Ireland
(State or other jurisdiction of
incorporation or organization)
|
|
98-0665416
(I.R.S. Employer Identification No.)
|
XL House, 8 St. Stephen's Green,
Dublin 2, Ireland
(Address of principal executive offices and zip code)
|
|
+353 (1) 400-5500
(Registrant’s telephone number, including area code) |
Title of each class
|
|
Name of each exchange on which registered
|
Ordinary Shares, Par Value $0.01 per Share
|
|
New York Stock Exchange
|
XLIT Ltd. 2.30% Senior Notes due 2018
|
|
New York Stock Exchange
|
XLIT Ltd. 5.75% Senior Notes due 2021
|
|
New York Stock Exchange
|
XLIT Ltd. 5.25% Senior Notes due 2043
|
|
New York Stock Exchange
|
|
|
Page
|
Business
|
||
Risk Factors
|
||
Unresolved Staff Comments
|
||
Properties
|
||
Legal Proceedings
|
||
Mine Safety Disclosures
|
||
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
||
Selected Financial Data
|
||
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
||
Quantitative and Qualitative Disclosures About Market Risk
|
||
Financial Statements and Supplementary Data
|
||
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
||
Controls and Procedures
|
||
Other Information
|
||
Directors, Executive Officers and Corporate Governance
|
||
Executive Compensation
|
||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
||
Certain Relationships and Related Transactions, and Director Independence
|
||
Principal Accounting Fees and Services
|
||
Exhibits and Financial Statement Schedules
|
ITEM 1.
|
|
BUSINESS
|
(U.S. dollars in thousands)
|
Gross Premiums Written
|
|
Percentage Change
|
||||||||||||||
2013
|
|
2012
|
|
2011
|
|
2013 to 2012
|
|
2012 to 2011
|
|||||||||
Insurance
|
$
|
5,523,181
|
|
|
$
|
5,166,973
|
|
|
$
|
4,824,665
|
|
|
6.9
|
%
|
|
7.1
|
%
|
Reinsurance
|
1,893,611
|
|
|
2,008,157
|
|
|
2,073,619
|
|
|
(5.7
|
)%
|
|
(3.2
|
)%
|
|||
Life operations
|
324,343
|
|
|
355,753
|
|
|
394,555
|
|
|
(8.8
|
)%
|
|
(9.8
|
)%
|
|||
Total
|
$
|
7,741,135
|
|
|
$
|
7,530,883
|
|
|
$
|
7,292,839
|
|
|
2.8
|
%
|
|
3.3
|
%
|
(U.S. dollars in thousands)
|
2013
|
|
2012 (1)
|
|
2011 (1)
|
||||||||||||||||||||||||||||||
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|||||||||||||||||||
Professional
|
$
|
1,465,689
|
|
|
$
|
1,161,045
|
|
|
$
|
1,370,196
|
|
|
$
|
1,460,018
|
|
|
$
|
1,395,694
|
|
|
$
|
1,350,319
|
|
|
$
|
1,377,560
|
|
|
$
|
1,278,724
|
|
|
$
|
1,287,231
|
|
Casualty
|
1,975,330
|
|
|
1,434,967
|
|
|
1,389,851
|
|
|
1,745,338
|
|
|
1,254,161
|
|
|
1,165,753
|
|
|
1,504,203
|
|
|
1,035,458
|
|
|
998,326
|
|
|||||||||
Property
|
875,773
|
|
|
568,575
|
|
|
544,278
|
|
|
782,339
|
|
|
483,682
|
|
|
489,739
|
|
|
858,839
|
|
|
499,622
|
|
|
464,576
|
|
|||||||||
Specialty
|
906,650
|
|
|
746,517
|
|
|
732,042
|
|
|
892,088
|
|
|
738,655
|
|
|
708,568
|
|
|
871,562
|
|
|
723,048
|
|
|
702,604
|
|
|||||||||
Other (2)
|
299,739
|
|
|
242,989
|
|
|
231,310
|
|
|
287,190
|
|
|
200,319
|
|
|
210,257
|
|
|
212,501
|
|
|
170,812
|
|
|
210,990
|
|
|||||||||
Total
|
$
|
5,523,181
|
|
|
$
|
4,154,093
|
|
|
$
|
4,267,677
|
|
|
$
|
5,166,973
|
|
|
$
|
4,072,511
|
|
|
$
|
3,924,636
|
|
|
$
|
4,824,665
|
|
|
$
|
3,707,664
|
|
|
$
|
3,663,727
|
|
(1)
|
Certain reclassifications have been made to conform to current year presentation.
|
(2)
|
Other includes excess and surplus, surety, structured indemnity and certain other discontinued lines.
|
(U.S. dollars in thousands)
|
2013
|
|
2012 (1)
|
|
2011 (1)
|
||||||||||||||||||||||||||||||
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|||||||||||||||||||
Casualty - professional lines
|
$
|
199,159
|
|
|
$
|
199,153
|
|
|
$
|
206,169
|
|
|
$
|
221,354
|
|
|
$
|
221,355
|
|
|
$
|
213,324
|
|
|
$
|
217,389
|
|
|
$
|
217,389
|
|
|
$
|
213,949
|
|
Casualty - other lines
|
332,153
|
|
|
330,681
|
|
|
312,156
|
|
|
332,563
|
|
|
330,714
|
|
|
311,166
|
|
|
292,507
|
|
|
290,962
|
|
|
256,853
|
|
|||||||||
Property catastrophe
|
556,493
|
|
|
498,997
|
|
|
492,568
|
|
|
537,087
|
|
|
473,373
|
|
|
463,975
|
|
|
461,742
|
|
|
404,447
|
|
|
387,523
|
|
|||||||||
Other property
|
587,278
|
|
|
545,846
|
|
|
561,105
|
|
|
653,513
|
|
|
622,855
|
|
|
613,291
|
|
|
847,816
|
|
|
583,100
|
|
|
587,611
|
|
|||||||||
Marine, energy, aviation & satellite
|
91,997
|
|
|
76,241
|
|
|
94,797
|
|
|
169,885
|
|
|
153,948
|
|
|
147,362
|
|
|
156,161
|
|
|
141,924
|
|
|
130,855
|
|
|||||||||
Other (2)
|
126,531
|
|
|
98,971
|
|
|
79,627
|
|
|
93,755
|
|
|
82,263
|
|
|
92,224
|
|
|
98,004
|
|
|
87,902
|
|
|
86,594
|
|
|||||||||
Total
|
$
|
1,893,611
|
|
|
$
|
1,749,889
|
|
|
$
|
1,746,422
|
|
|
$
|
2,008,157
|
|
|
$
|
1,884,508
|
|
|
$
|
1,841,342
|
|
|
$
|
2,073,619
|
|
|
$
|
1,725,724
|
|
|
$
|
1,663,385
|
|
(1)
|
Certain reclassifications have been made to conform to current year presentation.
|
(2)
|
Other includes whole account contracts, surety and other lines.
|
(U.S. dollars
in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||||||||||||||||||||||||||
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|||||||||||||||||||
Annuity
|
$
|
150,008
|
|
|
$
|
122,715
|
|
|
$
|
122,715
|
|
|
$
|
155,256
|
|
|
$
|
126,912
|
|
|
$
|
126,912
|
|
|
$
|
161,800
|
|
|
$
|
132,232
|
|
|
$
|
132,232
|
|
Other Life
|
174,335
|
|
|
172,707
|
|
|
172,707
|
|
|
200,497
|
|
|
197,520
|
|
|
197,547
|
|
|
232,755
|
|
|
230,130
|
|
|
230,786
|
|
|||||||||
Total
|
$
|
324,343
|
|
|
295,422
|
|
|
$
|
295,422
|
|
|
$
|
355,753
|
|
|
$
|
324,432
|
|
|
$
|
324,459
|
|
|
$
|
394,555
|
|
|
$
|
362,362
|
|
|
$
|
363,018
|
|
(U.S. dollars in thousands)
|
GAAP
|
|
Regulatory
|
|
Collateral - Secured Accounts/Trusts
|
|
Collateral - LOC
|
||||||||
Traditional Life
|
$
|
827,341
|
|
|
$
|
1,064,144
|
|
|
$
|
253,296
|
|
|
$
|
660,758
|
|
Annuities
|
3,976,475
|
|
|
4,930,948
|
|
|
5,036,698
|
|
|
—
|
|
||||
Total future policy benefit reserve
|
$
|
4,803,816
|
|
|
$
|
5,995,092
|
|
|
$
|
5,289,994
|
|
|
$
|
660,758
|
|
Year ended December 31,
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Unpaid losses and loss expenses at the beginning of the year
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
|
$
|
20,531,607
|
|
Unpaid losses and loss expenses recoverable
|
3,361,703
|
|
|
3,629,940
|
|
|
3,649,290
|
|
|||
Net unpaid losses and loss expenses at the beginning of the year
|
$
|
17,122,418
|
|
|
$
|
16,983,961
|
|
|
$
|
16,882,317
|
|
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
4,021,353
|
|
|
4,081,376
|
|
|
4,363,258
|
|
|||
Prior years
|
(289,889
|
)
|
|
(315,894
|
)
|
|
(284,867
|
)
|
|||
Total net incurred losses and loss expenses
|
$
|
3,731,464
|
|
|
$
|
3,765,482
|
|
|
$
|
4,078,391
|
|
Exchange rate effects
|
40,587
|
|
|
156,217
|
|
|
(130,545
|
)
|
|||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
425,254
|
|
|
416,844
|
|
|
589,870
|
|
|||
Prior years
|
3,402,885
|
|
|
3,366,398
|
|
|
3,256,332
|
|
|||
Total net paid losses
|
$
|
3,828,139
|
|
|
$
|
3,783,242
|
|
|
$
|
3,846,202
|
|
Net unpaid losses and loss expenses at the end of the year
|
17,066,330
|
|
|
17,122,418
|
|
|
16,983,961
|
|
|||
Unpaid losses and loss expenses recoverable
|
3,414,735
|
|
|
3,361,703
|
|
|
3,629,940
|
|
|||
Unpaid losses and loss expenses at the end of the year
|
$
|
20,481,065
|
|
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Insurance
|
$
|
11,512,569
|
|
|
$
|
11,384,854
|
|
Reinsurance
|
5,553,761
|
|
|
5,737,564
|
|
||
Net unpaid losses and loss expenses
|
$
|
17,066,330
|
|
|
$
|
17,122,418
|
|
Gross
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Unpaid losses and loss expenses at January 1
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
|
$
|
20,531,607
|
|
Gross (favorable) adverse development of those reserves during the year
|
(317,753
|
)
|
|
(413,764
|
)
|
|
(273,444
|
)
|
|||
Unpaid losses and loss expenses reserves re-estimated at December 31
|
$
|
20,166,368
|
|
|
$
|
20,200,137
|
|
|
$
|
20,258,163
|
|
Net
(U.S. dollars in thousands)
|
|
|
|
|
|
||||||
Unpaid losses and loss expenses at January 1
|
$
|
17,122,418
|
|
|
$
|
16,983,961
|
|
|
$
|
16,882,317
|
|
Net (favorable) adverse development of those reserves during the year
|
(289,889
|
)
|
|
(315,894
|
)
|
|
(284,867
|
)
|
|||
Unpaid losses and loss expenses reserves re-estimated at December 31
|
$
|
16,832,529
|
|
|
$
|
16,668,067
|
|
|
$
|
16,597,450
|
|
Gross:
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance
|
$
|
(132,825
|
)
|
|
$
|
(247,232
|
)
|
|
$
|
23,125
|
|
Reinsurance
|
(184,928
|
)
|
|
(166,532
|
)
|
|
(296,569
|
)
|
|||
Total
|
$
|
(317,753
|
)
|
|
$
|
(413,764
|
)
|
|
$
|
(273,444
|
)
|
Net:
|
|
|
|
|
|
||||||
Insurance
|
$
|
(102,039
|
)
|
|
$
|
(140,066
|
)
|
|
$
|
(76,516
|
)
|
Reinsurance
|
(187,850
|
)
|
|
(175,828
|
)
|
|
(208,351
|
)
|
|||
Total
|
$
|
(289,889
|
)
|
|
$
|
(315,894
|
)
|
|
$
|
(284,867
|
)
|
•
|
Oversees ERM activities, including the risk management framework employed by management. In light of the overall risk management framework, the RFC (i) reviews the methodology for establishing our overall risk capacity; (ii) reviews the policies for the establishment of risk limit frameworks, and adherence to such limits; and (iii) reviews and approves enterprise risk limits.
|
•
|
Oversees our compliance with any significant enterprise risk limits, authorities and policies. The RFC evaluates what actions to take with respect to such enterprise limits, authorities and policies, and approves any exceptions thereto from time to time as necessary.
|
•
|
Reviews our overall risk profile and monitors key risks across our organization as a whole, which may involve coordination with other committees of the Board from time to time as appropriate.
|
•
|
Reviews our process controls over model use and development with respect to model risk and model effectiveness, accuracy, and propriety.
|
•
|
Monitors our risk management performance and obtains reasonable assurance from management that our risk management policies are effective and are being adhered to.
|
•
|
Economic Capital Model Subcommittee: This subcommittee oversees the development of economic capital models that support ERM activities, and helps set priorities and manage resources related to such models. It reviews assumptions and related methodologies used within our economic capital models, including assessments of model validation, model control and model risk.
|
•
|
Liability Risk Subcommittee: This subcommittee supports and assists the ERC’s identification, measurement, management, monitoring and reporting of key underwriting liability and emerging risks.
|
•
|
Asset Risk Subcommittee: This subcommittee assists the ERC in its responsibilities in relation to governance and oversight of asset-related risks across the Company, including the investment portfolio. Among its activities are (a) involvement in policy decisions on modeling and quantification of risk measurements; and (b) providing an interpretation and assessment of asset-related risks, with a particular focus on market-related risks. Further, the subcommittee is responsible for coordinating on a regular basis with the Credit Risk Subcommittee of the ERC on asset-related credit risks.
|
•
|
Credit Risk Subcommittee: This subcommittee develops and implements the metrics and supporting framework for allocation of credit risk capacity across major business units and functions, including the amount and types of credit exposure.
|
•
|
Operational Risk Subcommittee: This subcommittee supports the ERC’s identification, measurement, management and oversight of key operational risks through its oversight of key operational risk management processes and through its review of related operational risk indicators, trends and metrics.
|
1.
|
We impose limits for each natural catastrophe peril region at a 1% tail value at risk (“TVaR”) probability. This statistic indicates the average amount of net loss expected to be incurred if a loss above the 1% exceedance probability level has occurred.
|
2.
|
For each event type other than natural catastrophes, we impose limits at a 1% exceedance probability. If we were to deploy the full limit, for any given event type, there would be a 1% probability that an event would occur during the next year that would result in a net underwriting loss in excess of the limit.
|
3.
|
We also impose limits for certain other event types at a 0.4% exceedance probability as described in further detail below. If we were to deploy the full limit, for any such given event type, there would be a 0.4% probability that an event would occur during the next year that would result in a net underwriting loss in excess of the limit.
|
•
|
Anticipated risk adjusted returns;
|
•
|
Strategic risk preferences;
|
•
|
Relativity to peers;
|
•
|
Shareholder expectations;
|
•
|
Robustness of exposure assessment methodology; and
|
•
|
Projected enterprise loss potential.
|
•
|
Correlation of underwriting risk with other risks (e.g., asset/investment risk, operational risk, etc.);
|
•
|
Model risk and robustness of data;
|
•
|
Geographical concentrations;
|
•
|
Exposures at lower return periods;
|
•
|
Expected payback period associated with losses;
|
•
|
Projected share of industry loss; and
|
•
|
Annual aggregate losses for natural catastrophes at various return periods including a 1% exceedance probability and a 1% TVaR level on both a peril region basis and a portfolio basis.
|
•
|
Inaccurate assumptions of event frequency and severity;
|
•
|
Inaccurate or incomplete data;
|
•
|
Changing climate conditions that may add to the unpredictability of frequency and severity of natural catastrophes in certain parts of the world and create additional uncertainty as to future trends and exposures;
|
•
|
Future possible increases in property values and the effects of inflation that may increase the severity of catastrophic events to levels above the modeled levels;
|
•
|
Natural catastrophe models that incorporate and are critically dependent on meteorological, seismological and other earth science assumptions and related statistical relationships that may not be representative of prevailing conditions and risks, and may therefore misstate how particular events actually materialize, causing a material deviation between forecasted and actual damages associated with such events; and
|
•
|
A change in the judicial climate.
|
•
|
maintain an adequate solvency margin and guarantee fund;
|
•
|
submit quarterly and annual regulatory returns as well as ad hoc reporting of certain material transactions; and
|
•
|
obtain regulatory pre-approval of certain transactions, such as payment of dividends or acquisitions and disposals of the ownership/voting rights of (re)insurance companies.
|
ITEM 1A.
|
|
RISK FACTORS
|
▪
|
We may develop products that insure risks we have not previously insured or contain new coverage or coverage terms.
|
▪
|
We may refine our underwriting processes.
|
▪
|
We may seek to expand distribution channels.
|
▪
|
We may focus on geographic markets within or outside of the United States where we have had relatively little or no market share or operating history.
|
▪
|
We may engage in insurance-linked securities and other reinsurance capital markets transactions, either alone or with third party investors.
|
▪
|
Demand for new products or in new markets may not meet our expectations.
|
▪
|
To the extent we are able to market new products or expand into new markets, our risk exposures may change, and the data and models we use to manage such exposures may not be as sophisticated as those we use in existing markets or with existing products. This, in turn, could lead to losses in excess of our expectations.
|
▪
|
Efforts to develop new products or markets have the potential to create or increase distribution channel conflict.
|
▪
|
In connection with the conversion of existing policyholders to a new product, some policyholders' pricing may increase, while the pricing for other policyholders may decrease, the net impact of which could negatively impact retention and margins.
|
▪
|
To develop new products or markets, we may encounter unanticipated operational issues or we may need to make substantial capital and operating expenditures, which may also negatively impact results.
|
▪
|
providing insurance and reinsurance capacity in markets and to consumers that we target, e.g., the creation or expansion of state or federal catastrophe funds such as those in Florida;
|
▪
|
requiring our participation in industry pools and guarantee associations;
|
▪
|
expanding the scope of coverage or altering the enforceability of deductibles under existing policies;
|
▪
|
regulating the terms of insurance and reinsurance policies;
|
▪
|
ordering the suspension of or otherwise altering the application of insurance laws or regulations; or
|
▪
|
disproportionately benefiting the companies of one country over those of another.
|
▪
|
the judgment must be for a definite sum;
|
▪
|
the judgment must be final and conclusive; and
|
▪
|
the judgment must be provided by a court of competent jurisdiction.
|
▪
|
judgments of U.S. courts based upon the civil liability provisions of U.S. federal securities laws obtained in actions against XL-Cayman or its directors and officers who reside outside the United States; or
|
▪
|
original actions brought in the Cayman Islands against these persons or XL-Cayman predicated solely upon U.S. federal securities laws.
|
▪
|
intended to hinder, delay or defraud its creditors; or
|
▪
|
received less than “reasonably equivalent value” or “fair value consideration” for such release; and either:
|
•
|
was insolvent or rendered insolvent by reason of such occurrence; or
|
•
|
was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
|
•
|
intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.
|
ITEM 1B.
|
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
|
PROPERTIES
|
ITEM 3.
|
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
|
MINE SAFETY DISCLOSURES
|
Name
|
|
Age
|
|
Position
|
Michael S. McGavick
|
|
56
|
|
Chief Executive Officer and Director
|
Susan L. Cross
|
|
53
|
|
Executive Vice President and Global Chief Actuary
|
Kirstin Gould
|
|
47
|
|
Executive Vice President, General Counsel and Secretary
|
Gregory S. Hendrick
|
|
48
|
|
Executive Vice President and Chief Executive of Insurance Operations
|
W. Myron Hendry
|
|
65
|
|
Executive Vice President and Chief Platform Officer
|
Peter R. Porrino
|
|
57
|
|
Executive Vice President and Chief Financial Officer
|
Jacob D. Rosengarten
|
|
58
|
|
Executive Vice President and Chief Enterprise Risk Officer
|
Sarah E. Street
|
|
52
|
|
Executive Vice President and Chief Investment Officer
|
James H. Veghte
|
|
57
|
|
Executive Vice President and Chief Executive of Reinsurance Operations
|
Eileen Whelley
|
|
60
|
|
Executive Vice President and Chief Human Resources Officer
|
ITEM 5.
|
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
|
|
Low
|
|
Close
|
|
Dividends
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
1st Quarter
|
$
|
30.61
|
|
|
$
|
25.20
|
|
|
$
|
30.30
|
|
|
$
|
0.14
|
|
2nd Quarter
|
$
|
32.96
|
|
|
$
|
28.88
|
|
|
$
|
30.32
|
|
|
$
|
0.14
|
|
3rd Quarter
|
$
|
33.12
|
|
|
$
|
29.48
|
|
|
$
|
30.82
|
|
|
$
|
0.14
|
|
4th Quarter
|
$
|
32.29
|
|
|
$
|
29.62
|
|
|
$
|
31.84
|
|
|
$
|
0.14
|
|
2012
|
|
|
|
|
|
|
|
||||||||
1st Quarter
|
$
|
22.03
|
|
|
$
|
18.86
|
|
|
$
|
21.69
|
|
|
$
|
0.11
|
|
2nd Quarter
|
$
|
22.64
|
|
|
$
|
19.52
|
|
|
$
|
21.04
|
|
|
$
|
0.11
|
|
3rd Quarter
|
$
|
24.89
|
|
|
$
|
19.90
|
|
|
$
|
24.03
|
|
|
$
|
0.11
|
|
4th Quarter
|
$
|
25.78
|
|
|
$
|
23.15
|
|
|
$
|
25.06
|
|
|
$
|
0.11
|
|
|
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Share-Based
Compensation Plans
(Excluding Securities
in column (a))
|
||||
Plan Category
|
(a)
|
|
(b)
|
|
(c)
|
||||
Share-based compensation plans approved by security holders (1)
|
11,122,934
|
|
|
$
|
36.91
|
|
|
13,056,809
|
|
Share-based compensation plans not approved by security holders (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
11,122,934
|
|
|
$
|
36.91
|
|
|
13,056,809
|
|
(1)
|
Pertains to our 1991 Performance Incentive Program and the Directors Stock & Option Plan. Includes for the 1991 Performance Incentive Program, 10,887,934 ordinary shares to be issued upon the exercise of outstanding options, warrants and rights, a $36.78 weighted average exercise price of outstanding options, warrants and rights, and 12,943,866 ordinary shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column a). Includes for the Directors Stock & Option Plan, 235,000 ordinary shares to be issued upon exercise of outstanding options, warrants and rights, a $42.69 weighted average exercise price of outstanding options, warrants and rights, and 112,943 ordinary shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column a).
|
(2)
|
In relation to the 1991 Performance Incentive Program (the “Program”), of such maximum number of ordinary shares at
December 31, 2013
, shares can be issued as any form of award, except that, for each restricted stock, restricted stock unit, stock appreciation right, or performance share award issued, the number of ordinary shares available under the Program will be reduced by two shares. In the event that an award issued under the Program expires or is terminated unexercised as to any shares covered thereby, or shares are forfeited for any reason under the Program, such shares shall thereafter be again available for issuance under the Program. At the Management Development and Compensation Committee’s discretion, these shares may be granted as stock options, performance shares, restricted stock, restricted stock units, stock appreciation rights or any combination of these provided that the combined total number of shares granted does not exceed either the overall share authorization described within the Program for performance shares, stock appreciation rights, restricted stock and restricted stock units.
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid
per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
|
Approximate
Value of Shares
that May Yet Be Purchased
Under the Plans or
Programs (1) (2)
|
||||
October 1, 2013 to October 31, 2013
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$425.0 million
|
November 1, 2013 to November 30, 2013
|
1,935,811
|
|
|
$
|
31.07
|
|
|
1,935,811
|
|
|
$364.9 million
|
December 1, 2013 to December 31, 2013
|
2,926,952
|
|
|
$
|
30.70
|
|
|
2,926,952
|
|
|
$275.0 million
|
Total
|
4,862,763
|
|
|
$
|
30.85
|
|
|
4,862,763
|
|
|
$275.0 million
|
(1)
|
Shares purchased in connection with the vesting of restricted shares granted under our equity compensation programs do not represent shares purchased as part of publicly announced plans or programs. All such purchases were made in connection with satisfying tax withholding obligations of those employees. These shares were not purchased as part of our share buyback program noted below.
|
(2)
|
For information regarding our share buyback activity see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Key Focuses of Management - Buybacks of Ordinary Shares" included herein.
|
ITEM 6.
|
|
SELECTED FINANCIAL DATA
|
(U.S. dollars in thousands, except per share amounts)
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net premiums earned
|
$
|
6,309,521
|
|
|
$
|
6,090,437
|
|
|
$
|
5,690,130
|
|
|
$
|
5,414,061
|
|
|
$
|
5,706,840
|
|
Net investment income
|
$
|
957,716
|
|
|
$
|
1,012,348
|
|
|
$
|
1,137,769
|
|
|
$
|
1,198,038
|
|
|
$
|
1,319,823
|
|
Net realized gains (losses) on investments
|
$
|
87,777
|
|
|
$
|
14,098
|
|
|
$
|
(188,359
|
)
|
|
$
|
(270,803
|
)
|
|
$
|
(921,437
|
)
|
Net realized and unrealized gains (losses) on derivative instruments
|
$
|
7,798
|
|
|
$
|
5,221
|
|
|
$
|
(10,738
|
)
|
|
$
|
(33,843
|
)
|
|
$
|
(33,647
|
)
|
Net income (loss) from investment fund affiliates (1)
|
$
|
138,391
|
|
|
$
|
58,504
|
|
|
$
|
26,253
|
|
|
$
|
51,102
|
|
|
$
|
78,867
|
|
Fee income and other
|
$
|
40,031
|
|
|
$
|
51,789
|
|
|
$
|
41,748
|
|
|
$
|
40,027
|
|
|
$
|
43,201
|
|
Net losses and loss expenses incurred
|
$
|
3,731,464
|
|
|
$
|
3,765,482
|
|
|
$
|
4,078,391
|
|
|
$
|
3,211,800
|
|
|
$
|
3,168,837
|
|
Claims and policy benefits – life operations
|
$
|
465,702
|
|
|
$
|
486,195
|
|
|
$
|
535,074
|
|
|
$
|
513,833
|
|
|
$
|
677,562
|
|
Acquisition costs, operating expenses and foreign exchange gains and losses
|
$
|
2,094,258
|
|
|
$
|
2,097,992
|
|
|
$
|
1,869,688
|
|
|
$
|
1,751,060
|
|
|
$
|
1,996,052
|
|
Interest expense
|
$
|
155,462
|
|
|
$
|
172,204
|
|
|
$
|
205,592
|
|
|
$
|
213,643
|
|
|
$
|
216,504
|
|
Loss on settlement of guarantee
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,500
|
|
|
$
|
—
|
|
Impairment of goodwill
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
429,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income (loss) before non-controlling interests, net income from operating affiliates and income tax expense
|
$
|
1,094,348
|
|
|
$
|
710,524
|
|
|
$
|
(420,962
|
)
|
|
$
|
684,746
|
|
|
$
|
134,714
|
|
Income (loss) from operating affiliates (1)(2)
|
$
|
119,804
|
|
|
$
|
53,887
|
|
|
$
|
76,786
|
|
|
$
|
121,372
|
|
|
$
|
60,480
|
|
Preference share dividends (3)
|
$
|
77,187
|
|
|
$
|
79,087
|
|
|
$
|
72,278
|
|
|
$
|
74,521
|
|
|
$
|
80,200
|
|
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
|
$
|
585,472
|
|
|
$
|
206,607
|
|
(U.S. dollars in thousands, except per share amounts)
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per ordinary share and ordinary share equivalent – basic (4)(5)
|
$
|
3.68
|
|
|
$
|
2.12
|
|
|
$
|
(1.52
|
)
|
|
$
|
1.74
|
|
|
$
|
0.61
|
|
Earnings (loss) per ordinary share and ordinary share equivalent – diluted (4)(5)
|
$
|
3.63
|
|
|
$
|
2.10
|
|
|
$
|
(1.52
|
)
|
|
$
|
1.73
|
|
|
$
|
0.61
|
|
Weighted average ordinary shares and ordinary share equivalents outstanding – diluted (4)
|
292,069
|
|
|
310,282
|
|
|
312,896
|
|
|
337,709
|
|
|
340,966
|
|
|||||
Cash dividends per ordinary share
|
$
|
0.56
|
|
|
$
|
0.44
|
|
|
$
|
0.44
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investments – available for sale (“AFS”)
|
$
|
28,996,661
|
|
|
$
|
28,818,982
|
|
|
$
|
27,017,285
|
|
|
$
|
27,677,553
|
|
|
$
|
29,307,171
|
|
Total investments – held to maturity (“HTM”)
|
$
|
2,858,695
|
|
|
$
|
2,814,447
|
|
|
$
|
2,668,978
|
|
|
$
|
2,728,335
|
|
|
$
|
546,067
|
|
Cash and cash equivalents
|
$
|
1,800,832
|
|
|
$
|
2,618,378
|
|
|
$
|
3,825,125
|
|
|
$
|
3,022,868
|
|
|
$
|
3,643,697
|
|
Investments in affiliates
|
$
|
1,370,943
|
|
|
$
|
1,126,875
|
|
|
$
|
1,052,729
|
|
|
$
|
1,127,181
|
|
|
$
|
1,185,604
|
|
Unpaid losses and loss expenses recoverable
|
$
|
3,435,230
|
|
|
$
|
3,382,102
|
|
|
$
|
3,654,948
|
|
|
$
|
3,671,887
|
|
|
$
|
3,584,028
|
|
Premiums receivable
|
$
|
2,612,602
|
|
|
$
|
2,568,862
|
|
|
$
|
2,411,611
|
|
|
$
|
2,414,912
|
|
|
$
|
2,597,602
|
|
Total assets
|
$
|
45,652,887
|
|
|
$
|
45,386,895
|
|
|
$
|
44,665,265
|
|
|
$
|
44,995,040
|
|
|
$
|
45,663,894
|
|
Unpaid losses and loss expenses
|
$
|
20,481,065
|
|
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
|
$
|
20,531,607
|
|
|
$
|
20,823,524
|
|
Future policy benefit reserves
|
$
|
4,803,816
|
|
|
$
|
4,812,046
|
|
|
$
|
4,845,394
|
|
|
$
|
5,075,127
|
|
|
$
|
5,490,119
|
|
Unearned premiums
|
$
|
3,846,526
|
|
|
$
|
3,755,086
|
|
|
$
|
3,555,310
|
|
|
$
|
3,484,830
|
|
|
$
|
3,651,310
|
|
Notes payable and debt
|
$
|
2,263,203
|
|
|
$
|
1,672,778
|
|
|
$
|
2,275,327
|
|
|
$
|
2,457,003
|
|
|
$
|
2,451,417
|
|
Shareholders’ equity
|
$
|
11,349,298
|
|
|
$
|
11,856,402
|
|
|
$
|
10,756,130
|
|
|
$
|
10,599,769
|
|
|
$
|
9,432,417
|
|
Fully diluted tangible book value per ordinary share
|
$
|
33.86
|
|
|
$
|
33.35
|
|
|
$
|
28.31
|
|
|
$
|
27.14
|
|
|
$
|
22.13
|
|
Operating Ratios:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss expense ratio (6)
|
62.0
|
%
|
|
65.3
|
%
|
|
76.6
|
%
|
|
63.8
|
%
|
|
61.5
|
%
|
|||||
Underwriting expense ratio (7)
|
30.5
|
%
|
|
31.0
|
%
|
|
30.9
|
%
|
|
31.0
|
%
|
|
32.1
|
%
|
|||||
Combined ratio (8)
|
92.5
|
%
|
|
96.3
|
%
|
|
107.5
|
%
|
|
94.8
|
%
|
|
93.6
|
%
|
(1)
|
We generally record the income related to alternative fund affiliates on a one-month lag and the private investment fund affiliates on a three-month lag in order for us to meet the filing deadlines for our periodic reports. We generally record the income related to operating affiliates on a three-month lag.
|
(2)
|
In 2010, net income from operating affiliates included $50.2 million relating to the sale of a majority of our shareholdings in Primus Guaranty Ltd.
|
(3)
|
Preference dividends represent dividends on the Redeemable Series C preference ordinary shares and the Series D and E preference ordinary shares. Following our Redomestication, subsequent to July 1, 2010, the Redeemable Series C preference ordinary shares and the Series D and E preference ordinary shares represent non-controlling interests in our consolidated financial statements. For additional information see Item 8, Note 18, “Share Capital,” to the Consolidated Financial Statements.
|
(4)
|
Effective for the fiscal year beginning January 1, 2009 and for all interim periods within 2009, we adopted final authoritative guidance that addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing basic earnings per share (“EPS”) pursuant to the two-class method described in EPS guidance. A share-based payment award that contains a non-forfeitable right to receive cash when dividends are paid to ordinary shareholders irrespective of whether that award ultimately vests is considered a participating security as these rights to dividends provide a non-contingent transfer of value to the holder of the share-based payment award. Accordingly, these awards are included in the computation of basic EPS pursuant to the two-class method. Under the terms of our restricted stock awards, grantees are entitled to receive dividends on the unvested portions of their awards. There is no requirement to return these dividends in the event the unvested awards are forfeited in the future. Accordingly, this guidance had an impact on our EPS calculations.
|
(5)
|
Effective April 1, 2009, we adopted final authoritative guidance that addressed the treatment of credit losses on investments.
|
(6)
|
The loss and loss expense ratio related to the property and casualty operations is calculated by dividing the losses and loss expenses incurred by the net premiums earned for the Insurance and Reinsurance segments.
|
(7)
|
The underwriting expense ratio related to the property and casualty operations is the sum of acquisition expenses and operating expenses for the Insurance and Reinsurance segments divided by net premiums earned for the Insurance and Reinsurance segments. See Item 8, Note 4, “Segment Information,” to the Consolidated Financial Statements included herein, for further information.
|
ITEM 7.
|
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Cautionary Note Regarding Forward-Looking Statements
|
|
Executive Overview
|
|
Results of Operations and Key Financial Measures
|
|
Reconciliation of Non-GAAP Measures
|
|
Significant Items Affecting the Results of Operations
|
|
Other Key Focuses of Management
|
|
Critical Accounting Policies and Estimates
|
|
Segments
|
|
Income Statement Analysis
|
|
Insurance
|
|
Reinsurance
|
|
Life Operations
|
|
Investment Performance
|
|
Investment Activities
|
|
Net Realized Gains and Losses on Investments and Other-Than-Temporary Declines in the Value Of Investments
|
|
Net Realized and Unrealized Gains and Losses on Derivative Instruments
|
|
Other Revenues and Expenses
|
|
Balance Sheet Analysis
|
|
Investments
|
|
Gross and Net Unrealized Gains and Losses on Investments
|
|
Fair Value Measurements of Assets and Liabilities
|
|
Unpaid Losses and Loss Expenses
|
|
Unpaid Losses and Loss Expenses Recoverable and Reinsurance Balances Receivable
|
|
Liquidity and Capital Resources
|
|
Holding Company Liquidity
|
|
Sources of Liquidity
|
|
Capital Resources
|
|
Covenants
|
|
Cross-Default and Other Provisions in Debt Instruments
|
|
Long-Term Contractual Obligations
|
|
Variable Interest Entities and Other Off-Balance Sheet Arrangements
|
|
Recent Accounting Pronouncements
|
▪
|
changes in the size of our claims relating to natural or man-made catastrophe losses due to the preliminary nature of some reports and estimates of loss and damage to date;
|
▪
|
trends in rates for property and casualty insurance and reinsurance;
|
▪
|
the timely and full recoverability of reinsurance placed by us with third parties, or other amounts due to us;
|
▪
|
changes in ratings or rating agency policies or practices;
|
▪
|
changes in the projected amount of ceded reinsurance recoverables and the ratings and creditworthiness of reinsurers;
|
▪
|
the timing of claims payments being faster or the receipt of reinsurance recoverables being slower than we anticipated;
|
▪
|
our ability to successfully implement our business strategy;
|
▪
|
increased competition on the basis of pricing, capacity, coverage terms or other factors, which could harm our ability to maintain or increase our business volumes or profitability;
|
▪
|
greater frequency or severity of claims and loss activity than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;
|
▪
|
changes in general economic conditions, including the effects of inflation on our business, including on pricing and reserving, and changes in interest rates, credit spreads and foreign currency exchange rates and future volatility in the world's credit, financial and capital markets that adversely affect the performance and valuation of our investments or access to such markets;
|
▪
|
developments, including uncertainties related to the future of the Euro-zone, the ability of Euro-zone countries to service existing debt obligations and the strength of the Euro as a currency and to the financial condition of counterparties, reinsurers and other companies that are at risk of bankruptcy;
|
▪
|
the potential impact on us from government-mandated insurance coverage for acts of terrorism;
|
▪
|
the potential for changes to methodologies, estimations and assumptions that underlie the valuation of our financial instruments that could result in changes to investment valuations;
|
▪
|
changes to our assessment as to whether it is more likely than not that we will be required to sell, or have the intent to sell, available for sale debt securities before their anticipated recovery;
|
▪
|
the availability of borrowings and letters of credit under our credit facilities;
|
▪
|
the ability of our subsidiaries to pay dividends to XL-Ireland and XLIT Ltd., an exempted company organized under the laws of the Cayman Islands ("XL-Cayman");
|
▪
|
the potential effect of regulatory developments in the jurisdictions in which we operate, including those which could impact the financial markets or increase our business costs and required capital levels;
|
▪
|
changes in regulations or laws applicable to XL-Ireland or our subsidiaries, brokers or customers;
|
▪
|
acceptance of our products and services, including new products and services;
|
▪
|
changes in the availability, cost or quality of reinsurance;
|
▪
|
changes in the distribution or placement of risks due to increased consolidation of insurance and reinsurance brokers;
|
▪
|
loss of key personnel;
|
▪
|
changes in accounting standards, policies or practices or the application thereof;
|
▪
|
legislative or regulatory developments including, but not limited to, changes in regulatory capital balances that must be maintained by our operating subsidiaries and governmental actions for the purpose of stabilizing the financial markets;
|
▪
|
the effects of mergers, acquisitions and divestitures;
|
▪
|
developments related to bankruptcies of companies insofar as they affect property and casualty insurance and reinsurance coverages or claims that we may have as a counterparty;
|
▪
|
changes in applicable tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof;
|
▪
|
the effects of business disruption or economic contraction due to war, terrorism or other hostilities; and
|
▪
|
the other factors set forth in Item 1A, “Risk Factors,” and our other documents on file with the SEC.
|
(U.S. dollars in thousands, except share and per share amounts)
|
2013
|
|
2012
|
|
2011
|
||||||
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Earnings (loss) per ordinary share – basic
|
$
|
3.68
|
|
|
$
|
2.12
|
|
|
$
|
(1.52
|
)
|
Earnings (loss) per ordinary share – diluted
|
$
|
3.63
|
|
|
$
|
2.10
|
|
|
$
|
(1.52
|
)
|
Weighted average number of ordinary shares and ordinary share equivalents outstanding, in thousands – basic
|
287,801
|
|
|
307,372
|
|
|
312,896
|
|
|||
Weighted average number of ordinary shares and ordinary share equivalents outstanding, in thousands – diluted
|
292,069
|
|
|
310,282
|
|
|
312,896
|
|
(U.S. dollars in thousands, except ratios and per share amounts)
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012
|
|
Change
2012 to 2011
|
||||||||||
Underwriting profit (loss) - P&C operations
|
$
|
451,062
|
|
|
$
|
216,132
|
|
|
$
|
(397,353
|
)
|
|
108.7
|
%
|
|
N/M
|
|
||
Combined ratio - P&C operations
|
92.5
|
%
|
|
96.3
|
%
|
|
107.5
|
%
|
|
(3.8)pts
|
|
|
(11.2)pts
|
|
|||||
Net investment income - P&C operations
|
$
|
671,071
|
|
|
$
|
712,905
|
|
|
$
|
819,708
|
|
|
(5.9
|
)%
|
|
(13.0
|
)%
|
||
Operating net income (1)
|
$
|
942,968
|
|
|
$
|
614,096
|
|
|
$
|
89,464
|
|
|
53.6
|
%
|
|
586.4
|
%
|
||
Operating net income per share (1)
|
$
|
3.23
|
|
|
$
|
1.98
|
|
|
$
|
0.28
|
|
|
$
|
1.25
|
|
|
$
|
1.7
|
|
Return on average ordinary shareholders’ equity (1)
|
10.3
|
%
|
|
6.5
|
%
|
|
(5.0
|
)%
|
|
3.8pts
|
|
|
11.5pts
|
|
|||||
Operating return on average ordinary shareholders’ equity (1)
|
9.2
|
%
|
|
6.2
|
%
|
|
0.9
|
%
|
|
3.0pts
|
|
|
5.3pts
|
|
|||||
Operating return on average ordinary shareholders’ equity excluding unrealized gains and losses on investments (1)
|
10.3
|
%
|
|
6.9
|
%
|
|
1.0
|
%
|
|
3.4pts
|
|
|
5.9pts
|
|
|||||
Book value per ordinary share (1)
|
$
|
35.92
|
|
|
$
|
35.18
|
|
|
$
|
29.81
|
|
|
$
|
0.74
|
|
|
$
|
5.37
|
|
Fully diluted tangible book value per ordinary share (1)
|
$
|
33.86
|
|
|
$
|
33.35
|
|
|
$
|
28.31
|
|
|
$
|
0.51
|
|
|
$
|
5.04
|
|
(1)
|
Represents a non-GAAP financial measure as discussed further below.
|
*
|
N/M - Not Meaningful
|
▪
|
The combined ratio related to the P&C operations is the sum of the loss and loss expense ratio and the underwriting expense ratio. A combined ratio under 100% represents an underwriting profit and over 100% represents an underwriting loss. In the P&C industry, the combined ratio is a widely used measure of underwriting profitability.
|
▪
|
The loss and loss expense ratio related to the P&C operations is calculated by dividing the losses and loss expenses incurred by the net premiums earned for the Insurance and Reinsurance segments.
|
▪
|
The underwriting expense ratio related to the P&C operations is the sum of acquisition costs and operating expenses for the Insurance and Reinsurance segments divided by net premiums earned for the Insurance and Reinsurance segments.
|
▪
|
The acquisition expense ratio related to the P&C operations is calculated by dividing the acquisition costs incurred by the net premiums earned for the Insurance and Reinsurance segments.
|
▪
|
The operating expense ratio related to the P&C operations is calculated by dividing the operating expenses incurred by the net premiums earned for the Insurance and Reinsurance segments.
|
|
2013
|
|
2012
|
|
2011
|
|
Percentage Point
Change
|
|||||||
2013 to 2012
|
2012 to 2011
|
|||||||||||||
Loss and loss expense ratio
|
62.0
|
%
|
|
65.3
|
%
|
|
76.6
|
%
|
|
(3.3
|
)
|
|
(11.3
|
)
|
Acquisition expense ratio
|
14.7
|
%
|
|
15.1
|
%
|
|
14.8
|
%
|
|
(0.4
|
)
|
|
0.3
|
|
Operating expense ratio
|
15.8
|
%
|
|
15.9
|
%
|
|
16.1
|
%
|
|
(0.1
|
)
|
|
(0.2
|
)
|
Underwriting expense ratio
|
30.5
|
%
|
|
31.0
|
%
|
|
30.9
|
%
|
|
(0.5
|
)
|
|
0.1
|
|
Combined ratio
|
92.5
|
%
|
|
96.3
|
%
|
|
107.5
|
%
|
|
(3.8
|
)
|
|
(11.2
|
)
|
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012 |
|
Change
2012 to 2011 |
|||
ROE
|
10.3
|
%
|
|
6.5
|
%
|
|
(5.0
|
)%
|
|
3.8pts
|
|
11.5pts
|
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012 |
|
Change
2012 to 2011 |
|||
Operating ROE
|
9.2
|
%
|
|
6.2
|
%
|
|
0.9
|
%
|
|
3.0pts
|
|
5.3pts
|
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012 |
|
Change
2012 to 2011 |
|||
Operating ROE ex-UGL
|
10.3
|
%
|
|
6.9
|
%
|
|
1.0
|
%
|
|
3.4pts
|
|
5.9pts
|
(U.S. dollars)
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012 |
|
Change
2012 to 2011 |
||||||||||
Book value per ordinary share
|
$
|
35.92
|
|
|
$
|
35.18
|
|
|
$
|
29.81
|
|
|
$
|
0.74
|
|
|
$
|
5.37
|
|
(U.S. dollars)
|
2013
|
|
2012
|
|
2011
|
|
Change
2013 to 2012 |
|
Change
2012 to 2011 |
||||||||||
Fully diluted tangible book value per ordinary share
|
$
|
33.86
|
|
|
$
|
33.35
|
|
|
$
|
28.31
|
|
|
$
|
0.51
|
|
|
$
|
5.04
|
|
(U.S. dollars in thousands, except share and per share amounts)
|
2013
|
|
2012
|
|
2011
|
||||||
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Impairment of goodwill, net of tax
|
—
|
|
|
—
|
|
|
417,566
|
|
|||
Net realized (gains) losses on investments, net of tax
|
(82,605
|
)
|
|
(38,234
|
)
|
|
178,432
|
|
|||
Net realized and unrealized (gains) losses on derivatives, net of tax
|
(7,798
|
)
|
|
(5,216
|
)
|
|
3,914
|
|
|||
Net realized and unrealized (gains) losses on investments and derivatives related to the Company's insurance company affiliates
|
6,556
|
|
|
(301
|
)
|
|
(322
|
)
|
|||
Foreign exchange (gains) losses, net of tax
|
(33,101
|
)
|
|
6,719
|
|
|
(34,016
|
)
|
|||
Gain on repurchase of non-controlling interest preference ordinary shares
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,350
|
)
|
Operating net income (loss)
|
$
|
942,968
|
|
|
$
|
614,096
|
|
|
$
|
89,464
|
|
Per ordinary share results:
|
|
|
|
|
|
||||||
Net income (loss) attributable to ordinary shareholders
|
$
|
3.63
|
|
|
$
|
2.10
|
|
|
$
|
(1.52
|
)
|
Operating net income (loss)
|
$
|
3.23
|
|
|
$
|
1.98
|
|
|
$
|
0.28
|
|
Weighted average ordinary shares outstanding, in thousands:
|
|
|
|
|
|
||||||
Basic
|
287,801
|
|
|
307,372
|
|
|
312,896
|
|
|||
Diluted - Net income
|
292,069
|
|
|
310,282
|
|
|
312,896
|
|
|||
Diluted - Operating net income
|
292,069
|
|
|
310,282
|
|
|
316,318
|
|
|||
Return on ordinary shareholders' equity:
|
|
|
|
|
|
||||||
Closing ordinary shareholders' equity (at period end)
|
$
|
9,997,633
|
|
|
$
|
10,510,077
|
|
|
$
|
9,411,658
|
|
Unrealized (gain) loss on investments, net of tax
|
$
|
(781,007
|
)
|
|
$
|
(1,476,453
|
)
|
|
$
|
(521,796
|
)
|
Average ordinary shareholders' equity for the period excluding unrealized gains and losses on investments
|
$
|
9,125,125
|
|
|
$
|
8,961,743
|
|
|
$
|
9,238,345
|
|
Average ordinary shareholders' equity for the period
|
$
|
10,253,855
|
|
|
$
|
9,960,868
|
|
|
$
|
9,504,565
|
|
Operating net income (loss)
|
$
|
942,968
|
|
|
$
|
614,096
|
|
|
$
|
89,464
|
|
Operating ROE
|
9.2
|
%
|
|
6.2
|
%
|
|
0.9
|
%
|
|||
Operating ROE ex-UGL
|
10.3
|
%
|
|
6.9
|
%
|
|
—
|
%
|
1)
|
The impact of significant large loss events
|
2)
|
Continuing competitive factors impacting the underwriting environment;
|
3)
|
Net favorable prior year loss development; and
|
4)
|
Market movement impacts on our investment portfolio.
|
1)
|
The impact of significant large loss events
|
|
Natural Catastrophe Underwriting Losses
|
|
Natural Catastrophe Loss Ratio Impact
|
|||||||||||||||||
(U.S. dollars in thousands, except ratios)
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|||||||||
Insurance
|
$
|
119,161
|
|
|
$
|
223,147
|
|
|
$
|
355,256
|
|
|
2.8
|
%
|
|
5.5
|
%
|
|
9.6
|
%
|
Reinsurance
|
198,202
|
|
|
241,171
|
|
|
405,870
|
|
|
11.9
|
%
|
|
13.8
|
%
|
|
25.2
|
%
|
|||
Total P&C
|
$
|
317,363
|
|
|
$
|
464,318
|
|
|
$
|
761,126
|
|
|
5.4
|
%
|
|
8.2
|
%
|
|
14.4
|
%
|
▪
|
2013 - included flooding in Europe ($55.9 million), Argentina and Canada (Calgary), a cyclone in Australia, tornadoes and hailstorms in the United States, the series of hailstorms in Germany and France in late July 2013 ($75.3 million) (the “Europe Hailstorms”), Hurricane Ingrid, flooding events in the United States (Colorado) and Canada (Toronto) and Typhoons Fitow and Haiyan.
|
▪
|
2012 - included Storm Sandy ($355.3 million) ("Sandy"), U.S. tornadoes and the large earthquake in Italy.
|
▪
|
2011 - included the March 11, 2011 earthquake and tsunami in Japan ($241.1 million), the earthquake that struck Christchurch, New Zealand on February 22, 2011, the 2011 flooding events in Australia, the severe weather occurrences, including tornado activity, in the United States during April and May 2011, the Atlantic Hurricanes ($108.7 million) (Hurricane Irene and Tropical Storm Lee) and the Thailand floods ($157.8 million).
|
2)
|
Continuing competitive factors impacting the underwriting environment
|
3)
|
Net favorable prior year loss development
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance
|
$
|
(102,039
|
)
|
|
$
|
(140,066
|
)
|
|
$
|
(76,516
|
)
|
Reinsurance
|
(187,850
|
)
|
|
(175,828
|
)
|
|
(208,351
|
)
|
|||
Total
|
$
|
(289,889
|
)
|
|
$
|
(315,894
|
)
|
|
$
|
(284,867
|
)
|
4)
|
Market movement impacts on the Company’s investment portfolio
|
|
Interest Rate Movement for the year
ended December 31, 2013 (1) (‘+’/‘-’ represents increases / decreases in interest rates) |
|
Credit Spread Movement for the year ended
December 31, 2013 (2) (‘+’/‘-’ represents widening / tightening of credit spreads) |
United States
|
+102 basis points (5 year Treasury)
|
|
-25 basis points (US Corporate A rated)
|
|
|
|
+8 basis points (US Mortgage Master Index)
|
|
|
|
+6 basis points (US CMBS, AAA rated)
|
United Kingdom
|
+119 basis points (10 year Gilt)
|
|
-43 basis points (UK Corporate, AA rated)
|
Euro-zone
|
+63 basis points (5 year Bund)
|
|
-30 basis points (Europe Corporate, A rated)
|
(1)
|
Source: Bloomberg Finance L.P.
|
(2)
|
Source: Merrill Lynch Global Indices.
|
Geographical Zone
(U.S. dollars in millions)
|
Peril
|
|
Measurement
Date
of In-Force
Exposures (1)
|
|
1% Exceedance
Probability
|
|
0.4% Exceedance
Probability
|
||||||||||
Probable
Maximum
Loss (2)
|
|
Percentage
of Adjusted Tangible
Shareholders’
Equity at
December 31,
2013
|
|
Probable
Maximum
Loss (2)
|
|
Percentage
of Adjusted Tangible
Shareholders’
Equity at
December 31,
2013
|
|||||||||||
North Atlantic
|
Windstorm
|
|
October 1, 2013
|
|
$
|
1,263
|
|
|
12.4
|
%
|
|
$
|
1,744
|
|
|
17.1
|
%
|
North America
|
Earthquake
|
|
October 1, 2013
|
|
$
|
894
|
|
|
8.8
|
%
|
|
$
|
1,517
|
|
|
14.9
|
%
|
Europe
|
Windstorm
|
|
October 1, 2013
|
|
$
|
535
|
|
|
5.2
|
%
|
|
$
|
761
|
|
|
7.5
|
%
|
Japan
|
Earthquake
|
|
October 1, 2013
|
|
$
|
236
|
|
|
2.3
|
%
|
|
$
|
282
|
|
|
2.8
|
%
|
Japan
|
Windstorm
|
|
October 1, 2013
|
|
$
|
115
|
|
|
1.1
|
%
|
|
$
|
213
|
|
|
2.1
|
%
|
(1)
|
Detailed analyses of aggregated in-force exposures and maximum loss levels are done periodically. The measurement dates represent the date of the last completed detailed analysis by geographical zone
|
(2)
|
Probable maximum losses, which include secondary uncertainty that incorporates variability around the expected probable maximum loss for each event, do not represent our maximum potential exposures and are pre-tax.
|
1)
|
Unpaid Loss and Loss Expenses and Unpaid Loss and Loss Expenses Recoverable
|
a)
|
Case reserves - reserves for reported losses and loss expenses that have not yet been settled; and
|
b)
|
IBNR reserves – reserves for incurred but not reported losses or for reported losses over and above the amount of case reserves.
|
a)
|
high layer excess casualty insurance;
|
b)
|
casualty reinsurance; and
|
c)
|
discontinued asbestos and long-tail environmental business.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Insurance
|
$
|
11,512,569
|
|
|
$
|
11,384,854
|
|
Reinsurance
|
5,553,761
|
|
|
5,737,564
|
|
||
Net unpaid losses and loss expenses
|
$
|
17,066,330
|
|
|
$
|
17,122,418
|
|
|
Net Unpaid Losses and Loss Expenses
|
||||||||||||||||||||||
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||||||||||||||||||
Case
Reserves
|
|
IBNR
Reserves
|
|
Total
Reserves
|
|
Case
Reserves
|
|
IBNR
Reserves
|
|
Total
Reserves
|
|||||||||||||
Insurance:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Professional
|
$
|
1,364,964
|
|
|
$
|
3,102,974
|
|
|
$
|
4,467,938
|
|
|
$
|
1,399,190
|
|
|
$
|
3,039,648
|
|
|
$
|
4,438,838
|
|
Casualty
|
1,499,325
|
|
|
3,128,620
|
|
|
4,627,945
|
|
|
1,361,415
|
|
|
3,014,047
|
|
|
4,375,462
|
|
||||||
Property
|
416,038
|
|
|
200,083
|
|
|
616,121
|
|
|
367,463
|
|
|
199,189
|
|
|
566,652
|
|
||||||
Specialty
|
617,793
|
|
|
501,889
|
|
|
1,119,682
|
|
|
673,918
|
|
|
568,747
|
|
|
1,242,665
|
|
||||||
Other (1)
|
216,292
|
|
|
464,591
|
|
|
680,883
|
|
|
243,970
|
|
|
517,267
|
|
|
761,237
|
|
||||||
Total
|
$
|
4,114,412
|
|
|
$
|
7,398,157
|
|
|
$
|
11,512,569
|
|
|
$
|
4,045,956
|
|
|
$
|
7,338,898
|
|
|
$
|
11,384,854
|
|
Reinsurance:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Casualty (2)
|
$
|
1,514,621
|
|
|
$
|
1,915,734
|
|
|
$
|
3,430,355
|
|
|
$
|
1,489,726
|
|
|
$
|
2,039,396
|
|
|
$
|
3,529,122
|
|
Property catastrophe (3)
|
276,004
|
|
|
187,743
|
|
|
463,747
|
|
|
165,748
|
|
|
248,270
|
|
|
414,018
|
|
||||||
Other property
|
415,238
|
|
|
415,175
|
|
|
830,413
|
|
|
461,717
|
|
|
537,912
|
|
|
999,629
|
|
||||||
Marine, energy, aviation and satellite
|
406,248
|
|
|
47,834
|
|
|
454,082
|
|
|
387,443
|
|
|
119,430
|
|
|
506,873
|
|
||||||
Other (1)
|
161,166
|
|
|
213,998
|
|
|
375,164
|
|
|
180,312
|
|
|
107,610
|
|
|
287,922
|
|
||||||
Total
|
$
|
2,773,277
|
|
|
$
|
2,780,484
|
|
|
$
|
5,553,761
|
|
|
$
|
2,684,946
|
|
|
$
|
3,052,618
|
|
|
$
|
5,737,564
|
|
TOTAL
|
$
|
6,887,689
|
|
|
$
|
10,178,641
|
|
|
$
|
17,066,330
|
|
|
$
|
6,730,902
|
|
|
$
|
10,391,516
|
|
|
$
|
17,122,418
|
|
(1)
|
Other within the Insurance segment includes: excess and surplus, programs, surety, structured indemnity and certain discontinued lines. Other within the Reinsurance segment includes: whole account contracts, surety, structured indemnity and other lines.
|
(2)
|
Within the Reinsurance segment, casualty-other and casualty-professional lines of business are shown in the aggregate.
|
(3)
|
Property catastrophe IBNR includes event specific reserves for losses that our insureds and cedants have informed us they expect to incur but have not yet had reported known claims.
|
(U.S. dollars in thousands)
|
Net Unpaid
Losses and Loss
Expenses
Recorded
|
|
Range of Net
Unpaid Losses &
Loss Expenses
Estimated
HIGH
|
|
Range of Net
Unpaid Losses &
Loss Expenses
Estimated
LOW
|
||||||
Insurance
|
|
|
|
|
|
||||||
Professional
|
$
|
4,467,938
|
|
|
$
|
4,995,021
|
|
|
$
|
3,964,094
|
|
Casualty
|
4,627,945
|
|
|
$
|
5,178,890
|
|
|
$
|
4,101,998
|
|
|
Property
|
616,121
|
|
|
$
|
703,827
|
|
|
$
|
533,038
|
|
|
Specialty
|
1,119,682
|
|
|
$
|
1,216,525
|
|
|
$
|
1,026,014
|
|
|
Other (1)
|
680,883
|
|
|
$
|
787,972
|
|
|
$
|
579,514
|
|
|
Total (2)
|
$
|
11,512,569
|
|
|
$
|
12,524,729
|
|
|
$
|
10,534,053
|
|
Reinsurance
|
|
|
|
|
|
||||||
Casualty (3)
|
$
|
3,430,355
|
|
|
$
|
3,766,404
|
|
|
$
|
3,106,725
|
|
Property catastrophe
|
463,747
|
|
|
$
|
545,248
|
|
|
$
|
387,485
|
|
|
Other property
|
830,413
|
|
|
$
|
1,009,064
|
|
|
$
|
665,612
|
|
|
Marine, energy, aviation and satellite
|
454,082
|
|
|
$
|
532,571
|
|
|
$
|
380,557
|
|
|
Other (1)
|
375,164
|
|
|
$
|
426,910
|
|
|
$
|
326,061
|
|
|
Total (2)
|
$
|
5,553,761
|
|
|
$
|
6,059,121
|
|
|
$
|
5,065,768
|
|
Total
|
$
|
17,066,330
|
|
|
|
|
|
(1)
|
Other within the Insurance segment includes: excess and surplus, surety, programs, structured indemnity and certain discontinued lines. Other within the Reinsurance segment includes: whole account contracts, surety, structured indemnity and other lines.
|
(2)
|
The range for the total Insurance and Reinsurance segment reserves is narrower than the sum of the ranges for the lines of business shown in the table due to diversification benefits across the lines of business.
|
(3)
|
Within the Reinsurance segment, casualty-other and casualty-professional lines of business are shown in the aggregate.
|
2)
|
Future Policy Benefit Reserves
|
3)
|
Other-Than-Temporary Declines in Investments (“OTTI”)
|
Loans < 30 days in arrears
|
|
50% will ultimately default
|
Loans 30-60 days in arrears
|
|
60% will ultimately default
|
Loans 60-90 days in arrears
|
|
75% will ultimately default
|
Bank held
|
|
100% default rate
|
Loans in foreclosure
|
|
100% default rate
|
|
Average Cumulative Losses by Vintage
|
||||||||||
2007
|
|
2006
|
|
2005
|
|
2004
|
|||||
Alt-A – Non Option ARM
|
38
|
%
|
|
26
|
%
|
|
11
|
%
|
|
3
|
%
|
Alt-A Option ARM
|
36
|
%
|
|
33
|
%
|
|
17
|
%
|
|
5
|
%
|
Prime
|
20
|
%
|
|
13
|
%
|
|
7
|
%
|
|
1
|
%
|
Subprime
|
48
|
%
|
|
35
|
%
|
|
18
|
%
|
|
7
|
%
|
▪
|
2 base cases assuming asset defaults are equivalent to either the expected corporate default probabilities, or the cumulative default rates for similar time frames from the period of 1983 to 2010.
|
▪
|
Optimistic/pessimistic cases assuming assets have a default rate equivalent to 1 rating notch higher/ lower than their current rating and if on positive/negative watch then 2 notches higher/lower than their current rating.
|
▪
|
A market implied scenario based on the current asset market price, assuming that lower priced loans have a higher default rate.
|
▪
|
Other asset-backed securities ("ABS"), which is a mix of mostly investment grade credit card, auto and non-U.S. ABS structures that have risk and performance characteristics unrelated to the U.S. housing market. In cases where these sectors have met Company screens, the individual securities are evaluated based on fundamental credit analysis of the underlying structure.
|
▪
|
Commercial mortgage-backed securities ("CMBS"), which are dominated by AAA rated holdings that generally have high levels of credit subordination, are highly diversified and priced reasonably close to par. We review these holdings on an individual security basis to the extent they meet the screens noted above, but generally do not believe these securities have a high risk of credit loss given their high subordination levels.
|
4)
|
Income Taxes
|
5)
|
Reinsurance Premium Estimates
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||||||||||||||
Gross
Premiums
Written
|
|
Acquisition
Expenses
|
|
Gross
Premiums
Written
|
|
Acquisition
Expenses
|
|
Gross
Premiums
Written
|
|
Acquisition
Expenses
|
|||||||||||||
Proportional Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Casualty – professional lines
|
$
|
59,213
|
|
|
$
|
17,383
|
|
|
$
|
64,061
|
|
|
$
|
16,948
|
|
|
$
|
65,492
|
|
|
$
|
19,422
|
|
Casualty – other lines
|
113,709
|
|
|
27,260
|
|
|
120,829
|
|
|
31,906
|
|
|
115,835
|
|
|
30,657
|
|
||||||
Other property
|
417,698
|
|
|
134,823
|
|
|
484,615
|
|
|
146,412
|
|
|
693,825
|
|
|
145,367
|
|
||||||
Marine, energy, aviation and satellite
|
34,202
|
|
|
11,165
|
|
|
51,253
|
|
|
13,085
|
|
|
50,438
|
|
|
12,556
|
|
||||||
Other (1)
|
106,331
|
|
|
18,643
|
|
|
76,598
|
|
|
17,206
|
|
|
90,846
|
|
|
25,796
|
|
||||||
Total proportional contracts
|
$
|
731,153
|
|
|
$
|
209,274
|
|
|
$
|
797,356
|
|
|
$
|
225,557
|
|
|
$
|
1,016,436
|
|
|
$
|
233,798
|
|
Excess of Loss Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Casualty – professional lines
|
$
|
139,946
|
|
|
$
|
28,997
|
|
|
$
|
157,293
|
|
|
$
|
29,092
|
|
|
$
|
151,897
|
|
|
$
|
28,055
|
|
Casualty – other lines
|
218,444
|
|
|
37,164
|
|
|
211,734
|
|
|
34,144
|
|
|
176,672
|
|
|
26,602
|
|
||||||
Property catastrophe
|
556,493
|
|
|
49,128
|
|
|
537,087
|
|
|
43,816
|
|
|
461,742
|
|
|
43,705
|
|
||||||
Other property
|
169,580
|
|
|
16,356
|
|
|
168,898
|
|
|
17,663
|
|
|
153,991
|
|
|
17,659
|
|
||||||
Marine, energy, aviation and satellite
|
57,795
|
|
|
7,557
|
|
|
118,632
|
|
|
10,354
|
|
|
105,723
|
|
|
9,267
|
|
||||||
Other (1)
|
20,200
|
|
|
4,912
|
|
|
17,157
|
|
|
7,546
|
|
|
7,158
|
|
|
4,656
|
|
||||||
Total excess of loss contracts
|
$
|
1,162,458
|
|
|
$
|
144,114
|
|
|
$
|
1,210,801
|
|
|
$
|
142,615
|
|
|
$
|
1,057,183
|
|
|
$
|
129,944
|
|
(1)
|
Other includes whole account, credit, surety, structured indemnity and other lines.
|
6)
|
Goodwill and Other Intangible Assets
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Gross premiums written
|
$
|
5,523,181
|
|
|
$
|
5,166,973
|
|
|
$
|
4,824,665
|
|
|
6.9
|
%
|
|
7.1
|
%
|
Net premiums written
|
4,154,093
|
|
|
4,072,511
|
|
|
3,707,664
|
|
|
2.0
|
%
|
|
9.8
|
%
|
|||
Net premiums earned
|
4,267,677
|
|
|
3,924,636
|
|
|
3,663,727
|
|
|
8.7
|
%
|
|
7.1
|
%
|
|||
Net losses and loss expenses
|
(2,829,999
|
)
|
|
(2,691,056
|
)
|
|
(2,951,413
|
)
|
|
5.2
|
%
|
|
(8.8
|
)%
|
|||
Acquisition costs
|
(529,270
|
)
|
|
(504,227
|
)
|
|
(461,965
|
)
|
|
5.0
|
%
|
|
9.1
|
%
|
|||
Operating expenses
|
(782,677
|
)
|
|
(754,308
|
)
|
|
(683,814
|
)
|
|
3.8
|
%
|
|
10.3
|
%
|
|||
Underwriting profit (loss)
|
$
|
125,731
|
|
|
$
|
(24,955
|
)
|
|
$
|
(433,465
|
)
|
|
N/M
|
|
|
N/M
|
|
Net results – structured products
|
15,562
|
|
|
20,978
|
|
|
10,976
|
|
|
(25.8
|
)%
|
|
91.1
|
%
|
|||
Net fee income and other (expense)
|
(9,317
|
)
|
|
850
|
|
|
(16,370
|
)
|
|
N/M
|
|
|
N/M
|
|
*
|
N/M - Not Meaningful
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
IPC
|
$
|
1,376,246
|
|
|
$
|
1,294,817
|
|
|
$
|
1,242,581
|
|
|
6.3
|
%
|
|
4.2
|
%
|
NAPC
|
1,774,596
|
|
|
1,520,050
|
|
|
1,332,962
|
|
|
16.7
|
%
|
|
14.0
|
%
|
|||
Professional
|
1,465,689
|
|
|
1,460,018
|
|
|
1,377,560
|
|
|
0.4
|
%
|
|
6.0
|
%
|
|||
Specialty
|
906,650
|
|
|
892,088
|
|
|
871,562
|
|
|
1.6
|
%
|
|
2.4
|
%
|
|||
Total
|
$
|
5,523,181
|
|
|
$
|
5,166,973
|
|
|
$
|
4,824,665
|
|
|
6.9
|
%
|
|
7.1
|
%
|
▪
|
IPC - increase of
6.3%
driven mainly by higher renewed premiums across most businesses and strong pricing, most notably in primary casualty and middle markets, as well as growth in new business in property, partially offset by lower levels of new business in primary casualty and middle markets.
|
▪
|
NAPC - increase of
16.7%
largely driven by strong new business in construction, primary casualty and environmental as well as higher renewed premiums in property, primary and excess casualty, surplus lines and construction.
|
▪
|
Professional - increase of
0.4%
driven primarily by increases in new business and renewed select business (which offers professional liability to small and mid-size niche professional groups in the United States) primarily in the technology errors and omissions and programs lines of businesses; new business in Bermuda and strong pricing in the U.S., partially offset by international due to the non-renewal of a large program focused on legal professionals and lower new business.
|
▪
|
Specialty - increase of
1.6%
due to new business in marine, and our crisis management and political risk business initatives, improved renewed premiums in our fine art and specie and marine businesses, partially offset by lower renewed premiums and lower new business in aerospace.
|
▪
|
IPC - increase of
4.2%
mainly due to improved retention levels and positive amendments to prior year premium estimates in primary casualty and middle market lines, partially offset by lower retention and lower new business in
|
▪
|
NAPC - increase of
14.0%
largely driven by new business growth across most lines including surplus lines, construction and primary casualty, improved retention for property, construction, and primary casualty, and improved pricing in all lines over the prior year, partially offset by lower multi-year transactions in excess casualty.
|
▪
|
Professional - increase of
6.0%
largely driven by improved pricing and retention as well as new business in the U.S. professional business, and favorable retention in the select and international businesses, partially offset by lower new business in international.
|
▪
|
Specialty - increase of
2.4%
due to the new political risk business and new business and favorable amendments to prior year premium estimates in marine, partially offset by lower retention levels and adverse amendments to prior year premium estimates in aerospace.
|
▪
|
A modification in the reinsurance structure to one that employs proportional reinsurance in the Professional business group as well as higher utilization of this proportional reinsurance in our U.S. and select businesses in order to take advantage of favorable market terms;
|
▪
|
An increase in global property writings that involve cessions to co-insurers and/or the captive insurance operations of our insureds;
|
▪
|
Higher reinsurer participation on certain casualty treaties; and
|
▪
|
An increase in certain proportional reinsurance treaties cessions from higher NAPC construction writings.
|
▪
|
Decreased utilization of facultative reinsurance, primarily in IPC property, following the cancelation of a large general property program in 2011 and lower gross premiums written as a result of underwriting actions for business that did not meet our return requirements;
|
▪
|
Changes in the structure and reinsurer participation of certain NAPC casualty and professional reinsurance treaties;
|
▪
|
Lower cessions as a result of a lower level of premiums subject to the Professional treaty; and
|
▪
|
Favorable impact of foreign exchange rates.
|
▪
|
Changes in the structure, protection layers and costs of certain property and IPC casualty reinsurance treaties;
|
▪
|
A new reinsurance cover in NAPC programs; and
|
▪
|
Additional reinstatement premiums in 2012 as a result of marine and Sandy losses.
|
|
2013
|
|
2012
|
|
2011
|
|
Percentage Point
Change
|
|||||||
2013 to 2012
|
2012 to 2011
|
|||||||||||||
Loss and loss expense ratio
|
66.3
|
%
|
|
68.6
|
%
|
|
80.6
|
%
|
|
(2.3
|
)
|
|
(12.0
|
)
|
Acquisition expense ratio
|
12.4
|
%
|
|
12.8
|
%
|
|
12.6
|
%
|
|
(0.4
|
)
|
|
0.2
|
|
Operating expense ratio
|
18.4
|
%
|
|
19.2
|
%
|
|
18.6
|
%
|
|
(0.8
|
)
|
|
0.6
|
|
Underwriting expense ratio
|
30.8
|
%
|
|
32.0
|
%
|
|
31.2
|
%
|
|
(1.2
|
)
|
|
0.8
|
|
Combined ratio
|
97.1
|
%
|
|
100.6
|
%
|
|
111.8
|
%
|
|
(3.5
|
)
|
|
(11.2
|
)
|
|
2013
|
|
2012
|
|
2011
|
|
Percentage Point
Change
|
|||||||
2013 to 2012
|
2012 to 2011
|
|||||||||||||
Loss and loss expense ratio
|
66.3
|
%
|
|
68.6
|
%
|
|
80.6
|
%
|
|
(2.3
|
)
|
|
(12.0
|
)
|
Prior year reserve development
|
2.4
|
%
|
|
3.5
|
%
|
|
2.0
|
%
|
|
(1.1
|
)
|
|
1.5
|
|
Loss ratio excluding prior year development
|
68.7
|
%
|
|
72.1
|
%
|
|
82.6
|
%
|
|
(3.4
|
)
|
|
(10.5
|
)
|
(U.S. dollars in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Property
|
$
|
(46,387
|
)
|
|
$
|
(46,735
|
)
|
|
$
|
(8,922
|
)
|
Casualty
|
(21,983
|
)
|
|
(61,133
|
)
|
|
34,500
|
|
|||
Professional
|
75,045
|
|
|
(106,360
|
)
|
|
(87,520
|
)
|
|||
Specialty
|
(140,740
|
)
|
|
(61,755
|
)
|
|
(71,285
|
)
|
|||
Other (1)
|
32,026
|
|
|
135,917
|
|
|
56,711
|
|
|||
Total
|
$
|
(102,039
|
)
|
|
$
|
(140,066
|
)
|
|
$
|
(76,516
|
)
|
(1)
|
Other includes excess and surplus, programs, surety, structured indemnity and certain discontinued lines.
|
▪
|
Acquisition expense ratio - decreased
0.4
percentage points largely from the favorable changes in the reinsurance structure for the professional businesses and NAPC casualty business during 2013 mentioned above, the impact of marine and Sandy reinstatement premiums and adverse ceded earned premium adjustments, primarily in NAPC in 2012, partially offset by lower ceding income in the IPC casualty business and increased commissions or adverse business mix in certain NAPC and Specialty lines in 2013.
|
▪
|
Operating expense ratio - decreased
0.8
percentage points due to the leveraging of the growth in net premiums earned for the year ended
December 31, 2013
compared to the same period of 2012, partially offset by higher compensation and professional fees compared to 2012.
|
▪
|
Acquisition expense ratio - increased largely from the impact of reinstatement premiums and other adjustments to earned premium, lower ceding income in IPC, NAPC and Professional and a change in the mix of direct business in Professional.
|
▪
|
Operating expense ratio - increased mainly due to higher compensation expenses resulting from higher variable compensation costs and certain severance costs in 2012.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Gross premiums written
|
$
|
1,893,611
|
|
|
$
|
2,008,157
|
|
|
$
|
2,073,619
|
|
|
(5.7
|
)%
|
|
(3.2
|
)%
|
Net premiums written
|
1,749,889
|
|
|
1,884,508
|
|
|
1,725,724
|
|
|
(7.1
|
)%
|
|
9.2
|
%
|
|||
Net premiums earned
|
1,746,422
|
|
|
1,841,342
|
|
|
1,663,385
|
|
|
(5.2
|
)%
|
|
10.7
|
%
|
|||
Net losses and loss expenses
|
(901,465
|
)
|
|
(1,074,426
|
)
|
|
(1,126,978
|
)
|
|
(16.1
|
)%
|
|
(4.7
|
)%
|
|||
Acquisition costs
|
(353,388
|
)
|
|
(368,172
|
)
|
|
(324,128
|
)
|
|
(4.0
|
)%
|
|
13.6
|
%
|
|||
Operating expenses
|
(166,238
|
)
|
|
(157,657
|
)
|
|
(176,167
|
)
|
|
5.4
|
%
|
|
(10.5
|
)%
|
|||
Underwriting profit (loss)
|
$
|
325,331
|
|
|
$
|
241,087
|
|
|
$
|
36,112
|
|
|
34.9
|
%
|
|
N/M
|
|
Net results – structured products
|
8,229
|
|
|
(15,721
|
)
|
|
12,053
|
|
|
N/M
|
|
|
N/M
|
|
|||
Net fee income and other
|
2,320
|
|
|
2,492
|
|
|
3,903
|
|
|
(6.9
|
)%
|
|
(36.2
|
)%
|
*
|
N/M - Not Meaningful
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Bermuda
|
$
|
556,905
|
|
|
$
|
532,515
|
|
|
$
|
453,714
|
|
|
4.6
|
%
|
|
17.4
|
%
|
North America
|
513,032
|
|
|
562,383
|
|
|
766,050
|
|
|
(8.8
|
)%
|
|
(26.6
|
)%
|
|||
International
|
823,506
|
|
|
916,268
|
|
|
858,037
|
|
|
(10.1
|
)%
|
|
6.8
|
%
|
|||
Other (1)
|
168
|
|
|
(3,009
|
)
|
|
(4,182
|
)
|
|
N/M
|
|
|
(28.0
|
)%
|
|||
Total
|
$
|
1,893,611
|
|
|
$
|
2,008,157
|
|
|
$
|
2,073,619
|
|
|
(5.7
|
)%
|
|
(3.2
|
)%
|
(1)
|
Other relates to discontinued structured indemnity.
|
*
|
N/M - Not Meaningful
|
▪
|
Bermuda - increase of
4.6%
, due to new whole account business, partially offset by higher property catastrophe reinstatement premiums in 2012, driven by Sandy losses, and unfavorable property catastrophe renewals due to lower rates.
|
▪
|
North America - decrease of
8.8%
, primarily as a result of the non-renewal of a crop quota share program, partially offset by a new agricultural program.
|
▪
|
International - decrease of
10.1%
, attributable to the non-renewal of certain marine exposures as a result of the re-underwriting of this line to manage aggregate exposures; reduced and non-renewals of new business and certain premium adjustments in casualty; lower renewals in Latin America as a result of re-underwriting activities and competitive market conditions in the region; and higher reinstatement premiums in 2012, driven by marine and Sandy losses.
|
▪
|
Bermuda - increase of
17.4%
, due to favorable property catastrophe and other property renewals with price, share, line and capacity increases and new business.
|
▪
|
North America - decrease of
26.6%
, primarily as a result of changes in the structure of an agricultural program that renewed as reinsurance rather than as primary business, as well as a reduction in volume, shares and price for certain renewed property quota share and property excess of loss contracts, partially offset by new business.
|
▪
|
International - increase of
6.8%
, attributable to casualty lines through significantly higher renewals and new business and increased property catastrophe shares and rates in Continental Europe partially offset by the non-renewal of certain significant property and surety treaties as a result of the re-underwriting of the business within this region.
|
|
2013
|
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||||||
2013 to 2012
|
2012 to 2011
|
|||||||||||||
Loss and loss expense ratio
|
51.6
|
%
|
|
58.4
|
%
|
|
67.8
|
%
|
|
(6.8
|
)
|
|
(9.4
|
)
|
Acquisition expense ratio
|
20.2
|
%
|
|
20.0
|
%
|
|
19.5
|
%
|
|
0.2
|
|
|
0.5
|
|
Operating expense ratio
|
9.6
|
%
|
|
8.5
|
%
|
|
10.5
|
%
|
|
1.1
|
|
|
(2.0
|
)
|
Underwriting expense ratio
|
29.8
|
%
|
|
28.5
|
%
|
|
30.0
|
%
|
|
1.3
|
|
|
(1.5
|
)
|
Combined ratio
|
81.4
|
%
|
|
86.9
|
%
|
|
97.8
|
%
|
|
(5.5
|
)
|
|
(10.9
|
)
|
|
2013
|
|
2012
|
|
2011
|
|
Percentage Point Change
|
|||||||
2013 to 2012
|
2012 to 2011
|
|||||||||||||
Loss and loss expense ratio
|
51.6
|
%
|
|
58.4
|
%
|
|
67.8
|
%
|
|
(6.8
|
)
|
|
(9.4
|
)
|
Prior year reserve development
|
10.8
|
%
|
|
9.5
|
%
|
|
12.5
|
%
|
|
1.3
|
|
|
(3.0
|
)
|
Loss ratio excluding prior year development
|
62.4
|
%
|
|
67.9
|
%
|
|
80.3
|
%
|
|
(5.5
|
)
|
|
(12.4
|
)
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Property and other short-tail lines
|
$
|
(136,912
|
)
|
|
$
|
(107,613
|
)
|
|
$
|
(64,267
|
)
|
Casualty and other
|
(50,938
|
)
|
|
(68,215
|
)
|
|
(144,084
|
)
|
|||
Total
|
$
|
(187,850
|
)
|
|
$
|
(175,828
|
)
|
|
$
|
(208,351
|
)
|
▪
|
Operating expense ratio - increased mainly due to higher compensation costs while net premiums earned decreased compared to 2012, and higher professional fees from the establishment of new business initiatives.
|
▪
|
Acquisition expense ratio - increased largely from an increase in profit based commissions on prior underwriting years in Bermuda on property treaty lines in the year ended December 31, 2013.
|
▪
|
Operating expense ratio - decreased with reduced compensation costs due to decreased headcount and lower professional fees, while net earned premiums increased compared to 2011.
|
▪
|
Acquisition expense ratio - the acquisition expense ratio was largely in line with 2011, with a slight increase from Latin America due to a favorable movement on sliding scale commissions in the prior year.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Gross premiums written
|
$
|
324,343
|
|
|
$
|
355,753
|
|
|
$
|
394,555
|
|
|
(8.8
|
)%
|
|
(9.8
|
)%
|
Net premiums written
|
295,422
|
|
|
324,432
|
|
|
362,362
|
|
|
(8.9
|
)%
|
|
(10.5
|
)%
|
|||
Net premiums earned
|
295,422
|
|
|
324,459
|
|
|
363,018
|
|
|
(8.9
|
)%
|
|
(10.6
|
)%
|
|||
Claims and policy benefits
|
(465,702
|
)
|
|
(486,195
|
)
|
|
(535,074
|
)
|
|
(4.2
|
)%
|
|
(9.1
|
)%
|
|||
Acquisition costs
|
(26,665
|
)
|
|
(41,093
|
)
|
|
(40,318
|
)
|
|
(35.1
|
)%
|
|
1.9
|
%
|
|||
Operating expenses
|
(8,926
|
)
|
|
(9,335
|
)
|
|
(9,311
|
)
|
|
(4.4
|
)%
|
|
0.3
|
%
|
|||
Net investment income
|
286,645
|
|
|
299,443
|
|
|
318,061
|
|
|
(4.3
|
)%
|
|
(5.9
|
)%
|
|||
Net fee income and other
|
1,305
|
|
|
426
|
|
|
219
|
|
|
N/M
|
|
|
94.5
|
%
|
|||
Realized gains (losses) on investments
|
1,985
|
|
|
(21,003
|
)
|
|
(89,999
|
)
|
|
(109.5
|
)%
|
|
(76.7
|
)%
|
|||
Contribution from Life operations
|
$
|
84,064
|
|
|
$
|
66,702
|
|
|
$
|
6,596
|
|
|
26.0
|
%
|
|
N/M
|
|
*
|
N/M - Not Meaningful
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||||||||||||||||||||||||||
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Net
Premiums
Earned
|
|||||||||||||||||||
Annuity
|
$
|
150,008
|
|
|
$
|
122,715
|
|
|
$
|
122,715
|
|
|
$
|
155,256
|
|
|
$
|
126,912
|
|
|
$
|
126,912
|
|
|
$
|
161,800
|
|
|
$
|
132,232
|
|
|
$
|
132,232
|
|
Other Life
|
174,335
|
|
|
172,707
|
|
|
172,707
|
|
|
200,497
|
|
|
197,520
|
|
|
197,547
|
|
|
232,755
|
|
|
230,130
|
|
|
230,786
|
|
|||||||||
Total
|
$
|
324,343
|
|
|
$
|
295,422
|
|
|
$
|
295,422
|
|
|
$
|
355,753
|
|
|
$
|
324,432
|
|
|
$
|
324,459
|
|
|
$
|
394,555
|
|
|
$
|
362,362
|
|
|
$
|
363,018
|
|
|
2013
|
|
2012
|
||
Total Return on Investments (1)
|
|
|
|
||
P&C portfolio
|
1.0
|
%
|
|
5.5
|
%
|
Life portfolio
|
(0.6
|
)%
|
|
11.5
|
%
|
|
|
|
|
||
Other Portfolios (2)
|
|
|
|
||
Alternative portfolio (3)
|
12.2
|
%
|
|
5.6
|
%
|
Equity portfolio
|
21.7
|
%
|
|
15.5
|
%
|
(1)
|
The performance of investment portfolios is measured on a local currency basis. For aggregate performance calculation, respective local currency balances are translated to U.S. dollars at quarter end rates to calculate composite portfolio results.
|
(2)
|
Performance on Other Portfolios is included in the Total Return on Investments.
|
(3)
|
Performance on the alternative portfolio reflects the year ended November 30, 2013 and 2012, respectively for both equity and non-equity alternative funds.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Net investment income – P&C operations (1)
|
$
|
671,071
|
|
|
$
|
712,905
|
|
|
$
|
819,708
|
|
|
(5.9
|
)%
|
|
(13.0
|
)%
|
Net income (loss) from investment fund affiliates (2)
|
$
|
138,391
|
|
|
$
|
58,504
|
|
|
$
|
26,253
|
|
|
136.5
|
%
|
|
122.8
|
%
|
Net realized gains (losses) on investments
|
$
|
85,792
|
|
|
$
|
14,098
|
|
|
$
|
(188,359
|
)
|
|
N/M
|
|
|
N/M
|
|
Net realized and unrealized gains (losses) on investment and other derivative instruments (3)
|
$
|
7,798
|
|
|
$
|
5,221
|
|
|
$
|
(10,738
|
)
|
|
49.4
|
%
|
|
N/M
|
|
(1)
|
Net investment income relating to P&C operations includes the net investment income related to the net results from structured products.
|
(2)
|
We generally record the income related to alternative fund affiliates on a one-month lag and the private investment fund affiliates on a three-month lag based upon the availability of the information provided by the investees.
|
(3)
|
For a summary of realized and unrealized gains and losses on all derivative instruments, see Item 8, Note 14, “Derivative Instruments,” to the Consolidated Financial Statements included herein.
|
*
|
N/M - Not Meaningful
|
▪
|
Net realized gains of
$104.1 million
resulted primarily from redemptions of non-equity alternative investments and sales of non-Agency RMBS, equity and non-U.S. Sovereign Government securities.
|
▪
|
Realized losses of approximately
$16.3 million
related to the write-down of certain of our AFS investments. The main components of the net impairment charges were:
|
▪
|
$7.7 million
for structured securities, principally non-Agency RMBS, where we determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.
|
▪
|
$4.3 million
related to medium term notes backed primarily by European investment grade credit. On certain notes, management concluded that expected future returns on the underlying assets were not sufficient to support the previously reported amortized cost.
|
▪
|
$4.3 million
related to foreign exchange losses.
|
▪
|
Net realized gains of
$94.8 million
resulted from sales transactions primarily from a repositioning of the Agency RMBS portfolio and sales of equity and non-U.S. Sovereign Government securities.
|
▪
|
Realized losses of approximately
$80.7 million
related to the write-down of certain of the Company’s AFS investments. The significant components of the net impairment charges were:
|
▪
|
$48.7 million
for structured securities, principally non-Agency RMBS, where we determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.
|
▪
|
$19.1 million
related to medium term notes backed primarily by European investment grade credit. On certain notes, management concluded that expected future returns on the underlying assets were not sufficient to support the previously reported amortized cost. We also adjusted the estimated remaining holding period of certain notes resulting in a shorter reinvestment spectrum.
|
▪
|
$5.3 million
related to foreign exchange losses primarily arising on Swiss franc and U.K. sterling denominated securities held in U.S. dollar portfolios.
|
▪
|
$3.7 million
related to certain equities as the holdings were in a loss position for more than 11 months.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage Change
|
||||||||||
2013 to 2012
|
2012 to 2011
|
||||||||||||||||
Net income (loss) from operating affiliates (1)
|
$
|
119,804
|
|
|
$
|
53,887
|
|
|
$
|
76,786
|
|
|
122.3
|
%
|
|
(29.8
|
)%
|
Foreign exchange (gains) losses
|
$
|
(28,243
|
)
|
|
$
|
10,545
|
|
|
$
|
(40,640
|
)
|
|
N/M
|
|
|
N/M
|
|
Corporate operating expenses
|
$
|
209,454
|
|
|
$
|
204,502
|
|
|
$
|
160,596
|
|
|
2.4
|
%
|
|
27.3
|
%
|
Interest expense (2)
|
$
|
107,486
|
|
|
$
|
105,925
|
|
|
$
|
154,084
|
|
|
1.5
|
%
|
|
(31.3
|
)%
|
Impairment of goodwill
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
429,020
|
|
|
—%
|
|
|
(100.0
|
)%
|
Income tax expense
|
$
|
77,505
|
|
|
$
|
34,028
|
|
|
$
|
59,707
|
|
|
127.8
|
%
|
|
(43.0
|
)%
|
(1)
|
We generally record the income related to certain operating affiliates on a three-month lag based upon the availability of the information provided by the investees.
|
(2)
|
Interest expense includes costs related to our debt and collateral facilities and does not include deposit liability accretion, which is included in Net investment results - structured products.
|
*
|
N/M - Not Meaningful
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|
Percentage Change
|
||||||||||
2013 to 2012
|
|
2012 to 2011
|
|||||||||||||||
Net income (loss) from financial operating affiliates
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,018
|
)
|
|
—%
|
|
|
(100.0
|
)%
|
Net income (loss) from investment manager affiliates
|
78,644
|
|
|
28,776
|
|
|
56,913
|
|
|
173.3
|
%
|
|
(49.4
|
)%
|
|||
Net income (loss) from strategic operating affiliates
|
41,160
|
|
|
25,111
|
|
|
20,891
|
|
|
63.9
|
%
|
|
20.2
|
%
|
|||
Total
|
$
|
119,804
|
|
|
$
|
53,887
|
|
|
$
|
76,786
|
|
|
122.3
|
%
|
|
(29.8
|
)%
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||||||||
Carrying
Value (1)
|
|
Percent of
Total
|
|
Carrying
Value (1)
|
|
Percent of
Total
|
|||||||
Cash and cash equivalents
|
$
|
1,800,832
|
|
|
4.9
|
%
|
|
$
|
2,618,378
|
|
|
7.1
|
%
|
Net receivable/ (payable) for investments sold/ (purchased)
|
$
|
84,603
|
|
|
0.2
|
%
|
|
$
|
(86,110
|
)
|
|
(0.2
|
)%
|
Accrued investment income
|
$
|
346,809
|
|
|
0.9
|
%
|
|
$
|
342,778
|
|
|
0.9
|
%
|
Short-term investments
|
$
|
456,288
|
|
|
1.2
|
%
|
|
$
|
322,703
|
|
|
0.9
|
%
|
Fixed maturities - AFS:
|
|
|
|
|
|
|
|
||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
2,501,851
|
|
|
6.8
|
%
|
|
$
|
2,034,617
|
|
|
5.5
|
%
|
Corporate - Financials (3) (4)
|
3,481,991
|
|
|
9.5
|
%
|
|
3,240,399
|
|
|
8.8
|
%
|
||
Corporate - Non Financials (4)
|
7,643,839
|
|
|
20.9
|
%
|
|
7,241,601
|
|
|
19.6
|
%
|
||
RMBS – Agency
|
3,546,122
|
|
|
9.7
|
%
|
|
5,255,493
|
|
|
14.3
|
%
|
||
RMBS – Non-Agency
|
398,768
|
|
|
1.1
|
%
|
|
647,733
|
|
|
1.8
|
%
|
||
CMBS
|
1,246,795
|
|
|
3.4
|
%
|
|
1,077,251
|
|
|
2.9
|
%
|
||
CDO
|
717,313
|
|
|
2.0
|
%
|
|
709,816
|
|
|
1.9
|
%
|
||
Other asset-backed securities (5)
|
1,242,104
|
|
|
3.4
|
%
|
|
1,470,711
|
|
|
4.0
|
%
|
||
U.S. States and political subdivisions of the States
|
1,845,812
|
|
|
5.0
|
%
|
|
1,911,017
|
|
|
5.2
|
%
|
||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
4,875,541
|
|
|
13.3
|
%
|
|
4,258,282
|
|
|
11.6
|
%
|
||
Total fixed maturities - AFS
|
$
|
27,500,136
|
|
|
75.1
|
%
|
|
$
|
27,846,920
|
|
|
75.6
|
%
|
Fixed maturities - held to maturity ("HTM"):
|
|
|
|
|
|
|
|
||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
10,993
|
|
|
—
|
%
|
|
$
|
10,788
|
|
|
—
|
%
|
Corporate - Financials (3) (4)
|
269,547
|
|
|
0.7
|
%
|
|
266,565
|
|
|
0.7
|
%
|
||
Corporate - Non Financials (4)
|
1,117,316
|
|
|
3.1
|
%
|
|
1,158,755
|
|
|
3.1
|
%
|
||
RMBS – Non-Agency
|
66,987
|
|
|
0.2
|
%
|
|
83,205
|
|
|
0.2
|
%
|
||
CMBS
|
144,924
|
|
|
0.4
|
%
|
|
12,751
|
|
|
—
|
%
|
||
Other asset-backed securities (5)
|
106,540
|
|
|
0.3
|
%
|
|
222,340
|
|
|
0.6
|
%
|
||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
1,142,388
|
|
|
3.1
|
%
|
|
1,060,043
|
|
|
2.9
|
%
|
||
Total fixed maturities - HTM
|
$
|
2,858,695
|
|
|
7.8
|
%
|
|
$
|
2,814,447
|
|
|
7.5
|
%
|
Equity securities (6)
|
1,040,237
|
|
|
2.8
|
%
|
|
649,359
|
|
|
1.8
|
%
|
||
Investments in affiliates
|
1,370,943
|
|
|
3.8
|
%
|
|
1,126,875
|
|
|
3.1
|
%
|
||
Other investments
|
1,164,630
|
|
|
3.3
|
%
|
|
1,219,879
|
|
|
3.3
|
%
|
||
Total investments and cash and cash equivalents
|
$
|
36,623,173
|
|
|
100.0
|
%
|
|
$
|
36,855,229
|
|
|
100.0
|
%
|
(1)
|
Carrying values represents the fair value for AFS fixed maturities and amortized cost for HTM securities.
|
(2)
|
U.S. Government and Government-Related/Supported and Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported include government-related securities with an amortized cost of
$2,241.5 million
and
$1,912.7 million
and carrying value of
$2,261.3
|
(3)
|
Included in Corporate - Financials are gross unrealized losses of
$12.7 million
and
$23.7 million
on Tier One and Upper Tier Two securities of financial institutions (“Hybrids”) with a carrying value of
$114.7 million
and
$190.1 million
at
December 31, 2013 and 2012
, respectively, as well as gross unrealized losses of
$9.3 million
and
$11.8 million
on subordinated debt (including lower Tier Two securities) with a carrying value of
$86.6 million
and
$111.5 million
at
December 31, 2013 and 2012
, respectively.
|
(4)
|
Included within Corporate are certain floating rate medium term notes supported primarily by pools of European investment grade credit with varying degrees of leverage. The notes have a carrying value of
$154.6 million
and
$194.3 million
and an amortized cost of
$147.7 million
and
$194.8 million
at
December 31, 2013 and 2012
, respectively. These securities have been allocated ratings of the underlying pool of securities. These notes allow the investor to participate in cash flows of the underlying bonds including certain residual values, which could serve to either decrease or increase the ultimate values of these notes.
|
(5)
|
Covered Bonds within Fixed maturities - AFS with a carrying value of
$553.1 million
and
$647.1 million
at
December 31, 2013 and 2012
, respectively, and Covered Bonds within Fixed maturities - HTM with a carrying value of
$8.6 million
and
$8.6 million
at
December 31, 2013 and 2012
, respectively, are included within Other asset-backed securities to align our classification to market indices.
|
(6)
|
Included within Equity securities are investments in fixed income funds with a carrying value of
$87.4 million
and
$101.9 million
at
December 31, 2013 and 2012
, respectively.
|
Investments by Credit Rating (1)
|
2013
|
|
2012
|
||||||||||
(U.S. dollars in millions)
|
Carrying
Value
|
|
Percent of
Total
|
|
Carrying
Value
|
|
Percent of
Total
|
||||||
AAA
|
$
|
12,957
|
|
|
40.6
|
%
|
|
$
|
15,631
|
|
|
47.0
|
%
|
AA
|
6,738
|
|
|
21.1
|
%
|
|
5,954
|
|
|
17.8
|
%
|
||
A
|
7,761
|
|
|
24.3
|
%
|
|
7,436
|
|
|
22.3
|
%
|
||
BBB
|
3,654
|
|
|
11.4
|
%
|
|
3,317
|
|
|
10.0
|
%
|
||
BB and below
|
792
|
|
|
2.5
|
%
|
|
934
|
|
|
2.8
|
%
|
||
Not rated
|
18
|
|
|
0.1
|
%
|
|
19
|
|
|
0.1
|
%
|
||
Total
|
$
|
31,920
|
|
|
100.0
|
%
|
|
$
|
33,291
|
|
|
100.0
|
%
|
(1)
|
The credit rating for each asset reflected above was principally determined based on the weighted average rating of the individual securities from Standard & Poor's, Moody's Investors Service and Fitch Ratings (when available). U.S. Agency debt and related mortgage-backed securities, whether with implicit or explicit government support, reflect the credit quality rating of the U.S. government for the purpose of these calculations.
|
▪
|
gross unrealized losses of
$131.3 million
related to the P&C portfolio of Government and Government-Related holdings. Securities in a gross unrealized loss position had a fair value of
$4.0 billion
at
December 31, 2013
.
|
▪
|
gross unrealized losses of
$84.8 million
related to the Corporate holdings within our P&C investments portfolio. Securities in a gross unrealized loss position had a fair value of
$2.8 billion
at
December 31, 2013
. Of the gross unrealized losses,
$27.9 million
relate to financial institutions.
|
▪
|
gross unrealized losses of
$31.1 million
related to the P&C portfolio of Non-Agency RMBS portfolio (which consists of our holdings of sub-prime Non-Agency RMBS, second liens, asset backed securities collateralized debt obligations ("ABS CDOs") with sub-prime collateral, Alt-A and Prime RMBS). Securities in an unrealized loss position had a fair value of
$261.9 million
at
December 31, 2013
. The Company has incurred realized losses, consisting of charges for
|
▪
|
gross unrealized losses of
$42.9 million
related to the P&C portfolio of Core CDO holdings (defined by us as investments in non-subprime CDOs), which consisted primarily of CLOs. Securities in a gross unrealized loss position had a fair value of
$632.9 million
at
December 31, 2013
.
|
▪
|
gross unrealized losses of
$49.9 million
related to our Life operations investment portfolio. Securities in a gross unrealized loss position had a fair value of
$1.0 billion
at
December 31, 2013
. Of these gross unrealized losses,
$9.7 million
related to
$177.3 million
of exposures to corporate financial institutions, including
$5.7 million
related to Tier One and Upper Tier Two securities.
|
Security Type and Length of Time in a Continual Unrealized Loss Position
|
December 31, 2013
|
||||||
(U.S. dollars in thousands)
|
Amount of
Unrealized Loss
|
|
Fair Value of
Securities in an
Unrealized Loss
Position
|
||||
Fixed Maturities and Short-Term Investments
|
|
|
|
||||
Less than 6 months
|
$
|
(46,571
|
)
|
|
$
|
4,614,232
|
|
At least 6 months but less than 12 months
|
(183,538
|
)
|
|
4,257,636
|
|
||
At least 12 months but less than 2 years
|
(55,791
|
)
|
|
712,567
|
|
||
2 years and over
|
(133,666
|
)
|
|
1,404,877
|
|
||
Total
|
$
|
(419,566
|
)
|
|
$
|
10,989,312
|
|
Equities
|
|
|
|
||||
Less than 6 months
|
$
|
(1,800
|
)
|
|
$
|
39,170
|
|
At least 6 months but less than 12 months
|
(15,670
|
)
|
|
116,283
|
|
||
Total
|
$
|
(17,470
|
)
|
|
$
|
155,453
|
|
Maturity profile in years of AFS fixed income securities in a gross unrealized loss position
|
December 31, 2013
|
||||||
(U.S. dollars in thousands)
|
Amount of
Unrealized Loss
|
|
Fair Value of
Securities in an
Unrealized Loss
Position
|
||||
Less than 1 year remaining
|
$
|
(18,267
|
)
|
|
$
|
568,666
|
|
At least 1 year but less than 5 years remaining (1)
|
(67,155
|
)
|
|
3,558,515
|
|
||
At least 5 years but less than 10 years remaining (1)
|
(109,188
|
)
|
|
2,678,324
|
|
||
At least 10 years but less than 20 years remaining (1)
|
(34,739
|
)
|
|
420,859
|
|
||
At least 20 years or more remaining (1)
|
(29,467
|
)
|
|
386,802
|
|
||
RMBS – Agency
|
(62,077
|
)
|
|
1,654,965
|
|
||
RMBS – Non-Agency
|
(31,126
|
)
|
|
255,150
|
|
||
CMBS
|
(15,773
|
)
|
|
540,012
|
|
||
CDO
|
(42,934
|
)
|
|
632,852
|
|
||
Other asset-backed securities
|
(8,840
|
)
|
|
293,167
|
|
||
Total
|
$
|
(419,566
|
)
|
|
$
|
10,989,312
|
|
(1)
|
Tier One and Upper Tier Two securities, representing committed term debt and hybrid instruments senior to the common and preferred equities of the financial institutions, are allocated based on the call date unless such security is not called on such date, in which case it is allocated the final or longest expected maturity. Medium term notes supported primarily by pools of European investment grade credit with varying degrees of leverage are allocated based on contractual maturity.
|
Maturity profile in years of HTM fixed income securities in a gross unrealized loss position
|
December 31, 2013
|
||||||
(U.S. dollars in thousands)
|
Amount of
Unrealized Loss
|
|
Fair Value of
Securities in an
Unrealized Loss
Position
|
||||
Less than 1 year remaining
|
$
|
(45
|
)
|
|
$
|
3,724
|
|
At least 1 year but less than 5 years remaining
|
(63
|
)
|
|
2,041
|
|
||
At least 5 years but less than 10 years remaining
|
(33
|
)
|
|
6,287
|
|
||
At least 10 years but less than 20 years remaining
|
(271
|
)
|
|
15,281
|
|
||
At least 20 years or more remaining
|
(1,198
|
)
|
|
31,237
|
|
||
Other asset-backed securities
|
—
|
|
|
—
|
|
||
Total
|
$
|
(1,610
|
)
|
|
$
|
58,570
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||
(U.S. dollars in thousands)
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
Fixed maturities - European Periphery Nations - AFS:
|
|
|
|
|
|
|
|
||||||||
Government and government related – National Governments
|
$
|
33,879
|
|
|
$
|
33,606
|
|
|
$
|
5,350
|
|
|
$
|
4,896
|
|
Government and government related – Local Governments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate investments – Financial Institutions
|
754
|
|
|
757
|
|
|
372
|
|
|
374
|
|
||||
Corporate investments – Non-Financial Institutions
|
55,737
|
|
|
59,083
|
|
|
57,032
|
|
|
57,720
|
|
||||
Structured Credit
|
8,369
|
|
|
9,228
|
|
|
7,942
|
|
|
9,618
|
|
||||
Total
|
$
|
98,739
|
|
|
$
|
102,674
|
|
|
$
|
70,696
|
|
|
$
|
72,608
|
|
Due less than one year
|
$
|
7,159
|
|
|
$
|
6,918
|
|
|
$
|
5,392
|
|
|
$
|
5,431
|
|
Due after 1 through 5 years
|
46,306
|
|
|
46,756
|
|
|
16,144
|
|
|
15,744
|
|
||||
Due after 5 through 10 years
|
17,888
|
|
|
18,128
|
|
|
14,924
|
|
|
15,111
|
|
||||
Due after 10 years
|
27,386
|
|
|
30,872
|
|
|
34,236
|
|
|
36,322
|
|
||||
Total
|
$
|
98,739
|
|
|
$
|
102,674
|
|
|
$
|
70,696
|
|
|
$
|
72,608
|
|
Fixed maturities - European Periphery Nations - HTM:
|
|
|
|
|
|
|
|
||||||||
Government and government related – National Governments
|
$
|
12,536
|
|
|
$
|
11,894
|
|
|
$
|
12,237
|
|
|
$
|
10,518
|
|
Government and government related – Local Governments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Corporate investments – Non-Financial Institutions
|
61,058
|
|
|
62,732
|
|
|
59,757
|
|
|
60,199
|
|
||||
Structured Credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
73,594
|
|
|
$
|
74,626
|
|
|
$
|
71,994
|
|
|
$
|
70,717
|
|
Due less than one year
|
$
|
4,292
|
|
|
$
|
4,296
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after 1 through 5 years
|
5,144
|
|
|
5,359
|
|
|
4,285
|
|
|
4,332
|
|
||||
Due after 5 through 10 years
|
7,406
|
|
|
7,655
|
|
|
12,372
|
|
|
12,937
|
|
||||
Due after 10 years
|
56,752
|
|
|
57,316
|
|
|
55,337
|
|
|
53,448
|
|
||||
Total
|
$
|
73,594
|
|
|
$
|
74,626
|
|
|
$
|
71,994
|
|
|
$
|
70,717
|
|
|
December 31, 2013
|
||||||||||||||||||||||
(U.S. dollars in thousands)
|
Greece
|
|
Italy
|
|
Ireland
|
|
Portugal
|
|
Spain
|
|
TOTAL
|
||||||||||||
Gross Unrealized (Losses) - European Periphery Nations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and government related – National Governments
|
$
|
—
|
|
|
$
|
(965
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
$
|
(976
|
)
|
Government and government related – Local Governments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate investments – Financial Institutions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate investments – Non-Financial Institutions
|
—
|
|
|
(891
|
)
|
|
(145
|
)
|
|
—
|
|
|
(26
|
)
|
|
(1,062
|
)
|
||||||
Structured Credit
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
||||||
Total gross unrealized gains (losses) relating to European Periphery Nations
|
$
|
—
|
|
|
$
|
(1,856
|
)
|
|
$
|
(154
|
)
|
|
$
|
—
|
|
|
$
|
(37
|
)
|
|
$
|
(2,047
|
)
|
Net Unrealized Gains (Losses) - European Periphery Nations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Government and government related – National Governments
|
$
|
—
|
|
|
$
|
(919
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
(916
|
)
|
Government and government related – Local Governments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate investments – Financial Institutions
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Corporate investments – Non-Financial Institutions
|
154
|
|
|
1,064
|
|
|
(6
|
)
|
|
—
|
|
|
3,808
|
|
|
5,020
|
|
||||||
Structured Credit
|
—
|
|
|
—
|
|
|
862
|
|
|
—
|
|
|
—
|
|
|
862
|
|
||||||
Total net unrealized gains (losses) relating to European Periphery Nations
|
$
|
154
|
|
|
$
|
145
|
|
|
$
|
859
|
|
|
$
|
—
|
|
|
$
|
3,811
|
|
|
$
|
4,969
|
|
(U.S. dollars in thousands)
|
Total Assets and Liabilities Carried
at Fair Value at December 31, 2013
|
|
Fair Value of Level 3 Assets and Liabilities
|
|
Level 3 Assets and Liabilities as a Percentage of Total Assets and Liabilities Carried at Fair Value, by Class
|
|||||
Assets
|
|
|
|
|
|
|||||
Fixed maturities, at fair value
|
|
|
|
|
|
|||||
U.S. Government and Government Agency-Related/Supported
|
$
|
2,501,851
|
|
|
$
|
—
|
|
|
—
|
%
|
Corporate (1)
|
11,125,830
|
|
|
31,573
|
|
|
0.3
|
%
|
||
RMBS – Agency
|
3,546,122
|
|
|
10,473
|
|
|
0.3
|
%
|
||
RMBS – Non-Agency
|
398,768
|
|
|
9
|
|
|
—
|
%
|
||
CMBS
|
1,246,795
|
|
|
12,533
|
|
|
1.0
|
%
|
||
CDO
|
717,313
|
|
|
710,253
|
|
|
99.0
|
%
|
||
Other asset-backed securities (1)
|
1,242,104
|
|
|
11,877
|
|
|
1.0
|
%
|
||
U.S. States and political subdivisions of the States
|
1,845,812
|
|
|
—
|
|
|
—
|
%
|
||
Non-U.S. Sovereign Government, Supranational and Government-Related
|
4,875,541
|
|
|
—
|
|
|
—
|
%
|
||
Total Fixed maturities, at fair value
|
$
|
27,500,136
|
|
|
$
|
776,718
|
|
|
2.8
|
%
|
Equity securities, at fair value
|
1,040,237
|
|
|
—
|
|
|
—
|
%
|
||
Short-term investments, at fair value
|
456,288
|
|
|
2,015
|
|
|
0.4
|
%
|
||
Total investments available for sale
|
$
|
28,996,661
|
|
|
$
|
778,733
|
|
|
2.7
|
%
|
Cash equivalents (2)
|
1,061,150
|
|
|
—
|
|
|
—
|
%
|
||
Other investments (3)
|
870,582
|
|
|
113,472
|
|
|
13.0
|
%
|
||
Other assets (4)
|
26,145
|
|
|
—
|
|
|
—
|
%
|
||
Total assets carried at fair value
|
$
|
30,954,538
|
|
|
$
|
892,205
|
|
|
2.9
|
%
|
Liabilities
|
|
|
|
|
|
|||||
Financial instruments sold, but not yet purchased (5)
|
$
|
28,861
|
|
|
$
|
—
|
|
|
—
|
%
|
Other liabilities (6)
|
104,143
|
|
|
29,110
|
|
|
28.0
|
%
|
||
Total liabilities carried at fair value
|
$
|
133,004
|
|
|
$
|
29,110
|
|
|
21.9
|
%
|
(1)
|
Covered Bonds with a fair value of
$553.1 million
are included within Other asset-backed securities.
|
(2)
|
Cash equivalents balances subject to fair value measurements include certificates of deposit and money market funds.
|
(3)
|
The Other investments balances exclude certain structured transactions including certain investments in project finance transactions and a payment obligation (for further information, see Item 8, Note 7, “Other Investments,” to the Consolidated Financial Statements included herein) that has provided liquidity financing to a structured credit vehicle as a part of a third party medium term note facility. These Other investments are carried at amortized cost, which totaled
$294.0 million
at
December 31, 2013
.
|
(4)
|
Other assets include derivative instruments, reported on a gross basis.
|
(5)
|
Financial instruments sold, but not yet purchased, are included within “Payable for investments purchased” on the balance sheet.
|
(6)
|
Other liabilities include derivative instruments, reported on a gross basis.
|
(U.S. dollars in thousands)
|
Gross unpaid
losses and loss
expenses
|
|
Unpaid
losses and
loss expenses
recoverable
|
|
Net
unpaid losses
and loss
expenses
|
||||||
Balance at December 31, 2012
|
$
|
20,484,121
|
|
|
$
|
(3,361,703
|
)
|
|
$
|
17,122,418
|
|
Losses and loss expenses incurred
|
4,424,901
|
|
|
(693,437
|
)
|
|
3,731,464
|
|
|||
Losses and loss expenses paid/recovered
|
(4,496,802
|
)
|
|
668,663
|
|
|
(3,828,139
|
)
|
|||
Foreign exchange and other
|
68,845
|
|
|
(28,258
|
)
|
|
40,587
|
|
|||
Balance at December 31, 2013
|
$
|
20,481,065
|
|
|
$
|
(3,414,735
|
)
|
|
$
|
17,066,330
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Reinsurance balances receivable
|
$
|
163,067
|
|
|
$
|
113,023
|
|
Reinsurance recoverable on future policy benefits
|
20,493
|
|
|
20,394
|
|
||
Reinsurance recoverable on unpaid losses and loss expenses
|
3,456,088
|
|
|
3,415,043
|
|
||
Bad debt reserve on unpaid losses and loss expenses recoverable and reinsurance balances receivable
|
(85,533
|
)
|
|
(107,930
|
)
|
||
Net paid and unpaid losses and loss expenses recoverable and reinsurance balances receivable
|
$
|
3,554,115
|
|
|
$
|
3,440,530
|
|
Name of Reinsurer
|
Reinsurer Financial Strength Rating
|
|
% of Total
|
|
Munich Reinsurance Company
|
AA-/Stable
|
|
26.9
|
%
|
Swiss Reinsurance Company
|
AA-/Stable
|
|
10.5
|
%
|
Lloyd’s Syndicate
|
A+/Positive
|
|
6.1
|
%
|
Swiss Re Europe S.A.
|
AA-/Stable
|
|
5.0
|
%
|
Transatlantic Reinsurance Company
|
A+/Stable
|
|
4.7
|
%
|
▪
|
sufficient capital to maintain our financial strength and credit ratings, as issued by several ratings agencies, at levels considered necessary by management to enable our key operating subsidiaries to compete;
|
▪
|
sufficient capital to enable our regulated subsidiaries to meet the regulatory capital levels required in the United States, the U.K., Bermuda, Ireland, Switzerland and other key markets;
|
▪
|
letters of credit and other forms of collateral that are required to be posted or deposited, as the case may be, by our operating subsidiaries that are “non-admitted” under U.S. state insurance regulations in order for the U.S. cedant to receive statutory credit for reinsurance. We also use letters of credit to support our operations at Lloyd's; and
|
▪
|
revolving credit facilities to meet short-term liquidity needs.
|
▪
|
the credit available from banks may be reduced due to market conditions resulting in our need to pledge our investment portfolio to customers, which could result in a lower investment yield;
|
▪
|
we may be downgraded by one or more rating agencies, which could materially and negatively impact our business, financial condition, results of operations and/or liquidity; and
|
▪
|
the volume of business that our subsidiaries that are not admitted in the United States are able to transact could be reduced if we are unable to renew our letter of credit facilities at an appropriate amount.
|
▪
|
Consolidation within the banking industry may result in the aggregate amount of credit provided to us being reduced.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Non-controlling interests - Series D preference ordinary shares
|
$
|
345,000
|
|
|
$
|
345,000
|
|
Non-controlling interests - Series E preference ordinary shares
|
999,500
|
|
|
999,500
|
|
||
Ordinary share capital
|
9,997,633
|
|
|
10,510,077
|
|
||
Total ordinary shares and non-controlling interests
|
$
|
11,342,133
|
|
|
$
|
11,854,577
|
|
Notes payable and debt
|
2,260,436
|
|
|
1,666,103
|
|
||
Total
|
$
|
13,602,569
|
|
|
$
|
13,520,680
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Ordinary shareholders’ equity – beginning of period
|
$
|
10,510,077
|
|
|
$
|
9,411,660
|
|
Net income (loss) attributable to XL Group plc
|
1,059,916
|
|
|
651,128
|
|
||
Share buybacks
|
(675,616
|
)
|
|
(402,931
|
)
|
||
Share issues
|
12,665
|
|
|
6,945
|
|
||
Ordinary share dividends
|
(162,043
|
)
|
|
(135,572
|
)
|
||
Change in accumulated other comprehensive income
|
(783,363
|
)
|
|
936,955
|
|
||
Share based compensation and other
|
35,997
|
|
|
41,892
|
|
||
Ordinary shareholders’ equity – end of period
|
$
|
9,997,633
|
|
|
$
|
10,510,077
|
|
(U.S. dollars in thousands)
|
|
Commitment/
Debt
|
|
In Use/
Outstanding
|
|
Year of
Expiry
|
|
Payments Due by Period
|
||||||||||||||||||
Less than
1 Year
|
|
1 to 3
Years
|
|
3 to 5
Years
|
|
After 5
Years
|
||||||||||||||||||||
5-year revolver
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
5.25% Senior Notes
|
|
600,000
|
|
|
599,346
|
|
|
2014
|
|
600,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
2.30% Senior Notes
|
|
300,000
|
|
|
296,683
|
|
|
2018
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
||||||
5.75% Senior Notes
|
|
400,000
|
|
|
396,661
|
|
|
2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
||||||
6.375% Senior Notes
|
|
350,000
|
|
|
348,811
|
|
|
2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350,000
|
|
||||||
6.25% Senior Notes
|
|
325,000
|
|
|
322,905
|
|
|
2027
|
|
—
|
|
|
—
|
|
|
—
|
|
|
325,000
|
|
||||||
5.25% Senior Notes
|
|
300,000
|
|
|
296,030
|
|
|
2043
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
||||||
|
|
$
|
3,275,000
|
|
|
$
|
2,260,436
|
|
|
|
|
$
|
600,000
|
|
|
$
|
—
|
|
|
$
|
300,000
|
|
|
$
|
1,375,000
|
|
Adjustment to carrying value – impact of fair value hedges
|
|
2,767
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
|
$
|
2,263,203
|
|
|
|
|
|
|
|
|
|
|
|
▪
|
a revolving credit facility of
$1.0 billion
, which is reduced by any amount used for unsecured letters of credit issued under the Syndicated Credit Agreements, defined below; and
|
▪
|
senior unsecured notes of approximately
$2.3 billion
issued by XL-Cayman. These notes require XL-Cayman to pay a fixed rate of interest during their terms. At
December 31, 2013
, there were six outstanding issues of senior unsecured notes:
|
▪
|
$600 million senior notes due September 2014, with a fixed coupon of 5.25%. The security is publicly traded. The notes were issued in two tranches of $300 million aggregate principal amount each - one tranche at 99.432% and the other at 98.419% with aggregate net proceeds of $590.9 million. Related expenses of the offering amounted to $2.7 million.
|
▪
|
$300 million senior notes due December 2018, with a fixed coupon of 2.30%. The security is publicly traded. The notes were issued at 99.69% and net proceeds were $296.6 million. Related expenses of the offering amounted to $2.5 million.
|
▪
|
$400 million senior notes due October 2021, with a fixed coupon of 5.75%. The security is publicly traded. The notes were issued at 100.0% and net proceeds were $395.7 million. Related expenses of the offering amounted to $4.3 million.
|
▪
|
$350 million senior notes due November 2024, with a fixed coupon of 6.375%. The security is publicly traded. The notes were issued at 100.0% and net proceeds were $347.8 million. Related expenses of the offering amounted to $2.2 million.
|
▪
|
$325 million of senior notes due May 2027, with a fixed coupon of 6.25%. The security is publicly traded. The notes were issued at 99.805% and net proceeds were $321.9 million. Related expenses of the offering amounted to $2.5 million.
|
▪
|
$300 million senior notes due December 2043, with a fixed coupon of 5.25%. The security is publicly traded. The notes were issued at 99.77% and net proceeds were $296.0 million. Related expenses of the offering amounted to $3.3 million.
|
(U.S. dollars in thousands)
|
Commitment/
Debt
|
|
In Use/
Outstanding
|
|
Year of
Expiry
|
|
Amount of Commitment
Expiration by Period
|
||||||||||||||||||
Less than
1 Year
|
|
1 to 3
Years
|
|
3 to 5
Years
|
|
After 5
Years
|
|||||||||||||||||||
LOC Facility (1) (2)
|
$
|
1,000,000
|
|
|
$
|
38,606
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,606
|
|
|
$
|
—
|
|
LOC Facility (2)
|
1,000,000
|
|
|
854,275
|
|
|
2018
|
|
—
|
|
|
—
|
|
|
854,275
|
|
|
—
|
|
||||||
LOC Facility
|
750,000
|
|
|
292,034
|
|
|
Continuous
|
|
—
|
|
|
—
|
|
|
—
|
|
|
292,034
|
|
||||||
LOC Facility
|
250,000
|
|
|
135,510
|
|
|
Continuous
|
|
—
|
|
|
—
|
|
|
—
|
|
|
135,510
|
|
||||||
LOC Facility (3)
|
275,000
|
|
|
275,000
|
|
|
2015
|
|
—
|
|
|
275,000
|
|
|
—
|
|
|
—
|
|
||||||
LOC Facility (3)
|
200,000
|
|
|
200,000
|
|
|
2015
|
|
—
|
|
|
200,000
|
|
|
—
|
|
|
—
|
|
||||||
LOC Facility (3)
|
100,000
|
|
|
100,000
|
|
|
2016
|
|
—
|
|
|
100,000
|
|
|
—
|
|
|
—
|
|
||||||
Total LOC facilities
|
$
|
3,575,000
|
|
|
$
|
1,895,425
|
|
|
|
|
$
|
—
|
|
|
$
|
575,000
|
|
|
$
|
892,881
|
|
|
$
|
427,544
|
|
(1)
|
This letter of credit facility includes $1.0 billion that is also included in the “5-year revolver” listed under Debt. See the discussion regarding the Syndicated Credit Agreements below.
|
(2)
|
We have the option to increase the size of the facilities under the Syndicated Credit Agreements by an additional $500 million across both such facilities.
|
(3)
|
We have the option to increase the maximum amount of letters of credit and revolving credit loans available under the 2013 Citi Agreements, with the lender's and issuing lender's consent.
|
▪
|
engage in mergers or consolidations;
|
▪
|
dispose of assets outside of the ordinary course of business;
|
▪
|
create liens on assets; and
|
▪
|
engage in certain transactions with affiliates.
|
|
|
Covenant Requirement
|
|
Actual Ratio or
Balance
|
|
Margin of
Compliance at
December 31, 2013
|
Ratio of Total Funded Debt to Total Capitalization (1)
|
|
Less than 0.35 : 100
|
|
0.18 : 1.00
|
|
$2.2 billion
|
Maximum Secured Indebtedness (2)
|
|
Less than 20% of consolidated net worth
|
|
Nil
|
|
$2.1 billion
|
Consolidated Net Worth (3)
|
|
$6.7 billion
|
|
$10.6 billion
|
|
$3.9 billion
|
Financial Strength Ratings (4)
|
|
A– or better from A.M. Best
|
|
A (Stable)
|
|
Two notches
|
(1)
|
The ratio of total funded debt to total capitalization not to be greater than 0.35:1.00. This ratio is defined as total funded debt to the sum of total funded debt plus consolidated net worth.
|
(2)
|
Secured indebtedness excludes secured letter of credit facilities as permitted under the schedules to the credit facilities. At
December 31, 2013
, such secured letter of credit facilities amounted to
$1.28 billion
.
|
(3)
|
Consolidated net worth means, at any time, our consolidated shareholders’ equity excluding (a) the effect of any adjustments required under the authoritative accounting guidance for accounting for certain investments in debt and equity securities; and (b) any exempt indebtedness (and the assets relating thereto) in the event such exempt indebtedness is consolidated on our consolidated balance sheet.
|
(4)
|
Covenants require that none of XL Insurance (Bermuda) Ltd, XL Re Ltd or XL Re Europe SE has a financial strength ratings of less than “A –” from A.M. Best. At
December 31, 2013
, we were in compliance with such covenants.
|
Contractual Obligations
(U.S. dollars in thousands)
|
Total
|
|
Less than
1 year
|
|
1 to 3
years
|
|
3 to 5
years
|
|
More than
5 years
|
||||||||||
Long-term debt obligations
|
$
|
2,275,000
|
|
|
$
|
600,000
|
|
|
$
|
—
|
|
|
$
|
300,000
|
|
|
$
|
1,375,000
|
|
Interest on long-term debt
|
1,224,004
|
|
|
89,295
|
|
|
178,590
|
|
|
178,287
|
|
|
777,832
|
|
|||||
Operating lease obligations
|
226,005
|
|
|
37,095
|
|
|
62,964
|
|
|
42,756
|
|
|
83,190
|
|
|||||
Capital lease obligations
|
215,470
|
|
|
12,515
|
|
|
25,977
|
|
|
27,292
|
|
|
149,686
|
|
|||||
Deposit liabilities (1)
|
2,123,397
|
|
|
199,608
|
|
|
275,096
|
|
|
234,060
|
|
|
1,414,633
|
|
|||||
Future policy benefits (2)
|
7,331,068
|
|
|
405,155
|
|
|
804,563
|
|
|
783,713
|
|
|
5,337,637
|
|
|||||
Unpaid losses and loss expenses – P&C (3)
|
20,854,954
|
|
|
4,986,208
|
|
|
6,201,407
|
|
|
3,413,346
|
|
|
6,253,993
|
|
|||||
Total
|
$
|
34,249,898
|
|
|
$
|
6,329,876
|
|
|
$
|
7,548,597
|
|
|
$
|
4,979,454
|
|
|
$
|
15,391,971
|
|
(1)
|
Deposit liabilities were
$1.5 billion
on our Consolidated Balance Sheet at
December 31, 2013
. The difference from the amount included above relates to the discount on payments due in the future. The payment related to these liabilities varies primarily based on interest rates. The ultimate payments associated with these liabilities could differ from our estimate. See Item 8, Note 11, “Deposit Liabilities,” to the Consolidated Financial Statements included herein, for further information.
|
(2)
|
Future policy benefit reserves related to Life operations were
$4.8 billion
on our Consolidated Balance Sheet at
December 31, 2013
. Amounts reflected above include an allowance for future premiums in respect of contracts under which premiums are payable throughout the life of the underlying policy. The value of the discount is also included for those lines of business that have reserves where future claim payments and future premium receipts can be estimated using actuarial principles. The timing and amounts of actual claims payments and premium receipts related to these reserves vary based on the underlying experience of the portfolio. Typical elements of the experience include mortality, morbidity and persistency. The ultimate amount of the claims payments and premium receipts could differ materially from our estimated amounts.
|
(3)
|
The unpaid loss and loss expenses were
$20.5 billion
on our Consolidated Balance Sheet at
December 31, 2013
. The difference from the amount included above relates to the discount on payments due in the future for certain workers compensation lines and certain U.K. motor liability claims. The timing and amounts of actual claims payments related to these P&C reserves vary based on many factors including large individual losses, changes in the legal environment, as well as general market conditions. The ultimate amount of the claims payments could differ materially from our estimated amounts. For information regarding the estimates for unpaid loss and loss expenses as well as factors affecting potential payment patterns of reserves for actual and potential claims related to our different lines of business, see “Critical Accounting Policies and Estimates” above. Certain lines of business written by us, such as excess casualty, have loss experience characterized as low frequency and high severity. This may result in significant variability in loss payment patterns and, therefore, may impact the related asset/liability investment management process. In order to be in a position, if necessary, to make these payments, our liquidity requirements are supported by having revolving lines of credit facilities available to us and significant reinsurance programs, in addition to our general high grade fixed income investment portfolio.
|
ITEM 7A.
|
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
(Foreign Currency in Millions)
|
2013
|
|
2012
|
||
Euro
|
88.7
|
|
|
252.2
|
|
U.K. Sterling
|
47.3
|
|
|
81.6
|
|
Swiss Franc
|
107.9
|
|
|
117.0
|
|
Canadian Dollar
|
133.8
|
|
|
129.2
|
|
(1)
|
The credit ratings above were principally determined based on the weighted average rating of the individual securities from Standard & Poor's, Moody's Investors Service and Fitch Ratings (where available). The credit ratings for U.S. Agency debt and related mortgage-backed securities, whether with implicit or explicit government support, reflects the credit quality rating of the U.S. government for the purpose of these calculations.
|
|
December 31, 2013
|
||||||||
Issuer (by Global Ultimate Parent) (1)
(U.S. dollars in millions)
|
Weighted
Average
Credit Quality (2)
|
|
Amortized Cost
|
|
Unrealized Gain/
(Loss)
|
||||
JP Morgan Chase & Co.
|
A
|
|
$
|
197.4
|
|
|
$
|
(1.8
|
)
|
Rabobank Nederland Nv
|
AA-
|
|
195.5
|
|
|
5.5
|
|
||
Citigroup Inc.
|
A-
|
|
178.7
|
|
|
4.3
|
|
||
Wells Fargo & Company
|
A+
|
|
166.2
|
|
|
1.3
|
|
||
The Goldman Sachs Group, Inc.
|
BBB+
|
|
165.3
|
|
|
9.0
|
|
||
National Australia Bank Limited
|
AA-
|
|
134.5
|
|
|
5.4
|
|
||
HSBC Holdings Plc
|
A+
|
|
126.1
|
|
|
(1.1
|
)
|
||
Bank of America Corporation
|
BBB+
|
|
123.5
|
|
|
4.1
|
|
||
Lloyds Banking Group Plc
|
AA-
|
|
113.3
|
|
|
5.3
|
|
||
Morgan Stanley
|
A-
|
|
96.8
|
|
|
3.3
|
|
||
UBS AG
|
A+
|
|
95.5
|
|
|
2.9
|
|
||
The Bank of Nova Scotia
|
AA-
|
|
95.0
|
|
|
1.9
|
|
||
Credit Suisse Group AG
|
A
|
|
84.0
|
|
|
1.0
|
|
||
Commonwealth Bank of Australia
|
AA-
|
|
83.9
|
|
|
3.9
|
|
||
H M Government Cabinet Office (RBS Group Plc)
|
A+
|
|
83.0
|
|
|
1.0
|
|
||
Westpac Banking Corporation
|
AA
|
|
78.8
|
|
|
4.0
|
|
||
Standard Chartered Plc
|
A+
|
|
77.3
|
|
|
2.9
|
|
||
Royal Bank of Canada
|
AA-
|
|
73.6
|
|
|
0.7
|
|
||
U.S. Bancorp
|
A+
|
|
71.0
|
|
|
0.1
|
|
||
ING Groep N.V.
|
AA-
|
|
70.3
|
|
|
2.4
|
|
||
The PNC Financial Services Group, Inc.
|
A
|
|
69.7
|
|
|
1.7
|
|
||
Berkshire Hathaway Inc.
|
AA-
|
|
68.5
|
|
|
1.9
|
|
||
Nordea Bank AB (Publ)
|
AA-
|
|
66.0
|
|
|
1.6
|
|
||
Government of Netherlands (ABN Amro)
|
AAA
|
|
62.5
|
|
|
5.6
|
|
(1)
|
Includes Covered Bonds.
|
(2)
|
The credit rating for each asset reflected above was principally determined based on the weighted average rating of the individual securities from Standard & Poor's, Moody's Investors Service and Fitch Ratings.
|
|
December 31, 2013
|
||||||||||||||
Issuer (by Global Ultimate Parent)
(U.S. dollars in millions)
|
Tier One
Amortized Cost |
|
Upper Tier Two
Amortized Cost |
|
Total
Amortized Cost |
|
Net Unrealized
(Loss) |
||||||||
Zurich Insurance Group Ltd.
|
$
|
—
|
|
|
$
|
27.3
|
|
|
$
|
27.3
|
|
|
$
|
1.5
|
|
Barclays Plc
|
4.9
|
|
|
21.3
|
|
|
26.2
|
|
|
(2.2
|
)
|
||||
National Australia Bank Limited
|
21.3
|
|
|
—
|
|
|
21.3
|
|
|
1.0
|
|
||||
JPMorgan Chase & Co.
|
20.8
|
|
|
—
|
|
|
20.8
|
|
|
(4.9
|
)
|
||||
The British United Provident Association Limited
|
—
|
|
|
20.6
|
|
|
20.6
|
|
|
1.2
|
|
||||
Aviva Plc
|
5.4
|
|
|
14.5
|
|
|
19.9
|
|
|
(0.5
|
)
|
||||
Mitsubishi UFJ Financial Group, Inc.
|
19.7
|
|
|
—
|
|
|
19.7
|
|
|
1.4
|
|
||||
Legal & General Group Plc
|
—
|
|
|
19.4
|
|
|
19.4
|
|
|
0.9
|
|
||||
HSBC Holdings Plc
|
18.7
|
|
|
—
|
|
|
18.7
|
|
|
(0.2
|
)
|
||||
The Goldman Sachs Group, Inc.
|
18.6
|
|
|
—
|
|
|
18.6
|
|
|
0.1
|
|
||||
Total
|
$
|
109.4
|
|
|
$
|
103.1
|
|
|
$
|
212.5
|
|
|
$
|
(1.7
|
)
|
Top 10 Corporate Financial Holdings (1)
|
|
Percentage of Aggregate
Fixed Income Portfolio
|
JPMorgan Chase & Co.
|
|
0.6%
|
Rabobank Nederland Nv
|
|
0.6%
|
Citigroup Inc.
|
|
0.6%
|
Wells Fargo & Company
|
|
0.5%
|
The Goldman Sachs Group, Inc.
|
|
0.5%
|
National Australia Bank Limited
|
|
0.4%
|
HSBC Holdings Plc
|
|
0.4%
|
Bank of America Corporation
|
|
0.4%
|
Lloyds Banking Group Plc
|
|
0.4%
|
Morgan Stanley
|
|
0.3%
|
(1)
|
Corporate issuers include Covered Bonds.
|
Top 5 Sector Exposures
(U.S. dollars in millions)
|
|
Carrying Value
|
|
Percentage of
Aggregate
Fixed Income
Portfolio
|
|||
Financials (1)
|
|
$
|
3,786.7
|
|
|
11.8
|
%
|
Consumer, non-Cyclical
|
|
2,441.4
|
|
|
7.6
|
%
|
|
Utilities
|
|
1,393.0
|
|
|
4.3
|
%
|
|
Communications
|
|
1,091.3
|
|
|
3.4
|
%
|
|
Industrial
|
|
1,084.7
|
|
|
3.4
|
%
|
|
Total
|
|
$
|
9,797.1
|
|
|
30.5
|
%
|
(1)
|
Government-guaranteed securities and Covered Bonds have been excluded from the above figures.
|
(U.S. dollars in millions)
|
Carrying Value
|
|
Percentage of
Structured Portfolio
|
|||
Agency RMBS
|
$
|
3,546.1
|
|
|
47.5
|
%
|
Other ABS (1)
|
1,348.7
|
|
|
18.1
|
%
|
|
CMBS
|
1,391.7
|
|
|
18.6
|
%
|
|
Core CDO (non-ABS CDOs and CLOs)
|
717.3
|
|
|
9.6
|
%
|
|
Non-Agency RMBS
|
465.8
|
|
|
6.2
|
%
|
|
Total
|
$
|
7,469.6
|
|
|
100.0
|
%
|
(1)
|
Includes Covered Bonds.
|
(U.S. dollars in millions)
|
Interest
Rate
Risk (1)
|
|
Equity
Risk
(2)
|
|
Absolute
Spread
Risk (3)
|
|
Relative
Spread
Risk (4)
|
|
VaR
(5) (6)
|
||||||||||
Total Investment Portfolio (7)
|
$
|
(1,470.7
|
)
|
|
$
|
(175.8
|
)
|
|
$
|
(1,331.1
|
)
|
|
$
|
(122.8
|
)
|
|
$
|
1,160.9
|
|
A. P&C Investment Portfolio
|
$
|
(930.4
|
)
|
|
$
|
(175.8
|
)
|
|
$
|
(873.5
|
)
|
|
$
|
(71.2
|
)
|
|
$
|
785.3
|
|
(I) P&C Fixed Income Portfolio
|
(930.4
|
)
|
|
—
|
|
|
(873.5
|
)
|
|
(71.2
|
)
|
|
699.0
|
|
|||||
(a) Cash & Short Term Investments
|
(8.8
|
)
|
|
—
|
|
|
(4.7
|
)
|
|
(0.2
|
)
|
|
2.1
|
|
|||||
(b) Total Government Related
|
(391.4
|
)
|
|
—
|
|
|
(252.0
|
)
|
|
(10.3
|
)
|
|
264.4
|
|
|||||
(c) Total Corporate Credit
|
(307.8
|
)
|
|
—
|
|
|
(337.4
|
)
|
|
(31.0
|
)
|
|
252.4
|
|
|||||
(d) Total Structured Credit
|
(222.4
|
)
|
|
—
|
|
|
(279.4
|
)
|
|
(29.6
|
)
|
|
212.5
|
|
|||||
(II) P&C Non-Fixed Income Portfolio
|
—
|
|
|
(175.8
|
)
|
|
—
|
|
|
—
|
|
|
245.8
|
|
|||||
(e) Equity Portfolio
|
—
|
|
|
(101.5
|
)
|
|
—
|
|
|
—
|
|
|
155.5
|
|
|||||
(f) Alternative Portfolio
|
—
|
|
|
(45.2
|
)
|
|
—
|
|
|
—
|
|
|
95.7
|
|
|||||
(g) Private Investments
|
—
|
|
|
(29.1
|
)
|
|
—
|
|
|
—
|
|
|
31.4
|
|
|||||
(h) Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|||||
B. Life Investment Portfolio
|
$
|
(533.9
|
)
|
|
$
|
—
|
|
|
$
|
(426.4
|
)
|
|
$
|
(48.3
|
)
|
|
$
|
451.6
|
|
(III) Life Fixed Income Portfolio
|
(533.9
|
)
|
|
—
|
|
|
(426.4
|
)
|
|
(48.3
|
)
|
|
451.6
|
|
|||||
(i) Cash & Short Term Investments
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
(j) Total Government Related
|
(218.8
|
)
|
|
—
|
|
|
(82.6
|
)
|
|
(3.5
|
)
|
|
173.1
|
|
|||||
(k) Total Corporate Credit
|
(258.0
|
)
|
|
—
|
|
|
(281.2
|
)
|
|
(36.8
|
)
|
|
229.9
|
|
|||||
(l) Total Structured Credit
|
(57.1
|
)
|
|
—
|
|
|
(62.7
|
)
|
|
(8.0
|
)
|
|
54.5
|
|
|||||
(IV) Life Non-Fixed Income Portfolio
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +100 bps adverse parallel shift in global bond curves.
|
(2)
|
The estimated impact on the fair value of our investment portfolio of an immediate hypothetical -10% change in the value of equity exposures in our equity portfolio, certain equity-sensitive alternative investments and private equity investments. This includes our estimate of equity risk embedded in the alternatives and private investment portfolio with such estimates utilizing market exposures provided to us by certain individual fund investments, internal statistical analyses, and/or various assumptions regarding illiquidity and concentrations.
|
(3)
|
The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +100 basis point increase in all global government related, corporate and structured security spreads to which our fixed income portfolio is exposed. This excludes exposure to credit spreads in our alternative investments, private investments and counterparty exposure.
|
(4)
|
The estimated impact on the fair value of our fixed income portfolio of an immediate hypothetical +10% increase in all global government related, corporate and structured security spreads to which our fixed income portfolio is exposed. This excludes exposure to credit spreads in our alternative investments, private investments and counterparty exposure.
|
(5)
|
The VaR results are based on a 95% confidence interval, with a one-year holding period, excluding foreign exchange rate risk. Our investment portfolio VaR at
December 31, 2013
is not necessarily indicative of future VaR levels as these are based on statistical estimates of possible price changes and, therefore, exclude other sources of investment return such as coupon and dividend income.
|
(6)
|
The VaR results are the standalone VaRs, based on the prescribed methodology, for each component of our Total Investment Portfolio. The standalone VaRs of the individual components are non-additive, with the difference between the summation of the individual component VaRs and their respective aggregations being due to diversification benefits across the individual components. In the case of the VaR results for our Total Investment Portfolio, the results also include the impact associated with our Business and Other investments.
|
(7)
|
Our Total Investment Portfolio comprises our P&C Investment Portfolio and Life Operations Investment Portfolio as well as our Business and Other investments that do not form part of our P&C Investment Portfolio or Life Operations Investment Portfolio. The individual results reported in the above table for our Total Investment Portfolio therefore represent the aggregate impact on our P&C Investment Portfolio, Life Operations Investment Portfolio and the majority of our Other investments.
|
ITEM 8.
|
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Index to Consolidated Financial Statements
|
Page
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
|
Consolidated Statements of Income for the years ended December 31, 2013, 2012 and 2011
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 2012 and 2011
|
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011
|
|
Notes to Consolidated Financial Statements for the years ended December 31, 2013, 2012 and 2011
|
(U.S. dollars in thousands, except share data)
|
2013
|
|
2012
|
||||
ASSETS
|
|||||||
Investments:
|
|
|
|
||||
Fixed maturities, at fair value (amortized cost: 2013, $27,111,874; 2012, $26,544,806)
|
$
|
27,500,136
|
|
|
$
|
27,846,920
|
|
Equity securities, at fair value (cost: 2013, $903,201; 2012, $617,486)
|
1,040,237
|
|
|
649,359
|
|
||
Short-term investments, at fair value (amortized cost: 2013, $455,470; 2012, $322,563)
|
456,288
|
|
|
322,703
|
|
||
Total investments available for sale
|
$
|
28,996,661
|
|
|
$
|
28,818,982
|
|
Fixed maturities, held to maturity at amortized cost (fair value: 2013, $3,131,235; 2012, $3,262,804)
|
2,858,695
|
|
|
2,814,447
|
|
||
Investments in affiliates
|
1,370,943
|
|
|
1,126,875
|
|
||
Other investments
|
1,164,630
|
|
|
1,219,879
|
|
||
Total investments
|
$
|
34,390,929
|
|
|
$
|
33,980,183
|
|
Cash and cash equivalents
|
1,800,832
|
|
|
2,618,378
|
|
||
Accrued investment income
|
346,809
|
|
|
342,778
|
|
||
Deferred acquisition costs
|
670,659
|
|
|
675,653
|
|
||
Ceded unearned premiums
|
788,871
|
|
|
587,074
|
|
||
Premiums receivable
|
2,612,602
|
|
|
2,568,862
|
|
||
Reinsurance balances receivable
|
118,885
|
|
|
58,428
|
|
||
Unpaid losses and loss expenses recoverable
|
3,435,230
|
|
|
3,382,102
|
|
||
Receivable from investments sold
|
144,765
|
|
|
16,002
|
|
||
Goodwill and other intangible assets
|
411,611
|
|
|
408,527
|
|
||
Deferred tax asset
|
237,884
|
|
|
166,143
|
|
||
Other assets
|
693,810
|
|
|
582,765
|
|
||
Total assets
|
$
|
45,652,887
|
|
|
$
|
45,386,895
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|||||||
Liabilities:
|
|
|
|
||||
Unpaid losses and loss expenses
|
$
|
20,481,065
|
|
|
$
|
20,484,121
|
|
Deposit liabilities
|
1,509,243
|
|
|
1,551,398
|
|
||
Future policy benefit reserves
|
4,803,816
|
|
|
4,812,046
|
|
||
Unearned premiums
|
3,846,526
|
|
|
3,755,086
|
|
||
Notes payable and debt
|
2,263,203
|
|
|
1,672,778
|
|
||
Reinsurance balances payable
|
302,399
|
|
|
143,112
|
|
||
Payable for investments purchased
|
60,162
|
|
|
102,113
|
|
||
Deferred tax liability
|
86,330
|
|
|
141,803
|
|
||
Other liabilities
|
950,845
|
|
|
868,036
|
|
||
Total liabilities
|
$
|
34,303,589
|
|
|
$
|
33,530,493
|
|
Commitments and Contingencies
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Ordinary shares, 999,990,000 authorized, par value $0.01; issued and outstanding (2013, 278,253,308; 2012, 298,681,573)
|
$
|
2,783
|
|
|
$
|
2,987
|
|
Additional paid in capital
|
7,994,100
|
|
|
8,584,752
|
|
||
Accumulated other comprehensive income
|
736,657
|
|
|
1,520,020
|
|
||
Retained earnings
|
1,264,093
|
|
|
402,318
|
|
||
Shareholders’ equity attributable to XL Group plc
|
$
|
9,997,633
|
|
|
$
|
10,510,077
|
|
Non-controlling interest in equity of consolidated subsidiaries
|
1,351,665
|
|
|
1,346,325
|
|
||
Total shareholders’ equity
|
$
|
11,349,298
|
|
|
$
|
11,856,402
|
|
Total liabilities and shareholders’ equity
|
$
|
45,652,887
|
|
|
$
|
45,386,895
|
|
(U.S. dollars in thousands, except per share data)
|
2013
|
|
2012
|
|
2011
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
6,309,521
|
|
|
$
|
6,090,437
|
|
|
$
|
5,690,130
|
|
Net investment income
|
957,716
|
|
|
1,012,348
|
|
|
1,137,769
|
|
|||
Realized investment gains (losses):
|
|
|
|
|
|
||||||
Net realized gains (losses) on investments sold
|
104,076
|
|
|
94,807
|
|
|
(28,187
|
)
|
|||
Other-than-temporary impairments on investments
|
(10,266
|
)
|
|
(54,301
|
)
|
|
(174,102
|
)
|
|||
Other-than-temporary impairments on investments transferred to (from) other comprehensive income
|
(6,033
|
)
|
|
(26,408
|
)
|
|
13,930
|
|
|||
Total net realized gains (losses) on investments
|
$
|
87,777
|
|
|
$
|
14,098
|
|
|
$
|
(188,359
|
)
|
Net realized and unrealized gains (losses) on derivative instruments
|
7,798
|
|
|
5,221
|
|
|
(10,738
|
)
|
|||
Income (loss) from investment fund affiliates
|
138,391
|
|
|
58,504
|
|
|
26,253
|
|
|||
Fee income and other
|
40,031
|
|
|
51,789
|
|
|
41,748
|
|
|||
Total revenues
|
$
|
7,541,234
|
|
|
$
|
7,232,397
|
|
|
$
|
6,696,803
|
|
Expenses:
|
|
|
|
|
|
||||||
Net losses and loss expenses incurred
|
$
|
3,731,464
|
|
|
$
|
3,765,482
|
|
|
$
|
4,078,391
|
|
Claims and policy benefits
|
465,702
|
|
|
486,195
|
|
|
535,074
|
|
|||
Acquisition costs
|
909,323
|
|
|
913,492
|
|
|
826,411
|
|
|||
Operating expenses
|
1,213,178
|
|
|
1,173,955
|
|
|
1,083,917
|
|
|||
Foreign exchange (gains) losses
|
(28,243
|
)
|
|
10,545
|
|
|
(40,640
|
)
|
|||
Interest expense
|
155,462
|
|
|
172,204
|
|
|
205,592
|
|
|||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
429,020
|
|
|||
Total expenses
|
$
|
6,446,886
|
|
|
$
|
6,521,873
|
|
|
$
|
7,117,765
|
|
Income (loss) before income tax and income (loss) from operating affiliates
|
1,094,348
|
|
|
710,524
|
|
|
(420,962
|
)
|
|||
Income (loss) from operating affiliates
|
119,804
|
|
|
53,887
|
|
|
76,786
|
|
|||
Provision (benefit) for income tax
|
77,505
|
|
|
34,028
|
|
|
59,707
|
|
|||
Net income (loss)
|
$
|
1,136,647
|
|
|
$
|
730,383
|
|
|
$
|
(403,883
|
)
|
Non-controlling interests
|
76,731
|
|
|
79,255
|
|
|
70,877
|
|
|||
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – basic
|
287,801
|
|
|
307,372
|
|
|
312,896
|
|
|||
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – diluted
|
292,069
|
|
|
310,282
|
|
|
312,896
|
|
|||
Earnings (loss) per ordinary share and ordinary share equivalent – basic
|
$
|
3.68
|
|
|
$
|
2.12
|
|
|
$
|
(1.52
|
)
|
Earnings (loss) per ordinary share and ordinary share equivalent – diluted
|
$
|
3.63
|
|
|
$
|
2.10
|
|
|
$
|
(1.52
|
)
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Change in net unrealized gains (losses) on investments, net of tax
|
(798,924
|
)
|
|
841,215
|
|
|
446,427
|
|
|||
Change in net unrealized gains (losses) on affiliate and other investments, net of tax
|
26,637
|
|
|
46,162
|
|
|
25,269
|
|
|||
Change in OTTI losses recognized in other comprehensive income, net of tax
|
32,181
|
|
|
67,280
|
|
|
39,456
|
|
|||
Change in underfunded pension liability
|
11,162
|
|
|
(9,985
|
)
|
|
(2,622
|
)
|
|||
Change in value of cash flow hedge
|
439
|
|
|
439
|
|
|
440
|
|
|||
Foreign currency translation adjustments
|
(54,858
|
)
|
|
(8,156
|
)
|
|
(26,700
|
)
|
|||
Comprehensive income (loss)
|
$
|
276,553
|
|
|
$
|
1,588,083
|
|
|
$
|
7,510
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Ordinary Shares:
|
|
|
|
|
|
||||||
Balance – beginning of year
|
$
|
2,987
|
|
|
$
|
3,156
|
|
|
$
|
3,165
|
|
Issuance of ordinary shares
|
13
|
|
|
10
|
|
|
307
|
|
|||
Buybacks of ordinary shares
|
(226
|
)
|
|
(183
|
)
|
|
(317
|
)
|
|||
Exercise of stock options
|
9
|
|
|
4
|
|
|
1
|
|
|||
Balance – end of year
|
$
|
2,783
|
|
|
$
|
2,987
|
|
|
$
|
3,156
|
|
Additional Paid in Capital:
|
|
|
|
|
|
||||||
Balance – beginning of year
|
$
|
8,584,752
|
|
|
$
|
8,938,679
|
|
|
$
|
8,993,016
|
|
Issuance of ordinary shares
|
29
|
|
|
1,387
|
|
|
572,708
|
|
|||
Buybacks of ordinary shares
|
(639,292
|
)
|
|
(402,748
|
)
|
|
(666,705
|
)
|
|||
Exercise of stock options
|
12,614
|
|
|
5,545
|
|
|
1,333
|
|
|||
Share-based compensation expense
|
35,997
|
|
|
41,889
|
|
|
38,327
|
|
|||
Balance – end of year
|
$
|
7,994,100
|
|
|
$
|
8,584,752
|
|
|
$
|
8,938,679
|
|
Accumulated Other Comprehensive Income (Loss):
|
|
|
|
|
|
||||||
Balance – beginning of year
|
$
|
1,520,020
|
|
|
$
|
583,065
|
|
|
$
|
100,795
|
|
Change in net unrealized gains (losses) on investments, net of tax
|
(798,924
|
)
|
|
841,215
|
|
|
446,427
|
|
|||
Change in net unrealized gains (losses) on affiliate and other investments, net of tax
|
26,637
|
|
|
46,162
|
|
|
25,269
|
|
|||
Change in OTTI losses recognized in other comprehensive income, net of tax
|
32,181
|
|
|
67,280
|
|
|
39,456
|
|
|||
Change in underfunded pension liability
|
11,162
|
|
|
(9,985
|
)
|
|
(2,622
|
)
|
|||
Change in value of cash flow hedge
|
439
|
|
|
439
|
|
|
440
|
|
|||
Foreign currency translation adjustments
|
(54,858
|
)
|
|
(8,156
|
)
|
|
(26,700
|
)
|
|||
Balance – end of year
|
$
|
736,657
|
|
|
$
|
1,520,020
|
|
|
$
|
583,065
|
|
Retained Earnings (Deficit):
|
|
|
|
|
|
||||||
Balance – beginning of year
|
$
|
402,318
|
|
|
$
|
(113,242
|
)
|
|
$
|
500,497
|
|
Net income (loss) attributable to ordinary shareholders
|
1,059,916
|
|
|
651,128
|
|
|
(474,760
|
)
|
|||
Dividends on ordinary shares
|
(162,043
|
)
|
|
(135,568
|
)
|
|
(138,979
|
)
|
|||
Buybacks of ordinary shares
|
(36,098
|
)
|
|
—
|
|
|
—
|
|
|||
Balance – end of year
|
$
|
1,264,093
|
|
|
$
|
402,318
|
|
|
$
|
(113,242
|
)
|
Non-controlling Interest in Equity of Consolidated Subsidiaries:
|
|
|
|
|
|
||||||
Balance – beginning of year
|
$
|
1,346,325
|
|
|
$
|
1,344,472
|
|
|
$
|
1,002,296
|
|
Non-controlling interests – contributions
|
7,747
|
|
|
1,500
|
|
|
—
|
|
|||
Non-controlling interests – distributions
|
(37
|
)
|
|
—
|
|
|
—
|
|
|||
Non-controlling interests
|
(500
|
)
|
|
113
|
|
|
(83
|
)
|
|||
Non-controlling interest share in change in accumulated other comprehensive income (loss)
|
(29
|
)
|
|
240
|
|
|
(2,241
|
)
|
|||
Non-controlling interests - deconsolidation
|
(1,841
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of Series D preference ordinary shares
|
—
|
|
|
—
|
|
|
350,000
|
|
|||
Purchase of Series D preference ordinary shares
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|||
Purchase of Series E preference ordinary shares
|
—
|
|
|
—
|
|
|
(500
|
)
|
|||
Balance – end of year
|
$
|
1,351,665
|
|
|
$
|
1,346,325
|
|
|
$
|
1,344,472
|
|
Total Shareholders’ Equity
|
$
|
11,349,298
|
|
|
$
|
11,856,402
|
|
|
$
|
10,756,130
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
1,136,647
|
|
|
$
|
730,383
|
|
|
$
|
(403,883
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Net realized (gains) losses on investments
|
(87,777
|
)
|
|
(14,098
|
)
|
|
188,359
|
|
|||
Net realized and unrealized (gains) losses on derivative instruments
|
(7,798
|
)
|
|
(5,221
|
)
|
|
10,738
|
|
|||
Amortization of premiums (discounts) on fixed maturities
|
166,621
|
|
|
169,353
|
|
|
120,130
|
|
|||
(Income) loss from investment and operating affiliates
|
(229,386
|
)
|
|
(112,391
|
)
|
|
(103,039
|
)
|
|||
Impairment of goodwill
|
—
|
|
|
—
|
|
|
429,020
|
|
|||
Share based compensation
|
46,489
|
|
|
47,472
|
|
|
41,225
|
|
|||
Depreciation
|
56,229
|
|
|
57,280
|
|
|
49,800
|
|
|||
Accretion of deposit liabilities
|
47,256
|
|
|
81,269
|
|
|
82,799
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Unpaid losses and loss expenses
|
(88,636
|
)
|
|
(287,972
|
)
|
|
243,040
|
|
|||
Future policy benefit reserves
|
(164,923
|
)
|
|
(187,400
|
)
|
|
(171,618
|
)
|
|||
Unearned premiums
|
65,279
|
|
|
182,963
|
|
|
95,393
|
|
|||
Premiums receivable
|
(27,334
|
)
|
|
(127,633
|
)
|
|
(31,286
|
)
|
|||
Unpaid losses and loss expenses recoverable
|
(36,897
|
)
|
|
305,675
|
|
|
(2,168
|
)
|
|||
Ceded unearned premiums
|
(196,674
|
)
|
|
14,923
|
|
|
21,532
|
|
|||
Reinsurance balances receivable
|
(60,317
|
)
|
|
162,280
|
|
|
(49,286
|
)
|
|||
Deferred acquisition costs
|
8,532
|
|
|
(649
|
)
|
|
(41,881
|
)
|
|||
Reinsurance balances payable
|
161,132
|
|
|
48,159
|
|
|
(31,846
|
)
|
|||
Deferred tax asset – net
|
(29,230
|
)
|
|
(28,556
|
)
|
|
(43,583
|
)
|
|||
Derivatives
|
(22,324
|
)
|
|
7,252
|
|
|
93,796
|
|
|||
Other assets
|
(26,945
|
)
|
|
20,924
|
|
|
(24,747
|
)
|
|||
Other liabilities
|
60,331
|
|
|
50,342
|
|
|
(93,323
|
)
|
|||
Other
|
9,702
|
|
|
(58,249
|
)
|
|
(51,970
|
)
|
|||
Total adjustments
|
$
|
(356,670
|
)
|
|
$
|
325,723
|
|
|
$
|
731,085
|
|
Net cash provided by (used in) operating activities
|
$
|
779,977
|
|
|
$
|
1,056,106
|
|
|
$
|
327,202
|
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
||||||
Proceeds from sale of fixed maturities and short-term investments
|
$
|
4,341,429
|
|
|
$
|
3,604,792
|
|
|
$
|
5,091,375
|
|
Proceeds from redemption of fixed maturities and short-term investments
|
4,008,333
|
|
|
4,579,651
|
|
|
3,595,922
|
|
|||
Proceeds from sale of equity securities
|
245,538
|
|
|
221,617
|
|
|
205,736
|
|
|||
Purchases of fixed maturities and short-term investments
|
(9,143,973
|
)
|
|
(8,902,879
|
)
|
|
(7,529,962
|
)
|
|||
Purchases of equity securities
|
(534,356
|
)
|
|
(362,021
|
)
|
|
(631,169
|
)
|
|||
Proceeds from sale of affiliates
|
190,954
|
|
|
133,375
|
|
|
315,696
|
|
|||
Purchases of affiliates
|
(353,678
|
)
|
|
(138,027
|
)
|
|
(179,415
|
)
|
|||
Other, net
|
47,891
|
|
|
(79,101
|
)
|
|
(36,080
|
)
|
|||
Net cash provided by (used in) investing activities
|
$
|
(1,197,862
|
)
|
|
$
|
(942,593
|
)
|
|
$
|
832,103
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of ordinary shares and exercise of stock options
|
$
|
12,623
|
|
|
$
|
5,413
|
|
|
$
|
576,333
|
|
Proceeds from issuance of Series D preference ordinary shares
|
—
|
|
|
—
|
|
|
349,180
|
|
|||
Buybacks of ordinary shares
|
(675,617
|
)
|
|
(402,930
|
)
|
|
(667,022
|
)
|
|||
Purchase of Redeemable Series C preference ordinary shares
|
—
|
|
|
—
|
|
|
(71,801
|
)
|
|||
Purchase of Series D preference ordinary shares
|
—
|
|
|
—
|
|
|
(3,650
|
)
|
|||
Purchase of Series E preference ordinary shares
|
—
|
|
|
—
|
|
|
(465
|
)
|
|||
Dividends paid on ordinary shares
|
(160,155
|
)
|
|
(134,799
|
)
|
|
(138,050
|
)
|
|||
Distributions to non-controlling interests
|
(77,670
|
)
|
|
(78,987
|
)
|
|
(71,483
|
)
|
|||
Contributions from non-controlling interests
|
7,747
|
|
|
1,500
|
|
|
—
|
|
|||
Proceeds from issuance of debt
|
592,615
|
|
|
—
|
|
|
395,859
|
|
|||
Repayment of debt
|
—
|
|
|
(600,000
|
)
|
|
(575,000
|
)
|
|||
Deposit liabilities
|
(94,386
|
)
|
|
(134,950
|
)
|
|
(152,617
|
)
|
|||
Net cash provided by (used in) financing activities
|
$
|
(394,843
|
)
|
|
$
|
(1,344,753
|
)
|
|
$
|
(358,716
|
)
|
Effects of exchange rate changes on foreign currency cash
|
(4,818
|
)
|
|
24,493
|
|
|
1,668
|
|
|||
Increase (decrease) in cash and cash equivalents
|
$
|
(817,546
|
)
|
|
$
|
(1,206,747
|
)
|
|
$
|
802,257
|
|
Cash and cash equivalents – beginning of period
|
2,618,378
|
|
|
3,825,125
|
|
|
3,022,868
|
|
|||
Cash and cash equivalents – end of period
|
$
|
1,800,832
|
|
|
$
|
2,618,378
|
|
|
$
|
3,825,125
|
|
|
|
|
|
|
|
||||||
Net taxes paid
|
$
|
96,469
|
|
|
$
|
34,465
|
|
|
$
|
106,666
|
|
Interest paid on notes payable and debt
|
$
|
97,125
|
|
|
$
|
116,689
|
|
|
$
|
149,133
|
|
▪
|
unpaid losses and loss expenses and unpaid losses and loss expenses recoverable;
|
▪
|
future policy benefit reserves;
|
▪
|
valuation and other-than-temporary impairments of investments;
|
▪
|
income taxes;
|
▪
|
reinsurance premium estimates; and
|
▪
|
goodwill carrying value.
|
▪
|
Level 1
- Quoted prices in active markets for identical assets or liabilities (unadjusted); no blockage factors.
|
▪
|
Level 2
- Other observable inputs (quoted prices in markets that are not active or inputs that are observable either directly or indirectly)—include quoted prices for similar assets/liabilities (adjusted) other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
|
▪
|
Level 3
- Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
|
December 31, 2013
(U.S. dollars in thousands)
|
Quoted Prices
in Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant Other
Unobservable
Inputs
(Level 3)
|
|
Collateral and
Counterparty
Netting
|
|
Balance at
December 31,
2013
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government - Related/Supported
|
$
|
—
|
|
|
$
|
2,501,851
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,501,851
|
|
Corporate (1)
|
—
|
|
|
11,094,257
|
|
|
31,573
|
|
|
—
|
|
|
11,125,830
|
|
|||||
Residential mortgage-backed securities – Agency (“RMBS - Agency”)
|
—
|
|
|
3,535,649
|
|
|
10,473
|
|
|
—
|
|
|
3,546,122
|
|
|||||
Residential mortgage-backed securities – Non-Agency (“RMBS - Non-Agency”)
|
—
|
|
|
398,759
|
|
|
9
|
|
|
—
|
|
|
398,768
|
|
|||||
Commercial mortgage-backed securities (“CMBS”)
|
—
|
|
|
1,234,262
|
|
|
12,533
|
|
|
—
|
|
|
1,246,795
|
|
|||||
Collateralized debt obligations (“CDO”)
|
—
|
|
|
7,060
|
|
|
710,253
|
|
|
—
|
|
|
717,313
|
|
|||||
Other asset-backed securities (2)
|
—
|
|
|
1,230,227
|
|
|
11,877
|
|
|
—
|
|
|
1,242,104
|
|
|||||
U.S. States and political subdivisions of the States
|
—
|
|
|
1,845,812
|
|
|
—
|
|
|
—
|
|
|
1,845,812
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
—
|
|
|
4,875,541
|
|
|
—
|
|
|
—
|
|
|
4,875,541
|
|
|||||
Total fixed maturities, at fair value
|
$
|
—
|
|
|
$
|
26,723,418
|
|
|
$
|
776,718
|
|
|
$
|
—
|
|
|
$
|
27,500,136
|
|
Equity securities, at fair value (3)
|
540,331
|
|
|
499,906
|
|
|
—
|
|
|
—
|
|
|
1,040,237
|
|
|||||
Short-term investments, at fair value (1)(4)
|
—
|
|
|
454,273
|
|
|
2,015
|
|
|
—
|
|
|
456,288
|
|
|||||
Total investments available for sale
|
$
|
540,331
|
|
|
$
|
27,677,597
|
|
|
$
|
778,733
|
|
|
$
|
—
|
|
|
$
|
28,996,661
|
|
Cash equivalents (5)
|
834,514
|
|
|
226,636
|
|
|
—
|
|
|
—
|
|
|
1,061,150
|
|
|||||
Other investments (6)
|
—
|
|
|
757,110
|
|
|
113,472
|
|
|
—
|
|
|
870,582
|
|
|||||
Other assets (7)
|
—
|
|
|
27,487
|
|
|
—
|
|
|
(1,342
|
)
|
|
26,145
|
|
|||||
Total assets accounted for at fair value
|
$
|
1,374,845
|
|
|
$
|
28,688,830
|
|
|
$
|
892,205
|
|
|
$
|
(1,342
|
)
|
|
$
|
30,954,538
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments sold, but not yet purchased (8)
|
$
|
—
|
|
|
$
|
28,861
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,861
|
|
Other liabilities (7)
|
—
|
|
|
76,375
|
|
|
29,110
|
|
|
(1,342
|
)
|
|
104,143
|
|
|||||
Total liabilities accounted for at fair value
|
$
|
—
|
|
|
$
|
105,236
|
|
|
$
|
29,110
|
|
|
$
|
(1,342
|
)
|
|
$
|
133,004
|
|
December 31, 2012
(U.S. dollars in thousands)
|
Quoted Prices
in Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant Other
Unobservable
Inputs
(Level 3)
|
|
Collateral and
Counterparty
Netting
|
|
Balance at
December 31,
2012
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government - Related/Supported
|
$
|
—
|
|
|
$
|
2,034,617
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,034,617
|
|
Corporate (1)
|
—
|
|
|
10,451,902
|
|
|
30,098
|
|
|
—
|
|
|
10,482,000
|
|
|||||
RMBS – Agency
|
—
|
|
|
5,223,488
|
|
|
32,005
|
|
|
—
|
|
|
5,255,493
|
|
|||||
RMBS – Non-Agency
|
—
|
|
|
647,617
|
|
|
116
|
|
|
—
|
|
|
647,733
|
|
|||||
CMBS
|
—
|
|
|
1,051,904
|
|
|
25,347
|
|
|
—
|
|
|
1,077,251
|
|
|||||
CDO
|
—
|
|
|
8,080
|
|
|
701,736
|
|
|
—
|
|
|
709,816
|
|
|||||
Other asset-backed securities (2)
|
—
|
|
|
1,452,583
|
|
|
18,128
|
|
|
—
|
|
|
1,470,711
|
|
|||||
U.S. States and political subdivisions of the States
|
—
|
|
|
1,911,017
|
|
|
—
|
|
|
—
|
|
|
1,911,017
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
—
|
|
|
4,258,282
|
|
|
—
|
|
|
—
|
|
|
4,258,282
|
|
|||||
Total fixed maturities, at fair value
|
$
|
—
|
|
|
$
|
27,039,490
|
|
|
$
|
807,430
|
|
|
$
|
—
|
|
|
$
|
27,846,920
|
|
Equity securities, at fair value (3)
|
253,957
|
|
|
395,402
|
|
|
—
|
|
|
—
|
|
|
649,359
|
|
|||||
Short-term investments, at fair value (1)(4)
|
—
|
|
|
322,703
|
|
|
—
|
|
|
—
|
|
|
322,703
|
|
|||||
Total investments available for sale
|
$
|
253,957
|
|
|
$
|
27,757,595
|
|
|
$
|
807,430
|
|
|
$
|
—
|
|
|
$
|
28,818,982
|
|
Cash equivalents (5)
|
1,596,376
|
|
|
408,292
|
|
|
—
|
|
|
—
|
|
|
2,004,668
|
|
|||||
Other investments (6)
|
—
|
|
|
792,483
|
|
|
115,272
|
|
|
—
|
|
|
907,755
|
|
|||||
Other assets (7)
|
—
|
|
|
24,842
|
|
|
—
|
|
|
(1,327
|
)
|
|
23,515
|
|
|||||
Total assets accounted for at fair value
|
$
|
1,850,333
|
|
|
$
|
28,983,212
|
|
|
$
|
922,702
|
|
|
$
|
(1,327
|
)
|
|
$
|
31,754,920
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial instruments sold, but not yet purchased (8)
|
$
|
—
|
|
|
$
|
26,235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,235
|
|
Other liabilities (7)
|
—
|
|
|
30,379
|
|
|
36,247
|
|
|
(1,327
|
)
|
|
65,299
|
|
|||||
Total liabilities accounted for at fair value
|
$
|
—
|
|
|
$
|
56,614
|
|
|
$
|
36,247
|
|
|
$
|
(1,327
|
)
|
|
$
|
91,534
|
|
(1)
|
Included within Corporate are certain medium term notes supported primarily by pools of European investment grade credit with varying degrees of leverage. The notes had a fair value of
$154.6 million
and
$194.3 million
and an amortized cost of
$147.7 million
and
$194.8 million
at
December 31, 2013
and
December 31, 2012
, respectively. These notes allow the investor to participate in cash flows of the underlying bonds including certain residual values, which could serve to either decrease or increase the ultimate values of these notes.
|
(2)
|
The Company invests in covered bonds (“Covered Bonds”). Covered Bonds are senior secured debt instruments issued by financial institutions and backed by over-collateralized pools of public sector or mortgage loans. At
December 31, 2013
and
December 31, 2012
, Covered Bonds with a fair value of
$553.1 million
and
$647.1 million
, respectively, are included within Other asset-backed securities.
|
(3)
|
Included within Equity securities are investments in fixed income funds with a fair value of
$87.4 million
and
$101.9 million
at
December 31, 2013
and
December 31, 2012
, respectively.
|
(4)
|
Short-term investments consist primarily of Corporate securities and U.S. and Non-U.S. Government and Government-Related/ Supported securities.
|
(5)
|
Cash equivalents balances subject to fair value measurement include certificates of deposit and money market funds. Operating cash balances are not subject to fair value measurement guidance.
|
(6)
|
The Other investments balance excludes certain structured transactions including certain investments in project finance transactions, a payment obligation and liquidity financing provided to a structured credit vehicle as a part of a third party medium term note facility. These investments, which totaled
$294.0 million
at
December 31, 2013
and
$312.1 million
at
December 31, 2012
, are carried at amortized cost. For further information, see Note 7, “Other Investments.”
|
(7)
|
Other assets and other liabilities include derivative instruments. The derivative balances included in each category are reported on a gross basis by level with a netting adjustment presented separately in the Collateral and Counterparty Netting column. The fair values of the individual derivative contracts are reported gross in their respective levels based on the fair value hierarchy. For further details regarding derivative fair values and associated collateral received or paid see Note 14, “Derivative Instruments.”
|
(8)
|
Financial instruments sold, but not yet purchased, represent “short sales” and are included within “Payable for investments purchased” on the balance sheet.
|
(U.S. dollars in thousands)
|
Level 3 Assets and Liabilities – Year Ended December 31, 2013
|
||||||||||||||||||
Corporate
|
|
RMBS – Agency
|
|
RMBS –
Non Agency
|
|
CMBS
|
|
CDO
|
|||||||||||
Balance, beginning of period
|
$
|
30,098
|
|
|
$
|
32,005
|
|
|
$
|
116
|
|
|
$
|
25,347
|
|
|
$
|
701,736
|
|
Realized gains (losses)
|
4
|
|
|
10
|
|
|
(1
|
)
|
|
3
|
|
|
4,364
|
|
|||||
Movement in unrealized gains (losses)
|
766
|
|
|
(23
|
)
|
|
(1
|
)
|
|
(68
|
)
|
|
37,916
|
|
|||||
Purchases and issuances
|
10,691
|
|
|
—
|
|
|
3,326
|
|
|
—
|
|
|
136,035
|
|
|||||
Sales
|
(71
|
)
|
|
(535
|
)
|
|
—
|
|
|
—
|
|
|
(48,226
|
)
|
|||||
Settlements
|
(7,274
|
)
|
|
(3,349
|
)
|
|
(105
|
)
|
|
(12,749
|
)
|
|
(121,572
|
)
|
|||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3
|
(2,641
|
)
|
|
(17,635
|
)
|
|
(3,326
|
)
|
|
—
|
|
|
—
|
|
|||||
Fixed maturities to short-term investments classification change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, end of period
|
$
|
31,573
|
|
|
$
|
10,473
|
|
|
$
|
9
|
|
|
$
|
12,533
|
|
|
$
|
710,253
|
|
Movement in total gains (losses) above relating to instruments still held at the reporting date
|
$
|
845
|
|
|
$
|
(27
|
)
|
|
$
|
(1
|
)
|
|
$
|
(65
|
)
|
|
$
|
39,259
|
|
(U.S. dollars in thousands)
|
Level 3 Assets and Liabilities – Year Ended December 31, 2013
|
||||||||||||||||||
Other asset-
backed
securities
|
|
Non-US Sovereign
Government,
Provincial,
Supranational and
Government
Related/Supported
|
|
Short-term
investments
|
|
Other
investments
|
|
Derivative
Contracts – Net
|
|||||||||||
Balance, beginning of period
|
$
|
18,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,272
|
|
|
$
|
(36,247
|
)
|
Realized gains (losses)
|
848
|
|
|
—
|
|
|
(17
|
)
|
|
7,545
|
|
|
—
|
|
|||||
Movement in unrealized gains (losses)
|
1,691
|
|
|
—
|
|
|
15
|
|
|
4,095
|
|
|
7,137
|
|
|||||
Purchases and issuances
|
21,686
|
|
|
—
|
|
|
2,017
|
|
|
18,340
|
|
|
—
|
|
|||||
Sales
|
(15,711
|
)
|
|
—
|
|
|
—
|
|
|
(1,237
|
)
|
|
—
|
|
|||||
Settlements
|
(8,259
|
)
|
|
—
|
|
|
—
|
|
|
(30,543
|
)
|
|
—
|
|
|||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3
|
(6,506
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Fixed maturities to short-term investments classification change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, end of period
|
$
|
11,877
|
|
|
$
|
—
|
|
|
$
|
2,015
|
|
|
$
|
113,472
|
|
|
$
|
(29,110
|
)
|
Movement in total gains (losses) above relating to instruments still held at the reporting date
|
$
|
(515
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
10,750
|
|
|
$
|
7,137
|
|
(U.S. dollars in thousands)
|
Level 3 Assets and Liabilities – Year Ended December 31, 2012
|
||||||||||||||||||
Corporate
|
|
RMBS – Agency
|
|
RMBS –
Non Agency
|
|
CMBS
|
|
CDO
|
|||||||||||
Balance, beginning of period
|
$
|
23,818
|
|
|
$
|
32,041
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
650,851
|
|
Realized gains (losses)
|
4
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(894
|
)
|
|||||
Movement in unrealized gains (losses)
|
100
|
|
|
27
|
|
|
—
|
|
|
20
|
|
|
109,282
|
|
|||||
Purchases and issuances
|
10,278
|
|
|
—
|
|
|
—
|
|
|
25,546
|
|
|
—
|
|
|||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,496
|
)
|
|||||
Settlements
|
(282
|
)
|
|
(6,307
|
)
|
|
—
|
|
|
(219
|
)
|
|
(24,536
|
)
|
|||||
Transfers into Level 3
|
819
|
|
|
21,249
|
|
|
116
|
|
|
—
|
|
|
—
|
|
|||||
Transfers out of Level 3
|
(4,639
|
)
|
|
(14,990
|
)
|
|
—
|
|
|
—
|
|
|
(471
|
)
|
|||||
Fixed maturities to short-term investments classification change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, end of period
|
$
|
30,098
|
|
|
$
|
32,005
|
|
|
$
|
116
|
|
|
$
|
25,347
|
|
|
$
|
701,736
|
|
Movement in total gains (losses) above relating to instruments still held at the reporting date
|
$
|
122
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
104,474
|
|
(U.S. dollars in thousands)
|
Level 3 Assets and Liabilities – Year Ended December 31, 2012
|
||||||||||||||||||
Other asset-
backed
securities
|
|
Non-US Sovereign
Government,
Provincial,
Supranational and
Government
Related/Supported
|
|
Short-term
investments
|
|
Other
investments
|
|
Derivative
Contracts – Net
|
|||||||||||
Balance, beginning of period
|
$
|
16,552
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
113,959
|
|
|
$
|
(42,644
|
)
|
Realized gains (losses)
|
6,768
|
|
|
—
|
|
|
—
|
|
|
5,083
|
|
|
—
|
|
|||||
Movement in unrealized gains (losses)
|
(2,784
|
)
|
|
—
|
|
|
—
|
|
|
7,802
|
|
|
6,397
|
|
|||||
Purchases and issuances
|
8,753
|
|
|
—
|
|
|
—
|
|
|
7,375
|
|
|
—
|
|
|||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Settlements
|
(16,094
|
)
|
|
—
|
|
|
—
|
|
|
(18,637
|
)
|
|
—
|
|
|||||
Transfers into Level 3
|
4,933
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
(315
|
)
|
|
—
|
|
|||||
Fixed maturities to short-term investments classification change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance, end of period
|
$
|
18,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,272
|
|
|
$
|
(36,247
|
)
|
Movement in total gains (losses) above relating to instruments still held at the reporting date
|
$
|
(154
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,038
|
|
|
$
|
6,397
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||||||||||
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||
Fixed maturities, held to maturity
|
$
|
2,858,695
|
|
|
$
|
3,131,235
|
|
|
$
|
2,814,447
|
|
|
$
|
3,262,804
|
|
Other investments – structured transactions
|
294,048
|
|
|
296,799
|
|
|
312,122
|
|
|
293,813
|
|
||||
Financial Assets
|
$
|
3,152,743
|
|
|
$
|
3,428,034
|
|
|
$
|
3,126,569
|
|
|
$
|
3,556,617
|
|
Deposit liabilities
|
$
|
1,509,243
|
|
|
$
|
1,718,394
|
|
|
$
|
1,551,398
|
|
|
$
|
1,878,499
|
|
Notes payable and debt
|
2,263,203
|
|
|
2,429,412
|
|
|
1,672,778
|
|
|
1,918,134
|
|
||||
Financial Liabilities
|
$
|
3,772,446
|
|
|
$
|
4,147,806
|
|
|
$
|
3,224,176
|
|
|
$
|
3,796,633
|
|
Year Ended December 31, 2013
(U.S. dollars in thousands, except ratios)
|
Insurance
|
|
Reinsurance
|
|
Total P&C
|
|
Life
Operations
|
|
Total
|
||||||||||
Gross premiums written
|
$
|
5,523,181
|
|
|
$
|
1,893,611
|
|
|
$
|
7,416,792
|
|
|
$
|
324,343
|
|
|
$
|
7,741,135
|
|
Net premiums written
|
4,154,093
|
|
|
1,749,889
|
|
|
5,903,982
|
|
|
295,422
|
|
|
6,199,404
|
|
|||||
Net premiums earned
|
4,267,677
|
|
|
1,746,422
|
|
|
6,014,099
|
|
|
295,422
|
|
|
6,309,521
|
|
|||||
Net losses and loss expenses
|
2,829,999
|
|
|
901,465
|
|
|
3,731,464
|
|
|
465,702
|
|
|
4,197,166
|
|
|||||
Acquisition costs
|
529,270
|
|
|
353,388
|
|
|
882,658
|
|
|
26,665
|
|
|
909,323
|
|
|||||
Operating expenses (1)
|
782,677
|
|
|
166,238
|
|
|
948,915
|
|
|
8,926
|
|
|
957,841
|
|
|||||
Underwriting profit (loss)
|
$
|
125,731
|
|
|
$
|
325,331
|
|
|
$
|
451,062
|
|
|
$
|
(205,871
|
)
|
|
$
|
245,191
|
|
Net investment income
|
|
|
|
|
599,144
|
|
|
286,645
|
|
|
885,789
|
|
|||||||
Net results from structured products (2)
|
15,562
|
|
|
8,229
|
|
|
23,791
|
|
|
|
|
|
23,791
|
|
|||||
Net fee income and other (3)
|
(9,317
|
)
|
|
2,320
|
|
|
(6,997
|
)
|
|
1,305
|
|
|
(5,692
|
)
|
|||||
Net realized gains (losses) on investments
|
|
|
|
|
85,792
|
|
|
1,985
|
|
|
87,777
|
|
|||||||
Contribution from P&C and Life Operations
|
|
|
|
|
$
|
1,152,792
|
|
|
$
|
84,064
|
|
|
$
|
1,236,856
|
|
||||
Corporate & other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized & unrealized gains (losses) on derivative instruments
|
|
|
|
|
|
|
|
|
7,798
|
|
|||||||||
Net income (loss) from investment fund affiliates and operating affiliates (4)
|
|
|
|
|
|
|
|
|
258,195
|
|
|||||||||
Exchange (gains) losses
|
|
|
|
|
|
|
|
|
(28,243
|
)
|
|||||||||
Corporate operating expenses
|
|
|
|
|
|
|
|
|
209,454
|
|
|||||||||
Interest expense (5)
|
|
|
|
|
|
|
|
|
107,486
|
|
|||||||||
Non-controlling interests
|
|
|
|
|
|
|
|
|
76,731
|
|
|||||||||
Income tax expense
|
|
|
|
|
|
|
|
|
77,505
|
|
|||||||||
Net income (loss) attributable to ordinary shareholders
|
|
|
|
|
|
|
|
|
$
|
1,059,916
|
|
||||||||
Ratios – P&C operations: (6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss expense ratio
|
66.3
|
%
|
|
51.6
|
%
|
|
62.0
|
%
|
|
|
|
|
|||||||
Underwriting expense ratio
|
30.8
|
%
|
|
29.8
|
%
|
|
30.5
|
%
|
|
|
|
|
|||||||
Combined ratio
|
97.1
|
%
|
|
81.4
|
%
|
|
92.5
|
%
|
|
|
|
|
(1)
|
Operating expenses exclude Corporate operating expenses, shown separately.
|
(2)
|
The net results from P&C structured products include net investment income and interest expense of
$71.9 million
and
$48.0 million
, respectively.
|
(3)
|
Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.
|
(4)
|
The Company records the income related to the alternative funds and to the private investment and operating fund affiliates on a
one
-month and
three
-month lag, respectively.
|
(5)
|
Interest expense excludes interest expense related to deposit liabilities recorded in the Insurance and Reinsurance segments.
|
(6)
|
Ratios are based on net premiums earned from P&C operations.
|
Year Ended December 31, 2012
(U.S. dollars in thousands, except ratios)
|
Insurance
|
|
Reinsurance
|
|
Total P&C
|
|
Life
Operations
|
|
Total
|
||||||||||
Gross premiums written
|
$
|
5,166,973
|
|
|
$
|
2,008,157
|
|
|
$
|
7,175,130
|
|
|
$
|
355,753
|
|
|
$
|
7,530,883
|
|
Net premiums written
|
4,072,511
|
|
|
1,884,508
|
|
|
5,957,019
|
|
|
324,432
|
|
|
6,281,451
|
|
|||||
Net premiums earned
|
3,924,636
|
|
|
1,841,342
|
|
|
5,765,978
|
|
|
324,459
|
|
|
6,090,437
|
|
|||||
Net losses and loss expenses
|
2,691,056
|
|
|
1,074,426
|
|
|
3,765,482
|
|
|
486,195
|
|
|
4,251,677
|
|
|||||
Acquisition costs
|
504,227
|
|
|
368,172
|
|
|
872,399
|
|
|
41,093
|
|
|
913,492
|
|
|||||
Operating expenses (1)
|
754,308
|
|
|
157,657
|
|
|
911,965
|
|
|
9,335
|
|
|
921,300
|
|
|||||
Underwriting profit (loss)
|
$
|
(24,955
|
)
|
|
$
|
241,087
|
|
|
$
|
216,132
|
|
|
$
|
(212,164
|
)
|
|
$
|
3,968
|
|
Net investment income
|
|
|
|
|
641,237
|
|
|
299,443
|
|
|
940,680
|
|
|||||||
Net results from structured products (2)
|
20,978
|
|
|
(15,721
|
)
|
|
5,257
|
|
|
|
|
|
5,257
|
|
|||||
Net fee income and other (3)
|
850
|
|
|
2,492
|
|
|
3,342
|
|
|
426
|
|
|
3,768
|
|
|||||
Net realized gains (losses) on investments
|
|
|
|
|
35,101
|
|
|
(21,003
|
)
|
|
14,098
|
|
|||||||
Contribution from P&C and Life Operations
|
|
|
|
|
$
|
901,069
|
|
|
$
|
66,702
|
|
|
$
|
967,771
|
|
||||
Corporate & other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized & unrealized gains (losses) on derivative instruments
|
|
|
|
|
|
|
|
|
5,221
|
|
|||||||||
Net income (loss) from investment fund affiliates and operating affiliates (4)
|
|
|
|
|
|
|
|
|
112,391
|
|
|||||||||
Exchange (gains) losses
|
|
|
|
|
|
|
|
|
10,545
|
|
|||||||||
Corporate operating expenses
|
|
|
|
|
|
|
|
|
204,502
|
|
|||||||||
Interest expense (5)
|
|
|
|
|
|
|
|
|
105,925
|
|
|||||||||
Non-controlling interests
|
|
|
|
|
|
|
|
|
79,255
|
|
|||||||||
Income tax expense
|
|
|
|
|
|
|
|
|
34,028
|
|
|||||||||
Net income (loss) attributable to ordinary shareholders
|
|
|
|
|
|
|
|
|
$
|
651,128
|
|
||||||||
Ratios – P&C operations: (6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss expense ratio
|
68.6
|
%
|
|
58.4
|
%
|
|
65.3
|
%
|
|
|
|
|
|||||||
Underwriting expense ratio
|
32.0
|
%
|
|
28.5
|
%
|
|
31.0
|
%
|
|
|
|
|
|||||||
Combined ratio
|
100.6
|
%
|
|
86.9
|
%
|
|
96.3
|
%
|
|
|
|
|
(1)
|
Operating expenses exclude Corporate operating expenses, shown separately.
|
(2)
|
The net results from P&C structured products include net investment income and interest expense of
$71.7 million
and
$66.3 million
, respectively.
|
(3)
|
Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.
|
(4)
|
The Company records the income related to the alternative funds and to the private investment and operating fund affiliates on a
one
-month and
three
-month lag, respectively.
|
(5)
|
Interest expense excludes interest expense related to deposit liabilities recorded in the Insurance and Reinsurance segments.
|
(6)
|
Ratios are based on net premiums earned from P&C operations.
|
Year Ended December 31, 2011
(U.S. dollars in thousands, except ratios)
|
Insurance
|
|
Reinsurance
|
|
Total P&C
|
|
Life
Operations
|
|
Total
|
||||||||||
Gross premiums written
|
$
|
4,824,665
|
|
|
$
|
2,073,619
|
|
|
$
|
6,898,284
|
|
|
$
|
394,555
|
|
|
$
|
7,292,839
|
|
Net premiums written
|
3,707,664
|
|
|
1,725,724
|
|
|
5,433,388
|
|
|
362,362
|
|
|
5,795,750
|
|
|||||
Net premiums earned
|
3,663,727
|
|
|
1,663,385
|
|
|
5,327,112
|
|
|
363,018
|
|
|
5,690,130
|
|
|||||
Net losses and loss expenses
|
2,951,413
|
|
|
1,126,978
|
|
|
4,078,391
|
|
|
535,074
|
|
|
4,613,465
|
|
|||||
Acquisition costs
|
461,965
|
|
|
324,128
|
|
|
786,093
|
|
|
40,318
|
|
|
826,411
|
|
|||||
Operating expenses (1)
|
683,814
|
|
|
176,167
|
|
|
859,981
|
|
|
9,311
|
|
|
869,292
|
|
|||||
Underwriting profit (loss)
|
$
|
(433,465
|
)
|
|
$
|
36,112
|
|
|
$
|
(397,353
|
)
|
|
$
|
(221,685
|
)
|
|
$
|
(619,038
|
)
|
Net investment income
|
|
|
|
|
745,138
|
|
|
318,061
|
|
|
1,063,199
|
|
|||||||
Net results from structured products (2)
|
10,976
|
|
|
12,053
|
|
|
23,029
|
|
|
|
|
|
23,029
|
|
|||||
Net fee income and other (3)
|
(16,370
|
)
|
|
3,903
|
|
|
(12,467
|
)
|
|
219
|
|
|
(12,248
|
)
|
|||||
Net realized gains (losses) on investments
|
|
|
|
|
(98,360
|
)
|
|
(89,999
|
)
|
|
(188,359
|
)
|
|||||||
Contribution from P&C and Life Operations
|
|
|
|
|
$
|
259,987
|
|
|
$
|
6,596
|
|
|
$
|
266,583
|
|
||||
Corporate & other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net realized & unrealized gains (losses) on derivative instruments
|
|
|
|
|
|
|
|
|
(10,738
|
)
|
|||||||||
Net income (loss) from investment fund affiliates and operating affiliates (4)
|
|
|
|
|
|
|
|
|
103,039
|
|
|||||||||
Exchange (gains) losses
|
|
|
|
|
|
|
|
|
(40,640
|
)
|
|||||||||
Corporate operating expenses
|
|
|
|
|
|
|
|
|
160,596
|
|
|||||||||
Interest expense (5)
|
|
|
|
|
|
|
|
|
154,084
|
|
|||||||||
Non-controlling interests
|
|
|
|
|
|
|
|
|
70,877
|
|
|||||||||
Impairment of goodwill
|
|
|
|
|
|
|
|
|
429,020
|
|
|||||||||
Income tax expense
|
|
|
|
|
|
|
|
|
59,707
|
|
|||||||||
Net income (loss) attributable to ordinary shareholders
|
|
|
|
|
|
|
|
|
$
|
(474,760
|
)
|
||||||||
Ratios – P&C operations: (6)
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss expense ratio
|
80.6
|
%
|
|
67.8
|
%
|
|
76.6
|
%
|
|
|
|
|
|||||||
Underwriting expense ratio
|
31.2
|
%
|
|
30.0
|
%
|
|
30.9
|
%
|
|
|
|
|
|||||||
Combined ratio
|
111.8
|
%
|
|
97.8
|
%
|
|
107.5
|
%
|
|
|
|
|
(1)
|
Operating expenses exclude Corporate operating expenses, shown separately.
|
(2)
|
The net results from P&C structured products include net investment income and interest expense of
$74.6 million
and
$51.5 million
, respectively.
|
(3)
|
Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.
|
(4)
|
The Company records the income related to the alternative funds and to the private investment and operating fund affiliates on a
one
-month and
three
-month lag, respectively.
|
(5)
|
Interest expense excludes interest expense related to deposit liabilities recorded in the Insurance and Reinsurance segments.
|
(6)
|
Ratios are based on net premiums earned from P&C operations.
|
Year Ended December 31, 2013
(U.S. dollars in thousands)
|
Insurance
|
|
Reinsurance
|
|
Life
Operations
|
|
Total
|
||||||||
P&C Operations:
|
|
|
|
|
|
|
|
||||||||
Professional
|
$
|
1,370,196
|
|
|
$
|
206,169
|
|
|
$
|
—
|
|
|
$
|
1,576,365
|
|
Casualty
|
1,389,851
|
|
|
312,156
|
|
|
—
|
|
|
1,702,007
|
|
||||
Property catastrophe
|
—
|
|
|
492,568
|
|
|
—
|
|
|
492,568
|
|
||||
Property
|
544,278
|
|
|
561,105
|
|
|
—
|
|
|
1,105,383
|
|
||||
Marine, energy, aviation and satellite
|
—
|
|
|
94,797
|
|
|
—
|
|
|
94,797
|
|
||||
Specialty
|
732,042
|
|
|
—
|
|
|
—
|
|
|
732,042
|
|
||||
Other (1)
|
231,310
|
|
|
79,627
|
|
|
—
|
|
|
310,937
|
|
||||
Total P&C Operations
|
$
|
4,267,677
|
|
|
$
|
1,746,422
|
|
|
$
|
—
|
|
|
$
|
6,014,099
|
|
Life Operations:
|
|
|
|
|
|
|
|
||||||||
Annuity
|
—
|
|
|
—
|
|
|
122,715
|
|
|
122,715
|
|
||||
Other Life
|
—
|
|
|
—
|
|
|
172,707
|
|
|
172,707
|
|
||||
Total Life Operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
295,422
|
|
|
$
|
295,422
|
|
Total
|
$
|
4,267,677
|
|
|
$
|
1,746,422
|
|
|
$
|
295,422
|
|
|
$
|
6,309,521
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
||||||||
P&C Operations:
|
|
|
|
|
|
|
|
||||||||
Professional
|
$
|
1,350,319
|
|
|
$
|
213,324
|
|
|
$
|
—
|
|
|
$
|
1,563,643
|
|
Casualty
|
1,165,753
|
|
|
311,166
|
|
|
—
|
|
|
1,476,919
|
|
||||
Property catastrophe
|
—
|
|
|
463,975
|
|
|
—
|
|
|
463,975
|
|
||||
Property
|
489,739
|
|
|
613,291
|
|
|
—
|
|
|
1,103,030
|
|
||||
Marine, energy, aviation and satellite
|
—
|
|
|
147,362
|
|
|
—
|
|
|
147,362
|
|
||||
Specialty
|
708,568
|
|
|
—
|
|
|
—
|
|
|
708,568
|
|
||||
Other (1)
|
210,257
|
|
|
92,224
|
|
|
—
|
|
|
302,481
|
|
||||
Total P&C Operations
|
$
|
3,924,636
|
|
|
$
|
1,841,342
|
|
|
$
|
—
|
|
|
$
|
5,765,978
|
|
Life Operations:
|
|
|
|
|
|
|
|
||||||||
Annuity
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
126,912
|
|
|
$
|
126,912
|
|
Other Life
|
—
|
|
|
—
|
|
|
197,547
|
|
|
197,547
|
|
||||
Total Life Operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
324,459
|
|
|
$
|
324,459
|
|
Total
|
$
|
3,924,636
|
|
|
$
|
1,841,342
|
|
|
$
|
324,459
|
|
|
$
|
6,090,437
|
|
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
||||||||
P&C Operations:
|
|
|
|
|
|
|
|
||||||||
Professional
|
$
|
1,287,231
|
|
|
$
|
213,949
|
|
|
$
|
—
|
|
|
$
|
1,501,180
|
|
Casualty
|
998,326
|
|
|
256,853
|
|
|
—
|
|
|
1,255,179
|
|
||||
Property catastrophe
|
—
|
|
|
387,523
|
|
|
—
|
|
|
387,523
|
|
||||
Property
|
464,576
|
|
|
587,611
|
|
|
—
|
|
|
1,052,187
|
|
||||
Marine, energy, aviation and satellite
|
—
|
|
|
130,855
|
|
|
—
|
|
|
130,855
|
|
||||
Specialty
|
702,604
|
|
|
—
|
|
|
—
|
|
|
702,604
|
|
||||
Other (1)
|
210,990
|
|
|
86,594
|
|
|
—
|
|
|
297,584
|
|
||||
Total P&C Operations
|
$
|
3,663,727
|
|
|
$
|
1,663,385
|
|
|
$
|
—
|
|
|
$
|
5,327,112
|
|
Life Operations:
|
|
|
|
|
|
|
|
||||||||
Annuity
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
132,232
|
|
|
$
|
132,232
|
|
Other Life
|
—
|
|
|
—
|
|
|
230,786
|
|
|
230,786
|
|
||||
Total Life Operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
363,018
|
|
|
$
|
363,018
|
|
Total
|
$
|
3,663,727
|
|
|
$
|
1,663,385
|
|
|
$
|
363,018
|
|
|
$
|
5,690,130
|
|
(1)
|
Other within the Insurance segment includes: excess and surplus, programs, surety, structured indemnity and certain discontinued lines. Other within the Reinsurance segment includes: whole account contracts, surety and other lines.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
P&C Operations:
|
|
|
|
|
|
||||||
Bermuda
|
$
|
658,041
|
|
|
$
|
644,566
|
|
|
$
|
572,825
|
|
United States
|
2,650,916
|
|
|
2,626,855
|
|
|
2,320,274
|
|
|||
Europe
|
2,111,065
|
|
|
2,202,209
|
|
|
2,065,197
|
|
|||
Other
|
483,960
|
|
|
483,389
|
|
|
475,092
|
|
|||
Total P&C operations
|
$
|
5,903,982
|
|
|
$
|
5,957,019
|
|
|
$
|
5,433,388
|
|
Life Operations:
|
|
|
|
|
|
||||||
Bermuda
|
$
|
117,948
|
|
|
$
|
129,997
|
|
|
$
|
149,466
|
|
Europe
|
177,474
|
|
|
194,435
|
|
|
212,896
|
|
|||
Total Life operations
|
$
|
295,422
|
|
|
$
|
324,432
|
|
|
$
|
362,362
|
|
|
|
|
Included in AOCI
|
|
|
|
|
||||||||||||
December 31, 2013
(U.S. dollars in thousands)
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Non-credit Related OTTI (1)
|
||||||||||
Fixed maturities - AFS
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
2,484,193
|
|
|
$
|
51,701
|
|
|
$
|
(34,043
|
)
|
|
$
|
2,501,851
|
|
|
$
|
—
|
|
Corporate (4) (5)
|
10,802,332
|
|
|
433,097
|
|
|
(109,599
|
)
|
|
11,125,830
|
|
|
(4,758
|
)
|
|||||
RMBS – Agency
|
3,540,101
|
|
|
68,098
|
|
|
(62,077
|
)
|
|
3,546,122
|
|
|
—
|
|
|||||
RMBS – Non-Agency
|
396,798
|
|
|
33,096
|
|
|
(31,126
|
)
|
|
398,768
|
|
|
(74,528
|
)
|
|||||
CMBS
|
1,223,313
|
|
|
39,255
|
|
|
(15,773
|
)
|
|
1,246,795
|
|
|
(2,753
|
)
|
|||||
CDO
|
754,414
|
|
|
5,833
|
|
|
(42,934
|
)
|
|
717,313
|
|
|
(2,036
|
)
|
|||||
Other asset-backed securities (3)
|
1,210,384
|
|
|
40,560
|
|
|
(8,840
|
)
|
|
1,242,104
|
|
|
(2,807
|
)
|
|||||
U.S. States and political subdivisions of the States
|
1,821,499
|
|
|
55,083
|
|
|
(30,770
|
)
|
|
1,845,812
|
|
|
—
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
4,878,840
|
|
|
80,961
|
|
|
(84,260
|
)
|
|
4,875,541
|
|
|
—
|
|
|||||
Total fixed maturities - AFS
|
$
|
27,111,874
|
|
|
$
|
807,684
|
|
|
$
|
(419,422
|
)
|
|
$
|
27,500,136
|
|
|
$
|
(86,882
|
)
|
Total short-term investments (2)
|
455,470
|
|
|
962
|
|
|
(144
|
)
|
|
456,288
|
|
|
—
|
|
|||||
Total equity securities (6)
|
903,201
|
|
|
154,506
|
|
|
(17,470
|
)
|
|
1,040,237
|
|
|
—
|
|
|||||
Total investments - AFS
|
$
|
28,470,545
|
|
|
$
|
963,152
|
|
|
$
|
(437,036
|
)
|
|
$
|
28,996,661
|
|
|
$
|
(86,882
|
)
|
Fixed maturities - HTM
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
10,993
|
|
|
$
|
629
|
|
|
$
|
—
|
|
|
$
|
11,622
|
|
|
$
|
—
|
|
Corporate
|
1,386,863
|
|
|
113,179
|
|
|
(968
|
)
|
|
1,499,074
|
|
|
—
|
|
|||||
RMBS – Non-Agency
|
66,987
|
|
|
4,985
|
|
|
—
|
|
|
71,972
|
|
|
—
|
|
|||||
CMBS
|
144,924
|
|
|
11,864
|
|
|
—
|
|
|
156,788
|
|
|
—
|
|
|||||
Other asset-backed securities (3)
|
106,540
|
|
|
6,908
|
|
|
—
|
|
|
113,448
|
|
|
—
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
1,142,388
|
|
|
136,585
|
|
|
(642
|
)
|
|
1,278,331
|
|
|
—
|
|
|||||
Total investments - HTM
|
$
|
2,858,695
|
|
|
$
|
274,150
|
|
|
$
|
(1,610
|
)
|
|
$
|
3,131,235
|
|
|
$
|
—
|
|
(1)
|
Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.
|
(2)
|
U.S. Government and Government-Related/Supported, Non-U.S. Sovereign Government, Provincials, Supranationals and Government-Related/Supported and Total short-term investments includes government-related securities with an amortized cost of
$2,241.5 million
and fair value of
$2,275.6 million
and U.S. Agencies with an amortized cost of
$267.0 million
and fair value of
$284.3 million
.
|
(3)
|
Covered Bonds within Fixed maturities - AFS with an amortized cost of
$526.4 million
and a fair value of
$553.1 million
and Covered Bonds within Fixed maturities - HTM with an amortized cost of
$8.6 million
and a fair value of
$8.7 million
are included within Other asset-backed securities to align the Company's classification to market indices.
|
(4)
|
Included within Corporate are certain medium term notes supported primarily by pools of European investment grade credit with varying degrees of leverage. The notes have a fair value of
$154.6 million
and an amortized cost of
$147.7 million
. These notes allow the investor to participate in cash flows of the underlying bonds including certain residual values, which could serve to either decrease or increase the ultimate values of these notes.
|
(5)
|
Included within Corporate are Tier One and Upper Tier Two securities, representing committed term debt and hybrid instruments, which are senior to the common and preferred equities of the financial institutions. These securities have a fair value of
$282.2 million
and an amortized cost of
$286.2 million
at
December 31, 2013
.
|
(6)
|
Included within Total equity securities are investments in fixed income funds with a fair value of
$87.4 million
and an amortized cost of
$100.0 million
at
December 31, 2013
.
|
|
|
|
Included in AOCI
|
|
|
|
|
||||||||||||
December 31, 2012
(U.S. dollars in thousands)
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Non-credit Related OTTI (1)
|
||||||||||
Fixed maturities - AFS
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
1,906,044
|
|
|
$
|
131,860
|
|
|
$
|
(3,287
|
)
|
|
$
|
2,034,617
|
|
|
$
|
—
|
|
Corporate (4) (5)
|
9,837,962
|
|
|
723,028
|
|
|
(78,990
|
)
|
|
10,482,000
|
|
|
(11,453
|
)
|
|||||
RMBS – Agency
|
5,054,097
|
|
|
206,931
|
|
|
(5,535
|
)
|
|
5,255,493
|
|
|
—
|
|
|||||
RMBS – Non-Agency
|
678,469
|
|
|
46,132
|
|
|
(76,868
|
)
|
|
647,733
|
|
|
(93,259
|
)
|
|||||
CMBS
|
1,010,794
|
|
|
70,745
|
|
|
(4,288
|
)
|
|
1,077,251
|
|
|
(2,962
|
)
|
|||||
CDO
|
784,999
|
|
|
11,973
|
|
|
(87,156
|
)
|
|
709,816
|
|
|
(4,872
|
)
|
|||||
Other asset-backed securities (3)
|
1,426,483
|
|
|
59,663
|
|
|
(15,435
|
)
|
|
1,470,711
|
|
|
(6,530
|
)
|
|||||
U.S. States and political subdivisions of the States
|
1,767,669
|
|
|
146,294
|
|
|
(2,946
|
)
|
|
1,911,017
|
|
|
—
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
4,078,289
|
|
|
188,186
|
|
|
(8,193
|
)
|
|
4,258,282
|
|
|
—
|
|
|||||
Total fixed maturities - AFS
|
$
|
26,544,806
|
|
|
$
|
1,584,812
|
|
|
$
|
(282,698
|
)
|
|
$
|
27,846,920
|
|
|
$
|
(119,076
|
)
|
Total short-term investments (2)
|
322,563
|
|
|
192
|
|
|
(52
|
)
|
|
322,703
|
|
|
—
|
|
|||||
Total equity securities (6)
|
617,486
|
|
|
31,935
|
|
|
(62
|
)
|
|
649,359
|
|
|
—
|
|
|||||
Total investments - AFS
|
$
|
27,484,855
|
|
|
$
|
1,616,939
|
|
|
$
|
(282,812
|
)
|
|
$
|
28,818,982
|
|
|
$
|
(119,076
|
)
|
Fixed maturities - HTM
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and Government-Related/Supported (2)
|
$
|
10,788
|
|
|
$
|
1,651
|
|
|
$
|
—
|
|
|
$
|
12,439
|
|
|
$
|
—
|
|
Corporate
|
1,425,320
|
|
|
190,871
|
|
|
(794
|
)
|
|
1,615,397
|
|
|
—
|
|
|||||
RMBS – Non-Agency
|
83,205
|
|
|
10,502
|
|
|
—
|
|
|
93,707
|
|
|
—
|
|
|||||
CMBS
|
12,751
|
|
|
2,048
|
|
|
—
|
|
|
14,799
|
|
|
—
|
|
|||||
Other asset-backed securities (3)
|
222,340
|
|
|
29,287
|
|
|
(167
|
)
|
|
251,460
|
|
|
—
|
|
|||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported (2)
|
1,060,043
|
|
|
216,679
|
|
|
(1,720
|
)
|
|
1,275,002
|
|
|
—
|
|
|||||
Total investments - HTM
|
$
|
2,814,447
|
|
|
$
|
451,038
|
|
|
$
|
(2,681
|
)
|
|
$
|
3,262,804
|
|
|
$
|
—
|
|
(1)
|
Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.
|
(2)
|
U.S. Government and Government-Related/Supported, Non-U.S. Sovereign Government, Provincials, Supranationals and Government-Related/Supported and Total short-term investments includes government-related securities with an amortized cost of
$1,912.7 million
and fair value of
$1,988.5 million
and U.S. Agencies with an amortized cost of
$404.3 million
and fair value of
$446.7 million
.
|
(3)
|
Covered Bonds within Fixed maturities - AFS with an amortized cost of
$605.4 million
and a fair value of
$647.1 million
and Covered Bonds within Fixed maturities - HTM with an amortized cost of
$8.4 million
and a fair value of
$8.6 million
are included within Other asset-backed securities to align the Company's classification to market indices.
|
(4)
|
Included within Corporate are certain medium term notes supported primarily by pools of European investment grade credit with varying degrees of leverage. The notes have a fair value of
$194.3 million
and an amortized cost of
$194.8 million
. These notes allow the investor to participate in cash flows of the underlying bonds including certain residual values, which could serve to either decrease or increase the ultimate values of these notes.
|
(5)
|
Included within Corporate are Tier One and Upper Tier Two securities, representing committed term debt and hybrid instruments, which are senior to the common and preferred equities of the financial institutions. These securities have a fair value of
$308.5 million
and an amortized cost of
$327.6 million
at
December 31, 2012
.
|
(6)
|
Included within Total equity securities are investments in fixed income funds with a fair value of
$101.9 million
and an amortized cost of
$100.0 million
at
December 31, 2012
.
|
(U.S. dollars in thousands)
|
December 31,2013 (1)
|
|
December 31,2012 (1)
|
||||||||||||
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
|||||||||
Fixed maturities - AFS
|
|
|
|
|
|
|
|
||||||||
Due less than one year
|
$
|
2,052,251
|
|
|
$
|
2,060,365
|
|
|
$
|
1,939,803
|
|
|
$
|
1,952,250
|
|
Due after 1 through 5 years
|
10,075,087
|
|
|
10,305,986
|
|
|
8,521,090
|
|
|
8,877,512
|
|
||||
Due after 5 through 10 years
|
5,474,120
|
|
|
5,507,450
|
|
|
4,701,391
|
|
|
5,065,158
|
|
||||
Due after 10 years
|
2,385,406
|
|
|
2,475,233
|
|
|
2,427,680
|
|
|
2,790,996
|
|
||||
|
$
|
19,986,864
|
|
|
$
|
20,349,034
|
|
|
$
|
17,589,964
|
|
|
$
|
18,685,916
|
|
RMBS – Agency
|
$
|
3,540,101
|
|
|
$
|
3,546,122
|
|
|
$
|
5,054,097
|
|
|
$
|
5,255,493
|
|
RMBS – Non-Agency
|
396,798
|
|
|
398,768
|
|
|
678,469
|
|
|
647,733
|
|
||||
CMBS
|
1,223,313
|
|
|
1,246,795
|
|
|
1,010,794
|
|
|
1,077,251
|
|
||||
CDO
|
754,414
|
|
|
717,313
|
|
|
784,999
|
|
|
709,816
|
|
||||
Other asset-backed securities
|
1,210,384
|
|
|
1,242,104
|
|
|
1,426,483
|
|
|
1,470,711
|
|
||||
Total mortgage and asset-backed securities
|
$
|
7,125,010
|
|
|
$
|
7,151,102
|
|
|
$
|
8,954,842
|
|
|
$
|
9,161,004
|
|
Total fixed maturities - AFS
|
$
|
27,111,874
|
|
|
$
|
27,500,136
|
|
|
$
|
26,544,806
|
|
|
$
|
27,846,920
|
|
Fixed maturities - HTM
|
|
|
|
|
|
|
|
||||||||
Due less than one year
|
$
|
65,651
|
|
|
$
|
66,766
|
|
|
$
|
36,515
|
|
|
$
|
37,580
|
|
Due after 1 through 5 years
|
240,802
|
|
|
255,322
|
|
|
195,121
|
|
|
205,562
|
|
||||
Due after 5 through 10 years
|
455,633
|
|
|
492,095
|
|
|
377,541
|
|
|
420,008
|
|
||||
Due after 10 years
|
1,778,158
|
|
|
1,974,844
|
|
|
1,886,974
|
|
|
2,239,688
|
|
||||
|
$
|
2,540,244
|
|
|
$
|
2,789,027
|
|
|
$
|
2,496,151
|
|
|
$
|
2,902,838
|
|
RMBS – Non-Agency
|
66,987
|
|
|
71,972
|
|
|
83,205
|
|
|
93,707
|
|
||||
CMBS
|
144,924
|
|
|
156,788
|
|
|
12,751
|
|
|
14,799
|
|
||||
Other asset-backed securities
|
106,540
|
|
|
113,448
|
|
|
222,340
|
|
|
251,460
|
|
||||
Total mortgage and asset-backed securities
|
$
|
318,451
|
|
|
$
|
342,208
|
|
|
$
|
318,296
|
|
|
$
|
359,966
|
|
Total fixed maturities - HTM
|
$
|
2,858,695
|
|
|
$
|
3,131,235
|
|
|
$
|
2,814,447
|
|
|
$
|
3,262,804
|
|
(1)
|
Included in the table above are Tier One and Upper Tier Two securities, representing committed term debt and hybrid instruments, which are senior to the common and preferred equities of the financial institutions, at their fair value of
$282.2 million
and
$308.5 million
at
December 31, 2013
and
December 31, 2012
, respectively. These securities are reflected in the table based on their call date and have net unrealized losses of
$4.0 million
and
$19.1 million
at
December 31, 2013
and
December 31, 2012
, respectively.
|
December 31, 2013
(U.S. dollars in thousands)
|
Less than 12 months
|
|
Equal to or greater
than 12 months
|
||||||||||||
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||||
Fixed maturities and short-term investments - AFS
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Government-Related/Supported
|
$
|
1,333,704
|
|
|
$
|
(30,474
|
)
|
|
$
|
44,158
|
|
|
$
|
(3,614
|
)
|
Corporate
|
2,756,235
|
|
|
(59,497
|
)
|
|
513,106
|
|
|
(50,160
|
)
|
||||
RMBS – Agency
|
1,485,261
|
|
|
(50,362
|
)
|
|
169,704
|
|
|
(11,715
|
)
|
||||
RMBS – Non-Agency
|
14,204
|
|
|
(604
|
)
|
|
240,946
|
|
|
(30,522
|
)
|
||||
CMBS
|
432,820
|
|
|
(6,816
|
)
|
|
107,192
|
|
|
(8,957
|
)
|
||||
CDO
|
58,239
|
|
|
(217
|
)
|
|
574,613
|
|
|
(42,717
|
)
|
||||
Other asset-backed securities
|
196,639
|
|
|
(2,149
|
)
|
|
96,528
|
|
|
(6,691
|
)
|
||||
U.S. States and political subdivisions of the States
|
463,974
|
|
|
(23,124
|
)
|
|
64,324
|
|
|
(7,646
|
)
|
||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
2,130,792
|
|
|
(56,866
|
)
|
|
306,873
|
|
|
(27,435
|
)
|
||||
Total fixed maturities and short-term investments - AFS
|
$
|
8,871,868
|
|
|
$
|
(230,109
|
)
|
|
$
|
2,117,444
|
|
|
$
|
(189,457
|
)
|
Total equity securities
|
$
|
155,453
|
|
|
$
|
(17,470
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed maturities -HTM
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
46,034
|
|
|
$
|
(941
|
)
|
|
$
|
642
|
|
|
$
|
(27
|
)
|
Other asset-backed securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
—
|
|
|
—
|
|
|
11,894
|
|
|
(642
|
)
|
||||
Total fixed maturities - HTM
|
$
|
46,034
|
|
|
$
|
(941
|
)
|
|
$
|
12,536
|
|
|
$
|
(669
|
)
|
December 31, 2012
(U.S. dollars in thousands)
|
Less than 12 months
|
|
Equal to or greater
than 12 months
|
||||||||||||
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||||
Fixed maturities and short-term investments - AFS
|
|
|
|
|
|
|
|
||||||||
U.S. Government and Government-Related/Supported
|
$
|
307,879
|
|
|
$
|
(2,847
|
)
|
|
$
|
9,951
|
|
|
$
|
(471
|
)
|
Corporate
|
476,454
|
|
|
(10,603
|
)
|
|
607,796
|
|
|
(68,387
|
)
|
||||
RMBS – Agency
|
578,823
|
|
|
(4,541
|
)
|
|
11,135
|
|
|
(994
|
)
|
||||
RMBS – Non-Agency
|
6,674
|
|
|
(450
|
)
|
|
448,555
|
|
|
(76,418
|
)
|
||||
CMBS
|
92,899
|
|
|
(666
|
)
|
|
23,580
|
|
|
(3,622
|
)
|
||||
CDO
|
243
|
|
|
(1
|
)
|
|
694,351
|
|
|
(87,155
|
)
|
||||
Other asset-backed securities
|
111,431
|
|
|
(531
|
)
|
|
93,388
|
|
|
(14,904
|
)
|
||||
U.S. States and political subdivisions of the States
|
77,273
|
|
|
(1,407
|
)
|
|
12,851
|
|
|
(1,539
|
)
|
||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
355,409
|
|
|
(1,378
|
)
|
|
131,884
|
|
|
(6,836
|
)
|
||||
Total fixed maturities and short-term investments - AFS
|
$
|
2,007,085
|
|
|
$
|
(22,424
|
)
|
|
$
|
2,033,491
|
|
|
$
|
(260,326
|
)
|
Total equity securities
|
$
|
615
|
|
|
$
|
(62
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed maturities -HTM
|
|
|
|
|
|
|
|
||||||||
Corporate
|
$
|
4,568
|
|
|
$
|
(31
|
)
|
|
$
|
23,005
|
|
|
$
|
(763
|
)
|
Other asset-backed securities
|
1,239
|
|
|
(167
|
)
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported
|
—
|
|
|
—
|
|
|
10,518
|
|
|
(1,720
|
)
|
||||
Total fixed maturities - HTM
|
$
|
5,807
|
|
|
$
|
(198
|
)
|
|
$
|
33,523
|
|
|
$
|
(2,483
|
)
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
|||
Fixed maturities, short term investments and cash equivalents
|
982,275
|
|
|
1,046,255
|
|
|
1,178,038
|
|
Equity securities and other investments
|
35,388
|
|
|
29,807
|
|
|
17,804
|
|
Funds withheld
|
12,783
|
|
|
12,090
|
|
|
12,240
|
|
Total gross investment income
|
1,030,446
|
|
|
1,088,152
|
|
|
1,208,082
|
|
Investment expenses
|
(72,730
|
)
|
|
(75,804
|
)
|
|
(70,313
|
)
|
Net investment income
|
957,716
|
|
|
1,012,348
|
|
|
1,137,769
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net realized gains (losses):
|
|
|
|
|
|
||||||
Fixed maturities, short term investments, cash and cash equivalents:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
129,479
|
|
|
$
|
163,328
|
|
|
$
|
185,530
|
|
Gross realized losses on investments sold
|
(84,703
|
)
|
|
(107,033
|
)
|
|
(225,360
|
)
|
|||
OTTI on investments, net of amounts transferred to other comprehensive income
|
(16,282
|
)
|
|
(74,245
|
)
|
|
(159,435
|
)
|
|||
Net realized gains (losses)
|
$
|
28,494
|
|
|
$
|
(17,950
|
)
|
|
$
|
(199,265
|
)
|
Equity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
29,402
|
|
|
$
|
42,009
|
|
|
$
|
2,194
|
|
Gross realized losses on investments sold
|
(3,185
|
)
|
|
(7,121
|
)
|
|
(4,264
|
)
|
|||
OTTI on investments, net of amounts transferred to other comprehensive income
|
(17
|
)
|
|
(3,746
|
)
|
|
—
|
|
|||
Net realized gains (losses)
|
$
|
26,200
|
|
|
$
|
31,142
|
|
|
$
|
(2,070
|
)
|
Other investments:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
46,934
|
|
|
$
|
11,610
|
|
|
$
|
18,505
|
|
Gross realized losses on investments sold
|
(13,851
|
)
|
|
(7,983
|
)
|
|
(4,792
|
)
|
|||
OTTI on investments, net of amounts transferred to other comprehensive income
|
—
|
|
|
(2,721
|
)
|
|
(737
|
)
|
|||
Net realized gains (losses)
|
$
|
33,083
|
|
|
$
|
906
|
|
|
$
|
12,976
|
|
Net realized gains (losses) on investments
|
$
|
87,777
|
|
|
$
|
14,098
|
|
|
$
|
(188,359
|
)
|
Net realized and unrealized gains (losses) on investment related derivative instruments
|
6,367
|
|
|
(1,228
|
)
|
|
(22,981
|
)
|
|||
Net realized gains (losses) on investments and net realized and unrealized gains (losses) on investment related derivative instruments
|
$
|
94,144
|
|
|
$
|
12,870
|
|
|
$
|
(211,340
|
)
|
Change in unrealized gains (losses):
|
|
|
|
|
|
||||||
Fixed maturities – AFS
|
$
|
(913,174
|
)
|
|
$
|
884,259
|
|
|
$
|
598,542
|
|
Fixed maturities – HTM
|
(175,817
|
)
|
|
221,647
|
|
|
212,419
|
|
|||
Equity securities
|
105,163
|
|
|
44,361
|
|
|
(40,518
|
)
|
|||
Affiliates and other investments
|
26,636
|
|
|
46,163
|
|
|
25,269
|
|
|||
Net change in unrealized gains (losses) on investments
|
$
|
(957,192
|
)
|
|
$
|
1,196,430
|
|
|
$
|
795,712
|
|
Total net realized gains (losses) on investments, net realized and unrealized gains (losses) on investment related derivative instruments, and net change in unrealized gains (losses) on investments
|
$
|
(863,048
|
)
|
|
$
|
1,209,300
|
|
|
$
|
584,372
|
|
•
|
$7.7 million
for structured securities, principally non-Agency RMBS, where management determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.
|
•
|
$4.3 million
related to medium term notes backed primarily by European investment grade credit. On certain notes, management concluded that expected future returns on the underlying assets were not sufficient to support the previously reported amortized cost.
|
•
|
$4.3 million
related to foreign exchange losses.
|
Credit Loss Impairments
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Opening balance at beginning of indicated period
|
$
|
268,708
|
|
|
$
|
333,379
|
|
Credit loss impairment recognized in the current period on securities not previously impaired
|
806
|
|
|
13,000
|
|
||
Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period
|
(92,167
|
)
|
|
(114,056
|
)
|
||
Credit loss impairments previously recognized on securities impaired to fair value during the period
|
—
|
|
|
(271
|
)
|
||
Additional credit loss impairments recognized in the current period on securities previously impaired
|
11,182
|
|
|
52,869
|
|
||
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected
|
(13,724
|
)
|
|
(16,213
|
)
|
||
Closing balance at end of indicated period
|
$
|
174,805
|
|
|
$
|
268,708
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Investment fund affiliates
|
$
|
1,042,072
|
|
|
$
|
845,198
|
|
Operating affiliates
|
328,871
|
|
|
281,677
|
|
||
Total investment affiliates
|
$
|
1,370,943
|
|
|
$
|
1,126,875
|
|
Year Ended December 31, 2013
(U.S. dollars in thousands, except percentages)
|
XL Group Investment
|
|
Combined
Funds
|
|||||||||||
Carrying
Value
|
|
Equity in
Net Income
(Loss) for
the Year
|
|
Weighted
Average XL
Percentage
Ownership
|
|
|||||||||
Total Net Assets
(Estimated) (2)
|
||||||||||||||
Alternative Funds (1):
|
|
|
|
|
|
|
|
|||||||
Arbitrage
|
$
|
158,096
|
|
|
$
|
4,358
|
|
|
3.7
|
%
|
|
$
|
4,328,748
|
|
Directional
|
434,652
|
|
|
42,492
|
|
|
8.3
|
%
|
|
5,235,690
|
|
|||
Event Driven (3)
|
274,380
|
|
|
61,551
|
|
|
2.9
|
%
|
|
9,309,163
|
|
|||
Multi-Style
|
374
|
|
|
48
|
|
|
15.5
|
%
|
|
2,410
|
|
|||
Total alternative funds
|
$
|
867,502
|
|
|
$
|
108,449
|
|
|
4.6
|
%
|
|
$
|
18,876,011
|
|
Private Investment Funds (1):
|
174,570
|
|
|
29,942
|
|
|
19.6
|
%
|
|
890,815
|
|
|||
Total Investment Fund Affiliates
|
$
|
1,042,072
|
|
|
$
|
138,391
|
|
|
5.3
|
%
|
|
$
|
19,766,826
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|||||||
Alternative Funds (1):
|
|
|
|
|
|
|
|
|||||||
Arbitrage
|
$
|
131,037
|
|
|
$
|
7,149
|
|
|
3.7
|
%
|
|
$
|
3,517,404
|
|
Directional
|
297,535
|
|
|
14,791
|
|
|
5.9
|
%
|
|
5,057,381
|
|
|||
Event Driven (3)
|
198,282
|
|
|
13,125
|
|
|
2.4
|
%
|
|
8,272,227
|
|
|||
Multi-Style
|
326
|
|
|
(99
|
)
|
|
13.5
|
%
|
|
2,410
|
|
|||
Total alternative funds
|
$
|
627,180
|
|
|
$
|
34,966
|
|
|
3.7
|
%
|
|
$
|
16,849,422
|
|
Private Investment Funds (1):
|
218,018
|
|
|
23,538
|
|
|
17.1
|
%
|
|
1,275,543
|
|
|||
Total Investment Fund Affiliates
|
$
|
845,198
|
|
|
$
|
58,504
|
|
|
4.7
|
%
|
|
$
|
18,124,965
|
|
(1)
|
The Company generally records its alternative fund affiliates on a
one
-month lag and its private investment fund affiliates on a
three
-month lag.
|
(2)
|
Total estimated net assets are generally as at November 30 and September 30, respectively.
|
(3)
|
The Company accounts for its investment in certain funds where the ownership percentage is less than three percent using the equity method, where the Company has significant influence over the related investment management company.
|
Year ended December 31, 2013
(U.S. dollars in thousands)
|
XL Group Investment
|
|
Combined Investee Summarized
Financial Data (Estimated) (1)
|
||||||||||||||||||||
Carrying
Value
|
|
Equity in
Net Income
(Loss) for
the Year
|
|
Total
Assets
|
|
Total
Liabilities
|
|
Total
Revenue
(Loss)
|
|
Net Income
(Loss)
|
|||||||||||||
Other strategic operating affiliates
|
$
|
266,796
|
|
|
$
|
41,160
|
|
|
$
|
2,646,987
|
|
|
$
|
1,888,879
|
|
|
$
|
902,522
|
|
|
$
|
125,625
|
|
Investment manager affiliates
|
62,075
|
|
|
78,644
|
|
|
922,348
|
|
|
92,574
|
|
|
813,587
|
|
|
710,412
|
|
||||||
Total operating affiliates
|
$
|
328,871
|
|
|
$
|
119,804
|
|
|
$
|
3,569,335
|
|
|
$
|
1,981,453
|
|
|
$
|
1,716,109
|
|
|
$
|
836,037
|
|
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial operating affiliates
|
$
|
732
|
|
|
$
|
—
|
|
|
$
|
12,711,762
|
|
|
$
|
12,678,810
|
|
|
$
|
20,467
|
|
|
$
|
6,183
|
|
Other strategic operating affiliates
|
192,792
|
|
|
25,111
|
|
|
2,094,539
|
|
|
1,512,551
|
|
|
698,665
|
|
|
51,702
|
|
||||||
Investment manager affiliates (2)
|
88,153
|
|
|
28,776
|
|
|
610,940
|
|
|
37,699
|
|
|
364,551
|
|
|
274,312
|
|
||||||
Total operating affiliates
|
$
|
281,677
|
|
|
$
|
53,887
|
|
|
$
|
15,417,241
|
|
|
$
|
14,229,060
|
|
|
$
|
1,083,683
|
|
|
$
|
332,197
|
|
(1)
|
The Company generally records its operating affiliates on a
three
month lag. Estimated assets and liabilities are generally at September 30,
2013
and
2012
, respectively.
|
(2)
|
During the years ended
December 31, 2013 and 2012
the Company received distributions from its Investment Manager Affiliates of approximately
$28.3 million
and
$58.3 million
, respectively.
|
Year ended December 31,
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Alternative Investment Funds:
|
|
|
|
||||
Arbitrage
|
$
|
158,220
|
|
|
$
|
278,680
|
|
Directional
|
357,469
|
|
|
254,616
|
|
||
Event Driven
|
56,873
|
|
|
96,451
|
|
||
Multi-Style
|
72,625
|
|
|
65,125
|
|
||
Total alternative funds
|
$
|
645,187
|
|
|
$
|
694,872
|
|
Private investment funds
|
94,064
|
|
|
89,469
|
|
||
Overseas deposits
|
111,302
|
|
|
96,117
|
|
||
Structured transactions
|
294,048
|
|
|
312,122
|
|
||
Other
|
20,029
|
|
|
27,299
|
|
||
Total other investments
|
$
|
1,164,630
|
|
|
$
|
1,219,879
|
|
Year ended December 31,
(U.S. dollars in thousands)
|
Net Unrealized Gains
(Losses)
|
|
Net Realized Gains (Losses)
|
||||||||||||||||
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2011
|
|||||||||||
Alternative investment funds
|
$
|
158,825
|
|
|
$
|
130,702
|
|
|
$
|
30,858
|
|
|
$
|
(2,153
|
)
|
|
$
|
10,120
|
|
Private investment funds
|
44,027
|
|
|
38,518
|
|
|
4,331
|
|
|
257
|
|
|
3,585
|
|
|||||
Total
|
$
|
202,852
|
|
|
$
|
169,220
|
|
|
$
|
35,189
|
|
|
$
|
(1,896
|
)
|
|
$
|
13,705
|
|
(U.S. dollars in thousands)
|
Goodwill
|
|
Intangible
assets with an
indefinite life
|
|
Intangible
assets with a
definite life
|
|
Total
|
||||||||
Balance at December 31, 2010
|
$
|
822,247
|
|
|
$
|
15,366
|
|
|
$
|
1,895
|
|
|
$
|
839,508
|
|
Impairment
|
(429,020
|
)
|
|
—
|
|
|
—
|
|
|
(429,020
|
)
|
||||
Amortization
|
—
|
|
|
—
|
|
|
(1,438
|
)
|
|
(1,438
|
)
|
||||
Foreign Currency Translation
|
(1,729
|
)
|
|
—
|
|
|
—
|
|
|
(1,729
|
)
|
||||
Balance at December 31, 2011
|
$
|
391,498
|
|
|
$
|
15,366
|
|
|
$
|
457
|
|
|
$
|
407,321
|
|
Amortization
|
—
|
|
|
—
|
|
|
(178
|
)
|
|
(178
|
)
|
||||
Foreign Currency Translation
|
1,384
|
|
|
—
|
|
|
—
|
|
|
1,384
|
|
||||
Balance at December 31, 2012
|
$
|
392,882
|
|
|
$
|
15,366
|
|
|
$
|
279
|
|
|
$
|
408,527
|
|
Amortization
|
—
|
|
|
—
|
|
|
(279
|
)
|
|
(279
|
)
|
||||
Foreign Currency Translation
|
3,363
|
|
|
—
|
|
|
—
|
|
|
3,363
|
|
||||
Balance at December 31, 2013
|
$
|
396,245
|
|
|
$
|
15,366
|
|
|
$
|
—
|
|
|
$
|
411,611
|
|
(U.S. dollars in thousands)
|
Premiums Written
Year Ended December 31,
|
|
Premiums Earned
Year Ended December 31,
|
||||||||||||||||||||
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
|||||||||||||
Direct
|
$
|
5,050,953
|
|
|
$
|
4,733,516
|
|
|
$
|
4,714,588
|
|
|
$
|
4,966,207
|
|
|
$
|
4,604,323
|
|
|
$
|
4,624,557
|
|
Assumed
|
2,365,839
|
|
|
2,441,612
|
|
|
2,183,696
|
|
|
2,363,261
|
|
|
2,393,490
|
|
|
2,179,555
|
|
||||||
Ceded
|
(1,512,810
|
)
|
|
(1,218,109
|
)
|
|
(1,464,896
|
)
|
|
(1,315,369
|
)
|
|
(1,231,835
|
)
|
|
(1,477,000
|
)
|
||||||
Net
|
$
|
5,903,982
|
|
|
$
|
5,957,019
|
|
|
$
|
5,433,388
|
|
|
$
|
6,014,099
|
|
|
$
|
5,765,978
|
|
|
$
|
5,327,112
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
P&C operations
|
$
|
3,414,735
|
|
|
$
|
3,361,703
|
|
Life Operations
|
20,495
|
|
|
20,399
|
|
||
Total unpaid losses and loss expenses recoverable
|
$
|
3,435,230
|
|
|
$
|
3,382,102
|
|
Name of Reinsurer
|
Reinsurer Financial Strength Rating
|
|
% of Total
|
|
Munich Reinsurance Company
|
AA-/Stable
|
|
26.9
|
%
|
Swiss Reinsurance Company
|
AA-/Stable
|
|
10.5
|
%
|
Lloyd’s Syndicate
|
A+/Positive
|
|
6.1
|
%
|
Swiss Re Europe S.A.
|
AA-/Stable
|
|
5.0
|
%
|
Transatlantic Reinsurance Company
|
A+/Stable
|
|
4.7
|
%
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Reserve for reported losses and loss expenses
|
$
|
8,149,501
|
|
|
$
|
7,976,120
|
|
Reserve for losses incurred but not reported
|
12,331,564
|
|
|
12,508,001
|
|
||
Unpaid losses and loss expenses
|
$
|
20,481,065
|
|
|
$
|
20,484,121
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Loss and loss expenses payments
|
$
|
4,496,802
|
|
|
$
|
4,673,998
|
|
|
$
|
4,911,737
|
|
Change in unpaid losses and loss expenses
|
(71,901
|
)
|
|
(297,660
|
)
|
|
260,631
|
|
|||
Change in unpaid losses and loss expenses recoverable
|
(24,774
|
)
|
|
279,900
|
|
|
(28,442
|
)
|
|||
Paid loss recoveries
|
(668,663
|
)
|
|
(890,756
|
)
|
|
(1,065,535
|
)
|
|||
Net losses and loss expenses incurred
|
$
|
3,731,464
|
|
|
$
|
3,765,482
|
|
|
$
|
4,078,391
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Unpaid losses and loss expenses at the beginning of the year
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
|
$
|
20,531,607
|
|
Unpaid losses and loss expenses recoverable
|
3,361,703
|
|
|
3,629,940
|
|
|
3,649,290
|
|
|||
Net unpaid losses and loss expenses at the beginning of the year
|
$
|
17,122,418
|
|
|
$
|
16,983,961
|
|
|
$
|
16,882,317
|
|
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
4,021,353
|
|
|
4,081,376
|
|
|
4,363,258
|
|
|||
Prior year
|
(289,889
|
)
|
|
(315,894
|
)
|
|
(284,867
|
)
|
|||
Total net incurred losses and loss expenses
|
$
|
3,731,464
|
|
|
$
|
3,765,482
|
|
|
$
|
4,078,391
|
|
Exchange rate effects
|
40,587
|
|
|
156,217
|
|
|
(130,545
|
)
|
|||
Less net losses and loss expenses paid in respect of losses occurring in:
|
|
|
|
|
|
||||||
Current year
|
425,254
|
|
|
416,844
|
|
|
589,870
|
|
|||
Prior year
|
3,402,885
|
|
|
3,366,398
|
|
|
3,256,332
|
|
|||
Total net paid losses
|
$
|
3,828,139
|
|
|
$
|
3,783,242
|
|
|
$
|
3,846,202
|
|
Net unpaid losses and loss expenses at the end of the year
|
17,066,330
|
|
|
17,122,418
|
|
|
16,983,961
|
|
|||
Unpaid losses and loss expenses recoverable
|
3,414,735
|
|
|
3,361,703
|
|
|
3,629,940
|
|
|||
Unpaid losses and loss expenses at the end of the year
|
$
|
20,481,065
|
|
|
$
|
20,484,121
|
|
|
$
|
20,613,901
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance segment
|
$
|
(102,039
|
)
|
|
$
|
(140,066
|
)
|
|
$
|
(76,516
|
)
|
Reinsurance segment
|
(187,850
|
)
|
|
(175,828
|
)
|
|
(208,351
|
)
|
|||
Total
|
$
|
(289,889
|
)
|
|
$
|
(315,894
|
)
|
|
$
|
(284,867
|
)
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Property
|
$
|
(46,387
|
)
|
|
$
|
(46,735
|
)
|
|
$
|
(8,922
|
)
|
Casualty
|
(21,983
|
)
|
|
(61,133
|
)
|
|
34,500
|
|
|||
Professional
|
75,045
|
|
|
(106,360
|
)
|
|
(87,520
|
)
|
|||
Specialty
|
(140,740
|
)
|
|
(61,755
|
)
|
|
(71,285
|
)
|
|||
Other
|
32,026
|
|
|
135,917
|
|
|
56,711
|
|
|||
Total
|
$
|
(102,039
|
)
|
|
$
|
(140,066
|
)
|
|
$
|
(76,516
|
)
|
▪
|
For property, net prior year development was
$46.4 million
favorable. This was driven by better than expected loss experience reported for non-catastrophe exposures primarily in the 2012 accident year. It was also driven by a reduction of
$16.7 million
in prior year catastrophe losses predominantly in the 2011 and 2012 accident years.
|
▪
|
For casualty, net prior year development was
$22.0 million
favorable. This was driven by a release of
$44.9 million
in the excess casualty book mainly as a result of reflecting the better than expected loss experience reported across the 2006 and prior accident years. This was partially offset by adverse development of
$13.5 million
in the U.S. environmental book primarily attributable to the 2010 accident year. In addition, worse than expected loss experience reported in the Lloyd’s middle market book led to a deterioration of
$12.2 million
principally in the 2010 to 2012 accident years.
|
▪
|
For professional, net prior year development was
$75.0 million
unfavorable. This was driven by worse than expected loss experience reported in the core U.S. and international books across the 2009 to 2012 accident years.
|
▪
|
For specialty, net prior year development was
$140.7 million
favorable. This was driven by releases of
$80.4 million
,
$20.6 million
and
$19.1 million
for aerospace, marine and specie, respectively, due primarily to reflecting the better than expected loss experience reported predominantly across the 2005 and later accident years. It was also driven by a reduction of
$17.3 million
in the Bermuda discontinued political risk book as a result of a review of the open claims and remaining exposure.
|
▪
|
Other net prior year development was
$32.0 million
unfavorable. This was driven by deteriorations in the discontinued environmental book across the 2006 and prior accident years, strengthening of
$10.0 million
in the 2006 accident year for the discontinued surety book, and an increase of
$5.9 million
in the uncollectible reinsurance reserve from the Bermuda operations.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Property and other short-tail lines
|
$
|
(136,912
|
)
|
|
$
|
(107,613
|
)
|
|
$
|
(64,267
|
)
|
Casualty and other
|
(50,938
|
)
|
|
(68,215
|
)
|
|
(144,084
|
)
|
|||
Total
|
$
|
(187,850
|
)
|
|
$
|
(175,828
|
)
|
|
$
|
(208,351
|
)
|
▪
|
Net favorable prior year development for the short-tailed lines totaled
$136.9 million
and details of the significant components are as follows:
|
▪
|
For property catastrophe lines, net prior year development was
$60.0 million
favorable comprised of a
$28.6 million
release on attritional losses and
$31.5 million
favorable development on major catastrophe losses mainly driven by a review of reserves for the 2005 hurricanes as well as the 2009 and prior years’ typhoon and windstorm losses.
|
▪
|
For property other lines, net prior year development was
$57.3 million
favorable comprised of
$27.9 million
favorable development for catastrophe and large losses and
$29.4 million
favorable development due to better than expected attritional loss development. The notable favorable developments on prior year catastrophe losses include
$15.0 million
for 2010 events and
$4.5 million
for 2008 events.
|
▪
|
For marine and aviation lines, net prior year development was
$19.6 million
favorable driven by better than expected attritional loss development in the Europe marine book.
|
▪
|
Net favorable prior year development for the long-tailed lines totaled
$50.9 million
and details of the significant components are as follows:
|
▪
|
For casualty lines, net prior year development was
$72.2 million
favorable due to better than expected development on attritional losses mainly driven by
$58.1 million
from the North America book on underwriting years 2004-06 and
$14.4 million
from the Europe book on underwriting years 2005-07.
|
▪
|
For other lines, net prior year development was
$21.3 million
unfavorable mainly driven by adverse development on surety losses in Europe.
|
(1)
|
Reinsurance contracts written, both on a proportional and excess basis, after 1972. The Company discontinued writing contracts with these exposures in 1985. Business written was across many different policies, each with a relatively small contract limit. The Company’s reported asbestos claims relate to both traditional products and premises and operations coverage.
|
(2)
|
Winterthur – business of Winterthur purchased by the Company from AXA Insurance (formerly Winterthur Swiss Insurance Company) in 2001. Pursuant to the Sale and Purchase Agreement and related agreements, AXA Insurance reimburses the Company for all asbestos losses.
|
(3)
|
During 2006, the Company acquired
$40.2 million
in losses through a loss portfolio transfer contract of which
$18.3 million
in losses related to asbestos and environmental claims. Given the terms of the policy, the combined aggregate limit on the total acquired reserves is limited to
$60.0 million
, not including coverage for claims handling costs over a defined period.
|
Year ended December 31,
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net unpaid losses and loss expenses at beginning of year
|
$
|
78,315
|
|
|
$
|
77,778
|
|
|
$
|
84,075
|
|
Net incurred losses and loss expenses
|
6,257
|
|
|
6,558
|
|
|
(41
|
)
|
|||
Less net paid losses and loss expenses
|
4,137
|
|
|
6,021
|
|
|
6,256
|
|
|||
Net increase (decrease) in unpaid losses and loss expenses
|
$
|
2,120
|
|
|
$
|
537
|
|
|
$
|
(6,297
|
)
|
Net unpaid losses and loss expenses at end of year
|
80,435
|
|
|
78,315
|
|
|
77,778
|
|
|||
Unpaid losses and loss expenses recoverable at end of year
|
115,090
|
|
|
123,799
|
|
|
134,323
|
|
|||
Gross unpaid losses and loss expenses at end of year
|
$
|
195,525
|
|
|
$
|
202,114
|
|
|
$
|
212,101
|
|
|
Asbestos
Claims
|
|
Environmental
Claims
|
||
Total number of claims outstanding at December 31, 2010
|
1,200
|
|
|
417
|
|
New claims reported in 2011
|
106
|
|
|
36
|
|
Claims resolved in 2011
|
(268
|
)
|
|
(91
|
)
|
Total number of claims outstanding at December 31, 2011
|
1,038
|
|
|
362
|
|
New claims reported in 2012
|
236
|
|
|
60
|
|
Claims resolved in 2012
|
(201
|
)
|
|
(68
|
)
|
Total number of claims outstanding at December 31, 2012
|
1,073
|
|
|
354
|
|
New claims reported in 2013
|
178
|
|
|
34
|
|
Claims resolved in 2013
|
(154
|
)
|
|
(50
|
)
|
Total number of claims outstanding at December 31, 2013
|
1,097
|
|
|
338
|
|
Year ended December 31
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Traditional Life
|
$
|
827,341
|
|
|
$
|
805,558
|
|
Annuities
|
3,976,475
|
|
|
4,006,488
|
|
||
Total future policy benefit reserves
|
$
|
4,803,816
|
|
|
$
|
4,812,046
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||||||||||
Commitment/
Debt
|
|
In Use/
Outstanding (1)
|
|
Commitment/
Debt
|
|
In Use/
Outstanding (1)
|
|||||||||
Debt:
|
|
|
|
|
|
|
|
||||||||
5-year revolver expiring 2018
|
$
|
1,000,000
|
|
|
$
|
—
|
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
5.25% Senior Notes due 2014
|
600,000
|
|
|
599,346
|
|
|
600,000
|
|
|
598,424
|
|
||||
2.30% Senior Notes due 2018
|
300,000
|
|
|
296,683
|
|
|
—
|
|
|
—
|
|
||||
5.75% Senior Notes due 2021
|
400,000
|
|
|
396,661
|
|
|
400,000
|
|
|
396,230
|
|
||||
6.375% Senior Notes due 2024
|
350,000
|
|
|
348,811
|
|
|
350,000
|
|
|
348,701
|
|
||||
6.25% Senior Notes due 2027
|
325,000
|
|
|
322,905
|
|
|
325,000
|
|
|
322,748
|
|
||||
5.25% Senior Notes due 2043
|
300,000
|
|
|
296,030
|
|
|
—
|
|
|
—
|
|
||||
Total debt
|
$
|
3,275,000
|
|
|
$
|
2,260,436
|
|
|
$
|
2,675,000
|
|
|
$
|
1,666,103
|
|
Adjustment to carrying value – impact of fair value hedges
|
|
|
2,767
|
|
|
|
|
6,675
|
|
||||||
Total debt carrying value
|
$
|
3,275,000
|
|
|
$
|
2,263,203
|
|
|
$
|
2,675,000
|
|
|
$
|
1,672,778
|
|
Letters of Credit:
|
|
|
|
|
|
|
|
||||||||
Total letters of credit
|
$
|
3,575,000
|
|
|
$
|
1,895,425
|
|
|
$
|
4,000,000
|
|
|
$
|
1,757,250
|
|
(1)
|
“In Use” and “Outstanding” data represent
December 31, 2013 and 2012
accreted values.
|
(1)
|
At
December 31, 2013
, there were
seven
available letter of credit facilities; at
December 31, 2012
, there were
five
available letter of credit facilities.
|
(2)
|
At
December 31, 2013 and 2012
, the revolving credit available under the Syndicated Credit Agreements (as defined below) and under the December 9, 2011 unsecured credit agreement, respectively, was unutilized. The 2013 Citi Agreements (as defined below) provide for issuance of letters of credit and revolving credit loans up to an aggregate amount of
$575 million
. At
December 31, 2013
,
$575 million
of letters of credit were issued under the 2013 Citi Agreements and therefore such amount is not included here.
|
(3)
|
The Company has the option to increase the size of the facilities under the Syndicated Credit Agreements by an additional
$500 million
across such facilities. The Company also has the option to increase the maximum amount of the letters of credit and revolving credit loans available under the 2013 Citi Agreements, with the lender's and issuing lender's consent.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||||||||||||||||||||||||||
Asset
Derivative
Notional
Amount
|
|
Asset
Derivative
Fair
Value (1)
|
|
Liability
Derivative
Notional
Amount
|
|
Liability
Derivative
Fair
Value (1)
|
|
Asset
Derivative
Notional
Amount
|
|
Asset
Derivative
Fair
Value (1)
|
|
Liability
Derivative
Notional
Amount
|
|
Liability
Derivative
Fair
Value (1)
|
|||||||||||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
$
|
1,005,610
|
|
|
$
|
26,098
|
|
|
$
|
2,572,227
|
|
|
$
|
70,462
|
|
|
$
|
670,751
|
|
|
$
|
12,511
|
|
|
$
|
2,382,507
|
|
|
$
|
23,715
|
|
Total derivatives designated as hedging instruments
|
$
|
1,005,610
|
|
|
$
|
26,098
|
|
|
$
|
2,572,227
|
|
|
$
|
70,462
|
|
|
$
|
670,751
|
|
|
$
|
12,511
|
|
|
$
|
2,382,507
|
|
|
$
|
23,715
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investment Related Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate exposure
|
$
|
30,702
|
|
|
$
|
266
|
|
|
$
|
10,259
|
|
|
$
|
8
|
|
|
$
|
45,604
|
|
|
$
|
2,060
|
|
|
$
|
26,139
|
|
|
$
|
253
|
|
Foreign exchange exposure
|
17,497
|
|
|
12
|
|
|
50,614
|
|
|
680
|
|
|
33,007
|
|
|
226
|
|
|
54,449
|
|
|
1,790
|
|
||||||||
Credit exposure
|
—
|
|
|
—
|
|
|
340,020
|
|
|
15,128
|
|
|
25,000
|
|
|
486
|
|
|
436,959
|
|
|
15,472
|
|
||||||||
Financial market exposure
|
58,232
|
|
|
1,111
|
|
|
14,821
|
|
|
77
|
|
|
72,597
|
|
|
9,559
|
|
|
16,910
|
|
|
—
|
|
||||||||
Financial Operations Derivatives: (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Credit exposure
|
—
|
|
|
—
|
|
|
44,234
|
|
|
4,190
|
|
|
—
|
|
|
—
|
|
|
46,903
|
|
|
—
|
|
||||||||
Other Non-Investment Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Guaranteed minimum income benefit contract
|
—
|
|
|
—
|
|
|
53,564
|
|
|
14,940
|
|
|
—
|
|
|
—
|
|
|
69,051
|
|
|
25,396
|
|
||||||||
Modified coinsurance funds withheld contract
|
66,369
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76,975
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total derivatives not designated as hedging instruments
|
$
|
172,800
|
|
|
$
|
1,389
|
|
|
$
|
513,512
|
|
|
$
|
35,023
|
|
|
$
|
253,183
|
|
|
$
|
12,331
|
|
|
$
|
650,411
|
|
|
$
|
42,911
|
|
(1)
|
Derivative instruments in an asset or liability position are included within Other assets or Other liabilities, respectively, in the balance sheet on a net basis where the Company has both a legal right of offset and the intentions to settle the contracts on a net basis.
|
(2)
|
Financial operations derivatives represent interests in variable interest entities as described in Note 16, “Variable Interest Entities".
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
||||||||||||||||
December 31, 2013
(U.S. dollars in thousands)
|
Gross Amounts Recognized in Balance Sheet
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts in the Balance Sheet
|
|
Financial Instruments
|
|
Cash Collateral
|
|
Net Amounts
|
||||||||||||
Derivative Assets
|
$
|
27,487
|
|
|
$
|
1,342
|
|
|
$
|
26,145
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,145
|
|
Derivative Liabilities
|
$
|
105,485
|
|
|
$
|
1,342
|
|
|
$
|
104,143
|
|
|
$
|
—
|
|
|
$
|
19,847
|
|
|
$
|
84,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2012
(U.S. dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Assets
|
$
|
24,842
|
|
|
$
|
1,327
|
|
|
$
|
23,515
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,515
|
|
Derivative Liabilities
|
$
|
66,626
|
|
|
$
|
1,327
|
|
|
$
|
65,299
|
|
|
$
|
—
|
|
|
$
|
12,130
|
|
|
$
|
53,169
|
|
Derivatives Designated as Fair Value Hedges
(U.S. dollars in thousands)
|
Hedged Items – Amount of Gain/(Loss)
Recognized in Income Attributable to Risk
|
||||||||||||||
Gain/(Loss)
Recognized
in Income on
Derivative
|
|
Deposit
Liabilities
|
|
Fixed
Maturity
Investments
|
|
Ineffective
Portion of
Hedging
Relationship –
Gain/(Loss)
|
|||||||||
Year Ended December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Interest rate exposure
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Foreign exchange exposure
|
(22,568
|
)
|
|
|
|
|
|
|
|||||||
Total
|
$
|
(22,568
|
)
|
|
$
|
—
|
|
|
$
|
23,065
|
|
|
$
|
497
|
|
Year Ended December 31, 2012
|
|
|
|
|
|
|
|
||||||||
Interest rate exposure
|
$
|
1,813
|
|
|
|
|
|
|
|
||||||
Foreign exchange exposure
|
(24,183
|
)
|
|
|
|
|
|
|
|||||||
Total
|
$
|
(22,370
|
)
|
|
$
|
(6,182
|
)
|
|
$
|
23,967
|
|
|
$
|
(4,585
|
)
|
Year Ended December 31, 2011
|
|
|
|
|
|
|
|
||||||||
Interest rate exposure
|
$
|
25,680
|
|
|
|
|
|
|
|
||||||
Foreign exchange exposure
|
15,135
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
40,815
|
|
|
$
|
(27,391
|
)
|
|
$
|
(15,299
|
)
|
|
$
|
(1,875
|
)
|
Settlement of Fair Value Hedges – Summary
(U.S. dollars in thousands, except years)
|
Fair Value Hedges –
Notes Payable and Debt
December 31,
|
|
Fair Value Hedges –
Deposit Liabilities
December 31,
|
||||||||||||
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||||||
Cumulative reduction to interest expense
|
$
|
18,856
|
|
|
$
|
14,949
|
|
|
$
|
37,382
|
|
|
$
|
21,395
|
|
Remaining balance
|
$
|
2,768
|
|
|
$
|
6,675
|
|
|
$
|
195,814
|
|
|
$
|
211,800
|
|
Weighted average years remaining to maturity
|
0.7
|
|
|
1.7
|
|
|
22.7
|
|
|
25.3
|
|
(1)
|
Derivative gains (losses) from derivative instruments designated as hedges of the net investment in a foreign operation are recorded in the cumulative translation adjustment account within AOCI for each period.
|
Net Realized and Unrealized Gains (Losses) on Derivative Instruments
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Investment Related Derivatives:
|
|
|
|
|
|
||||||
Interest rate exposure
|
$
|
5,065
|
|
|
$
|
4,394
|
|
|
$
|
(1,021
|
)
|
Foreign exchange exposure
|
(948
|
)
|
|
(1,084
|
)
|
|
(302
|
)
|
|||
Credit exposure
|
(4,052
|
)
|
|
(7,611
|
)
|
|
(16,527
|
)
|
|||
Financial market exposure
|
6,302
|
|
|
3,073
|
|
|
(5,131
|
)
|
|||
Financial Operations Derivatives:
|
|
|
|
|
|
||||||
Credit exposure
|
(2,437
|
)
|
|
10,511
|
|
|
16,976
|
|
|||
Other Non-Investment Derivatives:
|
|
|
|
|
|
||||||
Contingent credit facility
|
—
|
|
|
—
|
|
|
(6,068
|
)
|
|||
Guaranteed minimum income benefit contract
|
10,457
|
|
|
(2,906
|
)
|
|
(1,300
|
)
|
|||
Modified coinsurance funds withheld contract
|
(7,086
|
)
|
|
3,429
|
|
|
4,510
|
|
|||
Total derivatives not designated as hedging instruments
|
$
|
7,301
|
|
|
$
|
9,806
|
|
|
$
|
(8,863
|
)
|
Amount of gain (loss) recognized in income from ineffective portion of fair value hedges
|
497
|
|
|
(4,585
|
)
|
|
(1,875
|
)
|
|||
Net realized and unrealized gains (losses) on derivative instruments
|
$
|
7,798
|
|
|
$
|
5,221
|
|
|
$
|
(10,738
|
)
|
Financial Operations Derivatives - Credit Exposure Summary:
(U.S. dollars in thousands, except term to maturity)
|
2013
|
|
2012
|
||||
Principal outstanding
|
$
|
42,080
|
|
|
$
|
44,281
|
|
Interest outstanding
|
2,154
|
|
|
2,622
|
|
||
Aggregate outstanding exposure
|
$
|
44,234
|
|
|
$
|
46,903
|
|
Total liability recorded
|
$
|
4,190
|
|
|
$
|
—
|
|
Weighted average contractual term to maturity
|
3.7 years
|
|
|
4.7 years
|
|
||
Underlying obligations credit rating
|
CC
|
|
|
BB
|
|
Contingent Credit Features - Summary:
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Aggregate fair value of derivative agreements with downgrade provisions in a net liability position
|
$
|
47,703
|
|
|
$
|
20,366
|
|
Collateral posted to counterparty
|
$
|
13,260
|
|
|
$
|
5,490
|
|
(Percentage of consolidated gross written premiums from P&C operations)
|
2013
|
|
2012
|
|
2011
|
|||
AON Corporation and subsidiaries
|
21
|
%
|
|
22
|
%
|
|
20
|
%
|
Marsh & McLennan Companies
|
23
|
%
|
|
21
|
%
|
|
20
|
%
|
Willis Group and subsidiaries
|
13
|
%
|
|
11
|
%
|
|
12
|
%
|
Year Ended December 31,
(U.S. dollars in thousands)
|
|
||
2014
|
$
|
37,095
|
|
2015
|
34,554
|
|
|
2016
|
28,410
|
|
|
2017
|
23,623
|
|
|
2018
|
19,133
|
|
|
2019-2031
|
83,190
|
|
|
Total minimum future rentals
|
$
|
226,005
|
|
Year Ended December 31,
(U.S. dollars in thousands)
|
|
||
2014
|
$
|
12,515
|
|
2015
|
12,828
|
|
|
2016
|
13,149
|
|
|
2017
|
13,477
|
|
|
2018
|
13,815
|
|
|
2019-2028
|
149,686
|
|
|
Total minimum future lease payments
|
$
|
215,470
|
|
Financial Guarantee Exposure Summary
(U.S. dollars in thousands except number of contracts and term to maturity)
|
2013
|
|
2012
|
||||
Opening number of financial guarantee contracts
|
4
|
|
|
4
|
|
||
Number of financial guarantee contracts matured, prepaid or commuted during the period
|
(1
|
)
|
|
—
|
|
||
Closing number of financial guarantee contracts
|
3
|
|
|
4
|
|
||
Principal outstanding
|
$
|
108,255
|
|
|
$
|
115,464
|
|
Interest outstanding
|
$
|
—
|
|
|
$
|
—
|
|
Aggregate exposure outstanding
|
$
|
108,255
|
|
|
$
|
115,464
|
|
Total gross claim liability recorded
|
$
|
—
|
|
|
$
|
1,399
|
|
Total unearned premiums and fees recorded
|
$
|
134
|
|
|
$
|
279
|
|
Weighted average contractual term to maturity in years
|
26.0
|
|
|
25.4
|
|
(in thousands)
|
2013
|
|
2012
|
||
Balance – beginning of year
|
298,682
|
|
|
315,646
|
|
Exercise of options
|
927
|
|
|
383
|
|
Net issuance of restricted shares
|
1,240
|
|
|
959
|
|
Share buybacks (1)
|
(22,596
|
)
|
|
(18,306
|
)
|
Balance – end of year
|
278,253
|
|
|
298,682
|
|
(1)
|
Includes share buybacks associated with authorized share buyback programs as well as purchases related to satisfying tax withholding obligations of employees in connection with the vesting of restricted shares granted under the Company’s equity compensation programs.
|
|
2013
|
|
2012
|
|
2011
|
|||
Dividend yield
|
2.00
|
%
|
|
1.90
|
%
|
|
1.90
|
%
|
Risk free interest rate
|
1.14
|
%
|
|
1.15
|
%
|
|
2.60
|
%
|
Volatility
|
37.0
|
%
|
|
46.0
|
%
|
|
50.0
|
%
|
Expected lives
|
6.0 years
|
|
|
6.0 years
|
|
|
6.0 years
|
|
(U.S. Dollars in thousands except for numbers of options, weighted average grant date fair value)
|
2013
|
|
2012
|
|
2011
|
||||||
Options granted to purchase ordinary shares under directors and employees incentive compensation plans - in thousands
|
1,047
|
|
|
1,209
|
|
|
974
|
|
|||
Weighted average grant date fair value
|
$
|
8.34
|
|
|
$
|
7.65
|
|
|
$
|
9.81
|
|
Total intrinsic value of stock options exercised
|
$
|
16,076
|
|
|
$
|
3,357
|
|
|
$
|
301
|
|
Options exercised during the year - in thousands
|
927
|
|
|
383
|
|
|
72
|
|
|||
Compensation expense related to stock option plans
|
$
|
8,294
|
|
|
$
|
7,716
|
|
|
$
|
11,848
|
|
Estimated tax benefit related to stock option plans
|
$
|
50
|
|
|
$
|
26
|
|
|
$
|
722
|
|
(U.S. Dollars in thousands, except for number of shares, exercise price and term)
|
Number of Shares (
in thousands
)
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding – beginning of year
|
12,091
|
|
|
$
|
38.50
|
|
|
5.0 years
|
|
$
|
46,803
|
|
Granted
|
1,047
|
|
|
28.64
|
|
|
|
|
|
|||
Exercised
|
(927
|
)
|
|
13.62
|
|
|
|
|
|
|||
Canceled/Expired
|
(1,088
|
)
|
|
66.48
|
|
|
|
|
|
|||
Outstanding – end of year
|
11,123
|
|
|
$
|
36.91
|
|
|
4.8 years
|
|
$
|
74,927
|
|
Options exercisable
|
9,032
|
|
|
$
|
39.67
|
|
|
3.9 years
|
|
$
|
60,593
|
|
Available for grant (1)
|
13,057
|
|
|
|
|
|
|
|
(In thousands except for weighted average grant date fair value)
|
2013
|
|
2012
|
|
2011
|
||||||
Restricted ordinary shares granted
|
181
|
|
|
325
|
|
|
49
|
|
|||
Weighted average grant date fair value
|
$
|
29.44
|
|
|
$
|
20.92
|
|
|
$
|
23.33
|
|
Aggregate grant date fair value
|
$
|
5,325
|
|
|
$
|
6,811
|
|
|
$
|
1,140
|
|
Compensation expense related to restricted stock awards
|
$
|
4,419
|
|
|
$
|
5,399
|
|
|
$
|
7,101
|
|
Estimated tax benefit related to restricted stock awards
|
$
|
1,047
|
|
|
$
|
1,113
|
|
|
$
|
1,546
|
|
(In thousands except for weighted average grant date fair value)
|
Number of
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Unvested at December 31, 2012
|
550
|
|
|
$
|
33.34
|
|
Granted
|
181
|
|
|
$
|
29.44
|
|
Vested
|
(134
|
)
|
|
$
|
25.27
|
|
Forfeited
|
(4
|
)
|
|
$
|
42.48
|
|
Unvested at December 31, 2013
|
593
|
|
|
$
|
33.92
|
|
(In thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Restricted stock units granted
|
1,803
|
|
|
1,312
|
|
|
1,318
|
|
|||
Aggregate grant date fair value
|
$
|
51,829
|
|
|
$
|
27,194
|
|
|
$
|
30,027
|
|
Compensation expense related to restricted stock units
|
$
|
32,874
|
|
|
$
|
24,451
|
|
|
$
|
15,033
|
|
Estimated tax benefit related to restricted stock units
|
$
|
8,813
|
|
|
$
|
6,501
|
|
|
$
|
3,998
|
|
(In thousands except for weighted average grant date fair value)
|
Number of
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Unvested at December 31, 2012
|
2,446
|
|
|
$
|
21.04
|
|
Granted
|
1,803
|
|
|
$
|
28.75
|
|
Vested
|
(1,187
|
)
|
|
$
|
20.75
|
|
Forfeited
|
(131
|
)
|
|
$
|
23.95
|
|
Unvested at December 31, 2013
|
2,931
|
|
|
$
|
25.77
|
|
(In thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Performance units granted
|
656
|
|
|
1,527
|
|
|
1,289
|
|
|||
Potential maximum share payout
|
1,312
|
|
|
3,054
|
|
|
2,578
|
|
|||
Aggregate grant date fair value
|
$
|
17,753
|
|
|
$
|
29,537
|
|
|
$
|
28,544
|
|
Compensation expense related to performance units
|
$
|
1,041
|
|
|
$
|
9,919
|
|
|
$
|
7,242
|
|
Estimated tax benefit (charge) related to performance units
|
$
|
(176
|
)
|
|
$
|
1,943
|
|
|
$
|
1,419
|
|
(In thousands except for weighted average grant date fair value)
|
Number of
Shares
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Unvested at December 31, 2012
|
2,556
|
|
|
$
|
20.07
|
|
Granted
|
656
|
|
|
$
|
27.05
|
|
Vested
|
(291
|
)
|
|
$
|
17.20
|
|
Forfeited
|
(79
|
)
|
|
$
|
21.97
|
|
Performance driven reduction
|
(1,155
|
)
|
|
$
|
20.36
|
|
Unvested at December 31, 2013
|
1,687
|
|
|
$
|
22.99
|
|
Funded Status
(U.S. dollars in thousands) |
2013
|
|
2012
|
||||
U.S.
|
$
|
(6,181
|
)
|
|
$
|
(17,210
|
)
|
U.K.
|
(7,654
|
)
|
|
(8,032
|
)
|
||
Other European
|
(20,983
|
)
|
|
(18,528
|
)
|
||
Funded status – end of year
|
$
|
(34,818
|
)
|
|
$
|
(43,770
|
)
|
Change in projected benefit obligation
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Projected benefit obligation – beginning of year
|
$
|
83,083
|
|
|
$
|
72,267
|
|
Service cost (1)
|
1,491
|
|
|
1,291
|
|
||
Interest cost
|
3,599
|
|
|
3,557
|
|
||
Actuarial (gain) / loss
|
(5,091
|
)
|
|
7,922
|
|
||
Benefits and expenses paid
|
(2,307
|
)
|
|
(2,069
|
)
|
||
Foreign currency (gains) / losses
|
1,201
|
|
|
1,086
|
|
||
Settlements
|
—
|
|
|
(971
|
)
|
||
Projected benefit obligation – end of year
|
$
|
81,976
|
|
|
$
|
83,083
|
|
Change in plan assets
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Fair value of plan assets – beginning of year
|
$
|
39,313
|
|
|
$
|
34,956
|
|
Actual return on plan assets
|
6,113
|
|
|
3,101
|
|
||
Employer contributions
|
2,919
|
|
|
2,133
|
|
||
Benefits and expenses paid
|
(1,462
|
)
|
|
(1,258
|
)
|
||
Foreign currency gains / (losses)
|
275
|
|
|
381
|
|
||
Fair value of plan assets – end of year
|
$
|
47,158
|
|
|
$
|
39,313
|
|
Funded status – end of year
|
$
|
(34,818
|
)
|
|
$
|
(43,770
|
)
|
Accrued pension liability
|
$
|
34,818
|
|
|
$
|
43,770
|
|
Components of net benefit cost
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Service cost
|
$
|
1,491
|
|
|
$
|
1,291
|
|
|
$
|
919
|
|
Interest cost
|
3,589
|
|
|
3,557
|
|
|
3,337
|
|
|||
Expected return on plan assets
|
(3,096
|
)
|
|
(3,028
|
)
|
|
(1,558
|
)
|
|||
Amortization of net actuarial loss
|
1,440
|
|
|
915
|
|
|
373
|
|
|||
Transfer from AOCI
|
—
|
|
|
3,363
|
|
|
—
|
|
|||
Net benefit cost
|
$
|
3,424
|
|
|
$
|
6,098
|
|
|
$
|
3,071
|
|
|
2013
|
|
2012
|
||||||||||||||
|
U.S. Plans
|
|
U.K. Plans
|
|
Other European Plans
|
|
U.S. Plans
|
|
U.K. Plans
|
|
Other European Plans
|
||||||
Net Benefit Cost – Weighted-average assumptions
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
4.00
|
%
|
|
4.50
|
%
|
|
4.20
|
%
|
|
4.40
|
%
|
|
4.65
|
%
|
|
5.20
|
%
|
Expected long-term rate of return on plan assets
|
8.00
|
%
|
|
5.70
|
%
|
|
N/A
|
|
|
8.00
|
%
|
|
5.70
|
%
|
|
N/A
|
|
Rate of compensation increase
|
N/A
|
|
|
4.90
|
%
|
|
2.50
|
%
|
|
N/A
|
|
|
5.00
|
%
|
|
3.00
|
%
|
Benefit Obligation – Weighted-average assumptions
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
4.95
|
%
|
|
4.50
|
%
|
|
3.50
|
%
|
|
4.00
|
%
|
|
4.65
|
%
|
|
4.20
|
%
|
Rate of compensation increase
|
N/A
|
|
|
4.90
|
%
|
|
2.50
|
%
|
|
N/A
|
|
|
5.00
|
%
|
|
3.00
|
%
|
(U.S. dollars in thousands, except percentages)
|
Expected
Return on
Assets for
2013
|
|
Weighted
Value at
December 31,
2013
|
|
Expected
Return on
Assets for
2012
|
|
Weighted
Value at
December 31,
2012
|
||||||
Equities
|
6.8
|
%
|
|
$
|
7,048
|
|
|
6.8
|
%
|
|
$
|
6,149
|
|
Gilts
|
3.0
|
%
|
|
1,775
|
|
|
3.0
|
%
|
|
1,700
|
|
||
Corporate Bonds
|
4.5
|
%
|
|
1,758
|
|
|
4.7
|
%
|
|
1,566
|
|
||
Other (cash)
|
3.4
|
%
|
|
133
|
|
|
3.5
|
%
|
|
68
|
|
||
Total market fair value of assets
|
|
|
$
|
10,714
|
|
|
|
|
$
|
9,483
|
|
(U.S. dollars in thousands)
|
Retirement Plan
|
|
Benefits Equalization Plan
|
|
Total
|
||||||
2014
|
$
|
825
|
|
|
$
|
429
|
|
|
$
|
1,254
|
|
2015
|
$
|
870
|
|
|
$
|
425
|
|
|
$
|
1,295
|
|
2016
|
$
|
945
|
|
|
$
|
425
|
|
|
$
|
1,370
|
|
2017
|
$
|
1,008
|
|
|
$
|
421
|
|
|
$
|
1,429
|
|
2018
|
$
|
1,078
|
|
|
$
|
424
|
|
|
$
|
1,502
|
|
2019-2023
|
$
|
8,519
|
|
|
$
|
2,828
|
|
|
$
|
11,347
|
|
(U.S. dollars in thousands)
|
Unrealized Gains (Losses) on Investments (1)
|
|
OTTI Losses Recognized in AOCI
|
|
Foreign Currency Translation Adjustments
|
|
Underfunded Pension Liability
|
|
Cash Flow Hedge
|
|
Total
|
||||||||||||
Balance, net of tax, December 31, 2010
|
$
|
238,751
|
|
|
$
|
(228,107
|
)
|
|
$
|
104,254
|
|
|
$
|
(14,899
|
)
|
|
$
|
796
|
|
|
$
|
100,795
|
|
OCI before reclassifications
|
384,495
|
|
|
—
|
|
|
(49,067
|
)
|
|
(2,995
|
)
|
|
—
|
|
|
332,433
|
|
||||||
Amounts reclassified from AOCI
|
146,188
|
|
|
42,171
|
|
|
23,469
|
|
|
373
|
|
|
440
|
|
|
212,641
|
|
||||||
Tax (benefit) expense
|
(58,987
|
)
|
|
(2,715
|
)
|
|
(1,102
|
)
|
|
—
|
|
|
—
|
|
|
(62,804
|
)
|
||||||
Net current period OCI - net of tax
|
$
|
471,696
|
|
|
$
|
39,456
|
|
|
$
|
(26,700
|
)
|
|
$
|
(2,622
|
)
|
|
$
|
440
|
|
|
$
|
482,270
|
|
Balance, net of tax, December 31, 2011
|
$
|
710,447
|
|
|
$
|
(188,651
|
)
|
|
$
|
77,554
|
|
|
$
|
(17,521
|
)
|
|
$
|
1,236
|
|
|
$
|
583,065
|
|
OCI before reclassifications
|
985,553
|
|
|
—
|
|
|
(6,798
|
)
|
|
(14,258
|
)
|
|
—
|
|
|
964,497
|
|
||||||
Amounts reclassified from AOCI
|
(81,679
|
)
|
|
67,580
|
|
|
350
|
|
|
4,273
|
|
|
438
|
|
|
(9,038
|
)
|
||||||
Tax (benefit) expense
|
(16,489
|
)
|
|
(300
|
)
|
|
(1,715
|
)
|
|
—
|
|
|
—
|
|
|
(18,504
|
)
|
||||||
Net current period OCI - net of tax
|
$
|
887,385
|
|
|
$
|
67,280
|
|
|
$
|
(8,163
|
)
|
|
$
|
(9,985
|
)
|
|
$
|
438
|
|
|
$
|
936,955
|
|
Balance, net of tax, December 31, 2012
|
$
|
1,597,832
|
|
|
$
|
(121,371
|
)
|
|
$
|
69,391
|
|
|
$
|
(27,506
|
)
|
|
$
|
1,674
|
|
|
$
|
1,520,020
|
|
OCI before reclassifications (1)
|
(742,767
|
)
|
|
—
|
|
|
(62,932
|
)
|
|
9,722
|
|
|
—
|
|
|
(795,977
|
)
|
||||||
Amounts reclassified from AOCI
|
(119,970
|
)
|
|
32,193
|
|
|
206
|
|
|
1,440
|
|
|
439
|
|
|
(85,692
|
)
|
||||||
Tax (benefit) expense
|
90,450
|
|
|
(12
|
)
|
|
7,868
|
|
|
—
|
|
|
—
|
|
|
98,306
|
|
||||||
Net current period OCI - net of tax
|
$
|
(772,287
|
)
|
|
$
|
32,181
|
|
|
$
|
(54,858
|
)
|
|
$
|
11,162
|
|
|
$
|
439
|
|
|
$
|
(783,363
|
)
|
Balance, net of tax, December 31, 2013
|
$
|
825,545
|
|
|
$
|
(89,190
|
)
|
|
$
|
14,533
|
|
|
$
|
(16,344
|
)
|
|
$
|
2,113
|
|
|
$
|
736,657
|
|
(1)
|
Amounts are net of cumulative adjustments recorded to the value of future policy benefit reserves of
$44.7 million
. These amounts were recorded during the year ended December 31, 2013.
|
Gross Amount Reclassified From AOCI
|
|||||
Details About AOCI Components
(U.S. dollars in thousands)
|
2013
|
|
Affected Line Item in the Statement of Income
|
||
Unrealized gains and losses on investments:
|
|
|
|
||
|
$
|
(130,236
|
)
|
|
Net realized gains (losses) on investments sold
|
|
10,266
|
|
|
OTTI on investments
|
|
|
$
|
(119,970
|
)
|
|
Total before tax
|
|
5,183
|
|
|
Provision (benefit) for income tax
|
|
|
$
|
(114,787
|
)
|
|
Net of tax
|
OTTI losses recognized in OCI:
|
|
|
|
||
|
$
|
26,160
|
|
|
Net realized gains (losses) on investments sold
|
|
6,033
|
|
|
OTTI on investments transferred to (from) OCI
|
|
|
$
|
32,193
|
|
|
Total before tax
|
|
(12
|
)
|
|
Provision (benefit) for income tax
|
|
|
$
|
32,181
|
|
|
Net of tax
|
Foreign Currency Translation:
|
|
|
|
||
Sale of foreign investment fund affiliate
|
$
|
206
|
|
|
Exchange gains (losses) - before tax
|
|
—
|
|
|
Provision (benefit) for income tax
|
|
|
$
|
206
|
|
|
Net of tax
|
|
|
|
|
||
Underfunded Pension Liability:
|
|
|
|
||
Pension expense
|
$
|
1,440
|
|
|
Operating Expenses
|
|
—
|
|
|
Provision (benefit) for income tax
|
|
|
$
|
1,440
|
|
|
Net of tax
|
|
|
|
|
||
Gains and losses on cash flow hedges:
|
|
|
|
||
Interest rate contracts
|
$
|
439
|
|
|
Interest Expense
|
|
—
|
|
|
Provision (benefit) for income tax
|
|
|
$
|
439
|
|
|
Net of tax
|
|
|
|
|
||
Total reclassifications for the period, gross of tax
|
$
|
(85,692
|
)
|
|
|
Tax (benefit) expense
|
5,171
|
|
|
|
|
Total reclassifications for the period, net of tax
|
$
|
(80,521
|
)
|
|
|
(U.S. dollars in millions)
|
2013
|
|
2012
|
|
2011
|
||||||
Series C preference ordinary shares (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.3
|
|
Series D preference ordinary shares (2) (3)
|
$
|
12.3
|
|
|
$
|
14.0
|
|
|
$
|
—
|
|
Series E preference ordinary shares (4)
|
$
|
65.1
|
|
|
$
|
65.1
|
|
|
$
|
66.2
|
|
(1)
|
At December 31, 2013, 2012 and 2011,
no
Series C preference ordinary shares were outstanding.
|
(2)
|
On October 25, 2013, the Company announced that the Board of Directors of XL-Cayman resolved to pay a dividend of
$8.5957
per share on XL-Cayman’s Series D Preference Ordinary Shares. The dividend was paid on January 15, 2014 to all shareholders of record as of January 1, 2014.
|
(3)
|
On
February 21, 2014
, the Company announced that the Board of Directors of XL-Cayman resolved to pay a dividend of
$8.3946
per share on XL-Cayman’s Series D Preference Ordinary Shares. The dividend will be paid on April 15, 2014 to all shareholders of record as of April 1, 2014.
|
(4)
|
On
February 21, 2014
, the Company announced that the Board of Directors of XL-Cayman resolved to pay a dividend of
$32.50
per share on XL-Cayman’s Series E Preference Ordinary Shares. The dividend will be paid on April 15, 2014 to all shareholders of record as of April 1, 2014.
|
Jurisdiction
|
Tax Years
|
U.S.
|
2010
|
Ireland
|
2006 - 2009
|
U.K.
|
2007 - 2010
|
Germany
|
2006 - 2009
|
Switzerland
|
2009 - 2010
|
Jurisdiction
|
Tax Years
|
U.S.
|
2011 - 2013
|
Ireland
|
2009 - 2013
|
U.K.
|
2012 - 2013
|
Germany
|
2010 - 2013
|
Switzerland
|
2009 - 2013
|
France
|
2011 - 2013
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Current expense:
|
|
|
|
|
|
||||||
U.S.
|
$
|
48,776
|
|
|
$
|
13,106
|
|
|
$
|
9,138
|
|
Non U.S.
|
42,711
|
|
|
44,474
|
|
|
87,220
|
|
|||
Total current expense
|
$
|
91,487
|
|
|
$
|
57,580
|
|
|
$
|
96,358
|
|
Deferred expense (benefit):
|
|
|
|
|
|
||||||
U.S.
|
$
|
703
|
|
|
$
|
(56,646
|
)
|
|
$
|
(5,550
|
)
|
Non U.S.
|
(14,685
|
)
|
|
33,094
|
|
|
(31,101
|
)
|
|||
Total deferred expense (benefit)
|
$
|
(13,982
|
)
|
|
$
|
(23,552
|
)
|
|
$
|
(36,651
|
)
|
Total tax expense
|
$
|
77,505
|
|
|
$
|
34,028
|
|
|
$
|
59,707
|
|
Jurisdiction
|
Applicable Statutory Taxation Rates
|
|
Ireland (1)
|
12.50
|
%
|
Ireland (1)
|
25.00
|
%
|
Bermuda
|
—
|
%
|
U.S.
|
35.00
|
%
|
U.K.
|
23.25
|
%
|
Switzerland (2)
|
7.83
|
%
|
Switzerland (2)
|
21.20
|
%
|
Germany
|
15.00
|
%
|
France
|
38.00
|
%
|
(1)
|
The different applicable statutory taxation rates in Ireland relate to entities classified as trading or non-trading companies.
|
(2)
|
The different applicable statutory taxation rates in Switzerland relate to entities classified as trading or holding companies.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Expected tax provision at weighted average rate
|
$
|
43,092
|
|
|
$
|
53,358
|
|
|
$
|
(66,493
|
)
|
Permanent differences:
|
|
|
|
|
|
||||||
Non-taxable investment (income) loss
|
(9,847
|
)
|
|
(16,717
|
)
|
|
(14,246
|
)
|
|||
Non-taxable (income) loss
|
(40,898
|
)
|
|
(25,711
|
)
|
|
(3,265
|
)
|
|||
Prior year adjustments
|
6,067
|
|
|
(622
|
)
|
|
(9,206
|
)
|
|||
Prior year adjustments on completion of IRS examinations
|
—
|
|
|
(19,192
|
)
|
|
—
|
|
|||
State, local and foreign taxes
|
12,225
|
|
|
18,312
|
|
|
42,581
|
|
|||
Valuation allowance
|
5,754
|
|
|
(16,644
|
)
|
|
24,990
|
|
|||
Allocated investment income
|
5,949
|
|
|
41,727
|
|
|
21,483
|
|
|||
Stock options
|
1,501
|
|
|
4,749
|
|
|
5,840
|
|
|||
Non-deductible expenses
|
23,662
|
|
|
16,145
|
|
|
12,901
|
|
|||
Realized capital loss carry-forward valuation allowance reduction
|
—
|
|
|
(24,473
|
)
|
|
—
|
|
|||
Non-deductible goodwill impairment
|
—
|
|
|
—
|
|
|
57,069
|
|
|||
Non-taxable reserve release
|
—
|
|
|
3,096
|
|
|
(11,947
|
)
|
|||
Uncertain tax positions
|
30,000
|
|
|
—
|
|
|
—
|
|
|||
Total tax expense
|
$
|
77,505
|
|
|
$
|
34,028
|
|
|
$
|
59,707
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Deferred tax asset:
|
|
|
|
||||
Net unpaid loss reserve discount
|
$
|
105,511
|
|
|
$
|
108,285
|
|
Net unearned premiums
|
69,811
|
|
|
70,071
|
|
||
Compensation liabilities
|
62,710
|
|
|
56,245
|
|
||
Net operating losses
|
89,233
|
|
|
83,061
|
|
||
Investment adjustments
|
12,573
|
|
|
12,927
|
|
||
Pension
|
5,695
|
|
|
11,976
|
|
||
Bad debt reserve
|
7,337
|
|
|
14,901
|
|
||
Amortizable goodwill
|
7,976
|
|
|
8,958
|
|
||
Net unrealized depreciation on investments
|
9,984
|
|
|
38,652
|
|
||
Stock options
|
12,171
|
|
|
13,035
|
|
||
Depreciation
|
3,501
|
|
|
1,910
|
|
||
Net realized capital losses
|
140,993
|
|
|
98,971
|
|
||
Deferred intercompany capital losses
|
69,500
|
|
|
97,566
|
|
||
Untaxed Lloyd's result
|
2,533
|
|
|
—
|
|
||
Other
|
9,638
|
|
|
9,392
|
|
||
Deferred tax asset, gross of valuation allowance
|
$
|
609,166
|
|
|
$
|
625,950
|
|
Valuation allowance
|
261,924
|
|
|
297,637
|
|
||
Deferred tax asset, net of valuation allowance
|
$
|
347,242
|
|
|
$
|
328,313
|
|
Deferred tax liability:
|
|
|
|
||||
Net unrealized appreciation on investments
|
$
|
28,843
|
|
|
$
|
106,520
|
|
Unremitted earnings
|
$
|
6,717
|
|
|
$
|
—
|
|
Deferred acquisition costs
|
7,057
|
|
|
16,135
|
|
||
Currency translation adjustments
|
7,195
|
|
|
11,225
|
|
||
Regulatory reserves
|
131,750
|
|
|
146,101
|
|
||
Investment adjustment
|
6,112
|
|
|
—
|
|
||
Untaxed Lloyd’s result
|
—
|
|
|
10,155
|
|
||
Other
|
8,014
|
|
|
13,837
|
|
||
Deferred tax liability
|
$
|
195,688
|
|
|
$
|
303,973
|
|
Net Deferred Tax Asset
|
$
|
151,554
|
|
|
$
|
24,340
|
|
Jurisdiction
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Switzerland
|
$
|
11,457
|
|
|
$
|
9,864
|
|
Ireland
|
60,133
|
|
|
59,210
|
|
||
U.S.
|
175,372
|
|
|
196,555
|
|
||
Other
|
14,962
|
|
|
32,008
|
|
||
Valuation Allowance Total
|
$
|
261,924
|
|
|
$
|
297,637
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
Unrecognized tax benefits, beginning of the year
|
$
|
—
|
|
|
$
|
—
|
|
Increases for tax positions taken during the year
|
9,591
|
|
|
—
|
|
||
Increases for tax positions taken in prior years
|
20,409
|
|
|
—
|
|
||
Decreases for tax positions taken during the year
|
—
|
|
|
—
|
|
||
Decreases for tax positions taken in prior years
|
—
|
|
|
—
|
|
||
Settlement with taxing authorities
|
—
|
|
|
—
|
|
||
Lapse of statute of limitations
|
—
|
|
|
—
|
|
||
Unrecognized tax benefits, end of year
|
$
|
30,000
|
|
|
$
|
—
|
|
(U.S. dollars in thousands)
|
Bermuda (1)
|
|
U.S. (2)
|
|
U.K., Europe and Other
|
||||||||||||||||||
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|||||||||||||
Required statutory capital and surplus
|
$
|
6,382,118
|
|
|
$
|
6,497,192
|
|
|
$
|
657,865
|
|
|
$
|
649,166
|
|
|
$
|
1,970,909
|
|
|
$
|
1,679,309
|
|
Actual statutory capital and surplus (3)
|
$
|
10,193,615
|
|
|
$
|
10,328,816
|
|
|
$
|
2,244,505
|
|
|
$
|
2,237,834
|
|
|
$
|
2,686,909
|
|
|
$
|
2,483,484
|
|
(1)
|
Required statutory capital and surplus at
December 31, 2013
represents
100%
Bermuda Solvency Capital Requirement (“BSCR”) level for the top Bermuda operating subsidiary, XL Insurance (Bermuda) Ltd, calculated on a consolidated basis (and therefore includes a BSCR requirement for all regions).
|
(2)
|
Required statutory capital and surplus represents
100%
RBC level for principal U.S. operating subsidiaries.
|
(3)
|
Statutory assets in Bermuda include investments in other U.S. and international subsidiaries reported separately herein.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Bermuda
|
$
|
1,257,791
|
|
|
$
|
857,832
|
|
|
$
|
614,313
|
|
U.S.
|
$
|
124,310
|
|
|
$
|
106,510
|
|
|
$
|
23,350
|
|
U.K., Europe and Other
|
$
|
(162,085
|
)
|
|
$
|
144,829
|
|
|
$
|
107,255
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Reported net premiums written
|
$
|
73,085
|
|
|
$
|
61,146
|
|
|
$
|
66,489
|
|
Net losses incurred
|
$
|
29,042
|
|
|
$
|
37,664
|
|
|
$
|
34,720
|
|
Reported acquisition costs
|
$
|
25,275
|
|
|
$
|
24,014
|
|
|
$
|
25,635
|
|
(U.S. dollars in thousands, except per share amounts)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
Net premiums earned – P&C operations
|
$
|
1,464,246
|
|
|
$
|
1,488,497
|
|
|
$
|
1,550,629
|
|
|
$
|
1,510,727
|
|
Net premiums earned – Life operations
|
$
|
65,445
|
|
|
$
|
73,896
|
|
|
$
|
74,683
|
|
|
$
|
81,398
|
|
Underwriting profit (loss) – P&C operations
|
$
|
180,588
|
|
|
$
|
92,124
|
|
|
$
|
76,900
|
|
|
$
|
101,450
|
|
Net income (loss) attributable to ordinary shareholders
|
$
|
350,790
|
|
|
$
|
272,698
|
|
|
$
|
135,648
|
|
|
$
|
300,780
|
|
Net income (loss) per ordinary share and ordinary equivalent – basic
|
$
|
1.19
|
|
|
$
|
0.94
|
|
|
$
|
0.48
|
|
|
$
|
1.07
|
|
Net income (loss) per ordinary share and ordinary equivalent – diluted
|
$
|
1.17
|
|
|
$
|
0.93
|
|
|
$
|
0.47
|
|
|
$
|
1.05
|
|
2012
|
|
|
|
|
|
|
|
||||||||
Net premiums earned – P&C operations
|
$
|
1,357,897
|
|
|
$
|
1,400,970
|
|
|
$
|
1,468,554
|
|
|
$
|
1,538,557
|
|
Net premiums earned – Life operations
|
$
|
78,520
|
|
|
$
|
85,623
|
|
|
$
|
79,487
|
|
|
$
|
80,829
|
|
Underwriting profit (loss) – P&C operations
|
$
|
63,238
|
|
|
$
|
129,372
|
|
|
$
|
114,203
|
|
|
$
|
(90,681
|
)
|
Net income (loss) attributable to ordinary shareholders
|
$
|
176,628
|
|
|
$
|
221,154
|
|
|
$
|
171,902
|
|
|
$
|
81,444
|
|
Net income (loss) per ordinary share and ordinary equivalent – basic
|
$
|
0.56
|
|
|
$
|
0.71
|
|
|
$
|
0.57
|
|
|
$
|
0.27
|
|
Net income (loss) per ordinary share and ordinary equivalent – diluted
|
$
|
0.56
|
|
|
$
|
0.71
|
|
|
$
|
0.56
|
|
|
$
|
0.27
|
|
ITEM 9.
|
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
|
OTHER INFORMATION
|
ITEM 10.
|
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
Schedule
Number
|
Page
|
I
|
||
II
|
||
IV
|
||
VI
|
||
Other Schedules have been omitted as they are not applicable to the Company.
|
|
|
▪
|
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
|
▪
|
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
|
▪
|
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
|
▪
|
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
|
Exhibit
|
Description
|
3.1
|
Memorandum and Articles of Association of XL Group plc, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K12B (No. 1-10804) filed on July 1, 2010.
|
3.2
|
Certification of Incorporation of XL Group plc, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K12B (No. 1-10804) filed on July 1, 2010.
|
3.3
|
Memorandum of Association of XLIT Ltd., incorporated by reference to Exhibit 4.19 of the Company’s Registration Statement on Form S-3 (No. 333-177869) filed on November 9, 2011.
|
3.4
|
Articles of Association of XLIT Ltd., incorporated by reference to Exhibit 4.20 of the Company’s Registration Statement on Form S-3 (No. 333-177869) filed on November 9, 2011.
|
4.1
|
Excerpts from the Minutes of a Meeting of a Committee of the Board of Directors pursuant to Article 75 of XL Capital Ltd’s Articles of Association held on March 12, 2007, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on March 15, 2007.
|
4.2
|
Indenture, dated as of June 2, 2004, between XL Capital Ltd and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (No. 333-116245) filed on June 7, 2004.
|
4.3
|
First Supplemental Indenture, dated as of August 23, 2004, to the Indenture, dated as of June 2, 2004, between XL Capital Ltd and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on August 23, 2004.
|
4.4
|
Form of 5.25% Senior Note due 2014 (included in Exhibit 4.3 hereto), incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on August 23, 2004.
|
4.5
|
Second Supplemental Indenture, dated as of November 12, 2004, to the Indenture, dated as of June 2, 2004, between XL Capital Ltd and The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on November 15, 2004.
|
4.6
|
Form of 6.375% Senior Note due 2024 (included in Exhibit 4.5 hereto), incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on November 15, 2004.
|
4.7
|
Fourth Supplemental Indenture, dated May 7, 2007, to the Indenture, dated as of June 2, 2004, between XL Capital Ltd, and The Bank of New York, as trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on May 7, 2007.
|
4.8
|
Form of 6.25% Senior Note due 2027 (included in Exhibit 4.8 hereto), incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on May 7, 2007.
|
4.9
|
Form of XL Group plc Ordinary Share Certificate, incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K12B (No. 1-10804) filed on July 1, 2010.
|
4.10
|
Excerpts from the Authorizing Resolutions of the Board of Directors of XL Capital Ltd., dated October 27, 2006, incorporated by reference to Exhibit 4.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (No. 1-10804).
|
4.11
|
Excerpts from the Authorizing Resolutions of the Special Finance Committee of XL Capital Ltd, dated July 3, 2003, incorporated by reference to Exhibit 99.11 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) filed on August 14, 2003.
|
4.12
|
Form of XL Capital Ltd Global Series E Preference Share Certificate, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on March 15, 2007.
|
4.13
|
Form of XLIT Ltd. Global Series D Preference Ordinary Share Certificate, incorporated by reference to Exhibit 4.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (No. 1-10804).
|
4.14
|
Indenture, dated September 30, 2011, among XL Group plc, XL Group Ltd. (n/k/a XLIT Ltd.) and Wells Fargo Bank, National Association, as Trustee, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 30, 2011 (No. 1-10804).
|
4.15
|
First Supplemental Indenture, dated September 30, 2011, to the Indenture dated September 30, 2011 among XL Group plc, XL Group Ltd. (n/k/a XLIT Ltd.) and Wells Fargo Bank, National Association, as Trustee, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on September 30, 2011 (No. 1-10804).
|
4.16
|
Form of 5.75% Senior Note due 2021 (included in Exhibit 4.30 hereto), incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on September 30, 2011 (No. 1-10804).
|
4.17
|
Second Supplemental Indenture, dated November 21, 2013, to the Indenture dated September 30, 2011 among XL Group plc, XL Group Ltd. (n/k/a XLIT Ltd.) and Wells Fargo Bank, National Association, as Trustee, incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on November 21, 2013.
|
4.18
|
Form of 2.30% Senior Note due 2018 (included in Exhibit 4.32 hereto), incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on November 21, 2013.
|
4.19
|
Form of 5.25% Senior Note due 2043 (included in Exhibit 4.32 hereto), incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on November 21, 2013.
|
10.1+
|
1991 Performance Incentive Plan (as amended and restated effective March 7, 2003), incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A (No. 1-10804) filed on April 4, 2003.
|
10.2+
|
1991 Performance Incentive Program (as amended and restated effective April 29, 2005), incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A (No. 1-10804) filed on March 24, 2005.
|
10.3+
|
1991 Performance Incentive Program (as amended and restated effective February 27, 2009), incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A (No. 1-10804) filed on March 9, 2009.
|
10.4+
|
1991 Performance Incentive Program (as amended and restated effective April 30, 2010), incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) for the period ended June 30, 2010.
|
10.5+
|
1991 Performance Incentive Program (as amended and restated effective May 6, 2011), incorporated by reference to Appendix A to the Company's Definities Proxy Statement on Schedule 14A (No. 1-10804) filed on March 7, 2011.
|
10.6*+
|
Amendment to the 1991 Performance Incentive Program (as amended and restated effective May 6, 2011).
|
10.7+
|
Amended and Restated Directors Stock & Option Plan, effective as of March 7, 2003, incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A (No. 1-10804) filed on April 4, 2003.
|
10.8+
|
Amended and Restated Directors Stock & Option Plan, effective as of January 1, 2009, incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A (No. 1-10804) filed on March 9, 2009.
|
10.9+
|
Amended and Restated Directors Stock & Option Plan, effective as of April 30, 2010, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) for the period ended June 30, 2010.
|
10.10+
|
Amendment to the Amended and Restated Directors Stock & Option Plan, incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended June 30, 2013.
|
10.11+
|
Employment Agreement, dated as of September 29, 2006, between XL Capital Ltd and Sarah E. Street, incorporated by reference to Exhibit 10.1 to the Company’s quarterly report on Form 10-Q for the period ended September 30, 2006 (No. 1-10804).
|
10.12+
|
Form of Non-Statutory Stock Option Agreement (One-Time Vesting), incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.13+
|
Form of Non-Statutory Stock Option Agreement (Incremental Vesting), incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804)
|
10.14+
|
Form of Non-Statutory Stock Option Agreement (Incremental Vesting), incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.15+
|
Form of Non-Statutory Stock Option Agreement, incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.16+
|
Form of Incentive Stock Option Agreement, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.17+
|
Form of Restricted Stock Agreement, incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.18+
|
Form of Restricted Stock Agreement, incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.19+
|
Form of Non-Statutory Stock Option Agreement (Renewal Form), incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.20+
|
Form of Non-Statutory Stock Option Agreement (Non-Employee Director Renewal Form), incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.21+
|
Form of Directors Restricted Stock Agreement, incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.22+
|
Form of Performance Restricted Stock Agreement, incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.23+
|
Form of Performance Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.24+
|
Form of Performance Unit Agreement, incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804).
|
10.25+
|
Form of Performance Unit Agreement, incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804).
|
10.26+
|
Form of Performance Unit Agreement (U.S. Citizens Subject to IRC 457A), incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.27+
|
Form of Performance Unit Agreement, incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.28+
|
Form of Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.29+
|
Form of Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804).
|
10.30+
|
Form of Restricted Stock Unit Agreement (for U.S. taxpayers based in Bermuda), incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804).
|
10.31+
|
Form of Restricted Stock Unit Agreement (U.S. Citizens Subject to IRC 457A), incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.32+
|
Form of Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (No. 1-10804) for the period ended March 31, 2013.
|
10.33+
|
Form of Director Stock Option Agreement, incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2004 (No. 1-10804).
|
10.34
|
Insurance Letters of Credit – Master Agreement between XL Mid Ocean Reinsurance Ltd and Citibank, N.A., dated May 19, 1993, incorporated by reference to Exhibit 10.33 to Amendment No. 2 to the Registration Statement on Form S-1 of Mid Ocean Limited (No. 333-63298) filed on June 25, 1993.
|
10.35
|
Second Amended and Restated Agreement for the Sale and Purchase of Winterthur International, dated as of February 15, 2001, between Winterthur Swiss Insurance Company and XL Insurance (Bermuda) Ltd (formerly XL Insurance Ltd), incorporated by reference to Exhibit 99(a) to the Company’s Current Report on Form 8-K (No. 1-10804) filed August 9, 2001.
|
10.36
|
Amendment Agreement, dated July 19, 2002, between Winterthur Swiss Insurance Company and XL Insurance (Bermuda) Ltd, incorporated by reference to Exhibit 10.58 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 (No. 1-10804).
|
10.37
|
Agreement, dated December 24, 2003, between Winterthur Swiss Insurance Company and XL Insurance (Bermuda) Ltd (including Schedule B thereto), relating to the Second Amended and Restated Agreement for the Sale and Purchase of Winterthur International, dated February 15, 2001, incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) filed on August 9, 2004.
|
10.38
|
Amendment Agreement, dated July 27, 2004, between Winterthur Swiss Insurance Company and XL Insurance (Bermuda) Ltd, relating to the Second Amended and Restated Agreement for the Sale and Purchase of Winterthur International, dated February 15, 2001, incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) filed on August 9, 2004.
|
10.39
|
Pledge Agreement, dated as of December 18, 2001, made by XL Investments Ltd, XL Re Ltd, XL Insurance (Bermuda) Ltd and XL Europe Ltd, as Grantors, in favor of Citibank, N.A., as Bank, incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001 (No. 1-10804).
|
10.40
|
Amendment No. 1, dated as of June 24, 2002, to the Pledge Agreement, dated December 18, 2001, made by XL Investments Ltd, XL Re Ltd, XL Insurance (Bermuda) Ltd, and XL Europe Ltd, as Grantors, in favor of Citibank, N.A., as Bank, incorporated by reference to Exhibit 10.67 to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2003 (No. 1-10804).
|
10.41
|
Replacement Capital Covenant, dated March 15, 2007, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on March 15, 2007.
|
10.42
|
Service Agreement Relative to Sureties, Letters of Guarantees and International Stand-By Letters of Credit, dated April 25, 2003, between Société Le Mans Re and Credit Lyonnais, incorporated by reference to Exhibit 10.62 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003 (No. 1-10804).
|
10.43
|
First Renewal, dated November 27, 2000, between Le Mans Re and BNP Paribas, to the Reinsurance Stand-By Letter of Credit Agreement, dated October 7, 1999, incorporated by reference to Exhibit 10.63 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2003 (No. 1-10804).
|
10.44
|
Master Commutation, Release and Restructuring Agreement by and among XL Capital Ltd, XL Insurance (Bermuda) Ltd, XL Reinsurance America Inc., X.L. Global Services, Inc., XL Services (Bermuda) Ltd and X.L. America, Inc., Security Capital Assurance Ltd (“SCA”), certain of SCA’s subsidiaries and certain financial institutions who have entered into various credit default swaps with affiliates of SCA, dated as of July 28, 2008, as amended, incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (No. 1-10804).
|
10.45+
|
Employment Agreement, dated as of March 14, 2008 by and between XL Capital Ltd and Michael S. McGavick, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 20, 2008 (No. 1-10804).
|
10.46+
|
Amendment to Employment Agreement, dated as of December 2008, between XL Capital Ltd and Michael S. McGavick (amended in response to Internal Revenue Code Section 457A), incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (No. 1-10804).
|
10.47+
|
Second Amendment to Employment Agreement, dated April 26, 2013, between XL Group plc and Michael S. McGavick, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on April 29, 2013.
|
10.48+
|
2008 Form of Employment Agreement between XL Capital Ltd and certain Executive Officers, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (No. 1-10804).
|
10.49+
|
2008 Form of Amendment to Employment Agreement between XL Capital Ltd and certain Executive Officers (amended in response to Internal Revenue Code Section 457A), incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (No. 1- 10804).
|
10.50+
|
Amended Employment Agreement, dated as of April 25, 2008, by and between XL Capital Ltd, X.L. Global Services, Inc. and James H. Veghte (amended in response to Internal Revenue Code Section 409A), incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2009 (No. 1-10804).
|
10.51+
|
Amendment to Employment Agreement, dated as of December 16, 2009, by and between XL Capital Ltd and Sarah E. Street, incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.52+
|
Form of Letter Agreement, dated December 15, 2009, relating to Employment Agreements between XL Capital Ltd and certain Executive Officers, incorporated by reference to Exhibit 10.53 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.53+
|
Insurance Letters of Credit – Master Agreement, dated November 11, 2009, between XL Insurance (Bermuda) Ltd and Citibank Europe plc, incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.54+
|
Pledge Agreement, dated November 11, 2009, between XL Re Ltd and XL Insurance (Bermuda) Ltd, as Pledgors, and Citibank Europe plc, as Pledgee, incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.55+
|
Amendment No. 1, dated November 23, 2009, to Pledge Agreement dated November 11, 2009 between XL Re Ltd and XL Insurance (Bermuda) Ltd, as Pledgors, and Citibank Europe plc, as Pledgee, incorporated by reference to Exhibit 10.56 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.56+
|
Amendment No. 2, dated December 23, 2009, to Pledge Agreement dated November 11, 2009 between XL Re Ltd and XL Insurance (Bermuda) Ltd, as Pledgors, and Citibank Europe plc, as Pledgee, incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (No. 1-10804).
|
10.57+
|
Form of Indemnification Agreement, dated July 1, 2010, by and between XL Capital Ltd and certain directors and executive officers of the Company, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K12B filed on July 1, 2010 (No. 1-10804).
|
10.58+
|
Deed Poll Indemnity, dated July 1, 2010, by XL Capital Ltd, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K12B filed on July 1, 2010 (No. 1-10804).
|
10.59+
|
Supplemental Deferred Compensation Plan, amended and restated effective as of January 1, 2007, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 (No. 1-10804).
|
10.60+
|
Aircraft Time Sharing Agreement, dated February 22, 2011, between Michael S. McGavick and X.L. America, Inc, incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
|
10.61+
|
XL Services UK Limited Profit Sharing Scheme, incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on May 11, 2011 (No. 333-174138).
|
10.62+
|
Employment Agreement, dated as of June 18, 2011, by and between XL Group plc, X.L. Global Services, Inc. and Peter R. Porrino, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 21, 2011.
|
10.63+
|
Form of Letter Agreement between XL Global Services, Inc. and/or XL Group plc and certain executive officers, incorporated by reference to Exhibit 10.67 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.
|
10.64
|
Subscription Agreement, dated as of December 5, 2006, among XL Capital Ltd, Stoneheath Re and Goldman Sachs International, incorporated by reference to Exhibit 10.1 to the Company’s Current report on Form 8-K (No. 1-10804) filed on December 11, 2006.
|
10.65
|
Excess of Loss Reinsurance Agreement, dated as of December 12, 2006, by and among XL Insurance (Bermuda) Ltd, XL Insurance Switzerland, XL Europe Limited, XL Insurance Company Limited, XL Re Latin America Ltd, XL Insurance Argentina S.A. Compania de Seguros, XL Insurance Company Ltd, XL Re Ltd, XL Re Europe Limited, Vitodurum Reinsurance Company, Underwriting Members of Lloyd’s Syndicate #1209 and Stoneheath Re, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on December 12, 2006.
|
10.66
|
Securities Issuance Agreement, dated as of December 12, 2006 between XL Capital Ltd and Stoneheath Re, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on December 12, 2006.
|
10.67
|
Trust Agreement, dated as of December 12, 2006 among the Asset Swap Counterparty, The Ceding Insurers and XL Capital Ltd as Beneficiaries and Stoneheath Re, as Guarantor and Beneficiary and The Bank of New York, as Trustee, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (No. 1-10804) filed on December 12, 2006.
|
10.68+
|
XL Group plc Reinsurance Supplemental Long Term Cash Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (No. 1-10804) filed on April 30, 2012.
|
10.69+
|
X.L. America, Inc. Deferred Compensation Plan, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) for the period ended June 30, 2012.
|
10.70+
|
Form of Letter Agreement between XL Global Services, Inc. and/or XL Group plc and certain executive officers, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (No. 1-10804) for the period ended June 30, 2012.
|
10.71
|
Credit Agreement, dated as of May 7, 2013, between XLIT Ltd., Citicorp USA, Inc., as Administrative Agent and Issuing Lender, and the Lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 7, 2013.
|
10.72
|
Credit Agreement First Amendment, dated as of May 13, 2013, to the Credit Agreement, dated as of May 7, 2013, between XLIT Ltd., Citicorp USA, Inc., as Administrative Agent and Issuing Lender, and the Lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 13, 2013.
|
10.73
|
Credit Agreement Second Amendment, dated as of May 15, 2013, to the Credit Agreement, dated as of May 7, 2013, between XLIT Ltd., Citicorp USA, Inc., as Administrative Agent and Issuing Lender, and the Lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 15, 2013.
|
10.74
|
Continuing Agreement for Standby Letters of Credit, dated as of May 7, 2013, between XLIT Ltd. and Citibank, N.A., incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 7, 2013.
|
10.75
|
Letter Agreement, dated as of May 7, 2013, between XLIT Ltd. and Citicorp USA, Inc., incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 7, 2013.
|
10.76
|
Fee Letter Amendment No. 1, dated as of May 13, 2013, to the Letter Agreement, dated as of May 7, 2013, between XLIT Ltd. and Citicorp USA, Inc., incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 13, 2013.
|
10.77
|
Fee Letter Amendment No. 2, dated as of May 15, 2013, to the Letter Agreement, dated as of May 7, 2013, between XLIT Ltd. and Citicorp USA, Inc., incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (No. 1-10804) filed on May 15, 2013.
|
10.78
|
Credit Agreement, dated as of August 6, 2013, between XLIT Ltd., Citicorp USA, Inc., as Administrative Agent and Issuing Lender, and the Lenders party thereto, incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (No. 1-10804) filed on August 6, 2013.
|
|
2013
|
|
2012
|
||||||||||||||||||||
(U.S. dollars in thousands)
|
Cost or
Amortized
Cost (1)
|
|
Fair
Value
|
|
Amount Presented in the Balance Sheet
|
|
Cost or
Amortized
Cost (1)
|
|
Fair
Value
|
|
Amount Presented in the Balance Sheet
|
||||||||||||
Fixed Maturities – AFS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and Government
agency-Related/Supported
|
$
|
2,484,193
|
|
|
$
|
2,501,851
|
|
|
$
|
2,501,851
|
|
|
$
|
1,906,044
|
|
|
$
|
2,034,617
|
|
|
$
|
2,034,617
|
|
Corporate
|
10,802,332
|
|
|
11,125,830
|
|
|
11,125,830
|
|
|
9,837,962
|
|
|
10,482,000
|
|
|
10,482,000
|
|
||||||
RMBS – Agency
|
3,540,101
|
|
|
3,546,122
|
|
|
3,546,122
|
|
|
5,054,097
|
|
|
5,255,493
|
|
|
5,255,493
|
|
||||||
RMBS – Non-Agency
|
396,798
|
|
|
398,768
|
|
|
398,768
|
|
|
678,469
|
|
|
647,733
|
|
|
647,733
|
|
||||||
CMBS
|
1,223,313
|
|
|
1,246,795
|
|
|
1,246,795
|
|
|
1,010,794
|
|
|
1,077,251
|
|
|
1,077,251
|
|
||||||
CDO
|
754,414
|
|
|
717,313
|
|
|
717,313
|
|
|
784,999
|
|
|
709,816
|
|
|
709,816
|
|
||||||
Other asset-backed securities
|
1,210,384
|
|
|
1,242,104
|
|
|
1,242,104
|
|
|
1,426,483
|
|
|
1,470,711
|
|
|
1,470,711
|
|
||||||
U.S. States and political subdivisions of the States
|
1,821,499
|
|
|
1,845,812
|
|
|
1,845,812
|
|
|
1,767,669
|
|
|
1,911,017
|
|
|
1,911,017
|
|
||||||
Non-U.S. Sovereign Government, Supranational and Government-Related
|
4,878,840
|
|
|
4,875,541
|
|
|
4,875,541
|
|
|
4,078,289
|
|
|
4,258,282
|
|
|
4,258,282
|
|
||||||
Total Fixed maturities – AFS
|
$
|
27,111,874
|
|
|
$
|
27,500,136
|
|
|
$
|
27,500,136
|
|
|
$
|
26,544,806
|
|
|
$
|
27,846,920
|
|
|
$
|
27,846,920
|
|
Equity securities
|
903,201
|
|
|
1,040,237
|
|
|
1,040,237
|
|
|
617,486
|
|
|
649,359
|
|
|
649,359
|
|
||||||
Short-term investments
|
455,470
|
|
|
456,288
|
|
|
456,288
|
|
|
322,563
|
|
|
322,703
|
|
|
322,703
|
|
||||||
Fixed maturities – HTM
|
2,858,695
|
|
|
3,131,235
|
|
|
2,858,695
|
|
|
2,814,447
|
|
|
3,262,804
|
|
|
2,814,447
|
|
||||||
Other investments
|
949,310
|
|
|
1,167,382
|
|
|
1,164,630
|
|
|
1,039,731
|
|
|
1,201,570
|
|
|
1,219,879
|
|
||||||
Total investments other than investments in related parties
|
$
|
32,278,550
|
|
|
$
|
33,295,278
|
|
|
$
|
33,019,986
|
|
|
$
|
31,339,033
|
|
|
$
|
33,283,356
|
|
|
$
|
32,853,308
|
|
(1)
|
Investments in fixed maturities, short-term investments and held to maturity are shown at amortized cost.
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
12,709
|
|
|
$
|
10,961
|
|
Investments in subsidiaries on an equity basis
|
10,187,614
|
|
|
10,601,653
|
|
||
Other assets
|
3,014
|
|
|
3,241
|
|
||
Total assets
|
$
|
10,203,337
|
|
|
$
|
10,615,855
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Amounts due to subsidiaries
|
$
|
190,601
|
|
|
$
|
86,012
|
|
Accounts payable and accrued liabilities
|
15,103
|
|
|
19,766
|
|
||
Total liabilities
|
$
|
205,704
|
|
|
$
|
105,778
|
|
Commitments and Contingencies
|
|
|
|
||||
Shareholders’ Equity:
|
|
|
|
||||
Ordinary shares, 999,990,000 authorized, par value $0.01; issued and outstanding: (2013: 278,253,308; 2012: 298,681,573)
|
$
|
2,783
|
|
|
$
|
2,987
|
|
Additional paid in capital
|
7,994,100
|
|
|
8,584,752
|
|
||
Accumulated other comprehensive income
|
736,657
|
|
|
1,520,020
|
|
||
Retained earnings (deficit)
|
1,264,093
|
|
|
402,318
|
|
||
Total shareholders’ equity
|
$
|
9,997,633
|
|
|
$
|
10,510,077
|
|
Total liabilities and shareholders’ equity
|
$
|
10,203,337
|
|
|
$
|
10,615,855
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net investment income
|
$
|
24
|
|
|
$
|
5
|
|
|
$
|
2
|
|
Total revenues
|
$
|
24
|
|
|
$
|
5
|
|
|
$
|
2
|
|
Operating expenses
|
$
|
11,699
|
|
|
$
|
10,971
|
|
|
$
|
74,422
|
|
Foreign exchange (gains) losses
|
243
|
|
|
165
|
|
|
(275
|
)
|
|||
Interest expense
|
2
|
|
|
15
|
|
|
3
|
|
|||
Total expenses
|
$
|
11,944
|
|
|
$
|
11,151
|
|
|
$
|
74,150
|
|
Income (loss) before income tax
|
$
|
(11,920
|
)
|
|
$
|
(11,146
|
)
|
|
$
|
(74,148
|
)
|
Equity in net earnings (losses) of subsidiaries (dividends were: 2013: $617,719; 2012: nil; 2011: $183,029)
|
1,071,836
|
|
|
662,274
|
|
|
(400,612
|
)
|
|||
Provision for income tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to ordinary shareholders
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Net income (loss)
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Change in unrealized gains (losses) on investments, affiliates and other investments, net of tax
|
(772,287
|
)
|
|
887,377
|
|
|
471,696
|
|
|||
Change in OTTI losses recognized in other comprehensive income, net of tax
|
32,181
|
|
|
67,280
|
|
|
39,456
|
|
|||
Change in underfunded pension liability
|
11,162
|
|
|
(9,985
|
)
|
|
(2,622
|
)
|
|||
Change in value of cash flow hedge
|
439
|
|
|
439
|
|
|
440
|
|
|||
Foreign currency translation adjustments
|
(54,858
|
)
|
|
(8,156
|
)
|
|
(26,700
|
)
|
|||
Comprehensive income (loss)
|
$
|
276,553
|
|
|
$
|
1,588,083
|
|
|
$
|
7,510
|
|
(U.S. dollars in thousands)
|
2013
|
|
2012
|
|
2011
|
||||||
Net income (loss)
|
$
|
1,059,916
|
|
|
$
|
651,128
|
|
|
$
|
(474,760
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||||||
Equity in (earnings) loss of subsidiaries
|
(1,071,836
|
)
|
|
(662,274
|
)
|
|
400,612
|
|
|||
Share based compensation
|
46,489
|
|
|
47,472
|
|
|
41,225
|
|
|||
Amounts due to (from) subsidiaries
|
104,590
|
|
|
166,853
|
|
|
(205,893
|
)
|
|||
Dividends received from subsidiaries
|
617,719
|
|
|
—
|
|
|
183,029
|
|
|||
Other
|
(16,570
|
)
|
|
(3,296
|
)
|
|
10,956
|
|
|||
Total adjustments
|
$
|
(319,608
|
)
|
|
$
|
(451,245
|
)
|
|
$
|
429,929
|
|
Net cash provided by (used in) operating activities
|
$
|
740,308
|
|
|
$
|
199,883
|
|
|
$
|
(44,831
|
)
|
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
||||||
Returns of capital from subsidiaries
|
$
|
84,589
|
|
|
$
|
341,750
|
|
|
$
|
272,398
|
|
Net cash provided by (used in) investing activities
|
$
|
84,589
|
|
|
$
|
341,750
|
|
|
$
|
272,398
|
|
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of ordinary shares and exercise of stock options
|
$
|
12,623
|
|
|
$
|
5,413
|
|
|
$
|
576,333
|
|
Dividends paid
|
(160,155
|
)
|
|
(134,799
|
)
|
|
(138,050
|
)
|
|||
Buybacks of ordinary shares
|
(675,617
|
)
|
|
(402,930
|
)
|
|
(667,022
|
)
|
|||
Net cash provided by (used in) financing activities
|
$
|
(823,149
|
)
|
|
$
|
(532,316
|
)
|
|
$
|
(228,739
|
)
|
Net change in cash and cash equivalents
|
1,748
|
|
|
9,317
|
|
|
(1,172
|
)
|
|||
Cash and cash equivalents – beginning of period
|
10,961
|
|
|
1,644
|
|
|
2,816
|
|
|||
Cash and cash equivalents – end of period
|
$
|
12,709
|
|
|
$
|
10,961
|
|
|
$
|
1,644
|
|
(U.S. dollars in million)
|
2013
|
|
2012
|
|
2011
|
||||||
Dividends and returns of capital
|
$
|
702
|
|
|
$
|
342
|
|
|
$
|
455
|
|
(U.S. dollars in thousands)
|
Gross
Amount
|
|
Ceded
to Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed
to Net
|
|||||||||
2013
|
|
|
|
|
|
|
|
|
|
|||||||||
Life reinsurance in force (1)
|
$
|
—
|
|
|
$
|
378,391
|
|
|
$
|
77,917,632
|
|
|
$
|
77,539,241
|
|
|
100.5
|
%
|
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty operations
|
$
|
4,966,207
|
|
|
$
|
1,315,369
|
|
|
$
|
2,363,261
|
|
|
$
|
6,014,099
|
|
|
39.3
|
%
|
Life operations
|
—
|
|
|
28,920
|
|
|
324,342
|
|
|
295,422
|
|
|
109.8
|
%
|
||||
Total premiums earned
|
$
|
4,966,207
|
|
|
$
|
1,344,289
|
|
|
$
|
2,687,603
|
|
|
$
|
6,309,521
|
|
|
42.6
|
%
|
2012
|
|
|
|
|
|
|
|
|
|
|||||||||
Life reinsurance in force (1)
|
$
|
—
|
|
|
$
|
443,798
|
|
|
$
|
82,099,647
|
|
|
$
|
81,655,849
|
|
|
100.5
|
%
|
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty operations
|
$
|
4,604,323
|
|
|
$
|
1,231,835
|
|
|
$
|
2,393,490
|
|
|
$
|
5,765,978
|
|
|
41.5
|
%
|
Life operations
|
—
|
|
|
31,322
|
|
|
355,781
|
|
|
324,459
|
|
|
109.7
|
%
|
||||
Total premiums earned
|
$
|
4,604,323
|
|
|
$
|
1,263,157
|
|
|
$
|
2,749,271
|
|
|
$
|
6,090,437
|
|
|
45.1
|
%
|
2011
|
|
|
|
|
|
|
|
|
|
|||||||||
Life reinsurance in force (1)
|
$
|
—
|
|
|
$
|
559,676
|
|
|
$
|
88,646,215
|
|
|
$
|
88,086,539
|
|
|
100.6
|
%
|
Premiums Earned:
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and casualty operations
|
$
|
4,624,557
|
|
|
$
|
1,477,000
|
|
|
$
|
2,179,555
|
|
|
$
|
5,327,112
|
|
|
40.9
|
%
|
Life operations
|
—
|
|
|
32,308
|
|
|
395,326
|
|
|
363,018
|
|
|
108.9
|
%
|
||||
Total premiums earned
|
$
|
4,624,557
|
|
|
$
|
1,509,308
|
|
|
$
|
2,574,881
|
|
|
$
|
5,690,130
|
|
|
45.3
|
%
|
(1)
|
Represents the sum face value outstanding of the in force life reinsurance policies.
|
(U.S. dollars
in thousands)
|
Deferred
Acquisition
Costs
|
|
Reserves
for
Losses
and Loss
Expenses
|
|
Reserves
for
Unearned
Premiums
|
|
Net
Earned
Premiums
|
|
Net
Investment
Income
|
|
Losses and Loss
Expenses
incurred related to
|
|
Net Paid
Losses
and
Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Net
Premiums
Written
|
||||||||||||||||||||||
Current
Year
|
|
Prior
Year
|
|
||||||||||||||||||||||||||||||||||||
2013
|
$
|
537,473
|
|
|
$
|
20,481,065
|
|
|
$
|
3,846,568
|
|
|
$
|
6,014,099
|
|
|
$
|
671,071
|
|
|
$
|
4,021,353
|
|
|
$
|
(289,889
|
)
|
|
$
|
3,828,139
|
|
|
$
|
882,658
|
|
|
$
|
5,903,982
|
|
2012
|
$
|
536,664
|
|
|
$
|
20,484,121
|
|
|
$
|
3,755,117
|
|
|
$
|
5,765,978
|
|
|
$
|
712,905
|
|
|
$
|
4,081,376
|
|
|
$
|
(315,894
|
)
|
|
$
|
3,783,242
|
|
|
$
|
872,399
|
|
|
$
|
5,957,019
|
|
2011
|
$
|
531,282
|
|
|
$
|
20,613,901
|
|
|
$
|
3,555,260
|
|
|
$
|
5,327,112
|
|
|
$
|
819,708
|
|
|
$
|
4,363,258
|
|
|
$
|
(284,867
|
)
|
|
$
|
3,846,202
|
|
|
$
|
786,093
|
|
|
$
|
5,433,388
|
|
Date:
|
February 26, 2014
|
|
|
|
XL Group plc
|
|
|
(Registrant)
|
|
|
/s/ MICHAEL S. MCGAVICK
|
|
|
Name: Michael S. McGavick
|
|
|
Title: Chief Executive Officer and Director
|
|
|
XL Group plc
|
Date:
|
February 26, 2014
|
|
|
|
/s/ PETER R. PORRINO
|
|
|
Name: Peter R. Porrino
|
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
|
XL Group plc
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ MICHAEL S. MCGAVICK
|
|
Chief Executive Officer (Principal Executive Officer) and Director
|
|
February 26, 2014
|
Michael S. McGavick
|
|
|
|
|
/s/ PETER R. PORRINO
|
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
February 26, 2014
|
Peter R. Porrino
|
|
|
|
|
/s/ RAMANI AYER
|
|
Director
|
|
February 26, 2014
|
Ramani Ayer
|
|
|
|
|
/s/ DALE R. COMEY
|
|
Director
|
|
February 26, 2014
|
Dale R. Comey
|
|
|
|
|
/s/ ROBERT R. GLAUBER
|
|
Director and Chairman of the Board of Directors
|
|
February 26, 2014
|
Robert R. Glauber
|
|
|
|
|
/s/ HERBERT N. HAAG
|
|
Director
|
|
February 26, 2014
|
Herbert N. Haag
|
|
|
|
|
/s/ SUZANNE B. LABARGE
|
|
Director
|
|
February 26, 2014
|
Suzanne B. Labarge
|
|
|
|
|
/s/ JOSEPH MAURIELLO
|
|
Director
|
|
February 26, 2014
|
Joseph Mauriello
|
|
|
|
|
/s/ EUGENE M. MCQUADE
|
|
Director
|
|
February 26, 2014
|
Eugene M. McQuade
|
|
|
|
|
/s/ CLAYTON S. ROSE
|
|
Director
|
|
February 26, 2014
|
Clayton S. Rose
|
|
|
|
|
/s/ SIR JOHN VEREKER
|
|
Director
|
|
February 26, 2014
|
Sir John Vereker
|
|
|
|
|
|
Years Ended December 31,
|
||||||
(U.S. dollars in thousands, except ratios)
|
2013
|
|
2012
|
||||
Earnings:
|
|
|
|
||||
Pre-tax income (loss) from continuing operations
|
$
|
955,957
|
|
|
$
|
652,020
|
|
Fixed charges
|
243,575
|
|
|
261,721
|
|
||
Distributed income of equity investees
|
136,795
|
|
|
81,518
|
|
||
Subtotal
|
$
|
1,336,327
|
|
|
$
|
995,259
|
|
Less: Non-controlling interests
|
(500
|
)
|
|
167
|
|
||
Preference share dividends
|
77,231
|
|
|
79,088
|
|
||
Total earnings (loss)
|
$
|
1,259,596
|
|
|
$
|
916,004
|
|
|
|
|
|
||||
Fixed charges:
|
|
|
|
||||
Interest costs
|
$
|
107,486
|
|
|
$
|
105,925
|
|
Accretion of deposit liabilities
|
47,976
|
|
|
66,279
|
|
||
Rental expense at 30% (1)
|
10,882
|
|
|
10,429
|
|
||
Total fixed charges
|
$
|
166,344
|
|
|
$
|
182,633
|
|
Preference share dividends
|
77,231
|
|
|
79,088
|
|
||
Total fixed charges and preference dividends
|
$
|
243,575
|
|
|
$
|
261,721
|
|
|
|
|
|
||||
Ratio of earnings to fixed charges
|
7.6
|
|
|
5.0
|
|
||
|
|
|
|
||||
Ratio of earnings to combined fixed charges and preference dividends
|
5.2
|
|
|
3.5
|
|
||
|
|
|
|
||||
Deficiency - fixed charges only
|
N/A
|
|
|
N/A
|
|
||
|
|
|
|
||||
Deficiency - fixed charges and preference dividends
|
N/A
|
|
|
N/A
|
|
(1)
|
30% represents a reasonable approximation of the interest factor.
|
COMPANY
|
%
|
JURISDICTION
|
|||||||||||||
XL Group plc
|
|
Ireland
|
|||||||||||||
|
XLIT Ltd.
|
|
Cayman
|
||||||||||||
|
|
XL Company Switzerland GmbH
|
|
Switzerland
|
|||||||||||
|
|
|
EXEL Holdings Limited
|
|
Cayman
|
||||||||||
|
|
|
|
X.L. Property Holdings Limited
|
|
Bermuda
|
|||||||||
|
|
|
|
XL Insurance (Bermuda) Ltd
|
|
Bermuda
|
|||||||||
|
|
|
|
|
Mid Ocean Holdings Ltd.
|
|
Bermuda
|
||||||||
|
|
|
|
|
|
XL London Market Group Ltd
|
|
UK
|
|||||||
|
|
|
|
|
|
|
Dornoch Limited
|
|
UK
|
||||||
|
|
|
|
|
|
|
XL London Market Ltd- Syndicate 1209
|
|
UK
|
||||||
|
|
|
|
|
|
XL Re Ltd
|
|
Bermuda
|
|||||||
|
|
|
|
|
|
|
ECS Reinsurance Company Inc.
|
|
Barbados
|
||||||
|
|
|
|
|
|
|
Fundamental Insurance Investments Ltd.
|
|
Bermuda
|
||||||
|
|
|
|
|
|
|
|
XL Underwriting Managers Ltd.
|
|
Bermuda
|
|||||
|
|
|
|
|
|
|
|
New Ocean Capital Management Limited
|
65.6
|
Bermuda
|
|||||
|
|
|
|
|
|
|
|
New Ocean Focus Cat Fund Ltd.***
|
71.3
|
Bermuda
|
|||||
|
|
|
|
|
|
|
|
Vector Reinsurance Ltd.***
|
100
|
Bermuda
|
|||||
|
|
|
|
|
|
|
XL Re Europe SE
|
|
Ireland
|
||||||
|
|
|
|
|
|
|
|
XL Insurance (Gibraltar) Limited
|
|
Gibraltar
|
|||||
|
|
|
|
|
|
|
|
XL Re Latin America Ltd
|
|
Switzerland
|
|||||
|
|
|
|
|
|
|
|
|
XL Latin America Investments Ltd
|
|
Bermuda
|
||||
|
|
|
|
|
|
|
|
|
XL Re Participacoes Ltda.
|
|
Brazil
|
||||
|
|
|
|
|
|
|
|
|
|
XL Resseguros Brasil S.A.
|
|
Brazil
|
|||
|
|
|
|
|
|
|
|
|
XL Re Latin America (Argentina SA)
|
80
|
Argentina
|
||||
|
|
|
|
|
|
|
|
|
XL Re Latin America Ltd Escritório de Representação no Brasil Ltda
|
|
Brazil
|
||||
|
|
|
|
|
XL (Brazil) Holdings Ltda
|
|
Brazil
|
||||||||
|
|
|
|
|
XL Services (Bermuda) Ltd
|
|
Bermuda
|
||||||||
|
|
|
|
|
XL Life Ltd
|
|
Bermuda
|
||||||||
|
|
|
|
|
|
Reeve Court General Partner Limited
|
|
Bermuda
|
|||||||
|
|
|
|
|
|
|
Reeve Court 4 Limited Partnership
|
|
Bermuda
|
||||||
|
|
|
|
|
|
|
Reeve Court 6 Limited Partnership
|
|
Bermuda
|
||||||
|
|
|
|
|
XL Gracechurch Limited
|
|
UK
|
||||||||
|
|
|
|
|
|
XL Insurance (UK) Holdings Limited
|
|
UK
|
|||||||
|
|
|
|
|
|
|
XL Insurance Argentina S.A. Compañia de Seguros
|
90
|
Argentina
|
||||||
|
|
|
|
|
|
|
XL Services UK Limited
|
|
UK
|
||||||
|
|
|
|
|
|
|
XL Insurance Company Plc
|
|
UK
|
||||||
|
|
|
|
|
|
|
|
XL Insurance Argentina S.A. Compañia de Seguros
|
10
|
Argentina
|
|||||
|
|
|
|
|
|
|
|
XL Insurance (China) Company Ltd
|
49
|
China
|
|||||
|
|
|
|
|
|
|
|
XL Seguros Brasil S.A.
|
|
Brazil
|
|||||
|
|
|
|
|
|
|
|
XL DS Plc
|
|
Ireland
|
|||||
|
|
|
|
|
|
|
|
XL Holdings Proprietary Limited
|
|
South Africa
|
|||||
|
|
|
|
|
|
|
|
|
XL AB (PTY) Ltd
|
|
South Africa
|
||||
|
|
|
|
|
XL Financial Holdings (Ireland) Limited
|
|
Ireland
|
||||||||
|
|
|
|
|
|
XL Finance (Ireland) Limited
|
|
Ireland
|
|||||||
|
|
|
|
|
|
XL Services Canada Ltd.
|
|
Canada
|
|||||||
|
|
|
|
|
|
X.L. America, Inc. *
|
|
Delaware
|
|||||||
|
|
|
|
|
|
|
XL Financial Solutions, Inc.
|
|
Delaware
|
||||||
|
|
|
|
|
|
|
XLA Garrison L.P.
|
|
Delaware
|
||||||
|
|
|
|
|
|
|
XL Reinsurance America Inc.
|
|
New York
|
||||||
|
|
|
|
|
|
|
|
XL Insurance (China) Company Ltd
|
51
|
China
|
1.
|
I have reviewed this Annual Report on Form 10-K of XL Group plc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
February 26, 2014
|
|
|
|
|
|
|
/s/ MICHAEL S. MCGAVICK
|
|
|
|
|
|
|
|
|
Michael S. McGavick
|
|
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of XL Group plc;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
February 26, 2014
|
|
|
|
|
|
|
/s/ PETER R. PORRINO
|
|
|
|
|
|
|
|
|
Peter R. Porrino
|
|
|
Executive Vice President and
|
|
|
Chief Financial Officer
|
|
Dated: February 26, 2014
|
|
|
|
/s/ MICHAEL S. MCGAVICK
|
|
|
|
|
|
Michael S. McGavick
|
|
Chief Executive Officer
|
|
XL Group plc
|
|
|
|
Dated: February 26, 2014
|
|
|
|
/s/ PETER R. PORRINO
|
|
|
|
|
|
Peter R. Porrino
|
|
Executive Vice President and
|
|
Chief Financial Officer
|
|
XL Group plc
|