Investments

9 Months Ended

Sep. 30, 2025

Investments, Debt and Equity Securities [Abstract]

Investments

2. INVESTMENTS

Our investments are primarily composed of fixed income debt securities and common stock equity securities. We carry our equity securities at fair value and categorize all of our debt securities as available-for-sale, which are carried at fair value.

Realized gains and losses on disposition of investments are based on the specific identification of the investments sold on the settlement date. The following is a summary of the disposition of fixed income and equity securities for the nine-month periods ended September 30, 2025 and 2024:

Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2025
Fixed income securities - available-for-sale	$	383,956	$	5,076	$	(3,219)	$	1,857
Equity securities		87,874		46,478		(991)		45,487
2024
Fixed income securities - available-for-sale	$	98,696	$	538	$	(2,489)	$	(1,951)
Equity securities		44,863		20,276		(340)		19,936
Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2025
Fixed income securities - available-for-sale	$	344,629	$	271	$	(72)	$	199
2024
Fixed income securities - available-for-sale	$	240,200	$	89	$	(1,062)	$	(973)

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 are summarized below:

	As of September 30, 2025
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	399,593	$	—	$	399,593
U.S. agency		—		55,483		—		55,483
Non-U.S. government & agency		—		11,376		1,001		12,377
Agency MBS		—		604,351		—		604,351
ABS/CMBS/MBS*		—		563,754		—		563,754
Corporate		—		1,393,777		96,258		1,490,035
Municipal		—		410,891		—		410,891
Total fixed income securities - available-for-sale	$	—	$	3,439,225	$	97,259	$	3,536,484
Equity securities		874,621		—		4,251		878,872
Total	$	874,621	$	3,439,225	$	101,510	$	4,415,356

	As of December 31, 2024
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Fixed income securities - available-for-sale
U.S. government	$	—	$	515,635	$	—	$	515,635
U.S. agency		—		54,338		—		54,338
Non-U.S. government & agency		—		6,898		973		7,871
Agency MBS		—		396,223		—		396,223
ABS/CMBS/MBS*		—		410,248		—		410,248
Corporate		—		1,256,991		89,530		1,346,521
Municipal		—		444,960		—		444,960
Total fixed income securities - available-for-sale	$	—	$	3,085,293	$	90,503	$	3,175,796
Equity securities		731,569		—		4,622		736,191
Total	$	731,569	$	3,085,293	$	95,125	$	3,911,987

* Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table summarizes changes in the balance of securities whose fair value was measured using significant unobservable inputs (Level 3).

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Beginning balance	$	101,534	$	72,680	$	95,125	$	62,096
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		1,130		3,104		2,922		2,789
Purchases		6,995		16,069		15,093		28,379
Sales / Calls / Maturities		(8,149)		(326)		(11,630)		(1,737)
Transfers into Level 3		—		—		—		—
Transfers out of Level 3		—		—		—		—
Balance as of September 30,	$	101,510	$	91,527	$	101,510	$	91,527
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	1,244	$	3,104	$	2,899	$	2,789

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of September 30, 2025 were as follows:

	September 30, 2025
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	263,214	$	262,065
Due after one year through five years		743,950		739,290
Due after five years through 10 years		890,177		891,802
Due after 10 years		548,742		475,222
ABS/CMBS/MBS*		1,209,871		1,168,105
Total available-for-sale	$	3,655,954	$	3,536,484

* Asset-backed, commercial mortgage-backed and mortgage-backed securities

The amortized cost and fair value of available-for-sale securities at September 30, 2025 and December 31, 2024 are presented in the tables below. Amortized cost does not include accrued interest receivable of $28 million as of September 30, 2025 and $27 million as of December 31, 2024.

	September 30, 2025
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	395,751	$	—	$	5,165	$	(1,323)	$	399,593
U.S. agency		55,268		—		850		(635)		55,483
Non-U.S. government & agency		12,730		—		261		(614)		12,377
Agency MBS		632,284		—		3,532		(31,465)		604,351
ABS/CMBS/MBS*		577,587		(614)		3,570		(16,789)		563,754
Corporate		1,501,345		(285)		17,536		(28,561)		1,490,035
Municipal		480,989		—		883		(70,981)		410,891
Total Fixed Income	$	3,655,954	$	(899)	$	31,797	$	(150,368)	$	3,536,484
	December 31, 2024
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	525,608	$	—	$	309	$	(10,282)	$	515,635
U.S. agency		55,921		—		261		(1,844)		54,338
Non-U.S. government & agency		8,959		—		—		(1,088)		7,871
Agency MBS		438,545		—		927		(43,249)		396,223
ABS/CMBS/MBS*		430,973		(8)		2,208		(22,925)		410,248
Corporate		1,397,676		(189)		4,737		(55,703)		1,346,521
Municipal		533,477		—		1,003		(89,520)		444,960
Total Fixed Income	$	3,391,159	$	(197)	$	9,445	$	(224,611)	$	3,175,796

* Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

Allowance for Credit Losses and Unrealized Losses on Fixed Income Securities

A reversible allowance for credit losses is recognized on available-for-sale fixed income securities, if applicable. Several criteria are reviewed to determine if securities in the fixed income portfolio should be included in the allowance for expected credit loss evaluation, including:

● Changes in technology that may impair the earnings potential of the investment,

● The discontinuance of a segment of business that may affect future earnings potential,

● Reduction of or non-payment of interest and/or principal,

● Specific concerns related to the issuer’s industry or geographic area of operation,

● Significant or recurring operating losses, poor cash flows and/or deteriorating liquidity ratios and

● Downgrades in credit quality by a major rating agency.

If changes in interest rates and credit spreads do not reasonably explain the unrealized loss for an available-for-sale security, or if any of the criteria above indicate a potential credit loss, the security is subjected to a discounted cash flow analysis. Inputs into the discounted cash flow analysis include prepayment assumptions for structured securities, default rates and recoverability rates based on credit rating. The allowance for any security is limited to the amount that the security’s fair value is below amortized cost. As of September 30, 2025, the discounted cash flow analysis resulted in an allowance for credit losses on 12 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2025		2024		2025		2024
Beginning balance	$	245	$	228	$	197	$	306
Increase to allowance from securities for which credit losses were not previously recorded		717		30		720		30
Reduction from securities sold during the period		—		—		—		(89)
Net increase (decrease) from securities that had an allowance at the beginning of the period		(63)		(24)		(18)		(13)
Balance as of September 30,	$	899	$	234	$	899	$	234

We recognized less than $1 million of losses on securities for which we no longer had the intent to hold until recovery during the first nine months of 2025. No such losses were recognized during the first nine months of 2024.

As of September 30, 2025, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,077 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $150 million in associated unrealized losses represents 4 percent of the fixed income portfolio’s cost basis and 3 percent of total invested assets. Isolated to these securities, unrealized losses decreased through the first nine months of 2025, as bonds rallied on falling interest rates. Of the total 1,077 securities, 926 have been in an unrealized loss position for 12 consecutive months or longer. The following table illustrates the total value of fixed income securities that were in an unrealized loss position as of September 30, 2025 and December 31, 2024 after factoring in the allowance for credit losses. All fixed income securities continue to pay the expected coupon payments and we believe we will recover the amortized cost basis of available-for-sale securities that remain in an unrealized loss position.

	September 30, 2025						December 31, 2024
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	11,055	$	105,375	$	116,430	$	303,226	$	157,418	$	460,644
Amortized cost		11,078		106,675		117,753		309,836		161,090		470,926
Unrealized loss	$	(23)	$	(1,300)	$	(1,323)	$	(6,610)	$	(3,672)	$	(10,282)
U.S. agency
Fair value	$	—	$	30,621	$	30,621	$	24,024	$	18,330	$	42,354
Amortized cost		—		31,256		31,256		24,910		19,288		44,198
Unrealized loss	$	—	$	(635)	$	(635)	$	(886)	$	(958)	$	(1,844)
Non-U.S. government
Fair value	$	—	$	4,188	$	4,188	$	4,075	$	3,796	$	7,871
Amortized cost		—		4,802		4,802		4,158		4,801		8,959
Unrealized Loss	$	—	$	(614)	$	(614)	$	(83)	$	(1,005)	$	(1,088)
Agency MBS
Fair value	$	149,151	$	273,022	$	422,173	$	108,772	$	233,625	$	342,397
Amortized cost		149,737		303,901		453,638		111,674		273,972		385,646
Unrealized loss	$	(586)	$	(30,879)	$	(31,465)	$	(2,902)	$	(40,347)	$	(43,249)
ABS/CMBS/MBS*
Fair value	$	72,227	$	149,479	$	221,706	$	43,027	$	164,433	$	207,460
Amortized cost		72,333		166,162		238,495		43,395		186,990		230,385
Unrealized loss	$	(106)	$	(16,683)	$	(16,789)	$	(368)	$	(22,557)	$	(22,925)
Corporate
Fair value	$	141,450	$	622,539	$	763,989	$	378,305	$	700,574	$	1,078,879
Amortized cost		142,776		649,774		792,550		389,299		745,283		1,134,582
Unrealized loss	$	(1,326)	$	(27,235)	$	(28,561)	$	(10,994)	$	(44,709)	$	(55,703)
Municipal
Fair value	$	8,179	$	349,045	$	357,224	$	48,514	$	355,475	$	403,989
Amortized cost		8,462		419,743		428,205		49,491		444,018		493,509
Unrealized loss	$	(283)	$	(70,698)	$	(70,981)	$	(977)	$	(88,543)	$	(89,520)
Total fixed income
Fair value	$	382,062	$	1,534,269	$	1,916,331	$	909,943	$	1,633,651	$	2,543,594
Amortized cost		384,386		1,682,313		2,066,699		932,763		1,835,442		2,768,205
Unrealized loss	$	(2,324)	$	(148,044)	$	(150,368)	$	(22,820)	$	(201,791)	$	(224,611)

* Non-agency asset-backed, commercial mortgage-backed and mortgage-backed securities

The following table shows the composition of the fixed income securities in unrealized loss positions, after factoring in the allowance for credit losses, at September 30, 2025 by the National Association of Insurance Commissioners (NAIC) rating and the generally equivalent Standard & Poor’s (S&P) and Moody’s ratings. The vast majority of the securities are rated by S&P and/or Moody’s.

	Equivalent	Equivalent	(dollars in thousands)
NAIC	S&P	Moody’s	Amortized				Unrealized		Percent
Rating	Rating	Rating	Cost		Fair Value		Loss		to Total
1	AAA/AA/A	Aaa/Aa/A	$	1,675,642	$	1,539,255	$	(136,387)	90.7	%
2	BBB	Baa		327,018		315,660		(11,358)	7.6	%
3	BB	Ba		32,804		32,154		(650)	0.4	%
4	B	B		26,763		25,279		(1,484)	1.0	%
5	CCC	Caa		3,652		3,330		(322)	0.2	%
6	CC or lower	Ca or lower		820		653		(167)	0.1	%
		Total	$	2,066,699	$	1,916,331	$	(150,368)	100.0	%

Other Invested Assets

We had $56 million of other invested assets at September 30, 2025, compared to $58 million at December 31, 2024. Other invested assets include investments in low-income housing tax credit partnerships (LIHTC) and historic tax credit partnerships (HTC), membership in the Federal Home Loan Bank of Chicago (FHLBC), and investments in private funds. Our

LIHTC and HTC investments are carried at amortized cost and our investment in FHLBC stock is carried at cost. Due to the nature of the LIHTC, HTC and our membership in the FHLBC, their carrying amounts approximate fair value. The private funds are carried at fair value, using each investment’s net asset value.

Our LIHTC interests increased to $10 million at September 30, 2025, compared to $7 million at December 31, 2024, as additional investments were made. Our LIHTC interests recognized amortization of $1 million as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025 and 2024. For the nine-months ended September 30, 2025 and 2024, our LIHTC interests recognized amortization of $2 million and a total tax benefit of $2 million. Our unfunded commitment for our LIHTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2039.

Our HTC investment had a balance of $12 million at September 30, 2025, compared to $15 million at December 31, 2024. Our HTC investment recognized $1 million of amortization as a component of income tax expense and a total tax benefit of $1 million during the third quarter of 2025, compared to $1 million of amortization and $2 million of tax benefit for the same period in 2024. For the nine-months ended September 30, 2025, our HTC investment recognized amortization of $3 million and a total tax benefit of $3 million, compared to $3 million of amortization and a total tax benefit of $4 million for the same period in 2024. Our unfunded commitment for our HTC investments was $4 million at September 30, 2025 and will be paid out in installments through 2027.

At September 30, 2025, $55 million of investments were pledged as collateral with the FHLBC to ensure timely access to the secured lending facility that ownership of FHLBC stock provides. At September 30, 2025, $50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $18 million at September 30, 2025, down from $24 million at December 31, 2024, and had $3 million of associated unfunded commitments at September 30, 2025. Our interest in private funds is generally restricted from being transferred or otherwise redeemed without prior consent by the respective entities, and the timed dissolution of the partnerships would trigger redemption.

Investments in Unconsolidated Investees

We had $64 million of investments in unconsolidated investees at September 30, 2025, compared to $56 million at December 31, 2024. At September 30, 2025, our investment in Prime Holdings Insurance Services, Inc. (Prime) was $63 million and other investments in unconsolidated investees totaled less than $1 million.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts. Short-term investments consist of investments with original maturities of 90 days or less, primarily AAA-rated government money market funds. Short-term investments are carried at cost. We had a cash and short-term investment balance of $53 million and $166 million, respectively, at September 30, 2025, compared to $40 million and $75 million, respectively, at December 31, 2024.