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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
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
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(Unaudited)
|
|
(Audited)
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities
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$
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13,343,132
|
|
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$
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13,551,250
|
|
Investment funds
|
1,161,127
|
|
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1,155,677
|
|
||
Real estate
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1,833,337
|
|
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1,469,601
|
|
||
Arbitrage trading account
|
744,859
|
|
|
617,649
|
|
||
Equity securities
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496,034
|
|
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576,647
|
|
||
Loans receivable
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75,902
|
|
|
79,684
|
|
||
Total investments
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17,654,391
|
|
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17,450,508
|
|
||
Cash and cash equivalents
|
956,603
|
|
|
950,471
|
|
||
Premiums and fees receivable
|
1,845,723
|
|
|
1,773,844
|
|
||
Due from reinsurers
|
1,868,667
|
|
|
1,783,200
|
|
||
Deferred policy acquisition costs
|
513,586
|
|
|
507,549
|
|
||
Prepaid reinsurance premiums
|
490,582
|
|
|
472,009
|
|
||
Trading account receivables from brokers and clearing organizations
|
26,667
|
|
|
189,280
|
|
||
Property, furniture and equipment
|
424,751
|
|
|
422,960
|
|
||
Goodwill
|
178,945
|
|
|
178,945
|
|
||
Accrued investment income
|
143,974
|
|
|
136,597
|
|
||
Other assets
|
483,943
|
|
|
434,554
|
|
||
Total assets
|
$
|
24,587,832
|
|
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$
|
24,299,917
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Reserves for losses and loss expenses
|
$
|
11,784,895
|
|
|
$
|
11,670,408
|
|
Unearned premiums
|
3,404,003
|
|
|
3,290,180
|
|
||
Due to reinsurers
|
248,746
|
|
|
246,460
|
|
||
Trading account securities sold but not yet purchased
|
29,453
|
|
|
64,358
|
|
||
Federal and foreign income taxes
|
96,735
|
|
|
98,091
|
|
||
Other liabilities
|
852,255
|
|
|
981,987
|
|
||
Senior notes and other debt
|
1,782,139
|
|
|
1,769,052
|
|
||
Subordinated debentures
|
897,426
|
|
|
728,218
|
|
||
Total liabilities
|
19,095,652
|
|
|
18,848,754
|
|
||
Equity:
|
|
|
|
||||
Preferred stock, par value $.10 per share:
|
|
|
|
||||
Authorized 5,000,000 shares; issued and outstanding - none
|
—
|
|
|
—
|
|
||
Common stock, par value $.20 per share:
|
|
|
|
||||
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 121,543,951 and 121,514,852 shares, respectively
|
47,024
|
|
|
47,024
|
|
||
Additional paid-in capital
|
1,057,230
|
|
|
1,048,283
|
|
||
Retained earnings
|
7,322,201
|
|
|
6,956,882
|
|
||
Accumulated other comprehensive (loss) income
|
(258,982
|
)
|
|
68,541
|
|
||
Treasury stock, at cost, 113,573,967 and 113,603,066 shares, respectively
|
(2,715,697
|
)
|
|
(2,709,386
|
)
|
||
Total stockholders’ equity
|
5,451,776
|
|
|
5,411,344
|
|
||
Noncontrolling interests
|
40,404
|
|
|
39,819
|
|
||
Total equity
|
5,492,180
|
|
|
5,451,163
|
|
||
Total liabilities and equity
|
$
|
24,587,832
|
|
|
$
|
24,299,917
|
|
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For the Three Months Ended March 31,
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||||||
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|||||||
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2018
|
|
2017
|
||||
REVENUES:
|
|
|
|
||||
Net premiums written
|
$
|
1,665,338
|
|
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$
|
1,646,838
|
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Change in net unearned premiums
|
(97,930
|
)
|
|
(76,796
|
)
|
||
Net premiums earned
|
1,567,408
|
|
|
1,570,042
|
|
||
Net investment income
|
174,518
|
|
|
148,858
|
|
||
Net realized and unrealized gains on investments
|
48,464
|
|
|
52,348
|
|
||
Revenues from non-insurance businesses
|
70,171
|
|
|
65,390
|
|
||
Insurance service fees
|
30,675
|
|
|
33,280
|
|
||
Other income
|
11
|
|
|
500
|
|
||
Total revenues
|
1,891,247
|
|
|
1,870,418
|
|
||
OPERATING COSTS AND EXPENSES:
|
|
|
|
||||
Losses and loss expenses
|
963,219
|
|
|
979,603
|
|
||
Other operating costs and expenses
|
610,439
|
|
|
603,700
|
|
||
Expenses from non-insurance businesses
|
69,543
|
|
|
66,019
|
|
||
Interest expense
|
37,056
|
|
|
36,799
|
|
||
Total operating costs and expenses
|
1,680,257
|
|
|
1,686,121
|
|
||
Income before income taxes
|
210,990
|
|
|
184,297
|
|
||
Income tax expense
|
(43,417
|
)
|
|
(59,623
|
)
|
||
Net income before noncontrolling interests
|
167,573
|
|
|
124,674
|
|
||
Noncontrolling interests
|
(1,177
|
)
|
|
(1,227
|
)
|
||
Net income to common stockholders
|
$
|
166,396
|
|
|
$
|
123,447
|
|
|
|
|
|
||||
NET INCOME PER SHARE:
|
|
|
|
||||
Basic
|
$
|
1.32
|
|
|
$
|
1.01
|
|
Diluted
|
$
|
1.30
|
|
|
$
|
0.96
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
|
2018
|
|
2017
|
||||
Net income before noncontrolling interests
|
$
|
167,573
|
|
|
$
|
124,674
|
|
Other comprehensive (loss) income:
|
|
|
|
||||
Change in unrealized currency translation adjustments
|
12,799
|
|
|
22,735
|
|
||
Change in unrealized investment gains, net of taxes
|
(125,772
|
)
|
|
(8,831
|
)
|
||
Other comprehensive (loss) income
|
(112,973
|
)
|
|
13,904
|
|
||
Comprehensive income
|
54,600
|
|
|
138,578
|
|
||
Noncontrolling interests
|
(1,188
|
)
|
|
(1,208
|
)
|
||
Comprehensive income to common stockholders
|
$
|
53,412
|
|
|
$
|
137,370
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
|
2018
|
|
2017
|
||||
COMMON STOCK:
|
|
|
|
||||
Beginning and end of period
|
$
|
47,024
|
|
|
$
|
47,024
|
|
ADDITIONAL PAID-IN CAPITAL:
|
|
|
|
||||
Beginning of period
|
$
|
1,048,283
|
|
|
$
|
1,037,446
|
|
Restricted stock units issued
|
(487
|
)
|
|
(667
|
)
|
||
Restricted stock units expensed
|
9,434
|
|
|
10,810
|
|
||
End of period
|
$
|
1,057,230
|
|
|
$
|
1,047,589
|
|
RETAINED EARNINGS:
|
|
|
|
||||
Beginning of period
|
$
|
6,956,882
|
|
|
$
|
6,595,987
|
|
Cumulative effect adjustment resulting from changes in accounting principles
|
215,939
|
|
|
—
|
|
||
Net income to common stockholders
|
166,396
|
|
|
123,447
|
|
||
Dividends
|
(17,016
|
)
|
|
(15,759
|
)
|
||
End of period
|
$
|
7,322,201
|
|
|
$
|
6,703,675
|
|
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME:
|
|
|
|
||||
Unrealized investment gains:
|
|
|
|
||||
Beginning of period
|
$
|
375,421
|
|
|
$
|
427,154
|
|
Cumulative effect adjustment resulting from changes in accounting principles
|
(214,539
|
)
|
|
—
|
|
||
Unrealized losses on securities not other-than-temporarily impaired
|
(125,796
|
)
|
|
(8,913
|
)
|
||
Unrealized gains on other-than-temporarily impaired securities
|
13
|
|
|
101
|
|
||
End of period
|
35,099
|
|
|
418,342
|
|
||
Currency translation adjustments:
|
|
|
|
||||
Beginning of period
|
(306,880
|
)
|
|
(371,586
|
)
|
||
Net change in period
|
12,799
|
|
|
22,735
|
|
||
End of period
|
(294,081
|
)
|
|
(348,851
|
)
|
||
Total accumulated other comprehensive (loss) income
|
$
|
(258,982
|
)
|
|
$
|
69,491
|
|
TREASURY STOCK:
|
|
|
|
||||
Beginning of period
|
$
|
(2,709,386
|
)
|
|
$
|
(2,688,817
|
)
|
Stock exercised/vested
|
488
|
|
|
644
|
|
||
Stock repurchased
|
(6,799
|
)
|
|
—
|
|
||
End of period
|
$
|
(2,715,697
|
)
|
|
$
|
(2,688,173
|
)
|
NONCONTROLLING INTERESTS:
|
|
|
|
||||
Beginning of period
|
$
|
39,819
|
|
|
$
|
33,926
|
|
(Distributions) contributions
|
(603
|
)
|
|
3,801
|
|
||
Net income
|
1,177
|
|
|
1,227
|
|
||
Other comprehensive income (loss), net of tax
|
11
|
|
|
(19
|
)
|
||
End of period
|
$
|
40,404
|
|
|
$
|
38,935
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
|
2018
|
|
2017
|
||||
CASH (USED IN) FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income to common stockholders
|
$
|
166,396
|
|
|
$
|
123,447
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
||||
Net realized and unrealized gains on investments
|
(48,464
|
)
|
|
(52,348
|
)
|
||
Depreciation and amortization
|
29,027
|
|
|
18,133
|
|
||
Noncontrolling interests
|
1,177
|
|
|
1,227
|
|
||
Investment funds
|
(40,354
|
)
|
|
(26,649
|
)
|
||
Stock incentive plans
|
9,434
|
|
|
10,780
|
|
||
Change in:
|
|
|
|
||||
Arbitrage trading account
|
497
|
|
|
2,350
|
|
||
Premiums and fees receivable
|
(74,492
|
)
|
|
(59,244
|
)
|
||
Reinsurance accounts
|
(100,379
|
)
|
|
67,205
|
|
||
Deferred policy acquisition costs
|
(6,851
|
)
|
|
(6,126
|
)
|
||
Income taxes
|
50,505
|
|
|
50,595
|
|
||
Reserves for losses and loss expenses
|
120,063
|
|
|
10,424
|
|
||
Unearned premiums
|
116,627
|
|
|
113,483
|
|
||
Other
|
(243,221
|
)
|
|
(177,805
|
)
|
||
Net cash (used in) from operating activities
|
(20,035
|
)
|
|
75,472
|
|
||
CASH USED IN INVESTING ACTIVITIES:
|
|
|
|
||||
Proceeds from sale of fixed maturity securities
|
2,004,008
|
|
|
719,969
|
|
||
Proceeds from sale of equity securities
|
152,949
|
|
|
51,854
|
|
||
Distributions from (contributions to) investment funds
|
33,695
|
|
|
(11,290
|
)
|
||
Proceeds from maturities and prepayments of fixed maturity securities
|
97,911
|
|
|
888,423
|
|
||
Purchase of fixed maturity securities
|
(2,085,683
|
)
|
|
(1,767,208
|
)
|
||
Purchase of equity securities
|
(44,219
|
)
|
|
(103
|
)
|
||
Real estate purchased
|
(336,601
|
)
|
|
(48,710
|
)
|
||
Change in loans receivable
|
2,058
|
|
|
3,147
|
|
||
Net additions to property, furniture and equipment
|
(14,102
|
)
|
|
(12,457
|
)
|
||
Change in balances due to security brokers
|
58,500
|
|
|
(22,034
|
)
|
||
Payment for business purchased net of cash acquired
|
—
|
|
|
(71,346
|
)
|
||
Net cash used in investing activities
|
(131,484
|
)
|
|
(269,755
|
)
|
||
CASH FROM (USED IN) FINANCING ACTIVITIES:
|
|
|
|
||||
Repayment of senior notes and other debt
|
(23
|
)
|
|
(1,475
|
)
|
||
Net proceeds from issuance of debt
|
181,792
|
|
|
—
|
|
||
Cash dividends to common stockholders
|
(17,016
|
)
|
|
—
|
|
||
Purchase of common treasury shares
|
(6,799
|
)
|
|
—
|
|
||
Other, net
|
(544
|
)
|
|
(1,281
|
)
|
||
Net cash from (used in) financing activities
|
157,410
|
|
|
(2,756
|
)
|
||
Net impact on cash due to change in foreign exchange rates
|
241
|
|
|
10,147
|
|
||
Net change in cash and cash equivalents
|
6,132
|
|
|
(186,892
|
)
|
||
Cash and cash equivalents at beginning of year
|
950,471
|
|
|
795,285
|
|
||
Cash and cash equivalents at end of period
|
$
|
956,603
|
|
|
$
|
608,393
|
|
(In thousands)
|
Unrealized Investment Gains (Losses)
|
|
Currency Translation Adjustments
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||
As of and for the three months ended March 31, 2018
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
375,421
|
|
|
$
|
(306,880
|
)
|
|
$
|
68,541
|
|
Cumulative effect adjustment resulting from changes in accounting principles
|
(214,539
|
)
|
|
—
|
|
|
(214,539
|
)
|
|||
Restated beginning of period
|
160,882
|
|
|
(306,880
|
)
|
|
(145,998
|
)
|
|||
Other comprehensive (loss) income before reclassifications
|
(118,189
|
)
|
|
12,799
|
|
|
(105,390
|
)
|
|||
Amounts reclassified from AOCI
|
(7,583
|
)
|
|
—
|
|
|
(7,583
|
)
|
|||
Other comprehensive (loss) income
|
(125,772
|
)
|
|
12,799
|
|
|
(112,973
|
)
|
|||
Unrealized investment gain related to noncontrolling interest
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
|||
End of period
|
$
|
35,099
|
|
|
$
|
(294,081
|
)
|
|
$
|
(258,982
|
)
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(9,599
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(9,599
|
)
|
Tax effect
|
2,016
|
|
(2)
|
—
|
|
|
2,016
|
|
|||
After-tax amounts reclassified
|
$
|
(7,583
|
)
|
|
$
|
—
|
|
|
$
|
(7,583
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(160,848
|
)
|
|
$
|
12,799
|
|
|
$
|
(148,049
|
)
|
Tax effect
|
35,076
|
|
|
—
|
|
|
35,076
|
|
|||
Other comprehensive (loss) income
|
$
|
(125,772
|
)
|
|
$
|
12,799
|
|
|
$
|
(112,973
|
)
|
|
|
|
|
|
|
||||||
As of and for the three months ended March 31, 2017:
|
|
|
|
|
|||||||
Changes in AOCI
|
|
|
|
|
|||||||
Beginning of period
|
$
|
427,154
|
|
|
$
|
(371,586
|
)
|
|
$
|
55,568
|
|
Other comprehensive income before reclassifications
|
19,994
|
|
|
22,735
|
|
|
42,729
|
|
|||
Amounts reclassified from AOCI
|
(28,825
|
)
|
|
—
|
|
|
(28,825
|
)
|
|||
Other comprehensive (loss) income
|
(8,831
|
)
|
|
22,735
|
|
|
13,904
|
|
|||
Unrealized investment loss related to noncontrolling interest
|
19
|
|
|
—
|
|
|
19
|
|
|||
End of period
|
$
|
418,342
|
|
|
$
|
(348,851
|
)
|
|
$
|
69,491
|
|
Amounts reclassified from AOCI
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(44,346
|
)
|
(1)
|
$
|
—
|
|
|
$
|
(44,346
|
)
|
Tax effect
|
15,521
|
|
(2)
|
—
|
|
|
15,521
|
|
|||
After-tax amounts reclassified
|
$
|
(28,825
|
)
|
|
$
|
—
|
|
|
$
|
(28,825
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
||||||
Pre-tax
|
$
|
(9,571
|
)
|
|
$
|
22,735
|
|
|
$
|
13,164
|
|
Tax effect
|
740
|
|
|
—
|
|
|
740
|
|
|||
Other comprehensive (loss) income
|
$
|
(8,831
|
)
|
|
$
|
22,735
|
|
|
$
|
13,904
|
|
|
|
|
|
|
|
(In thousands)
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
66,459
|
|
|
$
|
12,185
|
|
|
$
|
—
|
|
|
$
|
78,644
|
|
|
$
|
66,459
|
|
Residential mortgage-backed
|
12,772
|
|
|
988
|
|
|
—
|
|
|
13,760
|
|
|
12,772
|
|
|||||
Total held to maturity
|
79,231
|
|
|
13,173
|
|
|
—
|
|
|
92,404
|
|
|
79,231
|
|
|||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
479,330
|
|
|
6,692
|
|
|
(6,113
|
)
|
|
479,909
|
|
|
479,909
|
|
|||||
State and municipal:
|
|
|
|
|
|
|
|
|
|
||||||||||
Special revenue
|
2,644,248
|
|
|
36,059
|
|
|
(22,675
|
)
|
|
2,657,632
|
|
|
2,657,632
|
|
|||||
State general obligation
|
404,710
|
|
|
12,113
|
|
|
(2,610
|
)
|
|
414,213
|
|
|
414,213
|
|
|||||
Pre-refunded
|
443,852
|
|
|
18,131
|
|
|
(87
|
)
|
|
461,896
|
|
|
461,896
|
|
|||||
Corporate backed
|
368,073
|
|
|
7,415
|
|
|
(1,610
|
)
|
|
373,878
|
|
|
373,878
|
|
|||||
Local general obligation
|
389,887
|
|
|
17,227
|
|
|
(3,209
|
)
|
|
403,905
|
|
|
403,905
|
|
|||||
Total state and municipal
|
4,250,770
|
|
|
90,945
|
|
|
(30,191
|
)
|
|
4,311,524
|
|
|
4,311,524
|
|
|||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential (1)
|
1,067,814
|
|
|
6,233
|
|
|
(22,334
|
)
|
|
1,051,713
|
|
|
1,051,713
|
|
|||||
Commercial
|
338,683
|
|
|
1,164
|
|
|
(4,563
|
)
|
|
335,284
|
|
|
335,284
|
|
|||||
Total mortgage-backed securities
|
1,406,497
|
|
|
7,397
|
|
|
(26,897
|
)
|
|
1,386,997
|
|
|
1,386,997
|
|
|||||
Asset-backed
|
2,101,896
|
|
|
11,435
|
|
|
(11,640
|
)
|
|
2,101,691
|
|
|
2,101,691
|
|
|||||
Corporate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
2,378,793
|
|
|
27,145
|
|
|
(31,817
|
)
|
|
2,374,121
|
|
|
2,374,121
|
|
|||||
Financial
|
1,411,529
|
|
|
22,100
|
|
|
(15,031
|
)
|
|
1,418,598
|
|
|
1,418,598
|
|
|||||
Utilities
|
270,915
|
|
|
8,163
|
|
|
(4,546
|
)
|
|
274,532
|
|
|
274,532
|
|
|||||
Other
|
43,682
|
|
|
1
|
|
|
(233
|
)
|
|
43,450
|
|
|
43,450
|
|
|||||
Total corporate
|
4,104,919
|
|
|
57,409
|
|
|
(51,627
|
)
|
|
4,110,701
|
|
|
4,110,701
|
|
|||||
Foreign
|
850,866
|
|
|
25,791
|
|
|
(3,578
|
)
|
|
873,079
|
|
|
873,079
|
|
|||||
Total available for sale
|
13,194,278
|
|
|
199,669
|
|
|
(130,046
|
)
|
|
13,263,901
|
|
|
13,263,901
|
|
|||||
Total investments in fixed maturity securities
|
$
|
13,273,509
|
|
|
$
|
212,842
|
|
|
$
|
(130,046
|
)
|
|
$
|
13,356,305
|
|
|
$
|
13,343,132
|
|
(In thousands)
|
Amortized
Cost |
|
Gross Unrealized
|
|
Fair
Value |
|
Carrying
Value |
||||||||||||
Gains
|
|
Losses
|
|||||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Held to maturity:
|
|
|
|
|
|
|
|
|
|
||||||||||
State and municipal
|
$
|
65,882
|
|
|
$
|
14,499
|
|
|
$
|
—
|
|
|
$
|
80,381
|
|
|
$
|
65,882
|
|
Residential mortgage-backed
|
13,450
|
|
|
1,227
|
|
|
—
|
|
|
14,677
|
|
|
13,450
|
|
|||||
Total held to maturity
|
79,332
|
|
|
15,726
|
|
|
—
|
|
|
95,058
|
|
|
79,332
|
|
|||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency
|
372,748
|
|
|
8,824
|
|
|
(3,832
|
)
|
|
377,740
|
|
|
377,740
|
|
|||||
State and municipal:
|
|
|
|
|
|
|
|
|
|
||||||||||
Special revenue
|
2,663,245
|
|
|
53,512
|
|
|
(10,027
|
)
|
|
2,706,730
|
|
|
2,706,730
|
|
|||||
State general obligation
|
439,358
|
|
|
16,087
|
|
|
(711
|
)
|
|
454,734
|
|
|
454,734
|
|
|||||
Pre-refunded
|
436,241
|
|
|
22,701
|
|
|
(9
|
)
|
|
458,933
|
|
|
458,933
|
|
|||||
Corporate backed
|
375,268
|
|
|
10,059
|
|
|
(860
|
)
|
|
384,467
|
|
|
384,467
|
|
|||||
Local general obligation
|
417,955
|
|
|
23,242
|
|
|
(967
|
)
|
|
440,230
|
|
|
440,230
|
|
|||||
Total state and municipal
|
4,332,067
|
|
|
125,601
|
|
|
(12,574
|
)
|
|
4,445,094
|
|
|
4,445,094
|
|
|||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential (1)
|
1,043,629
|
|
|
9,304
|
|
|
(13,547
|
)
|
|
1,039,386
|
|
|
1,039,386
|
|
|||||
Commercial
|
261,652
|
|
|
1,521
|
|
|
(2,628
|
)
|
|
260,545
|
|
|
260,545
|
|
|||||
Total mortgage-backed securities
|
1,305,281
|
|
|
10,825
|
|
|
(16,175
|
)
|
|
1,299,931
|
|
|
1,299,931
|
|
|||||
Asset-backed
|
2,111,132
|
|
|
11,024
|
|
|
(10,612
|
)
|
|
2,111,544
|
|
|
2,111,544
|
|
|||||
Corporate:
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
2,574,400
|
|
|
52,210
|
|
|
(7,718
|
)
|
|
2,618,892
|
|
|
2,618,892
|
|
|||||
Financial
|
1,402,161
|
|
|
37,744
|
|
|
(5,138
|
)
|
|
1,434,767
|
|
|
1,434,767
|
|
|||||
Utilities
|
284,886
|
|
|
11,316
|
|
|
(1,248
|
)
|
|
294,954
|
|
|
294,954
|
|
|||||
Other
|
40,560
|
|
|
5
|
|
|
(66
|
)
|
|
40,499
|
|
|
40,499
|
|
|||||
Total corporate
|
4,302,007
|
|
|
101,275
|
|
|
(14,170
|
)
|
|
4,389,112
|
|
|
4,389,112
|
|
|||||
Foreign
|
819,345
|
|
|
32,018
|
|
|
(2,866
|
)
|
|
848,497
|
|
|
848,497
|
|
|||||
Total available for sale
|
13,242,580
|
|
|
289,567
|
|
|
(60,229
|
)
|
|
13,471,918
|
|
|
13,471,918
|
|
|||||
Total investments in fixed maturity securities
|
$
|
13,321,912
|
|
|
$
|
305,293
|
|
|
$
|
(60,229
|
)
|
|
$
|
13,566,976
|
|
|
$
|
13,551,250
|
|
(1)
|
Gross unrealized gains (losses) for residential mortgage-backed securities include
$89,704
and
$76,467
as of
March 31, 2018
and
December 31, 2017
, 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
|
$
|
813,191
|
|
|
$
|
816,313
|
|
Due after one year through five years
|
4,580,074
|
|
|
4,621,880
|
|
||
Due after five years through ten years
|
3,110,432
|
|
|
3,158,810
|
|
||
Due after ten years
|
3,350,543
|
|
|
3,358,545
|
|
||
Mortgage-backed securities
|
1,419,269
|
|
|
1,400,757
|
|
||
Total
|
$
|
13,273,509
|
|
|
$
|
13,356,305
|
|
(In thousands)
|
Cost
|
|
Gross Unrealized (1)
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||||||
Gains
|
|
Losses
|
|
||||||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stocks
|
$
|
95,447
|
|
|
$
|
232,206
|
|
|
$
|
(7,218
|
)
|
|
$
|
320,435
|
|
|
$
|
320,435
|
|
Preferred stocks
|
124,150
|
|
|
53,423
|
|
|
(1,974
|
)
|
|
175,599
|
|
|
175,599
|
|
|||||
Total
|
$
|
219,597
|
|
|
$
|
285,629
|
|
|
$
|
(9,192
|
)
|
|
$
|
496,034
|
|
|
$
|
496,034
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stocks
|
$
|
81,855
|
|
|
$
|
272,309
|
|
|
$
|
(1,960
|
)
|
|
$
|
352,204
|
|
|
$
|
352,204
|
|
Preferred stocks
|
124,150
|
|
|
102,890
|
|
|
(2,597
|
)
|
|
224,443
|
|
|
224,443
|
|
|||||
Total
|
$
|
206,005
|
|
|
$
|
375,199
|
|
|
$
|
(4,557
|
)
|
|
$
|
576,647
|
|
|
$
|
576,647
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
(In thousands)
|
2018
|
|
2017
|
||||
Investment income earned on:
|
|
|
|
||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
123,246
|
|
|
$
|
112,346
|
|
Investment funds
|
40,354
|
|
|
26,649
|
|
||
Arbitrage trading account
|
5,191
|
|
|
6,360
|
|
||
Real estate
|
6,568
|
|
|
4,566
|
|
||
Equity securities
|
646
|
|
|
639
|
|
||
Gross investment income
|
176,005
|
|
|
150,560
|
|
||
Investment expense
|
(1,487
|
)
|
|
(1,702
|
)
|
||
Net investment income
|
$
|
174,518
|
|
|
$
|
148,858
|
|
|
Carrying Value as of
|
|
Income from
Investment Funds
|
||||||||||||
|
March 31,
|
|
December 31,
|
|
For the Three Months Ended March 31,
|
||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Real estate
|
$
|
624,716
|
|
|
$
|
606,995
|
|
|
$
|
26,051
|
|
|
$
|
4,532
|
|
Energy
|
80,833
|
|
|
82,882
|
|
|
74
|
|
|
3,245
|
|
||||
Other funds
|
455,578
|
|
|
465,800
|
|
|
14,229
|
|
|
18,872
|
|
||||
Total
|
$
|
1,161,127
|
|
|
$
|
1,155,677
|
|
|
$
|
40,354
|
|
|
$
|
26,649
|
|
|
Carrying Value
|
||||||
|
March 31,
|
|
December 31,
|
||||
(In thousands)
|
2018
|
|
2017
|
||||
Properties in operation
|
$
|
739,405
|
|
|
$
|
451,691
|
|
Properties under development
|
1,093,932
|
|
|
1,017,910
|
|
||
Total
|
$
|
1,833,337
|
|
|
$
|
1,469,601
|
|
|
For the Three Months Ended March 31,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Net realized and unrealized gains (losses) on investments in earnings
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Gains
|
$
|
13,339
|
|
|
$
|
5,605
|
|
Losses
|
(3,740
|
)
|
|
(3,965
|
)
|
||
Equity securities (1):
|
|
|
|
||||
Net realized gains on investment sales
|
122,321
|
|
|
42,707
|
|
||
Change in unrealized gains
|
(94,205
|
)
|
|
—
|
|
||
Investment funds
|
119
|
|
|
1,267
|
|
||
Real estate
|
7,998
|
|
|
3,300
|
|
||
Loans receivable
|
2,058
|
|
|
—
|
|
||
Other
|
574
|
|
|
3,434
|
|
||
Net realized and unrealized gains on investments in earnings before OTTI
|
48,464
|
|
|
52,348
|
|
||
Other-than-temporary impairments (2)
|
—
|
|
|
—
|
|
||
Net realized and unrealized gains on investments in earnings
|
48,464
|
|
|
52,348
|
|
||
Income tax expense
|
(10,177
|
)
|
|
(18,322
|
)
|
||
After-tax net realized and unrealized gains on investments in earnings
|
$
|
38,287
|
|
|
$
|
34,026
|
|
Change in unrealized investment gains of available for sale securities:
|
|
|
|
||||
Fixed maturity securities
|
$
|
(159,727
|
)
|
|
$
|
37,984
|
|
Previously impaired fixed maturity securities
|
13
|
|
|
101
|
|
||
Equity securities available for sale (3)
|
—
|
|
|
(48,862
|
)
|
||
Investment funds
|
(1,134
|
)
|
|
1,206
|
|
||
Total change in unrealized investment gains
|
(160,848
|
)
|
|
(9,571
|
)
|
||
Income tax benefit
|
35,076
|
|
|
740
|
|
||
Noncontrolling interests
|
(11
|
)
|
|
19
|
|
||
After-tax change in unrealized investment gains of available for sale securities
|
$
|
(125,783
|
)
|
|
$
|
(8,812
|
)
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
(In thousands)
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
138,917
|
|
|
$
|
2,978
|
|
|
$
|
71,224
|
|
|
$
|
3,135
|
|
|
$
|
210,141
|
|
|
$
|
6,113
|
|
State and municipal
|
1,514,028
|
|
|
20,922
|
|
|
303,246
|
|
|
9,269
|
|
|
1,817,274
|
|
|
30,191
|
|
||||||
Mortgage-backed securities
|
754,800
|
|
|
12,603
|
|
|
362,331
|
|
|
14,294
|
|
|
1,117,131
|
|
|
26,897
|
|
||||||
Asset-backed securities
|
1,271,743
|
|
|
9,444
|
|
|
160,263
|
|
|
2,196
|
|
|
1,432,006
|
|
|
11,640
|
|
||||||
Corporate
|
1,912,850
|
|
|
42,874
|
|
|
168,813
|
|
|
8,753
|
|
|
2,081,663
|
|
|
51,627
|
|
||||||
Foreign government
|
216,681
|
|
|
3,301
|
|
|
25,541
|
|
|
277
|
|
|
242,222
|
|
|
3,578
|
|
||||||
Fixed maturity securities
|
$
|
5,809,019
|
|
|
$
|
92,122
|
|
|
$
|
1,091,418
|
|
|
$
|
37,924
|
|
|
$
|
6,900,437
|
|
|
$
|
130,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government agency
|
$
|
92,167
|
|
|
$
|
1,491
|
|
|
$
|
72,055
|
|
|
$
|
2,341
|
|
|
$
|
164,222
|
|
|
$
|
3,832
|
|
State and municipal
|
735,972
|
|
|
5,944
|
|
|
345,755
|
|
|
6,630
|
|
|
1,081,727
|
|
|
12,574
|
|
||||||
Mortgage-backed securities
|
480,435
|
|
|
5,110
|
|
|
373,956
|
|
|
11,065
|
|
|
854,391
|
|
|
16,175
|
|
||||||
Asset-backed securities
|
1,127,309
|
|
|
8,298
|
|
|
167,412
|
|
|
2,314
|
|
|
1,294,721
|
|
|
10,612
|
|
||||||
Corporate
|
1,103,747
|
|
|
8,224
|
|
|
170,858
|
|
|
5,946
|
|
|
1,274,605
|
|
|
14,170
|
|
||||||
Foreign government
|
244,139
|
|
|
2,615
|
|
|
25,824
|
|
|
251
|
|
|
269,963
|
|
|
2,866
|
|
||||||
Fixed maturity securities
|
$
|
3,783,769
|
|
|
$
|
31,682
|
|
|
$
|
1,155,860
|
|
|
$
|
28,547
|
|
|
$
|
4,939,629
|
|
|
$
|
60,229
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss
|
|||||
Corporate
|
10
|
|
|
$
|
86,345
|
|
|
$
|
4,429
|
|
Foreign government
|
8
|
|
|
$
|
30,997
|
|
|
$
|
739
|
|
Asset-backed securities
|
3
|
|
|
370
|
|
|
140
|
|
||
Mortgage-backed securities
|
5
|
|
|
4,532
|
|
|
117
|
|
||
State and municipal
|
1
|
|
|
3,641
|
|
|
3
|
|
||
Total
|
27
|
|
|
$
|
125,885
|
|
|
$
|
5,428
|
|
(In thousands)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
March 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
479,909
|
|
|
$
|
—
|
|
|
$
|
479,909
|
|
|
$
|
—
|
|
State and municipal
|
4,311,524
|
|
|
—
|
|
|
4,311,524
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,386,997
|
|
|
—
|
|
|
1,386,997
|
|
|
—
|
|
||||
Asset-backed securities
|
2,101,691
|
|
|
—
|
|
|
2,101,528
|
|
|
163
|
|
||||
Corporate
|
4,110,701
|
|
|
—
|
|
|
4,110,701
|
|
|
—
|
|
||||
Foreign government
|
873,079
|
|
|
—
|
|
|
873,079
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,263,901
|
|
|
—
|
|
|
13,263,738
|
|
|
163
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
320,435
|
|
|
311,329
|
|
|
—
|
|
|
9,106
|
|
||||
Preferred stocks
|
175,599
|
|
|
—
|
|
|
164,756
|
|
|
10,843
|
|
||||
Total equity securities
|
496,034
|
|
|
311,329
|
|
|
164,756
|
|
|
19,949
|
|
||||
Arbitrage trading account
|
744,859
|
|
|
434,470
|
|
|
306,547
|
|
|
3,842
|
|
||||
Total
|
$
|
14,504,794
|
|
|
$
|
745,799
|
|
|
$
|
13,735,041
|
|
|
$
|
23,954
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
29,453
|
|
|
$
|
29,444
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency
|
$
|
377,740
|
|
|
$
|
—
|
|
|
$
|
377,740
|
|
|
$
|
—
|
|
State and municipal
|
4,445,094
|
|
|
—
|
|
|
4,445,094
|
|
|
—
|
|
||||
Mortgage-backed securities
|
1,299,931
|
|
|
—
|
|
|
1,299,931
|
|
|
—
|
|
||||
Asset-backed securities
|
2,111,544
|
|
|
—
|
|
|
2,111,372
|
|
|
172
|
|
||||
Corporate
|
4,389,112
|
|
|
—
|
|
|
4,389,112
|
|
|
—
|
|
||||
Foreign government
|
848,497
|
|
|
—
|
|
|
848,497
|
|
|
—
|
|
||||
Total fixed maturity securities available for sale
|
13,471,918
|
|
|
—
|
|
|
13,471,746
|
|
|
172
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Common stocks
|
352,204
|
|
|
342,834
|
|
|
—
|
|
|
9,370
|
|
||||
Preferred stocks
|
224,443
|
|
|
—
|
|
|
213,600
|
|
|
10,843
|
|
||||
Total equity securities
|
576,647
|
|
|
342,834
|
|
|
213,600
|
|
|
20,213
|
|
||||
Arbitrage trading account
|
617,649
|
|
|
471,420
|
|
|
146,229
|
|
|
—
|
|
||||
Total
|
$
|
14,666,214
|
|
|
$
|
814,254
|
|
|
$
|
13,831,575
|
|
|
$
|
20,385
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Trading account securities sold but not yet purchased
|
$
|
64,358
|
|
|
$
|
64,358
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Gains (Losses) Included in:
|
||||||||||||||||||||||||||||||||||
(In thousands)
|
Beginning
Balance
|
|
Earnings (Losses)
|
|
Other
Comprehensive
Income (Loss)
|
|
Impairments
|
|
Purchases
|
|
(Sales)
|
|
Paydowns / Maturities
|
|
Transfers
|
|
Ending
Balance
|
||||||||||||||||||
In / (Out)
|
|||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
172
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
163
|
|
Total
|
172
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
163
|
|
|||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
9,370
|
|
|
(264
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,106
|
|
|||||||||
Preferred stocks
|
10,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,843
|
|
|||||||||
Total
|
20,213
|
|
|
(264
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,949
|
|
|||||||||
Arbitrage trading account
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
3,882
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,842
|
|
|||||||||
Total
|
$
|
20,385
|
|
|
$
|
(302
|
)
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
3,882
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Fixed maturities securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Asset-backed securities
|
$
|
183
|
|
|
$
|
3
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(48
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
172
|
|
Total
|
183
|
|
|
3
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
—
|
|
|
172
|
|
|||||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Common stocks
|
8,754
|
|
|
—
|
|
|
616
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,370
|
|
|||||||||
Preferred stocks
|
3,662
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
7,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,843
|
|
|||||||||
Total
|
12,416
|
|
|
8
|
|
|
616
|
|
|
—
|
|
|
7,173
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,213
|
|
|||||||||
Arbitrage trading account
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total
|
$
|
12,599
|
|
|
$
|
19
|
|
|
$
|
650
|
|
|
$
|
—
|
|
|
$
|
7,173
|
|
|
$
|
(56
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,385
|
|
|
March 31,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Net reserves at beginning of year
|
$
|
10,056,914
|
|
|
$
|
9,590,265
|
|
Net provision for losses and loss expenses:
|
|
|
|
||||
Claims occurring during the current year (1)
|
956,181
|
|
|
958,684
|
|
||
(Decrease) increase in estimates for claims occurring in prior years (2) (3)
|
(3,582
|
)
|
|
8,727
|
|
||
Loss reserve discount accretion
|
10,620
|
|
|
12,192
|
|
||
Total
|
963,219
|
|
|
979,603
|
|
||
Net payments for claims:
|
|
|
|
|
|
||
Current year
|
111,030
|
|
|
97,461
|
|
||
Prior year
|
810,709
|
|
|
773,571
|
|
||
Total
|
921,739
|
|
|
871,032
|
|
||
Foreign currency translation
|
2,501
|
|
|
23,204
|
|
||
Net reserves at end of period
|
10,100,895
|
|
|
9,722,040
|
|
||
Ceded reserve at end of period
|
1,684,000
|
|
|
1,502,284
|
|
||
Gross reserves at end of period
|
$
|
11,784,895
|
|
|
$
|
11,224,324
|
|
(1)
|
Claims occurring during the current year are net of loss reserve discounts of $
6,448,000
and $
5,761,000
for the
three months ended March 31, 2018
and
2017
, respectively.
|
(2)
|
The decrease or increase in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $
6,662,000
and increased by $
4,841,000
for the
three months ended March 31, 2018
and
2017
, 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
$12 million
and
$2 million
for the
three months ended March 31, 2018
and
2017
, respectively.
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
(In thousands)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
$
|
13,343,132
|
|
|
$
|
13,356,305
|
|
|
$
|
13,551,250
|
|
|
$
|
13,566,976
|
|
Equity securities
|
496,034
|
|
|
496,034
|
|
|
576,647
|
|
|
576,647
|
|
||||
Arbitrage trading account
|
744,859
|
|
|
744,859
|
|
|
617,649
|
|
|
617,649
|
|
||||
Loans receivable
|
75,902
|
|
|
78,238
|
|
|
79,684
|
|
|
82,047
|
|
||||
Cash and cash equivalents
|
956,603
|
|
|
956,603
|
|
|
950,471
|
|
|
950,471
|
|
||||
Trading account receivables from brokers and clearing organizations
|
26,667
|
|
|
26,667
|
|
|
189,280
|
|
|
189,280
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Due to broker
|
74,450
|
|
|
74,450
|
|
|
15,920
|
|
|
15,920
|
|
||||
Trading account securities sold but not yet purchased
|
29,453
|
|
|
29,453
|
|
|
64,358
|
|
|
64,358
|
|
||||
Subordinated debentures
|
897,426
|
|
|
929,948
|
|
|
728,218
|
|
|
769,060
|
|
||||
Senior notes and other debt
|
1,782,139
|
|
|
1,921,635
|
|
|
1,769,052
|
|
|
1,945,313
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
(In thousands)
|
2018
|
|
2017
|
||||
Written premiums:
|
|
|
|
||||
Direct
|
$
|
1,787,235
|
|
|
$
|
1,721,062
|
|
Assumed
|
192,187
|
|
|
215,145
|
|
||
Ceded
|
(314,084
|
)
|
|
(289,369
|
)
|
||
Total net premiums written
|
$
|
1,665,338
|
|
|
$
|
1,646,838
|
|
|
|
|
|
||||
Earned premiums:
|
|
|
|
||||
Direct
|
$
|
1,674,550
|
|
|
$
|
1,613,364
|
|
Assumed
|
188,866
|
|
|
208,626
|
|
||
Ceded
|
(296,008
|
)
|
|
(251,948
|
)
|
||
Total net premiums earned
|
$
|
1,567,408
|
|
|
$
|
1,570,042
|
|
|
|
|
|
||||
Ceded losses and loss expenses incurred
|
$
|
238,995
|
|
|
$
|
35,192
|
|
Ceded commissions earned
|
$
|
66,356
|
|
|
$
|
56,550
|
|
($ in thousands)
|
Units
|
|
Fair Value
|
|||
2018
|
4,174
|
|
|
$
|
290
|
|
2017
|
1,853
|
|
|
$
|
129
|
|
•
|
Insurance
- predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.
|
•
|
Reinsurance
- reinsurance business on a facultative and treaty basis, primarily in the United States, the United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South Africa.
|
|
Revenues
|
|
|
|
|
||||||||||||||||||
(In thousands)
|
Earned
Premiums
|
|
Investment
Income
|
|
Other
|
|
Total (1)
|
|
Pre-Tax
Income
(Loss)
|
|
Net Income
(Loss) to Common Stockholders
|
||||||||||||
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,432,337
|
|
|
$
|
135,862
|
|
|
$
|
18,968
|
|
|
$
|
1,587,167
|
|
|
$
|
229,028
|
|
|
$
|
181,626
|
|
Reinsurance
|
135,071
|
|
|
24,650
|
|
|
—
|
|
|
159,721
|
|
|
14,592
|
|
|
11,654
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
14,006
|
|
|
81,889
|
|
|
95,895
|
|
|
(81,094
|
)
|
|
(65,170
|
)
|
||||||
Net realized and unrealized gains on investments
|
—
|
|
|
—
|
|
|
48,464
|
|
|
48,464
|
|
|
48,464
|
|
|
38,286
|
|
||||||
Total
|
$
|
1,567,408
|
|
|
$
|
174,518
|
|
|
$
|
149,321
|
|
|
$
|
1,891,247
|
|
|
$
|
210,990
|
|
|
$
|
166,396
|
|
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Insurance
|
$
|
1,413,170
|
|
|
$
|
111,909
|
|
|
$
|
18,287
|
|
|
$
|
1,543,366
|
|
|
$
|
199,994
|
|
|
$
|
134,095
|
|
Reinsurance
|
156,872
|
|
|
24,778
|
|
|
—
|
|
|
181,650
|
|
|
4,594
|
|
|
3,099
|
|
||||||
Corporate, other and eliminations (2)
|
—
|
|
|
12,171
|
|
|
80,883
|
|
|
93,054
|
|
|
(72,639
|
)
|
|
(47,773
|
)
|
||||||
Net realized and unrealized gains on investments
|
—
|
|
|
—
|
|
|
52,348
|
|
|
52,348
|
|
|
52,348
|
|
|
34,026
|
|
||||||
Total
|
$
|
1,570,042
|
|
|
$
|
148,858
|
|
|
$
|
151,518
|
|
|
$
|
1,870,418
|
|
|
$
|
184,297
|
|
|
$
|
123,447
|
|
(In thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Insurance
|
$
|
19,322,526
|
|
|
$
|
19,263,193
|
|
Reinsurance
|
3,093,808
|
|
|
3,169,731
|
|
||
Corporate, other and eliminations
|
2,171,498
|
|
|
1,866,993
|
|
||
Consolidated
|
$
|
24,587,832
|
|
|
$
|
24,299,917
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|||||||
(In thousands)
|
2018
|
|
2017
|
||||
Insurance:
|
|
|
|
||||
Other liability
|
$
|
464,167
|
|
|
$
|
451,830
|
|
Workers’ compensation
|
365,948
|
|
|
361,136
|
|
||
Short-tail lines (1)
|
295,105
|
|
|
296,790
|
|
||
Commercial automobile
|
175,199
|
|
|
170,571
|
|
||
Professional liability
|
131,918
|
|
|
132,843
|
|
||
Total Insurance
|
1,432,337
|
|
|
1,413,170
|
|
||
|
|
|
|
||||
Reinsurance:
|
|
|
|
||||
Casualty
|
90,570
|
|
|
94,739
|
|
||
Property
|
44,501
|
|
|
62,133
|
|
||
Total Reinsurance
|
135,071
|
|
|
156,872
|
|
||
|
|
|
|
||||
Total
|
$
|
1,567,408
|
|
|
$
|
1,570,042
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(In thousands)
|
March 31, 2018
|
|
December 31, 2017
|
||||
Insurance
|
$
|
8,415,984
|
|
|
$
|
8,341,622
|
|
Reinsurance
|
1,684,911
|
|
|
1,715,292
|
|
||
Net reserves for losses and loss expenses
|
10,100,895
|
|
|
10,056,914
|
|
||
Ceded reserves for losses and loss expenses
|
1,684,000
|
|
|
1,613,494
|
|
||
Gross reserves for losses and loss expenses
|
$
|
11,784,895
|
|
|
$
|
11,670,408
|
|
(In thousands)
|
Reported Case
Reserves
|
|
Incurred But
Not Reported
|
|
Total
|
||||||
March 31, 2018
|
|
|
|
|
|
||||||
Other liability
|
$
|
1,289,211
|
|
|
$
|
2,235,130
|
|
|
$
|
3,524,341
|
|
Workers’ compensation (1)
|
1,561,486
|
|
|
1,242,754
|
|
|
2,804,239
|
|
|||
Professional liability
|
294,457
|
|
|
619,821
|
|
|
914,277
|
|
|||
Commercial automobile
|
355,785
|
|
|
277,551
|
|
|
633,336
|
|
|||
Short-tail lines (2)
|
263,793
|
|
|
275,997
|
|
|
539,790
|
|
|||
Total Insurance
|
3,764,732
|
|
|
4,651,252
|
|
|
8,415,984
|
|
|||
Reinsurance (1)
|
908,358
|
|
|
776,553
|
|
|
1,684,911
|
|
|||
Total
|
$
|
4,673,090
|
|
|
$
|
5,427,805
|
|
|
$
|
10,100,895
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
|
|
|
|
||||||
Other liability
|
$
|
1,261,957
|
|
|
$
|
2,189,596
|
|
|
$
|
3,451,553
|
|
Workers’ compensation (1)
|
1,543,379
|
|
|
1,242,501
|
|
|
2,785,880
|
|
|||
Professional liability
|
295,269
|
|
|
618,107
|
|
|
913,376
|
|
|||
Commercial automobile
|
364,900
|
|
|
269,942
|
|
|
634,842
|
|
|||
Short-tail lines (2)
|
297,777
|
|
|
258,194
|
|
|
555,971
|
|
|||
Total Insurance
|
3,763,282
|
|
|
4,578,340
|
|
|
8,341,622
|
|
|||
Reinsurance (1)
|
919,497
|
|
|
795,795
|
|
|
1,715,292
|
|
|||
Total
|
$
|
4,682,779
|
|
|
$
|
5,374,135
|
|
|
$
|
10,056,914
|
|
(In thousands)
|
2018
|
|
2017
|
||||
Net decrease (increase) in prior year loss reserves
|
$
|
3,582
|
|
|
$
|
(8,727
|
)
|
Increase in prior year earned premiums
|
8,622
|
|
|
11,173
|
|
||
Net favorable prior year development
|
$
|
12,204
|
|
|
$
|
2,446
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss
|
|||||
Unrealized loss less than 20% of amortized cost
|
1,018
|
|
|
$
|
6,900,270
|
|
|
$
|
129,939
|
|
Unrealized loss of 20% or greater of amortized cost:
|
|
|
|
|
|
|||||
Twelve months and longer
|
3
|
|
|
167
|
|
|
107
|
|
||
Total
|
1,021
|
|
|
$
|
6,900,437
|
|
|
$
|
130,046
|
|
($ in thousands)
|
Number of
Securities
|
|
Aggregate
Fair Value
|
|
Gross Unrealized
Loss |
|||||
Corporate
|
10
|
|
|
$
|
86,345
|
|
|
$
|
4,429
|
|
Foreign government
|
8
|
|
|
$
|
30,997
|
|
|
$
|
739
|
|
Asset-backed securities
|
3
|
|
|
370
|
|
|
140
|
|
||
Mortgage-backed securities
|
5
|
|
|
4,532
|
|
|
117
|
|
||
State and municipal
|
1
|
|
|
3,641
|
|
|
3
|
|
||
Total
|
27
|
|
|
$
|
125,885
|
|
|
$
|
5,428
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Pricing source:
|
|
|
|
|||
Independent pricing services
|
$
|
13,081,232
|
|
|
98.6
|
%
|
Syndicate manager
|
41,523
|
|
|
0.3
|
|
|
Directly by the Company based on:
|
|
|
|
|||
Observable data
|
140,983
|
|
|
1.1
|
|
|
Cash flow model
|
163
|
|
|
—
|
|
|
Total
|
$
|
13,263,901
|
|
|
100.0
|
%
|
($ in thousands)
|
2018
|
|
2017
|
||||
Insurance:
|
|
|
|
||||
Gross premiums written
|
$
|
1,837,971
|
|
|
$
|
1,769,405
|
|
Net premiums written
|
1,543,052
|
|
|
1,494,135
|
|
||
Net premiums earned
|
1,432,337
|
|
|
1,413,170
|
|
||
Loss ratio
|
60.6
|
%
|
|
60.9
|
%
|
||
Expense ratio
|
32.8
|
%
|
|
32.9
|
%
|
||
GAAP combined ratio
|
93.4
|
%
|
|
93.8
|
%
|
||
Reinsurance:
|
|
|
|
||||
Gross premiums written
|
$
|
141,450
|
|
|
$
|
166,802
|
|
Net premiums written
|
122,286
|
|
|
152,703
|
|
||
Net premiums earned
|
135,071
|
|
|
156,872
|
|
||
Loss ratio
|
69.9
|
%
|
|
75.9
|
%
|
||
Expense ratio
|
37.5
|
%
|
|
37.0
|
%
|
||
GAAP combined ratio
|
107.4
|
%
|
|
112.9
|
%
|
||
Consolidated:
|
|
|
|
||||
Gross premiums written
|
$
|
1,979,421
|
|
|
$
|
1,936,207
|
|
Net premiums written
|
1,665,338
|
|
|
1,646,838
|
|
||
Net premiums earned
|
1,567,408
|
|
|
1,570,042
|
|
||
Loss ratio
|
61.4
|
%
|
|
62.4
|
%
|
||
Expense ratio
|
33.2
|
%
|
|
33.3
|
%
|
||
GAAP combined ratio
|
94.6
|
%
|
|
95.7
|
%
|
(In thousands, except per share data)
|
2018
|
|
2017
|
||||
Net income to common stockholders
|
$
|
166,396
|
|
|
$
|
123,447
|
|
Weighted average diluted shares
|
128,125
|
|
|
128,453
|
|
||
Net income per diluted share
|
$
|
1.30
|
|
|
$
|
0.96
|
|
•
|
Insurance - gross premiums increased 4% to $1,838 million in
2018
from $1,769 million in
2017
. Gross premiums increased $36 million (7%) for other liability, $20 million (11%) for professional liability, $16 million (4%) for short-tail lines, and $12 million (5%) for commercial auto and decreased $15 million (3%) for workers' compensation.
|
•
|
Reinsurance - gross premiums decreased 15% to $142 million in
2018
from $167 million in
2017
. Gross premiums decreased $14 million (22%) for property lines and $11 million (11%) for casualty lines.
|
|
Amount
|
|
Average Annualized
Yield
|
||||||||||
($ in thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable
|
$
|
123,246
|
|
|
$
|
112,346
|
|
|
3.5
|
%
|
|
3.2
|
%
|
Investment funds
|
40,354
|
|
|
26,649
|
|
|
13.7
|
|
|
8.5
|
|
||
Arbitrage trading account
|
5,191
|
|
|
6,360
|
|
|
3.3
|
|
|
5.4
|
|
||
Real estate
|
6,568
|
|
|
4,566
|
|
|
1.6
|
|
|
1.5
|
|
||
Equity securities
|
646
|
|
|
639
|
|
|
1.2
|
|
|
1.2
|
|
||
Gross investment income
|
176,005
|
|
|
150,560
|
|
|
3.9
|
|
|
3.5
|
|
||
Investment expenses
|
(1,487
|
)
|
|
(1,702
|
)
|
|
—
|
|
|
—
|
|
||
Total
|
$
|
174,518
|
|
|
$
|
148,858
|
|
|
3.9
|
%
|
|
3.5
|
%
|
•
|
Insurance - The loss ratio was 60.6% in 2018 and 60.9% in 2017. Catastrophe losses were $7 million in 2018 compared with $14 million in 2017. Favorable prior year reserve development was $16 million in 2018 and $26 million in 2017. The loss ratio excluding catastrophe losses and prior year reserve development decreased 0.5 points to 61.3% in 2018 from 61.8% in 2017.
|
•
|
Reinsurance - The loss ratio of 69.9% in 2018 was 6 points lower than the loss ratio of 75.9% in 2017. Catastrophe losses were $0.3 million in 2018 compared with $0.2 million in 2017. Adverse prior year reserve development was $4 million in 2018 and $24 million in 2017. The 2017 adverse development was largely due to the impact of the change in the Ogden discount rate in the U.K. and adverse development related to U.S. facultative casualty excess of loss business. The loss ratio excluding catastrophe losses and prior year reserve development increased 5.9 points to 66.6% in 2018 from 60.7% in 2017.
|
($ in thousands)
|
2018
|
|
2017
|
||||
Policy acquisition and insurance operating expenses
|
$
|
520,231
|
|
|
$
|
523,409
|
|
Insurance service expenses
|
32,712
|
|
|
29,933
|
|
||
Net foreign currency losses
|
13,484
|
|
|
5,508
|
|
||
Other costs and expenses
|
44,012
|
|
|
44,850
|
|
||
Total
|
$
|
610,439
|
|
|
$
|
603,700
|
|
($ in thousands)
|
Carrying
Value
|
|
Percent
of Total
|
|||
Fixed maturity securities:
|
|
|
|
|||
U.S. government and government agencies
|
$
|
479,909
|
|
|
2.6
|
%
|
State and municipal:
|
|
|
|
|||
Special revenue
|
2,676,724
|
|
|
14.4
|
|
|
Pre-refunded (1)
|
467,758
|
|
|
2.5
|
|
|
State general obligation
|
450,878
|
|
|
2.4
|
|
|
Local general obligation
|
408,745
|
|
|
2.2
|
|
|
Corporate backed
|
373,878
|
|
|
2.0
|
|
|
Total state and municipal
|
4,377,983
|
|
|
23.5
|
|
|
Mortgage-backed securities:
|
|
|
|
|||
Agency
|
827,309
|
|
|
4.4
|
|
|
Commercial
|
335,284
|
|
|
1.8
|
|
|
Residential-Prime
|
218,183
|
|
|
1.2
|
|
|
Residential-Alt A
|
18,993
|
|
|
0.1
|
|
|
Total mortgage-backed securities
|
1,399,769
|
|
|
7.5
|
|
|
Asset-backed securities
|
2,101,691
|
|
|
11.3
|
|
|
Corporate:
|
|
|
|
|||
Industrial
|
2,374,121
|
|
|
12.8
|
|
|
Financial
|
1,418,598
|
|
|
7.6
|
|
|
Utilities
|
274,532
|
|
|
1.5
|
|
|
Other
|
43,450
|
|
|
0.2
|
|
|
Total corporate
|
4,110,701
|
|
|
22.1
|
|
|
Foreign government and foreign government agencies
|
873,079
|
|
|
4.7
|
|
|
Total fixed maturity securities
|
13,343,132
|
|
|
71.7
|
|
|
Equity securities:
|
|
|
|
|||
Common stocks
|
320,435
|
|
|
1.7
|
|
|
Preferred stocks
|
175,599
|
|
|
0.9
|
|
|
Total equity securities
|
496,034
|
|
|
2.6
|
|
|
Real estate
|
1,833,337
|
|
|
9.9
|
|
|
Investment funds
|
1,161,127
|
|
|
6.2
|
|
|
Cash and cash equivalents
|
956,603
|
|
|
5.1
|
|
|
Arbitrage trading account
|
744,859
|
|
|
4.0
|
|
|
Loans receivable
|
75,902
|
|
|
0.5
|
|
|
Total investments
|
$
|
18,610,994
|
|
|
100.0
|
%
|
|
Total number
of shares purchased |
|
Average price
paid per share |
|
Total number of shares purchased
as part of publicly announced plans or programs |
|
Maximum number of
shares that may yet be purchased under the plans or programs |
|||||
January 2018
|
101,000
|
|
|
$
|
67.31
|
|
|
101,000
|
|
|
9,167,997
|
|
February 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
9,167,997
|
|
|
March 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
9,167,997
|
|
Number
|
|
|
(
10.1
)
|
|
Form of 2018 Performance Unit Award Agreement under the W. R. Berkley Corporation 2014 Long-Term 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:
|
May 7, 2018
|
/s/ W. Robert Berkley, Jr.
|
|
|
W. Robert Berkley, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
May 7, 2018
|
/s/ Richard M. Baio
|
|
|
Richard M. Baio
|
|
|
Senior Vice President - Chief Financial Officer and Treasurer
|
(A)
|
underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission;
|
(B)
|
operating unit or other business projections and forecasts;
|
(C)
|
Client lists, brokers lists and price sensitive information;
|
(D)
|
technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets;
|
(E)
|
remuneration and personnel details;
|
(F)
|
planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels;
|
(G)
|
computer passwords, the contents of any databases, tables, know how documents or materials;
|
(H)
|
commissions, commission charges, pricing policies and all information about research and development; and
|
(ii)
|
This Agreement shall not be effective unless the Participant physically signs an original Agreement.
|
(i)
|
Section 9(e) 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.
|
|
The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable.
|
(i)
|
Section 6 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)
|
In Section 5(d), the words “or Solicitation” shall be added, in each instance after the phrase “Competitive Action”;
|
(ii)
|
In Section 5(d), in the second sentence, solely with respect to Solicitation the word “second” shall be replaced with “first”;
|
(iii)
|
In Section 9(j)(v), subsections (C) and (D) shall be deleted and subsection (E) shall be renumbered as subsection (C); and
|
(iv)
|
In Section 9(j), the following new subsection (xvii) shall be added:
|
(i)
|
In second sentence of Section 5(d),the phrase “that, in the Committee’s sole and absolute discretion, reflects the seriousness of the Competitive Action and/or Misconduct; the maximum amount that the Company may demand from the Participant is” shall be added after the words “an amount” ;
|
(ii)
|
In Section 5(d), in the last sentence, the following phrase shall be deleted:
|
(iii)
|
Section 9(e) shall be deleted in its entirety and replaced with the following:
|
(iv)
|
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 Participant’s employment or the date that the Participant gives or receives notice of termination of the Participant’s employment for any reason, any unsettled Performance Units shall lapse and be forfeited (except as set out in Section 5(b) of this Agreement and subject to the forfeiture provisions in paragraph 3 below) and the Participant shall have no further rights with respect to any such unsettled Performance Units.
|
2.
|
RESTRICTIVE COVENANTS
|
2.1
|
The Participant covenants with the Company and the Group that the Participant 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 Participant is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if:
|
(b)
|
the Participant is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business;
|
(c)
|
the Participant 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 Participant 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 or Prospective Client from the Company or any Group Company in relation to or for the benefit of a Competing Business;
|
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.
|
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 Participant 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.
|
2.2
|
The Participant gives the covenants above to the Company as trustee for itself (and any company forming part of the Group).
|
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.
|
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.
|
2.5
|
If, during the Participant’s employment or any period during which these restrictions apply, any person, firm, company or entity offers the Participant 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.
|
2.6
|
The period of any restraint on the Participant’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 Participant pursuant to his or her service agreement with the Company or any Group Company.
|
2.7
|
If the Participant breaches any of the covenants contained in clauses 2.1.1 to 2.1.6, then any unsettled Performance Units will lapse with immediate effect and the Participant will be obliged to return all amounts paid to the Participant in respect of the Performance Units within the Restricted Period to the Company within 14 days of being notified by the Company of its discovery of the breach.
|
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 Participant (or any person reporting to the Participant) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Participant has had Confidential Information during the course of his or her employment.
|
“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 Participant 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 Participant (or any person reporting to the Participant) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Participant has had Confidential Information during the course of Participant’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 Participant).
|
“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 Participant was directly or indirectly materially concerned or involved or had personal knowledge in the course of Participant’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 two years following the Settlemant Date.
|
“
Termination Date”
|
means the date on which the Participant’s employment or engagement with the Company terminates for any reason.
|
3.
|
CLAWBACK
|
3.1
|
If at any time under the terms of this Agreement the Committee becomes aware of any material wrongdoing, negligence or misconduct on the part of the Participant that would have entitled the Company to terminate the Participant's employment with or without notice for Cause, and (x) if such material wrongdoing, negligence or misconduct occurred prior to the Settlement Date, all Performance Units will lapse with immediate effect or (y) if such material wrongdoing, negligence or misconduct occurred on or after the Settlement Date or occurred prior to the Settlement Date but was not discovered until after the Settlement Date, the Company will be entitled, in its absolute discretion, to recover from the Participant up to 100% of the amount paid on the Settlement Date to the Participant in respect of the Performance Units (which have been settled within the 2 years prior to such determination by the Committee) 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 Performance Units granted to the Participant 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 Participant worked;
|
b.
|
the Participant having caused harm to the reputation of the Company or the Group;
|
c.
|
the Participant 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 Participant’s actions having amounted to gross misconduct, incompetence or negligence.
|
3.4
|
The Participant 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 Participant 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 Participant and the Participant 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 Participant in connection with or affecting the business or affairs of the Company or any member of the Group;
|
b.
|
the Participant being convicted of any arrestable offence other than an offence under road traffic legislation in the UK; or
|
c.
|
the Participant 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 Participant is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if:
|
(ii)
|
the Participant is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business;
|
(iii)
|
the Participant 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 Participant 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 Participant 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 Participant (or any person reporting to the Participant) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Participant 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 5(f).
|
“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”
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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.
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“directly or indirectly”
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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.
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“Group”
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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.
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“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 Participant 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.
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“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.
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“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 Participant (or any person reporting to the Participant) had Material Dealings in relation to Relevant Business; or
ii)
about whom or which the Participant has had Confidential Information during the course of Participant’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 Participant).
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“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 Participant was directly or indirectly materially concerned or involved or had personal knowledge in the course of Participant’s duties during the Relevant Period.
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“Relevant Period”
|
means (1) during employment, the twelve month period immediately prior to the action or activity that may be in breach of clauses A to D of Section 5(f) and (2) after termination of employment, the twelve month period immediately prior to the Termination Date.
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“
Termination Date”
|
means the date on which the Participant’s employment or engagement with the Company terminates for any reason.
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/s/ W. Robert Berkley, Jr.
|
|
W. Robert Berkley, Jr.
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|
President and
Chief Executive Officer
|
|
/s/ Richard M. Baio
|
|
Richard M. Baio
|
|
Senior Vice President — Chief Financial Officer and Treasurer
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(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ W. Robert Berkley, Jr.
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W. Robert Berkley, Jr.
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President and Chief Executive Officer
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/s/ Richard M. Baio
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Richard M. Baio
|
Senior Vice President — Chief Financial Officer and Treasurer
|