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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
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| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended March 31, 2023
or
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☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
For the Transition Period from to .
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Commission File Number | 1-15202 |
W. R. BERKLEY CORPORATION
(Exact name of registrant as specified in its charter)
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| Delaware | | 22-1867895 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | |
| 475 Steamboat Road | Greenwich | Connecticut | 06830 |
| (Address of principal executive offices) | | | (Zip Code) |
(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 Symbol | Name |
| | | |
| Common Stock, par value $.20 per share | WRB | New York Stock Exchange |
| | |
| | |
| 5.700% Subordinated Debentures due 2058 | WRB-PE | New York Stock Exchange |
| 5.100% Subordinated Debentures due 2059 | WRB-PF | New York Stock Exchange |
| 4.250% Subordinated Debentures due 2060 | WRB-PG | New York Stock Exchange |
| 4.125% Subordinated Debentures due 2061 | WRB-PH | New 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 ☐
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.
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| Large accelerated filer | ☒ | | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | | Smaller 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 27, 2023: 260,774,686
TABLE OF CONTENTS
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| 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 |
Part I — FINANCIAL INFORMATION
Item 1. Financial Statements
W. R. BERKLEY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| | | | | | | | | | | |
| March 31,
2023 | | December 31,
2022 |
| (Unaudited) | | (Audited) |
| Assets | | | |
| Investments: | | | |
Fixed maturity securities (amortized cost of $18,988,459 and $18,715,483; allowance for expected credit losses of $37,249 and $37,466 at March 31, 2023 and December 31, 2022, respectively) | $ | 18,091,113 | | | $ | 17,587,349 | |
| Investment funds | 1,601,567 | | | 1,608,548 | |
| Real estate | 1,338,504 | | | 1,340,622 | |
| Equity securities | 1,279,955 | | | 1,185,894 | |
| Arbitrage trading account | 609,001 | | | 944,230 | |
Loans receivable (net of allowance for expected credit losses of $1,609 and $1,791 at March 31, 2023 and December 31, 2022, respectively) | 194,944 | | | 193,002 | |
| | | |
| Total investments | 23,115,084 | | | 22,859,645 | |
| Cash and cash equivalents | 1,242,357 | | | 1,449,346 | |
Premiums and fees receivable (net of allowance for expected credit losses of $32,353 and $30,660 at March 31, 2023 and December 31, 2022, respectively) | 2,814,504 | | | 2,779,244 | |
Due from reinsurers (net of allowance for expected credit losses of $8,703 and $8,064 at March 31, 2023 and December 31, 2022, respectively) | 3,282,288 | | | 3,187,730 | |
| Deferred policy acquisition costs | 786,502 | | | 763,486 | |
| Prepaid reinsurance premiums | 701,295 | | | 696,468 | |
| Trading account receivables from brokers and clearing organizations | 583,970 | | | 233,863 | |
| Property, furniture and equipment | 421,102 | | | 423,232 | |
| Goodwill | 185,509 | | | 185,509 | |
| Accrued investment income | 181,342 | | | 166,784 | |
| Current and deferred federal and foreign income taxes | 205,291 | | | 333,774 | |
| | | |
| Other assets | 776,820 | | | 736,022 | |
| Total assets | $ | 34,296,064 | | | $ | 33,815,103 | |
| | | |
| Liabilities and Equity | | | |
| Liabilities: | | | |
| Reserves for losses and loss expenses | $ | 17,431,635 | | | $ | 17,011,223 | |
| Unearned premiums | 5,385,886 | | | 5,297,654 | |
| Due to reinsurers | 539,333 | | | 523,131 | |
| | | |
| | | |
| | | |
| | | |
| Other liabilities | 1,137,055 | | | 1,377,740 | |
| Senior notes and other debt | 1,827,981 | | | 1,828,823 | |
| Subordinated debentures | 1,008,551 | | | 1,008,371 | |
| Total liabilities | 27,330,441 | | | 27,046,942 | |
| Equity: | | | |
Preferred stock, par value $0.10 per share: | | | |
Authorized 5,000,000 shares; issued and outstanding - none | — | | | — | |
Common stock, par value $0.20 per share: | | | |
Authorized 1,250,000,000 shares; issued and outstanding, net of treasury shares, 262,536,530 and 264,546,100 shares, respectively | 105,803 | | | 105,803 | |
| Additional paid-in capital | 1,008,128 | | | 997,534 | |
| Retained earnings | 10,296,539 | | | 10,161,005 | |
| Accumulated other comprehensive loss | (1,078,917) | | | (1,264,581) | |
Treasury stock, at cost, 266,478,098 and 264,468,528 shares, respectively | (3,387,538) | | | (3,251,429) | |
| Total stockholders’ equity | 6,944,015 | | | 6,748,332 | |
| Noncontrolling interests | 21,608 | | | 19,829 | |
| Total equity | 6,965,623 | | | 6,768,161 | |
| Total liabilities and equity | $ | 34,296,064 | | | $ | 33,815,103 | |
See accompanying notes to interim consolidated financial statements.
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
| | | | | | | | | | | | | | | |
| For the Three Months
Ended March 31, | | |
| |
| 2023 | | 2022 | | | | |
| REVENUES: | | | | | | | |
| Net premiums written | $ | 2,574,824 | | | $ | 2,413,254 | | | | | |
| Change in net unearned premiums | (83,392) | | | (164,167) | | | | | |
| Net premiums earned | 2,491,432 | | | 2,249,087 | | | | | |
| Net investment income | 223,398 | | | 173,512 | | | | | |
| Net investment gains: | | | | | | | |
| Net realized and unrealized gains on investments | 22,611 | | | 369,882 | | | | | |
| | | | | | | |
| Change in allowance for expected credit losses on investments | 399 | | | (3,617) | | | | | |
| Net investment gains | 23,010 | | | 366,265 | | | | | |
| Revenues from non-insurance businesses | 124,200 | | | 97,776 | | | | | |
| Insurance service fees | 32,857 | | | 27,951 | | | | | |
| Other income | 107 | | | 818 | | | | | |
| Total revenues | 2,895,004 | | | 2,915,409 | | | | | |
| | | | | | | |
| | | | | | | |
| OPERATING COSTS AND EXPENSES: | | | | | | | |
| Losses and loss expenses | 1,538,755 | | | 1,339,252 | | | | | |
| Other operating costs and expenses | 825,575 | | | 713,899 | | | | | |
| Expenses from non-insurance businesses | 122,767 | | | 94,855 | | | | | |
| Interest expense | 31,836 | | | 34,970 | | | | | |
| Total operating costs and expenses | 2,518,933 | | | 2,182,976 | | | | | |
| Income before income taxes | 376,071 | | | 732,433 | | | | | |
| Income tax expense | (80,342) | | | (139,403) | | | | | |
| Net income before noncontrolling interests | 295,729 | | | 593,030 | | | | | |
| Noncontrolling interests | (1,603) | | | (2,392) | | | | | |
| Net income to common stockholders | $ | 294,126 | | | $ | 590,638 | | | | | |
| | | | | | | |
| NET INCOME PER SHARE: | | | | | | | |
| Basic | $ | 1.07 | | | $ | 2.13 | | | | | |
| Diluted | $ | 1.06 | | | $ | 2.12 | | | | | |
See accompanying notes to interim consolidated financial statements.
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
| | | | | | | | | | | | | | | |
| For the Three Months
Ended March 31, | | |
| |
| 2023 | | 2022 | | | | |
| Net income before noncontrolling interests | $ | 295,729 | | | $ | 593,030 | | | | | |
| Other comprehensive income (loss): | | | | | | | |
| Change in unrealized currency translation adjustments | 4,866 | | | 56,272 | | | | | |
| Change in unrealized investment gains (losses), net of taxes | 180,799 | | | (423,545) | | | | | |
| | | | | | | |
| Other comprehensive income (loss) | 185,665 | | | (367,273) | | | | | |
| Comprehensive income | 481,394 | | | 225,757 | | | | | |
| Noncontrolling interests | (1,602) | | | (2,391) | | | | | |
| Comprehensive income to common stockholders | $ | 479,792 | | | $ | 223,366 | | | | | |
See accompanying notes to interim consolidated financial statements.
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, | | |
|
| 2023 | | 2022 | | | | |
| COMMON STOCK: | | | | | | | |
| Beginning and end of period | $ | 105,803 | | | $ | 105,803 | | | | | |
| ADDITIONAL PAID-IN CAPITAL: | | | | | | | |
| Beginning of period | $ | 997,534 | | | $ | 981,104 | | | | | |
| Restricted stock units issued | (1,200) | | | (530) | | | | | |
| Restricted stock units expensed | 11,794 | | | 11,438 | | | | | |
| | | | | | | |
| End of period | $ | 1,008,128 | | | $ | 992,012 | | | | | |
| RETAINED EARNINGS: | | | | | | | |
| Beginning of period | $ | 10,161,005 | | | $ | 9,015,135 | | | | | |
| | | | | | | |
| Net income to common stockholders | 294,126 | | | 590,638 | | | | | |
Dividends ($0.60 and $0.09 per share, respectively) | (158,592) | | | (22,983) | | | | | |
| End of period | $ | 10,296,539 | | | $ | 9,582,790 | | | | | |
| ACCUMULATED OTHER COMPREHENSIVE LOSS: | | | | | | | |
| Unrealized investment (loss) gain: | | | | | | | |
| Beginning of period | $ | (892,905) | | | $ | 90,900 | | | | | |
| | | | | | | |
| Change in unrealized gains (losses) on securities without an allowance for expected credit losses | 177,342 | | | (423,839) | | | | | |
| Change in unrealized gains on securities with an allowance for expected credit losses | 3,456 | | | 293 | | | | | |
| End of period | (712,107) | | | (332,646) | | | | | |
| Currency translation adjustments: | | | | | | | |
| Beginning of period | (371,676) | | | (372,855) | | | | | |
| Net change in period | 4,866 | | | 56,272 | | | | | |
| End of period | (366,810) | | | (316,583) | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Total accumulated other comprehensive loss | $ | (1,078,917) | | | $ | (649,229) | | | | | |
| TREASURY STOCK: | | | | | | | |
| Beginning of period | $ | (3,251,429) | | | $ | (3,167,076) | | | | | |
| Stock exercised/vested | 395 | | | 203 | | | | | |
| Stock repurchased | (135,152) | | | — | | | | | |
| Other | (1,352) | | | — | | | | | |
| End of period | $ | (3,387,538) | | | $ | (3,166,873) | | | | | |
| NONCONTROLLING INTERESTS: | | | | | | | |
| Beginning of period | $ | 19,829 | | | $ | 14,719 | | | | | |
| Contributions | 177 | | | 6,186 | | | | | |
| Net income | 1,603 | | | 2,392 | | | | | |
| Other comprehensive loss, net of tax | (1) | | | (1) | | | | | |
| End of period | $ | 21,608 | | | $ | 23,296 | | | | | |
See accompanying notes to interim consolidated financial statements.
W. R. BERKLEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
| | | | | | | | | | | |
| For the Three Months
Ended March 31, |
|
| | 2023 | | 2022 |
| CASH FROM OPERATING ACTIVITIES: | | | |
| Net income to common stockholders | $ | 294,126 | | | $ | 590,638 | |
| Adjustments to reconcile net income to net cash from operating activities: | | | |
| Net investment gains | (23,010) | | | (366,265) | |
| Depreciation and amortization | 9,737 | | | 24,631 | |
| Noncontrolling interests | 1,603 | | | 2,392 | |
| Investment funds | (2,180) | | | (52,012) | |
| Stock incentive plans | 11,793 | | | 11,438 | |
| Change in: | | | |
| Arbitrage trading account | (14,879) | | | (7,215) | |
| Premiums and fees receivable | (33,460) | | | (69,704) | |
| Reinsurance accounts | (84,746) | | | (2,643) | |
| Deferred policy acquisition costs | (23,727) | | | (39,220) | |
| Income taxes | 76,933 | | | 123,763 | |
| | | |
| Reserves for losses and loss expenses | 424,149 | | | 316,065 | |
| Unearned premiums | 87,991 | | | 167,522 | |
| Other | (279,007) | | | (221,708) | |
| Net cash from operating activities | 445,323 | | | 477,682 | |
| CASH (USED IN) FROM INVESTING ACTIVITIES: | | | |
| Proceeds from sale of fixed maturity securities | 429,400 | | | 408,221 | |
| Proceeds from sale of equity securities | 9,933 | | | 9,227 | |
| Distributions from (contributions to) investment funds | 7,518 | | | (13,423) | |
| Proceeds from maturities and prepayments of fixed maturity securities | 956,308 | | | 1,440,457 | |
| Purchase of fixed maturity securities | (1,686,107) | | | (2,200,214) | |
| Purchase of equity securities | (59,529) | | | (100,356) | |
| Real estate sold | 7,472 | | | 28,141 | |
| | | |
| Change in loans receivable | 612 | | | 332 | |
| Net purchases of property, furniture and equipment | (11,532) | | | (9,114) | |
| Change in balances due to security brokers | (13,598) | | | 98,058 | |
| Cash received in connection with business disposition | — | | | 906,789 | |
| Payment for business purchased net of cash acquired | — | | | (49,572) | |
| Other | 93 | | | 17 | |
| Net cash (used in) from investing activities | (359,430) | | | 518,563 | |
| CASH USED IN FINANCING ACTIVITIES: | | | |
| Repayment of senior notes and other debt | — | | | (426,503) | |
| Net payments for stock options exercised | (806) | | | (327) | |
| Net proceeds from issuance of debt | (868) | | | 1,186 | |
| Cash dividends to common stockholders | (158,592) | | | (22,983) | |
| Purchase of common treasury shares | (135,152) | | | — | |
| Other, net | (308) | | | (2,703) | |
| Net cash used in financing activities | (295,726) | | | (451,330) | |
| Net impact on cash due to change in foreign exchange rates | 2,844 | | | 1,083 | |
| Net change in cash and cash equivalents | (206,989) | | | 545,998 | |
| Cash and cash equivalents at beginning of period | 1,449,346 | | | 1,568,843 | |
| Cash and cash equivalents at end of period | $ | 1,242,357 | | | $ | 2,114,841 | |
See accompanying notes to interim consolidated financial statements.
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. For the quarter ended March 31, 2022, the Company did not correct the proceeds from sale of fixed maturity securities and purchase of fixed maturity securities lines within the consolidated statements of cash flows for an incremental inter-company elimination as the effects were not material and had no impact on the total amount of investing activities.
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, 2022.
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 state and foreign income taxes, which was partially offset by 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 11,416,856 and 11,592,699 common shares held in a grantor trust as of March 31, 2023 and 2022, 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) | 2023 | | 2022 | | | | |
| Basic | 274,977 | | | 276,772 | | | | | |
| Diluted | 277,339 | | | 279,157 | | | | | |
(3) Recent Accounting Pronouncements and Accounting Policies
Recently adopted accounting pronouncements:
All accounting and reporting standards that became effective in 2023 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:
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.
(4) Consolidated Statements of Comprehensive Income
The following table presents the components of the changes in accumulated other comprehensive income ("AOCI"):
| | | | | | | | | | | | | | | | | | |
| (In thousands) | Unrealized Investment (Losses) Gains | | Currency Translation Adjustments | | | Accumulated Other Comprehensive
(Loss) Income |
| 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 reclassifications | 155,215 | | | 4,866 | | | | 160,081 | |
| Amounts reclassified from AOCI | 25,584 | | | — | | | | 25,584 | |
| Other comprehensive income | 180,799 | | | 4,866 | | | | 185,665 | |
| Unrealized investment loss related to noncontrolling interest | (1) | | | — | | | | (1) | |
| End of period | $ | (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 | |
| | | | | | |
| As of and for the three months ended March 31, 2022 | | | | | |
| Changes in AOCI | | | | | |
| Beginning of period | $ | 90,900 | | | $ | (372,855) | | | | $ | (281,955) | |
| | | | | | |
| | | | | | |
| Other comprehensive (loss) income before reclassifications | (433,136) | | | 56,272 | | | | (376,864) | |
| Amounts reclassified from AOCI | 9,591 | | | — | | | | 9,591 | |
| Other comprehensive (loss) income | (423,545) | | | 56,272 | | | | (367,273) | |
| Unrealized investment loss related to noncontrolling interest | (1) | | | — | | | | (1) | |
| Ending balance | $ | (332,646) | | | $ | (316,583) | | | | $ | (649,229) | |
| Amounts reclassified from AOCI | | | | | | |
| Pre-tax | $ | 12,141 | | (1) | $ | — | | | | $ | 12,141 | |
| Tax effect | (2,550) | | (2) | — | | | | (2,550) | |
| After-tax amounts reclassified | $ | 9,591 | | | $ | — | | | | $ | 9,591 | |
| Other comprehensive (loss) income | | | | | | |
| Pre-tax | $ | (539,449) | | | $ | 56,272 | | | | $ | (483,177) | |
| Tax effect | 115,904 | | | — | | | | 115,904 | |
| Other comprehensive (loss) income | $ | (423,545) | | | $ | 56,272 | | | | $ | (367,273) | |
____________
(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 $41,150,000 and $52,899,000 for the three months ended March 31, 2023 and 2022, respectively. There were no income taxes paid for the three months ended March 31, 2023 and 2022, respectively.
(6) Investments in Fixed Maturity Securities
At March 31, 2023 and December 31, 2022, investments in fixed maturity securities were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | Amortized
Cost | | Allowance for Expected Credit Losses (1) | | Gross Unrealized | | Fair
Value | | Carrying
Value |
| Gains | | Losses | |
| March 31, 2023 | | | | | | | | | | | |
| Held to maturity: | | | | | | | | | | | |
| State and municipal | $ | 48,474 | | | $ | (107) | | | $ | 3,902 | | | $ | — | | | $ | 52,269 | | | $ | 48,367 | |
| Residential mortgage-backed | 3,399 | | | — | | | 53 | | | — | | | 3,452 | | | 3,399 | |
| Total held to maturity | 51,873 | | | (107) | | | 3,955 | | | — | | | 55,721 | | | 51,766 | |
| Available for sale: | | | | | | | | | | | |
| U.S. government and government agency | 1,100,204 | | | — | | | 3,728 | | | (54,665) | | | 1,049,267 | | | 1,049,267 | |
| State and municipal: | | | | | | | | | | | |
| Special revenue | 1,759,098 | | | — | | | 5,429 | | | (90,044) | | | 1,674,483 | | | 1,674,483 | |
| State general obligation | 386,952 | | | — | | | 4,090 | | | (16,577) | | | 374,465 | | | 374,465 | |
| Pre-refunded | 105,812 | | | — | | | 3,351 | | | (248) | | | 108,915 | | | 108,915 | |
| Corporate backed | 204,773 | | | — | | | 491 | | | (8,447) | | | 196,817 | | | 196,817 | |
| Local general obligation | 442,571 | | | — | | | 4,212 | | | (12,104) | | | 434,679 | | | 434,679 | |
| Total state and municipal | 2,899,206 | | | — | | | 17,573 | | | (127,420) | | | 2,789,359 | | | 2,789,359 | |
| Mortgage-backed: | | | | | | | | | | | |
| Residential | 1,464,856 | | | (23) | | | 2,298 | | | (153,147) | | | 1,313,984 | | | 1,313,984 | |
| Commercial | 595,818 | | | — | | | 1,220 | | | (13,293) | | | 583,745 | | | 583,745 | |
| Total mortgage-backed | 2,060,674 | | | (23) | | | 3,518 | | | (166,440) | | | 1,897,729 | | | 1,897,729 | |
| Asset-backed | 3,960,140 | | | — | | | 3,166 | | | (117,853) | | | 3,845,453 | | | 3,845,453 | |
| Corporate: | | | | | | | | | | | |
| Industrial | 3,563,744 | | | (66) | | | 9,599 | | | (187,833) | | | 3,385,444 | | | 3,385,444 | |
| Financial | 2,737,880 | | | (3,729) | | | 7,421 | | | (115,268) | | | 2,626,304 | | | 2,626,304 | |
| Utilities | 650,151 | | | — | | | 5,117 | | | (27,941) | | | 627,327 | | | 627,327 | |
| Other | 495,850 | | | — | | | 122 | | | (9,398) | | | 486,574 | | | 486,574 | |
| Total corporate | 7,447,625 | | | (3,795) | | | 22,259 | | | (340,440) | | | 7,125,649 | | | 7,125,649 | |
| Foreign government | 1,468,737 | | | (33,324) | | | 6,312 | | | (109,835) | | | 1,331,890 | | | 1,331,890 | |
| Total available for sale | 18,936,586 | | | (37,142) | | | 56,556 | | | (916,653) | | | 18,039,347 | | | 18,039,347 | |
| Total investments in fixed maturity securities | $ | 18,988,459 | | | $ | (37,249) | | | $ | 60,511 | | | $ | (916,653) | | | $ | 18,095,068 | | | $ | 18,091,113 | |
____________
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (In thousands) | Amortized
Cost | | Allowance for Expected Credit Losses (1) | | Gross Unrealized | | Fair
Value | | Carrying
Value | | |
| Gains | | Losses | | |
| December 31, 2022 | | | | | | | | | | | | | |
| Held to maturity: | | | | | | | | | | | | | |
| State and municipal | $ | 47,802 | | | $ | (114) | | | $ | 4,239 | | | $ | — | | | $ | 51,927 | | | $ | 47,688 | | | |
| Residential mortgage-backed | 3,608 | | | — | | | 38 | | | — | | | 3,646 | | | 3,608 | | | |
| | | | | | | | | | | | | |
| Total held to maturity | 51,410 | | | (114) | | | 4,277 | | | — | | | 55,573 | | | 51,296 | | | |
| Available for sale: | | | | | | | | | | | | | |
| U.S. government and government agency | 960,479 | | | — | | | 937 | | | (69,158) | | | 892,258 | | | 892,258 | | | |
| State and municipal: | | | | | | | | | | | | | |
| Special revenue | 1,837,309 | | | — | | | 3,662 | | | (119,474) | | | 1,721,497 | | | 1,721,497 | | | |
| State general obligation | 387,709 | | | — | | | 2,651 | | | (21,335) | | | 369,025 | | | 369,025 | | | |
| Pre-refunded | 156,106 | | | — | | | 2,741 | | | (7) | | | 158,840 | | | 158,840 | | | |
| Corporate backed | 210,228 | | | — | | | 334 | | | (10,923) | | | 199,639 | | | 199,639 | | | |
| Local general obligation | 454,983 | | | — | | | 2,967 | | | (16,853) | | | 441,097 | | | 441,097 | | | |
| Total state and municipal | 3,046,335 | | | — | | | 12,355 | | | (168,592) | | | 2,890,098 | | | 2,890,098 | | | |
| Mortgage-backed: | | | | | | | | | | | | | |
| Residential | 1,308,019 | | | (18) | | | 395 | | | (171,595) | | | 1,136,801 | | | 1,136,801 | | | |
| Commercial | 547,757 | | | — | | | 215 | | | (19,363) | | | 528,609 | | | 528,609 | | | |
| Total mortgage-backed securities | 1,855,776 | | | (18) | | | 610 | | | (190,958) | | | 1,665,410 | | | 1,665,428 | | | |
| Asset-backed | 4,132,365 | | | — | | | 2,730 | | | (152,322) | | | 3,982,773 | | | 3,982,773 | | | |
| Corporate: | | | | | | | | | | | | | |
| Industrial | 3,491,645 | | | (1,704) | | | 4,439 | | | (241,381) | | | 3,252,999 | | | 3,252,999 | | | |
| Financial | 2,585,247 | | | (2,997) | | | 5,505 | | | (117,383) | | | 2,470,372 | | | 2,470,372 | | | |
| Utilities | 586,066 | | | — | | | 1,307 | | | (36,325) | | | 551,048 | | | 551,048 | | | |
| Other | 441,230 | | | — | | | — | | | (11,657) | | | 429,573 | | | 429,573 | | | |
| Total corporate | 7,104,188 | | | (4,701) | | | 11,251 | | | (406,746) | | | 6,703,992 | | | 6,703,992 | | | |
| Foreign government | 1,564,930 | | | (32,633) | | | 4,283 | | | (135,058) | | | 1,401,522 | | | 1,401,522 | | | |
| Total available for sale | 18,664,073 | | | (37,352) | | | 32,166 | | | (1,122,834) | | | 17,536,053 | | | 17,536,053 | | | |
| Total investments in fixed maturity securities | $ | 18,715,483 | | | $ | (37,466) | | | $ | 36,443 | | | $ | (1,122,834) | | | $ | 17,591,626 | | | $ | 17,587,349 | | | |
| | | | | | | | | | | | | |
____________(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, 2023 and 2022:
| | | | | | | | | | | |
| (In thousands) | 2023 | | 2022 |
| Allowance for expected credit losses, beginning of period | $ | 114 | | | $ | 387 | |
| | | |
| Provision for expected credit losses | (7) | | | (9) | |
| Allowance for expected credit losses, end of period | $ | 107 |