|
|
|
|
|
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
|
¨
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,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
$
|
3,797,592
|
|
|
$
|
2,814,918
|
|
|
$
|
2,432,475
|
|
|
|
Reinsurance
|
3,112,473
|
|
|
2,741,355
|
|
|
2,537,733
|
|
|
|||
|
Total
|
$
|
6,910,065
|
|
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
|
|
|
|
|
|
|
|
•
|
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 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, and 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 cover 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 cover 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, not-for-profit organizations and other professional service providers. 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.
|
•
|
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,
|
2018
|
|
2017
|
|
2016
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Marsh & McLennan Companies Inc.
|
$
|
380,238
|
|
|
10
|
%
|
|
$
|
330,057
|
|
|
12
|
%
|
|
$
|
362,151
|
|
|
15
|
%
|
|
|
Aon plc
|
405,281
|
|
|
11
|
%
|
|
374,940
|
|
|
13
|
%
|
|
368,876
|
|
|
15
|
%
|
|
|||
|
Willis Tower Watson PLC
|
228,643
|
|
|
6
|
%
|
|
246,081
|
|
|
9
|
%
|
|
235,834
|
|
|
10
|
%
|
|
|||
|
Other brokers
[a]
|
1,838,804
|
|
|
48
|
%
|
|
1,387,363
|
|
|
49
|
%
|
|
1,147,895
|
|
|
47
|
%
|
|
|||
|
Managing general agencies and underwriters
[a]
|
944,626
|
|
|
25
|
%
|
|
476,477
|
|
|
17
|
%
|
|
317,719
|
|
|
13
|
%
|
|
|||
|
Total
|
$
|
3,797,592
|
|
|
100
|
%
|
|
$
|
2,814,918
|
|
|
100
|
%
|
|
$
|
2,432,475
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Catastrophe:
provides protection for most catastrophic losses that are covered in the underlying insurance policies written by our cedants. The underlying policies principally cover property-related exposures but other exposures including workers compensation and personal accident are also covered. The principal perils covered by policies in this portfolio include hurricane and windstorm, earthquake, flood, tornado, hail and fire. In some instances, terrorism may be a covered peril or the only peril. This business is written on a proportional and excess of loss basis.
|
•
|
Property:
provides protection for property damage and related losses resulting from natural and man-made perils that are covered in the underlying personal and commercial lines insurance policies written by our cedants. The predominant exposure is property damage but other risks, including business interruption and other non-property losses, may also be covered when arising from a covered peril. The most significant perils covered by policies in this portfolio include windstorm, tornado and earthquake, but other perils such as freeze, riots, flood, industrial explosions, fire, hail and a number of other loss events are also included. This business is written on a proportional and excess of loss basis.
|
•
|
Professional Lines:
provides
cover for 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. This business is written on a proportional and excess of loss basis.
|
•
|
Credit and Surety:
provides reinsurance of trade credit insurance products and includes 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. Credit insurance cover is provided to mortgage guaranty insurers and government sponsored entities. Cover 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 is 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. Traditional proportional and non-proportional reinsurance as well as structured solutions are offered.
|
•
|
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 covers 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. This business is written on a proportional and aggregate stop loss reinsurance basis.
|
•
|
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 cover 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.
|
•
|
Accident and Health:
includes specialty health, accidental death, travel, life and disability reinsurance products which are offered on a proportional and catastrophic or per life excess of events loss basis.
|
•
|
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,
|
2018
|
|
2017
|
|
2016
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Marsh & McLennan Companies Inc.
|
$
|
779,375
|
|
|
25
|
%
|
|
$
|
783,286
|
|
|
29
|
%
|
|
$
|
704,319
|
|
|
28
|
%
|
|
|
Aon plc
|
765,779
|
|
|
25
|
%
|
|
583,199
|
|
|
21
|
%
|
|
590,480
|
|
|
23
|
%
|
|
|||
|
Willis Tower Watson PLC
|
361,983
|
|
|
12
|
%
|
|
408,188
|
|
|
15
|
%
|
|
356,241
|
|
|
14
|
%
|
|
|||
|
Other brokers
|
864,601
|
|
|
28
|
%
|
|
690,337
|
|
|
25
|
%
|
|
679,116
|
|
|
27
|
%
|
|
|||
|
Direct
|
178,568
|
|
|
6
|
%
|
|
176,600
|
|
|
6
|
%
|
|
135,604
|
|
|
5
|
%
|
|
|||
|
Managing general agencies and underwriters
|
162,167
|
|
|
5
|
%
|
|
99,744
|
|
|
4
|
%
|
|
71,973
|
|
|
3
|
%
|
|
|||
|
Total
|
$
|
3,112,473
|
|
|
100
|
%
|
|
$
|
2,741,355
|
|
|
100
|
%
|
|
$
|
2,537,733
|
|
|
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 our counterparties, as needed.
|
•
|
The Cyber, Property, and Credit Product Boards, which oversee the exposure management frameworks and views of risk for our cyber, property, and credit underwriting risks. Each Product Board contributes to portfolio management, setting underwriting guidelines and risk appetite, as well as encouraging general knowledge sharing.
|
•
|
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.
|
•
|
The Capital Management Committee oversees the integrity and effectiveness of the Company’s Capital Management Policy, including the capital management policies of the Company’s legal entities and branches, ensuring the Company’s effective implementation of the annual Capital Management Plan, which is approved by the Finance Committee of the Board, and overseeing the availability of capital within the Group.
|
•
|
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). This includes our Northshore Re catastrophe bond program, which provides a combined $550 million of limit across the Group. Refer to Item 7
'Management’s Discussion and Analysis of Financial Condition and Results of Operations' – Underwriting Results – Consolidated – Underwriting Expenses'
for additional information on our Northshore Re catastrophe bond program.
|
•
|
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)
|
2019
|
|
2018
|
|
||||||||||||||||||||||
|
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
|
$
|
383
|
|
|
$
|
441
|
|
|
$
|
620
|
|
|
$
|
350
|
|
|
$
|
430
|
|
|
$
|
848
|
|
|
|
Northeast
|
|
U.S. Hurricane
|
52
|
|
|
156
|
|
|
290
|
|
|
58
|
|
|
164
|
|
|
297
|
|
|
||||||
|
Mid-Atlantic
|
|
U.S. Hurricane
|
133
|
|
|
315
|
|
|
449
|
|
|
121
|
|
|
273
|
|
|
401
|
|
|
||||||
|
Gulf of Mexico
|
|
U.S. Hurricane
|
258
|
|
|
316
|
|
|
394
|
|
|
237
|
|
|
302
|
|
|
400
|
|
|
||||||
|
California
|
|
Earthquake
|
253
|
|
|
369
|
|
|
468
|
|
|
241
|
|
|
328
|
|
|
527
|
|
|
||||||
|
Europe
|
|
Windstorm
|
231
|
|
|
301
|
|
|
376
|
|
|
232
|
|
|
327
|
|
|
467
|
|
|
||||||
|
Japan
|
|
Earthquake
|
147
|
|
|
227
|
|
|
359
|
|
|
168
|
|
|
232
|
|
|
336
|
|
|
||||||
|
Japan
|
|
Windstorm
|
60
|
|
|
109
|
|
|
158
|
|
|
60
|
|
|
99
|
|
|
140
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
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
2018
, 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. Refer to Item 8, Note 20 to the Consolidated Financial Statements,
'Statutory Financial Information'
for further details.
|
•
|
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. Refer to Item 7
'Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Liquidity and Capital Resources
' for further information on our financial strength.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
$430M in aggregate, primarily related to Hurricanes Michael and Florence, the California Wildfires, and Typhoon Jebi in 2018;
|
•
|
$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;
|
•
|
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
|
Period
|
Total number
of shares
purchased
(a) (b)
|
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, 2018
|
17
|
|
|
$57.45
|
|
—
|
|
—
|
|
November 1-30, 2018
|
4
|
|
|
$52.54
|
|
—
|
|
—
|
|
December 1-31, 2018
|
3
|
|
|
$54.93
|
|
—
|
|
—
|
|
Total
|
24
|
|
|
—
|
|
—
|
|
(a)
|
In thousands.
|
(b)
|
Shares are repurchased from employees to satisfy withholding tax liabilities that arise upon the vesting of restricted stock units.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
At and for the year ended December 31,
|
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
||||||||||
|
|
(in thousands, except per share amounts)
|
|
||||||||||||||||||
|
Selected Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross premiums written
|
$
|
6,910,065
|
|
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
$
|
4,603,730
|
|
|
$
|
4,711,519
|
|
|
|
Net premiums earned
|
4,791,495
|
|
|
4,148,760
|
|
|
3,705,625
|
|
|
3,686,417
|
|
|
3,870,999
|
|
|
|||||
|
Net investment income
|
438,507
|
|
|
400,805
|
|
|
353,335
|
|
|
305,336
|
|
|
342,766
|
|
|
|||||
|
Net investment gains (losses)
|
(150,218
|
)
|
|
28,226
|
|
|
(60,525
|
)
|
|
(138,491
|
)
|
|
132,108
|
|
|
|||||
|
Net losses and loss expenses
|
3,190,287
|
|
|
3,287,772
|
|
|
2,204,197
|
|
|
2,176,199
|
|
|
2,186,722
|
|
|
|||||
|
Acquisition costs
|
968,835
|
|
|
823,591
|
|
|
746,876
|
|
|
718,112
|
|
|
737,197
|
|
|
|||||
|
General and administrative expenses
|
627,389
|
|
|
579,428
|
|
|
602,717
|
|
|
596,821
|
|
|
621,876
|
|
|
|||||
|
Interest expense and financing costs
|
67,432
|
|
|
54,811
|
|
|
51,360
|
|
|
50,963
|
|
|
74,695
|
|
|
|||||
|
Preferred share dividends
|
42,625
|
|
|
46,810
|
|
|
46,597
|
|
|
40,069
|
|
|
40,088
|
|
|
|||||
|
Net income (loss) available (attributable) to common shareholders
(1) (2) (3) (4) (5)
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
$
|
601,562
|
|
|
$
|
770,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Earnings (loss) per common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
|
$
|
6.10
|
|
|
$
|
7.38
|
|
|
|
Earnings (loss) per diluted common share
|
—
|
|
|
(4.94
|
)
|
|
5.08
|
|
|
6.04
|
|
|
7.29
|
|
|
|||||
|
Cash dividends declared per common share
|
$
|
1.57
|
|
|
$
|
1.53
|
|
|
$
|
1.43
|
|
|
$
|
1.22
|
|
|
$
|
1.10
|
|
|
|
Weighted average common shares outstanding
|
83,501
|
|
|
84,108
|
|
|
90,772
|
|
|
98,609
|
|
|
104,368
|
|
|
|||||
|
Weighted average diluted common shares outstanding
|
84,007
|
|
|
84,108
|
|
|
91,547
|
|
|
99,629
|
|
|
105,713
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Operating Ratios:
(6)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net loss and loss expense ratio
|
66.6
|
%
|
|
79.2
|
%
|
|
59.5
|
%
|
|
59.0
|
%
|
|
56.5
|
%
|
|
|||||
|
Acquisition cost ratio
|
20.2
|
%
|
|
19.9
|
%
|
|
20.2
|
%
|
|
19.5
|
%
|
|
19.0
|
%
|
|
|||||
|
General and administrative expense ratio
|
13.1
|
%
|
|
14.0
|
%
|
|
16.2
|
%
|
|
16.2
|
%
|
|
16.1
|
%
|
|
|||||
|
Combined ratio
|
99.9
|
%
|
|
113.1
|
%
|
|
95.9
|
%
|
|
94.7
|
%
|
|
91.6
|
%
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
$
|
13,155,560
|
|
|
$
|
14,784,210
|
|
|
$
|
13,459,507
|
|
|
$
|
13,386,118
|
|
|
$
|
13,778,911
|
|
|
|
Cash and cash equivalents
|
1,830,020
|
|
|
1,363,786
|
|
|
1,241,507
|
|
|
1,174,751
|
|
|
1,209,695
|
|
|
|||||
|
Reinsurance recoverable on unpaid and paid losses
|
3,781,902
|
|
|
3,338,840
|
|
|
2,334,922
|
|
|
2,096,104
|
|
|
1,926,145
|
|
|
|||||
|
Total assets
|
24,132,566
|
|
|
24,760,177
|
|
|
20,813,691
|
|
|
19,981,891
|
|
|
19,955,736
|
|
|
|||||
|
Reserve for losses and loss expenses
|
12,280,769
|
|
|
12,997,553
|
|
|
9,697,827
|
|
|
9,646,285
|
|
|
9,596,797
|
|
|
|||||
|
Unearned premiums
|
3,635,758
|
|
|
3,641,399
|
|
|
2,969,498
|
|
|
2,760,889
|
|
|
2,735,376
|
|
|
|||||
|
Senior notes and notes payable
|
1,341,961
|
|
|
1,376,529
|
|
|
992,950
|
|
|
991,825
|
|
|
990,790
|
|
|
|||||
|
Total shareholders’ equity attributable to AXIS Capital
|
$
|
5,030,071
|
|
|
$
|
5,341,264
|
|
|
$
|
6,272,370
|
|
|
$
|
5,866,882
|
|
|
$
|
5,821,121
|
|
|
|
Book value per common share
(7)(8)
|
$
|
50.91
|
|
|
$
|
54.91
|
|
|
$
|
59.54
|
|
|
$
|
55.32
|
|
|
$
|
52.23
|
|
|
|
Book value per diluted common share
(7)(8)
|
$
|
49.93
|
|
|
$
|
53.88
|
|
|
$
|
58.27
|
|
|
$
|
54.08
|
|
|
$
|
50.63
|
|
|
|
Common shares outstanding
(8)
|
83,586
|
|
|
83,161
|
|
|
86,441
|
|
|
94,708
|
|
|
99,426
|
|
|
|||||
|
Diluted common shares outstanding
(8)
|
85,229
|
|
|
84,745
|
|
|
88,317
|
|
|
96,883
|
|
|
102,577
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During 2018 and 2017, the Company recognized transaction and reorganization expenses of
$67 million
and
$27 million
, respectively, related to its transformation program which was launched in 2017. This program encompasses the integration of Novae Group plc ("Novae") which commenced in the fourth quarter of 2017, the realignment of our accident and health business, together with other initiatives designed to increase our efficiency and enhance our profitability while delivering a customer-centric operating model. During 2015, the Company implemented a number of profitability enhancement initiatives which resulted in recognition of transaction and reorganization expenses of
$46 million
and general and administrative expenses of
$5 million
.
|
(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 18 to the Consolidated Financial Statements
'Income Taxes'
for further details.
|
(3)
|
During 2018 and 2017, the Company recognized amortization of value of business acquired ("VOBA") of
$171 million
and
$50 million
, respectively, related to the acquisition of Novae. Refer to Item 8, Note 3 and Note 5 to 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 "Consolidation (Topic 810)
Amendments to the Consolidation Analysis
", issued by the Financial Accounting Standards Board. The adoption of this accounting guidance resulted in the Company concluding that it was no longer required to consolidate the results of operations and the financial position of Ventures Re. The Company adopted this accounting guidance using the modified retrospective approach and ceased to consolidate Ventures Re effective January 1, 2015. For the year ended December 31, 2014, net income available to common shareholders included 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 book value per diluted common share are based on total common shareholders’ equity divided by common shares and diluted common share 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
to the Consolidated Financial Statements
'Shareholders' Equity'
for further details.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Net income available to common shareholders of
$0.4 million
|
•
|
Operating income
(1)
of
$161 million
, or
$1.92
per diluted common share
(1)
|
•
|
Gross premiums written of
$6.9 billion
|
•
|
Net premiums written of
$4.7 billion
|
•
|
Net premiums earned of
$4.8 billion
|
•
|
Estimated pre-tax catastrophe and weather-related losses, net of reinstatement premiums, of
$430 million
(insurance:
$204 million
and reinsurance:
$226 million
), or
9.0
points on current accident year loss ratio related to the California Wildfires, Hurricanes Michael and Florence, Typhoon Jebi as well as U.S. and European weather-related events
|
•
|
Net favorable prior year reserve development of
$200 million
|
•
|
Underwriting income
(2)
of
$124 million
and combined ratio of
99.9%
|
•
|
Net investment income of
$439 million
|
•
|
Net investment losses of
$150 million
|
•
|
Amortization of value of business acquired ("VOBA") of
$172 million
|
•
|
Transaction and reorganization expenses of
$67 million
|
•
|
Foreign exchange gains of
$29 million
|
•
|
Total cash and investments of
$15.0 billion
; fixed maturities, cash and short-term securities comprise
89%
of total cash and investments and have an average credit rating of
AA-
|
•
|
Total assets of
$24.1 billion
|
•
|
Reserve for losses and loss expenses of
$12.3 billion
and reinsurance recoverable on unpaid and paid losses of
$3.8 billion
|
•
|
Total debt of
$1.3 billion
and a debt to total capital ratio of
21.1%
|
•
|
Total common shares repurchased were
0.2 million
for
$10 million
|
•
|
Common shareholders’ equity of
$4.3 billion
; diluted book value per common share of
$49.93
|
(1)
|
Operating income (loss) and 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 (attributable) to common shareholders and earnings per diluted common share, respectively) are provided in
'Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operations'
.
|
(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
'Management's Discussion and Analysis of Financial Condition – Executive Summary – Results of Operations
.
'
|
•
|
increasing our relevance in a select number of attractive specialty insurance and global reinsurance markets and continuing the implementation of a more focused distribution strategy;
|
•
|
continuing to grow a leadership position in business lines with strong growth potential including U.S. excess and surplus lines, and North America professional lines;
|
•
|
increasing our presence at Lloyd's of London ("Lloyd's") achieved through our acquisition of Novae Group plc ("Novae") in 2017 which provides us with access to Lloyd's worldwide licenses and an extensive distribution network;
|
•
|
continuing to re-balance our portfolio towards less volatile lines of business that carry attractive rates;
|
•
|
launching a new phase of our transformation efforts, an enterprise-wide program to enhance all of our functions and position us to lead in a transforming industry;
|
•
|
continuing to improve in the effectiveness and efficiency of our operating platforms and processes;
|
•
|
increasing investment in data and analytics; and
|
•
|
broadening risk-funding sources and the development of vehicles that utilize third-party capital.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Underwriting revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net premiums earned
|
$
|
4,791,495
|
|
|
15%
|
|
$
|
4,148,760
|
|
|
12%
|
|
$
|
3,705,625
|
|
|
|
Other insurance related income (losses)
|
10,622
|
|
|
nm
|
|
(1,240
|
)
|
|
nm
|
|
7,222
|
|
|
|||
|
Underwriting expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net losses and loss expenses
|
(3,190,287
|
)
|
|
(3%)
|
|
(3,287,772
|
)
|
|
49%
|
|
(2,204,197
|
)
|
|
|||
|
Acquisition costs
|
(968,835
|
)
|
|
18%
|
|
(823,591
|
)
|
|
10%
|
|
(746,876
|
)
|
|
|||
|
Underwriting general and administrative expenses
(1)
|
(519,168
|
)
|
|
16%
|
|
(449,483
|
)
|
|
(7%)
|
|
(482,701
|
)
|
|
|||
|
Underwriting Income (Loss)
|
$
|
123,827
|
|
|
|
|
$
|
(413,326
|
)
|
|
|
|
$
|
279,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
(1)
|
(108,221
|
)
|
|
(17%)
|
|
(129,945
|
)
|
|
8%
|
|
(120,016
|
)
|
|
|||
|
Net investment income
|
438,507
|
|
|
9%
|
|
400,805
|
|
|
13%
|
|
353,335
|
|
|
|||
|
Net investment gains (losses)
|
(150,218
|
)
|
|
nm
|
|
28,226
|
|
|
nm
|
|
(60,525
|
)
|
|
|||
|
Other (expenses) revenues, net
|
(38,267
|
)
|
|
(80%)
|
|
(189,548
|
)
|
|
nm
|
|
69,935
|
|
|
|||
|
Transaction and reorganization expenses
|
(66,940
|
)
|
|
nm
|
|
(26,718
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Amortization of value of business acquired
|
(172,332
|
)
|
|
nm
|
|
(50,104
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Amortization of intangible assets
|
(13,814
|
)
|
|
nm
|
|
(2,543
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Bargain purchase gain
|
—
|
|
|
nm
|
|
15,044
|
|
|
nm
|
|
—
|
|
|
|||
|
Income (loss) before income taxes and interest in income (loss) of equity method investments
|
12,542
|
|
|
|
|
(368,109
|
)
|
|
|
|
521,802
|
|
|
|||
|
Income tax (expense) benefit
|
29,486
|
|
|
nm
|
|
7,542
|
|
|
nm
|
|
(6,340
|
)
|
|
|||
|
Interest in income (loss) of equity method investments
|
993
|
|
|
nm
|
|
(8,402
|
)
|
|
nm
|
|
(2,094
|
)
|
|
|||
|
Net income (loss)
|
43,021
|
|
|
|
|
(368,969
|
)
|
|
|
|
513,368
|
|
|
|||
|
Preferred share dividends
|
(42,625
|
)
|
|
(9%)
|
|
(46,810
|
)
|
|
—%
|
|
(46,597
|
)
|
|
|||
|
Loss on repurchase of preferred shares
|
—
|
|
|
nm
|
|
—
|
|
|
nm
|
|
(1,309
|
)
|
|
|||
|
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
nm
|
|
$
|
(415,779
|
)
|
|
nm
|
|
$
|
465,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net investment (gains) losses, net of tax
(2)
|
138,576
|
|
|
nm
|
|
(26,204
|
)
|
|
nm
|
|
62,355
|
|
|
|||
|
Foreign exchange losses (gains), net of tax
(3)
|
(33,496
|
)
|
|
nm
|
|
126,960
|
|
|
nm
|
|
(119,181
|
)
|
|
|||
|
Transaction and reorganization expenses, net of tax
(4)
|
55,904
|
|
|
nm
|
|
23,879
|
|
|
nm
|
|
—
|
|
|
|||
|
Revaluation of net deferred tax
(5)
|
—
|
|
|
nm
|
|
41,629
|
|
|
nm
|
|
—
|
|
|
|||
|
Bargain purchase gain
(5)
|
—
|
|
|
nm
|
|
(15,044
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Loss on repurchase of preferred shares
(5)
|
—
|
|
|
nm
|
|
—
|
|
|
nm
|
|
1,309
|
|
|
|||
|
Operating income (loss)
(6)
|
$
|
161,380
|
|
|
nm
|
|
$
|
(264,559
|
)
|
|
nm
|
|
$
|
409,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 total general and administrative expenses, the most comparable GAAP measure, also included corporate expenses of
$108,221
,
$129,945
and
$120,016
for the years ended
December 31, 2018
,
2017
and 2016, respectively. Refer to
'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other (Expenses) Revenues, Net'
for additional information related to the corporate expenses. Refer to
'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'
for additional information.
|
(2)
|
Tax cost (benefit) of
($11,642)
,
$2,022
and
$1,830
for the years ended
December 31, 2018
,
2017
and 2016, 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
($4,331)
,
($7,777)
and
$2,114
for the years ended
December 31, 2018
,
2017
and 2016, 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 cost (benefit) of
($11,036)
,
($2,839)
and $nil for the
year ended
December 31, 2018
,
2017
and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
|
(5)
|
Tax impact is $nil.
|
(6)
|
Operating income (loss) is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliations to the most comparable GAAP financial measures (net income (loss) available (attributable) to common shareholders) is provided in the table above, and a discussion of the rationale for the presentation of this item is included in '
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'
.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
|
Operating income (loss)
|
$
|
161,380
|
|
|
$
|
(264,559
|
)
|
|
$
|
409,945
|
|
|
|
Weighted average diluted common shares outstanding
(1)
|
84,007
|
|
|
84,108
|
|
|
91,547
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Earnings (loss) per diluted common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
|
|
Operating income (loss) per diluted common share
(2)
|
$
|
1.92
|
|
|
$
|
(3.15
|
)
|
|
$
|
4.48
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Average common shareholders’ equity
|
$
|
4,410,668
|
|
|
$
|
4,856,280
|
|
|
$
|
5,192,668
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Return on average common equity
(3)
|
—
|
%
|
|
(8.6
|
%)
|
|
9.0
|
%
|
|
|||
|
Operating return on average common equity
(4)
|
3.7
|
%
|
|
(5.4
|
%)
|
|
7.9
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
Refer to Item 8, Note 13 to the Consolidated Financial Statements
'Earnings Per Common Share'
for further details on the dilution calculation.
|
(2)
|
Operating income (loss) per diluted common share is a non-GAAP financial measure as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measures (earnings per diluted common share) is provided in the table above, and a discussion of the rationale for the presentation of this item is included in
'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'.
|
(3)
|
Return on average common equity ("ROACE") is calculated by dividing net income (loss) available (attributable) to common shareholders 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.
|
(4)
|
Operating ROACE, a non-GAAP measure as defined in Item 10(e) of SEC Regulation S-K, is calculated by dividing operating income (loss) for the year by the average common shareholders' equity. The reconciliation to ROACE, the most comparable GAAP measure, is presented in the table above. Refer to '
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'
for additional information.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
nm
|
|
$
|
(415,779
|
)
|
|
nm
|
|
$
|
465,462
|
|
|
|
Net investment (gains) losses, net of tax
|
138,576
|
|
|
nm
|
|
(26,204
|
)
|
|
nm
|
|
62,355
|
|
|
|||
|
Foreign exchange losses (gains), net of tax
|
(33,496
|
)
|
|
nm
|
|
126,960
|
|
|
nm
|
|
(119,181
|
)
|
|
|||
|
Transaction and reorganization expenses, net of tax
|
55,904
|
|
|
nm
|
|
23,879
|
|
|
nm
|
|
—
|
|
|
|||
|
Revaluation of net deferred tax
|
—
|
|
|
nm
|
|
41,629
|
|
|
nm
|
|
—
|
|
|
|||
|
Bargain purchase gain
|
—
|
|
|
nm
|
|
(15,044
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Loss on repurchase of preferred shares
|
—
|
|
|
nm
|
|
—
|
|
|
nm
|
|
1,309
|
|
|
|||
|
Operating income (loss)
|
$
|
161,380
|
|
|
nm
|
|
$
|
(264,559
|
)
|
|
nm
|
|
$
|
409,945
|
|
|
|
Amortization of VOBA and intangible assets, net of tax
(2)
|
149,470
|
|
|
nm
|
|
42,644
|
|
|
nm
|
|
—
|
|
|
|||
|
Amortization of acquisition costs, net of tax
(3)
|
(101,628
|
)
|
|
nm
|
|
(26,443
|
)
|
|
nm
|
|
—
|
|
|
|||
|
Ex-PGAAP operating income (loss)
(1)
|
$
|
209,222
|
|
|
|
|
$
|
(248,358
|
)
|
|
|
|
$
|
409,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings (loss) per diluted common share
|
$
|
—
|
|
|
|
|
$
|
(4.94
|
)
|
|
|
|
$
|
5.08
|
|
|
|
Net investment (gains) losses, net of tax
|
1.65
|
|
|
|
|
(0.31
|
)
|
|
|
|
0.68
|
|
|
|||
|
Foreign exchange losses (gains), net of tax
|
(0.40
|
)
|
|
|
|
1.51
|
|
|
|
|
(1.29
|
)
|
|
|||
|
Transaction and reorganization expenses, net of tax
|
0.67
|
|
|
|
|
0.28
|
|
|
|
|
—
|
|
|
|||
|
Revaluation of net deferred tax asset
|
—
|
|
|
|
|
0.49
|
|
|
|
|
—
|
|
|
|||
|
Bargain purchase gain
|
—
|
|
|
|
|
(0.18
|
)
|
|
|
|
—
|
|
|
|||
|
Loss on repurchase of preferred shares
|
—
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|||
|
Operating income (loss) per diluted common share
|
1.92
|
|
|
|
|
(3.15
|
)
|
|
|
|
4.48
|
|
|
|||
|
Amortization of VOBA and intangible assets, net of tax
(2)
|
1.78
|
|
|
|
|
0.51
|
|
|
|
|
—
|
|
|
|||
|
Amortization of acquisition cost, net of tax
(3)
|
(1.21
|
)
|
|
|
|
(0.31
|
)
|
|
|
|
—
|
|
|
|||
|
Ex-PGAAP operating income (loss) per diluted common share
(1)
|
$
|
2.49
|
|
|
|
|
$
|
(2.95
|
)
|
|
|
|
$
|
4.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average diluted common shares outstanding
|
84,007
|
|
|
|
|
84,108
|
|
|
|
|
91,547
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Average common shareholders' equity
|
$
|
4,410,668
|
|
|
|
|
$
|
4,856,280
|
|
|
|
|
$
|
5,192,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Return on average common equity
|
—
|
%
|
|
|
|
(8.6
|
)%
|
|
|
|
9.0
|
%
|
|
|||
|
Operating return on average common equity
|
3.7
|
%
|
|
|
|
(5.4
|
)%
|
|
|
|
7.9
|
%
|
|
|||
|
Ex-PGAAP operating return on average common equity
(1)
|
4.7
|
%
|
|
|
|
(5.1
|
)%
|
|
|
|
n/a
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Ex-PGAAP operating income (loss), ex-PGAAP operating income (loss) per diluted common share and ex-PGAAP operating return on average common equity are non-GAAP financial measures as defined in SEC Regulation S-K. Ex-PGAAP operating ROACE, is calculated by dividing ex-PGAAP operating income (loss) for the year by the average common shareholders' equity. The reconciliation of ex-PGAAP operating income (loss), ex-PGAAP operating income (loss) per diluted common share and ex-PGAAP operating return on average common equity to the most comparable GAAP financial measures, (net income (loss) available (attributable) to common shareholders, earnings (loss) per diluted common share, and ROACE, respectively) are provided in the table above, and a discussion of the rationale for the presentation of these items is included in
'Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures'.
|
(2)
|
Tax cost (benefit) of
$(35,061)
,
$(10,003)
and $
nil
for the years ended
December 31, 2018
,
2017
and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
|
(3)
|
Tax cost (benefit) of
$23,839
,
$6,203
and $
nil
for the years ended
December 31, 2018
,
2017
and 2016, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended and at December 31,
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
ROACE
|
—
|
%
|
|
(8.6
|
%)
|
|
9.0
|
%
|
|
|||
|
Operating ROACE
|
3.7
|
%
|
|
(5.4
|
%)
|
|
7.9
|
%
|
|
|||
|
Ex-PGAAP operating ROACE
|
4.7
|
%
|
|
(5.1
|
%)
|
|
n/a
|
|
|
|||
|
Book value per diluted common share
(1)
|
$
|
49.93
|
|
|
$
|
53.88
|
|
|
$
|
58.27
|
|
|
|
Cash dividends declared per common share
|
1.57
|
|
|
1.53
|
|
|
1.43
|
|
|
|||
|
Increase (decrease) in book value per diluted common share adjusted for dividends
|
$
|
(2.38
|
)
|
|
$
|
(2.86
|
)
|
|
$
|
5.62
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Book value per diluted common share represents total common shareholders’ equity divided by the number of common shares and diluted common share outstanding, determined using the treasury stock method. Cash settled awards are excluded.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
|
$
|
6,910,065
|
|
|
24%
|
|
$
|
5,556,273
|
|
|
12%
|
|
$
|
4,970,208
|
|
|
|
Net premiums written
|
|
4,658,962
|
|
|
16%
|
|
4,027,143
|
|
|
7%
|
|
3,752,974
|
|
|
|||
|
Net premiums earned
|
|
4,791,495
|
|
|
15%
|
|
4,148,760
|
|
|
12%
|
|
3,705,625
|
|
|
|||
|
Other insurance related income (losses)
|
|
10,622
|
|
|
nm
|
|
(1,240
|
)
|
|
nm
|
|
7,222
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
|
(3,389,949
|
)
|
|
|
|
(3,487,826
|
)
|
|
|
|
(2,496,574
|
)
|
|
|||
|
Prior year reserve development
|
|
199,662
|
|
|
|
|
200,054
|
|
|
|
|
292,377
|
|
|
|||
|
Acquisition costs
|
|
(968,835
|
)
|
|
|
|
(823,591
|
)
|
|
|
|
(746,876
|
)
|
|
|||
|
Underwriting-related general and administrative expenses
(1)
|
|
(519,168
|
)
|
|
|
|
(449,483
|
)
|
|
|
|
(482,701
|
)
|
|
|||
|
Underwriting income (loss)
(2)
|
|
$
|
123,827
|
|
|
nm
|
|
$
|
(413,326
|
)
|
|
nm
|
|
$
|
279,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
General and administrative expenses
(1)
|
|
$
|
627,389
|
|
|
|
|
$
|
579,428
|
|
|
|
|
$
|
602,717
|
|
|
|
Income (loss) before income taxes and interest in income (loss) of equity method investments
(2)
|
|
$
|
12,542
|
|
|
|
|
$
|
(368,109
|
)
|
|
|
|
$
|
521,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 total general and administrative expenses, the most comparable GAAP measure, is presented in
'Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operations'.
|
(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 income (loss) before income taxes and interest in income (loss) of equity investments, the most comparable GAAP measure, is presented in '
Management's Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary – Results of Operation'.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Gross premiums written
|
|
||||||||||||||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance
|
$
|
3,797,592
|
|
|
35%
|
|
$
|
2,814,918
|
|
|
16%
|
|
$
|
2,432,475
|
|
|
||||
|
Reinsurance
|
3,112,473
|
|
|
14%
|
|
2,741,355
|
|
|
8%
|
|
2,537,733
|
|
|
|||||||
|
Total
|
$
|
6,910,065
|
|
|
24%
|
|
$
|
5,556,273
|
|
|
12%
|
|
$
|
4,970,208
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
% ceded
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Insurance
|
39
|
%
|
|
2
|
|
pts
|
|
37
|
%
|
|
(1
|
)
|
pts
|
|
38
|
%
|
|
|||
|
Reinsurance
|
25
|
%
|
|
7
|
|
pts
|
|
18
|
%
|
|
6
|
|
pts
|
|
12
|
%
|
|
|||
|
Total
|
33
|
%
|
|
5
|
|
pts
|
|
28
|
%
|
|
4
|
|
pts
|
|
24
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Net premiums written
|
|
||||||||||||||||||
|
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance
|
$
|
2,324,747
|
|
|
31%
|
|
$
|
1,775,825
|
|
|
17%
|
|
$
|
1,519,559
|
|
|
||||
|
Reinsurance
|
2,334,215
|
|
|
4%
|
|
2,251,318
|
|
|
1%
|
|
2,233,415
|
|
|
|||||||
|
Total
|
$
|
4,658,962
|
|
|
16%
|
|
$
|
4,027,143
|
|
|
7%
|
|
$
|
3,752,974
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
2017 to 2018
|
|
2016 to 2017
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Insurance
|
$
|
2,362,606
|
|
|
49
|
%
|
|
$
|
1,816,438
|
|
|
44
|
%
|
|
$
|
1,534,282
|
|
|
41
|
%
|
|
30
|
%
|
|
18
|
%
|
|
|
Reinsurance
|
2,428,889
|
|
|
51
|
%
|
|
2,332,322
|
|
|
56
|
%
|
|
2,171,343
|
|
|
59
|
%
|
|
4
|
%
|
|
7
|
%
|
|
|||
|
Total
|
$
|
4,791,495
|
|
|
100
|
%
|
|
$
|
4,148,760
|
|
|
100
|
%
|
|
$
|
3,705,625
|
|
|
100
|
%
|
|
15
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Year ended December 31,
|
2018
|
|
% Point
Change
|
|
2017
|
|
% Point
Change
|
|
2016
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Current accident year loss ratio excluding catastrophe and weather-related losses
|
61.7
|
%
|
|
(2.0
|
)
|
|
63.7
|
%
|
|
1.9
|
|
|
61.8
|
%
|
|
|
Catastrophe and weather-related losses
|
9.0
|
%
|
|
(11.4
|
)
|
|
20.4
|
%
|
|
14.8
|
|
|
5.6
|
%
|
|
|
Current accident year loss ratio
|
70.7
|
%
|
|
(13.4
|
)
|
|
84.1
|
%
|
|
16.7
|
|
|
67.4
|
%
|
|
|
Prior year reserve development
|
(4.1
|
%)
|
|
0.8
|
|
|
(4.9
|
%)
|
|
3.0
|
|
|
(7.9
|
%)
|
|
|
Net loss and loss expense ratio
|
66.6
|
%
|
|
(12.6
|
)
|
|
79.2
|
%
|
|
19.7
|
|
|
59.5
|
%
|
|
|
Acquisition cost ratio
|
20.2
|
%
|
|
0.3
|
|
|
19.9
|
%
|
|
(0.3
|
)
|
|
20.2
|
%
|
|
|
General and administrative expense ratio
(1)
|
13.1
|
%
|
|
(0.9
|
)
|
|
14.0
|
%
|
|
(2.2
|
)
|
|
16.2
|
%
|
|
|
Combined ratio
|
99.9
|
%
|
|
(13.2
|
)
|
|
113.1
|
%
|
|
17.2
|
|
|
95.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The general and administration expense ratio includes corporate expenses not allocated to underwriting segments of
2.3%
,
3.1%
and
3.2%
for
2018
,
2017
and
2016
, respectively. These costs are further discussed in the '
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Expenses (Revenues), Net'
section.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
$
|
92,806
|
|
|
$
|
60,459
|
|
|
$
|
48,978
|
|
|
|
Reinsurance
|
106,856
|
|
|
139,595
|
|
|
243,399
|
|
|
|||
|
Total
|
$
|
199,662
|
|
|
$
|
200,054
|
|
|
$
|
292,377
|
|
|
|
|
|
|
|
|
|
|
Insurance segment
|
|
|
|
|
|
|
|
Reserve class and tail
|
|||||
|
|
|
|
|
|
|
|
Property and other
|
Marine
|
Aviation
|
Credit and political risk
|
Professional lines
|
Liability
|
|
|
|
|
|
|
|
|
Short
|
Short
|
Short/Medium
|
Medium
|
Medium
|
Long
|
|
|
|
|
|
|
|
Reported lines of business
|
|
|
|
|
|
|
Property
|
X
|
|
|
|
|
|
Marine
|
|
X
|
|
|
|
|
Terrorism
|
X
|
|
|
|
|
|
Aviation
|
|
|
X
|
|
|
|
Credit and political risk
|
|
|
|
X
|
|
|
Professional lines
|
|
|
|
|
X
|
|
Liability
|
|
|
|
|
|
X
|
Accident and health
|
X
|
|
|
|
|
|
Discontinued lines - Novae
|
X
|
|
|
|
X
|
X
|
Reinsurance segment
|
|
|
|
|
|
|
Reserve class and tail
|
||||
|
|
|
|
|
|
|
Property and other
|
Credit and surety
|
Professional lines
|
Motor
|
Liability
|
|
|
|
|
|
|
|
Short
|
Medium
|
Medium
|
Long
|
Long
|
|
|
|
|
|
|
Reported lines of business
|
|
|
|
|
|
Catastrophe
|
X
|
|
|
|
|
Property
|
X
|
|
|
|
|
Credit and surety
|
|
X
|
|
|
|
Professional lines
|
|
|
X
|
|
|
Motor
|
|
|
|
X
|
|
Liability
|
|
|
|
|
X
|
Engineering
|
X
|
|
|
|
|
Agriculture
|
X
|
|
|
|
|
Marine and other
|
X
|
|
|
|
|
Accident and health
|
X
|
|
|
|
|
Discontinued lines - Novae
|
X
|
|
|
X
|
X
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Property and other
|
$
|
64,781
|
|
|
$
|
11,815
|
|
|
$
|
27,857
|
|
|
|
Marine
|
17,913
|
|
|
28,206
|
|
|
12,068
|
|
|
|||
|
Aviation
|
(2,938
|
)
|
|
1,895
|
|
|
3,113
|
|
|
|||
|
Credit and political risk
|
3,609
|
|
|
70
|
|
|
(242
|
)
|
|
|||
|
Professional lines
|
31,687
|
|
|
26,248
|
|
|
14,005
|
|
|
|||
|
Liability
|
(22,246
|
)
|
|
(7,775
|
)
|
|
(7,823
|
)
|
|
|||
|
Total
|
$
|
92,806
|
|
|
$
|
60,459
|
|
|
$
|
48,978
|
|
|
|
|
|
|
|
|
|
|
•
|
$65 million
of net favorable prior year reserve development on property and other lines business primarily due to overall better than expected loss emergence related to the 2017 catastrophe events.
|
•
|
$32 million
of net favorable prior year reserve development on professional lines business due to the recognition of better than expected loss experience, particularly on the 2014 and 2015 accident years.
|
•
|
$18 million
of net favorable prior year reserve development on marine business primarily due to better than expected loss emergence on more recent accident years.
|
•
|
$22 million
of net adverse prior year reserve development on liability business primarily due to reserve strengthening within our U.S. excess casualty book of business mainly driven by a higher frequency of large auto and general liability claims mainly related to the 2015 accident year.
|
•
|
$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.
|
•
|
$12 million
of net favorable prior year reserve development on property and other business primarily due to overall better than expected loss emergence related to the 2016 accident year.
|
•
|
$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 limited reserve strengthening within our U.S. excess casualty book of business.
|
•
|
$28 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 2015.
|
•
|
$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.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Property and other
|
$
|
6,012
|
|
|
$
|
18,564
|
|
|
$
|
104,618
|
|
|
|
Credit and surety
|
33,497
|
|
|
32,791
|
|
|
10,488
|
|
|
|||
|
Professional lines
|
21,310
|
|
|
44,164
|
|
|
29,592
|
|
|
|||
|
Motor
|
22,932
|
|
|
1,155
|
|
|
55,106
|
|
|
|||
|
Liability
|
23,105
|
|
|
42,921
|
|
|
43,595
|
|
|
|||
|
Total
|
$
|
106,856
|
|
|
$
|
139,595
|
|
|
$
|
243,399
|
|
|
|
|
|
|
|
|
|
|
•
|
$33 million
of net favorable prior year reserve development on credit and surety business primarily due to generally better than expected loss emergence, primarily related to accident years 2013 and 2014.
|
•
|
$23 million
of net favorable prior year reserve development on motor business primarily due to non proportional treaty business related to older accident years.
|
•
|
$23 million
of net favorable prior year reserve development on liability business due to progressively increased weight given by management to experience based indications on older accident years.
|
•
|
$21 million
of net favorable prior year reserve development on professional lines business reflecting the generally favorable experience on older accident years as we continue to transition to more experience based methods.
|
•
|
$44 million
of net favorable prior year reserve development on professional lines business, reflecting the generally favorable experience on older 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 older 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.
|
•
|
$19 million
of net favorable prior year development on property and other business due to overall better than expected loss emergence across multiple accident years, partially offset by reserve strengthening related to accident year 2016.
|
•
|
$1 million
of net favorable prior year reserve development on motor business, due to better than expected loss emergence spanning multiple accident years, largely offset by the impact of the change in Ogden rate.
|
•
|
$105 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
3,797,592
|
|
|
35%
|
|
$
|
2,814,918
|
|
|
16%
|
|
$
|
2,432,475
|
|
|
|
Net premiums written
|
2,324,747
|
|
|
31%
|
|
1,775,825
|
|
|
17%
|
|
1,519,559
|
|
|
|||
|
Net premiums earned
|
2,362,606
|
|
|
30%
|
|
1,816,438
|
|
|
18%
|
|
1,534,282
|
|
|
|||
|
Other insurance related income
|
3,460
|
|
|
18%
|
|
2,944
|
|
|
nm
|
|
89
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
(1,587,129
|
)
|
|
|
|
(1,525,886
|
)
|
|
|
|
(1,026,749
|
)
|
|
|||
|
Prior year reserve development
|
92,806
|
|
|
|
|
60,459
|
|
|
|
|
48,978
|
|
|
|||
|
Acquisition costs
|
(399,193
|
)
|
|
|
|
(270,229
|
)
|
|
|
|
(206,619
|
)
|
|
|||
|
General and administrative expenses
|
(395,252
|
)
|
|
|
|
(325,368
|
)
|
|
|
|
(327,351
|
)
|
|
|||
|
Underwriting income (loss)
|
$
|
77,298
|
|
|
nm
|
|
$
|
(241,642
|
)
|
|
nm
|
|
$
|
22,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
% Point
Change
|
|
|
|
% Point
Change
|
|
|
|
||||||
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current accident year loss ratio excluding catastrophe and weather-related losses
|
58.5
|
%
|
|
(2.8)
|
|
61.3
|
%
|
|
2.3
|
|
59.0
|
%
|
|
|||
|
Catastrophe and weather-related losses
|
8.7
|
%
|
|
(14.0)
|
|
22.7
|
%
|
|
14.8
|
|
7.9
|
%
|
|
|||
|
Current year loss ratio
|
67.2
|
%
|
|
(16.8)
|
|
84.0
|
%
|
|
17.1
|
|
66.9
|
%
|
|
|||
|
Prior year reserve development
|
(4.0
|
%)
|
|
(0.7)
|
|
(3.3
|
%)
|
|
(0.1)
|
|
(3.2
|
%)
|
|
|||
|
Net loss and loss expense ratio
|
63.2
|
%
|
|
(17.5)
|
|
80.7
|
%
|
|
17.0
|
|
63.7
|
%
|
|
|||
|
Acquisition cost ratio
|
16.9
|
%
|
|
2.0
|
|
14.9
|
%
|
|
1.4
|
|
13.5
|
%
|
|
|||
|
General and administrative expense ratio
|
16.8
|
%
|
|
(1.1)
|
|
17.9
|
%
|
|
(3.4)
|
|
21.3
|
%
|
|
|||
|
Combined ratio
|
96.9
|
%
|
|
(16.6)
|
|
113.5
|
%
|
|
15.0
|
|
98.5
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
2017 to 2018
|
|
2016 to 2017
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Property
|
$
|
1,192,807
|
|
|
31
|
%
|
|
$
|
738,373
|
|
|
25
|
%
|
|
$
|
672,891
|
|
|
27
|
%
|
|
62
|
%
|
|
10
|
%
|
|
|
Marine
|
367,047
|
|
|
10
|
%
|
|
241,393
|
|
|
9
|
%
|
|
225,609
|
|
|
9
|
%
|
|
52
|
%
|
|
7
|
%
|
|
|||
|
Terrorism
|
61,663
|
|
|
2
|
%
|
|
47,514
|
|
|
2
|
%
|
|
38,146
|
|
|
2
|
%
|
|
30
|
%
|
|
25
|
%
|
|
|||
|
Aviation
|
89,673
|
|
|
2
|
%
|
|
83,906
|
|
|
3
|
%
|
|
53,173
|
|
|
2
|
%
|
|
7
|
%
|
|
58
|
%
|
|
|||
|
Credit and political risk
|
190,433
|
|
|
5
|
%
|
|
91,316
|
|
|
3
|
%
|
|
49,930
|
|
|
2
|
%
|
|
nm
|
|
|
83
|
%
|
|
|||
|
Professional lines
|
1,115,213
|
|
|
29
|
%
|
|
922,502
|
|
|
33
|
%
|
|
845,358
|
|
|
35
|
%
|
|
21
|
%
|
|
9
|
%
|
|
|||
|
Liability
|
553,461
|
|
|
15
|
%
|
|
473,935
|
|
|
17
|
%
|
|
405,030
|
|
|
17
|
%
|
|
17
|
%
|
|
17
|
%
|
|
|||
|
Accident and health
|
210,502
|
|
|
6
|
%
|
|
201,159
|
|
|
7
|
%
|
|
142,338
|
|
|
6
|
%
|
|
5
|
%
|
|
41
|
%
|
|
|||
|
Discontinued lines - Novae
|
16,793
|
|
|
—
|
%
|
|
14,820
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
—
|
%
|
|
|||
|
Total
|
$
|
3,797,592
|
|
|
100
|
%
|
|
$
|
2,814,918
|
|
|
100
|
%
|
|
$
|
2,432,475
|
|
|
100
|
%
|
|
35
|
%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
2017 to 2018
|
|
2016 to 2017
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Property
|
$
|
796,945
|
|
|
34
|
%
|
|
$
|
543,342
|
|
|
30
|
%
|
|
$
|
426,918
|
|
|
28
|
%
|
|
47
|
%
|
|
27
|
%
|
|
|
Marine
|
300,944
|
|
|
13
|
%
|
|
181,533
|
|
|
10
|
%
|
|
150,046
|
|
|
10
|
%
|
|
66
|
%
|
|
21
|
%
|
|
|||
|
Terrorism
|
49,150
|
|
|
2
|
%
|
|
36,084
|
|
|
2
|
%
|
|
33,279
|
|
|
2
|
%
|
|
36
|
%
|
|
8
|
%
|
|
|||
|
Aviation
|
74,203
|
|
|
3
|
%
|
|
75,107
|
|
|
4
|
%
|
|
44,980
|
|
|
3
|
%
|
|
(1
|
%)
|
|
67
|
%
|
|
|||
|
Credit and political risk
|
102,825
|
|
|
4
|
%
|
|
56,432
|
|
|
3
|
%
|
|
57,964
|
|
|
4
|
%
|
|
82
|
%
|
|
(3
|
%)
|
|
|||
|
Professional lines
|
570,241
|
|
|
24
|
%
|
|
519,759
|
|
|
29
|
%
|
|
510,806
|
|
|
33
|
%
|
|
10
|
%
|
|
2
|
%
|
|
|||
|
Liability
|
229,373
|
|
|
10
|
%
|
|
188,770
|
|
|
10
|
%
|
|
169,182
|
|
|
11
|
%
|
|
22
|
%
|
|
12
|
%
|
|
|||
|
Accident and health
|
207,777
|
|
|
9
|
%
|
|
199,121
|
|
|
11
|
%
|
|
141,107
|
|
|
9
|
%
|
|
4
|
%
|
|
41
|
%
|
|
|||
|
Discontinued lines - Novae
|
31,148
|
|
|
1
|
%
|
|
16,290
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
nm
|
|
|
|||
|
Total
|
$
|
2,362,606
|
|
|
100
|
%
|
|
$
|
1,816,438
|
|
|
100
|
%
|
|
$
|
1,534,282
|
|
|
100
|
%
|
|
30
|
%
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
3,112,473
|
|
|
14%
|
|
$
|
2,741,355
|
|
|
8%
|
|
$
|
2,537,733
|
|
|
|
Net premiums written
|
2,334,215
|
|
|
4%
|
|
2,251,318
|
|
|
1%
|
|
2,233,415
|
|
|
|||
|
Net premiums earned
|
2,428,889
|
|
|
4%
|
|
2,332,322
|
|
|
7%
|
|
2,171,343
|
|
|
|||
|
Other insurance related income (losses)
|
7,162
|
|
|
nm
|
|
(4,184
|
)
|
|
nm
|
|
7,133
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current year net losses and loss expenses
|
(1,802,820
|
)
|
|
|
|
(1,961,940
|
)
|
|
|
|
(1,469,825
|
)
|
|
|||
|
Prior year reserve development
|
106,856
|
|
|
|
|
139,595
|
|
|
|
|
243,399
|
|
|
|||
|
Acquisition costs
|
(569,642
|
)
|
|
|
|
(553,362
|
)
|
|
|
|
(540,257
|
)
|
|
|||
|
General and administrative expenses
|
(123,916
|
)
|
|
|
|
(124,115
|
)
|
|
|
|
(155,350
|
)
|
|
|||
|
Underwriting income (loss)
|
$
|
46,529
|
|
|
nm
|
|
$
|
(171,684
|
)
|
|
nm
|
|
$
|
256,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
% Point
Change
|
|
|
|
% Point
Change
|
|
|
|
||||||
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Current accident year loss ratio excluding catastrophe and weather-related losses
|
64.8
|
%
|
|
(0.8)
|
|
65.6
|
%
|
|
1.8
|
|
63.8
|
%
|
|
|||
|
Catastrophe and weather-related losses
|
9.4
|
%
|
|
(9.1)
|
|
18.5
|
%
|
|
14.6
|
|
3.9
|
%
|
|
|||
|
Current year loss ratio
|
74.2
|
%
|
|
(9.9)
|
|
84.1
|
%
|
|
16.4
|
|
67.7
|
%
|
|
|||
|
Prior year reserve development
|
(4.4
|
%)
|
|
1.6
|
|
(6.0
|
%)
|
|
5.2
|
|
(11.2
|
%)
|
|
|||
|
Net loss and loss expense ratio
|
69.8
|
%
|
|
(8.3)
|
|
78.1
|
%
|
|
21.6
|
|
56.5
|
%
|
|
|||
|
Acquisition cost ratio
|
23.5
|
%
|
|
(0.2)
|
|
23.7
|
%
|
|
(1.2)
|
|
24.9
|
%
|
|
|||
|
General and administrative expense ratio
|
5.1
|
%
|
|
(0.2)
|
|
5.3
|
%
|
|
(1.8)
|
|
7.1
|
%
|
|
|||
|
Combined ratio
|
98.4
|
%
|
|
(8.7)
|
|
107.1
|
%
|
|
18.6
|
|
88.5
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
2017 to 2018
|
|
2016 to 2017
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Catastrophe
|
$
|
536,243
|
|
|
17
|
%
|
|
$
|
436,707
|
|
|
17
|
%
|
|
$
|
324,884
|
|
|
12
|
%
|
|
23
|
%
|
|
34
|
%
|
|
|
Property
|
342,789
|
|
|
11
|
%
|
|
352,609
|
|
|
13
|
%
|
|
282,535
|
|
|
11
|
%
|
|
(3
|
%)
|
|
25
|
%
|
|
|||
|
Professional lines
|
268,181
|
|
|
9
|
%
|
|
252,272
|
|
|
9
|
%
|
|
268,403
|
|
|
11
|
%
|
|
6
|
%
|
|
(6
|
%)
|
|
|||
|
Credit and surety
|
329,126
|
|
|
11
|
%
|
|
205,352
|
|
|
7
|
%
|
|
319,077
|
|
|
13
|
%
|
|
60
|
%
|
|
(36
|
%)
|
|
|||
|
Motor
|
499,727
|
|
|
16
|
%
|
|
391,923
|
|
|
14
|
%
|
|
346,087
|
|
|
14
|
%
|
|
28
|
%
|
|
13
|
%
|
|
|||
|
Liability
|
438,767
|
|
|
14
|
%
|
|
420,701
|
|
|
15
|
%
|
|
422,489
|
|
|
17
|
%
|
|
4
|
%
|
|
—
|
%
|
|
|||
|
Agriculture
|
226,246
|
|
|
7
|
%
|
|
236,200
|
|
|
9
|
%
|
|
158,278
|
|
|
6
|
%
|
|
(4
|
%)
|
|
49
|
%
|
|
|||
|
Engineering
|
60,358
|
|
|
2
|
%
|
|
77,134
|
|
|
3
|
%
|
|
68,892
|
|
|
3
|
%
|
|
(22
|
%)
|
|
12
|
%
|
|
|||
|
Marine and other
|
44,741
|
|
|
1
|
%
|
|
55,925
|
|
|
2
|
%
|
|
59,321
|
|
|
2
|
%
|
|
(20
|
%)
|
|
(6
|
%)
|
|
|||
|
Accident and health
|
365,660
|
|
|
12
|
%
|
|
312,919
|
|
|
11
|
%
|
|
287,767
|
|
|
11
|
%
|
|
17
|
%
|
|
9
|
%
|
|
|||
|
Discontinued lines - Novae
|
635
|
|
|
—
|
%
|
|
(387
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
nm
|
|
|
nm
|
|
|
|||
|
Total
|
$
|
3,112,473
|
|
|
100
|
%
|
|
$
|
2,741,355
|
|
|
100
|
%
|
|
$
|
2,537,733
|
|
|
100
|
%
|
|
14
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|||||||||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
2017 to 2018
|
|
2016 to 2017
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Catastrophe
|
$
|
250,016
|
|
|
12
|
%
|
|
$
|
209,470
|
|
|
10
|
%
|
|
$
|
199,825
|
|
|
8
|
%
|
|
19
|
%
|
|
5
|
%
|
|
|
Property
|
317,038
|
|
|
13
|
%
|
|
304,376
|
|
|
13
|
%
|
|
272,403
|
|
|
13
|
%
|
|
4
|
%
|
|
12
|
%
|
|
|||
|
Professional lines
|
220,687
|
|
|
9
|
%
|
|
226,622
|
|
|
10
|
%
|
|
289,868
|
|
|
13
|
%
|
|
(3
|
%)
|
|
(22
|
%)
|
|
|||
|
Credit and surety
|
250,276
|
|
|
10
|
%
|
|
244,186
|
|
|
10
|
%
|
|
252,210
|
|
|
12
|
%
|
|
2
|
%
|
|
(3
|
%)
|
|
|||
|
Motor
|
438,693
|
|
|
18
|
%
|
|
371,501
|
|
|
16
|
%
|
|
318,863
|
|
|
15
|
%
|
|
18
|
%
|
|
17
|
%
|
|
|||
|
Liability
|
363,292
|
|
|
15
|
%
|
|
351,940
|
|
|
15
|
%
|
|
332,479
|
|
|
15
|
%
|
|
3
|
%
|
|
6
|
%
|
|
|||
|
Agriculture
|
176,435
|
|
|
7
|
%
|
|
195,391
|
|
|
8
|
%
|
|
142,501
|
|
|
7
|
%
|
|
(10
|
%)
|
|
37
|
%
|
|
|||
|
Engineering
|
67,932
|
|
|
3
|
%
|
|
66,291
|
|
|
3
|
%
|
|
62,833
|
|
|
3
|
%
|
|
2
|
%
|
|
6
|
%
|
|
|||
|
Marine and other
|
35,570
|
|
|
1
|
%
|
|
64,449
|
|
|
3
|
%
|
|
57,322
|
|
|
3
|
%
|
|
(45
|
%)
|
|
12
|
%
|
|
|||
|
Accident and health
|
299,813
|
|
|
12
|
%
|
|
289,925
|
|
|
12
|
%
|
|
243,039
|
|
|
11
|
%
|
|
3
|
%
|
|
19
|
%
|
|
|||
|
Discontinued lines - Novae
|
9,137
|
|
|
—
|
%
|
|
8,171
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
12
|
%
|
|
nm
|
|
|
|||
|
Total
|
$
|
2,428,889
|
|
|
100
|
%
|
|
$
|
2,332,322
|
|
|
100
|
%
|
|
$
|
2,171,343
|
|
|
100
|
%
|
|
4
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
|
2018
|
|
% Point
Change
|
|
2017
|
|
% Point
Change
|
|
2016
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Current accident year
|
|
74.2
|
%
|
|
(9.9
|
)
|
|
84.1
|
%
|
|
16.4
|
|
67.7
|
%
|
|
|
Prior year reserve development
|
|
(4.4
|
%)
|
|
1.6
|
|
|
(6.0
|
%)
|
|
5.2
|
|
(11.2
|
%)
|
|
|
Loss ratio
|
|
69.8
|
%
|
|
(8.3
|
)
|
|
78.1
|
%
|
|
21.6
|
|
56.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
$
|
108,221
|
|
|
(17%)
|
|
$
|
129,945
|
|
|
8%
|
|
$
|
120,016
|
|
|
|
Foreign exchange losses (gains)
|
(29,165
|
)
|
|
nm
|
|
134,737
|
|
|
nm
|
|
(121,295
|
)
|
|
|||
|
Interest expense and financing costs
|
67,432
|
|
|
23%
|
|
54,811
|
|
|
7%
|
|
51,360
|
|
|
|||
|
Income tax (benefit) expense
|
(29,486
|
)
|
|
nm
|
|
(7,542
|
)
|
|
nm
|
|
6,340
|
|
|
|||
|
Total
|
$
|
117,002
|
|
|
nm
|
|
$
|
311,951
|
|
|
nm
|
|
$
|
56,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
% Change
|
|
2017
|
|
% Change
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
$
|
356,273
|
|
|
14%
|
|
$
|
312,662
|
|
|
2%
|
|
$
|
305,459
|
|
|
|
Other investments
|
48,959
|
|
|
(36%)
|
|
76,858
|
|
|
81%
|
|
42,514
|
|
|
|||
|
Equity securities
|
10,077
|
|
|
(32%)
|
|
14,919
|
|
|
(9%)
|
|
16,306
|
|
|
|||
|
Mortgage loans
|
13,566
|
|
|
26%
|
|
10,780
|
|
|
35%
|
|
7,996
|
|
|
|||
|
Cash and cash equivalents
|
27,566
|
|
|
nm
|
|
10,057
|
|
|
9%
|
|
9,209
|
|
|
|||
|
Short-term investments
|
9,365
|
|
|
nm
|
|
2,718
|
|
|
32%
|
|
2,060
|
|
|
|||
|
Gross investment income
|
465,806
|
|
|
9%
|
|
427,994
|
|
|
12%
|
|
383,544
|
|
|
|||
|
Investment expense
|
(27,299
|
)
|
|
—%
|
|
(27,189
|
)
|
|
(10%)
|
|
(30,209
|
)
|
|
|||
|
Net investment income
|
$
|
438,507
|
|
|
9%
|
|
$
|
400,805
|
|
|
13%
|
|
$
|
353,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Pre-tax yield:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
3.0
|
%
|
|
|
|
2.7
|
%
|
|
|
|
2.6
|
%
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Pre-tax yield is calculated by dividing net investment income by the average month-end amortized cost balances for the periods indicated.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Hedge, direct lending, private equity and real estate funds
|
$
|
40,295
|
|
|
$
|
69,740
|
|
|
$
|
21,378
|
|
|
|
Other privately held investments
|
2,036
|
|
|
4,560
|
|
|
124
|
|
|
|||
|
CLO-Equities
|
6,628
|
|
|
2,558
|
|
|
21,012
|
|
|
|||
|
Total net investment income from other investments
(1)
|
$
|
48,959
|
|
|
$
|
76,858
|
|
|
$
|
42,514
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Pre-tax return on other investments
(2)
|
6.4
|
%
|
|
9.6
|
%
|
|
5.1
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
Excluding overseas deposits.
|
(2)
|
The pre-tax return on other investments is 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,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
On sale of investments:
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
$
|
(96,086
|
)
|
|
$
|
(26,396
|
)
|
|
$
|
(48,193
|
)
|
|
|
Equity securities
|
17,046
|
|
|
77,384
|
|
|
2,949
|
|
|
|||
|
|
(79,040
|
)
|
|
50,988
|
|
|
(45,244
|
)
|
|
|||
|
OTTI charges recognized in net income
|
(9,733
|
)
|
|
(14,493
|
)
|
|
(26,210
|
)
|
|
|||
|
Change in fair value of investment derivatives
|
5,445
|
|
|
(8,269
|
)
|
|
10,929
|
|
|
|||
|
Change in fair value of equity securities
|
(66,890
|
)
|
|
—
|
|
|
—
|
|
|
|||
|
Net investment gains (losses)
|
$
|
(150,218
|
)
|
|
$
|
28,226
|
|
|
$
|
(60,525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Non-U.S. government
|
$
|
4,697
|
|
|
$
|
8,187
|
|
|
$
|
3,557
|
|
|
|
Corporate debt
|
4,995
|
|
|
6,306
|
|
|
20,093
|
|
|
|||
|
Non-Agency CMBS
|
41
|
|
|
—
|
|
|
—
|
|
|
|||
|
|
9,733
|
|
|
14,493
|
|
|
23,650
|
|
|
|||
|
Equity securities:
|
|
|
|
|
|
|
||||||
|
Exchange-traded funds
|
—
|
|
|
—
|
|
|
2,560
|
|
|
|||
|
|
—
|
|
|
—
|
|
|
2,560
|
|
|
|||
|
Total OTTI charge recognized in net income
|
$
|
9,733
|
|
|
$
|
14,493
|
|
|
$
|
26,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Net investment income
|
$
|
438,507
|
|
|
$
|
400,805
|
|
|
$
|
353,335
|
|
|
|
Net investments gains (losses)
|
(150,218
|
)
|
|
28,226
|
|
|
(60,525
|
)
|
|
|||
|
Change in net unrealized investment gains (losses) on fixed maturities
(1)
|
(191,529
|
)
|
|
177,259
|
|
|
70,588
|
|
|
|||
|
Interest in income (loss) of equity method investments
|
993
|
|
|
(8,402
|
)
|
|
(2,094
|
)
|
|
|||
|
Total
|
$
|
97,753
|
|
|
$
|
597,888
|
|
|
$
|
361,304
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Average cash and investments
(2)
|
$
|
15,361,287
|
|
|
$
|
14,854,569
|
|
|
$
|
14,491,830
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total return on average cash and investments, pre-tax:
|
|
|
|
|
|
|
||||||
|
Including investment related foreign exchange movements
|
0.6
|
%
|
|
4.0
|
%
|
|
2.5
|
%
|
|
|||
|
Excluding investment related foreign exchange movements
(3)
|
0.9
|
%
|
|
3.5
|
%
|
|
3.0
|
%
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
Change in net unrealized investment gains (losses) on fixed maturities is calculated by taking net unrealized investment gains (losses) at period end less net unrealized investment 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 total return on average cash and investments excluding foreign exchange rate 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 $(48) million, $80 million and $(79) million for the years ended December 31, 2018, 2017 and 2016, respectively.
|
|
|
|
|
|
|
||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||
|
|
Fair value
|
|
Fair value
|
|
||||
|
|
|
|
|
|
||||
|
Fixed maturities
|
$
|
11,435,347
|
|
|
$
|
12,622,006
|
|
|
|
Equity securities
|
381,633
|
|
|
635,511
|
|
|
||
|
Mortgage loans
|
298,650
|
|
|
325,062
|
|
|
||
|
Other investments
|
787,787
|
|
|
1,009,373
|
|
|
||
|
Equity method investments
|
108,103
|
|
|
108,597
|
|
|
||
|
Short-term investments
|
144,040
|
|
|
83,661
|
|
|
||
|
Total investments
|
$
|
13,155,560
|
|
|
$
|
14,784,210
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents
(1)
|
$
|
1,830,020
|
|
|
$
|
1,363,786
|
|
|
|
|
|
|
|
|
(1)
|
Includes restricted cash and cash equivalents of
$597 million
and
$415 million
for 2018 and 2017, respectively.
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||
|
|
Fair value
|
|
% of total
|
|
Fair value
|
|
% of total
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,515,697
|
|
|
13
|
%
|
|
$
|
1,712,469
|
|
|
14
|
%
|
|
|
Non-U.S. government
|
493,016
|
|
|
4
|
%
|
|
806,299
|
|
|
6
|
%
|
|
||
|
Corporate debt
|
4,876,921
|
|
|
44
|
%
|
|
5,297,866
|
|
|
43
|
%
|
|
||
|
Agency RMBS
|
1,643,308
|
|
|
14
|
%
|
|
2,395,152
|
|
|
19
|
%
|
|
||
|
CMBS
|
1,092,530
|
|
|
10
|
%
|
|
777,728
|
|
|
6
|
%
|
|
||
|
Non-Agency RMBS
|
40,687
|
|
|
—
|
%
|
|
46,831
|
|
|
—
|
%
|
|
||
|
ABS
|
1,637,603
|
|
|
14
|
%
|
|
1,436,281
|
|
|
11
|
%
|
|
||
|
Municipals
(1)
|
135,585
|
|
|
1
|
%
|
|
149,380
|
|
|
1
|
%
|
|
||
|
Total
|
$
|
11,435,347
|
|
|
100
|
%
|
|
$
|
12,622,006
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Credit ratings:
|
|
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,515,697
|
|
|
13
|
%
|
|
$
|
1,712,469
|
|
|
14
|
%
|
|
|
AAA
(2)
|
4,569,632
|
|
|
40
|
%
|
|
4,990,848
|
|
|
39
|
%
|
|
||
|
AA
|
874,932
|
|
|
8
|
%
|
|
1,050,631
|
|
|
8
|
%
|
|
||
|
A
|
1,769,686
|
|
|
15
|
%
|
|
2,090,632
|
|
|
17
|
%
|
|
||
|
BBB
|
1,678,962
|
|
|
15
|
%
|
|
1,758,291
|
|
|
14
|
%
|
|
||
|
Below BBB
(3)
|
1,026,438
|
|
|
9
|
%
|
|
1,019,135
|
|
|
8
|
%
|
|
||
|
Total
|
$
|
11,435,347
|
|
|
100
|
%
|
|
$
|
12,622,006
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes bonds issued by states, municipalities, and political subdivisions.
|
(2)
|
Includes U.S. government-sponsored agencies, Residential mortgage-backed securities ("RMBS") and Commercial mortgage-backed securities ("CMBS").
|
(3)
|
Non-investment grade and non-rated securities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||
|
Country
|
Fair value
|
|
% of total
|
|
Weighted
average
credit rating
|
|
Fair value
|
|
% of total
|
|
Weighted
average
credit rating
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Eurozone countries:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Belgium
|
$
|
10,983
|
|
|
2
|
%
|
|
AA-
|
|
$
|
36,095
|
|
|
4
|
%
|
|
AA-
|
|
|
Netherlands
|
5,534
|
|
|
1
|
%
|
|
AA+
|
|
42,739
|
|
|
5
|
%
|
|
AAA
|
|
||
|
France
|
4,156
|
|
|
1
|
%
|
|
AA
|
|
34,386
|
|
|
4
|
%
|
|
AA
|
|
||
|
Supranationals
(1)
|
3,849
|
|
|
1
|
%
|
|
AAA
|
|
19,196
|
|
|
2
|
%
|
|
AAA
|
|
||
|
Austria
|
2,309
|
|
|
—
|
%
|
|
AA+
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Spain
|
1,629
|
|
|
—
|
%
|
|
A-
|
|
2,948
|
|
|
—
|
%
|
|
BBB+
|
|
||
|
Portugal
|
876
|
|
|
—
|
%
|
|
BBB-
|
|
—
|
|
|
—
|
%
|
|
—
|
|
||
|
Germany
|
—
|
|
|
—
|
%
|
|
—
|
|
35,332
|
|
|
4
|
%
|
|
AA+
|
|
||
|
Italy
|
—
|
|
|
—
|
%
|
|
—
|
|
7,366
|
|
|
1
|
%
|
|
BBB
|
|
||
|
Ireland
|
—
|
|
|
—
|
%
|
|
—
|
|
7,060
|
|
|
1
|
%
|
|
A
|
|
||
|
Total eurozone
|
$
|
29,336
|
|
|
5
|
%
|
|
AA
|
|
$
|
185,122
|
|
|
21
|
%
|
|
AA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Other concentrations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
United Kingdom
|
$
|
219,452
|
|
|
45
|
%
|
|
AA
|
|
$
|
275,656
|
|
|
34
|
%
|
|
AA
|
|
|
Canada
|
90,187
|
|
|
18
|
%
|
|
AA+
|
|
151,027
|
|
|
19
|
%
|
|
AA+
|
|
||
|
Mexico
|
28,735
|
|
|
6
|
%
|
|
BBB+
|
|
37,021
|
|
|
5
|
%
|
|
BBB+
|
|
||
|
Other
|
125,306
|
|
|
26
|
%
|
|
A+
|
|
157,473
|
|
|
21
|
%
|
|
A
|
|
||
|
Total other concentrations
|
$
|
463,680
|
|
|
95
|
%
|
|
AA+
|
|
$
|
621,177
|
|
|
79
|
%
|
|
AA-
|
|
|
Total non-U.S. government
|
$
|
493,016
|
|
|
100
|
%
|
|
AA-
|
|
$
|
806,299
|
|
|
100
|
%
|
|
AA-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes supranationals only within the eurozone.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||
|
|
Fair value
|
|
% of total
|
|
Weighted
average credit rating |
|
Fair value
|
|
% of total
|
|
Weighted
average credit rating |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Financial institutions:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
U.S. banking
|
$
|
1,075,998
|
|
|
22
|
%
|
|
A-
|
|
$
|
1,169,750
|
|
|
22
|
%
|
|
A-
|
|
|
Foreign banking
|
433,182
|
|
|
9
|
%
|
|
A
|
|
600,114
|
|
|
11
|
%
|
|
A+
|
|
||
|
Corporate/commercial finance
|
305,896
|
|
|
6
|
%
|
|
BB
|
|
309,589
|
|
|
6
|
%
|
|
BB+
|
|
||
|
Insurance
|
134,537
|
|
|
3
|
%
|
|
A
|
|
147,446
|
|
|
3
|
%
|
|
A+
|
|
||
|
Investment brokerage
|
35,223
|
|
|
1
|
%
|
|
A
|
|
18,571
|
|
|
—
|
%
|
|
BBB+
|
|
||
|
Total financial institutions
|
1,984,836
|
|
|
41
|
%
|
|
A-
|
|
2,245,470
|
|
|
42
|
%
|
|
A-
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Consumer non-cyclicals
|
584,248
|
|
|
12
|
%
|
|
BBB-
|
|
668,621
|
|
|
13
|
%
|
|
BBB
|
|
||
|
Consumer cyclical
|
468,250
|
|
|
10
|
%
|
|
BBB-
|
|
513,824
|
|
|
10
|
%
|
|
BBB-
|
|
||
|
Communications
|
420,511
|
|
|
9
|
%
|
|
BBB-
|
|
418,945
|
|
|
8
|
%
|
|
BBB-
|
|
||
|
Technology
|
328,101
|
|
|
7
|
%
|
|
BBB-
|
|
348,725
|
|
|
7
|
%
|
|
BBB
|
|
||
|
Industrials
|
321,306
|
|
|
7
|
%
|
|
BB
|
|
339,819
|
|
|
6
|
%
|
|
BB
|
|
||
|
Energy
|
267,644
|
|
|
5
|
%
|
|
BBB
|
|
277,129
|
|
|
5
|
%
|
|
BBB
|
|
||
|
Utilities
|
149,276
|
|
|
3
|
%
|
|
BBB+
|
|
156,544
|
|
|
3
|
%
|
|
BBB
|
|
||
|
Other
|
352,749
|
|
|
6
|
%
|
|
A+
|
|
328,789
|
|
|
6
|
%
|
|
A+
|
|
||
|
Total
|
$
|
4,876,921
|
|
|
100
|
%
|
|
BBB+
|
|
$
|
5,297,866
|
|
|
100
|
%
|
|
BBB+
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Credit quality summary:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Investment grade
|
$
|
3,892,399
|
|
|
80
|
%
|
|
A-
|
|
$
|
4,319,620
|
|
|
82
|
%
|
|
A-
|
|
|
Non-investment grade
|
984,522
|
|
|
20
|
%
|
|
B
|
|
978,246
|
|
|
18
|
%
|
|
B
|
|
||
|
Total
|
$
|
4,876,921
|
|
|
100
|
%
|
|
BBB+
|
|
$
|
5,297,866
|
|
|
100
|
%
|
|
BBB+
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||
|
|
RMBS
|
|
CMBS
|
|
RMBS
|
|
CMBS
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Government agency
|
$
|
1,643,308
|
|
|
$
|
204,744
|
|
|
$
|
2,395,152
|
|
|
$
|
192,034
|
|
|
|
AAA
|
20,965
|
|
|
824,226
|
|
|
23,113
|
|
|
509,112
|
|
|
||||
|
AA
|
3,066
|
|
|
52,875
|
|
|
109
|
|
|
63,217
|
|
|
||||
|
A
|
1,459
|
|
|
9,943
|
|
|
1,913
|
|
|
12,608
|
|
|
||||
|
BBB
|
3,218
|
|
|
742
|
|
|
6,896
|
|
|
757
|
|
|
||||
|
Below BBB
(1)
|
11,979
|
|
|
—
|
|
|
14,800
|
|
|
—
|
|
|
||||
|
Total
|
$
|
1,683,995
|
|
|
$
|
1,092,530
|
|
|
$
|
2,441,983
|
|
|
$
|
777,728
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-investment grade securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Asset-backed securities
|
|
||||||||||||||||||||||
|
|
AAA
|
|
AA
|
|
A
|
|
BBB
|
|
Below BBB
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|||||||||||||||||
|
CLO - debt tranches
|
$
|
900,157
|
|
|
$
|
27,492
|
|
|
$
|
—
|
|
|
$
|
9,938
|
|
|
$
|
23,540
|
|
|
$
|
961,127
|
|
|
|
Auto
|
365,685
|
|
|
7,872
|
|
|
4,231
|
|
|
—
|
|
|
—
|
|
|
377,788
|
|
|
||||||
|
Student loan
|
79,419
|
|
|
17,415
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,834
|
|
|
||||||
|
Credit card
|
33,219
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,219
|
|
|
||||||
|
Other
|
127,638
|
|
|
13,457
|
|
|
24,867
|
|
|
103
|
|
|
2,570
|
|
|
168,635
|
|
|
||||||
|
Total
|
$
|
1,506,118
|
|
|
$
|
66,236
|
|
|
$
|
29,098
|
|
|
$
|
10,041
|
|
|
$
|
26,110
|
|
|
$
|
1,637,603
|
|
|
|
% of total
|
92%
|
|
4%
|
|
2%
|
|
1%
|
|
1%
|
|
100%
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
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%
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
G.O.
|
|
Revenue
|
|
Total
|
|
% of total
fair value
|
|
Gross
unrealized
gains
|
|
Gross
unrealized
losses
|
|
Weighted
average
credit rating
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
New York
|
$
|
9,805
|
|
|
$
|
29,479
|
|
|
$
|
39,284
|
|
|
29%
|
|
$
|
67
|
|
|
$
|
(726
|
)
|
|
AA
|
|
|
California
|
21,371
|
|
|
13,314
|
|
|
34,685
|
|
|
26%
|
|
518
|
|
|
(168
|
)
|
|
AA-
|
|
|||||
|
Utah
|
—
|
|
|
9,507
|
|
|
9,507
|
|
|
7%
|
|
57
|
|
|
—
|
|
|
AA+
|
|
|||||
|
Florida
|
—
|
|
|
9,160
|
|
|
9,160
|
|
|
7%
|
|
19
|
|
|
(34
|
)
|
|
AA
|
|
|||||
|
Michigan
|
—
|
|
|
9,147
|
|
|
9,147
|
|
|
7%
|
|
—
|
|
|
(136
|
)
|
|
AA-
|
|
|||||
|
Other
|
4,326
|
|
|
29,476
|
|
|
33,802
|
|
|
24%
|
|
253
|
|
|
(333
|
)
|
|
AA-
|
|
|||||
|
|
$
|
35,502
|
|
|
$
|
100,083
|
|
|
$
|
135,585
|
|
|
100%
|
|
$
|
914
|
|
|
$
|
(1,397
|
)
|
|
AA-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||||||
|
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%
|
$
|
7,496,064
|
|
|
$
|
(151,333
|
)
|
|
91
|
%
|
|
$
|
6,790,123
|
|
|
$
|
(71,076
|
)
|
|
86
|
%
|
|
|
10-20%
|
88,447
|
|
|
(12,573
|
)
|
|
8
|
%
|
|
78,348
|
|
|
(11,838
|
)
|
|
14
|
%
|
|
||||
|
20-30%
|
5,557
|
|
|
(1,522
|
)
|
|
1
|
%
|
|
872
|
|
|
(229
|
)
|
|
—
|
%
|
|
||||
|
30-40%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||||
|
40-50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||||
|
> 50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||||
|
Total
|
$
|
7,590,068
|
|
|
$
|
(165,428
|
)
|
|
100
|
%
|
|
$
|
6,869,343
|
|
|
$
|
(83,143
|
)
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||||||
|
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%
|
$
|
779,812
|
|
|
$
|
(31,179
|
)
|
|
63
|
%
|
|
$
|
270,281
|
|
|
$
|
(5,137
|
)
|
|
66
|
%
|
|
|
10-20%
|
107,931
|
|
|
(15,074
|
)
|
|
31
|
%
|
|
9,549
|
|
|
(1,408
|
)
|
|
18
|
%
|
|
||||
|
20-30%
|
9,289
|
|
|
(2,931
|
)
|
|
6
|
%
|
|
1,050
|
|
|
(314
|
)
|
|
4
|
%
|
|
||||
|
30-40%
|
370
|
|
|
(227
|
)
|
|
—
|
%
|
|
638
|
|
|
(287
|
)
|
|
4
|
%
|
|
||||
|
40-50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
654
|
|
|
(584
|
)
|
|
8
|
%
|
|
||||
|
> 50%
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
||||
|
Total
|
$
|
897,402
|
|
|
$
|
(49,411
|
)
|
|
100
|
%
|
|
$
|
282,172
|
|
|
$
|
(7,730
|
)
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Hedge funds
|
|
|
|
|
|
|
|
|
||||||
|
Long/short equity funds
|
$
|
26,779
|
|
|
3
|
%
|
|
$
|
38,470
|
|
|
4
|
%
|
|
|
Multi-strategy funds
|
153,883
|
|
|
20
|
%
|
|
286,164
|
|
|
28
|
%
|
|
||
|
Event-driven funds
|
13,936
|
|
|
2
|
%
|
|
39,177
|
|
|
4
|
%
|
|
||
|
Total hedge funds
|
194,598
|
|
|
25
|
%
|
|
363,811
|
|
|
36
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
|
Direct lending funds
|
274,478
|
|
|
35
|
%
|
|
250,681
|
|
|
25
|
%
|
|
||
|
Private equity funds
|
64,566
|
|
|
8
|
%
|
|
68,812
|
|
|
7
|
%
|
|
||
|
Real estate funds
|
84,202
|
|
|
11
|
%
|
|
50,009
|
|
|
5
|
%
|
|
||
|
Total hedge, direct lending, private equity and real estate funds
|
617,844
|
|
|
79
|
%
|
|
733,313
|
|
|
73
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
|
CLO-Equities
|
21,271
|
|
|
2
|
%
|
|
31,413
|
|
|
2
|
%
|
|
||
|
Other privately held investments
|
44,518
|
|
|
6
|
%
|
|
46,430
|
|
|
5
|
%
|
|
||
|
Overseas deposits
|
104,154
|
|
|
13
|
%
|
|
198,217
|
|
|
20
|
%
|
|
||
|
Total other investments
|
$
|
787,787
|
|
|
100
|
%
|
|
$
|
1,009,373
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total cash provided by (used in)
(1)
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Operating activities
|
$
|
10,773
|
|
|
$
|
259,229
|
|
|
$
|
406,724
|
|
|
|
Investing activities
|
638,554
|
|
|
391,510
|
|
|
(129,036
|
)
|
|
|||
|
Financing activities
|
(186,207
|
)
|
|
(545,688
|
)
|
|
(201,587
|
)
|
|
|||
|
Effect of exchange rate changes on cash
|
3,114
|
|
|
17,228
|
|
|
(9,345
|
)
|
|
|||
|
Increase (decrease) in cash and cash equivalents
|
$
|
466,234
|
|
|
$
|
122,279
|
|
|
$
|
66,756
|
|
|
|
|
|
|
|
|
|
|
(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
$11 million
in
2018
, compared to
$259 million
in
2017
and
$407 million
in
2016
. Our insurance and reinsurance operations typically receive cash inflows from premiums, net of policy acquisition costs, and reinsurance recoverables. Our cash outflows are principally 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 2018 compared to 2017, primarily attributable to losses paid on short-tail lines of business related to the 2017 and 2018 catastrophe events, consideration paid for the RITC transaction of the 2015 and prior years of account of Syndicate 2007, the quota share retrocessional agreement with Harrington Re, (refer to Item 8, Note 9 to the Consolidated Financial Statements
'Reserve for Losses and Loss Expenses'
for further details
)
and increased purchases of traditional reinsurance and retrocession covers, partially offset by an increase in premium collected due to higher gross premiums written in 2018, together with an increase in reinsurance recoveries, and an increase in interest and dividends received.
|
•
|
Investing cash inflows in
2018
principally related to the net proceeds from the sale and redemption of fixed maturities of
$364 million
(2017:
$300 million
, 2016:
$221 million
), net proceeds from the sale of equity securities of
$173 million
(2017:
$342 million
, 2016:
$3 million
) and the net proceeds from the sale of other investments of
$181 million
(2017:
$108 million
, 2016:
$25 million
).
|
•
|
Financing cash outflows primarily related to dividends paid to common and preferred shareholders on a recurring basis of
$176 million
in
2018
(
2017
:
$188 million
,
2016
:
$172 million
). Financing cash outflows also included common share repurchases of
$10 million
in
2018
(
2017
:
$286 million
and
2016
:
$510 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).
|
|
|
|
|
|
|
||||
|
At December 31,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Debt
|
$
|
1,341,961
|
|
|
$
|
1,376,529
|
|
|
|
|
|
|
|
|
||||
|
Preferred shares
|
775,000
|
|
|
775,000
|
|
|
||
|
Common equity
|
4,255,071
|
|
|
4,566,264
|
|
|
||
|
Shareholders’ equity
|
5,030,071
|
|
|
5,341,264
|
|
|
||
|
Total capital
|
$
|
6,372,032
|
|
|
$
|
6,717,793
|
|
|
|
|
|
|
|
|
||||
|
Ratio of debt to total capital
|
21.1
|
%
|
|
20.5
|
%
|
|
||
|
|
|
|
|
|
||||
|
Ratio of debt and preferred equity to total capital
|
33.2
|
%
|
|
32.0
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
|
||||
|
Common equity - opening
|
|
$
|
4,566,264
|
|
|
$
|
5,146,296
|
|
|
|
Net income (loss)
|
|
43,021
|
|
|
(368,969
|
)
|
|
||
|
Change in unrealized losses on available-for-sale investments, net of tax
|
|
(190,829
|
)
|
|
172,285
|
|
|
||
|
Share repurchases
|
|
(10,080
|
)
|
|
(285,858
|
)
|
|
||
|
Common share dividends
|
|
(134,748
|
)
|
|
(132,182
|
)
|
|
||
|
Preferred share dividends
|
|
(42,625
|
)
|
|
(46,810
|
)
|
|
||
|
Share-based compensation expense recognized in equity
|
|
33,505
|
|
|
38,677
|
|
|
||
|
Currency translation adjustment
|
|
(11,165
|
)
|
|
41,938
|
|
|
||
|
Other
|
|
1,728
|
|
|
887
|
|
|
||
|
Common equity - closing
|
|
$
|
4,255,071
|
|
|
$
|
4,566,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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+
(Stable)
(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)
|
|
$
|
12,280,769
|
|
|
$
|
3,339,623
|
|
|
$
|
3,823,196
|
|
|
$
|
2,012,903
|
|
|
$
|
3,105,047
|
|
|
|
Operating lease obligations
(2)
|
|
250,906
|
|
|
28,240
|
|
|
52,356
|
|
|
51,813
|
|
|
118,497
|
|
|
|||||
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Unfunded investment commitments
(3)
|
|
$
|
510,666
|
|
|
$
|
179,617
|
|
|
150,583
|
|
|
65,900
|
|
|
114,566
|
|
|
|||
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Debt (principal payments)
(4)
|
|
$
|
1,350,000
|
|
|
$
|
250,000
|
|
|
500,000
|
|
|
—
|
|
|
600,000
|
|
|
|||
|
Debt (interest payments)
(4)(5)
|
|
$
|
500,754
|
|
|
$
|
46,688
|
|
|
68,438
|
|
|
53,750
|
|
|
331,879
|
|
|
|||
|
Total
|
|
$
|
14,893,095
|
|
|
$
|
3,844,168
|
|
|
$
|
4,594,573
|
|
|
$
|
2,184,366
|
|
|
$
|
4,269,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We are obligated to pay claims for specified loss events covered by the (re)insurance contracts that we write. 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
|
(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
$507 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
$4 million
of unfunded commitments related to our commercial mortgage loans portfolio.
|
(4)
|
Refer to Item 8, Note 11(a) to the Consolidated Financial Statements '
Debt and Financing Arrangement
s' for further details.
|
(5)
|
Debt (interest payments) includes
$8 million
of unamortized discount and debt insurance expenses.
|
•
|
reserves for losses and loss expenses;
|
•
|
reinsurance recoverable on unpaid losses, including the provision for uncollectible amounts;
|
•
|
gross premiums written;
|
•
|
fair value measurements of financial assets and liabilities; and
|
•
|
other-than-temporary impairments ("OTTI") in the carrying value of available-for-sale securities.
|
•
|
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 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, among 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2018
|
|
2017
|
|
||||||||||||||||||||
|
At December 31,
|
Case reserves
|
|
IBNR
|
|
Total
|
|
Case reserves
|
|
IBNR
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
$
|
757,546
|
|
|
$
|
492,651
|
|
|
$
|
1,250,197
|
|
|
$
|
776,775
|
|
|
$
|
500,039
|
|
|
$
|
1,276,814
|
|
|
|
Marine
|
208,661
|
|
|
335,822
|
|
|
544,483
|
|
|
326,225
|
|
|
306,889
|
|
|
633,114
|
|
|
||||||
|
Aviation
|
102,954
|
|
|
41,554
|
|
|
144,508
|
|
|
99,135
|
|
|
51,480
|
|
|
150,615
|
|
|
||||||
|
Credit and political risk
|
(3,171
|
)
|
|
127,098
|
|
|
123,927
|
|
|
(22,536
|
)
|
|
120,287
|
|
|
97,751
|
|
|
||||||
|
Professional lines
|
666,486
|
|
|
1,937,326
|
|
|
2,603,812
|
|
|
672,262
|
|
|
1,876,326
|
|
|
2,548,588
|
|
|
||||||
|
Liability
|
302,462
|
|
|
1,308,564
|
|
|
1,611,026
|
|
|
367,981
|
|
|
1,218,207
|
|
|
1,586,188
|
|
|
||||||
|
Discontinued lines - Novae
|
60,982
|
|
|
87,374
|
|
|
148,356
|
|
|
457,991
|
|
|
260,744
|
|
|
718,735
|
|
|
||||||
|
Total Insurance
|
2,095,920
|
|
|
4,330,389
|
|
|
6,426,309
|
|
|
2,677,833
|
|
|
4,333,972
|
|
|
7,011,805
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Reinsurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
887,073
|
|
|
901,377
|
|
|
1,788,450
|
|
|
809,836
|
|
|
952,263
|
|
|
1,762,099
|
|
|
||||||
|
Credit and surety
|
125,560
|
|
|
229,218
|
|
|
354,778
|
|
|
132,305
|
|
|
250,296
|
|
|
382,601
|
|
|
||||||
|
Professional lines
|
432,213
|
|
|
702,442
|
|
|
1,134,655
|
|
|
340,516
|
|
|
831,047
|
|
|
1,171,563
|
|
|
||||||
|
Motor
|
649,471
|
|
|
513,416
|
|
|
1,162,887
|
|
|
649,706
|
|
|
499,178
|
|
|
1,148,883
|
|
|
||||||
|
Liability
|
373,178
|
|
|
958,199
|
|
|
1,331,377
|
|
|
312,450
|
|
|
916,423
|
|
|
1,228,873
|
|
|
||||||
|
Discontinued lines - Novae
|
62,789
|
|
|
19,524
|
|
|
82,313
|
|
|
215,012
|
|
|
76,715
|
|
|
291,727
|
|
|
||||||
|
Total Reinsurance
|
2,530,284
|
|
|
3,324,176
|
|
|
5,854,460
|
|
|
2,459,825
|
|
|
3,525,922
|
|
|
5,985,747
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
4,626,204
|
|
|
$
|
7,654,565
|
|
|
$
|
12,280,769
|
|
|
$
|
5,137,659
|
|
|
$
|
7,859,894
|
|
|
$
|
12,997,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Insurance and Reinsurance Professional Lines
|
•
|
Reinsurance Credit and Surety
|
•
|
Insurance Credit and Political Risk
|
•
|
more significant weight given to industry benchmarks in forming our key actuarial assumptions;
|
•
|
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.
|
•
|
estimates of the size of insured industry losses from the catastrophic event and our corresponding market share;
|
•
|
a review of our portfolio of contracts 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.
|
|
|
|
|
|
|
|
|
||||||
|
INSURANCE
|
|
|||||||||||
|
Development pattern
|
Expected loss ratio
|
|
||||||||||
|
Property and other
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(83,761
|
)
|
|
$
|
(70,333
|
)
|
|
$
|
(57,175
|
)
|
|
|
Unchanged
|
(15,736
|
)
|
|
—
|
|
|
15,470
|
|
|
|||
|
3 months longer
|
69,917
|
|
|
88,513
|
|
|
106,845
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Marine
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(45,676
|
)
|
|
$
|
(35,032
|
)
|
|
$
|
(24,385
|
)
|
|
|
Unchanged
|
(12,209
|
)
|
|
—
|
|
|
12,213
|
|
|
|||
|
3 months longer
|
24,457
|
|
|
38,311
|
|
|
52,170
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Aviation
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(9,628
|
)
|
|
$
|
(8,211
|
)
|
|
$
|
(6,795
|
)
|
|
|
Unchanged
|
(1,827
|
)
|
|
—
|
|
|
1,827
|
|
|
|||
|
3 months longer
|
12,365
|
|
|
14,939
|
|
|
17,513
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Credit and political risk
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(13,401
|
)
|
|
$
|
(384
|
)
|
|
$
|
7,634
|
|
|
|
Unchanged
|
(13,038
|
)
|
|
—
|
|
|
8,038
|
|
|
|||
|
3 months longer
|
(12,724
|
)
|
|
332
|
|
|
8,388
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Professional lines
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(369,545
|
)
|
|
$
|
(113,092
|
)
|
|
$
|
143,361
|
|
|
|
Unchanged
|
(267,898
|
)
|
|
—
|
|
|
267,829
|
|
|
|||
|
6 months longer
|
(150,298
|
)
|
|
130,827
|
|
|
411,783
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Liability
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(214,494
|
)
|
|
$
|
(39,013
|
)
|
|
$
|
136,468
|
|
|
|
Unchanged
|
(179,028
|
)
|
|
—
|
|
|
178,403
|
|
|
|||
|
6 months longer
|
(136,630
|
)
|
|
46,198
|
|
|
229,027
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Discontinued lines - Novae
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(2,320
|
)
|
|
$
|
(2,175
|
)
|
|
$
|
(832
|
)
|
|
|
Unchanged
|
(1,151
|
)
|
|
—
|
|
|
1,430
|
|
|
|||
|
6 months longer
|
3,464
|
|
|
4,748
|
|
|
6,308
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
REINSURANCE
|
|
|||||||||||
|
Development pattern
|
Expected loss ratio
|
|
||||||||||
|
Property and other
|
5% lower
|
|
Unchanged
|
|
5% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
3 months shorter
|
$
|
(95,611
|
)
|
|
$
|
(43,462
|
)
|
|
$
|
8,641
|
|
|
|
Unchanged
|
(56,063
|
)
|
|
—
|
|
|
48,703
|
|
|
|||
|
3 months longer
|
(3,133
|
)
|
|
49,562
|
|
|
101,713
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Credit and surety
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(37,438
|
)
|
|
$
|
(22,042
|
)
|
|
$
|
(6,636
|
)
|
|
|
Unchanged
|
(15,881
|
)
|
|
—
|
|
|
16,587
|
|
|
|||
|
6 months longer
|
29,131
|
|
|
48,067
|
|
|
67,071
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Professional lines
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(120,072
|
)
|
|
$
|
(46,366
|
)
|
|
$
|
33,877
|
|
|
|
Unchanged
|
(74,483
|
)
|
|
—
|
|
|
78,611
|
|
|
|||
|
6 months longer
|
(16,022
|
)
|
|
60,957
|
|
|
141,594
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Motor
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(74,843
|
)
|
|
$
|
(29,048
|
)
|
|
$
|
18,894
|
|
|
|
Unchanged
|
(44,456
|
)
|
|
—
|
|
|
48,246
|
|
|
|||
|
6 months longer
|
22,705
|
|
|
73,345
|
|
|
124,669
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Liability
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(158,904
|
)
|
|
$
|
(36,767
|
)
|
|
$
|
92,761
|
|
|
|
Unchanged
|
(116,119
|
)
|
|
—
|
|
|
124,328
|
|
|
|||
|
6 months longer
|
(54,596
|
)
|
|
61,157
|
|
|
181,848
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Discontinued lines - Novae
|
10% lower
|
|
Unchanged
|
|
10% higher
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
6 months shorter
|
$
|
(6,256
|
)
|
|
$
|
(4,485
|
)
|
|
$
|
(2,715
|
)
|
|
|
Unchanged
|
(2,164
|
)
|
|
—
|
|
|
2,164
|
|
|
|||
|
6 months longer
|
3,368
|
|
|
6,040
|
|
|
8,712
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
2018
|
|
2017
|
|
||||||||||||||||||||
|
At December 31,
|
Case
reserves
|
|
IBNR
|
|
Total
|
|
Case
reserves
|
|
IBNR
|
|
Total
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Insurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
$
|
253,798
|
|
|
$
|
208,511
|
|
|
$
|
462,309
|
|
|
$
|
193,662
|
|
|
$
|
194,288
|
|
|
$
|
387,950
|
|
|
|
Marine
|
74,269
|
|
|
112,904
|
|
|
187,173
|
|
|
105,908
|
|
|
101,751
|
|
|
207,659
|
|
|
||||||
|
Aviation
|
8,123
|
|
|
6,187
|
|
|
14,310
|
|
|
7,356
|
|
|
6,918
|
|
|
14,274
|
|
|
||||||
|
Credit and political risk
|
(313
|
)
|
|
24,849
|
|
|
24,536
|
|
|
1,963
|
|
|
13,115
|
|
|
15,078
|
|
|
||||||
|
Professional lines
|
250,214
|
|
|
736,368
|
|
|
986,582
|
|
|
238,450
|
|
|
652,223
|
|
|
890,673
|
|
|
||||||
|
Liability
|
180,410
|
|
|
774,281
|
|
|
954,691
|
|
|
208,965
|
|
|
712,054
|
|
|
921,019
|
|
|
||||||
|
Discontinued lines - Novae
|
24,714
|
|
|
37,937
|
|
|
62,651
|
|
|
173,673
|
|
|
110,996
|
|
|
284,669
|
|
|
||||||
|
Total Insurance
|
791,215
|
|
|
1,901,037
|
|
|
2,692,252
|
|
|
929,977
|
|
|
1,791,345
|
|
|
2,721,322
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Reinsurance segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Property and other
|
237,842
|
|
|
191,084
|
|
|
428,926
|
|
|
131,340
|
|
|
178,967
|
|
|
310,307
|
|
|
||||||
|
Credit and surety
|
9,621
|
|
|
26,719
|
|
|
36,340
|
|
|
2,561
|
|
|
10,500
|
|
|
13,061
|
|
|
||||||
|
Professional lines
|
10,076
|
|
|
71,546
|
|
|
81,622
|
|
|
1,930
|
|
|
35,892
|
|
|
37,822
|
|
|
||||||
|
Motor
|
41,112
|
|
|
78,305
|
|
|
119,417
|
|
|
1,481
|
|
|
2,185
|
|
|
3,666
|
|
|
||||||
|
Liability
|
20,073
|
|
|
112,251
|
|
|
132,324
|
|
|
8,314
|
|
|
58,378
|
|
|
66,692
|
|
|
||||||
|
Discontinued lines - Novae
|
8,343
|
|
|
2,445
|
|
|
10,788
|
|
|
5,435
|
|
|
1,209
|
|
|
6,644
|
|
|
||||||
|
Total Reinsurance
|
327,067
|
|
|
482,350
|
|
|
809,417
|
|
|
151,061
|
|
|
287,131
|
|
|
438,192
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total
|
$
|
1,118,282
|
|
|
$
|
2,383,387
|
|
|
$
|
3,501,669
|
|
|
$
|
1,081,038
|
|
|
$
|
2,078,476
|
|
|
$
|
3,159,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
changes in renewal rates or rates of new business accepted by cedants (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,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Catastrophe
|
$
|
12,944
|
|
|
$
|
16,344
|
|
|
$
|
4,418
|
|
|
|
Property
|
237,527
|
|
|
248,580
|
|
|
173,380
|
|
|
|||
|
Professional lines
|
174,126
|
|
|
214,184
|
|
|
211,567
|
|
|
|||
|
Credit and surety
|
221,260
|
|
|
223,184
|
|
|
188,365
|
|
|
|||
|
Motor
|
361,471
|
|
|
318,494
|
|
|
239,056
|
|
|
|||
|
Liability
|
246,554
|
|
|
263,790
|
|
|
272,390
|
|
|
|||
|
Agriculture
|
205,116
|
|
|
202,234
|
|
|
141,994
|
|
|
|||
|
Engineering
|
48,692
|
|
|
67,221
|
|
|
60,080
|
|
|
|||
|
Accident and health
|
284,675
|
|
|
189,567
|
|
|
185,370
|
|
|
|||
|
Other
|
11,360
|
|
|
51,211
|
|
|
56,283
|
|
|
|||
|
Total estimated premiums
|
$
|
1,803,725
|
|
|
$
|
1,794,809
|
|
|
$
|
1,532,903
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written (reinsurance segment)
|
$
|
3,112,473
|
|
|
$
|
2,741,355
|
|
|
$
|
2,537,733
|
|
|
|
As a % of total gross premiums written
|
58
|
%
|
|
65
|
%
|
|
60
|
%
|
|
|||
|
|
|
|
|
|
|
|
•
|
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 judgments about assumptions that market participants might use.
|
|
|
|
|
|
|
|
At December 31,
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Fair value of collateral
|
—
|
|
100%
|
|
|
Discount Margin
|
—
|
|
0.1% - 16.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Discount rate
|
3.0% - 8.0%
|
|
6.0% - 8.5%
|
|
|
|
|
|
|
|
a.
|
The length of time and extent to which the fair value is less than the amortized cost.
|
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 reason for the decline (e.g. credit spread widening, credit event, foreign exchange rate movements);
|
d.
|
The historical and implied volatility of the fair value.
|
e.
|
The collateral structure and credit support of the security, if applicable.
|
•
|
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, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. government and agency
|
$
|
1,515,697
|
|
|
$
|
(36,818
|
)
|
|
$
|
—
|
|
|
$
|
(36,818
|
)
|
|
|
Non-U.S. government
|
493,016
|
|
|
(17,219
|
)
|
|
—
|
|
|
(17,219
|
)
|
|
||||
|
Agency RMBS
|
1,643,308
|
|
|
(63,612
|
)
|
|
—
|
|
|
(63,612
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Securities exposed to credit spreads:
|
|
|
|
|
|
|
|
|
||||||||
|
Corporate debt
|
4,876,921
|
|
|
(149,896
|
)
|
|
(167,165
|
)
|
|
(317,061
|
)
|
|
||||
|
CMBS
|
1,092,530
|
|
|
(51,005
|
)
|
|
(54,608
|
)
|
|
(105,613
|
)
|
|
||||
|
Non agency RMBS
|
40,687
|
|
|
(315
|
)
|
|
(1,321
|
)
|
|
(1,636
|
)
|
|
||||
|
ABS
|
1,637,603
|
|
|
(10,966
|
)
|
|
(54,226
|
)
|
|
(65,192
|
)
|
|
||||
|
Municipals
|
135,585
|
|
|
(4,838
|
)
|
|
(5,316
|
)
|
|
(10,154
|
)
|
|
||||
|
|
$
|
11,435,347
|
|
|
$
|
(334,669
|
)
|
|
$
|
(282,636
|
)
|
|
$
|
(617,305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
AUD
|
|
NZD
|
|
CAD
|
|
EUR
|
|
GBP
|
|
JPY
|
|
Other
|
|
Total
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Net managed assets (liabilities), excluding derivatives
|
$
|
56,992
|
|
|
$
|
(5,943
|
)
|
|
$
|
110,394
|
|
|
$
|
(329,761
|
)
|
|
$
|
(166,396
|
)
|
|
$
|
(8,944
|
)
|
|
$
|
64,523
|
|
|
$
|
(279,135
|
)
|
|
|
Foreign currency derivatives, net
|
(38,383
|
)
|
|
3,020
|
|
|
(128,266
|
)
|
|
329,708
|
|
|
20,138
|
|
|
(8,663
|
)
|
|
(939
|
)
|
|
176,615
|
|
|
||||||||
|
Net managed foreign currency exposure
|
18,609
|
|
|
(2,923
|
)
|
|
(17,872
|
)
|
|
(53
|
)
|
|
(146,258
|
)
|
|
(17,607
|
)
|
|
63,584
|
|
|
(102,520
|
)
|
|
||||||||
|
Other net foreign currency exposure
|
1
|
|
|
—
|
|
|
82
|
|
|
(33
|
)
|
|
379
|
|
|
—
|
|
|
52,924
|
|
|
53,353
|
|
|
||||||||
|
Total net foreign currency exposure
|
$
|
18,610
|
|
|
$
|
(2,923
|
)
|
|
$
|
(17,790
|
)
|
|
$
|
(86
|
)
|
|
$
|
(145,879
|
)
|
|
$
|
(17,607
|
)
|
|
$
|
116,508
|
|
|
$
|
(49,167
|
)
|
|
|
Net foreign currency exposure as a percentage of total shareholders’ equity
|
0.4
|
%
|
|
(0.1
|
%)
|
|
(0.4
|
%)
|
|
—
|
%
|
|
(2.9
|
%)
|
|
(0.4
|
%)
|
|
2.3
|
%
|
|
(1.0
|
%)
|
|
||||||||
|
Pre-tax impact of net foreign currency exposure on shareholders’ equity given a hypothetical 10% rate movement
(1)
|
$
|
1,861
|
|
|
$
|
(292
|
)
|
|
$
|
(1,779
|
)
|
|
$
|
(9
|
)
|
|
$
|
(14,588
|
)
|
|
$
|
(1,761
|
)
|
|
$
|
11,651
|
|
|
$
|
(4,917
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Accompanying Notes
|
Page
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
Consolidated Balance Sheets at December 31, 2018 and 2017
|
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017 and 2016
|
|
|
|
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2018, 2017 and 2016
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
|
Note 1 – History
|
|
|
|
Note 2 – Basis of Presentation and 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 – Reserve 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 – Income Taxes
|
|
|
|
Note 19 – Other Comprehensive Income (Loss)
|
|
|
|
Note 20 – Statutory Financial Information
|
|
|
|
Note 21 – Unaudited Condensed Quarterly Financial Data
|
|
|
|
|
/s/ Deloitte Ltd.
|
Hamilton, Bermuda
|
February 26, 2019
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturities, available for sale, at fair value
(Amortized cost 2018: $11,616,312; 2017: $12,611,219) |
$
|
11,435,347
|
|
|
$
|
12,622,006
|
|
Equity securities, at fair value
(Cost 2018: $365,905; 2017: $552,867) |
381,633
|
|
|
635,511
|
|
||
Mortgage loans, held for investment, at amortized cost and fair value
|
298,650
|
|
|
325,062
|
|
||
Other investments, at fair value
|
787,787
|
|
|
1,009,373
|
|
||
Equity method investments
|
108,103
|
|
|
108,597
|
|
||
Short-term investments, at amortized cost and fair value
|
144,040
|
|
|
83,661
|
|
||
Total investments
|
13,155,560
|
|
|
14,784,210
|
|
||
Cash and cash equivalents
|
1,232,814
|
|
|
948,626
|
|
||
Restricted cash and cash equivalents
|
597,206
|
|
|
415,160
|
|
||
Accrued interest receivable
|
80,335
|
|
|
81,223
|
|
||
Insurance and reinsurance premium balances receivable
|
3,007,296
|
|
|
3,012,419
|
|
||
Reinsurance recoverable on unpaid losses
|
3,501,669
|
|
|
3,159,514
|
|
||
Reinsurance recoverable on paid losses
|
280,233
|
|
|
179,326
|
|
||
Deferred acquisition costs
|
566,622
|
|
|
474,061
|
|
||
Prepaid reinsurance premiums
|
1,013,573
|
|
|
809,274
|
|
||
Receivable for investments sold
|
32,627
|
|
|
11,621
|
|
||
Goodwill
|
102,003
|
|
|
102,003
|
|
||
Intangible assets
|
241,568
|
|
|
257,987
|
|
||
Value of business acquired
|
35,714
|
|
|
206,838
|
|
||
Other assets
|
285,346
|
|
|
317,915
|
|
||
Total assets
|
$
|
24,132,566
|
|
|
$
|
24,760,177
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Reserve for losses and loss expenses
|
$
|
12,280,769
|
|
|
$
|
12,997,553
|
|
Unearned premiums
|
3,635,758
|
|
|
3,641,399
|
|
||
Insurance and reinsurance balances payable
|
1,338,991
|
|
|
899,064
|
|
||
Senior notes and notes payable
|
1,341,961
|
|
|
1,376,529
|
|
||
Payable for investments purchased
|
111,838
|
|
|
100,589
|
|
||
Other liabilities
|
393,178
|
|
|
403,779
|
|
||
Total liabilities
|
19,102,495
|
|
|
19,418,913
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
||
Shareholders' equity
|
|
|
|
||||
Preferred shares
|
775,000
|
|
|
775,000
|
|
||
Common shares
(shares issued 2018: 176,580; 2017: 176,580
shares outstanding 2018: 83,586; 2017: 83,161)
|
2,206
|
|
|
2,206
|
|
||
Additional paid-in capital
|
2,308,583
|
|
|
2,299,166
|
|
||
Accumulated other comprehensive income (loss)
|
(177,110
|
)
|
|
92,382
|
|
||
Retained earnings
|
5,912,812
|
|
|
5,979,666
|
|
||
Treasury shares, at cost
(2018: 92,994; 2017: 93,419)
|
(3,791,420
|
)
|
|
(3,807,156
|
)
|
||
Total shareholders’ equity
|
5,030,071
|
|
|
5,341,264
|
|
||
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
24,132,566
|
|
|
$
|
24,760,177
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except for per share data)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net premiums earned
|
$
|
4,791,495
|
|
|
$
|
4,148,760
|
|
|
$
|
3,705,625
|
|
Net investment income
|
438,507
|
|
|
400,805
|
|
|
353,335
|
|
|||
Other insurance related income (losses)
|
10,622
|
|
|
(1,240
|
)
|
|
7,222
|
|
|||
Bargain purchase gain
|
—
|
|
|
15,044
|
|
|
—
|
|
|||
Net investment gains (losses):
|
|
|
|
|
|
||||||
Other-than-temporary impairment ("OTTI") losses
|
(9,733
|
)
|
|
(14,493
|
)
|
|
(26,210
|
)
|
|||
Other realized and unrealized investment gains (losses)
|
(140,485
|
)
|
|
42,719
|
|
|
(34,315
|
)
|
|||
Total net investment gains (losses)
|
(150,218
|
)
|
|
28,226
|
|
|
(60,525
|
)
|
|||
Total revenues
|
5,090,406
|
|
|
4,591,595
|
|
|
4,005,657
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
3,190,287
|
|
|
3,287,772
|
|
|
2,204,197
|
|
|||
Acquisition costs
|
968,835
|
|
|
823,591
|
|
|
746,876
|
|
|||
General and administrative expenses
|
627,389
|
|
|
579,428
|
|
|
602,717
|
|
|||
Foreign exchange losses (gains)
|
(29,165
|
)
|
|
134,737
|
|
|
(121,295
|
)
|
|||
Interest expense and financing costs
|
67,432
|
|
|
54,811
|
|
|
51,360
|
|
|||
Transaction and reorganization expenses
|
66,940
|
|
|
26,718
|
|
|
—
|
|
|||
Amortization of value of business acquired
|
172,332
|
|
|
50,104
|
|
|
—
|
|
|||
Amortization of intangible assets
|
13,814
|
|
|
2,543
|
|
|
—
|
|
|||
Total expenses
|
5,077,864
|
|
|
4,959,704
|
|
|
3,483,855
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before income taxes and interest in income (loss) of equity method investments
|
12,542
|
|
|
(368,109
|
)
|
|
521,802
|
|
|||
Income tax (expense) benefit
|
29,486
|
|
|
7,542
|
|
|
(6,340
|
)
|
|||
Interest in income (loss) of equity method investments
|
993
|
|
|
(8,402
|
)
|
|
(2,094
|
)
|
|||
Net income (loss)
|
43,021
|
|
|
(368,969
|
)
|
|
513,368
|
|
|||
Preferred share dividends
|
42,625
|
|
|
46,810
|
|
|
46,597
|
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
—
|
|
|
1,309
|
|
|||
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
|
|
|
|
|
||||||
Per share data
|
|
|
|
|
|
||||||
Earnings (loss) per common share:
|
|
|
|
|
|
||||||
Earnings (loss) per common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
Earnings (loss) per diluted common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
Weighted average common shares outstanding
|
83,501
|
|
|
84,108
|
|
|
90,772
|
|
|||
Weighted average diluted common shares outstanding
|
84,007
|
|
|
84,108
|
|
|
91,547
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
43,021
|
|
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Available for sale investments:
|
|
|
|
|
|
||||||
Unrealized investment gains (losses) arising during the year
|
(291,731
|
)
|
|
205,419
|
|
|
5,072
|
|
|||
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income (loss)
|
100,902
|
|
|
(33,134
|
)
|
|
62,190
|
|
|||
Unrealized investment gains (losses) arising during the year, net of reclassification adjustment
|
(190,829
|
)
|
|
172,285
|
|
|
67,262
|
|
|||
Foreign currency translation adjustment
|
(11,165
|
)
|
|
41,938
|
|
|
(638
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
(201,994
|
)
|
|
214,223
|
|
|
66,624
|
|
|||
Comprehensive income (loss)
|
$
|
(158,973
|
)
|
|
$
|
(154,746
|
)
|
|
$
|
579,992
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Preferred shares
|
|
|
|
|
|
||||||
Balance at beginning of year
|
$
|
775,000
|
|
|
$
|
1,126,074
|
|
|
$
|
627,843
|
|
Shares issued
|
—
|
|
|
—
|
|
|
550,000
|
|
|||
Shares repurchased
|
—
|
|
|
(351,074
|
)
|
|
(51,769
|
)
|
|||
Balance at end of year
|
775,000
|
|
|
775,000
|
|
|
1,126,074
|
|
|||
|
|
|
|
|
|
||||||
Common shares (par value)
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,206
|
|
|
2,206
|
|
|
2,202
|
|
|||
Shares issued
|
—
|
|
|
—
|
|
|
4
|
|
|||
Balance at end of year
|
2,206
|
|
|
2,206
|
|
|
2,206
|
|
|||
|
|
|
|
|
|
||||||
Additional paid-in capital
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,299,166
|
|
|
2,299,857
|
|
|
2,241,388
|
|
|||
Common shares issued
|
—
|
|
|
—
|
|
|
220
|
|
|||
Treasury shares reissued
|
(24,088
|
)
|
|
(39,368
|
)
|
|
(19,303
|
)
|
|||
Settlement of accelerated share repurchase
|
—
|
|
|
—
|
|
|
60,000
|
|
|||
Costs associated with issuance of preferred shares
|
—
|
|
|
—
|
|
|
(18,055
|
)
|
|||
Share-based compensation expense
|
33,505
|
|
|
38,677
|
|
|
35,607
|
|
|||
Balance at end of year
|
2,308,583
|
|
|
2,299,166
|
|
|
2,299,857
|
|
|||
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss)
|
|
|
|
|
|
||||||
Balance at beginning of year
|
92,382
|
|
|
(121,841
|
)
|
|
(188,465
|
)
|
|||
Unrealized gains (losses) on available-for-sale investments, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
89,962
|
|
|
(82,323
|
)
|
|
(149,585
|
)
|
|||
Cumulative effect of adoption of ASU No. 2018-02
|
2,106
|
|
|
—
|
|
|
—
|
|
|||
Cumulative effect of adoption of ASU No. 2016-01, net of taxes
|
(69,604
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized gains (losses) arising during the year, net of reclassification adjustment
|
(190,829
|
)
|
|
172,285
|
|
|
67,262
|
|
|||
Balance at end of year
|
(168,365
|
)
|
|
89,962
|
|
|
(82,323
|
)
|
|||
Cumulative foreign currency translation adjustments, net of tax:
|
|
|
|
|
|
||||||
Balance at beginning of year
|
2,420
|
|
|
(39,518
|
)
|
|
(38,880
|
)
|
|||
Foreign currency translation adjustment
|
(11,165
|
)
|
|
41,938
|
|
|
(638
|
)
|
|||
Balance at end of year
|
(8,745
|
)
|
|
2,420
|
|
|
(39,518
|
)
|
|||
Balance at end of year
|
(177,110
|
)
|
|
92,382
|
|
|
(121,841
|
)
|
|||
|
|
|
|
|
|
||||||
Retained earnings
|
|
|
|
|
|
||||||
Balance at beginning of year
|
5,979,666
|
|
|
6,527,627
|
|
|
6,194,353
|
|
|||
Cumulative effect of adoption of ASU No. 2018-02
|
(2,106
|
)
|
|
—
|
|
|
—
|
|
|||
Cumulative effect of adoption of ASU No. 2016-01, net of taxes
|
69,604
|
|
|
—
|
|
|
—
|
|
|||
Net income (loss)
|
43,021
|
|
|
(368,969
|
)
|
|
513,368
|
|
|||
Preferred share dividends
|
(42,625
|
)
|
|
(46,810
|
)
|
|
(46,597
|
)
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
—
|
|
|
(1,309
|
)
|
|||
Common share dividends
|
(134,748
|
)
|
|
(132,182
|
)
|
|
(132,188
|
)
|
|||
Balance at end of year
|
5,912,812
|
|
|
5,979,666
|
|
|
6,527,627
|
|
|||
|
|
|
|
|
|
||||||
Treasury shares, at cost
|
|
|
|
|
|
||||||
Balance at beginning of year
|
(3,807,156
|
)
|
|
(3,561,553
|
)
|
|
(3,010,439
|
)
|
|||
Shares repurchased
|
(10,080
|
)
|
|
(285,858
|
)
|
|
(571,805
|
)
|
|||
Shares reissued
|
25,816
|
|
|
40,255
|
|
|
20,691
|
|
|||
Balance at end of year
|
(3,791,420
|
)
|
|
(3,807,156
|
)
|
|
(3,561,553
|
)
|
|||
|
|
|
|
|
|
||||||
Total shareholders' equity
|
$
|
5,030,071
|
|
|
$
|
5,341,264
|
|
|
$
|
6,272,370
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
43,021
|
|
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Net investment (gains) losses
|
144,297
|
|
|
(28,226
|
)
|
|
60,525
|
|
|||
Net realized and unrealized gains on other investments
|
(45,153
|
)
|
|
(72,763
|
)
|
|
(38,669
|
)
|
|||
Amortization of fixed maturities
|
24,663
|
|
|
43,292
|
|
|
65,921
|
|
|||
Interest in income (loss) of equity method investments
|
495
|
|
|
8,402
|
|
|
2,094
|
|
|||
Amortization of value of business acquired
|
172,332
|
|
|
50,104
|
|
|
—
|
|
|||
Other amortization and depreciation
|
9,795
|
|
|
31,367
|
|
|
24,573
|
|
|||
Share-based compensation expense, net of cash payments
|
34,346
|
|
|
12,667
|
|
|
52,211
|
|
|||
Non-cash foreign exchange losses
|
—
|
|
|
24,149
|
|
|
—
|
|
|||
Bargain purchase gain
|
—
|
|
|
(15,044
|
)
|
|
—
|
|
|||
Changes in:
|
|
|
|
|
|
||||||
Accrued interest receivable
|
(3,184
|
)
|
|
(4,353
|
)
|
|
(885
|
)
|
|||
Reinsurance recoverable balances on unpaid and paid losses
|
(766,690
|
)
|
|
(131,160
|
)
|
|
(176,532
|
)
|
|||
Deferred acquisition costs
|
(98,329
|
)
|
|
(35,076
|
)
|
|
33,212
|
|
|||
Prepaid reinsurance premiums
|
(212,654
|
)
|
|
(56,377
|
)
|
|
(158,809
|
)
|
|||
Reserve for loss and loss expenses
|
442,839
|
|
|
1,004,578
|
|
|
54,476
|
|
|||
Unearned premiums
|
29,760
|
|
|
(56,603
|
)
|
|
198,938
|
|
|||
Insurance and reinsurance balances, net
|
208,783
|
|
|
(81,831
|
)
|
|
(209,895
|
)
|
|||
Other items
|
26,452
|
|
|
(64,928
|
)
|
|
(13,804
|
)
|
|||
Net cash provided by operating activities
|
10,773
|
|
|
259,229
|
|
|
406,724
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of:
|
|
|
|
|
|
||||||
Fixed maturities
|
(8,464,140
|
)
|
|
(8,714,990
|
)
|
|
(9,176,728
|
)
|
|||
Equity securities
|
(73,107
|
)
|
|
(106,136
|
)
|
|
(302,554
|
)
|
|||
Mortgage loans
|
(106,171
|
)
|
|
(31,077
|
)
|
|
(148,450
|
)
|
|||
Other investments
|
(180,126
|
)
|
|
(153,150
|
)
|
|
(190,370
|
)
|
|||
Equity method investments
|
—
|
|
|
(1,000
|
)
|
|
(107,913
|
)
|
|||
Short-term investments
|
(305,670
|
)
|
|
(41,609
|
)
|
|
(190,747
|
)
|
|||
Proceeds from the sale of:
|
|
|
|
|
|
||||||
Fixed maturities
|
7,586,536
|
|
|
7,004,973
|
|
|
7,905,316
|
|
|||
Equity securities
|
246,196
|
|
|
448,058
|
|
|
305,642
|
|
|||
Other investments
|
361,030
|
|
|
260,943
|
|
|
215,578
|
|
|||
Short-term investments
|
178,983
|
|
|
49,280
|
|
|
54,165
|
|
|||
Proceeds from redemption of fixed maturities
|
1,241,214
|
|
|
2,009,982
|
|
|
1,492,588
|
|
|||
Proceeds from redemption of short-term investments
|
45,831
|
|
|
119,427
|
|
|
36,546
|
|
|||
Proceeds from the repayment of mortgage loans
|
133,081
|
|
|
56,435
|
|
|
5,040
|
|
|||
Purchase of other assets
|
(25,103
|
)
|
|
(42,685
|
)
|
|
(27,149
|
)
|
|||
Purchase of subsidiaries, net
|
—
|
|
|
(466,941
|
)
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
638,554
|
|
|
391,510
|
|
|
(129,036
|
)
|
|||
|
|
|
|
|
|
||||||
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
|
)
|
|||
Taxes paid on withholding shares
|
(10,080
|
)
|
|
(24,678
|
)
|
|
(14,329
|
)
|
|||
Dividends paid - common shares
|
(133,502
|
)
|
|
(135,032
|
)
|
|
(132,323
|
)
|
|||
Repurchase of preferred shares
|
—
|
|
|
(351,074
|
)
|
|
(51,769
|
)
|
|||
Dividends paid - preferred shares
|
(42,625
|
)
|
|
(52,844
|
)
|
|
(39,909
|
)
|
|||
Proceeds from issuance of common shares
|
—
|
|
|
—
|
|
|
224
|
|
|||
Net cash used in financing activities
|
(186,207
|
)
|
|
(545,688
|
)
|
|
(201,587
|
)
|
|||
|
|
|
|
|
|
Effect of exchange rate changes on foreign currency cash, cash equivalents and restricted cash
|
3,114
|
|
|
17,228
|
|
|
(9,345
|
)
|
|||
Increase in cash, cash equivalents and restricted cash
|
466,234
|
|
|
122,279
|
|
|
66,756
|
|
|||
Cash, cash equivalents and restricted cash - beginning of year
|
1,363,786
|
|
|
1,241,507
|
|
|
1,174,751
|
|
|||
Cash, cash equivalents and restricted cash - end of year
|
$
|
1,830,020
|
|
|
$
|
1,363,786
|
|
|
$
|
1,241,507
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid
|
$
|
15,698
|
|
|
$
|
—
|
|
|
$
|
12,041
|
|
Interest paid
|
$
|
64,822
|
|
|
$
|
49,945
|
|
|
$
|
48,875
|
|
18.
|
INCOME TAXES (CONTINUED)
|
1.
|
HISTORY
|
•
|
AXIS Specialty Limited ("AXIS Specialty Bermuda"), a Bermuda domiciled company is licensed to provide specialty insurance and treaty reinsurance products on a worldwide basis. In addition, AXIS Specialty Bermuda conducts (re)insurance business through its branch in Singapore, AXIS Specialty Limited (Singapore Branch).
|
•
|
AXIS Insurance Company, domiciled in Illinois and AXIS Reinsurance Company, domiciled in New York, together with AXIS Reinsurance Company (Canadian branch) are licensed to offer a range of specialty insurance and treaty reinsurance products to a variety of niche markets on a worldwide basis. AXIS Surplus Insurance Company, domiciled in the state of Illinois is eligible to write insurance on a surplus lines basis.
|
•
|
AXIS Specialty Europe SE ("AXIS Specialty Europe") is a European public limited liability company, incorporated as a non-life insurer under the laws of Ireland. It is a Societas Europaea (SE), or European society company, and has been registered in accordance with company law of the E.U. AXIS Specialty Europe also conducts insurance business through its branch in the United Kingdom, AXIS Specialty Europe SE ("UK Branch"). Effective January 1, 2019, AXIS Specialty Europe will also conduct insurance business through new branches in Belgium and in the Netherlands.
|
•
|
AXIS Re SE ("AXIS Re") is a European public limited liability company, incorporated as a reinsurer under the laws of Ireland. AXIS Re SE is also a Societas Europaea (SE). AXIS Re also conducts reinsurance business through its branch in Switzerland, AXIS Re SE, Dublin (Zurich Branch).
|
•
|
The Company operates in the Lloyd's of London ("Lloyd's") market through AXIS Corporate Capital UK Limited which is the sole corporate member of AXIS Syndicate 1686 ("Syndicate 1686"). Effective August 4, 2017, AXIS Managing Agency Ltd. ("AXIS Managing Agency") assumed management of Syndicate 1686, replacing the Company's third-party managing agency agreement with Asta Managing Agency Limited, which had been in place since 2014. Effective January 1, 2019, AXIS Corporate Capital UK Limited and Novae Corporate Underwriting Limited ("NCUL") will provide
70%
and
30%
, respectively, of Syndicate 1686's capital support.
|
•
|
On October 2, 2017, AXIS Specialty UK Holdings Limited, a wholly owned subsidiary of the Company, acquired a
100%
ownership interest in Novae Group plc ("Novae"). Novae operates in the Lloyd's market through NCUL, the sole corporate member of Novae Syndicate 2007 ("Syndicate 2007") and owns Lloyd’s managing agency, Novae Syndicates Limited ("NSL") which operated in the Lloyd’s insurance market and managed Syndicate 2007 until January 1, 2018, when the Company received authorization from Lloyd’s for AXIS Managing Agency to commence management and oversight of Syndicate 2007.
|
•
|
AXIS Ventures Limited ("AXIS Ventures"), regulated by the BMA as an insurance manager, generates fee income from services provided to strategic capital partners. AXIS Ventures Reinsurance Limited ("Ventures Re") is a Bermuda domiciled insurer and is a registered segregated accounts company under the Bermuda Segregated Accounts Companies Act 2000, as amended. Ventures Re manages capital for investors interested in deploying funds directly into the property-catastrophe and other short-tail business.
|
2.
|
BASIS OF PRESENTATION AND 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;
|
•
|
fair value measurements of financial assets and liabilities; and
|
•
|
other-than-temporary impairments ("OTTI") in the carrying value of available-for-sale securities.
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
a)
|
Investments
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
b)
|
Cash and Cash Equivalents
|
c)
|
Premiums and Acquisition Costs
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
d)
|
Losses and Loss Expenses
|
e)
|
Reinsurance
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
f)
|
Foreign Exchange
|
h)
|
Derivative Instruments
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
i)
|
Goodwill and Intangible Assets
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
k)
|
Treasury Shares
|
l)
|
New Accounting Standards Adopted in 2018
|
•
|
requires 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.
|
BASIS OF PRESENTATION AND 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 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.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
m)
|
Recently Issued Accounting Standards Not Yet Adopted
|
2.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
1.
|
whether any expired or existing contracts are or contain leases;
|
2.
|
the lease classification for any expired or existing leases; and
|
3.
|
initial direct costs for any existing leases.
|
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 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, 2018
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
3,797,592
|
|
|
$
|
3,112,473
|
|
|
$
|
6,910,065
|
|
|
|
Net premiums written
|
2,324,747
|
|
|
2,334,215
|
|
|
4,658,962
|
|
|
|||
|
Net premiums earned
|
2,362,606
|
|
|
2,428,889
|
|
|
4,791,495
|
|
|
|||
|
Other insurance related income
|
3,460
|
|
|
7,162
|
|
|
10,622
|
|
|
|||
|
Net losses and loss expenses
|
(1,494,323
|
)
|
|
(1,695,964
|
)
|
|
(3,190,287
|
)
|
|
|||
|
Acquisition costs
|
(399,193
|
)
|
|
(569,642
|
)
|
|
(968,835
|
)
|
|
|||
|
General and administrative expenses
|
(395,252
|
)
|
|
(123,916
|
)
|
|
(519,168
|
)
|
|
|||
|
Underwriting income
|
$
|
77,298
|
|
|
$
|
46,529
|
|
|
123,827
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(108,221
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
438,507
|
|
|
|||||
|
Net investment losses
|
|
|
|
|
(150,218
|
)
|
|
|||||
|
Foreign exchange gains
|
|
|
|
|
29,165
|
|
|
|||||
|
Interest expense and financing costs
|
|
|
|
|
(67,432
|
)
|
|
|||||
|
Transaction and reorganization expenses
|
|
|
|
|
(66,940
|
)
|
|
|||||
|
Amortization of value of business acquired
|
|
|
|
|
(172,332
|
)
|
|
|||||
|
Amortization of intangible assets
|
|
|
|
|
(13,814
|
)
|
|
|||||
|
Income before income taxes and interest in income (loss) of equity method investments
|
|
|
|
|
$
|
12,542
|
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Net loss and loss expense ratio
|
63.2
|
%
|
|
69.8
|
%
|
|
66.6
|
%
|
|
|||
|
Acquisition cost ratio
|
16.9
|
%
|
|
23.5
|
%
|
|
20.2
|
%
|
|
|||
|
General and administrative expense ratio
|
16.8
|
%
|
|
5.1
|
%
|
|
13.1
|
%
|
|
|||
|
Combined ratio
|
96.9
|
%
|
|
98.4
|
%
|
|
99.9
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total intangible assets
|
$
|
379,285
|
|
|
$
|
—
|
|
|
$
|
379,285
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31, 2017
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
2,814,918
|
|
|
$
|
2,741,355
|
|
|
$
|
5,556,273
|
|
|
|
Net premiums written
|
1,775,825
|
|
|
2,251,318
|
|
|
4,027,143
|
|
|
|||
|
Net premiums earned
|
1,816,438
|
|
|
2,332,322
|
|
|
4,148,760
|
|
|
|||
|
Other insurance related income (loss)
|
2,944
|
|
|
(4,184
|
)
|
|
(1,240
|
)
|
|
|||
|
Net losses and loss expenses
|
(1,465,427
|
)
|
|
(1,822,345
|
)
|
|
(3,287,772
|
)
|
|
|||
|
Acquisition costs
|
(270,229
|
)
|
|
(553,362
|
)
|
|
(823,591
|
)
|
|
|||
|
General and administrative expenses
|
(325,368
|
)
|
|
(124,115
|
)
|
|
(449,483
|
)
|
|
|||
|
Underwriting loss
|
$
|
(241,642
|
)
|
|
$
|
(171,684
|
)
|
|
(413,326
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(129,945
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
400,805
|
|
|
|||||
|
Net investment gains
|
|
|
|
|
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 intangible assets
|
|
|
|
|
(2,543
|
)
|
|
|||||
|
Loss before income taxes and interest in income (loss) of equity method investments
|
|
|
|
|
$
|
(368,109
|
)
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Net loss and loss expense ratio
|
80.7
|
%
|
|
78.1
|
%
|
|
79.2
|
%
|
|
|||
|
Acquisition cost ratio
|
14.9
|
%
|
|
23.7
|
%
|
|
19.9
|
%
|
|
|||
|
General and administrative expense ratio
|
17.9
|
%
|
|
5.3
|
%
|
|
14.0
|
%
|
|
|||
|
Combined ratio
|
113.5
|
%
|
|
107.1
|
%
|
|
113.1
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total intangible assets
|
$
|
566,828
|
|
|
$
|
—
|
|
|
$
|
566,828
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31, 2016
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross premiums written
|
$
|
2,432,475
|
|
|
$
|
2,537,733
|
|
|
$
|
4,970,208
|
|
|
|
Net premiums written
|
1,519,559
|
|
|
2,233,415
|
|
|
3,752,974
|
|
|
|||
|
Net premiums earned
|
1,534,282
|
|
|
2,171,343
|
|
|
3,705,625
|
|
|
|||
|
Other insurance related income
|
89
|
|
|
7,133
|
|
|
7,222
|
|
|
|||
|
Net losses and loss expenses
|
(977,771
|
)
|
|
(1,226,426
|
)
|
|
(2,204,197
|
)
|
|
|||
|
Acquisition costs
|
(206,619
|
)
|
|
(540,257
|
)
|
|
(746,876
|
)
|
|
|||
|
General and administrative expenses
|
(327,351
|
)
|
|
(155,350
|
)
|
|
(482,701
|
)
|
|
|||
|
Underwriting income
|
$
|
22,630
|
|
|
$
|
256,443
|
|
|
279,073
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Corporate expenses
|
|
|
|
|
(120,016
|
)
|
|
|||||
|
Net investment income
|
|
|
|
|
353,335
|
|
|
|||||
|
Net investment losses
|
|
|
|
|
(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
|
63.7
|
%
|
|
56.5
|
%
|
|
59.5
|
%
|
|
|||
|
Acquisition cost ratio
|
13.5
|
%
|
|
24.9
|
%
|
|
20.2
|
%
|
|
|||
|
General and administrative expense ratio
|
21.3
|
%
|
|
7.1
|
%
|
|
16.2
|
%
|
|
|||
|
Combined ratio
|
98.5
|
%
|
|
88.5
|
%
|
|
95.9
|
%
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total intangible assets
|
$
|
85,049
|
|
|
$
|
—
|
|
|
$
|
85,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Bermuda
|
$
|
606,452
|
|
|
$
|
529,425
|
|
|
$
|
465,980
|
|
|
|
Ireland
|
1,805,882
|
|
|
1,569,956
|
|
|
1,650,229
|
|
|
|||
|
U.S.
|
2,811,537
|
|
|
2,814,933
|
|
|
2,562,789
|
|
|
|||
|
Lloyd's of London
|
1,686,194
|
|
|
641,959
|
|
|
291,210
|
|
|
|||
|
Total gross premium written
|
$
|
6,910,065
|
|
|
$
|
5,556,273
|
|
|
$
|
4,970,208
|
|
|
|
|
|
|
|
|
|
|
4.
|
SEGMENT INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Insurance
|
|
|
|
|
|
|
||||||
|
Property
|
$
|
796,945
|
|
|
$
|
543,342
|
|
|
$
|
426,918
|
|
|
|
Marine
|
300,944
|
|
|
181,533
|
|
|
150,046
|
|
|
|||
|
Terrorism
|
49,150
|
|
|
36,084
|
|
|
33,279
|
|
|
|||
|
Aviation
|
74,203
|
|
|
75,107
|
|
|
44,980
|
|
|
|||
|
Credit and political risk
|
102,825
|
|
|
56,432
|
|
|
57,964
|
|
|
|||
|
Professional lines
|
570,241
|
|
|
519,759
|
|
|
510,806
|
|
|
|||
|
Liability
|
229,373
|
|
|
188,770
|
|
|
169,182
|
|
|
|||
|
Accident and health
|
207,777
|
|
|
199,121
|
|
|
141,107
|
|
|
|||
|
Discontinued lines - Novae
|
31,148
|
|
|
16,290
|
|
|
—
|
|
|
|||
|
Total Insurance
|
2,362,606
|
|
|
1,816,438
|
|
|
1,534,282
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Reinsurance
|
|
|
|
|
|
|
||||||
|
Catastrophe
|
250,016
|
|
|
209,470
|
|
|
199,825
|
|
|
|||
|
Property
|
317,038
|
|
|
304,376
|
|
|
272,403
|
|
|
|||
|
Professional lines
|
220,687
|
|
|
226,622
|
|
|
289,868
|
|
|
|||
|
Credit and surety
|
250,276
|
|
|
244,186
|
|
|
252,210
|
|
|
|||
|
Motor
|
438,693
|
|
|
371,501
|
|
|
318,863
|
|
|
|||
|
Liability
|
363,292
|
|
|
351,940
|
|
|
332,479
|
|
|
|||
|
Agriculture
|
176,435
|
|
|
195,391
|
|
|
142,501
|
|
|
|||
|
Engineering
|
67,932
|
|
|
66,291
|
|
|
62,833
|
|
|
|||
|
Marine and other
|
35,570
|
|
|
64,449
|
|
|
57,322
|
|
|
|||
|
Accident and health
|
299,813
|
|
|
289,925
|
|
|
243,039
|
|
|
|||
|
Discontinued lines - Novae
|
9,137
|
|
|
8,171
|
|
|
—
|
|
|
|||
|
Total Reinsurance
|
2,428,889
|
|
|
2,332,322
|
|
|
2,171,343
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total
|
$
|
4,791,495
|
|
|
$
|
4,148,760
|
|
|
$
|
3,705,625
|
|
|
|
|
|
|
|
|
|
|
5.
|
GOODWILL AND INTANGIBLE ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Goodwill
|
|
Intangible
assets with an
indefinite life
|
|
Intangible
assets with a
finite life
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
|
Gross amount
|
$
|
42,237
|
|
|
$
|
26,036
|
|
|
$
|
23,030
|
|
|
$
|
91,303
|
|
|
|
Accumulated amortization
|
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
(1)
|
42,237
|
|
|
26,036
|
|
|
23,030
|
|
|
91,303
|
|
|
||||
|
Accumulated amortization
(1)
|
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
|
)
|
|
||||
|
Balance at December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
Gross amount
|
$
|
97,092
|
|
|
$
|
120,784
|
|
|
$
|
410,575
|
|
|
$
|
628,451
|
|
|
|
Accumulated amortization
|
n/a
|
|
|
n/a
|
|
|
(66,534
|
)
|
|
(66,534
|
)
|
|
||||
|
Accumulated translation adjustment
|
4,911
|
|
|
—
|
|
|
—
|
|
|
4,911
|
|
|
||||
|
|
102,003
|
|
|
120,784
|
|
|
344,041
|
|
|
566,828
|
|
|
||||
|
Amortization
|
n/a
|
|
|
n/a
|
|
|
(184,043
|
)
|
|
(184,043
|
)
|
|
||||
|
Impairment charge
|
—
|
|
|
—
|
|
|
(3,500
|
)
|
|
(3,500
|
)
|
|
||||
|
|
$
|
102,003
|
|
|
$
|
120,784
|
|
|
$
|
156,498
|
|
|
$
|
379,285
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
GOODWILL AND INTANGIBLE ASSETS (CONTINUED)
|
|
|
|
VOBA and intangible assets
|
|
||||||||||
|
Balance At December 31, 2018
|
|
Gross amount
|
|
Accumulated amortization and impairment
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||
|
U.S. state licenses
|
|
$
|
26,036
|
|
|
n/a
|
|
|
$
|
26,036
|
|
|
|
|
Customer lists, trademark and non-compete - Media Pro
|
|
9,700
|
|
|
(9,598
|
)
|
|
102
|
|
|
|||
|
Customer relationships and customers lists - Ternian
|
|
13,330
|
|
|
(4,999
|
)
|
|
8,331
|
|
|
|||
|
VOBA - Aviabel
|
|
2,140
|
|
|
(2,140
|
)
|
|
—
|
|
|
|||
|
VOBA - Novae
|
|
256,942
|
|
|
(221,228
|
)
|
|
35,714
|
|
|
|||
|
Syndicate capacity
|
|
94,748
|
|
|
n/a
|
|
|
94,748
|
|
|
|||
|
Coverholders
|
|
63,565
|
|
|
(6,622
|
)
|
|
56,943
|
|
|
|||
|
Large brokers
|
|
46,641
|
|
|
(3,888
|
)
|
|
42,753
|
|
|
|||
|
SME brokers
|
|
14,126
|
|
|
(1,471
|
)
|
|
12,655
|
|
|
|||
|
MGA contract
(1)
|
|
4,131
|
|
|
(4,131
|
)
|
|
—
|
|
|
|||
|
|
|
$
|
531,359
|
|
|
$
|
(254,077
|
)
|
|
$
|
277,282
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During the year ended December 31, 2018, an impairment charge of
$3,500
was recognized related to the termination of the MGA contract intangible asset identified in connection with the acquisition of Novae.
|
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
|
|
|
|||
|
VOBA - 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
VOBA
|
|
Intangible assets
|
|
Total
|
|
||||||
|
2019
|
|
26,722
|
|
|
11,017
|
|
|
37,739
|
|
|
|||
|
2020
|
|
5,139
|
|
|
10,916
|
|
|
16,055
|
|
|
|||
|
2021
|
|
3,853
|
|
|
10,916
|
|
|
14,769
|
|
|
|||
|
2022
|
|
—
|
|
|
10,916
|
|
|
10,916
|
|
|
|||
|
2023
|
|
—
|
|
|
10,916
|
|
|
10,916
|
|
|
|||
|
2024 and thereafter
|
|
—
|
|
|
66,103
|
|
|
66,103
|
|
|
|||
|
Total remaining amortization expense
|
|
35,714
|
|
|
120,784
|
|
|
156,498
|
|
|
|||
|
Indefinite lived intangible assets
|
|
—
|
|
|
120,784
|
|
|
120,784
|
|
|
|||
|
Total intangible assets
|
|
$
|
35,714
|
|
|
$
|
241,568
|
|
|
$
|
277,282
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS
|
a)
|
Fixed Maturities and Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Amortized
cost |
|
Gross
unrealized gains |
|
Gross
unrealized losses |
|
Fair
value |
|
Non-credit
OTTI in AOCI (5) |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,520,142
|
|
|
$
|
4,232
|
|
|
$
|
(8,677
|
)
|
|
$
|
1,515,697
|
|
|
$
|
—
|
|
|
|
Non-U.S. government
|
507,550
|
|
|
1,586
|
|
|
(16,120
|
)
|
|
493,016
|
|
|
—
|
|
|
|||||
|
Corporate debt
|
4,990,279
|
|
|
15,086
|
|
|
(128,444
|
)
|
|
4,876,921
|
|
|
—
|
|
|
|||||
|
Agency RMBS
(1)
|
1,666,684
|
|
|
6,508
|
|
|
(29,884
|
)
|
|
1,643,308
|
|
|
—
|
|
|
|||||
|
CMBS
(2)
|
1,103,507
|
|
|
2,818
|
|
|
(13,795
|
)
|
|
1,092,530
|
|
|
—
|
|
|
|||||
|
Non-Agency RMBS
|
40,732
|
|
|
1,237
|
|
|
(1,282
|
)
|
|
40,687
|
|
|
(857
|
)
|
|
|||||
|
ABS
(3)
|
1,651,350
|
|
|
1,493
|
|
|
(15,240
|
)
|
|
1,637,603
|
|
|
—
|
|
|
|||||
|
Municipals
(4)
|
136,068
|
|
|
914
|
|
|
(1,397
|
)
|
|
135,585
|
|
|
—
|
|
|
|||||
|
Total fixed maturities
|
$
|
11,616,312
|
|
|
$
|
33,874
|
|
|
$
|
(214,839
|
)
|
|
$
|
11,435,347
|
|
|
$
|
(857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 card receivables, collateralized debt obligations ("CDOs") and collateralized loan obligations ("CLOs").
|
(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)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Cost
|
|
Gross
unrealized gains |
|
Gross
unrealized losses |
|
Fair
value |
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
|
Common stocks
|
$
|
790
|
|
|
$
|
112
|
|
|
$
|
(375
|
)
|
|
$
|
527
|
|
|
|
Exchange-traded funds
|
213,420
|
|
|
33,498
|
|
|
(10,079
|
)
|
|
236,839
|
|
|
||||
|
Bond mutual funds
|
151,695
|
|
|
—
|
|
|
(7,428
|
)
|
|
144,267
|
|
|
||||
|
Total equity securities
|
$
|
365,905
|
|
|
$
|
33,610
|
|
|
$
|
(17,882
|
)
|
|
$
|
381,633
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
At December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|||||
|
|
Amortized
cost
|
|
Fair
value
|
|
% of Total
fair value
|
|
|||||
|
|
|
|
|
|
|
|
|||||
|
At December 31, 2018
|
|
|
|
|
|
|
|||||
|
Maturity
|
|
|
|
|
|
|
|||||
|
Due in one year or less
|
$
|
430,390
|
|
|
$
|
426,142
|
|
|
3.7
|
%
|
|
|
Due after one year through five years
|
4,751,064
|
|
|
4,691,263
|
|
|
41.0
|
%
|
|
||
|
Due after five years through ten years
|
1,762,452
|
|
|
1,697,737
|
|
|
14.8
|
%
|
|
||
|
Due after ten years
|
210,133
|
|
|
206,077
|
|
|
1.8
|
%
|
|
||
|
|
7,154,039
|
|
|
7,021,219
|
|
|
61.3
|
%
|
|
||
|
Agency RMBS
|
1,666,684
|
|
|
1,643,308
|
|
|
14.4
|
%
|
|
||
|
CMBS
|
1,103,507
|
|
|
1,092,530
|
|
|
9.6
|
%
|
|
||
|
Non-Agency RMBS
|
40,732
|
|
|
40,687
|
|
|
0.4
|
%
|
|
||
|
ABS
|
1,651,350
|
|
|
1,637,603
|
|
|
14.3
|
%
|
|
||
|
Total
|
$
|
11,616,312
|
|
|
$
|
11,435,347
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|||||
|
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
|
%
|
|
|
|
|
|
|
|
|
|
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, 2018
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. government and agency
|
$
|
374,030
|
|
|
$
|
(7,659
|
)
|
|
$
|
424,439
|
|
|
$
|
(1,018
|
)
|
|
$
|
798,469
|
|
|
$
|
(8,677
|
)
|
|
|
Non-U.S. government
|
44,339
|
|
|
(2,004
|
)
|
|
303,376
|
|
|
(14,116
|
)
|
|
347,715
|
|
|
(16,120
|
)
|
|
||||||
|
Corporate debt
|
1,439,378
|
|
|
(58,915
|
)
|
|
2,547,135
|
|
|
(69,529
|
)
|
|
3,986,513
|
|
|
(128,444
|
)
|
|
||||||
|
Agency RMBS
|
940,645
|
|
|
(29,255
|
)
|
|
117,181
|
|
|
(629
|
)
|
|
1,057,826
|
|
|
(29,884
|
)
|
|
||||||
|
CMBS
|
455,582
|
|
|
(11,430
|
)
|
|
353,802
|
|
|
(2,365
|
)
|
|
809,384
|
|
|
(13,795
|
)
|
|
||||||
|
Non-Agency RMBS
|
9,494
|
|
|
(1,170
|
)
|
|
11,432
|
|
|
(112
|
)
|
|
20,926
|
|
|
(1,282
|
)
|
|
||||||
|
ABS
|
237,237
|
|
|
(2,755
|
)
|
|
1,150,692
|
|
|
(12,485
|
)
|
|
1,387,929
|
|
|
(15,240
|
)
|
|
||||||
|
Municipals
|
68,814
|
|
|
(1,373
|
)
|
|
9,894
|
|
|
(24
|
)
|
|
78,708
|
|
|
(1,397
|
)
|
|
||||||
|
Total fixed maturities
|
$
|
3,569,519
|
|
|
$
|
(114,561
|
)
|
|
$
|
4,917,951
|
|
|
$
|
(100,278
|
)
|
|
$
|
8,487,470
|
|
|
$
|
(214,839
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01, which requires equity securities to be measured at fair value with changes in fair value recognized in net income therefore equity securities at fair value are excluded from the table above at December 31, 2018.
|
6.
|
INVESTMENTS (CONTINUED)
|
b)
|
Mortgage Loans
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||
|
|
Carrying value
|
|
% of Total
|
|
Carrying value
|
|
% of Total
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Mortgage Loans held-for-investment:
|
|
|
|
|
|
|
|
|
||||||
|
Commercial
|
$
|
298,650
|
|
|
100
|
%
|
|
$
|
325,062
|
|
|
100
|
%
|
|
|
Total Mortgage Loans held-for-investment
|
$
|
298,650
|
|
|
100
|
%
|
|
$
|
325,062
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
c)
|
Other Investments
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Fair value
|
|
Redemption frequency
(if currently eligible)
|
|
Redemption
notice period
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|||
|
Long/short equity funds
|
$
|
26,779
|
|
|
3
|
%
|
|
Annually
|
|
60 days
|
|
|
Multi-strategy funds
|
153,883
|
|
|
20
|
%
|
|
Quarterly, Semi-annually
|
|
60-95 days
|
|
|
|
Event-driven funds
|
13,936
|
|
|
2
|
%
|
|
Annually
|
|
45 days
|
|
|
|
Direct lending funds
|
274,478
|
|
|
35
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Private equity funds
|
64,566
|
|
|
8
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Real estate funds
|
84,202
|
|
|
11
|
%
|
|
n/a
|
|
n/a
|
|
|
|
CLO-Equities
|
21,271
|
|
|
2
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Other privately held investments
|
44,518
|
|
|
6
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Overseas deposits
|
104,154
|
|
|
13
|
%
|
|
n/a
|
|
n/a
|
|
|
|
Total other investments
|
$
|
787,787
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
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
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Long/short equity funds
: Seek to achieve attractive returns primarily by executing an equity trading strategy involving long and short investments in publicly-traded equity securities.
|
•
|
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,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
$
|
356,273
|
|
|
$
|
312,662
|
|
|
$
|
305,459
|
|
|
|
Other investments
|
48,959
|
|
|
76,858
|
|
|
42,514
|
|
|
|||
|
Equity securities
|
10,077
|
|
|
14,919
|
|
|
16,306
|
|
|
|||
|
Mortgage loans
|
13,566
|
|
|
10,780
|
|
|
7,996
|
|
|
|||
|
Cash and cash equivalents
|
27,566
|
|
|
10,057
|
|
|
9,209
|
|
|
|||
|
Short-term investments
|
9,365
|
|
|
2,718
|
|
|
2,060
|
|
|
|||
|
Gross investment income
|
465,806
|
|
|
427,994
|
|
|
383,544
|
|
|
|||
|
Investment expenses
|
(27,299
|
)
|
|
(27,189
|
)
|
|
(30,209
|
)
|
|
|||
|
Net investment income
|
$
|
438,507
|
|
|
$
|
400,805
|
|
|
$
|
353,335
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
f)
|
Net Investment Gains (Losses)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross realized investment gains
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
$
|
46,067
|
|
|
$
|
72,046
|
|
|
$
|
86,267
|
|
|
|
Equity securities
|
20,435
|
|
|
78,343
|
|
|
19,104
|
|
|
|||
|
Gross realized investment gains
|
66,502
|
|
|
150,389
|
|
|
105,371
|
|
|
|||
|
Gross realized investment losses
|
|
|
|
|
|
|
||||||
|
Fixed maturities and short-term investments
|
(142,153
|
)
|
|
(98,442
|
)
|
|
(134,460
|
)
|
|
|||
|
Equity securities
|
(3,389
|
)
|
|
(959
|
)
|
|
(16,155
|
)
|
|
|||
|
Gross realized investment losses
|
(145,542
|
)
|
|
(99,401
|
)
|
|
(150,615
|
)
|
|
|||
|
Net OTTI charge recognized in net income
|
(9,733
|
)
|
|
(14,493
|
)
|
|
(26,210
|
)
|
|
|||
|
Change in fair value of investment derivatives
(1)
|
5,445
|
|
|
(8,269
|
)
|
|
10,929
|
|
|
|||
|
Change in fair value of equity securities
(2)
|
(66,890
|
)
|
|
—
|
|
|
—
|
|
|
|||
|
Net investment gains (losses)
|
$
|
(150,218
|
)
|
|
$
|
28,226
|
|
|
$
|
(60,525
|
)
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to Note 8
'Derivative Instruments'
|
(2)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01. The change in fair value of equity securities is now recognized in net income.
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Fixed maturities:
|
|
|
|
|
|
|
||||||
|
Non-U.S. government
|
$
|
4,697
|
|
|
$
|
8,187
|
|
|
$
|
3,557
|
|
|
|
Corporate debt
|
4,995
|
|
|
6,306
|
|
|
20,093
|
|
|
|||
|
Non-Agency CMBS
|
41
|
|
|
—
|
|
|
—
|
|
|
|||
|
|
9,733
|
|
|
14,493
|
|
|
23,650
|
|
|
|||
|
Equity Securities
|
|
|
|
|
|
|
||||||
|
Exchange-traded funds
|
—
|
|
|
—
|
|
|
2,560
|
|
|
|||
|
|
—
|
|
|
—
|
|
|
2,560
|
|
|
|||
|
Total OTTI recognized in net income
|
$
|
9,733
|
|
|
$
|
14,493
|
|
|
$
|
26,210
|
|
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Balance at beginning of period
|
$
|
1,494
|
|
|
$
|
1,493
|
|
|
|
Credit impairments recognized on securities not previously impaired
|
—
|
|
|
—
|
|
|
||
|
Additional credit impairments recognized on securities previously impaired
|
8
|
|
|
13
|
|
|
||
|
Change in timing of future cash flows on securities previously impaired
|
—
|
|
|
—
|
|
|
||
|
Intent to sell of securities previously impaired
|
—
|
|
|
—
|
|
|
||
|
Securities sold/redeemed/matured
|
(992
|
)
|
|
(12
|
)
|
|
||
|
Balance at end of period
|
$
|
510
|
|
|
$
|
1,494
|
|
|
|
|
|
|
|
|
6.
|
INVESTMENTS (CONTINUED)
|
g)
|
Restricted Assets
|
6.
|
INVESTMENTS (CONTINUED)
|
|
|
|
|
|
|
|
||||
|
At December 31,
|
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
|
||||
|
Collateral in Trust for inter-company agreements
|
|
$
|
2,121,522
|
|
|
$
|
3,310,180
|
|
|
|
Collateral for secured letter of credit facility
|
|
470,051
|
|
|
386,451
|
|
|
||
|
Funds at Lloyd's
|
|
1,307,945
|
|
|
1,192,717
|
|
|
||
|
Collateral in Trust for third party agreements
|
|
1,510,416
|
|
|
2,085,443
|
|
|
||
|
Securities on deposit with regulatory authorities
|
|
64,360
|
|
|
53,925
|
|
|
||
|
Total restricted investments
|
|
$
|
5,474,294
|
|
|
$
|
7,028,716
|
|
|
|
|
|
|
|
|
|
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)
|
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, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. government and agency
|
$
|
1,480,466
|
|
|
$
|
35,231
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,515,697
|
|
|
|
Non-U.S. government
|
—
|
|
|
493,016
|
|
|
—
|
|
|
—
|
|
|
493,016
|
|
|
|||||
|
Corporate debt
|
—
|
|
|
4,827,909
|
|
|
49,012
|
|
|
—
|
|
|
4,876,921
|
|
|
|||||
|
Agency RMBS
|
—
|
|
|
1,643,308
|
|
|
—
|
|
|
—
|
|
|
1,643,308
|
|
|
|||||
|
CMBS
|
—
|
|
|
1,073,396
|
|
|
19,134
|
|
|
—
|
|
|
1,092,530
|
|
|
|||||
|
Non-Agency RMBS
|
—
|
|
|
40,687
|
|
|
—
|
|
|
—
|
|
|
40,687
|
|
|
|||||
|
ABS
|
—
|
|
|
1,619,070
|
|
|
18,533
|
|
|
—
|
|
|
1,637,603
|
|
|
|||||
|
Municipals
|
—
|
|
|
135,585
|
|
|
—
|
|
|
—
|
|
|
135,585
|
|
|
|||||
|
|
1,480,466
|
|
|
9,868,202
|
|
|
86,679
|
|
|
—
|
|
|
11,435,347
|
|
|
|||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Common stocks
|
527
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
527
|
|
|
|||||
|
Exchange-traded funds
|
236,839
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
236,839
|
|
|
|||||
|
Bond mutual funds
|
—
|
|
|
144,267
|
|
|
—
|
|
|
—
|
|
|
144,267
|
|
|
|||||
|
|
237,366
|
|
|
144,267
|
|
|
—
|
|
|
—
|
|
|
381,633
|
|
|
|||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Hedge funds
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
194,598
|
|
|
194,598
|
|
|
|||||
|
Direct lending funds
|
—
|
|
|
—
|
|
|
—
|
|
|
274,478
|
|
|
274,478
|
|
|
|||||
|
Private equity funds
|
—
|
|
|
—
|
|
|
—
|
|
|
64,566
|
|
|
64,566
|
|
|
|||||
|
Real estate funds
|
—
|
|
|
—
|
|
|
—
|
|
|
84,202
|
|
|
84,202
|
|
|
|||||
|
Other privately held investments
|
—
|
|
|
—
|
|
|
44,518
|
|
|
—
|
|
|
44,518
|
|
|
|||||
|
CLO-Equities
|
—
|
|
|
—
|
|
|
21,271
|
|
|
—
|
|
|
21,271
|
|
|
|||||
|
Overseas deposits
|
—
|
|
|
104,154
|
|
|
—
|
|
|
—
|
|
|
104,154
|
|
|
|||||
|
|
—
|
|
|
104,154
|
|
|
65,789
|
|
|
617,844
|
|
|
787,787
|
|
|
|||||
|
Short-term investments
|
—
|
|
|
144,040
|
|
|
—
|
|
|
—
|
|
|
144,040
|
|
|
|||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (refer to Note 8)
|
—
|
|
|
8,237
|
|
|
—
|
|
|
—
|
|
|
8,237
|
|
|
|||||
|
Total Assets
|
$
|
1,717,832
|
|
|
$
|
10,268,900
|
|
|
$
|
152,468
|
|
|
$
|
617,844
|
|
|
$
|
12,757,044
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Derivative instruments (refer to Note 8)
|
$
|
—
|
|
|
$
|
4,223
|
|
|
$
|
10,299
|
|
|
$
|
—
|
|
|
$
|
14,522
|
|
|
|
Cash settled awards (refer to Note 16)
|
—
|
|
|
20,648
|
|
|
—
|
|
|
—
|
|
|
20,648
|
|
|
|||||
|
Total Liabilities
|
$
|
—
|
|
|
$
|
24,871
|
|
|
$
|
10,299
|
|
|
$
|
—
|
|
|
$
|
35,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 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 (refer to 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 (refer to Note 8)
|
$
|
—
|
|
|
$
|
2,876
|
|
|
$
|
11,510
|
|
|
$
|
—
|
|
|
$
|
14,386
|
|
|
|
Cash settled awards (refer to 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)
|
|
|
|
|
|
|
|
|
||
|
|
Fair value
|
Valuation technique
|
Unobservable input
|
Range
|
Weighted
average
|
|
||
|
|
|
|
|
|
|
|
||
|
Other investments - CLO-Equities
|
$
|
21,271
|
|
Discounted cash flow
|
Default rates
|
3.0%
|
3.0%
|
|
|
|
|
|
Loss severity rate
|
35%
|
35%
|
|
||
|
|
|
|
Collateral spreads
|
3.0%
|
3.0%
|
|
||
|
|
|
|
Estimated maturity dates
|
7 years
|
7 years
|
|
||
|
|
|
|
|
|
|
|
||
|
Other investments - Other privately held investments
|
$
|
44,518
|
|
Discounted cash flow
|
Discount rate
|
3.0% - 8.0%
|
7.1%
|
|
|
|
|
|
|
|
|
|
||
|
Derivatives - Other underwriting-related derivatives
|
$
|
(10,299
|
)
|
Discounted cash flow
|
Discount rate
|
2.6%
|
2.6%
|
|
|
|
|
|
|
|
|
|
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
gains/losses
(3)
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Corporate debt
|
$
|
52,897
|
|
|
$
|
2,935
|
|
|
$
|
(4,279
|
)
|
|
$
|
(591
|
)
|
|
$
|
6,343
|
|
|
$
|
10,267
|
|
|
$
|
(7,446
|
)
|
|
$
|
(11,114
|
)
|
|
$
|
49,012
|
|
|
$
|
—
|
|
|
|
CMBS
|
—
|
|
|
5,096
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
17,200
|
|
|
—
|
|
|
(3,017
|
)
|
|
19,134
|
|
|
—
|
|
|
||||||||||
|
ABS
|
—
|
|
|
1,979
|
|
|
—
|
|
|
—
|
|
|
(446
|
)
|
|
17,000
|
|
|
—
|
|
|
—
|
|
|
18,533
|
|
|
—
|
|
|
||||||||||
|
|
52,897
|
|
|
10,010
|
|
|
(4,279
|
)
|
|
(591
|
)
|
|
5,752
|
|
|
44,467
|
|
|
(7,446
|
)
|
|
(14,131
|
)
|
|
86,679
|
|
|
—
|
|
|
||||||||||
|
Other investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Other privately held investments
|
46,430
|
|
|
—
|
|
|
—
|
|
|
(913
|
)
|
|
—
|
|
|
3,110
|
|
|
(4,109
|
)
|
|
—
|
|
|
44,518
|
|
|
(913
|
)
|
|
||||||||||
|
CLO-Equities
|
31,413
|
|
|
—
|
|
|
—
|
|
|
6,627
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,769
|
)
|
|
21,271
|
|
|
6,627
|
|
|
||||||||||
|
|
77,843
|
|
|
—
|
|
|
—
|
|
|
5,714
|
|
|
—
|
|
|
3,110
|
|
|
(4,109
|
)
|
|
(16,769
|
)
|
|
65,789
|
|
|
5,714
|
|
|
||||||||||
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||||||||||
|
Insurance-linked securities
|
25,090
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|
||||||||||
|
|
25,090
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,000
|
)
|
|
—
|
|
|
—
|
|
|
||||||||||
|
Total assets
|
$
|
155,830
|
|
|
$
|
10,010
|
|
|
$
|
(4,279
|
)
|
|
$
|
5,033
|
|
|
$
|
5,752
|
|
|
$
|
47,577
|
|
|
$
|
(11,555
|
)
|
|
$
|
(55,900
|
)
|
|
$
|
152,468
|
|
|
$
|
5,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Derivative instruments
|
11,510
|
|
|
—
|
|
|
—
|
|
|
(1,211
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,299
|
|
|
(1,211
|
)
|
|
||||||||||
|
Total liabilities
|
$
|
11,510
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,211
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,299
|
|
|
$
|
(1,211
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Realized investment gains (losses) on fixed maturities, and realized and unrealized gains (losses) on other assets and other liabilities included in net income are included in net investment gains (losses). Realized and unrealized gains (losses) on other investments included in net income are included in net investment income.
|
(2)
|
Unrealized investment gains (losses) on fixed maturities are included in other comprehensive income ("OCI").
|
(3)
|
Change in unrealized investment gains (losses) relating to assets held at the reporting date.
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
7.
|
FAIR VALUE MEASUREMENTS (CONTINUED)
|
8.
|
DERIVATIVE INSTRUMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
At December 31, 2018
|
|
At December 31, 2017
|
|
||||||||||||||||||||
|
|
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
|
$
|
79,336
|
|
|
$
|
262
|
|
|
$
|
531
|
|
|
$
|
137,422
|
|
|
$
|
10
|
|
|
$
|
619
|
|
|
|
Interest rate swaps
|
150,000
|
|
|
—
|
|
|
1,116
|
|
|
191,000
|
|
|
448
|
|
|
1,556
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Relating to underwriting portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Foreign exchange forward contracts
|
737,419
|
|
|
7,975
|
|
|
2,576
|
|
|
698,959
|
|
|
4,667
|
|
|
701
|
|
|
||||||
|
Other underwriting-related contracts
|
85,000
|
|
|
—
|
|
|
10,299
|
|
|
85,000
|
|
|
—
|
|
|
11,510
|
|
|
||||||
|
Total derivatives
|
|
|
$
|
8,237
|
|
|
$
|
14,522
|
|
|
|
|
$
|
5,125
|
|
|
$
|
14,386
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Asset and liability derivatives are classified within other assets and other liabilities in the consolidated balance sheets.
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||||
|
|
Gross amounts
|
Gross amounts offset
|
Net
amounts
(1)
|
|
Gross amounts
|
Gross amounts offset
|
Net
amounts
(1)
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Derivative assets
|
$
|
11,967
|
|
$
|
(3,730
|
)
|
$
|
8,237
|
|
|
$
|
8,178
|
|
$
|
(3,053
|
)
|
$
|
5,125
|
|
|
|
Derivative liabilities
|
$
|
18,252
|
|
$
|
(3,730
|
)
|
$
|
14,522
|
|
|
$
|
17,439
|
|
$
|
(3,053
|
)
|
$
|
14,386
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net asset and liability derivatives are classified within other assets and other liabilities on the consolidated balance sheets.
|
8.
|
DERIVATIVE INSTRUMENTS (CONTINUED)
|
a)
|
Relating to Investment Portfolio
|
8.
|
DERIVATIVE INSTRUMENTS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Location of gain (loss) recognized
in income on derivative
|
Amount of gain (loss) recognized in
income on derivative
|
|
||||||||||
|
|
|
||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
|||||||
|
|
|
|
|
|
|
|
|
||||||
|
Relating to investment portfolio:
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange forward contracts
|
Net investment gains (losses)
|
$
|
3,446
|
|
|
$
|
(6,935
|
)
|
|
$
|
10,929
|
|
|
|
Interest rate swaps
|
Net investment gains (losses)
|
1,999
|
|
|
(1,334
|
)
|
|
—
|
|
|
|||
|
Relating to underwriting portfolio:
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange forward contracts
|
Foreign exchange gains (losses)
|
(3,509
|
)
|
|
25,383
|
|
|
(8,179
|
)
|
|
|||
|
Weather-related contracts
|
Other insurance related income (losses)
|
—
|
|
|
(9,629
|
)
|
|
4,910
|
|
|
|||
|
Commodity contracts
|
Other insurance related income (losses)
|
—
|
|
|
—
|
|
|
(2,382
|
)
|
|
|||
|
Other underwriting-related contracts
|
Other insurance related income (losses)
|
2,384
|
|
|
1,476
|
|
|
—
|
|
|
|||
|
Total
|
|
$
|
4,320
|
|
|
$
|
8,961
|
|
|
$
|
5,278
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES
|
Insurance segment
|
|
|
|
|
|
|
|
Reserve class and tail
|
|||||
|
|
|
|
|
|
|
|
Property and other
|
Marine
|
Aviation
|
Credit and political risk
|
Professional lines
|
Liability
|
|
|
|
|
|
|
|
|
Short
|
Short
|
Short/Medium
|
Medium
|
Medium
|
Long
|
|
|
|
|
|
|
|
Reported lines of business
|
|
|
|
|
|
|
Property
|
X
|
|
|
|
|
|
Marine
|
|
X
|
|
|
|
|
Terrorism
|
X
|
|
|
|
|
|
Aviation
|
|
|
X
|
|
|
|
Credit and political risk
|
|
|
|
X
|
|
|
Professional lines
|
|
|
|
|
X
|
|
Liability
|
|
|
|
|
|
X
|
Accident and health
|
X
|
|
|
|
|
|
Discontinued lines - Novae
|
X
|
|
|
|
X
|
X
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance segment
|
|
|
|
|
|
|
Reserve class and tail
|
||||
|
|
|
|
|
|
|
Property and other
|
Credit and surety
|
Professional lines
|
Motor
|
Liability
|
|
|
|
|
|
|
|
Short
|
Medium
|
Medium
|
Long
|
Long
|
|
|
|
|
|
|
Reported lines of business
|
|
|
|
|
|
Catastrophe
|
X
|
|
|
|
|
Property
|
X
|
|
|
|
|
Credit and surety
|
|
X
|
|
|
|
Professional lines
|
|
|
X
|
|
|
Motor
|
|
|
|
X
|
|
Liability
|
|
|
|
|
X
|
Engineering
|
X
|
|
|
|
|
Agriculture
|
X
|
|
|
|
|
Marine and other
|
X
|
|
|
|
|
Accident and health
|
X
|
|
|
|
|
Discontinued lines - Novae
|
X
|
|
|
X
|
X
|
•
|
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, among other things. Furthermore,
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
•
|
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,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Reserve for reported losses and loss expenses
|
$
|
4,626,204
|
|
|
$
|
5,137,659
|
|
|
|
Reserve for losses incurred but not reported
|
7,654,565
|
|
|
7,859,894
|
|
|
||
|
Reserve for losses and loss expenses
|
$
|
12,280,769
|
|
|
$
|
12,997,553
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Gross reserve for losses and loss expenses, beginning of year
|
$
|
12,997,553
|
|
|
$
|
9,697,827
|
|
|
$
|
9,646,285
|
|
|
|
Less reinsurance recoverable on unpaid losses, beginning of year
|
(3,159,514
|
)
|
|
(2,276,109
|
)
|
|
(2,031,309
|
)
|
|
|||
|
Net reserve for unpaid losses and loss expenses, beginning of year
|
9,838,039
|
|
|
7,421,718
|
|
|
7,614,976
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net incurred losses and loss expenses related to:
|
|
|
|
|
|
|
||||||
|
Current year
|
3,389,949
|
|
|
3,487,826
|
|
|
2,496,574
|
|
|
|||
|
Prior years
|
(199,662
|
)
|
|
(200,054
|
)
|
|
(292,377
|
)
|
|
|||
|
|
3,190,287
|
|
|
3,287,772
|
|
|
2,204,197
|
|
|
|||
|
Net paid losses and loss expenses related to:
|
|
|
|
|
|
|
||||||
|
Current year
|
(724,199
|
)
|
|
(703,796
|
)
|
|
(428,153
|
)
|
|
|||
|
Prior years
|
(2,368,615
|
)
|
|
(1,880,882
|
)
|
|
(1,763,696
|
)
|
|
|||
|
|
(3,092,814
|
)
|
|
(2,584,678
|
)
|
|
(2,191,849
|
)
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange and other
|
(1,156,412
|
)
|
|
1,713,227
|
|
|
(205,606
|
)
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net reserve for unpaid losses and loss expenses, end of year
|
8,779,100
|
|
|
9,838,039
|
|
|
7,421,718
|
|
|
|||
|
Reinsurance recoverable on unpaid losses, end of year
|
3,501,669
|
|
|
3,159,514
|
|
|
2,276,109
|
|
|
|||
|
Gross reserve for losses and loss expenses, end of year
|
$
|
12,280,769
|
|
|
$
|
12,997,553
|
|
|
$
|
9,697,827
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2018
|
$
|
92,806
|
|
|
$
|
106,856
|
|
|
$
|
199,662
|
|
|
|
Year ended December 31, 2017
|
60,459
|
|
|
139,595
|
|
|
200,054
|
|
|
|||
|
Year ended December 31, 2016
|
48,978
|
|
|
243,399
|
|
|
292,377
|
|
|
|||
|
|
|
|
|
|
|
|
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, 2018
|
||||||||||||||||||||||||||||||||
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
||||||||||||||||||||||||
2009
|
$
|
117,309
|
|
$
|
99,079
|
|
$
|
89,768
|
|
$
|
82,460
|
|
$
|
80,461
|
|
$
|
78,269
|
|
$
|
78,490
|
|
$
|
78,150
|
|
$
|
78,395
|
|
$
|
77,338
|
|
$
|
83
|
|
3,201
|
2010
|
|
175,012
|
|
155,032
|
|
147,426
|
|
122,111
|
|
116,562
|
|
115,635
|
|
115,316
|
|
114,866
|
|
113,767
|
|
867
|
|
4,422
|
||||||||||||
2011
|
|
|
359,132
|
|
338,220
|
|
306,114
|
|
285,745
|
|
282,755
|
|
281,405
|
|
281,866
|
|
279,996
|
|
979
|
|
6,348
|
|||||||||||||
2012
|
|
|
|
391,646
|
|
399,473
|
|
381,746
|
|
361,476
|
|
357,267
|
|
351,673
|
|
350,827
|
|
8,992
|
|
29,931
|
||||||||||||||
2013
|
|
|
|
|
308,359
|
|
297,713
|
|
271,157
|
|
267,022
|
|
266,727
|
|
276,940
|
|
6,687
|
|
53,172
|
|||||||||||||||
2014
|
|
|
|
|
|
360,130
|
|
354,219
|
|
343,333
|
|
327,389
|
|
326,100
|
|
5,917
|
|
62,444
|
||||||||||||||||
2015
|
|
|
|
|
|
|
277,332
|
|
268,897
|
|
257,927
|
|
253,729
|
|
5,642
|
|
47,052
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
349,152
|
|
376,458
|
|
367,362
|
|
12,290
|
|
92,867
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
882,968
|
|
825,176
|
|
42,188
|
|
663,914
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
712,082
|
|
187,391
|
|
730,832
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
3,583,317
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance property and other
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
34.5%
|
40.2%
|
13.2%
|
5.8%
|
2.0%
|
0.8%
|
0.7%
|
0.2%
|
0.3%
|
—%
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
17,394
|
|
$
|
30,297
|
|
$
|
39,674
|
|
$
|
43,147
|
|
$
|
45,159
|
|
$
|
45,775
|
|
$
|
48,321
|
|
$
|
48,587
|
|
$
|
48,920
|
|
$
|
50,244
|
|
2010
|
|
18,029
|
|
28,631
|
|
33,298
|
|
42,364
|
|
45,194
|
|
45,976
|
|
46,940
|
|
43,346
|
|
43,433
|
|
|||||||||||
2011
|
|
|
26,435
|
|
44,218
|
|
54,930
|
|
58,025
|
|
59,862
|
|
60,572
|
|
64,868
|
|
66,913
|
|
||||||||||||
2012
|
|
|
|
10,711
|
|
38,545
|
|
44,800
|
|
49,523
|
|
50,331
|
|
52,724
|
|
54,721
|
|
|||||||||||||
2013
|
|
|
|
|
18,982
|
|
44,087
|
|
54,898
|
|
63,128
|
|
65,822
|
|
76,856
|
|
||||||||||||||
2014
|
|
|
|
|
|
6,349
|
|
15,172
|
|
26,838
|
|
26,924
|
|
35,987
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
21,426
|
|
54,869
|
|
108,152
|
|
111,027
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
12,486
|
|
31,981
|
|
57,745
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
14,472
|
|
68,563
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
23,016
|
|
|||||||||||||||||||
Total
|
|
588,505
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
8,619
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
340,668
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance marine
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
21.9%
|
27.3%
|
20.8%
|
7.2%
|
6.2%
|
4.1%
|
4.0%
|
(1.5)%
|
0.5%
|
2.6%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance aviation
|
||||||||||||||||||||||||||||||||||
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
At December 31, 2018
|
||||||||||||||||||||||||||||||||
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
||||||||||||||||||||||||
2009
|
$
|
17,468
|
|
$
|
14,560
|
|
$
|
18,752
|
|
$
|
18,090
|
|
$
|
16,743
|
|
$
|
16,618
|
|
$
|
15,437
|
|
$
|
14,604
|
|
$
|
14,330
|
|
$
|
13,821
|
|
$
|
41
|
|
1,659
|
2010
|
|
12,922
|
|
11,699
|
|
11,422
|
|
9,749
|
|
8,769
|
|
8,699
|
|
8,744
|
|
8,548
|
|
8,900
|
|
78
|
|
1,950
|
||||||||||||
2011
|
|
|
17,723
|
|
15,390
|
|
12,779
|
|
9,552
|
|
8,422
|
|
7,275
|
|
7,242
|
|
7,203
|
|
205
|
|
2,145
|
|||||||||||||
2012
|
|
|
|
12,789
|
|
10,668
|
|
10,791
|
|
8,708
|
|
7,758
|
|
7,804
|
|
7,695
|
|
200
|
|
2,242
|
||||||||||||||
2013
|
|
|
|
|
15,651
|
|
16,327
|
|
15,199
|
|
15,243
|
|
15,618
|
|
15,502
|
|
292
|
|
2,320
|
|||||||||||||||
2014
|
|
|
|
|
|
20,432
|
|
23,028
|
|
24,339
|
|
22,104
|
|
22,183
|
|
425
|
|
2,717
|
||||||||||||||||
2015
|
|
|
|
|
|
|
29,761
|
|
28,479
|
|
30,363
|
|
30,135
|
|
1,480
|
|
3,484
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
29,154
|
|
34,328
|
|
34,513
|
|
2,845
|
|
3,456
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
56,565
|
|
63,295
|
|
7,676
|
|
3,452
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
57,955
|
|
12,452
|
|
2,280
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
261,202
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance aviation
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
22.3%
|
24.8%
|
20.0%
|
15.5%
|
8.6%
|
3.1%
|
2.3%
|
(0.1)%
|
1.0%
|
(0.4)%
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
92,842
|
|
$
|
344,652
|
|
$
|
346,254
|
|
$
|
346,221
|
|
$
|
341,577
|
|
$
|
345,521
|
|
$
|
345,520
|
|
$
|
345,567
|
|
$
|
341,231
|
|
$
|
340,785
|
|
2010
|
|
50,000
|
|
85,418
|
|
90,729
|
|
106,767
|
|
101,786
|
|
101,948
|
|
102,154
|
|
102,196
|
|
102,514
|
|
|||||||||||
2011
|
|
|
32,788
|
|
37,205
|
|
27,636
|
|
27,636
|
|
27,636
|
|
27,636
|
|
27,631
|
|
27,631
|
|
||||||||||||
2012
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
38
|
|
39
|
|
42
|
|
|||||||||||||
2013
|
|
|
|
|
745
|
|
2,235
|
|
3,726
|
|
5,216
|
|
11,768
|
|
13,826
|
|
||||||||||||||
2014
|
|
|
|
|
|
1,924
|
|
39,952
|
|
61,108
|
|
57,855
|
|
57,855
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
—
|
|
23,309
|
|
23,298
|
|
23,298
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
—
|
|
24,445
|
|
24,479
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
1,504
|
|
5,589
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
4,294
|
|
|||||||||||||||||||
Total
|
|
600,313
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
(1,475
|
)
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
99,011
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance credit and political risk
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
21.7%
|
38.9%
|
1.6%
|
3.1%
|
9.9%
|
3.3%
|
0.4%
|
—%
|
(0.5)%
|
(0.1)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance professional lines
|
||||||||||||||||||||||||||||||||||
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
At December 31, 2018
|
||||||||||||||||||||||||||||||||
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
||||||||||||||||||||||||
2009
|
$
|
240,092
|
|
$
|
243,522
|
|
$
|
243,978
|
|
$
|
244,466
|
|
$
|
253,979
|
|
$
|
236,657
|
|
$
|
236,751
|
|
$
|
212,994
|
|
$
|
220,524
|
|
$
|
224,778
|
|
$
|
13,640
|
|
5,889
|
2010
|
|
230,353
|
|
235,610
|
|
233,407
|
|
204,744
|
|
181,917
|
|
157,921
|
|
179,517
|
|
167,038
|
|
186,340
|
|
18,897
|
|
5,690
|
||||||||||||
2011
|
|
|
312,805
|
|
314,466
|
|
331,800
|
|
324,739
|
|
329,318
|
|
342,598
|
|
351,247
|
|
351,747
|
|
33,877
|
|
7,215
|
|||||||||||||
2012
|
|
|
|
327,590
|
|
372,782
|
|
374,315
|
|
373,306
|
|
360,596
|
|
362,606
|
|
351,498
|
|
50,067
|
|
8,300
|
||||||||||||||
2013
|
|
|
|
|
382,270
|
|
394,548
|
|
394,461
|
|
361,785
|
|
351,330
|
|
353,112
|
|
70,914
|
|
9,409
|
|||||||||||||||
2014
|
|
|
|
|
|
408,103
|
|
407,688
|
|
418,164
|
|
389,610
|
|
369,129
|
|
111,975
|
|
9,766
|
||||||||||||||||
2015
|
|
|
|
|
|
|
374,209
|
|
373,747
|
|
380,265
|
|
355,300
|
|
127,537
|
|
10,379
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
346,289
|
|
349,223
|
|
355,601
|
|
152,080
|
|
11,632
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
375,397
|
|
393,443
|
|
256,260
|
|
12,903
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
357,398
|
|
304,926
|
|
12,392
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
3,298,346
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
1,657
|
|
$
|
20,619
|
|
$
|
44,065
|
|
$
|
68,690
|
|
$
|
96,631
|
|
$
|
106,985
|
|
$
|
126,542
|
|
$
|
165,088
|
|
$
|
177,492
|
|
$
|
184,577
|
|
2010
|
|
7,850
|
|
27,815
|
|
53,458
|
|
72,554
|
|
88,585
|
|
99,082
|
|
109,668
|
|
114,710
|
|
136,252
|
|
|||||||||||
2011
|
|
|
7,399
|
|
32,812
|
|
73,940
|
|
107,980
|
|
165,206
|
|
237,804
|
|
282,907
|
|
294,043
|
|
||||||||||||
2012
|
|
|
|
7,801
|
|
41,021
|
|
99,486
|
|
183,295
|
|
229,932
|
|
252,937
|
|
272,298
|
|
|||||||||||||
2013
|
|
|
|
|
17,633
|
|
72,784
|
|
128,858
|
|
174,759
|
|
211,931
|
|
241,074
|
|
||||||||||||||
2014
|
|
|
|
|
|
23,450
|
|
70,266
|
|
129,160
|
|
191,437
|
|
222,692
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
19,976
|
|
67,313
|
|
137,145
|
|
168,627
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
15,846
|
|
70,947
|
|
146,342
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
20,812
|
|
71,495
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
19,098
|
|
|||||||||||||||||||
Total
|
|
1,756,498
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
45,848
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,587,696
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Insurance professional lines
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
4.1%
|
11.8%
|
15.7%
|
13.4%
|
11.6%
|
9.1%
|
8.2%
|
7.7%
|
8.6%
|
3.2%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance liability
|
||||||||||||||||||||||||||||||||||
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
At December 31, 2018
|
||||||||||||||||||||||||||||||||
|
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
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
||||||||||||||||||||||||
2009
|
$
|
61,469
|
|
$
|
64,017
|
|
$
|
67,410
|
|
$
|
67,869
|
|
$
|
75,883
|
|
$
|
83,281
|
|
$
|
101,179
|
|
$
|
98,384
|
|
$
|
98,999
|
|
$
|
97,964
|
|
$
|
9,450
|
|
4,093
|
2010
|
|
79,407
|
|
94,220
|
|
98,635
|
|
98,112
|
|
99,570
|
|
98,061
|
|
105,119
|
|
104,258
|
|
103,906
|
|
11,742
|
|
3,670
|
||||||||||||
2011
|
|
|
72,586
|
|
75,329
|
|
83,118
|
|
87,059
|
|
85,242
|
|
83,730
|
|
82,127
|
|
82,625
|
|
17,357
|
|
3,222
|
|||||||||||||
2012
|
|
|
|
70,861
|
|
70,631
|
|
73,281
|
|
70,770
|
|
68,180
|
|
75,341
|
|
72,514
|
|
23,236
|
|
2,837
|
||||||||||||||
2013
|
|
|
|
|
92,150
|
|
94,178
|
|
94,253
|
|
87,498
|
|
93,216
|
|
95,632
|
|
21,345
|
|
3,520
|
|||||||||||||||
2014
|
|
|
|
|
|
106,148
|
|
122,643
|
|
128,524
|
|
130,021
|
|
131,539
|
|
31,126
|
|
4,614
|
||||||||||||||||
2015
|
|
|
|
|
|
|
127,319
|
|
125,819
|
|
136,305
|
|
164,036
|
|
52,818
|
|
5,975
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
123,243
|
|
129,139
|
|
128,172
|
|
73,747
|
|
6,628
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
161,211
|
|
165,061
|
|
107,070
|
|
5,842
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
166,659
|
|
141,099
|
|
3,725
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,208,108
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Insurance liability
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
2.8%
|
11.8%
|
12.9%
|
19.4%
|
10.0%
|
8.1%
|
5.0%
|
19.0%
|
1.3%
|
1.3%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance property and other
|
||||||||||||||||||||||||||||||
|
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
|
|||||||||||||||||||||||||||||
|
For the years ended December 31,
|
|||||||||||||||||||||||||||||
Accident year
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
56,420
|
|
$
|
129,397
|
|
$
|
160,284
|
|
$
|
178,388
|
|
$
|
188,919
|
|
$
|
188,240
|
|
$
|
191,046
|
|
$
|
192,728
|
|
$
|
191,900
|
|
$
|
190,174
|
|
2010
|
|
116,143
|
|
310,268
|
|
403,566
|
|
435,155
|
|
481,009
|
|
510,061
|
|
534,893
|
|
540,616
|
|
542,909
|
|
|||||||||||
2011
|
|
|
251,538
|
|
587,390
|
|
793,972
|
|
893,041
|
|
922,456
|
|
995,795
|
|
1,010,611
|
|
1,013,191
|
|
||||||||||||
2012
|
|
|
|
122,688
|
|
294,436
|
|
367,055
|
|
389,461
|
|
404,019
|
|
413,789
|
|
415,831
|
|
|||||||||||||
2013
|
|
|
|
|
107,085
|
|
324,443
|
|
440,804
|
|
470,990
|
|
480,712
|
|
482,114
|
|
||||||||||||||
2014
|
|
|
|
|
|
101,937
|
|
352,361
|
|
434,354
|
|
451,890
|
|
458,032
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
71,244
|
|
265,569
|
|
368,360
|
|
400,615
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
126,404
|
|
375,374
|
|
519,223
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
252,008
|
|
722,835
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
194,154
|
|
|||||||||||||||||||
Total
|
|
4,939,078
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
11,126
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,393,776
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Reinsurance property and other
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
22.2%
|
39.9%
|
19.1%
|
6.5%
|
3.8%
|
2.9%
|
1.9%
|
0.7%
|
—%
|
(0.9)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance credit and surety
|
|||||||||||||||||||||||||||||||||
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
At December 31, 2018
|
|||||||||||||||||||||||||||||||
|
For the years ended December 31,
|
Total of incurred-but-not-reported liabilities plus expected development on reported claims
|
|||||||||||||||||||||||||||||||
Accident year
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
|||||||||||||||||||||||
2009
|
$
|
143,398
|
|
$
|
122,111
|
|
$
|
105,827
|
|
$
|
105,062
|
|
$
|
104,236
|
|
$
|
98,958
|
|
$
|
95,726
|
|
$
|
95,321
|
|
$
|
93,688
|
|
$
|
92,519
|
|
$
|
1,304
|
|
2010
|
|
119,152
|
|
100,047
|
|
93,548
|
|
90,657
|
|
86,528
|
|
79,047
|
|
77,732
|
|
75,716
|
|
74,430
|
|
4,092
|
|
||||||||||||
2011
|
|
|
121,471
|
|
107,811
|
|
105,955
|
|
112,964
|
|
111,019
|
|
102,529
|
|
100,718
|
|
100,146
|
|
5,770
|
|
|||||||||||||
2012
|
|
|
|
160,109
|
|
148,566
|
|
151,141
|
|
148,363
|
|
140,000
|
|
131,963
|
|
128,323
|
|
8,830
|
|
||||||||||||||
2013
|
|
|
|
|
165,413
|
|
153,616
|
|
144,472
|
|
140,589
|
|
136,402
|
|
125,112
|
|
8,083
|
|
|||||||||||||||
2014
|
|
|
|
|
|
135,732
|
|
136,346
|
|
143,515
|
|
139,857
|
|
128,404
|
|
11,280
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
160,837
|
|
166,951
|
|
161,789
|
|
157,612
|
|
26,891
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
142,245
|
|
141,780
|
|
149,054
|
|
38,746
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
135,750
|
|
134,063
|
|
38,299
|
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
111,969
|
|
53,762
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,201,632
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance credit and surety
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
29.9%
|
30.0%
|
12.6%
|
5.5%
|
4.3%
|
1.9%
|
1.3%
|
0.9%
|
0.5%
|
(0.4)%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance professional lines
|
||||||||||||||||||||||||||||||
|
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
|
|||||||||||||||||||||||||||||
|
For the years ended December 31,
|
|||||||||||||||||||||||||||||
Accident year
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
914
|
|
$
|
8,588
|
|
$
|
32,306
|
|
$
|
63,066
|
|
$
|
83,703
|
|
$
|
108,373
|
|
$
|
128,071
|
|
$
|
138,247
|
|
$
|
143,732
|
|
$
|
150,811
|
|
2010
|
|
1,758
|
|
12,029
|
|
31,245
|
|
52,129
|
|
76,763
|
|
107,270
|
|
123,889
|
|
130,487
|
|
137,917
|
|
|||||||||||
2011
|
|
|
1,510
|
|
11,825
|
|
30,273
|
|
57,182
|
|
84,776
|
|
102,938
|
|
119,643
|
|
129,920
|
|
||||||||||||
2012
|
|
|
|
779
|
|
10,400
|
|
29,616
|
|
53,587
|
|
85,921
|
|
107,173
|
|
131,770
|
|
|||||||||||||
2013
|
|
|
|
|
1,062
|
|
12,070
|
|
30,495
|
|
64,966
|
|
81,641
|
|
104,883
|
|
||||||||||||||
2014
|
|
|
|
|
|
2,019
|
|
13,066
|
|
48,814
|
|
74,542
|
|
109,129
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
3,134
|
|
13,505
|
|
41,524
|
|
79,270
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
1,772
|
|
20,516
|
|
52,588
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
2,814
|
|
14,918
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
273
|
|
|||||||||||||||||||
Total
|
|
911,479
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
47,397
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,039,085
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Reinsurance professional lines
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
0.9%
|
5.9%
|
12.1%
|
14.4%
|
13.3%
|
12.7%
|
10.5%
|
5.2%
|
3.8%
|
3.9%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance motor
|
||||||||||||||||||||||||||||||
|
Cumulative paid claims and allocated claim adjustment expenses, net of reinsurance
|
|||||||||||||||||||||||||||||
|
For the years ended December 31,
|
|||||||||||||||||||||||||||||
Accident year
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017
unaudited
|
2018
|
||||||||||||||||||||
2009
|
$
|
2,709
|
|
$
|
6,830
|
|
$
|
8,012
|
|
$
|
9,523
|
|
$
|
12,933
|
|
$
|
19,066
|
|
$
|
21,368
|
|
$
|
25,910
|
|
$
|
29,144
|
|
$
|
31,650
|
|
2010
|
|
7,075
|
|
11,951
|
|
17,066
|
|
20,387
|
|
23,554
|
|
27,766
|
|
30,977
|
|
32,015
|
|
33,083
|
|
|||||||||||
2011
|
|
|
23,788
|
|
46,979
|
|
61,309
|
|
71,664
|
|
78,202
|
|
84,067
|
|
88,630
|
|
89,619
|
|
||||||||||||
2012
|
|
|
|
29,162
|
|
52,736
|
|
67,254
|
|
76,875
|
|
83,232
|
|
87,244
|
|
89,492
|
|
|||||||||||||
2013
|
|
|
|
|
33,807
|
|
52,639
|
|
66,119
|
|
75,865
|
|
81,388
|
|
86,832
|
|
||||||||||||||
2014
|
|
|
|
|
|
43,325
|
|
73,572
|
|
92,721
|
|
100,607
|
|
110,562
|
|
|||||||||||||||
2015
|
|
|
|
|
|
|
57,809
|
|
92,778
|
|
112,584
|
|
129,661
|
|
||||||||||||||||
2016
|
|
|
|
|
|
|
|
60,829
|
|
104,342
|
|
127,970
|
|
|||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
72,226
|
|
133,842
|
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
83,854
|
|
|||||||||||||||||||
Total
|
|
916,565
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
All outstanding liabilities before 2009, net of reinsurance
|
|
146,464
|
|
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
1,172,467
|
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Reinsurance motor
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
19.5%
|
14.1%
|
8.6%
|
5.8%
|
4.7%
|
4.9%
|
3.0%
|
2.6%
|
2.8%
|
3.2%
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance liability
|
|||||||||||||||||||||||||||||||||
|
Incurred claims and allocated claim adjustment expenses, net of reinsurance
|
At December 31, 2018
|
|||||||||||||||||||||||||||||||
|
For the years ended December 31,
|
Total of incurred-but-not-reported liabilities plus expected development on reported claims
|
|||||||||||||||||||||||||||||||
Accident year
|
2009 unaudited
|
2010 unaudited
|
2011 unaudited
|
2012 unaudited
|
2013 unaudited
|
2014 unaudited
|
2015 unaudited
|
2016 unaudited
|
2017 unaudited
|
2018
|
|||||||||||||||||||||||
2009
|
$
|
172,680
|
|
$
|
174,121
|
|
$
|
180,945
|
|
$
|
178,149
|
|
$
|
184,811
|
|
$
|
204,531
|
|
$
|
192,287
|
|
$
|
178,260
|
|
$
|
168,917
|
|
$
|
175,770
|
|
$
|
13,563
|
|
2010
|
|
171,634
|
|
170,784
|
|
182,515
|
|
183,056
|
|
201,329
|
|
190,959
|
|
181,938
|
|
165,990
|
|
159,156
|
|
14,137
|
|
||||||||||||
2011
|
|
|
172,431
|
|
172,399
|
|
174,124
|
|
191,761
|
|
197,871
|
|
194,715
|
|
193,830
|
|
191,962
|
|
24,450
|
|
|||||||||||||
2012
|
|
|
|
167,290
|
|
163,625
|
|
167,887
|
|
172,491
|
|
173,645
|
|
171,121
|
|
164,357
|
|
27,789
|
|
||||||||||||||
2013
|
|
|
|
|
172,784
|
|
176,465
|
|
182,428
|
|
184,467
|
|
184,147
|
|
177,273
|
|
53,822
|
|
|||||||||||||||
2014
|
|
|
|
|
|
200,203
|
|
203,136
|
|
204,871
|
|
200,819
|
|
199,583
|
|
75,626
|
|
||||||||||||||||
2015
|
|
|
|
|
|
|
214,942
|
|
215,273
|
|
216,201
|
|
215,997
|
|
97,353
|
|
|||||||||||||||||
2016
|
|
|
|
|
|
|
|
240,411
|
|
246,024
|
|
251,087
|
|
131,475
|
|
||||||||||||||||||
2017
|
|
|
|
|
|
|
|
|
277,034
|
|
270,564
|
|
176,854
|
|
|||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
264,450
|
|
209,612
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
Total
|
$
|
2,070,199
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
9.
|
RESERVE FOR LOSSES AND LOSS EXPENSES (CONTINUED)
|
Reinsurance liability
|
|||||||||
Average annual percentage payout of incurred claims by age, net of reinsurance (unaudited)
|
|||||||||
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Year 6
|
Year 7
|
Year 8
|
Year 9
|
Year 10
|
3.4%
|
9.2%
|
13.1%
|
12.0%
|
11.2%
|
11.6%
|
8.1%
|
5.2%
|
4.5%
|
2.0%
|
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, 2018
|
||||||||||
|
|
Net outstanding liabilities
|
|
Reinsurance recoverable on unpaid claims
|
|
Gross outstanding liabilities
|
||||||
|
|
|
|
|
|
|
||||||
Insurance segment
|
|
|
|
|
|
|
||||||
Property and other
|
|
$
|
771,659
|
|
|
$
|
482,207
|
|
|
$
|
1,253,866
|
|
Marine
|
|
340,668
|
|
|
187,164
|
|
|
527,832
|
|
|||
Aviation
|
|
91,404
|
|
|
14,310
|
|
|
105,714
|
|
|||
Credit and political risk
|
|
99,011
|
|
|
24,536
|
|
|
123,547
|
|
|||
Professional Lines
|
|
1,587,696
|
|
|
1,005,316
|
|
|
2,593,012
|
|
|||
Liability
|
|
650,470
|
|
|
978,719
|
|
|
1,629,189
|
|
|||
Total insurance segment
|
|
3,540,908
|
|
|
2,692,252
|
|
|
6,233,160
|
|
|||
|
|
|
|
|
|
|
||||||
Reinsurance segment
|
|
|
|
|
|
|
||||||
Property and other
|
|
1,393,776
|
|
|
435,671
|
|
|
1,829,447
|
|
|||
Credit and surety
|
|
325,491
|
|
|
36,180
|
|
|
361,671
|
|
|||
Professional lines
|
|
1,039,085
|
|
|
81,608
|
|
|
1,120,693
|
|
|||
Motor
|
|
1,172,467
|
|
|
128,575
|
|
|
1,301,042
|
|
|||
Liability
|
|
1,204,568
|
|
|
127,383
|
|
|
1,331,951
|
|
|||
Total reinsurance segment
|
|
5,135,387
|
|
|
809,417
|
|
|
5,944,804
|
|
|||
Total
|
|
$
|
8,676,295
|
|
|
$
|
3,501,669
|
|
|
12,177,964
|
|
|
Unallocated claims adjustment expenses
|
|
|
|
|
|
145,768
|
|
|||||
Foreign exchange and other
(1)
|
|
|
|
|
|
53,695
|
|
|||||
(Ceded)/assumed reserves related to retroactive transactions
|
|
|
|
|
|
(96,658
|
)
|
|||||
|
|
|
|
|
|
|
||||||
Total liability for unpaid claims and claims adjustment expense
|
|
|
|
|
|
$
|
12,280,769
|
|
||||
|
|
|
|
|
|
|
(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,
|
2018
|
|
2017
|
|
2016
|
|
||||||||||||||||||
|
|
Premiums
written
|
|
Premiums
earned
|
|
Premiums
written
|
|
Premiums
earned
|
|
Premiums
written
|
|
Premiums
earned
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Gross
|
$
|
6,910,065
|
|
|
$
|
6,882,217
|
|
|
$
|
5,556,273
|
|
|
$
|
5,616,234
|
|
|
$
|
4,970,208
|
|
|
$
|
4,762,394
|
|
|
|
Ceded
|
(2,251,103
|
)
|
|
(2,090,722
|
)
|
|
(1,529,130
|
)
|
|
(1,467,474
|
)
|
|
(1,217,234
|
)
|
|
(1,056,769
|
)
|
|
||||||
|
Net
|
$
|
4,658,962
|
|
|
$
|
4,791,495
|
|
|
$
|
4,027,143
|
|
|
$
|
4,148,760
|
|
|
$
|
3,752,974
|
|
|
$
|
3,705,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
||
|
|
|
|
||
|
2019
|
$
|
250,000
|
|
|
|
2020
|
500,000
|
|
|
|
|
2021
|
—
|
|
|
|
|
2022
|
—
|
|
|
|
|
2023
|
—
|
|
|
|
|
After 2023
|
600,000
|
|
|
|
|
Unamortized discount and debt issuance expenses
|
(8,039
|
)
|
|
|
|
Total senior notes and notes payable
|
$
|
1,341,961
|
|
|
|
|
|
|
c)
|
Credit Facilities
|
11.
|
DEBT AND FINANCING ARRANGEMENTS (CONTINUED)
|
11.
|
DEBT AND FINANCING ARRANGEMENTS (CONTINUED)
|
12.
|
COMMITMENTS AND CONTINGENCIES
|
a)
|
Concentrations of Credit Risk
|
12.
|
COMMITMENTS AND CONTINGENCIES (CONTINUED)
|
b)
|
Brokers
|
12.
|
COMMITMENTS AND CONTINGENCIES (CONTINUED)
|
c)
|
Lease Commitments
|
|
|
|
|
||
|
Year ended December 31,
|
|
|
||
|
|
|
|
||
|
2019
|
$
|
28,240
|
|
|
|
2020
|
25,331
|
|
|
|
|
2021
|
27,025
|
|
|
|
|
2022
|
28,012
|
|
|
|
|
2023
|
23,801
|
|
|
|
|
Later years
|
118,497
|
|
|
|
|
Total future minimum lease payments
|
$
|
250,906
|
|
|
|
|
|
|
d)
|
Reinsurance Purchase Commitment
|
e)
|
Legal Proceedings
|
f)
|
Investments
|
12.
|
COMMITMENTS AND CONTINGENCIES (CONTINUED)
|
g)
|
Funds at Lloyd's
|
13.
|
EARNINGS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
||||||
|
At and year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Earnings (loss) per common share
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
$
|
43,021
|
|
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
|
|
Less: Preferred share dividends
|
42,625
|
|
|
46,810
|
|
|
46,597
|
|
|
|||
|
Less: Loss on repurchase of preferred shares
|
—
|
|
|
—
|
|
|
1,309
|
|
|
|||
|
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
|
Weighted average common shares outstanding
|
83,501
|
|
|
84,108
|
|
|
90,772
|
|
|
|||
|
Earnings (loss) per common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.13
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Earnings (loss) per diluted common share
|
|
|
|
|
|
|
||||||
|
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding
|
83,501
|
|
|
84,108
|
|
|
90,772
|
|
|
|||
|
Share-based compensation plans
(1)
|
506
|
|
|
—
|
|
|
775
|
|
|
|||
|
Weighted average diluted common shares outstanding
(1)
|
84,007
|
|
|
84,108
|
|
|
91,547
|
|
|
|||
|
Earnings (loss) per diluted common share
|
$
|
—
|
|
|
$
|
(4.94
|
)
|
|
$
|
5.08
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average anti-dilutive shares excluded from the dilutive computation
|
245
|
|
|
702
|
|
|
170
|
|
|
|||
|
|
|
|
|
|
|
|
(1)
|
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,
|
2018
|
|
2017
|
|
2016
|
|
|||
|
|
|
|
|
|
|
|
|||
|
Shares issued, balance at beginning of year
|
176,580
|
|
|
176,580
|
|
|
176,240
|
|
|
|
Shares issued
|
—
|
|
|
—
|
|
|
340
|
|
|
|
Total shares issued at end of year
|
176,580
|
|
|
176,580
|
|
|
176,580
|
|
|
|
|
|
|
|
|
|
|
|||
|
Treasury shares, balance at beginning of year
|
(93,419
|
)
|
|
(90,139
|
)
|
|
(80,174
|
)
|
|
|
Shares repurchased
|
(200
|
)
|
|
(4,288
|
)
|
|
(10,508
|
)
|
|
|
Shares reissued
|
625
|
|
|
1,008
|
|
|
543
|
|
|
|
Total treasury shares at end of year
|
(92,994
|
)
|
|
(93,419
|
)
|
|
(90,139
|
)
|
|
|
|
|
|
|
|
|
|
|||
|
Total shares outstanding
|
83,586
|
|
|
83,161
|
|
|
86,441
|
|
|
|
|
|
|
|
|
|
|
14.
|
SHAREHOLDERS' EQUITY (CONTINUED)
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
In the open market:
|
|
|
|
|
|
|
||||||
|
Total shares
(1)
|
—
|
|
|
3,932
|
|
|
10,241
|
|
|
|||
|
Total cost
|
$
|
—
|
|
|
$
|
261,180
|
|
|
$
|
557,476
|
|
|
|
Average price per share
(2)
|
$
|
—
|
|
|
$
|
66.43
|
|
|
$
|
54.44
|
|
|
|
|
|
|
|
|
|
|
||||||
|
From employees:
(3)
|
|
|
|
|
|
|
||||||
|
Total shares
|
200
|
|
|
356
|
|
|
267
|
|
|
|||
|
Total cost
|
$
|
10,080
|
|
|
$
|
24,678
|
|
|
$
|
14,329
|
|
|
|
Average price per share
(2)
|
$
|
50.40
|
|
|
$
|
69.36
|
|
|
$
|
53.74
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total shares repurchased:
|
|
|
|
|
|
|
||||||
|
Total shares
|
200
|
|
|
4,288
|
|
|
10,508
|
|
|
|||
|
Total cost
|
$
|
10,080
|
|
|
$
|
285,858
|
|
|
$
|
571,805
|
|
|
|
Average price per share
(2)
|
$
|
50.40
|
|
|
$
|
66.67
|
|
|
$
|
54.42
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts in 2016 include common shares acquired under the accelerated share repurchase program of
1,358,380
(see below for more detail).
|
(2)
|
Calculated using whole numbers.
|
(3)
|
Shares are repurchased from employees to satisfy withholding tax liabilities that arise upon the vesting of restricted stock awards and restricted stock units. 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 RSUs
|
|
||||||||||
|
|
Number of
restricted
stock units
|
|
Weighted average grant date
fair value
(1)
|
|
Number of
restricted
stock units
|
|
Weighted average
grant date
fair value
(1)
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
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
|
|
|
||
|
Granted
|
104
|
|
|
48.89
|
|
|
737
|
|
|
49.36
|
|
|
||
|
Vested
|
(87
|
)
|
|
54.71
|
|
|
(539
|
)
|
|
54.51
|
|
|
||
|
Forfeited
|
(15
|
)
|
|
53.80
|
|
|
(142
|
)
|
|
55.36
|
|
|
||
|
Nonvested restricted stock - December 31, 2018
|
232
|
|
|
$
|
54.54
|
|
|
1,411
|
|
|
$
|
54.12
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
SHARE-BASED COMPENSATION (CONTINUED)
|
|
|
Cash-Settled PSUs
|
|
Cash-Settled Service based RSUs
|
|
||
|
|
Number of
restricted
stock units
|
|
Number of
restricted
stock units
|
|
||
|
|
|
|
|
|
||
|
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
|
|
|
|
Granted
|
—
|
|
|
473
|
|
|
|
Vested
|
(12
|
)
|
|
(390
|
)
|
|
|
Forfeited
|
(3
|
)
|
|
(139
|
)
|
|
|
Nonvested restricted stock units - December 31, 2018
|
27
|
|
|
932
|
|
|
|
|
|
|
|
|
17.
|
RELATED PARTY TRANSACTIONS
|
17.
|
RELATED PARTY TRANSACTIONS (CONTINUED)
|
18.
|
INCOME TAXES
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31,
|
2018
|
|
2017
|
|
2016
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Current income tax expense (benefit)
|
|
|
|
|
|
|
||||||
|
U.S.
|
$
|
(5,401
|
)
|
|
$
|
(6,207
|
)
|
|
$
|
606
|
|
|
|
Europe
|
10,409
|
|
|
10,249
|
|
|
7,451
|
|
|
|||
|
Other
|
51
|
|
|
—
|
|
|
—
|
|
|
|||
|
Deferred income tax expense (benefit)
|
|
|
|
|
|
|
||||||
|
U.S.
|
15,288
|
|
|
18,495
|
|
|
(1,829
|
)
|
|
|||
|
Europe
|
(49,833
|
)
|
|
(30,079
|
)
|
|
112
|
|
|
|||
|
Total income tax expense (benefit)
|
$
|
(29,486
|
)
|
|
$
|
(7,542
|
)
|
|
$
|
6,340
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net current tax receivables (payables)
|
$
|
9,683
|
|
|
$
|
(639
|
)
|
|
$
|
3,540
|
|
|
|
Net deferred tax assets
|
39,775
|
|
|
4,438
|
|
|
103,313
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net tax assets
|
$
|
49,458
|
|
|
$
|
3,799
|
|
|
$
|
106,853
|
|
|
|
|
|
|
|
|
|
|
18.
|
INCOME TAXES (CONTINUED)
|
|
|
|
|
|
|
||||
|
At December 31,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Deferred tax assets:
|
|
|
|
|
||||
|
Discounting of net reserves for losses and loss expenses
|
$
|
37,440
|
|
|
$
|
27,804
|
|
|
|
Unearned premiums
|
40,447
|
|
|
25,188
|
|
|
||
|
Net unrealized investments losses
|
11,438
|
|
|
—
|
|
|
||
|
Operating and capital loss carryforwards
(1)
|
83,850
|
|
|
53,095
|
|
|
||
|
Accruals not currently deductible
|
32,589
|
|
|
31,560
|
|
|
||
|
Tax credits
|
8,672
|
|
|
29,929
|
|
|
||
|
Other deferred tax assets
|
9,195
|
|
|
15,047
|
|
|
||
|
Deferred tax assets before valuation allowance
|
223,631
|
|
|
182,623
|
|
|
||
|
Valuation allowance
|
(18,955
|
)
|
|
(16,157
|
)
|
|
||
|
Deferred tax assets net of valuation allowance
|
204,676
|
|
|
166,466
|
|
|
||
|
|
|
|
|
|
||||
|
Deferred tax liabilities:
|
|
|
|
|
||||
|
Deferred acquisition costs
|
(39,745
|
)
|
|
(24,249
|
)
|
|
||
|
Net unrealized investments gains
|
—
|
|
|
(8,033
|
)
|
|
||
|
Amortization of VOBA, intangible assets and goodwill
|
(49,097
|
)
|
|
(85,296
|
)
|
|
||
|
Equalization reserves
|
(22,069
|
)
|
|
(23,274
|
)
|
|
||
|
Other deferred tax liabilities
|
(53,990
|
)
|
|
(21,176
|
)
|
|
||
|
Deferred tax liabilities
|
(164,901
|
)
|
|
(162,028
|
)
|
|
||
|
Net deferred tax assets
|
$
|
39,775
|
|
|
$
|
4,438
|
|
|
|
|
|
|
|
|
(1)
|
At December 31, 2018 and 2017, the total operating loss carryforwards includes Lloyd's deferred year of account losses of
$68 million
and
$19 million
, respectively.
|
18.
|
INCOME TAXES (CONTINUED)
|
|
|
|
|
|
|
||||
|
At December 31,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Operating and Capital Loss Carryforwards
(1)
|
|
|
|
|
||||
|
Singapore (branch) operating loss carryforward
|
$
|
79,445
|
|
|
$
|
77,467
|
|
|
|
U.K. operating loss carryforward
(2)
|
413,504
|
|
|
126,839
|
|
|
||
|
Ireland operating loss carryforward
|
12,756
|
|
|
—
|
|
|
||
|
U.S. operating loss carryforward
|
15,062
|
|
|
115,236
|
|
|
||
|
Ireland capital loss carryforward
|
716
|
|
|
716
|
|
|
||
|
|
|
|
|
|
||||
|
Tax Credits
(1)
|
|
|
|
|
||||
|
Ireland foreign tax credit
|
$
|
2,248
|
|
|
$
|
3,566
|
|
|
|
U.S. alternative minimum tax credit
(3)
|
6,026
|
|
|
12,052
|
|
|
||
|
U.K. tax credit
|
398
|
|
|
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)
|
At December 31, 2018 and 2017, the U.K. operating loss carryforward includes Lloyd's deferred year of account losses of
$403 million
and
$113 million
, respectively.
|
(3)
|
As a result of U.S. tax reform, all alternative minimum tax credits will be refunded by tax year 2021.
|
|
|
|
|
|
|
||||
|
At December 31,
|
2018
|
|
2017
|
|
||||
|
|
|
|
|
|
||||
|
Income tax expense:
|
|
|
|
|
||||
|
Valuation allowance - beginning of year
|
$
|
16,157
|
|
|
$
|
41,100
|
|
|
|
Operating loss carryforwards
|
198
|
|
|
(27,116
|
)
|
|
||
|
Foreign tax credit
|
(1,359
|
)
|
|
267
|
|
|
||
|
U.K. branch assets and other foreign rate differentials
|
(205
|
)
|
|
1,006
|
|
|
||
|
U.S. alternative minimum tax credits
|
(900
|
)
|
|
900
|
|
|
||
|
Valuation allowance - end of year
|
$
|
13,891
|
|
|
$
|
16,157
|
|
|
|
|
|
|
|
|
||||
|
Accumulated other comprehensive income:
|
|
|
|
|
||||
|
Valuation allowance - beginning of year
|
—
|
|
|
—
|
|
|
||
|
Change in investment - related items
|
5,064
|
|
|
—
|
|
|
||
|
Valuation allowance - end of year
|
5,064
|
|
|
—
|
|
|
||
|
|
|
|
|
|
||||
|
Total valuation allowance - end of year
|
$
|
18,955
|
|
|
$
|
16,157
|
|
|
|
|
|
|
|
|
18.
|
INCOME TAXES (CONTINUED)
|
19.
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
Before tax amount
|
|
Tax (expense) benefit
|
|
Net of tax amount
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2018
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses) arising during the year
|
$
|
(297,259
|
)
|
|
$
|
5,528
|
|
|
$
|
(291,731
|
)
|
|
|
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income
|
105,730
|
|
|
(4,828
|
)
|
|
100,902
|
|
|
|||
|
Unrealized investment gains (losses) arising during the year, net of reclassification adjustment
(1)
|
(191,529
|
)
|
|
700
|
|
|
(190,829
|
)
|
|
|||
|
Non-credit portion of OTTI losses
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
Foreign currency translation adjustment
|
(11,165
|
)
|
|
—
|
|
|
(11,165
|
)
|
|
|||
|
Total other comprehensive income (loss), net of tax
|
$
|
(202,694
|
)
|
|
$
|
700
|
|
|
$
|
(201,994
|
)
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2017
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses) arising during the year
|
$
|
211,151
|
|
|
$
|
(5,732
|
)
|
|
$
|
205,419
|
|
|
|
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income
|
(33,892
|
)
|
|
758
|
|
|
(33,134
|
)
|
|
|||
|
Unrealized investment gains (losses) 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 (loss), net of tax
|
$
|
219,197
|
|
|
$
|
(4,974
|
)
|
|
$
|
214,223
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Year ended December 31, 2016
|
|
|
|
|
|
|
||||||
|
Available for sale investments:
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses) arising during the year
|
$
|
10,165
|
|
|
$
|
(5,093
|
)
|
|
$
|
5,072
|
|
|
|
Adjustment for reclassification of net realized investment (gains) losses and OTTI losses recognized in net income
|
60,423
|
|
|
1,767
|
|
|
62,190
|
|
|
|||
|
Unrealized investment gains (losses) 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 (loss), net of tax
|
$
|
69,950
|
|
|
$
|
(3,326
|
)
|
|
$
|
66,624
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Effective January 1, 2018, the Company adopted ASU No. 2016-01. The adoption of this guidance resulted in a cumulative adjustment to reclassify unrealized investment gains on equity securities from accumulated other comprehensive income to retained earnings. Refer to Item 8, Note 2 '
Basis of Presentation and Significant Accounting Policies
' to the consolidated financial statements for additional information.
|
19.
|
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,
|
|
|||||||||||
|
2018
|
|
2017
|
|
2016
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Unrealized investment gains (losses) on available for sale investments
|
|
|
|
|
|
|
|
|
||||||
|
|
Other realized investment gains (losses)
|
$
|
(95,997
|
)
|
|
$
|
48,385
|
|
|
$
|
(34,213
|
)
|
|
|
|
|
OTTI losses
|
(9,733
|
)
|
|
(14,493
|
)
|
|
(26,210
|
)
|
|
|
|||
|
|
Total before tax
|
(105,730
|
)
|
|
33,892
|
|
|
(60,423
|
)
|
|
|
|||
|
|
Income tax (expense) benefit
|
4,828
|
|
|
(758
|
)
|
|
(1,767
|
)
|
|
|
|||
|
|
Net of tax
|
$
|
(100,902
|
)
|
|
$
|
33,134
|
|
|
$
|
(62,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
||||||
|
|
Foreign exchange loss
|
$
|
—
|
|
|
$
|
(24,149
|
)
|
|
$
|
—
|
|
|
|
|
|
Income tax (expense) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
|
|
Net of tax
|
$
|
—
|
|
|
$
|
(24,149
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts in parentheses are charges to net income (loss) available (attributable) to common shareholders
|
20.
|
STATUTORY FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
Bermuda
|
|
Ireland
|
|
U.S.
|
|
|||||||||||||||
|
At December 31,
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Required statutory capital and surplus
|
$
|
1,470,375
|
|
$
|
1,800,064
|
|
|
$
|
637,226
|
|
$
|
613,923
|
|
|
$
|
489,560
|
|
$
|
488,560
|
|
|
|
Available statutory capital and surplus
|
$
|
3,513,342
|
|
$
|
3,641,279
|
|
|
$
|
896,868
|
|
$
|
906,512
|
|
|
$
|
1,668,847
|
|
$
|
1,511,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.
|
STATUTORY FINANCIAL INFORMATION (CONTINUED)
|
20.
|
STATUTORY FINANCIAL INFORMATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Quarters ended
|
Mar 31
|
|
Jun 30
|
|
Sep 30
|
|
Dec 31
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
2018
|
|
|
|
|
|
|
|
|
||||||||
|
Net premiums earned
|
$
|
1,167,402
|
|
|
$
|
1,185,548
|
|
|
$
|
1,224,075
|
|
|
$
|
1,214,469
|
|
|
|
Net investment income
|
100,999
|
|
|
109,960
|
|
|
114,421
|
|
|
113,128
|
|
|
||||
|
Net investment losses
|
(14,830
|
)
|
|
(45,093
|
)
|
|
(17,628
|
)
|
|
(72,667
|
)
|
|
||||
|
Underwriting income (loss)
|
143,737
|
|
|
115,726
|
|
|
59,026
|
|
|
(194,664
|
)
|
|
||||
|
Net income (loss) available (attributable) to common shareholders
|
62,546
|
|
|
92,858
|
|
|
43,439
|
|
|
(198,448
|
)
|
|
||||
|
Earnings (loss) per common share
|
$
|
0.75
|
|
|
$
|
1.11
|
|
|
$
|
0.52
|
|
|
$
|
(2.37
|
)
|
|
|
Earnings (loss) per diluted common share
|
$
|
0.75
|
|
|
$
|
1.11
|
|
|
$
|
0.52
|
|
|
$
|
(2.37
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
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 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 (attributable) to common shareholders
|
5,014
|
|
|
85,030
|
|
|
(467,740
|
)
|
|
(38,081
|
)
|
|
||||
|
Earnings (loss) per common share
|
$
|
0.06
|
|
|
$
|
1.01
|
|
|
$
|
(5.61
|
)
|
|
$
|
(0.46
|
)
|
|
|
Earnings (loss) per diluted common share
|
$
|
0.06
|
|
|
$
|
1.01
|
|
|
$
|
(5.61
|
)
|
|
$
|
(0.46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
During the three months ended March 31, June 30, September 30 and December 31, 2018, the Company recognized transaction and reorganization expenses of
$13 million
,
$19 million
,
$16 million
and
$19 million
, respectively, related to its transformation program which was launched in 2017. This program encompasses the integration of Novae which commenced in the fourth quarter of 2017, the realignment of the accident and health business, together with other initiatives designed to increase the Company's efficiency and enhance the Company's profitability while delivering a customer-centric operating model. 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.
|
(2)
|
During the three months ended March 31, June 30, September 30 and December 31, 2018, the Company recognized amortization of VOBA of
$57 million
,
$53 million
,
$39 million
,
$23 million
, respectively, related to the acquisition of Novae. During the three months ended December 31, 2017, the Company recognized amortization of VOBA of
$50 million
. Refer to Item 8, Note 3 and Note 5 to the Consolidated Financial Statements '
Business Combinations
' and '
Goodwill and Intangible Assets
' for further details.
|
(3)
|
During the three months ended December 31, 2017, the Company recognized tax expense of
$42 million
due to the revaluation of net deferred tax asset pursuant to the U.S. Tax Reform. Refer to Item 8, Note 18 to the Consolidated Financial Statements
'Income Taxes'
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 26, 2019
|
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
|
|
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.)
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
Senior Indenture among AXIS Specialty Finance PLC, as issuer, the Company, as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of March 13, 2014 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 13, 2014).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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 10.5 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).
|
|
|
|
*
10.7
|
|
Amendment No. 5 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 7, 2017 (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
†*
10.8
|
|
Amendment No. 6 to Consulting Agreement by and between Michael A. Butt and AXIS Specialty Limited dated December 5, 2018.
|
|
|
|
*
10.9
|
|
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).
|
|
|
|
*
10.10
|
|
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).
|
|
|
|
*
10.11
|
|
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).
|
|
|
|
*
10.12
|
|
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 10.10 to the Company's Annual Report on Form 10-K filed on February 27, 2017).
|
|
|
|
*
10.13
|
|
Amendment No. 4 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 December 6, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on December 11, 2018).
|
|
|
|
*
10.14
|
|
Separation Agreement by and between Christopher DiSipio and AXIS Specialty U.S. Services, Inc. dated March 14, 2018 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 9, 2018).
|
|
|
|
*
10.15
|
|
Separation Agreement by and between John D. Nichols, Jr. and AXIS Specialty U.S. Services, Inc. dated February 27, 2017 (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
*
10.16
|
|
Consulting Agreement by and between Joseph C. Henry and AXIS Specialty U.S. Services, Inc. dated December 11, 2017 (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
*
10.17
|
|
Separation Agreement by and between Joseph C. Henry and AXIS Specialty U.S. Services, Inc. dated December 11, 2017 (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
*
10.18
|
|
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).
|
|
|
|
*
10.19
|
|
Employment Agreement by and between Peter Vogt and AXIS Specialty U.S. Services, Inc. dated December 11, 2017 (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
†*
10.20
|
|
Employment Agreement by and between Steve K. Arora and AXIS Specialty U.S. Services, Inc. dated July 5, 2017.
|
|
|
|
†*
10.21
|
|
Letter Agreement by and between Steve K. Arora and AXIS Specialty U.S. Services, Inc. dated July 5, 2017.
|
|
|
|
†*
10.22
|
|
Employment Agreement by and between David Phillips and AXIS Specialty U.S. Services, Inc. dated March 21, 2014.
|
|
|
|
*
10.23
|
|
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).
|
|
|
|
*
10.24
|
|
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).
|
|
|
|
*
10.25
|
|
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).
|
|
|
|
*
10.26
|
|
2018 Executive Long-Term Equity Compensation Program (incorporated by reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
†*
10.27
|
|
Executive Long-Term Equity Compensation Program.
|
|
|
|
*
10.28
|
|
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).
|
|
|
|
*
10.29
|
|
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).
|
|
|
|
*
10.30
|
|
Form of Employee Restricted Stock Unit Award 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
|
|
Form of Employee Restricted Stock Unit Award 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).
|
|
|
|
*
10.32
|
|
Form of Employee Restricted Stock Unit Award 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).
|
|
|
|
*
10.33
|
|
Form of Employee Restricted Stock Unit Award 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).
|
|
|
|
*
10.34
|
|
Form of Employee Restricted Stock Unit Award Agreement (Performance Vesting) (incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
*
10.35
|
|
Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
†*
10.36
|
|
Form of Employee Restricted Stock Unit Award Agreement (Performance Vesting).
|
|
|
|
†*
10.37
|
|
Form of Employee Restricted Stock Unit Award Agreement.
|
|
|
|
*
10.38
|
|
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).
|
|
|
|
*
10.39
|
|
2018 Directors Annual Compensation Program (incorporated by reference to Exhibit 10.42 to the Company's Annual Report on Form 10-K filed on February 28, 2018).
|
|
|
|
†*
10.40
|
|
Directors Annual Compensation Program.
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
Amendment to Committed Facility Letter dated March 28, 2018 by and among AXIS Specialty Limited, AXIS Re SE, AXIS Specialty Europe SE, AXIS Insurance Company, AXIS Surplus 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 April 3, 2018).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
|
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).
|
|
|
|
|
†
21.1
|
|
Subsidiaries of the registrant.
|
|
|
|
†
23.1
|
|
Consent of Deloitte Ltd.
|
|
|
|
†24.1
|
|
Power of Attorney (included as part of signature pages hereto).
|
|
|
|
†
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†
32.1
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
†
32.2
|
|
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, 2018 formatted in XBRL: (i) Consolidated Balance Sheets at December 31, 2018 and 2017; (ii) Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2018, 2017 and 2016; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail.
|
*
|
Exhibits 10.2 through 10.40 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/ KENT ZIEGLER
|
|
Global Corporate Controller
(Principal Accounting Officer)
|
Kent Ziegler
|
|
|
|
|
|
/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/ ELANOR HARDWICK
|
|
Director
|
Elanor Hardwick
|
|
|
|
|
|
/s/ MAURICE KEANE
|
|
Director
|
Maurice Keane
|
|
|
|
|
|
/s/ THOMAS C. RAMEY
|
|
Director
|
Thomas C. Ramey
|
|
|
|
|
|
/s/ HENRY B. SMITH
|
|
Director
|
Henry B. Smith
|
|
|
|
|
|
/s/ BARBARA YASTINE
|
|
Director
|
Barbara Yastine
|
|
|
|
|
|
/s/ WILHELM ZELLER
|
|
Director
|
Wilhelm Zeller
|
|
|
|
|
At December 31, 2018
|
|
||||||||||
|
|
Amortized cost
|
|
Fair value
|
|
Amount shown on the balance sheet
|
|
||||||
|
(in thousands)
|
|
|
|
|
|
|
||||||
|
Type of investment:
|
|
|
|
|
|
|
||||||
|
Fixed maturities
|
|
|
|
|
|
|
||||||
|
U.S. government and agency
|
$
|
1,520,142
|
|
|
$
|
1,515,697
|
|
|
$
|
1,515,697
|
|
|
|
Non-U.S. government
|
507,550
|
|
|
493,016
|
|
|
493,016
|
|
|
|||
|
Corporate debt
|
4,990,279
|
|
|
4,876,921
|
|
|
4,876,921
|
|
|
|||
|
Agency RMBS
|
1,666,684
|
|
|
1,643,308
|
|
|
1,643,308
|
|
|
|||
|
CMBS
|
1,103,507
|
|
|
1,092,530
|
|
|
1,092,530
|
|
|
|||
|
Non-Agency RMBS
|
40,732
|
|
|
40,687
|
|
|
40,687
|
|
|
|||
|
ABS
|
1,651,350
|
|
|
1,637,603
|
|
|
1,637,603
|
|
|
|||
|
Municipals
|
136,068
|
|
|
135,585
|
|
|
135,585
|
|
|
|||
|
Total fixed maturities
|
$
|
11,616,312
|
|
|
11,435,347
|
|
|
11,435,347
|
|
|
||
|
Mortgage loans, at amortized cost and fair value
|
|
|
298,650
|
|
|
298,650
|
|
|
||||
|
Short-term investments, at amortized cost and fair value
|
|
|
144,040
|
|
|
144,040
|
|
|
||||
|
Equity securities
|
|
|
381,633
|
|
|
381,633
|
|
|
||||
|
Other investments
(1)
|
|
|
445,792
|
|
|
787,787
|
|
|
||||
|
Equity method investments
(2)
|
|
|
—
|
|
|
108,103
|
|
|
||||
|
Total investments
|
|
|
$
|
12,705,462
|
|
|
$
|
13,155,560
|
|
|
||
|
|
|
|
|
|
|
|
(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.
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Assets
|
|
|
|
||||
Investments in subsidiaries
|
$
|
5,320,828
|
|
|
$
|
5,532,396
|
|
Cash and cash equivalents
|
3,099
|
|
|
10,541
|
|
||
Other assets
|
9,647
|
|
|
9,480
|
|
||
Total assets
|
$
|
5,333,574
|
|
|
$
|
5,552,417
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Intercompany payable
|
$
|
247,992
|
|
|
$
|
160,950
|
|
Dividends payable
|
51,157
|
|
|
49,907
|
|
||
Other liabilities
|
4,354
|
|
|
296
|
|
||
Total liabilities
|
303,503
|
|
|
211,153
|
|
||
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Preferred shares
|
775,000
|
|
|
775,000
|
|
||
Common shares
(shares issued 2018: 176,580; 2017: 176,580
shares outstanding 2018: 83,586; 2017: 83,161) |
2,206
|
|
|
2,206
|
|
||
Additional paid-in capital
|
2,308,583
|
|
|
2,299,166
|
|
||
Accumulated other comprehensive (income) loss
|
(177,110
|
)
|
|
92,382
|
|
||
Retained earnings
|
5,912,812
|
|
|
5,979,666
|
|
||
Treasury shares, at cost
(2018: 92,994; 2017: 93,419)
|
(3,791,420
|
)
|
|
(3,807,156
|
)
|
||
Total shareholders’ equity
|
5,030,071
|
|
|
5,341,264
|
|
||
Total liabilities and shareholders’ equity
|
$
|
5,333,574
|
|
|
$
|
5,552,417
|
|
(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 senior obligations 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 senior obligations 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 senior obligations and rank equally with all other senior obligations of AXIS Capital.
|
(4)
|
On February 15, 2018, AXIS Capital contributed
$105 million
to AXIS Specialty Global Holdings to support the capital requirements of its U.S. subsidiaries.
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Revenues
|
|
|
|
|
|
||||||
Net investment income
(1)
|
$
|
900
|
|
|
$
|
2,116
|
|
|
$
|
656
|
|
Total revenues
|
900
|
|
|
2,116
|
|
|
656
|
|
|||
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
||||||
General and administrative expenses
|
29,250
|
|
|
34,933
|
|
|
39,909
|
|
|||
Total expenses
|
29,250
|
|
|
34,933
|
|
|
39,909
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before equity in net income (loss) of subsidiaries
|
(28,350
|
)
|
|
(32,817
|
)
|
|
(39,253
|
)
|
|||
Equity in net income (loss) of subsidiaries
|
71,371
|
|
|
(336,152
|
)
|
|
552,621
|
|
|||
Net income (loss)
|
43,021
|
|
|
(368,969
|
)
|
|
513,368
|
|
|||
Preferred share dividends
|
42,625
|
|
|
46,810
|
|
|
46,597
|
|
|||
Loss on repurchase of preferred shares
|
—
|
|
|
—
|
|
|
1,309
|
|
|||
Net income (loss) available (attributable) to common shareholders
|
$
|
396
|
|
|
$
|
(415,779
|
)
|
|
$
|
465,462
|
|
|
|
|
|
|
|
||||||
Comprehensive income (loss)
|
$
|
(158,973
|
)
|
|
$
|
(154,746
|
)
|
|
$
|
579,992
|
|
(1)
|
On April 15, 2017 a 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.
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
43,021
|
|
|
$
|
(368,969
|
)
|
|
$
|
513,368
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Equity in net income (loss) of subsidiaries
|
(71,371
|
)
|
|
336,152
|
|
|
(552,621
|
)
|
|||
Change in intercompany payable
|
87,042
|
|
|
94,827
|
|
|
33,286
|
|
|||
Dividends received from subsidiaries
|
200,000
|
|
|
400,000
|
|
|
550,000
|
|
|||
Other items
|
(79,927
|
)
|
|
4,988
|
|
|
17,807
|
|
|||
Net cash provided by operating activities
|
178,765
|
|
|
466,998
|
|
|
561,840
|
|
|||
|
|
|
|
|
|
||||||
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
|
)
|
|||
Taxes paid on withholding shares
|
(10,080
|
)
|
|
(24,678
|
)
|
|
(14,329
|
)
|
|||
Dividends paid - common shares
|
(133,502
|
)
|
|
(135,032
|
)
|
|
(132,323
|
)
|
|||
Repurchase of preferred shares
|
—
|
|
|
(351,074
|
)
|
|
(51,769
|
)
|
|||
Dividends paid - preferred shares
|
(42,625
|
)
|
|
(52,844
|
)
|
|
(39,909
|
)
|
|||
Proceeds from issuance of common shares
|
—
|
|
|
—
|
|
|
224
|
|
|||
Net cash used in financing activities
|
(186,207
|
)
|
|
(824,808
|
)
|
|
(201,587
|
)
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(7,442
|
)
|
|
10,442
|
|
|
(7,999
|
)
|
|||
Cash, cash equivalents and restricted cash - beginning of year
|
10,541
|
|
|
99
|
|
|
8,098
|
|
|||
Cash, cash equivalents and restricted cash - end of year
|
$
|
3,099
|
|
|
$
|
10,541
|
|
|
$
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
At and year ended December 31, 2018
|
||||||||||||||||||||||||||||||||||
(in thousands)
|
|
Deferred
acquisition
costs
|
|
Reserve
for losses
and loss
expenses
|
|
Unearned
premiums
|
|
Net
premiums
earned
|
|
Net
investment
income
(1)
|
|
Net losses
and loss
expenses
|
|
Acquisition
costs
|
|
Other
operating
expenses
(2)
|
|
Net
premiums
written
|
||||||||||||||||||
Insurance
|
|
$
|
209,622
|
|
|
$
|
6,426,309
|
|
|
$
|
2,061,123
|
|
|
$
|
2,362,606
|
|
|
$
|
—
|
|
|
$
|
1,494,323
|
|
|
$
|
399,193
|
|
|
$
|
395,252
|
|
|
$
|
2,324,747
|
|
Reinsurance
|
|
357,000
|
|
|
5,854,460
|
|
|
1,574,635
|
|
|
2,428,889
|
|
|
—
|
|
|
1,695,964
|
|
|
569,642
|
|
|
123,916
|
|
|
2,334,215
|
|
|||||||||
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
438,507
|
|
|
—
|
|
|
—
|
|
|
108,221
|
|
|
—
|
|
|||||||||
Total
|
|
$
|
566,622
|
|
|
$
|
12,280,769
|
|
|
$
|
3,635,758
|
|
|
$
|
4,791,495
|
|
|
$
|
438,507
|
|
|
$
|
3,190,287
|
|
|
$
|
968,835
|
|
|
$
|
627,389
|
|
|
$
|
4,658,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
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)
|
|
Net losses
and loss
expenses
|
|
Acquisition
costs
|
|
Other
operating
expenses
(2)
|
|
Net
premiums
written
|
||||||||||||||||||
Insurance
|
|
$
|
115,332
|
|
|
$
|
7,011,805
|
|
|
$
|
2,053,422
|
|
|
$
|
1,816,438
|
|
|
$
|
—
|
|
|
$
|
1,465,427
|
|
|
$
|
270,229
|
|
|
$
|
325,368
|
|
|
$
|
1,775,825
|
|
Reinsurance
|
|
358,729
|
|
|
5,985,748
|
|
|
1,587,977
|
|
|
2,332,322
|
|
|
—
|
|
|
1,822,345
|
|
|
553,362
|
|
|
124,115
|
|
|
2,251,318
|
|
|||||||||
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)
|
|
Net losses
and loss
expenses
|
|
Acquisition
costs
|
|
Other
operating
expenses
(2)
|
|
Net
premiums
written
|
||||||||||||||||||
Insurance
|
|
$
|
100,149
|
|
|
$
|
5,198,070
|
|
|
$
|
1,423,891
|
|
|
$
|
1,534,282
|
|
|
$
|
—
|
|
|
$
|
977,771
|
|
|
$
|
206,619
|
|
|
$
|
327,351
|
|
|
$
|
1,519,559
|
|
Reinsurance
|
|
338,487
|
|
|
4,499,757
|
|
|
1,545,607
|
|
|
2,171,343
|
|
|
—
|
|
|
1,226,426
|
|
|
540,257
|
|
|
155,350
|
|
|
2,233,415
|
|
|||||||||
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We evaluate the underwriting results of each of our reportable segments separately from the performance of our investment portfolio therefore, 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, these expenses are excluded 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
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Property and Casualty
|
|
$
|
3,258,999
|
|
|
$
|
2,163,417
|
|
|
$
|
3,074,906
|
|
|
$
|
4,170,488
|
|
|
73.7
|
%
|
|
|
Accident and Health
|
|
209,041
|
|
|
87,686
|
|
|
367,119
|
|
|
488,474
|
|
|
75.2
|
%
|
|
||||
|
Total
|
|
$
|
3,468,040
|
|
|
$
|
2,251,103
|
|
|
$
|
3,442,025
|
|
|
$
|
4,658,962
|
|
|
73.9
|
%
|
|
|
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
|
%
|
|
1.
|
Section 3 of the Agreement (Consulting Fee) is hereby amended to insert the following after “April 2019.”:
|
2.
|
Section 4 of the Agreement (Consulting Term) is hereby amended by deleting the reference to “2019” with “2020”.
|
3.
|
Section 8 of the Agreement (Noncompetition and Nonsolicitation) is hereby amended by deleting the reference to “May 31, 2020” in the last line thereof and replacing such reference with “May 31, 2021”.
|
4.
|
Except as set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect.
|
1)
|
Employment
|
a)
|
Position and Duties
. Commencing July 9, 2018 or such earlier date as mutually agreed between the parties (the “
Commencement Date
”) (it being understood that you will utilize commercially reasonable efforts to facilitate such an earlier start date), the Company shall employ you in the position of Chief Executive Officer of AXIS Reinsurance 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
. Throughout the duration of your secondment to AXIS Re Europe under the terms of a letter agreement dated July 5, 2017 between you and the Company, you shall be based primarily at AXIS Re Europe’s office in Zurich, Switzerland, 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 $900,000 (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 commencing as of the Commencement Date of this Agreement is 125% of your then current Base Salary if the Parent achieves certain performance objectives and subject to your individual performance pursuant to the Parent’s Annual Incentive Plan. Except as provided in Section 4 below, the Annual Bonus for each period will be paid only if you are actively employed with the Company on the date of disbursement. Any Annual Bonus payable hereunder shall be paid in the calendar year following the applicable fiscal year of the Parent, after it has been determined by the Compensation Committee of the Parent. Any such Annual Bonus 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. Notwithstanding the foregoing, your annual bonus for the calendar year 2018 will not be less than $1,125,000.
|
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 $1,400,000, 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)
|
Within 30 days following the Commencement Date, Parent shall grant you a (i) sign-on cash award in the amount of $1,000,000 and (ii) a sign-on equity award valued at $1,000,000, with the number of Restricted Stock Units to be based on the Parent’s closing share price as of the Commencement Date. This equity award will vest on the third anniversary of the grant date as described in the award agreement.
|
e)
|
Within 60 days following the Commencement Date, Parent shall grant you a “make whole” equity award valued at an amount equal to the aggregate value of equity forfeited by you as a result of your termination of employment with Swiss Re (with such forfeited awards determined as of the date of your termination of employment with Swiss Re based on the awards actually forfeited as of such date, but valued based on the trading price of Swiss Re’s stock on July 5, 2017). The number of Restricted Stock Units that you receive as the “make whole” grant will be based on the Parent’s closing share price as of the Commencement Date. This “make whole” equity award will vest in three equal installments on the first, second and third anniversary of the grant date as described in the award agreement. This “make whole” equity award will be made upon your submission of an Equatex or similar statement showing the status of your equity awards following the Commencement Date.
|
f)
|
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.
|
g)
|
During the Employment Term, you will be entitled to twenty-five (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 (2) personal days per year.
|
h)
|
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 two and a half (2 1⁄2) months after the end of the calendar year in which the expense was incurred.
|
3)
|
Term of Employment
|
a)
|
The employment period shall commence on the Commencement Date and shall terminate on the third anniversary of the Commencement Date (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 one hundred eight-one (181) days in any twelve (12) 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) and (vii) 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 opportunity is reduced below the levels specified in Sections 2(a) and (b),
or there is a material adverse change in your employee benefits (excluding changes in any benefits plan where such changes apply generally to similarly situated participants in the plan), (C) you are notified by the Company that you are required to relocate to a place more than 50 miles from your place of employment in Zurich, Switzerland (other than due to your loss of authorization to work in Zurich, Switzerland for reasons unrelated to actions taken by the Company) (D) you are assigned duties that are materially inconsistent with your position with the Company/Parent, (E) 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 (F) 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; (ii) you give the Company written notice of your intent to terminate your employment as a result of such event and provide the specific reasons therefore within sixty (60) days of such event occurring; (iii) the Company does not make the necessary corrections within sixty (60) days of receipt of your written notice; and (iv) you terminate employment no later than ten (10) days following the end of such sixty (60) day period.
|
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
|
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 permanent disability.
|
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
|
(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;
|
(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)
|
For so long as you shall remain in full compliance with the obligations set forth in Sections 7, 8, 9 and 10 below, and conditioned on such continued compliance, 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 continue to vest on the applicable dates set forth in the applicable award agreements.
|
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:
|
(i)
|
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
|
(ii)
|
for purposes of Section 4(d)(vi), all outstanding and unvested Restricted Stock Units and other equity awards shall immediately vest upon said 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 3(a)(vi)(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 3(a)(vi)(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 vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, excluding any individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or entity other than the Board;
|
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
|
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)
|
Termination of this Agreement prior to the Commencement Date
. In the event this Agreement is terminated by the Company or any successor thereto (including a termination following a Change in Control), then your Commencement Date shall be deemed to have occurred and you shall be treated as having been terminated by the Company without Cause and entitled to the payments and benefits provided in Section 4(d) above (provided that in the case of equity, cash may be provided in lieu of equity), or, if the termination follows a Change in Control, treated as having been terminated by the Company without Cause following a Change in Control and entitled to the payments and benefits provided in Section 4(e) above (provided that in the case of equity, cash may be provided in lieu of equity).
|
g)
|
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 substantially similar to 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, any payment or benefit payment hereunder shall commence on the 60
th
day
|
h)
|
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
|
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 Company, (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. You further agree that you shall not maintain any Confidential Information or Trade Secrets on any piece of equipment or device owned by you.
|
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
|
8)
|
Intellectual Property
|
a)
|
You agree that all inventions, improvements, products, designs, specifications, trademarks, service marks, discoveries, formulae, processes, software or computer
|
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
|
b)
|
Accordingly, you covenant and agree that during the time you are employed 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, operate, engage in, 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 in Switzerland, Bermuda and throughout the United States of America. In the event that the Company exercises its right to you 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
|
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
|
16)
|
Section 409A
|
17)
|
Indemnification
|
18)
|
Miscellaneous
|
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, it being understood and agreed that except as provided in Section 4(f) your employment shall not commence under this Agreement until the Commencement Date.
|
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
|
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.
|
n)
|
Without limiting the restrictions set forth under this Agreement regarding Confidential Information, you hereby agree that you will not disclose the terms of this Agreement or your prospective employment with the Company prior to the Company’s public announcement of your hiring, without the Company’s advance written consent
.
|
1)
|
Employment
|
a)
|
Position and Duties
. Your date of hire will be the earliest day permitted under your contractual obligations to your current employer (the “Start Date”). Commencing on the Start Date, the Company shall employ you in the position of Chief Investment 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. Your duties and responsibilities will include oversight of the investment activities of the Parent and its direct and indirect subsidiaries (collectively, the “Parent Group”). 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 Parent Group on an exclusive basis, 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)
|
Place of Performance
. In connection with your employment during the Employment Term (as defined in Section 3(a)), you shall be based primarily at the Company’s offices in New York, NY except for necessary travel on Company business.
|
2)
|
Compensation and Benefits
|
a)
|
During the Employment Term, you shall receive an annual base salary of no less than $575,000 (such 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)
|
In addition to the Base Salary, in each fiscal year of the Parent ending during the Employment Term, you will be eligible to earn an annual cash bonus ("
Annual Bonus
"). Your target Annual Bonus is 125% of your then current Base Salary (“Target Bonus”). Except as provided in Section 4 below, the actual amount of your Annual Bonuses will be determined by reference to your Target Bonus, the extent to which the Parent achieves certain performance objectives and your individual performance pursuant to the Parent’s annual bonus plan. Except as provided in Section 4 below, the Annual Bonus for each period will be paid only if you are actively employed with the Company on the date of disbursement. Any Annual Bonus payable hereunder shall be paid in the calendar year following the applicable fiscal year of the Parent, after it has been determined by the Compensation Committee of the Parent in the first quarter following the applicable fiscal year. So long as you commence employment prior to May 1, 2014, any bonus payable in 2015 for 2014 service will not be pro-rated for partial year service in 2014.
|
c)
|
You will be eligible to participate in the Parent’s 2013 Executive Long-Term Equity Compensation Program (the “Program”) as it may be amended from time to time (or a successor plan), subject to award agreements in such form as the Compensation Committee of the Parent may determine from time to time. Your annual target equity award is valued at $720,000, subject to the rules of the Program and subject to adjustment based on Company financial performance. In all cases, awards under the Program are subject to the discretion of the Compensation Committee.
|
d)
|
Within 30 days following the commencement of the Employment Term, you will be granted an equity award valued at $3,000,000 pursuant to the Program as it may be amended from time to time (or a successor plan), pursuant to the award agreement attached hereto as
Exhibit A
.
|
e)
|
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.
|
f)
|
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.
|
g)
|
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.
|
h)
|
The Company will reimburse you, or pay your attorneys directly, for legal fees and other expenses of counsel incurred by you, in an amount not to exceed $7,500 in connection with your negotiation and implementation of this Agreement, not later than 30 days after presentation of an invoice with appropriate supporting documentation.
|
3)
|
Term of Employment
|
(a)
|
The “Employment Term” shall commence on the Start Date, and shall terminate on December 31, 2016; provided, however, that the Employment Term shall automatically be extended for successive one year periods unless either party shall give at least six (6) month’s prior notice of non-renewal or until terminated in accordance with this Agreement as follows:
|
(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 conviction of a felony or commission of any act which would rise to the level of a felony, (iii) the conviction (or commission of any act which would rise to the level of) a lesser crime or offense that adversely impacts or is reasonably expected to impact upon 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 or your position, (v) commission of a dishonest or wrongful act involving fraud, material misrepresentation or moral turpitude causing damage or potential damage to the Company, the Parent and/or affiliates and subsidiaries, (vi) the willful failure to perform a substantial part of your substantial job functions, 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 six (6) months
in advance of the date of termination;
further provided
, however, that notwithstanding the foregoing, no notice period under this Section 3(iv) shall end prior to September 30, 2015. A non-renewal of the Employment Term by the Company shall also be deemed to be a termination of your employment by the Company without Cause on the last day of the Employment Term.
|
(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) or (vii) below, you provide the Company with notice of your intent to terminate at least six (6) 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 Bonus is reduced below the levels specified in Sections 2(a) and (b) or there is a material adverse change in your employee benefits
|
(vii)
|
Good Reason following a Change in Control
. You may terminate your employment for Good Reason if (i) during the twenty-four (24) month period immediately following a Change in Control (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 Bonus is reduced below the levels specified in Sections 2(a) and (b) or there is a material adverse change in your employee benefits (excluding changes in any benefits plan where such changes apply generally to participants in the plan), (C) ) you are notified by the Company that you are required to relocate to a place more than 50 miles from your current place of employment in New York, NY, (D) you are assigned duties that are materially inconsistent with your position with the Company/Parent, (E) you are required to report to anyone other than the Chief Executive Officer or any other individual that is not mutually agreeable to you and the Company, or (F) 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; (ii) you give the Company written notice of your intent to terminate your employment as a result of such event and provide the specific reasons therefore within sixty (60) days of your knowledge of such event occurring; (iii) the Company does not make the necessary corrections within sixty (60) days of receipt of your written notice; and (iv) you terminate employment no later than ten (10) days following the end of such sixty (60) day period. For purposes of this Agreement, the “Change in Control" will be deemed to have occurred as of the first day any of the following events occur:
|
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 3(a)(vii)(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 3(a)(vii)(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 vote of at least a majority of the directors then comprising the Incumbent Board shall be considered a member of the Incumbent Board, excluding any individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or entity other than the Board;
|
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.
|
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, (v) require you to take accrued but unused vacation, and/or (vi) 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 Sections 3(a)(vi) or (vii) 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 and 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 for the calendar year in which your termination occurs, which shall be equal to the product of (1) the Target Bonus, and (2) a fraction, the numerator of which is the number of days in such year through your date of termination and the denominator of which is 365, to be paid in a cash lump sum no later than sixty (60) days following your termination (a “Pro-Rata Bonus”);
|
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
|
iii)
|
All outstanding and unvested restricted stock, units or other equity awards (“Restricted Stock Units”), shall immediately vest and become non-forfeitable 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 Bonus;
|
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 Bonus; and
|
iii)
|
All outstanding and unvested Restricted Stock Units shall immediately vest and become non-forfeitable upon said termination.
|
d)
|
Termination by the Company without Cause
. In the event that the Company terminates your employment without Cause in accordance with the provisions of Section 3(a)(iv) hereof, and conditioned on your material compliance with this Agreement during the Notice Period (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii), or (v)), 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(h) below, the following will be provided to you following the termination of the Notice Period:
|
(i)
|
You will be paid a cash lump sum amount equal to three-quarters (3/4) of one 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)
|
You will be paid a Pro-Rata Bonus;
|
(iii)
|
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 Bonus;
|
(iv)
|
You will be paid an amount equal to three-quarters (3/4) of your annual Target Bonus for the calendar year in which your termination occurs, to be paid in a cash lump sum no later than sixty (60) days following your termination;
|
(v)
|
The Company will pay COBRA premiums to continue your coverage pursuant to COBRA and the applicable insurance policies up and until the earlier of: (i) 12 months from the date of termination, (ii) or the date upon which you cease to be eligible for COBRA continuation coverage under applicable law and the terms of the applicable policies. You agree to notify the Company in the event that you obtain coverage with another employer group health plan that does not contain
|
(vi)
|
In the event that the Company terminates your employment without Cause, then for so long as you shall remain in compliance with the obligations set forth in Sections 7, 8, 9 and 10 below, and conditioned on such continued compliance, all Restricted Stock Units previously granted to you which have not vested as of the date of your termination, if any, shall continue to vest on the applicable dates set forth in the applicable award agreements granting such Restricted Stock Units.
|
e)
|
Termination by the Company without Cause Following Change in Control
. In the event that within 24 months following a Change in Control as defined in Section 3(a)(vii) (1 – 4) hereof the Company terminates your employment without Cause, (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii), or (v)) 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(h) below, the following will be provided to you following the termination of the Notice Period:
|
(i)
|
You will be paid a cash lump sum amount equal to one 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 Bonus;
|
(iii)
|
You will be paid an amount equal to two times the Target Bonus for the calendar year in which your termination occurs, to be paid in a cash lump sum no later than sixty (60) days following your termination;
|
(iv)
|
The Company will pay COBRA premiums to continue your coverage pursuant to COBRA and the applicable insurance policies up and until the earlier of: (i) 12 months from the date of termination, (ii) or the date upon which you cease to be eligible for COBRA continuation coverage under applicable law and the terms of the applicable policies. You agree to notify the Company in the event that you obtain coverage with another employer group health plan that does not contain any exclusions or limitations with respect to any pre-existing condition, or if you become entitled to Medicare benefits; and
|
(v)
|
All outstanding and unvested Restricted Stock Units shall immediately vest and become non-forfeitable upon said termination.
|
f)
|
Termination by You for Good Reason
. In the event that you terminate for Good Reason in accordance with the provisions of Section 3(a)(vi) hereof, (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii), or (v)) then in addition to the amounts provided in Section 4(a), but subject to your timely satisfaction of the condition precedent in Section 4(h) below, the following will be provided to you:
|
(i)
|
You will be paid a cash lump sum amount equal to one 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 Bonus;
|
(iii)
|
You will be paid an amount equal to the Target Bonus for the calendar year in which your termination occurs, to be paid in a cash lump sum no later than sixty (60) days following your termination;
|
(iv)
|
The Company will pay COBRA premiums to continue your coverage pursuant to COBRA and the applicable insurance policies up and until the earlier of: (i) 12 months from the date of termination, (ii) or the date upon which you cease to be eligible for COBRA continuation coverage under applicable law and the terms of the applicable policies. You agree to notify the Company in the event that you obtain coverage with another employer group health plan that does not contain any exclusions or limitations with respect to any pre-existing condition, or if you become entitled to Medicare benefits; and
|
(v)
|
In the event that you terminate for Good Reason in accordance with the provisions of Section 3(a)(vi), then for so long as you shall remain in compliance with the obligations set forth in Sections 7, 8, 9 and 10 below, and conditioned on such continued compliance, all Restricted Stock Units previously granted to you which have not vested as of the date of your termination, if any, shall continue to vest on the applicable dates set forth in the applicable award agreements granting such Restricted Stock Units.
|
g)
|
Termination by You for Good Reason Following Change in Control
. In the event that within 24 months following a Change of Control as defined in Section 3(a)(vii) (1 – 4) hereof you terminate for Good Reason in accordance with the provisions of Section 3(a)(vii) hereof, (but not for any other reason, including without limitation under Sections 3(a)(i), (ii), (iii), or (v)) then in addition to the amounts provided in Section 4(a), but subject to your timely satisfaction of the condition precedent in Section 4(h) below, the following will be provided to you:
|
(i)
|
You will be paid a cash lump sum amount equal to one 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 Bonus;
|
(iii)
|
You will be paid an amount equal to two times the Target Bonus for the calendar year in which your termination occurs, to be paid in a cash lump sum no later than sixty (60) days following your termination;
|
(iv)
|
The Company will pay COBRA premiums to continue your coverage pursuant to COBRA and the applicable insurance policies up and until the earlier of: (i) 12 months from the date of termination, (ii) or the date upon which you cease to be eligible for COBRA continuation coverage under applicable law and the terms of the applicable policies. You agree to notify the Company in the event that you obtain coverage with another employer group health plan that does not contain any exclusions or limitations with respect to any pre-existing condition, or if you become entitled to Medicare benefits; and
|
(v)
|
All outstanding and unvested Restricted Stock Units shall immediately vest and become non-forfeitable upon said termination.
|
h)
|
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 B
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, any payment or benefit payment hereunder shall commence on the 60
th
day following your termination, including any payments that would otherwise have been made prior to such date.
|
i)
|
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.
|
j)
|
If the Company declines to employ you under this Agreement on the Start Date (other than by reason of your death or incapacity), or promptly thereafter, you shall be treated as if you had become employed under this Agreement on the Start Date and your employment had been terminated by the Company without Cause thirty (30) days later.
|
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. Such Confidential Information and Trade Secrets include but are 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 Company’s customers or prospective customers to be confidential, sensitive, proprietary or a trade secret or is not readily available to the public; and (vii) intellectual property, including inventions and copyrightable works. Confidential Information and Trade Secrets 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 and Trade Secrets can be in any form: oral, written or machine readable, including electronic files, but shall not included any information known generally to the public or within the Company’s industry.
|
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 Company or this Agreement, (ii) as appropriate to enforce the terms of this Agreement or any other agreement with the Company/parent, (iii) in confidence to an attorney for the purpose of obtaining legal
|
d)
|
Immediately upon the termination of employment with the Company for any reason, or at any time the Company so requests, you will return to the Company: (i) any originals and all copies of all files, notes, documents, slides (including transparencies), computer disks, printouts, reports, lists of the Company’s clients or leads or referrals to prospective clients, and other media or property in Employee’s possession or control which contain or pertain to Confidential Information or Trade Secrets; and (ii) all property of the Company, including, but not limited to, supplies, keys, access devices, books, identification cards, computers, telephones and other equipment. Notwithstanding anything in this Agreement or elsewhere to the contrary, you may at all times retain, and use for otherwise permissible purposes, (a) your rolodex (and electronic equivalents) and (b) documents relating to your personal benefits, entitlements and obligations.
|
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 software or computer programs, data processing systems, analyses, techniques, trade secrets, creations, ideas, work product or contributions thereto, and any other intellectual property, regardless of whether patented, registered or otherwise protected or protectable, and regardless of whether containing or constituting Trade Secrets or Confidential Information as defined in this Agreement (referred to collectively as “Intellectual Property”), that were conceived, developed or made by you during the period of your employment by the Company and that relate directly to the Company’s insurance and reinsurance business and any other business in which the Company was engaged as of the date of your termination of employment with the Company (the “Proprietary Interests”), shall belong to and be the property of the Company.
|
b)
|
You further covenant and agree that you will: (i) promptly disclose to the Company such Intellectual Property of which you become aware; (ii) make and maintain for the Company, 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 reasonable 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
|
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 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 business which is directly competitive with the Company during the three (3) month period following your voluntary termination of employment will cause it great and irreparable harm.
|
b)
|
Accordingly, you covenant and agree that so long as you are employed by the Company and for a three (3) month period following your voluntary termination of employment, you shall not, without the express written consent of the Chief Executive Officer of the Parent, directly or indirectly, own, manage, operate or control, or be employed in the same or substantially the same position or duties as the position(s) held by you with the Company or the Parent, by any company or entity engaged in the insurance or reinsurance business in which the Company is engaged or has announced an intention to become engaged as of the date of termination of employment, and for which you had responsibility or about which you had knowledge of or access to Confidential Information and Trade Secrets. In recognition of the nature of the Company’s business, which includes the sale of its products and services throughout Bermuda and the New York, NY area, and the nature of your senior executive position, this restriction shall only apply throughout Bermuda as well as a 250 mile radius from the Company’s New York, NY office.
|
10)
|
Non-Solicitation of Employees
|
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 of the Company, you have and will come into contact with and acquire Confidential Information and Trade Secrets regarding other employees of the Company, and will develop relationships with those employees.
|
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.
|
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, Parent and its affiliates.
|
12)
|
Disclosure of Agreement; Disclosure of New Employment
|
13)
|
Confidential Information Belonging to Others
|
14)
|
Choice of Forum
|
15)
|
Governing Law
|
17)
|
Indemnification
|
18)
|
Miscellaneous
|
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. If there is a conflict with respect to the terms of this Agreement and the terms of any other agreement, plan or arrangement of the Parent, the Company or any of their affiliates, the terms of this Agreement shall control to the extent more favorable to you.
|
c)
|
This Agreement may be amended only by an instrument in writing that expressly identifies the provision being amended and is signed by the parties hereto, and any provision hereof may be waived only by an instrument in writing that expressly identifies the provision being waived and 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)
|
The Company shall withhold from any compensation and benefits payable under this Agreement all applicable U.S. federal, state, local, or other taxes.
|
e)
|
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.
|
f)
|
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.
|
g)
|
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.
|
h)
|
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.
|
i)
|
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 the Employment Term.
|
j)
|
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;
|
k)
|
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.
|
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, offer letter or as set by the Compensation Committee of the Company. 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
. 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 75% to 125% of the initial Target Equity Allocation on the third anniversary of the date of grant, depending on the Company’s relative total shareholder return performance as of the time of vesting, as compared to the Company’s performance peers.
|
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
|
Relative TSR Percentile
|
Performance Multiplier
|
Maximum
|
75
th
or above
|
125%
|
Target
|
50
th
|
100%
|
Threshold
|
25
th
or below
|
75%
|
1)
|
Annual retainer of $200,000 for all non-employee directors serving on the Board as of January 1 of each year. 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:
|
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
|
3)
|
Committee Chairs receive the following additional annual retainer:
|
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
|
4)
|
The Lead Independent Director receives an additional annual retainer of $15,000.
|
5)
|
In addition to the compensation described above that is payable to non-employee directors, a non-employee Chairman of the Board shall receive an additional annual retainer of $150,000, pro-rated based on months of service as Chairman of the Board in the applicable year.
|
|
|
|
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 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
|
|
|
|
|
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
|
|
|
|
|
AXIS UK Services Limited
|
United Kingdom
|
|
|
|
|
Novae Holdings Limited
|
United Kingdom
|
|
|
|
|
Novae Corporate Underwriting Limited
|
United Kingdom
|
|
|
|
|
Novae Syndicates Limited
|
United Kingdom
|
|
|
|
|
AXIS Underwriting Limited
|
United Kingdom
|
|
|
|
|
Contessa Limited
|
United Kingdom
|
|
|
|
|
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 26, 2019
|
1.
|
I have reviewed this Annual Report on Form 10-K of AXIS Capital Holdings Limited for the year ended
December 31, 2018
;
|
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 26, 2019
|
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, 2018
;
|
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 26, 2019
|
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 26, 2019
|
/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 26, 2019
|
/s/ PETER VOGT
|
|
|
Peter Vogt
|
|
|
Chief Financial Officer
|