EX-99.1

EX-99.1 2 d562244dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

2012 GLOBAL LOSS TRIANGLES

Global Loss Development Triangle Cautionary Language

This report is for informational purposes only and is current only as of December 31, 2012. Allied World Assurance Company Holdings, AG (“Allied World”, the “Company”, “we”, “us” or “our”) is under no obligation (and expressly disclaims any such obligation) to update or revise this report, whether as a result of new information, future events or otherwise. Nothing contained in this report is or should be relied upon as a promise or representation as to the future. Although the loss development patterns disclosed in this report are an important factor in the process used to estimate loss reserve requirements, they are not the only factors considered in establishing reserves. The process for establishing reserves is subject to considerable variability and requires the use of informed estimates and judgments. Important details, such as specific loss development expectations for particular contracts, years or events, cannot be developed solely by analyzing the information provided in this report. In addition to analyzing loss development data, management incorporates additional information into the reserving process, such as pricing for insurance and reinsurance products as well as current market conditions. Readers must keep these and other qualifications more fully described in this report in mind when reviewing this information. Information presented in this report may differ materially from that reported in the Company’s financial statements prepared in accordance with accounting principles generally accepted in the United States due to differences in foreign exchange rates, exclusions, the impact of premium adjustments and other adjustments. This report is a supplement to the Company’s financial disclosures and should be read in conjunction with the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents on file with the U.S. Securities and Exchange Commission (the “SEC”). This report shall not be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this report reflect the Company’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, the Company’s forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of our loss reserves; the Company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in the Company’s filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

2012 GLOBAL LOSS TRIANGLES

Table of Contents


		Page
I.	EXECUTIVE SUMMARY		1

	– Overview		1
	– Limitations of the Reserving Processes		3
	– Treaty Year Projections		5

II.	RECONCILIATION OF GLOBAL LOSS TRIANGLES TO DECEMBER 31, 2012 FINANCIAL STATEMENTS		6

III.	GLOBAL LOSS TRIANGLES		7

	– Basis of Presentation		7
	– Description of Data Presented		8
	– Large Losses		8
	– GLT Class Details		9
	– Property Insurance (Gross of Ceded Reinsurance)		12
	– General Casualty Insurance (Gross of Ceded Reinsurance)		13
	– Professional Liability Lines Insurance (Gross of Ceded Reinsurance)		14
	– Healthcare Insurance (Gross of Ceded Reinsurance)		15
	– Property Insurance (Net of Ceded Reinsurance)		16
	– General Casualty Insurance (Net of Ceded Reinsurance)		17
	– Professional Liability Lines Insurance (Net of Ceded Reinsurance)		18
	– Healthcare Insurance (Net of Ceded Reinsurance)		19
	– Property Catastrophe Reinsurance (Gross of Ceded Reinsurance)		20
	– Property Other Reinsurance (Gross of Ceded Reinsurance)		21
	– General Casualty Reinsurance (Gross of Ceded Reinsurance)		22
	– Professional Liability Lines Reinsurance (Gross of Ceded Reinsurance)		23
	– Other Reinsurance (Gross of Ceded Reinsurance)		24
	– Property Catastrophe Reinsurance (Net of Ceded Reinsurance)		25
	– Property Other Reinsurance (Net of Ceded Reinsurance)		26
	– General Casualty Reinsurance (Net of Ceded Reinsurance)		27
	– Professional Liability Lines Reinsurance (Net of Ceded Reinsurance)		28
	– Other Reinsurance (Net of Ceded Reinsurance)		29
	– Insurance (Gross of Ceded Reinsurance) Premium/Loss Summary		30
	– Insurance (Net of Ceded Reinsurance) Premium/Loss Summary		31
	– Reinsurance (Gross of Ceded Reinsurance) Premium/Loss Summary		32
	– Reinsurance (Net of Ceded Reinsurance) Premium/Loss Summary		33

IV.	SELECTED EXCERPTS FROM ALLIED WORLD’S 2012 10-K DISCLOSURE		34

V.	GLOSSARY		39

I.	EXECUTIVE SUMMARY

Overview

A critical component of financial reporting for insurance and reinsurance companies is to accurately estimate potential losses and associated loss expenses on risks that have been insured or reinsured. This report is Allied World’s release of its Global Loss Triangles (“GLTs”) as of December 31, 2012. For your convenience, we have included a glossary beginning on page 39 of selected insurance and reinsurance terms.

We establish a reserve for losses and loss expenses to cover our estimated liability for the payment of all losses and loss expenses incurred with respect to earned premiums on the policies and treaties that we write. This reserve is a balance sheet liability representing estimates of losses and loss expenses we are required to pay for insured or reinsured claims that have occurred as of or before the balance sheet date.

The process of establishing loss reserves can be complex and is subject to considerable variability as it requires the use of judgment regarding numerous items, including future litigation trends, future inflation trends, new laws and regulations, attachment points and timing of payments. Actuarial estimates of these reserves are subject to potential errors of estimation, which could be significant, as they are based upon the outcomes of future events. The estimates are even more difficult for a company such as Allied World, as many of our casualty lines of business have relatively high attachment points (often exceeding $100 million) and relatively high net limits (with $25 million being a typical maximum). Those characteristics make some of our casualty lines subject to claims that are very low in frequency (the number of actual claims), but very high in severity (the average claim size). The combination of low frequency and high severity exacerbates the difficulty in establishing loss reserves for Allied World. We caution that an attempt to evaluate our loss reserves using exclusively the data presented in this report could be misleading.

The reserve for losses and loss expenses is comprised of two main elements: outstanding loss reserves, also known as “case reserves,” and reserves for losses incurred but not reported (“IBNR”). Outstanding loss reserves relate to known claims and represent management’s best estimate of the likely loss settlement cost. Thus, there is a significant amount of estimation involved in determining the likely loss payment. IBNR reserves require judgment because they relate primarily to unreported events that, based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to have occurred and are reasonably likely to result in a loss to the Company. IBNR reserves also relate to estimated development of reported events that based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to reach our attachment point and are reasonably likely to result in a loss to the Company.

IBNR is the estimated liability for (1) claims that have occurred but have not yet been reported as well as (2) changes in the values of claims that have been reported to us but are not yet settled. Each claim is settled individually based upon its merits and it is not unusual for a claim to take years after being reported to settle, especially if legal action is involved. As a result, reserves for losses and loss expenses include significant estimates for IBNR reserves.

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The reserve for IBNR is estimated by management for each line of business based on various factors, including underwriters’ expectations about loss experience, actuarial analysis, comparisons with the results of industry benchmarks and loss experience to date. The reserve for IBNR is calculated as the ultimate amount of losses and loss expenses less cumulative paid losses and loss expenses and case reserves. Our actuaries employ generally accepted actuarial methodologies to determine estimated ultimate loss reserves.

When estimating IBNR reserves, we segregate the Company’s insurance and reinsurance loss and exposure data into over 110 classes in total. Within each class, the business is further segregated by treaty year, accident year or report year. Professional liability and healthcare lines of business are reviewed on a report year basis due to the claims-made nature of the underlying contracts. Our general casualty insurance business is a mixture of claims-made and loss-occurring contracts. Since the Company’s formation in November 2001, 59% of our gross earned premiums and 61% of our net earned premiums have been associated with occurrence policies for our general casualty insurance business.

Generally, initial actuarial estimates of IBNR reserves not related to a single event (such as a catastrophe) are based upon the expected loss ratio method applied to each class of business. Actual paid losses and case reserves are subtracted from the expected ultimate losses to derive the IBNR reserves. The initial expected loss ratio used in the expected loss ratio method involve managerial judgments and are based upon historical information for the class of business, which includes historic loss ratios, market conditions, changes in pricing, policy terms and conditions, peer analysis, underwriting changes, changes in claims emergence and other factors that may influence expected ultimate losses. Over time, the actuarial estimates for our non-property lines of business generally become a blend of the Bornhuetter-Ferguson reported loss method (the “B-F method”) and the expected loss ratio method. The B-F method incorporates actual reported loss data and expected unreported losses, which is a function of the initial expected loss ratio and the expected loss emergence pattern, to determine an estimate of ultimate losses. The B-F method is often appropriate for lines of business where there is limited actual loss data and/or a relatively less stable pattern of loss emergence. For additional details on the B-F method, see “IV. Selected Excerpts from Allied World’s 2012 10-K Disclosure – Expected Loss Ratio Method” and “– B-F Method.”

These actuarial methods may be inappropriate for lines of business with very low frequency and high severity and in certain specific situations, such as catastrophe losses. In such situations, specific knowledge of the open claims, the underlying exposures, ceded reinsurance, litigation trends, the types of coverages involved and the changes in the frequency or severity of the claim may be used to establish reserves.

Multiple estimates of ultimate losses using a variety of actuarial methods are calculated for many of our classes of business for each year of loss experience. Our actuaries review each class of business and each year of loss experience and determine the most appropriate point estimate based upon the characteristics of the particular class of business and other relevant

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factors as described above. Once our actuaries make their determination of the most appropriate point estimate for each class of business and for each year of loss experience, both gross and net of reinsurance, this information is aggregated and presented to management for consideration in establishing the recorded reserves for losses and loss expenses.

Limitations of the Reserving Processes

Reserving actuaries, especially in personal lines and mid-market commercial lines companies, often employ standard actuarial loss development methods to project ultimate losses from triangles of paid and reported losses. These methods rely on an assumption that losses develop consistently from one year to the next, and for the expected loss ratio and B-F methods, on the assumption that an initial expected loss ratio and expected emergence pattern can be accurately selected. However, Allied World writes complex lines of business, including excess casualty insurance and reinsurance, which often do not have the consistent patterns of reported losses that personal lines and mid-market commercial lines companies do.

Projections of ultimate losses require a significant amount of estimation and judgment based on a variety of factors. We strongly caution against any assumption that standard loss projection techniques applied mechanically can alone be used to estimate ultimate losses for our data as the outcome of such a simplistic approach would lead to misleading results and inaccurate conclusions. Reasons to avoid simplistic projections include:

•

Allied World has only been in existence since November 2001 and many of our GLTs lack sufficient actuarial credibility to project ultimate losses and do not have the history to accurately estimate the development of losses beyond ten years.

•

Allied World acquired Darwin Professional Underwriters, Inc. and its subsidiaries (“Darwin”) in October 2008. The loss triangles from Darwin have been merged into Allied World’s GLTs. However, it is likely that the historical loss emergence patterns from the Darwin business are substantially different from the historical loss patterns of the business written by Allied World due to different attachment point profiles, different policy forms (nearly all Darwin policies are claims-made) and differing claims department philosophies.

•

As many of our casualty lines can have relatively low frequency and relatively high severity losses, the absence or emergence of only a few losses can distort our paid and reported GLTs.

•

Our U.S. direct insurance business has been generally growing faster than our international direct insurance business. The difference in the business mix between these two insurance businesses and the lower attachment point profile of the U.S. business can cause historical loss development not to be appropriate for future loss development.

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•

Some of our largest reinsurance treaties have special characteristics, such as loss corridors, annual aggregate deductibles or swing-rated premiums that cannot be considered in a simplistic aggregate projection.

•

We have had changes in our underwriting philosophy over time, exiting or paring back some classes of business and in other classes changing coverage terms and conditions.

•

Losses develop differently for different classes of business. The aim of the GLTs contained herein is to present our loss development experience in an informative format, while protecting proprietary Company information. Accordingly, we do not show our 110+ reserving classes, but rather have aggregated them into nine classes, which represent different geographies, pricing environments, legislative climates and policy forms and which will not be as homogeneous as our actual reserving classes would be if reported individually.

•

Paid loss development patterns are considerably longer than the corresponding reported loss development patterns and can produce for many of our classes of business extremely volatile indications, particularly within the first several years of development.

•

For several classes of business, pricing conditions have changed in recent years. The extrapolation of losses and loss expense ratios from prior periods to current periods would not be appropriate.

In addition to these factors, the global credit crisis and the effects of inflation (as discussed in more detail below) could adversely impact our ultimate losses and cause our projections and judgments regarding our expected loss reserves to differ materially from the ultimate losses we may incur.

Global Credit Crisis – Worldwide financial and housing markets have experienced extreme volatility and disruption in recent years. As a result of the global credit crisis, the following reserving classes have been impacted:

•

direct insurance professional liability lines (primarily the 2007 and 2008 report years), and

•

reinsurance professional liability lines (primarily the 2006 through 2008 treaty years).

There continues to be increased uncertainty around the ultimate losses for the years referenced above. This is mainly attributable to the higher volume of reported claims and the higher proportion of open claims for these years compared to earlier years at the same stage of development. In addition, these reported claims have caused higher reported losses and ALAE ratios for these years compared to earlier years at similar stages of development. As a result, the ultimate loss development patterns on these years may differ from prior years. The uncertainty is

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increased by the fact that we have relatively high average attachment points for many of these potential credit crisis-related claims for our direct insurance business and by the fact that we often provide D&O side A cover. On side A cover, we are required to provide coverage to directors and officer for claims alleging negligence or malfeasance if such claims are not indemnified by the insured.

Our reserves for these lines of business are based on a detailed analysis of all open claims that considers attachment points, exposed limits, coverage provided and litigation trends as well as quarterly, in-depth discussions with members of our claims department and underwriting staff.

Inflation – Losses and loss expense reserves can be impacted by social and judicial inflation. Higher than expected inflation can negatively impact the costs of claims as it may cause an increase in frequency (the number of actual claims) and severity (the average claim size). Though our reserving techniques factor in inflation through the use of expected loss ratios derived from our pricing models, which consider the effects of inflation, and through the use of industry loss development patterns that go back as far as 1984, losses and loss expense reserves can be impacted by unexpected changes in inflation rates. We do not explicitly account for excessive inflation in our reserves.

Treaty Year Projections

Data organized by treaty year assigns claims and premiums to the year in which the assumed reinsurance contract incepted. As such, a treaty year may cover claims spanning several accident years. This has two primary implications for estimating ultimate loss reserves. First, the payment and reporting patterns are generally slower to develop than for the data presented by accident year or report year. This means that it is even more critical that premium-based reserving methods, such as the expected loss ratio method or the B-F method, are used for the more recent years rather than loss development methods that can be distorted by small movements in actual paid or reported loss activity due to the application of large loss development factors. Second, treaty years for which premium is not fully earned require an adjustment to the indicated reserves to reflect only the portion of the ultimate treaty year losses that are associated with losses that have occurred prior to the evaluation date. This is typically done by developing an ultimate loss ratio estimate for the full treaty year and applying this loss ratio to the earned premiums from the treaty year.

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II.

RECONCILIATION OF GLOBAL LOSS TRIANGLES TO DECEMBER 31, 2012 FINANCIAL STATEMENTS

The tables below provide a reconciliation of our presented GLTs to our audited financial statements as of and for the year ended December 31, 2011 and 2012, respectively.

(Expressed in U.S. dollars in thousands)


*Paid Losses and Paid LAE in 2011 Calendar Year*

Consolidated GLTs – net paid losses and ALAE¹	$	640,874
Paid losses and paid ALAE from excluded catastrophes		21,289
Paid ULAE		21,906
Foreign exchange and other		742

Paid losses and paid LAE in 2011 calendar year per 10-K	$	684,811


*Paid Losses and Paid LAE in 2012 Calendar Year*

Consolidated GLTs – net paid losses and ALAE¹	$	798,111
Paid losses and paid ALAE from excluded catastrophes		37,071
Paid ULAE		26,494
Foreign exchange and other		(709	)

Paid losses and paid LAE in 2012 calendar year per 10-K	$	860,967


*Incurred Losses and Incurred LAE in 2011 Calendar Year*

Consolidated GLTs – net reported losses and ALAE¹	$	835,518
Reported losses and reported ALAE from excluded catastrophes		48,073
Reported ULAE		21,906
Change in IBNR		61,024
Foreign exchange and other		(7,365	)

Incurred losses and incurred LAE in 2011 calendar year per 10-K	$	959,156


*Incurred Losses and Incurred LAE in 2012 Calendar Year*

Consolidated GLTs – net reported losses and ALAE¹	$	894,216
Reported losses and reported ALAE from excluded catastrophes		71,437
Reported ULAE		26,494
Change in IBNR		147,319
Foreign exchange and other		(202	)

Incurred losses and incurred LAE in 2012 calendar year per 10-K	$	1,139,264

Excludes losses from the following catastrophes: 2004 Hurricanes/Tropical Storms Charlie, Frances, Jeanne and Ivan; 2005 Hurricanes/Tropical Storms Katrina, Rita and Wilma; 2008 Hurricanes/Tropical Storms Gustav and Ike; 2010 Chilean Earthquake; 2011 Japanese Earthquake/Tsunami; 2012 Superstorm Sandy.

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III.

GLOBAL LOSS TRIANGLES

Basis of Presentation

For the basis of this presentation, we have split our data into nine classes of GLTs, four for our direct insurance business and five for our reinsurance business. They are listed below:


Direct Insurance Business		Reinsurance Business

• Property		• Property Catastrophe

• General Casualty		• Property Other

• Professional Liability Lines		• General Casualty

• Healthcare		• Professional Liability Lines

		• Other Reinsurance

•

Our direct insurance general casualty business contains a mix of claims-made, occurrence-reported and occurrence policy forms.


General Casualty
Distribution of Gross Premiums Written
Underwriting Year	Claims-Made			Occurrence- Reported			Occurrence			Total

2002		20.3	%		26.1	%		53.6	%		100.0	%
2003		16.6	%		30.0	%		53.4	%		100.0	%
2004		20.3	%		30.7	%		49.0	%		100.0	%
2005		14.4	%		35.2	%		50.4	%		100.0	%
2006		16.1	%		32.3	%		51.6	%		100.0	%
2007		16.5	%		35.5	%		48.0	%		100.0	%
2008		16.3	%		29.8	%		54.0	%		100.0	%
2009		10.9	%		22.2	%		67.0	%		100.0	%
2010		11.3	%		19.3	%		69.4	%		100.0	%
2011		11.1	%		15.4	%		73.6	%		100.0	%
2012		9.3	%		13.4	%		77.3	%		100.0	%

•

Our reinsurance business classified as “other reinsurance” includes accident and health, workers’ compensation catastrophe coverage, aviation, crop and marine.

•

Our reinsurance business is presented separately from our direct insurance business as we show the reinsurance classes on a treaty year basis. Many reinsurance treaties do not provide sufficient detail to split losses and loss adjustment expenses accurately by accident year or report year.

•

Our nine classes were selected to create categories that were relatively homogeneous yet were not so small as to have insufficient actuarial credibility.

•

Our GLTs are presented in thousands of U.S. dollars, reflecting conversions from local currencies based upon the date on which the transactions were entered into the Company’s systems.

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Description of Data Presented

For each class of business, earned premiums are presented both gross and net of external reinsurance, with intercompany reinsurance transactions not being reflected in the GLTs. For classes of business within our reinsurance lines, these premiums are presented on a treaty year basis. For all other classes of business, the net earned premiums are presented on a calendar year basis. GLTs that show cumulative paid losses and ALAE, gross and net of reinsurance, are presented for each class of business. In addition, we present GLTs of cumulative reported losses and ALAE (paid plus case reserves), gross and net of reinsurance, for each class of business. For the reinsurance classes of business, the GLTs are presented on a treaty year basis. For direct insurance business, property classes of business are presented on an accident year basis. Our general casualty classes of business are a blend of policies where losses can be triggered by either report date or accident date, so the paid and reported losses are a blend of report year and accident year data. The remaining casualty classes of business, including professional liability and healthcare, are presented on a report year basis. These conventions match the standard industry reserving practices for reinsurance and direct insurance, respectively.

Case reserves for Allied World’s reinsurance classes are generally established based upon reports received from ceding companies as we generally “follow their fortunes.” Additional case reserves may be established by Allied World to reflect our estimated ultimate cost of a loss. Any such additional case reserves have been included in the presented reinsurance GLTs.

The premiums in our reinsurance lines are often based upon estimates by the ceding companies. At the end of the treaty year, these estimates will be replaced by actual premiums. In addition, some of our reinsurance treaties may have premiums that are swing-rated subject to reinstatement premiums. The presented premium data is subject to future adjustments, either upwards or downwards, based upon these factors.

Large Losses

Loss development associated with the following six groups of catastrophic losses have been excluded from the GLTs for all lines except for property catastrophe reinsurance: (1) 2004 hurricanes, (2) 2005 hurricanes, (3) 2008 hurricanes, (4) 2010 Chilean Earthquake, (5) 2011 Japanese Earthquake/Tsunami and (6) 2012 Superstorm Sandy. These events have been excluded from the GLTs due to their magnitude in order to avoid distortions in the development factors and indicated reserve levels. Reserves for these events are not based on aggregate development statistics, but rather on ground-up, exposure-based assessments reflecting information provided by insureds and cedents on an insurance policy-by-policy and reinsurance contract-by-contract basis. Separate information is provided on these catastrophic events including gross and net paid losses, reported losses and IBNR as of December 31, 2012.

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GLT Class Details

Insurance Lines of Business

Property – Our property insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 12 and 16). The vast majority of the ceded reinsurance we have purchased for our direct property class of business is written as quota share reinsurance, with a smaller portion written as facultative reinsurance. We have not removed losses associated with recoveries from any catastrophe covers as we have excluded major catastrophes already from the data. The major catastrophes removed from our property insurance GLTs, as well as from our “property other reinsurance” and our “other reinsurance” GLTs discussed below, include:

•

2004 – Hurricanes/Tropical Storms Charlie, Frances, Jeanne and Ivan;

•

2005 – Hurricanes/Tropical Storms Katrina, Rita and Wilma;

•

2008 – Hurricanes/Tropical Storms Gustav and Ike;

•

2010 – Chilean Earthquake;

•

2011 – Japanese Earthquake/Tsunami; and

•

2012 – Superstorm Sandy.

It should be noted that we removed all property losses associated with these events, even after such storms may have weakened and moved inland. For our property insurance GLTs, the total amounts excluded from these storms are as follows:


	Gross				Net of Reinsurance
	Paid		Reported		Paid		Reported
	(Dollars in Millions)				(Dollars in Millions)
2004 Events	$	170.1	$	170.8	$	149.7	$	150.1
2005 Events	$	458.4	$	459.1	$	190.7	$	191.1
2008 Events	$	97.8	$	99.7	$	61.9	$	63.1
2010 Events	$	64.9	$	65.5	$	50.6	$	51.0
2011 Events	$	34.6	$	54.5	$	24.4	$	38.2
2012 Events	$	8.9	$	81.2	$	7.2	$	64.9

Our property book of business has shifted over time. Over the last several years, we have de-emphasized energy classes of business, which included such industry classes as mining, chemical plants, pulp and paper manufacturing and refiners. In addition, our Bermuda property book of business (which is included in the property insurance GLTs) has evolved from largely being a primary insurance account based book of business to where we now write many accounts on an excess basis.

General Casualty – Our general casualty insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 13 and 17). Our Bermuda and European casualty books of business are comprised largely of Fortune 1000-type accounts with generally high attachment points with medians between $80 million and $100 million. Historically, about 57% to 59% of the earned premiums have come from occurrence policies. This percentage grew to 77% in 2012 as our business mix has shifted to more occurrence business as we expanded our U.S.

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underwriting platform. The vast majority of the ceded reinsurance we have purchased for the casualty class of business has been either quota share reinsurance or surplus treaty reinsurance. The general casualty book has changed over time, with pharmaceutical and energy classes being de-emphasized in Bermuda and with the business underwritten in the United States (which generally has a lower attachment point profile) shrinking in the 2005-2007 calendar years and growing in the 2008-2012 calendar years.

Professional Liability Lines – Our professional liability lines insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 14 and 18). Professional liability lines include directors and officers liability, errors & omissions liability, D&O side A cover, employment practices liability insurance, crime and fiduciary liability business. Similar to our casualty lines of business, our Bermuda and European professional liability lines are comprised largely of Fortune 1000 and FTSE 1000-type accounts with generally high attachment points with medians between $80 million and $100 million. It is not uncommon for the Company to “ventilate” an account, which means the Company underwrites two excess layers with differing attachment points. Our U.S. professional liability book has a very different profile, with a portion of the business underwritten on a primary basis for smaller, non-Fortune 1000 accounts. Common classes include insurance agencies, psychologists/counselors and smaller law firms. Our professional liability lines book of business, excluding crime, is written on claims-made and occurrence-reported basis and virtually none of this business is written on an occurrence basis (regardless of where it is written). Crime insurance is written on a losses discovered basis.

Healthcare – Our healthcare insurance GLTs are shown on both a gross and net of reinsurance basis (see pages 15 and 19). Our healthcare book of business is written on a claims-made and occurrence-reported basis and has virtually no business written on occurrence policy forms. The Bermuda healthcare group writes gross lines of up to $25 million, with average attachment points of around $45 million. This business is largely comprised of large hospitals, but does include managed care organizations and healthcare systems. The U.S. healthcare business has a much lower attachment point profile than the international book of business, with much of the U.S. business being written on a primary basis. It includes smaller hospitals and hospital systems, managed care organizations and medical facilities such as home care providers, specialized surgery and rehabilitation centers, and outpatient clinics. Our Bermuda business also writes some accounts on a primary basis, although typically over a large deductible.

Reinsurance Lines of Business

Property Catastrophe – Our property catastrophe reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 20 and 25). This business is excess-of-loss property catastrophe reinsurance. Typically, it has a relatively short tail.

Property Other – Our property other reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 21 and 26). This line contains our entire property reinsurance book of business, excluding property catastrophe coverages, and is written as either excess-of-loss reinsurance or quota share reinsurance.

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General Casualty – Our general casualty reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 22 and 27). This business is essentially comprised of any business that does not fit into the other casualty classes. It is largely umbrella casualty business that contains some workers’ compensation business. This business can be written as either excess-of-loss reinsurance or quota share reinsurance.

Professional Liability Lines – Our professional liability lines reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 23 and 28). This business is largely written on a claims-made basis. Lines of business include employment practices liability insurance, medical malpractice, directors and officers, errors and omissions and miscellaneous professional classes and transactional risk liability. Some of our larger treaties can have complex structures, including swing-rated premiums, loss corridors and annual aggregate deductibles. This business is written as either excess-of-loss reinsurance or quota share reinsurance.

Other Reinsurance – Our other reinsurance GLTs are shown on both a gross and net of reinsurance basis (see pages 24 and 29). This business is a mixture of miscellaneous lines including accident and health (which is predominantly catastrophe driven), workers’ compensation catastrophe, aviation, crop and marine. The marine treaties were impacted by various hurricanes (specifically Ivan, Katrina, Rita, Ike and Gustav) which went through the Gulf of Mexico.

For our other reinsurance and property other GLTs, the total amounts excluded from the 2004, 2005, 2008, 2010, 2011 and 2012 events discussed above are as follows:


	Gross				Net of Reinsurance
	Paid		Reported		Paid		Reported
	(Dollars in Millions)				(Dollars in Millions)
2004 Events	$	38.3	$	40.3	$	38.3	$	40.3
2005 Events	$	93.0	$	95.9	$	86.0	$	88.9
2008 Events	$	1.5	$	5.8	$	1.5	$	5.8
2010 Events	$	0.1	$	0.8	$	0.1	$	0.8
2011 Events	$	0.1	$	5.2	$	0.1	$	5.2
2012 Events	$	0.7	$	10.0	$	0.7	$	10.0

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LOGO

December 2012 Global Loss Triangles - Direct Insurance

Excluding large losses

U.S. dollars in thousands

Property Insurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12		24		36		48		60		72		84		96		108		120		132
2002		2,584		29,354		46,287		51,590		56,582		56,687		56,776		56,675		56,700		56,701		56,701
2003		50,572		136,299		198,801		217,328		218,048		217,531		221,698		221,688		221,846		221,814
2004		38,251		153,141		203,006		217,517		229,205		232,011		233,997		234,829		237,674
2005		91,198		228,634		308,207		354,253		366,892		365,434		367,337		365,380
2006		30,040		103,621		172,546		201,132		208,659		210,277		212,916
2007		43,151		129,076		169,655		186,261		191,756		199,710
2008		75,528		155,973		198,875		210,168		218,452
2009		24,044		64,420		74,513		77,316
2010		44,677		107,035		128,648
2011		52,142		115,930
2012		21,849

Reported Loss & ALAE
Accident	Months of Development
Year	12		24		36		48		60		72		84		96		108		120		132
2002		18,005		55,432		58,559		59,169		57,437		56,848		57,987		56,707		56,700		56,701		56,701
2003		146,467		208,054		228,434		232,111		227,106		224,146		222,856		222,651		222,550		222,481
2004		132,453		223,557		246,425		247,612		244,839		239,798		238,060		235,425		238,232
2005		224,245		353,712		382,922		384,183		382,139		370,420		368,929		366,287
2006		157,140		225,124		235,681		222,453		219,524		215,327		217,148
2007		189,533		227,570		227,509		220,583		221,004		220,826
2008		263,049		265,851		240,547		229,376		226,406
2009		89,871		89,436		88,222		85,366
2010		114,296		156,419		155,811
2011		156,249		188,553
2012		72,864


Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		9	%		28	%		30	%		30	%		29	%		29	%		30	%		29	%		29	%		29	%		29	%
2003		30	%		43	%		47	%		48	%		47	%		46	%		46	%		46	%		46	%		46	%
2004		23	%		40	%		44	%		44	%		43	%		42	%		42	%		42	%		42	%
2005		47	%		74	%		80	%		81	%		80	%		78	%		77	%		77	%
2006		36	%		51	%		53	%		50	%		50	%		49	%		49	%
2007		45	%		54	%		54	%		52	%		52	%		52	%
2008		74	%		74	%		67	%		64	%		63	%
2009		33	%		33	%		32	%		31	%
2010		49	%		67	%		67	%
2011		69	%		84	%
2012		28	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		196,237		56,701		—		56,701		0		56,701		28.9	%		0
2003		483,719		221,814		667		222,481		182		222,664		46.0	%		850
2004		565,327		237,674		558		238,232		84		238,317		42.2	%		643
2005		476,481		365,380		907		366,287		227		366,514		76.9	%		1,134
2006		441,138		212,916		4,232		217,148		1,354		218,503		49.5	%		5,586
2007		423,468		199,710		21,115		220,826		3,334		224,160		52.9	%		24,450
2008		357,588		218,452		7,954		226,406		1,856		228,262		63.8	%		9,810
2009		272,873		77,316		8,050		85,366		1,874		87,240		32.0	%		9,924
2010		233,716		128,648		27,163		155,811		6,465		162,275		69.4	%		33,627
2011		225,599		115,930		72,623		188,553		27,285		215,838		95.7	%		99,908
2012		260,345		21,849		51,015		72,864		45,005		117,869		45.3	%		96,020

Total		3,936,490		1,856,389		194,285		2,050,674		87,668		2,138,342		54.3	%		281,953

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

General Casualty Insurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0			0			185			464			2,848			4,691			5,591			6,574			7,802			8,662			9,887
2003		0			461			16,019			18,500			29,401			55,140			57,458			57,463			57,487			57,534
2004		0			21			90			634			5,507			8,516			19,470			24,754			31,861
2005		15			26,548			31,396			63,544			65,785			118,117			118,386			120,531
2006		—			274			2,591			34,249			84,696			108,738			108,776
2007		107			7,235			9,707			13,553			26,963			29,224
2008		1,319			8,351			26,339			47,500			53,168
2009		309			8,309			36,402			60,422
2010		1,045			61,109			132,702
2011		8,380			28,876
2012		8,699

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		1,429			618			989			552			6,299			15,616			16,506			17,369			23,361			22,058			32,290
2003		23			13,124			25,852			33,579			58,980			59,141			57,667			57,575			57,537			57,534
2004		1,007			540			816			915			7,822			24,831			25,154			34,193			35,432
2005		30,852			109,619			113,339			119,923			124,573			124,781			123,362			149,613
2006		165			30,097			39,318			90,005			92,725			108,758			108,816
2007		4,131			15,419			15,970			32,500			37,670			38,733
2008		8,193			26,768			52,114			52,723			56,855
2009		1,876			35,225			49,792			70,495
2010		70,055			131,974			159,289
2011		34,513			109,349
2012		57,620

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		2	%		1	%		1	%		1	%		7	%		18	%		19	%		20	%		27	%		25	%		37	%
2003		0	%		5	%		10	%		13	%		23	%		23	%		22	%		22	%		22	%		22	%
2004		0	%		0	%		0	%		0	%		2	%		7	%		8	%		10	%		11	%
2005		10	%		37	%		38	%		40	%		42	%		42	%		41	%		50	%
2006		0	%		11	%		14	%		33	%		34	%		39	%		40	%
2007		2	%		6	%		6	%		12	%		14	%		15	%
2008		3	%		11	%		21	%		22	%		23	%
2009		1	%		13	%		19	%		27	%
2010		24	%		45	%		55	%
2011		10	%		33	%
2012		14	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		88,051		9,887		22,403		32,290		6,851		39,141		44.5	%		29,254
2003		257,017		57,534		—		57,534		31,383		88,917		34.6	%		31,383
2004		332,389		31,861		3,571		35,432		50,132		85,565		25.7	%		53,704
2005		297,511		120,531		29,082		149,613		47,792		197,405		66.4	%		76,874
2006		275,405		108,776		40		108,816		60,858		169,674		61.6	%		60,898
2007		264,680		29,224		9,509		38,733		84,914		123,647		46.7	%		94,423
2008		243,673		53,168		3,687		56,855		122,290		179,145		73.5	%		125,978
2009		265,068		60,422		10,073		70,495		130,349		200,845		75.8	%		140,423
2010		290,498		132,702		26,587		159,289		151,482		310,772		107.0	%		178,069
2011		333,193		28,876		80,473		109,349		190,310		299,658		89.9	%		270,783
2012		410,540		8,699		48,921		57,620		251,859		309,479		75.4	%		300,780

Total		3,058,025		641,679		234,348		876,027		1,128,220		2,004,247		65.5	%		1,362,568

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

Professional Liability Lines Insurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			10			61			5,225			13,909			45,884			59,860			59,930			59,944			59,984			62,538
2003		20			80			603			802			6,002			16,936			17,238			26,397			26,479			27,620
2004		15			683			7,406			29,477			30,403			39,004			48,452			48,571			48,702
2005		95			3,328			7,370			23,528			24,320			44,267			44,547			44,851
2006		296			6,850			44,815			59,330			88,030			97,134			111,154
2007		1,401			12,296			41,310			66,992			77,189			91,900
2008		2,750			22,943			46,656			103,602			162,596
2009		6,051			31,866			52,805			68,037
2010		9,628			43,547			70,837
2011		15,377			70,623
2012		17,676

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			2,010			7,062			23,775			28,000			47,706			60,648			59,930			59,944			59,984			62,538
2003		60			243			858			6,255			33,468			41,460			44,712			42,038			43,597			43,237
2004		434			1,692			8,106			32,701			55,437			55,592			61,361			60,795			60,926
2005		3,931			15,625			48,363			51,426			50,281			58,062			58,190			59,136
2006		41,225			52,944			92,820			120,819			133,887			185,213			184,305
2007		11,223			47,137			111,624			143,673			135,584			124,918
2008		17,483			86,164			126,011			175,230			214,571
2009		20,752			62,075			79,290			92,917
2010		30,731			70,628			107,204
2011		47,123			120,843
2012		47,124

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		3	%		12	%		40	%		47	%		80	%		102	%		101	%		101	%		101	%		105	%
2003		0	%		0	%		0	%		3	%		14	%		17	%		19	%		18	%		18	%		18	%
2004		0	%		1	%		3	%		10	%		17	%		17	%		19	%		19	%		19	%
2005		1	%		4	%		14	%		15	%		14	%		16	%		17	%		17	%
2006		10	%		13	%		23	%		31	%		34	%		47	%		47	%
2007		3	%		11	%		26	%		33	%		31	%		29	%
2008		4	%		19	%		28	%		38	%		47	%
2009		4	%		12	%		16	%		18	%
2010		6	%		15	%		23	%
2011		10	%		25	%
2012		9	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		59,558		62,538		—		62,538		2,830		65,368		109.8	%		2,830
2003		237,656		27,620		15,617		43,237		29,946		73,183		30.8	%		45,563
2004		321,801		48,702		12,224		60,926		22,655		83,581		26.0	%		34,879
2005		352,174		44,851		14,285		59,136		30,963		90,099		25.6	%		45,248
2006		395,104		111,154		73,151		184,305		51,885		236,190		59.8	%		125,036
2007		431,009		91,900		33,019		124,918		98,364		223,283		51.8	%		131,383
2008		457,068		162,596		51,975		214,571		117,500		332,071		72.7	%		169,475
2009		506,027		68,037		24,880		92,917		235,452		328,369		64.9	%		260,332
2010		475,224		70,837		36,367		107,204		217,280		324,484		68.3	%		253,647
2011		478,865		70,623		50,219		120,843		232,461		353,304		73.8	%		282,681
2012		537,257		17,676		29,448		47,124		317,495		364,619		67.9	%		346,943

Total		4,251,742		776,535		341,186		1,117,721		1,356,831		2,474,552		58.2	%		1,698,017

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

Healthcare Insurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			835			2,158			3,209			5,533			8,008			8,020			8,023			8,025			8,025			8,027
2003		1			4,202			11,148			13,777			14,724			18,198			18,756			20,074			20,104			23,203
2004		2			852			5,892			9,738			12,694			13,229			13,379			13,786			15,325
2005		277			2,861			4,941			10,255			11,122			11,692			13,475			13,647
2006		381			4,009			5,864			12,839			16,034			19,443			22,350
2007		944			7,190			17,307			20,125			23,303			32,100
2008		793			9,776			18,469			28,147			34,461
2009		6,586			16,658			27,066			38,919
2010		2,139			12,037			32,365
2011		1,931			15,556
2012		1,919

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		130			1,350			5,450			8,985			8,910			8,444			8,121			8,086			8,046			8,042			8,027
2003		345			11,153			20,246			20,723			20,529			23,625			23,160			23,420			23,793			25,905
2004		1,849			6,406			12,190			14,720			14,999			16,045			15,928			15,944			17,967
2005		5,566			11,649			15,497			14,435			13,384			13,710			14,639			15,443
2006		5,666			11,753			13,222			17,022			19,082			24,650			23,322
2007		3,773			15,281			24,537			37,172			39,822			45,816
2008		3,801			19,115			33,315			40,238			45,251
2009		10,999			29,590			48,454			73,176
2010		11,731			38,663			77,261
2011		10,204			50,594
2012		15,083

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		3	%		14	%		23	%		22	%		21	%		20	%		20	%		20	%		20	%		20	%
2003		0	%		15	%		27	%		27	%		27	%		31	%		30	%		31	%		31	%		34	%
2004		2	%		5	%		10	%		12	%		12	%		13	%		13	%		13	%		15	%
2005		4	%		9	%		11	%		11	%		10	%		10	%		11	%		11	%
2006		4	%		8	%		9	%		11	%		13	%		16	%		16	%
2007		3	%		10	%		17	%		25	%		27	%		31	%
2008		2	%		11	%		20	%		24	%		27	%
2009		6	%		15	%		25	%		37	%
2010		5	%		17	%		35	%
2011		4	%		22	%
2012		6	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		39,904		8,027		—		8,027		2,137		10,164		25.5	%		2,137
2003		76,140		23,203		2,702		25,905		4,001		29,907		39.3	%		6,703
2004		120,800		15,325		2,642		17,967		6,324		24,291		20.1	%		8,965
2005		136,577		13,647		1,796		15,443		11,043		26,487		19.4	%		12,839
2006		150,401		22,350		972		23,322		12,900		36,222		24.1	%		13,872
2007		147,720		32,100		13,715		45,816		8,330		54,146		36.7	%		22,045
2008		170,600		34,461		10,789		45,251		33,018		78,269		45.9	%		43,807
2009		197,314		38,919		34,257		73,176		39,569		112,745		57.1	%		73,827
2010		222,171		32,365		44,896		77,261		66,685		143,946		64.8	%		111,581
2011		228,445		15,556		35,037		50,594		91,274		141,868		62.1	%		126,312
2012		237,910		1,919		13,164		15,083		125,046		140,129		58.9	%		138,210

Total		1,727,981		237,873		159,972		397,845		400,327		798,172		46.2	%		560,299

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December 2012 Global Loss Triangles - Direct Insurance

Excluding large losses

U.S. dollars in thousands

Property Insurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12		24		36		48		60		72		84		96		108		120		132
2002		2,572		27,085		39,606		43,638		48,955		49,063		49,154		49,054		49,066		49,067		49,067
2003		49,208		118,094		163,485		175,303		175,715		175,379		179,293		179,283		179,378		179,392
2004		25,256		94,518		131,352		141,420		148,139		149,307		150,467		150,907		152,189
2005		40,373		99,880		138,713		161,091		165,024		165,290		166,393		164,486
2006		12,871		46,209		76,773		87,886		93,293		94,060		95,230
2007		20,325		62,106		79,511		86,918		89,091		94,204
2008		38,751		84,955		109,698		117,040		121,119
2009		15,993		42,846		50,242		53,634
2010		29,325		67,717		83,323
2011		31,764		79,874
2012		17,121

Reported Loss & ALAE
Accident	Months of Development
Year	12		24		36		48		60		72		84		96		108		120		132
2002		15,359		48,581		50,631		50,905		49,787		49,206		50,347		49,066		49,066		49,067		49,067
2003		130,863		173,192		187,840		187,279		182,859		180,769		179,873		179,676		179,641		179,619
2004		83,824		136,345		156,171		159,157		156,810		153,693		152,326		151,247		152,540
2005		99,789		152,456		173,462		173,122		172,390		167,846		167,108		164,600
2006		65,486		96,268		101,170		99,127		97,845		96,643		98,153
2007		91,985		107,261		107,409		105,592		105,695		105,889
2008		153,019		152,847		136,537		128,392		126,912
2009		59,002		61,631		60,966		60,584
2010		70,807		99,749		100,179
2011		109,475		134,352
2012		56,045



Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		9	%		28	%		29	%		30	%		29	%		29	%		29	%		29	%		29	%		29	%		29	%
2003		37	%		49	%		53	%		53	%		51	%		51	%		50	%		50	%		50	%		50	%
2004		25	%		41	%		47	%		48	%		47	%		46	%		46	%		45	%		46	%
2005		44	%		67	%		76	%		76	%		76	%		74	%		74	%		73	%
2006		34	%		50	%		53	%		52	%		51	%		51	%		51	%
2007		51	%		59	%		60	%		59	%		59	%		59	%
2008		88	%		88	%		79	%		74	%		73	%
2009		41	%		43	%		43	%		42	%
2010		55	%		78	%		78	%
2011		78	%		96	%
2012		30	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		171,696		49,067		—		49,067		0		49,067		28.6	%		0
2003		356,275		179,392		227		179,619		84		179,703		50.4	%		311
2004		333,170		152,189		350		152,540		34		152,574		45.8	%		384
2005		226,828		164,486		114		164,600		84		164,684		72.6	%		198
2006		190,783		95,230		2,923		98,153		611		98,764		51.8	%		3,534
2007		180,460		94,204		11,686		105,889		1,536		107,425		59.5	%		13,222
2008		173,790		121,119		5,794		126,912		1,148		128,060		73.7	%		6,942
2009		142,872		53,634		6,950		60,584		1,411		61,995		43.4	%		8,361
2010		128,427		83,323		16,856		100,179		5,429		105,608		82.2	%		22,285
2011		139,897		79,874		54,479		134,352		21,234		155,586		111.2	%		75,713
2012		184,340		17,121		38,925		56,045		35,142		91,187		49.5	%		74,066

Total		2,228,538		1,089,637		138,303		1,227,940		66,713		1,294,652		58.1	%		205,016

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

General Casualty Insurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0			0			185			464			2,848			4,691			5,591			6,574			7,802			8,662			9,887
2003		0			461			16,018			18,499			29,401			55,139			57,457			57,462			57,486			57,533
2004		0			14			77			506			5,053			7,545			16,465			21,746			28,834
2005		15			26,496			31,126			60,576			62,700			93,736			93,977			95,881
2006		—			266			2,570			29,999			56,694			72,659			72,688
2007		90			6,212			7,646			11,171			23,180			25,344
2008		1,114			5,663			18,971			35,915			39,859
2009		308			5,891			25,347			45,889
2010		932			33,959			81,399
2011		6,911			24,609
2012		8,513

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		1,429			618			989			552			6,299			15,616			16,506			17,369			23,361			22,058			32,290
2003		23			13,124			25,852			33,578			58,980			59,140			57,666			57,574			57,536			57,533
2004		1,007			533			803			668			7,208			21,354			21,803			30,832			32,091
2005		30,852			85,663			89,087			95,511			100,049			100,281			98,800			123,397
2006		165			27,081			35,290			61,938			63,445			72,671			72,728
2007		4,081			13,364			13,836			28,498			31,557			32,539
2008		5,543			19,509			39,067			39,434			42,650
2009		1,875			23,928			32,781			51,965
2010		46,228			81,263			100,472
2011		29,292			67,676
2012		43,065

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		2	%		1	%		1	%		1	%		7	%		18	%		19	%		20	%		27	%		25	%		37	%
2003		0	%		6	%		11	%		14	%		25	%		25	%		25	%		25	%		25	%		25	%
2004		0	%		0	%		0	%		0	%		3	%		8	%		8	%		11	%		12	%
2005		13	%		36	%		38	%		40	%		42	%		42	%		42	%		52	%
2006		0	%		13	%		16	%		29	%		30	%		34	%		34	%
2007		2	%		7	%		7	%		15	%		16	%		17	%
2008		3	%		12	%		24	%		24	%		26	%
2009		1	%		14	%		19	%		30	%
2010		24	%		42	%		51	%
2011		13	%		30	%
2012		16	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		88,051		9,887		22,403		32,290		6,851		39,141		44.5	%		29,254
2003		233,589		57,533		—		57,533		28,450		85,983		36.8	%		28,450
2004		271,160		28,834		3,256		32,091		40,637		72,727		26.8	%		43,893
2005		236,587		95,881		27,515		123,397		37,921		161,318		68.2	%		65,436
2006		214,376		72,688		40		72,728		47,261		119,989		56.0	%		47,301
2007		192,097		25,344		7,195		32,539		61,334		93,873		48.9	%		68,529
2008		162,750		39,859		2,791		42,650		80,397		123,048		75.6	%		83,188
2009		172,403		45,889		6,076		51,965		79,814		131,779		76.4	%		85,890
2010		195,237		81,399		19,073		100,472		93,718		194,190		99.5	%		112,791
2011		222,493		24,609		43,068		67,676		116,787		184,464		82.9	%		159,855
2012		274,263		8,513		34,551		43,065		157,625		200,689		73.2	%		192,176

Total		2,263,007		490,436		165,970		656,406		750,795		1,407,201		62.2	%		916,765

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

Professional Liability Lines Insurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			10			61			5,225			13,909			45,884			59,860			59,930			59,944			59,984			62,538
2003		20			80			603			799			5,997			15,424			15,727			24,885			24,967			26,108
2004		15			681			7,403			29,464			30,384			38,983			48,431			48,537			48,664
2005		95			3,328			7,272			18,291			19,043			40,954			41,214			41,518
2006		266			4,296			34,123			48,611			70,853			79,956			93,976
2007		1,312			11,982			36,732			56,952			66,212			77,668
2008		2,728			20,856			38,433			81,913			130,147
2009		5,938			30,737			51,066			65,484
2010		9,575			43,251			69,631
2011		15,257			65,775
2012		17,643

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			2,010			7,062			23,775			28,000			47,706			60,648			59,930			59,944			59,984			62,538
2003		60			243			858			6,252			31,963			39,947			43,200			40,526			42,085			41,725
2004		434			1,690			8,102			32,688			55,417			55,570			61,340			60,761			60,888
2005		3,931			12,613			40,988			43,748			42,802			54,727			54,855			55,801
2006		41,109			40,424			77,728			97,820			112,069			162,521			161,730
2007		10,557			30,869			79,692			107,002			112,600			106,267
2008		15,136			72,016			104,703			144,350			174,785
2009		20,418			59,130			74,956			86,672
2010		30,527			68,384			101,151
2011		46,013			113,706
2012		45,869

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		3	%		12	%		40	%		47	%		80	%		102	%		101	%		101	%		101	%		105	%
2003		0	%		0	%		0	%		3	%		14	%		17	%		19	%		17	%		18	%		18	%
2004		0	%		1	%		3	%		11	%		18	%		18	%		20	%		20	%		20	%
2005		1	%		4	%		13	%		13	%		13	%		17	%		17	%		17	%
2006		12	%		12	%		23	%		28	%		33	%		47	%		47	%
2007		3	%		9	%		23	%		31	%		32	%		30	%
2008		4	%		21	%		31	%		42	%		51	%
2009		5	%		15	%		19	%		22	%
2010		9	%		19	%		28	%
2011		13	%		32	%
2012		12	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		59,558		62,538		—		62,538		2,830		65,368		109.8	%		2,830
2003		232,141		26,108		15,617		41,725		29,205		70,930		30.6	%		44,822
2004		304,642		48,664		12,224		60,888		21,501		82,388		27.0	%		33,725
2005		326,766		41,518		14,283		55,801		29,566		85,367		26.1	%		43,849
2006		343,955		93,976		67,754		161,730		48,540		210,270		61.1	%		116,294
2007		349,869		77,668		28,600		106,267		86,614		192,881		55.1	%		115,214
2008		341,088		130,147		44,638		174,785		89,174		263,960		77.4	%		133,812
2009		386,618		65,484		21,189		86,672		183,045		269,717		69.8	%		204,234
2010		355,310		69,631		31,520		101,151		152,421		253,572		71.4	%		183,941
2011		354,064		65,775		47,931		113,706		153,467		267,173		75.5	%		201,398
2012		374,339		17,643		28,226		45,869		206,511		252,380		67.4	%		234,736

Total		3,428,350		699,152		311,982		1,011,134		1,002,872		2,014,007		58.7	%		1,314,854

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December 2012 Global Loss Triangles - Direct Insurance

U.S. dollars in thousands

Healthcare Insurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Accident Year	Months of Development
Accident Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			835			2,158			3,209			5,533			8,008			8,020			8,023			8,025			8,025			8,027
2003		1			4,202			11,148			13,777			14,724			18,198			18,756			20,074			20,104			23,203
2004		2			841			5,881			9,727			12,683			13,218			13,368			13,775			15,315
2005		237			2,681			4,577			9,493			10,026			10,549			11,912			12,068
2006		308			2,652			4,428			8,749			11,948			14,604			16,824
2007		934			6,029			15,608			18,396			21,564			25,807
2008		789			7,893			15,849			25,510			31,383
2009		4,581			14,167			24,529			36,001
2010		2,135			12,032			31,645
2011		1,902			15,010
2012		1,905

Reported Loss & ALAE
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		130			1,350			5,450			8,985			8,910			8,444			8,121			8,086			8,046			8,042			8,027
2003		345			11,153			20,246			20,723			20,529			23,625			23,160			23,420			23,793			25,905
2004		1,846			6,395			12,054			14,584			14,863			15,909			15,917			15,933			17,957
2005		5,197			10,142			13,483			12,473			11,766			12,116			12,937			13,753
2006		4,267			8,926			10,239			12,740			14,827			17,791			17,796
2007		3,603			13,040			22,295			31,659			34,971			35,581
2008		3,786			16,754			29,522			35,794			38,252
2009		8,941			26,830			45,270			62,051
2010		11,044			37,973			69,468
2011		9,943			48,178
2012		15,062

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Accident	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		3	%		14	%		23	%		22	%		21	%		20	%		20	%		20	%		20	%		20	%
2003		0	%		15	%		27	%		28	%		27	%		31	%		31	%		31	%		32	%		35	%
2004		2	%		6	%		10	%		13	%		13	%		14	%		14	%		14	%		16	%
2005		4	%		9	%		11	%		11	%		10	%		10	%		11	%		12	%
2006		3	%		7	%		8	%		10	%		12	%		14	%		14	%
2007		3	%		11	%		19	%		27	%		30	%		30	%
2008		3	%		13	%		22	%		27	%		29	%
2009		6	%		18	%		30	%		41	%
2010		7	%		22	%		41	%
2011		6	%		28	%
2012		9	%


Accident	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		39,904		8,027		—		8,027		2,137		10,164		25.5	%		2,137
2003		75,002		23,203		2,702		25,905		4,001		29,907		39.9	%		6,703
2004		114,883		15,315		2,642		17,957		6,324		24,280		21.1	%		8,965
2005		118,565		12,068		1,686		13,753		8,955		22,709		19.2	%		10,641
2006		124,024		16,824		972		17,796		10,210		28,005		22.6	%		11,182
2007		117,748		25,807		9,774		35,581		7,705		43,286		36.8	%		17,479
2008		131,356		31,383		6,869		38,252		24,524		62,776		47.8	%		31,394
2009		150,165		36,001		26,050		62,051		28,937		90,988		60.6	%		54,987
2010		169,545		31,645		37,823		69,468		47,254		116,722		68.8	%		85,077
2011		173,460		15,010		33,168		48,178		62,343		110,521		63.7	%		95,511
2012		175,947		1,905		13,157		15,062		89,074		104,135		59.2	%		102,231

Total		1,390,599		217,187		134,842		352,030		291,464		643,494		46.3	%		426,306

-19-

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

Property Catastrophe Reinsurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		101			2,131			4,161			4,194			4,310			4,310			4,336			4,336			4,336			4,336			4,336
2003		3,977			6,251			6,882			6,831			6,843			7,235			7,237			7,237			7,237			7,237
2004		17,379			47,475			55,350			57,786			59,259			60,040			60,489			60,852			61,286
2005		35,255			121,814			141,709			148,497			151,206			152,497			152,998			153,327
2006		710			8,912			9,671			9,829			9,903			9,917			9,917
2007		3,999			12,770			12,511			12,767			12,561			12,603
2008		15,798			26,979			30,619			32,007			33,204
2009		269			905			2,977			4,139
2010		3,798			54,580			76,523
2011		22,254			64,133
2012		26,282

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		3,041			5,163			4,370			4,390			4,372			4,371			4,356			4,356			4,336			4,336			4,336
2003		6,172			7,561			7,009			6,920			6,939			7,235			7,237			7,237			7,237			7,237
2004		33,642			56,808			59,396			60,325			60,712			61,073			60,889			61,110			61,373
2005		130,142			151,004			151,495			153,665			154,739			155,285			155,383			155,317
2006		3,275			9,580			9,885			10,172			10,131			10,136			10,131
2007		17,051			15,664			13,584			13,412			12,847			12,778
2008		31,318			32,595			33,106			33,901			33,952
2009		2,557			5,613			5,246			5,281
2010		32,490			86,547			103,457
2011		89,719			123,934
2012		55,315

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		12	%		15	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%
2003		13	%		13	%		12	%		12	%		12	%		12	%		12	%		12	%		12	%		12	%
2004		62	%		86	%		90	%		91	%		92	%		92	%		92	%		92	%		93	%
2005		178	%		180	%		181	%		183	%		185	%		185	%		185	%		185	%
2006		6	%		14	%		15	%		15	%		15	%		15	%		15	%
2007		25	%		19	%		16	%		16	%		15	%		15	%
2008		63	%		49	%		49	%		50	%		51	%
2009		4	%		7	%		6	%		6	%
2010		31	%		64	%		76	%
2011		64	%		63	%
2012		31	%


Treaty Year	Earned Premium		Loss & ALAE
Treaty Year	Earned Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		33,846		4,336		0		4,336		—		4,336		12.8	%		0
2003		58,868		7,237		0		7,237		—		7,237		12.3	%		0
2004		66,178		61,286		87		61,373		12		61,386		92.8	%		100
2005		83,838		153,327		1,991		155,317		393		155,711		185.7	%		2,384
2006		67,029		9,917		213		10,131		21		10,152		15.1	%		234
2007		83,675		12,603		175		12,778		8		12,787		15.3	%		183
2008		66,915		33,204		748		33,952		239		34,191		51.1	%		987
2009		83,264		4,139		1,142		5,281		290		5,571		6.7	%		1,432
2010		136,296		76,523		26,934		103,457		6,894		110,351		81.0	%		33,829
2011		195,282		64,133		59,801		123,934		18,825		142,759		73.1	%		78,626
2012		175,910		26,282		29,033		55,315		56,458		111,772		63.5	%		85,490

Total		1,051,101		452,988		120,125		573,112		83,141		656,253		62.4	%		203,266

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December 2012 Global Loss Triangles - Reinsurance

Excluding large losses

U.S. dollars in thousands

Property Other Reinsurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		1,994			14,146			21,254			24,533			26,202			27,034			27,241			27,550			27,573			27,588			27,587
2003		1,794			9,960			13,446			16,264			17,931			18,421			18,892			19,262			19,340			19,374
2004		949			7,461			11,995			14,439			15,598			17,294			17,210			17,405			17,442
2005		5,111			23,166			29,796			31,025			42,623			46,347			46,594			47,527
2006		3,793			17,679			23,689			27,465			29,525			29,862			29,924
2007		717			8,668			12,738			14,733			15,753			19,398
2008		3,920			10,738			12,479			14,966			15,195
2009		4,664			12,112			18,692			21,638
2010		5,835			20,289			29,650
2011		4,003			22,074
2012		5,422

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		3,082			17,552			26,185			27,026			27,589			27,756			27,588			27,715			27,606			27,628			27,603
2003		6,313			14,931			17,064			19,609			19,904			19,931			20,437			19,891			19,427			19,377
2004		7,729			9,571			14,654			16,236			16,650			17,180			17,493			17,538			17,528
2005		6,675			33,802			43,645			45,360			45,571			46,163			46,136			47,257
2006		9,307			23,794			30,449			30,525			30,085			30,377			30,259
2007		3,360			23,153			24,853			23,927			23,660			20,075
2008		9,627			15,156			15,746			16,123			16,068
2009		11,574			20,126			21,982			23,031
2010		13,219			34,080			36,749
2011		16,736			38,181
2012		19,163

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		17	%		28	%		41	%		42	%		43	%		43	%		43	%		43	%		43	%		43	%		43	%
2003		19	%		22	%		24	%		28	%		29	%		30	%		31	%		30	%		29	%		29	%
2004		16	%		13	%		20	%		22	%		22	%		23	%		23	%		23	%		23	%
2005		15	%		43	%		57	%		59	%		59	%		60	%		60	%		62	%
2006		19	%		35	%		45	%		45	%		44	%		45	%		44	%
2007		14	%		57	%		60	%		57	%		56	%		48	%
2008		42	%		46	%		48	%		49	%		48	%
2009		51	%		58	%		62	%		65	%
2010		39	%		69	%		72	%
2011		38	%		54	%
2012		33	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S			Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		64,253		27,587		16			27,603		8		27,611		43.0	%		23
2003		66,185		19,374		3			19,377		2		19,379		29.3	%		5
2004		75,094		17,442		87			17,528		32		17,561		23.4	%		119
2005		76,794		47,527		(270	)		47,257		567		47,824		62.3	%		297
2006		68,055		29,924		334			30,259		150		30,409		44.7	%		485
2007		41,916		19,398		677			20,075		357		20,432		48.7	%		1,034
2008		33,155		15,195		873			16,068		307		16,375		49.4	%		1,180
2009		35,446		21,638		1,393			23,031		836		23,866		67.3	%		2,228
2010		50,836		29,650		7,099			36,749		3,543		40,293		79.3	%		10,643
2011		70,098		22,074		16,107			38,181		19,577		57,758		82.4	%		35,684
2012		58,466		5,422		13,741			19,163		24,671		43,834		75.0	%		38,412

Total		640,299		255,231		40,060			295,291		50,050		345,341		53.9	%		90,110

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

General Casualty Reinsurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		329			3,688			7,670			10,682			13,471			15,290			16,500			17,685			18,347			18,481			18,814
2003		705			3,063			5,962			11,466			21,916			26,087			27,838			30,357			32,877			35,385
2004		648			1,088			6,331			11,850			21,718			28,466			37,451			40,561			44,091
2005		119			1,584			9,500			19,705			31,410			41,416			50,092			57,041
2006		944			6,183			20,496			34,829			43,542			51,219			56,562
2007		3			3,135			10,113			26,839			39,243			49,828
2008		29			1,468			13,077			22,515			34,675
2009		460			4,842			16,498			27,254
2010		519			24,429			45,235
2011		849			12,560
2012		842

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		346			5,531			10,970			18,737			19,011			19,864			20,694			19,214			19,906			19,931			19,860
2003		1,588			8,176			11,853			21,884			28,983			29,495			32,262			33,460			36,363			37,525
2004		1,357			9,104			14,286			23,228			36,173			44,570			45,306			48,468			53,339
2005		2,055			11,283			23,806			34,636			44,890			51,272			55,714			63,185
2006		2,682			20,398			38,266			51,622			57,314			64,110			67,040
2007		1,033			9,706			34,826			47,229			58,048			67,933
2008		1,591			13,743			37,550			48,234			61,791
2009		1,256			20,078			37,140			55,604
2010		10,615			43,972			67,172
2011		2,869			23,007
2012		2,991

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		10	%		20	%		33	%		56	%		57	%		59	%		62	%		57	%		59	%		59	%		59	%
2003		7	%		10	%		12	%		22	%		29	%		29	%		32	%		33	%		36	%		37	%
2004		3	%		8	%		11	%		19	%		29	%		36	%		37	%		40	%		43	%
2005		4	%		8	%		15	%		22	%		29	%		33	%		36	%		40	%
2006		6	%		16	%		29	%		40	%		44	%		49	%		52	%
2007		2	%		7	%		25	%		33	%		40	%		47	%
2008		4	%		11	%		29	%		37	%		47	%
2009		2	%		13	%		24	%		36	%
2010		18	%		28	%		37	%
2011		5	%		12	%
2012		5	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		33,679		18,814		1,046		19,860		1,436		21,296		63.2	%		2,482
2003		100,556		35,385		2,140		37,525		6,122		43,646		43.4	%		8,262
2004		122,676		44,091		9,249		53,339		10,762		64,102		52.3	%		20,011
2005		156,623		57,041		6,144		63,185		15,419		78,604		50.2	%		21,563
2006		130,166		56,562		10,478		67,040		16,165		83,204		63.9	%		26,643
2007		143,144		49,828		18,106		67,933		31,977		99,910		69.8	%		50,082
2008		131,471		34,675		27,116		61,791		36,622		98,413		74.9	%		63,738
2009		156,152		27,254		28,350		55,604		58,019		113,623		72.8	%		86,370
2010		179,230		45,235		21,937		67,172		73,643		140,815		78.6	%		95,580
2011		185,231		12,560		10,447		23,007		111,950		134,956		72.9	%		122,397
2012		60,169		842		2,150		2,991		38,835		41,827		69.5	%		40,985

Total		1,399,097		382,285		137,163		519,447		400,950		920,397		65.8	%		538,113

-22-

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

Professional Liability Lines Reinsurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			915			1,676			4,405			10,898			12,884			14,202			15,561			16,061			16,838			16,776
2003		0			191			1,274			3,207			12,429			16,125			21,385			24,308			26,798			27,514
2004		9			345			5,373			10,445			19,634			24,920			31,103			32,512			34,241
2005		8			786			6,852			22,841			35,126			43,205			48,780			51,822
2006		1			711			7,112			20,428			34,442			46,932			52,492
2007		5			1,263			11,453			41,735			69,029			100,723
2008		37			2,140			10,455			25,184			46,029
2009		17			1,675			6,595			15,484
2010		24			2,064			8,371
2011		19			610
2012		32

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			3,594			12,221			21,012			22,717			22,060			22,297			21,292			19,469			19,553			18,660
2003		65			1,599			13,981			21,047			29,125			29,219			33,173			33,043			34,729			34,090
2004		819			7,902			20,205			33,619			36,122			35,884			42,934			41,564			41,758
2005		456			6,067			22,581			46,077			50,876			55,740			61,260			68,872
2006		71			8,619			26,873			50,886			66,537			70,039			77,882
2007		227			17,507			75,722			118,166			134,239			138,158
2008		2,684			15,190			38,738			61,121			78,988
2009		295			6,314			17,184			29,616
2010		502			5,216			13,559
2011		165			2,973
2012		394

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		9	%		26	%		46	%		49	%		48	%		48	%		46	%		42	%		42	%		40	%
2003		0	%		2	%		15	%		22	%		29	%		29	%		33	%		33	%		35	%		34	%
2004		2	%		7	%		17	%		28	%		30	%		30	%		36	%		35	%		35	%
2005		1	%		3	%		11	%		22	%		24	%		27	%		30	%		33	%
2006		0	%		5	%		14	%		26	%		34	%		36	%		40	%
2007		0	%		9	%		36	%		55	%		62	%		64	%
2008		5	%		9	%		21	%		33	%		43	%
2009		1	%		5	%		13	%		22	%
2010		2	%		5	%		13	%
2011		1	%		4	%
2012		2	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		46,830		16,776		1,884		18,660		2,709		21,369		45.6	%		4,593
2003		99,803		27,514		6,575		34,090		7,399		41,489		41.6	%		13,975
2004		119,141		34,241		7,517		41,758		10,163		51,921		43.6	%		17,679
2005		207,087		51,822		17,049		68,872		17,019		85,891		41.5	%		34,069
2006		194,981		52,492		25,389		77,882		25,481		103,363		53.0	%		50,870
2007		214,606		100,723		37,435		138,158		29,064		167,222		77.9	%		66,499
2008		185,107		46,029		32,958		78,988		62,678		141,666		76.5	%		95,636
2009		134,603		15,484		14,132		29,616		65,962		95,578		71.0	%		80,093
2010		108,233		8,371		5,188		13,559		60,383		73,942		68.3	%		65,571
2011		69,305		610		2,363		2,973		43,422		46,395		66.9	%		45,785
2012		23,188		32		361		394		15,287		15,680		67.6	%		15,648

Total		1,402,885		354,098		150,852		504,949		339,566		844,516		60.2	%		490,418

-23-

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December 2012 Global Loss Triangles - Reinsurance

Excluding large losses

U.S. dollars in thousands

Other Reinsurance (Gross of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		52			1,225			2,576			3,222			3,687			4,081			4,191			4,439			4,466			4,475			4,484
2003		15			886			2,373			3,294			4,452			4,656			4,602			4,660			4,728			4,800
2004		43			5,115			8,048			10,943			9,076			9,470			9,876			10,582			10,649
2005		278			3,943			9,184			7,919			10,600			12,078			12,797			12,955
2006		68			2,821			5,666			6,934			7,793			8,329			8,560
2007		279			4,098			7,242			8,936			10,047			10,686
2008		534			4,050			7,972			10,335			12,427
2009		121			2,196			4,283			6,338
2010		73			1,222			3,879
2011		2,365			10,645
2012		28,387

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		270			3,065			4,472			4,580			4,963			4,700			4,691			4,629			4,623			4,609			4,587
2003		54			887			2,614			4,643			5,266			5,158			4,929			4,872			4,905			4,996
2004		134			8,197			9,085			11,931			10,545			9,696			9,826			9,694			9,641
2005		304			11,551			11,472			10,788			11,522			12,312			14,221			14,149
2006		69			6,022			7,949			8,880			9,035			9,226			9,256
2007		841			7,432			9,808			10,708			10,667			10,645
2008		1,072			9,821			12,870			11,804			12,130
2009		326			3,799			6,911			7,929
2010		237			3,781			5,245
2011		4,691			17,305
2012		31,773

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		22	%		28	%		39	%		38	%		41	%		39	%		39	%		38	%		38	%		38	%		38	%
2003		2	%		7	%		13	%		23	%		26	%		26	%		25	%		24	%		24	%		25	%
2004		1	%		26	%		24	%		32	%		28	%		25	%		26	%		25	%		25	%
2005		3	%		33	%		28	%		26	%		28	%		30	%		35	%		34	%
2006		0	%		20	%		26	%		29	%		29	%		30	%		30	%
2007		4	%		20	%		25	%		27	%		27	%		27	%
2008		5	%		30	%		38	%		35	%		36	%
2009		2	%		12	%		21	%		24	%
2010		1	%		10	%		13	%
2011		10	%		24	%
2012		29	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S			Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		12,192		4,484		103			4,587		116		4,704		38.6	%		219
2003		20,108		4,800		196			4,996		182		5,179		25.8	%		378
2004		38,404		10,649		(1,008	)		9,641		385		10,027		26.1	%		(622	)
2005		41,180		12,955		1,194			14,149		778		14,927		36.2	%		1,972
2006		30,959		8,560		695			9,256		739		9,995		32.3	%		1,435
2007		38,901		10,686		(41	)		10,645		913		11,558		29.7	%		872
2008		33,848		12,427		(298	)		12,130		1,877		14,007		41.4	%		1,579
2009		32,532		6,338		1,591			7,929		943		8,872		27.3	%		2,534
2010		38,918		3,879		1,367			5,245		2,918		8,164		21.0	%		4,285
2011		71,527		10,645		6,660			17,305		9,920		27,225		38.1	%		16,580
2012		110,703		28,387		3,387			31,773		70,299		102,072		92.2	%		73,685

Total		469,273		113,810		13,846			127,657		89,072		216,729		46.2	%		102,918

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

Property Catastrophe Reinsurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		101			2,131			4,161			4,194			4,310			4,310			4,336			4,336			4,336			4,336			4,336
2003		3,977			6,251			6,882			6,831			6,843			7,235			7,237			7,237			7,237			7,237
2004		17,379			47,475			55,350			57,786			58,813			59,457			59,741			60,097			60,525
2005		35,255			99,502			106,468			111,778			113,039			112,992			113,330			113,657
2006		710			8,912			9,671			9,829			9,903			9,917			9,917
2007		3,999			12,770			12,511			12,767			12,561			12,603
2008		15,798			26,979			30,619			32,007			33,204
2009		269			905			2,977			4,139
2010		3,798			54,580			76,523
2011		22,254			64,133
2012		26,282

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		3,041			5,163			4,370			4,390			4,372			4,371			4,356			4,356			4,336			4,336			4,336
2003		6,172			7,561			7,009			6,920			6,939			7,235			7,237			7,237			7,237			7,237
2004		33,642			56,808			59,396			60,325			60,267			60,490			60,141			60,355			60,613
2005		130,142			128,692			116,254			116,946			116,572			115,780			115,715			115,648
2006		3,275			9,580			9,885			10,172			10,131			10,136			10,131
2007		17,051			15,664			13,584			13,412			12,847			12,778
2008		31,318			32,595			33,106			33,901			33,952
2009		2,557			5,613			5,246			5,281
2010		32,490			86,547			103,457
2011		89,719			123,934
2012		55,315

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		12	%		15	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%		13	%
2003		13	%		13	%		12	%		12	%		12	%		12	%		12	%		12	%		12	%		12	%
2004		72	%		98	%		102	%		104	%		104	%		104	%		103	%		104	%		104	%
2005		220	%		184	%		166	%		167	%		167	%		166	%		166	%		165	%
2006		6	%		15	%		15	%		15	%		15	%		15	%		15	%
2007		25	%		19	%		16	%		16	%		15	%		15	%
2008		64	%		49	%		50	%		51	%		51	%
2009		4	%		7	%		6	%		6	%
2010		31	%		65	%		76	%
2011		64	%		63	%
2012		31	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR			Ultimate		Ult. Ratio			Unpaid
2002		33,846		4,336		0		4,336		—			4,336		12.8	%		0
2003		58,868		7,237		0		7,237		—			7,237		12.3	%		0
2004		58,128		60,525		87		60,613		(387	)		60,226		103.6	%		(299	)
2005		69,898		113,657		1,991		115,648		161			115,809		165.7	%		2,151
2006		65,966		9,917		213		10,131		21			10,152		15.4	%		234
2007		83,608		12,603		175		12,778		8			12,787		15.3	%		183
2008		66,833		33,204		748		33,952		239			34,191		51.2	%		987
2009		83,184		4,139		1,142		5,281		290			5,571		6.7	%		1,432
2010		136,279		76,523		26,934		103,457		6,894			110,351		81.0	%		33,829
2011		195,280		64,133		59,801		123,934		18,825			142,759		73.1	%		78,626
2012		175,908		26,282		29,033		55,315		56,458			111,772		63.5	%		85,490

Total		1,027,798		412,558		120,125		532,682		82,509			615,191		59.9	%		202,634

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December 2012 Global Loss Triangles - Reinsurance

Excluding large losses

U.S. dollars in thousands

Property Other Reinsurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		1,994			14,146			21,254			24,533			26,202			27,034			27,241			27,550			27,573			27,588			27,587
2003		1,794			9,960			13,446			16,264			17,931			18,421			18,892			19,262			19,340			19,374
2004		949			7,461			11,995			14,439			15,598			17,294			17,210			17,405			17,442
2005		5,111			23,166			29,796			31,025			42,623			46,347			46,594			47,527
2006		3,793			17,679			23,689			27,465			29,525			29,862			29,924
2007		717			8,668			12,738			14,733			15,753			19,398
2008		3,920			10,738			12,479			14,966			15,195
2009		4,664			12,112			18,692			21,638
2010		5,835			20,289			29,650
2011		4,003			22,074
2012		5,422

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		3,082			17,552			26,185			27,026			27,589			27,756			27,588			27,715			27,606			27,628			27,603
2003		6,313			14,931			17,064			19,609			19,904			19,931			20,437			19,891			19,427			19,377
2004		7,729			9,571			14,654			16,236			16,650			17,180			17,493			17,538			17,528
2005		6,675			33,802			43,645			45,360			45,571			46,163			46,136			47,257
2006		9,307			23,794			30,449			30,525			30,085			30,377			30,259
2007		3,360			23,153			24,853			23,927			23,660			20,075
2008		9,627			15,156			15,746			16,123			16,068
2009		11,574			20,126			21,982			23,031
2010		13,219			34,080			36,749
2011		16,736			38,181
2012		19,163

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		17	%		28	%		41	%		42	%		43	%		43	%		43	%		43	%		43	%		43	%		43	%
2003		19	%		22	%		24	%		28	%		29	%		30	%		31	%		30	%		29	%		29	%
2004		16	%		13	%		20	%		22	%		22	%		23	%		23	%		23	%		23	%
2005		16	%		44	%		59	%		61	%		61	%		62	%		62	%		64	%
2006		20	%		35	%		45	%		45	%		44	%		45	%		45	%
2007		14	%		57	%		60	%		57	%		56	%		48	%
2008		44	%		48	%		50	%		51	%		50	%
2009		51	%		58	%		62	%		65	%
2010		39	%		69	%		72	%
2011		38	%		54	%
2012		34	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S			Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		64,253		27,587		16			27,603		8		27,611		43.0	%		23
2003		66,185		19,374		3			19,377		2		19,379		29.3	%		5
2004		75,094		17,442		87			17,528		32		17,561		23.4	%		119
2005		74,334		47,527		(270	)		47,257		567		47,824		64.3	%		297
2006		67,629		29,924		334			30,259		150		30,409		45.0	%		485
2007		41,916		19,398		677			20,075		357		20,432		48.7	%		1,034
2008		31,822		15,195		873			16,068		307		16,375		51.5	%		1,180
2009		35,446		21,638		1,393			23,031		836		23,866		67.3	%		2,228
2010		50,836		29,650		7,099			36,749		3,543		40,293		79.3	%		10,643
2011		70,098		22,074		16,107			38,181		19,577		57,758		82.4	%		35,684
2012		56,141		5,422		13,741			19,163		23,159		42,322		75.4	%		36,900

Total		633,755		255,231		40,060			295,291		48,538		343,830		54.3	%		88,598

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

General Casualty Reinsurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		329			3,688			7,670			10,682			13,471			15,290			16,500			17,685			18,347			18,481			18,814
2003		705			3,063			5,962			11,466			21,916			26,087			27,838			30,357			32,877			35,385
2004		648			1,088			6,331			11,850			21,718			28,466			37,451			40,561			44,091
2005		119			1,584			9,500			19,705			31,410			41,416			50,092			57,041
2006		944			6,183			20,496			34,829			43,542			51,219			56,562
2007		3			3,135			10,113			26,839			39,243			49,828
2008		29			1,468			13,077			22,515			34,675
2009		460			4,842			16,498			27,254
2010		519			24,429			45,235
2011		849			12,560
2012		842

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		346			5,531			10,970			18,737			19,011			19,864			20,694			19,214			19,906			19,931			19,860
2003		1,588			8,176			11,853			21,884			28,983			29,495			32,262			33,460			36,363			37,525
2004		1,357			9,104			14,286			23,228			36,173			44,570			45,306			48,468			53,339
2005		2,055			11,283			23,806			34,636			44,890			51,272			55,714			63,185
2006		2,682			20,398			38,266			51,622			57,314			64,110			67,040
2007		1,033			9,706			34,826			47,229			58,048			67,933
2008		1,591			13,743			37,550			48,234			61,791
2009		1,256			20,078			37,140			55,604
2010		10,615			43,972			67,172
2011		2,869			23,007
2012		2,991

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		10	%		20	%		33	%		56	%		57	%		59	%		62	%		57	%		59	%		59	%		59	%
2003		7	%		10	%		12	%		22	%		29	%		29	%		32	%		33	%		36	%		37	%
2004		3	%		8	%		11	%		19	%		29	%		36	%		37	%		40	%		43	%
2005		4	%		8	%		15	%		22	%		29	%		33	%		36	%		40	%
2006		6	%		16	%		29	%		40	%		44	%		49	%		52	%
2007		2	%		7	%		25	%		33	%		41	%		48	%
2008		4	%		11	%		29	%		37	%		47	%
2009		2	%		13	%		24	%		36	%
2010		18	%		28	%		38	%
2011		5	%		12	%
2012		5	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		33,679		18,814		1,046		19,860		1,436		21,296		63.2	%		2,482
2003		100,556		35,385		2,140		37,525		6,122		43,646		43.4	%		8,262
2004		122,676		44,091		9,249		53,339		10,762		64,102		52.3	%		20,011
2005		156,395		57,041		6,144		63,185		15,419		78,604		50.3	%		21,563
2006		129,986		56,562		10,478		67,040		16,165		83,204		64.0	%		26,643
2007		142,884		49,828		18,106		67,933		31,977		99,910		69.9	%		50,082
2008		131,189		34,675		27,116		61,791		36,622		98,413		75.0	%		63,738
2009		155,822		27,254		28,350		55,604		58,019		113,623		72.9	%		86,370
2010		178,705		45,235		21,937		67,172		73,643		140,815		78.8	%		95,580
2011		185,231		12,560		10,447		23,007		111,950		134,956		72.9	%		122,397
2012		60,169		842		2,150		2,991		38,835		41,827		69.5	%		40,985

Total		1,397,291		382,285		137,163		519,447		400,950		920,397		65.9	%		538,113

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December 2012 Global Loss Triangles - Reinsurance

U.S. dollars in thousands

Professional Liability Lines Reinsurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			915			1,676			4,405			10,898			12,884			14,202			15,561			16,061			16,838			16,776
2003		0			191			1,274			3,207			12,429			16,125			21,385			24,308			26,798			27,514
2004		9			345			5,373			10,445			19,634			24,920			31,103			32,512			34,241
2005		8			786			6,852			22,841			35,126			43,205			48,780			51,822
2006		1			711			7,112			20,428			34,442			46,932			52,492
2007		5			1,263			11,453			41,735			69,029			100,723
2008		37			2,140			10,455			25,184			46,029
2009		17			1,675			6,595			15,484
2010		24			2,064			8,371
2011		19			610
2012		32

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		—			3,594			12,221			21,012			22,717			22,060			22,297			21,292			19,469			19,553			18,660
2003		65			1,599			13,981			21,047			29,125			29,219			33,173			33,043			34,729			34,090
2004		819			7,902			20,205			33,619			36,122			35,884			42,934			41,564			41,758
2005		456			6,067			22,581			46,077			50,876			55,740			61,260			68,872
2006		71			8,619			26,873			50,886			66,537			70,039			77,882
2007		227			17,507			75,722			118,166			134,239			138,158
2008		2,684			15,190			38,738			61,121			78,988
2009		295			6,314			17,184			29,616
2010		502			5,216			13,559
2011		165			2,973
2012		394

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		0	%		9	%		26	%		46	%		49	%		48	%		48	%		46	%		42	%		42	%		40	%
2003		0	%		2	%		15	%		22	%		29	%		29	%		33	%		33	%		35	%		34	%
2004		2	%		7	%		17	%		28	%		30	%		30	%		36	%		35	%		35	%
2005		1	%		3	%		11	%		22	%		24	%		27	%		30	%		33	%
2006		0	%		5	%		14	%		26	%		34	%		36	%		40	%
2007		0	%		9	%		36	%		55	%		62	%		64	%
2008		5	%		10	%		21	%		33	%		43	%
2009		1	%		5	%		13	%		22	%
2010		2	%		5	%		13	%
2011		1	%		4	%
2012		2	%


Treaty	Earned		Loss & ALAE
Year	Premium		Paid		Case O/S		Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		46,830		16,776		1,884		18,660		2,709		21,369		45.6	%		4,593
2003		99,803		27,514		6,575		34,090		7,399		41,489		41.6	%		13,975
2004		119,141		34,241		7,517		41,758		10,163		51,921		43.6	%		17,679
2005		207,087		51,822		17,049		68,872		17,019		85,891		41.5	%		34,069
2006		194,981		52,492		25,389		77,882		25,481		103,363		53.0	%		50,870
2007		214,606		100,723		37,435		138,158		29,064		167,222		77.9	%		66,499
2008		184,333		46,029		32,958		78,988		62,678		141,666		76.9	%		95,636
2009		134,603		15,484		14,132		29,616		65,962		95,578		71.0	%		80,093
2010		108,233		8,371		5,188		13,559		60,383		73,942		68.3	%		65,571
2011		69,305		610		2,363		2,973		43,422		46,395		66.9	%		45,785
2012		23,188		32		361		394		15,287		15,680		67.6	%		15,648

Total		1,402,112		354,098		150,852		504,949		339,566		844,516		60.2	%		490,418

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December 2012 Global Loss Triangles - Reinsurance

Excluding large losses

U.S. dollars in thousands

Other Reinsurance (Net of Ceded Reinsurance)


Cumulative Paid Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		52			1,225			2,576			3,222			3,687			4,081			4,191			4,439			4,466			4,475			4,484
2003		15			886			2,373			3,294			4,452			4,656			4,602			4,660			4,728			4,800
2004		24			4,699			6,910			9,525			7,585			7,963			8,368			9,075			9,141
2005		265			3,772			8,768			7,471			10,158			11,573			12,292			12,450
2006		68			2,821			5,666			6,934			7,793			8,329			8,560
2007		279			4,098			7,242			8,936			10,047			10,686
2008		534			4,050			7,972			10,335			12,427
2009		121			2,196			4,283			6,338
2010		73			1,222			3,879
2011		2,365			10,645
2012		28,387

Reported Loss & ALAE
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		270			3,065			4,472			4,580			4,963			4,700			4,691			4,629			4,623			4,609			4,587
2003		54			887			2,614			4,643			5,266			5,158			4,929			4,872			4,905			4,996
2004		37			7,097			7,476			10,324			9,038			8,188			8,319			8,186			8,134
2005		278			11,206			10,817			10,337			11,080			11,801			13,710			13,637
2006		69			6,022			7,949			8,880			9,035			9,226			9,256
2007		841			7,432			9,808			10,708			10,667			10,645
2008		1,072			9,821			12,870			11,804			12,130
2009		326			3,799			6,911			7,929
2010		237			3,781			5,245
2011		4,691			17,305
2012		31,773

Reported Loss & ALAE Ratio to Earned Premium (excluding IBNR)
Treaty	Months of Development
Year	12			24			36			48			60			72			84			96			108			120			132
2002		22	%		28	%		39	%		38	%		41	%		39	%		39	%		38	%		38	%		38	%		38	%
2003		2	%		7	%		13	%		23	%		26	%		26	%		25	%		24	%		24	%		25	%
2004		0	%		29	%		24	%		33	%		29	%		26	%		26	%		26	%		25	%
2005		2	%		34	%		28	%		27	%		29	%		31	%		36	%		35	%
2006		0	%		20	%		26	%		29	%		29	%		30	%		30	%
2007		4	%		20	%		25	%		27	%		27	%		27	%
2008		5	%		30	%		38	%		35	%		36	%
2009		2	%		12	%		21	%		24	%
2010		1	%		10	%		14	%
2011		11	%		25	%
2012		29	%


Treaty	Earned Premium		Loss & ALAE
Year	Earned Premium		Paid		Case O/S			Reported		IBNR		Ultimate		Ult. Ratio			Unpaid
2002		12,192		4,484		103			4,587		116		4,704		38.6	%		219
2003		20,108		4,800		196			4,996		182		5,179		25.8	%		378
2004		31,929		9,141		(1,008	)		8,134		385		8,519		26.7	%		(622	)
2005		38,654		12,450		1,188			13,637		784		14,422		37.3	%		1,972
2006		30,959		8,560		695			9,256		739		9,995		32.3	%		1,435
2007		38,901		10,686		(41	)		10,645		913		11,558		29.7	%		872
2008		33,848		12,427		(298	)		12,130		1,877		14,007		41.4	%		1,579
2009		32,532		6,338		1,591			7,929		943		8,872		27.3	%		2,534
2010		38,343		3,879		1,367			5,245		2,918		8,164		21.3	%		4,285
2011		70,014		10,645		6,660			17,305		9,920		27,225		38.9	%		16,580
2012		110,103		28,387		3,387			31,773		70,299		102,072		92.7	%		73,685

Total		457,583		111,798		13,840			125,638		89,078		214,716		46.9	%		102,918

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LOGO

December 2012 Global Loss Triangles - Direct Insurance

Excluding large losses on Property

U.S. dollars in thousands


Premium - Gross of ceded reinsurance
Cal/Acc	Property				General Casualty				Prof. Liab. Lines				Healthcare
Year	Written		Earned		Written		Earned		Written		Earned		Written		Earned
2002		376,526		196,237		166,995		88,051		141,612		59,558		73,076		39,904
2003		554,735		483,719		305,812		257,017		301,271		237,656		95,630		76,140
2004		547,959		565,327		352,392		332,389		358,020		321,801		142,160		120,800
2005		412,879		476,481		289,364		297,511		372,460		352,174		137,074		136,577
2006		463,900		441,138		276,940		275,405		434,999		395,104		156,698		150,401
2007		391,018		423,468		252,902		264,680		452,245		431,009		153,567		147,720
2008		327,491		357,588		235,939		243,673		498,544		457,068		184,055		170,600
2009		243,193		272,873		287,085		265,068		489,872		506,027		210,422		197,314
2010		224,453		233,716		311,987		290,498		469,036		475,224		228,810		222,171
2011		244,636		225,599		379,295		333,193		509,565		478,865		235,559		228,445
2012		274,556		260,345		471,090		410,540		589,248		537,257		234,099		237,910

Total		4,061,346		3,936,490		3,329,801		3,058,025		4,616,873		4,251,742		1,851,151		1,727,981

Loss & ALAE - Gross of ceded reinsurance
Accident	Property				General Casualty				Prof. Liab. Lines				Healthcare
Year	Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported
2002		56,701		56,701		9,887		32,290		62,538		62,538		8,027		8,027
2003		221,814		222,481		57,534		57,534		27,620		43,237		23,203		25,905
2004		237,674		238,232		31,861		35,432		48,702		60,926		15,325		17,967
2005		365,380		366,287		120,531		149,613		44,851		59,136		13,647		15,443
2006		212,916		217,148		108,776		108,816		111,154		184,305		22,350		23,322
2007		199,710		220,826		29,224		38,733		91,900		124,918		32,100		45,816
2008		218,452		226,406		53,168		56,855		162,596		214,571		34,461		45,251
2009		77,316		85,366		60,422		70,495		68,037		92,917		38,919		73,176
2010		128,648		155,811		132,702		159,289		70,837		107,204		32,365		77,261
2011		115,930		188,553		28,876		109,349		70,623		120,843		15,556		50,594
2012		21,849		72,864		8,699		57,620		17,676		47,124		1,919		15,083

Total		1,856,389		2,050,674		641,679		876,027		776,535		1,117,721		237,873		397,845

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LOGO

December 2012 Global Loss Triangles - Direct Insurance

Excluding large losses on Property

U.S. dollars in thousands


Premium - Net of ceded reinsurance
Cal/Acc	Property				General Casualty				Prof. Liab. Lines				Healthcare
Year	Written		Earned		Written		Earned		Written		Earned		Written		Earned
2002		300,021		171,696		166,995		88,051		141,612		59,558		73,076		39,904
2003		383,345		356,275		260,049		233,589		287,807		232,141		93,126		75,002
2004		308,623		333,170		283,537		271,160		330,199		304,642		126,731		114,883
2005		170,895		226,828		228,477		236,587		322,937		326,766		106,857		118,565
2006		193,652		190,783		211,686		214,376		362,190		343,955		124,109		124,024
2007		176,420		180,460		173,099		192,097		346,657		349,869		120,773		117,748
2008		169,889		173,790		150,779		162,750		386,010		341,088		149,237		131,356
2009		123,011		142,872		195,581		172,403		367,364		386,618		165,738		150,165
2010		132,548		128,427		207,783		195,237		355,963		355,310		175,110		169,545
2011		160,551		139,897		256,741		222,493		372,044		354,064		177,464		173,460
2012		204,044		184,340		313,044		274,263		398,691		374,339		173,997		175,947

Total		2,322,998		2,228,538		2,447,772		2,263,007		3,671,476		3,428,350		1,486,219		1,390,599

Loss & ALAE - Net of ceded reinsurance
Accident	Property				General Casualty				Prof. Liab. Lines				Healthcare
Year	Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported
2002		49,067		49,067		9,887		32,290		62,538		62,538		8,027		8,027
2003		179,392		179,619		57,533		57,533		26,108		41,725		23,203		25,905
2004		152,189		152,540		28,834		32,091		48,664		60,888		15,315		17,957
2005		164,486		164,600		95,881		123,397		41,518		55,801		12,068		13,753
2006		95,230		98,153		72,688		72,728		93,976		161,730		16,824		17,796
2007		94,204		105,889		25,344		32,539		77,668		106,267		25,807		35,581
2008		121,119		126,912		39,859		42,650		130,147		174,785		31,383		38,252
2009		53,634		60,584		45,889		51,965		65,484		86,672		36,001		62,051
2010		83,323		100,179		81,399		100,472		69,631		101,151		31,645		69,468
2011		79,874		134,352		24,609		67,676		65,775		113,706		15,010		48,178
2012		17,121		56,045		8,513		43,065		17,643		45,869		1,905		15,062

Total		1,089,637		1,227,940		490,436		656,406		699,152		1,011,134		217,187		352,030

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LOGO

December 2012 Global Loss Triangles - Reinsurance

Excluding large losses on Property Other and Other

U.S. dollars in thousands


Premium - Gross of ceded reinsurance
Treaty	Property Catastrophe				Property Other				General Casualty				Prof. Liab. Lines				Other
Year	Written		Earned		Written		Earned		Written		Earned		Written		Earned		Written		Earned
2002		33,846		33,846		64,253		64,253		33,679		33,679		46,830		46,830		12,192		12,192
2003		58,868		58,868		66,185		66,185		100,556		100,556		99,803		99,803		20,108		20,108
2004		66,178		66,178		75,094		75,094		122,676		122,676		119,141		119,141		38,404		38,404
2005		83,838		83,838		76,794		76,794		156,623		156,623		207,087		207,087		41,180		41,180
2006		67,029		67,029		68,055		68,055		130,166		130,166		194,981		194,981		30,959		30,959
2007		83,675		83,675		41,916		41,916		143,144		143,144		214,606		214,606		38,901		38,901
2008		66,915		66,915		33,155		33,155		131,492		131,471		185,107		185,107		33,848		33,848
2009		83,264		83,264		35,446		35,446		156,152		156,152		134,603		134,603		32,532		32,532
2010		136,491		136,296		50,838		50,836		179,230		179,230		108,260		108,233		38,918		38,918
2011		198,225		195,282		70,725		70,098		209,851		185,231		76,339		69,305		74,760		71,527
2012		249,048		175,910		97,490		58,466		159,638		60,169		62,621		23,188		141,248		110,703

Total		1,127,378		1,051,101		679,951		640,299		1,523,207		1,399,097		1,449,378		1,402,885		503,051		469,273

Loss & ALAE - Gross of ceded reinsurance
Treaty	Property Catastrophe				Property Other				General Casualty				Prof. Liab. Lines				Other
Year	Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported
2002		4,336		4,336		27,587		27,603		18,814		19,860		16,776		18,660		4,484		4,587
2003		7,237		7,237		19,374		19,377		35,385		37,525		27,514		34,090		4,800		4,996
2004		61,286		61,373		17,442		17,528		44,091		53,339		34,241		41,758		10,649		9,641
2005		153,327		155,317		47,527		47,257		57,041		63,185		51,822		68,872		12,955		14,149
2006		9,917		10,131		29,924		30,259		56,562		67,040		52,492		77,882		8,560		9,256
2007		12,603		12,778		19,398		20,075		49,828		67,933		100,723		138,158		10,686		10,645
2008		33,204		33,952		15,195		16,068		34,675		61,791		46,029		78,988		12,427		12,130
2009		4,139		5,281		21,638		23,031		27,254		55,604		15,484		29,616		6,338		7,929
2010		76,523		103,457		29,650		36,749		45,235		67,172		8,371		13,559		3,879		5,245
2011		64,133		123,934		22,074		38,181		12,560		23,007		610		2,973		10,645		17,305
2012		26,282		55,315		5,422		19,163		842		2,991		32		394		28,387		31,773

Total		452,988		573,112		255,231		295,291		382,285		519,447		354,098		504,949		113,810		127,657

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LOGO

December 2012 Global Loss Triangles - Reinsurance

Excluding large losses on Property Other and Other

U.S. dollars in thousands


Premium - Net of ceded reinsurance
Treaty	Property Catastrophe				Property Other				General Casualty				Prof. Liab. Lines				Other
Year	Written		Earned		Written		Earned		Written		Earned		Written		Earned		Written		Earned
2002		33,846		33,846		64,253		64,253		33,679		33,679		46,830		46,830		12,192		12,192
2003		58,868		58,868		66,185		66,185		100,556		100,556		99,803		99,803		20,108		20,108
2004		58,128		58,128		75,094		75,094		122,676		122,676		119,141		119,141		31,929		31,929
2005		69,898		69,898		74,334		74,334		156,395		156,395		207,087		207,087		38,654		38,654
2006		65,966		65,966		67,629		67,629		129,986		129,986		194,981		194,981		30,959		30,959
2007		83,608		83,608		41,916		41,916		142,884		142,884		214,606		214,606		38,901		38,901
2008		66,833		66,833		31,822		31,822		131,210		131,189		184,555		184,333		33,848		33,848
2009		83,184		83,184		35,446		35,446		155,822		155,822		134,603		134,603		32,532		32,532
2010		136,474		136,279		50,838		50,836		178,705		178,705		108,260		108,233		38,343		38,343
2011		198,223		195,280		70,725		70,098		209,851		185,231		76,339		69,305		72,945		70,014
2012		249,046		175,908		87,167		56,141		159,638		60,169		62,621		23,188		139,369		110,103

Total		1,104,075		1,027,798		665,410		633,755		1,521,401		1,397,291		1,448,826		1,402,112		489,781		457,583

Loss & ALAE - Net of ceded reinsurance
Treaty	Property Catastrophe				Property Other				General Casualty				Prof. Liab. Lines				Other
Year	Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported		Paid		Reported
2002		4,336		4,336		27,587		27,603		18,814		19,860		16,776		18,660		4,484		4,587
2003		7,237		7,237		19,374		19,377		35,385		37,525		27,514		34,090		4,800		4,996
2004		60,525		60,613		17,442		17,528		44,091		53,339		34,241		41,758		9,141		8,134
2005		113,657		115,648		47,527		47,257		57,041		63,185		51,822		68,872		12,450		13,637
2006		9,917		10,131		29,924		30,259		56,562		67,040		52,492		77,882		8,560		9,256
2007		12,603		12,778		19,398		20,075		49,828		67,933		100,723		138,158		10,686		10,645
2008		33,204		33,952		15,195		16,068		34,675		61,791		46,029		78,988		12,427		12,130
2009		4,139		5,281		21,638		23,031		27,254		55,604		15,484		29,616		6,338		7,929
2010		76,523		103,457		29,650		36,749		45,235		67,172		8,371		13,559		3,879		5,245
2011		64,133		123,934		22,074		38,181		12,560		23,007		610		2,973		10,645		17,305
2012		26,282		55,315		5,422		19,163		842		2,991		32		394		28,387		31,773

Total		412,558		532,682		255,231		295,291		382,285		519,447		354,098		504,949		111,798		125,638

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IV.

SELECTED EXCERPTS FROM ALLIED WORLD’S 2012 10-K DISCLOSURE

The reserve for losses and loss expenses is comprised of two main elements: outstanding loss reserves, also known as case reserves, and reserves for IBNR. Outstanding loss reserves relate to known claims and represent management’s best estimate of the likely loss settlement. IBNR reserves relate primarily to unreported events that, based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to have occurred and are reasonably likely to result in a loss to our company. IBNR reserves also relate to estimated development of reported events that based on industry information, management’s experience and actuarial evaluation, can reasonably be expected to reach our attachment point and are reasonably likely to result in a loss to our company. We also include IBNR changes in the values of claims that have been reported to us but are not yet settled. Each claim is settled individually based upon its merits and it is not unusual for a claim to take years after being reported to settle, especially if legal action is involved. As a result, reserves for losses and loss expenses include significant estimates for IBNR reserves.

While management believes that our case reserves and IBNR are sufficient to cover losses assumed by us, there can be no assurance that losses will not deviate from our reserves, possibly by material amounts. The methodology of estimating loss reserves is periodically reviewed to ensure that the assumptions made continue to be appropriate. To the extent actual reported losses exceed estimated losses, the carried estimate of the ultimate losses will be increased (i.e., unfavorable reserve development), and to the extent actual reported losses are less than estimated losses, the carried estimate of ultimate losses will be reduced (i.e., favorable reserve development). We record any changes in our loss reserve estimates and the related reinsurance recoverables in the periods in which they are determined.

In certain lines of business, claims are generally reported and paid within a relatively short period of time (“shorter tail lines”) during and following the policy coverage period. This generally enables us to determine with greater certainty our estimate of ultimate losses and loss expenses. The estimate of reserves for our shorter tail lines of business and products, including property, crop, aviation, marine, personal accident and workers compensation catastrophe relies primarily on traditional loss reserving methodologies, utilizing selected paid and reported loss development factors.

Our casualty insurance and casualty reinsurance lines of business include general liability risks, healthcare and professional liability risks. Claims may be reported or settled several years after the coverage period has terminated for these lines of business (“longer tail lines”), which increases uncertainties of our reserve estimates in such lines. In addition, our attachment points for these longer tail lines are often relatively high, making reserving for these lines of business

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more difficult than shorter tail lines due to having to estimate whether the severity of the estimated losses will exceed our attachment point. We establish a case reserve when sufficient information is gathered to make a reasonable estimate of the liability, which often requires a significant amount of information and time. Due to the lengthy reporting pattern of these casualty lines, reliance is placed on industry benchmarks supplemented by our own experience. For expected loss ratio selections, we are giving greater consideration to our existing experience supplemented with analysis of loss trends, rate changes and experience of peer companies.

Our reinsurance treaties are reviewed individually, based upon individual characteristics and loss experience emergence. Loss reserves on assumed reinsurance have unique features that make them more difficult to estimate than direct insurance. We establish loss reserves upon receipt of advice from a cedent that a reserve is merited. Our claims staff may establish additional loss reserves where, in their judgment, the amount reported by a cedent is potentially inadequate. The following are the most significant features that make estimating loss reserves on assumed reinsurance difficult:

•

Reinsurers have to rely upon the cedents and reinsurance intermediaries to report losses in a timely fashion.

•

Reinsurers must rely upon cedents to price the underlying business appropriately.

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Reinsurers have less predictable loss emergence patterns than direct insurers, particularly when writing excess-of-loss reinsurance.

For excess-of-loss reinsurance, cedents generally are required to report losses that either exceed 50% of the retention, have a reasonable probability of exceeding the retention or meet serious injury reporting criteria. All reinsurance claims that are reserved are reviewed at least every six months. For quota share reinsurance treaties, cedents are required to give a periodic statement of account, generally monthly or quarterly. These periodic statements typically include information regarding written premiums, earned premiums, unearned premiums, ceding commissions, brokerage amounts, applicable taxes, paid losses and outstanding losses. They can be submitted 60 to 90 days after the close of the reporting period. Some quota share reinsurance treaties have specific language regarding earlier notice of serious claims.

Reinsurance generally has a greater time lag than direct insurance in the reporting of claims. The time lag is caused by the claim first being reported to the cedent, then the intermediary (such as a broker) and finally the reinsurer. This lag can be up to six months or longer in certain cases. There is also a time lag because the insurer may not be required to report claims to the reinsurer until certain reporting criteria are met. In some instances this could be several years while a claim is being litigated. We use reporting factors based on data from the Reinsurance Association of America to adjust for time lags. We also use historical treaty-specific reporting factors when applicable. Loss and premium information are entered into our reinsurance system by our claims department and our accounting department on a timely basis.

We record the individual case reserves sent to us by the cedents through the reinsurance intermediaries. Individual claims are reviewed by our reinsurance claims department and adjusted as deemed appropriate. The loss data received from the intermediaries is checked for reasonableness and for known events. Details of the loss listings are reviewed during routine claim audits.

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The expected loss ratios that we assign to each treaty are based upon analysis and modeling performed by a team of actuaries. The historical data reviewed by the team of pricing actuaries is considered in setting the reserves for each cedent. The historical data in the submissions is matched against our carried reserves for our historical treaty years.

Loss reserves do not represent an exact calculation of liability. Rather, loss reserves are estimates of what we expect the ultimate resolution and administration of claims will cost. These estimates are based on actuarial and statistical projections and on our assessment of currently available data, as well as estimates of future trends in claims severity and frequency, judicial theories of liability and other factors. Loss reserve estimates are refined as experience develops and as claims are reported and resolved. In addition, the relatively long periods between when a loss occurs and when it may be reported to our claims department for our casualty insurance and casualty reinsurance lines of business increase the uncertainties of our reserve estimates in such lines.

We utilize a variety of standard actuarial methods in our analysis. The selections from these various methods are based on the loss development characteristics of the specific line of business. For lines of business with long reporting periods such as casualty reinsurance, we may rely more on an expected loss ratio method (as described below) until losses begin to develop. For lines of business with short reporting periods such as property insurance, we may rely more on a paid loss development method (as described below) as losses are reported relatively quickly. The actuarial methods we utilize include:

Paid Loss Development Method. We estimate ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid at a consistent rate. The paid loss development method provides an objective test of reported loss projections because paid losses contain no reserve estimates. In some circumstances, paid losses for recent periods may be too varied for accurate predictions. For many coverages, especially casualty coverages, claim payments are made slowly and it may take years for claims to be fully reported and settled. These payments may be unreliable for determining future loss projections because of shifts in settlement patterns or because of large settlements in the early stages of development. Choosing an appropriate “tail factor” to determine the amount of payments from the latest development period to the ultimate development period may also require considerable judgment, especially for coverages that have long payment patterns. As we have limited payment history, we have had to supplement our paid loss development patterns with appropriate benchmarks.

Reported Loss Development Method. We estimate ultimate losses by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than the paid loss development method. Thus, reported loss patterns may be less varied than paid loss patterns, especially for coverages that have historically been paid out over a long period of time but for which claims are reported relatively early and have case loss reserve estimates established. This method assumes that reserves have been

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established using consistent practices over the historical period that is reviewed. Changes in claims handling procedures, large claims or significant numbers of claims of an unusual nature may cause results to be too varied for accurate forecasting. Also, choosing an appropriate “tail factor” to determine the change in reported loss from the latest development period to the ultimate development period may require considerable judgment. As we have limited reported history, we have had to supplement our reported loss development patterns with appropriate benchmarks.

Expected Loss Ratio Method. To estimate ultimate losses under the expected loss ratio method, we multiply earned premiums by an expected loss ratio. The expected loss ratio is selected utilizing industry data, historical company data and professional judgment. This method is particularly useful for new insurance companies or new lines of business where there are no historical losses or where past loss experience is not credible.

Bornhuetter-Ferguson Paid Loss Method. The Bornhuetter-Ferguson paid loss method is a combination of the paid loss development method and the expected loss ratio method. The amount of losses yet to be paid is based upon the expected loss ratios and the expected percentage of losses unpaid. These expected loss ratios are modified to the extent paid losses to date differ from what would have been expected to have been paid based upon the selected paid loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of paid losses to calculate ultimate losses. This method will react slowly if actual loss ratios develop differently because of major changes in rate levels, retentions or deductibles, the forms and conditions of reinsurance coverage, the types of risks covered or a variety of other changes.

B-F Method. The B-F method is similar to the Bornhuetter-Ferguson paid loss method with the exception that it uses reported losses and reported loss development factors.

During 2012, 2011 and 2010, we adjusted our reliance on actuarial methods utilized for certain casualty lines of business and loss years within our U.S. insurance and international insurance lines from using a blend of the B-F method and the expected loss ratio method to using only the B-F method. We also began adjusting our reliance on actuarial methods utilized for certain other casualty lines of business and loss years within all of our operating units including the reinsurance lines, by placing greater reliance on the B-F method than on the expected loss ratio method. Placing greater reliance on more responsive actuarial methods for certain casualty lines of business and loss years within each of our operating units is a natural progression as we mature as a company and gain sufficient historical experience of our own that allows us to further refine our estimate of the reserve for losses and loss expenses. We believe utilizing only the B-F method for older loss years will more accurately reflect the reported loss activity we have had thus far in our ultimate loss ratio selections, and will better reflect how the ultimate losses will develop over time. We will continue to utilize the expected loss ratio method for the most recent loss years until we have sufficient experience to utilize other acceptable actuarial methodologies.

We expect that the trend of placing greater reliance on more responsive actuarial methods, for example from the expected loss ratio method to the B-F method, to continue as both (1) our loss years mature and become more statistically reliable and (2) as we build databases of our internal loss development patterns. The expected loss ratio remains a key assumption as the Bornhuetter-Ferguson methods rely upon an expected loss ratio selection and a loss development pattern selection.

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The key assumptions used to arrive at our best estimate of loss reserves are the expected loss ratios, rate of loss cost inflation, selection of benchmarks and reported and paid loss emergence patterns. Our reporting factors and expected loss ratios are based on a blend of our own experience and industry benchmarks for longer tailed business and primarily our own experience for shorter tail business. The benchmarks selected were those that we believe are most similar to our underwriting business.

Our expected loss ratios for shorter tail lines change from year to year. As our losses from shorter tail lines of business are reported relatively quickly, we select our expected loss ratios for the most recent years based upon our actual loss ratios for our older years adjusted for rate changes, inflation, cost of reinsurance and average storm activity. For the shorter tail lines, we initially used benchmarks for reported and paid loss emergence patterns. As we mature as a company, we have begun supplementing those benchmark patterns with our actual patterns as appropriate. For the longer tail lines, we continue to use benchmark patterns, although we update the benchmark patterns as additional information is published regarding the benchmark data.

For shorter tail lines, the primary assumption that changed during both 2012 as compared to 2011 and 2011 as compared to 2010 as it relates to prior year losses was actual paid and reported loss emergence patterns were generally less severe than estimated for each year due to lower frequency and severity of reported losses. As a result of this change, we recognized net favorable prior year reserve development in both 2012 and 2011. However, we did experience significant losses on certain of our shorter tail lines related to the current loss year.

The selection of the expected loss ratios for the longer tail lines is our most significant assumption. Due to the lengthy reporting pattern of longer tail lines, we supplement our own experience with industry benchmarks of expected loss ratios and reporting patterns in addition to our own experience. For our longer tail lines, the primary assumption that changed during both 2012 as compared to 2011 and 2011 as compared to 2010 as it relates to prior year losses was using the Bornhuetter-Ferguson loss development method for certain casualty lines of business and loss years as discussed above. This method calculated a lower projected loss ratio based on loss emergence patterns to date. As a result of the change in the expected loss ratio, we recognized net favorable prior year reserve development in 2012, 2011 and 2010. We believe that recognition of the reserve changes in the period they were recorded was appropriate since a pattern of reported losses had not emerged and the loss years were previously too immature to deviate from the expected loss ratio method in prior periods.

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V. GLOSSARY


Accident year		The year in which the event occurred that triggers a claim to us. All years referred to are years ending December 31.

ALAE		Allocated loss adjustment expense, which is an estimate of the associated external expenses to be incurred in settling a claim. ALAE includes the costs of third party loss assessors and legal experts.

Assumed reinsurance		That portion of a risk that a reinsurer accepts from an insurer in return for a stated premium.

Attachment point		The loss point of which an insurance or reinsurance policy becomes operative and below which any losses are retained by either the insured or other insurers or reinsurers, as the case may be.

Case reserves		Loss reserves, established with respect to specific, individual reported claims.

Casualty lines		Insurance that is primarily concerned with losses due to injuries to persons and liability imposed on the insured for such injury or for damage to the property of others.

Catastrophe reinsurance		A form of excess-of-loss reinsurance that, subject to a specified limit, indemnifies the ceding company for the amount of loss in excess of a specified retention with respect to an accumulation of losses resulting from a catastrophic event. The actual reinsurance document is called a “catastrophe cover.” These reinsurance contracts are typically designed to cover property insurance losses but can be written to cover other types of insurance losses such as workers’ compensation policies.

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Cede, cedent or ceding company		When an insurer transfers some or all of its risk to a reinsurer, it “cedes” business and is referred to as the “ceding company” or “cedent.”

Claims-made policies		A liability policy covering all claims first advised during the term of the insurance policy, regardless of when the loss itself was sustained.

Deductible		The amount of exposure an insured retains on any one risk or group of risks. The term may apply to an insurance policy, where the insured is an individual or business, or a reinsurance contract, where the insured is an insurance company. See “Retention.”

D&O side A cover		Insurance that provides liability coverage to directors and officers for non-indemnified losses arising from their negligence or malfeasance. Coverage applies only if the directors and officers are not indemnified by their company for such loss. Such coverage is provided on both an excess basis (i.e., policy attaches after all underlying policy limits are exhausted) and on a “difference-in-conditions” basis (i.e., policy drops down and attaches at a lower attachment point due to the failure or inability of the underlying policy(ies) to pay the loss).

Earned premiums		That portion of premiums written that applies to the expired portion of the policy term. Earned premiums are recognized as revenues under both statutory accounting practice and accounting principles generally accepted in the United States of America.

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Employment practices liability insurance		Insurance that primarily provides liability coverage to organizations and their employees for losses arising from acts of discrimination, harassment and retaliation against current and prospective employees of the organization.

Errors and omissions		Insurance that provides liability coverage for claims arising from professional negligence or malpractice, subject to applicable exclusions, terms and conditions of the policy.

Excess or Excess layer		Insurance to cover losses in one or more layers above a certain amount with losses below that amount usually covered by the insured’s primary policy and its self-insured retention.

Excess-of-loss reinsurance		Reinsurance that indemnifies the insured against all or a specified portion of losses over a specified amount or retention.

Exclusions		Provisions in an insurance or reinsurance policy excluding certain risks or otherwise limiting the scope of coverage.

Exposure		The possibility of loss. A unit of measure of the amount of risk a company assumes.

Facultative reinsurance		The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.

Fiduciary liability insurance		Insurance that primarily provides liability coverage to fiduciaries of employee benefit and welfare plans for losses arising from the breach of any fiduciary duty owed to plan beneficiaries.

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General casualty		Insurance that is primarily concerned with losses due to injuries to persons and liability imposed on the insured for such injury or for damage to the property of others.

Global loss triangles		A table of loss experience showing total losses for a certain period at regular valuation dates, reflecting the change in amounts as claims mature. Older periods in the table will have one more entry than the next youngest period, leading to the triangle shape of the data in the table.

Gross premiums written		Total premiums for insurance and reinsurance written during a given period.

Healthcare lines		Insurance coverage, often referred to as medical malpractice insurance, which addresses liability risks of doctors, surgeons, nurses, other healthcare professionals and the institutions (hospitals, clinics, etc.), in which they practice.

Incurred but not reported (“IBNR”) reserves		Reserves established by us for claims that have occurred but have not yet been reported to us as well as for changes in the values of claims that have been reported to us but are not yet settled.

LAE		The total of ALAE and ULAE.

Loss corridor		A mechanism contained in a reinsurance treaty that requires the cedent to be responsible for a certain amount of the ultimate net loss that is above the company’s designated retention and below the designated limit, and which would otherwise be reimbursed under the treaty. Loss corridors are employed to mitigate the volatility of reinsurance agreements.

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Loss development		The difference between the original loss as initially reserved by an insurer or reinsurer and its subsequent evaluation at a later date or at the time of its closure. Loss development occurs because of inflation and time lags between the occurrence of claims and the time they are actually reported to an insurer or reinsurer. To account for these increases, a “loss development factor” or multiplier is usually applied to a claim or group of claims in an effort to more accurately project the ultimate amount that will be paid.

Loss reserves		Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay. Reserves are established for losses and for loss expenses, and consist of case reserves and IBNR reserves. As the term is used in this Form 10-K, “loss reserves” is meant to include reserves for both losses and for loss expenses.

Loss year		The year to which a claim is attributed based upon the terms in the underlying policy or contract. All years referred to are years ending December 31.

Losses and loss expense ratio		Derived by dividing net losses and loss expenses by net earned premiums.

Losses and loss expenses		“Losses” are an occurrence that is the basis for submission or payment of a claim. Losses may be covered, limited or excluded from coverage, depending on the terms of the insurance policy or other insurance or reinsurance contracts. “Loss

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		expenses” are the expenses incurred by an insurance or reinsurance company in settling a loss.

Losses discovered basis		Covers losses that are discovered by the insured during the policy period and a specified period thereafter (unless replaced with similar insurance), no matter when the loss occurred and it does not matter if the insured had prior coverage.

Net limits		The amount that an insurer or reinsurer will insure or reinsure for a specified risk, a portfolio of risks or on a single insured entity, less any applicable reinsurance purchased by such insurer or reinsurer. The term also refers to the maximum amount of benefit payable for a given claim or occurrence.

Occurrence policies		A liability policy covering all claims arising from an event that takes place during the policy period, regardless of when the claim is reported to us.

Occurrence-reported policies		A liability policy covering all claims arising from an event that takes place after a date specified in the policy and the claims must be reported to the insurer during the policy period.

Paid losses		Claim amounts paid to insureds or ceding companies.

Primary insurance		Insurance that absorbs the losses immediately above the insured’s retention layer. A primary insurer will pay up to a certain dollar amount of losses over the insured’s retention, at which point a higher layer excess insurer will be liable for additional losses. The coverage terms of a primary insurance layer typically assume an element of regular loss frequency.

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Professional liability		Insurance that provides liability coverage to directors and officers, attorneys, doctors, accountants and other professionals who offer services to the general public and claim expertise in a particular area greater than the ordinary layperson for their negligence or malfeasance.

Property catastrophe coverage		In reinsurance, coverage that protects the ceding company against accumulated losses in excess of a stipulated sum that arise from a catastrophic event such as an earthquake, fire or windstorm. “Catastrophe loss” generally refers to the total loss of an insurer arising out of a single catastrophic event.

Quota share reinsurance		A proportional reinsurance treaty in which the ceding company cedes an agreed-on percentage of every risk it insures that falls within a class or classes of business subject to the treaty.

Reinsurance		The practice whereby one insurer, called the reinsurer, in consideration of a premium paid to that reinsurer, agrees to indemnify another insurer, called the ceding company, for part or all of the liability of the ceding company under one or more policies or contracts of insurance that it has issued.

Report year		The year in which a claim is reported to us. All years referred to are years ending December 31.

Reserves		Liabilities established by insurers and reinsurers to reflect the estimated cost of claims incurred that the insurer or reinsurer will ultimately be required to pay. Reserves are established for

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		losses and for loss expenses, and consist of case reserves and IBNR reserves. As the term is used in this report, “reserves” are meant to include reserves for both losses and for loss expenses.

Retention		The amount of exposure an insured retains on any one risk or group of risks. The term may apply to an insurance policy, where the insured is an individual or business, or a reinsurance contract, where the insured is an insurance company. See “Deductible.”

Short tail		Lines of business where claims are generally reported and paid within a relatively short period of time following the policy coverage period.

Surplus treaty reinsurance		Reinsurance contracts under which the ceding company agrees to cede and the reinsurer agrees to assume part of every risk that exceeds the ceding company’s predetermined retention limit. The reinsurer shares in premiums and losses in the same proportion as it shares in the total policy limits of the risk.

Swing-rated premium		Earned premiums from a “swing-rated” reinsurance contract, which is a contract that links the ultimate amount of ceded premium to the ultimate loss ratio on the reinsured business. This type of reinsurance contract enables the cedent to retain a greater portion of premium if the ultimate loss ratio develops at a level below the initial loss threshold set by the reinsurers, but requires a higher amount of ceded premium if the ultimate loss ratio develops above the initial threshold.

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Treaties		Reinsurance contracts under which the ceding company agrees to cede and the reinsurer agrees to assume risks of a particular class or classes of business.

Treaty year		The year in which the contract incepts. Exposure from contracts incepting during the current treaty year will potentially affect both the current accident year as well future accident years.

ULAE		Means unallocated loss adjustment expenses, which are an assessment of the internal expenses required to settle claims.

Ultimate loss		Total of all expected settlement amounts, whether paid or reserved together with any associated loss adjustment expenses, and is the estimated total amount of loss at the measurement date. For purposes of this report, “ultimate loss” is the sum of paid losses, case reserves and IBNR.

Underwriter		An employee of an insurance or reinsurance company who examines, accepts or rejects risks and classifies accepted risks in order to charge an appropriate premium for each accepted risk. The underwriter is expected to select business that will produce an average risk of loss no greater than that anticipated for the class of business.

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