Bermuda
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98-1120002
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Shares, par value $1.00 per share ("Common Shares")
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New York Stock Exchange and Bermuda Stock Exchange
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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Cautionary Statement Regarding Forward-Looking Statements
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PART I
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Item 1.
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Business
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Overview
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Gross Premiums Written
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Claims Management
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Reserve for losses and loss adjustment expenses
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Conflicts of Interest
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Competition
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Regulation and Capital Requirements
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Employees
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Intellectual Property
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Implications of Being an Emerging Growth Company
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Available Information
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
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Item 5.
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Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accountant Fees and Services
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PART IV
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Item 15.
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Exhibits and Financial Statement Schedules
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SIGNATURES
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•
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the fact that we have limited operating history;
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•
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the possibility of severe or unanticipated losses from natural and man-made catastrophes, including those that may result from changes in climate conditions, including global temperatures and expected sea levels;
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•
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the effectiveness of our loss limitation methods;
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•
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our dependence on our Chief Executive Officer (the "CEO") and Chief Financial Officer (the "CFO"), both of whom are not our direct employees, and our service providers including Blue Capital Management Ltd. (the "Manager") which provides various underwriting, investment and administrative services;
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•
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our ability to effectively execute our business plan and any new ventures that we may enter into;
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continued acceptance of our business strategy, security and financial condition by regulators, brokers and insureds;
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failure by any service provider to carry out its obligations to us in accordance with the terms of its appointment;
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•
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conflicts of interest that could result from our relationships and potential overlaps in business with related parties, including the Manager, a wholly owned subsidiary of Endurance Specialty Holdings Ltd. ("Endurance");
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•
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the cyclical nature of the property catastrophe insurance and reinsurance industry;
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•
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the availability of capital and financing, including our ability to raise more equity capital and our ability to release capital from existing obligations to redeploy annually;
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•
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the levels of new and renewal business achieved;
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the availability of opportunities to increase writings within our property and catastrophe lines of business and our ability to capitalize on those opportunities;
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•
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the inherent uncertainty of our risk management process, which is subject to, among other things, industry loss estimates and estimates generated by modeling techniques;
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•
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the inherent uncertainties in establishing loss and loss adjustment expense ("LAE") reserves and unanticipated adjustments to premium estimates;
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changes in the availability, cost or quality of reinsurance or retrocessional coverage;
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general economic and market conditions, including inflation, volatility in the credit and capital markets and conditions specific to the insurance and reinsurance markets in which we operate;
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changes in and the impact of governmental legislation or regulation, including changes in tax laws in the jurisdictions where we conduct business;
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statutory or regulatory developments, including those involving tax policy, reinsurance and other regulatory matters such as the adoption of proposed legislation that would affect Bermuda-headquartered companies or Bermuda-based insurers or reinsurers;
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potential treatment of us as an investment company or a passive foreign investment company for purposes of U.S. securities laws or U.S. federal taxation, respectively;
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the amount and timing of reinsurance recoveries;
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the effects of competitors' pricing policies, and of changes in laws and regulations on competition, industry consolidation and development of competing financial products;
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the overall level of competition, and the related supply and demand dynamics in our markets relating to growing capital levels in our industry;
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actions by our competitors, many of which are larger or have greater financial resources than we do;
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declining demand due to increased retentions by cedants and other factors;
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acts of terrorism, political unrest, outbreak of war and other hostilities or other non-forecasted and unpredictable events;
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unexpected developments concerning the small number of insurance and reinsurance brokers upon whom we rely for a large portion of revenues;
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the ability of the counterparty institutions with which we conduct business to continue to meet their obligations to us;
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operational risks, including the risk of fraud and any errors and omissions, as well as technology breaches or failures;
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changes in tax regulations or laws applicable to us, our subsidiaries, brokers or customers;
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our dependence as a holding company upon dividends or distributions from our operating subsidiaries; and
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changes in accounting principles or the application of such principles by regulators.
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Access to a Global Specialty Provider of Property and Casualty Insurance and Reinsurance with an Extensive Infrastructure.
We benefit substantially from the Manager’s relationship with Endurance by accessing and leveraging Endurance’s management talent, proprietary reinsurance modeling tools, underwriting expertise, proprietary risk management systems and longstanding broker/client relationships. The Manager’s affiliation with Endurance enables us to deploy our capital to build a diversified portfolio of reinsurance risks with an attractive risk-adjusted return potential for our shareholders. We also benefit from Endurance’s scale, experience and reputation in pricing reinsurance contracts and achieving key policy terms and conditions, which we believe is a competitive advantage relative to other independent or small reinsurance platforms. We further benefit from Endurance’s existing middle- and back-office support infrastructure.
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Differentiated Approach to Reinsurance Risk Selection.
The Manager performs our risk selection process, subject to the oversight of the Board, and primarily targets counterparties who can supply us with the full spectrum of information associated with each exposure. Our risk selection process includes using the Manager’s specific knowledge of the ceding insurer and underlying risks, including detailed portfolio data, such as home type, location, building code and date of construction. Additionally, the Manager analyzes the historical loss performance of the ceding insurer, its market position, its management’s capabilities and its claims mitigation history. The Manager generally acts as a "quoting market" participant, which means that it provides an initial quote to the broker rather than responding to quotes provided by the broker. We believe that this allows the Manager to be more selective in choosing the reinsurance contracts it selects for us and enhances its relationship with brokers. We benefit from the Manager’s use of Endurance’s analytics, risk management and actuarial team, which enables the Manager to analyze the granular data collected using proprietary analytical systems on our behalf in order to determine the appropriate pricing for the risks assumed. The Manager uses its and Endurance’s proprietary catastrophe pricing and risk management systems, various third-party models and its underwriting judgment in order to build a high quality portfolio and achieve superior risk adjusted returns. The Manager also seeks to exploit pricing inefficiencies that may exist in the market from time to time.
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Access to Reinsurance Products Not Generally Available to Collateralized Reinsurers.
In addition to offering collateralized reinsurance directly to third-party insurance and reinsurance companies, we further benefit from leveraging our relationship with Endurance in order to gain access to a broader range of reinsurance business than we believe is typically available to most collateralized reinsurers. Through a retrocessional contract (the "BW Retrocessional Agreement"), between Blue Capital Re and Blue Water Re, Blue Water Re has the option to cede to Blue Capital Re up to 100% of its participation in the ceded reinsurance business it writes, provided that such business is in accordance with Blue Capital Re’s underwriting guidelines. Pursuant to the BW Retrocessional Agreement, we participate in: (i) retrocessional, quota share or other agreements between Blue Water Re and Endurance Bermuda or other third-party reinsurers, which provide us with the opportunity to participate in a diversified portfolio of risks on a proportional basis; and (ii) fronting agreements between Blue Water Re and Endurance Bermuda or other well capitalized third-party rated reinsurers, which allow us to transact business with counterparties who prefer to enter into contracts with rated reinsurers. These arrangements enhance the depth of opportunities available to us, increase the diversification of our portfolio and provide enhanced risk-adjusted returns compared to most other collateralized reinsurers.
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Experienced Management Team.
Our CEO and CFO, as well as Endurance’s senior managers responsible for the day-to-day oversight of the Manager, have significant experience in the reinsurance industry, including the supervision of both traditional reinsurance markets and insurance-linked securities. We also benefit from the significant experience of the Manager’s Investment and Underwriting Committees.
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Alignment of Interests Between Our Shareholders and Endurance.
Endurance and its wholly owned subsidiary, Endurance Bermuda, currently own
33.3%
of our outstanding Common Shares. We believe that Endurance’s significant investment in us and our relationship with the Manager aligns Endurance’s interests with those of our shareholders and incentivizes Endurance to maximize returns, while managing risks, for our shareholders.
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•
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0% to 100% in indemnity reinsurance;
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0% to 50% in indemnity retrocession;
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0% to 50% in quota share retrocessional agreements;
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0% to 50% in industry loss warranties;
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0% to 20% in catastrophe bonds; and
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0% to 20% in other non-property catastrophe risks.
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North America
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Europe
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Rest of World
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·
U.S. Northeast
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U.S. Mid-Atlantic
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U.S. Florida
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U.S. Gulf
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U.S. New Madrid
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U.S. Midwest
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U.S. California
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U.S. Hawaii
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Eastern Canada
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Western Canada
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Western Central Europe
(France, Germany, Switzerland and Austria)
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Eastern Europe
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Southern Europe
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Northern Europe, Benelux and Scandinavia
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United Kingdom (the "U.K.") and Ireland
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·
Australia
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New Zealand
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Japan
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South America
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Middle East
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•
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the client’s and industry historical loss data and current market conditions;
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the business purpose served by a proposed contract;
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the client’s pricing and underwriting strategies;
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the client’s (or cedant’s) claims management and mitigation practices;
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the expected duration for claims to fully develop;
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the geographic areas in which the client is doing business and its market share;
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the reputation and financial strength of the client;
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the reputation and expertise of the broker;
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proposed contract terms and conditions; and
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•
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reports provided by independent industry specialists.
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Management Fee
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The Manager is entitled to a management fee (the "Management Fee") of 1.5% of our average total shareholders’ equity per annum, calculated and payable in arrears in cash each quarter (or part thereof) that the Investment Management Agreement is in effect. For purposes of calculating the Management Fee, our total shareholders’ equity means: (1) the net proceeds from all issuances of our equity securities since inception (allocated on a pro rata daily basis for such issuances during the quarter of any such issuance), plus (2) our retained earnings as of the end of the most recently completed quarter (without taking into account any non-cash compensation expense incurred in current or prior periods), minus (3) any amount that we may have paid to repurchase our Common Shares on a cumulative basis since inception. It also excludes (x) any unrealized gains and losses and other non-cash items that have impacted shareholders’ equity as reported in our financial statements prepared in accordance with GAAP, other than unrealized gains and losses and other non-cash items relating to insurance-linked securities, and (y) one-time events pursuant to changes in GAAP after discussions between the Manager and our independent directors and approval by both a majority of our independent directors and the Manager for all such adjustments. As a result, our shareholders’ equity, for purposes of calculating the Management Fee, could be greater or less than the amount of shareholders’ equity shown on our financial statements.
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Performance Fee
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The Manager is entitled to a performance fee (the "Performance Fee") calculated and payable in arrears in cash each quarter (or part thereof) that the Underwriting and Insurance Management Agreement is in effect in an amount, not less than zero, equal to the product of (1) 20% and (2) the difference between (A) our pre-tax, pre-Performance Fee Distributable Income for the then current quarter and (B) a hurdle amount calculated as the product of (i) the weighted average of the issue price per Common Share pursuant to each of our public or private offerings of Common Shares since our inception multiplied by the weighted average number of all Common Shares outstanding (including any restricted share units, any restricted Common Shares and other Common Shares underlying awards granted under our equity incentive plans), as further reduced by the amount, if any, by which our inception-to-date dividends to shareholders exceeds our inception-to-date GAAP net income, and (ii) 2% (equivalent to an 8% annualized hurdle rate); provided, however, that the foregoing Performance Fee is subject to a rolling three-year high water mark (except that for periods prior to the completion of the three-year period following the IPO, the high water mark calculation will be done over the inception-to-date period).
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Term
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We generally may not terminate the Investment Management Agreement, the Underwriting and Insurance Management Agreement or the Administrative Services Agreement until the fifth anniversary of the completion of the IPO, whether or not the Manager’s performance results are satisfactory. Each of these agreements renews automatically on the fifth anniversary of the completion of the IPO, and upon every third anniversary thereafter, unless terminated in accordance with its terms. During the term of these agreements, we may not enter into any other investment management, underwriting and insurance management or services agreement.
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Termination Fee
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Upon any termination or non-renewal of either of the Investment Management Agreement or the Underwriting and Insurance Management Agreement (other than for a material breach by, or the insolvency of, the Manager), we will pay a one-time termination fee to the Manager equal to 5% of our GAAP shareholders’ equity, calculated as of the most recently completed quarter prior to the date of termination.
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Expense Reimbursement
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Under the terms of the Investment Management Agreement and the Underwriting and Insurance Management Agreement, we reimburse the Manager for various fees, expenses and other costs in connection with the services provided under the terms of these agreements. The only fees payable under the terms of the Administrative Services Agreement are to reimburse the Manager for various fees, expenses and other costs in connection with the services provided under the terms of that agreement, including the services of our CFO, modeling software licenses and finance, legal and administrative support.
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Year Ended
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Year Ended
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||||||||||
($ in millions)
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December 31, 2015
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December 31, 2014
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Aon Benfield
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$
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12.4
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32
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%
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$
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15.3
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34
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%
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Marsh & McLennan Companies, Inc.
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7.3
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19
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%
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7.7
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17
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%
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Willis Group Holdings Limited
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6.3
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16
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%
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7.6
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17
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%
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All other brokers
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12.5
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33
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%
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14.1
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31
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%
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Gross premiums written through brokers
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38.5
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100
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%
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44.7
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99
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%
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Gross premiums not written through brokers
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0.1
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—
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%
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0.3
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1
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%
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Total gross premiums written
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$
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38.6
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100
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%
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$
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45.0
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100
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%
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Year Ended
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Year Ended
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||||||||||
($ in millions)
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December 31, 2015
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December 31, 2014
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Worldwide (1)
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$
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24.1
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62
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%
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$
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30.5
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68
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%
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USA:
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Nationwide
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5.6
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15
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%
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4.7
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11
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%
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Florida
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2.4
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6
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%
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3.7
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8
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%
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Gulf region
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1.7
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4
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%
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1.5
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3
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%
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California
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0.7
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2
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%
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1.2
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3
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%
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Mid-Atlantic region
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0.4
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1
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%
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1.0
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2
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%
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Midwest region and other
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0.6
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2
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%
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1.0
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2
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%
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Worldwide, excluding U.S. (2)
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3.1
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8
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%
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1.4
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|
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3
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%
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Total gross premiums written
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$
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38.6
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100
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%
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$
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45.0
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100
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%
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•
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reduced disclosure about our executive compensation arrangements and no requirement to include a compensation discussion and analysis;
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•
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no requirement to hold non-binding advisory shareholder votes on executive compensation or golden parachute arrangements;
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•
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an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended ("Sarbanes-Oxley"); and
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•
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the ability to use an extended transition period for complying with new or revised accounting standards.
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•
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providing insurance and reinsurance capacity in markets and to consumers that we or the reinsurers with which we do business target;
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•
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requiring us or the ceding companies with which we do business to participate in industry pools and guaranty associations;
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•
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expanding the scope of coverage under existing policies;
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•
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regulating the terms of insurance and reinsurance policies; or
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•
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disproportionately benefiting the companies of one country over those of another.
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•
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maintain a fixed level of capital;
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•
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maintain a minimum solvency margin valued at $1.0 million at all times;
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•
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restrict dividends and distributions;
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•
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obtain prior approval of ownership and transfer of shares;
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•
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maintain a principal office and appoint and maintain a principal representative in Bermuda; and
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•
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provide for the performance of certain periodic examinations of Blue Capital Re and its financial condition.
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•
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the Board is divided into three classes, with each class serving for a staggered three-year term, which prevents shareholders from electing an entirely new board of directors at an annual meeting;
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•
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the total voting power of any U.S. person owning more than 9.5% of our Common Shares will be reduced to no more than 9.5% of the total voting power of our Common Shares;
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•
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the Board has the authority to issue preferred shares without shareholder approval, which could be used to dilute the ownership of a potential hostile acquiror;
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•
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the Board may decline to record the transfer of any Common Shares on our share register if they believe that: (i) registration of the transfer is required under any federal or state securities law or under the laws of any other jurisdiction and the registration has not yet been effected; or (ii) such transfer is likely to expose us to adverse tax consequences or materially adverse legal or regulatory treatment in any jurisdiction;
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•
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our shareholders may only remove directors for cause, or for other reasons set out in our bye-laws (e.g., unsound mind);
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•
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there are advance notice requirements for shareholders with respect to director nominations and actions to be taken at annual meetings; and
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•
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under Bermuda law, for so long as Blue Capital Re is registered under the Insurance Act, the BMA may object to a person holding more than 10% of our Common Shares if it appears to the BMA that the person is not or is no longer fit and proper to be such a holder.
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•
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catastrophes that may specifically impact us or are perceived by investors as impacting the reinsurance market in general;
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•
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the financial condition, financial performance and prospects of the Company, the Manager or Endurance;
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•
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our quarterly or annual earnings or those of other companies in our industry;
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•
|
exposure to capital market risks related to the performance of insurance-linked investments;
|
•
|
our capital management policy and whether we repurchase Common Shares or dividends on our Common Shares have been, and are likely to be, declared and paid from time to time;
|
•
|
actual or anticipated growth rates relative to our competitors;
|
•
|
perceptions of the investment opportunity associated with our Common Shares relative to other investment alternatives, including investment opportunities in Endurance or affiliates of Endurance;
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•
|
speculation by the investment community regarding our business;
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•
|
future announcements concerning our business or our competitors’ businesses;
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•
|
the public’s reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
market and industry perception of our success, or lack thereof, in pursuing our strategy;
|
•
|
strategic actions by us or our competitors, such as acquisitions, restructurings, significant contracts or joint ventures;
|
•
|
changes in government regulation;
|
•
|
potential characterization of us as an investment company, a CFC or a PFIC;
|
•
|
general market, economic and political conditions;
|
•
|
changes in conditions or trends in our industry, geographies or customers;
|
•
|
arrival and departure of key personnel of the Company, the Manager or Endurance;
|
•
|
sales of our Common Shares by us, Endurance, our directors or members of our management team; and
|
•
|
adverse resolution of litigation against us.
|
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High
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Low
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||||
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|
|
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||
2015
|
|
|
|
|
||||
Fourth quarter
|
|
$
|
17.81
|
|
|
$
|
17.00
|
|
Third quarter
|
|
18.00
|
|
|
16.06
|
|
||
Second quarter
|
|
18.09
|
|
|
17.11
|
|
||
First quarter
|
|
18.25
|
|
|
16.96
|
|
||
2014
|
|
|
|
|
||||
Fourth quarter
|
|
$
|
17.97
|
|
|
$
|
16.63
|
|
Third quarter
|
|
20.05
|
|
|
17.50
|
|
||
Second quarter
|
|
19.89
|
|
|
17.25
|
|
||
First quarter
|
|
21.02
|
|
|
16.46
|
|
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (3)
|
|
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
|
|||
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|||
Equity compensation plans approved by shareholders (1)
|
|
9,799
|
|
|
—
|
|
|
75,366
|
|
|
|
|
|
Period ending:
|
||||||||||||
|
|
November 6,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
||||||||
Company/Index
|
|
2013
|
|
2013
|
|
2014
|
|
2015
|
||||||||
Blue Capital Reinsurance Holdings Ltd. Common Shares
|
|
$
|
100
|
|
|
$
|
97
|
|
|
$
|
99
|
|
|
$
|
104
|
|
S&P 500
|
|
100
|
|
|
106
|
|
|
120
|
|
|
122
|
|
||||
S&P 500 P&C
|
|
100
|
|
|
106
|
|
|
122
|
|
|
134
|
|
•
|
On June 24, 2013, the Company issued 1,000 Common Shares to Montpelier in connection with its $20,000 initial capital contribution to the Company. These Common Shares were repurchased from Montpelier by the Company on November 12, 2013, for the same price at which the Common Shares were issued.
|
•
|
On September 27, 2013, the Company issued 50,000 Common Shares to Montpelier for an aggregate price of $1.0 million in connection with Blue Capital Re’s capitalization as a Class 3A insurer. These Common Shares were issued in reliance on the exemption provided by Section 4(a)(2) of the Securities Act and were repurchased from Montpelier by the Company on November 12, 2013, for the same price at which the Common Shares were issued.
|
•
|
On November 12, 2013, the Company issued 2,500,000 Common Shares to Montpelier Re for an aggregate purchase price of $50.0 million in connection with the Private Placement. These Common Shares were issued in reliance on the exemption provided by Section 4(a)(2) of the Securities Act. In connection with the Private Placement, we have entered into a shareholder and registration rights agreement with Montpelier Re.
|
(Millions, except per share amounts)
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
Period from June 24, 2013 to December 31, 2013
|
||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
||||
Revenues (a)
|
|
$
|
38.1
|
|
|
$
|
44.6
|
|
|
$
|
—
|
|
Expenses (b)
|
|
(17.4
|
)
|
|
(29.5
|
)
|
|
(0.7
|
)
|
|||
Net income (loss) and comprehensive income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
||||
Total assets
|
|
$
|
217.6
|
|
|
$
|
201.3
|
|
|
$
|
175.5
|
|
Loss and LAE reserves
|
|
4.0
|
|
|
7.9
|
|
|
—
|
|
|||
Debt (c)
|
|
13.0
|
|
|
8.0
|
|
|
—
|
|
|||
Total liabilities
|
|
30.0
|
|
|
20.8
|
|
|
2.2
|
|
|||
Total shareholders’ equity
|
|
187.6
|
|
|
180.5
|
|
|
173.3
|
|
|||
Amounts per Common Share:
|
|
|
|
|
|
|
|
|
||||
Fully converted book value (d)
|
|
$
|
21.41
|
|
|
$
|
20.62
|
|
|
$
|
19.80
|
|
Basic and diluted earnings (loss)
|
|
2.36
|
|
|
1.72
|
|
|
(0.31
|
)
|
|||
Dividends declared (e)
|
|
1.56
|
|
|
0.90
|
|
|
—
|
|
|
|
December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Book value numerator (in millions)
:
|
|
|
|
|
|
|
||
[A]
Shareholders’ Equity
|
|
$
|
187.6
|
|
|
$
|
180.5
|
|
Book value denominators (in thousands):
|
|
|
|
|
|
|
||
[B]
Common Shares outstanding
|
|
8,752
|
|
|
8,750
|
|
||
RSUs outstanding
|
|
10
|
|
|
7
|
|
||
[C]
Common Shares and RSUs outstanding
|
|
8,762
|
|
|
8,757
|
|
||
BVPS [A] / [B]
|
|
$
|
21.44
|
|
|
$
|
20.63
|
|
FCBVPS [A] / [C]
|
|
$
|
21.41
|
|
|
$
|
20.62
|
|
Increase (decrease) in FCBVPS:
|
|
|
|
|
|
|
||
From December 31, 2014 (1)
|
|
11.4
|
%
|
|
|
|||
From December 31, 2013 (2)
|
|
|
|
|
8.7
|
%
|
North America
:
|
|
Europe
:
|
|
Rest of World:
|
|
|
|
|
|
U.S. - Northeast
|
|
Western Central Europe
(1)
|
|
Australia
|
U.S. - Mid-Atlantic
|
|
Eastern Europe
|
|
New Zealand
|
U.S. - Florida
|
|
Southern Europe
|
|
Japan
|
U.S. - Gulf
|
|
Northern Europe, Benelux
|
|
South America
|
U.S. - New Madrid
|
|
and Scandinavia
|
|
Middle East
|
U.S. - Midwest
|
|
U.K. and Ireland
|
|
|
U.S. - California
|
|
|
|
|
U.S. - Hawaii
|
|
|
|
|
Canada - Eastern
|
|
|
|
|
Canada - Western
|
|
|
|
|
|
|
Net Impact
(Millions)
|
|
Return Period (1)
|
|
Percentage of December 31, 2015
Shareholders’ Equity
|
|||
U.S. - Florida hurricane
|
|
$
|
61
|
|
|
1 in 100 year
|
|
33
|
%
|
Japan earthquake
|
|
32
|
|
|
1 in 250 year
|
|
17
|
%
|
|
California earthquake
|
|
29
|
|
|
1 in 250 year
|
|
15
|
%
|
|
All other zones
|
|
|
|
|
|
|
less than 15%
|
|
($ in millions)
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
Period From June 24, 2013 to December 31, 2013
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
||||
Reinsurance premiums written
|
|
$
|
38.6
|
|
|
$
|
45.0
|
|
|
$
|
—
|
|
Change in net unearned reinsurance premiums
|
|
(0.3
|
)
|
|
(1.1
|
)
|
|
—
|
|
|||
Net reinsurance premiums earned
|
|
38.3
|
|
|
43.9
|
|
|
—
|
|
|||
Net (loss) income from derivative instruments
|
|
(0.2
|
)
|
|
0.7
|
|
|
—
|
|
|||
Total revenues
|
|
38.1
|
|
|
44.6
|
|
|
—
|
|
|||
Expenses
|
|
|
|
|
|
|
|
|
||||
Underwriting expenses:
|
|
|
|
|
|
|
|
|
||||
Loss and LAE
|
|
2.6
|
|
|
17.1
|
|
|
—
|
|
|||
Reinsurance acquisition costs
|
|
8.6
|
|
|
7.7
|
|
|
—
|
|
|||
General and administrative expenses
|
|
6.1
|
|
|
4.7
|
|
|
0.7
|
|
|||
Non-underwriting expenses:
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total expenses
|
|
17.4
|
|
|
29.5
|
|
|
0.7
|
|
|||
Net income (loss) and comprehensive income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
|
|
|
|
|
|
|
||||||
Loss and LAE ratio
|
|
6.9
|
%
|
|
39.0
|
%
|
|
—
|
%
|
|||
Acquisition cost ratio
|
|
22.4
|
%
|
|
17.5
|
%
|
|
—
|
%
|
|||
General and administrative expense ratio
|
|
16.0
|
%
|
|
10.7
|
%
|
|
—
|
%
|
|||
GAAP combined ratio
|
|
45.3
|
%
|
|
67.2
|
%
|
|
—
|
%
|
|
|
Year Ended December 31,
|
||||||
($ in millions)
|
|
2015
|
|
2014
|
||||
Loss and LAE incurred - current year
|
|
$
|
3.2
|
|
|
$
|
17.1
|
|
Loss and LAE incurred - prior year
|
|
(0.6
|
)
|
|
—
|
|
||
Total loss and LAE incurred
|
|
$
|
2.6
|
|
|
$
|
17.1
|
|
Loss and LAE ratio
|
|
6.9
|
%
|
|
39.0%
|
|
|
|
Year Ended December 31,
|
||||||
($ in millions)
|
|
2015
|
|
2014
|
||||
Commissions, brokerage costs, fronting fees and other
|
|
$
|
6.5
|
|
|
$
|
6.5
|
|
Profit commissions
|
|
2.1
|
|
|
1.2
|
|
||
Total reinsurance acquisition costs
|
|
$
|
8.6
|
|
|
$
|
7.7
|
|
Reinsurance acquisition cost ratio
|
|
22.4%
|
|
|
17.5%
|
|
($ in millions)
|
|
Year Ended December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
Period From June 24, 2013 to December 31, 2013
|
||||||
Investment Management Agreement fees
|
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
0.4
|
|
Administrative Services Agreement fees
|
|
0.6
|
|
|
0.6
|
|
|
0.1
|
|
|||
Underwriting and Insurance Management Agreement fees
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|||
Credit Agreement structuring and facility fees
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
Public company expenses
|
|
1.4
|
|
|
1.3
|
|
|
0.2
|
|
|||
Total general and administrative expenses
|
|
$
|
6.1
|
|
|
$
|
4.7
|
|
|
$
|
0.7
|
|
General and administrative expense ratio
|
|
16.0%
|
|
|
10.7%
|
|
|
|
|
|
Payments due by period
|
||||||||||||||||||
($ in millions)
|
|
Total
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
||||||||||
Loss and loss adjustment expense reserves
|
|
$
|
4.0
|
|
|
$
|
3.2
|
|
|
$
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Borrowings under the Credit Agreement
|
|
13.0
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
17.0
|
|
|
$
|
16.2
|
|
|
$
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
($ in millions)
|
|
Year Ended December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
Period From June 24, 2013 to December 31, 2013
|
||||||
Net cash provided from (used for) operating activities
|
|
$
|
3.3
|
|
|
$
|
(162.4
|
)
|
|
$
|
(0.2
|
)
|
Net cash (used for) provided from financing activities
|
|
(8.7
|
)
|
|
0.1
|
|
|
174.0
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
(5.4
|
)
|
|
(162.3
|
)
|
|
173.8
|
|
|||
Cash and cash equivalents, beginning of year
|
|
11.5
|
|
|
173.8
|
|
|
—
|
|
|||
Cash and cash equivalents, end of year
|
|
$
|
6.1
|
|
|
$
|
11.5
|
|
|
$
|
173.8
|
|
|
|
December 31,
|
||||||
($ in millions)
|
|
2015
|
|
2014
|
||||
Gross and net IBNR
|
|
$
|
2.3
|
|
|
$
|
4.6
|
|
Gross and net Case Reserves
|
|
1.7
|
|
|
3.3
|
|
||
Gross and net unpaid loss and LAE reserves
|
|
$
|
4.0
|
|
|
$
|
7.9
|
|
|
|
December 31,
|
||||||
($ in millions)
|
|
2014
|
|
2015
|
||||
Loss and LAE reserves
|
|
$
|
7.9
|
|
|
$
|
2.0
|
|
Reserve estimated as of:
|
|
|
|
|
||||
1 year later
|
|
7.3
|
|
|
—
|
|
||
Cumulative redundancy
|
|
0.6
|
|
|
—
|
|
||
Cumulative paid losses:
|
|
|
|
|
||||
1 year later
|
|
5.3
|
|
|
—
|
|
Exhibit
Number
|
|
Description of Document
|
|
|
|
|
|
3.1
|
|
|
Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
3.2
|
|
|
Certificate of Incorporation on Change of Name of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
3.3
|
|
|
Memorandum of Association of the Company (incorporated herein by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
3.4
|
|
|
Certificate of Deposit of Memorandum of Increase of Share Capital of the Company (incorporated herein by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
3.5
|
|
|
Bye-Laws of the Company (incorporated herein by reference to Exhibit 3.5 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
4.1
|
|
|
Form of Share Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586).
|
|
|
|
|
10.1
|
|
|
Underwriting and Insurance Management Agreement dated November 12, 2013, among the Company, Blue Capital Re and the Manager (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on November 12, 2013).
|
|
|
|
|
10.2
|
|
|
Investment Management Agreement dated November 12, 2013, between the Company and the Manager (incorporated herein by reference to Exhibit 10.3 to the Company’s Form 8-K filed on November 12, 2013).
|
|
|
|
|
10.3
|
|
|
Amended and Restated Administrative Services Agreement dated November 13, 2014, between the Company and the Manager (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 14, 2014).
|
|
|
|
|
10.4
|
|
|
Trademark License Agreement dated November 12, 2013, between the Company and Montpelier (incorporated herein by reference to Exhibit 10.5 to the Company’s Form 8-K filed on November 12, 2013).
|
|
|
|
|
10.5
|
|
|
Shareholder and Registration Rights Agreement dated November 12, 2013 (incorporated herein by reference to Exhibit 10.6 to the Company’s Form 8-K filed on November 12, 2013).
|
|
|
|
|
10.6
|
|
|
Retrocession Agreement dated December 31, 2013, between Blue Capital Re and Blue Water Re (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 6, 2014).
|
|
|
|
|
10.7
|
|
|
The Company’s Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1, Registration No. 333-191586). (**)
|
|
|
|
|
10.8
|
|
|
Form of 2014 Director Restricted Share Unit Award Agreement under the Company’s 2013 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 15, 2014). (**)
|
|
|
|
|
10.9
|
|
|
Form of 2015 Restricted Share Unit Award Agreement under the 2013 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on July 30, 2015). (**)
|
|
|
|
|
10.10
|
|
|
Credit Agreement dated as of May 2, 2014, among the Company (as Borrower), the Guarantors party thereto (as Guarantors), Royal Bank of Canada (as Administrative Agent), RBC Capital Markets (as Arranger) and the Lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 5, 2014).
|
|
|
|
|
10.11
|
|
|
Guarantee Agreement dated as of May 2, 2014, among Montpelier, and the other Guarantors party thereto and Royal Bank of Canada (as Administrative Agent) (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on May 5, 2014).
|
|
|
|
|
10.12
|
|
|
First Amendment to the Credit Agreement among the Company, Montpelier and Royal Bank of Canada. (incorporated herein by reference to Exhibit 10 to the Company’s Form 10-Q filed on May 4, 2015).
|
|
|
|
|
10.13
|
|
|
Guarantee Agreement Supplement dated July 31, 2015 by and between Endurance and the Company. (*)
|
|
|
|
|
10.14
|
|
|
Accession Agreement dated July 31, 2015 by and between Endurance and the Company. (*)
|
|
|
|
|
10.15
|
|
|
Letter dated December 23, 2015 by and among Michael McGuire, Endurance and the Company (incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 23, 2015). (**)
|
|
|
|
|
10.16
|
|
|
Letter dated December 23, 2015 by and among Adam Szakmary, Endurance and the Company (incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K filed on December 23, 2015). (**)
|
|
|
|
|
11
|
|
|
Computation of Per Share Earnings (included in Note 6 of the Notes to Consolidated Financial Statements). (*)
|
|
|
|
|
14
|
|
|
Code of Ethics. (*)
|
|
|
|
|
21
|
|
|
Subsidiaries of the Registrant. (*)
|
|
|
|
|
23.1
|
|
|
Consent of Ernst & Young Ltd. (*)
|
|
|
|
|
23.2
|
|
|
Consent of PricewaterhouseCoopers Ltd. (*)
|
|
|
|
|
24
|
|
|
Power of Attorney (included as part of Signatures page.) (*)
|
|
BLUE CAPITAL REINSURANCE HOLDINGS LTD.
|
||
|
|
||
Date:
|
March 8, 2016
|
By:
|
/s/ GREG A. GARSIDE
|
|
|
Greg A. Garside
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Signature
|
|
Title
|
|
|
|
/s/ ADAM SZAKMARY
|
|
President, Chief Executive Officer and Director
|
Adam Szakmary
|
|
(Principal Executive Officer)
|
|
|
|
/s/ GREG A. GARSIDE
|
|
Chief Financial Officer
|
Greg A. Garside
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
/s/ MICHAEL J. MCGUIRE
|
|
Chairman
|
Michael M. McGuire
|
|
|
|
|
|
/s/ D. ANDREW COOK
|
|
Director
|
D. Andrew Cook
|
|
|
|
|
|
/s/ ERIC LEMIEUX
|
|
Director
|
Eric Lemieux
|
|
|
|
|
|
/s/ JOHN R. WEALE
|
|
Director
|
John R. Weale
|
|
|
|
Form
|
|
|
10-K
|
|
|
page(s)
|
|
|
|
|
Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial Information:
|
|
|
|
|
|
|
|
|
|
|
|
Financial Statement Schedules:
|
|
|
|
|
|
|
||
|
|
|
I.
|
Summary of Investments - Other than Investments in Related Parties
|
*
|
|
|
|
|
|
|
III
.
|
||
|
|
|
|
|
|
V.
|
Valuation and Qualifying Accounts
|
*
|
|
|
|
VI.
|
Supplemental Information Concerning Property and Casualty Insurance Operations
|
*
|
/s/ Ernst & Young Ltd.
|
|
|
|
Hamilton, Bermuda
|
|
March 8, 2016
|
|
/s/ PricewaterhouseCoopers Ltd.
|
|
|
|
Hamilton, Bermuda
|
|
March 11, 2015
|
|
|
|
December 31,
|
||||||
(In millions of U.S. dollars, except share and per share amounts)
|
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
6.1
|
|
|
$
|
11.5
|
|
Reinsurance premiums receivable
|
|
15.9
|
|
|
5.9
|
|
||
Deferred reinsurance acquisition costs
|
|
0.1
|
|
|
0.1
|
|
||
Funds held by ceding companies
|
|
195.3
|
|
|
183.6
|
|
||
Other assets
|
|
0.2
|
|
|
0.2
|
|
||
Total Assets
|
|
$
|
217.6
|
|
|
$
|
201.3
|
|
Liabilities
|
|
|
|
|
|
|
||
Loss and loss adjustment expense reserves
|
|
$
|
4.0
|
|
|
$
|
7.9
|
|
Unearned reinsurance premiums
|
|
1.3
|
|
|
1.1
|
|
||
Debt
|
|
13.0
|
|
|
8.0
|
|
||
Reinsurance balances payable
|
|
7.6
|
|
|
2.8
|
|
||
Other liabilities (See Note 11)
|
|
4.1
|
|
|
1.0
|
|
||
Total Liabilities
|
|
30.0
|
|
|
20.8
|
|
||
Commitments and Contingent Liabilities (See Note 12)
|
|
—
|
|
|
—
|
|
||
Shareholders’ Equity
|
|
|
|
|
|
|
||
Common Shares at $1.00 par value per share - 100,000,000 shares authorized;
8,752,335
(2014: 8,750,000) shares issued and outstanding
|
|
8.8
|
|
|
8.8
|
|
||
Additional paid-in capital
|
|
165.3
|
|
|
165.2
|
|
||
Retained earnings
|
|
13.5
|
|
|
6.5
|
|
||
Total Shareholders’ Equity
|
|
187.6
|
|
|
180.5
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
217.6
|
|
|
$
|
201.3
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Period From
June 24, 2013 to
|
||||||
(In millions of U.S. dollars, except per share amounts)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
||||
Reinsurance premiums written
|
|
$
|
38.6
|
|
|
$
|
45.0
|
|
|
$
|
—
|
|
Change in net unearned reinsurance premiums
|
|
(0.3
|
)
|
|
(1.1
|
)
|
|
—
|
|
|||
Net reinsurance premiums earned
|
|
38.3
|
|
|
43.9
|
|
|
—
|
|
|||
Net (loss) income from derivative instruments
|
|
(0.2
|
)
|
|
0.7
|
|
|
—
|
|
|||
Total revenues
|
|
38.1
|
|
|
44.6
|
|
|
—
|
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||
Underwriting expenses:
|
|
|
|
|
|
|
|
|||||
Loss and loss adjustment expenses
|
|
2.6
|
|
|
17.1
|
|
|
—
|
|
|||
Reinsurance acquisition costs
|
|
8.6
|
|
|
7.7
|
|
|
—
|
|
|||
General and administrative expenses
|
|
6.1
|
|
|
4.7
|
|
|
0.7
|
|
|||
Non-underwriting expenses:
|
|
|
|
|
|
|
|
|||||
Interest expenses
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Total expenses
|
|
17.4
|
|
|
29.5
|
|
|
0.7
|
|
|||
Net income (loss) and comprehensive income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Per share data:
|
|
|
|
|
|
|
|
|||||
Basic and diluted earnings (loss) per Common Share
|
|
$
|
2.36
|
|
|
$
|
1.72
|
|
|
$
|
(0.31
|
)
|
Dividends declared per Common Share and RSU
|
|
1.56
|
|
|
0.90
|
|
|
—
|
|
|
|
Total
shareholders’ equity
|
|
Common
Shares at par value
|
|
Additional
paid-in capital
|
|
Retained
earnings (deficit)
|
||||||||
(In millions of U.S. dollars)
|
|
|
|
|
||||||||||||
Beginning balances at June 24, 2013
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net loss
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Issuances of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
In connection with the Company’s initial capitalization
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
||||
In connection with the IPO
|
|
125.0
|
|
|
6.3
|
|
|
118.7
|
|
|
—
|
|
||||
In connection with the Private Placement
|
|
50.0
|
|
|
2.5
|
|
|
47.5
|
|
|
—
|
|
||||
Common Share issuance costs
|
|
(7.2
|
)
|
|
—
|
|
|
(7.2
|
)
|
|
—
|
|
||||
Reimbursement of certain Common Share issuance costs (see Note 11)
|
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|
—
|
|
||||
Repurchase of Common Shares
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
||||
Ending balances at December 31, 2013
|
|
$
|
173.3
|
|
|
$
|
8.8
|
|
|
$
|
165.2
|
|
|
$
|
(0.7
|
)
|
Net income
|
|
15.1
|
|
|
—
|
|
|
—
|
|
|
15.1
|
|
||||
Dividends declared - Common Shares and RSUs
|
|
(7.9
|
)
|
|
—
|
|
|
—
|
|
|
(7.9
|
)
|
||||
Ending balances at December 31, 2014
|
|
$
|
180.5
|
|
|
$
|
8.8
|
|
|
$
|
165.2
|
|
|
$
|
6.5
|
|
Net income
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
||||
Expense recognized for RSUs
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Dividends declared - Common Shares and RSUs
|
|
(13.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
||||
Ending balances at December 31, 2015
|
|
$
|
187.6
|
|
|
$
|
8.8
|
|
|
$
|
165.3
|
|
|
$
|
13.5
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Period From
June 24, 2013 to
|
||||||
(In millions of U.S. dollars)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Cash flows from operations:
|
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Charges to reconcile net income (loss) to net cash from operations:
|
|
|
|
|
|
|
||||||
Expense recognized for RSUs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Net change in:
|
|
|
|
|
|
|
|
|
||||
Loss and loss adjustment expense reserves
|
|
(3.9
|
)
|
|
7.9
|
|
|
—
|
|
|||
Unearned reinsurance premiums
|
|
0.2
|
|
|
1.1
|
|
|
—
|
|
|||
Reinsurance balances payable
|
|
4.8
|
|
|
2.8
|
|
|
—
|
|
|||
Deferred reinsurance acquisition costs
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|||
Reinsurance premiums receivable
|
|
(10.0
|
)
|
|
(5.9
|
)
|
|
—
|
|
|||
Funds held by ceding companies
|
|
(11.7
|
)
|
|
(183.6
|
)
|
|
—
|
|
|||
Other liabilities
|
|
3.1
|
|
|
(1.2
|
)
|
|
2.2
|
|
|||
Other assets
|
|
—
|
|
|
1.5
|
|
|
(1.7
|
)
|
|||
Net cash and cash equivalents provided from (used for) operations
|
|
3.3
|
|
|
(162.4
|
)
|
|
(0.2
|
)
|
|||
Net cash and cash equivalents from investing activities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||
Net proceeds from the issuance of Common Shares:
|
|
|
|
|
|
|
|
|
||||
In connection with the Company’s initial capitalization
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||
In connection with the IPO, net of $7.2 million of Common Share issuance costs
|
|
—
|
|
|
—
|
|
|
117.8
|
|
|||
In connection with the Private Placement
|
|
—
|
|
|
—
|
|
|
50.0
|
|
|||
Reimbursement of certain Common Share issuance costs (see Note 11)
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|||
Repurchase of Common Shares
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|||
Dividends paid - Common Shares and RSUs
|
|
(13.7
|
)
|
|
(7.9
|
)
|
|
—
|
|
|||
Borrowings under the Credit Agreement
|
|
9.0
|
|
|
8.0
|
|
|
—
|
|
|||
Repayment of borrowings under the Credit Agreement
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash and cash equivalents (used for) provided from financing activities
|
|
(8.7
|
)
|
|
0.1
|
|
|
174.0
|
|
|||
Net (decrease) increase in cash and cash equivalents during the period
|
|
(5.4
|
)
|
|
(162.3
|
)
|
|
173.8
|
|
|||
Cash and cash equivalents - beginning of period
|
|
11.5
|
|
|
173.8
|
|
|
—
|
|
|||
Cash and cash equivalents - end of period
|
|
$
|
6.1
|
|
|
$
|
11.5
|
|
|
$
|
173.8
|
|
|
|
Year Ended
|
|
Year Ended
|
||||
($ in millions)
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Gross and net unpaid loss and LAE reserves - beginning
|
|
$
|
7.9
|
|
|
$
|
—
|
|
Losses and LAE incurred:
|
|
|
|
|
||||
Current year losses
|
|
3.2
|
|
|
17.1
|
|
||
Prior year losses
|
|
(0.6
|
)
|
|
—
|
|
||
Total incurred losses and LAE
|
|
2.6
|
|
|
17.1
|
|
||
Losses and LAE paid and approved for payment:
|
|
|
|
|
||||
Current year losses
|
|
(1.2
|
)
|
|
(9.2
|
)
|
||
Prior year losses
|
|
(5.3
|
)
|
|
—
|
|
||
Total losses and LAE paid and approved for payment
|
|
(6.5
|
)
|
|
(9.2
|
)
|
||
Gross and net unpaid loss and LAE reserves - ending
|
|
$
|
4.0
|
|
|
$
|
7.9
|
|
|
|
Year Ended
|
|
Year Ended
|
||||||||||
($ in millions)
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||
Worldwide (1)
|
|
$
|
24.1
|
|
|
62
|
%
|
|
$
|
30.5
|
|
|
68
|
%
|
USA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Nationwide
|
|
5.6
|
|
|
15
|
%
|
|
4.7
|
|
|
11
|
%
|
||
Florida
|
|
2.4
|
|
|
6
|
%
|
|
3.7
|
|
|
8
|
%
|
||
Gulf region
|
|
1.7
|
|
|
4
|
%
|
|
1.5
|
|
|
3
|
%
|
||
California
|
|
0.7
|
|
|
2
|
%
|
|
1.2
|
|
|
3
|
%
|
||
Mid-Atlantic region
|
|
0.4
|
|
|
1
|
%
|
|
1.0
|
|
|
2
|
%
|
||
Midwest region and other
|
|
0.6
|
|
|
2
|
%
|
|
1.0
|
|
|
2
|
%
|
||
Worldwide, excluding U.S.(2)
|
|
3.1
|
|
|
8
|
%
|
|
1.4
|
|
|
3
|
%
|
||
Total gross premiums written
|
|
$
|
38.6
|
|
|
100
|
%
|
|
$
|
45.0
|
|
|
100
|
%
|
|
|
Year Ended
|
|
Year Ended
|
||||||||||
($ in millions)
|
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||
Worldwide (1)
|
|
$
|
24.1
|
|
|
63
|
%
|
|
$
|
30.5
|
|
|
69
|
%
|
USA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Nationwide
|
|
5.6
|
|
|
15
|
%
|
|
4.6
|
|
|
11
|
%
|
||
Florida
|
|
2.3
|
|
|
6
|
%
|
|
2.8
|
|
|
7
|
%
|
||
Gulf region
|
|
1.8
|
|
|
5
|
%
|
|
1.4
|
|
|
3
|
%
|
||
California
|
|
0.7
|
|
|
2
|
%
|
|
1.2
|
|
|
3
|
%
|
||
Mid-Atlantic region
|
|
0.4
|
|
|
1
|
%
|
|
1.0
|
|
|
2
|
%
|
||
Midwest region and other
|
|
0.6
|
|
|
1
|
%
|
|
1.0
|
|
|
2
|
%
|
||
Worldwide, excluding U.S.(2)
|
|
2.8
|
|
|
7
|
%
|
|
1.4
|
|
|
3
|
%
|
||
Total net premiums earned
|
|
$
|
38.3
|
|
|
100
|
%
|
|
$
|
43.9
|
|
|
100
|
%
|
($ in millions)
|
|
Year Ended December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
Period From June 24, 2013 to December 31, 2013
|
||||||
Net income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Less: net earnings allocated to participating securities (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Earnings (loss) per Common Share numerator
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Average Common Shares outstanding (in thousands of shares)
|
|
8,751
|
|
|
8,750
|
|
|
2,303
|
|
|||
Basic and diluted earnings (loss) per Common Share
|
|
$
|
2.36
|
|
|
$
|
1.72
|
|
|
$
|
(0.31
|
)
|
|
|
2015 Three Months Ended
|
|
2014 Three Months Ended
|
||||||||||||||||||||||||||||
Millions, except per share amounts
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
Mar. 31
|
|
Dec. 31
|
|
Sept. 30
|
|
June 30
|
|
Mar. 31
|
||||||||||||||||
Net reinsurance premiums earned
|
|
$
|
9.3
|
|
|
$
|
9.5
|
|
|
$
|
9.7
|
|
|
$
|
9.8
|
|
|
$
|
11.2
|
|
|
$
|
11.4
|
|
|
$
|
11.1
|
|
|
$
|
10.2
|
|
Net income (loss) from derivative instruments
|
|
0.1
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
||||||||
Total revenues
|
|
9.4
|
|
|
9.2
|
|
|
9.7
|
|
|
9.8
|
|
|
11.5
|
|
|
11.6
|
|
|
11.2
|
|
|
10.3
|
|
||||||||
Underwriting expenses
|
|
4.0
|
|
|
4.7
|
|
|
4.2
|
|
|
4.4
|
|
|
6.9
|
|
|
8.4
|
|
|
10.0
|
|
|
4.2
|
|
||||||||
Interest expense
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total expenses
|
|
4.0
|
|
|
4.8
|
|
|
4.2
|
|
|
4.4
|
|
|
6.9
|
|
|
8.4
|
|
|
10.0
|
|
|
4.2
|
|
||||||||
Net income
|
|
$
|
5.4
|
|
|
$
|
4.4
|
|
|
$
|
5.5
|
|
|
$
|
5.4
|
|
|
$
|
4.6
|
|
|
$
|
3.2
|
|
|
$
|
1.2
|
|
|
$
|
6.1
|
|
Amounts per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted earnings
|
|
$
|
0.62
|
|
|
$
|
0.50
|
|
|
$
|
0.63
|
|
|
$
|
0.61
|
|
|
$
|
0.52
|
|
|
$
|
0.37
|
|
|
$
|
0.13
|
|
|
$
|
0.70
|
|
Fully converted book value
|
|
$
|
21.41
|
|
|
$
|
20.80
|
|
|
$
|
20.59
|
|
|
$
|
20.28
|
|
|
$
|
20.62
|
|
|
$
|
20.09
|
|
|
$
|
20.02
|
|
|
$
|
20.20
|
|
/s/ Ernst & Young Ltd.
|
|
|
|
Hamilton, Bermuda
|
|
March 8, 2016
|
|
|
|
December 31,
|
||||||
(In millions of U.S. dollars)
|
|
2015
|
|
2014
|
||||
Assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
Investment in subsidiary, on the equity method of accounting
|
|
202.6
|
|
|
185.5
|
|
||
Intercompany receivables
|
|
0.5
|
|
|
2.5
|
|
||
Other assets
|
|
0.1
|
|
|
0.1
|
|
||
Total Assets
|
|
$
|
203.3
|
|
|
$
|
189.2
|
|
Liabilities:
|
|
|
|
|
|
|
||
Debt
|
|
13.0
|
|
|
8.0
|
|
||
Accounts payable and accrued expenses
|
|
2.7
|
|
|
0.7
|
|
||
Total Liabilities
|
|
15.7
|
|
|
8.7
|
|
||
Shareholders’ Equity:
|
|
187.6
|
|
|
180.5
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
203.3
|
|
|
$
|
189.2
|
|
|
|
Year Ended
|
|
Year Ended
|
|
Period From
June 24, 2013 to
|
||||||
(In millions of U.S. dollars)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Expenses
|
|
5.9
|
|
|
4.4
|
|
|
0.7
|
|
|||
Parent only net loss
|
|
(5.9
|
)
|
|
(4.4
|
)
|
|
(0.7
|
)
|
|||
Equity in earnings of subsidiaries
|
|
26.6
|
|
|
19.5
|
|
|
—
|
|
|||
Net income (loss) and comprehensive income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
|
|
Year Ended
|
|
Year Ended
|
|
Period From
June 24, 2013 to
|
||||||
(In millions of U.S. dollars)
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||
Cash flows from operations:
|
|
|
|
|
|
|
|
|
|
|||
Net income (loss)
|
|
$
|
20.7
|
|
|
$
|
15.1
|
|
|
$
|
(0.7
|
)
|
Charges (credits) to reconcile net income (loss) to net cash from operations:
|
|
|
|
|
|
|
|
|
|
|||
Equity in earnings of subsidiary
|
|
(26.6
|
)
|
|
(19.5
|
)
|
|
—
|
|
|||
Expense recognized for RSUs
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Net change in:
|
|
|
|
|
|
|
|
|
|
|||
Intercompany receivables
|
|
2.0
|
|
|
(2.5
|
)
|
|
—
|
|
|||
Other assets
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Accounts payable and accrued expenses
|
|
2.0
|
|
|
0.1
|
|
|
0.6
|
|
|||
Net cash used for operations
|
|
(1.8
|
)
|
|
(6.8
|
)
|
|
(0.2
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Dividends received from subsidiary
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|||
Contribution of capital from (to) subsidiary
|
|
6.5
|
|
|
(6.0
|
)
|
|
(160.0
|
)
|
|||
Net cash provided from (used for) investing activities
|
|
9.5
|
|
|
(6.0
|
)
|
|
(160.0
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|||
Borrowings under the Credit Agreement
|
|
9.0
|
|
|
8.0
|
|
|
—
|
|
|||
Repayment of borrowings
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|||
Dividends paid - Common Shares and RSUs
|
|
(13.7
|
)
|
|
(7.9
|
)
|
|
—
|
|
|||
Issuances of Common Shares, net of Common Share issuance costs
|
|
—
|
|
|
—
|
|
|
168.8
|
|
|||
Reimbursement of certain Common Share issuance costs
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|||
Repurchases of Common Shares
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|||
Net cash (used for) provided from financing activities
|
|
(8.7
|
)
|
|
0.1
|
|
|
174.0
|
|
|||
Net (decrease) increase in cash and cash equivalents during the year
|
|
(1.0
|
)
|
|
(12.7
|
)
|
|
13.8
|
|
|||
Cash and cash equivalents - beginning of period
|
|
1.1
|
|
|
13.8
|
|
|
—
|
|
|||
Cash and cash equivalents - end of period
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
|
$
|
13.8
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
|
Column G
|
|
Column H
|
|
Column I
|
|
Column J
|
|
Column K
|
||||||||||||||||||||
|
|
Deferred
policy
acquisition
costs
|
|
Reserves
for
unpaid
claims
and claim
adjustment
expenses
|
|
Unearned
premiums
|
|
Other
policy
claims and
benefits
payable
|
|
Net
premiums
earned
|
|
Net
investment
income
|
|
Claims and
claims
adjustment
expenses
|
|
Amortization
of policy
acquisition
costs
|
|
Other
underwriting
expenses
|
|
Net
premiums
written
|
||||||||||||||||||||
December 31, 2015
|
|
$
|
0.1
|
|
|
$
|
4.0
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
38.3
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
8.6
|
|
|
$
|
6.1
|
|
|
$
|
38.6
|
|
December 31, 2014
|
|
0.1
|
|
|
7.9
|
|
|
1.1
|
|
|
—
|
|
|
43.9
|
|
|
—
|
|
|
17.1
|
|
|
7.7
|
|
|
4.7
|
|
|
45.0
|
|
||||||||||
December 31, 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
|||||||||
Premiums Written
|
|
Gross
|
|
Ceded to Other Companies
|
|
Assumed from Other Companies
|
|
Net Amount
|
|
Percentage of Amount Assumed to Net
|
|||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and liability insurance
|
|
$
|
38.6
|
|
|
$
|
—
|
|
|
$
|
38.6
|
|
|
$
|
38.6
|
|
|
100
|
%
|
Year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Property and liability insurance
|
|
$
|
45.0
|
|
|
$
|
—
|
|
|
$
|
45.0
|
|
|
$
|
45.0
|
|
|
100
|
%
|
ENDURANCE SPECIALTY HOLDINGS LTD.
|
|
By:
|
|
Name:
|
Michael J. McGuire
|
Title:
|
Chief Financial Officer
|
ROYAL BANK OF CANADA
as Administrative Agent
|
|
By:
|
|
Name:
|
Susan Khokher
|
Title:
|
Manager, Agency
|
ENDURANCE SPECIALTY HOLDINGS LTD.
|
|
By:
|
|
|
Name: Michael J. McGuire
Title: Chief Financial Officer
|
BLUE CAPITAL REINSURANCE HOLDINGS LTD.
|
|
By:
|
|
|
Name: Michael S. Paquette
Title: Chief Financial Officer
|
Acknowledged:
ROYAL BANK OF CANADA,
as Administrative Agent
|
|
By:
|
|
|
Name: Susan Khokher
Title: Manager, Agency
|
•
|
recognize and identify the Company’s actual or potential intellectual property assets;
|
•
|
assist in securing the Company’s ownership of intellectual property assets;
|
•
|
assist, where appropriate, in registering, patenting or otherwise legally protecting intellectual property rights;
|
•
|
use the intellectual property rights properly, including in licensing and other transactions;
|
•
|
prevent any infringement or misuse of the Company’s intellectual property;
|
•
|
notify the appropriate Company personnel of any potential infringement or misuse of the Company’s intellectual property, so that the Company may take appropriate action; and
|
•
|
have outside vendors, contractors, licensees, joint venture partners and employees sign the appropriate Company documents acknowledging the Company’s intellectual property ownership.
|
•
|
is within the Company’s existing lines of business or a reasonable expansion thereof;
|
•
|
is one in which the Company either has an existing interest or a reasonable expectancy of an interest; and
|
•
|
the Company is reasonably capable of pursuing.
|
•
|
appropriate, for their own advantage, any corporate opportunity as described above that they discover through the use of corporate property or in the course of their association or in their capacity as directors;
|
•
|
compete directly or indirectly with the Company in the pursuit of corporate opportunities as described above; or
|
•
|
use the Company’s property or information or his or her position for personal gain outside of his or her relationship with the Company.
|
•
|
satisfy and fulfill any fiduciary duty he or she may have to the Company and its shareholders with respect to such corporate opportunity or conflict;
|
•
|
act in good faith and in a manner he or she reasonably believes is in the best interests of the Company;
|
•
|
act in a manner entirely fair to the Company; and
|
•
|
report such opportunity or conflict in accordance with the procedures below.
|
•
|
When a corporate opportunity is offered to a BCRH Associate or a conflict arises, such BCRH Associate must immediately report the opportunity or conflict to the chairman of the Audit Committee for consideration by the Audit Committee.
|
•
|
Any BCRH Associate who is uncertain as to whether an opportunity offered is a “corporate opportunity” or a “conflict” should err on the side of disclosing the opportunity to the Audit Committee for its determination.
|
•
|
The Audit Committee shall determine, in its sole discretion, whether a conflict of interest or corporate opportunity exists on a case-by-case basis and shall memorialize its determinations and the reasons behind such determinations. The Audit Committee will ensure that the directors voting on an issue are informed, disinterested and independent with respect to its determination.
|
•
|
If the Audit Committee determines that a conflict of interest exists in connection with a BCRH Associate, then such BCRH Associate shall not participate, directly or indirectly, in the matter or activity that has given rise to such conflict of interest unless expressly approved by the Audit Committee.
|
•
|
For the avoidance of doubt, each BCRH Associate shall disclose to the Audit Committee any transaction whereby the Company is investing in entities in which such BCRH Associate (or family member) has a material interest.
|
•
|
undisclosed or unrecorded funds or assets;
|
•
|
false or artificial entries being made in any books or records for any reason or engaging in any arrangement that results in such prohibited act;
|
•
|
non-disclosure of off-balance-sheet arrangements;
|
•
|
payments approved or made with the intention or understanding that it is to be used for any purpose other than that described by the document supporting the payment; and
|
•
|
BCRH Associates taking any action that fraudulently influences, coerces, manipulates or misleads any independent public or certified accountant involved in an audit of the Company.
|
|
|
|
|
|
|
|
|
|
SUBSIDIARIES OF THE REGISTRANT
|
||||||||
AS OF DECEMBER 31, 2015
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FULL NAME OF SUBSIDIARY
|
|
|
PLACE OF INCORPORATION
|
||||
|
|
|
|
|
|
|
|
|
|
BLUE CAPITAL RE LTD.
|
|
|
BERMUDA
|
|
|||
|
BLUE CAPITAL RE ILS LTD.
|
|
|
BERMUDA
|
|
|||
|
|
|
|
|
|
|
|
|
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;
|
By:
|
|
|
|
/s/ Adam Szakmary
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
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;
|
March 8, 2016
|
|
|
|
By:
|
|
|
|
/s/ Greg A. Garside
|
|
Chief Financial Officer
|
|
(Principal Financial Officer & Principal Accounting Officer)
|
|
/s/ Adam Szakmary
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Greg A Garside
|
|
Chief Financial Officer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|