secresponseltr10k-711.htm

The Company believes it is in compliance with ASC 320-10-35-1. The Company has portfolios of investments accounted for under ASC 320-10-35-1 where unrealized gains and losses are reported in other comprehensive income and other investment portfolios accounted for under ASC 825-10-15-1 where unrealized gains and losses are reflected in earnings. In order to provide clarity and transparency for the readers of the financial statements, the Company segregates these portfolios on its balance sheets. The portfolios accounted for under ASC 320-10-35-1 contain the phrase, “market value”, in their title while those portfolios accounted for under ASC 825-10-15-1 contain the phrase, “fair value”, in their title.

The Company fully explains this presentation on Page F-8 in the December 31, 2010 Form 10-K: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS; Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES; B. Investments: “Fixed maturity and equity security investments available for sale, at market value, reflect unrealized appreciation and depreciation, as a result of temporary changes in market value during the period, in shareholders’ equity, net of taxes in “accumulated other comprehensive income (loss)” in the consolidated balance sheets. Fixed maturity and equity securities carried at fair value reflect fair value re-measurements as net realized capital gains and losses in the consolidated statements of operations and comprehensive income” The Company believes its segregation of the portfolios by title differentiation, along with its accounting policy assists the reader in understanding the financial impact of market value changes in these portfolios.

All of the Company’s available for sale fixed maturity and equity portfolios comply with fair value reporting requirements. As indicated in the December 31, 2010 Form 10-K: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS; Note 4. FAIR VALUE; all of the Company’s fixed maturity and equity portfolios are properly disclosed according to their fair value measurement levels.

For available for sale investments that you record at fair value with re-measurements recorded as net realized capital gains and losses, tell us how your accounting complies with ASC 320-10-35-1 which requires unrealized holding gains and losses to be excluded from earnings and be reported in to the comprehensive income.

As indicated in the response to comment #1 above, the Company has portfolios accounted for under ASC 825-10-15-1 and appropriately reflects fair value re-measurements in the consolidated statements of operations and comprehensive income. As disclosed in the Company’s December 31, 2007 Form 10-K on page F-11, the Company adopted FAS No. 159 “The Fair Value Option for Financial Assets and Liabilities including an amendment to FASB Statement No. 115” as of January 1, 2007. The Company designates at the time of purchase whether a security will be accounted for under ASC 320-10-35-1 or ASC 825-10-15-1. The Company has never reclassified any securities between these two standards.

Please provide us proposed disclosure to be included in future filings to quantify the components of pretax income between domestic and foreign operations as required by Rule 4-08(h) of Regulation S-X. Also, include in your proposed disclosure the components of the “expected tax provision” including the “expected tax provision” and the applicable statutory tax rate by major jurisdiction for each year presented.

	Years Ended December 31,
	20XX Income (Loss)		20XX Income (Loss)		20XX Income (Loss)
	U.S.	Foreign	U.S.	Foreign	U.S.	Foreign

Pre-tax income	$ XX	$ XX	$ XX	$ XX	$ XX	$ XX

Expected income tax provision at
the statutory or blended rate	$ XX	$ XX	$ XX	$ XX	$ XX	$ XX

In Note 19, you state that “net income deriving from and assets residing in the individual foreign countries in which the Company writes business are not identifiable in the Company’s financial records.” Please explain to us why this limitation does not appear to affect your ability to determine income taxes for a foreign entity or jurisdiction.

The Company writes business around the world using different distribution and processing strategies. In several market locations such as Asia, Canada and the United Kingdom, the Company operates branch offices where the information processed through the branches is identified and appropriate local branch tax returns are filed. Conversely, for Latin America, which is a major market for the Company, the business is recorded through a U.S. domestic entity and appropriately included as part of the U.S. consolidated tax return. However, the results of this international business are not segregated within the U.S. entity processing the business.

You state that for lawsuits, arbitrations and other formal and informal dispute resolution procedures, you do not believe that any of these matters, when finally resolved will have a material adverse effect on your financial position or liquidity but an adverse resolution of one or more of these items in any one quarter or fiscal year could have a material adverse effect on your results of operations. We do not believe that this meets the disclosure requirements of ASC 450-20-50. Please provide us proposed disclosure to be included in future filings to quantify the loss or range of reasonably possible losses in excess of amounts accrued or state that these amounts cannot be estimated as required by ASC 450-20-50-4.b. If you cannot make an estimate, tell us the procedures you undertake on a quarterly basis for each matter to make this resolution.

All of the lawsuits, arbitrations and other disputes addressed in the Company’s contingency footnote relate to the normal operations of its insurance and reinsurance business. As a result, the statuses of these disputes are considered when the Company determines its best liability estimate for its reserve for losses and loss adjustment expenses. Accordingly, the Company does not believe these types of contingencies fall within the reporting requirements of ASC 450-20-50. Furthermore, the Company does not have any contingencies not related to its insurance and reinsurance business which would require reporting under ASC 450-20-50.

In the ordinary course of business, the Company is involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures, the outcomes of which will determine the Company’s rights and obligations under insurance, reinsurance and other contractual agreements. In some disputes, the Company seeks to enforce its rights under an agreement or to collect funds owing to it. In other matters, the Company is resisting attempts by others to collect funds or enforce alleged rights. These disputes arise from time to time and are ultimately resolved through both informal and formal means, including negotiated resolution, arbitration and litigation. In all such matters, the Company believes that its positions are legally and commercially reasonable. The statuses of these proceedings are considered when the Company determines its reserves for losses and loss adjustment expenses. While the final outcome of these matters cannot be predicted with certainty, the Company does not believe that any of these matters, when finally resolved, will have a material adverse effect on the Company’s financial position or liquidity. However, an adverse resolution of one or more of these items in any one quarter or fiscal year could have a material adverse effect on the Company’s results of operations in that period.

We note that in a letter dated December 1, 2009 you agreed to provide enhanced disclosure in future CD&As regarding the material factors considered by the Compensation Committee in adjusting salaries and in awarding cash incentive bonuses to your Named Executive Officers excluding the cash bonuses awarded to Mr. Taranto. We understand that the Committee utilized its discretion in adjusting salary and awarding bonuses rather than quantitative performance-related criteria but nevertheless considered responsibilities, experience, contributions and performance. The staff anticipated that you would disclose the specific considerations of the Committee related to each Named Executive Officer’s responsibilities, experience, contributions and performance. Please amend your 2010 10-K to disclose the specific facts and circumstances related to responsibilities, experience, contributions and performance that the Committee considered to be relevant for each Named Executive Officer in adjusting salary and awarding incentive cash compensation.

The Company believes that its CD&A complies with the requirements of Item 402(b) of Regulation S-K and with its undertaking contained in its letter dated December 1, 2009, addressed to Mr. Jeffrey Reidler wherein the Company agreed that in the future CD&A “will include a discussion of any material factors identified and considered by the Compensation Committee in adjusting the base salaries and bonus awards…”.

“base salaries are established upon hire or assignment date and reconsidered annually or as responsibilities change. Adjustments are based on each executive officer’s performance and the Company’s performance and may also take into account competitive conditions in the industry. All base salary determinations are in the subjective judgment and discretion of the Compensation Committee. The Compensation Committee has not identified any specific factors or particular criteria that must be met by each executive officer and does not assign any relative weighting to any factors or criteria it considers.”

“The bonus payments for Messrs. Addesso, de Saram, Mukherjee and Shoemaker were based on the Company’s financial performance, their individual responsibilities and the Chief Executive Officer’s and the Compensation Committee’s assessment of their individual performance.”

Consistent with Item 402(b) of Regulation S-K, the Company disclosed what was considered by the Compensation Committee in determining compensation of the Named Executive Officers. In 2011, the Compensation Committee, as disclosed in the proxy statement, did not identify any specific factors or criteria when evaluating the performance of each individual NEO, other than Mr. Taranto, and in determining adjustments to their base salaries and bonus determinations. Rather, the Compensation Committee discussed with the CEO each Named Executive Officer’s performance in executing his respective responsibilities during the prior year. Additionally, in making a salary adjustment and bonus award, the Compensation Committee informally reviewed each NEO’s compensation relative to the market compensation for similarly situated NEOs with similarly defined roles and responsibilities as may have been indicated in publicly filed financial statements of other publicly traded property/casualty insurance and reinsurance companies. However, no formal benchmarking study was performed by the Compensation Committee in making its compensation adjustments.

As noted in our December 1, 2009 letter, the Company will disclose in its future filings any material factors or criteria that may be specifically identified and considered by the Compensation Committee in adjusting the base salaries and bonus awards of its Named Executive Officers beyond just the Compensation Committee’s subjective and discretionary determination of the NEO’s performance in executing his respective responsibilities.