Investments

3 Months Ended

Mar. 31, 2026

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 three-month periods ended March 31, 2026 and 2025:

Sales	Proceeds		Gross Realized				Net Realized
(in thousands)	From Sales		Gains		Losses		Gain (Loss)
2026
Fixed income securities - available-for-sale	$	64,810	$	1,022	$	(1,466)	$	(444)
Equity securities		18,205		10,355		(102)		10,253
2025
Fixed income securities - available-for-sale	$	10,473	$	62	$	(205)	$	(143)
Equity securities		26,679		15,140		(62)		15,078
Calls/Maturities			Gross Realized				Net Realized
(in thousands)	Proceeds		Gains		Losses		Gain (Loss)
2026
Fixed income securities - available-for-sale	$	118,547	$	385	$	—	$	385
2025
Fixed income securities - available-for-sale	$	101,454	$	9	$	(71)	$	(62)

FAIR VALUE MEASUREMENTS

Assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 are summarized below:

	As of March 31, 2026
	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	$	—	$	307,140	$	—	$	307,140
U.S. agency		—		27,288		—		27,288
Non-U.S. government & agency		—		14,191		2,095		16,286
Agency MBS		—		600,802		—		600,802
ABS/CMBS/MBS*		—		710,301		—		710,301
Corporate		—		1,382,742		121,663		1,504,405
Municipal		—		362,470		—		362,470
Total fixed income securities - available-for-sale	$	—	$	3,404,934	$	123,758	$	3,528,692
Equity securities		856,689		—		8,223		864,912
Total	$	856,689	$	3,404,934	$	131,981	$	4,393,604

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

	As of December 31, 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	$	—	$	335,223	$	—	$	335,223
U.S. agency		—		37,927		—		37,927
Non-U.S. government & agency		—		11,417		2,130		13,547
Agency MBS		—		610,675		—		610,675
ABS/CMBS/MBS*		—		672,984		—		672,984
Corporate		—		1,383,329		108,177		1,491,506
Municipal		—		371,474		—		371,474
Total fixed income securities - available-for-sale	$	—	$	3,423,029	$	110,307	$	3,533,336
Equity securities		890,622		—		8,254		898,876
Total	$	890,622	$	3,423,029	$	118,561	$	4,432,212

* 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 March 31,
(in thousands)	2026		2025
Beginning balance	$	118,561	$	95,125
Net realized and unrealized gains (losses)
Included in other comprehensive earnings (loss)		(1,546)		893
Purchases		15,296		5,070
Sales / Calls / Maturities		(330)		(2,143)
Transfers into Level 3		—		—
Transfers out of Level 3		—		—
Balance as of March 31,	$	131,981	$	98,945
Change in unrealized gains (losses) during the period for Level 3 assets held at period-end - included in other comprehensive earnings (loss)	$	(1,550)	$	893

The amortized cost and fair value of available-for-sale fixed income securities by contractual maturity as of March 31, 2026 were as follows:

	March 31, 2026
(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	197,626	$	196,770
Due after one year through five years		737,002		726,768
Due after five years through 10 years		855,922		845,397
Due after 10 years		523,694		448,654
ABS/CMBS/MBS*		1,355,677		1,311,103
Total available-for-sale	$	3,669,921	$	3,528,692

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

The amortized cost and fair value of available-for-sale securities at March 31, 2026 and December 31, 2025 are presented in the tables below. Amortized cost does not include accrued interest receivable of $29 million as of March 31, 2026 and $29 million as of December 31, 2025.

	March 31, 2026
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	305,863	$	—	$	2,333	$	(1,056)	$	307,140
U.S. agency		27,280		—		264		(256)		27,288
Non-U.S. government & agency		16,882		—		102		(698)		16,286
Agency MBS		629,029		—		2,587		(30,814)		600,802
ABS/CMBS/MBS*		726,648		(377)		1,684		(17,654)		710,301
Corporate		1,535,290		(161)		7,861		(38,585)		1,504,405
Municipal		428,929		—		687		(67,146)		362,470
Total Fixed Income	$	3,669,921	$	(538)	$	15,518	$	(156,209)	$	3,528,692
	December 31, 2025
	Cost or		Allowance		Gross		Gross
	Amortized		for Credit		Unrealized		Unrealized		Fair
(in thousands)	Cost		Losses		Gains		Losses		Value
U.S. government	$	331,233	$	—	$	4,909	$	(919)	$	335,223
U.S. agency		37,379		—		677		(129)		37,927
Non-U.S. government & agency		13,831		—		274		(558)		13,547
Agency MBS		634,349		—		4,718		(28,392)		610,675
ABS/CMBS/MBS*		685,126		(470)		3,640		(15,312)		672,984
Corporate		1,502,843		(358)		16,951		(27,930)		1,491,506
Municipal		437,601		—		1,068		(67,195)		371,474
Total Fixed Income	$	3,642,362	$	(828)	$	32,237	$	(140,435)	$	3,533,336

* 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 March 31, 2026, the discounted cash flow analysis resulted in an allowance for credit losses on 8 securities. The following table presents changes in the allowance for expected credit losses on available-for-sale securities:

	Three Months Ended March 31,
(in thousands)	2026		2025
Beginning balance	$	828	$	197
Increase to allowance from securities for which credit losses were not previously recorded		24		21
Reduction from securities sold during the period		(65)		—
Reductions from intent to sell securities		(180)		—
Net increase (decrease) from securities that had an allowance at the beginning of the period		(69)		(61)
Balance as of March 31,	$	538	$	157

We recognized $1 million of losses on securities for which we no longer had the intent to hold until recovery during the first three months of 2026. No such losses were recognized during the first three months of 2025.

As of March 31, 2026, in addition to the securities included in the allowance for credit losses, the fixed income portfolio contained 1,328 securities with an unrealized loss position for which an allowance for credit losses had not been recorded. The $156 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 increased through the first three months of 2026, as interest rates increased during the period. Of the total 1,328 securities, 777 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 March 31, 2026 and December 31, 2025 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.

	March 31, 2026						December 31, 2025
(in thousands)	< 12 Mos.		12 Mos. & Greater		Total		< 12 Mos.		12 Mos. & Greater		Total
U.S. government
Fair value	$	13,965	$	61,176	$	75,141	$	8,610	$	80,088	$	88,698
Amortized cost		14,113		62,084		76,197		8,620		80,997		89,617
Unrealized loss	$	(148)	$	(908)	$	(1,056)	$	(10)	$	(909)	$	(919)
U.S. agency
Fair value	$	7,741	$	8,934	$	16,675	$	—	$	19,797	$	19,797
Amortized cost		7,923		9,008		16,931		—		19,926		19,926
Unrealized loss	$	(182)	$	(74)	$	(256)	$	—	$	(129)	$	(129)
Non-U.S. government
Fair value	$	7,210	$	4,204	$	11,414	$	—	$	4,244	$	4,244
Amortized cost		7,310		4,802		12,112		—		4,802		4,802
Unrealized Loss	$	(100)	$	(598)	$	(698)	$	—	$	(558)	$	(558)
Agency MBS
Fair value	$	238,880	$	197,811	$	436,691	$	34,783	$	239,581	$	274,364
Amortized cost		241,035		226,470		467,505		34,917		267,839		302,756
Unrealized loss	$	(2,155)	$	(28,659)	$	(30,814)	$	(134)	$	(28,258)	$	(28,392)
ABS/CMBS/MBS*
Fair value	$	354,186	$	136,541	$	490,727	$	110,600	$	142,903	$	253,503
Amortized cost		356,597		151,784		508,381		110,826		157,989		268,815
Unrealized loss	$	(2,411)	$	(15,243)	$	(17,654)	$	(226)	$	(15,086)	$	(15,312)
Corporate
Fair value	$	517,300	$	477,322	$	994,622	$	146,177	$	545,897	$	692,074
Amortized cost		525,093		508,114		1,033,207		148,444		571,560		720,004
Unrealized loss	$	(7,793)	$	(30,792)	$	(38,585)	$	(2,267)	$	(25,663)	$	(27,930)
Municipal
Fair value	$	26,282	$	301,492	$	327,774	$	3,759	$	324,235	$	327,994
Amortized cost		26,625		368,295		394,920		3,789		391,400		395,189
Unrealized loss	$	(343)	$	(66,803)	$	(67,146)	$	(30)	$	(67,165)	$	(67,195)
Total fixed income
Fair value	$	1,165,564	$	1,187,480	$	2,353,044	$	303,929	$	1,356,745	$	1,660,674
Amortized cost		1,178,696		1,330,557		2,509,253		306,596		1,494,513		1,801,109
Unrealized loss	$	(13,132)	$	(143,077)	$	(156,209)	$	(2,667)	$	(137,768)	$	(140,435)

* 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 March 31, 2026 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	$	1,987,281	$	1,850,834	$	(136,447)	87.3	%
2	BBB	Baa		423,761		407,998		(15,763)	10.1	%
3	BB	Ba		50,929		49,650		(1,279)	0.8	%
4	B	B		43,657		41,522		(2,135)	1.4	%
5	CCC	Caa		3,625		3,040		(585)	0.4	%
6	CC or lower	Ca or lower		—		—		—	0.0	%
		Total	$	2,509,253	$	2,353,044	$	(156,209)	100.0	%

Other Invested Assets

We had $61 million of other invested assets at March 31, 2026, compared to $59 million at December 31, 2025. 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 were $13 million at March 31, 2026, compared to $14 million at December 31, 2025. Our LIHTC interests recognized amortization of less than $1 million as a component of income tax expense and a total tax benefit of $1 million during the first quarter of 2026 and 2025. Our unfunded commitment for our LIHTC investments was $8 million at March 31, 2026 and will be paid out in installments through 2040.

Our HTC investment had a balance of $10 million at March 31, 2026, compared to $11 million at December 31, 2025. Our HTC investment recognized less than $1 million of amortization as a component of income tax expense and a total tax benefit of $1 million during the first quarter of 2026, the same as in 2025. Our unfunded commitment for our HTC investments was $4 million at March 31, 2026 and will be paid out in installments through 2027.

At March 31, 2026, $52 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 March 31, 2026, $50 million of borrowings were outstanding with the FHLBC.

Our investments in private funds totaled $19 million at March 31, 2026, up from $18 million at December 31, 2025, and had $2 million of associated unfunded commitments at March 31, 2026. 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

Our investment in Prime Holdings Insurance Services, Inc. was $56 million at March 31, 2026, compared to $54 million at December 31, 2025.

Cash and Short-Term Investments

Cash consists of uninvested balances in bank accounts. Short-term investments primarily consist of money market funds and fixed income securities with a contractual maturity of one year or less at the time of acquisition. Short-term investments are carried at cost, which approximates fair value. We had a cash and short-term investment balance of $49 million and $386 million, respectively, at March 31, 2026, compared to $52 million and $121 million, respectively, at December 31, 2025.