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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Endurance Specialty Holdings Ltd | NYSE:ENH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 92.98 | 0 | 01:00:00 |
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ý
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Bermuda
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98-0392908
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Description of Class
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Common Shares Outstanding
as of November 3, 2016
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Ordinary Shares - $1.00 par value
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67,603,885
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Page
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•
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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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•
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greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events or as a result of changing climate conditions, than our underwriting, reserving or investment practices have anticipated;
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•
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changes in market conditions in the agriculture industry, which may vary depending upon demand for agricultural products, weather, commodity prices, natural disasters, technological advances in agricultural practices, changes in U.S. and foreign legislation and policies related to agricultural products and producers;
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•
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termination of or changes in the terms of the U.S. multiple peril crop insurance program and termination or changes to the U.S. farm bill, including modifications to the Standard Reinsurance Agreement put in place by the Risk Management Agency of the U.S. Department of Agriculture;
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•
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decreased demand for property and casualty insurance or reinsurance or increased competition due to an increase in capacity of property and casualty insurers and reinsurers;
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•
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changes in the availability, cost or quality of reinsurance or retrocessional coverage;
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•
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the inability to renew business previously underwritten or acquired;
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•
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the inability to obtain or maintain financial strength or claims-paying ratings by one or more of our subsidiaries;
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•
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our ability to effectively integrate acquired operations and to continue to expand our business;
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•
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uncertainties in our reserving process, including the potential for adverse development of our loss reserves or failure of our loss limitation methods;
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•
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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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•
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the failure or delay of the Florida Hurricane Catastrophe Fund or private market participants in Florida to promptly pay claims, particularly following a large windstorm or of multiple smaller storms;
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•
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our continued ability to comply with applicable financial standards and restrictive covenants, the breach of which could trigger significant collateral or prepayment obligations;
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•
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Endurance Specialty Holdings Ltd. ("Endurance Holdings") or Endurance Specialty Insurance Ltd. ("Endurance Bermuda") becomes subject to income taxes in jurisdictions outside of Bermuda;
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•
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changes in tax regulations or laws applicable to us, our subsidiaries, brokers or customers;
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•
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state, federal and foreign regulations that impede our ability to charge adequate rates and efficiently allocate capital;
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•
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changes in insurance regulations in the U.S. or other jurisdictions in which we operate, including the implementation of Solvency II by the European Commission;
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•
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the impact of the United Kingdom's June 2016 referendum on European Union membership and the potential withdrawal of the United Kingdom from the European Union;
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•
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reduced acceptance of our existing or new products and services;
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•
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loss of business provided by any one of a few brokers on whom we depend for a large portion of our revenue, and our exposure to the credit risk of our brokers;
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•
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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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•
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assessments by states for high risk or otherwise uninsured individuals;
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•
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the impact of acts of terrorism and acts of war;
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•
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the effects of terrorist related insurance legislation and laws;
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•
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the inability to retain key personnel;
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•
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political stability of Bermuda or other countries in which we operate;
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•
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changes in the political environment of certain countries in which we operate or underwrite business;
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•
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changes in accounting regulation, policies or practices;
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•
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our investment performance;
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•
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the valuation of our invested assets and the determination of impairments of those assets, if any;
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•
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the breach of our investment guidelines or the inability of those guidelines to mitigate investment risk;
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•
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the need for additional capital in the future which may not be available or only available on unfavorable terms;
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•
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the ability to maintain the availability of our systems and safeguard the security of our data in the event of a disaster or other unanticipated event;
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•
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changes in general economic conditions and/or industry specific conditions, including inflation or deflation, foreign currency exchange rates, interest rates, and other factors; and
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•
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the failure of Sompo Holdings, Inc. to complete the acquisition of 100% of the outstanding ordinary shares of the Company.
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SEPTEMBER 30,
2016 |
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DECEMBER 31,
2015 |
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(UNAUDITED)
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ASSETS
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Investments
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Fixed maturity investments, trading at fair value (amortized cost: $2,369,345 and $1,611,079 at September 30, 2016 and December 31, 2015, respectively)
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$
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2,393,352
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$
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1,587,160
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Fixed maturity investments, available for sale at fair value (amortized cost: $3,525,682 and $4,361,997 at September 30, 2016 and December 31, 2015, respectively)
|
3,596,720
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|
|
4,359,019
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Short-term investments, trading at fair value (amortized cost: $226,437 and $394,096 at September 30, 2016 and December 31, 2015, respectively)
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226,454
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|
|
394,111
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Short-term investments, available for sale at fair value (amortized cost: $34,934 and $25,657 at September 30, 2016 and December 31, 2015, respectively)
|
34,934
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|
|
25,685
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|
||
Equity securities, trading at fair value (cost: $22,978 and $15,290 at September 30, 2016 and December 31, 2015, respectively)
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23,120
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15,229
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||
Equity securities, available for sale at fair value (cost: $468,176 and $542,429 at September 30, 2016 and December 31, 2015, respectively)
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496,402
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513,585
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Other investments
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679,007
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|
872,617
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|
||
Total investments
|
7,449,989
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|
|
7,767,406
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||
Cash and cash equivalents
|
1,323,110
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1,177,750
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Securities pledged under repurchase agreements
|
124,303
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|
|
—
|
|
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Premiums receivable, net
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2,264,651
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|
1,376,328
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|
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Insurance and reinsurance balances receivable
|
127,849
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|
102,403
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Deferred acquisition costs
|
311,894
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|
255,501
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Prepaid reinsurance premiums
|
825,913
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|
498,574
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Reinsurance recoverable on unpaid losses
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1,124,976
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|
907,944
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Reinsurance recoverable on paid losses
|
311,324
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|
288,026
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Accrued investment income
|
30,073
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|
|
30,213
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||
Goodwill and intangible assets
|
489,522
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|
553,960
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Deferred tax asset
|
57,050
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|
64,164
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Net receivable on sales of investments
|
106,305
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|
31,873
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Other assets
|
283,474
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|
|
187,383
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|
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Total assets
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$
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14,830,433
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$
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13,241,525
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LIABILITIES
|
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|
||||
Reserve for losses and loss expenses
|
$
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4,807,868
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$
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4,510,415
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Reserve for unearned premiums
|
2,348,566
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|
1,789,148
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Reinsurance balances payable
|
1,018,618
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|
661,213
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Payable under repurchase agreements
|
120,997
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—
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Debt
|
705,179
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|
717,650
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Net payable on purchases of investments
|
203,592
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|
63,442
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Deferred tax liability
|
12,815
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17,315
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Other liabilities
|
389,561
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|
358,270
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Total liabilities
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9,607,196
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|
8,117,453
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Commitments and contingent liabilities
|
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SHAREHOLDERS' EQUITY
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||||
Preferred shares, total liquidation preference $230,000 (2015 - $460,000)
|
9
|
|
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9,209
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||
Common shares, ordinary - 67,594,088 issued and outstanding (2015 - 66,797,991)
|
67,594
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|
|
66,798
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|
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Additional paid-in capital
|
1,953,507
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|
|
2,145,836
|
|
||
Accumulated other comprehensive income (loss)
|
27,993
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|
|
(46,634
|
)
|
||
Retained earnings
|
2,917,141
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|
|
2,681,053
|
|
||
Total shareholders' equity available to Endurance Holdings
|
4,966,244
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|
|
4,856,262
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||
Non-controlling interests
|
256,993
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|
|
267,810
|
|
||
Total shareholders' equity
|
5,223,237
|
|
|
5,124,072
|
|
||
Total liabilities and shareholders' equity
|
$
|
14,830,433
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|
|
$
|
13,241,525
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|
|
THREE MONTHS ENDED
SEPTEMBER 30, |
|
NINE MONTHS ENDED
SEPTEMBER 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
760,687
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|
|
$
|
642,597
|
|
|
$
|
3,509,294
|
|
|
$
|
2,805,213
|
|
Ceded premiums written
|
(411,701
|
)
|
|
(305,907
|
)
|
|
(1,503,698
|
)
|
|
(1,144,486
|
)
|
||||
Net premiums written
|
348,986
|
|
|
336,690
|
|
|
2,005,596
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|
|
1,660,727
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|
||||
Change in unearned premiums
|
261,170
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|
|
220,313
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|
|
(242,641
|
)
|
|
(255,730
|
)
|
||||
Net premiums earned
|
610,156
|
|
|
557,003
|
|
|
1,762,955
|
|
|
1,404,997
|
|
||||
Net investment income
|
62,236
|
|
|
16,533
|
|
|
117,394
|
|
|
90,646
|
|
||||
Net realized and unrealized gains
|
13,405
|
|
|
5,029
|
|
|
33,539
|
|
|
32,898
|
|
||||
Net impairment losses recognized in earnings
|
(183
|
)
|
|
(38
|
)
|
|
(10,647
|
)
|
|
(1,111
|
)
|
||||
Other underwriting (loss) income
|
(466
|
)
|
|
227
|
|
|
(1,980
|
)
|
|
4,022
|
|
||||
Total revenues
|
685,148
|
|
|
578,754
|
|
|
1,901,261
|
|
|
1,531,452
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Net losses and loss expenses
|
331,462
|
|
|
263,993
|
|
|
950,902
|
|
|
675,051
|
|
||||
Acquisition expenses
|
121,391
|
|
|
90,457
|
|
|
337,194
|
|
|
257,521
|
|
||||
General and administrative expenses
|
67,738
|
|
|
60,793
|
|
|
195,042
|
|
|
170,648
|
|
||||
Corporate expenses
|
11,952
|
|
|
74,308
|
|
|
35,553
|
|
|
99,210
|
|
||||
Amortization of intangibles
|
21,154
|
|
|
11,318
|
|
|
63,471
|
|
|
14,496
|
|
||||
Net foreign exchange (gains) losses
|
(18,576
|
)
|
|
8,621
|
|
|
(63,056
|
)
|
|
29,154
|
|
||||
Interest expense
|
10,826
|
|
|
12,324
|
|
|
33,053
|
|
|
30,445
|
|
||||
Total expenses
|
545,947
|
|
|
521,814
|
|
|
1,552,159
|
|
|
1,276,525
|
|
||||
Income before income taxes
|
139,201
|
|
|
56,940
|
|
|
349,102
|
|
|
254,927
|
|
||||
Income tax benefit (expense)
|
199
|
|
|
(2,410
|
)
|
|
2,570
|
|
|
(7,712
|
)
|
||||
Net income
|
139,400
|
|
|
54,530
|
|
|
351,672
|
|
|
247,215
|
|
||||
Net income attributable to non-controlling interests
|
(5,679
|
)
|
|
(2,707
|
)
|
|
(18,456
|
)
|
|
(2,707
|
)
|
||||
Net income available to Endurance Holdings
|
133,721
|
|
|
51,823
|
|
|
333,216
|
|
|
244,508
|
|
||||
Preferred dividends
|
(3,651
|
)
|
|
(8,188
|
)
|
|
(20,147
|
)
|
|
(24,564
|
)
|
||||
Net income available to Endurance Holdings' common and participating common shareholders
|
$
|
130,070
|
|
|
$
|
43,635
|
|
|
$
|
313,069
|
|
|
$
|
219,944
|
|
Comprehensive income
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
139,400
|
|
|
$
|
54,530
|
|
|
$
|
351,672
|
|
|
$
|
247,215
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
||||||||
Net unrealized holding gains (losses) on investments arising during the period (net of other-than-temporary impairment losses recognized in other comprehensive income (loss), reclassification adjustment and applicable deferred income taxes of ($18,464) and $1,323 for the nine months ended September 30, 2016 and 2015, respectively)
|
21,136
|
|
|
(29,906
|
)
|
|
137,731
|
|
|
(72,396
|
)
|
||||
Foreign currency translation adjustments
|
(13,114
|
)
|
|
(15,625
|
)
|
|
(63,170
|
)
|
|
(12,920
|
)
|
||||
Reclassification adjustment for net losses on derivative designated as cash flow hedge included in net income
|
22
|
|
|
22
|
|
|
66
|
|
|
66
|
|
||||
Other comprehensive income (loss)
|
8,044
|
|
|
(45,509
|
)
|
|
74,627
|
|
|
(85,250
|
)
|
||||
Comprehensive income
|
147,444
|
|
|
9,021
|
|
|
426,299
|
|
|
161,965
|
|
||||
Comprehensive income attributable to non-controlling interests
|
(5,679
|
)
|
|
(2,707
|
)
|
|
(18,456
|
)
|
|
(2,707
|
)
|
||||
Comprehensive income attributable to Endurance Holdings
|
$
|
141,765
|
|
|
$
|
6,314
|
|
|
$
|
407,843
|
|
|
$
|
159,258
|
|
Per share data
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
1.93
|
|
|
$
|
0.73
|
|
|
$
|
4.65
|
|
|
$
|
4.41
|
|
Diluted earnings per common share
|
$
|
1.92
|
|
|
$
|
0.73
|
|
|
$
|
4.64
|
|
|
$
|
4.39
|
|
Dividend per common share
|
$
|
0.38
|
|
|
$
|
0.35
|
|
|
$
|
1.14
|
|
|
$
|
1.05
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, |
||||||
|
2016
|
|
2015
|
||||
Preferred shares
|
|
|
|
||||
Balance, beginning of period
|
$
|
9,209
|
|
|
$
|
17,200
|
|
Redemption of Series B, non-cumulative preferred shares
|
(9,200
|
)
|
|
—
|
|
||
Balance, end of period
|
9
|
|
|
17,200
|
|
||
Common shares
|
|
|
|
||||
Balance, beginning of period
|
66,798
|
|
|
44,765
|
|
||
Issuance of common shares, net of forfeitures
|
796
|
|
|
21,842
|
|
||
Balance, end of period
|
67,594
|
|
|
66,607
|
|
||
Additional paid-in capital
|
|
|
|
||||
Balance, beginning of period
|
2,145,836
|
|
|
598,226
|
|
||
Issuance of common shares, net of forfeitures
|
10,218
|
|
|
1,474,432
|
|
||
Redemption of Series B, non-cumulative preferred shares
|
(219,741
|
)
|
|
—
|
|
||
Settlement of equity awards
|
(10,842
|
)
|
|
(10,494
|
)
|
||
Stock-based compensation expense
|
28,036
|
|
|
46,283
|
|
||
Balance, end of period
|
1,953,507
|
|
|
2,108,447
|
|
||
Accumulated other comprehensive income (loss)
|
|
|
|
||||
Cumulative foreign currency translation adjustments:
|
|
|
|
||||
Balance, beginning of period
|
(32,318
|
)
|
|
(7,628
|
)
|
||
Foreign currency translation adjustments
|
(63,170
|
)
|
|
(12,920
|
)
|
||
Balance, end of period
|
(95,488
|
)
|
|
(20,548
|
)
|
||
Unrealized holding gains on investments, net of deferred taxes:
|
|
|
|
||||
Balance, beginning of period
|
(12,638
|
)
|
|
86,100
|
|
||
Net unrealized holding gains (losses) arising during the period, net of other-than-temporary impairment losses and reclassification adjustment
|
137,731
|
|
|
(72,396
|
)
|
||
Balance, end of period
|
125,093
|
|
|
13,704
|
|
||
Accumulated derivative loss on cash flow hedging instruments:
|
|
|
|
||||
Balance, beginning of period
|
(1,678
|
)
|
|
(1,766
|
)
|
||
Net change from current period hedging transactions, net of reclassification adjustment
|
66
|
|
|
66
|
|
||
Balance, end of period
|
(1,612
|
)
|
|
(1,700
|
)
|
||
Total accumulated other comprehensive income (loss)
|
27,993
|
|
|
(8,544
|
)
|
||
Retained earnings
|
|
|
|
||||
Balance, beginning of period
|
2,681,053
|
|
|
2,448,285
|
|
||
Net income
|
351,672
|
|
|
247,215
|
|
||
Net income attributable to non-controlling interests
|
(18,456
|
)
|
|
(2,707
|
)
|
||
Dividends on preferred shares
|
(20,147
|
)
|
|
(24,564
|
)
|
||
Dividends on common shares
|
(76,981
|
)
|
|
(55,069
|
)
|
||
Balance, end of period
|
2,917,141
|
|
|
2,613,160
|
|
||
Total shareholders' equity available to Endurance Holdings
|
4,966,244
|
|
|
4,796,870
|
|
||
Non-controlling interests
|
256,993
|
|
|
259,474
|
|
||
Total shareholders' equity
|
$
|
5,223,237
|
|
|
$
|
5,056,344
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, |
||||||
|
2016
|
|
2015
|
||||
Cash flows provided by (used in) operating activities
|
|
||||||
Net income
|
$
|
351,672
|
|
|
$
|
247,215
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Amortization of net premium on investments
|
28,097
|
|
|
34,116
|
|
||
Amortization of other intangibles and depreciation
|
78,551
|
|
|
29,291
|
|
||
Net realized and unrealized gains
|
(33,539
|
)
|
|
(32,898
|
)
|
||
Net impairment losses recognized in earnings
|
10,647
|
|
|
1,111
|
|
||
Deferred taxes
|
(14,876
|
)
|
|
3,437
|
|
||
Stock-based compensation expense
|
28,036
|
|
|
46,283
|
|
||
Equity in losses of other investments
|
201
|
|
|
1,758
|
|
||
Change in:
|
|
|
|
||||
Premiums receivable, net
|
(888,323
|
)
|
|
(845,891
|
)
|
||
Insurance and reinsurance balances receivable
|
(25,446
|
)
|
|
21,085
|
|
||
Deferred acquisition costs
|
(56,393
|
)
|
|
(75,607
|
)
|
||
Prepaid reinsurance premiums
|
(327,339
|
)
|
|
(227,337
|
)
|
||
Reinsurance recoverable on unpaid losses
|
(217,032
|
)
|
|
(119,269
|
)
|
||
Reinsurance recoverable on paid losses
|
(23,298
|
)
|
|
63,141
|
|
||
Accrued investment income
|
140
|
|
|
4,996
|
|
||
Other assets
|
(2,575
|
)
|
|
(319
|
)
|
||
Reserve for losses and loss expenses
|
297,453
|
|
|
(77,954
|
)
|
||
Reserve for unearned premiums
|
559,418
|
|
|
477,440
|
|
||
Reinsurance balances payable
|
357,405
|
|
|
338,279
|
|
||
Other liabilities
|
(63,412
|
)
|
|
37,094
|
|
||
Net cash flows provided by (used in) operating activities
|
59,387
|
|
|
(74,029
|
)
|
||
Cash flows provided by investing activities
|
|
|
|
||||
Proceeds from sales and maturities of trading investments
|
2,059,959
|
|
|
103,450
|
|
||
Proceeds from sales and maturities of available for sale investments
|
3,150,250
|
|
|
4,201,152
|
|
||
Proceeds from the redemption of other investments
|
246,349
|
|
|
124,801
|
|
||
Purchases of trading investments
|
(2,643,730
|
)
|
|
(286,416
|
)
|
||
Purchases of available for sale investments
|
(2,385,309
|
)
|
|
(4,047,359
|
)
|
||
Purchases of other investments
|
(50,585
|
)
|
|
(116,988
|
)
|
||
Net settlements of other assets and other liabilities
|
(33,620
|
)
|
|
17,301
|
|
||
Purchases of fixed assets
|
(10,999
|
)
|
|
(18,053
|
)
|
||
Net cash (paid) received upon subsidiary acquisition
|
(7
|
)
|
|
675,310
|
|
||
Net cash flows provided by investing activities
|
332,308
|
|
|
653,198
|
|
||
Cash flows used in financing activities
|
|
|
|
||||
Issuance of common shares
|
9,550
|
|
|
24,378
|
|
||
Redemption of Series B, non-cumulative preferred shares
|
(230,000
|
)
|
|
—
|
|
||
Net distributions to non-controlling interests
|
(27,517
|
)
|
|
—
|
|
||
Settlement of equity awards
|
(10,842
|
)
|
|
(10,494
|
)
|
||
Offering and registration costs paid
|
(319
|
)
|
|
—
|
|
||
Proceeds from issuance of repurchase agreements
|
120,997
|
|
|
—
|
|
||
Proceeds from issuance of debt
|
537
|
|
|
791
|
|
||
Repayments of debt
|
(13,645
|
)
|
|
(794
|
)
|
||
Dividends on preferred shares
|
(20,147
|
)
|
|
(24,564
|
)
|
||
Dividends on common shares
|
(76,934
|
)
|
|
(54,959
|
)
|
||
Net cash flows used in financing activities
|
(248,320
|
)
|
|
(65,642
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,985
|
|
|
(16,002
|
)
|
||
Net increase in cash and cash equivalents
|
145,360
|
|
|
497,525
|
|
||
Cash and cash equivalents, beginning of period
|
1,177,750
|
|
|
745,472
|
|
||
Cash and cash equivalents, end of period
|
$
|
1,323,110
|
|
|
$
|
1,242,997
|
|
1.
|
General
|
2.
|
Summary of significant accounting policies
|
2.
|
Summary of significant accounting policies, cont'd.
|
2.
|
Summary of significant accounting policies, cont'd.
|
3.
|
Investments
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Fixed income investments
|
$
|
41,078
|
|
|
$
|
36,204
|
|
|
$
|
118,382
|
|
|
$
|
96,145
|
|
Equity investments
|
1,906
|
|
|
1,748
|
|
|
8,754
|
|
|
5,200
|
|
||||
Other investments
|
22,804
|
|
|
(17,716
|
)
|
|
(201
|
)
|
|
(1,758
|
)
|
||||
Cash and cash equivalents
|
392
|
|
|
515
|
|
|
2,043
|
|
|
2,108
|
|
||||
|
$
|
66,180
|
|
|
$
|
20,751
|
|
|
$
|
128,978
|
|
|
$
|
101,695
|
|
Investment expenses
|
(3,944
|
)
|
|
(4,218
|
)
|
|
(11,584
|
)
|
|
(11,049
|
)
|
||||
Net investment income
|
$
|
62,236
|
|
|
$
|
16,533
|
|
|
$
|
117,394
|
|
|
$
|
90,646
|
|
3.
|
Investments, cont'd.
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
Due within one year
|
$
|
508,899
|
|
|
$
|
509,417
|
|
|
$
|
622,070
|
|
|
$
|
622,248
|
|
Due after one year through five years
|
2,005,903
|
|
|
2,031,970
|
|
|
2,005,456
|
|
|
1,995,502
|
|
||||
Due after five years through ten years
|
736,318
|
|
|
757,530
|
|
|
683,147
|
|
|
676,932
|
|
||||
Due after ten years
|
45,303
|
|
|
48,537
|
|
|
33,168
|
|
|
34,651
|
|
||||
Residential mortgage-backed securities
|
1,299,811
|
|
|
1,329,069
|
|
|
1,301,083
|
|
|
1,311,373
|
|
||||
Commercial mortgage-backed securities
|
702,760
|
|
|
714,142
|
|
|
817,570
|
|
|
812,886
|
|
||||
Collateralized loan and debt obligations
|
392,578
|
|
|
393,922
|
|
|
419,795
|
|
|
405,128
|
|
||||
Asset-backed securities
|
464,826
|
|
|
466,873
|
|
|
510,540
|
|
|
507,255
|
|
||||
Total
|
$
|
6,156,398
|
|
|
$
|
6,251,460
|
|
|
$
|
6,392,829
|
|
|
$
|
6,365,975
|
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Fixed maturity investments
|
|
|
|
|
||||
U.S. government and agencies securities
|
|
$
|
396,468
|
|
|
$
|
319,674
|
|
U.S. state and municipal securities
|
|
5,203
|
|
|
5,559
|
|
||
Foreign government securities
|
|
128,786
|
|
|
49,861
|
|
||
Government guaranteed corporate securities
|
|
31,526
|
|
|
38,201
|
|
||
Corporate securities
|
|
951,523
|
|
|
532,192
|
|
||
Residential mortgage-backed securities
|
|
391,704
|
|
|
258,574
|
|
||
Commercial mortgage-backed securities
|
|
181,569
|
|
|
127,124
|
|
||
Collateralized loan and debt obligations
(1)
|
|
93,307
|
|
|
103,219
|
|
||
Asset-backed securities
|
|
213,266
|
|
|
152,756
|
|
||
Total fixed maturity investments
|
|
2,393,352
|
|
|
1,587,160
|
|
||
Short-term investments
|
|
226,454
|
|
|
394,111
|
|
||
Total fixed income investments
|
|
$
|
2,619,806
|
|
|
$
|
1,981,271
|
|
Equity securities
|
|
|
|
|
||||
Equity investments
|
|
$
|
117
|
|
|
$
|
48
|
|
Preferred equity investments
|
|
5,966
|
|
|
553
|
|
||
Short-term fixed income fund
|
|
17,037
|
|
|
14,628
|
|
||
Total equity securities
|
|
$
|
23,120
|
|
|
$
|
15,229
|
|
(1)
|
Balances include amounts related to collateralized debt obligations held with total fair values of
$3.6 million
and
$38.5 million
at
September 30, 2016
and
December 31, 2015
, respectively.
|
3.
|
Investments, cont'd.
|
September 30, 2016
|
|
Market Value
|
|
Unfunded
Commitments
|
|
Ineligible for
Redemption over
next 12 months
|
||||||
Alternative funds
|
|
|
|
|
|
|
||||||
Hedge funds
|
|
$
|
576,291
|
|
|
$
|
—
|
|
|
$
|
97,334
|
|
Private investment funds
|
|
76,665
|
|
|
95,846
|
|
|
76,665
|
|
|||
Other investment funds
|
|
26,051
|
|
|
—
|
|
|
25,575
|
|
|||
Total alternative funds
|
|
679,007
|
|
|
95,846
|
|
|
199,574
|
|
|||
Total other investments
|
|
$
|
679,007
|
|
|
$
|
95,846
|
|
|
$
|
199,574
|
|
December 31, 2015
|
|
Market Value
|
|
Unfunded
Commitments |
|
Ineligible for
Redemption in 2016 |
||||||
Alternative funds
|
|
|
|
|
|
|
||||||
Hedge funds
|
|
$
|
704,966
|
|
|
$
|
—
|
|
|
$
|
57,876
|
|
Private investment funds
|
|
80,690
|
|
|
102,070
|
|
|
80,690
|
|
|||
Other investment funds
|
|
23,465
|
|
|
—
|
|
|
24,958
|
|
|||
Total alternative funds
|
|
809,121
|
|
|
102,070
|
|
|
163,524
|
|
|||
Specialty funds
|
|
|
|
|
|
|
||||||
High yield loan funds
|
|
63,496
|
|
|
30,000
|
|
|
—
|
|
|||
Total specialty funds
|
|
63,496
|
|
|
30,000
|
|
|
—
|
|
|||
Total other investments
|
|
$
|
872,617
|
|
|
$
|
132,070
|
|
|
$
|
163,524
|
|
3.
|
Investments, cont'd.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross realized gains on investment sales
|
$
|
11,072
|
|
|
$
|
20,107
|
|
|
$
|
35,776
|
|
|
$
|
57,420
|
|
Gross realized losses on investment sales
|
(3,365
|
)
|
|
(8,236
|
)
|
|
(50,537
|
)
|
|
(18,190
|
)
|
||||
Net unrealized gains (losses) on trading securities
|
6,153
|
|
|
(5,037
|
)
|
|
48,229
|
|
|
(5,037
|
)
|
||||
Change in fair value of investment-related derivative financial instruments
(1)
|
(455
|
)
|
|
(1,805
|
)
|
|
71
|
|
|
(1,295
|
)
|
||||
Net realized and unrealized gains
|
$
|
13,405
|
|
|
$
|
5,029
|
|
|
$
|
33,539
|
|
|
$
|
32,898
|
|
(1)
|
For additional information on the Company's derivative financial instruments, see Note 7, Derivatives.
|
September 30, 2016
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies securities
|
|
$
|
338,564
|
|
|
$
|
8,551
|
|
|
$
|
(79
|
)
|
|
$
|
347,036
|
|
U.S. state and municipal securities
|
|
10,804
|
|
|
125
|
|
|
(157
|
)
|
|
10,772
|
|
||||
Foreign government securities
|
|
82,096
|
|
|
2,196
|
|
|
(2
|
)
|
|
84,290
|
|
||||
Government guaranteed corporate securities
|
|
9,613
|
|
|
298
|
|
|
—
|
|
|
9,911
|
|
||||
Corporate securities
|
|
1,096,722
|
|
|
24,174
|
|
|
(345
|
)
|
|
1,120,551
|
|
||||
Residential mortgage-backed securities
|
|
912,540
|
|
|
25,283
|
|
|
(458
|
)
|
|
937,365
|
|
||||
Commercial mortgage-backed securities
|
|
523,921
|
|
|
11,920
|
|
|
(3,268
|
)
|
|
532,573
|
|
||||
Collateralized loan and debt obligations
(1)
|
|
298,990
|
|
|
2,239
|
|
|
(614
|
)
|
|
300,615
|
|
||||
Asset-backed securities
|
|
252,432
|
|
|
1,860
|
|
|
(685
|
)
|
|
253,607
|
|
||||
Total fixed maturity investments
|
|
3,525,682
|
|
|
76,646
|
|
|
(5,608
|
)
|
|
3,596,720
|
|
||||
Short-term investments
|
|
34,934
|
|
|
—
|
|
|
—
|
|
|
34,934
|
|
||||
Total fixed income investments
|
|
$
|
3,560,616
|
|
|
$
|
76,646
|
|
|
$
|
(5,608
|
)
|
|
$
|
3,631,654
|
|
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Equity investments
|
|
$
|
330,971
|
|
|
$
|
22,347
|
|
|
$
|
(2,068
|
)
|
|
$
|
351,250
|
|
Emerging market debt funds
|
|
83,668
|
|
|
4,057
|
|
|
—
|
|
|
87,725
|
|
||||
Convertible funds
|
|
46,331
|
|
|
2,313
|
|
|
—
|
|
|
48,644
|
|
||||
Preferred equity investments
|
|
7,078
|
|
|
1,684
|
|
|
(110
|
)
|
|
8,652
|
|
||||
Short-term fixed income fund
|
|
128
|
|
|
3
|
|
|
—
|
|
|
131
|
|
||||
Total equity securities
|
|
$
|
468,176
|
|
|
$
|
30,404
|
|
|
$
|
(2,178
|
)
|
|
$
|
496,402
|
|
(1)
|
Balances include amounts related to collateralized debt obligations held with total fair values of
$3.2 million
.
|
3.
|
Investments, cont'd.
|
December 31, 2015
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies securities
|
|
$
|
499,386
|
|
|
$
|
2,561
|
|
|
$
|
(3,153
|
)
|
|
$
|
498,794
|
|
U.S. state and municipal securities
|
|
16,908
|
|
|
120
|
|
|
(181
|
)
|
|
16,847
|
|
||||
Foreign government securities
|
|
110,893
|
|
|
803
|
|
|
(581
|
)
|
|
111,115
|
|
||||
Government guaranteed corporate securities
|
|
19,248
|
|
|
311
|
|
|
(7
|
)
|
|
19,552
|
|
||||
Corporate securities
|
|
1,323,276
|
|
|
5,698
|
|
|
(11,232
|
)
|
|
1,317,742
|
|
||||
Residential mortgage-backed securities
|
|
1,041,540
|
|
|
16,400
|
|
|
(5,141
|
)
|
|
1,052,799
|
|
||||
Commercial mortgage-backed securities
|
|
689,078
|
|
|
4,737
|
|
|
(8,053
|
)
|
|
685,762
|
|
||||
Collateralized loan and debt obligations
(1)
|
|
304,915
|
|
|
796
|
|
|
(3,802
|
)
|
|
301,909
|
|
||||
Asset-backed securities
|
|
356,753
|
|
|
585
|
|
|
(2,839
|
)
|
|
354,499
|
|
||||
Total fixed maturity investments
|
|
4,361,997
|
|
|
32,011
|
|
|
(34,989
|
)
|
|
4,359,019
|
|
||||
Short-term investments
|
|
25,657
|
|
|
28
|
|
|
—
|
|
|
25,685
|
|
||||
Total fixed income investments
|
|
$
|
4,387,654
|
|
|
$
|
32,039
|
|
|
$
|
(34,989
|
)
|
|
$
|
4,384,704
|
|
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Equity investments
|
|
$
|
418,822
|
|
|
$
|
6,834
|
|
|
$
|
(31,875
|
)
|
|
$
|
393,781
|
|
Emerging market debt funds
|
|
61,874
|
|
|
—
|
|
|
(5,453
|
)
|
|
56,421
|
|
||||
Convertible funds
|
|
46,331
|
|
|
—
|
|
|
(146
|
)
|
|
46,185
|
|
||||
Preferred equity investments
|
|
15,275
|
|
|
1,946
|
|
|
(151
|
)
|
|
17,070
|
|
||||
Short-term fixed income funds
|
|
127
|
|
|
1
|
|
|
—
|
|
|
128
|
|
||||
Total equity securities
|
|
$
|
542,429
|
|
|
$
|
8,781
|
|
|
$
|
(37,625
|
)
|
|
$
|
513,585
|
|
(1)
|
Balances include amounts related to collateralized debt obligations held with total fair values of
$11.4 million
.
|
3.
|
Investments, cont'd.
|
|
|
Less than 12 months
|
|
12 months or greater
|
|
Total
|
||||||||||||||||||
September 30, 2016
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
||||||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agencies securities
|
|
$
|
(79
|
)
|
|
$
|
24,932
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(79
|
)
|
|
$
|
24,932
|
|
U.S. state and municipal securities
|
|
(74
|
)
|
|
5,697
|
|
|
(83
|
)
|
|
2,250
|
|
|
(157
|
)
|
|
7,947
|
|
||||||
Foreign government securities
|
|
(1
|
)
|
|
1,349
|
|
|
(1
|
)
|
|
549
|
|
|
(2
|
)
|
|
1,898
|
|
||||||
Corporate securities
|
|
(161
|
)
|
|
65,619
|
|
|
(184
|
)
|
|
19,814
|
|
|
(345
|
)
|
|
85,433
|
|
||||||
Residential mortgage-backed securities
|
|
(188
|
)
|
|
29,949
|
|
|
(270
|
)
|
|
36,070
|
|
|
(458
|
)
|
|
66,019
|
|
||||||
Commercial mortgage-backed securities
|
|
(1,356
|
)
|
|
118,481
|
|
|
(1,912
|
)
|
|
63,554
|
|
|
(3,268
|
)
|
|
182,035
|
|
||||||
Collateralized loan and debt obligations
|
|
(240
|
)
|
|
18,373
|
|
|
(374
|
)
|
|
52,084
|
|
|
(614
|
)
|
|
70,457
|
|
||||||
Asset-backed securities
|
|
(263
|
)
|
|
49,423
|
|
|
(422
|
)
|
|
31,248
|
|
|
(685
|
)
|
|
80,671
|
|
||||||
Total fixed income investments
|
|
$
|
(2,362
|
)
|
|
$
|
313,823
|
|
|
$
|
(3,246
|
)
|
|
$
|
205,569
|
|
|
$
|
(5,608
|
)
|
|
$
|
519,392
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity investments
|
|
$
|
(1,284
|
)
|
|
$
|
15,453
|
|
|
$
|
(784
|
)
|
|
$
|
14,222
|
|
|
$
|
(2,068
|
)
|
|
$
|
29,675
|
|
Preferred equity investments
|
|
(95
|
)
|
|
1,614
|
|
|
(15
|
)
|
|
235
|
|
|
(110
|
)
|
|
1,849
|
|
||||||
Total equity securities
|
|
$
|
(1,379
|
)
|
|
$
|
17,067
|
|
|
$
|
(799
|
)
|
|
$
|
14,457
|
|
|
$
|
(2,178
|
)
|
|
$
|
31,524
|
|
(1)
|
Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive income at
September 30, 2016
.
|
3.
|
Investments, cont'd.
|
|
|
Less than 12 months
|
|
12 months or greater
|
|
Total
|
||||||||||||||||||
December 31, 2015
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
|
Unrealized
Losses
(1)
|
|
Fair
Value
|
||||||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and agencies securities
|
|
$
|
(2,175
|
)
|
|
$
|
347,024
|
|
|
$
|
(978
|
)
|
|
$
|
16,669
|
|
|
$
|
(3,153
|
)
|
|
$
|
363,693
|
|
U.S. state and municipal securities
|
|
(96
|
)
|
|
9,662
|
|
|
(85
|
)
|
|
695
|
|
|
(181
|
)
|
|
10,357
|
|
||||||
Foreign government securities
|
|
(404
|
)
|
|
31,881
|
|
|
(177
|
)
|
|
3,966
|
|
|
(581
|
)
|
|
35,847
|
|
||||||
Government guaranteed corporate securities
|
|
(7
|
)
|
|
1,692
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
1,692
|
|
||||||
Corporate securities
|
|
(9,222
|
)
|
|
830,349
|
|
|
(2,010
|
)
|
|
51,024
|
|
|
(11,232
|
)
|
|
881,373
|
|
||||||
Residential mortgage-backed securities
|
|
(3,378
|
)
|
|
365,082
|
|
|
(1,763
|
)
|
|
79,355
|
|
|
(5,141
|
)
|
|
444,437
|
|
||||||
Commercial mortgage-backed securities
|
|
(6,708
|
)
|
|
436,387
|
|
|
(1,345
|
)
|
|
42,246
|
|
|
(8,053
|
)
|
|
478,633
|
|
||||||
Collateralized loan and debt obligations
|
|
(3,107
|
)
|
|
224,520
|
|
|
(695
|
)
|
|
48,167
|
|
|
(3,802
|
)
|
|
272,687
|
|
||||||
Asset-backed securities
|
|
(2,624
|
)
|
|
311,814
|
|
|
(215
|
)
|
|
12,880
|
|
|
(2,839
|
)
|
|
324,694
|
|
||||||
Total fixed income investments
|
|
$
|
(27,721
|
)
|
|
$
|
2,558,411
|
|
|
$
|
(7,268
|
)
|
|
$
|
255,002
|
|
|
$
|
(34,989
|
)
|
|
$
|
2,813,413
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity investments
|
|
$
|
(31,875
|
)
|
|
$
|
283,095
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(31,875
|
)
|
|
$
|
283,095
|
|
Emerging market debt funds
|
|
—
|
|
|
—
|
|
|
(5,453
|
)
|
|
56,421
|
|
|
(5,453
|
)
|
|
56,421
|
|
||||||
Convertible funds
|
|
(146
|
)
|
|
46,185
|
|
|
—
|
|
|
—
|
|
|
(146
|
)
|
|
46,185
|
|
||||||
Preferred equity investments
|
|
(151
|
)
|
|
7,361
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
7,361
|
|
||||||
Total equity securities
|
|
$
|
(32,172
|
)
|
|
$
|
336,641
|
|
|
$
|
(5,453
|
)
|
|
$
|
56,421
|
|
|
$
|
(37,625
|
)
|
|
$
|
393,062
|
|
(1)
|
Gross unrealized losses include unrealized losses on non-OTTI and non-credit OTTI securities recognized in accumulated other comprehensive loss at
December 31, 2015
.
|
3.
|
Investments, cont'd.
|
3.
|
Investments, cont'd.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Non-controlling interests, beginning of period
|
|
$
|
259,851
|
|
|
$
|
258,529
|
|
|
$
|
267,810
|
|
|
$
|
258,529
|
|
Income attributable to third-party investments in the BCGR Cell
|
|
3,453
|
|
|
821
|
|
|
11,603
|
|
|
821
|
|
||||
Income attributable to third-party investments in BCRH
|
|
2,226
|
|
|
1,886
|
|
|
6,853
|
|
|
1,886
|
|
||||
Net income attributable to non-controlling interests
|
|
5,679
|
|
|
2,707
|
|
|
18,456
|
|
|
2,707
|
|
||||
Net preferred share redemptions attributable to third-party investments in the BCGR Cell
(1)
|
|
(6,800
|
)
|
|
—
|
|
|
(16,807
|
)
|
|
—
|
|
||||
Net investments attributable to third-parties in BCRH
|
|
20
|
|
|
(7
|
)
|
|
53
|
|
|
(7
|
)
|
||||
Net change in third-party investments in non-controlling interests
|
|
(6,780
|
)
|
|
(7
|
)
|
|
(16,754
|
)
|
|
(7
|
)
|
||||
Dividends declared by BCRH attributable to non-controlling interests
|
|
(1,757
|
)
|
|
(1,755
|
)
|
|
(12,519
|
)
|
|
(1,755
|
)
|
||||
Non-controlling interests, end of period
|
|
$
|
256,993
|
|
|
$
|
259,474
|
|
|
$
|
256,993
|
|
|
$
|
259,474
|
|
4.
|
Fair value measurement
|
•
|
Government and agencies fixed maturity securities – These securities are generally priced by pricing services or index providers. The pricing services or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical models which may incorporate option adjusted spreads, daily interest rate data and market/sector news. The Company generally classifies the fair values of government and agencies securities in Level 2. Current issue U.S. government securities are generally valued based on Level 1 inputs, which use the market approach valuation technique.
|
•
|
Government guaranteed corporate fixed maturity securities – These securities are generally priced by pricing services or index providers. The pricing service or index providers may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the pricing service typically uses analytical spread models which may incorporate inputs from the U.S. treasury curve or LIBOR. The Company generally classifies the fair values of its government guaranteed corporate securities in Level 2.
|
•
|
Corporate fixed maturity securities – These securities are generally priced by pricing services or index providers. The pricing services or index providers typically use discounted cash flow models that incorporate benchmark curves for treasury, swap and high issuance credits. Credit spreads are developed from current market observations for like or similar securities. The Company generally classifies the fair values of its corporate securities in Level 2. The Company uses models that include unobservable inputs to price its corporate bank loan portfolio. As such, the fair values of the corporate bank loans are generally classified in Level 3.
|
•
|
Equity securities – These securities are generally priced by pricing services or index providers. Depending on the type of underlying equity security or equity fund, the securities are priced by pricing services or index providers based on quoted market prices in active markets or through a discounted cash flow model that incorporates benchmark curves for treasury, swap and credits for like or similar securities. The Company generally classifies the fair values of its equity securities in Level 1 or 2.
|
4.
|
Fair value measurement, cont'd.
|
•
|
Structured securities including agency and non-agency, residential and commercial mortgage-backed securities, asset-backed securities and collateralized loan and debt obligations – These securities are generally priced by broker/dealers. Broker/dealers may use current market trades for securities with similar qualities. If no such trades are available, inputs such as bid and offer, prepayment speeds, the U.S. treasury curve, swap curve and cash settlement may be used in a discounted cash flow model to determine the fair value of a security. The Company generally classifies the fair values of its structured securities in Level 2.
|
•
|
Securities pledged under repurchase agreements - These securities have been sold under a repurchase agreement and consist of U.S. government and agencies and residential mortgage-backed securities. Please refer to the pricing methods used for these types of securities.
|
•
|
Other assets and liabilities – A portion of other assets and liabilities are composed of a variety of derivative instruments used to enhance the efficiency of the investment portfolio and economically hedge certain risks. These instruments are generally priced by pricing services, broker/dealers and/or recent trading activity. The market value approach valuation technique is used to estimate the fair value for these derivatives based on significant observable market inputs. Certain derivative instruments are priced by pricing services based on quoted market prices in active markets. These derivative instruments are generally classified in Level 1. Other derivative instruments are priced using industry valuation models and are considered Level 2, as the inputs to the valuation model are based on observable market inputs. Also included in this line item are proprietary, non-exchange traded derivative-based risk management products primarily used to address weather and energy risks. The trading market for these weather and energy derivatives are generally linked to energy and agriculture commodities, weather and other natural phenomena. In instances where market prices are not available, the Company uses industry or internally developed valuation techniques such as spread option, Black Scholes, quanto and simulation modeling to determine fair value and classifies these in Level 3. These models may reference prices for similar instruments.
|
•
|
Debt – Outstanding debt consists of the Company's 7.0% Senior Notes due July 15, 2034, the 4.7% Senior Notes due October 15, 2022 (together, the "Senior Notes") and the Trust Preferred Securities. The fair values of the Senior Notes were obtained from a third party pricing service and pricing was based on the spread above the risk-free yield curve. The fair values of the Trust Preferred Securities were based on the spread above the risk-free yield curve. These spreads are generally obtained from the new issue market, secondary trading and broker-dealer quotes. As these spreads and the yields for the risk-free yield curve are observable market inputs, the fair values of the Senior Notes and the Trust Preferred Securities are classified in Level 2.
|
4.
|
Fair value measurement, cont'd.
|
|
Fair Value Measurements at September 30, 2016
|
||||||||||||||
|
Total at September 30, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies securities
|
$
|
743,504
|
|
|
$
|
51,668
|
|
|
$
|
691,836
|
|
|
$
|
—
|
|
U.S. state and municipal securities
|
15,975
|
|
|
—
|
|
|
15,975
|
|
|
—
|
|
||||
Foreign government securities
|
213,076
|
|
|
—
|
|
|
213,076
|
|
|
—
|
|
||||
Government guaranteed corporate securities
|
41,437
|
|
|
—
|
|
|
41,437
|
|
|
—
|
|
||||
Corporate securities
|
2,072,074
|
|
|
—
|
|
|
1,893,278
|
|
|
178,796
|
|
||||
Residential mortgage-backed securities
|
1,329,069
|
|
|
—
|
|
|
1,329,069
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
714,142
|
|
|
—
|
|
|
712,448
|
|
|
1,694
|
|
||||
Collateralized loan and debt obligations
|
393,922
|
|
|
—
|
|
|
393,865
|
|
|
57
|
|
||||
Asset-backed securities
|
466,873
|
|
|
—
|
|
|
466,873
|
|
|
—
|
|
||||
Total fixed maturity investments
|
5,990,072
|
|
|
51,668
|
|
|
5,757,857
|
|
|
180,547
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
||||||||
Equity investments
|
351,367
|
|
|
163,412
|
|
|
187,955
|
|
|
—
|
|
||||
Emerging market debt funds
|
87,725
|
|
|
—
|
|
|
87,725
|
|
|
—
|
|
||||
Convertible funds
|
48,644
|
|
|
—
|
|
|
48,644
|
|
|
—
|
|
||||
Preferred equity investments
|
14,618
|
|
|
—
|
|
|
14,618
|
|
|
—
|
|
||||
Short-term fixed income fund
|
17,168
|
|
|
17,168
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
519,522
|
|
|
180,580
|
|
|
338,942
|
|
|
—
|
|
||||
Short-term investments
|
261,388
|
|
|
—
|
|
|
261,388
|
|
|
—
|
|
||||
Securities pledged under repurchase agreements (see Note 10)
|
124,303
|
|
|
—
|
|
|
124,303
|
|
|
—
|
|
||||
Other assets (see Note 7)
|
159,273
|
|
|
2,331
|
|
|
124,373
|
|
|
32,569
|
|
||||
Total assets
|
$
|
7,054,558
|
|
|
$
|
234,579
|
|
|
$
|
6,606,863
|
|
|
$
|
213,116
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other liabilities (see Note 7)
|
$
|
97,958
|
|
|
$
|
2,942
|
|
|
$
|
67,075
|
|
|
$
|
27,941
|
|
Debt
|
799,393
|
|
|
—
|
|
|
799,393
|
|
|
—
|
|
||||
Total liabilities
|
$
|
897,351
|
|
|
$
|
2,942
|
|
|
$
|
866,468
|
|
|
$
|
27,941
|
|
4.
|
Fair value measurement, cont'd.
|
|
Fair Value Measurements at December 31, 2015
|
||||||||||||||
|
Total at December 31, 2015
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity investments
|
|
|
|
|
|
|
|
||||||||
U.S. government and agencies securities
|
$
|
818,468
|
|
|
$
|
37,741
|
|
|
$
|
780,727
|
|
|
$
|
—
|
|
U.S. state and municipal securities
|
22,406
|
|
|
—
|
|
|
22,406
|
|
|
—
|
|
||||
Foreign government securities
|
160,976
|
|
|
—
|
|
|
160,976
|
|
|
—
|
|
||||
Government guaranteed corporate securities
|
57,753
|
|
|
—
|
|
|
57,753
|
|
|
—
|
|
||||
Corporate securities
|
1,849,934
|
|
|
—
|
|
|
1,739,002
|
|
|
110,932
|
|
||||
Residential mortgage-backed securities
|
1,311,373
|
|
|
—
|
|
|
1,311,373
|
|
|
—
|
|
||||
Commercial mortgage-backed securities
|
812,886
|
|
|
—
|
|
|
812,174
|
|
|
712
|
|
||||
Collateralized loan and debt obligations
|
405,128
|
|
|
—
|
|
|
404,319
|
|
|
809
|
|
||||
Asset-backed securities
|
507,255
|
|
|
—
|
|
|
507,255
|
|
|
—
|
|
||||
Total fixed maturity investments
|
5,946,179
|
|
|
37,741
|
|
|
5,795,985
|
|
|
112,453
|
|
||||
Equity securities
|
|
|
|
|
|
|
|
||||||||
Equity investments
|
393,829
|
|
|
260,330
|
|
|
133,499
|
|
|
—
|
|
||||
Emerging market debt funds
|
56,421
|
|
|
—
|
|
|
56,421
|
|
|
—
|
|
||||
Convertible funds
|
46,185
|
|
|
—
|
|
|
46,185
|
|
|
—
|
|
||||
Preferred equity investments
|
17,623
|
|
|
—
|
|
|
17,623
|
|
|
—
|
|
||||
Short-term fixed income fund
|
14,756
|
|
|
14,756
|
|
|
—
|
|
|
—
|
|
||||
Total equity securities
|
528,814
|
|
|
275,086
|
|
|
253,728
|
|
|
—
|
|
||||
Short-term investments
|
419,796
|
|
|
—
|
|
|
419,796
|
|
|
—
|
|
||||
Other assets (see Note 7)
|
68,892
|
|
|
4
|
|
|
27,385
|
|
|
41,503
|
|
||||
Total assets
|
$
|
6,963,681
|
|
|
$
|
312,831
|
|
|
$
|
6,496,894
|
|
|
$
|
153,956
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Other liabilities (see Note 7)
|
$
|
46,088
|
|
|
$
|
—
|
|
|
$
|
4,059
|
|
|
$
|
42,029
|
|
Debt
|
737,974
|
|
|
—
|
|
|
737,974
|
|
|
—
|
|
||||
Total liabilities
|
$
|
784,062
|
|
|
$
|
—
|
|
|
$
|
742,033
|
|
|
$
|
42,029
|
|
4.
|
Fair value measurement, cont'd.
|
4.
|
Fair value measurement, cont'd.
|
|
September 30, 2016
|
||||||||||||||
|
Fair Value
(Level 3)
|
|
Valuation
Techniques
|
|
Inputs
|
|
Range
|
||||||||
|
|
|
|
Low
|
|
High
|
|||||||||
|
(Commodity curve in U.S. dollars in thousands)
|
||||||||||||||
Net weather and energy related derivative assets
|
$
|
4,628
|
|
|
Historical
Analysis and Simulation
|
|
Correlation
|
|
0
|
|
|
1
|
|
||
|
|
|
|
|
Temperature
|
|
-15F
|
|
|
115F
|
|
||||
|
|
|
|
|
Composite weather variable
|
|
-25 deg.
|
|
|
45 deg.
|
|
||||
|
|
|
|
|
Rainfall
|
|
0"
|
|
|
2"
|
|
||||
|
|
|
|
|
Windspeed
|
|
0.01 m/s
|
|
|
25 m/s
|
|
||||
|
|
|
|
|
Wave height
|
|
0 m
|
|
|
25 m
|
|
||||
|
|
|
|
|
Commodity curve
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
|
December 31, 2015
|
||||||||||||||
|
Fair Value
(Level 3)
|
|
Valuation
Techniques
|
|
Inputs
|
|
Range
|
||||||||
|
|
|
|
Low
|
|
High
|
|||||||||
|
(Commodity curve in U.S. dollars in thousands)
|
||||||||||||||
Net weather and energy related derivative liabilities
|
$
|
526
|
|
|
Historical
Analysis and Simulation
|
|
Correlation
|
|
0
|
|
|
1
|
|
||
|
|
|
|
|
Temperature
|
|
-15F
|
|
|
115F
|
|
||||
|
|
|
|
|
Composite weather variable
|
|
-25 deg.
|
|
|
45 deg.
|
|
||||
|
|
|
|
|
Rainfall
|
|
0"
|
|
|
2"
|
|
||||
|
|
|
|
|
Windspeed
|
|
0.01 m/s
|
|
|
25 m/s
|
|
||||
|
|
|
|
|
Snowfall
|
|
0"
|
|
|
18"
|
|
||||
|
|
|
|
|
Cyclone (category)
|
|
0
|
|
|
5
|
|
||||
|
|
|
|
|
Commodity curve
|
|
$
|
—
|
|
|
$
|
13
|
|
4.
|
Fair value measurement, cont'd.
|
|
Three Months Ended September 30, 2016
|
||||||||||||||
|
Fixed maturity
investments
|
|
Other assets
|
|
Total assets
|
|
Other
liabilities
|
||||||||
Level 3, beginning of period
|
$
|
109,025
|
|
|
$
|
34,357
|
|
|
$
|
143,382
|
|
|
$
|
(21,549
|
)
|
Total realized and unrealized gains included in earnings
|
1,585
|
|
|
—
|
|
|
1,585
|
|
|
—
|
|
||||
Total realized and unrealized losses included in earnings
|
(117
|
)
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
||||
Total income included in other underwriting (loss) income
|
—
|
|
|
1,651
|
|
|
1,651
|
|
|
7,186
|
|
||||
Total loss included in other underwriting (loss) income
|
—
|
|
|
(3,762
|
)
|
|
(3,762
|
)
|
|
(3,185
|
)
|
||||
Change in unrealized gains included in other comprehensive income (loss)
|
60
|
|
|
—
|
|
|
60
|
|
|
—
|
|
||||
Change in unrealized losses included in other comprehensive income (loss)
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
||||
Purchases
|
15,004
|
|
|
—
|
|
|
15,004
|
|
|
—
|
|
||||
Issues
|
—
|
|
|
9,378
|
|
|
9,378
|
|
|
(14,035
|
)
|
||||
Sales
|
(7,831
|
)
|
|
—
|
|
|
(7,831
|
)
|
|
—
|
|
||||
Settlements
|
—
|
|
|
(9,055
|
)
|
|
(9,055
|
)
|
|
3,642
|
|
||||
Transfers into Level 3
|
62,867
|
|
|
—
|
|
|
62,867
|
|
|
—
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Level 3, end of period
|
$
|
180,547
|
|
|
$
|
32,569
|
|
|
$
|
213,116
|
|
|
$
|
(27,941
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended September 30, 2015
|
||||||||||||||
|
Fixed maturity
investments
|
|
Other assets
|
|
Total assets
|
|
Other
liabilities
|
||||||||
Level 3, beginning of period
|
$
|
4,707
|
|
|
$
|
23,691
|
|
|
$
|
28,398
|
|
|
$
|
(22,184
|
)
|
Total realized and unrealized losses included in earnings
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
||||
Total income included in other underwriting (loss) income
|
—
|
|
|
1,589
|
|
|
1,589
|
|
|
14,745
|
|
||||
Total loss included in other underwriting (loss) income
|
—
|
|
|
(11,794
|
)
|
|
(11,794
|
)
|
|
(2,552
|
)
|
||||
Change in unrealized gains included in other comprehensive income (loss)
|
85
|
|
|
—
|
|
|
85
|
|
|
—
|
|
||||
Change in unrealized losses included in other comprehensive income (loss)
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
||||
Purchases
|
—
|
|
|
1,250
|
|
|
1,250
|
|
|
(737
|
)
|
||||
Issues
|
—
|
|
|
5,441
|
|
|
5,441
|
|
|
(9,058
|
)
|
||||
Sales
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
61
|
|
||||
Transfers into Level 3
|
128,880
|
|
|
—
|
|
|
128,880
|
|
|
—
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Level 3, end of period
|
$
|
133,376
|
|
|
$
|
20,177
|
|
|
$
|
153,553
|
|
|
$
|
(19,725
|
)
|
4.
|
Fair value measurement, cont'd.
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||
|
Fixed maturity
investments
|
|
Other assets
|
|
Total assets
|
|
Other
liabilities
|
||||||||
Level 3, beginning of period
|
$
|
112,453
|
|
|
$
|
41,503
|
|
|
$
|
153,956
|
|
|
$
|
(42,029
|
)
|
Total realized and unrealized gains included in earnings
|
3,901
|
|
|
—
|
|
|
3,901
|
|
|
—
|
|
||||
Total realized and unrealized losses included in earnings
|
(2,464
|
)
|
|
—
|
|
|
(2,464
|
)
|
|
—
|
|
||||
Total income included in other underwriting (loss) income
|
—
|
|
|
5,199
|
|
|
5,199
|
|
|
18,305
|
|
||||
Total loss included in other underwriting (loss) income
|
—
|
|
|
(11,544
|
)
|
|
(11,544
|
)
|
|
(8,541
|
)
|
||||
Change in unrealized gains included in other comprehensive income (loss)
|
384
|
|
|
—
|
|
|
384
|
|
|
—
|
|
||||
Change in unrealized losses included in other comprehensive income (loss)
|
(121
|
)
|
|
—
|
|
|
(121
|
)
|
|
—
|
|
||||
Purchases
|
16,678
|
|
|
—
|
|
|
16,678
|
|
|
—
|
|
||||
Issues
|
—
|
|
|
22,964
|
|
|
22,964
|
|
|
(32,780
|
)
|
||||
Sales
|
(24,100
|
)
|
|
—
|
|
|
(24,100
|
)
|
|
—
|
|
||||
Settlements
|
—
|
|
|
(25,553
|
)
|
|
(25,553
|
)
|
|
37,104
|
|
||||
Transfers into Level 3
|
79,332
|
|
|
—
|
|
|
79,332
|
|
|
—
|
|
||||
Transfers out of Level 3
|
(5,516
|
)
|
|
—
|
|
|
(5,516
|
)
|
|
—
|
|
||||
Level 3, end of period
|
$
|
180,547
|
|
|
$
|
32,569
|
|
|
$
|
213,116
|
|
|
$
|
(27,941
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended September 30, 2015
|
||||||||||||||
|
Fixed maturity
investments
|
|
Other assets
|
|
Total assets
|
|
Other
liabilities
|
||||||||
Level 3, beginning of period
|
$
|
12,290
|
|
|
$
|
25,615
|
|
|
$
|
37,905
|
|
|
$
|
(35,366
|
)
|
Total realized and unrealized gains included in earnings
|
113
|
|
|
—
|
|
|
113
|
|
|
—
|
|
||||
Total realized and unrealized losses included in earnings
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
||||
Total income included in other underwriting (loss) income
|
—
|
|
|
7,184
|
|
|
7,184
|
|
|
35,610
|
|
||||
Total loss included in other underwriting (loss) income
|
—
|
|
|
(24,788
|
)
|
|
(24,788
|
)
|
|
(9,772
|
)
|
||||
Change in unrealized gains included in other comprehensive income (loss)
|
109
|
|
|
—
|
|
|
109
|
|
|
—
|
|
||||
Change in unrealized losses included in other comprehensive income (loss)
|
(228
|
)
|
|
—
|
|
|
(228
|
)
|
|
—
|
|
||||
Purchases
|
—
|
|
|
1,250
|
|
|
1,250
|
|
|
(737
|
)
|
||||
Issues
|
—
|
|
|
17,774
|
|
|
17,774
|
|
|
(27,806
|
)
|
||||
Sales
|
(547
|
)
|
|
—
|
|
|
(547
|
)
|
|
—
|
|
||||
Settlements
|
—
|
|
|
(6,858
|
)
|
|
(6,858
|
)
|
|
18,346
|
|
||||
Transfers into Level 3
|
130,850
|
|
|
—
|
|
|
130,850
|
|
|
—
|
|
||||
Transfers out of Level 3
|
(9,176
|
)
|
|
—
|
|
|
(9,176
|
)
|
|
—
|
|
||||
Level 3, end of period
|
$
|
133,376
|
|
|
$
|
20,177
|
|
|
$
|
153,553
|
|
|
$
|
(19,725
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income available to common and participating common shareholders
|
$
|
130,070
|
|
|
$
|
43,635
|
|
|
$
|
313,069
|
|
|
$
|
219,944
|
|
Less amount allocated to participating common
shareholders
(1)
|
(2,607
|
)
|
|
(1,251
|
)
|
|
(6,662
|
)
|
|
(6,442
|
)
|
||||
Net income allocated to common shareholders
|
$
|
127,463
|
|
|
$
|
42,384
|
|
|
$
|
306,407
|
|
|
$
|
213,502
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average shares - basic
|
66,185,375
|
|
|
57,923,044
|
|
|
65,920,276
|
|
|
48,453,368
|
|
||||
Share equivalents:
|
|
|
|
|
|
|
|
||||||||
Options
|
37,597
|
|
|
111,760
|
|
|
53,438
|
|
|
137,366
|
|
||||
Restricted shares
|
18,976
|
|
|
11,344
|
|
|
8,699
|
|
|
1,367
|
|
||||
Weighted average shares - diluted
|
66,241,948
|
|
|
58,046,148
|
|
|
65,982,413
|
|
|
48,592,101
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
1.93
|
|
|
$
|
0.73
|
|
|
$
|
4.65
|
|
|
$
|
4.41
|
|
Diluted earnings per common share
|
$
|
1.92
|
|
|
$
|
0.73
|
|
|
$
|
4.64
|
|
|
$
|
4.39
|
|
(1)
|
Represents earnings attributable to holders of unvested restricted shares and restricted share units issued under the Company's equity compensation plan that are considered participating. In periods of loss, no losses are allocated to participating common shareholders (unvested restricted shares and restricted share units).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Dividends declared per Series A preferred share
|
$
|
—
|
|
|
$
|
0.484375
|
|
|
$
|
—
|
|
|
$
|
1.453125
|
|
Dividends declared per Series B preferred share
|
$
|
—
|
|
|
$
|
0.468750
|
|
|
$
|
0.864580
|
|
|
$
|
1.406250
|
|
Dividends declared per Series C preferred share
|
$
|
396.8750
|
|
|
$
|
—
|
|
|
$
|
1,283.2292
|
|
|
$
|
—
|
|
Dividends declared per common share
|
$
|
0.38
|
|
|
$
|
0.35
|
|
|
$
|
1.14
|
|
|
$
|
1.05
|
|
6.
|
Accumulated other comprehensive income (loss)
|
|
For the Three Months Ended September 30, 2016
|
||||||||||||||
|
Losses on cash flow hedges
|
|
Unrealized gains (losses) on available for sale securities
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1,634
|
)
|
|
$
|
103,957
|
|
|
$
|
(82,374
|
)
|
|
$
|
19,949
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
24,799
|
|
|
(13,114
|
)
|
|
11,685
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
(1)
|
22
|
|
|
(3,663
|
)
|
|
—
|
|
|
(3,641
|
)
|
||||
Net current period other comprehensive income (loss)
|
22
|
|
|
21,136
|
|
|
(13,114
|
)
|
|
8,044
|
|
||||
Ending balance
|
$
|
(1,612
|
)
|
|
$
|
125,093
|
|
|
$
|
(95,488
|
)
|
|
$
|
27,993
|
|
|
For the Three Months Ended September 30, 2015
|
||||||||||||||
|
Losses on cash flow hedges
|
|
Unrealized gains (losses) on available for sale securities
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1,722
|
)
|
|
43,610
|
|
|
$
|
(4,923
|
)
|
|
$
|
36,965
|
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(18,258
|
)
|
|
(15,625
|
)
|
|
(33,883
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
(1)
|
22
|
|
|
(11,648
|
)
|
|
—
|
|
|
(11,626
|
)
|
||||
Net current period other comprehensive income (loss)
|
22
|
|
|
(29,906
|
)
|
|
(15,625
|
)
|
|
(45,509
|
)
|
||||
Ending balance
|
$
|
(1,700
|
)
|
|
$
|
13,704
|
|
|
$
|
(20,548
|
)
|
|
$
|
(8,544
|
)
|
6.
|
Accumulated other comprehensive income (loss), cont'd.
|
|
For the Nine Months Ended September 30, 2016
|
||||||||||||||
|
Losses on cash flow hedges
|
|
Unrealized gains (losses) on available for sale securities
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1,678
|
)
|
|
$
|
(12,638
|
)
|
|
$
|
(32,318
|
)
|
|
$
|
(46,634
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
116,722
|
|
|
(63,170
|
)
|
|
53,552
|
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
(1)
|
66
|
|
|
21,009
|
|
|
—
|
|
|
21,075
|
|
||||
Net current period other comprehensive income (loss)
|
66
|
|
|
137,731
|
|
|
(63,170
|
)
|
|
74,627
|
|
||||
Ending balance
|
$
|
(1,612
|
)
|
|
$
|
125,093
|
|
|
$
|
(95,488
|
)
|
|
$
|
27,993
|
|
|
For the Nine Months Ended September 30, 2015
|
||||||||||||||
|
Losses on cash flow hedges
|
|
Unrealized gains (losses)
on available for sale securities
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1,766
|
)
|
|
$
|
86,100
|
|
|
$
|
(7,628
|
)
|
|
$
|
76,706
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
(35,195
|
)
|
|
(12,920
|
)
|
|
(48,115
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income (loss)
(1)
|
66
|
|
|
(37,201
|
)
|
|
—
|
|
|
(37,135
|
)
|
||||
Net current period other comprehensive income (loss)
|
66
|
|
|
(72,396
|
)
|
|
(12,920
|
)
|
|
(85,250
|
)
|
||||
Ending balance
|
$
|
(1,700
|
)
|
|
$
|
13,704
|
|
|
$
|
(20,548
|
)
|
|
$
|
(8,544
|
)
|
6.
|
Accumulated other comprehensive income (loss), cont'd.
|
Three Months Ended September 30, 2016
|
||||||
Details about accumulated other comprehensive
income (loss) components
|
|
Amount reclassified
from accumulated other
comprehensive income (loss)
|
|
Affected line item in the Unaudited
Condensed Consolidated Statements of
Income and Comprehensive Income
|
||
Losses on cash flow hedges - Debt
|
|
$
|
22
|
|
|
Interest expense
|
|
|
22
|
|
|
Total before income taxes
|
|
|
|
—
|
|
|
Income tax expense
|
|
|
|
$
|
22
|
|
|
Total net of income taxes
|
|
|
|
|
|
||
Unrealized gains on available for sale securities
|
|
$
|
(4,476
|
)
|
|
Net realized and unrealized gains
|
|
|
183
|
|
|
Net impairment losses recognized in earnings
|
|
|
|
(4,293
|
)
|
|
Total before income taxes
|
|
|
|
630
|
|
|
Income tax expense
|
|
|
|
$
|
(3,663
|
)
|
|
Total net of income taxes
|
|
|
|
|
|
||
Three Months Ended September 30, 2015
|
||||||
Details about accumulated other comprehensive
income (loss) components |
|
Amount reclassified
from accumulated other comprehensive income (loss) |
|
Affected line item in the Unaudited
Condensed Consolidated Statements of
Income and Comprehensive Income
|
||
Losses on cash flow hedges - Debt
|
|
$
|
22
|
|
|
Interest expense
|
|
|
22
|
|
|
Total before income taxes
|
|
|
|
—
|
|
|
Income tax expense
|
|
|
|
$
|
22
|
|
|
Total net of income taxes
|
|
|
|
|
|
||
Unrealized gains on available for sale securities
|
|
$
|
(11,871
|
)
|
|
Net realized and unrealized gains
|
|
|
38
|
|
|
Net impairment losses recognized in earnings
|
|
|
|
(11,833
|
)
|
|
Total before income taxes
|
|
|
|
185
|
|
|
Income tax expense
|
|
|
|
$
|
(11,648
|
)
|
|
Total net of income taxes
|
6.
|
Accumulated other comprehensive income (loss), cont'd.
|
Nine Months Ended September 30, 2016
|
||||||
Details about accumulated other comprehensive
income (loss) components
|
|
Amount reclassified
from accumulated other
comprehensive income (loss)
|
|
Affected line item in the Unaudited
Condensed Consolidated Statements of
Income and Comprehensive Income
|
||
Losses on cash flow hedges - Debt
|
|
$
|
66
|
|
|
Interest expense
|
|
|
66
|
|
|
Total before income taxes
|
|
|
|
—
|
|
|
Income tax expense
|
|
|
|
$
|
66
|
|
|
Total net of income taxes
|
|
|
|
|
|
||
Unrealized losses on available for sale securities
|
|
$
|
9,620
|
|
|
Net realized and unrealized losses
|
|
|
10,647
|
|
|
Net impairment losses recognized in earnings
|
|
|
|
20,267
|
|
|
Total before income taxes
|
|
|
|
742
|
|
|
Income tax expense
|
|
|
|
$
|
21,009
|
|
|
Total net of income taxes
|
|
|
|
|
|
||
Nine Months Ended September 30, 2015
|
||||||
Details about accumulated other comprehensive
income (loss) components |
|
Amount reclassified
from accumulated other comprehensive income (loss) |
|
Affected line item in the Unaudited
Condensed Consolidated Statements of
Income and Comprehensive Income
|
||
Losses on cash flow hedges - Debt
|
|
$
|
66
|
|
|
Interest expense
|
|
|
66
|
|
|
Total before income taxes
|
|
|
|
—
|
|
|
Income tax expense
|
|
|
|
$
|
66
|
|
|
Total net of income taxes
|
|
|
|
|
|
||
Unrealized gains on available for sale securities
|
|
$
|
(39,230
|
)
|
|
Net realized and unrealized gains
|
|
|
1,111
|
|
|
Net impairment losses recognized in earnings
|
|
|
|
(38,119
|
)
|
|
Total before income taxes
|
|
|
|
918
|
|
|
Income tax expense
|
|
|
|
$
|
(37,201
|
)
|
|
Total net of income taxes
|
7.
|
Derivatives
|
7.
|
Derivatives, cont'd.
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||
|
Fair
Value
|
|
Notional
Principal
Amount
|
|
Fair
Value
|
|
Notional
Principal
Amount
|
||||||||
Derivatives recorded in other assets
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forward contracts
|
$
|
213
|
|
|
$
|
32,895
|
|
|
$
|
425
|
|
|
$
|
38,818
|
|
Credit default swaps
|
117
|
|
|
3,241
|
|
|
36
|
|
|
4,225
|
|
||||
ILWs
|
2,336
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
||||
TBAs
|
121,707
|
|
|
115,900
|
|
|
26,924
|
|
|
25,700
|
|
||||
Energy and weather contracts
|
34,900
|
|
|
96,859
|
|
|
41,507
|
|
|
70,388
|
|
||||
Total recorded in other assets
|
$
|
159,273
|
|
|
|
|
$
|
68,892
|
|
|
|
||||
Derivatives recorded in other liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forward contracts
|
$
|
118
|
|
|
$
|
41,736
|
|
|
$
|
372
|
|
|
$
|
30,400
|
|
Credit default swaps
|
31
|
|
|
2,059
|
|
|
276
|
|
|
7,800
|
|
||||
Interest rate swaps
|
110
|
|
|
1,100
|
|
|
7
|
|
|
42,000
|
|
||||
Interest rate futures
|
—
|
|
|
—
|
|
|
8
|
|
|
54,488
|
|
||||
ILWs
|
733
|
|
|
14,209
|
|
|
259
|
|
|
19,500
|
|
||||
LIBOR swap
|
114
|
|
|
100,000
|
|
|
233
|
|
|
100,000
|
|
||||
TBAs
|
61,991
|
|
|
59,000
|
|
|
—
|
|
|
—
|
|
||||
Loss development cover
|
3,978
|
|
|
24,426
|
|
|
2,904
|
|
|
22,322
|
|
||||
Energy and weather contracts
|
30,883
|
|
|
153,344
|
|
|
42,029
|
|
|
148,325
|
|
||||
Total recorded in other liabilities
|
$
|
97,958
|
|
|
|
|
$
|
46,088
|
|
|
|
||||
Net derivative asset
|
$
|
61,315
|
|
|
|
|
$
|
22,804
|
|
|
|
7.
|
Derivatives, cont'd.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total (losses) gains included in net foreign exchange (gains) losses from foreign exchange forward contracts
|
$
|
(231
|
)
|
|
$
|
155
|
|
|
$
|
(732
|
)
|
|
$
|
1,281
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate futures
|
—
|
|
|
(78
|
)
|
|
(227
|
)
|
|
17
|
|
||||
Credit default swaps
|
70
|
|
|
(143
|
)
|
|
(12
|
)
|
|
(134
|
)
|
||||
Interest rate swaps
|
(69
|
)
|
|
(705
|
)
|
|
(117
|
)
|
|
(940
|
)
|
||||
Interest rate swaptions
|
—
|
|
|
28
|
|
|
(27
|
)
|
|
56
|
|
||||
ILWs
|
(958
|
)
|
|
(652
|
)
|
|
(898
|
)
|
|
(652
|
)
|
||||
LIBOR swap
|
232
|
|
|
(173
|
)
|
|
120
|
|
|
(173
|
)
|
||||
TBAs
|
270
|
|
|
(82
|
)
|
|
1,232
|
|
|
531
|
|
||||
Total (losses) gains included in net realized and unrealized gains
|
(455
|
)
|
|
(1,805
|
)
|
|
71
|
|
|
(1,295
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Energy and weather contracts
|
1,486
|
|
|
1,988
|
|
|
2,808
|
|
|
8,030
|
|
||||
Loss development cover
|
(618
|
)
|
|
(465
|
)
|
|
(2,104
|
)
|
|
(465
|
)
|
||||
Total gains included in other underwriting (loss) income
|
868
|
|
|
1,523
|
|
|
704
|
|
|
7,565
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total gains (losses) from derivatives
|
$
|
182
|
|
|
$
|
(127
|
)
|
|
$
|
43
|
|
|
$
|
7,551
|
|
8.
|
Stock-based employee compensation and other stock plans
|
8.
|
Stock-based employee compensation and other stock plans, cont'd.
|
9.
|
Segment reporting
|
9.
|
Segment reporting, cont'd.
|
|
Three Months Ended September 30, 2016
|
|
||||||||||
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
568,277
|
|
|
$
|
192,410
|
|
|
$
|
760,687
|
|
|
Ceded premiums written
|
(365,573
|
)
|
|
(46,128
|
)
|
|
(411,701
|
)
|
|
|||
Net premiums written
|
202,704
|
|
|
146,282
|
|
|
348,986
|
|
|
|||
Net premiums earned
|
272,603
|
|
|
337,553
|
|
|
610,156
|
|
|
|||
Other underwriting loss
|
—
|
|
|
(466
|
)
|
|
(466
|
)
|
|
|||
|
272,603
|
|
|
337,087
|
|
|
609,690
|
|
|
|||
Expenses
|
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
202,717
|
|
|
128,745
|
|
|
331,462
|
|
|
|||
Acquisition expenses
|
41,773
|
|
|
79,618
|
|
|
121,391
|
|
|
|||
General and administrative expenses
|
40,658
|
|
|
27,080
|
|
|
67,738
|
|
|
|||
|
285,148
|
|
|
235,443
|
|
|
520,591
|
|
|
|||
Underwriting (loss) income
|
$
|
(12,545
|
)
|
|
$
|
101,644
|
|
|
89,099
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income
|
|
|
|
|
62,236
|
|
|
|||||
Corporate expenses
|
|
|
|
|
(11,952
|
)
|
|
|||||
Net foreign exchange gains
|
|
|
|
|
18,576
|
|
|
|||||
Net realized and unrealized gains
|
|
|
|
|
13,405
|
|
|
|||||
Net impairment losses recognized in earnings
|
|
|
|
|
(183
|
)
|
|
|||||
Amortization of intangibles
|
|
|
|
|
(21,154
|
)
|
|
|||||
Interest expense
|
|
|
|
|
(10,826
|
)
|
|
|||||
Income before income taxes
|
|
|
|
|
$
|
139,201
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net loss ratio
|
74.4
|
%
|
|
38.1
|
%
|
|
54.3
|
%
|
|
|||
Acquisition expense ratio
|
15.3
|
%
|
|
23.6
|
%
|
|
19.9
|
%
|
|
|||
General and administrative expense ratio
|
14.9
|
%
|
|
8.0
|
%
|
|
13.1
|
%
|
(1)
|
|||
Combined ratio
|
104.6
|
%
|
|
69.7
|
%
|
|
87.3
|
%
|
|
|||
|
|
|
|
|
|
|
||||||
Reserve for losses and loss expenses
|
$
|
2,712,403
|
|
|
$
|
2,095,465
|
|
|
$
|
4,807,868
|
|
|
9.
|
Segment reporting, cont'd.
|
|
Three Months Ended September 30, 2015
|
|
||||||||||
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
448,563
|
|
|
$
|
194,034
|
|
|
$
|
642,597
|
|
|
Ceded premiums written
|
(273,626
|
)
|
|
(32,281
|
)
|
|
(305,907
|
)
|
|
|||
Net premiums written
|
174,937
|
|
|
161,753
|
|
|
336,690
|
|
|
|||
Net premiums earned
|
234,143
|
|
|
322,860
|
|
|
557,003
|
|
|
|||
Other underwriting income
|
—
|
|
|
227
|
|
|
227
|
|
|
|||
|
234,143
|
|
|
323,087
|
|
|
557,230
|
|
|
|||
Expenses
|
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
139,603
|
|
|
124,390
|
|
|
263,993
|
|
|
|||
Acquisition expenses
|
24,375
|
|
|
66,082
|
|
|
90,457
|
|
|
|||
General and administrative expenses
|
31,880
|
|
|
28,913
|
|
|
60,793
|
|
|
|||
|
195,858
|
|
|
219,385
|
|
|
415,243
|
|
|
|||
Underwriting income
|
$
|
38,285
|
|
|
$
|
103,702
|
|
|
141,987
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income
|
|
|
|
|
16,533
|
|
|
|||||
Corporate expenses
|
|
|
|
|
(74,308
|
)
|
|
|||||
Net foreign exchange losses
|
|
|
|
|
(8,621
|
)
|
|
|||||
Net realized and unrealized gains
|
|
|
|
|
5,029
|
|
|
|||||
Net impairment losses recognized in earnings
|
|
|
|
|
(38
|
)
|
|
|||||
Amortization of intangibles
|
|
|
|
|
(11,318
|
)
|
|
|||||
Interest expense
|
|
|
|
|
(12,324
|
)
|
|
|||||
Income before income taxes
|
|
|
|
|
$
|
56,940
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net loss ratio
|
59.6
|
%
|
|
38.5
|
%
|
|
47.4
|
%
|
|
|||
Acquisition expense ratio
|
10.4
|
%
|
|
20.5
|
%
|
|
16.2
|
%
|
|
|||
General and administrative expense ratio
|
13.6
|
%
|
|
9.0
|
%
|
|
24.3
|
%
|
(1)
|
|||
Combined ratio
|
83.6
|
%
|
|
68.0
|
%
|
|
87.9
|
%
|
|
|||
|
|
|
|
|
|
|
||||||
Reserve for losses and loss expenses
|
$
|
2,429,385
|
|
|
$
|
2,060,451
|
|
|
$
|
4,489,836
|
|
|
9.
|
Segment reporting, cont'd.
|
|
Gross
premiums
written
|
|
Net
premiums
written
|
|
Gross
premiums
written
|
|
Net
premiums
written
|
||||||||
Business Segment
|
2016
|
|
2016
|
|
2015
|
|
2015
|
||||||||
Insurance
|
|
|
|
|
|
|
|
||||||||
Agriculture
|
$
|
151,483
|
|
|
$
|
49,062
|
|
|
$
|
156,145
|
|
|
$
|
29,634
|
|
Casualty and other specialty
|
168,644
|
|
|
68,211
|
|
|
128,509
|
|
|
64,490
|
|
||||
Professional lines
|
97,432
|
|
|
30,328
|
|
|
80,069
|
|
|
37,479
|
|
||||
Property, marine/energy and aviation
|
150,718
|
|
|
55,103
|
|
|
83,840
|
|
|
43,334
|
|
||||
Total Insurance
|
568,277
|
|
|
202,704
|
|
|
448,563
|
|
|
174,937
|
|
||||
Reinsurance
|
|
|
|
|
|
|
|
||||||||
Catastrophe
|
51,040
|
|
|
32,696
|
|
|
40,660
|
|
|
14,814
|
|
||||
Property
|
41,975
|
|
|
40,882
|
|
|
53,423
|
|
|
52,887
|
|
||||
Casualty
|
35,438
|
|
|
35,772
|
|
|
42,802
|
|
|
42,802
|
|
||||
Professional lines
|
33,289
|
|
|
31,883
|
|
|
31,705
|
|
|
31,705
|
|
||||
Specialty
|
30,668
|
|
|
5,049
|
|
|
25,444
|
|
|
19,545
|
|
||||
Total Reinsurance
|
192,410
|
|
|
146,282
|
|
|
194,034
|
|
|
161,753
|
|
||||
Total
|
$
|
760,687
|
|
|
$
|
348,986
|
|
|
$
|
642,597
|
|
|
$
|
336,690
|
|
9.
|
Segment reporting, cont'd.
|
|
Nine Months Ended September 30, 2016
|
|
||||||||||
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
1,997,100
|
|
|
$
|
1,512,194
|
|
|
$
|
3,509,294
|
|
|
Ceded premiums written
|
(1,183,850
|
)
|
|
(319,848
|
)
|
|
(1,503,698
|
)
|
|
|||
Net premiums written
|
813,250
|
|
|
1,192,346
|
|
|
2,005,596
|
|
|
|||
Net premiums earned
|
745,956
|
|
|
1,016,999
|
|
|
1,762,955
|
|
|
|||
Other underwriting loss
|
—
|
|
|
(1,980
|
)
|
|
(1,980
|
)
|
|
|||
|
745,956
|
|
|
1,015,019
|
|
|
1,760,975
|
|
|
|||
Expenses
|
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
499,104
|
|
|
451,798
|
|
|
950,902
|
|
|
|||
Acquisition expenses
|
104,999
|
|
|
232,195
|
|
|
337,194
|
|
|
|||
General and administrative expenses
|
108,912
|
|
|
86,130
|
|
|
195,042
|
|
|
|||
|
713,015
|
|
|
770,123
|
|
|
1,483,138
|
|
|
|||
Underwriting income
|
$
|
32,941
|
|
|
$
|
244,896
|
|
|
277,837
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income
|
|
|
|
|
117,394
|
|
|
|||||
Corporate expenses
|
|
|
|
|
(35,553
|
)
|
|
|||||
Net foreign exchange gains
|
|
|
|
|
63,056
|
|
|
|||||
Net realized and unrealized gains
|
|
|
|
|
33,539
|
|
|
|||||
Net impairment losses recognized in earnings
|
|
|
|
|
(10,647
|
)
|
|
|||||
Amortization of intangibles
|
|
|
|
|
(63,471
|
)
|
|
|||||
Interest expense
|
|
|
|
|
(33,053
|
)
|
|
|||||
Income before income taxes
|
|
|
|
|
$
|
349,102
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net loss ratio
|
66.9
|
%
|
|
44.4
|
%
|
|
53.9
|
%
|
|
|||
Acquisition expense ratio
|
14.1
|
%
|
|
22.8
|
%
|
|
19.1
|
%
|
|
|||
General and administrative expense ratio
|
14.6
|
%
|
|
8.5
|
%
|
|
13.1
|
%
|
(1)
|
|||
Combined ratio
|
95.6
|
%
|
|
75.7
|
%
|
|
86.1
|
%
|
|
9.
|
Segment reporting, cont'd.
|
|
Nine Months Ended September 30, 2015
|
|
||||||||||
|
Insurance
|
|
Reinsurance
|
|
Total
|
|
||||||
Revenues
|
|
|
|
|
|
|
||||||
Gross premiums written
|
$
|
1,653,647
|
|
|
$
|
1,151,566
|
|
|
$
|
2,805,213
|
|
|
Ceded premiums written
|
(984,372
|
)
|
|
(160,114
|
)
|
|
(1,144,486
|
)
|
|
|||
Net premiums written
|
669,275
|
|
|
991,452
|
|
|
1,660,727
|
|
|
|||
Net premiums earned
|
571,467
|
|
|
833,530
|
|
|
1,404,997
|
|
|
|||
Other underwriting income
|
—
|
|
|
4,022
|
|
|
4,022
|
|
|
|||
|
571,467
|
|
|
837,552
|
|
|
1,409,019
|
|
|
|||
Expenses
|
|
|
|
|
|
|
||||||
Net losses and loss expenses
|
359,598
|
|
|
315,453
|
|
|
675,051
|
|
|
|||
Acquisition expenses
|
57,960
|
|
|
199,561
|
|
|
257,521
|
|
|
|||
General and administrative expenses
|
89,289
|
|
|
81,359
|
|
|
170,648
|
|
|
|||
|
506,847
|
|
|
596,373
|
|
|
1,103,220
|
|
|
|||
Underwriting income
|
$
|
64,620
|
|
|
$
|
241,179
|
|
|
305,799
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income
|
|
|
|
|
90,646
|
|
|
|||||
Corporate expenses
|
|
|
|
|
(99,210
|
)
|
|
|||||
Net foreign exchange losses
|
|
|
|
|
(29,154
|
)
|
|
|||||
Net realized and unrealized gains
|
|
|
|
|
32,898
|
|
|
|||||
Net impairment losses recognized in earnings
|
|
|
|
|
(1,111
|
)
|
|
|||||
Amortization of intangibles
|
|
|
|
|
(14,496
|
)
|
|
|||||
Interest expense
|
|
|
|
|
(30,445
|
)
|
|
|||||
Income before income taxes
|
|
|
|
|
$
|
254,927
|
|
|
||||
|
|
|
|
|
|
|
||||||
Net loss ratio
|
63.0
|
%
|
|
37.8
|
%
|
|
48.1
|
%
|
|
|||
Acquisition expense ratio
|
10.1
|
%
|
|
23.9
|
%
|
|
18.3
|
%
|
|
|||
General and administrative expense ratio
|
15.6
|
%
|
|
9.8
|
%
|
|
19.2
|
%
|
(1)
|
|||
Combined ratio
|
88.7
|
%
|
|
71.5
|
%
|
|
85.6
|
%
|
|
9.
|
Segment reporting, cont'd.
|
|
Gross
premiums
written
|
|
Net
premiums
written
|
|
Gross
premiums
written
|
|
Net
premiums
written
|
||||||||
Business Segment
|
2016
|
|
2016
|
|
2015
|
|
2015
|
||||||||
Insurance
|
|
|
|
|
|
|
|
||||||||
Agriculture
|
$
|
714,621
|
|
|
$
|
254,727
|
|
|
$
|
785,073
|
|
|
$
|
254,771
|
|
Casualty and other specialty
|
484,980
|
|
|
209,673
|
|
|
375,247
|
|
|
174,850
|
|
||||
Professional lines
|
297,526
|
|
|
124,866
|
|
|
231,565
|
|
|
105,153
|
|
||||
Property, marine/energy and aviation
|
499,973
|
|
|
223,984
|
|
|
261,762
|
|
|
134,501
|
|
||||
Total Insurance
|
1,997,100
|
|
|
813,250
|
|
|
1,653,647
|
|
|
669,275
|
|
||||
Reinsurance
|
|
|
|
|
|
|
|
||||||||
Catastrophe
|
488,865
|
|
|
319,245
|
|
|
304,900
|
|
|
190,579
|
|
||||
Property
|
229,087
|
|
|
222,242
|
|
|
209,683
|
|
|
206,454
|
|
||||
Casualty
|
216,421
|
|
|
215,412
|
|
|
149,032
|
|
|
149,032
|
|
||||
Professional lines
|
217,476
|
|
|
215,134
|
|
|
209,803
|
|
|
209,803
|
|
||||
Specialty
|
360,345
|
|
|
220,313
|
|
|
278,148
|
|
|
235,584
|
|
||||
Total Reinsurance
|
1,512,194
|
|
|
1,192,346
|
|
|
1,151,566
|
|
|
991,452
|
|
||||
Total
|
$
|
3,509,294
|
|
|
$
|
2,005,596
|
|
|
$
|
2,805,213
|
|
|
$
|
1,660,727
|
|
10.
|
Commitments and contingencies
|
Broker
|
|
2016
|
|
2015
|
||
Marsh & McLennan Companies, Inc.
|
|
20.6
|
%
|
|
24.9
|
%
|
Aon Benfield
|
|
14.4
|
%
|
|
15.8
|
%
|
Willis Companies
|
|
9.5
|
%
|
|
12.8
|
%
|
Total of largest brokers
|
|
44.5
|
%
|
|
53.5
|
%
|
10.
|
Commitments and contingencies, cont'd.
|
10.
|
Commitments and contingencies, cont'd.
|
10.
|
Commitments and contingencies, cont'd.
|
|
|
September 30, 2016
|
||
Collateral pledged under repurchase agreements
|
|
|
||
U.S. government and agencies securities
|
|
$
|
25,876
|
|
Residential mortgage-backed securities
|
|
98,427
|
|
|
|
|
$
|
124,303
|
|
Gross amount of recognized liabilities for repurchase agreements
|
|
$
|
120,997
|
|
Twelve months ended September 30,
|
|
Amount
|
||
2017
|
|
$
|
15,810
|
|
2018
|
|
16,194
|
|
|
2019
|
|
15,644
|
|
|
2020
|
|
14,874
|
|
|
2021
|
|
13,132
|
|
|
2022 and thereafter
|
|
17,425
|
|
|
|
|
$
|
93,079
|
|
10.
|
Commitments and contingencies, cont'd.
|
|
Three Months Ended
September 30, |
|
|
|||||||
|
2016
|
|
2015
|
|
Change
(1)
|
|||||
|
(U.S. dollars in thousands, except for ratios)
|
|||||||||
Revenues
|
|
|
|
|
|
|||||
Gross premiums written
|
$
|
760,687
|
|
|
$
|
642,597
|
|
|
18.4
|
%
|
Ceded premiums written
|
(411,701
|
)
|
|
(305,907
|
)
|
|
34.6
|
%
|
||
Net premiums written
|
348,986
|
|
|
336,690
|
|
|
3.7
|
%
|
||
Net premiums earned
|
610,156
|
|
|
557,003
|
|
|
9.5
|
%
|
||
Net investment income
|
62,236
|
|
|
16,533
|
|
|
276.4
|
%
|
||
Net realized and unrealized gains
|
13,405
|
|
|
5,029
|
|
|
166.6
|
%
|
||
Net impairment losses recognized in earnings
|
(183
|
)
|
|
(38
|
)
|
|
381.6
|
%
|
||
Other underwriting (loss) income
|
(466
|
)
|
|
227
|
|
|
NM
(2)
|
|
||
Total revenues
|
685,148
|
|
|
578,754
|
|
|
18.4
|
%
|
||
Expenses
|
|
|
|
|
|
|||||
Net losses and loss expenses
|
331,462
|
|
|
263,993
|
|
|
25.6
|
%
|
||
Acquisition expenses
|
121,391
|
|
|
90,457
|
|
|
34.2
|
%
|
||
General and administrative expenses
|
67,738
|
|
|
60,793
|
|
|
11.4
|
%
|
||
Corporate expenses
|
11,952
|
|
|
74,308
|
|
|
(83.9
|
)%
|
||
Amortization of intangibles
|
21,154
|
|
|
11,318
|
|
|
86.9
|
%
|
||
Net foreign exchange (gains) losses
|
(18,576
|
)
|
|
8,621
|
|
|
NM
(2)
|
|
||
Interest expense
|
10,826
|
|
|
12,324
|
|
|
(12.2
|
)%
|
||
Income tax (benefit) expense
|
(199
|
)
|
|
2,410
|
|
|
NM
(2)
|
|
||
Net income
|
139,400
|
|
|
54,530
|
|
|
155.6
|
%
|
||
Net income attributable to non-controlling interests
|
(5,679
|
)
|
|
(2,707
|
)
|
|
109.8
|
%
|
||
Preferred dividends
|
(3,651
|
)
|
|
(8,188
|
)
|
|
(55.4
|
)%
|
||
Net income available to Endurance Holdings' common and participating common shareholders
|
$
|
130,070
|
|
|
$
|
43,635
|
|
|
198.1
|
%
|
|
|
|
|
|
|
|||||
Net loss ratio
|
54.3
|
%
|
|
47.4
|
%
|
|
6.9
|
|
||
Acquisition expense ratio
|
19.9
|
%
|
|
16.2
|
%
|
|
3.7
|
|
||
General and administrative expense ratio
(3)
|
13.1
|
%
|
|
24.3
|
%
|
|
(11.2
|
)
|
||
Combined ratio
|
87.3
|
%
|
|
87.9
|
%
|
|
(0.6
|
)
|
(1)
|
With respect to ratios, changes show increase or decrease in percentage points.
|
(2)
|
Not meaningful.
|
(3)
|
General and administrative expense ratio includes general and administrative expenses and corporate expenses.
|
•
|
An increase in the property, marine/energy and aviation, professional lines and casualty and other specialty lines of business in the Insurance segment due primarily to business generated by new underwriting teams in the U.S. and the U.K. and new business resulting from the acquisition of Montpelier Re Holdings Ltd. ("Montpelier");
|
•
|
A decline in the agriculture line of business in the Insurance segment due to lower commodity prices;
|
•
|
An increase in the catastrophe line of business in the Reinsurance segment due to new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets and declines in signed lines;
|
•
|
An increase in the specialty line of business in the Reinsurance segment due to new business written and increased renewals, partially offset by non-renewal of policies that no longer met profitability targets;
|
•
|
A decline in the property line of business in the Reinsurance segment due to non-renewal of a large contract and declines in signed lines; and
|
•
|
A decline in the casualty line of business in the Reinsurance segment due to the timing of renewals for certain multi-year deals, partially offset by new business.
|
|
Three Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
(U.S. dollars in thousands)
|
||||||
Gross realized gains on investment sales
|
$
|
11,072
|
|
|
$
|
20,107
|
|
Gross realized losses on investment sales
|
(3,365
|
)
|
|
(8,236
|
)
|
||
Net unrealized gains (losses) on trading securities
|
6,153
|
|
|
(5,037
|
)
|
||
Change in fair value of investment-related derivative financial instruments
|
(455
|
)
|
|
(1,805
|
)
|
||
Net realized and unrealized gains
|
$
|
13,405
|
|
|
$
|
5,029
|
|
Three Months Ended September 30, 2016
|
|
Three Months Ended September 30, 2015
|
||||||||||||
Event Date
|
|
Event
|
|
Loss
|
|
Event Date
|
|
Event
|
|
Loss
|
||||
(U.S. dollars in millions)
|
||||||||||||||
|
|
Other loss events in 2016
|
|
$
|
5.1
|
|
|
August 2015
|
|
Tianjin explosions
|
|
$
|
8.9
|
|
|
|
|
|
|
|
August 2015
|
|
Unipetrol fire
|
|
9.7
|
|
|||
|
|
|
|
|
|
|
|
Other loss events in 2015
|
|
4.1
|
|
|||
Total impact on net losses and loss expenses
|
|
5.1
|
|
|
Total impact on net losses and loss expenses
|
|
22.7
|
|
||||||
Add: reduction in reinstatement premiums
|
|
0.9
|
|
|
Less: reinstatement premiums
|
|
(1.4
|
)
|
||||||
Net losses after adjustment for reinstatement premiums
|
|
$
|
6.0
|
|
|
Net losses after adjustment for reinstatement premiums
|
|
$
|
21.3
|
|
|
Nine Months Ended September 30,
|
|
|
|||||||
|
2016
|
|
2015
|
|
Change
(1)
|
|||||
|
(U.S. dollars in thousands, except for ratios)
|
|||||||||
Revenues
|
|
|
|
|
|
|||||
Gross premiums written
|
$
|
3,509,294
|
|
|
$
|
2,805,213
|
|
|
25.1
|
%
|
Ceded premiums written
|
(1,503,698
|
)
|
|
(1,144,486
|
)
|
|
31.4
|
%
|
||
Net premiums written
|
2,005,596
|
|
|
1,660,727
|
|
|
20.8
|
%
|
||
Net premiums earned
|
1,762,955
|
|
|
1,404,997
|
|
|
25.5
|
%
|
||
Net investment income
|
117,394
|
|
|
90,646
|
|
|
29.5
|
%
|
||
Net realized and unrealized gains
|
33,539
|
|
|
32,898
|
|
|
1.9
|
%
|
||
Net impairment losses recognized in earnings
|
(10,647
|
)
|
|
(1,111
|
)
|
|
858.3
|
%
|
||
Other underwriting (loss) income
|
(1,980
|
)
|
|
4,022
|
|
|
NM
(2)
|
|
||
Total revenues
|
1,901,261
|
|
|
1,531,452
|
|
|
24.1
|
%
|
||
Expenses
|
|
|
|
|
|
|||||
Losses and loss expenses
|
950,902
|
|
|
675,051
|
|
|
40.9
|
%
|
||
Acquisition expenses
|
337,194
|
|
|
257,521
|
|
|
30.9
|
%
|
||
General and administrative expenses
|
195,042
|
|
|
170,648
|
|
|
14.3
|
%
|
||
Corporate expenses
|
35,553
|
|
|
99,210
|
|
|
(64.2
|
)%
|
||
Amortization of intangibles
|
63,471
|
|
|
14,496
|
|
|
337.9
|
%
|
||
Net foreign exchange (gains) losses
|
(63,056
|
)
|
|
29,154
|
|
|
NM
(2)
|
|
||
Interest expense
|
33,053
|
|
|
30,445
|
|
|
8.6
|
%
|
||
Income tax (benefit) expense
|
(2,570
|
)
|
|
7,712
|
|
|
NM
(2)
|
|
||
Net income
|
351,672
|
|
|
247,215
|
|
|
42.3
|
%
|
||
Net income attributable to non-controlling interests
|
(18,456
|
)
|
|
(2,707
|
)
|
|
581.8
|
%
|
||
Preferred dividends
|
(20,147
|
)
|
|
(24,564
|
)
|
|
(18.0
|
)%
|
||
Net income available to Endurance Holdings' common and participating common shareholders
|
$
|
313,069
|
|
|
$
|
219,944
|
|
|
42.3
|
%
|
|
|
|
|
|
|
|||||
Net loss ratio
|
53.9
|
%
|
|
48.1
|
%
|
|
5.8
|
|
||
Acquisition expense ratio
|
19.1
|
%
|
|
18.3
|
%
|
|
0.8
|
|
||
General and administrative expense ratio
(3)
|
13.1
|
%
|
|
19.2
|
%
|
|
(6.1
|
)
|
||
Combined ratio
|
86.1
|
%
|
|
85.6
|
%
|
|
0.5
|
|
(1)
|
With respect to ratios, changes show increase or decrease in percentage points.
|
(2)
|
Not meaningful.
|
(3)
|
General and administrative expense ratio includes general and administrative expenses and corporate expenses.
|
•
|
An increase in the property, marine/energy and aviation, professional lines and casualty and other specialty lines of business in the Insurance segment due primarily to business generated by new underwriting teams in the U.S. and the U.K. and new business resulting from the acquisition of Montpelier;
|
•
|
A decline in the agriculture line of business in the Insurance segment due to lower commodity prices;
|
•
|
An increase in the catastrophe line of business in the Reinsurance segment due to new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets and declines in renewal rates;
|
•
|
An increase in the casualty line of business in the Reinsurance segment due to new business written in the U.S. and the U.K. and new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets;
|
•
|
An increase in the property line of business in the Reinsurance segment due to new business resulting from the acquisition of Montpelier, partially offset by the non-renewal of a large contract and declines in signed lines; and
|
•
|
An increase in the specialty line of business in the Reinsurance segment due to new business written and increased renewals, partially offset by non-renewal of policies that no longer met profitability targets.
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(U.S. dollars in thousands)
|
||||||
Gross realized gains on investment sales
|
$
|
35,776
|
|
|
$
|
57,420
|
|
Gross realized losses on investment sales
|
(50,537
|
)
|
|
(18,190
|
)
|
||
Net unrealized gains (losses) on trading securities
|
48,229
|
|
|
(5,037
|
)
|
||
Change in fair value of investment-related derivative financial instruments
|
71
|
|
|
(1,295
|
)
|
||
Net realized and unrealized gains
|
$
|
33,539
|
|
|
$
|
32,898
|
|
Nine Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2015
|
||||||||||||
Event Date
|
|
Event
|
|
Loss
|
|
Event Date
|
|
Event
|
|
Loss
|
||||
(U.S. dollars in millions)
|
||||||||||||||
February 2016
|
|
Earthquake in Taiwan
|
|
$
|
6.8
|
|
|
February 2015
|
|
Winter storm in the United States
|
|
$
|
12.0
|
|
April 2016
|
|
Convective storms in the United States
|
|
17.8
|
|
|
April 2015
|
|
Windstorm in the United States
|
|
7.4
|
|
||
April 2016
|
|
Earthquake in Japan
|
|
10.7
|
|
|
May 2015
|
|
Windstorm in the United States
|
|
5.2
|
|
||
May 2016
|
|
Wildfires in Canada
|
|
39.7
|
|
|
August 2015
|
|
Tianjin explosions
|
|
8.9
|
|
||
May 2016
|
|
Convective storms in Germany
|
|
3.9
|
|
|
August 2015
|
|
Unipetrol fire
|
|
9.7
|
|
||
|
|
Other loss events in 2016
|
|
6.1
|
|
|
|
|
|
|
|
|||
Total impact on net losses and loss expenses
|
|
85.0
|
|
|
Total impact on net losses and loss expenses
|
|
43.2
|
|
||||||
Less: reinstatement premiums
|
|
(10.3
|
)
|
|
Less: reinstatement premiums
|
|
(3.0
|
)
|
||||||
Net losses after adjustment for reinstatement premiums
|
|
$
|
74.7
|
|
|
Net losses after adjustment for reinstatement premiums
|
|
$
|
40.2
|
|
|
Incurred related to:
|
|
|
||||||||
Three Months Ended September 30, 2016
|
Current year
|
|
Prior years
|
|
Total incurred
losses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
63,143
|
|
|
$
|
(448
|
)
|
|
$
|
62,695
|
|
Casualty and other specialty
|
50,998
|
|
|
(5,855
|
)
|
|
45,143
|
|
|||
Professional lines
|
28,805
|
|
|
29
|
|
|
28,834
|
|
|||
Property, marine/energy and aviation
|
69,391
|
|
|
(3,346
|
)
|
|
66,045
|
|
|||
Total Insurance
|
212,337
|
|
|
(9,620
|
)
|
|
202,717
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
17,551
|
|
|
(5,747
|
)
|
|
11,804
|
|
|||
Property
|
42,276
|
|
|
(7,327
|
)
|
|
34,949
|
|
|||
Casualty
|
39,719
|
|
|
(5,379
|
)
|
|
34,340
|
|
|||
Professional lines
|
39,447
|
|
|
(9,789
|
)
|
|
29,658
|
|
|||
Specialty
|
34,384
|
|
|
(16,390
|
)
|
|
17,994
|
|
|||
Total Reinsurance
|
173,377
|
|
|
(44,632
|
)
|
|
128,745
|
|
|||
Totals
|
$
|
385,714
|
|
|
$
|
(54,252
|
)
|
|
$
|
331,462
|
|
|
Incurred related to:
|
|
|
||||||||
Nine Months Ended September 30, 2016
|
Current year
|
|
Prior years
|
|
Total incurred
losses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
159,581
|
|
|
$
|
(15,005
|
)
|
|
$
|
144,576
|
|
Casualty and other specialty
|
140,620
|
|
|
(28,038
|
)
|
|
112,582
|
|
|||
Professional lines
|
81,029
|
|
|
199
|
|
|
81,228
|
|
|||
Property, marine/energy and aviation
|
174,887
|
|
|
(14,169
|
)
|
|
160,718
|
|
|||
Total Insurance
|
556,117
|
|
|
(57,013
|
)
|
|
499,104
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
96,660
|
|
|
(28,556
|
)
|
|
68,104
|
|
|||
Property
|
132,148
|
|
|
(11,306
|
)
|
|
120,842
|
|
|||
Casualty
|
109,540
|
|
|
(17,216
|
)
|
|
92,324
|
|
|||
Professional lines
|
110,278
|
|
|
(25,741
|
)
|
|
84,537
|
|
|||
Specialty
|
120,155
|
|
|
(34,164
|
)
|
|
85,991
|
|
|||
Total Reinsurance
|
568,781
|
|
|
(116,983
|
)
|
|
451,798
|
|
|||
Totals
|
$
|
1,124,898
|
|
|
$
|
(173,996
|
)
|
|
$
|
950,902
|
|
|
Incurred related to:
|
|
|
||||||||
Three Months Ended September 30, 2015
|
Current year
|
|
Prior years
|
|
Total incurred
losses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
65,145
|
|
|
$
|
(212
|
)
|
|
$
|
64,933
|
|
Casualty and other specialty
|
34,757
|
|
|
(12,581
|
)
|
|
22,176
|
|
|||
Professional lines
|
21,980
|
|
|
345
|
|
|
22,325
|
|
|||
Property, marine/energy and aviation
|
40,277
|
|
|
(10,108
|
)
|
|
30,169
|
|
|||
Total Insurance
|
162,159
|
|
|
(22,556
|
)
|
|
139,603
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
16,561
|
|
|
(11,734
|
)
|
|
4,827
|
|
|||
Property
|
47,976
|
|
|
(8,101
|
)
|
|
39,875
|
|
|||
Casualty
|
33,928
|
|
|
(9,787
|
)
|
|
24,141
|
|
|||
Professional lines
|
31,676
|
|
|
(6,614
|
)
|
|
25,062
|
|
|||
Specialty
|
39,040
|
|
|
(8,555
|
)
|
|
30,485
|
|
|||
Total Reinsurance
|
169,181
|
|
|
(44,791
|
)
|
|
124,390
|
|
|||
Totals
|
$
|
331,340
|
|
|
$
|
(67,347
|
)
|
|
$
|
263,993
|
|
|
Incurred related to:
|
|
|
||||||||
Nine Months Ended September 30, 2015
|
Current year
|
|
Prior years
|
|
Total incurred
losses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
186,841
|
|
|
$
|
(1,367
|
)
|
|
$
|
185,474
|
|
Casualty and other specialty
|
94,642
|
|
|
(47,954
|
)
|
|
46,688
|
|
|||
Professional lines
|
56,956
|
|
|
106
|
|
|
57,062
|
|
|||
Property, marine/energy and aviation
|
82,986
|
|
|
(12,612
|
)
|
|
70,374
|
|
|||
Total Insurance
|
421,425
|
|
|
(61,827
|
)
|
|
359,598
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
44,262
|
|
|
(27,355
|
)
|
|
16,907
|
|
|||
Property
|
117,627
|
|
|
(17,117
|
)
|
|
100,510
|
|
|||
Casualty
|
87,747
|
|
|
(28,953
|
)
|
|
58,794
|
|
|||
Professional lines
|
88,564
|
|
|
(23,949
|
)
|
|
64,615
|
|
|||
Specialty
|
98,767
|
|
|
(24,140
|
)
|
|
74,627
|
|
|||
Total Reinsurance
|
436,967
|
|
|
(121,514
|
)
|
|
315,453
|
|
|||
Totals
|
$
|
858,392
|
|
|
$
|
(183,341
|
)
|
|
$
|
675,051
|
|
|
Case Reserves
|
|
IBNR Reserves
|
|
Reserve for losses
and loss expenses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
244,392
|
|
|
$
|
21,878
|
|
|
$
|
266,270
|
|
Casualty and other specialty
|
298,723
|
|
|
1,044,771
|
|
|
1,343,494
|
|
|||
Professional lines
|
152,279
|
|
|
523,760
|
|
|
676,039
|
|
|||
Property, marine/energy and aviation
|
294,036
|
|
|
132,564
|
|
|
426,600
|
|
|||
Total Insurance
|
989,430
|
|
|
1,722,973
|
|
|
2,712,403
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
144,210
|
|
|
75,520
|
|
|
219,730
|
|
|||
Property
|
226,985
|
|
|
112,994
|
|
|
339,979
|
|
|||
Casualty
|
242,503
|
|
|
517,980
|
|
|
760,483
|
|
|||
Professional lines
|
76,129
|
|
|
329,400
|
|
|
405,529
|
|
|||
Specialty
|
146,847
|
|
|
222,897
|
|
|
369,744
|
|
|||
Total Reinsurance
|
836,674
|
|
|
1,258,791
|
|
|
2,095,465
|
|
|||
Totals
|
$
|
1,826,104
|
|
|
$
|
2,981,764
|
|
|
$
|
4,807,868
|
|
|
Case Reserves
|
|
IBNR Reserves
|
|
Reserve for losses
and loss expenses
|
||||||
|
(U.S. dollars in thousands)
|
||||||||||
Insurance:
|
|
|
|
|
|
||||||
Agriculture
|
$
|
226,753
|
|
|
$
|
57,799
|
|
|
$
|
284,552
|
|
Casualty and other specialty
|
267,877
|
|
|
1,010,083
|
|
|
1,277,960
|
|
|||
Professional lines
|
116,920
|
|
|
464,638
|
|
|
581,558
|
|
|||
Property, marine/energy and aviation
|
226,894
|
|
|
122,930
|
|
|
349,824
|
|
|||
Total Insurance
|
838,444
|
|
|
1,655,450
|
|
|
2,493,894
|
|
|||
Reinsurance:
|
|
|
|
|
|
||||||
Catastrophe
|
109,374
|
|
|
89,734
|
|
|
199,108
|
|
|||
Property
|
229,283
|
|
|
112,026
|
|
|
341,309
|
|
|||
Casualty
|
247,802
|
|
|
539,896
|
|
|
787,698
|
|
|||
Professional lines
|
70,301
|
|
|
285,692
|
|
|
355,993
|
|
|||
Specialty
|
142,217
|
|
|
190,196
|
|
|
332,413
|
|
|||
Total Reinsurance
|
798,977
|
|
|
1,217,544
|
|
|
2,016,521
|
|
|||
Totals
|
$
|
1,637,421
|
|
|
$
|
2,872,994
|
|
|
$
|
4,510,415
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(U.S. dollars in thousands, except for ratios)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
568,277
|
|
|
$
|
448,563
|
|
|
$
|
1,997,100
|
|
|
$
|
1,653,647
|
|
Ceded premiums written
|
(365,573
|
)
|
|
(273,626
|
)
|
|
(1,183,850
|
)
|
|
(984,372
|
)
|
||||
Net premiums written
|
202,704
|
|
|
174,937
|
|
|
813,250
|
|
|
669,275
|
|
||||
Net premiums earned
|
272,603
|
|
|
234,143
|
|
|
745,956
|
|
|
571,467
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
202,717
|
|
|
139,603
|
|
|
499,104
|
|
|
359,598
|
|
||||
Acquisition expenses
|
41,773
|
|
|
24,375
|
|
|
104,999
|
|
|
57,960
|
|
||||
General and administrative expenses
|
40,658
|
|
|
31,880
|
|
|
108,912
|
|
|
89,289
|
|
||||
|
285,148
|
|
|
195,858
|
|
|
713,015
|
|
|
506,847
|
|
||||
Underwriting (loss) income
|
$
|
(12,545
|
)
|
|
$
|
38,285
|
|
|
$
|
32,941
|
|
|
$
|
64,620
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss ratio
|
74.4
|
%
|
|
59.6
|
%
|
|
66.9
|
%
|
|
63.0
|
%
|
||||
Acquisition expense ratio
|
15.3
|
%
|
|
10.4
|
%
|
|
14.1
|
%
|
|
10.1
|
%
|
||||
General and administrative expense ratio
|
14.9
|
%
|
|
13.6
|
%
|
|
14.6
|
%
|
|
15.6
|
%
|
||||
Combined ratio
|
104.6
|
%
|
|
83.6
|
%
|
|
95.6
|
%
|
|
88.7
|
%
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
||||||||
|
(U.S. dollars in thousands)
|
||||||||||||||
Agriculture
|
$
|
151,483
|
|
|
$
|
49,062
|
|
|
$
|
156,145
|
|
|
$
|
29,634
|
|
Casualty and other specialty
|
168,644
|
|
|
68,211
|
|
|
128,509
|
|
|
64,490
|
|
||||
Professional lines
|
97,432
|
|
|
30,328
|
|
|
80,069
|
|
|
37,479
|
|
||||
Property, marine/energy and aviation
|
150,718
|
|
|
55,103
|
|
|
83,840
|
|
|
43,334
|
|
||||
Total
|
$
|
568,277
|
|
|
$
|
202,704
|
|
|
$
|
448,563
|
|
|
$
|
174,937
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
||||||||
|
(U.S. dollars in thousands)
|
||||||||||||||
Agriculture
|
$
|
714,621
|
|
|
$
|
254,727
|
|
|
$
|
785,073
|
|
|
$
|
254,771
|
|
Casualty and other specialty
|
484,980
|
|
|
209,673
|
|
|
375,247
|
|
|
174,850
|
|
||||
Professional lines
|
297,526
|
|
|
124,866
|
|
|
231,565
|
|
|
105,153
|
|
||||
Property, marine/energy and aviation
|
499,973
|
|
|
223,984
|
|
|
261,762
|
|
|
134,501
|
|
||||
Total
|
$
|
1,997,100
|
|
|
$
|
813,250
|
|
|
$
|
1,653,647
|
|
|
$
|
669,275
|
|
•
|
An increase in gross premiums written in the property, marine/energy and aviation, professional lines and casualty and other specialty lines of business due primarily to business generated by new underwriting teams in the U.S. and the U.K. and new business resulting from the acquisition of Montpelier; and
|
•
|
A decline in gross premiums written in the agriculture line of business due to lower commodity prices.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(U.S. dollars in thousands, except for ratios)
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
$
|
192,410
|
|
|
$
|
194,034
|
|
|
$
|
1,512,194
|
|
|
$
|
1,151,566
|
|
Ceded premiums written
|
(46,128
|
)
|
|
(32,281
|
)
|
|
(319,848
|
)
|
|
(160,114
|
)
|
||||
Net premiums written
|
146,282
|
|
|
161,753
|
|
|
1,192,346
|
|
|
991,452
|
|
||||
Net premiums earned
|
337,553
|
|
|
322,860
|
|
|
1,016,999
|
|
|
833,530
|
|
||||
Other underwriting (loss) income
|
(466
|
)
|
|
227
|
|
|
(1,980
|
)
|
|
4,022
|
|
||||
|
337,087
|
|
|
323,087
|
|
|
1,015,019
|
|
|
837,552
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Losses and loss expenses
|
128,745
|
|
|
124,390
|
|
|
451,798
|
|
|
315,453
|
|
||||
Acquisition expenses
|
79,618
|
|
|
66,082
|
|
|
232,195
|
|
|
199,561
|
|
||||
General and administrative expenses
|
27,080
|
|
|
28,913
|
|
|
86,130
|
|
|
81,359
|
|
||||
|
235,443
|
|
|
219,385
|
|
|
770,123
|
|
|
596,373
|
|
||||
Underwriting income
|
$
|
101,644
|
|
|
$
|
103,702
|
|
|
$
|
244,896
|
|
|
$
|
241,179
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss ratio
|
38.1
|
%
|
|
38.5
|
%
|
|
44.4
|
%
|
|
37.8
|
%
|
||||
Acquisition expense ratio
|
23.6
|
%
|
|
20.5
|
%
|
|
22.8
|
%
|
|
23.9
|
%
|
||||
General and administrative expense ratio
|
8.0
|
%
|
|
9.0
|
%
|
|
8.5
|
%
|
|
9.8
|
%
|
||||
Combined ratio
|
69.7
|
%
|
|
68.0
|
%
|
|
75.7
|
%
|
|
71.5
|
%
|
|
Three Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
||||||||
|
(U.S. dollars in thousands)
|
||||||||||||||
Catastrophe
|
$
|
51,040
|
|
|
$
|
32,696
|
|
|
$
|
40,660
|
|
|
$
|
14,814
|
|
Property
|
41,975
|
|
|
40,882
|
|
|
53,423
|
|
|
52,887
|
|
||||
Casualty
|
35,438
|
|
|
35,772
|
|
|
42,802
|
|
|
42,802
|
|
||||
Professional lines
|
33,289
|
|
|
31,883
|
|
|
31,705
|
|
|
31,705
|
|
||||
Specialty
|
30,668
|
|
|
5,049
|
|
|
25,444
|
|
|
19,545
|
|
||||
Total
|
$
|
192,410
|
|
|
$
|
146,282
|
|
|
$
|
194,034
|
|
|
$
|
161,753
|
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
|
Gross
Premiums
Written
|
|
Net
Premiums
Written
|
||||||||
|
(U.S. dollars in thousands)
|
||||||||||||||
Catastrophe
|
$
|
488,865
|
|
|
$
|
319,245
|
|
|
$
|
304,900
|
|
|
$
|
190,579
|
|
Property
|
229,087
|
|
|
222,242
|
|
|
209,683
|
|
|
206,454
|
|
||||
Casualty
|
216,421
|
|
|
215,412
|
|
|
149,032
|
|
|
149,032
|
|
||||
Professional lines
|
217,476
|
|
|
215,134
|
|
|
209,803
|
|
|
209,803
|
|
||||
Specialty
|
360,345
|
|
|
220,313
|
|
|
278,148
|
|
|
235,584
|
|
||||
Total
|
$
|
1,512,194
|
|
|
$
|
1,192,346
|
|
|
$
|
1,151,566
|
|
|
$
|
991,452
|
|
•
|
An increase in gross premiums written in the catastrophe line of business due to new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets and declines in rates;
|
•
|
An increase in gross premiums written in the property line of business for the
nine
months ended
September 30, 2016
due to new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets and declines in rates;
|
•
|
A decline in gross premiums written in the property line of business for the three months ended
September 30, 2016
due to the non-renewal of a large contract and declines in signed lines;
|
•
|
An increase in gross premiums written in the specialty line of business due to new agriculture, marine and aerospace business written and increased renewals, partially offset by non-renewal of policies that no longer met profitability targets;
|
•
|
An increase in gross premiums written in the casualty line of business for the
nine
months ended
September 30, 2016
due to new business written in the U.S. and the U.K. and new business resulting from the acquisition of Montpelier, partially offset by non-renewal of policies that no longer met profitability targets; and
|
•
|
A decline in gross premiums written in the casualty line of business for the three months ended
September 30, 2016
due to the timing of renewals for certain multi-year deals, partially offset by new business.
|
Three Months Ended September 30, 2016
|
|
Three Months Ended September 30, 2015
|
||||||||||||
Event Date
|
|
Event
|
|
Loss
|
|
Event Date
|
|
Event
|
|
Loss
|
||||
(U.S. dollars in millions)
|
||||||||||||||
|
|
Other loss events in 2016
|
|
$
|
5.8
|
|
|
August 2015
|
|
Tianjin explosions
|
|
$
|
8.9
|
|
|
|
|
|
|
|
August 2015
|
|
Unipetrol fire
|
|
4.5
|
|
|||
|
|
|
|
|
|
|
|
Other loss events in 2015
|
|
4.1
|
|
|||
Total impact on net losses and loss expenses
|
|
5.8
|
|
|
Total impact on net losses and loss expenses
|
|
17.5
|
|
||||||
Add: reduction in reinstatement premiums
|
|
0.9
|
|
|
Less: reinstatement premiums
|
|
(1.3
|
)
|
||||||
Net losses after adjustment for reinstatement premiums
|
|
$
|
6.7
|
|
|
Net losses after adjustment for reinstatement premiums
|
|
$
|
16.2
|
|
Nine Months Ended September 30, 2016
|
|
Nine Months Ended September 30, 2015
|
||||||||||||
Event Date
|
|
Event
|
|
Loss
|
|
Event Date
|
|
Event
|
|
Loss
|
||||
(U.S. dollars in millions)
|
||||||||||||||
February 2016
|
|
Earthquake in Taiwan
|
|
$
|
6.8
|
|
|
February 2015
|
|
Winter storm in the United States
|
|
$
|
7.6
|
|
April 2016
|
|
Convective storms in the United States
|
|
16.7
|
|
|
April 2015
|
|
Windstorm in the United States
|
|
7.2
|
|
||
April 2016
|
|
Earthquake in Japan
|
|
8.1
|
|
|
May 2015
|
|
Windstorm in the United States
|
|
4.0
|
|
||
May 2016
|
|
Wildfires in Canada
|
|
39.7
|
|
|
August 2015
|
|
Tianjin explosions
|
|
8.9
|
|
||
May 2016
|
|
Convective storms in Germany
|
|
3.9
|
|
|
August 2015
|
|
Unipetrol fire
|
|
4.5
|
|
||
|
|
Other events in 2016
|
|
6.1
|
|
|
|
|
|
|
|
|||
Total impact on net losses and loss expenses
|
|
81.3
|
|
|
Total impact on net losses and loss expenses
|
|
32.2
|
|
||||||
Less: reinstatement premiums
|
|
(10.3
|
)
|
|
Less: reinstatement premiums
|
|
(2.8
|
)
|
||||||
Net losses after adjustment for reinstatement premiums
|
|
$
|
71.0
|
|
|
Net losses after adjustment for reinstatement premiums
|
|
$
|
29.4
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(U.S. dollars in thousands)
|
||||||
Net cash flows provided by (used in) operating activities
|
$
|
59,387
|
|
|
$
|
(74,029
|
)
|
Net cash flows provided by investing activities
|
332,308
|
|
|
653,198
|
|
||
Net cash flows used in financing activities
|
(248,320
|
)
|
|
(65,642
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,985
|
|
|
(16,002
|
)
|
||
Net increase in cash and cash equivalents
|
145,360
|
|
|
497,525
|
|
||
Cash and cash equivalents, beginning of period
|
1,177,750
|
|
|
745,472
|
|
||
Cash and cash equivalents, end of period
|
$
|
1,323,110
|
|
|
$
|
1,242,997
|
|
|
|
September 30, 2016
|
||
Collateral pledged under repurchase agreements
|
|
|
||
U.S. government and agencies securities
|
|
$
|
25,876
|
|
Residential mortgage-backed securities
|
|
98,427
|
|
|
|
|
$
|
124,303
|
|
Gross amount of recognized liabilities for repurchase agreements
|
|
$
|
120,997
|
|
•
|
The Company’s current stock price reflects a market assumption that the Merger will occur. In addition, as a result of the announcement of the Merger Agreement, trading in our common shares has increased substantially. If the Merger is not consummated, the investment goals of our shareholders may be materially different than those of our shareholders on a pre-Merger announcement basis.
|
•
|
Under certain circumstances, the Company may be required to pay a termination fee of $204.9 million and reimburse SOMPO's expenses relating to the Merger up to $15.8 million;
|
•
|
The Company may be required to pay significant costs relating to the Merger, such as legal, accounting, financial advisory and printing fees, whether or not the Merger is completed;
|
•
|
Time and resources committed by the Company's management to matters relating to the Merger could otherwise have been devoted to the Company's existing business or to pursuing other beneficial opportunities;
|
•
|
The Merger may not have been completed as a result of the occurrence of an event, change or other circumstances that have a material adverse effect on the Company’s business;
|
•
|
The manner in which brokers, insurers, cedants and other third parties perceive the Company may be negatively impacted, which in turn could affect the ability of the Company to compete for or write new business or obtain renewals in the marketplace;
|
•
|
The Company's ratings may be adversely affected, which could have an adverse effect on its business, financial condition and operating results; and
|
•
|
The Company could be subject to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against the Company to perform its obligations under the Merger Agreement.
|
(1)
|
Ordinary shares or share equivalents.
|
(2)
|
At its meeting on February 25, 2016, the Board of Directors of the Company authorized the repurchase of up to a total of 5,000,000 ordinary shares and share equivalents through February 28, 2018, superseding all previous authorizations.
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of October 5, 2016, by and among Endurance Specialty Holdings Ltd., Sompo Holdings, Inc. and Volcano International Limited. Incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on October 5, 2016.
|
|
|
|
10.1
|
|
Amended and Restated Employment Agreement, dated October 5, 2016, by and among Endurance Specialty Holdings Ltd., Volcano International Limited and John R. Charman. Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 5, 2016. **
|
|
|
|
10.2
|
|
Amended and Restated Indemnification Agreement, dated October 5, 2016, by and between Endurance Specialty Holdings Ltd. and John R. Charman. Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on October 5, 2016. **
|
|
|
|
10.3
|
|
Form of Amended and Restated Employment Agreement. Incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K filed on October 5, 2016. **
|
|
|
|
10.4
|
|
Form of Amended and Restated Indemnification Agreement. Incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on October 5, 2016. **
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
|
|
|
32
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as at September 30, 2016 (unaudited) and December 31, 2015; (ii) the Unaudited Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2016 and 2015; (iii) the Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity for the nine months ended September 30, 2016 and 2015; (iv) the Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
ENDURANCE SPECIALTY HOLDINGS LTD.
|
|
|
|
|
||
Date:
|
November 7, 2016
|
|
By:
|
|
/s/ John R. Charman
|
|
|
|
|
|
John R. Charman
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
||
Date:
|
November 7, 2016
|
|
By:
|
|
/s/ Michael J. McGuire
|
|
|
|
|
|
Michael J. McGuire
|
|
|
|
|
|
Chief Financial Officer (Principal Financial Officer)
|
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