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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, 2019.

The income tax provision has been computed based on the Company’s estimated annual effective tax rate. The effective tax rate for the quarter differs from the U.S. federal income tax rate of 21% principally because of tax-exempt investment income, tax benefits related to equity-based compensation, and tax on income from foreign jurisdictions with different tax rates.

The Company presents both basic and diluted net (loss) income per share (“EPS”) amounts. Basic EPS is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period (including 7,575,168 and 7,389,781 common shares held in a grantor trust as of March 31, 2020 and 2019, 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. For the period ended March 31, 2020, diluted shares have been reduced by 2.0 million to reflect the anti-dilutive effect of common equivalent shares.

The weighted average number of common shares used in the computation of basic and diluted (losses) earnings per share was as follows:

	For the Three Months Ended March 31,
(In thousands)	2020			2019
Basic	190,287			190,400
Diluted	190,287			192,669

Recently adopted accounting pronouncements:

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses, which amended the accounting guidance for credit losses on financial instruments. The updated guidance amended the current other-than-temporary impairment model for available for sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. This guidance also applies a new current expected credit loss model for determining credit-related impairments for financial instruments measured at amortized cost, such as reinsurance recoverables. The updated guidance was effective for reporting periods beginning after December 15, 2019.

The adoption of this guidance on January 1, 2020 resulted in the recognition of an allowance for expected credit loss in connection with operating assets (premiums and fees receivable and due from reinsurers) of $5.7 million (net of tax) and a

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corresponding cumulative effect adjustment that decreased common stockholders' equity. Certain investments (primarily fixed maturity securities available for sale) established an allowance for expected credit loss of $24.8 million (net of tax), with a cumulative effect adjustment decreasing retained earnings by $24.8 million (net of tax) and increasing accumulated other comprehensive (loss) income ("AOCI") by $25.0 million (net of tax), resulting in $0.2 million net impact to total common stockholders' equity.

All other accounting and reporting standards that have become effective in 2020 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.

Accounting policies:

The following accounting policies have been updated to reflect the Company's adoption of Financial Instruments - Credit Losses as described above.

Revenue recognition (related to premiums and fees receivable)

Insurance premiums are recognized as written at the inception of the policy. Reinsurance premiums are estimated based upon information received from ceding companies, and subsequent differences from such estimates are recorded in the period they are determined. Insurance and reinsurance premiums are primarily earned on a pro rata basis over the policy term. Fees for services are earned over the period that the services are provided. Premiums and fees receivable are reported net of an allowance for expected credit losses with the allowance being estimated based on current and future expected conditions, historical loss data and specific identification of collectability concerns where applicable. Changes in the allowance are reported within other operating costs and expenses.

Reinsurance ceded (related to due from reinsurers)

The unearned portion of premiums ceded to reinsurers is reported as prepaid reinsurance premiums and earned ratably over the policy term. The estimated amounts of reinsurance recoverable on unpaid losses are reported as due from reinsurers. To the extent any reinsurer does not meet its obligations under reinsurance agreements, the Company must discharge its liability. Amounts due from reinsurers are reflected net of funds held where the right of offset is present. The Company has provided an allowance for expected credit losses for estimated uncollectible reinsurance. The allowance is estimated based on the composition of the recoverable balance, considering reinsurer credit ratings, collateral received from financial institutions and funds withheld arrangements, length of collection periods, probability of default methodology, and specific identification of collectability concerns. Changes in the allowance are reported within losses and loss expenses.

Investments

For available for sale securities in an unrealized loss position where the Company intends to sell, or it is more likely than not that it will be required to sell the security before recovery in value, the amortized cost basis is written down to fair value through net investment (losses) gains. For available for sale securities in an unrealized loss position where the Company does not intend to sell, or it is more likely than not that it will not be required to sell the security before recovery in value, the Company evaluates whether the decline in fair value has resulted from credit losses or all other factors (non-credit factors). In making this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for expected credit losses is recorded for the credit loss through net investment (losses) gains, limited by the amount that the fair value is less than the amortized cost basis. The allowance is adjusted for any change in expected credit losses and subsequent recoveries through net investment (losses) gains. The impairment related to non-credit factors is recognized in other comprehensive income.

For financial assets carried at amortized cost, which includes held to maturity securities and loans receivable, the Company estimates an allowance for expected credit losses based on relevant information about past events, including historical loss experience, current conditions and forecasts that affect the expected collectability of the amortized cost of the financial asset. The allowance for expected credit losses is presented as a reduction to amortized cost of the financial asset in the consolidated balance sheet and changes to the estimate for expected credit losses are recognized through net investment (losses) gains.

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The Company’s credit assessment of allowance for expected credit losses uses a third party model for available for sale and held to maturity securities, as well as loans receivable. The allowance for expected credit losses is generally based on the performance of the underlying collateral under various economic and default scenarios that involve subjective judgments and estimates by management. Modeling these securities involves various factors, such as projected default rates, the nature and realizable value of the collateral, if any, the ability of the issuer to make scheduled payments, historical performance and other relevant economic and performance factors. A discounted cash flow analysis is used to ascertain the amount of the allowance for expected credit losses, if any.  In general, the model reverts to the rating-level long-term average marginal default rates based on 10 years of historical data, beyond the forecast period. For other inputs, the model in most cases reverts to the baseline long-term assumptions linearly over 5 years beyond the forecast period. The long-term assumptions are based on the historical averages.

The Company reports accrued investment income separately from fixed maturity securities, and has elected not to measure an allowance for expected credit losses for accrued investment income. Accrued investment income is written off through net investment income at the time the issuer of the bond defaults or is expected to default on payments.

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The following table presents the components of the changes in accumulated other comprehensive (loss) 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, 2020
Changes in AOCI
Beginning of period	$	124,514			$	(381,813	)		$	(257,299	)
Cumulative effect adjustment resulting from changes in accounting principles	24,952				—				24,952
Restated beginning of period	149,466				(381,813		)		(232,347		)
Other comprehensive loss before reclassifications	(298,531		)		(98,194		)		(396,725		)
Amounts reclassified from AOCI	39,550				—				39,550
Other comprehensive loss	(258,981		)		(98,194		)		(357,175		)
Unrealized investment losses related to noncontrolling interest	1				—				1
Ending balance	$	(109,514	)		$	(480,007	)		$	(589,521	)
Amounts reclassified from AOCI
Pre-tax	$	50,063		(1)	$	—			$	50,063
Tax effect	(10,513		)	(2)	—				(10,513		)
After-tax amounts reclassified	$	39,550			$	—			$	39,550
Other comprehensive loss
Pre-tax	$	(332,850	)		$	(98,194	)		$	(431,044	)
Tax effect	73,869				—				73,869
Other comprehensive loss	$	(258,981	)		$	(98,194	)		$	(357,175	)

As of and for the three months ended March 31, 2019
Changes in AOCI
Beginning of period	$	(91,491	)		$	(418,979	)		$	(510,470	)
Other comprehensive income before reclassifications	127,139				19,760				146,899
Amounts reclassified from AOCI	(1,365		)		—				(1,365		)
Other comprehensive income	125,774				19,760				145,534
Unrealized investment gain related to noncontrolling interest	(47		)		—				(47		)
Ending balance	$	34,236			$	(399,219	)		$	(364,983	)
Amounts reclassified from AOCI
Pre-tax	$	(1,728	)	(1)	$	—			$	(1,728	)
Tax effect	363			(2)	—				363
After-tax amounts reclassified	$	(1,365	)		$	—			$	(1,365	)
Other comprehensive income
Pre-tax	$	169,260			$	19,760			$	189,020
Tax effect	(43,486		)		—				(43,486		)
Other comprehensive income	$	125,774			$	19,760			$	145,534

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⁽¹⁾ Net investment (losses) gains in the consolidated statements of income.

⁽²⁾ Income tax benefit (expense) in the consolidated statements of income.

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At March 31, 2020 and December 31, 2019, 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, 2020
Held to maturity:
State and municipal	$	70,971			$	(107	)		$	11,516			$	—			$	82,380			$	70,864
Residential mortgage-backed	7,888				—				808				—				8,696				7,888
Total held to maturity	78,859				(107		)		12,324				—				91,076				78,752
Available for sale:
U.S. government and government agency	715,890				—				23,830				(58		)		739,662				739,662
State and municipal:
Special revenue	2,283,655				—				53,529				(9,043		)		2,328,141				2,328,141
State general obligation	365,109				—				22,440				(1,592		)		385,957				385,957
Pre-refunded	311,077				—				18,281				(128		)		329,230				329,230
Corporate backed	254,887				—				4,880				(1,705		)		258,062				258,062
Local general obligation	412,291				—				34,985				(511		)		446,765				446,765
Total state and municipal	3,627,019				—				134,115				(12,979		)		3,748,155				3,748,155
Mortgage-backed securities:
Residential	1,169,144				—				26,039				(15,480		)		1,179,703				1,179,703
Commercial	284,584				—				841				(9,688		)		275,737				275,737
Total mortgage-backed securities	1,453,728				—				26,880				(25,168		)		1,455,440				1,455,440
Asset-backed	3,123,627				—				2,415				(187,990		)		2,938,052				2,938,052
Corporate:
Industrial	2,175,423				(3,513		)		42,215				(62,365		)		2,151,760				2,151,760
Financial	1,482,371				(2,923		)		16,083				(28,128		)		1,467,403				1,467,403
Utilities	327,101				—				9,315				(1,838		)		334,578				334,578
Other	24,560				—				230				(14		)		24,776				24,776
Total corporate	4,009,455				(6,436		)		67,843				(92,345		)		3,978,517				3,978,517
Foreign government	809,869				(60,920		)		21,377				(42,837		)		727,489				727,489
Total available for sale	13,739,588				(67,356		)		276,460				(361,377		)		13,587,315				13,587,315
Total investments in fixed maturity securities	$	13,818,447			$	(67,463	)		$	288,784			$	(361,377	)		$	13,678,391			$	13,666,067

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(1) Represents the amount of impairment that has resulted from credit-related factors. The change in the allowance for expected credit losses, excluding the cumulative effect adjustment resulting from changes in accounting principles, is recognized in the consolidated statements of (loss) income. Amount excludes unrealized losses relating to non-credit factors.

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(In thousands)	Amortized Cost				Gross Unrealized								Fair Value				Carrying Value
					Gains				Losses
December 31, 2019
Held to maturity:
State and municipal	$	70,312			$	13,000			$	—			$	83,312			$	70,312
Residential mortgage-backed	8,371				994				—				9,365				8,371
Total held to maturity	78,683				13,994				—				92,677				78,683
Available for sale:
U.S. government and government agency	775,157				13,249				(1,475		)		786,931				786,931
State and municipal:
Special revenue	2,343,209				64,586				(4,152		)		2,403,643				2,403,643
State general obligation	359,298				22,074				(97		)		381,275				381,275
Pre-refunded	364,571				20,342				(128		)		384,785				384,785
Corporate backed	255,230				7,232				(903		)		261,559				261,559
Local general obligation	432,333				32,684				(647		)		464,370				464,370
Total state and municipal	3,754,641				146,918				(5,927		)		3,895,632				3,895,632
Mortgage-backed securities:
Residential	1,298,145				23,230				(5,155		)		1,316,220				1,316,220
Commercial	304,506				5,214				(346		)		309,374				309,374
Total mortgage-backed securities	1,602,651				28,444				(5,501		)		1,625,594				1,625,594
Asset-backed	2,802,588				9,532				(21,490		)		2,790,630				2,790,630
Corporate:
Industrial	2,260,073				72,900				(3,800		)		2,329,173				2,329,173
Financial	1,447,589				37,681				(4,118		)		1,481,152				1,481,152
Utilities	325,762				15,281				(402		)		340,641				340,641
Other	5,219				230				—				5,449				5,449
Total corporate	4,038,643				126,092				(8,320		)		4,156,415				4,156,415
Foreign government	924,284				16,465				(93,673		)		847,076				847,076
Total available for sale	13,897,964				340,700				(136,386		)		14,102,278				14,102,278
Total investments in fixed maturity securities	$	13,976,647			$	354,694			$	(136,386	)		$	14,194,955			$	14,180,961

The following table presents the rollforward of the allowance for expected credit losses for held to maturity securities for the period ended March 31, 2020:

	State and Municipal
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	—
Cumulative effect adjustment resulting from changes in accounting principles	69
Provision for expected credit losses	38
Allowance for expected credit losses at March 31, 2020	$	107

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The following table presents the rollforward of the allowance for expected credit losses for available for sale securities for the period ended March 31, 2020:

	Foreign Government				Corporate				Total
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	—			$	—			$	—
Cumulative effect adjustment resulting from changes in accounting principles	35,645				—				35,645
Expected credit losses on securities for which credit losses were not previously recorded	12,494				6,436				18,930
Expected credit losses on securities for which credit losses were previously recorded	16,369				—				16,369
Reduction due to disposals	(3,588		)		—				(3,588		)
Allowance for expected credit losses at March 31, 2020	$	60,920			$	6,436			$	67,356

During the three months ended March 31, 2020, the Company increased the allowance for expected credit losses utilizing its credit loss assessment process and inputs used in its credit loss model, primarily due to the negative impact to the financial markets caused by COVID-19. As a result, the Company recognized an initial allowance for expected credit losses on securities that previously did not have an allowance, and increased the allowance for expected credit losses on existing securities due to higher default rate and lower recovery rate assumptions.    

The amortized cost and fair value of fixed maturity securities at March 31, 2020, 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	$	867,594			$	845,806
Due after one year through five years	4,927,863				4,921,159
Due after five years through ten years	3,366,555				3,369,995
Due after ten years	3,194,713				3,077,295
Mortgage-backed securities	1,461,616				1,464,136
Total	$	13,818,341			$	13,678,391

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(1) Amortized cost includes the allowance for expected credit losses of $107 thousand related to held to maturity securities.    

At March 31, 2020 and December 31, 2019, investments in equity securities were as follows:

 

(In thousands)	Cost				Gross Unrealized								Fair Value				Carrying Value
					Gains				Losses
March 31, 2020
Common stocks	$	200,427			$	6,718			$	(60,487	)		$	146,658			$	146,658
Preferred stocks	174,621				45,516				(10,693		)		209,444				209,444
Total	$	375,048			$	52,234			$	(71,180	)		$	356,102			$	356,102
December 31, 2019
Common stocks	$	175,928			$	16,967			$	(26,090	)		$	166,805			$	166,805
Preferred stocks	169,171				148,243				(3,599		)		313,815				313,815
Total	$	345,099			$	165,210			$	(29,689	)		$	480,620			$	480,620

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At March 31, 2020 and December 31, 2019, the fair and carrying values of the arbitrage trading account were $667 million and $401 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, 2020, the fair value of long option contracts outstanding was $917 thousand (notional amount of $23.5 million) and the fair value of short option contracts outstanding was $545 thousand (notional amount of $29.8 million). Other than with respect to the use of these trading account securities, the Company does not make use of derivatives.

Net investment income consisted of the following: 

	For the Three Months Ended March 31,
(In thousands)	2020				2019
Investment income earned on:
Fixed maturity securities, including cash and cash equivalents and loans receivable	$	128,018			$	132,119
Investment funds	40,577				11,411
Arbitrage trading account	1,138				10,585
Real estate	6,096				4,307
Equity securities	1,563				1,288
Gross investment income	177,392				159,710
Investment expense	(2,629		)		(1,456		)
Net investment income	$	174,763			$	158,254

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 $225 million as of March 31, 2020.

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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)	2020				2019				2020				2019
Real estate	$	328,053			$	412,275			$	6,790			$	10,476
Financial services	318,084				280,705				15,209				1,528
Energy	152,658				156,869				4,413				(11,793		)
Transportation	150,353				147,034				2,646				8,602
Other funds	229,710				216,652				11,519				2,598
Total	$	1,178,858			$	1,213,535			$	40,577			$	11,411

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. Accordingly, income from investment funds for the first quarter of 2020 does not reflect the adverse impact from the recent disruption in global financial markets associated with COVID-19.

Investment in real estate represents directly owned property held for investment, as follows:

	Carrying Value
	March 31,				December 31,
(In thousands)	2020				2019
Properties in operation	$	1,637,162			$	1,351,249
Properties under development	447,225				754,701
Total	$	2,084,387			$	2,105,950

In 2020, properties in operation included a long-term ground lease in Washington, D.C., a hotel in Memphis, Tennessee, two office complexes in New York City, office buildings in West Palm Beach and Palm Beach, Florida, an office building in London, and the completed portion of a mixed-use project in Washington D.C.. Properties in operation are net of accumulated depreciation and amortization of $66,160,000 and $59,832,000 as of March 31, 2020 and December 31, 2019, respectively. Related depreciation expense was $6,620,000 and $3,427,000 for the three months ended March 31, 2020 and 2019, respectively. Future minimum rental income expected on operating leases relating to properties in operation is $44,198,185 in 2020, $60,669,125 in 2021, $60,719,260 in 2022, $54,301,460 in 2023, $52,053,044 in 2024, $48,299,498 in 2025 and $522,531,742 thereafter.

The Company borrowed $101,750,000 through a non-recourse loan secured by the West Palm Beach office building in 2018. The loan matures in November 2028 and carries a fixed interest rate of 4.21%. The carrying value does not reflect the outstanding financing, which is reflected within senior notes and other debt on the Company's consolidated balance sheet.

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At March 31, 2020 and December 31, 2019, loans receivable are as follows:

(In thousands)	March 31, 2020				December 31, 2019
Amortized cost (net of allowance for expected credit losses):
Real estate loans	$	52,890			$	58,541
Commercial loans	34,168				33,258
Total	$	87,058			$	91,799
Fair value:
Real estate loans	$	56,906			$	59,853
Commercial loans	34,168				34,760
Total	$	91,074			$	94,613

The following table presents the rollforward of the allowance for expected credit losses for loans receivable for the period ended March 31, 2020:

	Real Estate Loans				Commercial Loans				Total
(In thousands)
Allowance for expected credit losses at January 1, 2020	$	1,502			$	644			$	2,146
Cumulative effect adjustment resulting from changes in accounting principles	(905		)		548				(357		)
Provision for expected credit losses	838				1,301				2,139
Allowance for expected credit losses at March 31, 2020	$	1,435			$	2,493			$	3,928

Loans receivable in non-accrual status were both $0.2 million as of March 31, 2020 and December 31, 2019.

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.

The real estate loans are secured by commercial real estate primarily located in New York. These loans generally earn interest at floating LIBOR-based interest rates and have maturities (inclusive of extension options) through August 2025. 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.

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 Net investment (losses) gains are as follows:

	For the Three Months Ended March 31,
(In thousands)	2020				2019
Net investment (losses) gains:
Fixed maturity securities:
Gains	$	4,931			$	5,246
Losses	(4,847		)		(3,518		)
Equity securities (1):
Net realized gains on investment sales	—				23,345
Change in unrealized (losses) gains	(154,467		)		42,078
Investment funds	30,183				17
Real estate	(687		)		2,746
Loans receivable	—				(970		)
Other	(18,398		)		(291		)
Net realized and unrealized (losses) gains on investments in earnings before allowance for expected credit losses	(143,285		)		68,653
Change in allowance for expected credit losses on investments (2):
Fixed maturity securities	(31,750		)		—
Loans receivable	(2,139		)		—
Change in allowance for expected credit losses on investments	(33,889		)		—
Net investment (losses) gains	(177,174		)		68,653
Income tax benefit (expense)	37,207				(14,417		)
After-tax net investment (losses) gains	$	(139,967	)		$	54,236

Change in unrealized investment (losses) gains on available for sale securities:
Fixed maturity securities without allowance for expected credit losses	$	(326,416	)		$	174,494
Fixed maturity securities with allowance for expected credit losses	1,541				(69		)
Investment funds	(7,646		)		1,790
Other	(329		)		(6,955		)
Total change in unrealized investment (losses) gains	(332,850		)		169,260
Income tax benefit (expense)	73,869				(43,486		)
Noncontrolling interests	1				(47		)
After-tax change in unrealized investment (losses) gains of available for sale securities	$	(258,980	)		$	125,727

______________________

(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 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) The inclusion of the allowance for expected credit losses on investments commenced January 1, 2020 due to the adoption of ASU 2016-13. See Note 3 for more details.

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The following tables summarize all fixed maturity securities in an unrealized loss position at March 31, 2020 and December 31, 2019 by the length of time those securities have been continuously in an unrealized loss position:

	Less Than 12 Months								12 Months or Greater								Total
(In thousands)	Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses				Fair Value				Gross Unrealized Losses
March 31, 2020
U.S. government and government agency	$	13,308			$	13			$	7,145			$	45			$	20,453			$	58
State and municipal	640,570				11,306				74,998				1,673				715,568				12,979
Mortgage-backed securities	609,582				24,143				86,569				1,025				696,151				25,168
Asset-backed securities	2,014,456				108,100				614,876				79,890				2,629,332				187,990
Corporate	1,886,894				85,902				54,226				6,443				1,941,120				92,345
Foreign government	114,439				7,257				24,647				35,580				139,086				42,837
Fixed maturity securities	$	5,279,249			$	236,721			$	862,461			$	124,656			$	6,141,710			$	361,377
December 31, 2019
U.S. government and government agency	$	83,837			$	618			$	53,089			$	857			$	136,926			$	1,475
State and municipal	365,184				4,245				127,210				1,682				492,394				5,927
Mortgage-backed securities	301,358				2,281				180,148				3,220				481,506				5,501
Asset-backed securities	755,259				2,307				774,508				19,183				1,529,767				21,490
Corporate	307,367				3,148				121,470				5,172				428,837				8,320
Foreign government	164,536				32,028				107,266				61,645				271,802				93,673
Fixed maturity securities	$	1,977,541			$	44,627			$	1,363,691			$	91,759			$	3,341,232			$	136,386

Substantially all of the securities in an unrealized loss position are rated investment grade, except for the securities in the foreign government classification. In general, fair value in all classifications were negatively affected by market disruptions caused by COVID-19. A significant amount of the unrealized loss on foreign government securities is the result of changes in currency exchange rates.  

A summary of the Company’s non-investment grade fixed maturity securities that were in an unrealized loss position at March 31, 2020 is presented in the table below:

($ in thousands)	Number of Securities			Aggregate Fair Value				Gross Unrealized Loss
Foreign government	17			$	46,834			$	38,867
Corporate	15			55,989				7,293
Asset-backed securities	4			361				67
Mortgage-backed securities	13			14,213				1,484
Total	49			$	117,397			$	47,711

For fixed maturity securities that management does not intend to sell or to be required to sell, the portion of the decline in value that is considered to be due to credit factors is recognized in earnings, and the portion of the decline in value that is considered to be due to non-credit factors is recognized in other comprehensive (loss) income.

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The Company’s fixed maturity available for sale securities, equity securities and its arbitrage trading account securities are carried at fair value. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Quoted prices for similar assets or valuations based on inputs that are observable.

Level 3 - Estimates of fair value based on internal pricing methodologies using unobservable inputs. Unobservable inputs are only used to measure fair value to the extent that observable inputs are not available.

Substantially all of the Company’s fixed maturity securities were priced by independent pricing services. The prices provided by the independent pricing services are estimated based on observable market data in active markets utilizing pricing models and processes, which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, sector groupings, matrix pricing and reference data. The pricing services may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs are available for each security evaluation on any given day. The pricing services used by the Company have indicated that they will only produce an estimate of fair value if objectively verifiable information is available. The determination of whether markets are active or inactive is based upon the volume and level of activity for a particular asset class. The Company reviews the prices provided by pricing services for reasonableness and periodically performs independent price tests of a sample of securities to ensure proper valuation.

If prices from independent pricing services are not available for fixed maturity securities, the Company estimates the fair value. For Level 2 securities, the Company utilizes pricing models and processes which may include benchmark yields, sector groupings, matrix pricing, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, bids, offers and reference data. Where broker quotes are used, the Company generally requests two or more quotes and sets a price within the range of quotes received based on its assessment of the credibility of the quote and its own evaluation of the security. The Company generally does not adjust quotes received from brokers. For securities traded only in private negotiations, the Company determines fair value based primarily on the cost of such securities, which is adjusted to reflect prices of recent placements of securities of the same issuer, financial projections, credit quality and business developments of the issuer and other relevant information.

For Level 3 securities, the Company generally uses a discounted cash flow model to estimate the fair value of fixed maturity securities. The cash flow models are based upon assumptions as to prevailing credit spreads, interest rate and interest rate volatility, time to maturity and subordination levels. Projected cash flows are discounted at rates that are adjusted to reflect illiquidity, where appropriate.

    

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The following tables present the assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 by level:

(In thousands)	Total				Level 1				Level 2				Level 3
March 31, 2020
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	739,662			$	—			$	739,662			$	—
State and municipal	3,748,155				—				3,748,155				—
Mortgage-backed securities	1,455,440				—				1,455,440				—
Asset-backed securities	2,938,052				—				2,938,052				—
Corporate	3,978,517				—				3,978,517				—
Foreign government	727,489				—				727,489				—
Total fixed maturity securities available for sale	13,587,315				—				13,587,315				—
Equity securities:
Common stocks	146,658				137,791				—				8,867
Preferred stocks	209,444				—				202,939				6,505
Total equity securities	356,102				137,791				202,939				15,372
Arbitrage trading account	666,829				480,495				186,334				—
Total	$	14,610,246			$	618,286			$	13,976,588			$	15,372
Liabilities:
Trading account securities sold but not yet purchased	$	14,003			$	14,003			$	—			$	—
December 31, 2019
Assets:
Fixed maturity securities available for sale:
U.S. government and government agency	$	786,931			$	—			$	786,931			$	—
State and municipal	3,895,632				—				3,895,632				—
Mortgage-backed securities	1,625,594				—				1,625,594				—
Asset-backed securities	2,790,630				—				2,790,630				—
Corporate	4,156,415				—				4,156,415				—
Foreign government	847,076				—				847,076				—
Total fixed maturity securities available for sale	14,102,278				—				14,102,278				—
Equity securities:
Common stocks	166,805				157,752				—				9,053
Preferred stocks	313,815				—				307,310				6,505
Total equity securities	480,620				157,752				307,310				15,558
Arbitrage trading account	400,809				381,061				19,748				—
Total	$	14,983,707			$	538,813			$	14,429,336			$	15,558
Liabilities:
Trading account securities sold but not yet purchased	$	36,143			$	36,143			$	—			$	—

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The following tables summarize changes in Level 3 assets and liabilities for the three months ended March 31, 2020 and for the year ended December 31, 2019:

		Gains (Losses) Included in:
	(In thousands)	Beginning Balance				Earnings (Losses)				Other Comprehensive Income (Loss)				Impairments				Purchases				(Sales)				Paydowns / Maturities				Transfers In / (Out)				Ending Balance
	Three Months Ended March 31, 2020
	Assets:
	Equity securities:
	Common stocks	$	9,053			$	880			$	—			$	—			$	—			$	(1,066	)		$	—			$	—			$	8,867
	Preferred stocks	6,505				—				—				—				—				—				—				—				6,505
	Total	$	15,558			$	880			$	—			$	—			$	—			$	(1,066	)		$	—			$	—			$	15,372
	Year Ended December 31, 2019
	Assets:
	Fixed maturities securities available for sale:
	Asset-backed securities	$	99			$	(26	)		$	61			$	—			$	—			$	(134	)		$	—			$	—			$	—
	Total	99				(26		)		61				—				—				(134		)		—				—				—
	Equity securities:
	Common stocks	8,596				2,005								—				—				(1,548		)		—				—				9,053
	Preferred stocks	3,945				(42		)		—				—				2,602				—				—				—				6,505
	Total	12,541				1,963				—				—				2,602				(1,548		)		—				—				15,558
	Arbitrage trading account	17,308				(8,731		)		—				—				14,767				(38,233		)		—				14,889				—
	Total	$	29,948			$	(6,794	)		$	61			$	—			$	17,369			$	(39,915	)		$	—			$	14,889			$	15,558
	Liabilities:
	Trading account securities sold but not yet purchased	$	793			$	133			$	—			$	—			$	7,609			$	(8,535	)		$	—			$	—			$	—

For the quarter ended March 31, 2020, there were no securities transferred into or out of Level 3. For the year ended December 31, 2019, there were two common stocks transferred into Level 3 in the arbitrage trading account where publicly traded prices were no longer available, and both were sold by year end.

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The Company's reserves for losses and loss expenses are comprised of case reserves and incurred but not reported liabilities ("IBNR"). When a claim is reported, a case reserve is established for the estimated ultimate payment based upon known information about the claim. As more information about the claim becomes available over time, case reserves are adjusted up or down as appropriate. Reserves are also established on an aggregate basis to provide for IBNR liabilities and expected loss reserve development on reported claims.

Loss reserves included in the Company’s financial statements represent management’s best estimates based upon an actuarially derived point estimate and other considerations. The Company uses a variety of actuarial techniques and methods to derive an actuarial point estimate for each operating unit. These methods include paid loss development, incurred loss development, paid and incurred Bornhuetter-Ferguson methods and frequency and severity methods. In circumstances where one actuarial method is considered more credible than the others, that method is used to set the point estimate. The actuarial point estimate may also be based on a judgmental weighting of estimates produced from each of the methods considered. Industry loss experience is used to supplement the Company’s own data in selecting “tail factors” in areas where the Company’s own data is limited. The actuarial data is analyzed by line of business, coverage and accident or policy year, as appropriate, for each operating unit.

The establishment of the actuarially derived loss reserve point estimate also includes consideration of qualitative factors that may affect the ultimate losses. These qualitative considerations include, among others, the impact of re-underwriting initiatives, changes in the mix of business, changes in distribution sources and changes in policy terms and conditions.

The key assumptions used to arrive at the best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, and reported and paid loss emergence patterns. Expected loss ratios represent management’s expectation of losses at the time the business is priced and written, before any actual claims experience has emerged. This expectation is a significant determinant of the estimate of loss reserves for recently written business where there is little paid or incurred loss data to consider. Expected loss ratios are generally derived from historical loss ratios adjusted for the impact of rate changes, loss cost trends and known changes in the type of risks underwritten. Expected loss ratios are estimated for each key line of business within each operating unit. Expected loss cost inflation is particularly important for the long-tail lines, such as excess casualty, and claims with a high medical component, such as workers’ compensation. Reported and paid loss emergence patterns are used to project current reported or paid loss amounts to their ultimate settlement value. Loss development factors are based on the historical emergence patterns of paid and incurred losses, and are derived from the Company’s own experience and industry data. The paid loss emergence pattern is also significant to excess and assumed workers’ compensation reserves because those reserves are discounted to their estimated present value based upon such estimated payout patterns.

Loss frequency and severity are measures of loss activity that are considered in determining the key assumptions described in our discussion of loss and loss expense reserves, including expected loss ratios, rate of loss cost inflation and reported and paid loss emergence patterns. Loss frequency is a measure of the number of claims per unit of insured exposure, and loss severity is a measure of the average size of claims. Factors affecting loss frequency include the effectiveness of loss controls and safety programs and changes in economic activity or weather patterns. Factors affecting loss severity include changes in policy limits, retentions, rate of inflation and judicial interpretations.

Another factor affecting estimates of loss frequency and severity is the loss reporting lag, which is the period of time between the occurrence of a loss and the date the loss is reported to the Company. The length of the loss reporting lag affects our ability to accurately predict loss frequency (loss frequencies are more predictable for lines with short reporting lags) as well as the amount of reserves needed for incurred but not reported losses (less IBNR is required for lines with short reporting lags). As a result, loss reserves for lines with short reporting lags are likely to have less variation from initial loss estimates. For lines with short reporting lags, which include commercial automobile, primary workers’ compensation, other liability (claims-made) and property business, the key assumption is the loss emergence pattern used to project ultimate loss estimates from known losses paid or reported to date. For lines of business with long reporting lags, which include other liability (occurrence), products liability, excess workers’ compensation and liability reinsurance, the key assumption is the expected loss ratio since there is often little paid or incurred loss data to consider. Historically, the Company has experienced less variation from its initial loss estimates for lines of businesses with short reporting lags than for lines of business with long reporting lags.

The key assumptions used in calculating the most recent estimate of the loss reserves are reviewed each quarter and adjusted, to the extent necessary, to reflect the latest reported loss data, current trends and other factors observed.

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The table below provides a reconciliation of the beginning and ending reserve balances:

	March 31,
(In thousands)	2020				2019
Net reserves at beginning of period	$	10,697,998			$	10,248,883
Cumulative effect adjustment resulting from changes in accounting principles	5,927				—
Restated net reserves at beginning of period	10,703,925				10,248,883
Net provision for losses and loss expenses:
Claims occurring during the current year (1)	1,097,523				971,806
Increase in estimates for claims occurring in prior years (2) (3)	433				6,481
Loss reserve discount accretion	9,297				10,363
Total	1,107,253				988,650
Net payments for claims:
Current year	84,310				295,873
Prior years	864,064				567,756
Total	948,374				863,629
Foreign currency translation	(77,167		)		(163		)
Net reserves at end of period	10,785,637				10,373,741
Ceded reserves at end of period	1,946,878				1,719,369
Gross reserves at end of period	$	12,732,515			$	12,093,110

_______________________________________

(1) Claims occurring during the current year are net of loss reserve discounts of $3 million and $6 million for the three months ended March 31, 2020 and 2019, respectively.

(2) The change in estimates for claims occurring in prior years is net of loss reserve discount. On an undiscounted basis, the estimates for claims occurring in prior years decreased by $4 million and increased by $3 million for the three months ended March 31, 2020 and 2019, respectively.

(3) For certain retrospectively rated insurance policies and reinsurance agreements, reserve development is offset by additional or return premiums. Favorable development, net of additional and return premiums, was $4 million and $7 million for the three months ended March 31, 2020 and 2019, respectively.

One of the many ways in which the ongoing COVID-19 global pandemic may impact the Company’s results is through its impact on claim frequency and severity. Loss cost trends will be impacted directly by COVID-19 related claims filed in certain lines of business, as well as indirectly due to other impacts of COVID-19 associated with economic conditions, inflation, and social distancing and work from home rules, for example. These impacts could act to increase or decrease the overall loss cost trends and could have differing impacts on the Company's different lines of business. For certain lines of business, such as contingency and event cancellation, the Company has received reported claims related to COVID-19, and we expect additional claims to be reported in the future. Further, for workers’ compensation, several States have enacted rules, legislation or administrative orders creating the presumption that certain “essential” workers who contract COVID-19 did so through the course of their employment. Other States are considering similar actions, including with varying definitions of “essential” workers. The Company believes that such State actions will likely lead to increased workers’ compensation loss frequency and severity. As a result of these developments, the Company has estimated the potential COVID-19 impact to its workers’ compensation, contingency and event cancellation lines of business under a number of possible scenarios. Due to the rapidly evolving COVID-19 situation and the limited amount of available data, there is a high degree of uncertainty around these COVID-19 reserves. In addition, several States, through regulation, legislation and/or judicial action, are seeking to expand policy coverage terms beyond the policy’s intended coverage, including, for example, but not limited to, property coverages, where there are attempts to extend business interruption coverage where there is no physical damage or loss to property, and attempts to disregard policy exclusions for communicable disease. Policyholder losses arising from these State actions could exceed the reserves we have established for those related policies. For the three months ended March 31, 2020, the Company has recognized a best estimate preliminary reserve for COVID-19 related claims activity, net of reinsurance and inclusive of reinstatement premium, of approximately $67 million, of which $47 million relates to the Insurance segment and $20 million relates to the Reinsurance & Monoline Excess segment.

During the three months ended March 31, 2020, favorable prior year development (net of additional and return premiums) of $4.0 million included $7.0 million of favorable development for the Insurance segment, partially offset by $3.0 million of adverse development for the Reinsurance & Monoline Excess segment.

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The overall favorable development for the Insurance segment was primarily attributable to favorable development on workers’ compensation business, partially offset by adverse development on professional liability business. The favorable workers’ compensation development was spread across many accident years, including prior to 2010, and was especially significant in accident years 2018 and 2019. The favorable workers’ compensation development reflects a continuation of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). In addition, ongoing workers’ compensation claims management efforts, including active medical case management and use of networks and specialty vendors to control medical and pharmaceutical benefit costs, have added to the Company’s favorable workers’ compensation prior year development. The adverse professional liability development was mainly concentrated in accident years 2016 and 2017, but was also spread to a lesser degree across other accident years. The development mainly relates to directors and officers and lawyers professional liability lines of business, and was driven by a higher than expected number of large losses being reported in the period. The Company also experienced a small amount of adverse prior year development during the first quarter 2020 on general liability business stemming from large losses in its excess and surplus lines book of business, mainly in accident years 2016 and 2017.

The adverse development for the Reinsurance & Monoline Excess segment was mainly driven by non-proportional reinsurance assumed liability business written in the U.K., primarily from accident years 2015 through 2019. The development was driven by a higher than expected number of reported large losses.

During the three months ended March 31, 2019, favorable prior year development (net of additional and return premiums) of $6.7 million included $9.6 million of favorable development for the Insurance segment, offset by $2.9 million of adverse development for the Reinsurance & Monoline Excess segment. The overall favorable development for the Insurance segment was primarily attributable to favorable development on workers’ compensation business, partially offset by adverse development on other liability business and professional liability business. The favorable workers’ compensation development was spread across many accident years, including prior to 2009, but was most significant in accident years 2015 through 2017. The favorable workers’ compensation development reflects a continuation of the benign loss cost trends experienced during recent years, particularly the favorable claim frequency trends (i.e., number of reported claims per unit of exposure). The adverse other liability development was mainly related to accident years 2014 through 2018. It was driven by a higher than expected number of large losses being reported in the period, including both general liability and professional liability losses. The adverse development for the Reinsurance & Monoline Excess segment was mainly driven by U.S. casualty facultative business from accident years 2009 and prior related to construction projects.

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

	March 31, 2020								December 31, 2019
(In thousands)	Carrying Value				Fair Value				Carrying Value				Fair Value
Assets:
Fixed maturity securities	$	13,666,067			$	13,678,391			$	14,180,961			$	14,194,955
Equity securities	356,102				356,102				480,620				480,620
Arbitrage trading account	666,829				666,829				400,809				400,809
Loans receivable	87,058				91,074				91,799				94,613
Cash and cash equivalents	965,012				965,012				1,023,710				1,023,710
Trading account receivables from brokers and clearing organizations	132,928				132,928				423,543				423,543
Due from broker	11,476				11,476				—				—
Liabilities:
Due to broker	—				—				27,116				27,116
Trading account securities sold but not yet purchased	14,003				14,003				36,143				36,143
Subordinated debentures	1,198,951				1,092,780				1,198,704				1,274,088
Senior notes and other debt	1,432,117				1,454,081				1,427,575				1,582,290

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The following is a summary of insurance and reinsurance financial information:

	For the Three Months Ended March 31,
(In thousands)	2020				2019
Written premiums:
Direct	$	1,964,490			$	1,829,815
Assumed	266,882				216,415
Ceded	(385,526		)		(336,629		)
Total net premiums written	$	1,845,846			$	1,709,601
Earned premiums:
Direct	$	1,829,713			$	1,723,610
Assumed	228,214				188,191
Ceded	(366,509		)		(318,945		)
Total net premiums earned	$	1,691,418			$	1,592,856
Ceded losses and loss expenses incurred	$	235,183			$	173,046
Ceded commissions earned	$	81,045			$	71,017

The following table presents the rollforward of the allowance for expected credit losses for premiums and fees receivable for the period ended March 31, 2020:

(In thousands)
Allowance for expected credit losses at January 1, 2020	$	19,823
Cumulative effect adjustment resulting from changes in accounting principles	1,270
Provision for expected credit losses	431
Allowance for expected credit losses at March 31, 2020	$	21,524

The Company reinsures a portion of its insurance exposures in order to reduce its net liability on individual risks and catastrophe losses. The Company also cedes premiums to state assigned risk plans and captive insurance companies. Estimated amounts due from reinsurers are reported net of an allowance for expected credit losses. The following table presents the rollforward of the allowance for expected credit losses associated with due from reinsurers for the period ended March 31, 2020:

(In thousands)
Allowance for expected credit losses at January 1, 2020	$	690
Cumulative effect adjustment resulting from changes in accounting principles	5,927
Provision for expected credit losses	183
Allowance for expected credit losses at March 31, 2020	$	6,800

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Pursuant to its stock incentive plan, the Company may issue restricted stock units ("RSUs") to employees of the Company and its subsidiaries. The RSUs generally vest three to five years from the award date and are subject to other vesting and forfeiture provisions contained in the award agreement. RSUs are expensed pro-ratably over the vesting period. RSU expenses were $12 million and $15 million for the three months ended March 31, 2020 and 2019, respectively. A summary of RSUs issued in the three months ended March 31, 2020 and 2019 follows:

($ in thousands)	Units			Fair Value
2020	724			$	57
2019	1,106			$	60

In the ordinary course of business, the Company is subject to disputes, litigation and arbitration arising from its insurance and reinsurance businesses. These matters are generally related to insurance and reinsurance claims and are considered in the establishment of loss and loss expense reserves. In addition, the Company may also become involved in legal actions which seek extra-contractual damages, punitive damages or penalties, including claims alleging bad faith in handling of insurance claims. The Company expects its ultimate liability with respect to such matters will not be material to its financial condition. However, adverse outcomes on such matters are possible, from time to time, and could be material to the Company’s results of operations in any particular financial reporting period.

Lessees are required to recognize a right-of-use asset and a lease liability for leases with terms of more than 12 months on the balance sheet. All leases disclosed within this footnote are classified as operating leases. Recognized right-of-use asset and lease liability are reported within other assets and other liabilities, respectively, in the consolidated balance sheet. Lease expense is reported in other operating costs and expenses in the consolidated statement of income and accounted for on a straight-line basis over the lease term.

To determine the discount rate used to calculate present value of future minimum lease payments, the Company uses its incremental borrowing rate during the lease commencement period in line with the respective lease duration. In certain cases, the Company has the option to renew the lease. Lease renewal future payments are included in the present value of the future minimum lease payments when the Company determines it is reasonably certain to renew.

The main leases entered into by the Company are for office space used by the Company’s operating units across the world. Additionally, the Company, to a lesser extent, has equipment leases mainly for office equipment. Further information relating to operating lease expense and other operating lease information are as follows:

	For the Three Months Ended March 31,
(In thousands)	2020				2019
Leases:
Lease cost	$	11,236			$	11,555
Cash paid for amounts included in the measurement of lease liabilities reported in operating cash flows	$	10,830			$	11,657
Right-of-use assets obtained in exchange for new lease liabilities	$	1,612			$	4,966

	As of March 31,
($ in thousands)	2020				2019
Right-of-use assets	$	184,544			$	185,012
Lease liabilities	$	224,189			$	215,008
Weighted-average remaining lease term	6.95 years				6.8 years
Weighted-average discount rate	5.95		%		5.95		%

    

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Contractual maturities of the Company’s future minimum lease payments are as follows:

(In thousands)	March 31, 2020
Contractual Maturities:
2020	$	36,912
2021	45,262
2022	41,267
2023	37,602
2024	31,357
Thereafter	78,532
Total undiscounted future minimum lease payments	270,932
Less: Discount impact	(46,743		)
Total lease liability	$	224,189

The Company’s reportable segments include the following two business segments, plus a corporate segment:

•	Insurance - predominantly commercial insurance business, including excess and surplus lines, admitted lines and specialty personal lines throughout the United States, as well as insurance business in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia.

•	Reinsurance & Monoline Excess - reinsurance business on a facultative and treaty basis, primarily in the United States, the United Kingdom, Continental Europe, Australia, the Asia-Pacific Region and South Africa, as well as operations that solely retain risk on an excess basis.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Income tax expense and benefits are calculated based upon the Company's overall effective tax rate.

Summary financial information about the Company's reporting segments is presented in the following tables. Income (loss) before income taxes by segment includes allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.

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	Revenues
(In thousands)	Earned Premiums (1)				Investment Income				Other				Total (2)				Pre-Tax (Loss) Income				Net (Loss) Income to Common Stockholders
Three months ended March 31, 2020
Insurance	$	1,484,955			$	123,458			$	8,473			$	1,616,886			$	175,947			$	140,117
Reinsurance & Monoline Excess	206,463				37,710				—				244,173				36,514				29,187
Corporate, other and eliminations (3)	—				13,595				113,130				126,725				(41,755		)		(33,755		)
Net investment losses	—				—				(177,174		)		(177,174		)		(177,174		)		(139,967		)
Total	$	1,691,418			$	174,763			$	(55,571	)		$	1,810,610			$	(6,468	)		$	(4,418	)
Three months ended March 31, 2019
Insurance	$	1,427,034			$	100,041			$	13,244			$	1,540,319			$	184,516			$	145,993
Reinsurance & Monoline Excess	165,822				39,574				—				205,396				44,855				35,525
Corporate, other and eliminations (3)	—				18,639				104,015				122,654				(68,585		)		(55,032		)
Net investment gains	—				—				68,653				68,653				68,653				54,236
Total	$	1,592,856			$	158,254			$	185,912			$	1,937,022			$	229,439			$	180,722

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(1)Certain amounts included in earned premiums of each segment are related to inter-segment transactions.

(2)Revenues for Insurance from foreign countries for the three months ended March 31, 2020 and 2019 were $168 million and $170 million, respectively. Revenues for Reinsurance & Monoline Excess from foreign countries for the three months ended March 31, 2020 and 2019 were $69 million and $59 million, respectively.

(3)	Corporate, other and eliminations represent corporate revenues and expenses that are not allocated to business segments.

Identifiable Assets

(In thousands)	March 31, 2020				December 31, 2019
Insurance	$	19,485,407			$	20,005,802
Reinsurance & Monoline Excess	4,405,637				4,710,819
Corporate, other and eliminations	2,198,885				1,913,409
Consolidated	$	26,089,929			$	26,630,030

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Net premiums earned by major line of business are as follows:

	For the Three Months Ended March 31,
(In thousands)	2020				2019
Insurance:
Other liability	$	547,129			$	490,661
Workers’ compensation	301,600				326,676
Short-tail lines (1)	295,478				289,091
Commercial automobile	189,643				180,925
Professional liability	151,105				139,681
Total Insurance	1,484,955				1,427,034
Reinsurance & Monoline Excess:
Casualty reinsurance	122,731				90,830
Monoline excess (2)	42,161				38,981
Property reinsurance	41,571				36,011
Total Reinsurance & Monoline Excess	206,463				165,822
Total	$	1,691,418			$	1,592,856

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

(2) Monoline excess includes operations that solely retain risk on an excess basis.

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•	Insurance - gross premiums increased 7% to $1,942 million in 2020 from $1,810 million in 2019. Gross premiums increased $97 million (17%) for other liability, $35 million (15%) for professional liability and $44 million (11%) for short-tail lines, and decreased $33 million (9%) for workers' compensation and $11 million (5%) for commercial auto.

•	Reinsurance & Monoline Excess - gross premiums increased 23% to $290 million in 2020 from $236 million in 2019. Gross premiums increased $39 million (36%) for casualty reinsurance, $7 million (14%) for property reinsurance and $8 million (10%) for monoline excess.

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Insurance - The loss ratio was 65.1% in 2020 and 62.2% in 2019. Catastrophe losses were $66 million in 2020 compared with $13 million in 2019. The Company reflected a best estimate (net of reinsurance) based upon available information for COVID-19-related losses of approximately $47 million, which was included in catastrophe losses and primarily related to workers’ compensation, contingency and event cancellation coverage. Favorable prior year reserve development was $7 million in 2020 and $10 million in 2019. The loss ratio excluding catastrophe losses and prior year reserve development decreased 0.8 points to 61.2% in 2020 from 62.0% in 2019.

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Reinsurance & Monoline Excess - The loss ratio was 68.3% in 2020 and 60.7% in 2019. Catastrophe losses were $22 million in 2020 compared with $42 thousand in 2019. The Company reflected a best estimate (net of reinsurance) based upon available information for COVID-19-related losses of approximately $20 million, which was included in catastrophe losses and primarily related to excess workers’ compensation. Adverse prior year reserve development was $3 million in both 2020 and 2019. The loss ratio excluding catastrophe losses and prior year reserve development decreased 3.0 points to 56.1% in 2020 from 59.1% in 2019.

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