Clients’ names, addresses (including email addresses), telephone, facsimile or other contact numbers and contact names, the nature of their business operations, their requirements for services supplied by the Company or any Group Company and all confidential aspects of their relationship with the Company or any Group Company.
|
“directly or indirectly”
|
means (without prejudice to the generality of the expression) either alone or jointly with or on behalf of any other person and whether on his or her own account or in partnership with another or others or as the holder of any interest in or as officer, employee or agent of or consultant to any other person.
|
“Group”
|
means the Company, its subsidiaries or holding companies from time to time and any subsidiary of any holding company from time to time; and “Group Company” means any company within the Group.
|
“Key Employee”
|
means any director or officer of the Company or any Group Company and/or any employee (other than administrative or clerical personnel) of the Company or any Group Company, in each case who, at any time during the Relevant Period:
i)
was employed by the Company or any Group Company; and
ii)
with whom the Grantee has had Material Dealings or exercised control or had management responsibility for; and/or
iii)
has had access to or has obtained Confidential Information during the Relevant Period.
|
“Material Dealings”
|
means receiving orders, instructions or enquiries from, contracting or making preparations to contract with, making sales or presenting to or with, tendering for business from, having responsibility with or for, having personal knowledge of or otherwise having significant other contact.
|
“Prior Agreements”
|
means any previous restricted stock unit award agreement between Grantee and the Company whether the awards under those agreements have vested or are unvested.
|
“Prospective Client”
|
means any person, firm, company or other business entity who was at any time during the Relevant Period:
(a) in negotiations with the Company or any Group Company for the provision of insurance or reinsurance; or
(b) an insurance intermediary who may introduce such insurance or reinsurance business to the Company or any Group Company,
and in each case with whom or which during the Relevant Period:
i)
the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Grantee has had Confidential Information during the course of Grantee’s employment.
Provided that this definition shall not apply to any such person, firm, company or other business entity which has withdrawn from or discontinued such negotiations or discussions, having stated its intention to do so (other than through any unlawful activity by the Grantee).
|
“Relevant Business”
|
means any class or classes of insurance or reinsurance business which was underwritten in the twelve months immediately prior to the Termination Date by the Company or any Group Company and with which the Grantee was directly or indirectly materially concerned or involved or had personal knowledge in the course of Grantee’s duties during the Relevant Period.
|
“Relevant Period”
|
means (1) during employment, the twelve month period immediately prior to the action or activity that may be in breach of clauses 2.1.1 to 2.1.4 and (2) after termination of employment, the twelve month period immediately prior to the Termination Date.
|
“Restricted Period”
|
means the period beginning on the date hereof and ending one year following the Termination Date.
|
“
Termination Date”
|
means the date on which the Grantee’s employment or engagement with the Company terminates for any reason.
|
3.
|
CLAWBACK
|
3.1
|
If at any time after any Restricted Stock Units have vested under the terms of this Agreement the Committee becomes aware of any material wrongdoing, negligence or misconduct on the part of the Grantee that would have entitled the Company to terminate the Grantee's employment with or without notice for Cause, any unvested Restricted Stock Units will lapse with immediate effect and the Company will be entitled, in its absolute discretion, to recover from the Grantee up to 100% of the shares of Company common stock issued or issuable in respect of the Restricted Stock Units (which have vested within the 7 years prior to such determination by the Committee) or their equivalent value (determined by reference to the date of vesting) granted under this Agreement or any Prior Agreement to the Company within 14 days of being notified in writing by the Company of its discovery of the material wrongdoing, negligence or misconduct.
|
3.2
|
Clause 3.1 is without prejudice to the Company's other remedies for such wrongdoing or any other clawback policy that the Company may adopt from time to time as required by applicable laws or the applicable listing rules of any securities exchange.
|
3.3
|
The Committee may review any Restricted Stock Units granted to the Grantee under the terms of this Agreement, in light of:
|
a.
|
there being a significant deterioration in the financial health of the Company, the Group or the business area or team in which the Grantee worked;
|
b.
|
the Grantee having caused harm to the reputation of the Company or the Group;
|
c.
|
the Grantee having deliberately misled the Company in relation to the financial performance of the Company, the Group or the business area or team in which he or she worked; and/or
|
d.
|
the Grantee’s actions having amounted to gross misconduct, incompetence or negligence.
|
3.4
|
The Grantee agrees that any sums owed to the Company or any Group Company under this Agreement including any adjustment, forfeiture or repayment may be deducted from any sums due to the Grantee from the Company or any Group Company. For the avoidance of doubt, this is without prejudice to any right the Company or the Group may have at any time to recover any sums from the Grantee and the Grantee agrees that such sums are recoverable by the Company or any Group Company as a debt.
|
3.5
|
In this Clause 3, “Cause” means:
|
a.
|
any serious negligence or gross misconduct by the Grantee in connection with or affecting the business or affairs of the Company or any member of the Group;
|
b.
|
the Grantee being convicted of any arrestable offence other than an offence under road traffic legislation in the UK; or
|
c.
|
the Grantee being convicted of an offence under any statutory enactment or regulation relating to insider dealing or market abuse.
|
4.1
|
Any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales.
|
5.1
|
If at any time any dispute or question shall arise between the parties arising out of or in connection with this Agreement or its or their validity, construction or performance then the same shall be referred to and finally resolved by arbitration under the London Court of International Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause.
|
A.
|
during the Restricted Period, directly or indirectly, be employed, engaged or retained by or otherwise concerned or interested in any Competing Business. For this purpose, the Grantee is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if:
|
(ii)
|
the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business;
|
(iii)
|
the Grantee has any direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business; and/or
|
(iv)
|
the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who has a direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business,
|
B.
|
during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, have any business dealings with any Client or Prospective Client in relation to or for the benefit of a Competing Business;
|
C.
|
during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, canvass or solicit business or custom from or seek to entice away any Client or Prospective Client from the Company or any Group Company in relation to or for the benefit of a Competing Business;
|
D.
|
during the Restricted Period, directly or indirectly, solicit or endeavour to solicit the employment or engagement of any Key Employee (whether or not such person would thereby breach their contract of employment or engagement);
|
E.
|
at any time after the Termination Date represent himself or herself as being in any way connected with (other than as a former employee) or interested in the business of the Company or any Group Company or use any registered names, domain names or trading names the same as or that could reasonably be expected to be confused with any such names used by the Company or any Group Company.
|
F.
|
before or after the Termination Date and except in the proper performance of his or her duties of employment for the Company or Group Company directly or indirectly use for his or her own purposes or those of a third party or disclose to any third party any Confidential Information. The Grantee will use his or her best endeavours to prevent any unauthorised use or disclosure of Confidential Information. The obligations contained in this subsection F will not apply to any disclosures required by law or to any information or documents which after the Termination Date are in the public domain other than by way of unauthorised disclosure.
|
“Client”
|
means any person, firm, company or other business entity whom or which during the Relevant Period:
(a) to whom the Company or any Group Company provided insurance or reinsurance; or
(b) was an insurance intermediary which introduced such insurance or reinsurance business to the Company or any Group Company,
and in each case with whom or which during the Relevant Period:
i)
the Grantee (or any person reporting to the
Grantee) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Grantee has had Confidential Information during the course of his or her employment.
|
“Competitive Action”
|
means any of the activities, individually or in the aggregate, described in sub-sections A through F of Section 3(e).
|
“Competing Business”
|
means any business which at any time is in or which intends to be in competition with any Relevant Business.
|
“Confidential Information”
|
means any and all information which is of a confidential nature or which the Company reasonably regards as being confidential or a trade secret concerning the business, business performance or prospective business, financial information or arrangements, plans or internal affairs of the Company, any Group Company or any of their respective Clients or Prospective Clients including without prejudice to the generality of the foregoing all information, records and materials relating to:
(1)
underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission;
(2)
syndicate or other business projections and forecasts;
(3)
Client lists, brokers lists and price sensitive information;
(4)
technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets;
(5)
remuneration and personnel details;
(6)
planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels;
(7)
computer passwords, the contents of any databases, tables, know how documents or materials;
(8)
commissions, commission charges, pricing policies and all information about research and development; and
(9)
the Company’s or any Group Company’s suppliers’, Clients’ or Prospective Clients’ names, addresses (including email addresses), telephone, facsimile or other contact numbers and contact names, the nature of their business operations, their requirements for services supplied by the Company or any Group Company and all confidential aspects of their relationship with the Company or any Group Company.
|
“directly or indirectly”
|
means (without prejudice to the generality of the expression) either alone or jointly with or on behalf of any other person and whether on his or her own account or in partnership with another or others or as the holder of any interest in or as officer, employee or agent of or consultant to any other person.
|
“Group”
|
means the Company, its subsidiaries or holding companies from time to time and any subsidiary of any holding company from time to time; and “Group Company” means any company within the Group.
|
“Key Employee”
|
means any director or officer of the Company or any Group Company and/or any employee (other than administrative or clerical personnel) of the Company or any Group Company, in each case who, at any time during the Relevant Period:
i)
was employed by the Company or any Group
Company; and
ii)
with whom the Grantee has had Material Dealings or exercised control or had management responsibility for; and/or
iii)
has had access to or has obtained Confidential Information during the Relevant Period.
|
“Material Dealings”
|
means receiving orders, instructions or enquiries from, contracting or making preparations to contract with, making sales or presenting to or with, tendering for business from, having responsibility with or for, having personal knowledge of or otherwise having significant other contact.
|
“Prospective Client”
|
means any person, firm, company or other business entity who was at any time during the Relevant Period:
(a) in negotiations with the Company or any Group Company for the provision of insurance or reinsurance; or
(b) an insurance intermediary who may introduce such insurance or reinsurance business to the Company or any Group Company,
and in each case with whom or which during the Relevant Period:
i)
the Grantee (or any person reporting to the
Grantee) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Grantee has had Confidential Information during the course of Grantee’s employment.
Provided that this definition shall not apply to any such person, firm, company or other business entity which has withdrawn from or discontinued such negotiations or discussions, having stated its intention to do so (other than through any unlawful activity by the Grantee).
|
“Relevant Business”
|
means any class or classes of insurance or reinsurance business which was underwritten in the twelve months immediately prior to the Termination Date by the Company or any Group Company and with which the Grantee was directly or indirectly materially concerned or involved or had personal knowledge in the course of Grantee’s duties during the Relevant Period.
|
“Relevant Period”
|
means (1) during employment, the twelve month period immediately prior to the action or activity that may be in breach of clauses 2.1.1 to 2.1.4 and (2) after termination of employment, the twelve month period immediately prior to the Termination Date.
|
“
Termination Date”
|
means the date on which the Grantee’s employment or engagement with the Company terminates for any reason.
|
|
/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
|