Non-GAAP Financial Measures Reconciliation (Unaudited)

Consolidated Key Ratios

Year ended December 31, 2021 Year ended December 31, 2020
Insurance Reinsurance Total Insurance Reinsurance Total
Current accident year loss ratio excluding catastrophe and weather-related losses 51.4% 59.9% 55.1% 55.1% 60.6% 57.7%
Catastrophe and weather-related losses ratio 6.4% 13.3% 9.5% 19.1% 16.2% 17.7%
Current accident year loss ratio 57.8% 73.2% 64.6% 74.2% 76.8% 75.4%
Prior year reserve development ratio -0.7% -0.6% -0.7% -0.4% -0.4% -0.3%
Net losses and loss expenses ratio 57.1% 72.6% 63.9% 73.8% 76.4% 75.1%
Acquisition cost ratio 18.3% 21.3% 19.6% 20.1% 22.6% 21.3%
Underwriting-related general and administrative expense ratio 16.2% 5.1% 14.0% 16.5% 4.8% 13.2%
Combined ratio 91.6% 99.0% 97.5% 110.4% 103.8% 109.6%
Current accident year combined ratio, excluding catastrophe and weather-related losses 85.9% 86.3% 88.7% 91.7% 88.0% 92.2%

Operating Income And Operating Return On Average Common Equity

(in thousands, except per share amounts)

Year ended December 31
2021 2020
Net income (loss) available (attributable) to common shareholders $588,359 $(150,674)
Net investment gains[a] (134,279) (129,133)
Foreign exchange losses[b] 315 81,069
Reorganization expenses[c] - 7,881
Interest in (income) loss of equity method investments[d] (32,084) 3,612
Income tax expense 14,166 13,023
Operating income (loss) $436,477 $(174,222)
Earnings (loss) per diluted common share $6.90 $(1.79)
Net investment gains (1.57) (1.53)
Foreign exchange losses - 0.96
Reorganization expenses - 0.09
Interest in (income) loss of equity method investments (0.38) 0.04
Income tax expense 0.17 0.15
Operating income (loss) per diluted common share $5.12 $(2.08)
Weighted average diluted common shares outstanding 85,291 84,262
Average common shareholders' equity $4,803,175 $4,757,351
Annualized return on average common equity 12.2% -3.2%
Annualized operating return on average common equity[e] 9.1% -3.7%

[a] Tax expense (benefit) of $11 million and $18 million for the years ended December 31, 2021 and 2020, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.

[b] Tax expense (benefit) of $3 million and $(4) million for the years ended December 31, 2021 and 2020, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.

[c] Tax expense (benefit) of $(1) million for the year ended December 31, 2020. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

[d] Tax expense (benefit) of $nil for the years ended December 31, 2021 and 2020. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.

[e] Annualized operating return on average common equity (“operating ROACE”) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to annualized ROACE, the most comparable GAAP financial measure is presented in the table above, and a discussion of the rationale for its presentation is provided later in this report.

Consolidated Segmental Data

(in thousands)

Year ended December 31, 2021 Year ended December 31, 2020
Insurance Reinsurance Total Insurance Reinsurance Total
Gross premiums written $4,863,232 $2,822,752 $7,685,984 $4,018,399 $2,808,539 $6,826,938
Net premiums written 2,894,885 2,031,739 4,926,624 2,357,501 1,978,908 4,336,409
Net premiums earned 2,651,339 2,058,511 4,709,850 2,299,038 2,072,271 4,371,309
Other insurance related income (loss) 1,662 21,633 23,295 2,647 (10,736) (8,089)
Net losses and loss expenses (1,514,998) (1,493,785) (3,008,783) (1,697,014) (1,584,238) (3,281,252)
Acquisition costs (484,344) (437,490) (912,834) (461,533) (467,984) (929,517)
Underwriting-related general and administrative expenses[a] (429,282) (107,552) (536,834) (378,839) (99,129) (477,968)
Underwriting income (loss)[b] $224,377 $41,317 $265,694 $(235,701) $(89,816) $(325,517)
Net investment income 454,301 349,601
Net investment gains 134,279 129,133
Corporate expenses[a] (126,470) (101,822)
Foreign exchange losses (315) (81,069)
Interest expense and financing costs (62,302) (75,049)
Reorganization expenses - (7,881)
Amortization of value and business acquired (3,854) (5,139)
Amortization of intangible assets (12,424) (11,390)
Income (loss) before income taxes and interest in income (loss) of equity method investments 648,909 (129,133)
Income tax (expense) benefit (62,384) 12,321
Interest in income (loss) of equity method investments 32,084 (3,612)
Net income (loss) 618,609 (120,424)
Preferred share dividends 30,250 30,250
Net income (loss) available (attributable) to common shareholders $588,359 $(150,674)

[a] Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $126 million and $102 million for the years ended December 31, 2021 and 2020, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.

[b] Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented in the table above, and a discussion of the rationale for its presentation is provided later in this report.