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What changed in W. R. Berkley Corporation's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of W. R. Berkley Corporation's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+359 added−357 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in W. R. Berkley Corporation's 2023 10-K

359 paragraphs added · 357 removed · 299 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+30 added−21 removed143 unchanged
Biggest changeW / R / B Underwriting provides a broad range of insurance products to the Lloyd's marketplace, with a concentration in specialist classes of business including property, professional indemnity and financial lines. 10 The following table sets forth the percentage of gross premiums written by each Insurance business: Year Ended December 31, 2022 2021 2020 Acadia Insurance 5.2% 5.5% 6.0% Admiral Insurance 6.2 5.9 5.6 Berkley Accident and Health 5.1 5.0 5.2 Berkley Agribusiness 0.8 0.8 1.2 Berkley Alliance Managers 2.7 2.8 2.8 Berkley Aspire 0.9 0.7 0.5 Berkley Asset Protection 1.0 0.8 0.8 Berkley Canada 1.2 1.2 1.1 Berkley Construction Solutions 0.4 — — Berkley Custom Insurance 3.1 3.2 3.5 Berkley Cyber Risk Solutions 0.9 0.8 0.5 Berkley E&S Solutions — — — Berkley Enterprise Risk Solutions — — — Berkley Entertainment 1.8 1.8 2.1 Berkley Environmental 5.6 5.2 5.4 Berkley Financial Specialists 0.6 0.6 0.8 Berkley Fire & Marine 0.7 0.8 0.8 Berkley Healthcare 1.8 1.8 1.7 Berkley Human Services 1.1 1.0 1.0 Berkley Industrial Comp 0.7 0.8 0.8 Berkley Insurance Asia 0.8 0.8 0.7 Berkley Insurance Australia 1.7 1.7 1.4 Berkley Latinoamérica 2.9 2.7 2.8 Berkley Life Sciences 0.5 0.5 0.5 Berkley Luxury Group 0.8 0.9 1.1 Berkley Management Protection 0.1 — — Berkley Mid-Atlantic Group 1.0 1.3 1.2 Berkley Net Underwriters 2.2 2.1 2.2 Berkley North Pacific 0.7 0.7 0.7 Berkley Offshore Underwriting Managers 1.4 1.5 1.5 Berkley Oil & Gas 3.5 3.0 3.2 Berkley One 1.8 1.2 0.7 Berkley Product Protection 0.3 0.4 0.4 Berkley Professional Liability 5.8 7.5 4.8 Berkley Program Specialists 1.7 2.0 1.7 Berkley Public Entity 0.6 0.6 0.5 Berkley Risk 0.3 0.2 0.3 Berkley Select 1.8 2.0 2.4 Berkley Small Business Solutions — — — Berkley Southeast 2.2 2.3 2.3 Berkley Surety 1.1 1.1 1.2 Berkley Technology Underwriters 0.6 0.6 0.7 Carolina Casualty 2.1 1.7 0.9 Continental Western Group 2.4 2.5 2.8 Gemini Transportation 3.1 3.0 3.4 Intrepid Direct 1.2 1.1 0.9 Key Risk 2.2 2.5 2.5 Nautilus Insurance Group 4.7 4.5 4.9 Preferred Employers Insurance 1.2 1.5 1.9 Union Standard 1.5 1.7 2.0 Vela Insurance Services 2.5 2.6 2.6 Verus Specialty Insurance 0.8 0.8 0.7 W R B Europe 1.0 1.1 1.0 W/R/B Underwriting 3.6 4.0 4.3 Other 2.1 1.2 2.0 Total 100.0% 100.0% 100.0% 11 The following table sets forth percentages of gross premiums written, by line, by our Insurance operations: Year Ended December 31, 2022 2021 2020 Other liability 37.0% 35.6% 36.0% Short-tail lines (1) 23.2 22.2 23.3 Professional liability 15.5 17.3 14.6 Workers' compensation 11.7 12.4 14.3 Commercial auto 12.6 12.5 11.8 Total 100.0% 100.0% 100.0% ___________________ (1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.
Biggest changeW / R / B Underwriting provides a broad range of insurance products to the Lloyd's marketplace, with a concentration in specialist classes of business including property, professional indemnity and financial lines. 12 The following table sets forth the percentage of gross premiums written by each Insurance business: Year Ended December 31, 2023 2022 2021 Acadia Insurance 5.3% 5.2% 5.5% Admiral Insurance 7.0 6.2 5.9 Berkley Accident and Health 5.3 5.1 5.0 Berkley Agribusiness 0.8 0.8 0.8 Berkley Alliance Managers 2.3 2.7 2.8 Berkley Aspire 1.2 0.9 0.7 Berkley Asset Protection 0.9 1.0 0.8 Berkley Canada 1.0 1.2 1.2 Berkley Construction Solutions 0.6 0.4 — Berkley Custom Insurance 2.9 3.1 3.2 Berkley Cyber Risk Solutions 0.8 0.9 0.8 Berkley E&S Solutions 0.1 — — Berkley Enterprise Risk Solutions 0.1 — — Berkley Entertainment 1.7 1.8 1.8 Berkley Environmental 6.6 5.6 5.2 Berkley Financial Specialists 0.6 0.6 0.6 Berkley Fire & Marine 0.9 0.7 0.8 Berkley Healthcare 1.5 1.8 1.8 Berkley Human Services 1.3 1.1 1.0 Berkley Industrial Comp 0.7 0.7 0.8 Berkley Insurance Asia 0.8 0.8 0.8 Berkley Insurance Australia 1.6 1.7 1.7 Berkley Latinoamérica 3.2 2.9 2.7 Berkley Life Sciences 0.5 0.5 0.5 Berkley Luxury Group 0.7 0.8 0.9 Berkley Management Protection 0.2 0.1 — Berkley Mid-Atlantic Group 0.9 1.0 1.3 Berkley Net Underwriters 1.9 2.2 2.1 Berkley North Pacific 0.7 0.7 0.7 Berkley Offshore Underwriting Managers 1.5 1.4 1.5 Berkley Oil & Gas 3.0 3.5 3.0 Berkley One 2.6 1.8 1.2 Berkley Product Protection 0.3 0.3 0.4 Berkley Professional Liability 3.8 5.8 7.5 Berkley Program Specialists 0.9 1.7 2.0 Berkley Public Entity 0.7 0.6 0.6 Berkley Risk 0.3 0.3 0.2 Berkley Select 1.8 1.8 2.0 Berkley Small Business Solutions 0.2 — — Berkley Southeast 2.3 2.2 2.3 Berkley Specialty Excess 0.2 — — Berkley Surety 1.1 1.1 1.1 Berkley Technology Underwriters 0.6 0.6 0.6 Carolina Casualty 2.1 2.1 1.7 Continental Western Group 2.6 2.4 2.5 Gemini Transportation 3.0 3.1 3.0 Intrepid Direct 1.5 1.2 1.1 Key Risk 2.1 2.2 2.5 Nautilus Insurance Group 4.7 4.7 4.5 Preferred Employers Insurance 1.0 1.2 1.5 Union Standard 1.3 1.5 1.7 Vela Insurance Services 2.6 2.5 2.6 Verus Specialty Insurance 1.0 0.8 0.8 W R B Europe 1.1 1.0 1.1 W/R/B Underwriting 3.9 3.6 4.0 Other 1.7 2.1 2.1 1.2 Total 100.0% 100.0% 100.0% 13 The following table sets forth percentages of gross premiums written, by line, by our Insurance operations: Year Ended December 31, 2023 2022 2021 Other liability 38.4% 37.0% 35.6% Short-tail lines (1) 25.1 23.2 22.2 Professional liability 13.0 15.5 17.3 Auto 12.7 12.6 12.5 Workers' compensation 10.8 11.7 12.4 Total 100.0% 100.0% 100.0% ___________________ (1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery, high net worth homeowners and other lines.
Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty insurance business: • Insurance - Our Insurance business underwrite 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 Asia, Australia, Canada, Continental Europe, Mexico, Scandinavia, South America and the United Kingdom. • Reinsurance & Monoline Excess - Our Reinsurance businesses provide facultative and treaty reinsurance in the United States, as well as in the Asia Pacific region, Australia, Continental Europe, South Africa and the United Kingdom.
Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty insurance business: • Insurance - Our Insurance businesses underwrite 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 Asia, Australia, Canada, Continental Europe, Mexico, Scandinavia, South America and the United Kingdom. • Reinsurance & Monoline Excess - Our Reinsurance businesses provide facultative and treaty reinsurance in the United States, as well as in the Asia Pacific region, Australia, Continental Europe, South Africa and the United Kingdom.
TRIPRA is applicable to almost all commercial lines of property and casualty insurance but excludes commercial auto, burglary and theft, surety, professional liability and farm owners' multi-peril insurance. Insurers with direct commercial property and casualty insurance exposure in the United States are required to participate in the program and make available coverage for certified acts of terrorism.
TRIPRA is applicable to almost all commercial lines of property and casualty insurance but excludes auto, burglary and theft, surety, professional liability and farm owners' multi-peril insurance. Insurers with direct commercial property and casualty insurance exposure in the United States are required to participate in the program and make available coverage for certified acts of terrorism.
Berkley E&S Solutions provides general liability excess and surplus lines coverages for mid-market U.S. companies with generally hard-to-place, specialized risks that involve moderate to high degrees of hazard and require tailored terms, utilizing self-insurance retentions. The distribution of products is highly limited to a small number of individually appointed wholesale brokers.
Berkley E&S Solutions provides general liability excess and surplus lines coverages for mid-market U.S. companies with generally hard-to-place, specialized risks that involve moderate to high degrees of hazard and require tailored terms, primarily utilizing self-insurance retentions. The distribution of products is highly limited to a small number of individually appointed wholesale brokers.
Berkley Enterprise Risk Solutions provides custom workers' compensation programs to large, motivated employers operating in a broad range of industries. Loss sensitive and/or guaranteed cost programs are offered to employers with exposure predominately in California. Berkley Entertainment underwrites property casualty insurance products, both on an admitted and non-admitted basis, for clients in the entertainment industry and sports-related organizations.
Berkley Enterprise Risk Solutions provides custom workers' compensation programs to large employers operating in a broad range of industries. Loss sensitive and/or guaranteed cost programs are offered to employers with exposure predominately in California. Berkley Entertainment underwrites property casualty insurance products, both on an admitted and non-admitted basis, for clients in the entertainment industry and sports-related organizations.
In November 2019, the International Association of Insurance Supervisors (“IAIS”), an international standard setter, adopted a global framework for the supervision of internationally active insurance groups, as discussed below under “International Regulation.” This framework includes a risk-based, group-wide global insurance capital standard (“ICS”), which is undergoing a five-year monitoring period that started in January 2020.
In November 2019, the International Association of Insurance Supervisors (“IAIS”), an international standard setter, adopted a global framework for the supervision of internationally active insurance groups (“IAIGs”), as discussed below under “International Regulation.” This framework includes a risk-based, group-wide global insurance capital standard (“ICS”), which is undergoing a five-year monitoring period that started in January 2020.
Under the ORSA Model Act, as enacted by the states, we are required to: • regularly, no less than annually, conduct an ORSA to assess the adequacy of our risk management framework, and current and estimated projected future solvency position; • internally document the process and results of the assessment; and • provide an ORSA Report annually to the State of Delaware's Insurance Commissioner.
Under the ORSA Model Act, as enacted by the states, we are required to: • regularly, no less than annually, conduct an Own Risk and Solvency Assessment to assess the adequacy of our risk management framework, and current and estimated projected future solvency position; • internally document the process and results of the assessment; and • provide an ORSA Report annually to the State of Delaware's Insurance Commissioner.
In addition, some states require insurers to 19 participate in reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific mechanism in the applicable state. Dividends .
In addition, some states require insurers to participate in reinsurance pools for claims that exceed specified amounts. Our participation in these mandatory shared market or pooling mechanisms generally is related to the amount of our direct writings for the type of coverage written by the specific mechanism in the applicable state. Dividends .
Trade Representative to enter into international agreements of mutual recognition regarding the prudential regulation of insurance or reinsurance. The U.S. and the European Union ("EU") signed such a covered agreement (the "EU Covered Agreement") in September 2017. The EU Covered Agreement addresses three areas of prudential supervision: reinsurance, group supervision and the exchange of information between the U.S. and EU.
Trade Representative to enter into international agreements of mutual recognition regarding the prudential regulation of insurance or reinsurance. The U.S. and the European Union ("EU") signed such a covered agreement (the "EU Covered Agreement") in September 2017, which addresses three areas of prudential supervision: reinsurance, group supervision and the exchange of information between the U.S. and EU.
The Economic Growth, Regulatory Relief and Consumer Protection Act addresses the roles played by federal regulators at international insurance standard-setting forums, and it directs the Director of the FIO and the Board of Governors of the Federal Reserve to support increased transparency at international standard-setting regulatory forums (e.g., the IAIS).
The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 addresses the roles played by federal regulators at international insurance standard-setting forums, and it directs the Director of the FIO and the Board of Governors of the Federal Reserve to support increased transparency at international standard-setting regulatory forums (e.g., the IAIS).
In November 2019, the IAIS formally adopted a global framework for the supervision of internationally active insurance groups (“IAIGs”), which is referred to as the Common Framework for the Supervision of Internationally Active Insurance Groups, or “ComFrame.” ComFrame is intended to provide a framework of basic standards for IAIGs and a process for supervisors to cooperate in the supervision of IAIGs.
In November 2019, the IAIS formally adopted a global framework for the supervision of IAIGs, which is referred to as the Common Framework for the Supervision of Internationally Active Insurance Groups, or “ComFrame.” ComFrame is intended to provide a framework of basic standards for IAIGs and a process for supervisors to cooperate in the supervision of IAIGs.
Well-capitalized new entrants to the property and casualty insurance and reinsurance industries, or existing competitors that receive substantial infusions of capital, provide increasing competition, which may 23 adversely impact our business and profitability.
Well-capitalized new entrants to the property and casualty insurance and reinsurance industries, or existing competitors that receive substantial infusions of capital, provide increasing competition, which may adversely impact our business and profitability.
Aggregate Bond Index 2.7 % 2.3 % 2.8 % S&P 500 ® Index 1.3 1.8 1.8 The percentages of the fixed maturity portfolio categorized by contractual maturity, based on fair value, on the dates indicated, are set forth below.
Aggregate Bond Index 3.3 % 2.7 % 2.3 % S&P 500 ® Index 2.0 1.3 1.8 The percentages of the fixed maturity portfolio categorized by contractual maturity, based on fair value, on the dates indicated, are set forth below.
Furthermore, our businesses are overseen by senior corporate business managers and senior corporate functional managers, including actuarial, claims, underwriting, compliance and finance, providing a governance oversight structure that makes it easier to identify such issues.
Furthermore, our businesses are overseen by senior corporate business managers and senior corporate functional managers, including actuarial, underwriting, compliance and finance, providing a governance oversight structure that makes it easier to identify such issues.
Likewise, several states (or underwriting organizations of which our insurance subsidiaries are required to be members) have limited assessment authority with regard to deficits in certain lines of business.
Likewise, several states (or underwriting 21 organizations of which our insurance subsidiaries are required to be members) have limited assessment authority with regard to deficits in certain lines of business.
It has a diversified product and service portfolio serving a range of clients from small employers, health care organizations, and membership groups to Fortune 500 companies. 7 Berkley Agribusiness offers insurance for larger commercial risks across the United States involved in the supply, storage, handling, processing and distribution of commodities related to the agriculture and food industries.
It has a diversified product and service portfolio serving a range of clients from small employers, health care organizations, and membership groups to Fortune 500 companies. 8 Berkley Agribusiness offers insurance for larger commercial risks across the United States involved in the supply, storage, handling, processing and distribution of commodities related to the agriculture and food industries.
Generally, our subsidiaries must satisfy local regulatory requirements. While each country imposes licensing, solvency, auditing and financial reporting requirements, the type and extent of the requirements differ substantially.
Generally, our subsidiaries must satisfy local regulatory 25 requirements. While each country imposes licensing, solvency, auditing and financial reporting requirements, the type and extent of the requirements differ substantially.
Our twenty-five insurance company subsidiaries rated by Fitch Ratings ("Fitch") have insurer financial strength ratings of AA- (the fourth highest rating out of twenty-seven possible ratings). 6 The following sections describe our reporting segments and their businesses in greater detail. These businesses underwrite on behalf of one or more affiliated insurance companies within the group.
Our twenty-five insurance company subsidiaries rated by Fitch Ratings ("Fitch") have insurer financial strength ratings of AA- (the fourth highest rating out of twenty-seven possible ratings). 7 The following sections describe our reporting segments and their businesses in greater detail. These businesses underwrite on behalf of one or more affiliated insurance companies within the group.
Berkley Latinoamérica provides property, casualty, automobile, surety, group life and workers' compensation products and services in its operating territories of Argentina, Brazil, the Caribbean, Colombia, Mexico and Uruguay. Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a global basis, including both primary and excess product liability coverages.
Berkley Latinoamérica provides property, casualty, auto, surety, group life and workers' compensation products and services in its operating territories of Argentina, Brazil, the Caribbean, Colombia, Mexico and Uruguay. Berkley Life Sciences offers a comprehensive spectrum of property casualty products to the life sciences industry on a global basis, including both primary and excess product liability coverages.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2022), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates permitted by the Department of Insurance of the State of Delaware.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2023), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates permitted by the Department of Insurance of the State of Delaware.
Of this number, our subsidiaries employed 8,049 individuals and the remaining individuals were employed at the parent company. We believe that our people are our greatest asset and that our corporate culture is the most important intangible driver of long-term value creation for our Company and the highest priority for pursuing long-term risk-adjusted returns and growth in stockholder value.
Of this number, our subsidiaries employed 8,194 individuals and the remaining individuals were employed at the parent company. We believe that our people are our greatest asset and that our corporate culture is the most important intangible driver of long-term value creation for our Company and the highest priority for pursuing long-term risk-adjusted returns and growth in stockholder value.
On September 30, 2022, the FIO reported that it did not recommend taking any preemption action as a result of inconsistency between the Covered Agreements and state credit for reinsurance laws, although it is still monitoring state measures implementing the NAIC’s revisions to the Credit for Reinsurance Model Law.
On September 30, 2023, the FIO reported that it did not recommend taking any preemption action as a result of inconsistency between the Covered Agreements and state credit for reinsurance laws, although it is still monitoring state measures implementing the NAIC’s revisions to the Credit for Reinsurance Model Law.
The Cybersecurity Model Law imposes significant regulatory burdens intended to protect the confidentiality, integrity and availability of information systems. As of December 31, 2022, the Cybersecurity Model Law, or a form thereof, had been adopted by several states, including three of our U.S. insurance subsidiaries’ domiciliary states.
The Cybersecurity Model Law imposes significant regulatory burdens intended to protect the confidentiality, integrity and availability of information systems. As of December 31, 2023, the Cybersecurity Model Law, or a form thereof, had been adopted by several states, including three of our U.S. insurance subsidiaries’ domiciliary states.
Its product lines include general liability, liquor liability and some property and inland marine coverage. It serves a limited distribution channel, including select Berkley business agents. Berkley Asset Protection provides specialized insurance coverages for fine arts and jewelry exposures to commercial and individual clients.
Its product lines include general liability, excess liability and some property and inland marine coverage. It serves a limited distribution channel, including select Berkley business agents. Berkley Asset Protection provides specialized insurance coverages for fine arts and jewelry exposures to commercial and individual clients.
Although the loss reserves included in the Company’s financial statements represent management’s best estimates, setting reserves is inherently uncertain and the Company cannot provide assurance that its current reserves will prove adequate in light of subsequent events. 15 The Company discounts its liabilities for certain workers’ compensation reserves.
Although the loss reserves included in the Company’s financial statements represent management’s best estimates, setting reserves is inherently uncertain and the Company cannot provide assurance that its current reserves will prove adequate in light of subsequent events. 17 The Company discounts its liabilities for certain workers’ compensation reserves.
Best reviews its ratings on a periodic basis, and its ratings of the Company's subsidiaries are therefore subject to change. Our twenty-three insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of A + (the seventh highest rating out of twenty-seven possible ratings).
Best reviews its ratings on a periodic basis, and its ratings of the Company's subsidiaries are therefore subject to change. Our twenty-three insurance company subsidiaries rated by Standard & Poor's (“S&P”) have financial strength ratings of A + (the fifth highest rating out of twenty-seven possible ratings).
(2) Represents the change in unrealized investment (losses) gains for available for sale securities recognized in stockholders' equity. For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend returns for the S&P 500 ® Index: Year Ended December 31, 2022 2021 2020 Barclays U.S.
(2) Represents the change in unrealized investment gains (losses) for available for sale securities recognized in stockholders' equity. For comparison, the following are the coupon returns for the Barclays U.S. Aggregate Bond Index and the dividend returns for the S&P 500 ® Index: Year Ended December 31, 2023 2022 2021 Barclays U.S.
Regulation Our U.S. insurance subsidiaries are principally regulated by their domiciliary state insurance departments and are subject to varying degrees of regulation and supervision in the other U.S. jurisdictions in which they do business. As of January 1, 2023, there are six domiciliary states related to our U.S. insurance subsidiaries. Overview .
Regulation Our U.S. insurance subsidiaries are principally regulated by their domiciliary state insurance departments and are subject to varying degrees of regulation and supervision in the other U.S. jurisdictions in which they do business. As of January 1, 2024, there are six domiciliary states related to our U.S. insurance subsidiaries. Overview .
The RBC of each of our domestic insurance subsidiaries was above the calculated RBC target level as of December 31, 2022. Insurance Regulatory Information System. The NAIC also has developed a set of 13 financial ratios for property and casualty insurers referred to as the Insurance Regulatory Information System (“IRIS”).
The RBC of each of our domestic insurance subsidiaries was above the calculated RBC target level as of December 31, 2023. Insurance Regulatory Information System. The NAIC also has developed a set of 13 financial ratios for property and casualty insurers referred to as the Insurance Regulatory Information System (“IRIS”).
Also, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 14, Reserves for Losses and Loss Expenses included in our audited consolidated financial statements for further information regarding the changes in estimates for claims occurring in prior years.
Also, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 13, Reserves for Losses and Loss Expenses included in our audited consolidated financial statements for further information regarding the changes in estimates for claims occurring in prior years.
As a third party administrator, it manages workers’ compensation, liability and property claims nationwide. 9 Berkley Select specializes in underwriting professional liability insurance for law firms and accounting firms, as well as other professional firms and their practices.
As a third party administrator, it manages workers’ compensation, liability and property claims nationwide. 10 Berkley Select specializes in underwriting professional liability insurance for law firms and accounting firms, as well as other professional firms and their practices.
The NAIC is also examining practices in the insurance industry in order to determine how barriers are created that disadvantage or discriminate against people of color or historically underrepresented groups.
In addition, the NAIC is examining practices in the insurance industry in order to determine how barriers are created that disadvantage or discriminate against people of color or historically underrepresented groups.
While there is no one “Berkley” way, each of our businesses has its own culture that embodies a shared set of values that define our enterprise. Our structure, with more than 55 distinct businesses, facilitates the prompt identification of and appropriate action with respect to addressing individual business or cultural issues arising within a business, without affecting the larger enterprise.
While there is no one “Berkley” way, each of our businesses has its own culture that embodies a shared set of values that define our enterprise. Our structure, with 60 distinct businesses, facilitates the prompt identification of and appropriate action with respect to addressing individual business or cultural issues arising within a business, without affecting the larger enterprise.
At December 31, 2022, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%. Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2022) are excess workers’ compensation reserves.
At December 31, 2023, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.5%. Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2023) are excess workers’ compensation reserves.
Further, an expanded supply of reinsurance capital may lower costs for insurers that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively. Human Capital Resources As of January 15, 2023, we employed 8,186 individuals.
Further, an expanded supply of reinsurance capital may lower costs for insurers that rely on reinsurance and, as a consequence, those insurers may be able to price their products more competitively. Human Capital Resources As of January 15, 2024, we employed 8,329 individuals.
The insurer's deductible is calculated as 20% of earned premium for the prior year for covered lines of commercial property and casualty insurance. Based on our 2022 earned premiums, our aggregate deductible under TRIPRA during 2023 will be approximately $1,310 million.
The insurer's deductible is calculated as 20% of earned premium for the prior year for covered lines of commercial property and casualty insurance. Based on our 2023 earned premiums, our aggregate deductible under TRIPRA during 2024 will be approximately $1,464 million.
Although the potential impact of any future amendments to the Dodd-Frank Act on the U.S. insurance industry is not clear, our business could be affected by changes to the U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as systemically important non-bank financial companies.
Although the potential impact of any future amendments to the Dodd-Frank Act on the U.S. insurance industry is not clear, our business could be affected by changes to the U.S. system of insurance regulation or our designation or the designation of insurers or reinsurers with which we do business as non-bank SIFIs.
For example, the California Consumer Privacy Act (“CCPA”), which became effective in January 2020, broadly regulates the collection, processing and disclosure of California residents’ personal information, imposes limits on the “sale” of personal information and grants California residents certain rights to, among other things, access and delete data about them in certain circumstances.
For example, the California Consumer Privacy Act (“CCPA”), broadly regulates the collection, processing and disclosure of California residents’ personal information, imposes limits on the “sale” of personal information and grants California residents certain rights to, among other things, access and delete data about them in certain circumstances.
Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay certain obligations. 14 Year Ended December 31, 2022 2021 2020 1 year or less 8.7% 9.5% 11.4% Over 1 year through 5 years 47.2 46.1 38.9 Over 5 years through 10 years 23.4 25.2 25.0 Over 10 years 11.2 12.7 17.4 Mortgage-backed securities 9.5 6.5 7.3 Total 100.0% 100.0% 100.0% At both December 31, 2022 and 2021, the fixed maturity portfolio, including cash and cash equivalents, had an effective duration of 2.4 years.
Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay certain obligations. 16 Year Ended December 31, 2023 2022 2021 1 year or less 9.2% 8.7% 9.5% Over 1 year through 5 years 46.2 47.2 46.1 Over 5 years through 10 years 21.2 23.4 25.2 Over 10 years 12.2 11.2 12.7 Mortgage-backed securities 11.2 9.5 6.5 Total 100.0% 100.0% 100.0% At each of December 31, 2023 and 2022, the fixed maturity portfolio, including cash and cash equivalents, had an effective duration of 2.4 years.
The Company’s net reserves for losses and loss expenses relating to environmental and asbestos claims on policies written before adoption of the absolute exclusion was $20 million at both December 31, 2022 and 2021.
The Company’s net reserves for losses and loss expenses relating to environmental and asbestos claims on policies written before adoption of the absolute exclusion was $17 million and $20 million at December 31, 2023 and 2022, respectively.
Following this monitoring period, the ICS is expected to be implemented in 2025 as a group-wide prescribed capital requirement for IAIGs and integrated into the rest of ComFrame. As noted above under “U.S.
Following this monitoring period, the ICS is expected to be implemented in 2025 as a group-wide prescribed capital requirement for IAIGs and integrated into the rest of ComFrame.
However, the Covered Agreements prohibit any EU supervisor or the PRA (as applicable) from exercising group-wide supervision at any level above the highest company organized in the country of that supervisor. We must also comply with the EU General Data Protection Regulation (EU) 2016/879) (“GDPR”), which took effect 22 in May 2018.
However, the Covered Agreements prohibit any EU supervisor or the PRA (as applicable) from exercising group-wide supervision at any level above the highest company organized in the country of that supervisor. We must also comply with the EU General Data Protection Regulation (EU) 2016/879) (“GDPR”), which took effect in May 2018, including EEA member state legislation implementing the GDPR.
In particular, we need to monitor our compliance with all relevant member states’ laws and regulations, including where permitted derogations from the GDPR and the U.K. GDPR are introduced. The introduction of the GDPR and the U.K.
Moreover, there are significant fines associated with non-compliance. In particular, we need to monitor our compliance with all relevant member states’ laws and regulations, including where permitted derogations from the GDPR and the U.K. GDPR are introduced. The introduction of the GDPR and the U.K.
Federal or state measures may be introduced to increase the oversight of surplus lines insurance in the future. Climate Change and Financial Risks . The NAIC and state insurance regulators are evaluating issues related to the topic of climate risk.
Federal or state measures may be introduced to increase the oversight of surplus lines insurance in the future. Climate Change and Financial Risks . The NAIC and state insurance regulators continue to evaluate issues related to the management of climate risk.
Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for each of our reporting segments for each of the past three years were as follows: Year Ended December 31, (In thousands) 2022 2021 2020 Net premiums written: Insurance $ 8,784,146 $ 7,743,814 $ 6,347,101 Reinsurance & Monoline Excess 1,219,924 1,119,053 915,336 Total $ 10,004,070 $ 8,862,867 $ 7,262,437 Percentage of net premiums written: Insurance 87.8 % 87.4 % 87.4 % Reinsurance & Monoline Excess 12.2 12.6 12.6 Total 100.0 % 100.0 % 100.0 % Thirty-two of our insurance company subsidiaries are rated by A.M.
Net premiums written, as reported based on United States generally accepted accounting principles (“GAAP”), for each of our reporting segments for each of the past three years were as follows: Year Ended December 31, (In thousands) 2023 2022 2021 Net premiums written: Insurance $ 9,657,121 $ 8,784,146 $ 7,743,814 Reinsurance & Monoline Excess 1,297,346 1,219,924 1,119,053 Total $ 10,954,467 $ 10,004,070 $ 8,862,867 Percentage of net premiums written: Insurance 88.2 % 87.8 % 87.4 % Reinsurance & Monoline Excess 11.8 12.2 12.6 Total 100.0 % 100.0 % 100.0 % Thirty-two of our insurance company subsidiaries are rated by A.M.
The PRA/FCA’s Senior Managers and Certification Regime and analogous regulation in Liechtenstein further provide regulatory frameworks for standards of fitness and propriety, conduct and accountability for individuals in positions of responsibility at insurers. In addition, certain employees are individually registered at Lloyd’s.
The PRA/FCA’s Senior Managers and Certification Regime and analogous regulation in Liechtenstein further provide regulatory frameworks for standards of fitness and propriety, conduct and accountability for individuals in positions of responsibility at insurers.
Products are generally distributed through wholesale agents and brokers. Industry Specialty : Certain other businesses focus on providing specialty coverages to customers within a particular industry that are best served by underwriters and claims professionals with specialized knowledge of that industry.
Industry Specialty : Certain other businesses focus on providing specialty coverages to customers within a particular industry that are best served by underwriters and claims professionals with specialized knowledge of that industry.
We cannot predict the impact, if any, that any current, proposed or future federal or state cybersecurity laws or regulations will have on our business, financial condition or results of operations. Risk-Based Capital Requirements .
We cannot predict the impact, if any, that any current, proposed or future federal or state cybersecurity laws or regulations will have on our business, financial condition or results of operations. Innovation and Technology .
It has developed sophisticated, proprietary analytical tools and risk management services designed to help its insureds lower their total cost of risk. 12 The following table sets forth the percentages of gross premiums written by each Reinsurance & Monoline Excess business: Year Ended December 31, 2022 2021 2020 Berkley Re America 34.6% 31.2% 31.6% Berkley Re Asia Pacific 15.6 15.4 13.5 Berkley Re Solutions 12.5 13.8 14.4 Berkley Re UK 12.8 13.8 14.7 Lloyd's Syndicate 2791 Participation 6.1 6.8 6.0 Midwest Employers Casualty 18.4 19.0 19.8 Total 100.0% 100.0% 100.0% The following table sets forth the percentages of gross premiums written, by line, by our Reinsurance & Monoline Excess operations: Year Ended December 31, 2022 2021 2020 Casualty 61.7% 61.8% 58.1% Property 19.9 19.2 22.1 Monoline Excess 18.4 19.0 19.8 Total 100.0% 100.0% 100.0% Results by Segment Summary financial information about our segments is presented on a GAAP basis in the following table: Year Ended December 31, (In thousands) 2022 2021 2020 Insurance Revenue $ 8,952,493 $ 7,578,592 $ 6,478,834 Income before income taxes 1,455,658 1,219,798 668,012 Reinsurance & Monoline Excess Revenue 1,386,639 1,203,647 1,009,203 Income before income taxes 316,527 270,563 205,587 Other (1) Revenue 827,367 673,227 610,888 Loss before income taxes (52,504) (207,456) (168,797) Total Revenue $ 11,166,499 $ 9,455,466 $ 8,098,925 Income before income taxes $ 1,719,681 $ 1,282,905 $ 704,802 _______________________________________ (1) Represents corporate revenues and expenses, net investment gains and losses, and revenues and expenses from non-insurance businesses that are consolidated for financial reporting purposes. 13 The table below represents summary underwriting ratios on a GAAP basis for our segments.
It has developed sophisticated, proprietary analytical tools and risk management services designed to help its insureds lower their total cost of risk. 14 The following table sets forth the percentages of gross premiums written by each Reinsurance & Monoline Excess business: Year Ended December 31, 2023 2022 2021 Berkley Re America 33.7% 34.6% 31.2% Berkley Re Asia Pacific 16.0 15.6 15.4 Berkley Re Solutions 10.2 12.5 13.8 Berkley Re UK 11.4 12.8 13.8 Lloyd's Syndicate 2791 Participation 9.4 6.1 6.8 Midwest Employers Casualty 19.3 18.4 19.0 Total 100.0% 100.0% 100.0% The following table sets forth the percentages of gross premiums written, by line, by our Reinsurance & Monoline Excess operations: Year Ended December 31, 2023 2022 2021 Casualty 56.4% 61.7% 61.8% Property 24.4 19.9 19.2 Monoline Excess 19.2 18.4 19.0 Total 100.0% 100.0% 100.0% Results by Segment Summary financial information about our segments is presented on a GAAP basis in the following table: Year Ended December 31, (In thousands) 2023 2022 2021 Insurance Revenue $ 9,961,152 $ 8,952,493 $ 7,578,592 Income before income taxes 1,640,438 1,455,658 1,219,798 Reinsurance & Monoline Excess Revenue 1,481,991 1,386,639 1,203,647 Income before income taxes 438,765 316,527 270,563 Other (1) Revenue 699,795 827,367 673,227 Loss before income taxes (324,800) (52,504) (207,456) Total Revenue $ 12,142,938 $ 11,166,499 $ 9,455,466 Income before income taxes $ 1,754,403 $ 1,719,681 $ 1,282,905 _______________________________________ (1) Represents corporate revenues and expenses, net investment gains and losses, and revenues and expenses from non-insurance businesses that are consolidated for financial reporting purposes. 15 The table below represents summary underwriting ratios on a GAAP basis for our segments.
The amount of workers’ compensation reserves that were discounted was $1,267 million and $1,387 million at December 31, 2022 and 2021, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $416 million and $452 million at December 31, 2022 and 2021, respectively.
The amount of workers’ compensation reserves that were discounted was $1,352 million and $1,464 million at December 31, 2023 and 2022, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $390 million and $416 million at December 31, 2023 and 2022, respectively.
Following the U.K.’s withdrawal from the EU, or Brexit, our Lloyd’s managing agency (and the U.K. branch of our Liechtenstein subsidiary) are now subject to a separate U.K. prudential regime, which is broadly identical to Solvency II from January 1, 2021. However, the two regimes are likely to diverge in the near future.
Following the U.K.’s withdrawal from the EU, or Brexit, our Lloyd’s managing agency (and the U.K. branch of our Liechtenstein subsidiary) are now subject to a separate U.K. prudential regime, which is broadly identical to Solvency II but will diverge from Solvency II in the future.
A number in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit: Year Ended December 31, 2022 2021 2020 Insurance Loss ratio 61.3 % 61.1 % 64.9 % Expense ratio 27.9 28.3 30.3 Combined ratio 89.2 % 89.4 % 95.2 % Reinsurance & Monoline Excess Loss ratio 61.3 % 61.0 % 61.3 % Expense ratio 28.4 29.7 31.8 Combined ratio 89.7 % 90.7 % 93.1 % Total Loss ratio 61.3 % 61.1 % 64.5 % Expense ratio 28.0 28.5 30.4 Combined ratio 89.3 % 89.6 % 94.9 % Investments Investment results, before income taxes, were as follows: Year Ended December 31, (In thousands) 2022 2021 2020 Average investments, at cost (1) $ 24,438,112 $ 22,234,975 $ 20,012,182 Net investment income (1) $ 779,185 $ 671,618 $ 583,821 Percent earned on average investments (1) 3.2 % 3.0 % 2.9 % Net investment gains $ 202,397 $ 90,632 $ 103,000 Change in unrealized investment (losses) gains (2) $ (1,248,128) $ (254,939) $ 164,645 _______________________________________ (1) Includes investments, cash and cash equivalents, trading accounts receivable (payable) from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.
A number in excess of 100 indicates an underwriting loss; a number below 100 indicates an underwriting profit: Year Ended December 31, 2023 2022 2021 Insurance Loss ratio 62.3 % 61.3 % 61.1 % Expense ratio 28.4 27.9 28.3 Combined ratio 90.7 % 89.2 % 89.4 % Reinsurance & Monoline Excess Loss ratio 53.8 % 61.3 % 61.0 % Expense ratio 28.3 28.4 29.7 Combined ratio 82.1 % 89.7 % 90.7 % Total Loss ratio 61.3 % 61.3 % 61.1 % Expense ratio 28.4 28.0 28.5 Combined ratio 89.7 % 89.3 % 89.6 % Investments Investment results, before income taxes, were as follows: Year Ended December 31, (In thousands) 2023 2022 2021 Average investments, at cost (1) $ 26,444,111 $ 24,438,112 $ 22,234,975 Net investment income (1) $ 1,052,835 $ 779,185 $ 671,618 Percent earned on average investments (1) 3.9 % 3.2 % 3.0 % Net investment gains $ 47,042 $ 202,397 $ 90,632 Change in unrealized investment gains (losses) (2) $ 392,903 $ (1,248,128) $ (254,939) _______________________________________ (1) Includes investments, cash and cash equivalents, trading accounts receivable (payable) from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.
Of our 59 businesses, 52 have been organized and developed internally and seven have been added through acquisition.
Of our 60 businesses, 53 have been organized and developed internally and seven have been added through acquisition.
Our property casualty subsidiaries, other than our excess and surplus lines and reinsurance subsidiaries, must generally file all rates with the insurance department of each state in which they operate. Our excess and 17 surplus lines and reinsurance subsidiaries generally operate free of rate and form regulation. Legislative and Regulatory Activity Related to the COVID-19 Pandemic.
Our property casualty subsidiaries, other than our excess and surplus lines and reinsurance subsidiaries, must generally file all rates with the insurance department of each state in which they operate. Our excess and surplus lines and reinsurance subsidiaries generally operate free of rate and form regulation. 19 Holding Company Statutes .
A reconciliation between the reserves as of December 31, 2022 as reported in the accompanying consolidated GAAP financial statements and those reported on the basis of statutory accounting principles (“SAP”) in the Company’s U.S. regulatory filings is as follows: (In thousands) Net reserves reported in U.S. regulatory filings on a SAP basis $ 13,640,489 Reserves for non-U.S. companies 679,246 Loss reserve discounting (1) (78,336) Ceded reserves 2,762,344 Allowance for expected credit losses on due from reinsurers 7,480 Gross reserves reported in the consolidated GAAP financial statements $ 17,011,223 _________________________ (1) For statutory purposes, the Company discounts its workers’ compensation reinsurance reserves at 2.5% as prescribed or permitted by the Department of Insurance of the State of Delaware.
A reconciliation between the reserves as of December 31, 2023 as reported in the accompanying consolidated GAAP financial statements and those reported on the basis of statutory accounting principles (“SAP”) in the Company’s U.S. regulatory filings is as follows: (In thousands) Net reserves reported in U.S. regulatory filings on a SAP basis $ 14,954,598 Reserves for non-U.S. companies 780,762 Loss reserve discounting (1) (80,832) Ceded reserves 3,077,832 Allowance for expected credit losses on due from reinsurers 7,292 Gross reserves reported in the consolidated GAAP financial statements $ 18,739,652 _________________________ (1) For statutory purposes, the Company discounts its workers’ compensation reinsurance reserves at 2.5% as prescribed or permitted by the Department of Insurance of the State of Delaware.
Our insurance business throughout the EU and EEA is subject to “Solvency II,” an insurance regulatory regime governing, among other things, capital adequacy and risk management.
In addition, certain employees are individually registered at Lloyd’s. 24 Our insurance business throughout the EU and EEA is subject to “Solvency II,” an insurance regulatory regime governing, among other things, capital adequacy and risk management.
The CCPA also established a private right of action, with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures to protect against breaches of personal information could be liable to affected consumers. California subsequently enacted the California Privacy Rights Act (“CPRA”), which came into full effect in January 2023.
The CCPA also established a private right of action, with potentially significant statutory damages, whereby businesses that fail to implement reasonable security measures to protect against breaches of personal information could be liable to affected California consumers.
In 2020, the NAIC adopted amendments to the model holding company act and regulation that implement the group capital calculation by requiring the ultimate controlling person of an insurer subject to holding company registration to file the group capital calculation with its lead state regulator.
In 2022, Delaware, our lead state regulator, adopted the NAIC amendments to the model holding company act and regulation that require the ultimate controlling person of an insurer subject to holding company registration to submit the group capital calculation filing annually with its lead state regulator.
On March 16, 2021, the NYDFS issued a circular letter stating that it expects the insurers it regulates, such as our insurance subsidiaries licensed in New York, to make diversity of their leadership a business priority and a key element of their corporate governance. See “Human Capital Resources” below. Federal Regulation.
In March 2021, the NYDFS issued a circular letter stating that it expects the insurers it regulates, such as our insurance subsidiaries licensed in New York, to make diversity of their leadership a business priority and a key element of their corporate governance, and it includes diversity-related questions in its examination process.
Its products are distributed by a select group of independent retail agents. Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in North Asia and Southeast Asia through offices in Hong Kong, Singapore, Labuan and Shanghai. 8 Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity insurance for companies of all sizes.
Berkley Insurance Asia underwrites specialty commercial insurance coverages to clients in North Asia and Southeast Asia through offices in Hong Kong, Singapore, Labuan and Shanghai. 9 Berkley Insurance Australia underwrites general insurance business in Australia, including professional indemnity insurance for companies of all sizes.
Our surplus lines subsidiaries are subject to the surplus lines regulation and reporting requirements of the jurisdictions in which they are eligible to write surplus lines insurance.
Excess and Surplus Lines . The regulation of our U.S. subsidiaries' excess and surplus lines insurance business differs significantly from the regulation of our admitted business. Our surplus lines subsidiaries are subject to the surplus lines regulation and reporting requirements of the jurisdictions in which they are eligible to write surplus lines insurance.
Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee, specializing in small to mid-sized accounts.
Berkley Southeast offers a wide array of commercial lines products in six southeastern states: Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee, specializing in small to mid-sized accounts. Berkley Specialty Excess provides excess and surplus lines coverages for hard-to-place risks involved in moderate to high degrees of hazard.
Vela Insurance Services specializes in commercial casualty insurance on an excess and surplus lines basis. Its primary focus is on general liability insurance for construction, manufacturing and general casualty clients as well as products liability and miscellaneous professional liability coverages distributed through wholesale insurance brokers.
Its primary focus is on general liability insurance for construction, manufacturing and general casualty clients as well as products liability and miscellaneous professional liability coverages distributed through wholesale insurance brokers. 11 Verus Specialty Insurance offers tailored casualty, professional liability, and garage coverages, specializing in the excess and surplus lines market.
In response to the outbreak of the COVID-19 pandemic in 2020, legislators in several states and in the United States Congress introduced proposals that would have mandated insurance coverage for certain pandemic-related losses, including business interruption losses, under previously-issued policies that were not designed or priced to provide such coverage.
In response to the outbreak of the COVID-19 pandemic in 2020, legislators in several states and in the United States Congress introduced proposals that would have mandated insurance coverage for certain pandemic-related losses, including business interruption losses, or that would have established a federal insurance program for addressing pandemic risk. None of these proposals were enacted.
Its customer base includes risks of all sizes that work in the oil patch, including operators, drillers, geophysical contractors, well-servicing contractors, and manufacturers/distributors of oil field products, as well as those in the renewable energy sector. Berkley One provides a customizable suite of personal lines insurance solutions including home, condo/co-op, auto, liability and collectibles.
Its customer base includes risks of all sizes that work in the oil patch, including operators, drillers, geophysical contractors, well-servicing contractors, and manufacturers/distributors of oil field products, as well as those in the renewable energy sector.
The federal program will not pay losses for certified acts unless such losses exceed $200 million industry-wide for any calendar year after 2020. TRIPRA limits the federal government's share of losses at $100 billion for a program year.
The federal program will not pay losses for certified acts unless such losses exceed $200 million industry-wide for any calendar year. TRIPRA limits the federal government's share of losses at $100 billion for a program year. In addition, an insurer that has satisfied its deductible is not liable for the payment of losses in excess of the $100 billion cap.
The amended Credit for Reinsurance Model Law also extends the zero reinsurance collateral provisions in the Covered Agreements to qualified reinsurers domiciled in U.S. jurisdictions that are accredited by the NAIC and to non-U.S. jurisdictions that have not entered into a covered agreement with the U.S. but which the NAIC has identified as “reciprocal jurisdictions” pursuant to the NAIC Qualified Jurisdiction Process.
The amended Credit for Reinsurance Model Law also extends the zero reinsurance collateral provisions in the Covered Agreements to qualified reinsurers domiciled in U.S. jurisdictions that are accredited by the NAIC and to non-U.S. jurisdictions that have not entered into a covered agreement with the U.S. but which the NAIC has identified as “reciprocal jurisdictions” pursuant to the NAIC Qualified Jurisdiction Process. 23 We cannot currently predict the impact of these changes to the law or whether any other covered agreements will be successfully adopted, and cannot currently estimate the impact of these changes to the law and any such adopted covered agreements on our business, financial condition or operating results.
GDPR are extraterritorial in that they apply to all businesses in the EU and the U.K. respectively and any business outside the EU and the U.K. that process EU and/or U.K. personal data of individuals in the EU and/or the U.K. Moreover, there are significant fines associated with non-compliance.
GDPR are extraterritorial in that they apply to all businesses in the EU and the U.K. respectively and any business outside the EU and the U.K. that offers services, or monitors the behavior of individuals, in the EU and/or U.K., and that processes the personal data of individuals in the EU and/or the U.K.
Other Information about the Company's Business We maintain an interest in the acquisition and startup of complementary businesses and continue to evaluate possible acquisitions and new ventures on an ongoing basis.
Other Information about the Company's Business We maintain an interest in evaluating the startup of possible new ventures and the acquisition of complementary businesses on an ongoing basis. In addition, our businesses develop new coverages or enter lines of business to meet the needs of insureds.
Products include general liability, automobile liability, law enforcement liability, public officials and educator's legal liability, employment practices liability, incidental medical, property and crime. Berkley Risk provides at-risk and alternative risk insurance program management services for a broad range of groups and individuals including public entity pools, professional associations, captives and self-insured clients.
Berkley Risk provides at-risk and alternative risk insurance program management services for a broad range of groups and individuals including public entity pools, professional associations, captives and self-insured clients.
Our Board of Directors engages with our senior leadership team, including our senior vice president - human resources, on a periodic basis across a range of human capital management issues, including succession planning and development, compensation, benefits, talent recruiting and retention, engagement, diversity and inclusion, and employee feedback.
In addition, we support employees in making an impact in their local communities and globally through environmental and social efforts that are meaningful to them. 26 Our Board of Directors engages with our senior leadership team, including our senior vice president - human resources, on a periodic basis across a range of human capital management issues, including succession planning and development, compensation, benefits, talent recruiting and retention, engagement, diversity and inclusion, and employee feedback.
In November 2022, the NYDFS proposed amendments to New York’s cybersecurity regulation, which, if adopted, would require additional reporting, governance and oversight measures to be implemented. 18 The NAIC has adopted the Insurance Data Security Model Law (the “Cybersecurity Model Law”) for consideration by state legislatures, which, when adopted by the states, establishes standards for data security, the investigation of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information, and reporting to insurance commissioners.
The NAIC has adopted the Insurance Data Security Model Law (the “Cybersecurity Model Law”) for consideration by state legislatures, which establishes standards for data security, the investigation of cybersecurity events involving the unauthorized access to, or misuse of, certain nonpublic information, and reporting to insurance commissioners.
The NYDFS also adopted an amendment to the regulation governing enterprise risk management, which applies to our insurance subsidiaries licensed in New York, that requires an insurance group's enterprise risk management function to address certain additional risks, including climate change risk. 20 In addition, the Federal Insurance Office (the “FIO”) is authorized to monitor the U.S. insurance industry under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as discussed below under “Federal Regulation.” The FIO is assessing how the insurance sector may help mitigate climate-related risks and achieve national climate-related goals.
In addition, the Federal Insurance Office (the “FIO”) is authorized to monitor the U.S. insurance industry under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), as discussed below under “Federal Regulation.” Pursuant to this statutory authority, the FIO is assessing how the insurance sector may mitigate climate risks and help achieve national climate-related goals.
The circular letter states that the NYDFS expects these insurers to integrate financial risks related to climate change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their approach to climate-related financial disclosure.
The NYDFS’s 2020 circular letter, which applies to our insurance subsidiaries licensed in New York, states that regulated insurers are expected to integrate 22 financial risks related to climate change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their approach to climate-related financial disclosure.
Berkley Environmental underwrites casualty and specialty environmental products for environmental customers including contractors, consultants, property owners and facilities operators. Berkley Financial Specialists serves the insurance needs of companies in the financial services sector and beyond.
Berkley Environmental underwrites casualty and specialty environmental products for environmental customers including contractors, consultants, property owners and facilities operators. Berkley Financial Specialists serves the insurance needs of companies predominantly in the financial services sector. Its Berkley Crime division provides crime and fidelity related insurance products for commercial organizations, financial sector businesses and governmental entities on a primary and excess basis.
Berkley One targets high net worth individuals and families with sophisticated risk management needs. Berkley Product Protection offers a broad product suite, including Product Liability and Product Recall and Contamination, to assist clients in the manufacturing, wholesale and import space with their risk management and insurance needs.
Berkley Product Protection offers a broad product suite, including product liability and product recall and Contamination, to assist clients in the manufacturing, wholesale and import space with their risk management and insurance needs. Berkley Professional Liability specializes in professional liability insurance for publicly-traded and private entities on a worldwide basis.
Although the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms, wildfires, earthquakes and terrorist acts may be mitigated by reinsurance, they nevertheless can have a significant impact on the results of any one or more reporting periods. We have no customer that accounts for 10 percent or more of our consolidated revenues. Compliance by W. R.
Seasonal weather variations and other events affect the severity and frequency of losses sustained by the insurance and reinsurance businesses. Although the effect on our business of catastrophes such as tornadoes, hurricanes, hailstorms, wildfires, earthquakes and terrorist acts may be mitigated by reinsurance, they nevertheless can have a significant impact on the results of any one or more reporting periods.
The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the indicated years: (In thousands) 2022 2021 2020 Net reserves at beginning of year $ 12,848,362 $ 11,620,393 $ 10,697,998 Cumulative effect adjustment resulting from changes in accounting principles (1) — — 5,927 Restated net reserves at beginning of period 12,848,362 11,620,393 10,703,925 Net provision for losses and loss expenses: Claims occurring during the current year (2) 5,774,713 4,921,191 4,432,937 Increase in estimates for claims occurring in prior years (3) 54,511 863 627 Loss reserve discount amortization 32,526 31,906 35,142 Total 5,861,750 4,953,960 4,468,706 Net payments for claims: Current year 1,068,577 887,896 921,054 Prior years 3,279,333 2,777,798 2,677,595 Total 4,347,910 3,665,694 3,598,649 Foreign currency translation (113,323) (60,297) 46,411 Net reserves at end of year 14,248,879 12,848,362 11,620,393 Ceded reserves at end of year 2,762,344 2,542,526 2,164,037 Gross reserves at end of year $ 17,011,223 $ 15,390,888 $ 13,784,430 Net change in premiums and losses occurring in prior years: Increase in estimates for claims occurring in prior years (3) $ (54,511) $ (863) $ (627) Retrospective premium adjustments for claims occurring in prior years (4) 18,106 7,510 16,807 Net premium and reserve development on prior years $ (36,405) $ 6,647 $ 16,180 16 ____________________________________ (1) The cumulative effect adjustment resulting from changes in accounting principles relates to the allowance for expected credit losses on reinsurance recoverables that commenced on January 1, 2020 due to the adoption of ASU 2016-13.
The table below provides a reconciliation of the beginning of year and end of year property casualty reserves for the indicated years: (In thousands) 2023 2022 2021 Net reserves at beginning of year $ 14,248,879 $ 12,848,362 $ 11,620,393 Net provision for losses and loss expenses: Claims occurring during the current year (1) 6,311,780 5,774,713 4,921,191 Increase in estimates for claims occurring in prior years (2) 29,681 54,511 863 Loss reserve discount amortization 30,681 32,526 31,906 Total 6,372,142 5,861,750 4,953,960 Net payments for claims: Current year 1,217,078 1,068,577 887,896 Prior years 3,764,532 3,279,333 2,777,798 Total 4,981,610 4,347,910 3,665,694 Foreign currency translation 22,409 (113,323) (60,297) Net reserves at end of year 15,661,820 14,248,879 12,848,362 Ceded reserves at end of year 3,077,832 2,762,344 2,542,526 Gross reserves at end of year $ 18,739,652 $ 17,011,223 $ 15,390,888 Net change in premiums and losses occurring in prior years: Increase in estimates for claims occurring in prior years (2) $ (29,681) $ (54,511) $ (863) Retrospective premium adjustments for claims occurring in prior years (3) 10,782 18,106 7,510 Net premium and reserve development on prior years $ (18,899) $ (36,405) $ 6,647 ____________________________________ 18 (1) Claims occurring during the current year are net of loss reserve discounts of $47 million, $35 million and $21 million in 2023, 2022 and 2021, respectively.
Similarly, the European Commission has undertaken its own review of Solvency II and, on September 22, 2021, published a package of proposed legislative reforms for amending the existing regulatory framework.
Similarly, the EU’s legislative bodies have undertaken a review of Solvency II. In September 2021, the European Commission published a package of proposed legislative reforms for amending the existing regulatory framework. The legislative bodies reached a provisional agreement on the revised text of Solvency II in December 2023.
They serve a diverse group of customers that often have complex risk or unique exposures that typically fall outside the underwriting guidelines of the standard insurance market. Lines of business underwritten by our excess and surplus lines businesses include premises operations, commercial automobile, property, products liability, general liability and professional liability lines.
The Insurance businesses focus on the following general areas: Excess & Surplus Lines : A number of our businesses are dedicated to the U.S. excess and surplus lines market. They serve a diverse group of customers that often have complex risk or unique exposures that typically fall outside the underwriting guidelines of the standard insurance market.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe face additional risks as a result of our international operations which could have an adverse effect on our results of operations and financial condition including: burdens and costs of compliance with a variety of foreign laws and regulations and the associated risk and costs of non-compliance; exposure to undeveloped or evolving legal systems, which may result in unpredictable or inconsistent application of laws and regulations; exposure to commercial, political, legal or regulatory corruption; political, economic or other instability in countries in which we conduct business, including possible terrorist acts; the imposition of tariffs, trade barriers or other protectionist laws or business practices that favor local competition, increased costs and adverse effects on our business; changes to visa or immigration policies; diminished ability to enforce our contractual rights; potential increased risk of data breaches; differences in cultural environments; sociopolitical instability; social, political or economic instability resulting from climate change; changes in regulatory requirements, including changes in regulatory treatment of certain products or services; exposure to local economic conditions and its impact on our clients’ performance and creditworthiness; and restrictions on the repatriation of non-U.S. investments and earnings.
Biggest changeWe face additional risks as a result of our international operations which could have an adverse effect on our results of operations and financial condition including: burdens and costs of compliance with a variety of foreign laws and regulations and the associated risk and costs of non-compliance; exposure to undeveloped or evolving legal systems, which may result in unpredictable or inconsistent application of laws and regulations; exposure to commercial, political, legal or regulatory corruption; political, economic or other instability in countries in which we conduct business, including possible terrorist acts; the imposition of tariffs, trade barriers or other protectionist laws or business practices that favor local competition, increased costs and adverse effects on our business; changes to visa or immigration policies; diminished ability to enforce our contractual rights; potential increased risk of data breaches; differences in cultural environments; sociopolitical instability; social, political or economic instability resulting from climate change; changes in regulatory requirements, including changes in regulatory treatment of certain products or services; exposure to local economic conditions and its impact on our clients’ performance and creditworthiness; and restrictions on the repatriation of non-U.S. investments and earnings. 33 Our U.K. business could be specifically adversely impacted by the imposition of trade barriers between the EU and the U.K. following Brexit, which has already reduced the level of trade between the two markets and the U.K.’s overall trade exports, thereby negatively affecting the attractiveness of the U.K. market.
If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions, uncertainty or volatility in the capital and credit markets, we may be unable to access debt or equity capital on acceptable terms if needed, which could have a negative impact on our ability to invest in our insurance company subsidiaries and/or to take advantage of opportunities to expand our business, such as possible acquisitions and the creation of new ventures, and inhibit our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.
If conditions in the financial markets and the general economy are unfavorable, which may result from disruptions, uncertainty or volatility in the capital and credit markets, we may be unable to access debt or equity capital on acceptable terms if needed, which could have a negative impact on our ability to invest in our insurance company subsidiaries and/or to take advantage of opportunities to expand our business, such as the creation of new ventures and possible acquisitions, and inhibit our ability to refinance our existing indebtedness if we desire to do so, on terms acceptable to us.
We may not find suitable acquisition candidates or new insurance ventures and even if we do, we may not successfully integrate any such acquired companies or successfully invest in such ventures.
We may not find suitable new insurance ventures and acquisition candidates and even if we do, we may not successfully invest in such ventures or successfully integrate any such acquired companies.
As part of our present strategy, we continue to evaluate possible acquisition transactions and the start-up of complementary businesses on an ongoing basis, and at any given time we may be engaged in discussions with respect to possible acquisitions and new ventures.
As part of our present strategy, we continue to evaluate the possible start-up of complementary businesses and acquisition transactions on an ongoing basis, and at any given time we may be engaged in discussions with respect to possible new ventures and acquisitions.
We cannot assure you that we will be able to identify suitable acquisition targets or insurance ventures, that such transactions will be financed and completed on acceptable terms or that our future acquisitions or start-up ventures will be successful.
We cannot assure you that we will be able to identify suitable insurance ventures or acquisition targets, that such transactions will be financed and completed on acceptable terms or that our future start-up ventures or acquisitions will be successful.
Examples of emerging claims and coverage issues include, but are not limited to: 26 • judicial expansion of policy coverage and a greater propensity to grant claimants more favorable amounts and the impact of new theories of liability; • plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-handling and other practices; • social inflation trends, including higher and more frequent claims, more favorable judgments and legislated increases; • medical developments that link health issues to particular causes, resulting in liability claims; • claims relating to unanticipated consequences of current or new technologies, including cyber security related risks; • claims relating to potentially changing climate conditions; and • increased claims due to third party funding of litigation.
Examples of emerging claims and coverage issues include, but are not limited to: • judicial expansion of policy coverage and a greater propensity to grant claimants more favorable amounts and the impact of new theories of liability; • plaintiffs targeting property and casualty insurers, including us, in purported class action litigation relating to claims-handling and other practices; • social inflation trends, including higher and more frequent claims, more favorable judgments and legislated increases; • medical developments that link health issues to particular causes, resulting in liability claims; • claims relating to unanticipated consequences of current or new technologies, including cyber security related risks; • claims relating to potentially changing climate conditions; and • increased claims due to third party funding of litigation.
For 27 example, our business may be subject to, certain initiatives, including, but not limited to: legislative and regulatory action that seeks to retroactively mandate coverage for losses that our insurance policies would not otherwise cover and which were not priced to cover; legislative and regulatory action providing for shifting presumptions with respect to the burdens of proof for “essential” workers on workers’ compensation coverages and varying definitions of “essential” workers; actions prohibiting us from cancelling insurance policies in accordance with our policy terms or non-renewing policies at their natural expiration; and/or orders to provide premium refunds, grant extended grace periods for premium payments, and provide extended time to pay past due premiums.
For example, our business may be subject to, certain initiatives, including, but not limited to: legislative and regulatory action that seeks to retroactively mandate coverage for losses that our insurance policies would not otherwise cover and which were not priced to cover; legislative and regulatory action providing for shifting presumptions with respect to the burdens of proof for “essential” workers on workers’ compensation coverages and varying definitions of “essential” workers; actions prohibiting us from cancelling insurance policies in accordance with our policy terms or non-renewing policies at their natural expiration; and/or orders to provide premium refunds, grant extended grace periods for premium payments, and provide extended time to pay past due premiums.
Our financial results could be adversely affected by acquired businesses not performing as projected, unforeseen liabilities, routine and unanticipated transaction-related charges, diversion of management time and resources to acquisition integration challenges or growth strategies, loss of key employees, challenges in integrating information technology systems of acquired companies with our own, amortization of expenses related to intangibles, charges 32 for impairment of long-term assets or goodwill and indemnification.
Our financial results could be adversely affected by acquired businesses not performing as projected, unforeseen liabilities, routine and unanticipated transaction-related charges, diversion of management time and resources to acquisition integration challenges or growth strategies, loss of key employees, challenges in integrating information technology systems of acquired companies with our own, amortization of expenses related to intangibles, charges for impairment of long-term assets or goodwill and indemnification.
These estimates, which generally involve actuarial projections, are based on management's assessment of facts and circumstances then known, as well as estimates of future trends in claims severity and frequency, inflation, judicial theories of liability, reinsurance coverage, legislative changes and other factors, including the actions of third parties, which are beyond our control.
These estimates, which generally involve actuarial projections, are based on management's assessment of facts and circumstances then known, as 28 well as estimates of future trends in claims severity and frequency, inflation, judicial theories of liability, reinsurance coverage, legislative changes and other factors, including the actions of third parties, which are beyond our control.
For example our policyholders, independent agents or brokers may not pay a part of or the full amount of premiums owed to us 31 or our brokers or other third party claim administrators may not deliver amounts owed on claims under our insurance and reinsurance contracts for which we have provided funds.
For example our policyholders, independent agents or brokers may not pay a part of or the full amount of premiums owed to us or our brokers or other third party claim administrators may not deliver amounts owed on claims under our insurance and reinsurance contracts for which we have provided funds.
State regulation is the primary form of regulation of insurance and reinsurance in the United States, although Congress has considered various proposals regarding federal regulation of insurance, in addition to the changes brought about by the Dodd-Frank Act, such as proposals for the creation of an optional federal charter for insurance companies.
State regulation is the primary form of regulation of insurance and reinsurance in the United States, although Congress has considered various proposals regarding federal regulation of insurance, in addition to the changes brought about by the 32 Dodd-Frank Act, such as proposals for the creation of an optional federal charter for insurance companies.
In the context of the taxation of U.S. property/casualty insurance companies such as the Company, the Act also modified the loss reserve discounting rules and the proration rules that apply to reduce reserve deductions to reflect the lower 33 corporate income tax rate.
In the context of the taxation of U.S. property/casualty insurance companies such as the Company, the Act also modified the loss reserve discounting rules and the proration rules that apply to reduce reserve deductions to reflect the lower corporate income tax rate.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities 30 could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us.
If we do not have the requisite licenses and approvals or do not comply with applicable regulatory requirements, the insurance regulatory authorities could preclude or temporarily suspend us from carrying on some or all of our activities or monetarily penalize us.
These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable.
These provisions may discourage potential acquisition proposals and may delay, deter or prevent a change in control of us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable. 38
There is a growing scientific consensus that global warming and other climate change are altering the frequency, severity and peril characteristics of catastrophic weather events, such as hurricanes, windstorms, floods and other natural disasters.
There is a scientific consensus that global warming and other climate change are altering the frequency, severity and peril characteristics of catastrophic weather events, such as hurricanes, windstorms, floods and other natural disasters.
A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk) or damage to our reputation. We could be adversely affected by changes in U.S.
A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system's objectives will be met. If our controls are not effective, it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), regulatory scrutiny, and/or damage to our reputation. We could be adversely affected by changes in U.S.
However, loss costs have also increased and the duration and magnitude of the improving pricing environment remains uncertain. Despite rising interest rates, current price levels for certain lines of business may remain below the prices required for us to achieve our long-term return objectives. We expect to continue to face strong competition in our business.
However, loss costs have also increased and the duration and magnitude of the improving pricing environment remains uncertain. Despite higher interest rates, current price levels for certain lines of business may remain below the prices required for us to achieve our long-term return objectives. We expect to continue to face strong competition in our business.
This system of regulation, generally administered in the United States by a department of insurance in each state in which we do business, relates to, among other things: • standards of solvency, including risk-based capital measurements; • restrictions on the nature, quality and concentration of investments; • limitations on the amount of dividends, tax distributions, intercompany loans and other payments that can be made without prior regulatory approval; • requirements pertaining to certain methods of accounting; • evaluating enterprise risk to an insurer; • rate and form regulation pertaining to certain of our insurance businesses; • potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies provided by impaired, insolvent or failed insurance companies; and • involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.
This system of regulation, generally administered in the United States by a department of insurance in each state in which we do business, relates to, among other things: • standards of solvency, including risk-based capital measurements; • restrictions on the nature, quality and concentration of investments; • limitations on the amount of dividends, tax distributions, intercompany loans and other payments that can be made without prior regulatory approval; • requirements pertaining to certain methods of accounting; • evaluating enterprise risk to an insurer; • privacy, data protection, and cybersecurity; • rate and form regulation pertaining to certain of our insurance businesses; • potential assessments for the provision of funds necessary for the settlement of covered claims under certain policies provided by impaired, insolvent or failed insurance companies; and • involvement in the payment or adjudication of catastrophe or other claims beyond the terms of the policies.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current loss reserves. In addition, our estimate of loss reserves may change.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current loss 31 reserves. In addition, our estimate of loss reserves may change.
Cybersecurity breaches, including physical or electronic break-ins, computer viruses, malware, attacks by hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other similar breaches can create system disruptions, shutdowns or unauthorized access to information maintained in our information technology systems and in the information technology systems of our vendors and other third parties.
Cybersecurity breaches, including physical or electronic break-ins, computer viruses, malware, attacks by hackers, ransomware attacks, phishing attacks, supply chain attacks, breaches due to employee error or misconduct and other similar breaches can create system disruptions, shutdowns or unauthorized access to, or disclosure of, information maintained in our information technology systems and in the information technology systems of our 35 vendors and other third parties.
Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms and by diversifying our portfolio and emphasizing preservation of principal, our efforts may not be successful. Impairments, defaults and/or rate increases could reduce our net investment income and net realized investment gains or result in investment 34 losses.
Although we attempt to manage these risks through the use of investment guidelines and other oversight mechanisms and by diversifying our portfolio and emphasizing preservation of principal, our efforts may not be successful. Impairments, defaults and/or rate increases could reduce our net investment income or realized and unrealized investment gains or result in investment losses.
The payment of dividends by our insurance company subsidiaries is subject to regulatory restrictions and competitive pressures on maintaining financial strength ratings and will depend on the surplus and future earnings of these subsidiaries. During 2023, the maximum amount of dividends that can be paid without regulatory approval is approximately $1.2 billion.
The payment of dividends by our insurance company subsidiaries is subject to regulatory restrictions and competitive pressures on maintaining financial strength ratings and will depend on the surplus and future earnings of these subsidiaries. During 2024, the maximum amount of dividends that can be paid without regulatory approval is approximately $1.2 billion.
Changes in the value of the U.S. dollar relative to other currencies could have an adverse effect on our results of operations and financial condition. Our investments in non-U.S.-denominated assets are subject to fluctuations in non-U.S. securities and currency markets, and those markets can be volatile.
Changes in the value of the U.S. dollar relative to other currencies have had and could in the future have an adverse effect on our results of operations and financial condition. Our investments in non-U.S.-denominated assets are subject to fluctuations in non-U.S. securities and currency markets, and those markets can be volatile.
These activities often are subject to internal guidelines and policies, as well as legal and regulatory standards, including those related to privacy, anti-corruption, anti-bribery and global finance and insurance matters. Our continued expansion into new international markets has brought about additional requirements.
These activities often are subject to internal guidelines and policies, as well as legal and regulatory standards, including those related to privacy and data security, anti-corruption, anti-bribery and global finance and insurance matters. Our continued expansion into new international markets has brought about additional requirements.
The COVID-19 pandemic has previously materially and adversely affected our results of operations, and, whether as a result of COVID-19's long-term effects, or new or emerging variants, or other potential pandemics, may further materially and adversely affect our results of operations, financial position and liquidity in the future.
The COVID-19 pandemic materially and adversely affected our results of operations, and, whether as a result of COVID-19's long-term effects, or new or emerging variants, or other potential pandemics, may further materially and adversely affect our results of operations, financial position and liquidity in the future.
The ongoing COVID-19 pandemic, including the related impact on the U.S. and global economies, materially and adversely affected our results of operations. The pandemic and its impact on our business may continue, and potentially even worsen, whether as a result of COVID-19's long-term effects, or new or emerging variants, or even other potential pandemics.
The COVID-19 pandemic, including the related impact on the U.S. and global economies, materially and adversely affected our results of operations. The pandemic's impact on our business may continue, and potentially even worsen, whether as a result of COVID-19's long-term effects, or new or emerging variants, or even other potential pandemics.
There may be uncertainty surrounding the availability of reinsurance coverage for COVID-19-related losses as our reinsurers may dispute the applicability of reinsurance to such losses (including the application of reinsurance reinstatements) and, as a result, our reinsurers may refuse to pay reinsurance recoverables related thereto or they may not pay them on a timely basis.
There may be uncertainty surrounding the availability of reinsurance coverage for losses related to COVID-19 or any future pandemics as our reinsurers may dispute the applicability of reinsurance to such losses (including the application of reinsurance reinstatements) and, as a result, our reinsurers may refuse to pay reinsurance recoverables related thereto or they may not pay them on a timely basis.
These competitors within the reinsurance market include Swiss Re, Munich Re, Berkshire Hathaway and Partner Re. We expect that perceived financial strength, in particular, will become more important as customers seek high quality reinsurers. 25 Recently, insurance prices have generally increased for most lines of business, excluding workers' compensation.
These competitors within the reinsurance market include Swiss Re, Munich Re, Berkshire Hathaway and Partner Re. We expect that perceived financial strength, in particular, will become more important as customers seek high quality reinsurers. Recently, insurance prices have generally increased for most lines of business, excluding workers' compensation and certain professional liability lines of business.
Our merger arbitrage positions are exposed to the risk associated with the completion of announced deals, which are subject to regulatory as well as political and other risks. Real estate related investments, including directly owned, investment funds and loans receivable, were $1.7 billion, or 7.1% of our investment portfolio, including cash and cash equivalents, at December 31, 2022.
Our merger arbitrage positions are exposed to the risk associated with the completion of announced deals, which are subject to regulatory as well as political and other risks. Real estate related investments, including directly owned, investment funds and loans receivable, were $1.7 billion, or 6.2% of our investment portfolio, including cash and cash equivalents, at December 31, 2023.
As of December 31, 2022, the amount due from our reinsurers was approximately $3,188 million, including amounts due from state funds and industry pools where it was intended that we would bear no risk. Certain of these amounts are secured by letters of credit or by funds held in trust on our behalf.
As of December 31, 2023, the amount due from our reinsurers was approximately $3,535 million, including amounts due from state funds and industry pools where it was intended that we would bear no risk. Certain of these amounts are secured by letters of credit or by funds held in trust on our behalf.
However, any such coverage would be subject to a mandatory deductible based on 20% of earned premium for the prior year for the covered lines of commercial property and casualty insurance. Based on our 2022 earned premiums, our aggregate deductible under TRIPRA during 2023 is approximately $1,310 million.
However, any such coverage would be subject to a mandatory deductible based on 20% of earned premium for the prior year for the covered lines of commercial property and casualty insurance. Based on our 2023 earned premiums, our aggregate deductible under TRIPRA during 2024 is approximately $1,464 million.
As the effects of COVID-19 on industry practices and economic, legal, judicial, social and other environmental conditions occur, unexpected and unintended issues related to claims and coverages may emerge.
As the effects of COVID-19 or future pandemics on industry practices and economic, legal, judicial, social and other environmental conditions occur, unexpected and unintended issues related to claims and coverages may emerge.
Any such action would likely increase both our underwriting losses and our expenses and any legal challenges to any such action could take years to resolve. Claim Losses Related to COVID-19 May Exceed Reserves . As of December 31, 2022, we recorded approximately $341 million for COVID-19-related losses.
Any such action would likely increase both our underwriting losses and our expenses and any legal challenges to any such action could take years to resolve. Claim Losses Related to COVID-19 May Exceed Reserves . As of December 31, 2023, we recorded approximately $384 million for COVID-19-related losses.
Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or other third party service providers are unable to continue to work because of illness, government directives or otherwise.
Operational Disruptions and Costs . Our operations could be disrupted if key members of our senior management or a significant percentage of our workforce or the workforce of our agents, brokers, suppliers or other third party service providers are unable to continue to work because of illness, government directives or otherwise.
In addition, we may be unable to renew our current reinsurance coverages or obtain appropriate new reinsurance covers with respect to certain exposures under our policies, including COVID-19-related exposures, and therefore our net exposures could increase, or if we are unwilling to bear such increase in net exposure, we may reduce our level of underwriting commitments.
Legal Proceedings." In addition, we may be unable to renew our current reinsurance coverages or obtain appropriate new reinsurance covers with respect to certain exposures under our policies, including exposures related to COVID-19 or any future pandemics, and therefore our net exposures could increase, or if we are unwilling to bear such increase in net exposure, we may reduce our level of underwriting commitments.
The process of integrating any companies we do acquire or investing in new ventures may have a material adverse effect on our results of operations and financial condition. If we experience difficulties with our information technology, telecommunications or other computer systems, our ability to conduct our business could be negatively or severely impacted.
The process of investing in new ventures or integrating any companies we do acquire may have a material adverse effect on our results of operations and financial condition. If our information technology, telecommunications or other computer systems become unavailable or unreliable, our ability to conduct our business could be negatively or severely impacted.
For example, catastrophe losses net of reinsurance recoveries, including COVID-19 related losses, were $212 million in 2022, $202 million in 2021, and $340 million in 2020. Similarly, man-made catastrophes can also have a material impact on our financial results.
For example, catastrophe losses net of reinsurance recoveries, including COVID-19 related losses, were $195 million in 2023, $212 29 million in 2022, and $202 million in 2021. Similarly, man-made catastrophes can also have a material impact on our financial results.
The Dodd-Frank Act also established a Federal Insurance Office (“FIO”) which is authorized to study, monitor and report to Congress on the U.S. insurance industry and the significance of global reinsurance to the U.S. insurance market.
The Dodd-Frank Act also established a FIO which is authorized to study, monitor and report to Congress on the U.S. insurance industry and the significance of global reinsurance to the U.S. insurance market.
Our gross reserves for losses and loss expenses were approximately $17.0 billion as of December 31, 2022. Our loss reserves reflect our best estimates of the cost of settling claims and related expenses with respect to insured events that have occurred. Reserves do not represent an exact calculation of liability.
Our gross reserves for losses and loss expenses were approximately $18.7 billion as of December 31, 2023. Our loss reserves reflect our best estimates of the cost of settling claims and related expenses with respect to insured events that have occurred. Reserves do not represent an exact calculation of liability.
Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks.
Our operations rely on the secure processing, storage and transmission of confidential and other sensitive information, including personal information, in our computer systems and networks.
Investment returns are currently, and will likely continue to remain, under pressure due to economic uncertainty, more generally, and the shape of the yield curve. As a result, our exposure to the risks described above could materially and adversely affect our results of operations, liquidity and financial condition.
Investment returns are currently, and will likely continue to be, impacted by economic uncertainty, more generally, and the shape of the yield curve. As a result, our exposure to the risks described above could materially and adversely affect our results of operations, liquidity and financial condition.
Over the past several years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future 28 trends and exposures.
In recent years, changing weather patterns and climatic conditions, such as global warming, appear to have contributed to the unpredictability, frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures.
At December 31, 2022, our investment in these assets was approximately $5.3 billion, or 21.6%, of our investment portfolio, including cash and cash equivalents. Merger and arbitrage trading securities were $0.9 billion, or 3.9% of our investment portfolio, including cash and cash equivalents at December 31, 2022.
At December 31, 2023, our investment in these assets was approximately $5.1 billion, or 19.1%, of our investment portfolio, including cash and cash equivalents. Merger and arbitrage trading securities were $0.9 billion, or 3.5% of our investment portfolio, including cash and cash equivalents at December 31, 2023.
We may be subject to potentially increased federal oversight as a financial institution. In addition, the current U.S. administration and the volatile political environment may increase the chance of other federal legislative and regulatory changes that could affect us in ways we cannot predict.
We may be subject to potentially increased federal oversight as a financial institution. In addition, the current U.S. administration and the volatile political environment (including, in particular, the upcoming U.S. presidential election in November 2024) increases the chance of other federal legislative and regulatory changes that could affect us in ways we cannot predict.
As of that date, our portfolio of fixed maturity securities consisted of the following types of securities: U.S. Government securities (5.1%); state and municipal securities (16.8%); corporate securities (38.1%); asset-backed securities (22.6%); mortgage-backed securities (9.4%) and foreign government (8.0%). The fair value of these assets and the investment income from these assets fluctuate depending on general economic and market conditions.
As of that date, our portfolio of fixed maturity securities consisted of the following types of securities: U.S. Government securities (8.4%); state and municipal securities (13.3%); corporate securities (37.9%); asset-backed securities (20.8%); mortgage-backed securities (11.3%) and foreign government (8.3%). The fair value of these assets and the investment income from these assets fluctuate depending on general economic and market conditions.
Market conditions beyond our control determine the availability and cost of the reinsurance protection we seek to purchase, which may affect the level of our business and profitability.
We also purchase reinsurance on risks underwritten by others which we reinsure. Market conditions beyond our control determine the availability and cost of the reinsurance protection we seek to purchase, which may affect the level of our business and profitability.
Risks Relating to Our Investments A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations. Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2022, our investment in fixed maturity securities was approximately $17.6 billion, or 72.4% of our total investment portfolio, including cash and cash equivalents.
Risks Relating to Our Investments A significant amount of our assets is invested in fixed maturity securities and is subject to market fluctuations. 36 Our investment portfolio consists substantially of fixed maturity securities. As of December 31, 2023, our investment in fixed maturity securities was approximately $20.2 billion, or 75.8% of our total investment portfolio including cash and cash equivalents.
In the event of a disaster such as a natural catastrophe, terrorist attack or industrial accident, or the infection of our systems by a malicious computer virus, our systems could be inaccessible for an extended period of time.
In the event of a disaster such as a natural catastrophe, terrorist attack or industrial accident, physical or electronic security breaches, such as breaches by computer hackers, the infection of our systems by a malicious computer virus, denial of service attack, or other cybersecurity incident, our systems could be inaccessible for an extended period of time.
While we attempt to develop secure data transmission capabilities with these third-party vendors and others with whom we do business, our vendors and third parties could still suffer data breaches that could result in the exposure of sensitive data and the infiltration of our computer systems.
While we have implemented secure data transmission capabilities with these third-party vendors and others with whom we do business, such capabilities may not function as intended and our vendors and third parties could still suffer data breaches that could result in the exposure of sensitive data and the infiltration of our computer systems.
Consequently, any reduced economic activity relating to COVID-19 or other potential pandemics is likely to decrease demand for our insurance products and services and negatively impact our premium volumes (and, in certain cases, may result in return of premiums due to a decrease in exposures).
Premium Volumes May Be Negatively Impacted . The demand for insurance is significantly influenced by general economic conditions. Consequently, any reduced economic activity relating to potential pandemics is likely to decrease demand for our insurance products and services and negatively impact our premium volumes (and, in certain cases, may result in return of premiums due to a decrease in exposures).
We have to rely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt obligations, paying dividends to stockholders and repurchasing our shares and paying corporate expenses.
As an insurance holding company, our principal assets are the shares of capital stock of our insurance company subsidiaries. We have to rely on dividends from our insurance company subsidiaries to meet our obligations for paying principal and interest on outstanding debt obligations, paying dividends to stockholders and repurchasing our shares and paying corporate expenses.
We therefore may be required to utilize additional resources to ensure compliance with the different rules in each regime. If our compliance with Solvency II, the U.K.’s prudential regime or any other regulatory regime is challenged, we may be subject to monetary or other penalties.
If our compliance with Solvency II, the U.K.’s prudential regime or any other regulatory regime is challenged, we may be subject to monetary or other penalties.
The NYDFS also amended the regulation governing enterprise risk management, which applies to our insurance subsidiaries licensed in New York, that requires an insurance group's enterprise risk management function to address certain additional risks, including climate change risk. In addition, the FIO is assessing how the insurance sector may help mitigate climate-related risks and achieve national climate-related goals.
The NYDFS also amended the regulation governing enterprise risk management, which applies to our insurance subsidiaries licensed in New York, that requires an insurance group's enterprise risk management function to address certain additional risks, including climate change risk.
The Dodd-Frank Act effected sweeping changes to financial services regulation in the United States. The Dodd-Frank Act established the Financial Stability Oversight Council (“FSOC”), which is authorized to recommend that certain systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors of the Federal Reserve.
The Dodd-Frank Act established the FSOC, which is authorized to recommend that certain systemically significant non-bank financial companies, including insurance companies, be regulated by the Board of Governors of the Federal Reserve.
The results of companies in the property casualty insurance industry historically have been subject to significant fluctuations and uncertainties in demand and pricing, causing cyclical changes in the insurance and reinsurance industry.
Risks Relating to Our Industry Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance industry. 27 The results of companies in the property casualty insurance industry historically have been subject to significant fluctuations and uncertainties in demand and pricing, causing cyclical changes in the insurance and reinsurance industry.
These increased risks, and expanding regulatory requirements regarding data security, including required compliance with the GDPR, CCPA, CPRA and additional state-specific privacy statutes and regulations, could expose us to data loss, monetary and reputational damages and significant increases in compliance costs. As a result, our ability to conduct our business could be materially and adversely affected.
These increased risks, and expanding regulatory requirements regarding data security, including required compliance with applicable privacy and data protection laws (e.g., the GDPR, CCPA, and other state-specific privacy statutes and regulations, could expose us to data loss, monetary and reputational damages and significant increases in compliance costs.
These laws may discourage potential acquisition proposals and may delay, deter or prevent a change in control of us through transactions, and in particular unsolicited transactions, that some or all of our stockholders might consider to be desirable. 35 Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third party takeovers and thus may prevent our stockholders from receiving premium prices for their shares in an unsolicited takeover or make it more difficult for third parties to replace our current management.
Certain provisions in our organizational documents may have the effect of hindering, delaying or preventing third party takeovers and thus may prevent our stockholders from receiving premium prices for their shares in an unsolicited takeover or make it more difficult for third parties to replace our current management.
In addition to those described below, our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we currently consider immaterial. Risks Relating to Our Industry Our results may fluctuate as a result of many factors, including cyclical changes in the insurance and reinsurance industry.
In addition to those described below, our businesses may also be adversely affected by risks and uncertainties not currently known to us or that we currently consider immaterial.
We could be adversely affected if our controls to ensure compliance with guidelines, policies and legal and regulatory standards are not effective. Our business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting, claim processing and investment activities, many of which are highly complex.
Our business is highly dependent on our ability to engage on a daily basis in a large number of insurance underwriting, claim processing and investment activities, many of which are highly complex.
The circular letter states that the NYDFS expects these insurers to integrate financial risks related to climate change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their approach to climate-related financial disclosure.
For instance, in New York, the NYDFS’s circular letter, which applies to our insurance subsidiaries licensed in New York, states that regulated insurers are expected to integrate financial risks related to climate change into their governance frameworks, risk management processes, business strategies and scenario analysis, and develop their approach to climate-related financial disclosure.
Risks Relating to Limitations on Dividends from Subsidiaries and Anti-Takeover Provisions We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts. As an insurance holding company, our principal assets are the shares of capital stock of our insurance company subsidiaries.
These investments are subject to significant volatility as a result of the conditions in the financial and commodity markets and the global economy. 37 Risks Relating to Limitations on Dividends from Subsidiaries and Anti-Takeover Provisions We are an insurance holding company and, therefore, may not be able to receive dividends in needed amounts.
Our Insurance business internationally is also generally subject to a similar regulatory scheme in each of the jurisdictions where we conduct operations outside the United States. 29 Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be taken in response to conditions in the financial markets, global insurance supervision and other factors may lead to additional federal regulation of the insurance industry in the coming years.
Federal financial services modernization legislation and legislative and regulatory initiatives taken or which may be taken in response to conditions in the financial markets, global insurance supervision and other factors may lead to additional federal regulation of the insurance industry in the coming years. The Dodd-Frank Act effected sweeping changes to financial services regulation in the United States.
The ultimate impact of COVID-19 on our results of operations, financial position and liquidity is not yet known, but includes the following : Adverse Legislative and Regulatory Action. Legislative and regulatory initiatives in response to COVID-19 or other similar pandemics may adversely affect us, particularly in our workers’ compensation and property coverages businesses.
Legislative and regulatory initiatives in response to COVID-19 or other similar future pandemics may adversely affect us, particularly in our workers’ compensation and property coverages businesses.
As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk underwritten by our insurance company subsidiaries, especially catastrophe risks and those risks with relatively high policy limits. We also purchase reinsurance on risks underwritten by others which we reinsure.
If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments. 34 As part of our overall risk and capacity management strategy, we purchase reinsurance for certain amounts of risk underwritten by our insurance company subsidiaries, especially catastrophe risks and those risks with relatively high policy limits.
However, the two regimes, and their respective requirements, are likely to diverge in the near future due to both the EU’s review of Solvency II described above and HM Treasury’s publication of a finalized package of reforms to the U.K.’s domestic prudential regime on November 17, 2022 (please see “International Regulation” above for more information).
However, the two regimes, and their respective requirements, are diverging due to both the EU’s review of Solvency II described above and the recently adopted reforms to the U.K.’s domestic prudential regime (please see “International Regulation” above for more information). We therefore may be required to utilize additional resources to ensure compliance with the different rules in each regime.
The demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often directly related to available capacity or the perceived profitability of the business. We have faced significant competition in our business as a result of existing insurers seeking to gain or maintain market share as well as new entrants and capital providers.
The demand for insurance is influenced primarily by general economic conditions, while the supply of insurance is often directly related to available capacity or the perceived profitability of the business.
In addition, the economic uncertainty may result in a decline in interest rates, which may negatively impact our net investment income from future investment activity. Operational Disruptions and Costs .
Investments . Disruptions in global financial markets due to future pandemics could cause us to incur unrealized and/or realized investment losses, including impairments in our fixed maturity portfolio and other investments. In addition, the economic uncertainty may result in a decline in interest rates, which may negatively impact our net investment income from future investment activity.
A significant downgrade could result in a substantial loss of business as policyholders move to other companies with higher financial strength ratings. If market conditions cause reinsurance to be more costly or unavailable, we may be required to bear increased risks or reduce the level of our underwriting commitments.
A significant downgrade could result in a substantial loss of business as policyholders move to other companies with higher financial strength ratings.
In addition, our investments in real estate related assets and other alternative investments are less liquid than our other investments. These investments are subject to significant volatility as a result of the conditions in the financial and commodity markets and the global economy.
In addition, our investments in real estate related assets and other alternative investments are less liquid than our other investments.
Recently, premium rates have increased for most lines of business, while they have decreased in others, most notably workers' compensation.
At times, we have faced significant competition in our business as a result of existing insurers seeking to gain or maintain market share as well as new entrants and capital providers. Recently, premium rates have increased for most lines of business, while they have decreased in others, most notably workers' compensation and certain professional liability lines of business.
The topic of climate risk has come under increased scrutiny by the NAIC and insurance regulators. For instance, in New York, the NYDFS issued a circular letter in September 2020 that applies to both New York domestic and foreign authorized insurers, such as our insurance subsidiaries licensed in New York.
The topic of climate risk has come under increased scrutiny by the NAIC and insurance regulators.
We cannot predict the magnitude or duration of such impact, particularly given the uncertainties associated with COVID-19, including regarding the U.S. and global economies and the recovery from its devastating economic and other effects.
We cannot predict the magnitude or duration of such impact, particularly given the uncertainties associated with COVID-19 or other potential pandemics. The ultimate impact of COVID-19 or other potential pandemics on our results of operations, financial position and liquidity is not yet known, but includes the following: Adverse Legislative and Regulatory Action.
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Premium Volumes May Be Negatively Impacted . The demand for insurance is significantly influenced by general economic conditions.
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On December 22, 2023, one of the 30 Company’s subsidiaries filed a lawsuit against certain reinsurers to recover in excess of $90 million in respect of certain losses paid to its policyholders under certain event cancellation and related insurance policies. See, "Item 3.
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This may continue for an indefinite period, with the magnitude of the impact impossible to predict. In addition, as we continue to evaluate the effects of COVID-19 on the insurance coverages we currently offer, our appetite for providing certain coverages in various jurisdictions may change, which could further negatively impact our premium volumes.
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Our Insurance business internationally is also generally subject to a similar regulatory scheme in each of the jurisdictions where we conduct operations outside the United States.
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Any such reduction in our premiums would likely cause our expense ratio to rise . Investments . Further disruptions in global financial markets due to the continuing impact of COVID-19 or future pandemics could cause us to incur additional unrealized and/or realized investment losses, including impairments in our fixed maturity portfolio and other investments.
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In addition, the FIO is assessing how the insurance sector may help mitigate climate- related risks and achieve national climate-related goals, and it released a report in June 2023 urging insurance regulators to adopt climate-related risk monitoring guidance. These measures may subject us to increased oversight at the state and federal level.
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These measures may subject us to increased oversight at the state and federal level.
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As described in “International Regulation” above, the EU is performing a review of Solvency II and various regulatory reforms are expected to be introduced during 2024, which EU member states will implement in their domestic regulation.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeRental expense for the Company's operations was approximately $43,383,000, $44,051,000 and $44,291,000 for 2022, 2021 and 2020, respectively. Future minimum lease payments, without provision for sublease income, are $32,282,796 in 2023, $33,528,105 in 2024 and $599,371,375 thereafter.
Biggest changeRental expense for the Company's operations was approximately $44,256,000, $43,383,000 and $44,051,000 for 2023, 2022 and 2021, respectively. Future minimum lease payments, without provision for sublease income, are $50,222,000 in 2024, $41,249,000 in 2025 and $166,192,000 thereafter.
ITEM 2. PROPERTIES W. R. Berkley and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At December 31, 2022, the Company had aggregate office space of 4,295,165 square feet, of which 1,048,136 were owned and 3,247,029 were leased.
ITEM 2. PROPERTIES W. R. Berkley and its subsidiaries own or lease office buildings or office space suitable to conduct their operations. At December 31, 2023, the Company had aggregate office space of 4,333,225 square feet, of which 1,042,156 were owned and 3,291,069 were leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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On December 22, 2023, one of the Company’s subsidiaries filed a lawsuit against certain reinsurers to recover in excess of $90 million in respect of certain losses paid to its policyholders under certain event cancellation and related insurance policies. The Company believes its claims against the reinsurers are meritorious and expects a positive resolution to its lawsuit.
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While an adverse outcome is possible, the Company believes that the outcome, in any case, will not be material to the Company’s financial condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES In 2022, the Board declared regular quarterly cash dividends of $0.09 per share in the first quarter, and $0.10 per share in each of the remaining three quarters, and special dividends of $0.50 per share in the second quarter.
Biggest changeIn 2023, the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter and $0.11 per share in each of the remaining three quarters, as well as special dividends of $0.50 per share in the first, third, and fourth quarters, for a total of $501 million in aggregate dividends in 2023.
Berkley Corporation (added Dec. 2019). 2017 2018 2019 2020 2021 2022 W. R.
Berkley Corporation (added Dec. 2019). 2018 2019 2020 2021 2022 2023 W. R.
Comparison of 5 Year Cumulative Total Return Assumes initial investment of $100 on January 1, 2017, with dividends reinvested. As of December 31, 2022, the S&P 500® Property and Casualty Insurance Index consists of Allstate Corporation, Arch Capital Group Ltd. (added Nov. 2022), Chubb, Ltd., Cincinnati Financial Corporation, Progressive Corporation, The Travelers Companies, Inc., and W. R.
As of December 31, 2023 , the S&P 500® Property and Casualty Insurance Index consists of The Allstate Corporation, Arch Capital Group Ltd. (added Nov. 2022), Chubb Limited, Cincinnati Financial Corporation, The Hartford Financial Services Group, Inc., Loews Corporation (CNA), The Progressive Corporation, The Travelers Companies, Inc., and W. R.
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 October 2022 325,596 $ 69.22 325,596 14,568,100 November 2022 938,494 69.29 938,494 13,629,606 December 2022 — — — 13,629,606 38
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 October 2023 371,497 $ 63.75 371,497 14,430,487 November 2023 — — — 14,430,487 December 2023 1,189,204 69.75 1,189,204 13,241,283 42
Subject to availability, the Board currently expects to continue such regular quarterly cash dividends. The approximate number of record holders of the common stock on February 15, 2023 was 323. 37 The chart below shows a comparison of 5 year cumulative total return.
The approximate number of record holders of the common stock on February 15, 2024 was 327. 41 The chart below shows a comparison of 5 year cumulative total return. Comparison of 5 Year Cumulative Total Return Assumes initial investment of $100 on January 1, 2018, with dividends reinvested.
Berkley Corporation Cum $ 100.00 104.61 150.46 145.72 185.56 240.56 S&P 500 Index - Total Returns Cum $ 100.00 95.61 125.70 148.81 191.48 156.69 S&P 500 Property and Casualty Insurance Index Cum $ 100.00 95.31 119.97 127.56 149.90 178.27 Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of 2022 and the remaining number of shares authorized for purchase by the Company during such period.
Berkley Corporation Cum $ 100.00 143.83 139.30 177.37 237.46 238.04 S&P 500 Index - Total Returns Cum $ 100.00 131.48 155.64 200.28 163.89 207.05 S&P 500 Property and Casualty Insurance Index Cum $ 100.00 125.87 133.84 157.28 187.04 207.20 Set forth below is a summary of the shares repurchased by the Company during the fourth quarter of 2023 and the remaining number of shares authorized for purchase by the Company during such period.
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of the Company is traded on the New York Stock Exchange under the symbol “WRB”.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe $359 million increase in net income was primarily due to an after-tax increase in underwriting income of $145 million mainly due to the growth in premium rates and exposure as well as reductions in expense ratio driven by net earned premium growth outpacing expense growth, an after-tax increase in net investment gains of $90 million primarily due to the sale of a real estate investment in London as well as change in market value of equity securities, an after-tax increase in net investment income of $87 million primarily due to rising interest rates and a larger investment portfolio related to fixed maturity securities, an after-tax increase in foreign currency gains of $20 million, an after-tax reduction in interest expenses of $14 million due to debt repayment and refinancings, an after-tax reduction on debt extinguishment expense of $9 million for debt redeemed in 2021, an after-tax increase in profit from insurance service businesses of $5 million, an after-tax increase of $5 million in minority interest and a reduction of $2 million in tax expense due to a change in the effective tax rate, partially offset by an after-tax increase in corporate expenses of $17 million mainly due to performance-based compensation costs and an after-tax decrease in profits from non-insurance businesses of $1 million.
Biggest changeThe 2023 net income reflected an after-tax increase in net investment income of $216 million primarily due to rising interest rates and a larger investment portfolio related to fixed maturity securities, an after-tax increase in underwriting income of $38 million mainly due to the growth in premium rates, an after-tax reduction in interest expenses of $2 million due to debt repayment in 2022, an after-tax increase in profit from insurance service businesses of $1 million and an after-tax increase of $1 million in minority interest, offset by an after-tax reduction in net investment gains of $123 million mainly due to the gain on sale of a real estate investment in 2022, an after-tax increase in foreign currency losses of $65 million mainly due to weakening of the U.S. dollar against other currencies in 2023, an after-tax increase in corporate expenses of $37 million due to increased compensation-related costs, an increase of $28 million in tax expense due to a change in the effective tax rate and an after-tax decrease in profits from non-insurance businesses of $5 million.
The favorable development on the 2020 accident year was largely concentrated in the commercial auto liability and other liability lines of business, including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in its budget and in its initial loss ratio selections.
The favorable development on the 2020 accident year was largely concentrated in the auto liability and other liability lines of business, including commercial multi-peril liability. During 2020 the Company achieved larger rate increases in these lines of business than were contemplated in its budget and in its initial loss ratio selections.
Based upon the Company’s review of the methodologies used by the syndicate manager, these securities were classified as Level 2. 47 Observable data – If independent pricing is not available, the Company prices the securities directly. Prices are based on observable market data where available, including current trading levels for similar securities and non-binding quotations from brokers.
Based upon the Company’s review of the methodologies used by the syndicate manager, these securities were classified as Level 2. Observable data – If independent pricing is not available, the Company prices the securities directly. Prices are based on observable market data where available, including current trading levels for similar securities and non-binding quotations from brokers.
In 2022, the gains reflected net realized gains on investments of $218 million (primarily due to a $251 million net gain from sale of a real estate investment in London after 50 transaction expenses and the foreign currency impact including reversal of the currency translation adjustment), partially offset by a change in unrealized losses on equity securities of $1 million.
In 2022, the gains reflected net realized gains on investments of $218 million (primarily due to a $251 million net gain from the sale of a real estate investment in London after transaction expenses and the foreign currency impact including reversal of the currency translation adjustment), partially offset by a change in unrealized losses on equity securities of $1 million.
As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022. The unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including medical professional, lines of business, as well as commercial auto liability.
As these accident years have continued to mature, the Company has continued to recognize some of the favorable reported experience in its ultimate loss estimates made during 2022. The unfavorable development on the 2015 through 2019 accident years was concentrated in the general liability and professional liability, including medical professional, lines of business, as well as auto liability.
Fair value is defined as "the price that would be received to sell an asset or 46 paid to transfer a liability in an orderly transaction between market participants at the measurement date". The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
Fair value is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
The Company experienced lower 43 reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continued to experience lower reported incurred losses relative to its expectations for these accident years as they developed during 2022.
The Company experienced lower reported claim frequency in these lines of business during 2020 and 2021 relative to historical averages, and continued to experience lower reported incurred losses relative to its expectations for these accident years as they developed during 2022.
The Company determines whether inputs are observable based on the use of such information by pricing services and external investment managers, the uninterrupted availability of such inputs, the need to make significant adjustments to such inputs and the volatility of such inputs over time.
The Company determines whether inputs are observable based on the use of such information by pricing services and external investment managers, the uninterrupted availability of such inputs, the need to make significant 50 adjustments to such inputs and the volatility of such inputs over time.
These premium estimates represent management’s best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements. 45 Allowance for Expected Credit Losses on Investments .
These premium estimates represent management’s best estimate of the ultimate amount of premiums to be received under its assumed reinsurance agreements. Allowance for Expected Credit Losses on Investments .
Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of aggregate policy limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles and attachment points. 40 The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns.
Examples of changes in terms and conditions that can have a significant impact on reserve levels are the use of aggregate policy limits, the expansion of coverage exclusions, whether or not defense costs are within policy limits, and changes in deductibles and attachment points. 44 The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns.
Based on historical results and the prospects for future operations, management anticipates that it is more likely than not that future taxable income will be sufficient for the realization of this asset. 56 Reinsurance The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying reinsurers a part of the premiums received on the policies it writes.
Based on historical results and the prospects for future operations, management anticipates that it is more likely than not that future taxable income will be sufficient for the realization of this asset. 58 Reinsurance The Company follows customary industry practice of reinsuring a portion of its exposures in exchange for paying reinsurers a part of the premiums received on the policies it writes.
However, management of the available for sale 54 portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio as a result of changes in financial market conditions and tax considerations. The Company’s philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing total return.
However, management of the available for sale 56 portfolio is considered necessary to maintain an approximate matching of assets and liabilities as well as to adjust the portfolio as a result of changes in financial market conditions and tax considerations. The Company’s philosophy related to holding or selling fixed maturity securities is based on its objective of maximizing total return.
Investment funds are primarily reported on a one-quarter lag. Real Estate . Real estate is directly owned property held for investment. At December 31, 2022, real estate properties in operation included a long-term ground lease in Washington D.C., an office complex in New York City and the completed portion of a mixed-use project in Washington D.C.
Investment funds are primarily reported on a one-quarter lag. Real Estate . Real estate is directly owned property held for investment. At December 31, 2023, real estate properties in operation included a long-term ground lease in Washington D.C., an office complex in New York City and the completed portion of a mixed-use project in Washington D.C.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2022), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.
The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2023), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $169 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $261 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
Securities that are not rated by a rating agency are evaluated and classified by the Company on a case-by-case basis. A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at December 31, 2022 is presented in the table below.
Securities that are not rated by a rating agency are evaluated and classified by the Company on a case-by-case basis. A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at December 31, 2023 is presented in the table below.
In addition, the Company periodically performs independent price tests of a sample of securities to ensure proper valuation and to verify our understanding of how securities are priced. As of December 31, 2022, the Company did not make any adjustments to the prices provided by the pricing services.
In addition, the Company periodically performs independent price tests of a sample of securities to ensure proper valuation and to verify our understanding of how securities are priced. As of December 31, 2023, the Company did not make any adjustments to the prices provided by the pricing services.
The ultimate impact of COVID-19 on the economy and the Company’s results of operations, financial position and liquidity is not within the Company’s control and remains unclear due to, among other factors, its ongoing impact and uncertainty in connection with its claims, reserves and reinsurance recoverables. 39 Critical Accounting Estimates The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed reinsurance premiums and other-than-temporary impairments of investments.
The ultimate impact of COVID-19 on the Company’s results of operations, financial position and liquidity is not within the Company’s control and remains unclear due to, among other factors, its ongoing impact and uncertainty in connection with its claims, reserves and reinsurance recoverables. 43 Critical Accounting Estimates The following presents a discussion of accounting policies and estimates relating to reserves for losses and loss expenses, assumed reinsurance premiums and other-than-temporary impairments of investments.
Based on credit factors, the allowance for expected credit losses is increased or decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.
Change in Allowance for Expected Credit Losses on Investments. Based on credit factors, the allowance for expected credit losses is increased or decreased depending on the percentage of unrealized loss relative to amortized cost by security, changes in rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.
This pertains to all traditional treaty reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating. Lifson Re has been capitalized with $380 million of equity from a small group of sophisticated global investors with long-term investment horizons, including a minority participation by the Company.
This pertains to all traditional treaty reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating. Lifson Re is currently capitalized with $380 million of equity from a small group of sophisticated global investors with long-term investment horizons, including a minority participation by the Company.
Furthermore, due to 41 delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is also extended. Management considers the impact of delayed reporting and the extended tail in its selection of loss development factors for these lines of business.
Furthermore, due to 45 delayed reporting of claim information by ceding companies, the claim settlement tail for assumed reinsurance is also extended. Management considers the impact of delayed reporting and the extended tail in its selection of loss development factors for these lines of business.
Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 2.9% in 2022 and 2.2% in 2021. The effective duration of the fixed maturity portfolio was 2.4 years at both December 31, 2022 and 2021.
Investment funds are reported on a one quarter lag. The average annualized yield for fixed maturity securities was 4.4% in 2023 and 2.9% in 2022. The effective duration of the fixed maturity portfolio was 2.4 years at both December 31, 2023 and 2022.
At December 31, 2022, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%. Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2022) are excess workers’ compensation reserves.
At December 31, 2023, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%. Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2023) are excess workers’ compensation reserves.
Loans receivable include real estate loans of $174 million that are secured by commercial and residential real estate located primarily in London and New York. Real estate loans generally earn interest at fixed or stepped interest rates and have maturities through 2026.
Loans receivable include real estate loans of $200 million that are secured by commercial and residential real estate located primarily in London and New York. Real estate loans generally earn interest at fixed or stepped interest rates and have maturities through 2026.
The Company generally targets an average duration for its investment portfolio that is within 1.5 years of the average duration of its liabilities so that portions of its investment portfolio mature throughout the claim cycle and are available for the payment of claims if necessary.
The Company generally targets an average duration for its investment portfolio that is within 1.5 years of the average number of years held for its liabilities so that portions of its investment portfolio mature throughout the claim cycle and are available for the payment of claims if necessary.
While providing our business units with certain operating autonomy, our structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment, reinsurance, enterprise risk management, and actuarial, financial and corporate legal staff support. The Company’s primary sources of revenues and earnings are its insurance operations and its investments.
While providing our business units with certain operating autonomy, our structure allows us to capitalize on the benefits of economies of scale through centralized capital, investment, reinsurance, enterprise risk management, and actuarial, financial and corporate compliance support. The Company’s primary sources of revenues and earnings are its insurance operations and its investments.
Our workers’ compensation catastrophe reinsurance program is a shared cover for both excess and primary workers’ compensation business. • Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that are in excess of treaty reinsurance capacity. • Other reinsurance - Depending on the business, the Company purchases specific additional reinsurance to supplement the above programs. • Effective January 1, 2023, Lifson Re will continue to be a participant on the majority of the Company’s reinsurance placements for a 30.0% share of the placed amounts.
Our workers’ compensation catastrophe reinsurance program is a shared cover for both excess and primary workers’ compensation business. • Facultative reinsurance - The Company also purchases facultative reinsurance on certain individual policies or risks that are in excess of treaty reinsurance capacity. • Other reinsurance - Depending on the business, the Company purchases specific additional reinsurance to supplement the above programs. • Lifson Re will continue to be a participant on the majority of the Company’s reinsurance placements for a 30.0% share of the placed amounts.
The Company has no arrangements of these types that management believes may have a material current or future effect on our financial condition, liquidity or results of operations. 59
The Company has no arrangements of these types that management believes may have a material current or future effect on our financial condition, liquidity or results of operations. 61
For lines with short reporting lags, which include commercial automobile, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date.
For lines with short reporting lags, which include auto, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date.
The Company also attempts to maintain an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the investment portfolio was 2.4 years at both December 31, 2022 and 2021, respectively.
The Company also attempts to maintain an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the investment portfolio was 2.4 years at both December 31, 2023 and 2022.
These securities were classified as Level 3. 48 Results of Operations for the Years Ended December 31, 2022 and 2021 Business Segment Results Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the years ended December 31, 2022 and 2021.
These securities were classified as Level 3. 51 Results of Operations for the Years Ended December 31, 2023 and 2022 Business Segment Results Following is a summary of gross and net premiums written, net premiums earned, loss ratios (losses and loss expenses incurred expressed as a percentage of net premiums earned), expense ratios (underwriting expenses expressed as a percentage of net premiums earned) and GAAP combined ratios (sum of loss ratio and expense ratio) for each of our business segments for the years ended December 31, 2023 and 2022.
If the Company is unable to renew or replace its existing reinsurance coverage, protection for unexpired policies would remain in place until their expiration. In such case, the Company could revise its underwriting strategy for new business to reflect the absence of reinsurance protection. The casualty catastrophe treaty highlighted above was purchased on a losses discovered basis.
If the Company is unable to renew or replace its existing reinsurance coverage, protection for unexpired policies would remain in place until their expiration. In such case, the Company could revise its underwriting strategy for new business to reflect the absence of reinsurance protection. The casualty catastrophe treaty highlighted above was purchased on a “losses discovered” basis.
Cash flow provided from operating activities increased to $2,569 million in 2022 from $2,184 million in 2021, primarily due to an increase in premium receipts partially offset by increased loss and loss expense payments. The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and proceeds from sales and maturities of portfolio investments.
Cash flow provided from operating activities increased to $2,929 million in 2023 from $2,569 million in 2022, primarily due to an increase in premium receipts partially offset by increased loss and loss expense payments. The Company's insurance subsidiaries' principal sources of cash are premiums, investment income, service fees and proceeds from sales and maturities of portfolio investments.
The Company's investment portfolio is highly liquid, with approximately 76% invested in cash, cash equivalents and marketable fixed maturity securities as of December 31, 2022. If the sale of fixed maturity securities were to become necessary, a realized gain or loss equal to the difference between the cost and sales price of securities sold would be recognized. Debt .
The Company's investment portfolio is highly liquid, with approximately 81% invested in cash, cash equivalents and marketable fixed maturity securities as of December 31, 2023. If the sale of fixed maturity securities were to become necessary, a realized gain or loss equal to the difference between the cost and sales price of securities sold would be recognized. Debt .
The following table presents the Company’s net income to common stockholders and net income per diluted share for the years ended December 31, 2022 and 2021.
The following table presents the Company’s net income to common stockholders and net income per diluted share for the years ended December 31, 2023 and 2022.
A significant casualty treaty (casualty catastrophe) in effect as of January 1, 2023 provides significant protection for losses between $10 million and $60 million from single events with claims involving two or more insurable interests or for systemic events involving multiple insureds and/or policy years.
A significant casualty treaty (casualty catastrophe) in effect as of January 1, 2024 provides protection for losses between $10 million and $70 million from single events with claims involving two or more insurable interests or for systemic events involving multiple insureds and/or policy years.
The Company maintained the shortened duration of its fixed maturity security portfolio, thereby reducing the potential impact of mark-to-market on the portfolio and positioning the Company to react quickly to changes in the current interest rate environment. Average invested assets, at cost (including cash and cash equivalents), were $24.4 billion in 2022 and $22.2 billion in 2021.
The Company maintained the shortened duration of its fixed maturity security portfolio, thereby reducing the potential impact of mark-to-market on the portfolio and positioning the Company to react quickly to changes in the current interest rate environment. Average invested assets, at cost (including cash and cash equivalents), were $26.4 billion in 2023 and $24.4 billion in 2022.
Due to the ongoing uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company has been cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years.
Due to the uncertainty regarding the ultimate impacts of the pandemic on accident years 2020 and 2021 incurred losses, the Company was cautious in reacting to these lower trends in setting and updating its loss ratio estimates for these years.
Loans receivable include commercial loans of $19 million that are secured by business assets and have fixed interest rates with varying maturities not exceeding 10 years. 55 Liquidity and Capital Resources Cash Flow .
Loans receivable include commercial loans of $1 million that are secured by business assets and have fixed interest rates with varying maturities not exceeding 10 years. 57 Liquidity and Capital Resources Cash Flow .
Loans receivable are reported net of an allowance for expected credit losses of $2 million as of both December 31, 2022 and 2021. Fair Value Measurements . The Company’s fixed maturity available for sale securities, equity securities, and its trading account securities are carried at fair value.
Loans receivable are reported net of an allowance for expected credit losses of $3 million and $2 million as of December 31, 2023 and 2022, respectively. Fair Value Measurements . The Company’s fixed maturity available for sale securities, equity securities, and its trading account securities are carried at fair value.
Outstanding letters of credit were $5 million as of December 31, 2022. The Company has made certain guarantees to state regulators that the statutory capital of certain subsidiaries will be maintained above certain minimum levels.
Outstanding letters of credit were $29 million as of December 31, 2023. The Company has made certain guarantees to state regulators that the statutory capital of certain subsidiaries will be maintained above certain minimum levels.
At December 31, 2022, the Company had a gross deferred tax asset of $801 million (which primarily relates to unrealized losses on investments, loss and loss expense reserves and unearned premium reserves).
At December 31, 2023, the Company had a gross deferred tax asset of $777 million (which primarily relates to, loss and loss expense reserves, unearned premium reserves and unrealized losses on investments).
The maturities of the outstanding debt are $5 million in 2024, $2 million in 2025, $250 million in 2037, $350 million in 2044, $470 million in 2050, $400 million in 2052, $185 million in 2058, $300 million in 2059, $250 million in 2060, and $650 million in 2061.
The maturities of the outstanding debt are $7 million in 2024, $3 million in 2025, $250 million in 2037, $350 million in 2044, $470 million in 2050, $400 million in 2052, $185 million in 2058, $300 million in 2059, $250 million in 2060, and $650 million in 2061.
Changes in estimates of prior year losses are reported when such changes are made. The changes in prior year loss reserve estimates are generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information becomes known regarding individual claims and aggregate claim trends.
The changes in prior year loss reserve estimates are generally the result of ongoing analysis of recent loss development trends. Original estimates are increased or decreased as additional information becomes known regarding individual claims and aggregate claim trends.
As estimates of assumed premiums are made or revised, the related amount of earned premiums, commissions and incurred losses associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $60 million at both December 31, 2022 and 2021.
As estimates of assumed premiums are made or revised, the related amount of earned premiums, commissions and incurred losses associated with those premiums are recorded. Estimated assumed premiums receivable were approximately $65 million and $60 million at December 31, 2023 and 2022, respectively.
In addition, at December 31, 2022, the Company had commitments to invest up to $402 million and $146 million in certain investment funds and real estate construction projects, respectively. These amounts are not included in the above table. The Company utilizes letters of credit to back certain reinsurance payments and obligations.
In addition, at December 31, 2023, the Company had commitments to invest up to $339 million and $106 million in certain investment funds and real estate construction projects, respectively. These amounts are not included in the above table. The Company utilizes letters of credit to back certain reinsurance payments and obligations.
At December 31, 2022, the Company had senior notes, subordinated debentures and other debt outstanding with a carrying value of $2,837 million and a face amount of $2,862 million.
At December 31, 2023, the Company had senior notes, subordinated debentures and other debt outstanding with a carrying value of $2,837 million and a face amount of $2,865 million.
Effective January 1, 2020, the allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment gains (losses). The impairment related to non-credit factors is recognized in other comprehensive income (loss).
The allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment gains (losses). The 49 impairment related to non-credit factors is recognized in other comprehensive income (loss).
Approximately $3.0 billion, or 21%, of the Company’s net loss reserves as of December 31, 2022 relate to the Reinsurance & Monoline Excess segment. There is a higher degree of uncertainty and greater variability regarding estimates of excess workers' compensation and assumed reinsurance loss reserves.
Approximately $3.1 billion, or 20%, of the Company’s net loss reserves as of December 31, 2023 relate to the Reinsurance & Monoline Excess segment. There is a higher degree of uncertainty and greater variability regarding estimates of excess workers' compensation and assumed reinsurance loss reserves.
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs and expenses increased to $242 million in 2022 from $221 million in 2021, primarily due to the increase in performance-based compensation costs in 2022.
Other costs and expenses represent general and administrative expenses of the parent company and other expenses not allocated to business segments, including the cost of certain long-term incentive plans and new business ventures. Other costs and expenses increased to $286 million in 2023 from $242 million in 2022, primarily due to the increase in compensation-related costs in 2023.
The Company also has a $47 million valuation allowance against the gross deferred tax asset and a gross deferred tax liability of $425 million (which primarily relates to deferred policy acquisition costs, and various investment funds) resulting in a net deferred tax asset of $329 million.
The Company also has a $36 million valuation allowance against the gross deferred tax asset and a gross deferred tax liability of $473 million (which primarily relates to deferred policy acquisition costs, and various investment funds) resulting in a net deferred tax asset of $267 million.
A summary of gross premiums written in 2022 compared with 2021 by line of business within each business segment follows: • Insurance gross premiums increased 12% to $10,584 million in 2022 from $9,472 million in 2021.
A summary of gross premiums written in 2023 compared with 2022 by line of business within each business segment follows: • Insurance gross premiums increased 9% to $11,561 million in 2023 from $10,584 million in 2022.
The treaty also covers casualty contingency losses in excess of $5 million and up to $100 million. For losses involving two or more claimants for primary workers’ compensation business, coverage is generally in place for losses between $10 million and $500 million.
The treaty also covers casualty contingency losses in excess of $5 million and up to $100 million. We have a co-participation on this casualty catastrophe treaty. For losses involving two or more claimants for primary workers’ compensation business, coverage is generally in place for losses between $10 million and $500 million.
Catastrophe losses, net of reinsurance recoveries, were $212 million (including current accident year losses of approximately $5 million related to COVID-19) in 2022 compared with $202 million in 2021 (including losses of approximately $58 million related to COVID-19).
Catastrophe losses, net of reinsurance recoveries, were $195 million (including current accident year losses of approximately $1 million related to COVID-19) in 2023 compared with $212 million (including losses of approximately $5 million related to COVID-19) in 2022.
The amount of workers’ compensation reserves that were discounted was $1,267 million and $1,387 million at December 31, 2022 and 2021, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $416 million and $452 million at December 31, 2022 and 2021, respectively.
The amount of workers’ compensation reserves that were discounted was $1,352 million and $1,464 million at December 31, 2023 and 2022, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $390 million and $416 million at December 31, 2023 and 2022, respectively.
For the year ended December 31, 2022, the pre-tax change in allowance for expected credit losses on investments increased by $15 million ($12 million after-tax), which is reflected in net investment gains, primarily due to change in estimate.
In 2023, the pre-tax change in allowance for expected credit losses on investments increased by $498 thousand ($393 thousand after-tax), which is reflected in net investment gains. In 2022, the pre-tax change in allowance for expected credit losses on investments increased by $15 million ($12 million after-tax), which is reflected in net investment gains, primarily due to change in estimate.
Average renewal premium rates for insurance and facultative reinsurance excluding workers' compensation increased 7.5% in 2022 and 10.4% in 2021, when adjusted for changes in exposures.
Average renewal premium rates for insurance and facultative reinsurance excluding workers' compensation increased 8.1% in 2023 and 7.5% in 2022, when adjusted for changes in exposures.
In 2022, the Board declared regular quarterly cash dividends of $0.09 per share in the first quarter, and $0.10 per share in each of the remaining three quarters, as well as special dividends of $0.50 per share in the second quarter, for a total of $235 million in aggregate dividends in 2022. Total Capital .
In 2023, the Board declared regular quarterly cash dividends of $0.10 per share in the first quarter and $0.11 per share in each of the remaining three quarters, as well as special dividends of $0.50 per share in the first, third, and fourth quarters, for a total of $501 million in aggregate dividends in 2023. Total Capital .
Adverse prior year reserve development (net of premium offsets) was $36 million in 2022 and favorable prior year reserve development was $7 million in 2021 (refer to Note 14 of our consolidated financial statements for more detail). The loss ratio excluding catastrophe losses and prior year reserve development was 58.7% in both 2022 and 2021.
Adverse prior year reserve development (net of premium offsets) was $19 million in 2023 and $36 million in 2022 (refer to Note 13 of our consolidated financial statements for more detail). The loss ratio excluding catastrophe losses and prior year reserve development was 59.2% and 58.7% in 2023 and 2022, respectively.
Total capitalization (equity, debt and subordinated debentures) was $9.6 billion at December 31, 2022. The percentage of the Company’s capital attributable to senior notes, subordinated debentures and other debt was 30% and 33% at December 31, 2022 and 2021, respectively.
Total capitalization (equity, debt and subordinated debentures) was $10.3 billion at December 31, 2023. The percentage of the Company’s capital attributable to senior notes, subordinated debentures and other debt was 28% and 30% at December 31, 2023 and 2022, respectively.
We are continuing to evaluate the overall impact of this tax legislation on our operations and U.S. federal income tax position at this time. 52 Results of Operations for the Years Ended December 31, 2021 and 2020 For a comparison of the Company’s results of operations for the year ended December 31, 2021 to the year ended December 31, 2020, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on February 24, 2022. 53 Investments As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations.
Results of Operations for the Years Ended December 31, 2022 and 2021 For a comparison of the Company’s results of operations for the year ended December 31, 2022 to the year ended December 31, 2021, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission on February 24, 2023. 55 Investments As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations.
Loans receivable, net of allowance for expected credit losses, had an amortized cost of $193 million and an aggregate fair value of $188 million at December 31, 2022. The amortized cost of loans receivable is net of an allowance for expected credit losses of $2 million as of December 31, 2022.
Loans receivable, net of allowance for expected credit losses, had an amortized cost of $201 million and an aggregate fair value of $198 million at December 31, 2023. The amortized cost of loans receivable is net of an allowance for expected credit losses of $3 million as of December 31, 2023.
The ceded losses and loss expenses ratio decreased 2 points to 67% in 2022 from 69% in 2021. 57 The following table presents the credit quality of amounts due from reinsurers as of December 31, 2022.
The ceded losses and loss expenses ratio increased 3 points to 70% in 2023 from 67% in 2022. The following table presents the credit quality of amounts due from reinsurers as of December 31, 2023.
Net prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each of the last three years ended December 31, are as follows: (In thousands) 2022 2021 2020 Increase in prior year loss reserves $ (54,511) $ (863) $ (627) Increase in prior year earned premiums 18,106 7,510 16,807 Net (unfavorable) favorable prior year development $ (36,405) $ 6,647 $ 16,180 The COVID-19 global pandemic has impacted, and may further impact, the Company’s results through its effect on claim frequency and severity.
Net prior year development (i.e, the sum of prior year reserve changes and prior year earned premiums changes) for each of the last three years ended December 31, are as follows: (In thousands) 2023 2022 2021 Increase in prior year loss reserves $ (29,681) $ (54,511) $ (863) Increase in prior year earned premiums 10,782 18,106 7,510 Net (unfavorable) favorable prior year development $ (18,899) $ (36,405) $ 6,647 The COVID-19 global pandemic has impacted, and may further impact, the Company’s loss costs.
The aggregate cost of the repurchases was $94 million in 2022 and $122 million in 2021.
The aggregate cost of the repurchases was $537 million in 2023 and $94 million in 2022.
The arbitrage trading account is comprised of direct investments in arbitrage securities. Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced tender offers and mergers. Loans Receivable.
During the first quarter of 2022, the Company sold an office building in London. Arbitrage Trading Account . The arbitrage trading account is comprised of direct investments in arbitrage securities. Merger arbitrage is the business of investing in the securities of publicly held companies that are the targets in announced tender offers and mergers. Loans Receivable.
The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of December 31, 2022: (In thousands) Carrying Value Percent of Total Pricing source: Independent pricing services $ 17,025,723 97.1 % Syndicate manager 62,966 0.4 Directly by the Company based on: Observable data 447,364 2.5 Total $ 17,536,053 100.0 % Independent pricing services - Substantially all of the Company’s fixed maturity securities available for sale were priced by independent pricing services (generally one U.S. pricing service plus additional pricing services with respect to a limited number of foreign securities held by the Company).
The following is a summary of pricing sources for the Company's fixed maturity securities available for sale as of December 31, 2023: (In thousands) Carrying Value Percent of Total Pricing source: Independent pricing services $ 19,589,441 97.3 % Syndicate manager 85,139 0.4 Directly by the Company based on: Observable data 450,356 2.3 Total $ 20,124,936 100.0 % Independent pricing services - Substantially all of the Company’s fixed maturity securities available for sale were priced by independent pricing services (generally one U.S. pricing service plus additional pricing services with respect to a limited number of foreign securities held by the Company).
The number of weighted average diluted shares decreased by 0.3 million for 2022 compared to 2021 mainly reflecting shares repurchased in 2021 and 2022. Premiums . Gross premiums written were $11,909 million in 2022, an increase of 11% from $10,700 million in 2021.
The number of weighted average diluted shares decreased by 6.2 million for 2023 compared to 2022, mainly reflecting shares repurchased in 2023. Premiums . Gross premiums written were $12,972 million in 2023, an increase of 9% from $11,909 million in 2022.
Losses and loss expenses increased to $5,862 million in 2022 from $4,954 million in 2021. The consolidated loss ratio was 61.3% in 2022 and 61.1% in 2021.
Losses and loss expenses increased to $6,372 million in 2023 from $5,862 million in 2022. The consolidated loss ratio was 61.3% in both 2023 and 2022.
A summary of loss ratios in 2022 compared with 2021 by business segment follows: • Insurance - The loss ratio of 61.3% in 2022 was 0.2 points higher than the loss ratio of 61.1% in 2021. Catastrophe losses were $127 million in 2022 compared with $150 million in 2021.
A summary of loss ratios in 2023 compared with 2022 by business segment follows: • Insurance - The loss ratio was 62.3% in 2023 and 61.3% in 2022. Catastrophe losses were $160 million in 2023 compared with $127 million in 2022.
Income Taxes. The effective income tax rate was 19.5% in 2022 and 19.6% in 2021. The lower effective income tax rate for 2022 was primarily due to a net reduction in the Company’s valuation allowance against foreign tax credits and foreign net operating losses.
The effective income tax rate was 21.1% in 2023 and 19.5% in 2022. The higher effective income tax rate for the year, as compared to 2022, was primarily due to a net reduction to the Company’s valuation allowance against foreign tax credits and foreign net operating losses in the earlier period.
At December 31, 2022, the carrying value of investment funds was $1,609 million, including investments in financial services funds of $466 million, other funds of $370 million (which includes a deferred compensation trust asset of $30 million), transportation funds of $337 million, real estate funds of $205 million, energy funds of $116 million, and infrastructure funds of $115 million.
At December 31, 2023, the carrying value of investment funds was $1,622 million, including investments in financial services funds of $433 million, other funds of $397 million (which includes a deferred compensation trust asset of $36 million), transportation funds of $344 million, real estate funds of $202 million, infrastructure funds of $131 million and energy funds of $115 million.
Revenues from non-insurance businesses were $510 million in 2022 and $489 million in 2021. The increase mainly relates to the business recovery from COVID-19 on promotional merchandise and textile business as well as a newly acquired commercial and residential textile business in 2022, partially offset by a decrease for the aviation-related business. Losses and Loss Expenses .
Revenues from non-insurance businesses were $536 million in 2023 and $510 million in 2022. The increase mainly relates to aviation-related business and the commercial and residential textile business, which we acquired in 2022, partially offset by the decrease of promotional merchandise and existing textile business. Losses and Loss Expenses .
Expenses from non-insurance businesses were $493 million in 2022 compared to $472 million in 2021. The increase mainly relates to the business recovery from COVID-19 on promotional merchandise and textile business as well as a newly acquired residential and commercial textile business in 2022, partially offset by a decrease for the aviation-related business. Interest Expense .
Expenses from non-insurance businesses were $525 million in 2023 compared to $493 million in 2022. The increase mainly relates to the aviation-related business and the residential and commercial textile business, which we acquired in 2022, partially offset by the decrease of promotional merchandise and existing textile business. Interest Expense .
Insurance - Reserves for the Insurance segment developed favorably by $24 million in 2020 (net of additional and return premiums).
Reinsurance & Monoline Excess – Reserves for the Reinsurance & Monoline Excess segment developed favorably by $5 million in 2023 (net of additional and return premiums).
(In thousands, except per share data) 2022 2021 Net income to common stockholders $ 1,381,062 $ 1,022,490 Weighted average diluted shares 279,461 279,749 Net income per diluted share $ 4.94 $ 3.66 The Company reported net income of $1,381 million in 2022 compared to $1,022 million in 2021.
(In thousands, except per share data) 2023 2022 Net income to common stockholders $ 1,381,359 $ 1,381,062 Weighted average diluted shares 273,298 279,461 Net income per diluted share $ 5.05 $ 4.94 The Company reported net income of $1,381 million in both 2023 and 2022.
Premiums earned increased 18% to $9,561 million in 2022 from $8,106 million in 2021. Insurance premiums (including the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be earned over the upcoming quarters. Premiums earned in 2022 are related to business written during both 2022 and 2021.
Ceded reinsurance premiums as a percentage of gross written premiums were 16% in both 2023 and 2022. Premiums earned increased 9% to $10,401 million in 2023 from $9,561 million in 2022. Insurance premiums (including the impact of rate changes) are generally earned evenly over the policy term, and accordingly recent rate increases will be earned over the upcoming quarters.
The unfavorable non-proportional assumed liability development was concentrated in accident years 2014 through 2018, and related primarily to accounts insuring construction projects and professional liability exposures. Reserve Discount . The Company discounts its liabilities for certain workers’ compensation reserves.
The unfavorable non-proportional reinsurance assumed liability and other liability development was associated with our U.S. and U.K. assumed reinsurance business, and related primarily to accounts insuring construction projects and professional liability exposures. Reserve Discount . The Company discounts its liabilities for certain workers’ compensation reserves.
Following is a summary of net investment income for the years ended December 31, 2022 and 2021: Amount Average Annualized Yield (In thousands) 2022 2021 2022 2021 Fixed maturity securities, including cash and cash equivalents and loans receivable $ 549,281 $ 382,001 2.9 % 2.2 % Investment funds 145,099 220,014 8.9 15.8 Equity securities 52,600 32,020 4.9 5.0 Arbitrage trading account 45,213 37,676 4.0 5.3 Real estate (3,087) 7,703 (0.2) 0.4 Gross investment income 789,106 679,414 3.2 3.1 Investment expenses (9,921) (7,796) — — Total $ 779,185 $ 671,618 3.2 % 3.0 % Net investment income increased 16% to $779 million in 2022 from $672 million in 2021 due primarily to an $167 million increase in income from fixed maturity securities mainly driven by rising interest rates and a larger investment portfolio, a $21 million increase from equity securities and a $7 million increase from the arbitrage trading account, partially offset by a $75 million decrease in income from investment funds primarily due to financial service funds, an $11 million decrease in real estate and a $2 million increase in investment expenses.
Following is a summary of net investment income (loss) for the years ended December 31, 2023 and 2022: Amount Average Annualized Yield (In thousands) 2023 2022 2023 2022 Fixed maturity securities, including cash and cash equivalents and loans receivable $ 929,098 $ 549,281 4.4 % 2.9 % Arbitrage trading account 69,369 45,213 5.7 3.9 Equity securities 55,726 52,600 5.1 4.9 Investment funds 16,743 145,099 1.0 8.9 Real estate (11,185) (3,087) (0.9) (0.2) Gross investment income 1,059,751 789,106 4.0 3.2 Investment expenses (6,916) (9,921) — — Total $ 1,052,835 $ 779,185 4.0 % 3.2 % Net investment income increased 35% to $1,053 million in 2023 from $779 million in 2022 due primarily to a $380 million increase in income from fixed maturity securities mainly driven by higher interest rates and a larger investment portfolio, a $24 million increase from the arbitrage trading account (including investment income from trading account receivables from brokers and clearing organizations), a $3 million increase from equity securities and a $3 million reduction in investment expenses, partially offset by a $128 million decrease in income from investment funds primarily due to financial service funds and real estate funds and an $8 million decrease in real estate.
As of December 31, 2022, there were no borrowings outstanding under the facility. Equity . At December 31, 2022, total common stockholders’ equity was $6.7 billion, common shares outstanding were 264,546,100 and stockholders’ equity per outstanding share was $25.51. The Company repurchased 1,370,394 and 1,752,619 shares of its common stock in 2022 and 2021, respectively.
As of December 31, 2023, there were no borrowings outstanding under the facility. Equity . At December 31, 2023, total common stockholders’ equity was $7.5 billion, common shares outstanding were 256,544,757 and stockholders’ equity per outstanding share was $29.06. The Company repurchased 8,707,676 and 1,370,394 shares of its common stock in 2023 and 2022, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.4 years at both December 31, 2022 and 2021.
Biggest changeThe Company attempts to manage its interest rate risk by maintaining an appropriate relationship between the effective duration of the investment portfolio and the average number of years held for its liabilities (i.e., policy claims and debt obligations).
The Company's merger arbitrage securities are primarily exposed to the risk of completion of announced deals, which are subject to regulatory as well as transactional and other risks. 60
The Company's merger arbitrage securities are primarily exposed to the risk of completion of announced deals, which are subject to regulatory as well as transactional and other risks. 62
The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2022: Effective Duration ($ in thousands) (Years) Fair Value Mortgage-backed securities 4.5 $ 1,669,056 State and municipal 3.3 2,942,025 U.S. government and government agencies 3.1 892,258 Corporate 2.7 6,703,992 Foreign government 2.2 1,401,522 Loans receivable 1.3 187,981 Asset-backed securities 0.9 3,982,773 Cash and cash equivalents 0.0 1,449,346 Total 2.4 $ 19,228,953 Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates.
The following table outlines the groups of fixed maturity securities and their effective duration at December 31, 2023: Effective Duration ($ in thousands) (Years) Fair Value Mortgage-backed securities 3.9 $ 2,269,430 State and municipal 3.2 2,688,058 U.S. government and government agencies 3.1 1,716,731 Foreign government 2.7 1,666,229 Corporate 2.5 7,654,059 Loans receivable 1.4 198,244 Asset-backed securities 1.1 4,187,040 Cash and cash equivalents 0.0 1,363,195 Total 2.4 $ 21,742,986 Duration is a common measure of the price sensitivity of fixed maturity securities to changes in interest rates.
In addition, the fair value of the Company’s international investments is subject to currency risk. The Company attempts to manage its currency risk by matching its foreign currency assets and liabilities where considered appropriate.
The effective duration for the fixed maturity portfolio (including cash and cash equivalents) was 2.4 years at both December 31, 2023 and 2022. In addition, the fair value of the Company’s international investments is subject to currency risk. The Company attempts to manage its currency risk by matching its foreign currency assets and liabilities where considered appropriate.
The estimated fair value at specified levels at December 31, 2022 would be as follows: (In thousands) Estimated Fair Value Change in Fair Value Change in interest rates: 300 basis point rise $ 17,931,180 $ (1,297,772) 200 basis point rise 18,344,941 (884,011) 100 basis point rise 18,778,053 (450,899) Base scenario 19,228,952 — 100 basis point decline 19,692,291 463,339 200 basis point decline 20,161,330 932,378 300 basis point decline 20,632,243 1,403,291 Arbitrage investing differs from other types of investments in that its focus is on transactions and events believed likely to bring about a change in value over a relatively short time period (usually four months or less).
The estimated fair value at specified levels at December 31, 2023 would be as follows: (In thousands) Estimated Fair Value Change in Fair Value Change in interest rates: 300 basis point rise $ 20,180,450 $ (1,562,536) 200 basis point rise 20,691,790 (1,051,196) 100 basis point rise 21,215,431 (527,555) Base scenario 21,742,986 — 100 basis point decline 22,265,903 522,917 200 basis point decline 22,780,386 1,037,400 300 basis point decline 23,286,292 1,543,306 Arbitrage investing differs from other types of investments in that its focus is on transactions and events believed likely to bring about a change in value over a relatively short time period (usually four months or less).

Other WRB 10-K year-over-year comparisons