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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2024
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the Transition Period from                      to                     .
Commission File Number
1-15202

W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware22-1867895
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
  
475 Steamboat RoadGreenwichConnecticut06830
(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.
Securities registered pursuant to Section 12(b) of the Act:
Title Trading SymbolName
 
Common Stock, par value $.20 per shareWRBNew York Stock Exchange
5.700% Subordinated Debentures due 2058WRB-PENew York Stock Exchange
5.100% Subordinated Debentures due 2059WRB-PFNew York Stock Exchange
4.250% Subordinated Debentures due 2060WRB-PGNew York Stock Exchange
4.125% Subordinated Debentures due 2061WRB-PHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No
1

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No
Number of shares of common stock, $.20 par value, outstanding as of April 29, 2024: 255,662,277
2

TABLE OF CONTENTS
3

Part I — FINANCIAL INFORMATION
Item 1.     Financial Statements
W. R. BERKLEY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31,
2024
December 31,
2023
(Unaudited)(Audited)
Assets  
Investments:  
Fixed maturity securities (amortized cost of $21,775,516 and $20,915,245; allowance for expected credit losses of $22,869 and $36,751 at March 31, 2024 and December 31, 2023, respectively)
$20,964,854 $20,178,308 
Investment funds1,555,818 1,621,655 
Real estate1,273,063 1,249,874 
Equity securities1,178,048 1,090,347 
Arbitrage trading account1,146,119 938,049 
Loans receivable (net of allowance for expected credit losses of $2,609 and $3,004 at March 31, 2024 and December 31, 2023, respectively)
228,766 201,271 
Total investments26,346,668 25,279,504 
Cash and cash equivalents1,169,053 1,363,195 
Premiums and fees receivable (net of allowance for expected credit losses of $35,039 and $35,110 at March 31, 2024 and December 31, 2023, respectively)
3,171,108 3,109,334 
Due from reinsurers (net of allowance for expected credit losses of $9,185 and $8,404 at March 31, 2024 and December 31, 2023, respectively)
3,510,097 3,534,527 
Deferred policy acquisition costs888,719 861,609 
Prepaid reinsurance premiums757,659 758,927 
Trading account receivables from brokers and clearing organizations141,277 303,614 
Property, furniture and equipment466,855 426,803 
Goodwill174,597 174,597 
Accrued investment income217,801 213,408 
Current and deferred federal and foreign income taxes120,754 220,756 
Other assets886,484 865,556 
Total assets$37,851,072 $37,111,830 
Liabilities and Equity  
Liabilities:  
Reserves for losses and loss expenses$19,099,628 $18,739,652 
Unearned premiums5,996,812 5,922,326 
Due to reinsurers683,508 631,164 
Trading account securities sold but not yet purchased40,298 9,357 
Other liabilities1,395,048 1,503,053 
Senior notes and other debt1,827,997 1,827,951 
Subordinated debentures1,009,269 1,009,090 
Total liabilities30,052,560 29,642,593 
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 1,250,000,000 shares; issued and outstanding, net of treasury shares, 256,548,669 and 256,544,757 shares, respectively
105,803 105,803 
Additional paid-in capital1,030,475 1,017,691 
Retained earnings11,455,158 11,040,908 
Accumulated other comprehensive loss(1,023,530)(925,838)
Treasury stock, at cost, 272,465,959 and 272,469,871 shares, respectively
(3,783,074)(3,783,133)
Total stockholders’ equity7,784,832 7,455,431 
Noncontrolling interests13,680 13,806 
Total equity7,798,512 7,469,237 
Total liabilities and equity$37,851,072 $37,111,830 
See accompanying notes to interim consolidated financial statements.
1

W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
For the Three Months
Ended March 31,
20242023
REVENUES:
Net premiums written$2,851,291 $2,574,824 
Change in net unearned premiums(86,944)(83,392)
Net premiums earned2,764,347 2,491,432 
Net investment income319,839 223,398 
Net investment gains:
Net realized and unrealized gains on investments11,503 22,611 
Change in allowance for expected credit losses on investments14,277 399 
Net investment gains25,780 23,010 
Revenues from non-insurance businesses120,992 124,200 
Insurance service fees25,319 32,857 
Other income496 107 
Total revenues3,256,773 2,895,004 
OPERATING COSTS AND EXPENSES:
Losses and loss expenses1,663,778 1,538,755 
Other operating costs and expenses868,589 825,575 
Expenses from non-insurance businesses118,607 122,767 
Interest expense31,728 31,836 
Total operating costs and expenses2,682,702 2,518,933 
Income before income taxes574,071 376,071 
Income tax expense(132,036)(80,342)
Net income before noncontrolling interests442,035 295,729 
Noncontrolling interests436 (1,603)
Net income to common stockholders$442,471 $294,126 
NET INCOME PER SHARE:
Basic$1.65 $1.07 
Diluted$1.64 $1.06 

See accompanying notes to interim consolidated financial statements.






2

W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
For the Three Months
Ended March 31,
20242023
Net income before noncontrolling interests$442,035 $295,729 
Other comprehensive (loss) income:
Change in unrealized currency translation adjustments(27,570)4,866 
Change in unrealized investment (losses) gains, net of taxes(70,122)180,799 
Other comprehensive (loss) income(97,692)185,665 
Comprehensive income344,343 481,394 
Noncontrolling interests436 (1,602)
Comprehensive income to common stockholders$344,779 $479,792 

See accompanying notes to interim consolidated financial statements.
3

W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(In thousands, except per share data)
For the Three Months
Ended March 31,
20242023
COMMON STOCK:
Beginning and end of period$105,803 $105,803 
ADDITIONAL PAID-IN CAPITAL:
Beginning of period$1,017,691 $997,534 
Restricted stock units issued(195)(1,200)
Restricted stock units expensed12,979 11,794 
End of period$1,030,475 $1,008,128 
RETAINED EARNINGS:
Beginning of period$11,040,908 $10,161,005 
Net income to common stockholders442,471 294,126 
Dividends ($0.11 and $0.60 per share, respectively)
(28,221)(158,592)
End of period$11,455,158 $10,296,539 
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrealized investment losses:
Beginning of period$(586,354)$(892,905)
Change in unrealized (losses) gains on securities without an allowance for expected credit losses(71,109)177,342 
Change in unrealized gains on securities with an allowance for expected credit losses987 3,456 
End of period(656,476)(712,107)
Currency translation adjustments:
Beginning of period(339,484)(371,676)
Net change in period(27,570)4,866 
End of period(367,054)(366,810)
Total accumulated other comprehensive loss$(1,023,530)$(1,078,917)
TREASURY STOCK:
Beginning of period$(3,783,133)$(3,251,429)
Stock exercised/vested59 395 
Stock repurchased (135,152)
Other (1,352)
End of period$(3,783,074)$(3,387,538)
NONCONTROLLING INTERESTS:
Beginning of period$13,806 $19,829 
Contributions310 177 
Net (loss) income(436)1,603 
Other comprehensive loss, net of tax (1)
End of period$13,680 $21,608 
See accompanying notes to interim consolidated financial statements.
4

W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
For the Three Months
Ended March 31,
 20242023
CASH FROM OPERATING ACTIVITIES:  
Net income to common stockholders$442,471 $294,126 
Adjustments to reconcile net income to net cash from operating activities:  
Net investment gains(25,780)(23,010)
Depreciation and (accretion) amortization (80,784)9,737 
Noncontrolling interests(436)1,603 
Investment funds29,349 (2,180)
Stock incentive plans12,979 11,793 
Change in:
Arbitrage trading account(14,793)(14,879)
Premiums and fees receivable(68,133)(33,460)
Reinsurance accounts81,684 (84,746)
Deferred policy acquisition costs(28,283)(23,727)
Income taxes120,052 76,933 
Reserves for losses and loss expenses393,176 424,149 
Unearned premiums84,952 87,991 
Other(200,219)(279,007)
Net cash from operating activities746,235 445,323 
CASH USED IN INVESTING ACTIVITIES:  
Proceeds from sale of fixed maturity securities426,084 429,400 
Proceeds from sale of equity securities83,987 9,933 
Distributions from investment funds31,238 7,518 
Proceeds from maturities and prepayments of fixed maturity securities968,330 956,308 
Purchase of fixed maturity securities(2,266,087)(1,686,107)
Purchase of equity securities(105,599)(59,529)
Real estate (purchased) sold(30,697)7,472 
Change in loans receivable(28,150)612 
Net purchases of property, furniture and equipment(54,335)(11,532)
Change in balances due to security brokers70,120 (13,598)
Other 93 
Net cash used in investing activities(905,109)(359,430)
CASH USED IN FINANCING ACTIVITIES:  
Net proceeds (payments) from issuance of debt20 (868)
Cash dividends to common stockholders(28,220)(158,592)
Purchase of common treasury shares (135,152)
Other, net(1,505)(1,114)
Net cash used in financing activities(29,705)(295,726)
Net impact on cash due to change in foreign exchange rates(5,563)2,844 
Net change in cash and cash equivalents(194,142)(206,989)
Cash and cash equivalents at beginning of period1,363,195 1,449,346 
Cash and cash equivalents at end of period$1,169,053 $1,242,357 
See accompanying notes to interim consolidated financial statements.
5


W. R. Berkley Corporation and Subsidiaries

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) 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 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, 2023.
Reclassifications have been made in the 2023 financial statements as originally reported to conform to the presentation of the 2024 financial statements. The Company reclassified a program management business from the Insurance segment to the Reinsurance & Monoline Excess segment. The reclassified business is a program management business offering support on a nationwide basis for commercial casualty and property program administrators.
The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective income tax rate differs from the federal income tax rate of 21% primarily due to the geographical mix of earnings and larger amounts being subject to tax at a rate greater than the U.S. statutory rate, which was partially offset by tax benefits related to tax-exempt investment income.


(2) 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 11,663,450 and 11,416,856 common shares held in a grantor trust as of March 31, 2024 and 2023, respectively). 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:
For the Three Months
Ended March 31,
(In thousands)20242023
Basic268,211 274,977 
Diluted270,505 277,339 


(3) Recent Accounting Pronouncements and Accounting Policies
Recently adopted accounting pronouncements:
    All accounting and reporting standards that became effective in 2024 were either not applicable to the Company or their adoption did not have a material impact on the Company.
6


Accounting and reporting standards that are not yet effective:
    All 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.
7

(4) Consolidated Statements of Comprehensive (Loss) Income

    The following table presents the components of the changes in accumulated other comprehensive (loss) income ("AOCI"):

(In thousands)Unrealized Investment (Losses) GainsCurrency Translation AdjustmentsAccumulated Other Comprehensive
(Loss) Income
As of and for the three months ended March 31, 2024
Changes in AOCI
Beginning of period$(586,354)$(339,484)$(925,838)
Other comprehensive loss before reclassifications(101,312)(27,570)(128,882)
Amounts reclassified from AOCI31,190  31,190 
Other comprehensive loss(70,122)(27,570)(97,692)
Unrealized investment loss related to noncontrolling interest   
End of period$(656,476)$(367,054)$(1,023,530)
Amounts reclassified from AOCI
Pre-tax$39,481 (1)$ $39,481 
Tax effect (8,291)(2) (8,291)
After-tax amounts reclassified$31,190 $ $31,190 
Other comprehensive loss
Pre-tax$(89,297)$(27,570)$(116,867)
Tax effect19,175  19,175 
Other comprehensive loss$(70,122)$(27,570)$(97,692)
As of and for the three months ended March 31, 2023
Changes in AOCI
Beginning of period$(892,905)$(371,676)$(1,264,581)
Other comprehensive income before reclassifications155,215 4,866 160,081 
Amounts reclassified from AOCI25,584  25,584 
Other comprehensive income180,799 4,866 185,665 
Unrealized investment loss related to noncontrolling interest(1) (1)
Ending balance$(712,107)$(366,810)$(1,078,917)
Amounts reclassified from AOCI
Pre-tax$32,385 (1)$ $32,385 
Tax effect (6,801)(2) (6,801)
After-tax amounts reclassified$25,584 $ $25,584 
Other comprehensive income
Pre-tax$232,021 $4,866 $236,887 
Tax effect(51,222) (51,222)
Other comprehensive income$180,799 $4,866 $185,665 
____________
(1) Net investment gains in the consolidated statements of income.
(2) Income tax expense in the consolidated statements of income.



(5) Statements of Cash Flows
    Interest payments were $28,577,000 and $41,150,000 for the three months ended March 31, 2024 and 2023, respectively. There were no income taxes paid for the three months ended March 31, 2024 and 2023, respectively.
8

(6) Investments in Fixed Maturity Securities
    At March 31, 2024 and December 31, 2023, investments in fixed maturity securities were as follows:
 
(In thousands)Amortized
Cost
Allowance for Expected Credit Losses (1)Gross UnrealizedFair
Value
Carrying
Value
GainsLosses
March 31, 2024
Held to maturity:
State and municipal$51,258 $(38)$2,276 $ $53,496 $51,220 
Residential mortgage-backed2,762  82  2,844 2,762 
Total held to maturity54,020 (38)2,358  56,340 53,982 
Available for sale:
U.S. government and government agency1,875,920  8,888 (55,256)1,829,552 1,829,552 
State and municipal:
Special revenue1,626,511  3,370 (83,769)1,546,112 1,546,112 
State general obligation393,807  1,833 (16,316)379,324 379,324 
Pre-refunded88,359  908 (214)89,053 89,053 
Corporate backed166,261 (693)539 (10,588)155,519 155,519 
Local general obligation393,482  2,298 (13,002)382,778 382,778 
Total state and municipal2,668,420 (693)8,948 (123,889)2,552,786 2,552,786 
Mortgage-backed:
Residential1,963,060  9,805 (174,727)1,798,138 1,798,138 
Commercial630,348 (562)326 (20,232)609,880 609,880 
Total mortgage-backed2,593,408 (562)10,131 (194,959)2,408,018 2,408,018 
Asset-backed4,298,768 (1,097)6,475 (64,585)4,239,561 4,239,561 
Corporate:
Industrial3,865,664  14,741 (146,130)3,734,275 3,734,275 
Financial3,172,945  10,100 (69,749)3,113,296 3,113,296 
Utilities751,234  2,864 (24,436)729,662 729,662 
Other590,644  2,516 (7,690)585,470 585,470 
Total corporate8,380,487  30,221 (248,005)8,162,703 8,162,703 
Foreign government1,904,493 (20,479)8,585 (174,347)1,718,252 1,718,252 
Total available for sale21,721,496 (22,831)73,248 (861,041)20,910,872 20,910,872 
Total investments in fixed maturity securities$21,775,516 $(22,869)$75,606 $(861,041)$20,967,212 $20,964,854 
____________
(1) Represents the amount of impairment that has resulted from credit-related factors. The change in the allowance for expected credit losses is recognized in the consolidated statements of income. Amount excludes unrealized losses relating to non-credit factors.
















9

(In thousands)Amortized
Cost
Allowance for Expected Credit Losses (1)Gross UnrealizedFair
Value
Carrying
Value
GainsLosses
December 31, 2023
Held to maturity:
State and municipal$50,547 $(43)$3,132 $ $53,636 $50,504 
Residential mortgage-backed2,868  107  2,975 2,868 
Total held to maturity53,415 (43)3,239  56,611 53,372 
Available for sale:
U.S. government and government agency1,762,997  11,403 (57,669)1,716,731 1,716,731 
State and municipal:
Special revenue1,682,550  5,651 (82,006)1,606,195 1,606,195 
State general obligation394,429  3,550 (16,405)381,574 381,574 
Pre-refunded103,029  1,634 (185)104,478 104,478 
Corporate backed166,873 (757)696 (11,973)154,839 154,839 
Local general obligation396,041  3,188 (11,893)387,336 387,336 
Total state and municipal2,742,922 (757)14,719 (122,462)2,634,422 2,634,422 
Mortgage-backed:
Residential1,773,206  12,780 (163,844)1,622,142 1,622,142 
Commercial657,157 (158)626 (13,312)644,313 644,313 
Total mortgage-backed2,430,363 (158)13,406 (177,156)2,266,455 2,266,455 
Asset-backed4,252,883 (1,164)8,527 (73,206)4,187,040 4,187,040 
Corporate:
Industrial3,679,219 (40)24,312 (143,936)3,559,555 3,559,555 
Financial2,838,220 (4,986)14,681 (68,681)2,779,234 2,779,234 
Utilities701,865  6,471 (23,412)684,924 684,924 
Other635,975  1,605 (7,234)630,346 630,346 
Total corporate7,855,279 (5,026)47,069 (243,263)7,654,059 7,654,059 
Foreign government1,817,386 (29,603)15,865 (137,419)1,666,229 1,666,229 
Total available for sale20,861,830 (36,708)110,989 (811,175)20,124,936 20,124,936 
Total investments in fixed maturity securities$20,915,245 $(36,751)$114,228 $(811,175)$20,181,547 $20,178,308 
____________
(1) Represents the amount of impairment that has resulted from credit-related factors. The change in the allowance for expected credit losses is recognized in the consolidated statements of income. Amount excludes unrealized losses relating to non-credit factors.

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the three months ended March 31, 2024 and 2023:
(In thousands)20242023
Allowance for expected credit losses, beginning of period$43 $114 
Provision for expected credit losses(5)(7)
Allowance for expected credit losses, end of period$38 $107 


The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the three months ended March 31, 2024 and 2023:
10

20242023
(In thousands)Foreign GovernmentCorporateMortgage-backedAsset-backedState and MunicipalTotalForeign GovernmentCorporateMortgage-backedTotal
Allowance for expected credit losses, beginning of period$29,603 $5,026 $158 $1,164 $757 $36,708 $32,633 $4,701 $18 $37,352 
Expected credit losses on securities for which credit losses were not previously recorded  562   562  186  186 
Expected credit (gains) losses on securities for which credit losses were previously recorded(9,124)(5,026)(158)(67)(64)(14,439)691 (1,087)5 (391)
Reduction due to disposals       (5) (5)
Allowance for expected credit losses, end of period$20,479 $ $562 $1,097 $693 $22,831 $33,324 $3,795 $23 $37,142 
During the three months ended March 31, 2024, the Company decreased the allowance for expected credit losses for available for sale securities utilizing its credit loss assessment process and inputs used in its credit loss model, primarily due to improved pricing associated with foreign government securities and corporate securities. During the three months ended March 31, 2023, the Company decreased the allowance for expected credit losses for available for sale securities utilizing its credit loss assessment process and inputs used in its credit loss model due to a decrease in unrealized losses primarily associated with corporate securities.
The amortized cost and fair value of fixed maturity securities at March 31, 2024, 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.  
(In thousands)Amortized
Cost (1)
Fair
Value
Due in one year or less$1,980,563 $1,907,003 
Due after one year through five years9,877,133 9,528,047 
Due after five years through ten years4,681,226 4,577,859 
Due after ten years2,640,386 2,543,441 
Mortgage-backed securities2,596,170 2,410,862 
Total$21,775,478 $20,967,212 
________________
(1) Amortized cost is reduced by the allowance for expected credit losses of $38 thousand related to held to maturity securities.    
At March 31, 2024 and December 31, 2023, there were no investments that exceeded 10% of common stockholders' equity, other than investments in United States government and government agency securities.

11

(7) Investments in Equity Securities
    At March 31, 2024 and December 31, 2023, investments in equity securities were as follows:
 
(In thousands)CostGross UnrealizedFair
Value
Carrying
Value
GainsLosses
March 31, 2024
Common stocks$671,958 $196,093 $(21,382)$846,669 $846,669 
Preferred stocks339,263 8,491 (16,375)331,379 331,379 
Total$1,011,221 $204,584 $(37,757)$1,178,048 $1,178,048 
December 31, 2023
Common stocks$664,997 $191,806 $(18,749)$838,054 $838,054 
Preferred stocks284,335 3,075 (35,117)252,293 252,293 
Total$949,332 $194,881 $(53,866)$1,090,347 $1,090,347 


(8) Arbitrage Trading Account
    At March 31, 2024 and December 31, 2023, the fair and carrying values of the arbitrage trading account were $1,146 million and $938 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 and call options in order to mitigate the impact of potential changes in market conditions on the merger arbitrage trading account. These options are reported at fair value. As of March 31, 2024, the fair value of long option contracts outstanding was $117 thousand (notional amount of $162 million) and the fair value of short option contracts was $40 million (notional amount of $162 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives.


(9) Net Investment Income
    Net investment income consisted of the following: 
 For the Three Months
Ended March 31,
(In thousands)20242023
Investment income (loss) earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable$335,248 $195,642 
Arbitrage trading account (1)18,011 18,256 
Equity securities11,336 13,746 
Investment funds(29,349)2,180 
Real estate(13,163)(3,711)
Gross investment income322,083 226,113 
Investment expense(2,244)(2,715)
Net investment income$319,839 $223,398 
(1) Net investment income includes earnings from trading account receivables from brokers and clearing organizations.

12

(10) 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 $309 million as of March 31, 2024.
    Investment funds consisted of the following:
Carrying Value as of Income (Loss) from
Investment Funds
March 31,December 31,For the Three Months
Ended March 31,
(In thousands)2024202320242023
Financial services$418,877 $433,407 $(13,491)$(13,047)
Transportation296,021 344,278 (28,661)11,788 
Real Estate189,309 201,625 5,356 956 
Infrastructure137,201 130,589 5,039 3,355 
Energy134,195 114,794 8,632 3,439 
Other funds380,215 396,962 (6,224)(4,311)
Total$1,555,818 $1,621,655 $(29,349)$2,180 
    The Company's share of the earnings or losses from investment funds is generally reported on a one-quarter lag in order to facilitate the timely completion of the Company's consolidated financial statements.
Financial services investment funds include the minority investment in Lifson Re, a Bermuda reinsurance company. Effective January 1, 2021, Lifson Re participated on a fully collateralized basis in a majority of the Company’s reinsurance placements for a 22.5% share of placed amounts. The percentage increased from 22.5% to 30.0% effective July 1, 2022. This pertains to all traditional reinsurance/retrocessional placements for both property and casualty business where there is more than one open market reinsurer participating. For the three months ended March 31, 2024 and 2023, the Company ceded approximately $94 million and $107 million, respectively, of written premiums to Lifson Re.
Other funds include deferred compensation trust assets of $41 million and $36 million as of March 31, 2024 and December 31, 2023, respectively. These assets support other liabilities reflected in the balance sheet of an equal amount for employees who have elected to defer a portion of their compensation. The change in the net asset value of the trust is recorded in other funds within net investment income with an offsetting equal amount within corporate expenses.

(11) Real Estate
    Investment in real estate represents directly owned property held for investment, as follows:
Carrying Value
March 31,December 31,
(In thousands)20242023
Properties in operation$1,045,712 $1,022,654 
Properties under development227,351 227,220 
Total$1,273,063 $1,249,874 

    As of March 31, 2024, properties in operation included a long-term ground lease in Washington, D.C., an office complex in New York City and the completed portion of a mixed-use project in Washington D.C. Properties in operation are net of accumulated depreciation and amortization of $34,131,000 and $32,745,000 as of March 31, 2024 and December 31, 2023, respectively. Related depreciation expense was $1,941,000 and $2,281,000 for the three months ended March 31, 2024
13

and 2023, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $25,874,266 in 2024, $33,742,431 in 2025, $31,539,135 in 2026, $30,794,160 in 2027, $31,352,156 in 2028, $26,899,553 in 2029 and $413,976,622 thereafter.
    A mixed-use project in Washington, D.C. had been under development in 2024 and 2023, with the completed portion reported in properties in operation as of March 31, 2024.

(12) Loans Receivable

At March 31, 2024 and December 31, 2023, loans receivable were as follows:
(In thousands)March 31,
2024
December 31,
2023
Amortized cost (net of allowance for expected credit losses):
Real estate loans$227,431 $200,381 
Commercial loans1,335 890 
Total$228,766 $201,271 
Fair value:
Real estate loans$227,821 $197,354 
Commercial loans1,335 890 
Total$229,156 $198,244 
The real estate loans are secured by commercial and residential real estate primarily located in the UK and New York. These loans generally earn interest at fixed or stepped interest rates and have maturities through 2026. 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.
The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the three months ended March 31, 2024 and 2023:
20242023
(In thousands)Real Estate LoansCommercial LoansTotalReal Estate LoansCommercial LoansTotal
Allowance for expected credit losses, beginning of period$2,983 $21 $3,004 $1,100 $691 $1,791 
Change in expected credit losses(396)1 (395)(61)(121)(182)
Allowance for expected credit losses, end of period$2,587 $22 $2,609 $1,039 $570 $1,609 

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.
    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.

14

(13) Net Investment Gains
     Net investment gains were as follows:
For the Three Months
Ended March 31,
(In thousands)20242023
Net investment gains:
Fixed maturity securities:
Gains$3,557 $943 
Losses(2,323)(18,130)
Equity securities (1):
Net realized gains on investment sales40,277 1,060 
Change in unrealized gains25,812 43,404 
Investment funds993 10 
Real estate(2,216)10,739 
Loans receivable  
Other (2)(54,597)(15,415)
Net realized and unrealized gains on investments in earnings before allowance for expected credit losses11,503 22,611 
Change in allowance for expected credit losses on investments:
Fixed maturity securities13,882 217 
Loans receivable395 182 
Change in allowance for expected credit losses on investments14,277 399 
Net investment gains25,780 23,010 
Income tax expense(6,633)(4,850)
After-tax net investment gains$19,147 $18,160 
Change in unrealized investment (losses) gains on available for sale securities:
Fixed maturity securities without allowance for expected credit losses$(88,594)$227,116 
Fixed maturity securities with allowance for expected credit losses987 3,456 
Investment funds(1,703)1,936 
Other13 (487)
Total change in unrealized investment (losses) gains(89,297)232,021 
Income tax benefit (expense)19,175 (51,222)
Noncontrolling interests (1)
After-tax change in unrealized investment (losses) gains of available for sale securities$(70,122)$180,798 
______________________
(1) The net realized gains or losses on investment sales represent the total gains or losses from the purchase dates of the equity securities. The change in unrealized gains (losses) consists of two components: (i) the reversal of the gain or loss recognized in previous periods on equity securities sold and (ii) the change in unrealized gain or loss resulting from mark-to-market adjustments on equity securities still held.
(2) Primarily relates to realized foreign currency losses upon the disposition of fixed maturity securities.


15

(14) Fixed Maturity Securities in an Unrealized Loss Position
    The following tables summarize all fixed maturity securities in an unrealized loss position at March 31, 2024 and December 31, 2023 by the length of time those securities have been continuously in an unrealized loss position:
  Less Than 12 Months12 Months or GreaterTotal
(In thousands)Fair
Value
Gross
Unrealized Losses
Fair
Value
Gross
Unrealized Losses
Fair
Value
Gross
Unrealized Losses
March 31, 2024
U.S. government and government agency$439,699 $6,725 $666,947 $48,531 $1,106,646 $55,256 
State and municipal308,609 3,376 1,764,296