Business Wire | Jan 27, 2022 04:10PM EST

W. R. Berkley Corporation Reports Fourth Quarter and Full Year Results

Jan. 27, 2022

GREENWICH, Conn.--(BUSINESS WIRE)--Jan. 27, 2022--W. R. Berkley Corporation (NYSE: WRB) today reported its fourth quarter and full year 2021 results.

Summary Financial Data(Amounts in thousands, except per share data)

Fourth Quarter Twelve Months

2021 2020 2021 2020



Gross premiums $ 2,766,688 $ 2,221,484 $ 10,700,134 $ 8,847,647 written

Net premiums 2,275,509 1,797,457 8,862,867 7,262,437 written



Net income tocommon 294,430 312,150 1,022,490 530,670 stockholders

Net income per 1.59 1.67 5.48 2.81 diluted share



Operating income 284,323 173,043 951,861 438,253 (1)

Operating incomeper diluted 1.53 0.92 5.10 2.32 share



Return on equity 18.7 % 20.6 % 16.2 % 8.7 %(2)

(1)Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses) and related expenses.

(2)Return on equity represents net income expressed on an annualized basis as a percentage of beginning of year common stockholders' equity.

Fourth quarter highlights included:

* Return on equity of 18.7%.

* Record quarterly underwriting income of $260.9 million.

* Net premiums written increased 26.6%.

* The current accident year combined ratio before catastrophe losses of 2.2 loss ratio points was 86.0%.

* The reported combined ratio was 88.2%, including catastrophe losses of $48.5 million.

* Average rate increases excluding workers' compensation were approximately 9.3%.

* Total capital returned to shareholders was $199.6 million, consisting of $176.7 million of special dividends and $22.9 million of regular dividends.

Full year highlights included:

* Record full year underwriting income and net income of $845.3 million and $1.0 billion, respectively.

* Return on equity of 16.2%.

* Record gross and net premiums written grew 20.9% and 22.0% to $10.7 billion and $8.9 billion, respectively.

* Average rate increases excluding workers' compensation were approximately 10.4%.

* Operating cash flow increased 35.1% to approximately $2.2 billion.

* Book value per share grew 12.5%, before dividends and share repurchases.

* Total capital returned to shareholders was $478.1 million, including $265.3 million of special dividends, $90.4 million of regular dividends and $122.4 million of share repurchases.

* Formed two new operating units, Berkley Management Protection and Berkley Small Business Solutions.

The Company commented:

The Company had another outstanding quarter, which together with strong performance in the first nine months of 2021, led to a record year on many fronts, despite catastrophe losses and continuing low interest rates. The fourth quarter was highlighted by more than 26% growth in net premiums written and an 18.7% annualized return on equity.

Robust premium growth was driven by continued strong rate increases in nearly all lines of business combined with higher exposure growth. Record underwriting income in the quarter reflected year-over-year margin improvement and a further reduction in the expense ratio. We anticipate that the factors fueling the Company's growth should remain in place for the foreseeable future and that compounding rate increases in excess of loss trend will further contribute to underwriting profits as premiums are fully earned.

Our investment portfolio also performed extremely well in both the quarter and full year. Through our total return strategy, including our allocation to alternative investments, we seek to maximize our investment portfolio's risk-adjusted returns. In addition, we maintain a short duration in our fixed-maturity portfolio, which has limited the impact of rising interest rates on book value.

Our decentralized business model, built on a culture of innovation with specialized teams of people having extensive knowledge and expertise, allows us to quickly and effectively respond to opportunities in the marketplace. This structure enables us to maintain appropriate discipline throughout the market cycle and achieve robust growth in revenues and earnings when margins improve. Our underwriting and investment portfolios are well-positioned for the anticipated inflationary environment. The Company is performing exceptionally well and we look forward to another great year in 2022.

Webcast Conference Call

The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on January 27, 2022, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/news-and-events/events-and-presentations/default.aspx. Please log on at least ten minutes early to register and download and install any necessary software. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call. Additional financial information can be found on the Company's website at https://ir.berkley.com/investor-relations/financial-information/quarterly-results/default.aspx.

About W. R. Berkley Corporation

Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty business: Insurance and Reinsurance & Monoline Excess.

Forward Looking Information

This is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2022 and beyond, are based upon the Company's historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts, including claims for cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing COVID-19 pandemic; the impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, interest rates, and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response, on our results and financial condition; foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the European Union, or "Brexit") relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; potential difficulties with technology and/or cyber security issues; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties could cause our actual results for the year 2022 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Operating income is a non-GAAP financial measure defined by the Company as(1) net income excluding after-tax net investment gains (losses) and related expenses.

Return on equity represents net income expressed on an annualized basis as(2) a percentage of beginning of year common stockholders' equity.

Fourth quarter highlights included:

* Return on equity of 18.7%.

* Record quarterly underwriting income of $260.9 million.

* Net premiums written increased 26.6%.

* The current accident year combined ratio before catastrophe losses of 2.2 loss ratio points was 86.0%.

* The reported combined ratio was 88.2%, including catastrophe losses of $48.5 million.

* Average rate increases excluding workers' compensation were approximately 9.3%.

* Total capital returned to shareholders was $199.6 million, consisting of $176.7 million of special dividends and $22.9 million of regular dividends.

Full year highlights included:

* Record full year underwriting income and net income of $845.3 million and $1.0 billion, respectively.

* Return on equity of 16.2%.

* Record gross and net premiums written grew 20.9% and 22.0% to $10.7 billion and $8.9 billion, respectively.

* Average rate increases excluding workers' compensation were approximately 10.4%.

* Operating cash flow increased 35.1% to approximately $2.2 billion.

* Book value per share grew 12.5%, before dividends and share repurchases.

* Total capital returned to shareholders was $478.1 million, including $265.3 million of special dividends, $90.4 million of regular dividends and $122.4 million of share repurchases.

* Formed two new operating units, Berkley Management Protection and Berkley Small Business Solutions.

The Company commented:

The Company had another outstanding quarter, which together with strong performance in the first nine months of 2021, led to a record year on many fronts, despite catastrophe losses and continuing low interest rates. The fourth quarter was highlighted by more than 26% growth in net premiums written and an 18.7% annualized return on equity.

Robust premium growth was driven by continued strong rate increases in nearly all lines of business combined with higher exposure growth. Record underwriting income in the quarter reflected year-over-year margin improvement and a further reduction in the expense ratio. We anticipate that the factors fueling the Company's growth should remain in place for the foreseeable future and that compounding rate increases in excess of loss trend will further contribute to underwriting profits as premiums are fully earned.

Our investment portfolio also performed extremely well in both the quarter and full year. Through our total return strategy, including our allocation to alternative investments, we seek to maximize our investment portfolio's risk-adjusted returns. In addition, we maintain a short duration in our fixed-maturity portfolio, which has limited the impact of rising interest rates on book value.

Our decentralized business model, built on a culture of innovation with specialized teams of people having extensive knowledge and expertise, allows us to quickly and effectively respond to opportunities in the marketplace. This structure enables us to maintain appropriate discipline throughout the market cycle and achieve robust growth in revenues and earnings when margins improve. Our underwriting and investment portfolios are well-positioned for the anticipated inflationary environment. The Company is performing exceptionally well and we look forward to another great year in 2022.

Webcast Conference Call

The Company will hold its quarterly conference call with analysts and investors to discuss its earnings and other information on January 27, 2022, at 5:00 p.m. eastern time. The conference call will be webcast live on the Company's website at https://ir.berkley.com/news-and-events/events-and-presentations/default.aspx. Please log on at least ten minutes early to register and download and install any necessary software. A replay of the webcast will be available on the Company's website approximately two hours after the end of the conference call. Additional financial information can be found on the Company's website at https://ir.berkley.com/investor-relations/financial-information/quarterly-results/default.aspx.

About W. R. Berkley Corporation

Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty business: Insurance and Reinsurance & Monoline Excess.

Forward Looking Information

This is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein, including statements related to our outlook for the industry and for our performance for the year 2022 and beyond, are based upon the Company's historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. They are subject to various risks and uncertainties, including but not limited to: the cyclical nature of the property casualty industry; the impact of significant competition, including new entrants to the industry; the long-tail and potentially volatile nature of the insurance and reinsurance business; product demand and pricing; claims development and the process of estimating reserves; investment risks, including those of our portfolio of fixed maturity securities and investments in equity securities, including investments in financial institutions, municipal bonds, mortgage-backed securities, loans receivable, investment funds, including real estate, merger arbitrage, energy related and private equity investments; the effects of emerging claim and coverage issues; the uncertain nature of damage theories and loss amounts, including claims for cybersecurity-related risks; natural and man-made catastrophic losses, including as a result of terrorist activities; the ongoing COVID-19 pandemic; the impact of climate change, which may alter the frequency and increase the severity of catastrophe events; general economic and market activities, including inflation, interest rates, and volatility in the credit and capital markets; the impact of the conditions in the financial markets and the global economy, and the potential effect of legislative, regulatory, accounting or other initiatives taken in response, on our results and financial condition; foreign currency and political risks (including those associated with the United Kingdom's withdrawal from the European Union, or "Brexit") relating to our international operations; our ability to attract and retain key personnel and qualified employees; continued availability of capital and financing; the success of our new ventures or acquisitions and the availability of other opportunities; the availability of reinsurance; our retention under the Terrorism Risk Insurance Program Reauthorization Act of 2019; the ability or willingness of our reinsurers to pay reinsurance recoverables owed to us; other legislative and regulatory developments, including those related to business practices in the insurance industry; credit risk related to our policyholders, independent agents and brokers; changes in the ratings assigned to us or our insurance company subsidiaries by rating agencies; the availability of dividends from our insurance company subsidiaries; potential difficulties with technology and/or cyber security issues; the effectiveness of our controls to ensure compliance with guidelines, policies and legal and regulatory standards; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These risks and uncertainties could cause our actual results for the year 2022 and beyond to differ materially from those expressed in any forward-looking statement we make. Any projections of growth in our revenues would not necessarily result in commensurate levels of earnings. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Consolidated Financial Summary(Amounts in thousands, except per share data)

Fourth Quarter Twelve Months

2021 2020 2021 2020

Revenues:

Net premiums $ 2,275,509 $ 1,797,457 $ 8,862,867 $ 7,262,437 written

Change in (72,076 ) 16,133 (756,836 ) (331,594 )unearned premiums

Net premium 2,203,433 1,813,590 8,106,031 6,930,843 earned

Net investment 165,003 180,977 671,618 583,821 income

Net investment gains:

Net realized andunrealized gains 17,551 162,918 106,958 73,514 on investments

Change inallowance for (5,322 ) 393 (16,326 ) 29,486 credit losses oninvestments

Net investment 12,229 163,311 90,632 103,000 gains

Revenues fromnon-insurance 172,225 132,923 489,151 389,888 businesses

Insurance service 24,326 21,521 93,857 88,777 fees

Other Income 1,014 149 4,177 2,596

Total Revenues 2,578,230 2,312,471 9,455,466 8,098,925

Expenses:

Loss and loss 1,330,330 1,111,695 4,953,960 4,468,706 expenses

Other operatingcosts and 692,252 637,250 2,599,270 2,390,392 expenses

Expenses fromnon-insurance 163,698 128,457 472,151 384,488 businesses

Interest expense 37,333 35,663 147,180 150,537

Total expenses 2,223,613 1,913,065 8,172,561 7,394,123

Income before 354,617 399,406 1,282,905 704,802 income tax

Income tax (60,313 ) (86,917 ) (251,890 ) (171,817 )expense

Net Income beforenoncontrolling 294,304 312,489 1,031,015 532,985 interests

Noncontrolling 126 (339 ) (8,525 ) (2,315 )interest

Net income tocommon $ 294,430 $ 312,150 $ 1,022,490 $ 530,670 stockholders



Net income per share:

Basic $ 1.60 $ 1.68 $ 5.53 $ 2.84

Diluted $ 1.59 $ 1.67 $ 5.48 $ 2.81



Average shares outstanding (1):

Basic 184,436 185,693 184,953 186,924

Diluted 185,690 187,180 186,499 188,763

(1)Basic shares outstanding consist of the weighted average number of common shares outstanding during the period (including shares held in a grantor trust). Diluted shares outstanding consist of the weighted average number of basic and common equivalent shares outstanding during the period.

Basic shares outstanding consist of the weighted average number of common shares outstanding during the period (including shares held in a grantor(1) trust). Diluted shares outstanding consist of the weighted average number of basic and common equivalent shares outstanding during the period.

Business Segment Operating Results(Amounts in thousands, except ratios) (1)

Fourth Quarter

Twelve Months

2021

2020

2021

2020

Insurance:

Gross premiums written

$

2,463,050

$

1,996,169

$

9,471,667

$

7,837,496

Net premiums written

2,002,584

1,592,311

7,743,814

6,347,101

Net premiums earned

1,926,456

1,586,578

7,077,708

6,067,669

Pre-tax income

357,399

236,548

1,219,798

668,012

Loss ratio

60.5

%

63.4

%

61.1

%

64.9

%

Expense ratio

27.6

%

29.4

%

28.3

%

30.3

%

GAAP Combined ratio

88.1

%

92.8

%

89.4

%

95.2

%

Reinsurance & Monoline Excess:

Gross premiums written

$

303,638

$

225,315

$

1,228,467

$

1,010,151

Net premiums written

272,925

205,146

1,119,053

915,336

Net premiums earned

276,977

227,012

1,028,323

863,174

Pre-tax income

74,378

94,975

270,563

205,587

Loss ratio

59.7

%

46.7

%

61.0

%

61.3

%

Expense ratio

28.7

%

31.1

%

29.7

%

31.8

%

GAAP Combined ratio

88.4

%

77.8

%

90.7

%

93.1

%

Corporate and Eliminations:

Net investment gains

$

12,229

$

163,311

$

90,632

$

103,000

Interest expense

(37,333

)

(35,663

)

(147,180

)

(150,537

)

Other revenues and expenses

(52,056

)

(59,765

)

(150,908

)

(121,260

)

Pre-tax (loss) gain

(77,160

)

67,883

(207,456

)

(168,797

)

Consolidated:

Gross premiums written

$

2,766,688

$

2,221,484

$

10,700,134

$

8,847,647

Net premiums written

2,275,509

1,797,457

8,862,867

7,262,437

Net premiums earned

2,203,433

1,813,590

8,106,031

6,930,843

Pre-tax income

354,617

399,406

1,282,905

704,802

Loss ratio

60.4

%

61.3

%

61.1

%

64.5

%

Expense ratio

27.8

%

29.6

%

28.5

%

30.4

%

GAAP Combined ratio

88.2

%

90.9

%

89.6

%

94.9

%

Business Segment Operating Results(Amounts in thousands, except ratios) (1)

Fourth Quarter Twelve Months

2021 2020 2021 2020

Insurance:

Gross premiums $ 2,463,050 $ 1,996,169 $ 9,471,667 $ 7,837,496 written

Net premiums 2,002,584 1,592,311 7,743,814 6,347,101 written

Net premiums 1,926,456 1,586,578 7,077,708 6,067,669 earned

Pre-tax income 357,399 236,548 1,219,798 668,012

Loss ratio 60.5 % 63.4 % 61.1 % 64.9 %

Expense ratio 27.6 % 29.4 % 28.3 % 30.3 %

GAAP Combined 88.1 % 92.8 % 89.4 % 95.2 %ratio



Reinsurance & Monoline Excess:

Gross premiums $ 303,638 $ 225,315 $ 1,228,467 $ 1,010,151 written

Net premiums 272,925 205,146 1,119,053 915,336 written

Net premiums 276,977 227,012 1,028,323 863,174 earned

Pre-tax income 74,378 94,975 270,563 205,587

Loss ratio 59.7 % 46.7 % 61.0 % 61.3 %

Expense ratio 28.7 % 31.1 % 29.7 % 31.8 %

GAAP Combined 88.4 % 77.8 % 90.7 % 93.1 %ratio



Corporate and Eliminations:

Net investment $ 12,229 $ 163,311 $ 90,632 $ 103,000 gains

Interest expense (37,333 ) (35,663 ) (147,180 ) (150,537 )

Other revenues (52,056 ) (59,765 ) (150,908 ) (121,260 )and expenses

Pre-tax (loss) (77,160 ) 67,883 (207,456 ) (168,797 )gain



Consolidated:

Gross premiums $ 2,766,688 $ 2,221,484 $ 10,700,134 $ 8,847,647 written

Net premiums 2,275,509 1,797,457 8,862,867 7,262,437 written

Net premiums 2,203,433 1,813,590 8,106,031 6,930,843 earned

Pre-tax income 354,617 399,406 1,282,905 704,802

Loss ratio 60.4 % 61.3 % 61.1 % 64.5 %

Expense ratio 27.8 % 29.6 % 28.5 % 30.4 %

GAAP Combined 88.2 % 90.9 % 89.6 % 94.9 %ratio

(1)Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a percentage of premiums earned. GAAP combined ratio is the sum of the loss ratio and the expense ratio.

Loss ratio is losses and loss expenses incurred expressed as a percentage of premiums earned. Expense ratio is underwriting expenses expressed as a(1) percentage of premiums earned. GAAP combined ratio is the sum of the loss ratio and the expense ratio.

Supplemental Information(Amounts in thousands)

Fourth Quarter

Twelve Months

2021

2020

2021

2020

Net premiums written:

Other liability

$

740,799

$

594,546

$

2,879,616

$

2,342,884

Short-tail lines (1)

392,430

325,809

1,482,687

1,300,750

Workers' compensation

269,060

241,935

1,148,912

1,099,886

Commercial automobile

297,663

227,190

1,120,566

876,031

Professional liability

302,632

202,831

1,112,033

727,550

Total Insurance

2,002,584

1,592,311

7,743,814

6,347,101

Casualty reinsurance

199,262

141,481

724,595

560,717

Property reinsurance

46,317

41,174

182,436

178,023

Monoline Excess

27,346

22,491

212,022

176,596

Total Reinsurance & Monoline Excess

272,925

205,146

1,119,053

915,336

Total

$

2,275,509

$

1,797,457

$

8,862,867

$

7,262,437

Current accident year losses from catastrophes (including COVID-19 related losses):

Insurance

$

41,462

$

62,380

$

150,326

$

307,037

Reinsurance & Monoline Excess

7,000

(19,934

)

51,721

32,799

Total

$

48,462

$

42,446

$

202,047

$

339,836

Net Investment income:

Core portfolio (2)

$

107,027

$

102,039

$

413,928

$

451,637

Investment funds

50,476

52,992

220,014

54,253

Arbitrage trading account

7,500

25,946

37,676

77,931

Total

$

165,003

$

180,977

$

671,618

$

583,821

Net realized and unrealized gains on investments:

Net realized (losses) gains on investments

$

(5,812

)

$

126,927

$

145,413

$

99,382

Change in unrealized gains (losses) on equity securities

23,363

35,991

(38,455

)

(25,868

)

Total

$

17,551

$

162,918

$

106,958

$

73,514

Other operating costs and expenses:

Policy acquisition and insurance operating expenses

$

612,179

$

536,507

$

2,306,727

$

2,111,013

Insurance service expenses

22,186

21,694

86,003

85,724

Net foreign currency (gains) losses

(6,508

)

24,207

(25,725

)

363

Debt extinguishment costs

-

8,440

11,521

8,440

Other costs and expenses

64,395

46,402

220,744

184,852

Total

$

692,252

$

637,250

$

2,599,270

$

2,390,392

Cash flow from operations

$

659,593

$

479,740

$

2,183,987

$

1,616,686

Reconciliation of net income to operating income:

Net income

$

294,430

$

312,150

$

1,022,490

$

530,670

Pre-tax investment gains, net of related expenses

(12,317

)

(162,337

)

(87,712

)

(102,027

)

Income tax expense

2,210

23,230

17,083

9,610

Operating income after-tax (3)

$

284,323

$

173,043

$

951,861

$

438,253

Supplemental Information(Amounts in thousands)

Fourth Quarter Twelve Months

2021 2020 2021 2020

Net premiums written:

Other liability $ 740,799 $ 594,546 $ 2,879,616 $ 2,342,884

Short-tail lines 392,430 325,809 1,482,687 1,300,750 (1)

Workers' 269,060 241,935 1,148,912 1,099,886 compensation

Commercial 297,663 227,190 1,120,566 876,031 automobile

Professional 302,632 202,831 1,112,033 727,550 liability

Total Insurance 2,002,584 1,592,311 7,743,814 6,347,101

Casualty 199,262 141,481 724,595 560,717 reinsurance

Property 46,317 41,174 182,436 178,023 reinsurance

Monoline Excess 27,346 22,491 212,022 176,596

Total Reinsurance 272,925 205,146 1,119,053 915,336 & Monoline Excess

Total $ 2,275,509 $ 1,797,457 $ 8,862,867 $ 7,262,437



Current accident year losses from catastrophes (including COVID-19 related losses):

Insurance $ 41,462 $ 62,380 $ 150,326 $ 307,037

Reinsurance & 7,000 (19,934 ) 51,721 32,799 Monoline Excess

Total $ 48,462 $ 42,446 $ 202,047 $ 339,836



Net Investment income:

Core portfolio $ 107,027 $ 102,039 $ 413,928 $ 451,637 (2)

Investment funds 50,476 52,992 220,014 54,253

Arbitrage trading 7,500 25,946 37,676 77,931 account

Total $ 165,003 $ 180,977 $ 671,618 $ 583,821



Net realized andunrealized gains on investments:

Net realized(losses) gains on $ (5,812 ) $ 126,927 $ 145,413 $ 99,382 investments

Change inunrealized gains 23,363 35,991 (38,455 ) (25,868 )(losses) onequity securities

Total $ 17,551 $ 162,918 $ 106,958 $ 73,514



Other operatingcosts and expenses:

Policyacquisition andinsurance $ 612,179 $ 536,507 $ 2,306,727 $ 2,111,013 operatingexpenses

Insurance service 22,186 21,694 86,003 85,724 expenses

Net foreigncurrency (gains) (6,508 ) 24,207 (25,725 ) 363 losses

Debtextinguishment - 8,440 11,521 8,440 costs

Other costs and 64,395 46,402 220,744 184,852 expenses

Total $ 692,252 $ 637,250 $ 2,599,270 $ 2,390,392



Cash flow from $ 659,593 $ 479,740 $ 2,183,987 $ 1,616,686 operations



Reconciliation ofnet income to operating income:

Net income $ 294,430 $ 312,150 $ 1,022,490 $ 530,670

Pre-taxinvestment gains, (12,317 ) (162,337 ) (87,712 ) (102,027 )net of relatedexpenses

Income tax 2,210 23,230 17,083 9,610 expense

Operating income $ 284,323 $ 173,043 $ 951,861 $ 438,253 after-tax (3)

(1)Short-tail lines include commercial multi-peril (non-liability), inland marine, accident and health, fidelity and surety, boiler and machinery and other lines.

(2)Core portfolio includes fixed maturity securities, equity securities, cash and cash equivalents, real estate and loans receivable.

(3)Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses). Net investment gains (losses) are computed net of related expenses, including performance-based compensatory costs associated with realized investment gains. Management believes this measurement provides a useful indicator of trends in the Company's underlying operations.

Short-tail lines include commercial multi-peril (non-liability), inland(1) marine, accident and health, fidelity and surety, boiler and machinery and other lines.

Core portfolio includes fixed maturity securities, equity securities, cash(2) and cash equivalents, real estate and loans receivable.

Operating income is a non-GAAP financial measure defined by the Company as net income excluding after-tax net investment gains (losses). Net investment gains (losses) are computed net of related expenses, including(3) performance-based compensatory costs associated with realized investment gains. Management believes this measurement provides a useful indicator of trends in the Company's underlying operations.

Selected Balance Sheet Information(Amounts in thousands, except per share data)

December 31, 2021

December 31, 2020

Net invested assets (1)

$

23,705,508

$

21,370,503

Total assets

32,086,414

28,606,913

Reserves for losses and loss expenses

15,390,888

13,784,430

Senior notes and other debt

2,259,416

1,623,025

Subordinated debentures

1,007,652

1,102,309

Common stockholders' equity (2)

6,653,011

6,310,802

Common stock outstanding (3)

176,781

177,825

Book value per share (4)

37.63

35.49

Tangible book value per share (4)

36.40

34.22

Selected Balance Sheet Information(Amounts in thousands, except per share data)

December 31, December 31, 2021 2020



Net invested assets (1) $ 23,705,508 $ 21,370,503

Total assets 32,086,414 28,606,913

Reserves for losses and loss expenses 15,390,888 13,784,430

Senior notes and other debt 2,259,416 1,623,025

Subordinated debentures 1,007,652 1,102,309

Common stockholders' equity (2) 6,653,011 6,310,802

Common stock outstanding (3) 176,781 177,825

Book value per share (4) 37.63 35.49

Tangible book value per share (4) 36.40 34.22

(1)Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases, net of related liabilities.

(2)As of December 31, 2021, reflected in common stockholders' equity are after-tax unrealized investment gains of $91 million and unrealized currency translation losses of $373 million. As of December 31, 2020, after-tax unrealized investment gains were $290 million and unrealized currency translation losses were $352 million.

(3)During the twelve months ended December 31, 2021, the Company repurchased 1,752,619 shares of its common stock for $122 million. During the three months ended December 31, 2021, the Company did not repurchase any shares of its common stock. The number of shares of common stock outstanding excludes shares held in a grantor trust.

(4)Book value per share is total common stockholders' equity divided by the number of common shares outstanding. Tangible book value per share is total common stockholders' equity excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding.

Net invested assets include investments, cash and cash equivalents, trading accounts receivable from brokers and clearing organizations,(1) trading account securities sold but not yet purchased and unsettled purchases, net of related liabilities.

As of December 31, 2021, reflected in common stockholders' equity are after-tax unrealized investment gains of $91 million and unrealized(2) currency translation losses of $373 million. As of December 31, 2020, after-tax unrealized investment gains were $290 million and unrealized currency translation losses were $352 million.

During the twelve months ended December 31, 2021, the Company repurchased 1,752,619 shares of its common stock for $122 million. During the three(3) months ended December 31, 2021, the Company did not repurchase any shares of its common stock. The number of shares of common stock outstanding excludes shares held in a grantor trust.

Book value per share is total common stockholders' equity divided by the number of common shares outstanding. Tangible book value per share is(4) total common stockholders' equity excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding.

Investment Portfolio December 31, 2021(Amounts in thousands, except percentages)

Carrying Value

Percent of Total

Fixed maturity securities:

United States government and government agencies

$

855,343

3.6

%

State and municipal:

Special revenue

2,092,438

8.8

%

State general obligation

455,323

1.9

%

Local general obligation

430,697

1.8

%

Pre-refunded

222,225

1.0

%

Corporate backed

172,602

0.7

%

Total state and municipal

3,373,285

14.2

%

Mortgage-backed securities:

Agency

752,318

3.2

%

Residential - Prime

186,260

0.8

%

Commercial

128,756

0.5

%

Residential - Alt A

5,570

0.0

%

Total mortgage-backed securities

1,072,904

4.5

%

Asset-backed securities

4,490,565

19.0

%

Corporate:

Industrial

3,273,163

13.8

%

Financial

1,763,400

7.4

%

Utilities

406,302

1.7

%

Other

152,810

0.7

%

Total corporate

5,595,675

23.6

%

Foreign government

1,214,901

5.1

%

Total fixed maturity securities (1)

16,602,673

70.0

%

Equity securities available for sale:

Common stocks

695,403

2.9

%

Preferred stocks

245,840

1.1

%

Total equity securities available for sale

941,243

4.0

%

Cash and cash equivalents (2)

1,534,486

6.5

%

Real estate

1,852,508

7.8

%

Investment funds (3)

1,479,820

6.2

%

Arbitrage trading account

1,179,606

5.0

%

Loans receivable

115,172

0.5

%

Net invested assets

$

23,705,508

100.0

%

Investment PortfolioDecember 31, 2021(Amounts in thousands, except percentages)

Carrying Value Percent of Total

Fixed maturity securities:

United States government and government $ 855,343 3.6 %agencies

State and municipal:

Special revenue 2,092,438 8.8 %

State general obligation 455,323 1.9 %

Local general obligation 430,697 1.8 %

Pre-refunded 222,225 1.0 %

Corporate backed 172,602 0.7 %

Total state and municipal 3,373,285 14.2 %

Mortgage-backed securities:

Agency 752,318 3.2 %

Residential - Prime 186,260 0.8 %

Commercial 128,756 0.5 %

Residential - Alt A 5,570 0.0 %

Total mortgage-backed securities 1,072,904 4.5 %

Asset-backed securities 4,490,565 19.0 %

Corporate:

Industrial 3,273,163 13.8 %

Financial 1,763,400 7.4 %

Utilities 406,302 1.7 %

Other 152,810 0.7 %

Total corporate 5,595,675 23.6 %

Foreign government 1,214,901 5.1 %

Total fixed maturity securities (1) 16,602,673 70.0 %

Equity securities available for sale:

Common stocks 695,403 2.9 %

Preferred stocks 245,840 1.1 %

Total equity securities available for sale 941,243 4.0 %

Cash and cash equivalents (2) 1,534,486 6.5 %

Real estate 1,852,508 7.8 %

Investment funds (3) 1,479,820 6.2 %

Arbitrage trading account 1,179,606 5.0 %

Loans receivable 115,172 0.5 %

Net invested assets $ 23,705,508 100.0 %

(1)Total fixed maturity securities had an average rating of AA- and an average duration of 2.4 years, including cash and cash equivalents.

(2)Cash and cash equivalents includes trading accounts receivable from brokers and clearing organizations, trading account securities sold but not yet purchased and unsettled purchases.

(3)Investment funds are net of related liabilities of $0.8 million.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220127005855/en/

CONTACT: Karen A. Horvath Vice President - External Financial Communications (203) 629-3000