NOTE 12. STATUTORY FINANCIAL INFORMATION

The following table presents statutory Net income and capital and surplus in accordance with statutory accounting practices:

	Years Ended December 31,
amounts in millions	2015		2014		2013
NIC & NSIC:
Statutory net income	$	60.8	$	75.7	$	59.4
Statutory capital and surplus	$	949.1	$	893.9	$	804.1

The Syndicate:
Syndicate's net income	$	41.0	$	33.8	$	21.0
Syndicate's capital and surplus	$	177.5	$	140.1	$	124.2

Our insurance subsidiaries file financial statements prepared in accordance with statutory accounting practices prescribed or permitted by domestic and foreign insurance regulatory authorities. The differences between statutory financial statements and financial statements prepared in accordance with U.S. GAAP vary between domestic and foreign jurisdictions.

For NIC and NSIC, the National Association of Insurance Commissioners (“NAIC”) has codified Statutory Accounting Practices and Procedures (“SAP”) for insurance enterprises. We prepare our statutory basis financial statements in accordance with the most recently updated NAIC SAP manual subject to any deviations prescribed or permitted by the New York Insurance Commissioner. The following table represents some of the significant differences between SAP and U.S. GAAP as they relate to our operations:

Differences	SAP	U.S. GAAP
Acquisition and Commission Costs	Expensed when incurred	Costs are generally deferred
Bonds	Generally stated at amortized cost	Stated at fair value
Deferred tax assets	Certain temporary differences are not admitted	All temporary differences recognized
Receivables over 90 days outstanding and other intangible assets	Not recognized	Generally recognized (subject to valuation allowances)
Unearned premiums and loss reserves	Net of ceded amounts	Gross of ceded amounts

The Syndicate is subject to oversight by the Council of Lloyd’s. Lloyd’s as a whole is authorized and regulated by the PRA. Our other international businesses are also regulated by the PRA. The following table represents some of the significant differences between U.K. GAAP and U.S. GAAP as they relate to our operations:

Differences	U.K. GAAP	U.S. GAAP
Unrealized gains/losses	Recognized in income	Recognized in AOCI
Foreign exchange gains/losses on translation	Recognized in income	Recognized in AOCI
Lloyd’s membership costs	Expensed when incurred	Amortized over each UWY

Refer to Note 1, Organization and Summary of Significant Accounting Policies, for additional disclosure on the accounting treatment for the Syndicate as it relates to closed and open UWYs.

For NIC and NSIC, aggregate minimum required statutory capital and surplus is based on the greater of the risk-based capital level that would trigger regulatory action or minimum requirements per state insurance regulation. Capital and surplus requirements of our foreign subsidiaries differ from those prescribed in the U.S. and vary by jurisdiction. The capital requirement of the Syndicate, known as FAL, is currently calculated using the internal Lloyd’s risk-based capital model. The FAL may be comprised of cash, investments and undrawn letters of credit provided by various banks. Lloyd’s sets the corporate member’s required capital annually based on the Syndicate business plans, rating environment, reserving environment and input arising from Lloyd’s discussions with regulatory and rating agencies.

As of December 31, 2015 and 2014, all insurance subsidiaries individually exceed the minimum required statutory capital and surplus requirements and all U.S. domestic insurance subsidiaries individually exceeded risk-based capital minimum requirements.