Reconciliation of GAAP Measures to Non-GAAP Measures

Management utilizes financial measures not in accordance with GAAP to monitor the Company's insurance operations and investment portfolio. The Company believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the Company's operating performance. Reconciliations of these measures to the most comparable GAAP measures follow below.

Reconciliation of Net Income (Loss) to Core Income (Loss)

Core income (loss) is calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and gains or losses resulting from pension settlement transactions. Net investment gains or losses are excluded from the calculation of core income (loss) because they are generally driven by economic factors that are not necessarily reflective of our primary operations. The calculation of core income (loss) excludes gains or losses resulting from pension settlement transactions as they result from decisions regarding our defined benefit pension plans which are unrelated to our primary operations. Management monitors core income (loss) for each business segment to assess segment performance. Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure.

 
                     Results for the Three Months              Results for the Nine Months 
                          Ended September 30                        Ended September 30 
               ---------------------------------------- 
($ millions)          2024                 2023                 2024                 2023 
               -------------------  -------------------  -------------------  ------------------- 
Net income     $               283  $               258  $               938  $               838 
 Less: Net 
  investment 
  losses                       (7)                 (31)                 (33)                 (84) 
 Less: 
  Pension 
  settlement 
  transaction 
  losses                       (3)                   --                  (3)                   -- 
               -------------------  -------------------  -------------------  ------------------- 
Core income    $               293  $               289  $               974  $               922 
               ===================  ===================  ===================  =================== 
 

Reconciliation of Net Income (Loss) per Diluted Share to Core Income (Loss) per Diluted Share

Core income (loss) per diluted share provides management and investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core income (loss). Core income (loss) per diluted share is core income (loss) on a per diluted share basis.

 
                     Results for the Three Months              Results for the Nine Months 
                          Ended September 30                        Ended September 30 
               ---------------------------------------- 
                      2024                 2023                 2024                 2023 
               -------------------  -------------------  -------------------  ------------------- 
Net income 
 per diluted 
 share         $              1.04  $              0.95  $              3.44  $              3.08 
 Less: Net 
  investment 
  losses                    (0.03)               (0.11)               (0.12)               (0.31) 
 Less: 
  Pension 
  settlement 
  transaction 
  losses                    (0.01)                   --               (0.01)                   -- 
               -------------------  -------------------  -------------------  ------------------- 
Core income 
 per diluted 
 share         $              1.08  $              1.06  $              3.57  $              3.39 
               ===================  ===================  ===================  =================== 
 

Reconciliation of Net Income (Loss) to Underwriting Gain (Loss) and Underlying Underwriting Gain (Loss)

Underwriting gain (loss) is deemed to be a non-GAAP measure and is calculated pretax as net earned premiums less total insurance expenses, which includes insurance claims and policyholders' benefits, amortization of deferred acquisition costs and other insurance related expenses. Net income (loss) is the most directly comparable GAAP measure. Management believes some investors may find this measure useful to evaluate the profitability, before tax, derived from our underwriting activities which are managed separately from our investing activities.

Underlying underwriting gain (loss) is deemed to be a non-GAAP measure that represents pretax underwriting results excluding catastrophe losses and development-related items. Management believes some investors may find this measure useful to evaluate profitability, before tax, of our underwriting activities, excluding the impact of catastrophe losses which are unpredictable as to timing and amount, and development-related items as they are not indicative of our current year underwriting performance.

 
                                              Results for the Three Months Ended 
                                                      September 30, 2024 
                       -------------------------------------------------------------------------------- 
                                                                                         Property & 
                            Specialty           Commercial         International          Casualty 
                       -------------------  ------------------  -------------------  ------------------ 
(In millions) 
Net income              $              167  $              132  $                34  $              333 
 Net investment 
  losses, after tax                      4                   7                    2                  13 
Core income             $              171  $              139  $                36  $              346 
 Net investment 
  income                             (157)               (183)                 (32)               (372) 
 Non-insurance 
  warranty (revenue) 
  expense                             (14)                  --                   --                (14) 
 Other (revenue) 
  expense, including 
  interest expense                      12                   3                  (8)                   7 
 Income tax expense 
  on core income                        47                  38                   16                 101 
                       -------------------  ------------------  -------------------  ------------------ 
Underwriting gain 
 (loss)                                 59                 (3)                   12                  68 
                       -------------------  ------------------  -------------------  ------------------ 
 Effect of 
  catastrophe losses                    --                 127                   16                 143 
 Effect of favorable 
  development-related 
  items                                 --                  --                  (2)                 (2) 
                       -------------------  ------------------  -------------------  ------------------ 
Underlying 
 underwriting gain     $                59  $              124  $                26  $              209 
                       ===================  ==================  ===================  ================== 
 
 
                                              Results for the Three Months Ended 
                                                      September 30, 2023 
                       -------------------------------------------------------------------------------- 
                                                                                         Property & 
                            Specialty           Commercial         International          Casualty 
                       -------------------  ------------------  -------------------  ------------------ 
(In millions) 
Net income              $              165  $              117  $                40  $              322 
 Net investment 
  losses, after tax                     13                  16                   --                  29 
Core income             $              178  $              133  $                40  $              351 
 Net investment 
  income                             (136)               (156)                 (26)               (318) 
 Non-insurance 
  warranty (revenue) 
  expense                             (21)                  --                   --                (21) 
 Other (revenue) 
  expense, including 
  interest expense                      13                   2                    7                  22 
 Income tax expense 
  on core income                        49                  34                   14                  97 
                       -------------------  ------------------  -------------------  ------------------ 
Underwriting gain                       83                  13                   35                 131 
                       -------------------  ------------------  -------------------  ------------------ 
 Effect of 
  catastrophe losses                    --                  87                    7                  94 
 Effect of favorable 
  development-related 
  items                                (5)                  --                   --                 (5) 
                       -------------------  ------------------  -------------------  ------------------ 
Underlying 
 underwriting gain     $                78  $              100  $                42  $              220 
                       ===================  ==================  ===================  ================== 
 
 
                                              Results for the Nine Months Ended 
                                                      September 30, 2024 

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November 04, 2024 06:00 ET (11:00 GMT)