|
|
|
|
|
Title of each class
|
|
Name of each exchange on which registered
|
Common shares, par value $0.0125 per share
|
|
New York Stock Exchange
|
5.50% Series D preferred shares
|
|
New York Stock Exchange
|
5.50% Series E preferred shares
|
|
New York Stock Exchange
|
Large accelerated filer
|
ý
Accelerated filer
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company) Smaller reporting company
¨
|
|
|
|
|
|
Page
|
|
PART I
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 1B.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
PART II
|
|
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 7.
|
||
|
|
|
Item 7A.
|
||
|
|
|
Item 8.
|
||
|
|
|
Item 9.
|
||
|
|
|
Item 9A.
|
||
|
|
|
Item 9B.
|
||
|
|
|
|
PART III
|
|
|
|
|
Item 10.
|
||
|
|
|
Item 11.
|
||
|
|
|
Item 12.
|
||
|
|
|
Item 13.
|
||
|
|
|
Item 14.
|
||
|
|
|
|
PART IV
|
|
|
|
|
Item 15.
|
||
Item 16.
|
ITEM 1.
|
BUSINESS
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
$
|
3,127,837
|
|
|
$
|
2,720,242
|
|
|
$
|
2,583,081
|
|
|
|
Reinsurance
|
2,428,436
|
|
|
2,249,966
|
|
|
2,020,649
|
|
|
|||
|
Total
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
$
|
4,603,730
|
|
|
|
|
|
|
|
|
|
|
•
|
Property
: provides physical loss or damage, business interruption and machinery breakdown cover for virtually all types of property, including commercial buildings, residential premises, construction projects and onshore energy installations. This line of business includes both primary and excess risks, some of which are catastrophe-exposed.
|
•
|
Marine
: provides cover for traditional marine classes, including offshore energy, cargo, liability, recreational marine, fine art, specie, hull and war. Offshore energy coverage includes physical damage, business interruption, operators extra expense and liability coverage for all aspects of offshore upstream energy, from exploration and construction through the operation and distribution phases.
|
•
|
Terrorism
: provides coverage for physical damage and business interruption of an insured following an act of terrorism, and includes kidnap and ransom, and crisis management insurance.
|
•
|
Aviation
: provides hull and liability and specific war coverage primarily for passenger airlines but also for cargo operations, general aviation operations, airports, aviation authorities, security firms and product manufacturers.
|
•
|
Credit and Political Risk:
provides credit and political risk insurance products for banks, commodity traders, corporations and multilateral and export credit agencies. Cover is provided for a range of risks including sovereign default, credit default, political violence, currency inconvertibility and non-transfer, expropriation, aircraft non-repossession and contract frustration due to political events.
|
•
|
Professional Lines:
provides directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy insurance, medical malpractice and other financial insurance related covers for commercial enterprises, financial institutions and not-for-profit organizations. This business is predominantly written on a claims-made basis.
|
•
|
Liability:
primarily targets primary and low/mid-level excess and umbrella commercial liability risks in the U.S. wholesale markets in addition to primary and excess of loss employers, public, and products liability predominately in the U.K. Target industry sectors include construction, manufacturing, transportation and trucking and other services.
|
•
|
Accident and Health:
includes accidental death, travel insurance and specialty health products for employer and affinity groups, as well as accident and health reinsurance for catastrophic or per life events on a quota share and/or excess of loss basis, with aggregate and/or per person deductibles.
|
•
|
Discontinued Lines - Novae:
includes those lines of business that Novae exited or placed into run-off in the fourth quarter of 2016 and in the first quarter of 2017. These discontinued insurance lines include Financial Institutions, Professional Indemnity, International Liability, and International Direct Property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Marsh & McLennan Companies Inc.
|
$
|
352,661
|
|
|
11
|
%
|
|
$
|
388,793
|
|
|
14
|
%
|
|
$
|
416,876
|
|
|
16
|
%
|
|
|
Aon plc
|
410,145
|
|
|
13
|
%
|
|
402,779
|
|
|
15
|
%
|
|
401,612
|
|
|
16
|
%
|
|
|||
|
Willis Tower Watson PLC
|
276,085
|
|
|
9
|
%
|
|
253,887
|
|
|
9
|
%
|
|
314,615
|
|
|
12
|
%
|
|
|||
|
Other brokers
[a]
|
1,512,725
|
|
|
48
|
%
|
|
1,285,091
|
|
|
47
|
%
|
|
1,202,747
|
|
|
47
|
%
|
|
|||
|
Managing general agencies and underwriters
[a]
|
576,221
|
|
|
19
|
%
|
|
389,692
|
|
|
15
|
%
|
|
247,231
|
|
|
9
|
%
|
|
|||
|
Total
|
$
|
3,127,837
|
|
|
100
|
%
|
|
$
|
2,720,242
|
|
|
100
|
%
|
|
$
|
2,583,081
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Catastrophe:
provides protection for most catastrophic losses that are covered in the underlying insurance policies written by our cedants. The exposure in the underlying policies is principally property exposure but also covers other exposures including workers compensation, personal accident and life. The principal perils in this portfolio are hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. We underwrite catastrophe reinsurance principally on an excess of loss basis.
|
•
|
Property:
provides protection for property damage and related losses resulting from natural and man-made perils contained in underlying personal and commercial policies. While our predominant exposure is to property damage, other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. While our most significant exposures typically relate to losses from windstorms, tornadoes and earthquakes, we are also exposed to other perils such as freezes, riots, floods, industrial explosions, fires, hail and a number of other loss events. We assume business on both a proportional and excess of loss basis.
|
•
|
Professional Lines:
covers directors’ and officers’ liability, employment practices liability, medical malpractice, professional indemnity, environmental liability and miscellaneous errors and omissions insurance risks. The underlying business is predominantly written on a claims-made basis. Business is written on both a proportional and excess of loss basis.
|
•
|
Credit and Surety:
provides reinsurance of trade credit insurance products and includes both proportional and excess of loss structures. The underlying insurance indemnifies sellers of goods and services in the event of a payment default by the buyer of those goods and services. The Company provides credit insurance coverage to mortgage guaranty insurers and government sponsored entities. Coverage for losses arising from a broad array of surety bonds issued by insurers to satisfy regulatory demands or contract obligations in a variety of jurisdictions around the world are also offered.
|
•
|
Motor:
provides cover to insurers for motor liability and property damage losses arising out of any one occurrence. A loss occurrence can involve one or many claimants where the ceding insurer aggregates the claims from the occurrence. We offer traditional proportional and non-proportional reinsurance as well as structured solutions.
|
•
|
Liability:
provides cover to insurers of standard casualty business, excess and surplus casualty business and specialty casualty programs. The primary focus of the underlying business is general liability, although workers' compensation and auto liability are also written.
|
•
|
Agriculture:
provides protection for risks associated with the production of food and fiber on a global basis for primary insurance companies writing multi-peril crop insurance, crop hail, and named peril covers, as well as custom risk transfer mechanisms for agricultural dependent industries with exposures to crop yield and/or price deviations. We provide both proportional and aggregate stop loss reinsurance.
|
•
|
Engineering:
provides protection for all types of construction risks and risks associated with erection, testing and commissioning of machinery and plants during the construction stage. This line of business also includes coverage for losses arising from operational failures of machinery, plant and equipment and electronic equipment as well as business interruption.
|
•
|
Marine and Other:
includes marine, aviation and personal accident reinsurance.
|
•
|
Discontinued Lines - Novae
:
includes those lines of business that Novae exited or placed into run-off in the fourth quarter of 2016 and in the first quarter of 2017. These discontinued reinsurance lines include Motor Reinsurance, General Liability Reinsurance, International Facultative Property.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Marsh & McLennan Companies Inc.
|
$
|
760,682
|
|
|
31
|
%
|
|
$
|
677,677
|
|
|
30
|
%
|
|
$
|
580,843
|
|
|
29
|
%
|
|
|
Aon plc
|
547,994
|
|
|
23
|
%
|
|
556,577
|
|
|
25
|
%
|
|
439,069
|
|
|
22
|
%
|
|
|||
|
Willis Tower Watson PLC
|
378,185
|
|
|
16
|
%
|
|
338,188
|
|
|
15
|
%
|
|
295,244
|
|
|
15
|
%
|
|
|||
|
Capsicum & Gallagher
|
233,868
|
|
|
10
|
%
|
|
222,461
|
|
|
10
|
%
|
|
250,662
|
|
|
12
|
%
|
|
|||
|
Other brokers
|
331,106
|
|
|
14
|
%
|
|
319,459
|
|
|
14
|
%
|
|
327,365
|
|
|
16
|
%
|
|
|||
|
Direct
|
176,600
|
|
|
6
|
%
|
|
135,604
|
|
|
6
|
%
|
|
127,466
|
|
|
6
|
%
|
|
|||
|
Total
|
$
|
2,428,436
|
|
|
100
|
%
|
|
$
|
2,249,966
|
|
|
100
|
%
|
|
$
|
2,020,649
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Protect our capital base and earnings by monitoring our risks against our stated risk appetite and limits;
|
•
|
Promote a sound risk management culture through disciplined and informed risk taking;
|
•
|
Enhance value creation and contribute to an optimal risk-return profile by providing the basis for efficient capital deployment;
|
•
|
Support our group-wide decision making process by providing reliable and timely risk information; and
|
•
|
Safeguard our reputation.
|
•
|
The Investment & Finance Committee oversees the Group’s investment activities by, among other things, monitoring market risks, the performance of our investment managers and the Group’s asset-liability management, liquidity positions and investment policies and guidelines. The Investment & Finance Committee also prepares the Group’s strategic asset allocation and presents it to the Finance Committee of the Board for approval.
|
•
|
The Reinsurance Security Committee ("RSC") sets out the financial security requirements of our reinsurance counterparties and approves reinsurance counterparties, as needed.
|
•
|
The Cyber Enterprise Product Board oversees and facilitates the Group's Risk framework for the identification, management, mitigation and measurement of cyber risk exposures. It facilitates the embedding of effective risk management practices for cyber exposures throughout the Company, based on currently available information.
|
•
|
The Internal Model Committee oversees the Group's Internal Model framework, including the key model assumptions, methodology and validation framework.
|
•
|
The Operational Risk Committee oversees the Group's Operational Risk framework for the identification, management, mitigation and measurement of operational risk and facilitates the embedding of effective operational risk management practices throughout the Group.
|
•
|
The Emerging Risks Committee oversees the processes for identifying, assessing and monitoring current and potential emerging risks.
|
•
|
Excess of loss per risk – the reinsurer indemnifies us for loss amounts of all individual policies effected, defined in the treaty terms and conditions. Per risk treaties are an effective means of risk mitigation against large single losses (e.g. a large fire claim).
|
•
|
Catastrophe excess of loss – provides aggregate loss cover for our insurance portfolio against the accumulation of losses incurred from a single event (e.g. windstorm).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At January 1,
(in millions of U.S. dollars)
|
2018
|
|
2017
|
|
||||||||||||||||||||||
|
Single zone/single event
|
|
Perils
|
50 Year
Return
Period
|
|
100 Year
Return
Period
|
|
250 Year
Return
Period
|
|
50 Year
Return
Period
|
|
100 Year
Return
Period
|
|
250 Year
Return
Period
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Southeast
|
|
U.S. Hurricane
|
$
|
350
|
|
|
$
|
430
|
|
|
$
|
848
|
|
|
$
|
461
|
|
|
$
|
534
|
|
|
$
|
811
|
|
|
|
Northeast
|
|
U.S. Hurricane
|
58
|
|
|
164
|
|
|
297
|
|
|
38
|
|
|
105
|
|
|
223
|
|
|
||||||
|
Mid-Atlantic
|
|
U.S. Hurricane
|
121
|
|
|
273
|
|
|
401
|
|
|
100
|
|
|
256
|
|
|
453
|
|
|
||||||
|
Gulf of Mexico
|
|
U.S. Hurricane
|
237
|
|
|
302
|
|
|
400
|
|
|
332
|
|
|
405
|
|
|
468
|
|
|
||||||
|
California
|
|
Earthquake
|
241
|
|
|
328
|
|
|
527
|
|
|
381
|
|
|
446
|
|
|
561
|
|
|
||||||
|
Europe
|
|
Windstorm
|
232
|
|
|
327
|
|
|
467
|
|
|
145
|
|
|
205
|
|
|
273
|
|
|
||||||
|
Japan
|
|
Earthquake
|
168
|
|
|
232
|
|
|
336
|
|
|
121
|
|
|
157
|
|
|
276
|
|
|
||||||
|
Japan
|
|
Windstorm
|
60
|
|
|
99
|
|
|
140
|
|
|
35
|
|
|
60
|
|
|
108
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Major failures and disasters which could cause a severe disruption to working environments, facilities and personnel, represent a significant operational risk to us. Our Business Continuity Management framework strives to protect critical business functions from these effects to enable us to carry out our core tasks in time and at the quality required. During
2017
, we continued to review our Business Continuity Planning procedures through cyclical planned tests.
|
•
|
We have developed a number of Information Technology ("IT") platforms, applications and security controls to support our business activities worldwide. Dedicated security standards are in place for our IT systems to ensure the proper use, availability and protection of our information assets.
|
•
|
Our use of third party vendors exposes us to a number of increased operational risks, including the risk of security breaches, fraud, non-compliance with laws and regulations or internal guidelines and inadequate service. We manage material third party vendor risk, by, among other things, performing a thorough risk assessment on potential large vendors, reviewing a vendor’s financial stability, ability to provide ongoing service and business continuity planning.
|
•
|
We maintain cash and cash equivalents and high quality, liquid investment portfolios to meet expected outflows, as well as those that could result from a range of potential stress events. We place internal limits on the maximum percentage of cash and investments which may be in an illiquid form as well as a minimum percentage of our investment portfolio to mature within a defined timeframe.
|
•
|
We maintain committed borrowing facilities, as well as access to diverse funding sources to cover contingencies. Funding sources include asset sales, external debt issuances and lines of credit.
|
•
|
Internal risk capital - We use our internal capital model to assess the capital consumption of our business, measuring and monitoring the potential aggregation of risk at extreme return periods.
|
•
|
Regulatory capital requirements - In each country in which we operate, the local regulator specifies the minimum amount and type of capital that each of the regulated entities must hold in support of their liabilities and business plans. We target to hold, in addition to the minimum capital required to comply with the solvency requirements, an adequate buffer to ensure that each of our operating entities meets its local capital requirements. For further information refer to Item 8, Note 21 of the Consolidated Financial Statements, 'Statutory Financial Information' section of this report.
|
•
|
Rating agency capital requirements - Rating agencies apply their own models to evaluate the relationship between the required risk capital of a company and its available capital resources. The assessment of capital adequacy is usually an integral part of the rating agency process. Meeting rating agency capital requirements and maintaining strong credit ratings are strategic business objectives of the Company. For further information on our financial strength refer to Item 7, 'Liquidity and Capital Resources' section of this report.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
$835 million, in aggregate, primarily related to U.S. weather-related events, Hurricanes Harvey, Irma and Maria, Mexico earthquakes and California wildfires in 2017;
|
•
|
$204 million, in aggregate, relating to U.S. weather-related events, Hurricane Matthew, Fort McMurray wildfires, the Japanese, Ecuadorian and South Island earthquakes, North Calgary hailstorm and European floods in 2016;
|
•
|
$201 million, in aggregate, relating to various worldwide catastrophe and weather-related events in 2013;
|
•
|
$331 million in relation to Storm Sandy in 2012;
|
•
|
$789 million, in aggregate, in relation to the earthquakes near Christchurch, New Zealand, the Japanese earthquake and tsunami, Australian weather events and the Thai floods in 2011; and
|
•
|
$256 million, in aggregate, in relation to the Chilean and September New Zealand earthquakes in 2010.
|
•
|
Capital - Lloyd's can vary the method by which they solvency capital requirement is calculated; be subject to a reduced ability to trade in certain classes of business at current levels as a consequence of downgrading of the Lloyd's market; experience reduced underwriting capacity due to a reduction in the funds held in trust at Lloyd's (as a result of changes in the market value of investments or otherwise).
|
•
|
Licensing - Lloyd's licenses may not be available or be subject to revised conditions by events such as: credit downgrading of Lloyd's reducing the ability to trade in certain classes of business at current levels; being required by U.S. regulators to increase the level of funding required as minimum deposits for the protection of U.S. policyholders.
|
•
|
Lloyd's Oversight - being subject to potential changes in business strategy due to requirements of the Lloyd's Franchise Board (which is responsible for the day-to-day management of the Lloyd's market); modification or rejection by Lloyd's of the annual syndicate business plan or proposals by our managing agency to change the plan.
|
•
|
Reputational - issues arising from the actions of other Lloyd's syndicates or actions against the Lloyd's franchise as a whole.
|
•
|
Providing reinsurance capacity in markets and to consumers that we target;
|
•
|
Requiring our further participation in industry pools and guaranty associations;
|
•
|
Expanding the scope of coverage under existing policies; e.g., following large disasters;
|
•
|
Further regulating the terms of (re)insurance contracts; or
|
•
|
Disproportionately benefiting the companies of one country over those of another.
|
•
|
actual or anticipated variations in our quarterly results, including as a result of catastrophes or our investment performance;
|
•
|
any share repurchase program;
|
•
|
changes in market valuation of companies in the insurance and reinsurance industry;
|
•
|
changes in expectations of future financial performance or changes in estimates of securities analysts;
|
•
|
fluctuations in stock market processes and volumes;
|
•
|
issuances or sales of common shares or other securities in the future;
|
•
|
the addition or departure of key personnel;
|
•
|
changes in tax law; and
|
•
|
announcements by us or our competitors of acquisitions, investments or strategic alliances.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
||||||||||||||||||||
|
|
High
|
|
Low
|
|
Dividends
Declared
|
|
High
|
|
Low
|
|
Dividends
Declared |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
1st Quarter
|
$
|
71.06
|
|
|
$
|
63.67
|
|
|
$
|
0.38
|
|
|
$
|
56.39
|
|
|
$
|
51.67
|
|
|
$
|
0.35
|
|
|
|
2nd Quarter
|
$
|
68.51
|
|
|
$
|
62.00
|
|
|
$
|
0.38
|
|
|
$
|
56.38
|
|
|
$
|
51.01
|
|
|
$
|
0.35
|
|
|
|
3rd Quarter
|
$
|
66.44
|
|
|
$
|
52.15
|
|
|
$
|
0.38
|
|
|
$
|
57.33
|
|
|
$
|
52.67
|
|
|
$
|
0.35
|
|
|
|
4th Quarter
|
$
|
58.03
|
|
|
$
|
49.42
|
|
|
$
|
0.39
|
|
|
$
|
66.23
|
|
|
$
|
53.66
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
Total Number
of Shares
Purchased
(a)
|
Average
Price Paid
Per Share
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
Maximum Number (or Approximate
Dollar Value) of Shares That
May Yet Be Purchased Under the
Plans or Programs
(b)
|
||||||
October 1-31, 2017
|
806
|
|
|
$57.31
|
|
—
|
|
|
$738.8
|
million
|
November 1-30, 2017
|
1,537
|
|
|
$54.37
|
|
—
|
|
|
$738.8
|
million
|
December 1-31, 2017
|
1,332
|
|
|
$51.06
|
|
—
|
|
|
$738.8
|
million
|
Total
|
3,675
|
|
|
—
|
|
|
$738.8
|
million
|
(a)
|
Shares are repurchased from employees to satisfy withholding tax liabilities upon the vesting of restricted stock awards, restricted stock units, and the exercise of stock options. Share repurchases from employees are excluded from the Board-authorized share repurchase plan.
|
(b)
|
Following the offer to acquire Novae on July 5, 2017, the Company suspended its open market share repurchase program. AXIS Capital acquired the shares of Novae on October 2, 2017. On December 31, 2017, authorization under the Board-authorized share repurchase plan for common share repurchases through 2017 expired. A common share repurchase plan has not been authorized for 2018.
|
Period
|
Total Number
of Shares Purchased (a) |
Average
Price Paid Per Share |
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number (or Approximate
Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs |
||||||
April 1-30, 2017
|
14,042,955
|
|
|
$25.00
|
|
—
|
|
|
$0.0
|
million
|
Total
|
14,042,955
|
|
|
|
—
|
|
|
$0.0
|
million
|
(a)
|
On April 17, 2017, the Company repurchased the remaining
14,042,955
of its 6.875% Series C preferred shares for an aggregate liquidation preference of
$351 million
.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
At and For the year Ended December 31,
|
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
|
|
(in thousands, except per share amounts)
|
|
||||||||||||||||||
|
Selected Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross premiums written
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
$
|
4,603,730
|
|
|
$
|
4,711,519
|
|
|
$
|
4,697,041
|
|
|
|
Net premiums earned
|
4,148,760
|
|
|
3,705,625
|
|
|
3,686,417
|
|
|
3,870,999
|
|
|
3,707,065
|
|
|
|||||
|
Net investment income
|
400,805
|
|
|
353,335
|
|
|
305,336
|
|
|
342,766
|
|
|
409,312
|
|
|
|||||
|
Net realized investment gains (losses)
|
28,226
|
|
|
(60,525
|
)
|
|
(138,491
|
)
|
|
132,108
|
|
|
75,564
|
|
|
|||||
|
Net losses and loss expenses
|
3,287,772
|
|
|
2,204,197
|
|
|
2,176,199
|
|
|
2,186,722
|
|
|
2,134,195
|
|
|
|||||
|
Acquisition costs
|
823,591
|
|
|
746,876
|
|
|
718,112
|
|
|
737,197
|
|
|
664,191
|
|
|
|||||
|
General and administrative expenses
|
579,428
|
|
|
602,717
|
|
|
596,821
|
|
|
621,876
|
|
|
575,390
|
|
|
|||||
|
Interest expense and financing costs
|
54,811
|
|
|
51,360
|
|
|
50,963
|
|
|
74,695
|
|
|
61,979
|
|
|
|||||
|
Preferred share dividends
|
46,810
|
|
|
46,597
|
|
|
40,069
|
|
|
40,088
|
|
|
40,474
|
|
|
|||||
|
Net income (loss) available to common shareholders
(1) (2) (3) (4) (5)
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
$
|
770,657
|
|
|
$
|
683,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic earnings (loss) per common share
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
|
$
|
6.10
|
|
|
$
|
7.38
|
|
|
$
|
6.02
|
|
|
|
Diluted earnings (loss) per common share
|
(4.94
|
)
|
|
5.08
|
|
|
6.04
|
|
|
7.29
|
|
|
5.93
|
|
|
|||||
|
Cash dividends declared per common share
|
$
|
1.53
|
|
|
$
|
1.43
|
|
|
$
|
1.22
|
|
|
$
|
1.10
|
|
|
$
|
1.02
|
|
|
|
Basic weighted average common shares outstanding
|
84,108
|
|
|
90,772
|
|
|
98,609
|
|
|
104,368
|
|
|
113,636
|
|
|
|||||
|
Diluted weighted average common shares outstanding
|
84,108
|
|
|
91,547
|
|
|
99,629
|
|
|
105,713
|
|
|
115,328
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating Ratios:
(6)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net loss and loss expense ratio
|
79.2
|
%
|
|
59.5
|
%
|
|
59.0
|
%
|
|
56.5
|
%
|
|
57.6
|
%
|
|
|||||
|
Acquisition cost ratio
|
19.9
|
%
|
|
20.2
|
%
|
|
19.5
|
%
|
|
19.0
|
%
|
|
17.9
|
%
|
|
|||||
|
General and administrative expense ratio
|
14.0
|
%
|
|
16.2
|
%
|
|
16.2
|
%
|
|
16.1
|
%
|
|
15.5
|
%
|
|
|||||
|
Combined ratio
|
113.1
|
%
|
|
95.9
|
%
|
|
94.7
|
%
|
|
91.6
|
%
|
|
91.0
|
%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
$
|
14,784,210
|
|
|
$
|
13,459,507
|
|
|
$
|
13,386,118
|
|
|
$
|
13,778,911
|
|
|
$
|
13,780,336
|
|
|
|
Cash and cash equivalents
|
1,363,786
|
|
|
1,241,507
|
|
|
1,174,751
|
|
|
1,209,695
|
|
|
987,876
|
|
|
|||||
|
Reinsurance recoverable on unpaid and paid losses
|
3,338,840
|
|
|
2,334,922
|
|
|
2,096,104
|
|
|
1,926,145
|
|
|
1,929,988
|
|
|
|||||
|
Total assets
|
24,760,177
|
|
|
20,813,691
|
|
|
19,981,891
|
|
|
19,955,736
|
|
|
19,634,784
|
|
|
|||||
|
Reserve for losses and loss expenses
|
12,997,553
|
|
|
9,697,827
|
|
|
9,646,285
|
|
|
9,596,797
|
|
|
9,582,140
|
|
|
|||||
|
Unearned premiums
|
3,641,399
|
|
|
2,969,498
|
|
|
2,760,889
|
|
|
2,735,376
|
|
|
2,683,849
|
|
|
|||||
|
Senior notes and notes payable
|
1,376,529
|
|
|
992,950
|
|
|
991,825
|
|
|
990,790
|
|
|
995,855
|
|
|
|||||
|
Total shareholders’ equity attributable to AXIS Capital
|
$
|
5,341,264
|
|
|
$
|
6,272,370
|
|
|
$
|
5,866,882
|
|
|
$
|
5,821,121
|
|
|
$
|
5,817,962
|
|
|
|
Book value per common share
(7)(8)
|
$
|
54.91
|
|
|
$
|
59.54
|
|
|
$
|
55.32
|
|
|
$
|
52.23
|
|
|
$
|
47.40
|
|
|
|
Diluted book value per common share
(7)(8)
|
$
|
53.88
|
|
|
$
|
58.27
|
|
|
$
|
54.08
|
|
|
$
|
50.63
|
|
|
$
|
45.80
|
|
|
|
Common shares outstanding
(8)
|
83,161
|
|
|
86,441
|
|
|
94,708
|
|
|
99,426
|
|
|
109,485
|
|
|
|||||
|
Common shares outstanding - diluted
(8)
|
84,745
|
|
|
88,317
|
|
|
96,883
|
|
|
102,577
|
|
|
113,325
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During 2017, the Company recognized transaction and reorganization expenses of
$27 million
related to the acquisition and integration of Novae. During 2015, the Company implemented a number of profitability enhancement initiatives, which resulted in recognition of transaction and reorganization expenses of
$46 million
and additional general and administrative expenses of
$5 million
. Refer to Item 8, Note 18 of the Consolidated Financial Statements '
Transaction and Reorganization Expenses
' for further details.
|
(2)
|
During 2017, the Company recognized a tax expense of
$42 million
due to the revaluation of net deferred tax assets pursuant to the U.S. Tax Reform. Refer to Item 8, Note 19 of the Consolidated Financial Statements
'Income Taxes'
for further details.
|
(3)
|
During 2017, the Company recognized amortization of value of business acquired of
$50 million
related to the acquisition of Novae. Refer to Item 8, Note 3 and Note 5 of the Consolidated Financial Statements '
Business Combinations
' and '
Goodwill and Intangible Assets
' for further details.
|
(4)
|
During 2015, the Company accepted a request from PartnerRe Ltd., a Bermuda exempted company ("PartnerRe") to terminate the Agreement and Plan of Amalgamation (the "Amalgamation Agreement") with the Company. PartnerRe paid the Company a termination fee of $280 million.
|
(5)
|
During 2015, the Company early adopted the Accounting Standard Update ('ASU') 2015-02, 'Amendments to the Consolidation Analysis', issued by the Financial Accounting Standards Board. The adoption of this amended accounting guidance resulted in the Company concluding that it is no longer required to consolidate the results of operations and the financial position of Ventures Re. The Company adopted this revised accounting guidance using the modified retrospective approach and ceased to consolidate Ventures Re effective as of January 1, 2015. The 2014 net income available to common shareholders includes an amount attributable from noncontrolling interests of $6,181.
|
(6)
|
Operating ratios are calculated by dividing the respective operating expenses by net premiums earned.
|
(7)
|
Book value per common share and diluted book value per common share are based on total common shareholders’ equity divided by common shares and diluted common share equivalents outstanding, respectively.
|
(8)
|
Calculations and share amounts at December 31, 2015 include 1,358,380 additional shares delivered to the Company in January 2016 under the Company's Accelerated Share Repurchase ("ASR") agreement entered into on August 17, 2015. Refer to Item 8, Note 14
of the Consolidated Financial Statements
'Shareholders' Equity'
for further details.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Net loss attributable to common shareholders of
$416 million
, or
$(4.94)
per common share and per diluted common share
|
•
|
Non-GAAP operating loss
(1)
of
$265 million
, or
$(3.15)
per diluted common share
(1)
|
•
|
Gross premiums written of
$5.6 billion
|
•
|
Net premiums written of
$4.0 billion
|
•
|
Net premiums earned of
$4.1 billion
|
•
|
Net favorable prior year reserve development of
$200 million
|
•
|
Estimated pre-tax catastrophe and weather-related losses, net of reinstatement premiums, of
$835
million compared to
$204 million
for 2016
|
•
|
Underwriting loss
(2)
of
$413 million
and combined ratio of
113.1%
|
•
|
Net investment income of
$401 million
|
•
|
Net realized investment gains of
$28 million
|
•
|
Foreign exchange losses of
$135 million
|
•
|
Total cash and investments of
$16.1 billion
; fixed maturities, cash and short-term securities comprise
87%
of total cash and investments and have an average credit rating of
AA-
|
•
|
Total assets of
$24.8 billion
|
•
|
Reserve for losses and loss expenses of
$13.0 billion
and reinsurance recoverable of
$3.3 billion
|
•
|
Total debt of
$1.4 billion
and a debt to total capital ratio of
20.5%
|
•
|
Total common shares repurchased were
4.3 million
for
$286 million
|
•
|
Following the offer to acquire Novae Group plc ("Novae") on July 5, 2017, we suspended our open market share repurchase program. We acquired the shares of Novae on October 2, 2017.
|
•
|
On December 31, 2017, the authorization under our Board-authorized share repurchase program for common share repurchases expired. A common share repurchase program has not been authorized for 2018.
|
•
|
Common shareholders’ equity of
$4.6 billion
; diluted book value per common share of
$53.88
|
(1)
|
Non-GAAP operating income (loss) and non-GAAP operating income (loss) per diluted common share are non-GAAP financial measures as defined in Item 10(e) of SEC Regulation S-K. The reconciliations of non-GAAP measures to the most comparable GAAP financial measures (net income (loss) available to common shareholders and diluted earnings per common share, respectively) are provided in the '
Results of Operations'
, which is included in the '
Executive Summary'
section of this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A").
|
(2)
|
Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to net income (loss) before income taxes and interest in income (loss) of equity method investments, the most comparable GAAP measure, is presented in the '
Results of Operations'
, which is included in the '
Executive Summary'
section of this MD&A.
|
•
|
continued growth of our accident and health lines, which is focused on specialty accident and health products;
|
•
|
growth of our syndicate at Lloyd's of London ("Lloyd's") which provides us with access to Lloyd's worldwide licenses and an extensive distribution network. During the first quarter of 2016 we commenced writing business through our underwriting division at Lloyd's in China.
|
•
|
continued implementation of a more focused distribution strategy and increased our scale and relevance in key markets;
|
•
|
continued rebalancing of our portfolio towards less volatile lines of business that carry attractive rates;
|
•
|
continued improvement in the effectiveness and efficiency of our operating platforms and processes;
|
•
|
increased investment in data and analytics; and
|
•
|
broadened risk-funding sources and developed vehicles that utilize third-party capital including:
|
•
|
Our investment in Harrington Reinsurance Holdings Limited ("Harrington"), the parent company of Harrington Re Ltd. ("Harrington Re"), an independent reinsurance company jointly sponsored by AXIS Capital and The Blackstone Group L.P. ("Blackstone"). Harrington Re’s strategy is to combine a multi-line reinsurance portfolio with a diversified allocation to alternative investment strategies to earn attractive risk-adjusted returns. Harrington has developed a portfolio that optimizes the risk-reward characteristics of both assets and liabilities, leveraging the respective strengths of AXIS Capital and Blackstone while deploying a disciplined and fully integrated approach to both underwriting and investing; and
|
•
|
AXIS Ventures Reinsurance Limited, which manages capital for investors interested in deploying funds directly into the property-catastrophe and other short-tail business.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Underwriting revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net premiums earned
|
$
|
4,148,760
|
|
|
12%
|
|
$
|
3,705,625
|
|
|
1%
|
|
$
|
3,686,417
|
|
|
|
Other insurance related income (losses)
|
(1,240
|
)
|
|
nm
|
|
7,222
|
|
|
nm
|
|
(2,953
|
)
|
|
|||
|
Underwriting expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net losses and loss expenses
|
(3,287,772
|
)
|
|
49%
|
|
(2,204,197
|
)
|
|
1%
|
|
(2,176,199
|
)
|
|
|||
|
Acquisition costs
|
(823,591
|
)
|
|
10%
|
|
(746,876
|
)
|
|
4%
|
|
(718,112
|
)
|
|
|||
|
Underwriting general and administrative expenses
(1)
|
(449,483
|
)
|
|
(7%)
|
|
(482,701
|
)
|
|
(1%)
|
|
(486,911
|
)
|
|
|||
|
Underwriting Income (Loss)
|
$
|
(413,326
|
)
|
|
|
|
$
|
279,073
|
|
|
|
|
$
|
302,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
(1)
|
(129,945
|
)
|
|
8%
|
|
(120,016
|
)
|
|
9%
|
|
(109,910
|
)
|
|
|||
|
Net investment income
|
400,805
|
|
|
13%
|
|
353,335
|
|
|
16%
|
|
305,336
|
|
|
|||
|
Net realized investment gains (losses)
|
28,226
|
|
|
nm
|
|
(60,525
|
)
|
|
(56%)
|
|
(138,491
|
)
|
|
|||
|
Other (expenses) revenues, net
|
(189,548
|
)
|
|
nm
|
|
69,935
|
|
|
36%
|
|
51,349
|
|
|
|||
|
Termination fees received
|
—
|
|
|
nm
|
|
—
|
|
|
nm
|
|
280,000
|
|
|
|||
|
Bargain purchase gain
|
15,044
|
|
|
nm
|
|
—
|
|
|
nm
|
|
—
|
|
|
|||
|
Transaction and reorganization expenses
|
(26,718
|
)
|
|
nm
|
|
—
|
|
|
nm
|
|
(45,867
|
)
|
|
|||
|
Amortization of value of business acquired
|
(50,104
|
)
|
|
nm
|
|
—
|
|
|
nm
|
|
—
|
|
|
|||
|
Amortization of intangibles
|
(2,543
|
)
|
|
nm
|
|
—
|
|
|
nm
|
|
—
|
|
|
|||
|
Income (loss) before income taxes and interest in income (loss) of equity method investments
|
(368,109
|
)
|
|
|
|
521,802
|
|
|
|
|
644,659
|
|
|
|||
|
Income tax (expense) benefit
|
7,542
|
|
|
nm
|
|
(6,340
|
)
|
|
nm
|
|
(3,028
|
)
|
|
|||
|
Interest in loss of equity method investments
|
(8,402
|
)
|
|
nm
|
|
(2,094
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Net income (loss)
|
(368,969
|
)
|
|
|
|
513,368
|
|
|
|
|
641,631
|
|
|
|||
|
Preferred share dividends
|
(46,810
|
)
|
|
—%
|
|
(46,597
|
)
|
|
16%
|
|
(40,069
|
)
|
|
|||
|
Loss on repurchase of preferred shares
|
—
|
|
|
nm
|
|
$
|
(1,309
|
)
|
|
nm
|
|
$
|
—
|
|
|
|
|
Net income available to common shareholders
|
$
|
(415,779
|
)
|
|
nm
|
|
$
|
465,462
|
|
|
(23%)
|
|
$
|
601,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net realized investment gains (losses), net of tax
(2)
|
(26,204
|
)
|
|
nm
|
|
62,355
|
|
|
(54%)
|
|
135,320
|
|
|
|||
|
Foreign exchange gains (losses), net of tax
(3)
|
126,960
|
|
|
nm
|
|
(119,181
|
)
|
|
20%
|
|
(99,291
|
)
|
|
|||
|
Revaluation of net deferred tax
(4)
|
41,629
|
|
|
nm
|
|
—
|
|
|
nm
|
|
—
|
|
|
|||
|
Termination fee received
(4)
|
—
|
|
|
nm
|
|
—
|
|
|
nm
|
|
(280,000
|
)
|
|
|||
|
Bargain purchase gain
(4)
|
(15,044
|
)
|
|
nm
|
|
—
|
|
|
nm
|
|
—
|
|
|
|||
|
Transaction and reorganization expenses, net of tax
(5)
|
23,879
|
|
|
nm
|
|
—
|
|
|
nm
|
|
42,924
|
|
|
|||
|
Loss on repurchase of preferred shares
(4)
|
—
|
|
|
nm
|
|
1,309
|
|
|
nm
|
|
—
|
|
|
|||
|
Non-GAAP operating income (loss)
|
$
|
(264,559
|
)
|
|
nm
|
|
$
|
409,945
|
|
|
2%
|
|
$
|
400,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Underwriting-related general and administrative expenses is a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP measure, also included corporate expenses of
$129,945
,
$120,016
and
$109,910
for the year ended
December 31, 2017
,
2016
and 2015, respectively. Refer to '
Other (Expenses) Revenues, Net'
for additional information related to the corporate expenses. Also, refer to '
Non-GAAP Financial Measures'
for additional information.
|
(2)
|
Tax cost (benefit) of
$2,022
,
$1,830
and
$(3,171)
for the
year ended
December 31, 2017
,
2016
and 2015, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.
|
(3)
|
Tax cost (benefit) of
($7,777)
,
$2,114
and
$3,021
for the
year ended
December 31, 2017
,
2016
and 2015, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.
|
(4)
|
Tax impact is $nil.
|
(5)
|
Tax cost (benefit) of
($2,839)
, $nil and
$(2,943)
for the
year ended
December 31, 2017
,
2016
and 2015, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Net income (loss) available to common shareholders
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
|
Non-GAAP operating income (loss)
|
$
|
(264,559
|
)
|
|
$
|
409,945
|
|
|
$
|
400,515
|
|
|
|
Weighted average common shares and common share equivalents - diluted
(1)
|
84,108
|
|
|
91,547
|
|
|
99,629
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Earnings (loss) per common share - diluted
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
|
$
|
6.04
|
|
|
|
Non-GAAP operating income (loss) per common share - diluted
|
$
|
(3.15
|
)
|
|
$
|
4.48
|
|
|
$
|
4.02
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Average common shareholders’ equity
|
$
|
4,856,280
|
|
|
$
|
5,192,668
|
|
|
$
|
5,216,159
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Annualized return on average common equity
(2)
|
(8.6
|
%)
|
|
9.0
|
%
|
|
11.5
|
%
|
|
|||
|
Annualized Non-GAAP operating ROACE
(3)
|
(5.4
|
%)
|
|
7.9
|
%
|
|
7.7
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
Refer to Item 8, Note 13 to the Consolidated Financial Statements
'Earnings Per Common Share'
for further details on the dilution calculation.
|
(2)
|
Return on average common equity ("ROACE") is calculated by dividing net income available to common shareholders for the year by the average shareholders' equity determined by using the common shareholders' equity balances at the beginning and end of the year.
|
(3)
|
Non-GAAP operating ROACE, a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K, is calculated by dividing annualized operating income for the period by the average common shareholders' equity.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended and at December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
ROACE
(1)
|
(8.6
|
%)
|
|
9.0
|
%
|
|
11.5
|
%
|
|
|||
|
Non-GAAP operating ROACE
(2)
|
(5.4
|
%)
|
|
7.9
|
%
|
|
7.7
|
%
|
|
|||
|
Diluted book value per common share
(3)(4)
|
$
|
53.88
|
|
|
$
|
58.27
|
|
|
$
|
54.08
|
|
|
|
Cash dividends declared per common share
|
1.53
|
|
|
1.43
|
|
|
1.22
|
|
|
|||
|
Increase (decrease) in diluted book value per common share adjusted for dividends
|
$
|
(2.86
|
)
|
|
$
|
5.62
|
|
|
$
|
4.67
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Return on average common equity ("ROACE") is calculated by dividing net income available to common shareholders for the year by the average shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the year.
|
(2)
|
Non-GAAP operating ROACE is calculated by dividing non-GAAP operating income for the year by the average common shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the year. Non-GAAP operating ROACE is a non-GAAP financial measure, as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to ROACE, the most comparable GAAP measure, is presented in the '
Results of Operations'
. Refer to
‘Non-GAAP Financial Measures’
for additional information.
|
(3)
|
Diluted book value per common share represents total common shareholders’ equity divided by the number of common shares and diluted common share equivalents outstanding, determined using the treasury stock method. Cash settled awards are excluded from the denominator.
|
(4)
|
Calculation of diluted book value per common share per common share at December 31, 2015 includes
1,358,380
additional shares delivered to us in January 2016 under the ASR agreement. Refer to Item 8, Note 14 to the Consolidated Financial Statements '
Shareholders' Equity'
for information relating to the ASR.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
|
$
|
5,556,273
|
|
|
12%
|
|
$
|
4,970,208
|
|
|
8%
|
|
$
|
4,603,730
|
|
|
|
Net premiums written
|
|
4,027,143
|
|
|
7%
|
|
3,752,974
|
|
|
2%
|
|
3,674,666
|
|
|
|||
|
Net premiums earned
|
|
4,148,760
|
|
|
12%
|
|
3,705,625
|
|
|
1%
|
|
3,686,417
|
|
|
|||
|
Other insurance related income (losses)
|
|
(1,240
|
)
|
|
nm
|
|
7,222
|
|
|
nm
|
|
(2,953
|
)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
|
(3,487,826
|
)
|
|
|
|
(2,496,574
|
)
|
|
|
|
(2,419,247
|
)
|
|
|||
|
Prior year reserve development
|
|
200,054
|
|
|
|
|
292,377
|
|
|
|
|
243,048
|
|
|
|||
|
Acquisition costs
|
|
(823,591
|
)
|
|
|
|
(746,876
|
)
|
|
|
|
(718,112
|
)
|
|
|||
|
Underwriting-related general and administrative expenses
(1)
|
|
(449,483
|
)
|
|
|
|
(482,701
|
)
|
|
|
|
(486,911
|
)
|
|
|||
|
Underwriting income
(2)
|
|
$
|
(413,326
|
)
|
|
nm
|
|
$
|
279,073
|
|
|
(8%)
|
|
$
|
302,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
General and administrative expenses
(1)
|
|
$
|
579,428
|
|
|
|
|
$
|
602,717
|
|
|
|
|
$
|
596,821
|
|
|
|
Income before income taxes and interest in income (loss) of equity method investments
(2)
|
|
$
|
(368,109
|
)
|
|
|
|
$
|
521,802
|
|
|
|
|
$
|
644,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Underwriting-related general and administrative expenses is a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to general and administrative expenses, the most comparable GAAP measure, is presented in the '
Results of Operations
', which is included in the '
Executive Summary
' section of this MD&A.
|
(2)
|
Group (or consolidated) underwriting income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to net income (loss before tax and interest in income (loss) of equity investments), the most comparable GAAP measure, is presented in the '
Results of Operations'
, which is included in the '
Executive Summary'
section of this MD&A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gross Premiums Written
|
|
||||||||||||||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance
|
$
|
3,127,837
|
|
|
15%
|
|
$
|
2,720,242
|
|
|
5%
|
|
$
|
2,583,081
|
|
|
||||
|
Reinsurance
|
2,428,436
|
|
|
8%
|
|
2,249,966
|
|
|
11%
|
|
2,020,649
|
|
|
|||||||
|
Total
|
$
|
5,556,273
|
|
|
12%
|
|
$
|
4,970,208
|
|
|
8%
|
|
$
|
4,603,730
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
% ceded
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Insurance
|
33
|
%
|
|
(1
|
)
|
pts
|
|
34
|
%
|
|
2
|
|
pts
|
|
32
|
%
|
|
|||
|
Reinsurance
|
20
|
%
|
|
6
|
|
pts
|
|
14
|
%
|
|
9
|
|
pts
|
|
5
|
%
|
|
|||
|
Total
|
28
|
%
|
|
4
|
|
pts
|
|
24
|
%
|
|
4
|
|
pts
|
|
20
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Net Premiums Written
|
|
||||||||||||||||||
|
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance
|
$
|
2,087,734
|
|
|
16%
|
|
$
|
1,807,125
|
|
|
3%
|
|
$
|
1,759,359
|
|
|
||||
|
Reinsurance
|
1,939,409
|
|
|
—%
|
|
1,945,849
|
|
|
2%
|
|
1,915,307
|
|
|
|||||||
|
Total
|
$
|
4,027,143
|
|
|
7%
|
|
$
|
3,752,974
|
|
|
2%
|
|
$
|
3,674,666
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
16 to 17
|
|
15 to 16
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Insurance
|
$
|
2,106,363
|
|
|
51
|
%
|
|
$
|
1,777,321
|
|
|
48
|
%
|
|
$
|
1,798,191
|
|
|
49
|
%
|
|
19
|
%
|
|
(1
|
%)
|
|
|
Reinsurance
|
2,042,397
|
|
|
49
|
%
|
|
1,928,304
|
|
|
52
|
%
|
|
1,888,226
|
|
|
51
|
%
|
|
6
|
%
|
|
2
|
%
|
|
|||
|
Total
|
$
|
4,148,760
|
|
|
100
|
%
|
|
$
|
3,705,625
|
|
|
100
|
%
|
|
$
|
3,686,417
|
|
|
100
|
%
|
|
12
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Year ended December 31,
|
2017
|
|
% Point
Change
|
|
2016
|
|
% Point
Change
|
|
2015
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Current accident year loss ratio
|
84.1
|
%
|
|
16.7
|
|
|
67.4
|
%
|
|
1.8
|
|
|
65.6
|
%
|
|
|
Prior year reserve development
|
(4.9
|
%)
|
|
3.0
|
|
|
(7.9
|
%)
|
|
(1.3
|
)
|
|
(6.6
|
%)
|
|
|
Acquisition cost ratio
|
19.9
|
%
|
|
(0.3
|
)
|
|
20.2
|
%
|
|
0.7
|
|
|
19.5
|
%
|
|
|
General and administrative expense ratio
(1)
|
14.0
|
%
|
|
(2.2
|
)
|
|
16.2
|
%
|
|
—
|
|
|
16.2
|
%
|
|
|
Combined ratio
|
113.1
|
%
|
|
17.2
|
|
|
95.9
|
%
|
|
1.2
|
|
|
94.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The general and administration expense ratio includes corporate expenses not allocated to underwriting segments of
3.1%
,
3.2%
and
3.0%
for
2017
,
2016
and
2015
, respectively. These costs are further discussed in the ‘
Other Expenses (Revenues), Net
’ section.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
$
|
48,969
|
|
|
$
|
55,905
|
|
|
$
|
23,447
|
|
|
|
Reinsurance
|
151,085
|
|
|
236,472
|
|
|
219,601
|
|
|
|||
|
Total
|
$
|
200,054
|
|
|
$
|
292,377
|
|
|
$
|
243,048
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Property and Other
|
$
|
325
|
|
|
$
|
34,784
|
|
|
$
|
52,257
|
|
|
|
Marine
|
28,206
|
|
|
12,068
|
|
|
24,563
|
|
|
|||
|
Aviation
|
1,895
|
|
|
3,113
|
|
|
2,429
|
|
|
|||
|
Credit and Political Risk
|
70
|
|
|
(242
|
)
|
|
(15,435
|
)
|
|
|||
|
Professional Lines
|
26,248
|
|
|
14,005
|
|
|
(13,789
|
)
|
|
|||
|
Liability
|
(7,775
|
)
|
|
(7,823
|
)
|
|
(26,578
|
)
|
|
|||
|
Total
|
$
|
48,969
|
|
|
$
|
55,905
|
|
|
$
|
23,447
|
|
|
|
|
|
|
|
|
|
|
•
|
$28 million
of net favorable prior year reserve development on marine business, due to better than expected loss emergence on more recent accident years including a large case reserve reduction on a 2013 accident year claim.
|
•
|
$26 million
of net favorable prior year reserve development on professional lines business, due to the recognition of better the expected emerging loss experience, particularly on the 2013 and 2014 accident years.
|
•
|
$8 million
of net adverse prior year reserve development on liability business, due to reserve strengthening on several large claims within our run-off Bermuda excess casualty book of business and due to limited reserve strengthening within our U.S. excess casualty book of business.
|
•
|
$35 million
of net favorable prior year reserve development on property and other business, driven by better than expected loss emergence primarily related to accident years 2012 through 2014.
|
•
|
$14 million
of net favorable prior year reserve development on professional lines business, driven by better than expected development related to various accident years, partially offset by reserve strengthening relating to updated information on specific claims impacting accident years 2010 and 2011.
|
•
|
$12 million
of net favorable prior year reserve development on marine business, driven by better than expected loss emergence, primarily driven by reductions in mid-size loss estimates impacting accident year 2015.
|
•
|
$8 million
of net adverse prior year reserve development on liability business, primarily related to reserve strengthening on certain claims within our excess casualty book of business.
|
•
|
$52 million
of net favorable prior year reserve development on property and other business, related to the 2012 and 2013 accident years and driven by better than expected loss emergence, including reserve reductions related to Storm Sandy of $18 million.
|
•
|
$25 million
of net favorable prior year reserve development on marine business, largely related to better than expected loss emergence in our energy offshore business spanning multiple years, particularly accident year 2014.
|
•
|
$14 million
of net adverse prior year reserve development on professional lines business, predominately reflecting reserve strengthening resulting from updated actuarial assumptions for our Australian professional lines and impacting accident years 2010 to 2014, partially offset by favorable development in certain US professional lines.
|
•
|
$15 million
of net adverse prior year reserve development on credit and political risk business, primarily related to updated information on one specific claim impacting accident year 2014, partially offset by better than expected development on the 2013 accident year.
|
•
|
$27 million
of net adverse prior year reserve development on liability business, related to strengthening of specific individual claim reserves and a higher frequency of large auto liability claims in accident year 2014.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Property and Other
|
$
|
30,054
|
|
|
$
|
97,691
|
|
|
$
|
72,789
|
|
|
|
Credit and Surety
|
32,791
|
|
|
10,488
|
|
|
26,568
|
|
|
|||
|
Professional Lines
|
44,164
|
|
|
29,592
|
|
|
37,778
|
|
|
|||
|
Motor
|
1,155
|
|
|
55,106
|
|
|
36,677
|
|
|
|||
|
Liability
|
42,921
|
|
|
43,595
|
|
|
45,789
|
|
|
|||
|
Total
|
$
|
151,085
|
|
|
$
|
236,472
|
|
|
$
|
219,601
|
|
|
|
|
|
|
|
|
|
|
•
|
$44 million
of net favorable prior year reserve development on professional lines business, reflecting the generally favorable experience on earlier accident years, particularly 2009 through 2012, as we continue to transition to more experience based methods.
|
•
|
$43 million
of net favorable prior year reserve development on liability business due to progressively increased weight given by management to experience based indications on earlier accident years, particularly 2008 through 2010.
|
•
|
$33 million
of net favorable prior year reserve development on credit and surety business, due to better than expected loss emergence primarily related to accident years 2012 through 2015.
|
•
|
$30 million
of net favorable prior year development on property and other business due to overall better than expected loss emergence across multiple accident years.
|
•
|
$1 million
of net favorable prior year reserve development on motor business, due to the impact of the change in Ogden rate, largely offset by continued better than expected loss emergence spanning multiple accident years.
|
•
|
$98 million
of net favorable prior year development on property and other business, primarily related to the 2010 through 2015 accident years driven by better than expected loss emergence.
|
•
|
$55 million
of net favorable prior year reserve development on motor business, primarily related to non-proportional business spanning multiple accident years, driven by better than expected loss emergence.
|
•
|
$44 million
of net favorable prior year reserve development on liability business, primarily related to the 2006 through 2011 accident years, for reasons discussed in the overview.
|
•
|
$30 million
of net favorable prior year reserve development on professional lines business, primarily related to the earlier accident years, for reasons discussed in the overview.
|
•
|
$10 million
of net favorable prior year reserve development on credit and surety business, spanning multiple accident years and driven by generally better than expected loss emergence.
|
•
|
$73 million
of net favorable prior year reserve development on property and other business, spanning a number of accident years and driven by better than expected loss emergence. Included in this net development is $17 million of adverse development on agriculture reserves relating to loss developments on the 2014 accident year driven by lower than expected crop yields reported for two specific treaties.
|
•
|
$46 million
of net favorable prior year reserve development on liability business, primarily related to the 2003 through 2010 accident years, reflecting the greater weight management is giving to experience based indications.
|
•
|
$38 million
of net favorable prior year reserve development on professional lines business, primarily related to the 2009 and 2010 accident years, reflecting increased weight being given to experience-based actuarial methods in selecting our ultimate loss estimates for accident years 2010 and prior.
|
•
|
$37 million
of net favorable prior year reserve development on motor business, predominantly related to non-proportional business and driven by better than expected loss emergence on accident years 2007 through 2013, partially offset by reserve strengthening on accident year 2014.
|
•
|
$27 million
of net favorable prior year reserve development on credit and surety business, spanning multiple accident years and driven by better than expected loss emergence, as well as additional information obtained about a specific claim.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
3,127,837
|
|
|
15%
|
|
$
|
2,720,242
|
|
|
5%
|
|
$
|
2,583,081
|
|
|
|
Net premiums written
|
2,087,734
|
|
|
16%
|
|
1,807,125
|
|
|
3%
|
|
1,759,359
|
|
|
|||
|
Net premiums earned
|
2,106,363
|
|
|
19%
|
|
1,777,321
|
|
|
(1%)
|
|
1,798,191
|
|
|
|||
|
Other insurance related income
|
3,458
|
|
|
nm
|
|
89
|
|
|
(91)%
|
|
1,036
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
(1,710,001
|
)
|
|
|
|
(1,197,838
|
)
|
|
|
|
(1,178,375
|
)
|
|
|||
|
Prior year reserve development
|
48,969
|
|
|
|
|
55,905
|
|
|
|
|
23,447
|
|
|
|||
|
Acquisition costs
|
(332,749
|
)
|
|
|
|
(251,120
|
)
|
|
|
|
(261,208
|
)
|
|
|||
|
General and administrative expenses
|
(344,012
|
)
|
|
|
|
(346,857
|
)
|
|
|
|
(341,658
|
)
|
|
|||
|
Underwriting income (loss)
|
$
|
(227,972
|
)
|
|
nm
|
|
$
|
37,500
|
|
|
(9%)
|
|
$
|
41,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
% Point
Change
|
|
|
|
% Point
Change
|
|
|
|
||||||
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year loss ratio
|
81.2
|
%
|
|
13.8
|
|
67.4
|
%
|
|
1.9
|
|
65.5
|
%
|
|
|||
|
Prior year reserve development
|
(2.3
|
%)
|
|
0.8
|
|
(3.1
|
%)
|
|
(1.8)
|
|
(1.3
|
%)
|
|
|||
|
Acquisition cost ratio
|
15.8
|
%
|
|
1.7
|
|
14.1
|
%
|
|
(0.4)
|
|
14.5
|
%
|
|
|||
|
General and administrative expense ratio
|
16.3
|
%
|
|
(3.2)
|
|
19.5
|
%
|
|
0.4
|
|
19.1
|
%
|
|
|||
|
Combined ratio
|
111.0
|
%
|
|
13.1
|
|
97.9
|
%
|
|
0.1
|
|
97.8
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
16 to 17
|
|
15 to 16
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Property
|
$
|
738,373
|
|
|
24
|
%
|
|
$
|
672,891
|
|
|
25
|
%
|
|
$
|
607,358
|
|
|
24
|
%
|
|
10
|
%
|
|
11
|
%
|
|
|
Marine
|
241,393
|
|
|
8
|
%
|
|
225,609
|
|
|
8
|
%
|
|
241,956
|
|
|
9
|
%
|
|
7
|
%
|
|
(7
|
%)
|
|
|||
|
Terrorism
|
47,514
|
|
|
2
|
%
|
|
38,146
|
|
|
1
|
%
|
|
33,709
|
|
|
1
|
%
|
|
25
|
%
|
|
13
|
%
|
|
|||
|
Aviation
|
83,906
|
|
|
3
|
%
|
|
53,173
|
|
|
2
|
%
|
|
54,642
|
|
|
2
|
%
|
|
58
|
%
|
|
(3
|
%)
|
|
|||
|
Credit and Political Risk
|
91,316
|
|
|
3
|
%
|
|
49,930
|
|
|
2
|
%
|
|
59,967
|
|
|
2
|
%
|
|
83
|
%
|
|
(17
|
%)
|
|
|||
|
Professional Lines
|
922,502
|
|
|
29
|
%
|
|
845,358
|
|
|
31
|
%
|
|
850,011
|
|
|
33
|
%
|
|
9
|
%
|
|
(1
|
%)
|
|
|||
|
Liability
|
473,935
|
|
|
15
|
%
|
|
405,030
|
|
|
15
|
%
|
|
384,145
|
|
|
15
|
%
|
|
17
|
%
|
|
5
|
%
|
|
|||
|
Accident and Health
|
514,078
|
|
|
16
|
%
|
|
430,105
|
|
|
16
|
%
|
|
351,293
|
|
|
14
|
%
|
|
20
|
%
|
|
22
|
%
|
|
|||
|
Discontinued Lines - Novae
|
14,820
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
—
|
%
|
|
|||
|
Total
|
$
|
3,127,837
|
|
|
100
|
%
|
|
$
|
2,720,242
|
|
|
100
|
%
|
|
$
|
2,583,081
|
|
|
100
|
%
|
|
15
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
16 to 17
|
|
15 to 16
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Property
|
$
|
543,342
|
|
|
25
|
%
|
|
$
|
426,918
|
|
|
23
|
%
|
|
$
|
432,587
|
|
|
24
|
%
|
|
27
|
%
|
|
(1
|
%)
|
|
|
Marine
|
181,533
|
|
|
9
|
%
|
|
150,046
|
|
|
8
|
%
|
|
183,696
|
|
|
10
|
%
|
|
21
|
%
|
|
(18
|
%)
|
|
|||
|
Terrorism
|
36,084
|
|
|
2
|
%
|
|
33,279
|
|
|
2
|
%
|
|
36,818
|
|
|
2
|
%
|
|
8
|
%
|
|
(10
|
%)
|
|
|||
|
Aviation
|
75,107
|
|
|
4
|
%
|
|
44,980
|
|
|
3
|
%
|
|
45,659
|
|
|
3
|
%
|
|
67
|
%
|
|
(1
|
%)
|
|
|||
|
Credit and Political Risk
|
56,432
|
|
|
3
|
%
|
|
57,964
|
|
|
3
|
%
|
|
63,583
|
|
|
4
|
%
|
|
(3
|
%)
|
|
(9
|
%)
|
|
|||
|
Professional Lines
|
519,759
|
|
|
25
|
%
|
|
510,806
|
|
|
29
|
%
|
|
596,430
|
|
|
33
|
%
|
|
2
|
%
|
|
(14
|
%)
|
|
|||
|
Liability
|
188,770
|
|
|
9
|
%
|
|
169,182
|
|
|
10
|
%
|
|
161,614
|
|
|
9
|
%
|
|
12
|
%
|
|
5
|
%
|
|
|||
|
Accident and Health
|
489,046
|
|
|
23
|
%
|
|
384,146
|
|
|
22
|
%
|
|
277,804
|
|
|
15
|
%
|
|
27
|
%
|
|
38
|
%
|
|
|||
|
Discontinued Lines - Novae
|
16,290
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
—
|
%
|
|
|||
|
Total
|
$
|
2,106,363
|
|
|
100
|
%
|
|
$
|
1,777,321
|
|
|
100
|
%
|
|
$
|
1,798,191
|
|
|
100
|
%
|
|
19
|
%
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
2,428,436
|
|
|
8%
|
|
$
|
2,249,966
|
|
|
11%
|
|
$
|
2,020,649
|
|
|
|
Net premiums written
|
1,939,409
|
|
|
—%
|
|
1,945,849
|
|
|
2%
|
|
1,915,307
|
|
|
|||
|
Net premiums earned
|
2,042,397
|
|
|
6%
|
|
1,928,304
|
|
|
2%
|
|
1,888,226
|
|
|
|||
|
Other insurance related income (losses)
|
(4,698
|
)
|
|
nm
|
|
7,133
|
|
|
nm
|
|
(3,989
|
)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
(1,777,825
|
)
|
|
|
|
(1,298,736
|
)
|
|
|
|
(1,240,872
|
)
|
|
|||
|
Prior year reserve development
|
151,085
|
|
|
|
|
236,472
|
|
|
|
|
219,601
|
|
|
|||
|
Acquisition costs
|
(490,842
|
)
|
|
|
|
(495,756
|
)
|
|
|
|
(456,904
|
)
|
|
|||
|
General and administrative expenses
|
(105,471
|
)
|
|
|
|
(135,844
|
)
|
|
|
|
(145,253
|
)
|
|
|||
|
Underwriting income (loss)
|
$
|
(185,354
|
)
|
|
nm
|
|
$
|
241,573
|
|
|
(7%)
|
|
$
|
260,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
% Point
Change
|
|
|
|
% Point
Change
|
|
|
|
||||||
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year loss ratio
|
87.0
|
%
|
|
19.6
|
|
67.4
|
%
|
|
1.7
|
|
65.7
|
%
|
|
|||
|
Prior year reserve development
|
(7.4
|
%)
|
|
4.9
|
|
(12.3
|
%)
|
|
(0.7)
|
|
(11.6
|
%)
|
|
|||
|
Acquisition cost ratio
|
24.0
|
%
|
|
(1.7)
|
|
25.7
|
%
|
|
1.5
|
|
24.2
|
%
|
|
|||
|
General and administrative expense ratio
|
5.2
|
%
|
|
(1.8)
|
|
7.0
|
%
|
|
(0.7)
|
|
7.7
|
%
|
|
|||
|
Combined ratio
|
108.8
|
%
|
|
21.0
|
|
87.8
|
%
|
|
1.8
|
|
86.0
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
16 to 17
|
|
15 to 16
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Catastrophe
|
$
|
436,707
|
|
|
19
|
%
|
|
$
|
324,884
|
|
|
14
|
%
|
|
$
|
291,697
|
|
|
13
|
%
|
|
34
|
%
|
|
11
|
%
|
|
|
Property
|
352,609
|
|
|
15
|
%
|
|
282,535
|
|
|
13
|
%
|
|
305,160
|
|
|
15
|
%
|
|
25
|
%
|
|
(7
|
%)
|
|
|||
|
Professional Lines
|
252,272
|
|
|
10
|
%
|
|
268,403
|
|
|
12
|
%
|
|
276,479
|
|
|
14
|
%
|
|
(6
|
%)
|
|
(3
|
%)
|
|
|||
|
Credit and Surety
|
205,352
|
|
|
8
|
%
|
|
319,077
|
|
|
14
|
%
|
|
242,620
|
|
|
12
|
%
|
|
(36
|
%)
|
|
32
|
%
|
|
|||
|
Motor
|
391,923
|
|
|
16
|
%
|
|
346,087
|
|
|
15
|
%
|
|
335,084
|
|
|
17
|
%
|
|
13
|
%
|
|
3
|
%
|
|
|||
|
Liability
|
420,701
|
|
|
17
|
%
|
|
422,489
|
|
|
19
|
%
|
|
345,319
|
|
|
17
|
%
|
|
—
|
%
|
|
22
|
%
|
|
|||
|
Agriculture
|
236,200
|
|
|
10
|
%
|
|
158,278
|
|
|
7
|
%
|
|
132,629
|
|
|
7
|
%
|
|
49
|
%
|
|
19
|
%
|
|
|||
|
Engineering
|
77,134
|
|
|
3
|
%
|
|
68,892
|
|
|
3
|
%
|
|
72,050
|
|
|
4
|
%
|
|
12
|
%
|
|
(4
|
%)
|
|
|||
|
Marine and Other
|
55,925
|
|
|
2
|
%
|
|
59,321
|
|
|
3
|
%
|
|
19,611
|
|
|
1
|
%
|
|
(6
|
%)
|
|
202
|
%
|
|
|||
|
Discontinued Lines - Novae
|
(387
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
—
|
%
|
|
|||
|
Total
|
$
|
2,428,436
|
|
|
100
|
%
|
|
$
|
2,249,966
|
|
|
100
|
%
|
|
$
|
2,020,649
|
|
|
100
|
%
|
|
8
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
16 to 17
|
|
15 to 16
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Catastrophe
|
$
|
209,470
|
|
|
11
|
%
|
|
$
|
199,825
|
|
|
11
|
%
|
|
$
|
216,020
|
|
|
12
|
%
|
|
5
|
%
|
|
(7
|
%)
|
|
|
Property
|
304,376
|
|
|
15
|
%
|
|
272,403
|
|
|
14
|
%
|
|
306,083
|
|
|
16
|
%
|
|
12
|
%
|
|
(11
|
%)
|
|
|||
|
Professional Lines
|
226,622
|
|
|
11
|
%
|
|
289,868
|
|
|
15
|
%
|
|
310,915
|
|
|
16
|
%
|
|
(22
|
%)
|
|
(7
|
%)
|
|
|||
|
Credit and Surety
|
244,186
|
|
|
12
|
%
|
|
252,210
|
|
|
13
|
%
|
|
250,208
|
|
|
13
|
%
|
|
(3
|
%)
|
|
1
|
%
|
|
|||
|
Motor
|
371,501
|
|
|
18
|
%
|
|
318,863
|
|
|
17
|
%
|
|
299,883
|
|
|
16
|
%
|
|
17
|
%
|
|
6
|
%
|
|
|||
|
Liability
|
351,940
|
|
|
17
|
%
|
|
332,479
|
|
|
17
|
%
|
|
297,000
|
|
|
16
|
%
|
|
6
|
%
|
|
12
|
%
|
|
|||
|
Agriculture
|
195,391
|
|
|
10
|
%
|
|
142,501
|
|
|
7
|
%
|
|
129,346
|
|
|
7
|
%
|
|
37
|
%
|
|
10
|
%
|
|
|||
|
Engineering
|
66,291
|
|
|
3
|
%
|
|
62,833
|
|
|
3
|
%
|
|
61,043
|
|
|
3
|
%
|
|
6
|
%
|
|
3
|
%
|
|
|||
|
Marine and Other
|
64,449
|
|
|
3
|
%
|
|
57,322
|
|
|
3
|
%
|
|
17,728
|
|
|
1
|
%
|
|
12
|
%
|
|
223
|
%
|
|
|||
|
Discontinued Lines - Novae
|
8,171
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
—
|
%
|
|
|||
|
Total
|
$
|
2,042,397
|
|
|
100
|
%
|
|
$
|
1,928,304
|
|
|
100
|
%
|
|
$
|
1,888,226
|
|
|
100
|
%
|
|
6
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
|
2017
|
|
% Point
Change
|
|
2016
|
|
% Point
Change
|
|
2015
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Current accident year
|
|
87.0
|
%
|
|
19.6
|
|
67.4
|
%
|
|
1.7
|
|
|
65.7
|
%
|
|
|
Prior year reserve development
|
|
(7.4
|
%)
|
|
4.9
|
|
(12.3
|
%)
|
|
(0.7
|
)
|
|
(11.6
|
%)
|
|
|
Loss ratio
|
|
79.6
|
%
|
|
24.5
|
|
55.1
|
%
|
|
1.0
|
|
|
54.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
$
|
129,945
|
|
|
8%
|
|
$
|
120,016
|
|
|
9%
|
|
$
|
109,910
|
|
|
|
Foreign exchange losses (gains)
|
134,737
|
|
|
nm
|
|
(121,295
|
)
|
|
19%
|
|
(102,312
|
)
|
|
|||
|
Interest expense and financing costs
|
54,811
|
|
|
7%
|
|
51,360
|
|
|
1%
|
|
50,963
|
|
|
|||
|
Income tax (benefit) expense
|
(7,542
|
)
|
|
nm
|
|
6,340
|
|
|
109%
|
|
3,028
|
|
|
|||
|
Total
|
$
|
311,951
|
|
|
nm
|
|
$
|
56,421
|
|
|
(8%)
|
|
$
|
61,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
% Change
|
|
2016
|
|
% Change
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
$
|
312,662
|
|
|
2%
|
|
$
|
305,459
|
|
|
4%
|
|
$
|
294,725
|
|
|
|
Other investments
|
76,858
|
|
|
81%
|
|
42,514
|
|
|
111%
|
|
20,148
|
|
|
|||
|
Equities
|
14,919
|
|
|
(9%)
|
|
16,306
|
|
|
44%
|
|
11,289
|
|
|
|||
|
Mortgage loans
|
10,780
|
|
|
35%
|
|
7,996
|
|
|
nm
|
|
1,861
|
|
|
|||
|
Cash and cash equivalents
|
10,057
|
|
|
9%
|
|
9,209
|
|
|
7%
|
|
8,572
|
|
|
|||
|
Short-term investments
|
2,718
|
|
|
32%
|
|
2,060
|
|
|
nm
|
|
439
|
|
|
|||
|
Gross investment income
|
427,994
|
|
|
12%
|
|
383,544
|
|
|
14%
|
|
337,034
|
|
|
|||
|
Investment expense
|
(27,189
|
)
|
|
(10%)
|
|
(30,209
|
)
|
|
(5%)
|
|
(31,698
|
)
|
|
|||
|
Net investment income
|
$
|
400,805
|
|
|
13%
|
|
$
|
353,335
|
|
|
16%
|
|
$
|
305,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Pre-tax yield:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
2.7
|
%
|
|
|
|
2.6
|
%
|
|
|
|
2.4
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Pre-tax yield is annualized and calculated as net investment income divided by the average month-end amortized cost balances for the periods indicated.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Hedge, direct lending, private equity and real estate funds
|
$
|
69,740
|
|
|
$
|
21,378
|
|
|
$
|
21,888
|
|
|
|
Other privately held investments
|
4,560
|
|
|
124
|
|
|
—
|
|
|
|||
|
CLO-Equities
|
2,558
|
|
|
21,012
|
|
|
(1,740
|
)
|
|
|||
|
Total net investment income from other investments
|
$
|
76,858
|
|
|
$
|
42,514
|
|
|
$
|
20,148
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Pre-tax return on other investments
(1)
|
9.6
|
%
|
|
5.1
|
%
|
|
2.3
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
The pre-tax return on other investments is non-annualized and calculated by dividing total net investment income from other investments by the average month-end fair value balances held for the periods indicated, excluding overseas deposits.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
On sale of investments:
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
$
|
(26,396
|
)
|
|
$
|
(48,193
|
)
|
|
$
|
(83,600
|
)
|
|
|
Equities
|
77,384
|
|
|
2,949
|
|
|
10,570
|
|
|
|||
|
|
50,988
|
|
|
(45,244
|
)
|
|
(73,030
|
)
|
|
|||
|
OTTI charges recognized in earnings
|
(14,493
|
)
|
|
(26,210
|
)
|
|
(72,720
|
)
|
|
|||
|
Change in fair value of investment derivatives
|
(8,269
|
)
|
|
10,929
|
|
|
7,259
|
|
|
|||
|
Net realized investment gains (losses)
|
$
|
28,226
|
|
|
$
|
(60,525
|
)
|
|
$
|
(138,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Non-U.S. government
|
$
|
8,187
|
|
|
$
|
3,557
|
|
|
$
|
3,538
|
|
|
|
Corporate debt
|
6,306
|
|
|
20,093
|
|
|
47,029
|
|
|
|||
|
Non-Agency RMBS
|
—
|
|
|
—
|
|
|
111
|
|
|
|||
|
ABS
|
—
|
|
|
—
|
|
|
124
|
|
|
|||
|
|
14,493
|
|
|
23,650
|
|
|
50,802
|
|
|
|||
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Exchange-traded funds
|
—
|
|
|
2,560
|
|
|
10,732
|
|
|
|||
|
Bond mutual funds
|
—
|
|
|
—
|
|
|
11,186
|
|
|
|||
|
|
—
|
|
|
2,560
|
|
|
21,918
|
|
|
|||
|
Total OTTI recognized in earnings
|
$
|
14,493
|
|
|
$
|
26,210
|
|
|
$
|
72,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Net investment income
|
$
|
400,805
|
|
|
$
|
353,335
|
|
|
$
|
305,336
|
|
|
|
Net realized investments gains (losses)
|
28,226
|
|
|
(60,525
|
)
|
|
(138,491
|
)
|
|
|||
|
Change in net unrealized gains (losses)
(1)
|
177,259
|
|
|
70,588
|
|
|
(134,746
|
)
|
|
|||
|
Interest in loss of equity method investments
|
(8,402
|
)
|
|
(2,094
|
)
|
|
—
|
|
|
|||
|
Total
|
$
|
597,888
|
|
|
$
|
361,304
|
|
|
$
|
32,099
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Average cash and investments
(2)
|
$
|
14,854,569
|
|
|
$
|
14,491,830
|
|
|
$
|
14,894,856
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total return on average cash and investments, pre-tax:
|
|
|
|
|
|
|
||||||
|
Inclusive of investment related foreign exchange movements
|
4.0
|
%
|
|
2.5
|
%
|
|
0.2
|
%
|
|
|||
|
Exclusive of investment related foreign exchange movements
(3)
|
3.5
|
%
|
|
3.0
|
%
|
|
0.9
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
Change in net unrealized gains (losses) is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
|
(2)
|
The average cash and investments balance is calculated by taking the average of the month-end fair value balances held for the periods indicated.
|
(3)
|
Pre-tax return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure included foreign exchange gains (losses) of $80 million, $(79) million and $(105) million for the years ended December 31, 2017, 2016 and 2015 respectively.
|
|
|
|
|
|
|
||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||
|
|
Fair Value
|
|
Fair Value
|
|
||||
|
|
|
|
|
|
||||
|
Fixed maturities
|
$
|
12,622,006
|
|
|
$
|
11,397,114
|
|
|
|
Equities
|
635,511
|
|
|
638,744
|
|
|
||
|
Mortgage loans
|
325,062
|
|
|
349,969
|
|
|
||
|
Other investments
|
1,009,373
|
|
|
830,219
|
|
|
||
|
Equity method investments
|
108,597
|
|
|
116,000
|
|
|
||
|
Short-term investments
|
83,661
|
|
|
127,461
|
|
|
||
|
Total investments
|
$
|
14,784,210
|
|
|
$
|
13,459,507
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents
(1)
|
$
|
1,363,786
|
|
|
$
|
1,241,507
|
|
|
|
|
|
|
|
|
(1)
|
Includes restricted cash and cash equivalents of
$415 million
and
$202 million
for 2017 and 2016, respectively.
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||
|
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,712,469
|
|
|
14
|
%
|
|
$
|
1,656,069
|
|
|
15
|
%
|
|
|
Non-U.S. government
|
806,299
|
|
|
6
|
%
|
|
565,834
|
|
|
5
|
%
|
|
||
|
Corporate debt
|
5,297,866
|
|
|
43
|
%
|
|
4,600,743
|
|
|
40
|
%
|
|
||
|
Agency RMBS
|
2,395,152
|
|
|
19
|
%
|
|
2,465,135
|
|
|
22
|
%
|
|
||
|
CMBS
|
777,728
|
|
|
6
|
%
|
|
666,237
|
|
|
6
|
%
|
|
||
|
Non-Agency RMBS
|
46,831
|
|
|
—
|
%
|
|
56,921
|
|
|
—
|
%
|
|
||
|
ABS
|
1,436,281
|
|
|
11
|
%
|
|
1,222,214
|
|
|
11
|
%
|
|
||
|
Municipals
(1)
|
149,380
|
|
|
1
|
%
|
|
163,961
|
|
|
1
|
%
|
|
||
|
Total
|
$
|
12,622,006
|
|
|
100
|
%
|
|
$
|
11,397,114
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Credit ratings:
|
|
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,712,469
|
|
|
14
|
%
|
|
$
|
1,656,069
|
|
|
15
|
%
|
|
|
AAA
(2)
|
4,990,848
|
|
|
39
|
%
|
|
4,165,226
|
|
|
36
|
%
|
|
||
|
AA
|
1,050,631
|
|
|
8
|
%
|
|
1,124,167
|
|
|
10
|
%
|
|
||
|
A
|
2,090,632
|
|
|
17
|
%
|
|
1,747,857
|
|
|
15
|
%
|
|
||
|
BBB
|
1,758,291
|
|
|
14
|
%
|
|
1,563,352
|
|
|
14
|
%
|
|
||
|
Below BBB
(3)
|
1,019,135
|
|
|
8
|
%
|
|
1,140,443
|
|
|
10
|
%
|
|
||
|
Total
|
$
|
12,622,006
|
|
|
100
|
%
|
|
$
|
11,397,114
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes bonds issued by states, municipalities, and political subdivisions.
|
(2)
|
Includes U.S. government-sponsored agency RMBS and CMBS.
|
(3)
|
Non-investment grade and non-rated securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||||
|
Country
|
Fair Value
|
|
% of Total
|
|
Weighted
Average
Credit Rating
|
|
Fair Value
|
|
% of Total
|
|
Weighted
Average
Credit Rating
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Eurozone countries:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Netherlands
|
$
|
42,739
|
|
|
5
|
%
|
|
AAA
|
|
$
|
18,003
|
|
|
3
|
%
|
|
AAA
|
|
|
Germany
|
35,332
|
|
|
4
|
%
|
|
AA+
|
|
2,573
|
|
|
—
|
%
|
|
AAA
|
|
||
|
France
|
34,386
|
|
|
4
|
%
|
|
AA
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Belgium
|
36,095
|
|
|
4
|
%
|
|
AA-
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Supranationals
(1)
|
19,196
|
|
|
2
|
%
|
|
AAA
|
|
7,316
|
|
|
1
|
%
|
|
AAA
|
|
||
|
Italy
|
7,366
|
|
|
1
|
%
|
|
BBB
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Ireland
|
7,060
|
|
|
1
|
%
|
|
A
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Spain
|
2,948
|
|
|
—
|
%
|
|
BBB+
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Total eurozone
|
$
|
185,122
|
|
|
21
|
%
|
|
AA
|
|
$
|
27,892
|
|
|
4
|
%
|
|
AAA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Other concentrations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
United Kingdom
|
$
|
275,656
|
|
|
34
|
%
|
|
AA
|
|
$
|
217,517
|
|
|
38
|
%
|
|
AA
|
|
|
Canada
|
151,027
|
|
|
19
|
%
|
|
AA+
|
|
101,549
|
|
|
18
|
%
|
|
AAA
|
|
||
|
Mexico
|
37,021
|
|
|
5
|
%
|
|
BBB+
|
|
37,489
|
|
|
7
|
%
|
|
BBB+
|
|
||
|
Other
|
157,473
|
|
|
21
|
%
|
|
A
|
|
181,387
|
|
|
33
|
%
|
|
AA-
|
|
||
|
Total other concentrations
|
$
|
621,177
|
|
|
79
|
%
|
|
AA-
|
|
$
|
537,942
|
|
|
96
|
%
|
|
AA
|
|
|
Total non-U.S. government
|
$
|
806,299
|
|
|
100
|
%
|
|
AA-
|
|
$
|
565,834
|
|
|
100
|
%
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes supranationals only within the eurozone.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||||
|
|
Fair Value
|
|
% of Total
|
|
Weighted
Average
Credit Rating
|
|
Fair Value
|
|
% of Total
|
|
Weighted
Average
Credit Rating
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Financial institutions:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
U.S. banking
|
$
|
1,169,750
|
|
|
22
|
%
|
|
A-
|
|
$
|
979,377
|
|
|
21
|
%
|
|
A-
|
|
|
Foreign banking
|
600,114
|
|
|
11
|
%
|
|
A+
|
|
271,951
|
|
|
6
|
%
|
|
A
|
|
||
|
Corporate/commercial finance
|
309,589
|
|
|
6
|
%
|
|
BB+
|
|
341,121
|
|
|
7
|
%
|
|
BB+
|
|
||
|
Insurance
|
147,446
|
|
|
3
|
%
|
|
A+
|
|
131,375
|
|
|
3
|
%
|
|
A+
|
|
||
|
Investment brokerage
|
18,571
|
|
|
—
|
%
|
|
BBB+
|
|
24,858
|
|
|
1
|
%
|
|
BBB+
|
|
||
|
Total financial institutions
|
2,245,470
|
|
|
42
|
%
|
|
A-
|
|
1,748,682
|
|
|
38
|
%
|
|
BBB+
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consumer non-cyclicals
|
668,621
|
|
|
13
|
%
|
|
BBB
|
|
644,296
|
|
|
14
|
%
|
|
BBB
|
|
||
|
Consumer cyclical
|
513,824
|
|
|
10
|
%
|
|
BBB-
|
|
517,103
|
|
|
11
|
%
|
|
BBB-
|
|
||
|
Communications
|
418,945
|
|
|
8
|
%
|
|
BBB-
|
|
401,656
|
|
|
9
|
%
|
|
BBB-
|
|
||
|
Technology
|
348,725
|
|
|
7
|
%
|
|
BBB
|
|
296,078
|
|
|
6
|
%
|
|
BBB
|
|
||
|
Industrials
|
339,819
|
|
|
6
|
%
|
|
BB
|
|
358,371
|
|
|
8
|
%
|
|
BB
|
|
||
|
Energy
|
277,129
|
|
|
5
|
%
|
|
BBB
|
|
269,875
|
|
|
6
|
%
|
|
BBB
|
|
||
|
Utilities
|
156,544
|
|
|
3
|
%
|
|
BBB
|
|
141,526
|
|
|
3
|
%
|
|
BBB+
|
|
||
|
Other
|
328,789
|
|
|
6
|
%
|
|
A+
|
|
223,156
|
|
|
5
|
%
|
|
A
|
|
||
|
Total
|
$
|
5,297,866
|
|
|
100
|
%
|
|
BBB+
|
|
$
|
4,600,743
|
|
|
100
|
%
|
|
BBB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Credit quality summary:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Investment grade
|
$
|
4,319,620
|
|
|
82
|
%
|
|
A-
|
|
$
|
3,499,457
|
|
|
76
|
%
|
|
A-
|
|
|
Non-investment grade
|
978,246
|
|
|
18
|
%
|
|
B
|
|
1,101,286
|
|
|
24
|
%
|
|
B
|
|
||
|
Total
|
$
|
5,297,866
|
|
|
100
|
%
|
|
BBB+
|
|
$
|
4,600,743
|
|
|
100
|
%
|
|
BBB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||
|
|
RMBS
|
|
CMBS
|
|
RMBS
|
|
CMBS
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Government agency
|
$
|
2,395,152
|
|
|
$
|
192,034
|
|
|
$
|
2,465,135
|
|
|
$
|
—
|
|
|
|
AAA
|
23,113
|
|
|
509,112
|
|
|
20,902
|
|
|
475,504
|
|
|
||||
|
AA
|
109
|
|
|
63,217
|
|
|
1,882
|
|
|
118,653
|
|
|
||||
|
A
|
1,913
|
|
|
12,608
|
|
|
4,233
|
|
|
61,036
|
|
|
||||
|
BBB
|
6,896
|
|
|
757
|
|
|
9,755
|
|
|
10,791
|
|
|
||||
|
Below BBB
(1)
|
14,800
|
|
|
—
|
|
|
20,149
|
|
|
253
|
|
|
||||
|
Total
|
$
|
2,441,983
|
|
|
$
|
777,728
|
|
|
$
|
2,522,056
|
|
|
$
|
666,237
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-investment grade securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Asset-backed securities
|
|
||||||||||||||||||||||
|
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
Below BBB
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|||||||||||||||||
|
CLO - debt tranches
|
$
|
795,968
|
|
|
$
|
38,621
|
|
|
$
|
—
|
|
|
$
|
3,617
|
|
|
$
|
3,771
|
|
|
$
|
841,977
|
|
|
|
Auto
|
308,991
|
|
|
7,093
|
|
|
9,476
|
|
|
8,731
|
|
|
—
|
|
|
334,291
|
|
|
||||||
|
Student loan
|
64,755
|
|
|
20,222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,977
|
|
|
||||||
|
Credit card
|
26,674
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,674
|
|
|
||||||
|
Other
|
98,628
|
|
|
19,430
|
|
|
25,971
|
|
|
1,625
|
|
|
2,708
|
|
|
148,362
|
|
|
||||||
|
Total
|
$
|
1,295,016
|
|
|
$
|
85,366
|
|
|
$
|
35,447
|
|
|
$
|
13,973
|
|
|
$
|
6,479
|
|
|
$
|
1,436,281
|
|
|
|
% of total
|
90%
|
|
6%
|
|
2%
|
|
1%
|
|
1%
|
|
100%
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|||||||||||||||||
|
CLO - debt tranches
|
$
|
537,703
|
|
|
$
|
260,960
|
|
|
$
|
—
|
|
|
$
|
3,510
|
|
|
$
|
5,978
|
|
|
$
|
808,151
|
|
|
|
Auto
|
156,981
|
|
|
11,084
|
|
|
12,926
|
|
|
17,495
|
|
|
—
|
|
|
198,486
|
|
|
||||||
|
Student loan
|
49,974
|
|
|
13,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,980
|
|
|
||||||
|
Credit card
|
25,379
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,379
|
|
|
||||||
|
Other
|
73,398
|
|
|
9,748
|
|
|
39,668
|
|
|
1,811
|
|
|
2,593
|
|
|
127,218
|
|
|
||||||
|
Total
|
$
|
843,435
|
|
|
$
|
294,798
|
|
|
$
|
52,594
|
|
|
$
|
22,816
|
|
|
$
|
8,571
|
|
|
$
|
1,222,214
|
|
|
|
% of total
|
69%
|
|
24%
|
|
4%
|
|
2%
|
|
1%
|
|
100%
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
G.O.
|
|
Revenue
|
|
Total
|
|
% of Total
Fair Value
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Weighted
Average
Credit Rating
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
New York
|
$
|
12,510
|
|
|
$
|
29,211
|
|
|
$
|
41,721
|
|
|
28%
|
|
$
|
103
|
|
|
$
|
(569
|
)
|
|
AA+
|
|
|
California
|
20,119
|
|
|
11,597
|
|
|
31,716
|
|
|
21%
|
|
663
|
|
|
(98
|
)
|
|
AA-
|
|
|||||
|
Utah
|
—
|
|
|
11,626
|
|
|
11,626
|
|
|
8%
|
|
87
|
|
|
—
|
|
|
AA+
|
|
|||||
|
Michigan
|
—
|
|
|
9,247
|
|
|
9,247
|
|
|
6%
|
|
19
|
|
|
(83
|
)
|
|
A+
|
|
|||||
|
Florida
|
—
|
|
|
7,702
|
|
|
7,702
|
|
|
5%
|
|
40
|
|
|
(2
|
)
|
|
AA
|
|
|||||
|
Other
|
5,558
|
|
|
41,810
|
|
|
47,368
|
|
|
32%
|
|
273
|
|
|
(220
|
)
|
|
AA-
|
|
|||||
|
|
$
|
38,187
|
|
|
$
|
111,193
|
|
|
$
|
149,380
|
|
|
100%
|
|
$
|
1,185
|
|
|
$
|
(972
|
)
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
New York
|
$
|
16,181
|
|
|
$
|
19,676
|
|
|
$
|
35,857
|
|
|
22%
|
|
$
|
199
|
|
|
$
|
(447
|
)
|
|
AA
|
|
|
California
|
15,032
|
|
|
8,046
|
|
|
23,078
|
|
|
14%
|
|
644
|
|
|
(73
|
)
|
|
AA-
|
|
|||||
|
Utah
|
—
|
|
|
14,491
|
|
|
14,491
|
|
|
9%
|
|
18
|
|
|
—
|
|
|
AA+
|
|
|||||
|
Michigan
|
—
|
|
|
9,081
|
|
|
9,081
|
|
|
6%
|
|
—
|
|
|
(256
|
)
|
|
A+
|
|
|||||
|
Florida
|
—
|
|
|
7,921
|
|
|
7,921
|
|
|
5%
|
|
107
|
|
|
(39
|
)
|
|
AA
|
|
|||||
|
Other
|
15,150
|
|
|
58,383
|
|
|
73,533
|
|
|
44%
|
|
542
|
|
|
(175
|
)
|
|
AA-
|
|
|||||
|
|
$
|
46,363
|
|
|
$
|
117,598
|
|
|
$
|
163,961
|
|
|
100%
|
|
$
|
1,510
|
|
|
$
|
(990
|
)
|
|
AA-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||||||||
|
Severity of
Unrealized Loss
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
% of
Total Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
% of
Total Gross
Unrealized
Losses
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
0-10%
|
$
|
6,790,123
|
|
|
$
|
(71,076
|
)
|
|
86
|
%
|
|
$
|
6,162,925
|
|
|
$
|
(109,381
|
)
|
|
60
|
%
|
|
|
10-20%
|
78,348
|
|
|
(11,838
|
)
|
|
14
|
%
|
|
208,223
|
|
|
(37,642
|
)
|
|
21
|
%
|
|
||||
|
20-30%
|
872
|
|
|
(229
|
)
|
|
—
|
%
|
|
110,579
|
|
|
(30,692
|
)
|
|
17
|
%
|
|
||||
|
30-40%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
4,706
|
|
|
(2,368
|
)
|
|
1
|
%
|
|
||||
|
40-50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
2,738
|
|
|
(1,923
|
)
|
|
1
|
%
|
|
||||
|
> 50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||||
|
Total
|
$
|
6,869,343
|
|
|
$
|
(83,143
|
)
|
|
100
|
%
|
|
$
|
6,489,171
|
|
|
$
|
(182,006
|
)
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||||||||
|
Severity of
Unrealized Loss
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
% of
Total Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
% of
Total Gross
Unrealized
Losses
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
0-10%
|
$
|
270,281
|
|
|
$
|
(5,137
|
)
|
|
66
|
%
|
|
$
|
281,498
|
|
|
$
|
(6,575
|
)
|
|
44
|
%
|
|
|
10-20%
|
9,549
|
|
|
(1,408
|
)
|
|
18
|
%
|
|
28,115
|
|
|
(4,572
|
)
|
|
30
|
%
|
|
||||
|
20-30%
|
1,050
|
|
|
(314
|
)
|
|
4
|
%
|
|
2,656
|
|
|
(778
|
)
|
|
5
|
%
|
|
||||
|
30-40%
|
638
|
|
|
(287
|
)
|
|
4
|
%
|
|
283
|
|
|
(151
|
)
|
|
1
|
%
|
|
||||
|
40-50%
|
654
|
|
|
(584
|
)
|
|
8
|
%
|
|
2,833
|
|
|
(2,280
|
)
|
|
15
|
%
|
|
||||
|
> 50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
648
|
|
|
(833
|
)
|
|
5
|
%
|
|
||||
|
Total
|
$
|
282,172
|
|
|
$
|
(7,730
|
)
|
|
100
|
%
|
|
$
|
316,033
|
|
|
$
|
(15,189
|
)
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Hedge funds
|
|
|
|
|
|
|
|
|
||||||
|
Long/short equity funds
|
$
|
38,470
|
|
|
4
|
%
|
|
$
|
118,619
|
|
|
14
|
%
|
|
|
Multi-strategy funds
|
286,164
|
|
|
28
|
%
|
|
285,992
|
|
|
34
|
%
|
|
||
|
Event-driven funds
|
39,177
|
|
|
4
|
%
|
|
93,539
|
|
|
11
|
%
|
|
||
|
Total hedge funds
|
363,811
|
|
|
36
|
%
|
|
498,150
|
|
|
59
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
|
Direct lending funds
|
250,681
|
|
|
25
|
%
|
|
134,650
|
|
|
16
|
%
|
|
||
|
Private equity funds
|
68,812
|
|
|
7
|
%
|
|
81,223
|
|
|
10
|
%
|
|
||
|
Real estate funds
|
50,009
|
|
|
5
|
%
|
|
13,354
|
|
|
2
|
%
|
|
||
|
Total hedge, direct lending, private equity and real estate funds
|
733,313
|
|
|
73
|
%
|
|
727,377
|
|
|
87
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
|
CLO-Equities
|
31,413
|
|
|
2
|
%
|
|
60,700
|
|
|
8
|
%
|
|
||
|
Other privately held investments
|
46,430
|
|
|
5
|
%
|
|
42,142
|
|
|
5
|
%
|
|
||
|
Overseas deposits
|
198,217
|
|
|
20
|
%
|
|
—
|
|
|
—
|
%
|
|
||
|
Total other investments
|
$
|
1,009,373
|
|
|
100
|
%
|
|
$
|
830,219
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total cash provided by (used in)
(1)
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
259,229
|
|
|
$
|
406,724
|
|
|
$
|
791,200
|
|
|
|
Investing activities
|
178,363
|
|
|
(144,431
|
)
|
|
(225,697
|
)
|
|
|||
|
Financing activities
|
(545,688
|
)
|
|
(201,587
|
)
|
|
(487,006
|
)
|
|
|||
|
Effect of exchange rate changes on cash
|
17,228
|
|
|
(9,345
|
)
|
|
(12,194
|
)
|
|
|||
|
Increase (decrease) in cash and cash equivalents
|
$
|
(90,868
|
)
|
|
$
|
51,361
|
|
|
$
|
66,303
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to Consolidated Statements of Cash Flows included in Item 8, ‘
Financial Statements and Supplementary Data
’, for further details.
|
•
|
Net cash provided by operating activities was
$259 million
in
2017
, compared to
$407 million
in
2016
and
$791 million
in
2015
. Our insurance and reinsurance operations typically receive principal cash inflows from premiums, net of policy acquisition costs, and reinsurance recoverables. Our principal cash outflows are for the payment of claims and loss adjustment expenses, premium payments to reinsurers and operating expenses. Cash provided by operating activities can fluctuate due to timing differences in the collection of premium receivable and reinsurance recoverables and the payment of losses and ceded premiums payable.
|
•
|
Operating cash flows decreased in 2017 primarily attributable to increased purchases of reinsurance and retrocession covers, together with an increase in losses paid primarily in our property, catastrophe, marine as well as our accident and health lines, partially offset by an increase in premium collection due to higher gross premiums written in 2017, together with an increase in reinsurance recoveries.
|
•
|
Investing cash inflows in
2017
principally related to the net sale of equity securities of
$342 million
(2016:
$3 million
, 2015:
$81 million
outflow), net proceeds from the sale and redemption of fixed maturities of
$300 million
(2016:
$221 million
, 2015:
$172 million
outflow) and the net proceeds from the sale of other investments of
$108 million
(2016:
$25 million
, 2015:
$169 million
), partially offset by cash used for the purchase of Novae and Aviabel.
|
•
|
Financing cash outflows primarily relate to dividends paid to common and preferred shareholders on a recurring basis and totaled
$188 million
in
2017
(
2016
:
$172 million
,
2015
:
$159 million
). Financing cash outflows also included common share repurchases which totaled
$286 million
in
2017
(
2016
:
$510 million
and
2015
:
$332 million
). We note that market share repurchases are discretionary; the timing and amount of the additional repurchase transactions will depend on a variety of factors including, but not limited to, global (re)insurance and financial market conditions and opportunities, capital management and regulatory considerations (refer to
'Capital Resources – Share Repurchases'
below for further details). In addition, we redeemed our remaining Series C preferred shares, resulting in a cash outflow of
$351 million
and issued senior notes, resulting in cash inflows of
$346 million
in
2017
(refer to Item 8, Note 11(a) of the Consolidated Financial Statements
'Debt and Financing Arrangements'
for further details
).
We used a portion of the proceeds from the issuance of senior notes to repay a Novae term loan of $67 million. Cash outflows in 2016 were partially offset by net cash inflows of $480 million related to the preferred share transactions (refer to '
Capital Resources – Preferred Shares
' below for further details).
|
|
|
|
|
|
|
||||
|
At December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Debt
|
$
|
1,376,529
|
|
|
$
|
992,950
|
|
|
|
|
|
|
|
|
||||
|
Preferred shares
|
775,000
|
|
|
1,126,074
|
|
|
||
|
Common equity
|
4,566,264
|
|
|
5,146,296
|
|
|
||
|
Shareholders’ equity attributable to AXIS Capital
|
5,341,264
|
|
|
6,272,370
|
|
|
||
|
Total capital
|
$
|
6,717,793
|
|
|
$
|
7,265,320
|
|
|
|
|
|
|
|
|
||||
|
Ratio of debt to total capital
|
20.5
|
%
|
|
13.7
|
%
|
|
||
|
|
|
|
|
|
||||
|
Ratio of debt and preferred equity to total capital
|
32.0
|
%
|
|
29.2
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
|
||||
|
Common equity - opening
|
|
$
|
5,146,296
|
|
|
$
|
5,239,039
|
|
|
|
Net income attributable to AXIS Capital
|
|
(368,969
|
)
|
|
513,368
|
|
|
||
|
Change in unrealized losses on available for sale investments, net of tax
|
|
172,285
|
|
|
67,262
|
|
|
||
|
Share repurchases
|
|
(285,858
|
)
|
|
(571,805
|
)
|
|
||
|
Settlement of accelerated share repurchase
|
|
—
|
|
|
60,000
|
|
|
||
|
Common share dividends
|
|
(132,182
|
)
|
|
(132,188
|
)
|
|
||
|
Preferred share dividends
|
|
(46,810
|
)
|
|
(46,597
|
)
|
|
||
|
Share-based compensation expense recognized in equity
|
|
38,677
|
|
|
35,607
|
|
|
||
|
Loss on repurchase of preferred shares
|
|
—
|
|
|
(1,309
|
)
|
|
||
|
Issue costs of newly issued preferred shares (included in additional paid-in capital)
|
|
—
|
|
|
(18,055
|
)
|
|
||
|
Currency translation adjustment
|
|
41,938
|
|
|
(638
|
)
|
|
||
|
Other
|
|
887
|
|
|
1,612
|
|
|
||
|
Common equity - closing
|
|
$
|
4,566,264
|
|
|
$
|
5,146,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rating agency
|
|
Agency’s description of rating
|
|
Rating and outlook
|
|
Agency’s rating
definition
|
|
Ranking of rating
|
|
|
|
|
|
|
|
|
||||
|
Standard & Poor’s
|
|
An "opinion about the financial security characteristics of an insurance organization, with respect to its ability to pay under its insurance policies and contracts, in accordance with their terms".
|
|
A+
(Negative)
(1)
|
|
"Strong capacity to meet its financial commitments"
|
|
The ‘A’ grouping is the third highest out of ten major rating categories. The second through eighth major rating categories may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.
|
|
|
|
|
|
|
|
|
||||
|
A.M. Best
|
|
An "opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations".
|
|
A+
(Negative)
(2)
|
|
"Superior ability to meet ongoing insurance obligations"
|
|
The ‘A+’ grouping is the second highest rating out of fourteen. Ratings outlooks (‘Positive’, ‘Negative’ and ‘Stable’) are assigned to indicate a rating’s potential direction over an intermediate term, generally defined as 36 months.
|
|
|
|
|
|
|
|
|
||||
|
Moody’s Investors Service
|
|
"Opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations."
|
|
A2 (Stable)
(3)
|
|
"Offers good financial security"
|
|
The ‘A’ grouping is the third highest out of nine rating categories. Each of the second through seventh categories are subdivided into three subcategories, as indicated by an appended numerical modifier of ‘1’, ‘2’ and ‘3’. The ‘1’ modifier indicates that the obligation ranks in the higher end of the rating category, the ‘2’ modifier indicates a mid-category ranking and the ‘3’ modifier indicates a ranking in the lower end of the rating category.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Payment Due By Period
|
|
||||||||||||||||||
|
Contractual Obligations and Commitments
|
|
Total
|
|
Less than 1
year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Estimated gross loss and loss expense payments
(1)
|
|
$
|
12,997,553
|
|
|
$
|
3,944,971
|
|
|
$
|
3,820,077
|
|
|
$
|
2,019,845
|
|
|
$
|
3,212,660
|
|
|
|
Operating lease obligations
(2)
|
|
208,120
|
|
|
27,777
|
|
|
49,175
|
|
|
46,562
|
|
|
84,606
|
|
|
|||||
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Unfunded investment commitments
(3)
|
|
$
|
429,665
|
|
|
$
|
105,502
|
|
|
169,434
|
|
|
70,983
|
|
|
83,746
|
|
|
|||
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Debt (including interest payments)
(4)
|
|
2,001,299
|
|
|
66,072
|
|
|
855,575
|
|
|
58,200
|
|
|
1,021,452
|
|
|
|||||
|
Total
|
|
$
|
15,636,637
|
|
|
$
|
4,144,322
|
|
|
$
|
4,894,261
|
|
|
$
|
2,195,590
|
|
|
$
|
4,402,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We are obligated to pay claims for specified loss events covered by the (re)insurance contracts we write. Such loss payments represent our most significant future payment obligation. In contrast to our other contractual obligations, our cash payments are not determinable from the terms specified within the underlying contracts. The total amount in the table above reflects our best estimate of our reserve for losses and loss expenses. However, the actual amounts and timing may differ materially refer to ‘
Critical Accounting Estimates – Reserve for Losses and Loss Expenses
’ for further details. We have not taken into account corresponding reinsurance recoverable amounts that would be due to us.
|
(2)
|
In the ordinary course of business, we renew and enter into new leases for office space which expire at various dates.
|
(3)
|
We have
$414 million
of unfunded investment commitments related to our other investments portfolio, which are callable by our investment managers. refer to Item 8, Note 6(c) to the Consolidated Financial Statements '
Investments
' for further details. In addition, we have a
$16 million
commitment to purchase commercial mortgage loans.
|
(4)
|
Refer to Item 8, Note 11(a) to the Consolidated Financial Statements '
Debt and Financing Arrangement
s' for further details.
|
•
|
reserves for losses and loss expenses;
|
•
|
reinsurance recoverable balances;
|
•
|
premiums;
|
•
|
fair value measurements for our financial assets and liabilities; and
|
•
|
assessments of other-than-temporary impairments.
|
•
|
Expected Loss Ratio Method ("ELR Method"): This method estimates ultimate losses for an accident year or underwriting year by applying an expected loss ratio to the earned or written premium for that year. Generally, expected loss ratios are based on one or more of (a) an analysis of historical loss experience to date, (b) pricing information and (c) industry data, adjusted as appropriate, to reflect changes in rates and terms and conditions. This method is insensitive to actual incurred losses for the accident year or underwriting year in question and is, therefore, often useful in the early stages of development when very few losses have been incurred. Conversely, the lack of sensitivity to incurred/paid losses for the accident year or underwriting year in question means that this method is usually inappropriate in later stages of an accident year or underwriting year’s development.
|
•
|
Loss Development Method (also referred to as the Chain Ladder Method or Link Ratio Method): This method assumes that the losses incurred/paid for each accident year or underwriting year at a particular development stage follow a relatively similar pattern. It assumes that on average, every accident year or underwriting year will display the same percentage of ultimate losses incurred/paid at the same point in time after the inception of that year. The percentages incurred/paid are established for each development stage (e.g. 12 months, 24 months, etc.) after examining historical averages from historical loss development data and/or external industry benchmark information. Ultimate losses are then estimated by multiplying the actual incurred/paid losses by the reciprocal of the established incurred/paid percentage. The strengths of this method are that it reacts to loss emergence/payments and that it makes full use of historical claim emergence/payment experience. However, this method has weaknesses when the underlying assumption of stable loss development/payment patterns is not valid. This could be the consequence of changes in business mix, claim inflation trends or claim reporting practices and/or the presence of large claims, amongst other things. Furthermore, this method tends to produce volatile estimates of ultimate losses where there is volatility in the underlying incurred/paid patterns. In particular, where the expected percentage of incurred/paid losses is low, small deviations between actual and expected claims can lead to very volatile estimates of ultimate losses. As a result, this method is often unsuitable at early development stages for an accident year or underwriting year.
|
•
|
Bornhuetter-Ferguson Method ("BF Method"): This method can be seen as a combination of the ELR and Loss Development Methods, under which the Loss Development Method is given progressively more weight as an accident year or underwriting year matures. The main advantage of the BF Method is that it provides a more stable estimate of ultimate losses than the Loss Development Method at earlier stages of development, while remaining more sensitive to emerging loss development than the ELR Method. In addition, the BF Method allows for the incorporation of external market information through the use of expected loss ratios, whereas the Loss Development Method does not incorporate such information.
|
•
|
estimates of the size of insured industry losses from the catastrophic event and our corresponding market share;
|
•
|
a review of our portfolio of contracts performed to identify those contracts which may be exposed to the catastrophic event;
|
•
|
a review of modeled loss estimates based on information previously reported by customers and brokers, including exposure data obtained during the underwriting process;
|
•
|
discussions of the impact of the event with our customers and brokers and
|
•
|
catastrophe bulletins published by various independent statistical reporting agencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
||||||||||||||||||||
|
At December 31,
|
Case Reserves
|
|
IBNR
|
|
Total
|
|
Case Reserves
|
|
IBNR
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
$
|
805,407
|
|
|
$
|
623,966
|
|
|
$
|
1,429,373
|
|
|
$
|
436,737
|
|
|
$
|
312,481
|
|
|
$
|
749,218
|
|
|
|
Marine
|
326,225
|
|
|
306,889
|
|
|
633,114
|
|
|
287,383
|
|
|
152,230
|
|
|
439,613
|
|
|
||||||
|
Aviation
|
99,135
|
|
|
51,480
|
|
|
150,615
|
|
|
36,701
|
|
|
24,917
|
|
|
61,618
|
|
|
||||||
|
Credit and political risk
|
(22,536
|
)
|
|
120,287
|
|
|
97,751
|
|
|
(21,853
|
)
|
|
74,665
|
|
|
52,812
|
|
|
||||||
|
Professional lines
|
672,262
|
|
|
1,876,326
|
|
|
2,548,588
|
|
|
668,587
|
|
|
1,963,307
|
|
|
2,631,894
|
|
|
||||||
|
Liability
|
367,981
|
|
|
1,218,207
|
|
|
1,586,188
|
|
|
323,930
|
|
|
1,086,570
|
|
|
1,410,500
|
|
|
||||||
|
Discontinued lines - Novae
|
457,991
|
|
|
260,744
|
|
|
718,735
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Total Insurance
|
2,706,465
|
|
|
4,457,899
|
|
|
7,164,364
|
|
|
1,731,485
|
|
|
3,614,170
|
|
|
5,345,655
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Reinsurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
781,205
|
|
|
828,336
|
|
|
1,609,542
|
|
|
461,071
|
|
|
379,403
|
|
|
840,474
|
|
|
||||||
|
Credit and surety
|
132,305
|
|
|
250,296
|
|
|
382,601
|
|
|
128,840
|
|
|
223,109
|
|
|
351,949
|
|
|
||||||
|
Professional lines
|
340,516
|
|
|
831,047
|
|
|
1,171,563
|
|
|
302,927
|
|
|
879,477
|
|
|
1,182,404
|
|
|
||||||
|
Motor
|
649,706
|
|
|
499,178
|
|
|
1,148,883
|
|
|
462,843
|
|
|
413,101
|
|
|
875,945
|
|
|
||||||
|
Liability
|
312,450
|
|
|
916,423
|
|
|
1,228,873
|
|
|
271,348
|
|
|
830,053
|
|
|
1,101,400
|
|
|
||||||
|
Discontinued lines - Novae
|
215,012
|
|
|
76,715
|
|
|
291,727
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Total Reinsurance
|
2,431,194
|
|
|
3,401,995
|
|
|
5,833,189
|
|
|
1,627,029
|
|
|
2,725,143
|
|
|
4,352,172
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
5,137,659
|
|
|
$
|
7,859,894
|
|
|
$
|
12,997,553
|
|
|
$
|
3,358,514
|
|
|
$
|
6,339,313
|
|
|
$
|
9,697,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
The more significant weight given to industry benchmarks in forming our key actuarial assumptions;
|
•
|
The potential volatility of actuarial estimates, given the number of years of development it takes to produce a meaningful incurred loss as a percentage of ultimate losses;
|
•
|
Inherent uncertainties about loss trends, claims inflation (e.g. medical, judicial, social) and general economic conditions; and
|
•
|
The possibility of future litigation, legislative or judicial change that may impact future loss experience relative to the prior industry loss experience relied upon in reserve estimation.
|
|
|
|
|
|
|
|
|
||||||
|
INSURANCE
|
|
|||||||||||
|
Development Pattern
|
Expected Loss Ratio
|
|
||||||||||
|
Property and Other
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(105,725
|
)
|
|
$
|
(86,949
|
)
|
|
$
|
(68,174
|
)
|
|
|
Unchanged
|
(20,763
|
)
|
|
—
|
|
|
20,763
|
|
|
|||
|
3 months longer
|
75,016
|
|
|
98,063
|
|
|
121,110
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Marine
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(47,465
|
)
|
|
$
|
(36,396
|
)
|
|
$
|
(25,327
|
)
|
|
|
Unchanged
|
(13,026
|
)
|
|
—
|
|
|
13,026
|
|
|
|||
|
3 months longer
|
22,632
|
|
|
37,675
|
|
|
52,718
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Aviation
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(12,100
|
)
|
|
$
|
(10,558
|
)
|
|
$
|
(9,017
|
)
|
|
|
Unchanged
|
(2,069
|
)
|
|
—
|
|
|
2,069
|
|
|
|||
|
3 months longer
|
18,075
|
|
|
21,204
|
|
|
24,334
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Credit and Political Risk
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(15,508
|
)
|
|
$
|
(233
|
)
|
|
$
|
20,592
|
|
|
|
Unchanged
|
(15,275
|
)
|
|
—
|
|
|
20,825
|
|
|
|||
|
3 months longer
|
(14,994
|
)
|
|
281
|
|
|
21,106
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Professional Lines
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(351,839
|
)
|
|
$
|
(104,442
|
)
|
|
$
|
142,955
|
|
|
|
Unchanged
|
(257,876
|
)
|
|
—
|
|
|
257,876
|
|
|
|||
|
6 months longer
|
(150,203
|
)
|
|
119,701
|
|
|
389,039
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Liability
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(206,450
|
)
|
|
$
|
(40,958
|
)
|
|
$
|
124,534
|
|
|
|
Unchanged
|
(169,651
|
)
|
|
—
|
|
|
169,651
|
|
|
|||
|
6 months longer
|
(123,913
|
)
|
|
50,891
|
|
|
225,695
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Discontinued Lines - Novae
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(9,543
|
)
|
|
$
|
(5,767
|
)
|
|
$
|
(1,990
|
)
|
|
|
Unchanged
|
(4,391
|
)
|
|
—
|
|
|
4,391
|
|
|
|||
|
6 months longer
|
1,174
|
|
|
6,140
|
|
|
11,105
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
REINSURANCE
|
|
|||||||||||
|
Development Pattern
|
Expected Loss Ratio
|
|
||||||||||
|
Property and Other
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(95,467
|
)
|
|
$
|
(45,006
|
)
|
|
$
|
5,876
|
|
|
|
Unchanged
|
(54,829
|
)
|
|
—
|
|
|
48,916
|
|
|
|||
|
3 months longer
|
(6,083
|
)
|
|
42,575
|
|
|
96,383
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Credit and Surety
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(39,488
|
)
|
|
$
|
(22,128
|
)
|
|
$
|
(3,970
|
)
|
|
|
Unchanged
|
(18,665
|
)
|
|
—
|
|
|
18,826
|
|
|
|||
|
6 months longer
|
22,366
|
|
|
43,442
|
|
|
65,322
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Professional Lines
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(128,175
|
)
|
|
$
|
(39,644
|
)
|
|
$
|
60,758
|
|
|
|
Unchanged
|
(84,653
|
)
|
|
—
|
|
|
94,287
|
|
|
|||
|
6 months longer
|
(31,371
|
)
|
|
55,093
|
|
|
144,532
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Motor
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(78,511
|
)
|
|
$
|
(32,323
|
)
|
|
$
|
15,518
|
|
|
|
Unchanged
|
(38,376
|
)
|
|
—
|
|
|
44,515
|
|
|
|||
|
6 months longer
|
34,048
|
|
|
76,953
|
|
|
127,304
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Liability
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(129,725
|
)
|
|
$
|
(29,471
|
)
|
|
$
|
80,342
|
|
|
|
Unchanged
|
(99,584
|
)
|
|
—
|
|
|
105,882
|
|
|
|||
|
6 months longer
|
(56,421
|
)
|
|
39,389
|
|
|
144,179
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Discontinued Lines - Novae
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(10,206
|
)
|
|
$
|
(7,258
|
)
|
|
$
|
(4,310
|
)
|
|
|
Unchanged
|
(3,557
|
)
|
|
—
|
|
|
3,557
|
|
|
|||
|
6 months longer
|
3,516
|
|
|
7,650
|
|
|
11,783
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
||||||||||||||||||||
|
At December 31,
|
Case
Reserves
|
|
IBNR
|
|
Total
|
|
Case
Reserves
|
|
IBNR
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
$
|
193,662
|
|
|
$
|
194,288
|
|
|
$
|
387,950
|
|
|
$
|
139,650
|
|
|
$
|
30,058
|
|
|
$
|
169,707
|
|
|
|
Marine
|
105,908
|
|
|
101,751
|
|
|
207,659
|
|
|
130,680
|
|
|
50,316
|
|
|
180,996
|
|
|
||||||
|
Aviation
|
7,356
|
|
|
6,918
|
|
|
14,274
|
|
|
2,443
|
|
|
3,941
|
|
|
6,384
|
|
|
||||||
|
Credit and political risk
|
1,963
|
|
|
13,115
|
|
|
15,078
|
|
|
—
|
|
|
154
|
|
|
154
|
|
|
||||||
|
Professional lines
|
238,450
|
|
|
652,223
|
|
|
890,673
|
|
|
263,135
|
|
|
735,738
|
|
|
998,873
|
|
|
||||||
|
Liability
|
208,965
|
|
|
712,054
|
|
|
921,019
|
|
|
187,357
|
|
|
649,858
|
|
|
837,215
|
|
|
||||||
|
Discontinued lines - Novae
|
173,673
|
|
|
110,996
|
|
|
284,669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Total Insurance
|
929,977
|
|
|
1,791,345
|
|
|
2,721,322
|
|
|
723,265
|
|
|
1,470,065
|
|
|
2,193,329
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Reinsurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
131,340
|
|
|
178,967
|
|
|
310,307
|
|
|
33,768
|
|
|
21,869
|
|
|
55,637
|
|
|
||||||
|
Credit and surety
|
2,561
|
|
|
10,500
|
|
|
13,061
|
|
|
494
|
|
|
1,422
|
|
|
1,916
|
|
|
||||||
|
Professional lines
|
1,930
|
|
|
35,892
|
|
|
37,822
|
|
|
243
|
|
|
8,110
|
|
|
8,353
|
|
|
||||||
|
Motor
|
1,481
|
|
|
2,185
|
|
|
3,666
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Liability
|
8,314
|
|
|
58,378
|
|
|
66,692
|
|
|
1,821
|
|
|
15,053
|
|
|
16,874
|
|
|
||||||
|
Discontinued lines - Novae
|
5,435
|
|
|
1,209
|
|
|
6,644
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Total Reinsurance
|
151,061
|
|
|
287,131
|
|
|
438,192
|
|
|
36,326
|
|
|
46,454
|
|
|
82,780
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
1,081,038
|
|
|
$
|
2,078,476
|
|
|
$
|
3,159,514
|
|
|
$
|
759,591
|
|
|
$
|
1,516,519
|
|
|
$
|
2,276,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
changes in renewal rates or rates of new business accepted by cedants (such changes could result from changes in the relevant insurance market that could affect more than one of our cedants or could be a consequence of changes in the marketing strategy or risk appetite of an individual cedant);
|
•
|
changes in underlying exposure values; and/or
|
•
|
changes in rates being charged by cedants.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Catastrophe
|
$
|
16,344
|
|
|
$
|
4,418
|
|
|
$
|
7,400
|
|
|
|
Property
|
248,580
|
|
|
173,380
|
|
|
180,941
|
|
|
|||
|
Professional lines
|
214,184
|
|
|
211,567
|
|
|
201,595
|
|
|
|||
|
Credit and surety
|
223,184
|
|
|
188,365
|
|
|
202,609
|
|
|
|||
|
Motor
|
318,494
|
|
|
239,056
|
|
|
222,091
|
|
|
|||
|
Liability
|
263,790
|
|
|
272,390
|
|
|
182,246
|
|
|
|||
|
Agriculture
|
202,234
|
|
|
141,994
|
|
|
119,695
|
|
|
|||
|
Engineering
|
67,221
|
|
|
60,080
|
|
|
62,483
|
|
|
|||
|
Other
|
51,211
|
|
|
56,283
|
|
|
12,945
|
|
|
|||
|
Total estimated premiums
|
$
|
1,605,242
|
|
|
$
|
1,347,533
|
|
|
$
|
1,192,005
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written (reinsurance segment)
|
$
|
2,428,436
|
|
|
$
|
2,249,966
|
|
|
$
|
2,020,649
|
|
|
|
As a % of total gross premiums written
|
66
|
%
|
|
60
|
%
|
|
59
|
%
|
|
|||
|
|
|
|
|
|
|
|
•
|
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments.
|
•
|
Level 2 – Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
|
•
|
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect our own assumptions about assumptions that market participants might use.
|
|
|
|
|
|
|
|
At December 31,
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Fair value of collateral
|
100%
|
|
100%
|
|
|
Discount Margin
|
0.1% - 16.6%
|
|
0.4% - 16.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Discount rate
|
6.0% - 8.5%
|
|
5.0% - 8.0%
|
|
|
|
|
|
|
|
a.
|
The length of time and extent to which the fair value has been less than the amortized cost for fixed maturities or cost for equity securities.
|
b.
|
The financial condition, near-term and long-term prospects for the issuer of the security, including relevant industry conditions and trends, and the implications of rating agency actions, and offering prices.
|
c.
|
The historical and implied volatility of the fair value.
|
d.
|
The collateral structure and credit support.
|
1)
|
have the intent to sell the security,
|
2)
|
more likely than not will be required to sell the security before its anticipated recovery, or
|
3)
|
do not anticipate to recover fully the amortized cost based on projected cash flows to be collected (i.e. a credit loss exists).
|
•
|
declines in value greater than 20% for nine consecutive months, and
|
•
|
declines in value greater than 10% for twelve consecutive months.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fair Value
|
|
Potential Adverse Change in Fair Value
|
|
||||||||||||
Increase in
interest rate
by 100
basis points
|
|
Widening of
credit spreads
by 100
basis points
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. government and agency
|
$
|
1,712,469
|
|
|
$
|
(59,896
|
)
|
|
$
|
—
|
|
|
$
|
(59,896
|
)
|
|
|
Non-U.S. government
|
806,299
|
|
|
(24,443
|
)
|
|
—
|
|
|
(24,443
|
)
|
|
||||
|
Agency RMBS
|
2,395,152
|
|
|
(102,736
|
)
|
|
—
|
|
|
(102,736
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Securities exposed to credit spreads:
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate debt
|
5,297,866
|
|
|
(168,711
|
)
|
|
(153,920
|
)
|
|
(322,631
|
)
|
|
||||
|
CMBS
|
777,728
|
|
|
(39,572
|
)
|
|
(42,817
|
)
|
|
(82,389
|
)
|
|
||||
|
Non agency RMBS
|
46,831
|
|
|
(378
|
)
|
|
(1,681
|
)
|
|
(2,059
|
)
|
|
||||
|
ABS
|
1,436,281
|
|
|
(9,632
|
)
|
|
(29,517
|
)
|
|
(39,149
|
)
|
|
||||
|
Municipals
|
149,380
|
|
|
(5,156
|
)
|
|
(5,830
|
)
|
|
(10,986
|
)
|
|
||||
|
|
$
|
12,622,006
|
|
|
$
|
(410,524
|
)
|
|
$
|
(233,765
|
)
|
|
$
|
(644,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. government and agency
|
$
|
1,656,069
|
|
|
$
|
(74,786
|
)
|
|
$
|
—
|
|
|
$
|
(74,786
|
)
|
|
|
Non-U.S. government
|
565,834
|
|
|
(16,705
|
)
|
|
—
|
|
|
(16,705
|
)
|
|
||||
|
Agency RMBS
|
2,465,135
|
|
|
(123,928
|
)
|
|
—
|
|
|
(123,928
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Securities exposed to credit spreads:
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate debt
|
4,600,743
|
|
|
(153,947
|
)
|
|
(166,352
|
)
|
|
(320,299
|
)
|
|
||||
|
CMBS
|
666,237
|
|
|
(18,502
|
)
|
|
(19,794
|
)
|
|
(38,296
|
)
|
|
||||
|
Non agency RMBS
|
56,921
|
|
|
(254
|
)
|
|
(1,801
|
)
|
|
(2,055
|
)
|
|
||||
|
ABS
|
1,222,214
|
|
|
(6,826
|
)
|
|
(20,659
|
)
|
|
(27,485
|
)
|
|
||||
|
Municipals
|
163,961
|
|
|
(5,738
|
)
|
|
(9,033
|
)
|
|
(14,771
|
)
|
|
||||
|
|
$
|
11,397,114
|
|
|
$
|
(400,686
|
)
|
|
$
|
(217,639
|
)
|
|
$
|
(618,325
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
AUD
|
|
NZD
|
|
CAD
|
|
EUR
|
|
GBP
|
|
JPY
|
|
Other
|
|
Total
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net managed assets (liabilities), excluding derivatives
|
$
|
31,278
|
|
|
$
|
(8,923
|
)
|
|
$
|
118,972
|
|
|
$
|
(258,664
|
)
|
|
$
|
166,871
|
|
|
$
|
15,044
|
|
|
$
|
102,662
|
|
|
$
|
167,240
|
|
|
|
Foreign currency derivatives, net
|
(5,468
|
)
|
|
7,095
|
|
|
(117,945
|
)
|
|
279,481
|
|
|
(82,488
|
)
|
|
13,946
|
|
|
(4,739
|
)
|
|
89,882
|
|
|
||||||||
|
Net managed foreign currency exposure
|
25,810
|
|
|
(1,828
|
)
|
|
1,027
|
|
|
20,817
|
|
|
84,383
|
|
|
28,990
|
|
|
97,923
|
|
|
257,122
|
|
|
||||||||
|
Other net foreign currency exposure
|
1
|
|
|
—
|
|
|
(20
|
)
|
|
99
|
|
|
(54
|
)
|
|
—
|
|
|
80,669
|
|
|
80,695
|
|
|
||||||||
|
Total net foreign currency exposure
|
$
|
25,811
|
|
|
$
|
(1,828
|
)
|
|
$
|
1,007
|
|
|
$
|
20,916
|
|
|
$
|
84,329
|
|
|
$
|
28,990
|
|
|
$
|
178,592
|
|
|
$
|
337,817
|
|
|
|
Net foreign currency exposure as a percentage of total shareholders’ equity
|
0.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
0.4
|
%
|
|
1.6
|
%
|
|
0.5
|
%
|
|
3.3
|
%
|
|
6.3
|
%
|
|
||||||||
|
Pre-tax impact of net foreign currency exposure on shareholders’ equity given a hypothetical 10% rate movement
(1)
|
$
|
2,581
|
|
|
$
|
(183
|
)
|
|
$
|
101
|
|
|
$
|
2,092
|
|
|
$
|
8,433
|
|
|
$
|
2,899
|
|
|
$
|
17,859
|
|
|
$
|
33,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net managed assets (liabilities), excluding derivatives
|
$
|
64,818
|
|
|
$
|
(6,924
|
)
|
|
$
|
77,554
|
|
|
$
|
(219,811
|
)
|
|
$
|
(52,030
|
)
|
|
$
|
(1,870
|
)
|
|
$
|
101,274
|
|
|
$
|
(36,989
|
)
|
|
|
Foreign currency derivatives, net
|
(66,368
|
)
|
|
6,939
|
|
|
(81,970
|
)
|
|
210,111
|
|
|
(30,225
|
)
|
|
(5,573
|
)
|
|
14,306
|
|
|
47,220
|
|
|
||||||||
|
Net managed foreign currency exposure
|
(1,550
|
)
|
|
15
|
|
|
(4,416
|
)
|
|
(9,700
|
)
|
|
(82,255
|
)
|
|
(7,443
|
)
|
|
115,580
|
|
|
10,231
|
|
|
||||||||
|
Other net foreign currency exposure
|
1,939
|
|
|
—
|
|
|
—
|
|
|
22,558
|
|
|
675
|
|
|
(46
|
)
|
|
70,304
|
|
|
95,430
|
|
|
||||||||
|
Total net foreign currency exposure
|
$
|
389
|
|
|
$
|
15
|
|
|
$
|
(4,416
|
)
|
|
$
|
12,858
|
|
|
$
|
(81,580
|
)
|
|
$
|
(7,489
|
)
|
|
$
|
185,884
|
|
|
$
|
105,661
|
|
|
|
Net foreign currency exposure as a percentage of total shareholders’ equity
|
—
|
%
|
|
—
|
%
|
|
(0.1
|
%)
|
|
0.2
|
%
|
|
(1.3
|
%)
|
|
(0.1
|
%)
|
|
3.0
|
%
|
|
1.7
|
%
|
|
||||||||
|
Pre-tax impact of net foreign currency exposure on shareholders’ equity given a hypothetical 10% rate movement
(1)
|
$
|
39
|
|
|
$
|
2
|
|
|
$
|
(442
|
)
|
|
$
|
1,286
|
|
|
$
|
(8,158
|
)
|
|
$
|
(749
|
)
|
|
$
|
18,588
|
|
|
$
|
10,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Assumes 10% change in underlying currencies relative to the U.S. dollar.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Index to Consolidated Financial Statements and Related Notes
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
Note 1 – History
|
|
|
|
Note 2 – Significant Accounting Policies
|
|
|
|
Note 3 – Business Combinations
|
|
|
|
Note 4 – Segment Information
|
|
|
|
Note 5 – Goodwill and Intangible Assets
|
|
|
|
Note 6 – Investments
|
|
|
|
Note 7 – Fair Value Measurements
|
|
|
|
Note 8 – Derivative Instruments
|
|
|
|
Note 9 – Reserves for Losses and Loss Expenses
|
|
|
|
Note 10 – Reinsurance
|
|
|
|
Note 11 – Debt and Financing Arrangements
|
|
|
|
Note 12 – Commitments and Contingencies
|
|
|
|
Note 13 – Earnings Per Common Share
|
|
|
|
Note 14 – Shareholders’ Equity
|
|
|
|
Note 15 – Retirement Plans
|
|
|
|
Note 16 – Share-Based Compensation
|
|
|
|
Note 17 – Related Party Transactions
|
|
|
|
Note 18 – Transaction and Reorganization Expenses
|
|
|
|
Note 19 – Income Taxes
|
|
|
|
Note 20 – Other Comprehensive Income (Loss)
|
|
|
|
Note 21 – Statutory Financial Information
|
|
|
|
Note 22 – Unaudited Condensed Quarterly Financial Data
|
|
|
|
Note 23 – Subsequent Events
|
|
|
|
|
/s/ Deloitte Ltd.
|
Hamilton, Bermuda
|
February 28, 2018
|
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturities, available for sale, at fair value
(Amortized cost 2017: $12,611,219; 2016: $11,523,316) |
$
|
12,622,006
|
|
|
$
|
11,397,114
|
|
Equity securities, available for sale, at fair value
(Cost 2017: $552,867; 2016: $597,366) |
635,511
|
|
|
638,744
|
|
||
Mortgage loans, held for investment, at amortized cost and fair value
|
325,062
|
|
|
349,969
|
|
||
Other investments, at fair value
|
1,009,373
|
|
|
830,219
|
|
||
Equity method investments
|
108,597
|
|
|
116,000
|
|
||
Short-term investments, at amortized cost and fair value
|
83,661
|
|
|
127,461
|
|
||
Total investments
|
14,784,210
|
|
|
13,459,507
|
|
||
Cash and cash equivalents
|
948,626
|
|
|
1,039,494
|
|
||
Restricted cash and cash equivalents
|
415,160
|
|
|
202,013
|
|
||
Accrued interest receivable
|
81,223
|
|
|
74,971
|
|
||
Insurance and reinsurance premium balances receivable
|
3,012,419
|
|
|
2,313,512
|
|
||
Reinsurance recoverable on unpaid and paid losses
|
3,338,840
|
|
|
2,334,922
|
|
||
Deferred acquisition costs
|
474,061
|
|
|
438,636
|
|
||
Prepaid reinsurance premiums
|
809,274
|
|
|
556,344
|
|
||
Receivable for investments sold
|
11,621
|
|
|
14,123
|
|
||
Goodwill
|
102,003
|
|
|
47,148
|
|
||
Intangible assets
|
257,987
|
|
|
37,901
|
|
||
Value of business acquired
|
206,838
|
|
|
—
|
|
||
Other assets
|
317,915
|
|
|
295,120
|
|
||
Total assets
|
$
|
24,760,177
|
|
|
$
|
20,813,691
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Reserve for losses and loss expenses
|
$
|
12,997,553
|
|
|
$
|
9,697,827
|
|
Unearned premiums
|
3,641,399
|
|
|
2,969,498
|
|
||
Insurance and reinsurance balances payable
|
899,064
|
|
|
493,183
|
|
||
Senior notes and notes payable
|
1,376,529
|
|
|
992,950
|
|
||
Payable for investments purchased
|
100,589
|
|
|
62,550
|
|
||
Other liabilities
|
403,779
|
|
|
325,313
|
|
||
Total liabilities
|
19,418,913
|
|
|
14,541,321
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
||
Shareholders' equity
|
|
|
|
||||
Preferred shares
|
775,000
|
|
|
1,126,074
|
|
||
Common shares
(shares issued 2017: 176,580; 2016: 176,580
shares outstanding 2017: 83,161; 2016: 86,441)
|
2,206
|
|
|
2,206
|
|
||
Additional paid-in capital
|
2,299,166
|
|
|
2,299,857
|
|
||
Accumulated other comprehensive income (loss)
|
92,382
|
|
|
(121,841
|
)
|
||
Retained earnings
|
5,979,666
|
|
|
6,527,627
|
|
||
Treasury shares, at cost
(2017: 93,419; 2016: 90,139)
|
(3,807,156
|
)
|
|
(3,561,553
|
)
|
||
Total shareholders’ equity
|
5,341,264
|
|
|
6,272,370
|
|
||
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
24,760,177
|
|
|
$
|
20,813,691
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands, except for per share data)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
4,148,760
|
|
|
$
|
3,705,625
|
|
|
$
|
3,686,417
|
|
Net investment income
|
400,805
|
|
|
353,335
|
|
|
305,336
|
|
|||
Other insurance related income (losses)
|
(1,240
|
)
|
|
7,222
|
|
|
(2,953
|
)
|
|||
Bargain purchase gain
|
15,044
|
|
|
—
|
|
|
—
|
|
|||
Termination fee received
|
—
|
|
|
—
|
|
|
280,000
|
|
|||
Net realized investment gains (losses):
|
|
|
|
|
|
||||||
Other-than-temporary impairment ("OTTI") losses
|
(14,493
|
)
|
|
(26,210
|
)
|
|
(72,720
|
)
|
|||
Other realized investment gains (losses)
|
42,719
|
|
|
(34,315
|
)
|
|
(65,771
|
)
|
|||
Total net realized investment gains (losses)
|
28,226
|
|
|
(60,525
|
)
|
|
(138,491
|
)
|
|||
Total revenues
|
4,591,595
|
|
|
4,005,657
|
|
|
4,130,309
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
3,287,772
|
|
|
2,204,197
|
|
|
2,176,199
|
|
|||
Acquisition costs
|
823,591
|
|
|
746,876
|
|
|
718,112
|
|
|||
General and administrative expenses
|
579,428
|
|
|
602,717
|
|
|
596,821
|
|
|||
Foreign exchange losses (gains)
|
134,737
|
|
|
(121,295
|
)
|
|
(102,312
|
)
|
|||
Interest expense and financing costs
|
54,811
|
|
|
51,360
|
|
|
50,963
|
|
|||
Transaction and reorganization expenses
|
26,718
|
|
|
—
|
|
|
45,867
|
|
|||
Amortization of value of business acquired
|
50,104
|
|
|
—
|
|
|
—
|
|
|||
Amortization of intangibles
|
2,543
|
|
|
—
|
|
|
—
|
|
|||
Total expenses
|
4,959,704
|
|
|
3,483,855
|
|
|
3,485,650
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before income taxes and interest in income (loss) of equity method investments
|
(368,109
|
)
|
|
521,802
|
|
|
644,659
|
|
|||
Income tax benefit (expense)
|
7,542
|
|
|
(6,340
|
)
|
|
(3,028
|
)
|
|||
Interest in loss of equity method investments
|
(8,402
|
)
|
|
(2,094
|
)
|
|
—
|
|
|||
Net income (loss)
|
(368,969
|
)
|
|
513,368
|
|
|
641,631
|
|
|||
Preferred share dividends
|
46,810
|
|
|
46,597
|
|
|
40,069
|
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
1,309
|
|
|
—
|
|
|||
Net income (loss) available to common shareholders
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
|
|
|
|
|
||||||
Per share data
|
|
|
|
|
|
||||||
Net income (loss) per common share:
|
|
|
|
|
|
||||||
Basic net income (loss)
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
|
$
|
6.10
|
|
Diluted net income (loss)
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
|
$
|
6.04
|
|
Weighted average common shares outstanding - basic
|
84,108
|
|
|
90,772
|
|
|
98,609
|
|
|||
Weighted average common shares outstanding - diluted
|
84,108
|
|
|
91,547
|
|
|
99,629
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
$
|
641,631
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Available for sale investments:
|
|
|
|
|
|
||||||
Unrealized investment gains (losses) arising during the year
|
205,419
|
|
|
5,072
|
|
|
(266,384
|
)
|
|||
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income
|
(33,134
|
)
|
|
62,190
|
|
|
144,991
|
|
|||
Unrealized investment gains (losses) arising during the year, net of reclassification adjustment
|
172,285
|
|
|
67,262
|
|
|
(121,393
|
)
|
|||
Foreign currency translation adjustment
|
41,938
|
|
|
(638
|
)
|
|
(21,498
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
214,223
|
|
|
66,624
|
|
|
(142,891
|
)
|
|||
Comprehensive income (loss)
|
$
|
(154,746
|
)
|
|
$
|
579,992
|
|
|
$
|
498,740
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Preferred shares
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
1,126,074
|
|
|
$
|
627,843
|
|
|
$
|
627,843
|
|
Shares issued
|
—
|
|
|
550,000
|
|
|
—
|
|
|||
Shares repurchased
|
(351,074
|
)
|
|
(51,769
|
)
|
|
—
|
|
|||
Balance at end of year
|
775,000
|
|
|
1,126,074
|
|
|
627,843
|
|
|||
|
|
|
|
|
|
||||||
Common shares (par value)
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,206
|
|
|
2,202
|
|
|
2,191
|
|
|||
Shares issued
|
—
|
|
|
4
|
|
|
11
|
|
|||
Balance at end of year
|
2,206
|
|
|
2,206
|
|
|
2,202
|
|
|||
|
|
|
|
|
|
||||||
Additional paid-in capital
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,299,857
|
|
|
2,241,388
|
|
|
2,285,016
|
|
|||
Common shares issued
|
—
|
|
|
220
|
|
|
3,416
|
|
|||
Treasury shares reissued
|
(39,368
|
)
|
|
(19,303
|
)
|
|
(17,958
|
)
|
|||
Settlement of accelerated share repurchase
|
—
|
|
|
60,000
|
|
|
(60,000
|
)
|
|||
Costs associated with issuance of preferred shares
|
—
|
|
|
(18,055
|
)
|
|
—
|
|
|||
Stock options exercised
|
—
|
|
|
—
|
|
|
559
|
|
|||
Share-based compensation expense
|
38,677
|
|
|
35,607
|
|
|
30,355
|
|
|||
Balance at end of year
|
2,299,166
|
|
|
2,299,857
|
|
|
2,241,388
|
|
|||
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(121,841
|
)
|
|
(188,465
|
)
|
|
(45,574
|
)
|
|||
Unrealized gains (losses) on available for sale investments, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(82,323
|
)
|
|
(149,585
|
)
|
|
(28,192
|
)
|
|||
Unrealized gains (losses) arising during the year, net of reclassification adjustment
|
172,285
|
|
|
67,262
|
|
|
(121,393
|
)
|
|||
Balance at end of year
|
89,962
|
|
|
(82,323
|
)
|
|
(149,585
|
)
|
|||
Cumulative foreign currency translation adjustments, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(39,518
|
)
|
|
(38,880
|
)
|
|
(17,382
|
)
|
|||
Foreign currency translation adjustment
|
41,938
|
|
|
(638
|
)
|
|
(21,498
|
)
|
|||
Balance at end of year
|
2,420
|
|
|
(39,518
|
)
|
|
(38,880
|
)
|
|||
Balance at end of year
|
92,382
|
|
|
(121,841
|
)
|
|
(188,465
|
)
|
|||
|
|
|
|
|
|
||||||
Retained earnings
|
|
|
|
|
|
||||||
Balance at beginning of year
|
6,527,627
|
|
|
6,194,353
|
|
|
5,715,504
|
|
|||
Net income (loss)
|
(368,969
|
)
|
|
513,368
|
|
|
641,631
|
|
|||
Preferred share dividends
|
(46,810
|
)
|
|
(46,597
|
)
|
|
(40,069
|
)
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
(1,309
|
)
|
|
—
|
|
|||
Common share dividends
|
(132,182
|
)
|
|
(132,188
|
)
|
|
(122,713
|
)
|
|||
Balance at end of year
|
5,979,666
|
|
|
6,527,627
|
|
|
6,194,353
|
|
|||
|
|
|
|
|
|
||||||
Treasury shares, at cost
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(3,561,553
|
)
|
|
(3,010,439
|
)
|
|
(2,763,859
|
)
|
|||
Shares repurchased
|
(285,858
|
)
|
|
(571,805
|
)
|
|
(264,538
|
)
|
|||
Treasury shares reissued
|
40,255
|
|
|
20,691
|
|
|
17,958
|
|
|||
Balance at end of year
|
(3,807,156
|
)
|
|
(3,561,553
|
)
|
|
(3,010,439
|
)
|
|||
|
|
|
|
|
|
||||||
Total shareholders' equity
|
$
|
5,341,264
|
|
|
$
|
6,272,370
|
|
|
$
|
5,866,882
|
|
|
|
|
|
|
|
||||||
Per share data
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
$
|
1.53
|
|
|
$
|
1.43
|
|
|
$
|
1.22
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
$
|
641,631
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Net realized investment (gains) losses
|
(28,226
|
)
|
|
60,525
|
|
|
138,491
|
|
|||
Net realized and unrealized gains on other investments
|
(72,763
|
)
|
|
(38,669
|
)
|
|
(20,148
|
)
|
|||
Amortization of fixed maturities
|
43,292
|
|
|
65,921
|
|
|
97,223
|
|
|||
Interest in loss of equity method investments
|
8,402
|
|
|
2,094
|
|
|
—
|
|
|||
Other amortization and depreciation
|
81,471
|
|
|
24,573
|
|
|
26,341
|
|
|||
Share-based compensation expense, net of cash payments
|
12,667
|
|
|
52,211
|
|
|
43,052
|
|
|||
Non-cash foreign exchange losses
|
24,149
|
|
|
—
|
|
|
—
|
|
|||
Bargain purchase gain
|
(15,044
|
)
|
|
—
|
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Accrued interest receivable
|
(4,353
|
)
|
|
(885
|
)
|
|
8,908
|
|
|||
Reinsurance recoverable balances
|
(131,160
|
)
|
|
(176,532
|
)
|
|
(214,992
|
)
|
|||
Deferred acquisition costs
|
(35,076
|
)
|
|
33,212
|
|
|
(4,744
|
)
|
|||
Prepaid reinsurance premiums
|
(56,377
|
)
|
|
(158,809
|
)
|
|
(46,955
|
)
|
|||
Reserve for loss and loss expenses
|
1,004,578
|
|
|
54,476
|
|
|
151,011
|
|
|||
Unearned premiums
|
(56,603
|
)
|
|
198,938
|
|
|
29,841
|
|
|||
Insurance and reinsurance balances, net
|
(81,831
|
)
|
|
(209,895
|
)
|
|
(74,578
|
)
|
|||
Other items
|
(64,928
|
)
|
|
(13,804
|
)
|
|
16,119
|
|
|||
Net cash provided by operating activities
|
259,229
|
|
|
406,724
|
|
|
791,200
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(8,714,990
|
)
|
|
(9,176,728
|
)
|
|
(11,011,979
|
)
|
|||
Equity securities
|
(106,136
|
)
|
|
(302,554
|
)
|
|
(356,617
|
)
|
|||
Mortgage loans
|
(31,077
|
)
|
|
(148,450
|
)
|
|
(206,191
|
)
|
|||
Other investments
|
(153,150
|
)
|
|
(190,370
|
)
|
|
(83,561
|
)
|
|||
Equity method investments
|
(1,000
|
)
|
|
(107,913
|
)
|
|
—
|
|
|||
Short-term investments
|
(41,609
|
)
|
|
(190,747
|
)
|
|
(80,069
|
)
|
|||
Proceeds from the sale of:
|
|
|
|
|
|
||||||
Fixed maturities
|
7,004,973
|
|
|
7,905,316
|
|
|
9,432,226
|
|
|||
Equity securities
|
448,058
|
|
|
305,642
|
|
|
275,357
|
|
|||
Other investments
|
260,943
|
|
|
215,578
|
|
|
252,418
|
|
|||
Short-term investments
|
49,280
|
|
|
54,165
|
|
|
125,311
|
|
|||
Proceeds from redemption of fixed maturities
|
2,009,982
|
|
|
1,492,588
|
|
|
1,407,806
|
|
|||
Proceeds from redemption of short-term investments
|
119,427
|
|
|
36,546
|
|
|
23,687
|
|
|||
Proceeds from the repayment of mortgage loans
|
56,435
|
|
|
5,040
|
|
|
—
|
|
|||
Purchase of other assets
|
(42,685
|
)
|
|
(27,149
|
)
|
|
(33,683
|
)
|
|||
Change in restricted cash and cash equivalents
|
(213,147
|
)
|
|
(15,395
|
)
|
|
29,598
|
|
|||
Purchase of subsidiaries, net
|
(466,941
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
178,363
|
|
|
(144,431
|
)
|
|
(225,697
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net proceeds from issuance of debt
|
346,362
|
|
|
—
|
|
|
—
|
|
|||
Repayment of notes payable
|
(67,242
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from issuance of preferred shares
|
—
|
|
|
531,945
|
|
|
—
|
|
|||
Repurchase of common shares - open market
|
(261,180
|
)
|
|
(495,426
|
)
|
|
(314,204
|
)
|
|||
Taxes paid on withholding shares
|
(24,678
|
)
|
|
(14,329
|
)
|
|
(18,048
|
)
|
|||
Dividends paid - common shares
|
(135,032
|
)
|
|
(132,323
|
)
|
|
(118,652
|
)
|
|||
Repurchase of preferred shares
|
(351,074
|
)
|
|
(51,769
|
)
|
|
—
|
|
|||
Dividends paid - preferred shares
|
(52,844
|
)
|
|
(39,909
|
)
|
|
(40,088
|
)
|
|||
Proceeds from issuance of common shares
|
—
|
|
|
224
|
|
|
3,986
|
|
|||
Net cash used in financing activities
|
(545,688
|
)
|
|
(201,587
|
)
|
|
(487,006
|
)
|
|||
|
|
|
|
|
|
Effect of exchange rate changes on foreign currency cash and cash equivalents
|
17,228
|
|
|
(9,345
|
)
|
|
(12,194
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
(90,868
|
)
|
|
51,361
|
|
|
66,303
|
|
|||
Cash and cash equivalents - beginning of year
|
1,039,494
|
|
|
988,133
|
|
|
921,830
|
|
|||
Cash and cash equivalents - end of year
|
$
|
948,626
|
|
|
$
|
1,039,494
|
|
|
$
|
988,133
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid
|
$
|
—
|
|
|
$
|
12,041
|
|
|
$
|
12,661
|
|
Interest paid
|
$
|
49,945
|
|
|
$
|
48,875
|
|
|
$
|
48,875
|
|
1.
|
HISTORY
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
•
|
reserve for losses and loss expenses;
|
•
|
reinsurance recoverable on unpaid losses, including the provision for uncollectible amounts;
|
•
|
gross and net premiums written and net premiums earned;
|
•
|
other-than-temporary impairments ("OTTI") in the carrying value of available-for-sale securities; and
|
•
|
fair value measurements for its financial assets and liabilities.
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
a)
|
Investments
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
b)
|
Cash and cash equivalents
|
c)
|
Premiums and Acquisition Costs
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
d)
|
Losses and Loss Expenses
|
e)
|
Reinsurance
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
f)
|
Foreign Exchange
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
h)
|
Derivative Instruments
|
i)
|
Goodwill and Intangible Assets
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
k)
|
Treasury Shares
|
l)
|
New Accounting Standards Adopted in 2017
|
m)
|
Recently Issued Accounting Standards Not Yet Adopted
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
•
|
equity investments (except those accounted for under the equity method of accounting, investments that are consolidated or those that meet a practicability exception) to be measured at fair value with changes in fair value recognized in net income,
|
•
|
simplifies the impairment assessment of equity investments without readily determinable values by requiring a qualitative assessment to identify impairment, eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost,
|
•
|
requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes,
|
•
|
requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liabilities in accordance with the fair value option,
|
•
|
requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and
|
•
|
clarifies that the reporting organization should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the organization’s other deferred tax assets.
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
1.
|
the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified;
|
2.
|
the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and
|
3.
|
the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
3.
|
BUSINESS COMBINATIONS
|
a)
|
Acquisition of Novae Group plc
|
|
|
|
|
|
||
|
|
|
|
|
||
|
Total purchase price paid
|
|
$
|
616,926
|
|
|
|
|
|
|
|
||
|
Assets
|
|
|
|
||
|
Investments
|
|
1,733,611
|
|
|
|
|
Cash and cash equivalents
|
|
191,337
|
|
|
|
|
Insurance and reinsurance premium balances receivable
|
|
472,180
|
|
|
|
|
Reinsurance recoverable on unpaid and paid losses
|
|
787,907
|
|
|
|
|
Prepaid reinsurance premiums
|
|
197,907
|
|
|
|
|
Other assets
|
|
42,696
|
|
|
|
|
Total assets acquired
|
|
$
|
3,425,638
|
|
|
|
|
|
|
|
||
|
Liabilities
|
|
|
|
||
|
Reserve for losses and loss expenses
|
|
2,125,634
|
|
|
|
|
Unearned premiums
|
|
717,442
|
|
|
|
|
Insurance and reinsurance balances payable
|
|
273,405
|
|
|
|
|
Notes payable
|
|
101,846
|
|
|
|
|
Other liabilities
|
|
124,585
|
|
|
|
|
Total liabilities assumed
|
|
$
|
3,342,912
|
|
|
|
|
|
|
|
||
|
Fair value of identifiable intangible assets:
|
|
|
|
||
|
Value of business acquired - definite lived intangible asset
|
|
256,942
|
|
|
|
|
Identifiable definite lived intangible assets
|
|
128,463
|
|
|
|
|
Identifiable indefinite lived intangible assets
|
|
94,748
|
|
|
|
|
|
|
|
|
||
|
Excess purchase price over fair value of net assets acquired assigned to goodwill
|
|
$
|
54,047
|
|
|
|
|
|
|
|
•
|
Deferred acquisition costs
:
To eliminate Novae's deferred acquisition costs;
|
•
|
Prepaid reinsurance premiums
:
To reflect adjustments to align premium recognition accounting policies;
|
•
|
VOBA
:
To establish the fair value of VOBA identifiable intangible asset related to the acquisition of Novae;
|
•
|
Goodwill:
To establish the fair value of goodwill related to the acquisition of Novae;
|
•
|
Indefinite lived and finite lived intangible assets
:
To establish the fair value of identifiable intangible assets related to the acquisition of Novae and to eliminate Novae's pre-existing intangible assets;
|
•
|
Other assets
:
To reflect an investment at fair value and deferred tax assets on fair value adjustments;
|
•
|
Reserves for losses and loss expenses
:
To reflect adjustments arising from the alignment of premium recognition accounting policies and reserving methodologies, as well as the price associated with the Reinsurance to Close ("RITC") of the 2015 and prior years of account of Lloyd's Syndicate 2007 ;
|
•
|
Unearned premiums
:
To reflect adjustments to align premium recognition accounting policies; and
|
•
|
Other liabilities
:
To reflect deferred tax liabilities on fair value adjustments.
|
|
|
|
|
|
Economic Useful Life
|
|
||
|
Indefinite lived intangible assets
|
|
|
|
|
|
||
|
Lloyd's syndicate capacity
|
|
$
|
94,748
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
||
|
Finite lived other intangible assets
|
|
|
|
|
|
||
|
Distribution networks:
|
|
|
|
|
|
||
|
Coverholders
|
|
63,565
|
|
|
12 years
|
|
|
|
Large brokers
|
|
46,641
|
|
|
15 years
|
|
|
|
Small & Mid-sized Enterprise ("SME") brokers
|
|
14,126
|
|
|
12 years
|
|
|
|
|
|
|
|
|
|
||
|
Managing General Agent ("MGA") Contract
|
|
4,131
|
|
|
7 years
|
|
|
|
Total
|
|
128,463
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Identifiable intangible assets at October 2, 2017
|
|
$
|
223,211
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Lloyd's syndicate capacity: The value of Lloyd's syndicate capacity, which represents Novae's right to underwrite a certain allocated limit of premium in the Lloyd's market.
|
•
|
Distribution network:
|
•
|
Coverholders: The value of sales of insurance policies that result directly from relationships with insurance intermediaries who are authorized by Novae's managing agent to enter into contracts of insurance to be underwritten by Syndicate 2007, in accordance with the terms of a binding authority.
|
•
|
Large brokers: These relationships include Novae's large brokers and consideration was given to the expectation of the renewal of these relationships and the associated expenses.
|
•
|
SME brokers: These relationships consist of Novae's brokers with the exception of the large brokers listed above and consideration was given to the expectation of the renewal of these relationships and the associated expenses.
|
•
|
MGA contract: Represents the value of managing agent fees and profit commission Novae earns related to the provision of underwriting services to Special Purpose Arrangement, SPA 6129.
|
•
|
Lloyd's syndicate capacity
:
Lloyd's syndicate capacity was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included projected pre-tax operating profit attributable to syndicate capacity, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.
|
•
|
Distribution network
:
Distribution network including coverholders, large broker and SME brokers was valued using the Distributor Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included net premiums earned attributable to existing distributors, attrition rates, profit margins, projected pre-tax operating profit attributable to existing distributors, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.
|
•
|
MGA contract
:
MGA contract was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Key inputs used in the valuation model used for this intangible asset included SPA 6129's stamp capacity with Lloyd's, return on stamp capacity, fee income and profit commission associated with the managing agent contract for SPA 6129, profit margins, contributory asset charges which represent the required return on and of intangibles assets utilized to generate future revenue and operating income, and an appropriate discount rate.
|
•
|
VOBA
:
VOBA was computed as the difference between the fair value of unearned obligations and the unearned premiums reserve recorded by Novae at the acquisition date. Key inputs used in the valuation model used for this intangible asset included the fair value of the unearned premium computed as the present value of future unearned cash flows, plus the present value of the costs associated with holding capital to support these exposures together with the fair value of reserves computed as the present value of future net losses and loss expense payments, plus the present value of the costs associated with holding capital to support those payments.
|
|
|
|
From acquisition date to
|
|
||
|
(in thousands)
|
|
December 31, 2017
|
|
||
|
Net premiums written
|
|
$
|
140,635
|
|
|
|
Total revenue
|
|
191,929
|
|
|
|
|
Total expenses
|
|
(197,895
|
)
|
|
|
|
Net income
|
|
$
|
(5,966
|
)
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
||||||
|
|
|
2017
|
|
2016
|
|
||||
|
(in thousands)
|
|
(unaudited)
|
|
(unaudited)
|
|
||||
|
Net premiums earned
|
|
$
|
4,728,700
|
|
|
$
|
4,560,800
|
|
|
|
Net income
|
|
$
|
(468,400
|
)
|
|
$
|
532,500
|
|
|
|
|
|
|
|
|
|
b)
|
Acquisition of Compagnie Belge d'Assurances Aviation NV/SA
|
c)
|
Acquisition of Contessa
|
4.
|
SEGMENT INFORMATION
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31, 2017
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
3,127,837
|
|
|
$
|
2,428,436
|
|
|
$
|
5,556,273
|
|
|
|
Net premiums written
|
2,087,734
|
|
|
1,939,409
|
|
|
4,027,143
|
|
|
|||
|
Net premiums earned
|
2,106,363
|
|
|
2,042,397
|
|
|
4,148,760
|
|
|
|||
|
Other insurance related income (losses)
|
3,458
|
|
|
(4,698
|
)
|
|
(1,240
|
)
|
|
|||
|
Net losses and loss expenses
|
(1,661,032
|
)
|
|
(1,626,740
|
)
|
|
(3,287,772
|
)
|
|
|||
|
Acquisition costs
|
(332,749
|
)
|
|
(490,842
|
)
|
|
(823,591
|
)
|
|
|||
|
General and administrative expenses
|
(344,012
|
)
|
|
(105,471
|
)
|
|
(449,483
|
)
|
|
|||
|
Underwriting loss
|
$
|
(227,972
|
)
|
|
$
|
(185,354
|
)
|
|
(413,326
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(129,945
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
400,805
|
|
|
|||||
|
Net realized investment losses
|
|
|
|
|
28,226
|
|
|
|||||
|
Foreign exchange losses
|
|
|
|
|
(134,737
|
)
|
|
|||||
|
Interest expense and financing costs
|
|
|
|
|
(54,811
|
)
|
|
|||||
|
Bargain purchase gain
|
|
|
|
|
15,044
|
|
|
|||||
|
Transaction and reorganization expenses
|
|
|
|
|
(26,718
|
)
|
|
|||||
|
Amortization of value of business acquired
|
|
|
|
|
(50,104
|
)
|
|
|||||
|
Amortization of intangibles
|
|
|
|
|
(2,543
|
)
|
|
|||||
|
Loss before income taxes and interest in income (loss) of equity method investments
|
|
|
|
|
$
|
(368,109
|
)
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Net loss and loss expense ratio
|
78.9
|
%
|
|
79.6
|
%
|
|
79.2
|
%
|
|
|||
|
Acquisition cost ratio
|
15.8
|
%
|
|
24.0
|
%
|
|
19.9
|
%
|
|
|||
|
General and administrative expense ratio
|
16.3
|
%
|
|
5.2
|
%
|
|
14.0
|
%
|
|
|||
|
Combined ratio
|
111.0
|
%
|
|
108.8
|
%
|
|
113.1
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Goodwill and intangible assets
|
$
|
566,828
|
|
|
$
|
—
|
|
|
$
|
566,828
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31, 2016
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
2,720,242
|
|
|
$
|
2,249,966
|
|
|
$
|
4,970,208
|
|
|
|
Net premiums written
|
1,807,125
|
|
|
1,945,849
|
|
|
3,752,974
|
|
|
|||
|
Net premiums earned
|
1,777,321
|
|
|
1,928,304
|
|
|
3,705,625
|
|
|
|||
|
Other insurance related income
|
89
|
|
|
7,133
|
|
|
7,222
|
|
|
|||
|
Net losses and loss expenses
|
(1,141,933
|
)
|
|
(1,062,264
|
)
|
|
(2,204,197
|
)
|
|
|||
|
Acquisition costs
|
(251,120
|
)
|
|
(495,756
|
)
|
|
(746,876
|
)
|
|
|||
|
General and administrative expenses
|
(346,857
|
)
|
|
(135,844
|
)
|
|
(482,701
|
)
|
|
|||
|
Underwriting income
|
$
|
37,500
|
|
|
$
|
241,573
|
|
|
279,073
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(120,016
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
353,335
|
|
|
|||||
|
Net realized investment loss
|
|
|
|
|
(60,525
|
)
|
|
|||||
|
Foreign exchange gains
|
|
|
|
|
121,295
|
|
|
|||||
|
Interest expense and financing costs
|
|
|
|
|
(51,360
|
)
|
|
|||||
|
Income before income taxes and interest in income (loss) of equity method investments
|
|
|
|
|
$
|
521,802
|
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Net loss and loss expense ratio
|
64.3
|
%
|
|
55.1
|
%
|
|
59.5
|
%
|
|
|||
|
Acquisition cost ratio
|
14.1
|
%
|
|
25.7
|
%
|
|
20.2
|
%
|
|
|||
|
General and administrative expense ratio
|
19.5
|
%
|
|
7.0
|
%
|
|
16.2
|
%
|
|
|||
|
Combined ratio
|
97.9
|
%
|
|
87.8
|
%
|
|
95.9
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Goodwill and intangible assets
|
$
|
85,049
|
|
|
$
|
—
|
|
|
$
|
85,049
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31, 2015
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
2,583,081
|
|
|
$
|
2,020,649
|
|
|
$
|
4,603,730
|
|
|
|
Net premiums written
|
1,759,359
|
|
|
1,915,307
|
|
|
3,674,666
|
|
|
|||
|
Net premiums earned
|
1,798,191
|
|
|
1,888,226
|
|
|
3,686,417
|
|
|
|||
|
Other insurance related income (losses)
|
1,036
|
|
|
(3,989
|
)
|
|
(2,953
|
)
|
|
|||
|
Net losses and loss expenses
|
(1,154,928
|
)
|
|
(1,021,271
|
)
|
|
(2,176,199
|
)
|
|
|||
|
Acquisition costs
|
(261,208
|
)
|
|
(456,904
|
)
|
|
(718,112
|
)
|
|
|||
|
General and administrative expenses
|
(341,658
|
)
|
|
(145,253
|
)
|
|
(486,911
|
)
|
|
|||
|
Underwriting income
|
$
|
41,433
|
|
|
$
|
260,809
|
|
|
302,242
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(109,910
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
305,336
|
|
|
|||||
|
Net realized investment loss
|
|
|
|
|
(138,491
|
)
|
|
|||||
|
Foreign exchange gains
|
|
|
|
|
102,312
|
|
|
|||||
|
Interest expense and financing costs
|
|
|
|
|
(50,963
|
)
|
|
|||||
|
Termination fee received
|
|
|
|
|
280,000
|
|
|
|||||
|
Transaction and reorganization expenses
|
|
|
|
|
(45,867
|
)
|
|
|||||
|
Income before income taxes and interest in income (loss) of equity method investments
|
|
|
|
|
$
|
644,659
|
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Net loss and loss expense ratio
|
64.2
|
%
|
|
54.1
|
%
|
|
59.0
|
%
|
|
|||
|
Acquisition cost ratio
|
14.5
|
%
|
|
24.2
|
%
|
|
19.5
|
%
|
|
|||
|
General and administrative expense ratio
|
19.1
|
%
|
|
7.7
|
%
|
|
16.2
|
%
|
|
|||
|
Combined ratio
|
97.8
|
%
|
|
86.0
|
%
|
|
94.7
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Goodwill and intangible assets
|
$
|
86,858
|
|
|
$
|
—
|
|
|
$
|
86,858
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Bermuda
|
$
|
529,425
|
|
|
$
|
465,980
|
|
|
$
|
525,226
|
|
|
|
Ireland
|
1,569,956
|
|
|
1,650,229
|
|
|
1,532,753
|
|
|
|||
|
U.S.
|
2,814,933
|
|
|
2,562,789
|
|
|
2,364,099
|
|
|
|||
|
Lloyd's of London
|
641,959
|
|
|
291,210
|
|
|
181,652
|
|
|
|||
|
Total gross premium written
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
$
|
4,603,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
|
|
|
|
|
||||||
|
Property
|
$
|
543,342
|
|
|
$
|
426,918
|
|
|
$
|
432,587
|
|
|
|
Marine
|
181,533
|
|
|
150,046
|
|
|
183,696
|
|
|
|||
|
Terrorism
|
36,084
|
|
|
33,279
|
|
|
36,818
|
|
|
|||
|
Aviation
|
75,107
|
|
|
44,980
|
|
|
45,659
|
|
|
|||
|
Credit and Political Risk
|
56,432
|
|
|
57,964
|
|
|
63,583
|
|
|
|||
|
Professional Lines
|
519,759
|
|
|
510,806
|
|
|
596,430
|
|
|
|||
|
Liability
|
188,770
|
|
|
169,182
|
|
|
161,614
|
|
|
|||
|
Accident and Health
|
489,046
|
|
|
384,146
|
|
|
277,804
|
|
|
|||
|
Discontinued lines - Novae
|
16,290
|
|
|
—
|
|
|
—
|
|
|
|||
|
Total Insurance
|
2,106,363
|
|
|
1,777,321
|
|
|
1,798,191
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Reinsurance
|
|
|
|
|
|
|
||||||
|
Catastrophe
|
209,470
|
|
|
199,825
|
|
|
216,020
|
|
|
|||
|
Property
|
304,376
|
|
|
272,403
|
|
|
306,083
|
|
|
|||
|
Professional Lines
|
226,622
|
|
|
289,868
|
|
|
310,915
|
|
|
|||
|
Credit and Surety
|
244,186
|
|
|
252,210
|
|
|
250,208
|
|
|
|||
|
Motor
|
371,501
|
|
|
318,863
|
|
|
299,883
|
|
|
|||
|
Liability
|
351,940
|
|
|
332,479
|
|
|
297,000
|
|
|
|||
|
Agriculture
|
195,391
|
|
|
142,501
|
|
|
129,346
|
|
|
|||
|
Engineering
|
66,291
|
|
|
62,833
|
|
|
61,043
|
|
|
|||
|
Marine and Other
|
64,449
|
|
|
57,322
|
|
|
17,728
|
|
|
|||
|
Discontinued lines - Novae
|
8,171
|
|
|
—
|
|
|
—
|
|
|
|||
|
Total Reinsurance
|
2,042,397
|
|
|
1,928,304
|
|
|
1,888,226
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
4,148,760
|
|
|
$
|
3,705,625
|
|
|
$
|
3,686,417
|
|
|
|
|
|
|
|
|
|
|
5.
|
GOODWILL AND INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Goodwill
|
|
Intangible
assets with an
indefinite life
|
|
Intangible
assets with a
finite life
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
|
Gross amount
|
$
|
42,237
|
|
|
$
|
26,036
|
|
|
$
|
29,166
|
|
|
$
|
97,439
|
|
|
|
Accumulated amortization
|
n/a
|
|
|
n/a
|
|
|
(13,390
|
)
|
|
(13,390
|
)
|
|
||||
|
Accumulated translation adjustment
|
4,911
|
|
|
—
|
|
|
—
|
|
|
4,911
|
|
|
||||
|
|
47,148
|
|
|
26,036
|
|
|
15,776
|
|
|
88,960
|
|
|
||||
|
Acquired during the year
|
—
|
|
|
—
|
|
|
13,330
|
|
|
13,330
|
|
|
||||
|
Amortization
|
n/a
|
|
|
n/a
|
|
|
(2,493
|
)
|
|
(2,493
|
)
|
|
||||
|
Impairment charges
|
—
|
|
|
—
|
|
|
(12,939
|
)
|
|
(12,939
|
)
|
|
||||
|
Balance at December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
|
Gross amount
(1)
|
42,237
|
|
|
26,036
|
|
|
23,030
|
|
|
91,303
|
|
|
||||
|
Accumulated amortization
(1)
|
n/a
|
|
|
n/a
|
|
|
(9,356
|
)
|
|
(9,356
|
)
|
|
||||
|
Accumulated translation adjustment
|
4,911
|
|
|
—
|
|
|
—
|
|
|
4,911
|
|
|
||||
|
|
47,148
|
|
|
26,036
|
|
|
13,674
|
|
|
86,858
|
|
|
||||
|
Amortization
|
n/a
|
|
|
n/a
|
|
|
(1,809
|
)
|
|
(1,809
|
)
|
|
||||
|
Balance at December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
|
Gross amount
|
$
|
42,237
|
|
|
$
|
26,036
|
|
|
$
|
23,030
|
|
|
$
|
91,303
|
|
|
|
Accumulated amortization
|
n/a
|
|
|
n/a
|
|
|
(11,165
|
)
|
|
(11,165
|
)
|
|
||||
|
Accumulated translation adjustment
|
4,911
|
|
|
—
|
|
|
—
|
|
|
4,911
|
|
|
||||
|
|
47,148
|
|
|
26,036
|
|
|
11,865
|
|
|
85,049
|
|
|
||||
|
Acquired during the year
|
54,855
|
|
|
94,748
|
|
|
387,545
|
|
|
537,148
|
|
|
||||
|
Amortization
|
n/a
|
|
|
n/a
|
|
|
(55,369
|
)
|
|
(55,369
|
)
|
|
||||
|
|
$
|
102,003
|
|
|
$
|
120,784
|
|
|
$
|
344,041
|
|
|
$
|
566,828
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During the year ended December 31, 2017, an amount of $
6,136
and
7,945
was adjusted from gross amount and accumulated amortization, respectively, as a result of the wind-down of the Company's retail insurance operations in Australia.
|
5.
|
GOODWILL AND INTANGIBLE ASSETS (CONTINUED)
|
|
|
|
VOBA and intangible assets
|
|
||||||||||
|
Balance At December 31, 2017
|
|
Gross amount
|
|
Accumulated amortization
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
U.S. state licenses
|
|
$
|
26,036
|
|
|
n/a
|
|
|
$
|
26,036
|
|
|
|
|
Customer lists, trademark and non-compete - Media Pro
|
|
9,700
|
|
|
(9,244
|
)
|
|
456
|
|
|
|||
|
Customer relationships and customers lists - Ternian
|
|
13,330
|
|
|
(3,666
|
)
|
|
9,664
|
|
|
|||
|
Other intangibles - Aviabel
|
|
2,140
|
|
|
(977
|
)
|
|
1,163
|
|
|
|||
|
VOBA - Novae
|
|
256,942
|
|
|
(50,104
|
)
|
|
206,838
|
|
|
|||
|
Syndicate capacity
|
|
94,748
|
|
|
n/a
|
|
|
94,748
|
|
|
|||
|
Coverholders
|
|
63,565
|
|
|
(1,324
|
)
|
|
62,241
|
|
|
|||
|
Large brokers
|
|
46,641
|
|
|
(777
|
)
|
|
45,864
|
|
|
|||
|
SME brokers
|
|
14,126
|
|
|
(294
|
)
|
|
13,832
|
|
|
|||
|
MGA contract
|
|
4,131
|
|
|
(148
|
)
|
|
3,983
|
|
|
|||
|
|
|
$
|
531,359
|
|
|
$
|
(66,534
|
)
|
|
$
|
464,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
||||||||||
|
Balance At December 31, 2016
|
|
Gross amount
|
|
Accumulated amortization
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
U.S. state licenses
|
|
$
|
26,036
|
|
|
n/a
|
|
|
$
|
26,036
|
|
|
|
|
Customer lists, trademark and non-compete - Media Pro
|
|
9,700
|
|
|
(8,832
|
)
|
|
868
|
|
|
|||
|
Customer relationships and customers lists - Ternian
|
|
13,330
|
|
|
(2,333
|
)
|
|
10,997
|
|
|
|||
|
|
|
$
|
49,066
|
|
|
$
|
(11,165
|
)
|
|
$
|
37,901
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
GOODWILL AND INTANGIBLE ASSETS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
VOBA
|
|
Intangible assets
|
|
Total
|
|
||||||
|
2018
|
|
$
|
171,124
|
|
|
$
|
13,025
|
|
|
$
|
184,149
|
|
|
|
2019
|
|
26,722
|
|
|
11,606
|
|
|
38,328
|
|
|
|||
|
2020
|
|
5,139
|
|
|
11,506
|
|
|
16,645
|
|
|
|||
|
2021
|
|
3,853
|
|
|
11,506
|
|
|
15,359
|
|
|
|||
|
2022
|
|
—
|
|
|
11,506
|
|
|
11,506
|
|
|
|||
|
2023 and thereafter
|
|
—
|
|
|
78,054
|
|
|
78,054
|
|
|
|||
|
Total remaining amortization expense
|
|
206,838
|
|
|
137,203
|
|
|
344,041
|
|
|
|||
|
Indefinite lived intangible assets
|
|
—
|
|
|
120,784
|
|
|
120,784
|
|
|
|||
|
Total intangible assets
|
|
$
|
206,838
|
|
|
$
|
257,987
|
|
|
$
|
464,825
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS
|
a)
|
Fixed Maturities and Equities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Amortized
Cost or
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Non-credit
OTTI
in AOCI
(5)
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,727,643
|
|
|
$
|
1,735
|
|
|
$
|
(16,909
|
)
|
|
$
|
1,712,469
|
|
|
$
|
—
|
|
|
|
Non-U.S. government
|
798,582
|
|
|
17,240
|
|
|
(9,523
|
)
|
|
806,299
|
|
|
—
|
|
|
|||||
|
Corporate debt
|
5,265,795
|
|
|
61,922
|
|
|
(29,851
|
)
|
|
5,297,866
|
|
|
—
|
|
|
|||||
|
Agency RMBS
(1)
|
2,414,720
|
|
|
8,132
|
|
|
(27,700
|
)
|
|
2,395,152
|
|
|
—
|
|
|
|||||
|
CMBS
(2)
|
776,715
|
|
|
4,138
|
|
|
(3,125
|
)
|
|
777,728
|
|
|
—
|
|
|
|||||
|
Non-Agency RMBS
|
45,713
|
|
|
1,917
|
|
|
(799
|
)
|
|
46,831
|
|
|
(853
|
)
|
|
|||||
|
ABS
(3)
|
1,432,884
|
|
|
5,391
|
|
|
(1,994
|
)
|
|
1,436,281
|
|
|
—
|
|
|
|||||
|
Municipals
(4)
|
149,167
|
|
|
1,185
|
|
|
(972
|
)
|
|
149,380
|
|
|
—
|
|
|
|||||
|
Total fixed maturities
|
$
|
12,611,219
|
|
|
$
|
101,660
|
|
|
$
|
(90,873
|
)
|
|
$
|
12,622,006
|
|
|
$
|
(853
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stocks
|
$
|
22,836
|
|
|
$
|
3,412
|
|
|
$
|
(590
|
)
|
|
$
|
25,658
|
|
|
|
|
||
|
Exchange-traded funds
|
356,252
|
|
|
71,675
|
|
|
(294
|
)
|
|
427,633
|
|
|
|
|
||||||
|
Bond mutual funds
|
173,779
|
|
|
9,440
|
|
|
(999
|
)
|
|
182,220
|
|
|
|
|
||||||
|
Total equity securities
|
$
|
552,867
|
|
|
$
|
84,527
|
|
|
$
|
(1,883
|
)
|
|
$
|
635,511
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,681,425
|
|
|
$
|
1,648
|
|
|
$
|
(27,004
|
)
|
|
$
|
1,656,069
|
|
|
$
|
—
|
|
|
|
Non-U.S. government
|
613,282
|
|
|
2,206
|
|
|
(49,654
|
)
|
|
565,834
|
|
|
—
|
|
|
|||||
|
Corporate debt
|
4,633,834
|
|
|
42,049
|
|
|
(75,140
|
)
|
|
4,600,743
|
|
|
—
|
|
|
|||||
|
Agency RMBS
(1)
|
2,487,837
|
|
|
13,275
|
|
|
(35,977
|
)
|
|
2,465,135
|
|
|
—
|
|
|
|||||
|
CMBS
(2)
|
664,368
|
|
|
5,433
|
|
|
(3,564
|
)
|
|
666,237
|
|
|
—
|
|
|
|||||
|
Non-Agency RMBS
|
57,316
|
|
|
1,628
|
|
|
(2,023
|
)
|
|
56,921
|
|
|
(823
|
)
|
|
|||||
|
ABS
(3)
|
1,221,813
|
|
|
3,244
|
|
|
(2,843
|
)
|
|
1,222,214
|
|
|
—
|
|
|
|||||
|
Municipals
(4)
|
163,441
|
|
|
1,510
|
|
|
(990
|
)
|
|
163,961
|
|
|
—
|
|
|
|||||
|
Total fixed maturities
|
$
|
11,523,316
|
|
|
$
|
70,993
|
|
|
$
|
(197,195
|
)
|
|
$
|
11,397,114
|
|
|
$
|
(823
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stocks
|
$
|
379
|
|
|
$
|
41
|
|
|
$
|
(342
|
)
|
|
$
|
78
|
|
|
|
|
||
|
Exchange-traded funds
|
463,936
|
|
|
53,405
|
|
|
(2,634
|
)
|
|
514,707
|
|
|
|
|
||||||
|
Bond mutual funds
|
133,051
|
|
|
—
|
|
|
(9,092
|
)
|
|
123,959
|
|
|
|
|
||||||
|
Total equity securities
|
$
|
597,366
|
|
|
$
|
53,446
|
|
|
$
|
(12,068
|
)
|
|
$
|
638,744
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Residential mortgage-backed securities (RMBS) originated by U.S. government-sponsored agencies.
|
(2)
|
Commercial mortgage-backed securities (CMBS).
|
(3)
|
Asset-backed securities (ABS) include debt tranched securities collateralized primarily by auto loans, student loans, credit cards, and other asset types. This asset class also includes collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs).
|
(4)
|
Municipals include bonds issued by states, municipalities and political subdivisions.
|
(5)
|
Represents the non-credit component of the other-than-temporary impairment (OTTI) losses, adjusted for subsequent sales, maturities and redemptions. It does not include the change in fair value subsequent to the impairment measurement date.
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|||||
|
|
Amortized
Cost
|
|
Fair
Value
|
|
% of Total
Fair Value
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
At December 31, 2017
|
|
|
|
|
|
|
|||||
|
Maturity
|
|
|
|
|
|
|
|||||
|
Due in one year or less
|
$
|
486,659
|
|
|
$
|
484,663
|
|
|
3.8
|
%
|
|
|
Due after one year through five years
|
4,906,207
|
|
|
4,912,189
|
|
|
38.9
|
%
|
|
||
|
Due after five years through ten years
|
2,338,964
|
|
|
2,350,433
|
|
|
18.6
|
%
|
|
||
|
Due after ten years
|
209,357
|
|
|
218,729
|
|
|
1.7
|
%
|
|
||
|
|
7,941,187
|
|
|
7,966,014
|
|
|
63.0
|
%
|
|
||
|
Agency RMBS
|
2,414,720
|
|
|
2,395,152
|
|
|
19.0
|
%
|
|
||
|
CMBS
|
776,715
|
|
|
777,728
|
|
|
6.2
|
%
|
|
||
|
Non-Agency RMBS
|
45,713
|
|
|
46,831
|
|
|
0.4
|
%
|
|
||
|
ABS
|
1,432,884
|
|
|
1,436,281
|
|
|
11.4
|
%
|
|
||
|
Total
|
$
|
12,611,219
|
|
|
$
|
12,622,006
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|||||
|
At December 31, 2016
|
|
|
|
|
|
|
|||||
|
Maturity
|
|
|
|
|
|
|
|||||
|
Due in one year or less
|
$
|
313,287
|
|
|
$
|
305,972
|
|
|
2.8
|
%
|
|
|
Due after one year through five years
|
3,906,190
|
|
|
3,850,149
|
|
|
33.8
|
%
|
|
||
|
Due after five years through ten years
|
2,546,299
|
|
|
2,510,975
|
|
|
22.0
|
%
|
|
||
|
Due after ten years
|
326,206
|
|
|
319,511
|
|
|
2.8
|
%
|
|
||
|
|
7,091,982
|
|
|
6,986,607
|
|
|
61.4
|
%
|
|
||
|
Agency RMBS
|
2,487,837
|
|
|
2,465,135
|
|
|
21.6
|
%
|
|
||
|
CMBS
|
664,368
|
|
|
666,237
|
|
|
5.8
|
%
|
|
||
|
Non-Agency RMBS
|
57,316
|
|
|
56,921
|
|
|
0.5
|
%
|
|
||
|
ABS
|
1,221,813
|
|
|
1,222,214
|
|
|
10.7
|
%
|
|
||
|
Total
|
$
|
11,523,316
|
|
|
$
|
11,397,114
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
12 months or greater
|
|
Less than 12 months
|
|
Total
|
|
||||||||||||||||||
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. government and agency
|
$
|
194,916
|
|
|
$
|
(5,963
|
)
|
|
$
|
1,389,792
|
|
|
$
|
(10,946
|
)
|
|
$
|
1,584,708
|
|
|
$
|
(16,909
|
)
|
|
|
Non-U.S. government
|
62,878
|
|
|
(6,806
|
)
|
|
204,110
|
|
|
(2,717
|
)
|
|
266,988
|
|
|
(9,523
|
)
|
|
||||||
|
Corporate debt
|
407,300
|
|
|
(11,800
|
)
|
|
2,041,845
|
|
|
(18,051
|
)
|
|
2,449,145
|
|
|
(29,851
|
)
|
|
||||||
|
Agency RMBS
|
759,255
|
|
|
(17,453
|
)
|
|
1,172,313
|
|
|
(10,247
|
)
|
|
1,931,568
|
|
|
(27,700
|
)
|
|
||||||
|
CMBS
|
31,607
|
|
|
(703
|
)
|
|
348,943
|
|
|
(2,422
|
)
|
|
380,550
|
|
|
(3,125
|
)
|
|
||||||
|
Non-Agency RMBS
|
8,029
|
|
|
(788
|
)
|
|
4,197
|
|
|
(11
|
)
|
|
12,226
|
|
|
(799
|
)
|
|
||||||
|
ABS
|
57,298
|
|
|
(570
|
)
|
|
392,170
|
|
|
(1,424
|
)
|
|
449,468
|
|
|
(1,994
|
)
|
|
||||||
|
Municipals
|
11,230
|
|
|
(269
|
)
|
|
65,632
|
|
|
(703
|
)
|
|
76,862
|
|
|
(972
|
)
|
|
||||||
|
Total fixed maturities
|
$
|
1,532,513
|
|
|
$
|
(44,352
|
)
|
|
$
|
5,619,002
|
|
|
$
|
(46,521
|
)
|
|
$
|
7,151,515
|
|
|
$
|
(90,873
|
)
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Common stocks
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,202
|
|
|
$
|
(590
|
)
|
|
$
|
3,202
|
|
|
$
|
(590
|
)
|
|
|
Exchange-traded funds
|
—
|
|
|
—
|
|
|
12,323
|
|
|
(294
|
)
|
|
12,323
|
|
|
(294
|
)
|
|
||||||
|
Bond mutual funds
|
—
|
|
|
—
|
|
|
12,184
|
|
|
(999
|
)
|
|
12,184
|
|
|
(999
|
)
|
|
||||||
|
Total equity securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,709
|
|
|
$
|
(1,883
|
)
|
|
$
|
27,709
|
|
|
$
|
(1,883
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. government and agency
|
$
|
54,051
|
|
|
$
|
(2,729
|
)
|
|
$
|
1,340,719
|
|
|
$
|
(24,275
|
)
|
|
$
|
1,394,770
|
|
|
$
|
(27,004
|
)
|
|
|
Non-U.S. government
|
149,360
|
|
|
(38,683
|
)
|
|
283,796
|
|
|
(10,971
|
)
|
|
433,156
|
|
|
(49,654
|
)
|
|
||||||
|
Corporate debt
|
230,218
|
|
|
(30,652
|
)
|
|
1,948,976
|
|
|
(44,488
|
)
|
|
2,179,194
|
|
|
(75,140
|
)
|
|
||||||
|
Agency RMBS
|
76,694
|
|
|
(1,101
|
)
|
|
1,724,170
|
|
|
(34,876
|
)
|
|
1,800,864
|
|
|
(35,977
|
)
|
|
||||||
|
CMBS
|
84,640
|
|
|
(749
|
)
|
|
193,499
|
|
|
(2,815
|
)
|
|
278,139
|
|
|
(3,564
|
)
|
|
||||||
|
Non-Agency RMBS
|
13,642
|
|
|
(1,752
|
)
|
|
7,194
|
|
|
(271
|
)
|
|
20,836
|
|
|
(2,023
|
)
|
|
||||||
|
ABS
|
362,110
|
|
|
(1,950
|
)
|
|
266,763
|
|
|
(893
|
)
|
|
628,873
|
|
|
(2,843
|
)
|
|
||||||
|
Municipals
|
774
|
|
|
(29
|
)
|
|
68,598
|
|
|
(961
|
)
|
|
69,372
|
|
|
(990
|
)
|
|
||||||
|
Total fixed maturities
|
$
|
971,489
|
|
|
$
|
(77,645
|
)
|
|
$
|
5,833,715
|
|
|
$
|
(119,550
|
)
|
|
$
|
6,805,204
|
|
|
$
|
(197,195
|
)
|
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Common stocks
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
(342
|
)
|
|
$
|
37
|
|
|
$
|
(342
|
)
|
|
|
Exchange-traded funds
|
4,959
|
|
|
(461
|
)
|
|
87,760
|
|
|
(2,173
|
)
|
|
92,719
|
|
|
(2,634
|
)
|
|
||||||
|
Bond mutual funds
|
—
|
|
|
—
|
|
|
123,954
|
|
|
(9,092
|
)
|
|
123,954
|
|
|
(9,092
|
)
|
|
||||||
|
Total equity securities
|
$
|
4,959
|
|
|
$
|
(461
|
)
|
|
$
|
211,751
|
|
|
$
|
(11,607
|
)
|
|
$
|
216,710
|
|
|
$
|
(12,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
b)
|
Mortgage Loans
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||
|
|
Carrying Value
|
|
% of Total
|
|
Carrying Value
|
|
% of Total
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Mortgage Loans held-for-investment:
|
|
|
|
|
|
|
|
|
||||||
|
Commercial
|
$
|
325,062
|
|
|
100
|
%
|
|
$
|
349,969
|
|
|
100
|
%
|
|
|
|
325,062
|
|
|
100
|
%
|
|
349,969
|
|
|
100
|
%
|
|
||
|
Valuation allowances
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
||
|
Total Mortgage Loans held-for-investment
|
$
|
325,062
|
|
|
100
|
%
|
|
$
|
349,969
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
c)
|
Other Investments
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Fair Value
|
|
Redemption Frequency
(if currently eligible)
|
|
Redemption
Notice Period
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|||
|
Long/short equity funds
|
$
|
38,470
|
|
|
4
|
%
|
|
Annually
|
|
60 days
|
|
|
Multi-strategy funds
|
286,164
|
|
|
28
|
%
|
|
Quarterly, Semi-annually
|
|
60-95 days
|
|
|
|
Event-driven funds
|
39,177
|
|
|
4
|
%
|
|
Annually
|
|
45 days
|
|
|
|
Direct lending funds
|
250,681
|
|
|
25
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Private equity funds
|
68,812
|
|
|
7
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Real estate funds
|
50,009
|
|
|
5
|
%
|
|
n/a
|
|
n/a
|
|
|
|
CLO-Equities
|
31,413
|
|
|
2
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Other privately held investments
|
46,430
|
|
|
5
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Overseas deposits
|
198,217
|
|
|
20
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Total other investments
|
$
|
1,009,373
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|||
|
Long/short equity funds
|
$
|
118,619
|
|
|
14
|
%
|
|
Semi-annually, Annually
|
|
45-60 days
|
|
|
Multi-strategy funds
|
285,992
|
|
|
34
|
%
|
|
Quarterly, Semi-annually
|
|
60-95 days
|
|
|
|
Event-driven funds
|
93,539
|
|
|
11
|
%
|
|
Annually
|
|
45 days
|
|
|
|
Direct lending funds
|
134,650
|
|
|
16
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Private equity funds
|
81,223
|
|
|
10
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Real estate funds
|
13,354
|
|
|
2
|
%
|
|
n/a
|
|
n/a
|
|
|
|
CLO-Equities
|
60,700
|
|
|
8
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Other privately held investments
|
42,142
|
|
|
5
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Overseas deposits
|
—
|
|
|
—
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Total other investments
|
$
|
830,219
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Long/short equity funds
: Seek to achieve attractive returns primarily by executing an equity trading strategy involving both long and short investments in publicly-traded equities.
|
•
|
Multi-strategy funds
: Seek to achieve above-market returns by pursuing multiple investment strategies to diversify risks and reduce volatility. This category includes funds of hedge funds which invest in a large pool of hedge funds across a diversified range of hedge fund strategies.
|
•
|
Event-driven funds
: Seek to achieve attractive returns by exploiting situations where announced or anticipated events create opportunities.
|
•
|
Direct lending funds
: Seek to achieve attractive risk-adjusted returns, including current income generation, by investing in funds which provide financing directly to borrowers.
|
6.
|
INVESTMENTS (CONTINUED)
|
•
|
Private equity funds
: Seek to achieve attractive risk-adjusted returns by investing in private transactions over the course of several years.
|
•
|
Real estate funds
: Seek to achieve attractive risk-adjusted returns by making and managing investments in real estate and real estate securities and businesses.
|
6.
|
INVESTMENTS (CONTINUED)
|
d)
|
Equity Method Investments
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
$
|
312,662
|
|
|
$
|
305,459
|
|
|
$
|
294,725
|
|
|
|
Other investments
|
76,858
|
|
|
42,514
|
|
|
20,148
|
|
|
|||
|
Equity securities
|
14,919
|
|
|
16,306
|
|
|
11,289
|
|
|
|||
|
Mortgage loans
|
10,780
|
|
|
7,996
|
|
|
1,861
|
|
|
|||
|
Cash and cash equivalents
|
10,057
|
|
|
9,209
|
|
|
8,572
|
|
|
|||
|
Short-term investments
|
2,718
|
|
|
2,060
|
|
|
439
|
|
|
|||
|
Gross investment income
|
427,994
|
|
|
383,544
|
|
|
337,034
|
|
|
|||
|
Investment expenses
|
(27,189
|
)
|
|
(30,209
|
)
|
|
(31,698
|
)
|
|
|||
|
Net investment income
|
$
|
400,805
|
|
|
$
|
353,335
|
|
|
$
|
305,336
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
f)
|
Net Realized Investment Gains (Losses)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross realized gains
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
$
|
72,046
|
|
|
$
|
86,267
|
|
|
$
|
60,102
|
|
|
|
Equities
|
78,343
|
|
|
19,104
|
|
|
19,113
|
|
|
|||
|
Gross realized gains
|
150,389
|
|
|
105,371
|
|
|
79,215
|
|
|
|||
|
Gross realized losses
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
(98,442
|
)
|
|
(134,460
|
)
|
|
(143,702
|
)
|
|
|||
|
Equities
|
(959
|
)
|
|
(16,155
|
)
|
|
(8,543
|
)
|
|
|||
|
Gross realized losses
|
(99,401
|
)
|
|
(150,615
|
)
|
|
(152,245
|
)
|
|
|||
|
Net OTTI recognized in net income
|
(14,493
|
)
|
|
(26,210
|
)
|
|
(72,720
|
)
|
|
|||
|
Change in fair value of investment derivatives
(1)
|
(8,269
|
)
|
|
10,929
|
|
|
7,259
|
|
|
|||
|
Net realized investment gains (losses)
|
$
|
28,226
|
|
|
$
|
(60,525
|
)
|
|
$
|
(138,491
|
)
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to Note 8
'Derivative Instruments'
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Non-U.S. government
|
$
|
8,187
|
|
|
$
|
3,557
|
|
|
$
|
3,538
|
|
|
|
Corporate debt
|
6,306
|
|
|
20,093
|
|
|
47,029
|
|
|
|||
|
Non-Agency RMBS
|
—
|
|
|
—
|
|
|
111
|
|
|
|||
|
ABS
|
—
|
|
|
—
|
|
|
124
|
|
|
|||
|
|
14,493
|
|
|
23,650
|
|
|
50,802
|
|
|
|||
|
Equity Securities
|
|
|
|
|
|
|
||||||
|
Exchange-traded funds
|
—
|
|
|
2,560
|
|
|
10,732
|
|
|
|||
|
Bond mutual funds
|
—
|
|
|
—
|
|
|
11,186
|
|
|
|||
|
|
—
|
|
|
2,560
|
|
|
21,918
|
|
|
|||
|
Total OTTI recognized in net income
|
$
|
14,493
|
|
|
$
|
26,210
|
|
|
$
|
72,720
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Balance at beginning of period
|
$
|
1,493
|
|
|
$
|
1,506
|
|
|
|
Credit impairments recognized on securities not previously impaired
|
—
|
|
|
—
|
|
|
||
|
Additional credit impairments recognized on securities previously impaired
|
13
|
|
|
20
|
|
|
||
|
Change in timing of future cash flows on securities previously impaired
|
—
|
|
|
—
|
|
|
||
|
Intent to sell of securities previously impaired
|
—
|
|
|
—
|
|
|
||
|
Securities sold/redeemed/matured
|
(12
|
)
|
|
(33
|
)
|
|
||
|
Balance at end of period
|
$
|
1,494
|
|
|
$
|
1,493
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
g)
|
Restricted Assets
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
|
||||
|
At December 31,
|
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
|
||||
|
Collateral in Trust for inter-company agreements
|
|
$
|
3,310,180
|
|
|
$
|
2,877,823
|
|
|
|
Collateral for secured letter of credit facility
|
|
386,451
|
|
|
448,366
|
|
|
||
|
Funds at Lloyd's
|
|
1,192,717
|
|
|
382,611
|
|
|
||
|
Collateral in Trust for third party agreements
|
|
2,085,443
|
|
|
508,262
|
|
|
||
|
Securities on deposit with regulatory authorities
|
|
53,925
|
|
|
50,290
|
|
|
||
|
Total restricted investments
|
|
$
|
7,028,716
|
|
|
$
|
4,267,352
|
|
|
|
|
|
|
|
|
|
h)
|
Reverse Repurchase Agreements
|
7.
|
FAIR VALUE MEASUREMENTS
|
•
|
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
|
•
|
Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
•
|
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The unobservable inputs reflect the Company's own judgments about assumptions that market participants might use.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
|
|
Quoted Prices in Active Markets
for Identical Assets (Level 1) |
|
Significant Other Observable
Inputs (Level 2) |
|
Significant Unobservable Inputs (Level 3)
|
|
Fair value based on NAV practical expedient
|
|
Total Fair Value
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,658,622
|
|
|
$
|
53,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,712,469
|
|
|
|
Non-U.S. government
|
—
|
|
|
806,299
|
|
|
—
|
|
|
—
|
|
|
806,299
|
|
|
|||||
|
Corporate debt
|
—
|
|
|
5,244,969
|
|
|
52,897
|
|
|
—
|
|
|
5,297,866
|
|
|
|||||
|
Agency RMBS
|
—
|
|
|
2,395,152
|
|
|
—
|
|
|
—
|
|
|
2,395,152
|
|
|
|||||
|
CMBS
|
—
|
|
|
777,728
|
|
|
—
|
|
|
—
|
|
|
777,728
|
|
|
|||||
|
Non-Agency RMBS
|
—
|
|
|
46,831
|
|
|
—
|
|
|
—
|
|
|
46,831
|
|
|
|||||
|
ABS
|
—
|
|
|
1,436,281
|
|
|
—
|
|
|
—
|
|
|
1,436,281
|
|
|
|||||
|
Municipals
|
—
|
|
|
149,380
|
|
|
—
|
|
|
—
|
|
|
149,380
|
|
|
|||||
|
|
1,658,622
|
|
|
10,910,487
|
|
|
52,897
|
|
|
—
|
|
|
12,622,006
|
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stocks
|
25,658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,658
|
|
|
|||||
|
Exchange-traded funds
|
427,633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
427,633
|
|
|
|||||
|
Bond mutual funds
|
—
|
|
|
182,220
|
|
|
—
|
|
|
—
|
|
|
182,220
|
|
|
|||||
|
|
453,291
|
|
|
182,220
|
|
|
—
|
|
|
—
|
|
|
635,511
|
|
|
|||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Hedge funds
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
363,811
|
|
|
363,811
|
|
|
|||||
|
Direct lending funds
|
—
|
|
|
—
|
|
|
—
|
|
|
250,681
|
|
|
250,681
|
|
|
|||||
|
Private equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
68,812
|
|
|
68,812
|
|
|
|||||
|
Real estate funds
|
—
|
|
|
—
|
|
|
—
|
|
|
50,009
|
|
|
50,009
|
|
|
|||||
|
Other privately held investments
|
—
|
|
|
—
|
|
|
46,430
|
|
|
—
|
|
|
46,430
|
|
|
|||||
|
CLO-Equities
|
—
|
|
|
—
|
|
|
31,413
|
|
|
—
|
|
|
31,413
|
|
|
|||||
|
Overseas deposits
|
—
|
|
|
198,217
|
|
|
—
|
|
|
—
|
|
|
198,217
|
|
|
|||||
|
|
—
|
|
|
198,217
|
|
|
77,843
|
|
|
733,313
|
|
|
1,009,373
|
|
|
|||||
|
Short-term investments
|
—
|
|
|
83,661
|
|
|
—
|
|
|
—
|
|
|
83,661
|
|
|
|||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (see Note 8)
|
—
|
|
|
5,125
|
|
|
—
|
|
|
—
|
|
|
5,125
|
|
|
|||||
|
Insurance-linked securities
|
—
|
|
|
—
|
|
|
25,090
|
|
|
—
|
|
|
25,090
|
|
|
|||||
|
Total Assets
|
$
|
2,111,913
|
|
|
$
|
11,379,710
|
|
|
$
|
155,830
|
|
|
$
|
733,313
|
|
|
$
|
14,380,766
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (see Note 8)
|
$
|
—
|
|
|
$
|
2,876
|
|
|
$
|
11,510
|
|
|
$
|
—
|
|
|
$
|
14,386
|
|
|
|
Cash settled awards (see Note 16)
|
—
|
|
|
21,535
|
|
|
—
|
|
|
—
|
|
|
21,535
|
|
|
|||||
|
Total Liabilities
|
$
|
—
|
|
|
$
|
24,411
|
|
|
$
|
11,510
|
|
|
$
|
—
|
|
|
$
|
35,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes Long/short equity, Multi-strategy and Event-driven funds.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
|
|
Quoted Prices in Active Markets
for Identical Assets (Level 1) |
|
Significant Other Observable
Inputs (Level 2) |
|
Significant Unobservable Inputs (Level 3)
|
|
Fair value based on NAV practical expedient
|
|
Total Fair Value
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,583,106
|
|
|
$
|
72,963
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,656,069
|
|
|
|
Non-U.S. government
|
—
|
|
|
565,834
|
|
|
—
|
|
|
—
|
|
|
565,834
|
|
|
|||||
|
Corporate debt
|
—
|
|
|
4,524,868
|
|
|
75,875
|
|
|
—
|
|
|
4,600,743
|
|
|
|||||
|
Agency RMBS
|
—
|
|
|
2,465,135
|
|
|
—
|
|
|
—
|
|
|
2,465,135
|
|
|
|||||
|
CMBS
|
—
|
|
|
663,176
|
|
|
3,061
|
|
|
—
|
|
|
666,237
|
|
|
|||||
|
Non-Agency RMBS
|
—
|
|
|
56,921
|
|
|
—
|
|
|
—
|
|
|
56,921
|
|
|
|||||
|
ABS
|
—
|
|
|
1,204,750
|
|
|
17,464
|
|
|
—
|
|
|
1,222,214
|
|
|
|||||
|
Municipals
|
—
|
|
|
163,961
|
|
|
—
|
|
|
—
|
|
|
163,961
|
|
|
|||||
|
|
1,583,106
|
|
|
9,717,608
|
|
|
96,400
|
|
|
—
|
|
|
11,397,114
|
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stocks
|
78
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
|||||
|
Exchange-traded funds
|
514,707
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
514,707
|
|
|
|||||
|
Bond mutual funds
|
—
|
|
|
123,959
|
|
|
—
|
|
|
—
|
|
|
123,959
|
|
|
|||||
|
|
514,785
|
|
|
123,959
|
|
|
—
|
|
|
—
|
|
|
638,744
|
|
|
|||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Hedge funds
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
498,150
|
|
|
498,150
|
|
|
|||||
|
Direct lending funds
|
—
|
|
|
—
|
|
|
—
|
|
|
134,650
|
|
|
134,650
|
|
|
|||||
|
Private equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
81,223
|
|
|
81,223
|
|
|
|||||
|
Real estate funds
|
—
|
|
|
—
|
|
|
—
|
|
|
13,354
|
|
|
13,354
|
|
|
|||||
|
Other privately held investments
|
—
|
|
|
—
|
|
|
42,142
|
|
|
—
|
|
|
42,142
|
|
|
|||||
|
CLO-Equities
|
—
|
|
|
—
|
|
|
60,700
|
|
|
—
|
|
|
60,700
|
|
|
|||||
|
Overseas deposits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
|
|
—
|
|
|
—
|
|
|
102,842
|
|
|
727,377
|
|
|
830,219
|
|
|
|||||
|
Short-term investments
|
—
|
|
|
127,461
|
|
|
—
|
|
|
—
|
|
|
127,461
|
|
|
|||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (see Note 8)
|
—
|
|
|
14,365
|
|
|
2,532
|
|
|
—
|
|
|
16,897
|
|
|
|||||
|
Insurance-linked securities
|
—
|
|
|
—
|
|
|
25,023
|
|
|
—
|
|
|
25,023
|
|
|
|||||
|
Total Assets
|
$
|
2,097,891
|
|
|
$
|
9,983,393
|
|
|
$
|
226,797
|
|
|
$
|
727,377
|
|
|
$
|
13,035,458
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (see Note 8)
|
$
|
—
|
|
|
$
|
9,076
|
|
|
$
|
6,500
|
|
|
$
|
—
|
|
|
$
|
15,576
|
|
|
|
Cash settled awards (see Note 16)
|
—
|
|
|
48,432
|
|
|
—
|
|
|
—
|
|
|
48,432
|
|
|
|||||
|
Total Liabilities
|
$
|
—
|
|
|
$
|
57,508
|
|
|
$
|
6,500
|
|
|
$
|
—
|
|
|
$
|
64,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes Long/short equity, Multi-strategy and Event-driven funds.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
||
|
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Range
|
Weighted
Average
|
|
||
|
|
|
|
|
|
|
|
||
|
Other investments - CLO-Equities
|
$
|
29,604
|
|
Discounted cash flow
|
Default rates
|
3.8%
|
3.8%
|
|
|
|
|
|
Loss severity rate
|
35%
|
35%
|
|
||
|
|
|
|
Collateral spreads
|
3.0%
|
3.0%
|
|
||
|
|
|
|
Estimated maturity dates
|
7 years
|
7 years
|
|
||
|
|
|
|
|
|
|
|
||
|
|
$
|
1,809
|
|
Liquidation value
|
Fair value of collateral
|
100%
|
100%
|
|
|
|
|
|
Discount margin
|
0.1% - 16.6%
|
2.8%
|
|
||
|
|
|
|
|
|
|
|
||
|
Other investments - Other privately held investments
|
$
|
46,430
|
|
Discounted cash flow
|
Discount rate
|
6.0% - 8.5%
|
7.5%
|
|
|
|
|
|
|
|
|
|
||
|
Derivatives - Other underwriting-related derivatives
|
$
|
(11,510
|
)
|
Discounted cash flow
|
Discount rate
|
2.4%
|
2.4%
|
|
|
|
|
|
|
|
|
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
|
|
Opening
Balance
|
|
Transfers
into
Level 3
|
|
Transfers
out of
Level 3
|
|
Included in
net income
(1)
|
|
Included
in OCI
(2)
|
|
Purchases
|
|
Sales
|
|
Settlements/
Distributions
|
|
Closing
Balance
|
|
Change in
unrealized
investment
gain/loss
(3)
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Corporate debt
|
$
|
75,875
|
|
|
$
|
2,324
|
|
|
$
|
(2,721
|
)
|
|
$
|
(503
|
)
|
|
$
|
(1,524
|
)
|
|
$
|
17,062
|
|
|
$
|
(22,903
|
)
|
|
$
|
(14,713
|
)
|
|
$
|
52,897
|
|
|
$
|
—
|
|
|
|
CMBS
|
3,061
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,061
|
)
|
|
—
|
|
|
—
|
|
|
||||||||||
|
ABS
|
17,464
|
|
|
—
|
|
|
(18,949
|
)
|
|
—
|
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||||||
|
|
96,400
|
|
|
2,324
|
|
|
(21,670
|
)
|
|
(503
|
)
|
|
(39
|
)
|
|
17,062
|
|
|
(22,903
|
)
|
|
(17,774
|
)
|
|
52,897
|
|
|
—
|
|
|
||||||||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other privately held investments
|
42,142
|
|
|
—
|
|
|
—
|
|
|
1,584
|
|
|
—
|
|
|
2,704
|
|
|
—
|
|
|
—
|
|
|
46,430
|
|
|
1,584
|
|
|
||||||||||
|
CLO-Equities
|
60,700
|
|
|
—
|
|
|
—
|
|
|
2,558
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,845
|
)
|
|
31,413
|
|
|
2,558
|
|
|
||||||||||
|
|
102,842
|
|
|
—
|
|
|
—
|
|
|
4,142
|
|
|
—
|
|
|
2,704
|
|
|
—
|
|
|
(31,845
|
)
|
|
77,843
|
|
|
4,142
|
|
|
||||||||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
2,532
|
|
|
—
|
|
|
—
|
|
|
653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,185
|
)
|
|
—
|
|
|
—
|
|
|
||||||||||
|
Insurance-linked securities
|
25,023
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,090
|
|
|
67
|
|
|
||||||||||
|
|
27,555
|
|
|
—
|
|
|
—
|
|
|
720
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,185
|
)
|
|
25,090
|
|
|
67
|
|
|
||||||||||
|
Total assets
|
$
|
226,797
|
|
|
$
|
2,324
|
|
|
$
|
(21,670
|
)
|
|
$
|
4,359
|
|
|
$
|
(39
|
)
|
|
$
|
19,766
|
|
|
$
|
(22,903
|
)
|
|
$
|
(52,804
|
)
|
|
$
|
155,830
|
|
|
$
|
4,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
6,500
|
|
|
—
|
|
|
—
|
|
|
9,320
|
|
|
—
|
|
|
12,472
|
|
|
—
|
|
|
(16,782
|
)
|
|
11,510
|
|
|
(962
|
)
|
|
||||||||||
|
Total liabilities
|
$
|
6,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,320
|
|
|
$
|
—
|
|
|
$
|
12,472
|
|
|
$
|
—
|
|
|
$
|
(16,782
|
)
|
|
$
|
11,510
|
|
|
$
|
(962
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Corporate debt
|
$
|
38,518
|
|
|
$
|
5,733
|
|
|
$
|
(4,955
|
)
|
|
$
|
(1,037
|
)
|
|
$
|
1,296
|
|
|
$
|
48,298
|
|
|
$
|
(4,371
|
)
|
|
$
|
(7,607
|
)
|
|
$
|
75,875
|
|
|
$
|
—
|
|
|
|
CMBS
|
10,922
|
|
|
—
|
|
|
(2,516
|
)
|
|
—
|
|
|
(192
|
)
|
|
—
|
|
|
—
|
|
|
(5,153
|
)
|
|
3,061
|
|
|
—
|
|
|
||||||||||
|
ABS
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(917
|
)
|
|
18,381
|
|
|
—
|
|
|
—
|
|
|
17,464
|
|
|
—
|
|
|
||||||||||
|
|
49,440
|
|
|
5,733
|
|
|
(7,471
|
)
|
|
(1,037
|
)
|
|
187
|
|
|
66,679
|
|
|
(4,371
|
)
|
|
(12,760
|
)
|
|
96,400
|
|
|
—
|
|
|
||||||||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other privately held investments
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,263
|
)
|
|
—
|
|
|
44,405
|
|
|
—
|
|
|
—
|
|
|
42,142
|
|
|
(2,263
|
)
|
|
||||||||||
|
CLO-Equities
|
27,257
|
|
|
36,378
|
|
|
—
|
|
|
18,976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,911
|
)
|
|
60,700
|
|
|
18,976
|
|
|
||||||||||
|
|
27,257
|
|
|
36,378
|
|
|
—
|
|
|
16,713
|
|
|
—
|
|
|
44,405
|
|
|
—
|
|
|
(21,911
|
)
|
|
102,842
|
|
|
16,713
|
|
|
||||||||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
4,395
|
|
|
—
|
|
|
—
|
|
|
6,772
|
|
|
—
|
|
|
1,289
|
|
|
—
|
|
|
(9,924
|
)
|
|
2,532
|
|
|
1,200
|
|
|
||||||||||
|
Insurance-linked securities
|
24,925
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,023
|
|
|
98
|
|
|
||||||||||
|
|
29,320
|
|
|
—
|
|
|
—
|
|
|
6,870
|
|
|
—
|
|
|
1,289
|
|
|
—
|
|
|
(9,924
|
)
|
|
27,555
|
|
|
1,298
|
|
|
||||||||||
|
Total assets
|
$
|
106,017
|
|
|
$
|
42,111
|
|
|
$
|
(7,471
|
)
|
|
$
|
22,546
|
|
|
$
|
187
|
|
|
$
|
112,373
|
|
|
$
|
(4,371
|
)
|
|
$
|
(44,595
|
)
|
|
$
|
226,797
|
|
|
$
|
18,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
10,937
|
|
|
—
|
|
|
—
|
|
|
1,862
|
|
|
—
|
|
|
2,723
|
|
|
—
|
|
|
(9,022
|
)
|
|
6,500
|
|
|
(654
|
)
|
|
||||||||||
|
Total liabilities
|
$
|
10,937
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,862
|
|
|
$
|
—
|
|
|
$
|
2,723
|
|
|
$
|
—
|
|
|
$
|
(9,022
|
)
|
|
$
|
6,500
|
|
|
$
|
(654
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Gains and losses included in net income on fixed maturities are included in net realized investment gains (losses). Gains and (losses) included in net income on other investments are included in net investment income. Gains (losses) on weather derivatives and other underwriting-related derivatives included in net income are included in other insurance-related income.
|
(2)
|
Gains and losses included in other comprehensive income ("OCI") on fixed maturities are included in unrealized gains (losses) arising during the period.
|
(3)
|
Change in unrealized investment gain (loss) relating to assets held at the reporting date.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
At December 31, 2017
|
|
At December 31, 2016
|
|
||||||||||||||||||||
|
|
Derivative
Notional
Amount
|
|
Asset
Derivative
Fair
Value
(1)
|
|
Liability
Derivative
Fair
Value
(1)
|
|
Derivative
Notional
Amount
|
|
Asset
Derivative
Fair
Value
(1)
|
|
Liability
Derivative
Fair
Value
(1)
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Relating to investment portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign exchange forward contracts
|
$
|
137,422
|
|
|
$
|
10
|
|
|
$
|
619
|
|
|
$
|
195,979
|
|
|
$
|
12,331
|
|
|
$
|
87
|
|
|
|
Interest rate swaps
|
191,000
|
|
|
448
|
|
|
1,556
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Relating to underwriting portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign exchange forward contracts
|
698,959
|
|
|
4,667
|
|
|
701
|
|
|
492,899
|
|
|
2,034
|
|
|
8,989
|
|
|
||||||
|
Weather-related contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
67,957
|
|
|
2,532
|
|
|
6,500
|
|
|
||||||
|
Commodity contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Other underwriting-related contracts
|
85,000
|
|
|
—
|
|
|
11,510
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||
|
Total derivatives
|
|
|
$
|
5,125
|
|
|
$
|
14,386
|
|
|
|
|
$
|
16,897
|
|
|
$
|
15,576
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Asset and liability derivatives are classified within other assets and other liabilities on the Consolidated Balance Sheets.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||||||||||||||
|
|
Gross Amounts
|
Gross Amounts Offset
|
Net
Amounts
(1)
|
|
Gross Amounts
|
Gross Amounts Offset
|
Net
Amounts
(1)
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Derivative assets
|
$
|
8,178
|
|
$
|
(3,053
|
)
|
$
|
5,125
|
|
|
$
|
22,270
|
|
$
|
(5,373
|
)
|
$
|
16,897
|
|
|
|
Derivative liabilities
|
$
|
17,439
|
|
$
|
(3,053
|
)
|
$
|
14,386
|
|
|
$
|
20,949
|
|
$
|
(5,373
|
)
|
$
|
15,576
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net asset and liability derivatives are classified within other assets and other liabilities on the Consolidated Balance Sheets.
|
8.
|
DERIVATIVE INSTRUMENTS
|
8.
|
DERIVATIVE INSTRUMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Location of Gain (Loss) Recognized
in Income on Derivative
|
Amount of Gain (Loss) Recognized in
Income on Derivative
|
|
||||||||||
|
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
|||||||
|
|
|
|
|
|
|
|
|
||||||
|
Relating to investment portfolio:
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange forward contracts
|
Net realized investment gains (losses)
|
$
|
(6,935
|
)
|
|
$
|
10,929
|
|
|
$
|
11,265
|
|
|
|
Interest rate swaps
|
Net realized investment gains (losses)
|
(1,334
|
)
|
|
—
|
|
|
(4,006
|
)
|
|
|||
|
Relating to underwriting portfolio:
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange forward contracts
|
Foreign exchange gains (losses)
|
25,383
|
|
|
(8,179
|
)
|
|
(25,412
|
)
|
|
|||
|
Weather-related contracts
|
Other insurance related income (loss)
|
(9,629
|
)
|
|
4,910
|
|
|
(3,005
|
)
|
|
|||
|
Commodity contracts
|
Other insurance related income (loss)
|
—
|
|
|
(2,382
|
)
|
|
(1,814
|
)
|
|
|||
|
Other underwriting-related contracts
|
Other insurance related income (loss)
|
1,476
|
|
|
—
|
|
|
—
|
|
|
|||
|
Total
|
|
$
|
8,961
|
|
|
$
|
5,278
|
|
|
$
|
(22,972
|
)
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
•
|
Expected Loss Ratio Method ("ELR Method"): This method estimates ultimate losses for an accident year or underwriting year by applying an expected loss ratio to the earned or written premium for that year. Generally, expected loss ratios are based on one or more of (a) an analysis of historical loss experience to date, (b) pricing information and (c) industry data, adjusted as appropriate, to reflect changes in rates and terms and conditions. This method is insensitive to actual incurred losses for the accident year or underwriting year in question and is, therefore, often useful in the early stages of development when very few losses have been incurred. Conversely, the lack of sensitivity to incurred/paid losses for the accident year or underwriting year in question means that this method is usually inappropriate in later stages of an accident year or underwriting year’s development.
|
•
|
Loss Development Method (also referred to as the Chain Ladder Method or Link Ratio Method): This method assumes that the losses incurred/paid for each accident year or underwriting year at a particular development stage follow a relatively similar pattern. It assumes that on average, every accident year or underwriting year will display the same percentage of ultimate losses incurred/paid at the same point in time after the inception of that year. The percentages incurred/paid are established for each development stage (e.g. 12 months, 24 months, etc.) after examining historical averages from historical loss development data and/or external industry benchmark information. Ultimate losses are then estimated by multiplying the actual incurred/paid losses by the reciprocal of the established incurred/paid percentage. The strengths of this method are that it reacts to loss emergence/payments and that it makes full use of historical claim emergence/payment experience. However, this method has weaknesses when the underlying assumption of stable loss development/payment patterns is not valid. This could be the consequence of changes in business mix, claim inflation trends or claim reporting practices and/or the presence of large claims, amongst other things. Furthermore, this method tends to produce volatile estimates of ultimate losses where there is volatility in the underlying incurred/paid patterns. In particular, where the expected percentage of incurred/paid losses is low, small deviations between actual and expected claims can lead to very volatile estimates of ultimate losses. As a result, this method is often unsuitable at early development stages for an accident year or underwriting year.
|
•
|
Bornhuetter-Ferguson Method ("BF Method"): This method can be seen as a combination of the ELR and Loss Development Methods, under which the Loss Development Method is given progressively more weight as an accident year or underwriting year matures. The main advantage of the BF Method is that it provides a more stable estimate of ultimate losses than the Loss Development Method at earlier stages of development, while remaining more sensitive to emerging loss development than the ELR Method. In addition, the BF Method allows for the incorporation of external market information through the use of expected loss ratios, whereas the Loss Development Method does not incorporate such information.
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
•
|
estimates of the size of insured industry losses from the catastrophic event and the Company's corresponding market share;
|
•
|
a review of portfolio of contracts performed to identify those contracts which may be exposed to the catastrophic event;
|
•
|
a review of modeled loss estimates based on information previously reported by customers and brokers, including exposure data obtained during the underwriting process;
|
•
|
discussions of the impact of the event with customers and brokers and
|
•
|
catastrophe bulletins published by various independent statistical reporting agencies.
|
|
|
|
|
|
|
||||
|
As of December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Reserve for reported losses and loss expenses
|
$
|
5,137,659
|
|
|
$
|
3,358,514
|
|
|
|
Reserve for losses incurred but not reported
|
7,859,894
|
|
|
6,339,313
|
|
|
||
|
Reserve for losses and loss expenses
|
$
|
12,997,553
|
|
|
$
|
9,697,827
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross reserve for losses and loss expenses, beginning of year
|
$
|
9,697,827
|
|
|
$
|
9,646,285
|
|
|
$
|
9,596,797
|
|
|
|
Less reinsurance recoverable on unpaid losses, beginning of year
|
(2,276,109
|
)
|
|
(2,031,309
|
)
|
|
(1,890,280
|
)
|
|
|||
|
Net reserve for unpaid losses and loss expenses, beginning of year
|
7,421,718
|
|
|
7,614,976
|
|
|
7,706,517
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net incurred losses and loss expenses related to:
|
|
|
|
|
|
|
||||||
|
Current year
|
3,487,826
|
|
|
2,496,574
|
|
|
2,419,247
|
|
|
|||
|
Prior years
|
(200,054
|
)
|
|
(292,377
|
)
|
|
(243,048
|
)
|
|
|||
|
|
3,287,772
|
|
|
2,204,197
|
|
|
2,176,199
|
|
|
|||
|
Net paid losses and loss expenses related to:
|
|
|
|
|
|
|
||||||
|
Current year
|
(703,796
|
)
|
|
(428,153
|
)
|
|
(343,063
|
)
|
|
|||
|
Prior years
|
(1,880,882
|
)
|
|
(1,763,696
|
)
|
|
(1,709,659
|
)
|
|
|||
|
|
(2,584,678
|
)
|
|
(2,191,849
|
)
|
|
(2,052,722
|
)
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange and other
|
1,713,227
|
|
|
(205,606
|
)
|
|
(215,018
|
)
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net reserve for unpaid losses and loss expenses, end of year
|
9,838,039
|
|
|
7,421,718
|
|
|
7,614,976
|
|
|
|||
|
Reinsurance recoverable on unpaid losses, end of year
|
3,159,514
|
|
|
2,276,109
|
|
|
2,031,309
|
|
|
|||
|
Gross reserve for losses and loss expenses, end of year
|
$
|
12,997,553
|
|
|
$
|
9,697,827
|
|
|
$
|
9,646,285
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2017
|
$
|
48,969
|
|
|
$
|
151,085
|
|
|
$
|
200,054
|
|
|
|
Year ended December 31, 2016
|
55,905
|
|
|
236,472
|
|
|
292,377
|
|
|
|||
|
Year ended December 31, 2015
|
23,447
|
|
|
219,601
|
|
|
243,048
|
|
|
|||
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Property and Other
|
||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
||||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||||||
2008
|
$
|
312,164
|
|
$
|
260,206
|
|
$
|
251,722
|
|
$
|
242,139
|
|
$
|
226,472
|
|
$
|
225,007
|
|
$
|
220,616
|
|
$
|
218,851
|
|
$
|
217,846
|
|
$
|
216,806
|
|
$
|
982
|
|
1,573
|
2009
|
|
117,662
|
|
99,367
|
|
89,993
|
|
82,683
|
|
80,718
|
|
78,501
|
|
78,720
|
|
78,368
|
|
78,623
|
|
971
|
|
1,483
|
||||||||||||
2010
|
|
|
175,554
|
|
155,343
|
|
147,881
|
|
122,472
|
|
116,888
|
|
116,020
|
|
115,740
|
|
115,289
|
|
687
|
|
2,310
|
|||||||||||||
2011
|
|
|
|
380,921
|
|
356,524
|
|
333,911
|
|
313,281
|
|
310,404
|
|
309,197
|
|
309,638
|
|
2,836
|
|
3,737
|
||||||||||||||
2012
|
|
|
|
|
461,790
|
|
472,088
|
|
448,763
|
|
428,524
|
|
424,475
|
|
418,869
|
|
9,739
|
|
27,701
|
|||||||||||||||
2013
|
|
|
|
|
|
419,392
|
|
414,394
|
|
387,093
|
|
381,550
|
|
380,800
|
|
6,117
|
|
51,238
|
||||||||||||||||
2014
|
|
|
|
|
|
|
463,732
|
|
459,996
|
|
436,130
|
|
417,691
|
|
6,539
|
|
60,151
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
373,256
|
|
373,071
|
|
355,883
|
|
12,284
|
|
43,790
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
523,086
|
|
574,267
|
|
40,961
|
|
66,488
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
939,565
|
|
333,630
|
|
237,332
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
3,807,431
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Property and Other
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
76,558
|
|
$
|
150,470
|
|
$
|
172,320
|
|
$
|
184,038
|
|
$
|
211,002
|
|
$
|
213,569
|
|
$
|
215,628
|
|
$
|
215,121
|
|
$
|
215,071
|
|
$
|
214,663
|
|
2009
|
|
31,379
|
|
60,166
|
|
68,768
|
|
72,622
|
|
73,538
|
|
74,636
|
|
76,865
|
|
77,187
|
|
77,466
|
|
|||||||||||
2010
|
|
|
48,624
|
|
87,059
|
|
95,747
|
|
106,593
|
|
110,785
|
|
110,934
|
|
110,709
|
|
110,763
|
|
||||||||||||
2011
|
|
|
|
87,525
|
|
217,578
|
|
277,260
|
|
299,567
|
|
298,766
|
|
298,559
|
|
299,248
|
|
|||||||||||||
2012
|
|
|
|
|
107,358
|
|
278,870
|
|
343,503
|
|
366,854
|
|
374,485
|
|
379,696
|
|
||||||||||||||
2013
|
|
|
|
|
|
129,157
|
|
304,207
|
|
347,531
|
|
361,209
|
|
372,338
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
169,961
|
|
341,023
|
|
393,868
|
|
401,482
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
123,126
|
|
281,377
|
|
317,850
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
174,455
|
|
442,007
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
314,839
|
|
|||||||||||||||||||
Total
|
|
2,930,352
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
3,875
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
880,954
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Property and Other
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
34.4%
|
40.6%
|
12.2%
|
5.4%
|
3.6%
|
0.8%
|
0.9%
|
0.1%
|
0.2%
|
(0.2)%
|
Insurance Marine
|
||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
||||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||||||
2008
|
$
|
99,618
|
|
$
|
106,731
|
|
$
|
101,872
|
|
$
|
100,793
|
|
$
|
93,587
|
|
$
|
87,201
|
|
$
|
83,432
|
|
$
|
83,051
|
|
$
|
82,789
|
|
$
|
82,848
|
|
$
|
381
|
|
516
|
2009
|
|
80,665
|
|
74,298
|
|
69,932
|
|
64,601
|
|
57,213
|
|
55,027
|
|
53,622
|
|
52,523
|
|
52,428
|
|
528
|
|
477
|
||||||||||||
2010
|
|
|
68,603
|
|
70,685
|
|
66,639
|
|
53,574
|
|
51,663
|
|
48,823
|
|
47,397
|
|
45,785
|
|
735
|
|
472
|
|||||||||||||
2011
|
|
|
|
90,659
|
|
78,611
|
|
72,463
|
|
65,697
|
|
65,707
|
|
65,919
|
|
68,008
|
|
1,549
|
|
603
|
||||||||||||||
2012
|
|
|
|
|
89,703
|
|
82,729
|
|
68,842
|
|
70,942
|
|
71,917
|
|
74,541
|
|
12,824
|
|
700
|
|||||||||||||||
2013
|
|
|
|
|
|
80,034
|
|
101,276
|
|
96,722
|
|
97,777
|
|
83,064
|
|
4,121
|
|
733
|
||||||||||||||||
2014
|
|
|
|
|
|
|
59,665
|
|
44,562
|
|
48,471
|
|
44,439
|
|
7,167
|
|
799
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
158,697
|
|
139,931
|
|
136,608
|
|
16,023
|
|
915
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
86,324
|
|
78,864
|
|
19,460
|
|
1,372
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
74,639
|
|
48,739
|
|
1,772
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
741,224
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Marine
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
14,357
|
|
$
|
52,697
|
|
$
|
69,114
|
|
$
|
77,203
|
|
$
|
78,313
|
|
$
|
82,043
|
|
$
|
82,128
|
|
$
|
82,259
|
|
$
|
82,339
|
|
$
|
82,344
|
|
2009
|
|
17,431
|
|
30,364
|
|
39,699
|
|
43,243
|
|
45,286
|
|
45,896
|
|
48,430
|
|
48,712
|
|
49,060
|
|
|||||||||||
2010
|
|
|
18,062
|
|
28,771
|
|
33,392
|
|
42,554
|
|
45,373
|
|
46,150
|
|
47,088
|
|
43,587
|
|
||||||||||||
2011
|
|
|
|
26,417
|
|
44,168
|
|
54,874
|
|
57,972
|
|
59,816
|
|
60,523
|
|
64,750
|
|
|||||||||||||
2012
|
|
|
|
|
10,730
|
|
38,560
|
|
44,858
|
|
49,631
|
|
50,448
|
|
52,833
|
|
||||||||||||||
2013
|
|
|
|
|
|
19,313
|
|
44,437
|
|
55,414
|
|
63,637
|
|
66,326
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
6,363
|
|
15,277
|
|
26,831
|
|
26,977
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
21,467
|
|
54,845
|
|
108,071
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
12,497
|
|
32,038
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
10,061
|
|
|||||||||||||||||||
Total
|
|
536,047
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
8,213
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
213,390
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance Marine
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
22.6%
|
28.6%
|
18.8%
|
8.3%
|
3.1%
|
2.3%
|
3.3%
|
(2.3)%
|
0.4%
|
—%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Aviation
|
||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
||||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||||||
2008
|
$
|
14,485
|
|
$
|
12,021
|
|
$
|
8,516
|
|
$
|
8,354
|
|
$
|
8,256
|
|
$
|
7,108
|
|
$
|
5,937
|
|
$
|
5,851
|
|
$
|
5,996
|
|
$
|
5,905
|
|
$
|
42
|
|
187
|
2009
|
|
17,505
|
|
14,608
|
|
18,800
|
|
18,146
|
|
16,974
|
|
16,674
|
|
15,494
|
|
14,661
|
|
14,388
|
|
68
|
|
317
|
||||||||||||
2010
|
|
|
12,939
|
|
11,729
|
|
11,460
|
|
9,791
|
|
8,807
|
|
8,739
|
|
8,784
|
|
8,574
|
|
131
|
|
521
|
|||||||||||||
2011
|
|
|
|
17,725
|
|
15,400
|
|
12,791
|
|
9,568
|
|
8,437
|
|
7,290
|
|
7,257
|
|
218
|
|
734
|
||||||||||||||
2012
|
|
|
|
|
12,788
|
|
10,681
|
|
10,807
|
|
8,724
|
|
7,775
|
|
7,730
|
|
320
|
|
874
|
|||||||||||||||
2013
|
|
|
|
|
|
15,656
|
|
16,344
|
|
15,221
|
|
15,264
|
|
15,579
|
|
542
|
|
1,027
|
||||||||||||||||
2014
|
|
|
|
|
|
|
20,437
|
|
23,046
|
|
24,368
|
|
21,859
|
|
982
|
|
1,324
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
29,772
|
|
28,512
|
|
29,965
|
|
2,646
|
|
1,917
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
29,178
|
|
33,641
|
|
5,145
|
|
1,692
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
24,752
|
|
12,737
|
|
1,177
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
169,650
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Aviation
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
488
|
|
$
|
2,063
|
|
$
|
3,084
|
|
$
|
3,666
|
|
$
|
4,216
|
|
$
|
4,487
|
|
$
|
4,663
|
|
$
|
5,269
|
|
$
|
5,526
|
|
$
|
5,519
|
|
2009
|
|
2,118
|
|
3,628
|
|
7,071
|
|
12,834
|
|
13,957
|
|
14,322
|
|
14,258
|
|
13,755
|
|
13,547
|
|
|||||||||||
2010
|
|
|
1,053
|
|
4,156
|
|
6,341
|
|
6,920
|
|
7,586
|
|
7,708
|
|
8,152
|
|
8,247
|
|
||||||||||||
2011
|
|
|
|
639
|
|
2,830
|
|
4,521
|
|
5,040
|
|
5,576
|
|
5,826
|
|
6,056
|
|
|||||||||||||
2012
|
|
|
|
|
957
|
|
2,868
|
|
4,159
|
|
5,958
|
|
6,836
|
|
7,070
|
|
||||||||||||||
2013
|
|
|
|
|
|
4,402
|
|
7,336
|
|
9,757
|
|
11,462
|
|
13,551
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
3,989
|
|
8,033
|
|
11,706
|
|
13,914
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
8,090
|
|
16,177
|
|
21,095
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
10,421
|
|
19,403
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
6,459
|
|
|||||||||||||||||||
Total
|
|
114,861
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
1,611
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
56,400
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Aviation
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
18.7%
|
24.4%
|
19.4%
|
15.5%
|
9.5%
|
3.0%
|
2.8%
|
2.6%
|
1.5%
|
(0.1)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Credit and Political Risk
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
—
|
|
$
|
69,217
|
|
$
|
45,625
|
|
$
|
45,638
|
|
$
|
45,379
|
|
$
|
45,379
|
|
$
|
44,410
|
|
$
|
44,410
|
|
$
|
44,410
|
|
$
|
44,161
|
|
2009
|
|
92,844
|
|
344,658
|
|
346,267
|
|
346,243
|
|
341,600
|
|
345,545
|
|
345,545
|
|
345,592
|
|
340,809
|
|
|||||||||||
2010
|
|
|
50,000
|
|
85,418
|
|
90,729
|
|
106,769
|
|
101,790
|
|
101,952
|
|
102,158
|
|
102,200
|
|
||||||||||||
2011
|
|
|
|
32,788
|
|
37,205
|
|
27,636
|
|
27,636
|
|
27,636
|
|
27,636
|
|
27,631
|
|
|||||||||||||
2012
|
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40
|
|
42
|
|
||||||||||||||
2013
|
|
|
|
|
|
745
|
|
2,235
|
|
3,726
|
|
5,216
|
|
11,768
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
1,924
|
|
39,952
|
|
61,108
|
|
57,855
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
—
|
|
23,309
|
|
23,298
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
—
|
|
23,789
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||||||||||||
Total
|
|
631,553
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
(1,475
|
)
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
51,469
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance Credit and Political Risk
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
18.8%
|
54.1%
|
(4.3)%
|
3.3%
|
20.3%
|
1.1%
|
(0.5)%
|
—%
|
(0.7)%
|
(0.6)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Professional Lines
|
||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
||||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||||||
2008
|
$
|
238,550
|
|
$
|
278,691
|
|
$
|
280,842
|
|
$
|
298,905
|
|
$
|
296,499
|
|
$
|
309,642
|
|
$
|
329,458
|
|
$
|
327,240
|
|
$
|
326,192
|
|
$
|
325,573
|
|
$
|
9,175
|
|
4,558
|
2009
|
|
240,818
|
|
244,150
|
|
244,751
|
|
245,319
|
|
256,295
|
|
238,902
|
|
239,428
|
|
215,732
|
|
223,737
|
|
13,584
|
|
5,882
|
||||||||||||
2010
|
|
|
231,232
|
|
236,578
|
|
234,334
|
|
205,801
|
|
182,713
|
|
158,946
|
|
181,232
|
|
168,632
|
|
26,396
|
|
5,669
|
|||||||||||||
2011
|
|
|
|
313,858
|
|
315,654
|
|
333,321
|
|
326,255
|
|
330,562
|
|
343,782
|
|
352,406
|
|
50,239
|
|
7,211
|
||||||||||||||
2012
|
|
|
|
|
329,769
|
|
375,557
|
|
377,277
|
|
376,604
|
|
364,423
|
|
366,725
|
|
70,219
|
|
8,279
|
|||||||||||||||
2013
|
|
|
|
|
|
384,755
|
|
397,852
|
|
398,578
|
|
365,818
|
|
355,777
|
|
95,220
|
|
9,371
|
||||||||||||||||
2014
|
|
|
|
|
|
|
411,690
|
|
412,288
|
|
423,087
|
|
394,470
|
|
157,747
|
|
9,650
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
377,652
|
|
377,725
|
|
383,959
|
|
186,383
|
|
9,862
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
349,268
|
|
352,414
|
|
220,770
|
|
10,728
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
346,582
|
|
302,135
|
|
9,984
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
3,270,275
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Professional Lines
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
4,068
|
|
$
|
22,325
|
|
$
|
68,197
|
|
$
|
124,681
|
|
$
|
167,828
|
|
$
|
189,339
|
|
$
|
214,481
|
|
$
|
249,321
|
|
$
|
267,611
|
|
$
|
268,487
|
|
2009
|
|
1,689
|
|
20,670
|
|
44,312
|
|
69,050
|
|
97,061
|
|
107,421
|
|
127,033
|
|
167,129
|
|
179,770
|
|
|||||||||||
2010
|
|
|
7,857
|
|
27,880
|
|
53,738
|
|
72,840
|
|
89,051
|
|
99,554
|
|
110,156
|
|
115,204
|
|
||||||||||||
2011
|
|
|
|
6,782
|
|
32,351
|
|
74,224
|
|
108,470
|
|
165,755
|
|
238,523
|
|
283,718
|
|
|||||||||||||
2012
|
|
|
|
|
7,824
|
|
41,545
|
|
100,526
|
|
185,059
|
|
231,963
|
|
255,140
|
|
||||||||||||||
2013
|
|
|
|
|
|
17,739
|
|
73,334
|
|
130,342
|
|
176,899
|
|
214,534
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
23,665
|
|
71,510
|
|
131,610
|
|
194,294
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
20,403
|
|
68,400
|
|
138,967
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
16,010
|
|
71,619
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
19,524
|
|
|||||||||||||||||||
Total
|
|
1,741,257
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
30,546
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,559,564
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance Professional Lines
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
3.7%
|
10.9%
|
14.7%
|
14.5%
|
12.5%
|
8.9%
|
8.9%
|
10.5%
|
5.6%
|
0.3%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Liability
|
||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
||||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||||||
2008
|
$
|
82,969
|
|
$
|
79,836
|
|
$
|
80,947
|
|
$
|
81,785
|
|
$
|
82,225
|
|
$
|
81,949
|
|
$
|
101,589
|
|
$
|
102,444
|
|
$
|
108,189
|
|
$
|
94,165
|
|
$
|
11,783
|
|
3,790
|
2009
|
|
61,469
|
|
64,017
|
|
67,410
|
|
67,869
|
|
76,431
|
|
83,282
|
|
101,180
|
|
98,384
|
|
98,999
|
|
10,895
|
|
2,777
|
||||||||||||
2010
|
|
|
79,401
|
|
94,231
|
|
98,648
|
|
98,134
|
|
99,596
|
|
98,086
|
|
105,145
|
|
104,296
|
|
12,681
|
|
2,206
|
|||||||||||||
2011
|
|
|
|
72,584
|
|
75,329
|
|
83,118
|
|
87,060
|
|
85,243
|
|
83,731
|
|
82,128
|
|
19,227
|
|
1,788
|
||||||||||||||
2012
|
|
|
|
|
70,877
|
|
70,645
|
|
73,282
|
|
70,770
|
|
68,181
|
|
75,342
|
|
27,824
|
|
1,240
|
|||||||||||||||
2013
|
|
|
|
|
|
92,153
|
|
94,182
|
|
94,258
|
|
87,502
|
|
93,221
|
|
24,296
|
|
1,562
|
||||||||||||||||
2014
|
|
|
|
|
|
|
106,166
|
|
122,686
|
|
128,568
|
|
130,035
|
|
41,151
|
|
2,440
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
127,321
|
|
126,047
|
|
136,615
|
|
61,944
|
|
3,317
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
123,259
|
|
129,225
|
|
90,482
|
|
3,811
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
141,644
|
|
129,373
|
|
2,519
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,085,670
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Liability
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
1,906
|
|
$
|
8,796
|
|
$
|
18,507
|
|
$
|
27,861
|
|
$
|
37,408
|
|
$
|
47,447
|
|
$
|
51,776
|
|
$
|
55,314
|
|
$
|
61,618
|
|
$
|
87,159
|
|
2009
|
|
726
|
|
4,646
|
|
13,305
|
|
26,754
|
|
31,865
|
|
41,323
|
|
44,105
|
|
83,991
|
|
84,427
|
|
|||||||||||
2010
|
|
|
1,029
|
|
15,986
|
|
30,809
|
|
53,604
|
|
61,055
|
|
66,140
|
|
71,814
|
|
86,471
|
|
||||||||||||
2011
|
|
|
|
2,761
|
|
10,540
|
|
20,190
|
|
38,377
|
|
46,074
|
|
54,996
|
|
60,263
|
|
|||||||||||||
2012
|
|
|
|
|
1,631
|
|
5,515
|
|
15,412
|
|
30,146
|
|
37,140
|
|
42,745
|
|
||||||||||||||
2013
|
|
|
|
|
|
2,363
|
|
23,285
|
|
33,324
|
|
42,055
|
|
60,021
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
1,419
|
|
18,662
|
|
49,858
|
|
71,630
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
5,439
|
|
22,474
|
|
39,767
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
6,332
|
|
23,335
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
4,243
|
|
|||||||||||||||||||
Total
|
|
560,061
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
44,150
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
569,759
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance Liability
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
2.5%
|
11.3%
|
13.2%
|
16.2%
|
10.1%
|
8.7%
|
4.8%
|
19.4%
|
3.6%
|
27.1%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Property and Other
|
|||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
|||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
|||||||||||||||||||||||
2008
|
$
|
677,556
|
|
$
|
577,309
|
|
$
|
593,015
|
|
$
|
571,142
|
|
$
|
557,060
|
|
$
|
546,034
|
|
$
|
529,918
|
|
$
|
524,422
|
|
$
|
523,154
|
|
$
|
523,591
|
|
$
|
(224
|
)
|
2009
|
|
344,543
|
|
288,510
|
|
250,630
|
|
237,339
|
|
230,351
|
|
209,335
|
|
203,261
|
|
205,145
|
|
202,300
|
|
1,018
|
|
||||||||||||
2010
|
|
|
619,241
|
|
610,563
|
|
580,601
|
|
594,238
|
|
597,427
|
|
591,331
|
|
583,563
|
|
581,616
|
|
4,587
|
|
|||||||||||||
2011
|
|
|
|
1,092,977
|
|
1,105,962
|
|
1,105,415
|
|
1,064,864
|
|
1,047,944
|
|
1,022,452
|
|
1,020,771
|
|
8,207
|
|
||||||||||||||
2012
|
|
|
|
|
488,776
|
|
456,173
|
|
445,932
|
|
415,327
|
|
399,193
|
|
394,332
|
|
6,544
|
|
|||||||||||||||
2013
|
|
|
|
|
|
475,162
|
|
452,433
|
|
422,160
|
|
403,217
|
|
397,673
|
|
4,083
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
441,147
|
|
461,961
|
|
448,887
|
|
438,815
|
|
45,519
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
386,614
|
|
368,320
|
|
369,734
|
|
27,033
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
452,342
|
|
452,169
|
|
96,090
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
870,456
|
|
488,104
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
5,251,457
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Property and Other
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
158,206
|
|
$
|
316,280
|
|
$
|
444,047
|
|
$
|
497,078
|
|
$
|
510,305
|
|
$
|
514,696
|
|
$
|
514,765
|
|
$
|
519,711
|
|
$
|
519,391
|
|
$
|
517,657
|
|
2009
|
|
57,796
|
|
132,309
|
|
164,047
|
|
182,556
|
|
193,309
|
|
192,746
|
|
195,614
|
|
197,310
|
|
193,973
|
|
|||||||||||
2010
|
|
|
119,385
|
|
318,198
|
|
412,731
|
|
444,822
|
|
491,817
|
|
521,377
|
|
546,253
|
|
551,588
|
|
||||||||||||
2011
|
|
|
|
242,494
|
|
561,377
|
|
769,142
|
|
872,086
|
|
902,188
|
|
976,120
|
|
991,307
|
|
|||||||||||||
2012
|
|
|
|
|
93,847
|
|
231,961
|
|
305,020
|
|
327,361
|
|
341,925
|
|
351,558
|
|
||||||||||||||
2013
|
|
|
|
|
|
55,047
|
|
223,666
|
|
336,940
|
|
365,089
|
|
374,944
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
65,848
|
|
274,886
|
|
351,496
|
|
369,000
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
48,116
|
|
190,057
|
|
282,967
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
78,916
|
|
231,682
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
172,937
|
|
|||||||||||||||||||
Total
|
|
4,037,613
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
6,225
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,220,069
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Property and Other
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
20.6%
|
36.6%
|
20.8%
|
7.4%
|
4.2%
|
3.0%
|
1.8%
|
0.9%
|
(0.9)%
|
(0.3)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Credit and Surety
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
20,891
|
|
$
|
70,349
|
|
$
|
71,501
|
|
$
|
86,796
|
|
$
|
88,604
|
|
$
|
91,014
|
|
$
|
93,282
|
|
$
|
94,040
|
|
$
|
94,446
|
|
$
|
94,601
|
|
2009
|
|
32,888
|
|
78,254
|
|
80,744
|
|
83,138
|
|
87,079
|
|
89,736
|
|
89,921
|
|
89,894
|
|
89,986
|
|
|||||||||||
2010
|
|
|
28,387
|
|
50,148
|
|
61,983
|
|
62,586
|
|
64,455
|
|
65,722
|
|
67,252
|
|
68,294
|
|
||||||||||||
2011
|
|
|
|
22,640
|
|
56,106
|
|
74,037
|
|
82,015
|
|
86,653
|
|
88,944
|
|
91,307
|
|
|||||||||||||
2012
|
|
|
|
|
50,516
|
|
88,092
|
|
102,976
|
|
108,858
|
|
112,423
|
|
114,251
|
|
||||||||||||||
2013
|
|
|
|
|
|
32,708
|
|
78,976
|
|
94,347
|
|
101,104
|
|
108,839
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
35,839
|
|
62,900
|
|
88,668
|
|
97,957
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
33,064
|
|
84,077
|
|
103,123
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
42,348
|
|
75,170
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
34,758
|
|
|||||||||||||||||||
Total
|
|
878,286
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
10,351
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
375,762
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Credit and Surety
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
27.3%
|
32.2%
|
10.9%
|
6.0%
|
3.5%
|
2.0%
|
1.7%
|
0.7%
|
0.3%
|
0.2%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Professional Lines
|
|||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
|||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
|||||||||||||||||||||||
2008
|
$
|
176,166
|
|
$
|
183,064
|
|
$
|
182,587
|
|
$
|
178,530
|
|
$
|
176,767
|
|
$
|
173,316
|
|
$
|
174,286
|
|
$
|
173,217
|
|
$
|
172,937
|
|
$
|
169,515
|
|
$
|
6,938
|
|
2009
|
|
212,285
|
|
212,046
|
|
216,737
|
|
219,447
|
|
210,084
|
|
209,625
|
|
194,753
|
|
190,811
|
|
181,665
|
|
11,657
|
|
||||||||||||
2010
|
|
|
211,273
|
|
211,397
|
|
212,359
|
|
215,298
|
|
215,043
|
|
197,548
|
|
189,880
|
|
180,219
|
|
24,929
|
|
|||||||||||||
2011
|
|
|
|
202,504
|
|
202,676
|
|
203,706
|
|
212,439
|
|
209,837
|
|
208,973
|
|
201,077
|
|
51,009
|
|
||||||||||||||
2012
|
|
|
|
|
210,612
|
|
217,184
|
|
222,600
|
|
224,737
|
|
223,492
|
|
213,601
|
|
75,647
|
|
|||||||||||||||
2013
|
|
|
|
|
|
210,196
|
|
215,425
|
|
216,528
|
|
214,855
|
|
214,477
|
|
101,607
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
219,927
|
|
219,966
|
|
219,960
|
|
219,968
|
|
85,643
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
212,536
|
|
212,852
|
|
215,178
|
|
124,029
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
195,527
|
|
196,852
|
|
140,194
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
155,882
|
|
144,098
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,948,434
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Professional Lines
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
373
|
|
$
|
6,465
|
|
$
|
21,736
|
|
$
|
49,393
|
|
$
|
70,815
|
|
$
|
92,320
|
|
$
|
109,093
|
|
$
|
124,658
|
|
$
|
133,596
|
|
$
|
139,917
|
|
2009
|
|
914
|
|
8,589
|
|
32,327
|
|
63,180
|
|
83,946
|
|
108,787
|
|
128,608
|
|
138,823
|
|
143,634
|
|
|||||||||||
2010
|
|
|
1,759
|
|
12,037
|
|
31,269
|
|
52,187
|
|
76,931
|
|
107,534
|
|
124,158
|
|
130,837
|
|
||||||||||||
2011
|
|
|
|
1,506
|
|
11,829
|
|
30,326
|
|
57,402
|
|
85,052
|
|
103,309
|
|
120,076
|
|
|||||||||||||
2012
|
|
|
|
|
780
|
|
10,441
|
|
29,730
|
|
53,801
|
|
86,211
|
|
107,581
|
|
||||||||||||||
2013
|
|
|
|
|
|
1,068
|
|
12,121
|
|
30,666
|
|
65,195
|
|
81,940
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
2,020
|
|
13,085
|
|
48,930
|
|
74,748
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
3,134
|
|
13,507
|
|
41,610
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
1,782
|
|
20,624
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
2,815
|
|
|||||||||||||||||||
Total
|
|
863,782
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
34,882
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,119,534
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Professional Lines
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
0.8%
|
5.3%
|
11.1%
|
13.9%
|
12.4%
|
12.5%
|
9.6%
|
6.2%
|
4.0%
|
3.7%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Motor
|
|||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
|||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
|||||||||||||||||||||||
2008
|
$
|
74,058
|
|
$
|
78,924
|
|
$
|
78,193
|
|
$
|
80,897
|
|
$
|
77,937
|
|
$
|
77,027
|
|
$
|
72,330
|
|
$
|
65,983
|
|
$
|
61,702
|
|
$
|
62,557
|
|
$
|
20,916
|
|
2009
|
|
85,779
|
|
83,784
|
|
91,915
|
|
93,917
|
|
96,069
|
|
97,089
|
|
87,995
|
|
82,093
|
|
84,458
|
|
21,053
|
|
||||||||||||
2010
|
|
|
103,990
|
|
112,528
|
|
113,304
|
|
112,285
|
|
106,058
|
|
100,707
|
|
90,839
|
|
87,253
|
|
24,419
|
|
|||||||||||||
2011
|
|
|
|
160,444
|
|
164,579
|
|
168,734
|
|
175,021
|
|
171,007
|
|
161,958
|
|
150,818
|
|
33,732
|
|
||||||||||||||
2012
|
|
|
|
|
186,033
|
|
176,870
|
|
164,734
|
|
156,957
|
|
151,820
|
|
141,923
|
|
25,982
|
|
|||||||||||||||
2013
|
|
|
|
|
|
169,876
|
|
168,554
|
|
156,692
|
|
146,799
|
|
143,186
|
|
26,041
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
190,363
|
|
193,691
|
|
188,725
|
|
185,570
|
|
24,003
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
231,614
|
|
229,110
|
|
233,172
|
|
37,198
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
255,354
|
|
276,126
|
|
55,173
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
348,068
|
|
170,065
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,713,131
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Motor
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
3,093
|
|
$
|
6,371
|
|
$
|
6,625
|
|
$
|
7,910
|
|
$
|
9,491
|
|
$
|
12,088
|
|
$
|
14,897
|
|
$
|
15,570
|
|
$
|
17,231
|
|
$
|
17,657
|
|
2009
|
|
2,819
|
|
7,134
|
|
8,428
|
|
10,020
|
|
13,627
|
|
20,029
|
|
22,446
|
|
27,248
|
|
30,378
|
|
|||||||||||
2010
|
|
|
7,406
|
|
13,316
|
|
19,189
|
|
22,873
|
|
26,489
|
|
30,942
|
|
34,342
|
|
35,444
|
|
||||||||||||
2011
|
|
|
|
21,274
|
|
46,277
|
|
61,691
|
|
72,663
|
|
79,729
|
|
85,995
|
|
90,871
|
|
|||||||||||||
2012
|
|
|
|
|
29,727
|
|
55,282
|
|
70,634
|
|
80,891
|
|
87,658
|
|
91,896
|
|
||||||||||||||
2013
|
|
|
|
|
|
34,607
|
|
56,009
|
|
70,849
|
|
81,419
|
|
87,407
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
44,225
|
|
77,736
|
|
98,483
|
|
107,090
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
58,884
|
|
97,495
|
|
118,902
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
61,938
|
|
109,559
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
71,052
|
|
|||||||||||||||||||
Total
|
|
760,256
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
129,548
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,082,423
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Motor
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
16.8%
|
13.2%
|
7.6%
|
5.0%
|
4.1%
|
4.8%
|
3.6%
|
2.7%
|
3.2%
|
0.7%
|
Reinsurance Liability
|
|||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
|||||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
|||||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
|||||||||||||||||||||||
2008
|
$
|
140,069
|
|
$
|
140,460
|
|
$
|
141,152
|
|
$
|
141,553
|
|
$
|
139,564
|
|
$
|
133,917
|
|
$
|
111,873
|
|
$
|
106,942
|
|
$
|
95,649
|
|
$
|
86,008
|
|
$
|
10,016
|
|
2009
|
|
175,100
|
|
176,187
|
|
182,970
|
|
180,596
|
|
188,090
|
|
208,301
|
|
195,679
|
|
181,488
|
|
171,979
|
|
23,215
|
|
||||||||||||
2010
|
|
|
173,358
|
|
172,261
|
|
183,773
|
|
184,180
|
|
202,649
|
|
192,051
|
|
182,794
|
|
166,533
|
|
29,101
|
|
|||||||||||||
2011
|
|
|
|
174,125
|
|
173,815
|
|
175,279
|
|
193,228
|
|
200,190
|
|
196,948
|
|
196,277
|
|
34,097
|
|
||||||||||||||
2012
|
|
|
|
|
168,641
|
|
164,742
|
|
168,956
|
|
173,596
|
|
174,765
|
|
172,124
|
|
43,129
|
|
|||||||||||||||
2013
|
|
|
|
|
|
173,966
|
|
177,606
|
|
183,683
|
|
185,689
|
|
185,321
|
|
71,652
|
|
||||||||||||||||
2014
|
|
|
|
|
|
|
201,355
|
|
204,323
|
|
206,100
|
|
202,130
|
|
91,483
|
|
|||||||||||||||||
2015
|
|
|
|
|
|
|
|
216,076
|
|
216,518
|
|
217,480
|
|
125,377
|
|
||||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
241,952
|
|
247,768
|
|
171,869
|
|
|||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
266,945
|
|
226,036
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,912,565
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance Liability
|
||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||||||||||||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||||||||||||
Accident Year
|
2008 Unaudited
|
2009 Unaudited
|
2010 Unaudited
|
2011 Unaudited
|
2012 Unaudited
|
2013 Unaudited
|
2014 Unaudited
|
2015 Unaudited
|
2016
|
2017
|
||||||||||||||||||||
2008
|
$
|
2,160
|
|
$
|
9,952
|
|
$
|
21,953
|
|
$
|
30,028
|
|
$
|
36,567
|
|
$
|
43,509
|
|
$
|
51,922
|
|
$
|
53,882
|
|
$
|
58,022
|
|
$
|
63,903
|
|
2009
|
|
1,705
|
|
17,104
|
|
44,552
|
|
56,730
|
|
73,521
|
|
105,410
|
|
125,329
|
|
129,644
|
|
135,031
|
|
|||||||||||
2010
|
|
|
2,484
|
|
17,659
|
|
46,207
|
|
62,300
|
|
83,976
|
|
97,617
|
|
108,938
|
|
119,872
|
|
||||||||||||
2011
|
|
|
|
5,191
|
|
21,297
|
|
40,021
|
|
70,283
|
|
92,696
|
|
112,581
|
|
123,719
|
|
|||||||||||||
2012
|
|
|
|
|
3,542
|
|
12,809
|
|
28,418
|
|
58,855
|
|
78,368
|
|
101,343
|
|
||||||||||||||
2013
|
|
|
|
|
|
5,978
|
|
22,259
|
|
52,360
|
|
69,098
|
|
88,327
|
|
|||||||||||||||
2014
|
|
|
|
|
|
|
7,117
|
|
28,699
|
|
48,498
|
|
70,389
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
|
7,273
|
|
27,473
|
|
54,646
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
|
11,891
|
|
37,819
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
12,073
|
|
|||||||||||||||||||
Total
|
|
807,122
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2008, net of reinsurance
|
|
42,182
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,147,625
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Reinsurance Liability
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
2.9%
|
8.9%
|
13.0%
|
11.3%
|
10.6%
|
11.6%
|
8.5%
|
3.8%
|
4.0%
|
6.8%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Aviabel
|
|||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
At December 31, 2017
|
|||||||||||
Accident Year
|
Net claim and allocated claim adjustment expense reserves at the Acquisition Date
|
Net incurred claims and allocated claim adjustment expenses from the Acquisition Date to December 31, 2017
|
Total acquired net claim and allocated claim adjustment expense reserves and net incurred claims and allocated claim adjustment expenses from the Acquisition Date to December 31, 2017
|
Total of Incurred-But-Not-Reported Liabilities Plus Expected Development on Reported Claims
|
Cumulative Number of Reported Claims
|
||||||||
2008
|
$
|
998
|
|
$
|
(293
|
)
|
$
|
705
|
|
$
|
30
|
|
1,066
|
2009
|
842
|
|
82
|
|
924
|
|
25
|
|
1,347
|
||||
2010
|
1,516
|
|
(39
|
)
|
1,477
|
|
46
|
|
1,452
|
||||
2011
|
1,418
|
|
(423
|
)
|
995
|
|
43
|
|
1,420
|
||||
2012
|
5,248
|
|
(1,066
|
)
|
4,183
|
|
177
|
|
1,380
|
||||
2013
|
5,702
|
|
956
|
|
6,658
|
|
200
|
|
1,286
|
||||
2014
|
10,589
|
|
(1,636
|
)
|
8,953
|
|
804
|
|
1,373
|
||||
2015
|
15,004
|
|
(1,575
|
)
|
13,429
|
|
1,650
|
|
1,475
|
||||
2016
|
19,388
|
|
2,134
|
|
21,522
|
|
4,278
|
|
1,535
|
||||
2017
|
7,666
|
|
27,096
|
|
34,762
|
|
7,180
|
|
1,114
|
||||
|
$
|
68,371
|
|
$
|
25,237
|
|
$
|
93,608
|
|
|
|
||
|
|
|
|
|
|
Aviabel
|
||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|||
|
From the Acquisition Date to December 31, 2017
|
|||
Accident Year
|
|
|
||
2008
|
|
$
|
(33
|
)
|
2009
|
|
1
|
|
|
2010
|
|
97
|
|
|
2011
|
|
20
|
|
|
2012
|
|
661
|
|
|
2013
|
|
425
|
|
|
2014
|
|
1,944
|
|
|
2015
|
|
3,291
|
|
|
2016
|
|
5,453
|
|
|
2017
|
|
14,970
|
|
|
Total
|
|
26,830
|
|
|
|
|
|
||
|
All outstanding liabilities before 2008, net of reinsurance
|
10,626
|
|
|
|
|
|
||
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
$
|
77,405
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Novae
|
||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance
|
|
||
|
From the Acquisition Date to December 31, 2017
|
|
||
Accident Year
|
|
|
||
2008
|
|
$
|
1,458
|
|
2009
|
|
1,147
|
|
|
2010
|
|
3,197
|
|
|
2011
|
|
4,332
|
|
|
2012
|
|
7,352
|
|
|
2013
|
|
5,878
|
|
|
2014
|
|
12,370
|
|
|
2015
|
|
19,349
|
|
|
2016
|
|
51,065
|
|
|
2017
|
|
33,278
|
|
|
Total
|
139,427
|
|
||
|
|
|||
|
All outstanding liabilities before 2008, net of reinsurance
|
102,164
|
|
|
|
|
|||
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
$
|
1,300,361
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses
|
||||||||||||
|
|
|
||||||||||
|
|
At December 31, 2017
|
||||||||||
|
|
Net outstanding liabilities
|
|
Reinsurance recoverable on unpaid claims
|
|
Gross outstanding liabilities
|
||||||
|
|
|
|
|
|
|
||||||
Insurance Segment
|
|
|
|
|
|
|
||||||
Property and Other
|
|
$
|
880,954
|
|
|
$
|
181,101
|
|
|
$
|
1,062,055
|
|
Marine
|
|
213,390
|
|
|
106,466
|
|
|
319,856
|
|
|||
Aviation
|
|
56,400
|
|
|
8,945
|
|
|
65,345
|
|
|||
Credit and Political Risk
|
|
51,469
|
|
|
1,384
|
|
|
52,853
|
|
|||
Professional Lines
|
|
1,559,564
|
|
|
853,130
|
|
|
2,412,694
|
|
|||
Liability
|
|
569,759
|
|
|
896,266
|
|
|
1,466,025
|
|
|||
Total Insurance Segment
|
|
3,331,536
|
|
|
2,047,292
|
|
|
5,378,828
|
|
|||
|
|
|
|
|
|
|
||||||
Reinsurance Segment
|
|
|
|
|
|
|
||||||
Property and Other
|
|
1,220,069
|
|
|
214,394
|
|
|
1,434,463
|
|
|||
Credit and Surety
|
|
375,762
|
|
|
13,061
|
|
|
388,823
|
|
|||
Professional Lines
|
|
1,119,534
|
|
|
37,822
|
|
|
1,157,356
|
|
|||
Motor
|
|
1,082,423
|
|
|
3,666
|
|
|
1,086,089
|
|
|||
Liability
|
|
1,147,625
|
|
|
66,692
|
|
|
1,214,317
|
|
|||
Total Reinsurance Segment
|
|
4,945,413
|
|
|
335,635
|
|
|
5,281,048
|
|
|||
Aviabel
|
|
77,405
|
|
|
5,329
|
|
|
82,734
|
|
|||
Novae
|
|
1,300,361
|
|
|
771,258
|
|
|
2,071,619
|
|
|||
Total
|
|
$
|
9,654,715
|
|
|
$
|
3,159,514
|
|
|
12,814,229
|
|
|
Unallocated claims adjustment expenses
|
|
|
|
|
|
170,168
|
|
|||||
Foreign exchange and other
(1)
|
|
|
|
|
|
(45,262
|
)
|
|||||
Assumed reserves related to retroactive transactions
|
|
|
|
|
|
58,418
|
|
|||||
|
|
|
|
|
|
|
||||||
Total liability for unpaid claims and claims adjustment expense
|
|
|
|
|
|
$
|
12,997,553
|
|
||||
|
|
|
|
|
|
|
(1)
|
Non-U.S. dollar denominated loss data is converted to U.S dollar at the rates of exchange in effect at the balance sheet
date for material underlying currencies. Fluctuations in currency exchange rates cause material shifts in loss development. Reserves for losses and loss expenses, disclosed in the Consolidated Balance Sheets, are also revalued using the exchange rate at the balance sheet date.
|
10.
|
REINSURANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||||||||
|
|
Premiums
written
|
|
Premiums
earned
|
|
Premiums
written
|
|
Premiums
earned
|
|
Premiums
written
|
|
Premiums
earned
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Gross
|
$
|
5,556,273
|
|
|
$
|
5,616,234
|
|
|
$
|
4,970,208
|
|
|
$
|
4,762,394
|
|
|
$
|
4,603,730
|
|
|
$
|
4,567,953
|
|
|
|
Ceded
|
(1,529,130
|
)
|
|
(1,467,474
|
)
|
|
(1,217,234
|
)
|
|
(1,056,769
|
)
|
|
(929,064
|
)
|
|
(881,536
|
)
|
|
||||||
|
Net
|
$
|
4,027,143
|
|
|
$
|
4,148,760
|
|
|
$
|
3,752,974
|
|
|
$
|
3,705,625
|
|
|
$
|
3,674,666
|
|
|
$
|
3,686,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
DEBT AND FINANCING ARRANGEMENTS
|
a)
|
Senior Notes and Notes Payable
|
11.
|
DEBT AND FINANCING ARRANGEMENTS (CONTINUED)
|
b)
|
Dekania Notes
|
11.
|
DEBT AND FINANCING ARRANGEMENTS (CONTINUED)
|
|
Year ended December 31,
|
|
|
||
|
|
|
|
||
|
2018
|
$
|
—
|
|
|
|
2019
|
250,000
|
|
|
|
|
2020
|
500,000
|
|
|
|
|
2021
|
—
|
|
|
|
|
2022
|
—
|
|
|
|
|
After 2022
|
636,060
|
|
|
|
|
Unamortized discount and debt issuance expenses
|
(9,531
|
)
|
|
|
|
Total senior notes and notes payable
|
$
|
1,376,529
|
|
|
|
|
|
|
c)
|
Credit Facilities
|
11.
|
DEBT AND FINANCING ARRANGEMENTS (CONTINUED)
|
12.
|
COMMITMENTS AND CONTINGENCIES
|
a)
|
Concentrations of Credit Risk
|
12.
|
COMMITMENTS AND CONTINGENCIES (CONTINUED)
|
b)
|
Brokers
|
c)
|
Lease Commitments
|
|
|
|
|
||
|
Year ended December 31,
|
|
|
||
|
|
|
|
||
|
2018
|
$
|
27,777
|
|
|
|
2019
|
26,514
|
|
|
|
|
2020
|
22,661
|
|
|
|
|
2021
|
23,817
|
|
|
|
|
2022
|
22,745
|
|
|
|
|
Later years
|
84,606
|
|
|
|
|
Total future minimum lease payments
|
$
|
208,120
|
|
|
|
|
|
|
12.
|
COMMITMENTS AND CONTINGENCIES (CONTINUED)
|
d)
|
Legal Proceedings
|
e)
|
Investments
|
f)
|
Funds at Lloyd's
|
13.
|
EARNINGS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Basic earnings (loss) per common share
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
$
|
641,631
|
|
|
|
Less: Preferred share dividends
|
46,810
|
|
|
46,597
|
|
|
40,069
|
|
|
|||
|
Less: Loss on repurchase of preferred shares
|
—
|
|
|
1,309
|
|
|
—
|
|
|
|||
|
Net income (loss) available to common shareholders
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
|
Weighted average common shares outstanding - basic
(1)
|
84,108
|
|
|
90,772
|
|
|
98,609
|
|
|
|||
|
Basic earnings (loss) per common share
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
|
$
|
6.10
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Diluted basic earnings (loss) per common share
|
|
|
|
|
|
|
||||||
|
Net income (loss) available to common shareholders
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding - basic
(1)
|
84,108
|
|
|
90,772
|
|
|
98,609
|
|
|
|||
|
Share-based compensation plans
(2)
|
—
|
|
|
775
|
|
|
1,020
|
|
|
|||
|
Weighted average common shares outstanding - diluted
(1)
|
84,108
|
|
|
91,547
|
|
|
99,629
|
|
|
|||
|
Diluted earnings (loss) per common share
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
|
$
|
6.04
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average anti-dilutive shares excluded from the dilutive computation
|
702
|
|
|
170
|
|
|
165
|
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
On
August 17, 2015
, the Company entered into an Accelerated Share Repurchase ("ASR") agreement (see Note 14
'Shareholders' Equity'
). The weighted-average number of shares outstanding used in the computation of basic and diluted earnings per share reflects the Company’s receipt of
4,149,378
shares delivered to the Company on August 20, 2015, and
1,358,380
common shares delivered to the Company on January 15, 2016 under the Company's ASR agreement.
|
(2)
|
Due to the net loss incurred in the year ended December 31, 2017, all the share equivalents were anti-dilutive.
|
14.
|
SHAREHOLDERS' EQUITY
|
a)
|
Common Shares
|
|
|
|
|
|
|
|
|
|||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
|||
|
|
|
|
|
|
|
|
|||
|
Shares issued, balance at beginning of year
|
176,580
|
|
|
176,240
|
|
|
175,478
|
|
|
|
Shares issued
|
—
|
|
|
340
|
|
|
762
|
|
|
|
Total shares issued at end of year
|
176,580
|
|
|
176,580
|
|
|
176,240
|
|
|
|
|
|
|
|
|
|
|
|||
|
Treasury shares, balance at beginning of year
|
(90,139
|
)
|
|
(80,174
|
)
|
|
(76,052
|
)
|
|
|
Shares repurchased
|
(4,288
|
)
|
|
(10,508
|
)
|
|
(4,616
|
)
|
|
|
Shares reissued
|
1,008
|
|
|
543
|
|
|
494
|
|
|
|
Total treasury shares at end of year
|
(93,419
|
)
|
|
(90,139
|
)
|
|
(80,174
|
)
|
|
|
|
|
|
|
|
|
|
|||
|
Total shares outstanding
|
83,161
|
|
|
86,441
|
|
|
96,066
|
|
|
|
|
|
|
|
|
|
|
14.
|
SHAREHOLDERS' EQUITY (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
In the open market:
|
|
|
|
|
|
|
||||||
|
Total shares
(1)
|
3,932
|
|
|
10,241
|
|
|
4,264
|
|
|
|||
|
Total cost
|
$
|
261,180
|
|
|
$
|
557,476
|
|
|
$
|
246,490
|
|
|
|
Average price per share
(2)
|
$
|
66.43
|
|
|
$
|
54.44
|
|
|
$
|
57.80
|
|
|
|
|
|
|
|
|
|
|
||||||
|
From employees:
(3)
|
|
|
|
|
|
|
||||||
|
Total shares
|
356
|
|
|
267
|
|
|
352
|
|
|
|||
|
Total cost
|
$
|
24,678
|
|
|
$
|
14,329
|
|
|
$
|
18,048
|
|
|
|
Average price per share
(2)
|
$
|
69.36
|
|
|
$
|
53.74
|
|
|
$
|
51.34
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total shares repurchased:
|
|
|
|
|
|
|
||||||
|
Total shares
|
4,288
|
|
|
10,508
|
|
|
4,616
|
|
|
|||
|
Total cost
|
$
|
285,858
|
|
|
$
|
571,805
|
|
|
$
|
264,538
|
|
|
|
Average price per share
(2)
|
$
|
66.67
|
|
|
$
|
54.42
|
|
|
$
|
57.32
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts in 2016 and 2015 include common shares acquired under the accelerated share repurchase program of
1,358,380
and
4,149,378
, respectively (see below for more detail).
|
(2)
|
Calculated using whole numbers.
|
(3)
|
Shares are repurchased from employees to satisfy withholding tax liabilities upon the vesting of restricted stock awards, restricted stock units, and the exercise of stock options. Share repurchases from employees are excluded from the authorized share repurchase plan noted above.
|
b)
|
Preferred Shares
|
14.
|
SHAREHOLDERS' EQUITY (CONTINUED)
|
14.
|
SHAREHOLDERS' EQUITY (CONTINUED)
|
15.
|
RETIREMENT PLANS
|
16.
|
SHARE-BASED COMPENSATION
|
16.
|
SHARE-BASED COMPENSATION (CONTINUED)
|
16.
|
SHARE-BASED COMPENSATION (CONTINUED)
|
a)
|
Share Settled Awards
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Share Settled PSUs
|
|
Share Settled - Service Based Restricted Stock
|
|
||||||||||
|
|
Number of
Restricted
Stock
|
|
Weighted Average
Grant Date
Fair Value
(1)
|
|
Number of
Restricted
Stock
|
|
Weighted Average
Grant Date
Fair Value
(1)
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Nonvested restricted stock - December 31, 2015
|
201
|
|
|
$
|
49.24
|
|
|
1,954
|
|
|
$
|
43.34
|
|
|
|
Granted
|
104
|
|
|
53.80
|
|
|
589
|
|
|
53.87
|
|
|
||
|
Performance Adjustment
|
26
|
|
|
45.95
|
|
|
n/a
|
|
|
n/a
|
|
|
||
|
Vested
|
(48
|
)
|
|
45.38
|
|
|
(789
|
)
|
|
39.29
|
|
|
||
|
Forfeited
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
47.33
|
|
|
||
|
Nonvested restricted stock - December 31, 2016
|
283
|
|
|
51.27
|
|
|
1,593
|
|
|
48.88
|
|
|
||
|
Granted
|
87
|
|
|
64.58
|
|
|
733
|
|
|
61.94
|
|
|
||
|
Vested
(2)
|
(119
|
)
|
|
49.14
|
|
|
(889
|
)
|
|
47.48
|
|
|
||
|
Forfeited
|
(21
|
)
|
|
55.00
|
|
|
(82
|
)
|
|
54.89
|
|
|
||
|
Nonvested restricted stock - December 31, 2017
|
230
|
|
|
$
|
57.08
|
|
|
1,355
|
|
|
$
|
57.09
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
SHARE-BASED COMPENSATION (CONTINUED)
|
|
|
Cash Settled PSUs
|
|
Service-based Cash Settled RSUs
|
|
||
|
|
Number of
Restricted
Stock Units
|
|
Number of
Restricted
Stock Units
|
|
||
|
|
|
|
|
|
||
|
Nonvested restricted stock units - December 31, 2015
|
70
|
|
|
1,433
|
|
|
|
Granted
|
18
|
|
|
497
|
|
|
|
Performance Adjustment
|
12
|
|
|
n/a
|
|
|
|
Vested
|
(32
|
)
|
|
(377
|
)
|
|
|
Forfeited
|
—
|
|
|
(161
|
)
|
|
|
Nonvested restricted stock units - December 31, 2016
|
68
|
|
|
1,392
|
|
|
|
Granted
|
15
|
|
|
432
|
|
|
|
Vested
(1)
|
(38
|
)
|
|
(763
|
)
|
|
|
Forfeited
|
(3
|
)
|
|
(73
|
)
|
|
|
Nonvested restricted stock units - December 31, 2017
|
42
|
|
|
988
|
|
|
|
|
|
|
|
|
17.
|
RELATED PARTY TRANSACTIONS
|
17.
|
RELATED PARTY TRANSACTIONS (CONTINUED)
|
18.
|
TRANSACTION AND REORGANIZATION EXPENSES
|
19.
|
INCOME TAXES
|
19.
|
INCOME TAXES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Current income tax expense (benefit)
|
|
|
|
|
|
|
||||||
|
U.S.
|
$
|
(6,207
|
)
|
|
$
|
606
|
|
|
$
|
4,927
|
|
|
|
Europe
|
10,249
|
|
|
7,451
|
|
|
144
|
|
|
|||
|
Other
|
—
|
|
|
—
|
|
|
5
|
|
|
|||
|
Deferred income tax expense (benefit)
|
|
|
|
|
|
|
||||||
|
U.S.
|
18,495
|
|
|
(1,829
|
)
|
|
(267
|
)
|
|
|||
|
Europe
|
(30,079
|
)
|
|
112
|
|
|
(1,781
|
)
|
|
|||
|
Total income tax expense (benefit)
|
$
|
(7,542
|
)
|
|
$
|
6,340
|
|
|
$
|
3,028
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net current tax receivables (payables)
|
$
|
(639
|
)
|
|
$
|
3,540
|
|
|
$
|
(69
|
)
|
|
|
Net deferred tax assets
|
4,438
|
|
|
103,313
|
|
|
104,762
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net tax assets
|
$
|
3,799
|
|
|
$
|
106,853
|
|
|
$
|
104,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
At December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Deferred tax assets:
|
|
|
|
|
||||
|
Discounting of net reserves for losses and loss expenses
|
$
|
27,804
|
|
|
$
|
47,258
|
|
|
|
Unearned premiums
|
25,188
|
|
|
41,797
|
|
|
||
|
Operating and capital loss carryforwards
|
53,095
|
|
|
43,687
|
|
|
||
|
Accruals not currently deductible
|
31,560
|
|
|
59,098
|
|
|
||
|
Other investment adjustments and impairments
|
—
|
|
|
84
|
|
|
||
|
Tax credits
|
29,929
|
|
|
10,139
|
|
|
||
|
Other deferred tax assets
|
15,047
|
|
|
3,684
|
|
|
||
|
Deferred tax assets before valuation allowance
|
182,623
|
|
|
205,747
|
|
|
||
|
Valuation allowance
|
(16,157
|
)
|
|
(41,100
|
)
|
|
||
|
Deferred tax assets net of valuation allowance
|
166,466
|
|
|
164,647
|
|
|
||
|
|
|
|
|
|
||||
|
Deferred tax liabilities:
|
|
|
|
|
||||
|
Deferred acquisition costs
|
(24,249
|
)
|
|
(45,788
|
)
|
|
||
|
Net unrealized investments gains
|
(8,033
|
)
|
|
(1,168
|
)
|
|
||
|
Amortization of VOBA, intangible assets and goodwill
|
(85,296
|
)
|
|
(13,096
|
)
|
|
||
|
Equalization reserves
|
(23,274
|
)
|
|
—
|
|
|
||
|
Other deferred tax liabilities
|
(21,176
|
)
|
|
(1,282
|
)
|
|
||
|
Deferred tax liabilities
|
(162,028
|
)
|
|
(61,334
|
)
|
|
||
|
Net deferred tax assets
|
$
|
4,438
|
|
|
$
|
103,313
|
|
|
|
|
|
|
|
|
19.
|
INCOME TAXES (CONTINUED)
|
|
|
|
|
|
|
||||
|
At December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Operating and Capital Loss Carryforwards
(1)
|
|
|
|
|
||||
|
Singapore (branch) operating loss carryforward
|
$
|
77,467
|
|
|
$
|
83,532
|
|
|
|
Australia (branch) operating loss carryforward
(2)
|
—
|
|
|
147,193
|
|
|
||
|
Australia (branch) capital loss carryforward
(2)
|
—
|
|
|
4,207
|
|
|
||
|
U. K. operating loss carryforward
(3)
|
126,839
|
|
|
19,306
|
|
|
||
|
Ireland capital loss carryforward
|
716
|
|
|
716
|
|
|
||
|
U.S. operating loss carryforward
|
115,236
|
|
|
14,221
|
|
|
||
|
|
|
|
|
|
||||
|
Tax Credits
(1)
|
|
|
|
|
||||
|
Ireland foreign tax credit
|
$
|
3,566
|
|
|
$
|
3,298
|
|
|
|
U.S. alternative minimum tax credit
|
12,052
|
|
|
6,840
|
|
|
||
|
U.K. tax credit
(3)
|
14,310
|
|
|
—
|
|
|
||
|
|
|
|
|
|
(1)
|
All operating and capital loss carryforwards and tax credits can be carried forward indefinitely with the exception of the U.S. net operating loss which will expire in 2037.
|
(2)
|
As a result of ceasing the Company's Australian operations, operating loss and capital loss carryforwards were written off.
|
(3)
|
As a result of the Company's acquisition of Novae, these amounts include
$23.0 million
and
$14.8 million
of acquired operating loss and tax credit carryforwards, respectively.
|
|
|
|
|
|
|
||||
|
At December 31,
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
|
||||
|
Income tax expense:
|
|
|
|
|
||||
|
Valuation allowance - beginning of year
|
$
|
41,100
|
|
|
$
|
40,331
|
|
|
|
Operating loss carryforwards
|
(27,116
|
)
|
|
3,857
|
|
|
||
|
Foreign tax credit
|
267
|
|
|
(2,775
|
)
|
|
||
|
Australian CTA and accruals and other foreign rate differentials
|
1,006
|
|
|
(313
|
)
|
|
||
|
Change in investment-related items
|
900
|
|
|
—
|
|
|
||
|
Valuation allowance - end of year
|
$
|
16,157
|
|
|
$
|
41,100
|
|
|
|
|
|
|
|
|
19.
|
INCOME TAXES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Income (loss) before income taxes
|
|
|
|
|
|
|
||||||
|
Bermuda (domestic)
|
$
|
(188,420
|
)
|
|
$
|
469,306
|
|
|
$
|
652,235
|
|
|
|
Foreign
|
(188,091
|
)
|
|
50,402
|
|
|
(7,576
|
)
|
|
|||
|
Total income before income taxes
|
$
|
(376,511
|
)
|
|
$
|
519,708
|
|
|
$
|
644,659
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Reconciliation of effective tax rate (% of income before income taxes)
|
|
|
|
|
|
|
||||||
|
Expected tax rate
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|||
|
Foreign taxes at local expected rates:
|
|
|
|
|
|
|
||||||
|
U.S.
|
6.6
|
%
|
|
(0.6
|
)%
|
|
0.8
|
%
|
|
|||
|
Europe
|
5.8
|
%
|
|
1.5
|
%
|
|
(0.2
|
)%
|
|
|||
|
Other
|
0.3
|
%
|
|
0.0
|
%
|
|
(0.3
|
)%
|
|
|||
|
Valuation allowance
|
0.0
|
%
|
|
0.2
|
%
|
|
1.2
|
%
|
|
|||
|
Net tax exempt income
|
0.1
|
%
|
|
(0.2
|
)%
|
|
(0.1
|
)%
|
|
|||
|
Change in U.S. enacted tax rate
|
(11.1
|
)%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
|||
|
Other
|
0.3
|
%
|
|
0.3
|
%
|
|
(0.9
|
)%
|
|
|||
|
Actual tax rate
|
2.0
|
%
|
|
1.2
|
%
|
|
0.5
|
%
|
|
|||
|
|
|
|
|
|
|
|
20.
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
Before Tax Amount
|
|
Tax (Expense) Benefit
|
|
Net of Tax Amount
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2017
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains arising during the year
|
$
|
211,151
|
|
|
$
|
(5,732
|
)
|
|
$
|
205,419
|
|
|
|
Adjustment for reclassification of net realized investment gains and OTTI losses recognized in net income
|
(33,892
|
)
|
|
758
|
|
|
(33,134
|
)
|
|
|||
|
Unrealized investment gains arising during the year, net of reclassification adjustment
|
177,259
|
|
|
(4,974
|
)
|
|
172,285
|
|
|
|||
|
Non-credit portion of OTTI losses
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
Foreign currency translation adjustment
|
41,938
|
|
|
—
|
|
|
41,938
|
|
|
|||
|
Total other comprehensive income, net of tax
|
$
|
219,197
|
|
|
$
|
(4,974
|
)
|
|
$
|
214,223
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2016
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains arising during the year
|
$
|
10,165
|
|
|
$
|
(5,093
|
)
|
|
$
|
5,072
|
|
|
|
Adjustment for reclassification of net realized investment losses and OTTI losses recognized in net income
|
60,423
|
|
|
1,767
|
|
|
62,190
|
|
|
|||
|
Unrealized investment gains arising during the year, net of reclassification adjustment
|
70,588
|
|
|
(3,326
|
)
|
|
67,262
|
|
|
|||
|
Non-credit portion of OTTI losses
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
Foreign currency translation adjustment
|
(638
|
)
|
|
—
|
|
|
(638
|
)
|
|
|||
|
Total other comprehensive income, net of tax
|
$
|
69,950
|
|
|
$
|
(3,326
|
)
|
|
$
|
66,624
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2015
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment losses arising during the year
|
$
|
(280,512
|
)
|
|
$
|
14,128
|
|
|
$
|
(266,384
|
)
|
|
|
Adjustment for reclassification of net realized investment losses and OTTI losses recognized in net income
|
145,766
|
|
|
(775
|
)
|
|
144,991
|
|
|
|||
|
Unrealized investment losses arising during the year, net of reclassification adjustment
|
(134,746
|
)
|
|
13,353
|
|
|
(121,393
|
)
|
|
|||
|
Non-credit portion of OTTI losses
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
Foreign currency translation adjustment
|
(21,498
|
)
|
|
—
|
|
|
(21,498
|
)
|
|
|||
|
Total other comprehensive loss, net of tax
|
$
|
(156,244
|
)
|
|
$
|
13,353
|
|
|
$
|
(142,891
|
)
|
|
|
|
|
|
|
|
|
|
20.
|
OTHER COMPREHENSIVE INCOME (LOSS) (CONTINUED)
|
|
|
|
Amount Reclassified from AOCI
(1)
|
|
|||||||||||
|
Details About AOCI Components
|
Consolidated Statement of Operations Line Item That Includes Reclassification
|
Year ended December 31,
|
|
|||||||||||
|
2017
|
|
2016
|
|
2015
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses) on available for sale investments
|
|
|
|
|
|
|
|
|
||||||
|
|
Other realized investment gains (losses)
|
$
|
48,385
|
|
|
$
|
(34,213
|
)
|
|
$
|
(73,046
|
)
|
|
|
|
|
OTTI losses
|
(14,493
|
)
|
|
(26,210
|
)
|
|
(72,720
|
)
|
|
|
|||
|
|
Total before tax
|
33,892
|
|
|
(60,423
|
)
|
|
(145,766
|
)
|
|
|
|||
|
|
Income tax (expense) benefit
|
(758
|
)
|
|
(1,767
|
)
|
|
775
|
|
|
|
|||
|
|
Net of tax
|
$
|
33,134
|
|
|
$
|
(62,190
|
)
|
|
$
|
(144,991
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
||||||
|
|
Foreign exchange loss
|
$
|
(24,149
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Income tax (expense) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
|
|
Net of tax
|
$
|
(24,149
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts in parentheses are debits to net income (loss) available to common shareholders
|
21.
|
STATUTORY FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Bermuda
|
|
Ireland
|
|
U.S.
|
|
|||||||||||||||
|
At December 31,
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Required statutory capital and surplus
|
$
|
1,800,064
|
|
$
|
1,835,279
|
|
|
$
|
613,923
|
|
$
|
552,678
|
|
|
$
|
488,560
|
|
$
|
430,145
|
|
|
|
Available statutory capital and surplus
|
$
|
3,641,279
|
|
$
|
4,055,252
|
|
|
$
|
906,512
|
|
$
|
925,164
|
|
|
$
|
1,511,480
|
|
$
|
1,470,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.
|
STATUTORY FINANCIAL INFORMATION (CONTINUED)
|
21.
|
STATUTORY FINANCIAL INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Quarters ended
|
Mar 31
|
|
Jun 30
|
|
Sep 30
|
|
Dec 31
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
2017
|
|
|
|
|
|
|
|
|
||||||||
|
Net premiums earned
|
$
|
938,703
|
|
|
$
|
981,431
|
|
|
$
|
1,017,131
|
|
|
$
|
1,211,495
|
|
|
|
Net investment income
|
98,664
|
|
|
106,063
|
|
|
95,169
|
|
|
100,908
|
|
|
||||
|
Net realized investment gains (losses)
|
(25,050
|
)
|
|
(4,392
|
)
|
|
14,632
|
|
|
43,038
|
|
|
||||
|
Underwriting income (loss)
|
16,385
|
|
|
57,012
|
|
|
(512,853
|
)
|
|
26,130
|
|
|
||||
|
Net income (loss) available to common shareholders
|
5,014
|
|
|
85,030
|
|
|
(467,740
|
)
|
|
(38,081
|
)
|
|
||||
|
Earnings (loss) per common share - basic
|
$
|
0.06
|
|
|
$
|
1.01
|
|
|
$
|
(5.61
|
)
|
|
$
|
(0.46
|
)
|
|
|
Earnings (loss) per common share - diluted
|
$
|
0.06
|
|
|
$
|
1.01
|
|
|
$
|
(5.61
|
)
|
|
$
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2016
|
|
|
|
|
|
|
|
|
||||||||
|
Net premiums earned
|
$
|
902,340
|
|
|
$
|
946,990
|
|
|
$
|
934,415
|
|
|
$
|
921,879
|
|
|
|
Net investment income
|
49,164
|
|
|
91,730
|
|
|
116,923
|
|
|
95,517
|
|
|
||||
|
Net realized investment gains (losses)
|
(66,508
|
)
|
|
21,010
|
|
|
5,205
|
|
|
(20,229
|
)
|
|
||||
|
Underwriting income
|
98,951
|
|
|
9,860
|
|
|
103,998
|
|
|
66,265
|
|
|
||||
|
Net income available to common shareholders
|
38,417
|
|
|
119,491
|
|
|
176,644
|
|
|
130,912
|
|
|
||||
|
Earnings per common share - basic
|
$
|
0.41
|
|
|
$
|
1.30
|
|
|
$
|
1.97
|
|
|
$
|
1.50
|
|
|
|
Earnings per common share - diluted
|
$
|
0.41
|
|
|
$
|
1.29
|
|
|
$
|
1.96
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During the three months ended September 30, and December 31, 2017, the Company recognized transaction and reorganization expenses of
$6 million
and
$21 million
, respectively, related to the acquisition and integration of Novae. Refer to Item 8, Note 18 of the Consolidated Financial Statements '
Transaction and Reorganization Expenses
' for further details.
|
(2)
|
During the three months ended December 31, 2017, the Company recognized a tax expense of
$42 million
due to the revaluation of net deferred tax assets pursuant to the U.S. Tax Reform. Refer to Item 8, Note 19 of the Consolidated Financial Statements
'Income Taxes'
for further details.
|
(3)
|
During the three months ended December 31, 2017, the Company recognized amortization of value of business acquired of
$50 million
related to the acquisition of Novae. Refer to Item 8, Note 3 and Note 5 of the Consolidated Financial Statements '
Business Combinations
' and '
Goodwill and Intangible Assets
' for further details.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
|
/s/ Deloitte Ltd.
|
Hamilton, Bermuda
|
February 28, 2018
|
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 ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)
|
Financial Statements, Financial Statement Schedules and Exhibits
|
1.
|
Financial Statements
|
2.
|
Financial Statement Schedules
|
Schedule I
|
– Summary of Investments - Other than Investments in Related Parties
|
Schedule II
|
– Condensed Financial Information of Registrant
|
Schedule III
|
– Supplementary Insurance Information
|
Schedule IV
|
– Supplementary Reinsurance Information
|
3.
|
Exhibits
|
Exhibit
Number
|
|
Description of Document
|
2.1
|
|
Termination Agreement dated August 2, 2015 by and between PartnerRe Ltd. and AXIS Capital Holdings Limited (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 3, 2015.)
|
|
|
|
2.2
|
|
Rule 2.7 Announcement dated July 5, 2017 in connection with acquisition of Novae Group plc (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on July 6, 2017).
|
|
|
|
2.3
|
|
Rule 2.7 Announcement dated August 24, 2017 in connection with acquisition of Novae Group plc (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on August 25, 2017).
|
|
|
|
3.1
|
|
Certificate of Incorporation and Memorandum of Association of AXIS Capital Holdings Limited (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Amendment No. 1) (No. 333-103620) filed on April 16, 2003).
|
|
|
|
3.2
|
|
Amended and Restated Bye-laws of AXIS Capital Holdings Limited (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 filed on May 15, 2009).
|
|
|
|
4.1
|
|
Specimen Common Share Certificate (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Amendment No. 3) (No. 333-103620) filed on June 10, 2003).
|
|
|
|
4.2
|
|
Senior Indenture between AXIS Capital Holdings Limited and The Bank of New York, as trustee, dated as of November 15, 2004 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 15, 2004).
|
|
|
|
4.3
|
|
First Supplemental Indenture between AXIS Capital Holdings Limited and The Bank of New York, as trustee, dated as of November 15, 2004 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on November 15, 2004).
|
|
|
|
4.4
|
|
Senior Indenture among AXIS Specialty Finance LLC, AXIS Capital Holdings Limited and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of March 23, 2010 (incorporated by reference to Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q filed on April 27, 2010).
|
|
|
|
4.5
|
|
Senior Indenture, dated as of March 13, 2014, among AXIS Specialty Finance PLC, as issuer, the Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 13, 2014).
|
|
|
|
4.6
|
|
Form of 2.650% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on March 13, 2014).
|
|
|
|
4.7
|
|
Form of 5.150% Senior Notes due 2045 (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on March 13, 2014).
|
|
|
|
4.8
|
|
Form of 4.000% Senior Notes due 2027 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on December 6, 2017).
|
|
|
|
4.9
|
|
Certificate of Designations setting forth the specific rights, preferences, limitations and other terms of the Series C Preferred Shares (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 19, 2012).
|
|
|
|
4.10
|
|
Certificate of Designations setting forth the specific rights, preferences, limitations and other terms of the Series D Preferred Shares (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 20, 2013).
|
|
|
|
4.11
|
|
Certificate of Designations setting forth the specific rights, preferences, limitations and other terms of the Series E Preferred Shares (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on November 7, 2016).
|
|
|
|
10.1
|
|
Amended and Restated Shareholders Agreement dated December 31, 2002, among AXIS Capital Holdings Limited and each of the persons listed on Schedule A thereto (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (Amendment No. 3) (No. 333-103620) filed on June 10, 2003).
|
|
|
|
*10.2
|
|
Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated May 3, 2012 (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K/A filed on May 9, 2012).
|
|
|
|
*10.3
|
|
Amendment No. 1 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 5, 2013 (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on December 9, 2013).
|
|
|
|
*10.4
|
|
Amendment No. 2 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 5, 2014 (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed on February 23, 2015).
|
|
|
|
*10.5
|
|
Amendment No. 3 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated January 15, 2016 (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed on February 25, 2016).
|
|
|
|
*10.6
|
|
Amendment No. 4 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 8, 2016 (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
|
Amendment No. 5 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 7, 2017.
|
|
|
|
|
*10.8
|
|
Employment Agreement by and among Albert Benchimol, AXIS Capital Holdings Limited and AXIS Specialty U.S. Services, Inc. dated May 3, 2012 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K/A filed on May 9, 2012).
|
|
|
|
*10.9
|
|
Amendment No. 1 to Employment Agreement dated May 3, 2012 by and among Albert Benchimol, AXIS Capital Holdings Limited and AXIS Specialty U.S. Services, Inc. effective as of March 9, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 11, 2015).
|
|
|
|
*10.10
|
|
Amendment No. 2 to Employment Agreement dated May 3, 2012 by and among Albert Benchimol, AXIS Capital Holdings Limited and AXIS Specialty U.S. Services, Inc. effective as of January 19, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 25, 2016).
|
|
|
|
*10.11
|
|
Amendment No. 3 to Employment Agreement dated May 3, 2012 by and among Albert Benchimol, AXIS Capital Holdings Limited, AXIS Specialty U.S. Services, Inc. and AXIS Specialty Limited effective as of January 1, 2017 (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*10.12
|
|
Restricted Stock Agreement for Albert Benchimol pursuant to the AXIS Capital Holdings Limited 2007 Long-Term Equity Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K/A filed on May 9, 2012).
|
|
|
|
*10.13
|
|
Letter Agreement by and between John D. Nichols, Jr. and AXIS Specialty U.S. Services, Inc. dated July 8, 2013 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 12, 2013).
|
|
|
|
*10.14
|
|
Employment Agreement by and between John D. Nichols, Jr. and AXIS Specialty U.S. Services, Inc. dated January 23, 2015 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 29, 2015).
|
|
|
|
*10.15
|
|
Amendment No. 1 to Letter Agreement by and between John D. Nichols, Jr. and AXIS Specialty U.S. Services, Inc. dated September 23, 2015 (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K filed on February 25, 2016).
|
|
|
|
|
Separation Agreement by and between John D. Nichols, Jr. and AXIS Specialty U.S. Services, Inc. dated February 27, 2017.
|
|
|
|
|
*10.17
|
|
Employment Agreement by and between Joseph C. Henry and AXIS Specialty U.S. Services, Inc. dated January 23, 2015 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 29, 2015).
|
|
|
|
|
Consulting Agreement by and between Joseph C. Henry and AXIS Specialty U.S. Services, Inc. dated December 11, 2017.
|
|
|
|
|
|
Separation Agreement by and between Joseph C. Henry and AXIS Specialty U.S. Services, Inc. dated December 11, 2017.
|
|
|
|
|
*10.20
|
|
Employment Agreement by and between Peter W. Wilson and AXIS Specialty U.S. Services, Inc. dated June 23, 2014 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K filed on February 23, 2015).
|
|
|
|
*10.21
|
|
Employment Agreement by and between Chris DiSipio and AXIS Specialty U.S. Services, Inc. dated February 27, 2014 (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K filed on February 23, 2015).
|
|
|
|
|
Employment Agreement by and between Peter Vogt and AXIS Specialty U.S. Services, Inc. dated December 11, 2017.
|
|
|
|
|
|
Employment Agreement by and between Jan Ekberg and AXIS Re SE (Swiss Branch) effective March 6, 2015.
|
|
|
|
|
|
Addendum to Employment Agreement effective March 6, 2015 by and between Jan Ekberg and AXIS Re SE (Swiss Branch) effective February 23, 2017.
|
|
|
|
|
*10.25
|
|
2003 Long-Term Equity Compensation Plan (incorporated by reference to Exhibit 10.12 to the Company's Registration Statement on Form S-1 (Amendment No. 2) (No. 333-103620) filed on May 17, 2003).
|
|
|
|
*10.26
|
|
2007 Long-Term Equity Compensation Plan, as amended (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8 filed on May 15, 2012).
|
|
|
|
*10.27
|
|
2017 Long-Term Equity Compensation Plan (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8 filed on May 8, 2017).
|
|
|
|
*10.28
|
|
Form of Employee Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 28, 2010).
|
|
|
|
*10.29
|
|
Form of Employee Restricted Stock Unit Agreement (Performance Vesting) (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*10.30
|
|
Form of Employee Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K filed on February 21, 2014).
|
|
|
|
*10.31
|
|
2013 Executive Long-Term Equity Compensation Program (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 9, 2013).
|
|
|
|
|
2018 Executive Long-Term Equity Compensation Program.
|
|
|
|
|
*10.33
|
|
2014 Executive Annual Incentive Plan (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*10.34
|
|
AXIS Executive RSU Retirement Plan (incorporated by reference to Exhibit 10.26 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*10.35
|
|
Form of Employee Restricted Stock Unit Agreement (Retirement Eligible/Performance Vesting) (incorporated by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*10.36
|
|
Form of Employee Restricted Stock Unit Agreement (Retirement Eligible) (incorporated by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
|
Form of Employee Restricted Stock Unit Agreement (Performance Vesting).
|
|
|
|
|
|
Form of Employee Restricted Stock Unit Agreement.
|
|
|
|
|
*10.39
|
|
2003 Directors Long-Term Equity Compensation Plan (incorporated by reference to Exhibit 4.5 to the Company's Registration Statement on Form S-8 (No. 333-110228) filed on November 4, 2003).
|
|
|
|
*10.40
|
|
2003 Directors Deferred Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed on April 28, 2009).
|
|
|
|
*10.41
|
|
2017 Directors Annual Compensation Program (incorporated by reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
|
2018 Directors Annual Compensation Program.
|
|
|
|
|
*10.43
|
|
AXIS Specialty U.S. Services, Inc. Supplemental Retirement Plan (incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K filed on February 26, 2008).
|
|
|
|
10.44
|
|
Master Reimbursement Agreement, dated as of May 14, 2010, by and among AXIS Specialty Limited, AXIS Re Limited, AXIS Specialty Europe Limited, AXIS Insurance Company, AXIS Surplus Insurance Company, AXIS Specialty Insurance Company, AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 19, 2010).
|
|
|
|
10.45
|
|
Amendment to Master Reimbursement Agreement dated January 27, 2012 by and among AXIS Specialty Limited, AXIS Re Limited, AXIS Specialty Europe Limited, AXIS Insurance Company, AXIS Surplus Insurance Company, AXIS Specialty Insurance Company and AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 30, 2012).
|
|
|
|
10.46
|
|
Amendment to Committed Facility Letter dated November 20, 2013 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Surplus Insurance Company and AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 21, 2013).
|
|
|
|
10.47
|
|
Amendment to Committed Facility Letter dated March 31, 2015 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1, 2015).
|
|
|
|
10.48
|
|
Amendment to Facility Fee Letter dated March 31, 2015 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 1, 2015).
|
|
|
|
10.49
|
|
Committed Facility Letter dated December 18, 2015 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Surplus Insurance Company and AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 22, 2015).
|
|
|
|
10.50
|
|
Committed Facility Letter dated March 27, 2017 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Surplus Insurance Company and AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 31, 2017).
|
|
|
|
10.51
|
|
Amendment to Master Reimbursement Agreement dated March 27, 2017 by and among AXIS Specialty Limited, AXIS Re Limited, AXIS Specialty Europe Limited, AXIS Insurance Company, AXIS Surplus Insurance Company, AXIS Reinsurance Company and Citibank Europe plc (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on March 31, 2017).
|
|
|
|
10.52
|
|
Credit Agreement dated March 26, 2013 by and among AXIS Capital Holdings Limited, certain subsidiaries of AXIS Capital Holdings Limited party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Fronting Bank and L/C Administrator and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 29, 2013).
|
|
|
|
10.53
|
|
First Amendment to Credit Agreement dated September 18, 2013 by and among AXIS Capital Holdings Limited, certain subsidiaries of AXIS Capital Holdings Limited party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Fronting Bank and L/C Administrator and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 24, 2013).
|
|
|
|
10.54
|
|
Guaranty dated February 10, 2014 by AXIS Specialty Finance PLC in favor of the lenders, the Administrative Agent, the Fronting Banks and the L/C Administrator under the Credit Agreement dated March 26, 2013, as amended, by and among AXIS Capital Holdings Limited, certain subsidiaries of AXIS Capital Holdings Limited party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Fronting Bank and L/C Administrator and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 11, 2014).
|
|
|
|
10.55
|
|
Master Confirmation and form of Supplemental Confirmation, dated August 17, 2015, by and between AXIS Capital Holdings Limited and Goldman, Sachs & Co. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 19, 2015).
|
|
|
|
|
Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends.
|
|
|
|
|
|
Subsidiaries of the registrant.
|
|
|
|
|
|
Consent of Deloitte Ltd.
|
|
|
|
|
†24.1
|
|
Power of Attorney (included as part of signature pages hereto).
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
†101
|
|
The following financial information from AXIS Capital Holdings Limited’s Annual Report on Form 10-K for the year ended December 31, 2017 formatted in XBRL: (i) Consolidated Balance Sheets at December 31, 2017 and 2016; (ii) Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015; (iv) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2017, 2016 and 2015; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
|
*
|
Exhibits 10.2 through 10.42 represent a management contract, compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.
|
†
|
Filed herewith.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
|
|
|
|
|
|
|
AXIS CAPITAL HOLDINGS LIMITED
|
||||
|
|
|
|
|||
|
|
By:
|
|
/s/ ALBERT BENCHIMOL
|
|
|
|
|
|
|
Albert Benchimol
|
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ ALBERT BENCHIMOL
|
|
Chief Executive Officer, President and Director
(Principal Executive Officer)
|
Albert Benchimol
|
|
|
|
|
|
/s/ PETER VOGT
|
|
Chief Financial Officer
(Principal Financial Officer)
|
Peter Vogt
|
|
|
|
|
|
/s/ JAMES O'SHAUGHNESSY
|
|
Controller
(Principal Accounting Officer)
|
James O'Shaughnessy
|
|
|
|
|
|
/s/ MICHAEL A. BUTT
|
|
Director
|
Michael A. Butt
|
|
|
|
|
|
/s/ CHARLES A. DAVIS
|
|
Director
|
Charles A. Davis
|
|
|
|
|
|
/s/ ROBERT L. FRIEDMAN
|
|
Director
|
Robert L. Friedman
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ CHRISTOPHER V. GREETHAM
|
|
Director
|
Christopher V. Greetham
|
|
|
|
|
|
/s/ MAURICE A. KEANE
|
|
Director
|
Maurice A. Keane
|
|
|
|
|
|
/s/ CHERYL-ANN LISTER
|
|
Director
|
Cheryl-Ann Lister
|
|
|
|
|
|
/s/ THOMAS C. RAMEY
|
|
Director
|
Thomas C. Ramey
|
|
|
|
|
|
/s/ HENRY B. SMITH
|
|
Director
|
Henry B. Smith
|
|
|
|
|
|
/s/ WILHELM ZELLER
|
|
Director
|
Wilhelm Zeller
|
|
|
/s/ Deloitte Ltd.
|
Hamilton, Bermuda
|
February 28, 2018
|
|
|
At December 31, 2017
|
|
||||||||||
|
|
Amortized Cost
|
|
Fair Value
|
|
Amount shown on the Balance Sheet
|
|
||||||
|
(in thousands)
|
|
|
|
|
|
|
||||||
|
Type of investment:
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,727,643
|
|
|
$
|
1,712,469
|
|
|
$
|
1,712,469
|
|
|
|
Non-U.S. government
|
798,582
|
|
|
806,299
|
|
|
806,299
|
|
|
|||
|
Corporate debt
|
5,265,795
|
|
|
5,297,866
|
|
|
5,297,866
|
|
|
|||
|
Agency RMBS
|
2,414,720
|
|
|
2,395,152
|
|
|
2,395,152
|
|
|
|||
|
CMBS
|
776,715
|
|
|
777,728
|
|
|
777,728
|
|
|
|||
|
Non-Agency RMBS
|
45,713
|
|
|
46,831
|
|
|
46,831
|
|
|
|||
|
ABS
|
1,432,884
|
|
|
1,436,281
|
|
|
1,436,281
|
|
|
|||
|
Municipals
|
149,167
|
|
|
149,380
|
|
|
149,380
|
|
|
|||
|
Total fixed maturities
|
$
|
12,611,219
|
|
|
12,622,006
|
|
|
12,622,006
|
|
|
||
|
Mortgage loans, at amortized cost and fair value
|
|
|
325,062
|
|
|
325,062
|
|
|
||||
|
Short-term investments, at amortized cost and fair value
|
|
|
83,661
|
|
|
83,661
|
|
|
||||
|
Equity securities
|
|
|
635,511
|
|
|
635,511
|
|
|
||||
|
Other investments
(1)
|
|
|
667,432
|
|
|
1,009,373
|
|
|
||||
|
Equity method investments
(2)
|
|
|
—
|
|
|
108,597
|
|
|
||||
|
Total investments
|
|
|
$
|
14,333,672
|
|
|
$
|
14,784,210
|
|
|
||
|
|
|
|
|
|
|
|
(1)
|
Other investments exclude investments where the Company is considered to have the ability to exercise significant influence over the operating and financial policies of the investees.
|
(2)
|
Equity method investments are excluded as the Company has the ability to exercise significant influence over the operating and financial policies of the investees.
|
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Investments in subsidiaries
|
$
|
5,532,396
|
|
|
$
|
6,033,564
|
|
Promissory note receivable from subsidiary
|
—
|
|
|
368,252
|
|
||
Cash and cash equivalents
|
10,541
|
|
|
99
|
|
||
Other assets
|
9,480
|
|
|
9,913
|
|
||
Total assets
|
$
|
5,552,417
|
|
|
$
|
6,411,828
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Intercompany payable
|
$
|
160,950
|
|
|
$
|
66,123
|
|
Dividends payable
|
49,907
|
|
|
58,791
|
|
||
Other liabilities
|
296
|
|
|
14,544
|
|
||
Total liabilities
|
211,153
|
|
|
139,458
|
|
||
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Preferred shares
|
775,000
|
|
|
1,126,074
|
|
||
Common shares
(shares issued 2017: 176,580; 2016: 176,580
shares outstanding 2017: 83,161; 2016: 86,441) |
2,206
|
|
|
2,206
|
|
||
Additional paid-in capital
|
2,299,166
|
|
|
2,299,857
|
|
||
Accumulated other comprehensive (income) loss
|
92,382
|
|
|
(121,841
|
)
|
||
Retained earnings
|
5,979,666
|
|
|
6,527,627
|
|
||
Treasury shares, at cost
(2017: 93,419; 2016: 90,139)
|
(3,807,156
|
)
|
|
(3,561,553
|
)
|
||
Total shareholders’ equity
|
5,341,264
|
|
|
6,272,370
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,552,417
|
|
|
$
|
6,411,828
|
|
(1)
|
AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance LLC, a
100%
owned finance subsidiary, related to the issuance of
$500 million
aggregate principal amount of
5.875%
senior unsecured notes. AXIS Capital’s obligations under this guarantee are unsecured and senior and rank equally with all other senior obligations of AXIS Capital.
|
(2)
|
AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance PLC, a
100%
owned finance subsidiary, related to the issuance of
$250 million
aggregate principal amount of
2.65%
and
$250 million
aggregate principal amount of
5.15%
senior unsecured notes. AXIS Capital's obligations under this guarantee are unsecured and senior and rank equally with all other senior obligations of AXIS Capital.
|
(3)
|
AXIS Capital has fully and unconditionally guaranteed all obligations of AXIS Specialty Finance PLC, a
100%
owned finance subsidiary, related to the issuance of
$350 million
aggregate principal amount of
4.0%
senior unsecured notes. AXIS Capital's obligations under this guarantee are unsecured and senior and rank equally with all other senior obligations of AXIS Capital.
|
(4)
|
AXIS Capital has fully and unconditionally guaranteed the derivative instrument obligations of certain of its
100%
owned operating subsidiaries. At
December 31, 2017
, the notional value of guaranteed obligations utilized aggregated to $
nil
(
2016
: $
64 million
).
|
(5)
|
On April 15, 2017 the promissory note of
$368 million
advanced by AXIS Capital to AXIS Specialty Limited on November 7, 2016, matured. For the year ended December 31, 2017, interest earned at an annual rate of
1.132%
and was recorded in net investment income.
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net investment income
|
$
|
2,116
|
|
|
$
|
656
|
|
|
$
|
1
|
|
Termination fee received
|
—
|
|
|
—
|
|
|
280,000
|
|
|||
Total revenues
|
2,116
|
|
|
656
|
|
|
280,001
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
General and administrative expenses
|
34,933
|
|
|
39,909
|
|
|
8,012
|
|
|||
Total expenses
|
34,933
|
|
|
39,909
|
|
|
8,012
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before equity in net income (loss) of subsidiaries
|
(32,817
|
)
|
|
(39,253
|
)
|
|
271,989
|
|
|||
Equity in net income (loss) of subsidiaries
|
(336,152
|
)
|
|
552,621
|
|
|
369,642
|
|
|||
Net income (loss)
|
(368,969
|
)
|
|
513,368
|
|
|
641,631
|
|
|||
Preferred share dividends
|
46,810
|
|
|
46,597
|
|
|
40,069
|
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
1,309
|
|
|
—
|
|
|||
Net income (loss) available to common shareholders
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
|
|
|
|
|
||||||
Comprehensive income (loss)
|
$
|
(154,746
|
)
|
|
$
|
579,992
|
|
|
$
|
498,740
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
$
|
641,631
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Equity in net income (loss) of subsidiaries
|
336,152
|
|
|
(552,621
|
)
|
|
(369,642
|
)
|
|||
Change in intercompany payable
|
94,827
|
|
|
33,286
|
|
|
(180,312
|
)
|
|||
Dividends received from subsidiaries
|
400,000
|
|
|
550,000
|
|
|
420,000
|
|
|||
Other items
|
4,988
|
|
|
17,807
|
|
|
(23,614
|
)
|
|||
Net cash provided by operating activities
|
466,998
|
|
|
561,840
|
|
|
488,063
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Promissory note receivable from subsidiary
|
—
|
|
|
(368,252
|
)
|
|
—
|
|
|||
Capital returned by subsidiary
|
368,252
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
368,252
|
|
|
(368,252
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net proceeds from issuance of preferred shares
|
—
|
|
|
531,945
|
|
|
—
|
|
|||
Repurchase of common shares - open market
|
(261,180
|
)
|
|
(495,426
|
)
|
|
(314,204
|
)
|
|||
Taxes paid on withholding shares
|
(24,678
|
)
|
|
(14,329
|
)
|
|
(18,048
|
)
|
|||
Dividends paid - common shares
|
(135,032
|
)
|
|
(132,323
|
)
|
|
(118,652
|
)
|
|||
Repurchase of preferred shares
|
(351,074
|
)
|
|
(51,769
|
)
|
|
—
|
|
|||
Dividends paid - preferred shares
|
(52,844
|
)
|
|
(39,909
|
)
|
|
(40,088
|
)
|
|||
Proceeds from issuance of common shares
|
—
|
|
|
224
|
|
|
3,986
|
|
|||
Net cash used in financing activities
|
(824,808
|
)
|
|
(201,587
|
)
|
|
(487,006
|
)
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash and cash equivalents
|
10,442
|
|
|
(7,999
|
)
|
|
1,057
|
|
|||
Cash and cash equivalents - beginning of year
|
99
|
|
|
8,098
|
|
|
7,041
|
|
|||
Cash and cash equivalents - end of year
|
$
|
10,541
|
|
|
$
|
99
|
|
|
$
|
8,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
At and year ended December 31, 2017
|
||||||||||||||||||||||||||||||||||
(in thousands)
|
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
(1)
|
|
Losses
And Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
(2)
|
|
Net
Premiums
Written
|
||||||||||||||||||
Insurance
|
|
$
|
152,070
|
|
|
$
|
7,164,364
|
|
|
$
|
2,225,647
|
|
|
$
|
2,106,363
|
|
|
$
|
—
|
|
|
$
|
1,661,032
|
|
|
$
|
332,749
|
|
|
$
|
344,012
|
|
|
$
|
2,087,734
|
|
Reinsurance
|
|
321,991
|
|
|
5,833,189
|
|
|
1,415,752
|
|
|
2,042,397
|
|
|
—
|
|
|
1,626,740
|
|
|
490,842
|
|
|
105,471
|
|
|
1,939,409
|
|
|||||||||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,805
|
|
|
—
|
|
|
—
|
|
|
129,945
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
474,061
|
|
|
$
|
12,997,553
|
|
|
$
|
3,641,399
|
|
|
$
|
4,148,760
|
|
|
$
|
400,805
|
|
|
$
|
3,287,772
|
|
|
$
|
823,591
|
|
|
$
|
579,428
|
|
|
$
|
4,027,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
At and year ended December 31, 2016
|
||||||||||||||||||||||||||||||||||
(in thousands)
|
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
(1)
|
|
Losses
And Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
(2)
|
|
Net
Premiums
Written
|
||||||||||||||||||
Insurance
|
|
$
|
128,880
|
|
|
$
|
5,345,655
|
|
|
$
|
1,574,164
|
|
|
$
|
1,777,321
|
|
|
$
|
—
|
|
|
$
|
1,141,933
|
|
|
$
|
251,120
|
|
|
$
|
346,857
|
|
|
$
|
1,807,125
|
|
Reinsurance
|
|
309,756
|
|
|
4,352,172
|
|
|
1,395,334
|
|
|
1,928,304
|
|
|
—
|
|
|
1,062,264
|
|
|
495,756
|
|
|
135,844
|
|
|
1,945,849
|
|
|||||||||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
353,335
|
|
|
—
|
|
|
—
|
|
|
120,016
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
438,636
|
|
|
$
|
9,697,827
|
|
|
$
|
2,969,498
|
|
|
$
|
3,705,625
|
|
|
$
|
353,335
|
|
|
$
|
2,204,197
|
|
|
$
|
746,876
|
|
|
$
|
602,717
|
|
|
$
|
3,752,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
At and year ended December 31, 2015
|
||||||||||||||||||||||||||||||||||
(in thousands)
|
|
Deferred
Acquisition
Costs
|
|
Reserve
for Losses
and Loss
Expenses
|
|
Unearned
Premiums
|
|
Net
Premiums
Earned
|
|
Net
Investment
Income
(1)
|
|
Losses
And Loss
Expenses
|
|
Amortization
of Deferred
Acquisition
Costs
|
|
Other
Operating
Expenses
(2)
|
|
Net
Premiums
Written
|
||||||||||||||||||
Insurance
|
|
$
|
119,186
|
|
|
$
|
5,291,218
|
|
|
$
|
1,494,068
|
|
|
$
|
1,798,191
|
|
|
$
|
—
|
|
|
$
|
1,154,928
|
|
|
$
|
261,208
|
|
|
$
|
341,658
|
|
|
$
|
1,759,359
|
|
Reinsurance
|
|
352,596
|
|
|
4,355,067
|
|
|
1,266,821
|
|
|
1,888,226
|
|
|
—
|
|
|
1,021,271
|
|
|
456,904
|
|
|
145,253
|
|
|
1,915,307
|
|
|||||||||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
305,336
|
|
|
—
|
|
|
—
|
|
|
109,910
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
471,782
|
|
|
$
|
9,646,285
|
|
|
$
|
2,760,889
|
|
|
$
|
3,686,417
|
|
|
$
|
305,336
|
|
|
$
|
2,176,199
|
|
|
$
|
718,112
|
|
|
$
|
596,821
|
|
|
$
|
3,674,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We evaluate the underwriting results of each of our reportable segments separately from the performance of our investment portfolio. As such, we believe it is appropriate to exclude net investment income from our underwriting profitability measure.
|
(2)
|
Amounts related to our reportable segments reflect underwriting-related general and administrative expenses, which includes those general and administrative expenses that are incremental and/or directly attributable to our individual underwriting operations. Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our individual underwriting operations, we exclude them from underwriting-related general and administrative expenses. The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP measure, is presented in Item 7 '
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive summary, Results of Operations'.
|
|
(in thousands)
|
|
DIRECT
GROSS
PREMIUM
|
|
CEDED TO
OTHER
COMPANIES
|
|
ASSUMED
FROM
OTHER
COMPANIES
|
|
NET
AMOUNT
|
|
PERCENTAGE
OF AMOUNT
ASSUMED TO
NET
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Property and Casualty
|
|
$
|
2,228,022
|
|
|
$
|
1,523,662
|
|
|
$
|
2,814,173
|
|
|
$
|
3,518,533
|
|
|
80.0
|
%
|
|
|
Accident and Health
|
|
195,104
|
|
|
5,468
|
|
|
318,974
|
|
|
508,610
|
|
|
62.7
|
%
|
|
||||
|
Total
|
|
$
|
2,423,126
|
|
|
$
|
1,529,130
|
|
|
$
|
3,133,147
|
|
|
$
|
4,027,143
|
|
|
77.8
|
%
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Property and Casualty
|
|
$
|
1,975,497
|
|
|
$
|
1,215,775
|
|
|
$
|
2,564,606
|
|
|
$
|
3,324,328
|
|
|
77.1
|
%
|
|
|
Accident and Health
|
|
136,681
|
|
|
1,459
|
|
|
293,424
|
|
|
428,646
|
|
|
68.5
|
%
|
|
||||
|
Total
|
|
$
|
2,112,178
|
|
|
$
|
1,217,234
|
|
|
$
|
2,858,030
|
|
|
$
|
3,752,974
|
|
|
76.2
|
%
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Property and Casualty
|
|
$
|
1,901,757
|
|
|
$
|
910,917
|
|
|
$
|
2,350,680
|
|
|
$
|
3,341,520
|
|
|
70.3
|
%
|
|
|
Accident and Health
|
|
129,808
|
|
|
18,147
|
|
|
221,485
|
|
|
333,146
|
|
|
66.5
|
%
|
|
||||
|
Total
|
|
$
|
2,031,565
|
|
|
$
|
929,064
|
|
|
$
|
2,572,165
|
|
|
$
|
3,674,666
|
|
|
70.0
|
%
|
|
1.
|
Section 3 of the Agreement (Consulting Fee) is hereby amended to insert the following after “April 2018.”:
|
2.
|
Section 4 of the Agreement (Consulting Term) is hereby amended by deleting the reference to “2018” with “2019”.
|
3.
|
Section 8 of the Agreement (Noncompetition and Nonsolicitation) is hereby amended by deleting the reference to “May 31, 2019” in the last line thereof and replacing such reference with “May 31, 2020”.
|
4.
|
Except as set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect.
|
a.
|
$2,905,397, less tax and payroll withholding required by law, as set forth on
Exhibit C
hereto, payable in a lump sum as soon as practicable following the Departure Date, but no later than the sixtieth (60th) day following the Departure Date; and
|
b.
|
An amount to compensate you for all accrued and unused vacation time as of the Departure Date consistent with the Company’s policies and procedures as set forth in the Company’s employee handbook, which amount will be payable in a lump sum as soon as practicable following the Departure Date, but no later than the sixtieth (60
th
) day following the Departure Date.
|
c.
|
Notwithstanding the terms of any applicable award agreements, all of your outstanding and unvested restricted shares or restricted stock units granted under the Long-Term Equity Compensation Plan (a complete list of which is attached hereto as
Exhibit D
), determined as of the Departure Date, will vest as of the Departure Date.
|
d.
|
The Company will also provide or reimburse you for the reasonable expense of tax return preparation and assistance for tax years 2016 and 2017 in a manner similar to similarly situated executives in connection with your relocation from Switzerland to the United States. Any such expense shall be pre-approved by the Company.
|
10.
|
Nondisparagement.
|
11.
|
Miscellaneous.
|
|
AXIS Specialty U.S. Services, Inc.
|
|
|
By: /s/ John D. Nichols, Jr.
|
By: /s/ Noreen McMullan
|
John D. Nichols, Jr.
|
Chief Human Resources Officer
|
i.
|
Attest or confirm SOX or other regulatory compliance in connection with 2016 year-end financial results, or otherwise;
|
ii.
|
Assist with the orderly transition of the current pipeline of transactions/projects, as requested by the CEO or the Interim Head of Reinsurance;
|
iii.
|
Assist with the transition of external relationships/contacts for which you had primary or significant responsibility CEO or the Interim Head of Reinsurance.
|
Executed and delivered by:
|
Accepted by:
|
|
|
|
|
|
|
|
AXIS SPECIALTY U.S. SERVICES, INC.
|
|
|
|
|
By: ______________________
|
By: _______________________
|
Executive
|
|
|
|
|
||||||||||||
AXIS Share Price as of February 8, 2017
|
$67.52
|
|||||||||||
Award Number
|
Award Date
|
Award Type
|
Vest Date
|
Unvested Share Amount
|
Value of Unvested Shares
|
|||||||
A2845
(1)
|
3/1/2014
|
PSU
|
3/1/2017
|
23,685
|
$1,599,211
|
Vest Prior to Departure
|
||||||
A788
|
2/4/2013
|
RSU
|
2/4/2017
|
10,000
|
$675,200
|
Vest Prior to Departure
|
||||||
A2241
|
3/1/2014
|
RSU
|
3/1/2017
|
3,947
|
$266,501
|
Vest Prior to Departure
|
||||||
A3610
|
3/1/2015
|
RSU
|
3/1/2017
|
3,070
|
$207,286
|
Vest Prior to Departure
|
||||||
A4403
|
3/1/2016
|
RSU
|
3/1/2017
|
3,252
|
$219,575
|
Vest Prior to Departure
|
||||||
Subtotal
|
43,954
|
|
$2,967,774
|
|||||||||
A2241
|
3/1/2014
|
RSU
|
3/1/2018
|
3,948
|
$266,569
|
|||||||
A3610
|
3/1/2015
|
RSU
|
3/1/2018
|
3,069
|
$207,219
|
|||||||
A4403
|
3/1/2016
|
RSU
|
3/1/2018
|
3,253
|
$219,643
|
|||||||
2017 RSU Award
|
3/1/2017
|
RSU
|
3/1/2018
|
3,144
|
$212,283
|
|||||||
A3627
|
3/1/2015
|
PSU
|
3/1/2018
|
13,642
|
$921,108
|
|||||||
A3610
|
3/1/2015
|
RSU
|
3/1/2019
|
3,070
|
$207,286
|
|||||||
A4403
|
3/1/2016
|
RSU
|
3/1/2019
|
3,253
|
$219,643
|
|||||||
2017 RSU Award
|
3/1/2017
|
RSU
|
3/1/2019
|
3,144
|
$212,283
|
|||||||
A4421
|
3/1/2016
|
PSU
|
3/1/2019
|
13,011
|
$878,503
|
|||||||
A4403
|
3/1/2016
|
RSU
|
3/1/2020
|
3,253
|
$219,643
|
|||||||
2017 RSU Award
|
3/1/2017
|
RSU
|
3/1/2020
|
3,144
|
$212,283
|
|||||||
2017 PSU Award
|
3/1/2017
|
PSU
|
3/1/2020
|
10,935
|
$738,331
|
|||||||
2017 RSU Award
|
3/1/2017
|
RSU
|
3/1/2021
|
3,144
|
$212,283
|
|||||||
Subtotal (PSUs at Target)
|
70,010
|
$4,727,075
|
||||||||||
Footnotes:
|
||||||||||||
(1)
2014 PSU reflects 150% payout. Target award is 15,790.
D-1
|
1.
|
Agreement
. The Company hereby retains the Consultant as a consultant to the Company and Parent on and subject to the terms and conditions set forth herein, and the Consultant hereby accepts such consultancy, on and subject to such terms and conditions.
|
2.
|
Consulting Services
. During the Consulting Term (as defined below), the Consultant shall serve as a Senior Advisor to the Chief Executive Officer of Parent (the “Chief Executive Officer”) and shall provide such consulting services to the Company commensurate with his status and experience as the former Chief Financial Officer of the Parent with respect to such matters as shall be reasonably requested from time to time by the Chief Executive Officer, including the services set forth in the attached
Appendix A
. The Consultant shall not, by virtue of the consulting services provided hereunder, be considered an officer or executive of the Company or its affiliates, and he shall have no power or authority to contract in the name of or bind the Company or its affiliates.
|
3.
|
Consulting Fee
. In consideration of the Consultant’s provision of consulting services during the Consulting Term (as defined below), the Company will provide the Consultant the following fee:
|
4.
|
Consulting Term
. The period during which the Consultant will be retained by the Company to provide the consulting services hereunder will commence on January 1, 2018 and shall terminate on December 31, 2018, unless earlier terminated by the Company (the “
Consulting Term
”).
|
5.
|
Reimbursement of Expenses
. The Company shall reimburse the Consultant for all pre-approved reasonable expenses incurred by him in the course of performing his services under this Agreement (which expenses are consistent with the Company’s policies in effect from time to time with respect to travel and other business expenses), subject to the Company’s requirements with respect to reporting and documentation of expenses.
|
6.
|
Office Space
. Upon prior request and as required, the Company shall provide Consultant with reasonable office accommodations, access to a computer workstation, administrative support and office supplies.
|
7.
|
Confidential Information
. The Consultant covenants that he shall not, without the prior written consent of the Company, use for his own benefit or the benefit of any other person or entity other than the Company and its affiliates or disclose to any person, other than an employee of the Company or other person to whom disclosure is necessary to the performance by the Consultant of his duties as a consultant to the Company, any confidential, proprietary, secret, or privileged information about the Company or its affiliates or their business or operations, including, but not limited to, information concerning trade secrets, know-how, software, data processing systems, policy language and forms, inventions, designs, processes, formulae, notations, improvements, financial information, business plans, prospects, referral sources, lists of suppliers and customers, legal advice and other information with respect to the affairs, business, clients, customers, agents or other business relationships of the Company or its affiliates (the “Confidential Information”). The Consultant shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information which shall have been obtained by the Consultant during his employment or consultancy, unless and until such information has become known to the public generally (other than as a result of unauthorized disclosure by the Consultant) or unless he is required to disclose such information by a court or by a governmental body with apparent authority to require such disclosure. The foregoing covenant by the Consultant shall be without limitation as to time and geographic application. The Consultant acknowledges and agrees that he shall have no authority to waive any attorney-client or other privilege without the express prior written consent of the Company’s General Counsel.
|
8.
|
Return of Company Property
. The Consultant agrees that, upon the expiration or termination of the Consulting Term, he will immediately return to the Company all materials containing or reflecting the Confidential Information and all copies, reproductions and summaries thereof, in his possession or under his control and shall erase all Confidential Information from all media in his possession or under his control, and, if the Company so requests, shall certify in writing that he has done so. All Confidential Information is and shall remain the property of the Company or its affiliates, as the case may be.
|
9.
|
Indemnification
. The Company shall indemnify the Consultant against expenses incurred and damages paid or payable by him with respect to claims based on actions or failures to act by the Consultant in his capacity as a consultant under this Agreement, but not including expenses incurred or damages paid or payable by the Consultant arising out of his negligence or willful misconduct.
|
10.
|
Insurance Coverage
. Company will add Consultant as a named insured to all applicable insurance policies to ensure coverage for Consultant during the Consulting Term consistent with the services to be provided.
|
11.
|
General Provisions
.
|
(a)
|
This Agreement constitutes the entire understanding of the Company and the Consultant with respect to the subject matter hereof and supersedes all prior understandings, written or oral, with respect thereto, except for the Separation Agreement and General Release and Waiver, which agreements are incorporated herein by this reference. The terms of this Agreement may be changed, modified or discharged only by an instrument in writing signed by the parties hereto. A failure of the Company or the Consultant to insist on strict compliance with any provision of this Agreement shall not be deemed a waiver of such provision or any other provision hereof. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.
|
(b)
|
This Agreement shall be construed, enforced and interpreted in accordance with and governed by the laws of the State of New York, without regard to its conflict of laws provisions. The parties being desirous of having any disputes resolved in a forum having a substantial body of law and experience with the matters contained herein, the parties agree that any action or proceeding with respect to this Consulting Agreement shall be brought exclusively in the Supreme Court of the State of New York, New York County, or in the United States District Court for the Southern District of New York and the parties agree to the personal jurisdiction thereof. The parties hereby irrevocably waive any objection they may now or hereafter have to the laying of venue of any such action in the said court(s), and further irrevocably waive any claim they may now or hereafter have that any such action brought in said court(s) has been brought in an inconvenient forum.
|
(c)
|
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement.
|
(d)
|
Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or sent by courier, or by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such changed address as such party may subsequently by similar process give notice of:
|
(e)
|
To the extent the Consultant is eligible to participate in any employee benefit plan, executive compensation plan or similar arrangement sponsored by the Company or Parent pursuant to its terms, to the extent permitted by law Consultant hereby waives the right to participate in any such plan or arrangement and Consultant shall receive no additional compensation in connection with such waiver.
|
(f)
|
The Company’s and Parent’s rights and obligations under this Separation Agreement will inure to the benefit of, and be binding on, a successor of the Company and/or Parent. No rights or obligations of the Consultant under this Agreement may be assigned or transferred by him. This Agreement may be assigned or transferred by the Company.
|
•
|
Serve as a Senior Advisor to the Chief Executive Officer
|
•
|
Assist and provide guidance and support to the Chief Financial Officer, as requested by the Chief Financial Officer
|
a)
|
The Company will continue to pay your annual base salary of $565,000 pursuant to the Company’s customary payroll practices.
|
b)
|
You will be eligible to participate in or receive benefits under any 401(k) savings plan, medical and dental benefits plan, life insurance plan, short-term and long-term disability plans, supplemental and/or incentive compensation plans, or any other employee benefit or fringe benefit plan, generally made available by the Company to senior executives in accordance with the eligibility requirements of such plans.
|
c)
|
You will be entitled to twenty-five (25) days of paid vacation in 2017 (prorated for any partial year of employment), subject to the applicable vacation policies and procedures on usage and carry over plus two (2) personal days.
|
d)
|
The Company will reimburse you for all reasonable business expenses incurred by you in the course of performing your duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of expenses.
|
e)
|
You will continue to vest in any unvested restricted share units previously awarded to you by the Company or Parent that vest during the Notice Period in accordance with the terms of the applicable award agreements.
|
a.
|
One Million One Hundred Fifty-One Thousand Dollars ($1,151,000), less tax and payroll withholding required by law, payable in a lump sum as soon as practicable following the Separation Date, but no later than the forty-fifth (45
th
) day following the Separation Date;
|
b.
|
You will remain eligible to participate in the Company’s Annual Incentive Plan for the 2017 performance year and the Company hereby waives the requirement that you be employed by the Company on the date of payment in 2018 in order to be eligible to receive such payment. Any cash incentive payment for 2017 performance will be at the discretion of the Compensation Committee of the Board of Directors of the Parent (the “Compensation Committee”) consistent with the Company’s customary practice and will be paid in accordance with the Company’s payment schedule for 2017 Annual Incentive Plan payments;
|
c.
|
To the extent approved by the Compensation Committee for other U.S. employees working in Bermuda in 2017, you will receive a cash payment equal to the amount of contributions and credits that you would have been eligible to receive or be credited under certain Company-sponsored United States qualified and nonqualified retirement plans in respect of the calendar year 2017 if you had not been employed outside of the United States in 2017. The amount of any payment provided under this section shall be determined by the Compensation Committee in its sole and absolute discretion and will be made as soon as practicable following your Separation Date, but no later than the forty-fifth (45
th
) day following the Separation Date;
|
d.
|
An amount equal to your accrued and unused vacation time as of the Separation Date consistent with the Company’s policies and procedures as set forth in the Company’s employee handbook, which amount will be payable in a lump sum as soon as practicable following the Separation Date, but no later than the forty-fifth (45
th
) day following the Separation Date; and
|
e.
|
Notwithstanding the terms of any applicable award agreements, all of your restricted shares and restricted stock units granted under the Parent’s equity plan that remain outstanding and unvested as of the Separation Date shall immediately vest upon the Separation Date.
|
12.
|
Miscellaneous.
|
|
AXIS Specialty U.S. Services, Inc.
|
|
|
|
|
By: /s/ Joseph C. Henry
|
By: /s/ Noreen McMullan
|
Joseph C. Henry
|
Noreen McMullan
|
|
Executive Vice President and Chief
|
|
Human Resources Officer
|
|
|
Executed and delivered by:
|
Accepted by:
|
|
|
|
AXIS Specialty U.S. Services, Inc.
|
|
|
|
|
By: /s/ Joseph C. Henry
|
By: /s/ Noreen McMullan
|
Executive
|
|
|
|
|
|
|
|
1)
|
Employment
|
a)
|
Position and Duties
. Effective January 1, 2018, the Company shall employ you in the position of Executive Vice President and Chief Financial Officer of the Parent or in such other position as is mutually agreeable to you and the Company. You will report directly and exclusively to the Chief Executive Officer of the Parent or any other individual as is mutually agreeable to you and the Company. You will be expected to devote your full business time and energy, attention, skills and ability to the performance of your duties and responsibilities to the Company and its direct and indirect subsidiaries (collectively, the “Parent Group”) on an exclusive basis, as requested by the Chief Executive Officer of the Parent, and shall faithfully and diligently endeavor to promote the business and best interests of the Company and its subsidiaries and affiliates. Anything herein to the contrary notwithstanding, nothing shall preclude you from (i) upon the written approval of the Parent’s Board, serving on the board of directors of another corporation or a trade association; (ii) serving on the board of charitable organizations, (iii) engaging in charitable, community and other business affairs, and (iv) managing your personal investments and affairs; provided such activities do not, in the reasonable judgment of the Company, materially interfere with the proper performance of your responsibilities and duties hereunder.
|
b)
|
Work Location
. In connection with your employment during the Employment Term (as defined in Section 3(a)), you shall be based primarily at the Company’s office in New York, NY except for necessary travel on Company business.
|
2)
|
Compensation and Benefits
|
a)
|
During the Employment Term, your annual base salary shall be no less than $550,000 (the base salary as may be increased from time to time referred to as "
Base Salary
") and shall be paid pursuant to the Company's customary payroll practices.
|
b)
|
During the Employment Term, you will be eligible to earn an annual cash bonus ("
Annual Bonus
"). Your target Annual Bonus is 100% of your then current Base Salary if the Parent achieves certain performance objectives and subject to your individual performance pursuant to
|
c)
|
During the Employment Term, you will be eligible to participate in the Parent’s Executive Long-Term Equity Compensation Program (the “
Program
”) as it may be amended from time to time, or a successor program, with an annual target equity award valued at $900,000, with the number of restricted stock units granted pursuant to the Company’s Long-Term Equity Compensation Plan as it may be amended from time to time, or any successor plan, unless prohibited by such successor plan (“Restricted Stock Units”) subject to: (i) the rules of the Program, which may include adjustment of the target award value based on the Parent’s achievement of certain performance objectives, and (ii) an award agreement in such form as the Compensation Committee of the Parent may determine from time to time. Any such award granted under the Program shall be subject in all respects to the Parent’s Executive Compensation Recoupment Policy, as it may be amended from time to time, or any successor policy thereto.
|
d)
|
During the Employment Term, you will be eligible to participate in or receive benefits under any 401(k) savings plan, medical and dental benefits plan, life insurance plan, short-term and long-term disability plans, supplemental and/or incentive compensation plans, or any other employee benefit or fringe benefit plan, generally made available by the Parent to senior executives in accordance with the eligibility requirements of such plans and subject to the terms and conditions set forth in this Agreement.
|
e)
|
During the Employment Term, you will be entitled to 25 days of paid vacation per calendar year (prorated for any partial years of employment), subject to the applicable vacation policies and procedures on usage and carry over. You are also eligible for two personal days per year.
|
f)
|
During the Employment Term, the Company will reimburse you for all reasonable business expenses incurred by you in the course of performing your duties under this Agreement which are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements with respect to reporting and documentation of expenses. Reimbursements will be paid promptly after submission and review of appropriate documentation, but in any event no later than 2½ months after the end of the calendar year in which the expense was incurred.
|
g)
|
By December 31, 2017, the Company will pay you a one-time lump sum of $100,000, less taxes and withholdings, for relocation expenses.
|
3)
|
Term of Employment
|
a)
|
The employment period shall commence on January1, 2018 and shall terminate on December 31, 2020 (the “
Employment Term
”), unless earlier terminated as provided in this Section 3. Your employment hereunder may be terminated by the Company or by you, as applicable, prior to the end of the Employment Term without any breach of this Agreement under the following circumstances:
|
i)
|
Death
. Your employment shall automatically terminate upon your death.
|
ii)
|
Disability
. The Company shall be entitled to terminate your employment if, as a result of your incapacity due to physical or mental illness or injury, you shall have been unable to perform your duties hereunder for a period of 181 days in any twelve-month period (your “Disability”).
|
iii)
|
Cause
. The Company may terminate your employment at any time for Cause which, for purposes of this Agreement, shall mean (i) any act or omission which constitutes a material breach by you of the terms of this Agreement, the employment policies of the Parent Group, or applicable law governing the Parent Group or your employment, (ii) the indictment or conviction of a felony, (iii) the indictment or conviction of a lesser crime or offense that adversely impacts or potentially could adversely impact the business or reputation of the Parent Group in a material way, (iv) your willful violation of specific lawful and material directives of the Parent that are not contrary to this Agreement, (v) commission of a dishonest or wrongful act involving fraud, misrepresentation or moral turpitude causing damage to the Company, its parent and/or affiliates and subsidiaries, (vi) the willful failure to perform a substantial part of your substantial job functions after written notice from the Board requesting such performance, or (vii) material breach of fiduciary duty.
|
iv)
|
Without Cause
. The Company may terminate your employment at any time without Cause;
provided
, however, that the Company provides you with notice of its intent to terminate at least thirty (30) days
in advance of the date of termination (or pays you severance in lieu of all or a portion of such notice).
|
v)
|
Voluntary Resignation
. You may voluntarily terminate your employment hereunder; provided, however, that in the event you are not terminating for Good Reason pursuant to subparagraphs (vi) below, you provide the Company with notice of your intent to terminate at least twelve (12) months
in advance of the date of termination.
|
vi)
|
Good Reason
. You may terminate your employment for Good Reason if (i) (A) the scope of your position, authority or duties is materially adversely changed (except for changes during a Notice Period as authorized under Section 3(c) below), (B) your compensation under this Agreement is not paid or your Base Salary or your target Annual Bonus is reduced below the levels specified in Sections 2(a) and (b), (C) you are assigned duties that are materially inconsistent with your position with the Company/Parent; (D) you are required to report to anyone other than the Chief Executive Officer of the Parent (or, if you and the Company had mutually agreed that you would report to a different individual, you are required to report to someone other than that individual) or (E) in the event that any other person or entity acquires all or substantially all of the Parent Group’s business, the Company fails to obtain the assumption of this Agreement by the successor;
|
b)
|
Any termination of your employment by the Company or by you under this Section 3 (other than termination pursuant to Section 3(a)(i)) shall be communicated by a written notice to the other party hereto indicating the specific termination provision in this Agreement relied upon and specifying a date of termination.
|
c)
|
The period between the date notice of termination is provided and your termination date shall be referred to as the “Notice Period.” During any Notice Period, the Company may, in its absolute discretion (i) require you to perform only such portion of your normal duties as it may allocate to you from time to time, (ii) require you not to perform any of your duties, (iii) require you not to have any contact with customers or clients of the Company nor any contact (other than purely social contact) with such employees of the Company as the Company shall determine, (iv) exclude you from any premises of the Company, and/or (v) require you to resign from all directorships and other offices that you hold in connection with your employment with the Company (including any directorships with subsidiaries or other affiliates of the Company) effective as of any date during the Notice Period. If the Company elects to take any such action, such election shall not constitute a breach by the Company of this Agreement or Good Reason for you to terminate your Employment under Section 3(a)(vi) and you shall not have any claim against the Company in connection therewith so long as, during the Notice Period, the Company continues to pay to you your Base Salary, Annual Bonus and all of the other amounts described in Section 2 of this Agreement.
|
4)
|
Severance Payments and Other Benefits Following Termination of Employment
|
a)
|
In the event that your employment with the Company shall terminate for any reason, and except as otherwise set forth in this Agreement, the Company’s sole obligation under this Agreement shall be to pay to you any accrued but unpaid Base Salary for services rendered to the date of termination, any bonus awarded by the Compensation Committee in respect of a prior year’s target Annual Bonus but not yet paid as of the date of termination, any accrued but unpaid expenses required to be reimbursed under this Agreement, any unused vacation accrued to the date of termination. For the sake of clarity, this Section 4(a) does not limit any rights you may have under the Company’s retirement or welfare plans.
|
b)
|
Death
. In the event your employment is terminated due to your death pursuant to Section 3(a)(i), then in addition to the amounts provided under Section 4(a) above:
|
i)
|
Your beneficiary will be paid a pro-rata portion of your Annual Bonus that you would have been entitled to receive for the calendar year in which your termination occurs, based on the number of days you were employed by the Parent Group during such year and calculated as if all targets were met, to be paid in a lump sum no later than sixty (60) days following your termination; and
|
ii)
|
All outstanding and unvested Restricted Stock Units and other equity awards shall immediately vest upon said termination.
|
c)
|
Disability
. In the event that the Company terminates your employment due to your disability, pursuant to Section 3(a)(ii), then in addition to the amounts provided under Section 4(a) above:
|
i)
|
You will be paid a pro-rata portion of your Annual Bonus that you would have been entitled to receive for the calendar year in which your termination occurs, based on the number of days you were employed by the Parent Group during such year and calculated as if all targets were met, to be paid in a lump sum no later than sixty (60) days following your termination; and
|
ii)
|
All outstanding and unvested Restricted Stock Units and other equity awards shall immediately vest upon the date of your termination.
|
d)
|
Termination by the Company without Cause or by you for Good Reason
. In the event that the Company terminates your employment without Cause or you terminate your employment for Good Reason, in each case, in accordance with the provisions of Section 3(a)(iv) or 3(a)(vi) hereof (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii) or (v)) and conditioned on your compliance with this Agreement during the Notice Period, then in addition to the amounts you have received during the Notice Period and any other amounts provided in Section 4(a), but subject to your timely satisfaction of the condition precedent in Section 4(e) below, the following will be provided to you following the termination of the Notice Period:
|
i)
|
You will be paid a lump sum amount equal to one (1) year’s Base Salary at the rate in effect immediately prior to said termination, to be paid no later than sixty (60) days following your termination;
|
ii)
|
With respect to the Annual Bonus for the calendar year prior to the calendar year in which your termination occurs, you will be excused from the requirement in Section 2(b) that you must be actively employed with the Company on the date of disbursement in order to receive the Annual Bonus and such Annual Bonus will be paid during the period set forth in Section 2(b) above;
|
iii)
|
You will be paid an amount equal to the Annual Bonus that you would have been entitled to receive for the calendar year in which your termination occurs, calculated as if all targets were met, to be paid in a lump sum no later than sixty (60) days following your termination;
|
iv)
|
You will be paid a pro-rata portion of your Annual Bonus that you would have been entitled to receive for the calendar year in which your termination occurs, based on the number of days you were employed by the Parent Group during such year and calculated as if all targets were met, to be paid in a lump sum no later than sixty (60) days following your termination;
|
v)
|
You will be paid an amount equal to premiums you would have paid if you had elected COBRA under the Company group health, dental and vision plans, as applicable, at the same level of coverage as you had immediately prior to your termination, for the twelve (12) month period following your termination. Such payment shall be paid in a lump sum no later than sixty (60) days following your termination; and
|
vi)
|
Subject to your compliance with the obligations set forth in Sections 5, 7, 8, 9 and 10 below, all Restricted Stock Units and other equity awards previously awarded to you which have not vested as of the date of your termination, if any, shall immediately vest upon your termination.
|
e)
|
Termination by the Company without Cause or by you for Good Reason Following Change in Control
. In the event that within twenty-four (24) months following a Change in Control as defined below the Company terminates your employment without Cause or you terminate your employment for Good Reason, (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii), or (v)) then you shall be entitled to the same payments and benefits described in Section 4(d) above subject to the terms thereof, except that for purposes of Section 4(d)(iii), you will be paid an amount equal to twice the Annual Bonus that you would have been entitled to receive for the calendar year in which your termination occurs, calculated as if all targets were met, to be paid in a lump sum no later than sixty (60) days following your termination.
|
1.
|
Any person or entity is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Parent representing 50% or more of the combined voting power of the Parent’s then outstanding voting securities entitled to vote generally in the election of directors (the "
Outstanding Parent Voting Securities
");
provided
, however, that for purposes of this Section 4(e)(1), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Parent, (B) any acquisition by the Parent, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Parent or any affiliate of the Parent, or (D) any acquisition by any entity pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 4(e)(3) hereof;
|
2.
|
Individuals who, as of the date of this Agreement, constitute the Board (hereinafter referred to as the "
Incumbent Board
") cease for any reason to constitute at least a majority of the Board;
provided
, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Parent's stockholders, was approved by a
|
3.
|
Consummation of a reorganization, merger, share exchange, amalgamation, recapitalization, consolidation or similar transaction by and among the Parent and another person or entity, including, for this purpose, a transaction as a result of which another person or entity owns the Parent or all or substantially all of the Parent's assets, either directly or through one or more subsidiaries (a "
Business Combination
"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Parent Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent management personnel) of the entity resulting from such Business Combination or that, as a result of such Business Combination, owns the Parent or all or substantially all of the Parent's assets, either directly or through one or more subsidiaries, in substantially the same proportions as their ownership of the Outstanding Parent Voting Securities immediately prior to such Business Combination, (B) no person or entity (excluding any entity resulting from such Business Combination, or that, as a result of such Business Combination, owns the Parent or all or substantially all of the Parent's assets, either directly or through one or more subsidiaries, or any employee benefit plan (or related trust) of the foregoing) beneficially owns, directly or indirectly, 50% or more of the then outstanding shares of common stock or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or equivalent management personnel) of the entity resulting from such Business Combination or that, as a result of such Business Combination, owns the Parent or all or substantially all of the Parent's assets, either directly or through one or more subsidiaries, except to the extent that such ownership existed with respect to the Parent prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or equivalent management personnel) of the entity resulting from such Business Combination or that, as a result of such Business Combination, owns the Parent or all or substantially all of the Parent's assets, either directly or through one or more subsidiaries, were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, pursuant to which such Business Combination is effected or approved; or
|
4.
|
Approval by the shareholders of the Parent of a complete liquidation or dissolution of the Parent or the sale or other disposition of all or substantially all of the Parent's assets.
|
f)
|
No severance benefits or payments provided pursuant to this Section 4, other than the amounts described in Section 4(a), will be provided to you unless you execute a waiver and release in the form specified in
Exhibit A
hereto (with such changes as may be required due to change in applicable law or regulation) within forty-five (45) days following your employment termination date and do not revoke such release. To the extent required to avoid penalty taxes under Section 409A of the Code, no payment or benefit hereunder conditioned on such release shall be made or shall commence until the 60
th
day following your termination, including any payments that would otherwise have been made prior to such date.
|
g)
|
In the event of any termination of your Employment by the Company, or by you in conformity with this Agreement, you shall be under no obligation to seek other employment, and there shall be no offset against amounts due you under this Agreement on account of any remuneration attributable to any subsequent employment you may obtain. Any amounts due under this Section 4 are considered to be reasonable by the Company and not in the nature of a penalty.
|
5)
|
Resignation from Directorships and Other Offices
|
6)
|
Conflict of Interest
|
7)
|
Confidential Information
|
a)
|
As an executive of the Company, you will learn or have access to, or may assist in the development of, highly confidential and sensitive information and trade secrets about the Company, its operations, its subsidiaries and affiliates, its employees, and its customers, which are the property of the Company. Confidential Information and Trade Secrets are items of information relating to the Company, its products, services, customers, suppliers, vendors, business partners, and employees that are not generally known or available to the general public, but have been developed, compiled or acquired by the Company at its great effort and expense. Confidential Information includes but is not limited to: (i) financial and business information relating to the Company, such as information with respect to costs, commissions, fees, profits, expenses, sales, markets, mailing lists, strategies and plans for future business, new business, product or other development, potential acquisitions or divestitures, and new marketing ideas; (ii) product and technical information relating to the Company, such as product formulations, new and innovative product ideas, methods, procedures, devices, machines, equipment, data processing programs, software, software codes, computer models, and research and development projects; (iii) customer information, such as the identity of the Company’s customers, the names of representatives of the Company’s customers responsible for entering into contracts with the Company, the amounts paid by such customers to the Company, specific customer needs and requirements, specific customer risk characteristics, policy expiration dates, policy terms and conditions, information regarding the markets or sources with which insurance is placed, and leads and referrals to prospective customers; (iv) personnel information, such as the identity and number of the Company’s other employees, their salaries, bonuses, benefits, skills, qualifications, and abilities; (v) any and all information in whatever form relating to any client or prospective customer of the Company, including but not limited to, its business, employees, operations, systems, assets, liabilities, finances, products, and marketing, selling and operating practices; (vi) any information not included in (i) or (ii) above which you know or should know is subject to a restriction on disclosure or which you know or should know is considered by the Company or the
|
b)
|
You acknowledge and agree that the Company is engaged in a highly competitive business and that its competitive position depends upon its ability to maintain the confidentiality of the Confidential Information and Trade Secrets which were developed, compiled and acquired by the Company at its great effort and expense. You further acknowledge and agree that any disclosing, divulging, revealing, or using of any of the Confidential Information and Trade Secrets, other than in connection with the Company’s business or as appropriate to carry out your duties for the Parent Group, will be highly detrimental to the Company and cause it to suffer serious loss of business and pecuniary damage.
|
c)
|
Accordingly, you agree that you will not, while associated with the Company and for so long thereafter as the pertinent information or documentation remains confidential, for any purpose whatsoever, directly or indirectly use, disseminate or disclose to any other person, organization or entity Confidential Information or Trade Secrets, except as appropriate to carry out your duties as an executive of the Parent and except (i) as expressly authorized by the Chief Executive Officer of the Parent, (ii) appropriate to enforce the terms of this Agreement, or (iii) required by law or legal process; provided, that you give notice to the Company promptly on becoming aware of any obligations to disclose such information under this provision, and not less than ten days prior to making any such disclosure.
|
d)
|
You agree to deliver to the Company, immediately upon separation from employment for any reason, and at any time the Company so requests: (i) any and all documents, files, notes, memoranda, databases, computer files and/or other computer programs reflecting any Confidential Information and Trade Secrets whatsoever or otherwise relating to the Company’s business; (ii) lists of the Company’s customers and leads or referrals to prospective customers; and (iii) any computer equipment, home office equipment, automobile or other business equipment belonging to the Company that you may then possess, or have under your control. For any equipment or devices owned by you on which proprietary information of the Company is stored or accessible, you shall, immediately upon or prior to your separation from employment, deliver such equipment or devices to the Company so that any proprietary information may be deleted or removed, and provide all necessary passwords or passcodes. You expressly authorize the Company’s designated representatives to access such equipment or devices for this limited purpose and shall provide any passwords or access codes necessary to accomplish this task.
|
8)
|
Intellectual Property
|
a)
|
You agree that all inventions, improvements, products, designs, specifications, trademarks, service marks, discoveries, formulae, processes, software or computer programs, modifications of
|
b)
|
You further covenant and agree that you will: (i) promptly disclose such Intellectual Property to the Company; (ii) make and maintain for the Company, adequate and current written records of your innovations, inventions, discoveries and improvements; (iii) assign to the Company, without additional compensation, the entire rights to Intellectual Property for the United States and all foreign countries; (iv) execute assignments and all other papers and do all acts necessary to carry out the above, including enabling the Company to file and prosecute applications for, acquire, ascertain and enforce in all countries, letters patent, trademark registrations and/or copyrights covering or otherwise relating to Intellectual Property and to enable the Company to protect its proprietary interests therein; and (v) give testimony, at the Company’s expense, in any action or proceeding to enforce rights in the Intellectual Property.
|
c)
|
You further covenant and agree that it shall be conclusively presumed as against you that any Intellectual Property related to the Proprietary Interests described by you in a patent, service mark, trademark, or copyright application, disclosed by you in any manner to a third person, or created by you or any person with whom you have any business, financial or confidential relationship, within one (1) year after cessation of your employment with the Company, was conceived or made by you during the period of employment by the Company and that such Intellectual Property be the sole property of the Company.
|
d)
|
Nothing in this Section 8 shall be construed as granting or implying any right to you under any patent or unpatented intellectual property right of the Company, or your right to use any invention covered thereby.
|
e)
|
In the event that you are requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose any information protected by Sections 7 and 8 (collectively, “Restricted Material,”) you agree to provide the Company with prompt notice of such request(s) so that the Company may seek an appropriate protective order or other appropriate remedy and/or waive your compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, or that the Company grants a waiver hereunder, you may furnish that portion (and only that portion) of the Restricted Material which you are legally compelled to disclose and will exercise your reasonable best efforts to obtain reliable assurance that confidential treatment will be accorded any Restricted Material so furnished.
|
9)
|
Non-Competition
|
a)
|
You acknowledge and agree that the Company is engaged in a highly competitive and global business and that by virtue of your senior executive position and responsibilities with the Company and your access to the Confidential Information and Trade Secrets, engaging in any
|
b)
|
Accordingly, you covenant and agree that during the time you are employed by the Company and for a period of twelve (12) months after such employment ends for any reason whatsoever, whether voluntarily or involuntarily and whether with or without Cause, you will not, without the express written consent of the Chief Executive Officer of the Parent, directly or indirectly (individually or on behalf of other persons), own, manage, engage in, operate or control, or be employed in a capacity similar to positions you held with the Company, or render consulting or other services to, any person, firm or corporation engaged in the insurance or reinsurance business or any other business in which the Company is, or has announced an intention to become engaged in at any time during your employment with the Company. In recognition of the global nature of the Company’s business, which includes the sale of its products and services globally, this restriction shall apply throughout the United States of America, Bermuda, Ireland, the United Kingdom and Switzerland. In the event that the Company exercises its right to relieve you of your normal duties during the Notice Period as set forth and described in Section 3(c)of this Agreement (a “Garden Leave Period”), then the twelve (12) month non-competition period shall be reduced on a day-for-day basis by any such Garden Leave Period.
|
10)
|
Non-Solicitation of Employees, Contractors and Consultants
|
a)
|
You acknowledge and agree that solely as a result of employment with the Company, and in light of the broad responsibilities of such employment which include working with other employees, contractors and consultants of the Company, you have and will come into contact with and acquire Confidential Information and Trade Secrets regarding, and will develop relationships with employees, contractors and consultants of the Company.
|
11)
|
Enforcement
|
a)
|
The parties acknowledge and agree that compliance with the covenants set forth in this Agreement is necessary to protect the Confidential Information and Trade Secrets, business and goodwill of the Company, and that any breach of this Agreement will result in irreparable and continuing harm to the Company, for which money damages may not provide adequate relief. Accordingly, in the event of any breach or anticipatory breach of this Agreement by you, or your claim in a declaratory judgment action that all or part of this Agreement is unenforceable, the parties agree that the Company shall be entitled to the following particular forms of relief as a result of such breach, in addition to any remedies otherwise available to it at law or equity: (a) injunctions, both preliminary and permanent, enjoining or restraining such breach or anticipatory breach, and you consent to the issuance thereof forthwith and without bond by any court of competent jurisdiction; and (b) recovery of all reasonable sums and costs, including attorneys’ fees, incurred by the Company to defend or enforce the provisions of this Agreement if you argue that such covenants are unreasonable or unenforceable. In addition to any and all remedies available to the Company upon breach of this Agreement, the Company expressly reserves the right to stop all future payments and recoup all prior payments made under this Agreement for breach of its terms.
|
b)
|
The parties hereto hereby declare that it is impossible to measure in money the damages that will accrue to the Company by reason of your failure to perform any of your obligations under Sections 7, 8, 9, and 10. Accordingly, if the Company institutes any action or proceeding to enforce the provisions hereof, to the extent permitted by applicable law, you hereby waive the claim or defense that the Company has an adequate remedy at law, and you shall not urge in any such action or proceeding the defense that any such remedy exists at law. The foregoing rights shall be in addition to any other rights and remedies available to the Company under law or in equity.
|
c)
|
If any of the covenants contained in Sections 7, 8, 9, and 10, or any part thereof, is construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portion(s). In addition, if any of the covenants contained in Sections 7, 8, 9, and 10 hereof, or any part thereof, is held by any person or entity with jurisdiction over the matter to be invalid or unenforceable because of duration of such provision or the geographical area covered thereby, the parties agree that such person or entity shall have the power to reduce the duration and/or geographical area of such provision and, in its reduced form, said provisions shall then be enforceable.
|
d)
|
It is understood and agreed that no failure or delay by the Company in exercising any right, power or privilege contained in Sections 7, 8, 9, and 10 shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege contained in Sections 7, 8, 9, or 10.
|
e)
|
It is understood and agreed that references to the “Company” in the foregoing Sections 7, 8, 9 and 10 include the Company, the Parent and its affiliates.
|
12)
|
Disclosure of Agreement; Disclosure of New Employment
|
13)
|
Representation Regarding Conflicts; Confidential Information Belonging to Others
|
14)
|
Choice of Forum
|
15)
|
Governing Law
|
a)
|
Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally or three days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or one day after it is sent by a reputable overnight courier service and, in each case, addressed to the relevant party at the address provided for such party on the first page hereof, or to such other address as any party hereto may designate by notice to the other in accordance with the foregoing.
|
b)
|
This Agreement constitutes the entire agreement among you and the Company, the Parent and any affiliate with respect to your employment by the Company, and supersedes and is in full substitution for any and all prior understandings or agreements with respect to your employment. This Agreement shall be binding upon execution by both parties.
|
c)
|
This Agreement may be amended only by an instrument in writing signed by the parties hereto, and any provision hereof may be waived only by an instrument in writing signed by the party against whom or which enforcement of such waiver is sought. Any amendment to this Agreement must comply with the requirements of Section 409A of the Code.
|
d)
|
Nothing in this Agreement (i) prohibits you from reporting an event that you reasonably and in good faith believes is a violation of law to the relevant law-enforcement agency (such as the Securities and Exchange Commission), and nothing herein requires notice to or approval from the Company or Parent before doing so, or (ii) prohibits you from cooperating in an investigation conducted by such a law-enforcement agency.
|
e)
|
You are also hereby provided notice that under the 2016 Defend Trade Secrets Act: (x) no individual will be held criminally or civilly liable under federal or State trade secret law for the disclosure of a trade secret (as defined in the Economic Espionage Act) that is made in confidence to a federal, State, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law, or is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal so that it is not made public, and, (y) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.
|
f)
|
The Company shall withhold from any compensation and benefits payable under this Agreement all applicable U.S. federal, state, local, or other taxes.
|
g)
|
Except as otherwise set forth herein, in the event of any contest or dispute between you and the Company with respect to this Agreement, each of the parties shall be responsible for their respective legal fees and expenses.
|
h)
|
If any term or provision of this Agreement is declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such term or provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect.
|
i)
|
Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, representatives, successors and assigns. Your rights and benefits under this Agreement are personal to you and no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; provided, however, that nothing in this Section 18 shall preclude you from designating a beneficiary or beneficiaries to receive any benefit payable on your death.
|
j)
|
The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.
|
k)
|
Except as otherwise expressly set forth in this Agreement, to the extent necessary to carry out the intentions of the parties hereunder, the respective rights and obligations of the parties hereunder shall survive any termination of your employment or expiration or termination of this Agreement.
|
l)
|
Nothing in this Agreement shall be construed as giving you any claim against any specific assets of the Company, Parent or any affiliate or as imposing any trustee relationship upon the Company in respect of you. The Company shall not be required to establish a special or separate fund or to segregate any of its assets in order to provide for the satisfaction of its obligations under this Agreement. Your rights under this Agreement shall be limited to those of an unsecured general creditor of the Company, Parent and its affiliates;
|
m)
|
Both parties, through their respective counsel, have participated in the preparation of this Agreement and its
Exhibit A
. Accordingly, both parties shall be deemed to be the drafter of this Agreement or its
Exhibit A
for purposes of construing their provisions. The language in all parts of this Agreement and its exhibits shall be interpreted according to its fair meaning, and shall not be interpreted for or against either of the Parties as the drafter of the language.
|
Executed and delivered by:
|
Accepted by:
|
|
|
|
AXIS SPECIALTY U.S. SERVICES, INC.
|
|
|
|
|
By: ________________________
|
By: ____________________________
|
Executive
|
|
|
|
|
|
|
|
1
|
Employment.
Th
e E
mployee is employ
e
d as Presid
e
nt
&
Regional Chief Und
er
writing Officer AXIS Re Europe
(the
Employee's fu
n
ction
hereinafter
referred to as "President
&
Regional CUO
"
).
|
2
|
Term.
The
Contract wi
ll
begin on
March
6, 2015 and shall
replace the
previ
o
u
s
employment contra
c
t between the Employee and the Employe
r
dated Mar
c
h 4, 2004. The Contract shall
l
ast for an
unlimited period
of time. The Contract may be
termi
n
ated
in
writing by
either
party
as per the end of a calendar month w
i
th a notice
period of
6
months.
|
3
|
Position, Responsibilities.
The Employee
w
ill
be responsible
for
Underwriting
of AXIS Re
Europe, the
overall management
of the
Zurich
Branch
and all other du
ties
as ass
ign
ed by
his manager
.
|
4
|
Performance of Duties.
The Employee undertakes to attend to his contractual duties for the Employer consistent with his position hereunder, including, as the case may be, with the business regulations of the Employer and applicable regulations of the AXIS Group, and in any event punctually and conscientiously in all respects and to devote his full working time to the furtherance of the interests of the Employer. The Employee may not pursue any other professional or commercial activity for his own benefit or that of any third party during the term of his employment, except with the prior written consent of the Employer or upon instruction of his superior within the AXIS Group.
|
5
|
Accountability and Competence.
The Employee will report directly to the CEO AXIS Re. The Employer reserves the right to change reporting lines at any time by giving written notice to the Employee.
|
6
|
Compensation and Related Matter.
As compensation for his services, the Employee will be provided with the following:
|
a)
|
Salary.
The
Employee is
entitled to an annual base salary
(gross salary
per annum) of CHF 510'000, payable
in
12 equal monthly
i
nstalments
at
the
end of each calendar month
(and as the
case may be
pro
rate for the number of
cale
ndar
days of
his
employment).
|
b)
|
Bonus
Plan.
A year-end bonus will be paid at
the
discretion of the Compensation Committee of the Board of Directors of the
Emp
loyer. The
bonus target is 65% of the base salary.
|
c)
|
Restricted
Stock and Stock Options.
Your annual equity target
w
i
ll
be
valued
at
USD
350,000
.
This award generally vests
in
four
equal in
stallme
nts
on the first, second, third and fourth anniversary of the grant date per your Award Agreement.
Upon
vesting, awards are generally settled half in shares
and
half in cash. Our
long
-term
equity plan
is
discretionary
and
awards are based on company and
individual
performance.
|
d)
|
Deductions and Set-Off.
The Employer reserves
the
right at its absolute discretion to deduct from or set-off with the Employee’s pay
any
sums
w
hich
the Employee may owe to the Employer,
including, w
ithout limita
tion, any overpayments or
loans
made to his or losses
suffered
by the Employer as a result of
his
negligence or breach of Employer rules issued
from
time to time.
|
7
|
Social Insurance System, Pension Benefits Plan
. The Employee will benefit, subject as the case may be to related deductions from his salary payments, from insurance coverage, a pension scheme, sick pay etc. as required to be provided by an employer under Swiss law and, to the extent such coverage and/or benefits exceed what is required under Swiss law, from the related programs and cover age generally provided by related plans of the AXIS Group as applicable to employees with a position, responsibilities and the duration of service etc. corresponding to such of the Employee.
|
8
|
Place of work.
Th
e
Employee'
s
place of work
is
Z
uri
c
h.
|
9
|
Hours of Work.
The Employee
shall devote his full time and attention to carrying out his
duties
and
responsibilities
as
Pre
sident
and Regional CUO. The Employe
e
acknowledges that in his function
as
Pr
esident
and Regional
CUO
he will
not
be
pa
id
for any
hours
worked in excess of standard 40 weekly working hours In Swit
ze
rland.
Th
e
salary of the Employee as set
forth
in this employment agre
e
ment covers
the
remuneration
of any extra hours.
|
10
|
Vacation and Holidays.
The Employee is
entitled
to 30 working days of vacation per calendar
year.
In addition, he is
en
ti
t
l
e
d to the public bank holidays
qualify
ing as
such
in th
e
Canton of Zurich.
|
11
|
Expenses
.
Expenses reasonably and properly incurred by the Employee
in
the proper performance
of his duties
will
be reimbursed by
the Employer on the basis of appropriate accounting
th
erefor
and according to the policy of the Employer.
|
12
|
Confidentiality.
The Employee
sha
ll
treat as confidential and not disclose to others any business matters of
the
Employer,
the
AXIS Group,
the Zurich
Branch, its business and its customers. Such
business
matters include manufacturing secrets, business secrets and all other facts that are relevant for the
busine
ss
and not known to the
public and either
facts of a confidential
nature (such
as ad dresses of employees, suppliers and customers, agreements and
their
terms and conditions, accounting
figures
and balance sheet
figures,
etc.) or that have been indicated
to
the Employee as
being
confidential.
|
13
|
Prohibition to Compete and to Solicit.
In addition to
his general duty
of
loyalty pursuant
to
Art. 321a CO, the
Emp
l
oyee, who has access to
the clientele
and
to
manufacturing
and business secrets of the Employer, in particular under takes,
during his
employment
relationship
with the Employer,
to refrain from
any activity that competes with
the business
of
the
Employer and
not to solic
i
t employees for
h
is
own
business
or the
business
of
any
third
parties.
|
•
|
not
to participate, directly or indirectly, financially
or otherwise, in any enterprise (other than as a
shareholder of up
to 5% of its issued shares for the
purposes
of
investment only)
which
develops,
manufactures,
offers,
or distributes
products,
or prov
i
des
services
similar to those
of the
Employer or which otherwise competes with the business of the Employer;
|
•
|
not to be active, fully or partially, for such an enterprise, be it as an employee, representative, adviser or otherwise;
|
•
|
not to directly or indirectly establish such an enterprise;
|
•
|
not to directly or indirectly solicit or employ other employees of the Employer or in any other way enter into an agreement with such employees for the benefit of himself or a third party.
|
14
|
Liquidated Damages.
The Employee is aware and acknowledges that a violation of the obligations set out in Sections 12 and 13 may seriously damage the Employer.
|
15
|
Acceptance of Gifts.
The Employee may not, without prior written consent of the Employer, accept any cash payments as gifts and/or any other gift and/or favour of whatever kind from any customer, client or supplier of the Employer, whether already existing as such or prospective, which in value or nature exceed the standards set by the Employer orally or in writing.
|
16
|
Data Transfer.
The Employee acknowledges that the Employer holds personal information about his, including details of his name, address, salary and other benefits, health and sickness, work record and next of kin for administrative purposes in connection with his employment. The Employee understands that this information may be made available to other companies within the AXIS Group. By signing this agreement, the Employee expressly consents to the collection and use of such information in accordance with this section.
|
17
|
Applicable Law and Jurisdiction.
This Agreement is subject to the laws of Switzerland. All conflicts arising out of this Contract shall be brought to the competent courts of the Canton of Zurich, Switzerland.
|
18
|
Employee Handbook.
The Employee Handbook handed out to the Employer is an integrated part of this contract.
|
|
AXIS Re Europe
|
|
|
|
|
|
|
/s/ Jan Ekberg
|
/s/ Timothy Hennessy
|
Jan Ekberg
|
Timothy Hennessy, CEO, AXIS Re SE
|
|
|
|
|
|
|
|
|
a)
|
Sa
lar
y
|
b)
|
Bonus Plan
|
c)
|
Annual Equity Grant
|
Zurich
|
AXIS Re SE, Dublin, Zurich Branch
|
|
|
|
|
/s/ Jan Ekberg
|
/s/ Victoria Westerberg
|
Jan Ekberg
|
VP, Senior HR Business Partner
|
|
|
|
|
|
|
|
|
|
|
1.
|
Eligibility
. Any Executive Committee Member who is employed by the Company or one of its subsidiaries shall be entitled to annual allocation from the equity pool (as defined in Section 2) and shall be a “Participant” in the Program.
|
2.
|
Target Equity Allocation.
Each Participant’s initial “Target Equity Allocation” shall be based on the Participant’s annual equity target value as set forth in their respective employment agreement or offer letter. This Target Equity Allocation shall be split between a time-based award and a performance-based award at the Compensation Committee’s discretion.
|
3.
|
Time-Based Award
. The time-based portion of the Target Equity Allocation shall be adjusted based on performance at the time of grant. Such adjustment ultimately will be based on the Company’s three-year growth in diluted book value per share (DBVPS) as compared to the Company’s peer group, and shall range from 75% to 125% of the time-based Target Equity Allocation. Time-based awards will vest 25% per year over a four year vesting period.
|
4.
|
Performance-Based Award
. The performance-based portion of the Target Equity Allocation will be granted as initially determined without adjustment, but vesting will be subject to a performance condition. Specifically, performance-based awards will be eligible to vest in a range of 0% to 200% of the initial Target Equity Allocation on the third anniversary of the date of grant, depending on the Company’s three-year growth in DBVPS percentile rank as compared to the Company’s peers, as determined as of the time of vesting.
|
5.
|
Form of Awards
. Awards may be made in the form of restricted stock or restricted stock units, at the Committee’s discretion.
|
6.
|
Clawback.
Any equity compensation award hereunder is subject to recoupment, at the Committee’s discretion, under the Company’s executive compensation recoupment, or “clawback”, policy.
|
7.
|
Interpretation of Program
. The Committee shall have the authority to administer the Program, to conclusively make all determinations under the Program and to interpret the Program, subject to and in accordance with the Company’s 2017 Long-Term Equity Compensation Plan. Any such determinations or interpretations made by the Committee shall be binding on all persons.
|
8.
|
Governing Law
. The Program shall be governed by the laws of Bermuda.
|
9.
|
No Guarantee of Continued Employment
. Nothing in the Program shall interfere with or limit in any way the right of the Company or any of its subsidiaries to terminate any
|
10.
|
Successors
. All obligations of the Company under the Program shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or otherwise.
|
11.
|
Amendment and Termination
. This Program may be amended or terminated at any time by the Committee.
|
Performance Level
|
DBVPS Percentile
|
Performance Multiplier
|
Maximum
|
85
th
or above
|
200%
|
Target
|
55
th
|
100%
|
Threshold
|
25
th
|
25%
|
Below Threshold
|
<25
th
|
0%
|
1)
|
Annual retainer of $200,000 for all non-employee directors serving on the Board as of January 1, 2018. Members of the Board who become Participants after January 1 of any year shall be entitled to a pro-rated amount based on months of service in that year, with eligibility for the full annual retainer commencing as of January 1 of the subsequent year.
|
2)
|
Committee members receive the following annual retainer payment:
|
Committee Member
|
|
Annual Retainer
|
|
Corporate Governance and Nominating Committee
|
|
$
|
7,500
|
Finance Committee
|
|
$
|
10,000
|
Compensation Committee
|
|
$
|
10,000
|
Risk Committee
|
|
$
|
10,000
|
Audit Committee
|
|
$
|
15,000
|
Committee Chair
|
|
Annual Retainer
|
|
|
Corporate Governance and Nominating Committee
|
|
$
|
7,500
|
|
Finance Committee
|
|
$
|
10,000
|
|
Compensation Committee
|
|
$
|
15,000
|
|
Risk Committee
|
|
$
|
20,000
|
|
Audit Committee
|
|
$
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year ended December 31,
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Earnings: income (loss) before income taxes
|
$
|
(368,109
|
)
|
|
$
|
521,802
|
|
|
$
|
644,659
|
|
|
$
|
830,472
|
|
|
$
|
734,467
|
|
|
|
Add: fixed charges
|
61,686
|
|
|
57,641
|
|
|
58,702
|
|
|
80,809
|
|
|
67,944
|
|
|
|||||
|
Add: amounts attributable from noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
6,181
|
|
|
—
|
|
|
|||||
|
Earnings (loss) for computation
|
$
|
(306,423
|
)
|
|
$
|
579,443
|
|
|
$
|
703,361
|
|
|
$
|
917,462
|
|
|
$
|
802,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Assumed interest component of rent expense
(1)
|
$
|
8,756
|
|
|
$
|
7,673
|
|
|
$
|
8,793
|
|
|
$
|
8,327
|
|
|
$
|
8,866
|
|
|
|
Interest expense
|
52,930
|
|
|
49,968
|
|
|
49,909
|
|
|
72,482
|
|
|
59,078
|
|
|
|||||
|
Total fixed charges
|
$
|
61,686
|
|
|
$
|
57,641
|
|
|
$
|
58,702
|
|
|
$
|
80,809
|
|
|
$
|
67,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Ratio of earnings to fixed charges
(3)
|
(5.0
|
)
|
|
10.1
|
|
|
12.0
|
|
|
11.4
|
|
|
11.8
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Preferred share dividends
(2)
|
$
|
46,810
|
|
|
$
|
46,597
|
|
|
$
|
40,069
|
|
|
$
|
40,088
|
|
|
$
|
40,474
|
|
|
|
Total fixed charges and preferred share dividends
|
$
|
108,496
|
|
|
$
|
104,238
|
|
|
$
|
98,771
|
|
|
$
|
120,897
|
|
|
$
|
108,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Ratio of earnings to fixed charges and preferred
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
share dividends
(3)
|
(2.8
|
)
|
|
5.6
|
|
|
7.1
|
|
|
7.6
|
|
|
7.4
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
33.3%
represents a reasonable approximation of the interest factor.
|
(2)
|
Dividends have been tax effected at a 0% rate because it is presumed they will be funded from a Bermuda entity.
|
(3)
|
For the year ended December 31, 2017, AXIS Capital required
$368,109
of additional earnings to achieve a 1:1 ratio of earnings to fixed charges and
$414,919
of additional earnings to achieve a 1:1 ratio of earnings to fixed charges and preferred share dividends.
|
|
|
|
Subsidiaries
|
|
Jurisdiction of Incorporation
|
AXIS Specialty Holdings Bermuda Limited
|
Bermuda
|
|
|
|
|
AXIS Specialty Limited
|
Bermuda
|
|
|
|
|
AXIS Specialty Investments Limited
|
Bermuda
|
|
|
|
|
AXIS Specialty Investments II Limited
|
Bermuda
|
|
|
|
|
AXIS Specialty Markets Limited
|
Bermuda
|
|
|
|
|
AXIS Specialty Markets II Limited
|
Bermuda
|
|
|
|
|
AXIS Ventures Limited
|
Bermuda
|
|
|
|
|
AXIS Ventures Reinsurance Limited
|
Bermuda
|
|
|
|
|
AXIS Reinsurance Managers Limited
|
Bermuda
|
|
|
|
|
Novae Bermuda Holdings Limited
|
Bermuda
|
|
|
|
|
Novae Bermuda Underwriting Limited
|
Bermuda
|
|
|
|
|
Glen Rock Holdings Ltd.
|
Bermuda
|
|
|
|
|
Glen Rock Re Ltd.
|
Bermuda
|
|
|
|
|
AXIS Re SE
|
Ireland
|
|
|
|
|
AXIS Specialty Europe SE
|
Ireland
|
|
|
|
|
AXIS Specialty Global Holdings Limited
|
Ireland
|
|
|
|
|
AXIS Specialty Holdings Ireland Limited
|
Ireland
|
|
|
|
|
Ternian Insurance Group LLC
|
Arizona
|
|
|
|
|
AXIS Specialty Insurance Company
|
Connecticut
|
|
|
|
|
AXIS Group Services, Inc.
|
Delaware
|
|
|
|
|
AXIS Specialty Finance LLC
|
Delaware
|
|
|
|
|
AXIS Specialty U.S. Holdings, Inc.
|
Delaware
|
|
|
|
|
AXIS Specialty U.S. Services, Inc.
|
Delaware
|
|
|
|
|
AXIS Specialty Underwriters, Inc.
|
Delaware
|
|
|
|
AXIS Insurance Company
|
Illinois
|
|
|
|
|
AXIS Surplus Insurance Company
|
Illinois
|
|
|
|
|
AXIS Reinsurance Company
|
New York
|
|
|
|
|
AXIS Managing Agency Ltd.
|
United Kingdom
|
|
|
|
|
AXIS Specialty Finance PLC
|
United Kingdom
|
|
|
|
|
AXIS Specialty UK Holdings Limited
|
United Kingdom
|
|
|
|
|
AXIS Corporate Capital UK Limited
|
United Kingdom
|
|
|
|
|
Novae Group Limited
|
United Kingdom
|
|
|
|
|
Novae Management Limited
|
United Kingdom
|
|
|
|
|
Novae Holdings Limited
|
United Kingdom
|
|
|
|
|
Novae Corporate Underwriting Limited
|
United Kingdom
|
|
|
|
|
Novae Syndicates Limited
|
United Kingdom
|
|
|
|
|
Novae Underwriting Limited
|
United Kingdom
|
|
|
|
|
Contessa Limited
|
United Kingdom
|
|
|
|
|
Compagnie Belge d'Assurances Aviation NV/SA
|
Belgium
|
|
|
|
|
AXIS Re SE Escritório de Representação No Brasil Ltda.
|
Brazil
|
|
|
|
|
AXIS Specialty Canada Services, ULC
|
British Columbia
|
|
|
|
|
AXIS Reinsurance (DIFC) Limited
|
Dubai
|
|
|
|
|
Aviabel RE S.A.
|
Luxembourg
|
|
/s/ Deloitte Ltd.
|
Hamilton, Bermuda
|
February 28, 2018
|
1.
|
I have reviewed this Annual Report on Form 10-K of AXIS Capital Holdings Limited for the year ended
December 31, 2017
;
|
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.
|
|
|
/s/ ALBERT BENCHIMOL
|
Date:
|
February 28, 2018
|
Albert Benchimol
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of AXIS Capital Holdings Limited for the year ended
December 31, 2017
;
|
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.
|
|
|
/s/ PETER VOGT
|
Date:
|
February 28, 2018
|
Peter Vogt
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 28, 2018
|
/s/ ALBERT BENCHIMOL
|
|
|
Albert Benchimol
|
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
February 28, 2018
|
/s/ PETER VOGT
|
|
|
Peter Vogt
|
|
|
Chief Financial Officer
|