þ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
Delaware | 22-1867895 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
475 Steamboat Road, Greenwich, Connecticut | 06830 | |
(Address of principal executive offices) | (Zip Code) |
(203) 629-3000 | ||
(Registrant’s telephone number, including area code) | ||
None | ||
Former name, former address and former fiscal year, if changed since last report. |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) | Emerging growth company o |
EX-10.1 | |
EX-31.1 | |
EX-31.2 | |
EX-32.1 | |
EX-101 INSTANCE DOCUMENT | |
EX-101 SCHEMA DOCUMENT | |
EX-101 CALCULATION LINKBASE DOCUMENT | |
EX-101 LABELS LINKBASE DOCUMENT | |
EX-101 PRESENTATION LINKBASE DOCUMENT | |
EX-101 DEFINITION LINKBASE DOCUMENT |
Item 1. | Financial Statements |
September 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | (Audited) | ||||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities | $ | 13,873,690 | $ | 13,190,668 | |||
Investment funds | 1,119,907 | 1,198,146 | |||||
Real estate | 1,391,274 | 1,184,981 | |||||
Arbitrage trading account | 488,238 | 299,999 | |||||
Equity securities available for sale | 614,025 | 669,200 | |||||
Loans receivable | 74,229 | 106,798 | |||||
Total investments | 17,561,363 | 16,649,792 | |||||
Cash and cash equivalents | 773,997 | 795,285 | |||||
Premiums and fees receivable | 1,818,836 | 1,701,854 | |||||
Due from reinsurers | 1,739,835 | 1,743,980 | |||||
Deferred policy acquisition costs | 534,091 | 537,890 | |||||
Prepaid reinsurance premiums | 473,766 | 413,140 | |||||
Trading account receivables from brokers and clearing organizations | 297,208 | 484,593 | |||||
Property, furniture and equipment | 399,924 | 349,432 | |||||
Goodwill | 173,422 | 144,513 | |||||
Accrued investment income | 139,864 | 127,047 | |||||
Other assets | 423,770 | 402,550 | |||||
Total assets | $ | 24,336,076 | $ | 23,350,076 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Reserves for losses and loss expenses | $ | 11,654,346 | $ | 11,197,195 | |||
Unearned premiums | 3,409,628 | 3,283,300 | |||||
Due to reinsurers | 228,539 | 213,128 | |||||
Trading account securities sold but not yet purchased | 44,937 | 51,179 | |||||
Federal and foreign income taxes | 116,608 | 119,597 | |||||
Other liabilities | 923,369 | 916,318 | |||||
Senior notes and other debt | 1,759,929 | 1,760,595 | |||||
Subordinated debentures | 728,071 | 727,630 | |||||
Total liabilities | 18,865,427 | 18,268,942 | |||||
Equity: | |||||||
Preferred stock, par value $.10 per share: | |||||||
Authorized 5,000,000 shares; issued and outstanding - none | — | — | |||||
Common stock, par value $.20 per share: | |||||||
Authorized 500,000,000 shares, issued and outstanding, net of treasury shares, 121,769,109 and 121,193,599 shares, respectively | 47,024 | 47,024 | |||||
Additional paid-in capital | 1,040,575 | 1,037,446 | |||||
Retained earnings | 6,880,062 | 6,595,987 | |||||
Accumulated other comprehensive income | 153,759 | 55,568 | |||||
Treasury stock, at cost, 113,348,809 and 113,924,319 shares, respectively | (2,690,884 | ) | (2,688,817 | ) | |||
Total stockholders’ equity | 5,430,536 | 5,047,208 | |||||
Noncontrolling interests | 40,113 | 33,926 | |||||
Total equity | 5,470,649 | 5,081,134 | |||||
Total liabilities and equity | $ | 24,336,076 | $ | 23,350,076 |
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
REVENUES: | |||||||||||||||
Net premiums written | $ | 1,571,183 | $ | 1,607,365 | $ | 4,782,272 | $ | 4,913,656 | |||||||
Change in net unearned premiums | 10,317 | (21,421 | ) | (62,028 | ) | (240,584 | ) | ||||||||
Net premiums earned | 1,581,500 | 1,585,944 | 4,720,244 | 4,673,072 | |||||||||||
Net investment income | 142,479 | 145,668 | 426,601 | 404,850 | |||||||||||
Net realized investment gains | 183,959 | 175,738 | 276,760 | 207,508 | |||||||||||
Other-than-temporary impairments | — | — | — | (18,114 | ) | ||||||||||
Revenues from non-insurance businesses | 89,786 | 80,242 | 225,033 | 305,787 | |||||||||||
Insurance service fees | 33,612 | 32,135 | 100,475 | 109,437 | |||||||||||
Other income | 6 | — | 695 | — | |||||||||||
Total revenues | 2,031,342 | 2,019,727 | 5,749,808 | 5,682,540 | |||||||||||
OPERATING COSTS AND EXPENSES: | |||||||||||||||
Losses and loss expenses | 1,081,174 | 965,856 | 3,025,475 | 2,852,339 | |||||||||||
Other operating costs and expenses | 600,822 | 606,348 | 1,821,155 | 1,770,450 | |||||||||||
Expenses from non-insurance businesses | 86,412 | 78,865 | 221,389 | 291,127 | |||||||||||
Interest expense | 36,821 | 37,043 | 110,419 | 104,019 | |||||||||||
Total operating costs and expenses | 1,805,229 | 1,688,112 | 5,178,438 | 5,017,935 | |||||||||||
Income before income taxes | 226,113 | 331,615 | 571,370 | 664,605 | |||||||||||
Income tax expense | (63,295 | ) | (110,952 | ) | (174,305 | ) | (214,789 | ) | |||||||
Net income before noncontrolling interests | 162,818 | 220,663 | 397,065 | 449,816 | |||||||||||
Noncontrolling interests | (764 | ) | (13 | ) | (2,560 | ) | (689 | ) | |||||||
Net income to common stockholders | $ | 162,054 | $ | 220,650 | $ | 394,505 | $ | 449,127 | |||||||
NET INCOME PER SHARE: | |||||||||||||||
Basic | $ | 1.29 | $ | 1.80 | $ | 3.17 | $ | 3.66 | |||||||
Diluted | $ | 1.26 | $ | 1.72 | $ | 3.05 | $ | 3.50 |
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income before noncontrolling interests | $ | 162,818 | $ | 220,663 | $ | 397,065 | $ | 449,816 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Change in unrealized currency translation adjustments | 28,592 | (19,470 | ) | 71,574 | (77,389 | ) | |||||||||
Change in unrealized investment gains (losses), net of taxes | (8,168 | ) | (47,676 | ) | 26,598 | 134,213 | |||||||||
Other comprehensive income (loss): | 20,424 | (67,146 | ) | 98,172 | 56,824 | ||||||||||
Comprehensive income | 183,242 | 153,517 | 495,237 | 506,640 | |||||||||||
Noncontrolling interests | (731 | ) | 44 | (2,541 | ) | (623 | ) | ||||||||
Comprehensive income to common stockholders | $ | 182,511 | $ | 153,561 | $ | 492,696 | $ | 506,017 |
For the Nine Months | |||||||
Ended September 30, | |||||||
2017 | 2016 | ||||||
COMMON STOCK: | |||||||
Beginning and end of period | $ | 47,024 | $ | 47,024 | |||
ADDITIONAL PAID-IN CAPITAL: | |||||||
Beginning of period | $ | 1,037,446 | $ | 1,005,455 | |||
Restricted stock units issued | (27,047 | ) | (3,421 | ) | |||
Restricted stock units expensed | 30,176 | 25,431 | |||||
End of period | $ | 1,040,575 | $ | 1,027,465 | |||
RETAINED EARNINGS: | |||||||
Beginning of period | $ | 6,595,987 | $ | 6,178,070 | |||
Net income to common stockholders | 394,505 | 449,127 | |||||
Dividends | (110,430 | ) | (107,661 | ) | |||
End of period | $ | 6,880,062 | $ | 6,519,536 | |||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||
Unrealized investment gains: | |||||||
Beginning of period | $ | 427,154 | $ | 180,695 | |||
Unrealized gains on securities not other-than-temporarily impaired | 25,712 | 133,866 | |||||
Unrealized gains on other-than-temporarily impaired securities | 905 | 413 | |||||
End of period | 453,771 | 314,974 | |||||
Currency translation adjustments: | |||||||
Beginning of period | (371,586 | ) | (247,393 | ) | |||
Net change in period | 71,574 | (77,389 | ) | ||||
End of period | (300,012 | ) | (324,782 | ) | |||
Total accumulated other comprehensive income (loss) | $ | 153,759 | $ | (9,808 | ) | ||
TREASURY STOCK: | |||||||
Beginning of period | $ | (2,688,817 | ) | $ | (2,563,605 | ) | |
Stock exercised/vested | 25,584 | 5,023 | |||||
Stock repurchased | (28,378 | ) | (99,870 | ) | |||
Stock incentive plans expensed | 727 | — | |||||
End of period | $ | (2,690,884 | ) | $ | (2,658,452 | ) | |
NONCONTROLLING INTERESTS: | |||||||
Beginning of period | $ | 33,926 | $ | 32,962 | |||
Contributions | 3,646 | 2,474 | |||||
Net income | 2,560 | 689 | |||||
Other comprehensive loss, net of tax | (19 | ) | (66 | ) | |||
End of period | $ | 40,113 | $ | 36,059 |
For the Nine Months | |||||||
Ended September 30, | |||||||
2017 | 2016 | ||||||
CASH FROM OPERATING ACTIVITIES: | |||||||
Net income to common stockholders | $ | 394,505 | $ | 449,127 | |||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Net investment gains | (276,760 | ) | (189,394 | ) | |||
Depreciation and amortization | 78,137 | 69,153 | |||||
Noncontrolling interests | 2,560 | 689 | |||||
Investment funds | (51,907 | ) | (60,387 | ) | |||
Stock incentive plans | 31,883 | 27,033 | |||||
Change in: | |||||||
Arbitrage trading account | (2,835 | ) | (4,777 | ) | |||
Premiums and fees receivable | (112,420 | ) | (92,372 | ) | |||
Reinsurance accounts | (42,319 | ) | (154,939 | ) | |||
Deferred policy acquisition costs | 4,483 | (51,795 | ) | ||||
Income taxes | (15,451 | ) | 89,007 | ||||
Reserves for losses and loss expenses | 422,657 | 440,486 | |||||
Unearned premiums | 121,583 | 269,287 | |||||
Other | (32,258 | ) | (64,608 | ) | |||
Net cash from operating activities | 521,858 | 726,510 | |||||
CASH USED IN INVESTING ACTIVITIES: | |||||||
Proceeds from sale of fixed maturity securities | 3,081,619 | 1,074,630 | |||||
Proceeds from sale of equity securities | 137,062 | 123,187 | |||||
Distributions from investment funds | 265,371 | 5,630 | |||||
Proceeds from maturities and prepayments of fixed maturity securities | 2,860,678 | 2,189,365 | |||||
Purchase of fixed maturity securities | (6,530,466 | ) | (4,280,457 | ) | |||
Purchase of equity securities | (17,049 | ) | (127,303 | ) | |||
Real estate purchased | (159,006 | ) | (207,829 | ) | |||
Change in loans receivable | 32,574 | 159,128 | |||||
Net additions to property, furniture and equipment | (74,268 | ) | (37,895 | ) | |||
Change in balances due to security brokers | 39,978 | 102,981 | |||||
Cash received in connection with business disposition | — | 250,216 | |||||
Payment for business purchased net of cash aquired | (70,570 | ) | (53,524 | ) | |||
Net cash used in investing activities | (434,077 | ) | (801,871 | ) | |||
CASH (USED IN) FROM FINANCING ACTIVITIES: | |||||||
Repayment of senior notes and other debt | (1,788 | ) | (70,567 | ) | |||
Net proceeds from issuance of debt | — | 386,848 | |||||
Cash dividends to common stockholders | (93,371 | ) | (30,654 | ) | |||
Purchase of common treasury shares | (28,378 | ) | (99,870 | ) | |||
Other, net | (3,835 | ) | (1,376 | ) | |||
Net cash (used in) from financing activities | (127,372 | ) | 184,381 | ||||
Net impact on cash due to change in foreign exchange rates | 18,303 | 413 | |||||
Net change in cash and cash equivalents | (21,288 | ) | 109,433 | ||||
Cash and cash equivalents at beginning of year | 795,285 | 763,631 | |||||
Cash and cash equivalents at end of period | $ | 773,997 | $ | 873,064 |
For the Three Months | For the Nine Months | ||||||||||
Ended September 30, | Ended September 30, | ||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||
Basic | 125,818 | 122,562 | 124,363 | 122,652 | |||||||
Diluted | 128,944 | 128,556 | 129,289 | 128,501 |
(In thousands) | 2017 | ||
Cash and cash equivalents | $ | 2,721 | |
Real estate, furniture and equipment | 7,042 | ||
Goodwill | 28,522 | ||
Intangible assets | 32,395 | ||
Other assets | 9,862 | ||
Total assets acquired | 80,542 | ||
Other liabilities assumed | (2,251 | ) | |
Noncontrolling interest | (5,000 | ) | |
Net assets acquired | $ | 73,291 |
(In thousands) | Unrealized Investment Gains (Losses) | Currency Translation Adjustments | Accumulated Other Comprehensive Income | ||||||||
As of and for the nine months ended September 30, 2017: | |||||||||||
Changes in AOCI | |||||||||||
Beginning of period | $ | 427,154 | $ | (371,586 | ) | $ | 55,568 | ||||
Other comprehensive income before reclassifications | 109,277 | 71,574 | 180,851 | ||||||||
Amounts reclassified from AOCI | (82,679 | ) | — | (82,679 | ) | ||||||
Other comprehensive income | 26,598 | 71,574 | 98,172 | ||||||||
Unrealized investment loss related to non-controlling interest | 19 | — | 19 | ||||||||
End of period | $ | 453,771 | $ | (300,012 | ) | $ | 153,759 | ||||
Amounts reclassified from AOCI | |||||||||||
Pre-tax | $ | (127,198 | ) | (1) | $ | — | $ | (127,198 | ) | ||
Tax effect | 44,519 | (2) | — | 44,519 | |||||||
After-tax amounts reclassified | $ | (82,679 | ) | $ | — | $ | (82,679 | ) | |||
Other comprehensive income | |||||||||||
Pre-tax | $ | 50,148 | $ | 71,574 | $ | 121,722 | |||||
Tax effect | (23,550 | ) | — | (23,550 | ) | ||||||
Other comprehensive income | $ | 26,598 | $ | 71,574 | $ | 98,172 | |||||
As of and for the three months ended September 30, 2017: | |||||||||||
Changes in AOCI | |||||||||||
Beginning of period | $ | 461,906 | $ | (328,604 | ) | $ | 133,302 | ||||
Other comprehensive income before reclassifications | 19,968 | 28,592 | 48,560 | ||||||||
Amounts reclassified from AOCI | (28,136 | ) | — | (28,136 | ) | ||||||
Other comprehensive (loss) income | (8,168 | ) | 28,592 | 20,424 | |||||||
Unrealized investment loss related to non-controlling interest | 33 | — | 33 | ||||||||
End of period | $ | 453,771 | $ | (300,012 | ) | $ | 153,759 | ||||
Amounts reclassified from AOCI | |||||||||||
Pre-tax | $ | (43,286 | ) | (1) | $ | — | $ | (43,286 | ) | ||
Tax effect | 15,150 | (2) | — | 15,150 | |||||||
After-tax amounts reclassified | $ | (28,136 | ) | $ | — | $ | (28,136 | ) | |||
Other comprehensive (loss) income | |||||||||||
Pre-tax | $ | (8,563 | ) | $ | 28,592 | $ | 20,029 | ||||
Tax effect | 395 | — | 395 | ||||||||
Other comprehensive (loss) income | $ | (8,168 | ) | $ | 28,592 | $ | 20,424 | ||||
(In thousands) | Unrealized Investment Gains (Losses) | Currency Translation Adjustments | Accumulated Other Comprehensive Income (Loss) | ||||||||
As of and for the nine months ended September 30, 2016: | |||||||||||
Changes in AOCI | |||||||||||
Beginning of period | $ | 180,695 | $ | (247,393 | ) | $ | (66,698 | ) | |||
Other comprehensive income (loss) before reclassifications | 170,824 | (77,389 | ) | 93,435 | |||||||
Amounts reclassified from AOCI | (36,611 | ) | — | (36,611 | ) | ||||||
Other comprehensive income (loss) | 134,213 | (77,389 | ) | 56,824 | |||||||
Unrealized investment loss related to non-controlling interest | 66 | — | 66 | ||||||||
End of period | $ | 314,974 | $ | (324,782 | ) | $ | (9,808 | ) | |||
Amounts reclassified from AOCI | |||||||||||
Pre-tax | $ | (56,325 | ) | (1) | $ | — | $ | (56,325 | ) | ||
Tax effect | 19,714 | (2) | — | 19,714 | |||||||
After-tax amounts reclassified | $ | (36,611 | ) | $ | — | $ | (36,611 | ) | |||
Other comprehensive income (loss) | |||||||||||
Pre-tax | $ | 198,808 | $ | (77,389 | ) | $ | 121,419 | ||||
Tax effect | (64,595 | ) | — | (64,595 | ) | ||||||
Other comprehensive income (loss) | $ | 134,213 | $ | (77,389 | ) | $ | 56,824 | ||||
As of and for the three months ended September 30, 2016: | |||||||||||
Changes in AOCI | |||||||||||
Beginning of period | $ | 362,593 | $ | (305,312 | ) | $ | 57,281 | ||||
Other comprehensive loss before reclassifications | (20,968 | ) | (19,470 | ) | (40,438 | ) | |||||
Amounts reclassified from AOCI | (26,708 | ) | — | (26,708 | ) | ||||||
Other comprehensive loss | (47,676 | ) | (19,470 | ) | (67,146 | ) | |||||
Unrealized investment loss related to non-controlling interest | 57 | — | 57 | ||||||||
End of period | $ | 314,974 | $ | (324,782 | ) | $ | (9,808 | ) | |||
Amounts reclassified from AOCI | |||||||||||
Pre-tax | $ | (41,090 | ) | (1) | $ | — | $ | (41,090 | ) | ||
Tax effect | 14,382 | (2) | — | 14,382 | |||||||
After-tax amounts reclassified | $ | (26,708 | ) | $ | — | $ | (26,708 | ) | |||
Other comprehensive loss | |||||||||||
Pre-tax | $ | (72,188 | ) | $ | (19,470 | ) | $ | (91,658 | ) | ||
Tax effect | 24,512 | — | 24,512 | ||||||||
Other comprehensive loss | $ | (47,676 | ) | $ | (19,470 | ) | $ | (67,146 | ) | ||
(In thousands) | Amortized Cost | Gross Unrealized | Fair Value | Carrying Value | |||||||||||||||
Gains | Losses | ||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
Held to maturity: | |||||||||||||||||||
State and municipal | $ | 65,372 | $ | 15,212 | $ | — | $ | 80,584 | $ | 65,372 | |||||||||
Residential mortgage-backed | 14,024 | 1,452 | — | 15,476 | 14,024 | ||||||||||||||
Total held to maturity | 79,396 | 16,664 | — | 96,060 | 79,396 | ||||||||||||||
Available for sale: | |||||||||||||||||||
U.S. government and government agency | 402,901 | 10,828 | (2,124 | ) | 411,605 | 411,605 | |||||||||||||
State and municipal: | |||||||||||||||||||
Special revenue | 2,730,653 | 80,144 | (5,469 | ) | 2,805,328 | 2,805,328 | |||||||||||||
State general obligation | 481,070 | 21,377 | (565 | ) | 501,882 | 501,882 | |||||||||||||
Pre-refunded | 282,488 | 21,052 | (173 | ) | 303,367 | 303,367 | |||||||||||||
Corporate backed | 380,351 | 11,775 | (499 | ) | 391,627 | 391,627 | |||||||||||||
Local general obligation | 384,930 | 26,566 | (531 | ) | 410,965 | 410,965 | |||||||||||||
Total state and municipal | 4,259,492 | 160,914 | (7,237 | ) | 4,413,169 | 4,413,169 | |||||||||||||
Mortgage-backed securities: | |||||||||||||||||||
Residential (1) | 1,064,705 | 12,696 | (8,860 | ) | 1,068,541 | 1,068,541 | |||||||||||||
Commercial | 251,387 | 1,641 | (1,450 | ) | 251,578 | 251,578 | |||||||||||||
Total mortgage-backed securities | 1,316,092 | 14,337 | (10,310 | ) | 1,320,119 | 1,320,119 | |||||||||||||
Asset-backed | 2,389,187 | 9,836 | (10,405 | ) | 2,388,618 | 2,388,618 | |||||||||||||
Corporate: | |||||||||||||||||||
Industrial | 2,569,673 | 70,054 | (2,842 | ) | 2,636,885 | 2,636,885 | |||||||||||||
Financial | 1,335,101 | 43,636 | (4,716 | ) | 1,374,021 | 1,374,021 | |||||||||||||
Utilities | 255,478 | 12,760 | (907 | ) | 267,331 | 267,331 | |||||||||||||
Other | 42,183 | 2 | (48 | ) | 42,137 | 42,137 | |||||||||||||
Total corporate | 4,202,435 | 126,452 | (8,513 | ) | 4,320,374 | 4,320,374 | |||||||||||||
Foreign | 909,608 | 32,889 | (2,088 | ) | 940,409 | 940,409 | |||||||||||||
Total available for sale | 13,479,715 | 355,256 | (40,677 | ) | 13,794,294 | 13,794,294 | |||||||||||||
Total investments in fixed maturity securities | $ | 13,559,111 | $ | 371,920 | $ | (40,677 | ) | $ | 13,890,354 | $ | 13,873,690 |
(In thousands) | Amortized Cost | Gross Unrealized | Fair Value | Carrying Value | |||||||||||||||
Gains | Losses | ||||||||||||||||||
December 31, 2016 | |||||||||||||||||||
Held to maturity: | |||||||||||||||||||
State and municipal | $ | 72,582 | $ | 12,453 | $ | — | $ | 85,035 | $ | 72,582 | |||||||||
Residential mortgage-backed | 15,944 | 1,693 | — | 17,637 | 15,944 | ||||||||||||||
Total held to maturity | 88,526 | 14,146 | — | 102,672 | 88,526 | ||||||||||||||
Available for sale: | |||||||||||||||||||
U.S. government and government agency | 496,187 | 20,208 | (2,593 | ) | 513,802 | 513,802 | |||||||||||||
State and municipal: | |||||||||||||||||||
Special revenue | 2,791,211 | 58,559 | (26,315 | ) | 2,823,455 | 2,823,455 | |||||||||||||
State general obligation | 524,682 | 16,964 | (5,139 | ) | 536,507 | 536,507 | |||||||||||||
Pre-refunded | 356,535 | 19,181 | (165 | ) | 375,551 | 375,551 | |||||||||||||
Corporate backed | 410,933 | 6,172 | (6,452 | ) | 410,653 | 410,653 | |||||||||||||
Local general obligation | 360,022 | 15,682 | (2,367 | ) | 373,337 | 373,337 | |||||||||||||
Total state and municipal | 4,443,383 | 116,558 | (40,438 | ) | 4,519,503 | 4,519,503 | |||||||||||||
Mortgage-backed securities: | |||||||||||||||||||
Residential (1) | 1,034,301 | 15,431 | (12,950 | ) | 1,036,782 | 1,036,782 | |||||||||||||
Commercial | 155,540 | 304 | (2,981 | ) | 152,863 | 152,863 | |||||||||||||
Total mortgage-backed securities | 1,189,841 | 15,735 | (15,931 | ) | 1,189,645 | 1,189,645 | |||||||||||||
Asset-backed | 1,913,830 | 5,971 | (11,941 | ) | 1,907,860 | 1,907,860 | |||||||||||||
Corporate: | |||||||||||||||||||
Industrial | 2,315,567 | 71,007 | (7,174 | ) | 2,379,400 | 2,379,400 | |||||||||||||
Financial | 1,369,001 | 39,543 | (11,270 | ) | 1,397,274 | 1,397,274 | |||||||||||||
Utilities | 229,154 | 10,801 | (2,411 | ) | 237,544 | 237,544 | |||||||||||||
Other | 54,073 | 299 | (63 | ) | 54,309 | 54,309 | |||||||||||||
Total corporate | 3,967,795 | 121,650 | (20,918 | ) | 4,068,527 | 4,068,527 | |||||||||||||
Foreign | 858,773 | 46,794 | (2,762 | ) | 902,805 | 902,805 | |||||||||||||
Total available for sale | 12,869,809 | 326,916 | (94,583 | ) | 13,102,142 | 13,102,142 | |||||||||||||
Total investments in fixed maturity securities | $ | 12,958,335 | $ | 341,062 | $ | (94,583 | ) | $ | 13,204,814 | $ | 13,190,668 |
(1) | Gross unrealized gains and (losses) for residential mortgage-backed securities include $85,907 and $(818,691) as of September 30, 2017 and December 31, 2016, respectively, related to securities with the non-credit portion of other-than-temporary impairments (“OTTI”) recognized in accumulated other comprehensive income. |
(In thousands) | Amortized Cost | Fair Value | |||||
Due in one year or less | $ | 745,010 | $ | 750,479 | |||
Due after one year through five years | 5,089,768 | 5,210,268 | |||||
Due after five years through ten years | 3,248,254 | 3,396,461 | |||||
Due after ten years | 3,145,963 | 3,197,551 | |||||
Mortgage-backed securities | 1,330,116 | 1,335,595 | |||||
Total | $ | 13,559,111 | $ | 13,890,354 |
(In thousands) | Cost | Gross Unrealized | Fair Value | Carrying Value | |||||||||||||||
Gains | Losses | ||||||||||||||||||
September 30, 2017 | |||||||||||||||||||
Common stocks | $ | 83,709 | $ | 339,297 | $ | (3,486 | ) | $ | 419,520 | $ | 419,520 | ||||||||
Preferred stocks | 125,076 | 71,147 | (1,718 | ) | 194,505 | 194,505 | |||||||||||||
Total | $ | 208,785 | $ | 410,444 | $ | (5,204 | ) | $ | 614,025 | $ | 614,025 | ||||||||
December 31, 2016 | |||||||||||||||||||
Common stocks | $ | 94,998 | $ | 351,906 | $ | (1,046 | ) | $ | 445,858 | $ | 445,858 | ||||||||
Preferred stocks | 125,589 | 101,392 | (3,639 | ) | 223,342 | 223,342 | |||||||||||||
Total | $ | 220,587 | $ | 453,298 | $ | (4,685 | ) | $ | 669,200 | $ | 669,200 |
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Investment income earned on: | |||||||||||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable | $ | 118,834 | $ | 114,271 | $ | 347,976 | $ | 331,448 | |||||||
Investment funds | 15,200 | 25,293 | 50,744 | 60,385 | |||||||||||
Arbitrage trading account | 4,418 | 6,441 | 16,235 | 12,883 | |||||||||||
Real estate | 5,042 | 585 | 14,894 | 4,552 | |||||||||||
Equity securities available for sale | 604 | 1,069 | 1,845 | 3,217 | |||||||||||
Gross investment income | 144,098 | 147,659 | 431,694 | 412,485 | |||||||||||
Investment expense | (1,619 | ) | (1,991 | ) | (5,093 | ) | (7,635 | ) | |||||||
Net investment income | $ | 142,479 | $ | 145,668 | $ | 426,601 | $ | 404,850 |
Carrying Value as of | Income (Loss) from Investment Funds | ||||||||||||||
September 30, | December 31, | For the Nine Months Ended September 30, | |||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Real estate | $ | 614,508 | $ | 641,783 | $ | 30,661 | $ | 33,028 | |||||||
Energy | 85,817 | 91,448 | (12,763 | ) | 7,174 | ||||||||||
Hedge equity | — | 73,913 | (1,164 | ) | 791 | ||||||||||
Other funds | 419,582 | 391,002 | 34,010 | 19,392 | |||||||||||
Total | $ | 1,119,907 | $ | 1,198,146 | $ | 50,744 | $ | 60,385 |
Carrying Value | |||||||
September 30, | December 31, | ||||||
(In thousands) | 2017 | 2016 | |||||
Properties in operation | $ | 451,669 | $ | 457,237 | |||
Properties under development | 939,605 | 727,744 | |||||
Total | $ | 1,391,274 | $ | 1,184,981 |
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Amortized cost (net of valuation allowance): | |||||||
Real estate loans | $ | 59,487 | $ | 92,415 | |||
Commercial loans | 14,742 | 14,383 | |||||
Total | $ | 74,229 | $ | 106,798 | |||
Fair value: | |||||||
Real estate loans | $ | 60,372 | $ | 92,415 | |||
Commercial loans | 16,243 | 15,884 | |||||
Total | $ | 76,615 | $ | 108,299 | |||
Valuation allowance: | |||||||
Specific | $ | 1,200 | $ | 1,200 | |||
General | 2,183 | 2,197 | |||||
Total | $ | 3,383 | $ | 3,397 | |||
For the Three Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Increase in valuation allowance | $ | — | $ | 467 | |||
For the Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(Decrease) increase in valuation allowance | $ | (14 | ) | $ | 1,128 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Realized investment gains (losses): | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Gains | $ | 8,763 | $ | 33,798 | $ | 21,795 | $ | 66,972 | |||||||
Losses | (197 | ) | (1,150 | ) | (4,162 | ) | (5,570 | ) | |||||||
Equity securities available for sale | 34,720 | 8,441 | 109,566 | 13,037 | |||||||||||
Investment funds (1) | 124,228 | (3,788 | ) | 125,383 | (9,041 | ) | |||||||||
Real estate | 1,956 | 687 | 4,892 | 5,247 | |||||||||||
Other (2) | 14,489 | 137,750 | 19,286 | 136,863 | |||||||||||
Net realized gains on investments sales | 183,959 | 175,738 | 276,760 | 207,508 | |||||||||||
Other-than-temporary impairments (3) | — | — | — | (18,114 | ) | ||||||||||
Net investment gains | 183,959 | 175,738 | 276,760 | 189,394 | |||||||||||
Income tax expense | (64,386 | ) | (61,508 | ) | (96,866 | ) | (66,288 | ) | |||||||
After-tax net realized investment gains | $ | 119,573 | $ | 114,230 | $ | 179,894 | $ | 123,106 |
Change in unrealized investment gains of available for sale securities: | |||||||||||||||
Fixed maturity securities | $ | (10,627 | ) | $ | (45,388 | ) | $ | 84,214 | $ | 169,933 | |||||
Previously impaired fixed maturity securities | 61 | (1,406 | ) | 905 | 413 | ||||||||||
Equity securities available for sale | (2,126 | ) | (28,517 | ) | (44,812 | ) | 12,433 | ||||||||
Investment funds | 4,129 | 3,143 | 9,841 | 16,028 | |||||||||||
Total change in unrealized investment gains | (8,563 | ) | (72,168 | ) | 50,148 | 198,807 | |||||||||
Income tax benefit (expense) | 423 | 24,493 | (23,550 | ) | (64,594 | ) | |||||||||
Noncontrolling interests | 5 | 57 | 19 | 66 | |||||||||||
After-tax change in unrealized investment gains of available for sale securities | $ | (8,135 | ) | $ | (47,618 | ) | $ | 26,617 | $ | 134,279 |
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||||
(In thousands) | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||
September 30, 2017 | |||||||||||||||||||||||
U.S. government and government agency | $ | 118,066 | $ | 1,048 | $ | 48,880 | $ | 1,076 | $ | 166,946 | $ | 2,124 | |||||||||||
State and municipal | 650,353 | 5,797 | 119,087 | 1,440 | 769,440 | 7,237 | |||||||||||||||||
Mortgage-backed securities | 527,034 | 5,000 | 221,923 | 5,310 | 748,957 | 10,310 | |||||||||||||||||
Asset-backed securities | 1,116,878 | 8,033 | 130,734 | 2,372 | 1,247,612 | 10,405 | |||||||||||||||||
Corporate | 651,373 | 5,395 | 57,557 | 3,118 | 708,930 | 8,513 | |||||||||||||||||
Foreign government | 220,860 | 2,072 | 1,599 | 16 | 222,459 | 2,088 | |||||||||||||||||
Fixed maturity securities | 3,284,564 | 27,345 | 579,780 | 13,332 | 3,864,344 | 40,677 | |||||||||||||||||
Common stocks | 4,678 | 3,095 | 9,387 | 391 | 14,065 | 3,486 | |||||||||||||||||
Preferred stocks | — | — | 23,957 | 1,718 | 23,957 | 1,718 | |||||||||||||||||
Equity securities available for sale | 4,678 | 3,095 | 33,344 | 2,109 | 38,022 | 5,204 | |||||||||||||||||
Total | $ | 3,289,242 | $ | 30,440 | $ | 613,124 | $ | 15,441 | $ | 3,902,366 | $ | 45,881 | |||||||||||
December 31, 2016 | |||||||||||||||||||||||
U.S. government and government agency | $ | 112,709 | $ | 1,252 | $ | 35,450 | $ | 1,341 | $ | 148,159 | $ | 2,593 | |||||||||||
State and municipal | 1,562,614 | 35,553 | 133,034 | 4,885 | 1,695,648 | 40,438 | |||||||||||||||||
Mortgage-backed securities | 625,903 | 11,103 | 109,066 | 4,828 | 734,969 | 15,931 | |||||||||||||||||
Asset-backed securities | 1,010,836 | 5,340 | 201,693 | 6,601 | 1,212,529 | 11,941 | |||||||||||||||||
Corporate | 1,035,245 | 13,448 | 65,147 | 7,470 | 1,100,392 | 20,918 | |||||||||||||||||
Foreign government | 213,246 | 1,985 | 24,820 | 777 | 238,066 | 2,762 | |||||||||||||||||
Fixed maturity securities | 4,560,553 | 68,681 | 569,210 | 25,902 | 5,129,763 | 94,583 | |||||||||||||||||
Common stocks | 336 | 22 | 8,755 | 1,024 | 9,091 | 1,046 | |||||||||||||||||
Preferred stocks | — | — | 22,034 | 3,639 | 22,034 | 3,639 | |||||||||||||||||
Equity securities available for sale | 336 | 22 | 30,789 | 4,663 | 31,125 | 4,685 | |||||||||||||||||
Total | $ | 4,560,889 | $ | 68,703 | $ | 599,999 | $ | 30,565 | $ | 5,160,888 | $ | 99,268 |
($ in thousands) | Number of Securities | Aggregate Fair Value | Gross Unrealized Loss | |||||||
Foreign government | 9 | $ | 55,292 | $ | 462 | |||||
Mortgage-backed securities | 6 | 5,975 | 150 | |||||||
Corporate | 3 | 2,852 | 211 | |||||||
Asset-backed securities | 3 | 1,331 | 115 | |||||||
Total | 21 | $ | 65,450 | $ | 938 |
(In thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||
September 30, 2017 | |||||||||||||||
Assets: | |||||||||||||||
Fixed maturity securities available for sale: | |||||||||||||||
U.S. government and government agency | $ | 411,605 | $ | — | $ | 411,605 | $ | — | |||||||
State and municipal | 4,413,169 | — | 4,413,169 | — | |||||||||||
Mortgage-backed securities | 1,320,119 | — | 1,320,119 | — | |||||||||||
Asset-backed securities | 2,388,618 | — | 2,388,444 | 174 | |||||||||||
Corporate | 4,320,374 | — | 4,320,374 | — | |||||||||||
Foreign government | 940,409 | — | 940,409 | — | |||||||||||
Total fixed maturity securities available for sale | 13,794,294 | — | 13,794,120 | 174 | |||||||||||
Equity securities available for sale: | |||||||||||||||
Common stocks | 419,520 | 410,133 | — | 9,387 | |||||||||||
Preferred stocks | 194,505 | — | 190,649 | 3,856 | |||||||||||
Total equity securities available for sale | 614,025 | 410,133 | 190,649 | 13,243 | |||||||||||
Arbitrage trading account | 488,238 | 275,818 | 212,420 | — | |||||||||||
Total | $ | 14,896,557 | $ | 685,951 | $ | 14,197,189 | $ | 13,417 | |||||||
Liabilities: | |||||||||||||||
Trading account securities sold but not yet purchased | $ | 44,937 | $ | 44,851 | $ | 86 | $ | — | |||||||
December 31, 2016 | |||||||||||||||
Assets: | |||||||||||||||
Fixed maturity securities available for sale: | |||||||||||||||
U.S. government and government agency | $ | 513,802 | $ | — | $ | 513,802 | $ | — | |||||||
State and municipal | 4,519,503 | — | 4,519,503 | — | |||||||||||
Mortgage-backed securities | 1,189,645 | — | 1,189,645 | — | |||||||||||
Asset-backed securities | 1,907,860 | — | 1,907,677 | 183 | |||||||||||
Corporate | 4,068,527 | — | 4,068,527 | — | |||||||||||
Foreign government | 902,805 | — | 902,805 | — | |||||||||||
Total fixed maturity securities available for sale | 13,102,142 | — | 13,101,959 | 183 | |||||||||||
Equity securities available for sale: | |||||||||||||||
Common stocks | 445,858 | 429,647 | 7,457 | 8,754 | |||||||||||
Preferred stocks | 223,342 | — | 219,680 | 3,662 | |||||||||||
Total equity securities available for sale | 669,200 | 429,647 | 227,137 | 12,416 | |||||||||||
Arbitrage trading account | 299,999 | 224,623 | 75,376 | — | |||||||||||
Total | $ | 14,071,341 | $ | 654,270 | $ | 13,404,472 | $ | 12,599 | |||||||
Liabilities: | |||||||||||||||
Trading account securities sold but not yet purchased | $ | 51,179 | $ | 51,089 | $ | 90 | $ | — |
Gains (Losses) Included in: | |||||||||||||||||||||||||||||||||||
(In thousands) | Beginning Balance | Earnings (Losses) | Other Comprehensive Income (Loss) | Impairments | Purchases | (Sales) | Paydowns / Maturities | Transfers | Ending Balance | ||||||||||||||||||||||||||
In / (Out) | |||||||||||||||||||||||||||||||||||
Nine months ended September 30, 2017: | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Fixed maturities securities available for sale: | |||||||||||||||||||||||||||||||||||
Asset-backed securities | $ | 183 | $ | 2 | $ | 32 | $ | — | $ | — | $ | (43 | ) | $ | — | $ | — | $ | 174 | ||||||||||||||||
Corporate | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total | 183 | 2 | 32 | — | — | (43 | ) | — | — | 174 | |||||||||||||||||||||||||
Equity securities available for sale: | |||||||||||||||||||||||||||||||||||
Common stocks | 8,754 | — | 633 | — | — | — | — | — | 9,387 | ||||||||||||||||||||||||||
Preferred stocks | 3,662 | 19 | — | — | 175 | — | — | — | 3,856 | ||||||||||||||||||||||||||
Total | 12,416 | 19 | 633 | — | 175 | — | — | — | 13,243 | ||||||||||||||||||||||||||
Arbitrage trading account | — | 8 | — | — | — | (8 | ) | — | — | — | |||||||||||||||||||||||||
Total | $ | 12,599 | $ | 29 | $ | 665 | $ | — | $ | 175 | $ | (51 | ) | $ | — | $ | — | $ | 13,417 | ||||||||||||||||
Year ended December 31, 2016: | |||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||
Fixed maturities securities available for sale: | |||||||||||||||||||||||||||||||||||
Asset-backed securities | $ | 199 | $ | 3 | $ | 16 | $ | — | $ | — | $ | — | $ | (35 | ) | $ | — | $ | 183 | ||||||||||||||||
Corporate | 154 | 177 | — | — | — | (331 | ) | — | — | — | |||||||||||||||||||||||||
Total | 353 | 180 | 16 | — | — | (331 | ) | (35 | ) | — | 183 | ||||||||||||||||||||||||
Equity securities available for sale: | |||||||||||||||||||||||||||||||||||
Common stocks | 7,829 | — | 160 | — | 765 | — | — | — | 8,754 | ||||||||||||||||||||||||||
Preferred stocks | 3,624 | 38 | — | — | — | — | — | — | 3,662 | ||||||||||||||||||||||||||
Total | 11,453 | 38 | 160 | — | 765 | — | — | — | 12,416 | ||||||||||||||||||||||||||
Arbitrage trading account | 176 | (176 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 11,982 | $ | 42 | $ | 176 | $ | — | $ | 765 | $ | (331 | ) | $ | (35 | ) | $ | — | $ | 12,599 |
September 30, | |||||||
(In thousands) | 2017 | 2016 | |||||
Net reserves at beginning of year | $ | 9,590,265 | $ | 9,244,872 | |||
Net provision for losses and loss expenses: | |||||||
Claims occurring during the current year (1) | 2,998,687 | 2,838,777 | |||||
Decrease in estimates for claims occurring in prior years (2) (3) | (7,648 | ) | (23,518 | ) | |||
Loss reserve discount accretion | 34,436 | 37,080 | |||||
Total | 3,025,475 | 2,852,339 | |||||
Net payments for claims: | |||||||
Current year | 628,078 | 612,615 | |||||
Prior year | 1,996,977 | 1,931,454 | |||||
Total | 2,625,055 | 2,544,069 | |||||
Foreign currency translation | 57,789 | (6,266 | ) | ||||
Net reserves at end of period | 10,048,474 | 9,546,876 | |||||
Ceded reserve at end of period | 1,605,872 | 1,550,954 | |||||
Gross reserves at end of period | $ | 11,654,346 | $ | 11,097,830 |
(1) | Claims occurring during the current year are net of loss reserve discounts of $16,787,000 and $12,085,000 for the nine months ended September 30, 2017 and 2016, respectively. |
(2) | The decrease in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $30,609,000 and $45,813,000 for the nine months ended September 30, 2017 and 2016, respectively. |
(3) | For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was $31 million and $42 million for the nine months ended September 30, 2017 and 2016, respectively. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
(In thousands) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Assets: | |||||||||||||||
Fixed maturity securities | $ | 13,873,690 | $ | 13,890,354 | $ | 13,190,668 | $ | 13,204,814 | |||||||
Equity securities available for sale | 614,025 | 614,025 | 669,200 | 669,200 | |||||||||||
Arbitrage trading account | 488,238 | 488,238 | 299,999 | 299,999 | |||||||||||
Loans receivable | 74,229 | 76,615 | 106,798 | 108,299 | |||||||||||
Cash and cash equivalents | 773,997 | 773,997 | 795,285 | 795,285 | |||||||||||
Trading account receivables from brokers and clearing organizations | 297,208 | 297,208 | 484,593 | 484,593 | |||||||||||
Liabilities: | |||||||||||||||
Due to broker | 58,973 | 58,973 | 19,416 | 19,416 | |||||||||||
Trading account securities sold but not yet purchased | 44,937 | 44,937 | 51,179 | 51,179 | |||||||||||
Subordinated debentures | 728,071 | 728,291 | 727,630 | 687,504 | |||||||||||
Senior notes and other debt | 1,759,929 | 1,946,700 | 1,760,595 | 1,914,727 |
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Written premiums: | |||||||||||||||
Direct | $ | 1,679,389 | $ | 1,643,870 | $ | 5,127,465 | $ | 5,061,646 | |||||||
Assumed | 194,769 | 224,979 | 570,052 | 702,265 | |||||||||||
Ceded | (302,975 | ) | (261,484 | ) | (915,245 | ) | (850,255 | ) | |||||||
Total net premiums written | $ | 1,571,183 | $ | 1,607,365 | $ | 4,782,272 | $ | 4,913,656 | |||||||
Earned premiums: | |||||||||||||||
Direct | $ | 1,692,453 | $ | 1,647,033 | $ | 4,972,755 | $ | 4,824,768 | |||||||
Assumed | 202,972 | 216,758 | 605,281 | 635,443 | |||||||||||
Ceded | (313,925 | ) | (277,847 | ) | (857,792 | ) | (787,139 | ) | |||||||
Total net premiums earned | $ | 1,581,500 | $ | 1,585,944 | $ | 4,720,244 | $ | 4,673,072 | |||||||
Ceded losses and loss expenses incurred | $ | 247,104 | $ | 213,065 | $ | 424,905 | $ | 507,258 | |||||||
Ceded commissions earned | $ | 63,222 | $ | 47,315 | $ | 177,524 | $ | 143,809 |
($ in thousands) | Units | Fair Value | ||||
2017 | 855,051 | $ | 58,712 | |||
2016 | 990,487 | $ | 57,959 |
• | Insurance - primarily commercial insurance business, including excess and surplus lines and admitted lines in the United States, United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia; and |
• | Reinsurance - reinsurance business on a facultative and treaty basis, primarily in the United States, United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South Africa. |
Revenues | |||||||||||||||||||||||
(In thousands) | Earned Premiums | Investment Income | Other | Total (1) | Pre-Tax Income (Loss) | Net Income (Loss) to Common Stockholders | |||||||||||||||||
Three months ended September 30, 2017 | |||||||||||||||||||||||
Insurance | $ | 1,433,729 | $ | 105,924 | $ | — | $ | 1,539,653 | $ | 171,478 | $ | 123,240 | |||||||||||
Reinsurance | 147,771 | 21,528 | — | 169,299 | (57,643 | ) | (35,074 | ) | |||||||||||||||
Corporate, other and eliminations (2) | — | 15,027 | 123,404 | 138,431 | (71,681 | ) | (45,685 | ) | |||||||||||||||
Net investment gains | — | — | 183,959 | 183,959 | 183,959 | 119,573 | |||||||||||||||||
Total | $ | 1,581,500 | $ | 142,479 | $ | 307,363 | $ | 2,031,342 | $ | 226,113 | $ | 162,054 | |||||||||||
Three months ended September 30, 2016 | |||||||||||||||||||||||
Insurance | $ | 1,423,635 | $ | 111,300 | $ | — | $ | 1,534,935 | $ | 210,498 | $ | 140,730 | |||||||||||
Reinsurance | 162,309 | 27,567 | — | 189,876 | 27,321 | 18,725 | |||||||||||||||||
Corporate, other and eliminations (2) | — | 6,801 | 112,377 | 119,178 | (81,942 | ) | (53,035 | ) | |||||||||||||||
Net investment gains | — | — | 175,738 | 175,738 | 175,738 | 114,230 | |||||||||||||||||
Total | $ | 1,585,944 | $ | 145,668 | $ | 288,115 | $ | 2,019,727 | $ | 331,615 | $ | 220,650 | |||||||||||
Nine months ended September 30, 2017: | |||||||||||||||||||||||
Insurance | $ | 4,262,485 | 320,552 | $ | — | $ | 4,583,037 | $ | 557,605 | $ | 381,736 | ||||||||||||
Reinsurance | 457,759 | 67,798 | — | 525,557 | (38,279 | ) | (20,801 | ) | |||||||||||||||
Corporate, other and eliminations (2) | — | 38,251 | 326,203 | 364,454 | (224,716 | ) | (146,324 | ) | |||||||||||||||
Net investment gains | — | — | 276,760 | 276,760 | 276,760 | 179,894 | |||||||||||||||||
Total | $ | 4,720,244 | $ | 426,601 | $ | 602,963 | $ | 5,749,808 | $ | 571,370 | $ | 394,505 | |||||||||||
Nine months ended September 30, 2016: | |||||||||||||||||||||||
Insurance | $ | 4,180,985 | $ | 304,904 | $ | — | $ | 4,485,889 | $ | 586,651 | $ | 394,746 | |||||||||||
Reinsurance | 492,087 | 77,119 | — | 569,206 | 79,215 | 54,885 | |||||||||||||||||
Corporate, other and eliminations (2) | — | 22,827 | 415,224 | 438,051 | (190,655 | ) | (123,610 | ) | |||||||||||||||
Net investment gains | — | — | 189,394 | 189,394 | 189,394 | 123,106 | |||||||||||||||||
Total | $ | 4,673,072 | $ | 404,850 | $ | 604,618 | $ | 5,682,540 | $ | 664,605 | $ | 449,127 |
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Insurance | $ | 19,136,776 | $ | 19,137,758 | |||
Reinsurance | 3,243,610 | 2,524,338 | |||||
Corporate, other and eliminations | 1,955,690 | 1,687,980 | |||||
Consolidated | $ | 24,336,076 | $ | 23,350,076 |
For the Three Months | For the Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Insurance: | |||||||||||||||
Other liability | $ | 466,616 | $ | 455,841 | $ | 1,378,505 | $ | 1,302,841 | |||||||
Workers’ compensation | 378,529 | 354,185 | 1,106,616 | 1,042,503 | |||||||||||
Short-tail lines (1) | 287,860 | 312,865 | 887,791 | 962,435 | |||||||||||
Commercial automobile | 163,277 | 164,540 | 482,929 | 481,249 | |||||||||||
Professional liability | 137,447 | 136,204 | 406,644 | 391,957 | |||||||||||
Total Insurance | 1,433,729 | 1,423,635 | 4,262,485 | 4,180,985 | |||||||||||
Reinsurance: | |||||||||||||||
Casualty | 94,478 | 97,153 | 282,430 | 301,571 | |||||||||||
Property | 53,293 | 65,156 | 175,329 | 190,516 | |||||||||||
Total Reinsurance | 147,771 | 162,309 | 457,759 | 492,087 | |||||||||||
Total | $ | 1,581,500 | $ | 1,585,944 | $ | 4,720,244 | $ | 4,673,072 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(In thousands) | Frequency (+/-) | ||||||||||
Severity (+/-) | 1% | 5% | 10% | ||||||||
1% | $ | 76,915 | $ | 231,511 | $ | 424,755 | |||||
5% | 231,511 | 392,229 | 593,126 | ||||||||
10% | 424,755 | 593,126 | 803,590 |
(In thousands) | September 30, 2017 | December 31, 2016 | |||||
Insurance | $ | 8,291,708 | $ | 7,913,074 | |||
Reinsurance | 1,756,766 | 1,677,191 | |||||
Net reserves for losses and loss expenses | 10,048,474 | 9,590,265 | |||||
Ceded reserves for losses and loss expenses | 1,605,872 | 1,606,930 | |||||
Gross reserves for losses and loss expenses | $ | 11,654,346 | $ | 11,197,195 |
(In thousands) | Reported Case Reserves | Incurred But Not Reported | Total | ||||||||
September 30, 2017 | |||||||||||
Other liability | $ | 1,243,208 | $ | 2,162,031 | $ | 3,405,239 | |||||
Workers’ compensation (1) | 1,530,194 | 1,246,084 | 2,776,278 | ||||||||
Professional liability | 299,418 | 584,606 | 884,024 | ||||||||
Commercial automobile | 341,998 | 267,136 | 609,134 | ||||||||
Short-tail lines (2) | 309,692 | 307,341 | 617,033 | ||||||||
Total Insurance | 3,724,510 | 4,567,198 | 8,291,708 | ||||||||
Reinsurance (1) | 909,690 | 847,076 | 1,756,766 | ||||||||
Total | $ | 4,634,200 | $ | 5,414,274 | $ | 10,048,474 | |||||
December 31, 2016 | |||||||||||
Other liability | $ | 1,159,082 | $ | 2,061,966 | $ | 3,221,048 | |||||
Workers’ compensation (1) | 1,453,318 | 1,228,774 | 2,682,092 | ||||||||
Professional liability | 264,188 | 542,539 | 806,727 | ||||||||
Commercial automobile | 344,143 | 252,978 | 597,121 | ||||||||
Short-tail lines (2) | 322,872 | 283,214 | 606,086 | ||||||||
Total Insurance | 3,543,603 | 4,369,471 | 7,913,074 | ||||||||
Reinsurance (1) | 823,516 | 853,675 | 1,677,191 | ||||||||
Total | $ | 4,367,119 | $ | 5,223,146 | $ | 9,590,265 |
(In thousands) | 2017 | 2016 | |||||
Net decrease in prior year loss reserves | $ | 7,648 | $ | 23,518 | |||
Increase in prior year earned premiums | 22,940 | 18,039 | |||||
Net favorable prior year development | $ | 30,588 | $ | 41,557 |
($ in thousands) | Number of Securities | Aggregate Fair Value | Gross Unrealized Loss | |||||||
Unrealized loss less than 20% of amortized cost | 592 | $ | 3,864,164 | $ | 40,565 | |||||
Unrealized loss of 20% or greater of amortized cost: | ||||||||||
Twelve months and longer | 3 | 180 | 112 | |||||||
Total | 595 | $ | 3,864,344 | $ | 40,677 |
($ in thousands) | Number of Securities | Aggregate Fair Value | Gross Unrealized Loss | |||||||
Foreign government | 9 | $ | 55,292 | $ | 462 | |||||
Mortgage-backed securities | 6 | 5,975 | 150 | |||||||
Corporate | 3 | 2,852 | 211 | |||||||
Asset-backed securities | 3 | 1,331 | 115 | |||||||
Total | 21 | $ | 65,450 | $ | 938 |
($ in thousands) | Carrying Value | Percent of Total | ||||
Pricing source: | ||||||
Independent pricing services | $ | 13,570,457 | 98.4 | % | ||
Syndicate manager | 43,196 | 0.3 | ||||
Directly by the Company based on: | ||||||
Observable data | 180,467 | 1.3 | ||||
Cash flow model | 174 | — | ||||
Total | $ | 13,794,294 | 100.0 | % |
($ in thousands) | 2017 | 2016 | |||||
Insurance: | |||||||
Gross premiums written | $ | 5,233,692 | $ | 5,184,033 | |||
Net premiums written | 4,364,638 | 4,386,944 | |||||
Net premiums earned | 4,262,485 | 4,180,985 | |||||
Loss ratio | 61.7 | % | 61.1 | % | |||
Expense ratio | 32.8 | % | 32.3 | % | |||
GAAP combined ratio | 94.5 | % | 93.4 | % | |||
Reinsurance: | |||||||
Gross premiums written | $ | 463,825 | $ | 579,878 | |||
Net premiums written | 417,634 | 526,712 | |||||
Net premiums earned | 457,759 | 492,087 | |||||
Loss ratio | 86.1 | % | 60.5 | % | |||
Expense ratio | 37.1 | % | 39.1 | % | |||
GAAP combined ratio | 123.2 | % | 99.6 | % | |||
Consolidated: | |||||||
Gross premiums written | $ | 5,697,517 | $ | 5,763,911 | |||
Net premiums written | 4,782,272 | 4,913,656 | |||||
Net premiums earned | 4,720,244 | 4,673,072 | |||||
Loss ratio | 64.1 | % | 61.0 | % | |||
Expense ratio | 33.2 | % | 33.1 | % | |||
GAAP combined ratio | 97.3 | % | 94.1 | % |
(In thousands, except per share data) | 2017 | 2016 | |||||
Net income to common stockholders | $ | 394,505 | $ | 449,127 | |||
Weighted average diluted shares | 129,289 | 128,501 | |||||
Net income per diluted share | $ | 3.05 | $ | 3.50 |
• | Insurance - gross premiums increased 1% to $5,234 million in 2017 from $5,184 million in 2016. Gross premiums increased $25 million (5%) for professional liability, $19 million (4%) for commercial auto, $8 million (1%) for workers' compensation, and $2 million (less than 1%) for short-tail lines and decreased $4 million (less than 1%) for other liability. |
• | Reinsurance - gross premiums decreased 20% to $464 million in 2017 from $580 million in 2016. Gross premiums decreased $87 million (35%) for property lines and $29 million (9%) for casualty lines. |
Amount | Average Annualized Yield | ||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable | $ | 347,976 | $ | 331,448 | 3.3 | % | 3.3 | % | |||||
Investment funds | 50,744 | 60,385 | 5.5 | 6.6 | |||||||||
Arbitrage trading account | 16,235 | 12,883 | 4.0 | 4.4 | |||||||||
Real estate | 14,894 | 4,552 | 1.6 | 0.6 | |||||||||
Equity securities available for sale | 1,845 | 3,217 | 1.2 | 2.2 | |||||||||
Gross investment income | 431,694 | 412,485 | 3.3 | 3.3 | |||||||||
Investment expenses | (5,093 | ) | (7,635 | ) | |||||||||
Total | $ | 426,601 | $ | 404,850 | 3.3 | % | 3.3 | % |
• | Insurance - The loss ratio was 61.7% in 2017 and 61.1% in 2016. Catastrophe losses were $94 million in 2017 compared with $58 million in 2016. Favorable prior year reserve development was $62 million in 2017 and $38 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 0.4 points to 61.0% in 2017 from 60.6% in 2016. |
• | Reinsurance - The loss ratio of 86.1% in 2017 was 25.6 points higher than the loss ratio of 60.5% in 2016. Catastrophe losses were $73 million in 2017 compared with $10 million in 2016. Adverse prior year reserve development was $31 million in 2017 largely due to the impact of the change in the Ogden discount rate in the U.K. and adverse development related to the U.S. facultative casualty excess of loss business, compared with favorable prior year development of $4 million in 2016. The loss ratio excluding catastrophe losses and prior year reserve development increased 4.1 points to 63.3% in 2017 from 59.2% in 2016. |
($ in thousands) | 2017 | 2016 | |||||
Policy acquisition and operating insurance expenses | $ | 1,567,359 | $ | 1,544,792 | |||
Insurance service expenses | 97,308 | 103,868 | |||||
Net foreign currency (gains) losses | 14,255 | (11,547 | ) | ||||
Other costs and expenses | 142,233 | 133,337 | |||||
Total | $ | 1,821,155 | $ | 1,770,450 |
($ in thousands) | 2017 | 2016 | |||||
Insurance: | |||||||
Gross premiums written | $ | 1,718,552 | $ | 1,688,712 | |||
Net premiums written | 1,432,334 | 1,443,986 | |||||
Net premiums earned | 1,433,729 | 1,423,635 | |||||
Loss ratio | 63.2 | % | 60.9 | % | |||
Expense ratio | 32.4 | % | 32.3 | % | |||
GAAP combined ratio | 95.6 | % | 93.2 | % | |||
Reinsurance: | |||||||
Gross premiums written | $ | 155,606 | $ | 180,137 | |||
Net premiums written | 138,849 | 163,379 | |||||
Net premiums earned | 147,771 | 162,309 | |||||
Loss ratio | 118.7 | % | 61.3 | % | |||
Expense ratio | 34.9 | % | 38.9 | % | |||
GAAP combined ratio | 153.6 | % | 100.2 | % | |||
Consolidated: | |||||||
Gross premiums written | $ | 1,874,158 | $ | 1,868,849 | |||
Net premiums written | 1,571,183 | 1,607,365 | |||||
Net premiums earned | 1,581,500 | 1,585,944 | |||||
Loss ratio | 68.4 | % | 60.9 | % | |||
Expense ratio | 32.6 | % | 33.0 | % | |||
GAAP combined ratio | 101.0 | % | 93.9 | % |
(in thousands, except per share data) | 2017 | 2016 | |||||
Net income to common stockholders | $ | 162,054 | $ | 220,650 | |||
Weighted average diluted shares | 128,944 | 128,556 | |||||
Net income per diluted share | $ | 1.26 | $ | 1.72 |
• | Insurance - gross premiums increased 2% to $1,719 million in 2017 from $1,689 million in 2016. Gross premiums increased $13 million (3%) for short tail lines, $12 million (3%) for workers' compensation, $6 million (3%) for commercial auto and $4 million (2%) for professional liability and decreased $5 million (1%) for other liability. |
• | Reinsurance - gross premiums decreased 14% to $156 million in 2017 from $180 million in 2016. Gross premiums decreased $26 million (34%) for property lines and increased $2 million (2%) for casualty lines. |
Amount | Average Annualized Yield | ||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||
Fixed maturity securities, including cash and cash equivalents and loans receivable | $ | 118,834 | $ | 114,271 | 3.4 | % | 3.3 | % | |||||
Investment funds | 15,200 | 25,293 | 5.2 | 8.1 | |||||||||
Arbitrage trading account | 4,418 | 6,441 | 3.5 | 5.6 | |||||||||
Real estate | 5,042 | 585 | 1.5 | 0.2 | |||||||||
Equity securities available for sale | 604 | 1,069 | 1.2 | 2.0 | |||||||||
Gross investment income | 144,098 | 147,659 | 3.3 | 3.5 | |||||||||
Investment expenses | (1,619 | ) | (1,991 | ) | |||||||||
Total | $ | 142,479 | $ | 145,668 | 3.2 | % | 3.4 | % |
• | Insurance - The loss ratio of 63.2% in 2017 was 2.3 points higher than the loss ratio of 60.9% in 2016. Catastrophe losses were $47 million in 2017 and $9 million in 2016. Favorable prior year reserve development was $13 million in both 2017 and 2016. The loss ratio, excluding catastrophe losses and prior year reserve development, decreased 0.4 points to 60.8% in 2017 from 61.2% in 2016. |
• | Reinsurance - The loss ratio of 118.7% in 2017 was 57.4 points higher than the loss ratio of 61.3% in 2016. Catastrophe losses were $72 million in 2017 compared with $3 million in 2016. Adverse prior year reserve development was $6 million in 2017 compared with favorable prior year reserve development of $0.2 million in 2016. The loss ratio, excluding catastrophe losses and prior year reserve development, increased 6.9 points to 66.1% in 2017 from 59.2% in 2016 largely due to increased attritional losses. |
(In thousands) | 2017 | 2016 | |||||
Policy acquisition and operating insurance expenses | $ | 516,243 | $ | 523,254 | |||
Insurance service expenses | 32,451 | 32,441 | |||||
Net foreign currency (gains) losses | 1,779 | (2,193 | ) | ||||
Other costs and expenses | 50,349 | 52,846 | |||||
Total | $ | 600,822 | $ | 606,348 |
($ in thousands) | Carrying Value | Percent of Total | ||||
Fixed maturity securities: | ||||||
U.S. government and government agency | $ | 411,605 | 2.2 | % | ||
State and municipal: | ||||||
Special revenue | 2,829,795 | 15.4 | ||||
State general obligation | 537,537 | 2.9 | ||||
Local general obligation | 415,635 | 2.3 | ||||
Corporate backed | 391,627 | 2.1 | ||||
Pre-refunded (1) | 303,947 | 1.8 | ||||
Total state and municipal | 4,478,541 | 24.4 | ||||
Mortgage-backed securities: | ||||||
Agency | 832,993 | 4.5 | ||||
Commercial | 251,578 | 1.4 | ||||
Residential-Prime | 226,274 | 1.2 | ||||
Residential-Alt A | 23,298 | 0.2 | ||||
Total mortgage-backed securities | 1,334,143 | 7.2 | ||||
Asset-backed securities | 2,388,618 | 13.0 | ||||
Corporate: | ||||||
Industrial | 2,636,885 | 14.4 | ||||
Financial | 1,374,021 | 7.5 | ||||
Utilities | 267,331 | 1.5 | ||||
Other | 42,137 | 0.2 | ||||
Total corporate | 4,320,374 | 23.6 | ||||
Foreign government and foreign government agencies | 940,409 | 5.1 | ||||
Total fixed maturity securities | 13,873,690 | 75.7 | ||||
Equity securities available for sale: | ||||||
Common stocks | 419,520 | 2.3 | ||||
Preferred stocks | 194,505 | 1.1 | ||||
Total equity securities available for sale | 614,025 | 3.4 | ||||
Real estate | 1,391,274 | 7.5 | ||||
Investment funds | 1,119,907 | 6.0 | ||||
Cash and cash equivalents | 773,997 | 4.2 | ||||
Arbitrage trading account | 488,238 | 2.7 | ||||
Loans receivable | 74,229 | 0.5 | ||||
Total investments | $ | 18,335,360 | 100.0 | % |
(In thousands) | Carrying Value | ||
Argentina | $ | 259,720 | |
Australia | 217,397 | ||
Canada | 175,816 | ||
United Kingdom | 84,894 | ||
Brazil | 53,547 | ||
Germany | 48,794 | ||
Supranational (1) | 40,591 | ||
Singapore | 25,326 | ||
Norway | 9,930 | ||
Mexico | 9,490 | ||
Colombia | 7,696 | ||
Uruguay | 7,208 | ||
Total | $ | 940,409 |
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 | |||||||||
July 2017 | — | — | — | 6,851,086 | ||||||||
August 2017 | — | — | — | 10,000,000 (1) | ||||||||
September 2017 | 441,119 | $ | 64.333 | 441,119 | 9,558,881 |
Number | ||
(10.1) | Form of 2017 Performance-Based Restricted Stock Unit Agreement Under the W. R. Berkley Corporation 2012 Stock Incentive Plan | |
(31.1) | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a). | |
(31.2) | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/ 15d-14(a). | |
(32.1) | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
W. R. BERKLEY CORPORATION | ||
Date: | November 8, 2017 | /s/ W. Robert Berkley, Jr. |
W. Robert Berkley, Jr. | ||
President and Chief Executive Officer | ||
Date: | November 8, 2017 | /s/ Richard M. Baio |
Richard M. Baio | ||
Senior Vice President - Chief Financial Officer and Treasurer |
a. | In the event that the Committee determines that the Grantee, prior to the Vesting Date during Grantee’s employment, has engaged in a Competitive Action or enters into, or has entered into, an agreement (written, oral or otherwise) to engage in a Competitive Action or has engaged in Misconduct, all of the unvested Restricted Stock Units granted hereunder shall be immediately forfeited, and the Grantee shall have no further rights with respect to such Restricted Stock Units. |
b. | In the event that the Committee determines that the Grantee, (1) on or after the Vesting Date during Grantee’s employment or within one year following Grantee’s termination of employment for any reason, has engaged in a Competitive Action or has entered into an agreement (written, oral or otherwise) to engage in a Competitive Action, or (2) on or after the Vesting Date, has engaged in Misconduct, or prior to the Vesting Date Grantee has engaged in Misconduct that is not discovered or acted upon by the Company until on or after the Vesting Date, (x) the Grantee shall immediately forfeit all shares of Stock not yet delivered to Grantee with respect to the Restricted Stock Units and all rights to future payments of Dividend Equivalents (as defined below), and (y) the Grantee shall pay to the Company, upon demand by the Company, an amount equal to (i) the value, as of the Settlement Date (as defined below), of the number of shares of Stock delivered to the Grantee with respect to the Restricted Stock Units, (ii) all amounts paid to Grantee on or at any time prior to the Settlement Date in respect of Dividend Equivalents, and (iii) the value of all dividends, if any, paid to the Grantee in respect of the shares of Stock delivered to the Grantee on the Settlement Date. The Grantee |
C. | Grantee acknowledges that engaging in (1) a Competitive Action during the Restricted Period within the geographic areas set forth in Section 3(e) below or (2) Misconduct is contrary to the interests of the Company and would result in irreparable injuries to the Company and would cause loss in an amount that cannot be readily quantified. Grantee acknowledges that retaining the amounts required to be paid to the Company pursuant to this Section 3(d) once Grantee has (x) chosen to engage in or to agree to engage in a Competitive Action or (y) engaged in Misconduct is contrary to the interests of the Company. The amounts forfeited or paid to the Company hereunder do not and are not intended to constitute actual or liquidated damages. Any action or inaction by the Company with respect to enforcing the forfeiture or recapture provisions set forth herein shall not reduce, eliminate or in any way affect the Company’s right to enforce the forfeiture or recapture provisions in any other agreement with Grantee. |
D. | The term “ Restricted Period” as used herein shall mean the period beginning on the date hereof and ending one year following Grantee’s termination of employment for any reason. |
E. | Furthermore, if the Grantee engages in Misconduct or a Competitive Action or has entered into an agreement (written, oral or otherwise) to engage in a Competitive Action during the Restricted Period, then the Company shall be entitled to, and reserves the right to, pursue any other legal or equitable remedies in addition to the right to receive forfeitures and/or payments pursuant to this Section 3(d), including, but not limited to, the recovery of monetary damages resulting from such action set forth in Section 3(e) and injunctive relief. |
(1) | underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission; |
(2) | operating unit or other business projections and forecasts; |
(3) | Client lists, brokers lists and price sensitive information; |
(4) | technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets; |
(5) | remuneration and personnel details; |
(6) | planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels; |
(7) | computer passwords, the contents of any databases, tables, know how documents or materials; |
(8) | commissions, commission charges, pricing policies and all information about research and development; and |
ROE Relative Performance* | ROE Relative Performance Vesting Percentage (% of Target)* |
+ | 0% |
+ | 80.0% |
≥+633 basis points | 90.0% |
≥+766 basis points | 100.0% (target) |
+ | 110.0% |
* | In the event that the ROE Relative Performance falls between any two values listed in the table above, the ROE Relative Performance Vesting Percentage shall be determined using a straight line interpolation between such two values. For the avoidance of doubt if the ROE Relative Performance is less than +500 basis points (i.e., the Average Return on Equity is less than 6.89%), the ROE Relative Vesting Percentage shall be 0% (i.e., no linear interpolation between 0% and 80%) and if the ROE Relative Performance is equal to or greater than +900 basis points (i.e., the Average Return on Equity at least 10.89%), the ROE Relative Vesting Percentage shall be 110%. |
(ii) | This Agreement shall not be effective unless the Grantee physically signs an original Agreement. |
(i) | Section 19 shall be deleted in its entirety and replaced with the following: |
(ii) | The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable. |
(i) | A new Section 24 shall be added as follows: |
(ii) | The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable. |
(i) | Section 2 shall be deleted in its entirety and replaced with the following: |
(ii) | Section 23 is amended to add the following two paragraphs at the end thereof: |
(iii) | In addition to the grant of the Restricted Stock Units, the Company shall pay the Grantee a further cash payment of HK$700 to be made on a regular pay date as soon as administratively practicable after Grantee accepts such grant as further consideration for the agreement contained in the last sentence of Section 18. |
(iv) | The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable. |
(i) | In the third recital under WITNESSETH the words “or Solicitation” shall be added after the word “Misconduct”; |
(ii) | In Section 3(d)A., the words “or Solicitation” shall be added after the word “Misconduct”; |
(iii) | In Section 3(d)B., the phrase, “or (3) on or after the Vesting Date or within one year following Grantee’s termination of employment, has engaged in Solicitation,” shall be added after the phrase “until on or after the Vesting Date” in subsection (2) of Section 3(d)B; |
(iv) | In Section 3(d)C., the phrase, “or (3) Solicitation” shall be added after the phrase “(2) Misconduct”; |
(v) | In Section 3(d)C., the phrase, “or (z) engaged in Solicitation” shall be added after the phrase “(y) engaged in Misconduct,”; |
(vi) | In Section 3(d)E., the words “or Solicitation” shall be added after the words “Misconduct,”; |
(vii) | In Section 3(e), subsections (iv) and (v) shall be deleted and subsection (vi) shall be renumbered as subsection (iv); and |
(viii) | In Section 3, the following new subsections shall be added after subsection (g): |
(i) | In Section 3(d)B., the phrase “that, in the Committee’s sole and absolute discretion, reflects the seriousness of the Competitive Action and/or the Misconduct. The maximum amount that the Company may demand from the Grantee is” shall be added after the words “an amount” in subsection (2) of Section 3(d)B; |
(ii) | In Section 3(d)B, the last sentence shall be deleted and replaced with the following sentence: |
(iii) | In Section 3(d)C., the following sentence shall be deleted: |
(iv) | In Section 3(g), the last sentence shall be deleted; |
(v) | Section 19 shall be deleted in its entirety and replaced with the following: |
(vi) | The provisions in “Addendum for Australia, Canada, Hong Kong and Singapore” set forth below shall be applicable. |
With effect from the earlier of the date of termination of the Grantee’s employment or the date that the Grantee gives or receives notice of termination of the Grantee’s employment for any reason, any unvested Restricted Stock Units shall lapse and be forfeited (except for those that vest immediately upon termination as set out in Section 3(a) of this Agreement and subject to the forfeiture provisions in paragraph 3 below) and the Grantee shall have no further rights with respect to any such unvested Restricted Stock Units. |
2. | RESTRICTIVE COVENANTS |
2.1 | The Grantee covenants with the Company and the Group that the Grantee will not, save with the prior written consent of the Committee (in its absolute discretion): |
2.1.1. | during the Restricted Period directly or indirectly be employed, engaged or retained by or otherwise concerned or interested in any Competing Business. For this purpose, the Grantee is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if: |
(b) | the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business; |
(c) | the Grantee has any direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business; and/or |
(d) | the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who has a direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business, |
2.1.2 | during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, have any business dealings with any Client or Prospective Client in relation to or for the benefit of a Competing Business; |
2.1.3 | during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, canvass or solicit business or custom from or seek to entice away any Client |
2.1.4 | during the Restricted Period, directly or indirectly, solicit or endeavour to solicit the employment or engagement of any Key Employee (whether or not such person would thereby breach their contract of employment or engagement); |
2.1.5 | at any time after the Termination Date represent himself as being in any way connected with (other than as a former employee) or interested in the business of the Company or any Group Company or use any registered names, domain names or trading names the same as or that could reasonably be expected to be confused with any such names used by the Company or any Group Company. |
2.1.6 | before or after the Termination Date, and except in the proper performance of his or her duties of employment by the Company or any Group Company, directly or indirectly use for his or her own purposes or those of a third party or disclose to any third party any Confidential Information. The Grantee will use his or her best endeavours to prevent any unauthorised use or disclosure of Confidential Information. The obligations contained in this clause 2.1.6 will not apply to any disclosures required by law or to any information or documents which after the Termination Date are in the public domain other than by way of unauthorised disclosure. |
2.2 | The Grantee gives the covenants above to the Company as trustee for itself (and any company forming part of the Group). |
2.3 | Each restriction contained in this clause 2 is an entirely separate and independent restriction, despite the fact that they may be contained in the same phrase, and if any part is found to be unenforceable the remainder will remain valid and enforceable. |
2.4 | While the restrictions in this clause 2 are considered by the parties to be fair and reasonable in the circumstances, it is agreed that if any such restriction should be held to be void or ineffective for any reason but would be treated as valid and effective if some part of parts of the restriction were deleted, the restriction in question will apply with such deletion as may be necessary to make it valid and effective. |
2.5 | If, during the Grantee’s employment or any period during which these restrictions apply, any person, firm, company or entity offers the Grantee any employment, engagement, arrangement or contract which might or would cause him or her to breach any of the restrictions, he or she will notify that person, firm, company or entity of the terms of these restrictions. |
2.6 | The period of any restraint on the Grantee’s activities after the Termination Date imposed pursuant to clauses 2.1.1 to 2.1.4 shall be reduced pro rata by any period of garden leave served by the Grantee pursuant to his or her service agreement with the Company or any Group Company. |
2.7 | If the Grantee breaches any of the covenants contained in clauses 2.1.1 to 2.1.6, then any unvested Restricted Stock Units will lapse with immediate effect and the Grantee will be obliged to return all shares of Company stock issued or issuable in respect of Restricted Stock Units which have vested within the three years immediately preceding the breach or their equivalent value (determined by reference to the date of vesting) granted under this Agreement or any Prior Agreement to the Company within 14 days of being notified by the Company of its discovery of the breach. |
2.8 | In this clause, the following definitions shall apply: |
“Client” | means any person, firm, company or other business entity whom or which during the Relevant Period: (a) to whom the Company or any Group Company provided insurance or reinsurance; or (b) was an insurance intermediary which introduced such insurance or reinsurance business to the Company or any Group Company, and in each case with whom or which during the Relevant Period: i) the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or ii) about whom or which the Grantee has had Confidential Information during the course of his or her employment. |
“Competing Business” | means any business which at any time is in or which intends to be in competition with any Relevant Business. |
“Confidential Information” | means any and all information which is of a confidential nature or which the Company reasonably regards as being confidential or a trade secret concerning the business, business performance or prospective business, financial information or arrangements, plans or internal affairs of the Company, any Group Company or any of their respective Clients or Prospective Clients including without prejudice to the generality of the foregoing all information, records and materials relating to: (1) underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission; (2) syndicate or other business projections and forecasts; (3) Client lists, brokers lists and price sensitive information; (4) technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets; (5) remuneration and personnel details; (6) planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels; (7) computer passwords, the contents of any databases, tables, know how documents or materials; (8) commissions, commission charges, pricing policies and all information about research and development; and (9) the Company’s or any Group Company’s suppliers’, Clients’ or Prospective Clients’ names, addresses (including email addresses), telephone, facsimile or other contact numbers and contact names, the nature of their business operations, their requirements for services supplied by the Company or any Group Company and all confidential aspects of their relationship with the Company or any Group Company. |
“directly or indirectly” | means (without prejudice to the generality of the expression) either alone or jointly with or on behalf of any other person and whether on his or her own account or in partnership with another or others or as the holder of any interest in or as officer, employee or agent of or consultant to any other person. |
“Group” | means the Company, its subsidiaries or holding companies from time to time and any subsidiary of any holding company from time to time; and “Group Company” means any company within the Group. |
“Key Employee” | means any director or officer of the Company or any Group Company and/or any employee (other than administrative or clerical personnel) of the Company or any Group Company, in each case who, at any time during the Relevant Period: i) was employed by the Company or any Group Company; and ii) with whom the Grantee has had Material Dealings or exercised control or had management responsibility for; and/or iii) has had access to or has obtained Confidential Information during the Relevant Period. |
“Material Dealings” | means receiving orders, instructions or enquiries from, contracting or making preparations to contract with, making sales or presenting to or with, tendering for business from, having responsibility with or for, having personal knowledge of or otherwise having significant other contact. |
“Prior Agreements” | means any previous restricted stock unit award agreement between Grantee and the Company whether the awards under those agreements have vested or are unvested. |
“Prospective Client” | means any person, firm, company or other business entity who was at any time during the Relevant Period: (a) in negotiations with the Company or any Group Company for the provision of insurance or reinsurance; or (b) an insurance intermediary who may introduce such insurance or reinsurance business to the Company or any Group Company, and in each case with whom or which during the Relevant Period: i) the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or ii) about whom or which the Grantee has had Confidential Information during the course of Grantee’s employment. Provided that this definition shall not apply to any such person, firm, company or other business entity which has withdrawn from or discontinued such negotiations or discussions, having stated its intention to do so (other than through any unlawful activity by the Grantee). |
“Relevant Business” | means any class or classes of insurance or reinsurance business which was underwritten in the twelve months immediately prior to the Termination Date by the Company or any Group Company and with which the Grantee was directly or indirectly materially concerned or involved or had personal knowledge in the course of Grantee’s duties during the Relevant Period. |
“Relevant Period” | means (1) during employment, the twelve month period immediately prior to the action or activity that may be in breach of clauses 2.1.1 to 2.1.4 and (2) after termination of employment, the twelve month period immediately prior to the Termination Date. |
“Restricted Period” | means the period beginning on the date hereof and ending one year following the Termination Date. |
“Termination Date” | means the date on which the Grantee’s employment or engagement with the Company terminates for any reason. |
3. | CLAWBACK |
3.1 | If at any time after any Restricted Stock Units have vested under the terms of this Agreement the Committee becomes aware of any material wrongdoing, negligence or misconduct on the part of the Grantee that would have entitled the Company to terminate the Grantee's employment with or without notice for Cause, any unvested Restricted Stock Units will lapse with immediate effect and the Company will be entitled, in its absolute discretion, to recover from the Grantee up to 100% of the shares of Company common stock issued or issuable in respect of the Restricted Stock Units (which have vested within the 7 years prior to such determination by the Committee) or their equivalent value (determined by reference to the date of vesting) granted under this Agreement or any Prior Agreement to the Company within 14 days of being notified in writing by the Company of its discovery of the material wrongdoing, negligence or misconduct. |
3.2 | Clause 3.1 is without prejudice to the Company's other remedies for such wrongdoing or any other clawback policy that the Company may adopt from time to time as required by applicable laws or the applicable listing rules of any securities exchange. |
3.3 | The Committee may review any Restricted Stock Units granted to the Grantee under the terms of this Agreement, in light of: |
a. | there being a significant deterioration in the financial health of the Company, the Group or the business area or team in which the Grantee worked; |
b. | the Grantee having caused harm to the reputation of the Company or the Group; |
c. | the Grantee having deliberately misled the Company in relation to the financial performance of the Company, the Group or the business area or team in which he or she worked; and/or |
d. | the Grantee’s actions having amounted to gross misconduct, incompetence or negligence. |
3.4 | The Grantee agrees that any sums owed to the Company or any Group Company under this Agreement including any adjustment, forfeiture or repayment may be deducted from any sums due to the Grantee from the Company or any Group Company. For the avoidance of doubt, this is without prejudice to any right the Company or the Group may have at any time to recover any sums from the Grantee and the Grantee agrees that such sums are recoverable by the Company or any Group Company as a debt. |
3.5 | In this Clause 3, “Cause” means: |
a. | any serious negligence or gross misconduct by the Grantee in connection with or affecting the business or affairs of the Company or any member of the Group; |
b. | the Grantee being convicted of any arrestable offence other than an offence under road traffic legislation in the UK; or |
c. | the Grantee being convicted of an offence under any statutory enactment or regulation relating to insider dealing or market abuse. |
4.1 | Any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with this Agreement or its subject matter or formation shall be governed by and construed in accordance with the law of England and Wales. |
5.1 | If at any time any dispute or question shall arise between the parties arising out of or in connection with this Agreement or its or their validity, construction or performance then the same shall be referred to and finally resolved by arbitration under the London Court of International Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause. |
A. | during the Restricted Period, directly or indirectly, be employed, engaged or retained by or otherwise concerned or interested in any Competing Business. For this purpose, the Grantee is directly or indirectly employed, engaged or retained by or concerned or interested in a Competing Business if: |
(ii) | the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the Competing Business; |
(iii) | the Grantee has any direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business; and/or |
(iv) | the Grantee is a partner, director, employee, secondee, consultant or agent in, of or to any person who has a direct or indirect financial interest (as shareholder, creditor or otherwise) in any person who carries on the Competing Business, |
B. | during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, have any business dealings with any Client or Prospective Client in relation to or for the benefit of a Competing Business; |
C. | during the Restricted Period and whether directly or indirectly, either alone or with or on behalf of any person, firm, company or entity and whether on his or her own account or as principal, partner, shareholder, director, employee, consultant or in any other capacity whatsoever, canvass or solicit business or custom from or seek to entice away any Client or Prospective Client from the Company or any Group Company in relation to or for the benefit of a Competing Business; |
D. | during the Restricted Period, directly or indirectly, solicit or endeavour to solicit the employment or engagement of any Key Employee (whether or not such person would thereby breach their contract of employment or engagement); |
E. | at any time after the Termination Date represent himself or herself as being in any way connected with (other than as a former employee) or interested in the business of the Company or any Group Company or use any registered names, domain names or trading names the same as or that could reasonably be expected to be confused with any such names used by the Company or any Group Company. |
F. | before or after the Termination Date and except in the proper performance of his or her duties of employment for the Company or Group Company directly or indirectly use for his or her own purposes or those of a third party or disclose to any third party any Confidential Information. The Grantee will use his or her best endeavours to prevent any unauthorised use or disclosure of Confidential Information. The obligations contained in this subsection F will not apply to any disclosures required by law or to any information or documents which after the Termination Date are in the public domain other than by way of unauthorised disclosure. |
“Client” | means any person, firm, company or other business entity whom or which during the Relevant Period: (a) to whom the Company or any Group Company provided insurance or reinsurance; or (b) was an insurance intermediary which introduced such insurance or reinsurance business to the Company or any Group Company, and in each case with whom or which during the Relevant Period: i) the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or ii) about whom or which the Grantee has had Confidential Information during the course of his or her employment. |
“Competitive Action” | means any of the activities, individually or in the aggregate, described in sub-sections A through F of Section 3(e). |
“Competing Business” | means any business which at any time is in or which intends to be in competition with any Relevant Business. |
“Confidential Information” | means any and all information which is of a confidential nature or which the Company reasonably regards as being confidential or a trade secret concerning the business, business performance or prospective business, financial information or arrangements, plans or internal affairs of the Company, any Group Company or any of their respective Clients or Prospective Clients including without prejudice to the generality of the foregoing all information, records and materials relating to: (1) underwriting premiums or quotes, income and receipts, claims records and levels, renewals, policy wording and terms, reinsurance quotas, profit commission; (2) syndicate or other business projections and forecasts; (3) Client lists, brokers lists and price sensitive information; (4) technical information, reports, interpretations, forecasts, corporate and business plans and accounts, business methods, financial details, projections and targets; (5) remuneration and personnel details; (6) planned products, planned services, marketing surveys, research reports, market share and pricing statistics, budgets, fee levels; (7) computer passwords, the contents of any databases, tables, know how documents or materials; (8) commissions, commission charges, pricing policies and all information about research and development; and (9) the Company’s or any Group Company’s suppliers’, Clients’ or Prospective Clients’ names, addresses (including email addresses), telephone, facsimile or other contact numbers and contact names, the nature of their business operations, their requirements for services supplied by the Company or any Group Company and all confidential aspects of their relationship with the Company or any Group Company. |
“directly or indirectly” | means (without prejudice to the generality of the expression) either alone or jointly with or on behalf of any other person and whether on his or her own account or in partnership with another or others or as the holder of any interest in or as officer, employee or agent of or consultant to any other person. |
“Group” | means the Company, its subsidiaries or holding companies from time to time and any subsidiary of any holding company from time to time; and “Group Company” means any company within the Group. |
“Key Employee” | means any director or officer of the Company or any Group Company and/or any employee (other than administrative or clerical personnel) of the Company or any Group Company, in each case who, at any time during the Relevant Period: i) was employed by the Company or any Group Company; and ii) with whom the Grantee has had Material Dealings or exercised control or had management responsibility for; and/or iii) has had access to or has obtained Confidential Information during the Relevant Period. |
“Material Dealings” | means receiving orders, instructions or enquiries from, contracting or making preparations to contract with, making sales or presenting to or with, tendering for business from, having responsibility with or for, having personal knowledge of or otherwise having significant other contact. |
“Prospective Client” | means any person, firm, company or other business entity who was at any time during the Relevant Period: (a) in negotiations with the Company or any Group Company for the provision of insurance or reinsurance; or (b) an insurance intermediary who may introduce such insurance or reinsurance business to the Company or any Group Company, and in each case with whom or which during the Relevant Period: i) the Grantee (or any person reporting to the Grantee) had Material Dealings in relation to Relevant Business; or ii) about whom or which the Grantee has had Confidential Information during the course of Grantee’s employment. Provided that this definition shall not apply to any such person, firm, company or other business entity which has withdrawn from or discontinued such negotiations or discussions, having stated its intention to do so (other than through any unlawful activity by the Grantee). |
“Relevant Business” | means any class or classes of insurance or reinsurance business which was underwritten in the twelve months immediately prior to the Termination Date by the Company or any Group Company and with which the Grantee was directly or indirectly materially concerned or involved or had personal knowledge in the course of Grantee’s duties during the Relevant Period. |
“Relevant Period” | means (1) during employment, the twelve month period immediately prior to the action or activity that may be in breach of clauses 2.1.1 to 2.1.4 and (2) after termination of employment, the twelve month period immediately prior to the Termination Date. |
“Termination Date” | means the date on which the Grantee’s employment or engagement with the Company terminates for any reason. |
/s/ W. Robert Berkley, Jr. | |
W. Robert Berkley, Jr. | |
President and Chief Executive Officer |
/s/ Richard M. Baio | |
Richard M. Baio | |
Senior Vice President — Chief Financial Officer and Treasurer |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ W. Robert Berkley, Jr. |
W. Robert Berkley, Jr. |
President and Chief Executive Officer |
/s/ Richard M. Baio |
Richard M. Baio |
Senior Vice President — Chief Financial Officer and Treasurer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 06, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BERKLEY W R CORP | |
Entity Central Index Key | 0000011544 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 121,794,758 |
Consolidated Balance Sheets Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollar per share) | $ 0.1 | $ 0.1 |
Preferred shares authorized | 5,000,000 | 5,000,000 |
Preferred shares issued | 0 | 0 |
Preferred shares outstanding | 0 | 0 |
Common stock, par value (in dollar per share) | $ 0.2 | $ 0.2 |
Common shares authorized | 500,000,000 | 500,000,000 |
Common shares issued | 121,769,109 | 121,193,599 |
Common shares outstanding | 121,769,109 | 121,193,599 |
Treasury stock issued at cost | 113,348,809 | 113,924,319 |
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
REVENUES: | ||||
Net premiums written | $ 1,571,183 | $ 1,607,365 | $ 4,782,272 | $ 4,913,656 |
Change in net unearned premiums | 10,317 | (21,421) | (62,028) | (240,584) |
Net premiums earned | 1,581,500 | 1,585,944 | 4,720,244 | 4,673,072 |
Net investment income | 142,479 | 145,668 | 426,601 | 404,850 |
Net realized investment gains | 183,959 | 175,738 | 276,760 | 207,508 |
Other-than-temporary impairments | 0 | 0 | 0 | (18,114) |
Insurance service fees | 33,612 | 32,135 | 100,475 | 109,437 |
Revenues from non-insurance businesses | 89,786 | 80,242 | 225,033 | 305,787 |
Other income | 6 | 0 | 695 | 0 |
Total revenues | 2,031,342 | 2,019,727 | 5,749,808 | 5,682,540 |
OPERATING COSTS AND EXPENSES: | ||||
Losses and loss expenses | 1,081,174 | 965,856 | 3,025,475 | 2,852,339 |
Other operating costs and expenses | 600,822 | 606,348 | 1,821,155 | 1,770,450 |
Expenses from non-insurance businesses | 86,412 | 78,865 | 221,389 | 291,127 |
Interest expense | 36,821 | 37,043 | 110,419 | 104,019 |
Total operating costs and expenses | 1,805,229 | 1,688,112 | 5,178,438 | 5,017,935 |
Income before income taxes | 226,113 | 331,615 | 571,370 | 664,605 |
Income tax expense | (63,295) | (110,952) | (174,305) | (214,789) |
Net income before noncontrolling interests | 162,818 | 220,663 | 397,065 | 449,816 |
Noncontrolling interests | (764) | (13) | (2,560) | (689) |
Net income to common stockholders | $ 162,054 | $ 220,650 | $ 394,505 | $ 449,127 |
NET INCOME PER SHARE: | ||||
Basic (in dollar per share) | $ 1.29 | $ 1.80 | $ 3.17 | $ 3.66 |
Diluted (in dollar per share) | $ 1.26 | $ 1.72 | $ 3.05 | $ 3.50 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income before noncontrolling interests | $ 162,818 | $ 220,663 | $ 397,065 | $ 449,816 |
Other comprehensive income (loss): | ||||
Change in unrealized currency translation adjustments | 28,592 | (19,470) | 71,574 | (77,389) |
Change in unrealized investment gains (losses), net of taxes | (8,168) | (47,676) | 26,598 | 134,213 |
Other comprehensive income (loss) | 20,424 | (67,146) | 98,172 | 56,824 |
Comprehensive income | 183,242 | 153,517 | 495,237 | 506,640 |
Noncontrolling interests | (731) | 44 | (2,541) | (623) |
Comprehensive income to common stockholders | $ 182,511 | $ 153,561 | $ 492,696 | $ 506,017 |
General |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The unaudited consolidated financial statements, which include the accounts of W. R. Berkley Corporation and its subsidiaries (the “Company”) have been prepared on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements. The unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly the Company’s financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for interim periods are not necessarily indicative of the results that may be expected for the year. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the revenues and expenses reflected during the reporting period. For further information related to a description of areas of judgment and estimates and other information necessary to understand the Company’s financial position and results of operations, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Reclassifications have been made in the 2016 financial statements as originally reported to conform to the presentation of the 2017 financial statements. The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective tax rate for the quarter differs from the federal income tax rate of 35% principally because of tax-exempt investment income, as well as the new requirement in 2017 to recognize tax benefits for stock compensation in income tax expense. |
Per Share Data |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share Data | Per Share Data The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the period (including 4,087,731 common shares held in a grantor trust established in March 2017). The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the weighted average number of basic and common equivalent shares outstanding during the period and is calculated using the treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. The weighted average number of common shares used in the computation of basic and diluted earnings per share was as follows:
|
Recent Accounting Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently adopted accounting pronouncements: In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-09, Disclosures about Short-Duration Contracts. ASU 2015-09 requires companies that issue short duration insurance contracts to disclose additional information, including: (i) incurred and paid claims development tables; (ii) frequency and severity of claims; and (iii) information about material changes in judgments made in calculating the liability for unpaid claim adjustment expenses, including reasons for the change and the effects on the financial statements. The Company adopted this updated guidance on January 1, 2016 with regard to the annual requirements and on January 1, 2017 with regard to the interim requirements. The amendments in ASU 2015-09 are applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. As the requirements are disclosure only, the adoption of this guidance did not impact our financial condition or results of operations, but did result in additional disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 includes provisions intended to simplify various previous provisions related to how share-based payments are accounted for and presented in the financial statements. Under the new guidance, excess tax benefits (deductions for share based payment awards for tax purposes that exceed the compensation cost recognized for financial reporting purposes) are reported within the income tax expense financial statement line item. Previously, excess tax benefits were reported within additional paid in capital. The Company adopted this updated guidance on January 1, 2017 prospectively. The adoption of this guidance did not have a material impact on the Company's financial condition or results of operations. All other accounting and reporting standards that became effective in 2017 were either not applicable to the Company or their adoption did not have a material impact on the Company. Accounting and reporting standards that are not yet effective: In May 2014, the FASB issued ASU 2014-09, Revenue from Customers. ASU 2014-09 clarifies the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s insurance service fee revenue and non-insurance business revenue will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The updated guidance, as amended by ASU 2015-14, is effective for public business entities for annual and interim reporting periods beginning after December 15, 2017. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition or results of operations. In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 amends the accounting guidance for financial instruments to require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The updated guidance is effective for public business entities for annual reporting periods beginning after December 15, 2017 and interim periods within those years. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition upon adoption, but will impact results of operations after adoption of this guidance as unrealized gains and losses on equity securities will no longer be reported directly in accumulated other comprehensive income (AOCI), but will instead be reported in net income. In February 2016, the FASB issued ASU 2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications of a lease, as either an operating or finance lease, both of which will require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability will be determined based upon the present value of cash flows. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not significantly changed by the updated guidance. The updated guidance is effective for reporting periods beginning after December 15, 2018, and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied. The Company is currently evaluating the impact that the adoption of this guidance will have on its results of operations, financial position and liquidity. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost. The updated guidance is effective for reporting periods beginning after December 15, 2019. The Company will not be able to determine the impact the adoption of this guidance will have on its results of operations, financial position or liquidity until the year the guidance becomes effective. All other recently issued but not yet effective accounting and reporting standards are either not applicable to the Company or are not expected to have a material impact on the Company. |
Acquisitions/Dispositions |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions/Dispositions | Acquisitions/Disposition In March 2017, the Company acquired an 89.5% ownership interest for $73.3 million in a company engaged in providing textile solutions world-wide. The fair value of the assets acquired and liabilities assumed have been estimated based on a third party valuation. The following table summarizes the estimated fair value of net assets acquired and liabilities assumed for the business combination completed in 2017:
In February 2016, the Company acquired an 85% ownership interest for $42.3 million in a company engaged in the distribution of promotional merchandise. |
Consolidated Statements of Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Statements of Comprehensive Income | Consolidated Statement of Comprehensive Income The following table presents the components of the changes in accumulated other comprehensive income ("AOCI"):
_________________________ (1) Net investment gains in the consolidated statements of income. (2) Income tax expense in the consolidated statements of income.
_______________ (1) Net investment gains in the consolidated statements of income. (2) Income tax expense in the consolidated statements of income. |
Statements of Cash Flow |
9 Months Ended |
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Sep. 30, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Statements of Cash Flow | Statements of Cash Flow Interest payments were $134,291,000 and $124,791,000 and income taxes paid were $182,487,000 and $99,161,000 in the nine months ended September 30, 2017 and 2016, respectively. |
Investments In Fixed Maturity Securities |
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Schedule of Available-for-sale Securities [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Fixed Maturity Securities | Investments in Fixed Maturity Securities At September 30, 2017 and December 31, 2016, investments in fixed maturity securities were as follows:
____________
The amortized cost and fair value of fixed maturity securities at September 30, 2017, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations.
At September 30, 2017 and December 31, 2016, there were no investments that exceeded 10% of common stockholders' equity, other than investments in United States government and government agency securities. |
Investments in Equity Securities Available for Sale |
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Schedule of Available-for-sale Securities [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Equity Securities Available for Sale | Investments in Equity Securities Available for Sale At September 30, 2017 and December 31, 2016, investments in equity securities were as follows:
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Arbitrage Trading Account |
9 Months Ended |
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Sep. 30, 2017 | |
Trading Securities [Abstract] | |
Arbitrage Trading Account | Arbitrage Trading Account At September 30, 2017 and December 31, 2016, the fair and carrying values of the arbitrage trading account were $488 million and $300 million, respectively. The primary focus of the trading account is merger arbitrage. Merger arbitrage is the business of investing in the securities of publicly held companies which are the targets in announced tender offers and mergers. Arbitrage investing differs from other types of investing in its focus 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 Company uses put options, call options and swap contracts in order to mitigate the impact of potential changes in market conditions on the merger arbitrage trading account. These options and contracts are reported at fair value. As of September 30, 2017, the fair value of long option contracts outstanding was $1 million (notional amount of $33 million) and the fair value of short option contracts outstanding was $1 million (notional amount of $54 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives. |
Net Investment Income |
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Net Investment Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investment Income | Net Investment Income Net investment income consists of the following:
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Investment Funds |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Funds | Investment Funds The Company evaluates whether it is an investor in a variable interest entity (VIE). Such entities do not have sufficient equity at risk to finance their activities without additional subordinated financial support, or the equity investors, as a group, do not have the characteristics of a controlling financial interest (primary beneficiary). The Company determines whether it is the primary beneficiary of an entity subject to consolidation based on a qualitative assessment of the VIE's capital structure, contractual terms, nature of the VIE's operations and purpose, and the Company's relative exposure to the related risks of the VIE on the date it becomes initially involved in the VIE and on an ongoing basis. The Company is not the primary beneficiary in any of its investment funds, and accordingly, carries its interests in investment funds under the equity method of accounting. The Company’s maximum exposure to loss with respect to these investments is limited to the carrying amount reported on the Company’s consolidated balance sheet and its unfunded commitments which were $442 million as of September 30, 2017. Investment funds consisted of the following:
The Company's share of the earnings or losses of investment funds is generally reported on a one-quarter lag in order to facilitate the timely completion of the Company's consolidated financial statements. |
Real Estate |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate | Real Estate Investment in real estate represents directly owned property held for investment, as follows:
In 2017, properties in operation included a long-term ground lease in Washington, D.C., a hotel in Memphis, Tennessee, an office complex in New York City and office buildings in West Palm Beach and Palm Beach, Florida. Properties in operation are net of accumulated depreciation and amortization of $20,378,000 and $14,996,000 as of September 30, 2017 and December 31, 2016, respectively. Related depreciation expense was $5,382,000 and $4,117,000 for the nine months ended September 30, 2017 and 2016, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $4,966,133 in 2017, $28,251,980 in 2018, $30,174,146 in 2019, $29,415,103 in 2020, $30,054,813 in 2021, $29,966,679 in 2022 and $467,192,215 thereafter. Properties under development include an office building in London and a mixed-use project in Washington, D.C. |
Loans Receivable |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Receivable | Loans Receivable Loans receivable are as follows:
Loans receivable in non-accrual status were $4.5 million and $5.4 million as of September 30, 2017 and December 31, 2016, respectively. The Company monitors the performance of its loans receivable and assesses the ability of the borrower to pay principal and interest based upon loan structure, underlying property values, cash flow and related financial and operating performance of the property and market conditions. Loans receivable with a potential for default are further assessed using discounted cash flow analysis and comparable cost and sales methodologies, if appropriate. The real estate loans are secured by commercial real estate primarily located in New York. These loans generally earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025. The commercial loans are with small business owners who have secured the related financing with the assets of the business. Commercial loans primarily earn interest on a fixed basis and have varying maturities generally not exceeding 10 years. In evaluating the real estate loans, the Company considers their credit quality indicators, including loan to value ratios, which compare the outstanding loan amount to the estimated value of the property, the borrower’s financial condition and performance with respect to loan terms, the position in the capital structure, the overall leverage in the capital structure and other market conditions. Based on these considerations, none of the real estate loans were considered to be impaired at September 30, 2017, and accordingly, the Company determined that a specific valuation allowance was not required. |
Realized And Unrealized Investment Gains (Losses) |
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Realized and Unrealized Investment Gains (Losses) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized and Unrealized Investment Gains (Losses) | Realized and Unrealized Investment Gains (Losses) Realized and unrealized investment gains (losses) are as follows:
(1) Investment funds includes a gain of $124.3 million from the sale of an investment in an office building located in Washington, D.C. for the three and nine months ended September 30, 2017. (2) Other includes a gain of $134.9 million from the sale of Aero Precision Industries and certain related aviation services business for the three and nine months ended September 30, 2016. (3) There were no other than temporary impairments (OTTI) for the three and nine months ended September 30, 2017, or for the three months ended September 30, 2016. OTTI for the nine months ended September 30, 2016 of $18.1 million were related to common stock. |
Securities In An Unrealized Loss Position |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in Unrealized Loss Position | Securities in an Unrealized Loss Position The following tables summarize all securities in an unrealized loss position at September 30, 2017 and December 31, 2016 by the length of time those securities have been continuously in an unrealized loss position:
Fixed Maturity Securities – A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, 2017 is presented in the table below:
For OTTI of fixed maturity securities that management does not intend to sell or, to be required to sell, the portion of the decline in value that is considered to be due to credit factors is recognized in earnings, and the portion of the decline in value that is considered to be due to non-credit factors is recognized in other comprehensive income. The Company has evaluated its fixed maturity securities in an unrealized loss position and believes the unrealized losses are due primarily to temporary market and sector-related factors rather than to issuer-specific factors. None of these securities are delinquent or in default under financial covenants. Based on its assessment of these issuers, the Company expects them to continue to meet their contractual payment obligations as they become due and does not consider any of these securities to be OTTI. Preferred Stocks – At September 30, 2017, there was one preferred stock in an unrealized loss position, with a fair value of $24.0 million and a gross unrealized loss of $1.7 million. Based upon management’s view of the underlying value of the security, the Company does not consider the equity security to be OTTI. For the nine months ended September 30, 2017 and 2016, there was no OTTI for preferred stocks. Common Stocks – At September 30, 2017, there were three common stocks in an unrealized loss position, with an aggregate fair value of $14.1 million and a gross unrealized loss of $3.5 million. Based upon management's view of the underlying value of these securities, the Company does not consider these equity securities to be OTTI. There was no OTTI of common stocks for the nine months ended September 30, 2017. For the nine months ended September 30, 2016, OTTI for common stocks was $18.1 million. |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are carried at fair value. 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, as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable. Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available. Substantially, all of the Company’s fixed maturity securities were priced by independent pricing services. The prices provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to ensure proper valuation. If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant information. For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate. The following tables present the assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 by level:
There were no significant transfers between Levels 1 and 2 during the nine months ended September 30, 2017 or during the year ended December 31, 2016. The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, 2017 and for the year ended December 31, 2016:
During the nine months ended September 30, 2017 and for the year ended December 31, 2016, there were no transfers out of Level 3. Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
The estimated fair values of the Company’s fixed maturity securities, equity securities available for sale and arbitrage trading account securities are based on various valuation techniques that rely on fair value measurements as described in Note 16 above. The fair value of loans receivable are estimated by using current institutional purchaser yield requirements for loans with similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input. |
Reserves for Loss and Loss Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserves for Loss and Loss Expenses | Reserves for Loss and Loss Expenses The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities (IBNR). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims. Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit. The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions. 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. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns. Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations. Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. 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 of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags. The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed. The table below provides a reconciliation of the beginning and ending reserve balances:
In 2017, favorable prior year development (net of additional and return premiums) of $31 million included $62 million of favorable development for the Insurance segment, partially offset by $31 million of adverse development for the Reinsurance segment. The favorable development for the Insurance segment was primarily attributable to workers' compensation business (including excess workers' compensation). The favorable workers' compensation development was spread across many accident years, including prior to 2008, but was most significant in accident years 2014 and 2015. The favorable workers' compensation development reflects a continuation of the benign loss cost trends experienced during 2016, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The adverse development for the Reinsurance segment was due to reserve strengthening associated with claims impacted by the change in the Ogden discount rate in the U.K., as well as adverse development in the U.S. facultative casualty excess of loss business. The Ogden rate is the discount rate used to calculate lump-sum bodily injury payouts in the U.K., and was reduced by the U.K. Ministry of Justice from +2.5% to -0.75%; the adverse development mostly related to U.K. motor bodily injury claims which we reinsured on an excess of loss basis in accident years 2012 through 2016. The adverse development on U.S. facultative casualty business related to construction-related risks in accident years 2008 and prior. In 2016, favorable prior year development (net of additional and return premiums) of $42 million included $38 million for the Insurance segment and $4 million for the Reinsurance segment. The favorable development for the Insurance segment was primarily attributable to workers' compensation business, partially offset by adverse development for commercial auto liability and medical and other professional liability. The favorable development for workers' compensation stems from accident years 2003 through 2015, but is concentrated in accident years 2014 and 2015; it reflects claims frequency trends (i.e., number of reported claims per unit of exposure) that continue to be better than we expected. The unfavorable development for commercial auto liability was driven by higher large loss activity than expected in accident years 2014 and 2015, and the unfavorable development for medical professional liability was primarily in accident years prior to 2013 and stemmed from a class of medical professional liability business that we discontinued writing in 2013. |
Fair Value Of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments | Fair Value Measurements The Company’s fixed maturity and equity securities classified as available for sale and its trading account securities are carried at fair value. 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, as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable. Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available. Substantially, all of the Company’s fixed maturity securities were priced by independent pricing services. The prices provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to ensure proper valuation. If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant information. For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate. The following tables present the assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 by level:
There were no significant transfers between Levels 1 and 2 during the nine months ended September 30, 2017 or during the year ended December 31, 2016. The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, 2017 and for the year ended December 31, 2016:
During the nine months ended September 30, 2017 and for the year ended December 31, 2016, there were no transfers out of Level 3. Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
The estimated fair values of the Company’s fixed maturity securities, equity securities available for sale and arbitrage trading account securities are based on various valuation techniques that rely on fair value measurements as described in Note 16 above. The fair value of loans receivable are estimated by using current institutional purchaser yield requirements for loans with similar credit characteristics, which is considered a Level 2 input. The fair value of the senior notes and other debt and the subordinated debentures is based on spreads for similar securities, which is considered a Level 2 input. |
Reinsurance |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance | Reinsurance The following is a summary of reinsurance financial information:
The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and catastrophe losses. The Company also cedes premiums to state assigned risk plans and captive insurance companies. Estimated amounts due from reinsurers are reported net of reserves for uncollectible reinsurance of $1 million as of September 30, 2017 and December 31, 2016. |
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Restricted Stock Units | Restricted Stock Units Pursuant to its stock incentive plan, the Company may issue restricted stock units (RSUs) to employees of the Company and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other vesting and forfeiture provisions contained in the award agreement. RSUs are expensed pro-ratably over the vesting period. RSU expenses were $30 million and $25 million for the nine months ended September 30, 2017 and 2016, respectively. A summary of RSUs issued in the nine months ended September 30, 2017 and 2016 follows:
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Litigation and Contingent Liabilities |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingent Liabilities | Litigation and Contingent Liabilities In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are considered in the establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of insurance claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial condition. However, adverse outcomes on such matters are possible, from time to time, and could be material to the Company’s results of operations in any particular financial reporting period. |
Business Segments |
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Business Segments | Business Segments The Company’s reportable segments include the following two business segments, plus a corporate segment:
Commencing with the first quarter of 2017, the Company reclassified two businesses from the Insurance Segment to the Reinsurance segment. Reclassifications have been made to the Company's 2016 financial information to conform with this presentation. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Income tax expense and benefits are calculated based upon the Company's overall effective tax rate. Summary financial information about the Company's reporting segments is presented in the following tables. Income (loss) before income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.
(1) Revenues for Insurance from foreign countries for the three months ended September 30, 2017 and 2016 were $166 million and $187 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $513 million and $546 million, respectively. Revenues for Reinsurance from foreign countries for the three months ended September 30, 2017 and 2016 were $49 million and $48 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $150 million and $153 million, respectively. (2) Corporate, other and eliminations represent corporate revenues and expenses that are not allocated to business segments. Identifiable Assets
Net premiums earned by major line of business are as follows:
______________ (1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines. |
Recent Accounting Pronouncements (Policies) |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Per Share Data | Per Share Data The Company presents both basic and diluted net income per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the period (including 4,087,731 common shares held in a grantor trust established in March 2017). The common shares held in the grantor trust are for delivery upon settlement of vested but mandatorily deferred restricted stock units ("RSUs"). Shares held by the grantor trust do not affect diluted shares outstanding since the shares deliverable under vested RSUs were already included in diluted shares outstanding. Diluted EPS is based upon the weighted average number of basic and common equivalent shares outstanding during the period and is calculated using the treasury stock method for stock incentive plans. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently adopted accounting pronouncements: In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-09, Disclosures about Short-Duration Contracts. ASU 2015-09 requires companies that issue short duration insurance contracts to disclose additional information, including: (i) incurred and paid claims development tables; (ii) frequency and severity of claims; and (iii) information about material changes in judgments made in calculating the liability for unpaid claim adjustment expenses, including reasons for the change and the effects on the financial statements. The Company adopted this updated guidance on January 1, 2016 with regard to the annual requirements and on January 1, 2017 with regard to the interim requirements. The amendments in ASU 2015-09 are applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. As the requirements are disclosure only, the adoption of this guidance did not impact our financial condition or results of operations, but did result in additional disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 includes provisions intended to simplify various previous provisions related to how share-based payments are accounted for and presented in the financial statements. Under the new guidance, excess tax benefits (deductions for share based payment awards for tax purposes that exceed the compensation cost recognized for financial reporting purposes) are reported within the income tax expense financial statement line item. Previously, excess tax benefits were reported within additional paid in capital. The Company adopted this updated guidance on January 1, 2017 prospectively. The adoption of this guidance did not have a material impact on the Company's financial condition or results of operations. All other accounting and reporting standards that became effective in 2017 were either not applicable to the Company or their adoption did not have a material impact on the Company. Accounting and reporting standards that are not yet effective: In May 2014, the FASB issued ASU 2014-09, Revenue from Customers. ASU 2014-09 clarifies the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company’s insurance service fee revenue and non-insurance business revenue will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services. The updated guidance, as amended by ASU 2015-14, is effective for public business entities for annual and interim reporting periods beginning after December 15, 2017. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition or results of operations. In January 2016, the FASB issued ASU 2016-01, Financial Instruments. ASU 2016-01 amends the accounting guidance for financial instruments to require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee). The updated guidance is effective for public business entities for annual reporting periods beginning after December 15, 2017 and interim periods within those years. The adoption of this guidance is not expected to have a material effect on the Company’s financial condition upon adoption, but will impact results of operations after adoption of this guidance as unrealized gains and losses on equity securities will no longer be reported directly in accumulated other comprehensive income (AOCI), but will instead be reported in net income. In February 2016, the FASB issued ASU 2016-02, Leases, which amends the accounting and disclosure guidance for leases. This guidance retains the two classifications of a lease, as either an operating or finance lease, both of which will require lessees to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months. The right-of-use asset and the lease liability will be determined based upon the present value of cash flows. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-of-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not significantly changed by the updated guidance. The updated guidance is effective for reporting periods beginning after December 15, 2018, and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied. The Company is currently evaluating the impact that the adoption of this guidance will have on its results of operations, financial position and liquidity. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which amends the accounting guidance for credit losses on financial instruments. The updated guidance amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost. The updated guidance is effective for reporting periods beginning after December 15, 2019. The Company will not be able to determine the impact the adoption of this guidance will have on its results of operations, financial position or liquidity until the year the guidance becomes effective. All other recently issued but not yet effective accounting and reporting standards are either not applicable to the Company or are not expected to have a material impact on the Company. |
Per Share Data (Tables) |
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Weighted average number of common shares | The weighted average number of common shares used in the computation of basic and diluted earnings per share was as follows:
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Acquisitions/Dispositions (Tables) |
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Summary of fair value of net assets acquired and liabilities assumed | The following table summarizes the estimated fair value of net assets acquired and liabilities assumed for the business combination completed in 2017:
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Consolidated Statements of Comprehensive Income (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of changes in accumulated other comprehensive income (loss) | The following table presents the components of the changes in accumulated other comprehensive income ("AOCI"):
_________________________ (1) Net investment gains in the consolidated statements of income. (2) Income tax expense in the consolidated statements of income.
_______________ (1) Net investment gains in the consolidated statements of income. (2) Income tax expense in the consolidated statements of income. |
Investments in Fixed Maturity Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of investments in fixed maturity securities | At September 30, 2017 and December 31, 2016, investments in fixed maturity securities were as follows:
____________
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Amortized cost and fair value of fixed maturity securities by contractual maturity | The amortized cost and fair value of fixed maturity securities at September 30, 2017, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations.
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Investments in Equity Securities Available for Sale (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity securities available for sale | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investments in Equity Securities | At September 30, 2017 and December 31, 2016, investments in equity securities were as follows:
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Net Investment Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Investment Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Investment Income | Net investment income consists of the following:
|
Investment Funds (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment Funds | Investment funds consisted of the following:
|
Real Estate Real Estate (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Investments | Investment in real estate represents directly owned property held for investment, as follows:
|
Loans Receivable Loans Receivable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | Loans receivable are as follows:
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Realized And Unrealized Investment Gains (Losses) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized and Unrealized Investment Gains (Losses) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized and Unrealized Investment Gains (Losses) | Realized and unrealized investment gains (losses) are as follows:
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Unrealized Gain (Loss) on Investments |
(1) Investment funds includes a gain of $124.3 million from the sale of an investment in an office building located in Washington, D.C. for the three and nine months ended September 30, 2017. (2) Other includes a gain of $134.9 million from the sale of Aero Precision Industries and certain related aviation services business for the three and nine months ended September 30, 2016. (3) There were no other than temporary impairments (OTTI) for the three and nine months ended September 30, 2017, or for the three months ended September 30, 2016. OTTI for the nine months ended September 30, 2016 of $18.1 million were related to common stock. |
Securities In An Unrealized Loss Position Securities In An Unrealized Loss Position (Tables) |
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Statement of Financial Position [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in an unrealized loss position | The following tables summarize all securities in an unrealized loss position at September 30, 2017 and December 31, 2016 by the length of time those securities have been continuously in an unrealized loss position:
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Non-Investment Grade Fixed Maturity Securities | Fixed Maturity Securities – A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at September 30, 2017 is presented in the table below:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets And Liabilities Measured At Fair value, On A Recurring Basis | The following tables present the assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 by level:
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Summarize Changes In Level 3 Assets | The following tables summarize changes in Level 3 assets and liabilities for the nine months ended September 30, 2017 and for the year ended December 31, 2016:
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Reserves for Loss and Loss Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve Balances | The table below provides a reconciliation of the beginning and ending reserve balances:
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Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts And Estimated Fair Values Of Financial Instruments | The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:
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Reinsurance (Tables) |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Financial Information | The following is a summary of reinsurance financial information:
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Restricted Stock Units (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||
Summary Of Restricted Stock Units Issued | A summary of RSUs issued in the nine months ended September 30, 2017 and 2016 follows:
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Business Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information Of Company Operating Segments | Summary financial information about the Company's reporting segments is presented in the following tables. Income (loss) before income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.
(1) Revenues for Insurance from foreign countries for the three months ended September 30, 2017 and 2016 were $166 million and $187 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $513 million and $546 million, respectively. Revenues for Reinsurance from foreign countries for the three months ended September 30, 2017 and 2016 were $49 million and $48 million, respectively, and for the nine months ended September 30, 2017 and 2016 were $150 million and $153 million, respectively. (2) Corporate, other and eliminations represent corporate revenues and expenses that are not allocated to business segments. |
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Identifiable Assets By Segment | Identifiable Assets
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Net Premiums Earned By Major Line Of Business | Net premiums earned by major line of business are as follows:
______________ (1) Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines. |
General (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Federal Income Tax Rate | 35.00% |
Per Share Data (Narrative) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
shares
| |
Earnings Per Share [Abstract] | |
Weighted average number of shares held in grantor trust | 4,087,731 |
Per Share Data (Weighted Average Number of Common Shares Used In the Computation of Basic and Diluted Earnings per Share) (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Basic (shares) | 125,818 | 122,562 | 124,363 | 122,652 |
Diluted (shares) | 128,944 | 128,556 | 129,289 | 128,501 |
Acquisitions/Dispositions (Narrative) (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Feb. 29, 2016 |
|
Business Combinations [Abstract] | ||
Ownership interest acquired (as percent) | 89.50% | 85.00% |
Consideration transferred to acquire interest | $ 73.3 | $ 42.3 |
Acquisitions/Dispositions (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Business Combinations [Abstract] | |||
Cash and cash equivalents | $ 2,721 | ||
Real estate, furniture and equipment | 7,042 | ||
Goodwill | $ 173,422 | 28,522 | $ 144,513 |
Intangible assets | 32,395 | ||
Other assets | 9,862 | ||
Total assets acquired | 80,542 | ||
Other liabilities assumed | (2,251) | ||
Noncontrolling interest | (5,000) | ||
Net assets acquired | $ 73,291 |
Statements of Cash Flow (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Interest payments | $ 134,291 | $ 124,791 |
Income taxes paid | $ 182,487 | $ 99,161 |
Investments In Fixed Maturity Securities Investments in Fixed Maturity Securities (Amortized cost and fair value of fixed maturity securities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Amortized Cost, Due in one year or less | $ 745,010 | |
Amortized Cost, Due after one year through five years | 5,089,768 | |
Amortized Cost, Due after five years through ten years | 3,248,254 | |
Amortized Cost, Due after ten years | 3,145,963 | |
Amortized Cost, Mortgaged-backed securities | 1,330,116 | |
Total investments in fixed maturity securities, Amortized Value | 13,559,111 | $ 12,958,335 |
Fair Value, Due in one year or less | 750,479 | |
Fair Value, Due after one year through five years | 5,210,268 | |
Fair Value, Due after five years through ten years | 3,396,461 | |
Fair Value, Due after ten years | 3,197,551 | |
Fair Value, Mortgage-backed securities | 1,335,595 | |
Total investments in fixed maturity securities, Fair Value | $ 13,890,354 | $ 13,204,814 |
Investments in Equity Securities Available for Sale (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $ 208,785 | $ 220,587 |
Gross Unrealized, Gains | 410,444 | 453,298 |
Gross Unrealized, Losses | (5,204) | (4,685) |
Carrying and fair value of equity securities | 614,025 | 669,200 |
Common stock | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 83,709 | 94,998 |
Gross Unrealized, Gains | 339,297 | 351,906 |
Gross Unrealized, Losses | (3,486) | (1,046) |
Carrying and fair value of equity securities | 419,520 | 445,858 |
Preferred stocks | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 125,076 | 125,589 |
Gross Unrealized, Gains | 71,147 | 101,392 |
Gross Unrealized, Losses | (1,718) | (3,639) |
Carrying and fair value of equity securities | $ 194,505 | $ 223,342 |
Arbitrage Trading Account (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Derivative [Line Items] | ||
Arbitrage trading account | $ 488,238 | $ 299,999 |
Long | Options held | ||
Derivative [Line Items] | ||
Fair value of derivative | 1,000 | |
Notional amount of derivative | 33,000 | |
Short | Options held | ||
Derivative [Line Items] | ||
Fair value of derivative | 1,000 | |
Notional amount of derivative | $ 54,000 |
Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Net Investment Income [Line Items] | ||||
Gross investment income | $ 144,098 | $ 147,659 | $ 431,694 | $ 412,485 |
Investment expense | (1,619) | (1,991) | (5,093) | (7,635) |
Net investment income | 142,479 | 145,668 | 426,601 | 404,850 |
Fixed maturity securities, including cash and cash equivalents and loans receivable | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 118,834 | 114,271 | 347,976 | 331,448 |
Investment funds | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 15,200 | 25,293 | 50,744 | 60,385 |
Arbitrage trading account | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 4,418 | 6,441 | 16,235 | 12,883 |
Real estate | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 5,042 | 585 | 14,894 | 4,552 |
Equity securities available for sale | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | $ 604 | $ 1,069 | $ 1,845 | $ 3,217 |
Investment Funds Investment Funds (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Schedule of Equity Method Investments [Line Items] | |||
Unfunded commitments | $ 442,000 | ||
Investment funds | 1,119,907 | $ 1,198,146 | |
Income (Loss) from Investment Funds | 50,744 | $ 60,385 | |
Real estate | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment funds | 614,508 | 641,783 | |
Income (Loss) from Investment Funds | 30,661 | 33,028 | |
Energy | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment funds | 85,817 | 91,448 | |
Income (Loss) from Investment Funds | (12,763) | 7,174 | |
Hedge equity | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment funds | 0 | 73,913 | |
Income (Loss) from Investment Funds | (1,164) | 791 | |
Other funds | |||
Schedule of Equity Method Investments [Line Items] | |||
Investment funds | 419,582 | $ 391,002 | |
Income (Loss) from Investment Funds | $ 34,010 | $ 19,392 |
Real Estate Real Estate (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Real Estate [Abstract] | ||
Properties in operation | $ 451,669 | $ 457,237 |
Properties under development | 939,605 | 727,744 |
Total | $ 1,391,274 | $ 1,184,981 |
Real Estate Real Estate (Narrative) (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Real Estate [Abstract] | |||
Accumulated depreciation and amortization on properties | $ 20,378,000 | $ 14,996,000 | |
Real estate depreciation expense | 5,382,000 | $ 4,117,000 | |
Lease future minimum payments 2017 | 4,966,133 | ||
Lease future minimum payments 2018 | 28,251,980 | ||
Lease future minimum payments 2019 | 30,174,146 | ||
Lease future minimum payments 2020 | 29,415,103 | ||
Lease future minimum payments 2021 | 30,054,813 | ||
Lease future minimum payments 2022 | 29,966,679 | ||
Lease future minimum payments there after | $ 467,192,215 |
Loans Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans receivable, gross | $ 74,229 | $ 74,229 | $ 106,798 | ||
Loans receivable | 76,615 | 76,615 | 108,299 | ||
Valuation allowance, specific | 1,200 | 1,200 | 1,200 | ||
Valuation allowance, general | 2,183 | 2,183 | 2,197 | ||
Valuation allowance of loans receivable | 3,383 | 3,383 | 3,397 | ||
(Decrease) increase in valuation allowance | 0 | $ 467 | (14) | $ 1,128 | |
Loans in nonaccrual status | 4,500 | 4,500 | 5,400 | ||
Real estate loans | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans receivable, gross | 59,487 | 59,487 | 92,415 | ||
Loans receivable | 60,372 | 60,372 | 92,415 | ||
Commercial loans | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Loans receivable, gross | 14,742 | 14,742 | 14,383 | ||
Loans receivable | $ 16,243 | $ 16,243 | $ 15,884 |
Reserves for Loss and Loss Expenses (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | |||
Net reserves at beginning of year | $ 9,590,265 | $ 9,244,872 | |
Net provision for losses and loss expenses: | |||
Claims occurring during the current year | 2,998,687 | 2,838,777 | |
Decrease in estimates for claims occurring in prior years | (7,648) | (23,518) | |
Loss reserve discount accretion | 34,436 | 37,080 | |
Liability for Unpaid Claims and Claims Adjustment Expense, Incurred Claims | 3,025,475 | 2,852,339 | |
Net payments for claims: | |||
Current year | 628,078 | 612,615 | |
Prior year | 1,996,977 | 1,931,454 | |
Total | 2,625,055 | 2,544,069 | |
Foreign currency translation | 57,789 | (6,266) | |
Net reserves at end of period | 10,048,474 | 9,546,876 | |
Ceded reserve at end of period | 1,605,872 | 1,550,954 | |
Gross reserves at end of period | $ 11,654,346 | $ 11,097,830 | $ 11,197,195 |
Reserves for Loss and Loss Expenses (Narrative) (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Net of loss reserve discounts | $ 16,787 | $ 12,085 | |
Decrease in estimates for claims | 30,609 | 45,813 | |
Adjustment expense | 30,600 | $ 42,000 | $ 42,000 |
Insurance | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Adjustment expense | 62,000 | 38,000 | |
Reinsurance | |||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||
Adjustment expense | $ 31,000 | $ 4,000 |
Reinsurance (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Written premiums: | |||||
Written premiums, direct | $ 1,679,389 | $ 1,643,870 | $ 5,127,465 | $ 5,061,646 | |
Written premiums, assumed | 194,769 | 224,979 | 570,052 | 702,265 | |
Written premiums, ceded | (302,975) | (261,484) | (915,245) | (850,255) | |
Total net premiums written | 1,571,183 | 1,607,365 | 4,782,272 | 4,913,656 | |
Earned premiums: | |||||
Earned premiums, direct | 1,692,453 | 1,647,033 | 4,972,755 | 4,824,768 | |
Earned premiums, assumed | 202,972 | 216,758 | 605,281 | 635,443 | |
Earned premiums, ceded | (313,925) | (277,847) | (857,792) | (787,139) | |
Net premiums earned | 1,581,500 | 1,585,944 | 4,720,244 | 4,673,072 | |
Ceded losses and loss expenses incurred | 247,104 | 213,065 | 424,905 | 507,258 | |
Ceded commissions earned | 63,222 | $ 47,315 | 177,524 | $ 143,809 | |
Uncollectible reinsurance | $ 1,000 | $ 1,000 | $ 1,000 |
Restricted Stock Units (Summary of Restricted Stock Units Issued) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Share-Based Compensation Arrangement by Share-based Payment Award [Line Item] | ||
Share based compensation expense | $ 30,000 | $ 25,000 |
Restricted stock | ||
Share-Based Compensation Arrangement by Share-based Payment Award [Line Item] | ||
Restricted stock units (in units) | 855,051 | 990,487,000 |
Fair Value | $ 58,712 | $ 57,959 |
Minimum | Restricted stock | ||
Share-Based Compensation Arrangement by Share-based Payment Award [Line Item] | ||
Award vesting period | 3 years | |
Maximum | Restricted stock | ||
Share-Based Compensation Arrangement by Share-based Payment Award [Line Item] | ||
Award vesting period | 5 years |
Business Segments (Financial Information of Company Operating Segments) (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
segment
|
Sep. 30, 2016
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 2 | ||||
Earned Premiums | $ 1,581,500 | $ 1,585,944 | $ 4,720,244 | $ 4,673,072 | |
Investment Income | 142,479 | 145,668 | 426,601 | 404,850 | |
Other | 307,363 | 288,115 | 602,963 | 604,618 | |
Total revenues | 2,031,342 | 2,019,727 | 5,749,808 | 5,682,540 | |
Pre-Tax Income (Loss) | 226,113 | 331,615 | 571,370 | 664,605 | |
Net Income (Loss) to Common Stockholders | 162,054 | 220,650 | 394,505 | 449,127 | |
Net investment gains | 183,959 | 175,738 | 276,760 | 189,394 | |
Net investment gains, net of tax | 119,573 | 114,230 | 179,894 | 123,106 | |
Corporate, other and eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 0 | 0 | 0 | 0 | |
Investment Income | 15,027 | 6,801 | 38,251 | 22,827 | |
Other | 123,404 | 112,377 | 326,203 | 415,224 | |
Total revenues | 138,431 | 119,178 | 364,454 | 438,051 | |
Pre-Tax Income (Loss) | (71,681) | (81,942) | (224,716) | (190,655) | |
Net Income (Loss) to Common Stockholders | (45,685) | (53,035) | (146,324) | (123,610) | |
Insurance | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 1,433,729 | 1,423,635 | 4,262,485 | 4,180,985 | |
Insurance | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 1,433,729 | 1,423,635 | 4,262,485 | 4,180,985 | |
Investment Income | 105,924 | 111,300 | 320,552 | 304,904 | |
Other | 0 | 0 | 0 | 0 | |
Total revenues | 1,539,653 | 1,534,935 | 4,583,037 | 4,485,889 | |
Pre-Tax Income (Loss) | 171,478 | 210,498 | 557,605 | 586,651 | |
Net Income (Loss) to Common Stockholders | 123,240 | 140,730 | 381,736 | 394,746 | |
Reinsurance | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 147,771 | 162,309 | 457,759 | 492,087 | |
Reinsurance | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 147,771 | 162,309 | 457,759 | 492,087 | |
Investment Income | 21,528 | 27,567 | 67,798 | 77,119 | |
Other | 0 | 0 | 0 | 0 | |
Total revenues | 169,299 | 189,876 | 525,557 | 569,206 | |
Pre-Tax Income (Loss) | (57,643) | 27,321 | (38,279) | 79,215 | |
Net Income (Loss) to Common Stockholders | (35,074) | 18,725 | (20,801) | 54,885 | |
Re-insurance - International | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 49,000 | $ 50,000 | 48,000 | 150,000 | 153,000 |
Net investment gains | |||||
Segment Reporting Information [Line Items] | |||||
Earned Premiums | 0 | 0 | 0 | 0 | |
Investment Income | 0 | 0 | 0 | 0 | |
Insurance-International Segment | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | $ 166,000 | $ 187,000 | $ 513,000 | $ 546,000 |
Business Segments (Identifiable Assets by Segment) (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Consolidated Assets | $ 24,336,076 | $ 23,350,076 |
Operating Segments | Insurance | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Consolidated Assets | 19,136,776 | 19,137,758 |
Operating Segments | Reinsurance | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Consolidated Assets | 3,243,610 | 2,524,338 |
Corporate, other and eliminations | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Consolidated Assets | $ 1,955,690 | $ 1,687,980 |
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