10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2018

or

☐ Transitional Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to

Commission file number 0-15886

The Navigators Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3138397
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
400 Atlantic Street, Stamford, Connecticut	06901
(Address of principal executive offices)	(Zip Code)

(203) 905-6090

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of common shares outstanding as of October 30, 2018 was 29,777,883.

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

INDEX

Contents

PART I. FINANCIAL INFORMATION	3
Item 1.      Financial Statements	3
Consolidated Balance Sheets – September 30, 2018 (Unaudited) and December 31, 2017	3
Consolidated Statements of Income (Loss) (Unaudited) – Three and Nine Months Ended September 30, 2018 and 2017	4
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three and Nine Months Ended September 30, 2018 and 2017	5
Consolidated Statement of Stockholders’ Equity (Unaudited) –Nine Months Ended September 30, 2018	6
Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended September 30, 2018 and 2017	7
Notes to Interim Consolidated Financial Statements (Unaudited)	8
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.      Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.      Controls and Procedures	62
PART II. OTHER INFORMATION	63
Item 1.      Legal Proceedings	63
Item 1A.   Risk Factors	63
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.      Defaults Upon Senior Securities	64
Item 4.      Mine Safety Disclosures	64
Item 5.      Other Information	64
Item 6.      Exhibits	65
Signatures	66

2

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2018			2017
amounts in thousands, except per share amounts	(Unaudited)
ASSETS
Investments:
Fixed Maturities, available-for-sale, at fair value (amortized cost: 2018: $3,027,835;    2017: $3,027,408)	$	2,989,473		$	3,057,054
Equity Securities, at fair value (cost: 2018: $359,400; 2017: $224,159)		371,680			235,981
Other Invested Assets		42,489			30,488
Short-Term Investments, available-for-sale, at fair value (amortized cost: 2018: $7,268;    2017: $6,477)		7,264			6,480
Total Investments	$	3,410,906		$	3,330,003
Cash and Cash Equivalents		219,980			102,735
Restricted Cash and Cash Equivalents		61,644			56,229
Premiums Receivable		392,392			351,393
Prepaid Reinsurance Premiums		235,642			228,569
Reinsurance Recoverable on Paid Losses		102,829			72,494
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses		780,215			809,765
Deferred Policy Acquisition Costs		161,419			135,249
Accrued Investment Income		21,981			19,480
Goodwill and Other Intangible Assets		28,140			6,596
Current Income Tax Receivable, Net		25,429			16,667
Deferred Income Tax, Net		26,377			22,271
Other Assets		81,373			73,171
Total Assets	$	5,548,327		$	5,224,622
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserves for Losses and Loss Adjustment Expenses	$	2,633,835		$	2,515,145
Unearned Premiums		1,128,762			987,681
Reinsurance Balances Payable		147,129			136,192
Senior Notes		264,009			263,885
Payable for Investments Purchased		16,968			—
Accounts Payable and Other Liabilities		125,796			95,754
Total Liabilities	$	4,316,499		$	3,998,657
Stockholders' Equity:
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued)	$	—		$	—
Common Stock ($.10 par value per share, authorized 50,000 shares, issued    36,795 shares for 2018 and 36,530 shares for 2017)		3,677			3,650
Additional Paid-In Capital		379,212			376,868
Treasury Stock, at cost (7,023 shares for 2018 and 2017)		(155,801	)		(155,801	)
Retained Earnings		1,047,673			981,380
Accumulated Other Comprehensive Income (Loss)		(42,933	)		19,868
Total Stockholders' Equity	$	1,231,828		$	1,225,965
Total Liabilities and Stockholders' Equity	$	5,548,327		$	5,224,622

See accompanying Notes to Interim Consolidated Financial Statements.

3

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands, except per share amounts	2018			2017			2018			2017
Gross Written Premiums	$	455,943		$	402,038		$	1,448,403		$	1,304,522
Revenues:
Net Written Premiums		352,412			296,016			1,124,966			966,461
Change in Unearned Premiums		(5,374	)		5,339			(124,286	)		(85,140	)
Net Earned Premiums	$	347,038		$	301,355		$	1,000,680		$	881,321
Net Investment Income		25,651			22,598			73,954			66,311
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment Losses		(15	)		(957	)		(71	)		(2,005	)
Portion of Loss Recognized in Other Comprehensive    Income		15			(15	)		71			(60	)
Net Other-Than-Temporary Impairment Losses Recognized    in Earnings		—			(972	)		—			(2,065	)
Net Realized Gains on Investments Sold		253			5,190			3,210			7,933
Net Unrealized Gains on Equity Securities		2,310			—			457			—
Total Net Realized and Unrealized Gains		2,563			4,218			3,667			5,868
Other Income (Loss)		1,724			(1,699	)		4,235			(1,042	)
Total Revenues	$	376,976		$	326,472		$	1,082,536		$	952,458
Expenses:
Net Losses and Loss Adjustment Expenses	$	240,900		$	276,171		$	623,378		$	622,881
Commission Expenses		57,999			45,509			165,344			141,526
Other Operating Expenses		67,584			45,773			198,692			165,077
Merger Transaction Costs		2,439			—			2,439			—
Interest Expense		3,891			3,862			11,619			11,584
Total Expenses	$	372,813		$	371,315		$	1,001,472		$	941,068
Income (Loss) Before Income Taxes	$	4,163		$	(44,843	)	$	81,064		$	11,390
Income Tax Expense (Benefit)		(462	)		(16,864	)		13,457			(2,243	)
Net Income (Loss)	$	4,625		$	(27,979	)	$	67,607		$	13,633
Net Income (Loss) per Common Share:
Basic	$	0.16		$	(0.95	)	$	2.28		$	0.46
Diluted	$	0.15		$	(0.95	)	$	2.24		$	0.45
Average Common Shares Outstanding:
Basic		29,768			29,500			29,699			29,419
Diluted		30,184			29,500			30,160			30,006

See accompanying Notes to Interim Consolidated Financial Statements.

4

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended September 30,
amounts in thousands	2018			2017
Net Income (Loss)	$	4,625		$	(27,979	)
Other Comprehensive Income (Loss):
Change in Net Unrealized Gains (Losses) on Available-For-Sale Investments:
Unrealized Gains (Losses) on Investments arising during the period, net    of Deferred Tax of $1,821 and $(5,197) in 2018 and 2017, respectively		(6,844	)		9,653
Reclassification adjustment for Net Realized Gains (Losses) included    in Net Income net of Deferred Tax of $(84) and $881 in 2018 and    2017, respectively		318			(1,636	)
Change in Net Unrealized Gains (Losses) on Investments	$	(6,526	)	$	8,017
Change in Other-Than-Temporary Impairments
Non Credit Other-Than-Temporary Impairments arising during the period,    net of Deferred Tax of $3 and $(6) in 2018 and 2017, respectively		(12	)		9
Reclassification Adjustment for Other-Than-Temporary Impairment Credit    Losses Recognized in Net Income net of Deferred Tax of $0 and $(193) in 2018    and 2017, respectively		—			358
Change in Other-Than-Temporary Impairments	$	(12	)	$	367
Change in Foreign Currency Translation Gains (Losses), net of Deferred    Tax of $73 and $(691) in 2018 and 2017, respectively		(768	)		1,284
Other Comprehensive Income (Loss)	$	(7,306	)	$	9,668
Comprehensive Loss	$	(2,681	)	$	(18,311	)

	Nine Months Ended September 30,
amounts in thousands	2018			2017
Net Income	$	67,607		$	13,633
Other Comprehensive Income (Loss):
Change in Net Unrealized Gains (Losses) on Investments:
Unrealized Gains (Losses) on Investments arising during the period, net    of Deferred Tax of $13,543 and $(19,884) in 2018 and 2017, respectively		(50,706	)		36,928
Reclassification adjustment for Net Realized Gains (Losses) included    in Net Income net of Deferred Tax of $992 and $(72) in 2018 and    2017, respectively		(2,699	)		134
Change in Net Unrealized Gains (Losses) on Investments	$	(53,405	)	$	37,062
Change in Other-Than-Temporary Impairments
Non Credit Other-Than-Temporary Impairments arising during the period,    net of Deferred Tax of $20 and $(21) in 2018 and 2017, respectively		(56	)		39
Reclassification Adjustment for Other-Than-Temporary Impairment Credit    Losses Recognized in Net Income net of Deferred Tax of $0 and $(410) in    2018 and 2017, respectively		—			761
Change in Other-Than-Temporary Impairments	$	(56	)	$	800
Change in Foreign Currency Translation Gains (Losses), net of Deferred    Tax of $2,516 and $(971) in 2018 and 2017, respectively		(4,420	)		1,803
Other Comprehensive Income (Loss)	$	(57,881	)	$	39,665
Comprehensive Income	$	9,726		$	53,298

See accompanying Notes to Interim Consolidated Financial Statements

5

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)

					Additional											Accumulated Other			Total
	Common Stock				Paid-in			Treasury Stock					Retained			Comprehensive			Stockholders'
amounts in thousands	Shares		Amount		Capital			Shares		Amount			Earnings			Income (Loss)			Equity
Balance, December 31, 2017		36,530	$	3,650	$	376,868			7,023	$	(155,801	)	$	981,380		$	19,868		$	1,225,965
Net Income		—		—		—			—		—			67,607			—			67,607
Dividends Declared		—		—		—			—		—			(6,234	)		—			(6,234	)
Changes in Other Comprehensive Income:
Change in Net Unrealized Loss on Available-For-Sale    Investments		—		—		—			—		—			—			(53,405	)		(53,405	)
Change in Net Non-Credit Other-Than-    Temporary Impairment Losses		—		—		—			—		—			—			(56	)		(56	)
Change in Foreign Currency Translation    Loss		—		—		—			—		—			—			(4,420	)		(4,420	)
Total Other Comprehensive Loss		—		—		—			—		—			—			(57,881	)		(57,881	)
Cumulative Effect of Adoption of ASU 2016-01 at    January 1st, Net of Tax		—		—		—			—		—			7,748			(7,748	)		—
Cumulative Effect of Adoption of ASU 2018-02 at    January 1st, Net of Tax		—		—		—			—		—			(2,828	)		2,828			—
Shares Issued (1)		265		27		(5,069	)		—		—			—			—			(5,042	)
Share-Based Compensation		—		—		7,413			—		—			—			—			7,413
Balance, September 30, 2018		36,795	$	3,677	$	379,212			7,023	$	(155,801	)	$	1,047,673		$	(42,933	)	$	1,231,828

(1) - Includes shares issued under the Second Amended and Restated 2005 Stock Incentive Plan to Directors and the Employee Stock Purchase Plan.

See accompanying Notes to Interim Consolidated Financial Statements.

6

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
amounts in thousands	2018			2017
Operating Activities:
Net Income	$	67,607		$	13,633
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation & Amortization		2,782			3,586
Share-Based Compensation		7,413			8,360
Deferred Income Taxes		(862	)		(13,920	)
Total Net Realized and Unrealized Gains		(3,667	)		(5,868	)
Changes in Assets and Liabilities:
Reinsurance Recoverable on Paid and Unpaid Losses and Loss Adjustment Expenses		16,668			(40,786	)
Reserves for Losses and Loss Adjustment Expenses		86,851			251,971
Prepaid Reinsurance Premiums		(4,482	)		(17,797	)
Unearned Premiums		130,270			103,174
Premiums Receivable		(39,969	)		(48,985	)
Deferred Policy Acquisition Costs		(26,254	)		(14,965	)
Accrued Investment Income		(2,513	)		(3,105	)
Reinsurance Balances Payable		11,036			19,058
Current Income Tax Receivable, Net		(5,665	)		(25,073	)
Other		27,874			(6,532	)
Net Cash Provided by Operating Activities	$	267,089		$	222,751
Investing Activities:
Fixed Maturities
Redemptions and Maturities	$	341,632		$	233,384
Sales		345,828			192,417
Purchases		(696,869	)		(560,018	)
Equity Securities
Sales		33,288			59,673
Purchases		(122,083	)		(61,562	)
Net Sales and Purchases of Other Invested Assets		(12,930	)		(13,853	)
Net Sales, Maturities and Purchases of Short-Term Investments		(827	)		(552	)
Net Change in Unsettled Security Transactions		14,706			21,761
Purchase of Subsidiaries, Net of Acquired Cash		(22,383	)		—
Net Purchase of Property and Equipment		(7,482	)		(2,649	)
Net Cash Used in Investing Activities	$	(127,120	)	$	(131,399	)
Financing Activities:
Proceeds from Employee Stock Purchase Plan	$	1,508		$	2,289
Payment of Employee Tax Withholding on Stock Compensation		(8,067	)		(13,835	)
Dividends Paid		(6,234	)		(4,862	)
Net Cash Used in Financing Activities	$	(12,793	)	$	(16,408	)
Effect of Exchange Rate on Unrestricted and Restricted Cash and Cash Equivalents	$	(4,516	)	$	2,885
Change in Unrestricted and Restricted Cash and Cash Equivalents	$	122,660		$	77,829
Unrestricted and Restricted Cash and Cash Equivalents at Beginning of Year		158,964			172,846
Unrestricted and Restricted Cash and Cash Equivalents at End of Period	$	281,624		$	250,675
Supplemental Information:
Income Taxes Paid, Net	$	22,935		$	39,877
Interest Paid	$	7,619		$	7,619
Issuance of Stock to Directors	$	783		$	578

See accompanying Notes to Interim Consolidated Financial Statements.

7

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited)

NOTE 1. ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless the context requires otherwise, the terms “we,” “us,” “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity.

On June 7, 2018, we acquired 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”) and Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”). The acquisition was accounted for in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations.” Refer to Note 2. Merger and Business Combinations and Note 6. Goodwill and Intangible Assets for further information regarding the acquisition.

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). Refer to Note 2. Merger and Business Combinations for further information.

Basis of Presentation

The Consolidated Balance Sheet at September 30, 2018 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended September 30, 2018 and 2017 are unaudited. The Balance Sheet at December 31, 2017 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of these Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Certain amounts for the prior period have been reclassified to conform with the current period presentation.

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contained several key tax provisions that affected us, including a one-time mandatory Deemed Repatriation Transition Tax (the “Transition Tax”) on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We were required to recognize the effect of the tax law changes in the period of enactment, such as determining the Transition Tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Act, which allowed us to record provisional amounts during a measurement period not to extend beyond one

8

year of the enactment date. During the fourth quarter of 2017, we made a reasonable estimate of the effects on our deferred tax balances and recognized provisional tax amounts of $2.6 million related to the Transition Tax. As of September 30, 2018, we have finalized the calculation of the Transition Tax which resulted in a decrease in the provisional amount of $1.3 million and has been reflected as a discrete item in our Effective Tax Rate calculation.We will continue to evaluate the estimated effects on our deferred tax balances during the measurement period.

The interim income tax provision has been computed based on our estimated annual Effective Tax Rate, which represents our best estimate on a year to date basis for the interim period. As a result, the tax provision for a given quarter equals the difference between the provision recorded cumulatively year to date less the amount recorded cumulatively as of the end of the prior interim period. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to tax-exempt investment income, the dividends received deduction, Transition Tax benefit, and an excess tax benefit related to the vesting of stock compensation at fair market value.

Short-Term Investments Reclassifications

Cash and overseas deposits that were misclassified within Short-Term Investments were reclassified representing an immaterial correction. Cash of $20.5 million as of December 31, 2017 was reclassified from Short-Term Investments to Cash and Cash Equivalents. Overseas deposits of $28.8 million as of December 31, 2017 were reclassified from Short-Term Investments to Other Invested Assets. The reclassification of cash within Short-Term Investments to Cash and Cash Equivalents impacted the Statement of Cash Flows for the nine months ended September 30, 2017 by decreasing Net Cash Used in Investing Activities by $9.2 million.

New Accounting Standards Adopted in 2018

Revenue From Contracts With Customers

Effective January 1, 2018, our Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance affects any contracts with customers to transfer goods or services or for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts are not in scope of the new guidance). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Our Company generates an insignificant amount of fee income that is within the scope of this guidance and was not materially impacted by the adoption of this guidance. The adoption of this guidance did not have a material impact on our results of operations, financial condition or liquidity.

Classification and Measurement of Financial Instruments

Effective January 1, 2018, our Company adopted ASU 2016-01 “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This guidance requires equity investments (except those accounted for under the equity method of accounting, investments that are consolidated or those that meet a practicability exception) to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments without readily determinable values by requiring a qualitative assessment to identify impairment, eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost, requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liabilities in accordance with the fair value option, requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and clarifies that the reporting organization should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the organization’s other deferred tax assets.

As of January 1, 2018, the adoption of this guidance resulted in a $7.7 million net after-tax increase to Retained Earnings with a corresponding decrease to Accumulated Other Comprehensive Income (Loss), resulting in no change to our Total Stockholders’ Equity. This adjustment reflects the cumulative effect adjustment to reclassify Net Unrealized Gain on Investments in Accumulated Other Comprehensive Income (Loss) for available-for-sale Equity Securities to Retained Earnings upon adoption. Upon the adoption of this guidance, Equity Securities have been measured at fair value with changes in fair value recognized in Net Income through Net Unrealized Gains (Losses) on Equity Securities. The other aspects of this guidance only impacted disclosure or did not apply to our Company and therefore did not impact our results of operations, financial condition or liquidity.

9

Cash Flows

Effective January 1, 2018, our Company adopted ASU 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments” which addresses diversity in practice in how eight specific cash receipts and cash payments should be presented and classified on the statement of cash flows. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Effective January 1, 2018, our Company adopted ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” which addresses diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. To assist in meeting the requirements of this guidance to provide a reconciliation from the Statement of Cash Flows to the Balance Sheet, upon adoption of this guidance our Company added new accounts titled “Cash and Cash Equivalents” and “Restricted Cash and Cash Equivalents” and reclassified amounts previously held in Short-Term Investments to these accounts for all periods presented. This resulted in the reclassification of $71.3 million of restricted and unrestricted cash and cash equivalent balances as of December 31, 2017. This guidance was adopted on a retrospective basis. Prior to the adoption of this guidance, restricted and unrestricted cash and cash equivalent balances included in the Short-Term Investments account had been presented as a cash flow provided by (used in) investing activities. Consequently, the Statement of Cash Flows for the nine months ended September 30, 2017 includes a revision to decrease “Net Cash Used in Investing Activities” by $76.8 million.

Income Taxes

Effective January 1, 2018, our Company adopted ASU 2016-16, “Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory” that requires companies to account for the income tax effects of intercompany transfers of assets other than inventory when the transfer occurs. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Definition of a Business

Effective January 1, 2018, our Company adopted ASU 2017-01, “Clarifying the Definition of a Business” that provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be applied to transactions prospectively. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Tax Reform Reclassification from Other Comprehensive Income

Effective January 1, 2018, our Company early adopted ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” that permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. The total impact of the remeasurement and other adjustments was reflected in 2017 income from continuing operations, regardless of where deferred taxes were originally recorded. As of January 1, 2018, the adoption of this guidance resulted in a one-time reclassification of $2.8 million, decreasing Retained Earnings and increasing Accumulated Other Comprehensive Income (Loss) primarily from the remeasurement of deferred tax assets and liabilities associated with unrealized gains and losses on investments and currency translation adjustments using the 21% corporate tax rate.

Recently Issued Accounting Standards Not Yet Adopted

Fair Value Measurement Disclosure

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The guidance eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels of the fair value hierarchy, and the valuation processes for Level 3 fair value measurements. The guidance adds the requirement to disclose changes in unrealized gains and losses included in other comprehensive income for the period and to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance modifies disclosures around the use of the practical expedient to measure the fair value of certain investments at their net asset values and modifies the requirement to disclose information as of the reporting date about the measurement uncertainty of Level 3 fair value measurement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for the entire standard or only the provisions that eliminate or modify requirements. This guidance will be adopted on a prospective and retrospective basis, where applicable and as required. As this new guidance is disclosure-related only, adoption will not impact our results of operations, financial condition or liquidity.

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Implementation Costs in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which requires companies to follow the internal-use software guidance in ASC 350-40 (Intangibles - Goodwill and Other - Internal-Use Software) to determine which implementation costs to capitalize as an asset and which costs to expense. Capitalized implementation costs will be amortized over the term of the service arrangement, beginning when the service arrangement or a component of the arrangement is ready for its intended use. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. This guidance will be applied prospectively. The adoption of this guidance is not expected to materially impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of changes related to the adoption of ASU 2016-01 and ASU 2016-18 impacting the following accounting policies:

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash includes cash on hand and demand deposits with banks. Cash Equivalents include highly liquid investments with original maturities of three months or less including money-market funds. Restricted Cash and Cash Equivalents primarily relates to funds that are held to support regulatory and contractual obligations.

Investments

Fixed Maturities held by our Company were carried at fair value and classified as available-for-sale. Available-for-sale securities are debt securities not classified as either held-to-maturity securities or trading securities and are reported at fair value, with unrealized gains and losses excluded from earnings and reported in Accumulated Other Comprehensive Income (“AOCI”) as a separate component of Stockholders’ Equity. Fixed Maturities include bonds, mortgage-backed and asset-backed securities, and redeemable preferred stocks.

Upon adoption of ASU 2016-01 on January 1, 2018, Equity Securities held by our Company were carried at fair value with any changes in fair value recognized in Net Income through the Net Unrealized Gains (Losses) on Equity Securities account. Prior to the adoption of ASU 2016-01, Equity Securities were carried at fair value and classified as available-for-sale. For our policy on Equity Securities classified as available-for-sale, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017. Equity Securities consist of common stock, exchange traded funds, mutual funds and preferred stock.

Other Invested Assets consist of investments our Company made in certain strategic companies which are accounted for using the equity method of accounting and overseas deposits which are carried at fair value.

For our investments applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our Company’s proportionate share of the net income or loss of the companies. Changes in the carrying value of such investments are recorded in Other Income. In applying the equity method, we use the most recently available financial information provided by the companies which is generally three months prior to the end of the reporting period.

Overseas deposits include private funds held by the Syndicate and invested according to local regulatory requirements. The compositions of the overseas deposits vary and the deposits are based on the portfolio level reporting that is provided by Lloyd’s. The fair values of these overseas deposits were measured using the net asset value practical expedient and therefore have not been categorized within the fair value hierarchy. Changes in the fair value of the overseas deposits are recorded in Net Investment Income.

Short-Term Investments are carried at fair value. Short-Term Investments have maturities greater than three months but less than one year from the purchase date.

All prices for our Fixed Maturities, Equity Securities and Short-Term Investments are classified as Level 1, Level 2 or Level 3 under the fair value hierarchy, as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”).

Premiums and discounts on Fixed Maturities are amortized into interest income over the life of the security using the interest method. For Mortgage-Backed and Asset-Backed Securities, anticipated prepayments and expected maturities are utilized in applying the interest rate method. An effective yield is calculated based on projected principal cash flows at the time of original purchase. The effective yield is used to amortize the purchase price of the security over the security’s expected life. Book values are adjusted to

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reflect the amortization of premium or accretion of discount on a monthly basis. The projected principal cash flows are based on certain prepayment assumptions, which are generated using a prepayment model. The prepayment model uses a number of factors to estimate prepayment activity including the current levels of interest rates (refinancing incentive), time of year (seasonality), economic activity (including housing turnover) and term and age of the underlying collateral (burnout, seasoning). Prepayment assumptions associated with the Mortgage-Backed and Asset-Backed Securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective adjustment method, whereby the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The investment in such securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the security. Such adjustments, if any, are included in Net Investment Income for the current period.

Realized Gains and Losses on sales of investments are recognized when the related trades are executed and are determined on the basis of the specific identification method.

Impairment of Invested Assets

Management regularly reviews our Fixed Maturities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of securities.

Our Company reviews the magnitude of a security’s unrealized loss compared to its cost/amortized cost and the length of time that the security has been impaired to determine if an unrealized loss is other-than-temporary. If warranted as a result of conditions relating to a particular security, our Company will also review securities with declines in fair value resulting from a headline news event involving the issuer, a headline news event involving the asset class, the advice of our external asset managers, or economic events that may impact the issuer to determine if an unrealized loss is other-than-temporary. The depth of analysis performed is dependent upon the nature and magnitude of the indicators of other-than-temporary impairment present in regards to each impaired security.

Our Company assesses the underlying fundamentals of each issuer to determine if there is a change in the amount or timing of expected cash flows. Management compares the amortized cost basis to the present value of the revised cash flows using the historical book yield to determine the credit loss portion of impairment which is recognized in earnings. All non-credit losses where we have the intent and ability to hold the security until recovery are recognized as changes in Other than Temporary Impairment (“OTTI”) losses within AOCI.

Specifically for structured Fixed Maturities, our Company analyzes projections provided by our investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break-even default rate is also calculated. A comparison of the break-even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. For securities in which a tranche loss is present and the net present value of loss adjusted cash flows is less than book value, credit impairment is recognized in earnings. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating. The significant inputs used to measure the amount of credit loss recognized in earnings are actual delinquency rates, default probability, severity and prepayment assumptions.

Projected losses are a function of both loss severity and probability of default, which differ based on property type, vintage and the stress of the collateral.

For our policy on evaluating Equity Securities for impairment prior to the adoption of ASU 2016-01 on January 1, 2018, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017.

NOTE 2. MERGER AND BUSINESS COMBINATIONS

The Hartford

On August 22, 2018, our Company entered into the Merger Agreement with The Hartford, where subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford. Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share (the “Merger Consideration”). The Merger is expected to close in the first half of 2019, subject to the receipt of regulatory approvals and other customary closing conditions.

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The Merger Agreement contains various covenants of our Company and The Hartford. These covenants include interim operating covenants that, subject to certain exceptions, (i) require the Company to (1) conduct its business in all material respects in the ordinary course of business consistent with past practice, (2) use reasonable best efforts to preserve substantially intact, consistent with past practice, the Company’s business organization and (3) preserve, consistent with past practice, existing relations and goodwill with customers, producers, reinsurance providers, governmental authorities and other persons with whom the Company or its subsidiaries have significant business relationships, and (ii) restrict the Company’s ability to take certain actions prior to the effective time of the Merger without The Hartford’s consent (such consent, in certain cases, not to be unreasonably withheld, conditioned or delayed), which include, subject to certain exceptions, issuing additional common shares, incurring additional indebtedness, selling or purchasing material assets, making unbudgeted capital expenditures, making loans or investments (or disposing of investments) not permitted by the Company’s investment guidelines, increasing compensation other than in ordinary course, making material changes to accounting, underwriting, or reserving practices, making material tax elections, settling material litigation, or entering into, modifying or terminating material contracts.

BDM and ASCO

During the second quarter of 2018, our Company established a wholly owned subsidiary, Navigators Holdings (Europe) NV, which on June 7, 2018 (the “acquisition date”), acquired a 100% ownership interest in BDM, ASCO, and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). The acquisition of all three of these entities will be referred to as the “Acquisition” and the group of companies will be referred to as the Navigators Insurance Company Europe Group (the “NICE Group”). The Acquisition was undertaken as part of our Company’s strategy of expanding to more brokers and insureds across Europe and reinforces our Company’s presence in the European Union’s single market. We anticipate that this will enable our Company to better serve its European clients after Brexit, and will also provide an opportunity to reach a wider European audience.

Our Company paid a purchase price of EUR 35.0 million in cash at the acquisition date (which was approximately $40.5 million based on the exchange rate as of the acquisition date). Additionally, our Company will be reimbursed up to EUR 5.0 million (which is approximately $5.8 million based on the exchange rate as of the acquisition date) in the event of adverse development of claims incurred prior to December 31, 2016 as measured on December 31, 2019. This reimbursement was valued at $nil as of the acquisition date and September 30, 2018.

The purchase price was allocated to the assets acquired and liabilities assumed of the NICE Group, based on estimated fair values as of the acquisition date and our Company recognized goodwill of $12.7 million.

Our Company identified finite lived intangible assets of $6.5 million, including customer relationships, the value of business acquired (“VOBA”), broker networks, and a trade name. These finite lived intangible assets will be amortized over a weighted average period of 9 years.

Our Company identified indefinite lived intangible assets of $2.5 million, related to ASCO’s European licenses.

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The fair value of the assets acquired and liabilities assumed and the allocation of the purchase price on the acquisition date are summarized in the table below:

amounts in thousands
Consideration paid	$	40,492
Assets
Investments		45,182
Cash and Cash Equivalents		18,109
Prepaid Reinsurance Premiums		2,701
Reinsurance Recoverables on Paid Losses		1,311
Reinsurance Recoverables on Unpaid Losses and LAE		15,769
Other Assets		19,943
Fair Value of Identifiable Intangible Assets		9,000
Total Assets Acquired	$	112,015
Liabilities
Reserves for Losses and LAE		31,928
Unearned Premiums		11,139
Deferred Income Tax		8,947
Accounts Payable and Other Liabilities		32,212
Total Liabilities Assumed	$	84,226
Goodwill	$	12,703

Significant Fair Value Adjustments were as follows:

• Fair Value of Finite and Indefinite-Lived Intangibles – To establish the fair value of identifiable intangible assets related to customer relationships, licenses, value of business acquired, broker networks, and trade name.

• Fair Value of Property – To adjust the carrying value of real estate property to reflect fair value.

• Fair Value of Software – To establish the fair value of internal use software systems.

• Deferred Income Tax – To reflect the deferred tax impact on the fair value adjustments.

• Goodwill – To establish the fair value of goodwill related to the Acquisition.

During the three months ended September 30, 2018, as part of our business combination accounting within the measurement period, the Company recorded an adjustment to the fair value of the customer relationships intangible asset. As a result, the Fair Value of Identifiable Intangible Assets decreased by $1.4 million and Goodwill increased by $1.4 million from the amounts initially recorded at June 30, 2018. Refer to Note 6. Goodwill and Intangible Assets for further information.

The business combination accounting is subject to change if additional information that existed as of the balance sheet date, but was not available, later becomes available within the measurement period, which cannot exceed twelve months from the acquisition date. The acquisition date fair values of the assets acquired and liabilities assumed, including Reserves for Losses and LAE, Deferred Income Tax and Identifiable Intangible Assets, as well as the related estimated useful lives, are provisional and may be subject to adjustments, which may impact the amounts recorded for assets acquired and liabilities assumed as well as the goodwill.

Since the acquisition date, total NICE Group Revenues and Net Income (Loss) of $6.6 million and $(0.1) million, respectively, have been included in our Company’s Consolidated Statements of Income (Loss).

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NOTE 3. SEGMENT INFORMATION

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance through our reporting segments: U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. 

We classify our business into three underwriting segments: U.S. Insurance, Int’l Insurance and GlobalRe. Both the U.S. Insurance and Int’l Insurance reporting segments are each comprised of three operating segments: Marine, P&C, and Professional Liability. The underwriting results of the acquired business from the NICE Group are included in the Int’l Insurance reporting segment, with no new operating segments resulting from the acquisition.

We evaluate the performance of each of the underwriting segments based on underwriting results. Underwriting results are measured based on Underwriting Profit or Loss and the related Combined Ratio, which are both measures of underwriting profitability. Underwriting Profit (Loss) is calculated from Net Earned Premiums less the sum of Net Losses and Loss Adjustment Expenses (“LAE”), Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). The Combined Ratio is derived by dividing the sum of Net Losses and LAE, Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense) by Net Earned Premiums. A Combined Ratio of less than 100% indicates an Underwriting Profit and greater than 100% indicates an Underwriting Loss. Our underwriting performance is evaluated separately from the rest of our operations.

The performance of our investment portfolios, our liquidity and capital resource needs, our foreign currency exposure and our tax planning strategies are evaluated on a consolidated basis within our Corporate segment. We do not allocate our assets by underwriting segment as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

Financial data by segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	280,183		$	117,376		$	58,384		$	—		$	455,943
Ceded written premiums		(72,615	)		(29,020	)		(1,896	)		—			(103,531	)
Net written premiums	$	207,568		$	88,356		$	56,488		$	—		$	352,412
Retention Ratio		74.1	%		75.3	%		96.8	%		—			77.3	%
Net Earned Premiums	$	188,504		$	95,226		$	63,308		$	—		$	347,038
Net Losses and LAE		(141,182	)		(60,275	)		(39,443	)		—			(240,900	)
Commission Expenses		(22,247	)		(22,547	)		(13,282	)		77			(57,999	)
Other Operating Expenses		(36,826	)		(24,441	)		(6,317	)		—			(67,584	)
Other Underwriting Income (Expense)		65			945			20			(77	)		953
Underwriting Profit (Loss)	$	(11,686	)	$	(11,092	)	$	4,286		$	—		$	(18,492	)
Net Investment Income											25,651			25,651
Total Net Realized and Unrealized Gains											2,563			2,563
Interest Expense											(3,891	)		(3,891	)
Other Income											771			771
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	(11,686	)	$	(11,092	)	$	4,286		$	22,655		$	4,163
Income Tax Benefit											462			462
Net Income													$	4,625
Losses and LAE Ratio		74.9	%		63.3	%		62.3	%					69.4	%
Commission Expense Ratio		11.8	%		23.7	%		21.0	%					16.7	%
Other Operating Expense Ratio (2)		19.5	%		24.6	%		9.9	%					19.2	%
Combined Ratio		106.2	%		111.6	%		93.2	%					105.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

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	Three Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	235,052		$	113,601		$	53,385		$	—		$	402,038
Ceded written premiums		(64,328	)		(38,966	)		(2,728	)		—			(106,022	)
Net written premiums	$	170,724		$	74,635		$	50,657		$	—		$	296,016
Retention Ratio		72.6	%		65.7	%		94.9	%		—			73.6	%
Net Earned Premiums	$	169,150		$	84,407		$	47,798		$	—		$	301,355
Net Losses and LAE		(135,340	)		(81,713	)		(59,118	)		—			(276,171	)
Commission Expenses		(18,286	)		(16,201	)		(11,233	)		211			(45,509	)
Other Operating Expenses		(25,375	)		(16,388	)		(4,010	)		—			(45,773	)
Other Underwriting Income (Expense)		125			—			94			(211	)		8
Underwriting Loss	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	—		$	(66,090	)
Net Investment Income											22,598			22,598
Total Net Realized and Unrealized Gains											4,218			4,218
Interest Expense											(3,862	)		(3,862	)
Other Loss											(1,707	)		(1,707	)
Income (Loss) Before Income Taxes	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	21,247		$	(44,843	)
Income Tax Benefit											16,864			16,864
Net Loss													$	(27,979	)
Losses and LAE Ratio		80.0	%		96.8	%		123.7	%					91.6	%
Commission Expense Ratio		10.8	%		19.2	%		23.5	%					15.1	%
Other Operating Expense Ratio (2)		14.9	%		19.4	%		8.2	%					15.2	%
Combined Ratio		105.7	%		135.4	%		155.4	%					121.9	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	808,589		$	377,771		$	262,043		$	—		$	1,448,403
Ceded written premiums		(215,340	)		(97,790	)		(10,307	)		—			(323,437	)
Net written premiums	$	593,249		$	279,981		$	251,736		$	—		$	1,124,966
Retention Ratio		73.4	%		74.1	%		96.1	%		—			77.7	%
Net Earned Premiums	$	541,163		$	280,507		$	179,010		$	—		$	1,000,680
Net Losses and LAE		(363,489	)		(158,422	)		(101,467	)		—			(623,378	)
Commission Expenses		(63,490	)		(62,166	)		(40,198	)		510			(165,344	)
Other Operating Expenses		(112,264	)		(68,270	)		(18,158	)		—			(198,692	)
Other Underwriting Income (Expense)		234			945			294			(510	)		963
Underwriting Profit (Loss)	$	2,154		$	(7,406	)	$	19,481		$	—		$	14,229
Net Investment Income											73,954			73,954
Total Net Realized and Unrealized Gains											3,667			3,667
Interest Expense											(11,619	)		(11,619	)
Other Income											3,272			3,272
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	2,154		$	(7,406	)	$	19,481		$	66,835		$	81,064
Income Tax Expense											(13,457	)		(13,457	)
Net Income													$	67,607
Losses and LAE Ratio		67.2	%		56.5	%		56.7	%					62.3	%
Commission Expense Ratio		11.7	%		22.2	%		22.5	%					16.5	%
Other Operating Expense Ratio (2)		20.7	%		23.9	%		9.9	%					19.8	%
Combined Ratio		99.6	%		102.6	%		89.1	%					98.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

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	Nine Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	729,843		$	386,654		$	188,025		$	—		$	1,304,522
Ceded written premiums		(199,672	)		(129,368	)		(9,021	)		—			(338,061	)
Net written premiums	$	530,171		$	257,286		$	179,004		$	—		$	966,461
Retention Ratio		72.6	%		66.5	%		95.2	%		—			74.1	%
Net Earned Premiums	$	500,241		$	250,593		$	130,487		$	—		$	881,321
Net Losses and LAE		(339,436	)		(176,513	)		(106,932	)		—			(622,881	)
Commission Expenses		(59,130	)		(54,435	)		(28,695	)		734			(141,526	)
Other Operating Expenses		(91,987	)		(58,687	)		(14,403	)		—			(165,077	)
Other Underwriting Income (Expense)		335			—			439			(734	)		40
Underwriting Profit (Loss)	$	10,023		$	(39,042	)	$	(19,104	)	$	—		$	(48,123	)
Net Investment Income											66,311			66,311
Total Net Realized and Unrealized Gains											5,868			5,868
Interest Expense											(11,584	)		(11,584	)
Other Loss											(1,082	)		(1,082	)
Income (Loss) Before Income Taxes	$	10,023		$	(39,042	)	$	(19,104	)	$	59,513		$	11,390
Income Tax Benefit											2,243			2,243
Net Income													$	13,633
Losses and LAE Ratio		67.9	%		70.4	%		81.9	%					70.7	%
Commission Expense Ratio		11.8	%		21.7	%		22.0	%					16.1	%
Other Operating Expense Ratio (2)		18.3	%		23.5	%		10.7	%					18.7	%
Combined Ratio		98.0	%		115.6	%		114.6	%					105.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

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Revenue by operating segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018									Three Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	31,681	$	(14,442	)	$	17,239	$	20,401	$	36,403	$	(18,859	)	$	17,544	$	20,129		(13.0	%)		(23.4	%)		(1.7	%)		1.4	%
P&C		212,911		(52,993	)		159,918		141,650		166,097		(39,952	)		126,145		125,931		28.2	%		32.6	%		26.8	%		12.5	%
ProfessionalLiability		35,591		(5,180	)		30,411		26,453		32,552		(5,517	)		27,035		23,090		9.3	%		(6.1	%)		12.5	%		14.6	%
Total	$	280,183	$	(72,615	)	$	207,568	$	188,504	$	235,052	$	(64,328	)	$	170,724	$	169,150		19.2	%		12.9	%		21.6	%		11.4	%
Int'l Insurance
Marine	$	32,486	$	(4,965	)	$	27,521	$	38,866	$	41,689	$	(9,948	)	$	31,741	$	39,038		(22.1	%)		(50.1	%)		(13.3	%)		(0.4	%)
P&C		41,898		(13,727	)		28,171		29,616		37,415		(19,772	)		17,643		21,775		12.0	%		(30.6	%)		59.7	%		36.0	%
Professional Liability		42,992		(10,328	)		32,664		26,744		34,497		(9,246	)		25,251		23,594		24.6	%		11.7	%		29.4	%		13.3	%
Total	$	117,376	$	(29,020	)	$	88,356	$	95,226	$	113,601	$	(38,966	)	$	74,635	$	84,407		3.3	%		(25.5	%)		18.4	%		12.8	%
GlobalRe	$	58,384	$	(1,896	)	$	56,488	$	63,308	$	53,385	$	(2,728	)	$	50,657	$	47,798		9.4	%		(30.5	%)		11.5	%		32.4	%
Total	$	455,943	$	(103,531	)	$	352,412	$	347,038	$	402,038	$	(106,022	)	$	296,016	$	301,355		13.4	%		(2.3	%)		19.1	%		15.2	%

	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	112,235	$	(48,840	)	$	63,395	$	62,670	$	119,040	$	(55,830	)	$	63,210	$	64,635		(5.7	%)		(12.5	%)		0.3	%		(3.0	%)
P&C		599,088		(152,740	)		446,348		401,870		524,223		(129,297	)		394,926		366,280		14.3	%		18.1	%		13.0	%		9.7	%
ProfessionalLiability		97,266		(13,760	)		83,506		76,623		86,580		(14,545	)		72,035		69,326		12.3	%		(5.4	%)		15.9	%		10.5	%
Total	$	808,589	$	(215,340	)	$	593,249	$	541,163	$	729,843	$	(199,672	)	$	530,171	$	500,241		10.8	%		7.8	%		11.9	%		8.2	%
Int'l Insurance
Marine	$	129,678	$	(24,542	)	$	105,136	$	115,342	$	160,119	$	(33,410	)	$	126,709	$	116,058		(19.0	%)		(26.5	%)		(17.0	%)		(0.6	%)
P&C		122,437		(45,099	)		77,338		75,100		124,446		(69,780	)		54,666		67,292		(1.6	%)		(35.4	%)		41.5	%		11.6	%
ProfessionalLiability		125,656		(28,149	)		97,507		90,065		102,089		(26,178	)		75,911		67,243		23.1	%		7.5	%		28.4	%		33.9	%
Total	$	377,771	$	(97,790	)	$	279,981	$	280,507	$	386,654	$	(129,368	)	$	257,286	$	250,593		(2.3	%)		(24.4	%)		8.8	%		11.9	%
GlobalRe	$	262,043	$	(10,307	)	$	251,736	$	179,010	$	188,025	$	(9,021	)	$	179,004	$	130,487		39.4	%		14.3	%		40.6	%		37.2	%
Total	$	1,448,403	$	(323,437	)	$	1,124,966	$	1,000,680	$	1,304,522	$	(338,061	)	$	966,461	$	881,321		11.0	%		(4.3	%)		16.4	%		13.5	%

18

NOTE 4.  INVESTMENTS

The following tables set forth our Company’s Available-For-Sale Investments as of September 30, 2018 and December 31, 2017 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	September 30, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	245,285	$	1,031	$	(3,879	)	$	248,133
States, Municipalities and Political Subdivisions		631,514		7,569		(7,534	)		631,479
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		344,016		874		(17,219	)		360,361
Residential Mortgage Obligations		124,191		521		(493	)		124,163
Asset-Backed Securities		540,566		554		(4,033	)		544,045
Commercial Mortgage-Backed Securities		186,251		696		(3,126	)		188,681
Subtotal	$	1,195,024	$	2,645	$	(24,871	)	$	1,217,250
Corporate Exposures (1)		917,650		4,191		(17,514	)		930,973
Total Fixed Maturities	$	2,989,473	$	15,436	$	(53,798	)	$	3,027,835
Short-Term Investments		7,264		—		(4	)		7,268
Total Available-For-Sale Investments	$	2,996,737	$	15,436	$	(53,802	)	$	3,035,103

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	393,563	$	2,081	$	(2,014	)	$	393,496
States, Municipalities and Political Subdivisions		814,632		20,136		(1,423	)		795,919
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		407,619		2,352		(5,414	)		410,681
Residential Mortgage Obligations		54,104		606		(79	)		53,577
Asset-Backed Securities		328,753		2,138		(663	)		327,278
Commercial Mortgage-Backed Securities		160,904		2,354		(1,182	)		159,732
Subtotal	$	951,380	$	7,450	$	(7,338	)	$	951,268
Corporate Exposures (1)		897,479		14,491		(3,737	)		886,725
Total Fixed Maturities	$	3,057,054	$	44,158	$	(14,512	)	$	3,027,408
Equity Securities:
Common Stocks	$	52,439	$	7,423	$	(112	)	$	45,128
Preferred Stocks		183,542		6,071		(1,560	)		179,031
Total Equity Securities	$	235,981	$	13,494	$	(1,672	)	$	224,159
Short-Term Investments		6,480		3		—			6,477
Total Available-For-Sale Investments	$	3,299,515	$	57,655	$	(16,184	)	$	3,258,044

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

19

The following table sets forth our Company’s Equity Securities at fair value as of September 30, 2018:

	As of September 30, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	190,722	$	15,573	$	(116	)	$	175,265
Preferred Stocks		180,958		1,901		(5,078	)		184,135
Total Equity Securities	$	371,680	$	17,474	$	(5,194	)	$	359,400

Our Company made investments in certain companies, which are reported as Other Invested Assets on the Consolidated Balance Sheet and accounted for using the equity method.  In applying the equity method, these investments were initially recorded at cost and subsequently adjusted based on our Company’s proportionate share of the net income or loss of the investments. Our initial purchase price for these investments was $2.0 million with a current carrying value of $1.8 million at September 30, 2018 and $1.7 million at December 31, 2017, as reflected on our Consolidated Balance Sheet.  

Other Invested Assets also includes overseas deposits with a fair value of $40.7 million at September 30, 2018 and $28.8 million at December 31, 2017.  The overseas deposits consist of investments in private funds which are managed centrally by The Corporation of Lloyds in support of all Lloyd’s market participants. The funds consist of fixed income securities, bank deposits, and cash invested in local markets which are intended to fulfill regulatory deposit requirements in worldwide jurisdictions. Our Company’s ability to withdraw from the funds is restricted by an annual and quarterly funding and release process managed by Lloyd’s in conjunction with Syndicate 1221’s capital requirements in various jurisdictions.

As of September 30, 2018 and December 31, 2017, our Company did not have a concentration of greater than 5% of invested assets in a single non-government backed issuer.

As of September 30, 2018 and December 31, 2017, Fixed Maturities for which Non-Credit OTTI was previously recognized and included in AOCI were in a Net Unrealized Gain position of $0.4 million and $0.5 million, respectively.

The fair value of our Company’s Fixed Maturities investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, foreign exchange rates and credit spreads. Our Company does not have the intent to sell nor is it more likely than not that it will have to sell Fixed Maturities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. Our Company does not intend to sell, and it is more likely than not that our Company will not be required to sell, these securities before the recovery of the amortized cost basis. Our Company may realize investment losses to the extent our liquidity needs require the disposition of Fixed Maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors our Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the Consolidated Financial Statements.

The contractual maturity dates for Fixed Maturities categorized by the number of years until maturity as of September 30, 2018 are shown in the following table:

	September 30, 2018
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	179,367	$	180,246
Due after one year through five years		715,620		725,231
Due after five years through ten years		345,661		348,557
Due after ten years		553,801		556,551
Mortgage-Backed and Asset-Backed Securities		1,195,024		1,217,250
Total	$	2,989,473	$	3,027,835

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Prepayment assumptions associated with the Mortgage-Backed and Asset-Backed Securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective accounting method. Due to the periodic repayment of principal, our Mortgage-Backed and Asset-Backed Securities are estimated to have an effective maturity of approximately 5.3 years.

20

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of September 30, 2018 and December 31, 2017, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	September 30, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	130,366	$	(2,559	)	$	73,266	$	(1,320	)	$	203,632	$	(3,879	)
States, Municipalities and Political Subdivisions		267,333		(4,895	)		58,882		(2,639	)		326,215		(7,534	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		72,698		(2,537	)		242,433		(14,682	)		315,131		(17,219	)
Residential Mortgage Obligations		43,108		(297	)		6,501		(196	)		49,609		(493	)
Asset-Backed Securities		364,764		(3,178	)		38,290		(855	)		403,054		(4,033	)
Commercial Mortgage-Backed Securities		56,209		(706	)		31,868		(2,420	)		88,077		(3,126	)
Subtotal	$	536,779	$	(6,718	)	$	319,092	$	(18,153	)	$	855,871	$	(24,871	)
Corporate Exposures (1)		614,332		(12,034	)		148,254		(5,480	)		762,586		(17,514	)
Total Fixed Maturities	$	1,548,810	$	(26,206	)	$	599,494	$	(27,592	)	$	2,148,304	$	(53,798	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	273,672	$	(1,502	)	$	54,484	$	(512	)	$	328,156	$	(2,014	)
States, Municipalities and Political Subdivisions		74,097		(503	)		45,085		(920	)		119,182		(1,423	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		87,496		(346	)		236,745		(5,068	)		324,241		(5,414	)
Residential Mortgage Obligations		12,418		(62	)		546		(17	)		12,964		(79	)
Asset-Backed Securities		85,877		(468	)		24,733		(195	)		110,610		(663	)
Commercial Mortgage-Backed Securities		20,482		(95	)		22,903		(1,087	)		43,385		(1,182	)
Subtotal	$	206,273	$	(971	)	$	284,927	$	(6,367	)	$	491,200	$	(7,338	)
Corporate Exposures (1)		295,433		(1,690	)		121,410		(2,047	)		416,843		(3,737	)
Total Fixed Maturities	$	849,475	$	(4,666	)	$	505,906	$	(9,846	)	$	1,355,381	$	(14,512	)
Equity Securities:
Common Stocks	$	11,245	$	(81	)	$	1,770	$	(31	)	$	13,015	$	(112	)
Preferred Stocks		50,861		(1,524	)		662		(36	)		51,523		(1,560	)
Total Equity Securities	$	62,106	$	(1,605	)	$	2,432	$	(67	)	$	64,538	$	(1,672	)
Total Fixed Maturities and Equity Securities	$	911,581	$	(6,271	)	$	508,338	$	(9,913	)	$	1,419,919	$	(16,184	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Our Company analyzes impaired securities quarterly to determine if any impairments are other-than-temporary.  The above securities with unrealized losses are deemed to be temporarily impaired based on our evaluation.

21

As of September 30, 2018, there were 830 Fixed Maturities in an unrealized loss position. As of December 31, 2017, there were 454 Fixed Maturities and 22 Equity Securities  in an unrealized loss position. As of September 30, 2018, the gross unrealized loss for the greater than 12 months category consists primarily of Agency Residential Mortgage-Backed Securities and Corporate Exposures principally due to an increase in interest rates. The gross unrealized loss for the less than 12 months category for the period ended September 30, 2018 consists primarily of Corporate Exposures due to an increase in interest rates.  As of December 31, 2017, the gross unrealized loss for the greater than 12 month category consists primarily of Agency Residential Mortgage-Backed Securities and Corporate Exposures and is mostly due to an increase in interest rates since the time of purchase.  The gross unrealized loss for the less than 12 months category for the period ended December 31, 2017 consists primarily of Corporate Bonds and Preferred Stocks, which are reported in Equity Securities due to an increase in interest rates since time of purchase, as well as Foreign Government Bonds due to an unfavorable exchange rate movement in our Canadian portfolio.

As of September 30, 2018 and December 31, 2017, the largest unrealized loss by a non-government backed issuer in the investment portfolio was $1.4 million and $0.7 million, respectively.

Our Company’s ability to hold securities is supported by sufficient cash flow from our operations and from maturities within our investment portfolio in order to meet our claims payments and other disbursement obligations arising from our underwriting operations without selling such investments.  With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss.  Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.  

Upon adoption of ASU 2016-01 as of January 1, 2018, changes in the fair value of Equity Securities are recognized through Net Income. Our Company did not have any credit related OTTI losses during the three and nine months ended September 30, 2018. Our Company had two credit related OTTI losses totaling $1.0 million in the equity portfolio during the three months ended September 30, 2017.  Our Company had four credit related OTTI losses totaling $2.1 million in the equity portfolio during the nine months ended September 30, 2017.    

As of September 30, 2018 and 2017, the cumulative amounts related to our Company’s credit loss portion of the OTTI losses on Fixed Maturities was $2.4 million.  There were no changes to the cumulative amounts of our Company’s credit loss portion of OTTI for the three and nine months ended September 30, 2018 and 2017

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities	$	22,733		$	19,491		$	65,504		$	57,019
Equity Securities		3,052			3,774			9,138			11,337
Short-Term Investments, Cash & Cash Equivalents		509			84			1,151			254
Other Invested Assets		159			166			486			408
Total Investment Income	$	26,453		$	23,515		$	76,279		$	69,018
Investment Expenses		(802	)		(917	)		(2,325	)		(2,707	)
Net Investment Income	$	25,651		$	22,598		$	73,954		$	66,311

22

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities:
Gains	$	331		$	2,589		$	3,678		$	3,401
Losses		(369	)		(900	)		(1,125	)		(3,114	)
Fixed Maturities, Net	$	(38	)	$	1,689		$	2,553		$	287
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	107		$	758		$	189		$	984
Losses		(71	)		(14	)		(266	)		(139	)
Short-Term, Net	$	36		$	744		$	(77	)	$	845
Other Invested Assets:
Gains	$	9		$	9		$	78		$	30
Losses		(50	)		(97	)		(136	)		(232	)
Other Invested Assets, Net	$	(41	)	$	(88	)	$	(58	)	$	(202	)
Equity Securities:
Gains	$	347		$	2,863		$	1,102		$	7,249
Losses		(51	)		(18	)		(310	)		(246	)
Equity Securities, Net	$	296		$	2,845		$	792		$	7,003
Net Realized Gains on Investments Sold	$	253		$	5,190		$	3,210		$	7,933

The following table presents the portion of Net Unrealized Gains (Losses) recognized during the three and nine months ended September 30, 2018, that relates to Equity Securities held as of September 30, 2018:

	Three Months Ended September 30,		Nine Months Ended September 30,
amounts in thousands	2018		2018
Equity Securities:
Total Net Realized and Unrealized Gains recognized during the period	$	2,606	$	1,249
Less: Net Realized Gains on Investments Sold recognized during the period		296		792
Net Unrealized Gains recognized during the period	$	2,310	$	457

NOTE 5. FAIR VALUE MEASUREMENT

The fair value of our financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equities and fixed income securities traded on an exchange. U.S. Treasury securities are reported as Level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that our Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are Asset-Backed and Mortgage-Backed Securities that are similar to other Asset-Backed or Mortgage-Backed Securities observed in the market. U.S. Government Agency Securities are reported as Level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

23

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of September 30, 2018 and December 31, 2017:

	September 30, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	45,093	$	200,192	$	—	$	245,285
States, Municipalities and Political Subdivisions		—		631,514		—		631,514
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		344,016		—		344,016
Residential Mortgage Obligations		—		124,191		—		124,191
Asset-Backed Securities		—		540,566		—		540,566
Commercial Mortgage-Backed Securities		—		186,251		—		186,251
Subtotal	$	—	$	1,195,024	$	—	$	1,195,024
Corporate Exposures		—		917,650		—		917,650
Total Fixed Maturities	$	45,093	$	2,944,380	$	—	$	2,989,473
Equity Securities:
Common Stocks	$	40,416	$	150,306	$	—	$	190,722
Preferred Stocks		—		180,958		—		180,958
Total Equity Securities	$	40,416	$	331,264	$	—	$	371,680
Short-Term Investments		—		7,264		—		7,264
Total Assets Measured at Fair Value	$	85,509	$	3,282,908	$	—	$	3,368,417
Senior Notes	$	—	$	274,348	$	—	$	274,348
Total Liabilities Measured at Fair Value	$	—	$	274,348	$	—	$	274,348

	December 31, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	178,251	$	215,312	$	—	$	393,563
States, Municipalities and Political Subdivisions		—		814,632		—		814,632
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		407,619		—		407,619
Residential Mortgage Obligations		—		54,104		—		54,104
Asset-Backed Securities		—		328,753		—		328,753
Commercial Mortgage-Backed Securities		—		160,904		—		160,904
Subtotal	$	—	$	951,380	$	—	$	951,380
Corporate Exposures		—		897,479		—		897,479
Total Fixed Maturities	$	178,251	$	2,878,803	$	—	$	3,057,054
Equity Securities:
Common Stocks	$	52,439	$	—	$	—	$	52,439
Preferred Stocks		—		183,542		—		183,542
Total Equity Securities	$	52,439	$	183,542	$	—	$	235,981
Short-Term Investments		6,480		—		—		6,480
Total Assets Measured at Fair Value	$	237,170	$	3,062,345	$	—	$	3,299,515
Senior Notes	$	—	$	277,951	$	—	$	277,951
Total Liabilities Measured at Fair Value	$	—	$	277,951	$	—	$	277,951

Other financial assets and liabilities including Cash, Premium Receivable, Reinsurance Recoverable and Reinsurance Balances Payable are carried at cost, which approximates fair value. Our Company has overseas deposits in Other Invested Assets of $40.7 million and $28.8 million at September 30, 2018 and December 2017, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

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Our Company did not have any transfers between Level 1 and Level 2 classifications for the three and nine months ended September 30, 2018 and 2017.

As of September 30, 2018, our Company did not have any Level 3 assets.

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table shows an analysis of goodwill by reporting segment:

	Nine Months Ended September 30, 2018
	U.S.		Int'l
amounts in thousands	Insurance		Insurance		Total
Goodwill at Beginning of the Period	$	1,978	$	2,482	$	4,460
Goodwill Acquired		—		12,703		12,703
Foreign Currency Translation Adjustment		—		81		81
Goodwill at End of the Period	$	1,978	$	15,266	$	17,244

The Goodwill Acquired primarily relates to expected synergies from combining operations of the NICE Group and is not expected to be deductible for tax purposes. Included in the Goodwill Acquired is an increase of $1.4 million from the amount initially recorded at June 30, 2018, as a result of a measurement period adjustment to the fair value of the ASCO customer relationships intangible asset. See the “Intangibles” section below for further information.

Intangibles

The gross carrying value and weighted average amortization period of intangible assets by type at September 30, 2018 was as follows:

	As of September 30, 2018
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,383	$	(85	)	10 years
ASCO VOBA		1,711		(107	)	4 years
BDM Broker Networks		1,012		(17	)	15 years
BDM Trade Name		498		(124	)	1 year
Total	$	6,604	$	(333	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,489	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,625

During the three months ended September 30, 2018, as part of our business combination accounting within the measurement period, the Company recorded an adjustment to the fair value of the ASCO customer relationships intangible asset. The adjustment resulted from additional analysis of the duration of customer contracts, which decreased the useful life of the intangible asset from 15 to 10 years. As a result, the fair value of the intangible asset decreased by $1.4 million from the amount initially recorded at June 30, 2018.

The amortization of the Finite-Lived Assets was recognized within Other Operating Expenses on our Consolidated Statements of Income (Loss) with the exception of the amortization of the VOBA asset, which was recognized within Commission Expenses.

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The estimated remaining amortization expense for the finite-lived intangible assets is as follows:

amounts in thousands	Total
2018	$	333
2019		1,082
2020		834
2021		834
2022		620
2023 and thereafter		2,568
Total	$	6,271

NOTE 7. LOSS RESERVES

We establish reserves for the estimated unpaid ultimate liability for losses and LAE under the terms of our policies and agreements. The determination of Reserves for Losses and LAE is partially dependent upon the receipt of information from agents and brokers. Reserves include estimates for both claims that have been reported and for those that have been incurred but not reported (“IBNR”), and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Reserves for Losses and LAE in the Consolidated Balance Sheets. Our estimates and judgements may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. Frequency/severity analyses are also performed for certain books of business. To the extent that reserves are found deficient or redundant, a strengthening or release is recognized as a charge or credit to earnings.

The following table summarizes our Company’s Reserves for Losses and LAE activity for the nine months ended September 30, 2018 and 2017:

	For the Nine Months Ended September 30,
amounts in thousands	2018			2017
Net Reserves for Losses and LAE at Beginning of Year	$	1,705,380		$	1,510,451
Acquired Net Reserves		16,159			—
Provision for Losses and LAE for Claims Occurring in the Current Year		603,564			578,272
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		19,814			44,609
Incurred Losses and LAE	$	623,378		$	622,881
Losses and LAE Paid for Claims Occurring During:
Current Year		(65,445	)		(75,707	)
Prior Years		(420,870	)		(358,684	)
Losses and LAE Payments	$	(486,315	)	$	(434,391	)
Foreign Currency Adjustment		(4,982	)		11,688
Net Reserves for Losses and LAE at End of Period		1,853,620			1,710,629
Reinsurance Recoverables on Unpaid Losses and LAE		780,215			847,505
Gross Reserves for Losses and LAE at End of Period	$	2,633,835		$	2,558,134

For the nine months ended September 30, 2018, our Incurred Losses and LAE increased $0.5 million as compared to the same period in 2017, with an increase due to growth in Net Earned Premium over the prior year largely offset by a higher level of catastrophe losses and prior year reserve strengthening in 2017.

The nine months ended September 30, 2018 recognized total net catastrophe losses of $12.6 million, which included losses from Typhoon Jebi and Hurricane Florence. This compared to total net catastrophe losses of $77.9 million for the same period in 2017, which included losses from Hurricanes Harvey, Irma, and Maria (the “Hurricane events”) and the Puebla, Mexico Earthquake.

The nine months ended September 30, 2018 recognized $19.8 million of net prior AY reserve strengthening primarily driven by our Primary Casualty division within the U.S. Insurance P&C operating segment due to significant loss development within our Premises product. This compares to $44.6 million of net prior accident year reserve strengthening for the same period in 2017 primarily related to loss development in our Int’l Insurance reporting segment, large loss activity in our U.S. D&O division, strengthening of our U.S. casualty business and the settlement of a large claim in our GlobalRe reporting segment.

For the nine months ended September 30, 2018, our Losses and LAE Payments increased $51.9 million as compared to the same period in 2017, primarily due to increased claim payments associated with growth in our business and the catastrophe activity occurring in the third quarter of 2017.

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Our September 30, 2018 Net Reserves for Losses and LAE includes estimated amounts for numerous catastrophe events. We caution that the magnitude and complexity of losses arising from these events inherently increases the level of uncertainty and therefore the level of management judgment involved in arriving at our estimated Net Reserves for Losses and LAE. As a result, our actual losses for these events may ultimately differ materially from our current estimates.

NOTE 8. CEDED REINSURANCE

As of September 30, 2018, the credit quality distribution of our Company’s reinsurance recoverable of $1.1 billion for ceded paid losses, ceded unpaid losses and LAE, and ceded unearned premiums based on insurer financial strength ratings from A.M. Best or S&P was not significantly different from the credit quality distribution as of December 31, 2017.

Our allowance for uncollectible reinsurance was $12.6 million as of September 30, 2018 and December 31, 2017.

As of September 30, 2018, the list of our 10 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium, together with the reinsurance recoverable and collateral, was similar to the list as of December 31, 2017.

NOTE 9. DEBT

During the first quarter of 2018, the Company reclassified certain overseas deposits from Short-Term Investments to Other Invested Assets. Refer to Note 1. Organization & Summary of Significant Accounting Policies. Although the nature of the investments did not change, this reclassification caused the Company to exceed a covenant of our Club Facility that sets a limitation on other investments as a percentage of total investments. During the second quarter of 2018, our Company received a waiver of compliance with respect to this covenant, which was subsequently amended to increase the percentage of other investments permitted. As of September 30, 2018, our Company was in compliance with all covenants for our Club Facility, Senior Notes, Australian Facility and Bilateral Facility.

NOTE 10. COMMITMENTS AND CONTINGENCIES

In 2013, the State of Connecticut (“the State”) awarded our Company up to $11.5 million ($8.0 million in loans and $3.5 million in grants) to move our corporate headquarters to Stamford, Connecticut. The loan is non-interest bearing, has a term of 10 years and is subject to forgiveness based on our compliance with certain conditions set forth in the agreement with the State. The amount of the loan to be received is dependent on our Company reaching certain milestones for creation of new jobs over a five-year period, and the funds are to be used to offset certain equipment purchases, facility costs, training of employees and other eligible project-related costs. As of September 30, 2018, our Company has received all of the award and earned a loan forgiveness credit of $7.0 million with the State. Our Company is recognizing the amount of loan and grants received over the period in which offsetting expenses are recognized. Our Company recognized $0.3 million and $1.0 million of the incentive for the three and nine months ended September 30, 2018, respectively. As of September 30, 2018 and December 31, 2017, our Company has deferred revenue of $5.0 million and $4.4 million, respectively, which is included in Other Liabilities on the Consolidated Balance Sheets.

On February 16, 2017, our Company entered into a guarantee, pursuant to which it guaranteed all of the liabilities and obligations of NIIC (the “Guarantee”). The Guarantee will remain effective until all of such liabilities and obligations are discharged, and in the event that our Company does not meet its obligations under the Guarantee, any person who is covered by an insurance policy, certificate of coverage or reinsurance contract issued by NIIC will be a third party beneficiary under the Guarantee. Our Company’s obligations under the Guarantee may be terminated by providing twelve months prior written notice to NIIC. However the obligations of our Company under the Guarantee terminate immediately in the event that (i) the majority of the outstanding voting capital stock in NIIC is sold to any non-affiliated entity; (ii) A.M. Best has confirmed that NIIC will receive the same financial strength rating as NIC or NSIC, without the benefit of the Guarantee; or (iii) NIIC withdraws its request to be rated by A.M. Best, provided that NIIC has not been downgraded within the prior twelve months.

On August 22, 2018, our Company entered into a Merger Agreement with The Hartford. In accordance with the terms of the Merger Agreement, our Company would be obligated to pay The Hartford a $68.25 million termination fee if the Merger Agreement is terminated for certain reasons outlined in the Merger Agreement. Our Company is obligated to reimburse the Hartford for its transaction-related expenses, up to $7.0 million, if the Merger Agreement is terminated due to our Company’s stockholders failing to adopt the Merger Agreement, provided that any such transaction-related expenses reimbursed by our Company would be credited toward any termination fee.

In the ordinary course of conducting business, our Parent Company’s subsidiaries are involved in various legal proceedings. Most of these proceedings consist of claims litigation involving our Parent Company’s subsidiaries as either: (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. In general, our Company believes we have valid defenses to these cases. Our Company’s management believes that the ultimate liability, if any, with respect to these legal proceedings, after consideration of provisions made for potential losses and cost of defense, will not be material to our Company’s Consolidated Balance Sheets, Statements of Income and Statements of Cash Flows.

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NOTE 11.STOCK-BASED COMPENSATION

Stock-based compensation granted under our Company’s stock plans is expensed in tranches over the vesting period. Non-performance based grants generally vest equally over a three or four-year period. Performance units generally cliff vest three years after they are granted. Each performance unit and restricted stock unit represents a contingent right to receive one share of Common Stock as of the vesting date. Such Common Stock may be subject to forfeiture for the payment of any required tax withholding.

The activity related to our Company's restricted stock unit awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		159,539		$	41.60
Granted		24,593		$	50.01
Vested (2)		(76,168	)	$	35.23
Forfeited		(7,000	)	$	38.00
Nonvested at the end of the period		100,964		$	48.70

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 29,954 were withheld for tax payments at a weighted average vest date fair value of $56.83.

The activity related to our Company's performance-based equity awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		966,361		$	43.39
Granted		247,554		$	54.15
Performance Adjustment		(59,833	)	$	37.25
Vested (2)		(274,299	)	$	37.25
Forfeited		(34,250	)	$	46.00
Nonvested at the end of the period		845,533		$	48.86

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 117,005 were withheld for tax payments at a weighted average vest date fair value of $55.65.

Awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each performance unit award granted prior to January 1, 2017, and each tranche of a restricted stock unit award that vests prior to January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2019 Vesting Company Awards”) will be converted into the right to receive an amount in cash equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance unit awards, the target number of shares, in each case subject to the 2019 Vesting Company Award immediately prior to the Merger.

Each performance unit award granted on or after January 1, 2017 and prior to January 1, 2019, and each tranche of a restricted stock unit award that vests on or after January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2020 Vesting Company Awards”) will be canceled and converted into the right to receive a cash payment equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance units, the target number of shares, in each case subject to the 2020 Vesting Company Award immediately prior to the Merger; provided that the right to a cash payment with respect to a 2020 Vesting Company Award shall be subject to the same vesting and payment schedules as the 2020 Vesting Company Award it replaces (other than performance-based vesting conditions).

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NOTE 12. STOCKHOLDERS’ EQUITY

On August 9, 2018 our Board of Directors declared a cash dividend of $0.07 per share that was paid on September 21, 2018. During the three months ended September 30, 2017, a dividend of $0.06 per share was declared and paid.

During the nine months ended September 30, 2018 and 2017, dividends of $0.21 and $0.165 per share were declared and paid, respectively.

The declaration and amount of any future dividend will be at the discretion of the Board of Directors, and will depend upon many factors, including financial condition, results of operations, business requirements, regulatory and legal constraints and other factors the Board of Directors deems relevant.

NOTE 13. SUBSEQUENT EVENTS

On November 7, 2018, we amended and restated the Club Facility (the “Restated Club Facility”). The Restated Club Facility has two tranches with one tranche extending a $165.0 million commitment and the other tranche extending a £60.0 million commitment. The Restated Club Facility will be used to support the Company’s capacity at its Lloyd’s of London operations for the 2019 and 2020 underwriting years of accounts, as well as prior open years.

On November 7, 2018, our Board of Directors declared a cash dividend on our Company’s Common Stock of $0.07 per share, payable on December 21, 2018 to stockholders of record on November 30, 2018.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in or incorporated by reference in this Quarterly Report are forward-looking statements. Whenever used in this report, the words “estimate,” “expect,” “believe,” “may,” “will,” “intend,” “continue” or similar expressions or their negative are intended to identify such forward-looking statements. Forward-looking statements are derived from information that we currently have and assumptions that we make, and are subject to a number of risks and uncertainties, including those described in the “Risk Factors” section of our 2017 Annual Report on Form 10-K and Part II, Item 1A “Risk Factors,” included in this Form 10-Q. We operate in a competitive environment, with new risks emerging from time to time. We cannot assure you that anticipated results will be achieved, since actual results may differ materially because of both known and unknown risks and uncertainties which we face.

In light of these risks, uncertainties and assumptions, any forward-looking events discussed in this Form 10-Q may not occur, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their respective dates.

U.S. GAAP and Non-GAAP Financial Performance Metrics

Throughout this Quarterly Report, we present our operations in the way we believe will be most meaningful, useful and transparent to anyone using this financial information to evaluate our performance. In addition to the presentation of Net Income (Loss), Book Value, Book Value per Share, Net Losses and LAE Reserves and Combined Ratio, we show certain non-GAAP financial measures as defined in Regulation G that we believe are valuable in managing our business and drawing comparisons to our peers. These non-GAAP measures are Net Operating Earnings (Loss) and Underwriting Profit (Loss).

The following is a list of GAAP and non-GAAP measures found throughout this report with their definitions, relationships to GAAP measures and explanations of their importance to our operations:

Book Value and Book Value Per Share

Book Value is equivalent to Stockholders’ Equity and Book Value per Share is calculated by dividing Stockholders’ Equity by the number of outstanding shares at the end of the interim period.

Net Losses and LAE Reserves

Reserves for Losses and LAE, as shown in the liabilities section of our Consolidated Balance Sheets, represents the total gross obligations to claimants for both estimates of known claims and estimates for IBNR claims. The related asset item, Reinsurance Recoverable on Unpaid Losses and LAE, is the estimate of both known claims and IBNR that we expect to recover from reinsurers. The net of these two items is generally referred to as Net Losses and LAE Reserves and is commonly used in our disclosures regarding the process of establishing these various estimated amounts.

Combined Ratio

The Combined Ratio is a common insurance industry measure of profitability for any underwriting operation and is calculated in three components. First, the Loss Ratio is represented by Net Losses and LAE divided by Net Earned Premiums. The second component is the Commission Expense Ratio, which is Commission Expenses divided by Net Earned Premiums. The third component is the Other Operating Expense Ratio, which reflects the sum of Other Operating Expenses and Other Underwriting Income (Expense), divided by Net Earned Premiums. All items included in these components of the Combined Ratio are presented in our GAAP Consolidated Financial Statements. The sum of the Loss, Commission Expense and Other Operating Expense Ratios is the Combined Ratio. The difference between the Combined Ratio and 100% reflects the rate of Underwriting Profit (Loss). For example, a Combined Ratio of 85% implies that for every $100 of premium we earn, we record $15 of Underwriting Profit.

Net Operating Earnings (Loss)

Net Operating Earnings (Loss) is a “non-GAAP financial measure” as defined in Regulation G. Net Operating Earnings (Loss) is comprised of Net Income (Loss) excluding After-Tax adjustments, including: Total Net Realized and Unrealized Gains (Losses), Foreign Exchange Gains (Losses), the Net Gain on Disposition of Product Line, and Merger Transaction Costs recognized in our Consolidated Statements of Income (Loss). We believe that this presentation reflects the underlying fundamentals of our business.

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A reconciliation of Net Income (Loss) (the nearest GAAP financial measure) to Net Operating Earnings (Loss) can be found in Item 2, Results of Operations. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our business and enables investors and other users of our financial information to analyze underlying business performance in a manner similar to management. We also believe this measure follows industry practice and, therefore facilitates comparison of our performance with our peer group.

Underwriting Profit (Loss)

Underwriting Profit (Loss) represents one measure of the pre-tax profitability of our insurance operations and is derived by subtracting the following from Net Earned Premiums: Net Losses and LAE Incurred, Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). This information is available in total and by segment in Note 3 – Segment Information in the Interim Consolidated Financial Statements. The nearest comparable GAAP measure is Income (Loss) Before Income Taxes which, in addition to Net Underwriting Profit (Loss), includes Net Investment Income, Total Net Realized and Unrealized Gains (Losses) recognized in our Consolidated Statements of Income (Loss), Interest Expense, Other Income (Loss), and Merger Transaction Costs. While this measure is presented in the footnotes to the Interim Consolidated Financial Statements, it is considered a “non-GAAP financial measure” as defined in Regulation G when presented elsewhere on a consolidated basis.

A reconciliation of total Net Underwriting Profit (Loss) and its components to Income (Loss) Before Income Taxes (the nearest GAAP financial measure) can be found in Item 1, Note 3 – Segment Information to the Interim Consolidated Financial Statements and in Item 2, Segment Results. We believe that presentation of Net Underwriting Profit (Loss) provides investors with an enhanced understanding of our results of operations, by highlighting the underlying pre-tax profitability of our underwriting activities.

Overview

The discussion and analysis of our financial condition and results of operations contained herein should be read in conjunction with our 2017 Annual Report on Form 10-K in its entirety as well as the statements under “Forward-Looking Statements” and the Interim Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a complete description of events, trends, uncertainties, risks and critical accounting estimates affecting us.

Unless the context requires otherwise, the terms “we,” “us,”, “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer P&C insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our D&O and E&O divisions, as well as assumed reinsurance products.

On February 7, 2018, certain wholly owned subsidiaries of our Company entered into a Renewal Rights Agreement with Thomas Miller Specialty Underwriting Agency Limited and Thomas Miller & Co Limited (collectively “Thomas Miller”), pursuant to which Thomas Miller agreed to acquire the renewal rights to our Company’s fixed-premium protection and indemnity business. During the first quarter of 2018, our Company recorded a gain from this transaction. Our Company agreed to continue to underwrite such business from February 8, 2018 through an end date of August 31, 2018, which was originally June 30, 2018, while all transitional arrangements are put in place, and ceded 100% of such business through a quota share agreement. After August 31, 2018 this business renewed through Thomas Miller. Our Company remains responsible for all losses incurred on such business written prior to February 8, 2018, and our Company continues to participate in the protection and indemnity market primarily through reinsurance of mutual clubs via our Lloyd’s of London (“Lloyd’s”) syndicate, Syndicate 1221.

During the second quarter of 2018, our Company established a wholly owned subsidiary, Navigators Holding (Europe) NV, which on June 7, 2018 (the “acquisition date”), acquired a 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”), Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”), and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). The acquisition of all three of these entities will be referred to as the “Acquisition” and the group of companies will be referred to as the Navigators Insurance Company Europe Group (the “NICE Group”). The Acquisition was undertaken as part of the Company’s strategy of expanding to more brokers and insureds across Europe and reinforces the Company’s presence in the European Union’s single market. We anticipate that this will enable the Company to better serve its European clients after Brexit, and will also provide opportunity to reach a wider European audience. The underwriting results of the acquired business from the NICE Group are included in the Int’l Insurance reporting segment, with no new operating segments resulting from the acquisition.

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On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of the Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share. The Merger is expected to close in the first half of 2019, subject to the receipt of regulatory approvals and other customary closing conditions.

Financial Highlights – Selected Indicators

	Three Months Ended						Nine Months Ended
amounts in thousands, except per share amounts	September 30, 2018			September 30, 2017			September 30, 2018		September 30, 2017
Results of Operations Data:
Net Earned Premiums	$	347,038		$	301,355		$	1,000,680	$	881,321
Net Investment Income		25,651			22,598			73,954		66,311
Underwriting Profit (Loss)		(18,492	)		(66,090	)		14,229		(48,123	)
Net Income (Loss)		4,625			(27,979	)		67,607		13,633
Net Income (Loss) per Diluted Share	$	0.15		$	(0.95	)	$	2.24	$	0.45
Net Cash provided by Operating Activities	$	184,368		$	149,847		$	267,089	$	222,751

amounts in thousands, except per share amounts	As of September 30, 2018		As of December 31, 2017
Balance Sheet Data:
Total Assets	$	5,548,327	$	5,224,622
Total Shareholders' Equity	$	1,231,828	$	1,225,965
Book Value per Share	$	41.38	$	41.55

Our revenue is primarily comprised of premiums and investment income. Cash flow is generated from premiums collected and investment income received less paid losses and loss expenses, commission and administrative expenses as well as the timing of reinsurance receipts and payments. Our products are distributed through multiple channels, utilizing global, national and regional retail and wholesale insurance brokers.

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance of our four reportable segments: U.S. Insurance, Int’l Insurance, GlobalRe and Corporate.

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Results of Operations

The following table presents a summary of our consolidated financial results for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,						Nine Months Ended September 30,						%Change
amounts in thousands, except per share amounts	2018			2017			2018			2017			QTD			YTD
Gross Written Premiums	$	455,943		$	402,038		$	1,448,403		$	1,304,522			13.4	%		11.0	%
Ceded Written Premiums		(103,531	)		(106,022	)		(323,437	)		(338,061	)		(2.3	%)		(4.3	%)
Net Written Premiums		352,412			296,016			1,124,966			966,461			19.1	%		16.4	%
Net Earned Premiums		347,038			301,355			1,000,680			881,321			15.2	%		13.5	%
Net Losses and LAE		(240,900	)		(276,171	)		(623,378	)		(622,881	)		(12.8	%)		0.1	%
Commission Expenses		(57,999	)		(45,509	)		(165,344	)		(141,526	)		27.4	%		16.8	%
Other Operating Expenses		(67,584	)		(45,773	)		(198,692	)		(165,077	)		47.6	%		20.4	%
Other Underwriting Income		953			8			963			40		NM			NM
Underwriting Profit (Loss)	$	(18,492	)	$	(66,090	)	$	14,229		$	(48,123	)		(72.0	%)	NM
Net Investment Income		25,651			22,598			73,954			66,311			13.5	%		11.5	%
Total Net Realized and Unrealized Gains		2,563			4,218			3,667			5,868			(39.2	%)		(37.5	%)
Interest Expense		(3,891	)		(3,862	)		(11,619	)		(11,584	)		0.8	%		0.3	%
Other Income (Loss)		771			(1,707	)		3,272			(1,082	)	NM			NM
Merger Transaction Costs		(2,439	)		—			(2,439	)		—		NM			NM
Income (Loss) Before Income Taxes	$	4,163		$	(44,843	)	$	81,064		$	11,390		NM			NM
Income Tax (Expense) Benefit		462			16,864			(13,457	)		2,243			(97.3	%)	NM
Net Income (Loss)	$	4,625		$	(27,979	)	$	67,607		$	13,633		NM			NM
Net Income (Loss) per Basic Share	$	0.16		$	(0.95	)	$	2.28		$	0.46
Net Income (Loss) per Diluted Share	$	0.15		$	(0.95	)	$	2.24		$	0.45
Effective Tax Rate		(11.1	%)		37.6	%		16.6	%		(19.7	%)
Losses and LAE Ratio		69.4	%		91.6	%		62.3	%		70.7	%
Commission Expense Ratio		16.7	%		15.1	%		16.5	%		16.1	%
Other Operating Expense Ratio (1)		19.2	%		15.2	%		19.8	%		18.7	%
Combined Ratio		105.3	%		121.9	%		98.6	%		105.5	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.

NM - Percentage change not meaningful

33

The following tables calculate our Net Operating Earnings (Loss) for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30, 2018									Three Months Ended September 30, 2017									% Change
amounts in thousands, except per share amounts	Pre-Tax			Tax (1)			After-Tax			Pre-Tax			Tax (1)			After-Tax			QTD
Net Income (Loss)	$	4,163		$	462		$	4,625		$	(44,843	)	$	16,864		$	(27,979	)	NM
Adjustments to Net Income (Loss):
Total Net Realized and Unrealized Gains		(2,563	)		538			(2,025	)		(4,218	)		1,477			(2,741	)		(26.1	%)
FX Losses (Gains)		(706	)		148			(558	)		1,675			(586	)		1,089		NM
Merger Transaction Costs		2,439			(302	)		2,137			—			—			—		NM
Net Operating Earnings (Loss)	$	3,333		$	846		$	4,179		$	(47,386	)	$	17,755		$	(29,631	)	NM
Average Common Shares Outstanding:
Basic								29,768									29,500
Diluted								30,184									29,500
Net Operating Earnings (Loss) per Common Share:
Basic							$	0.14								$	(1.00	)
Diluted							$	0.14								$	(1.00	)

(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.

NM - Percentage change not meaningful

	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017									% Change
amounts in thousands, except per share amounts	Pre-Tax			Tax (1)			After-Tax			Pre-Tax			Tax (1)			After-Tax			YTD
Net Income	$	81,064		$	(13,457	)	$	67,607		$	11,390		$	2,243		$	13,633		NM
Adjustments to Net Income:
Total Net Realized and Unrealized Gains		(3,667	)		770			(2,897	)		(5,868	)		2,055			(3,813	)		(24.0	%)
FX Losses (Gains)		(1,770	)		371			(1,399	)		1,015			(355	)		660		NM
Net Gain on Disposition of Product Line		(948	)		199			(749	)		—			—			—		NM
Merger Transaction Costs		2,439			(302	)		2,137			—			—			—		NM
Net Operating Earnings	$	77,118		$	(12,419	)	$	64,699		$	6,537		$	3,943		$	10,480		NM
Average Common Shares Outstanding:
Basic								29,699									29,419
Diluted								30,160									30,006
Net Operating Earnings per Common Share:
Basic							$	2.18								$	0.36
Diluted							$	2.15								$	0.35

(1) - Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of any other relevant factors.

NM - Percentage change not meaningful

Underwriting Profit (Loss)

Quarter to Date Variance

The Company’s Underwriting Loss of $18.5 million for the three months ended September 30, 2018, decreased by $47.6 million, compared to an Underwriting Loss of $66.1 million for the three months ended September 30, 2017.

The decrease in the Underwriting Loss was significantly impacted by a lower Net Current AY Losses and LAE Ratio largely due to a lower level of catastrophe losses with $11.8 million of net catastrophe losses net of RRPs in 2018 related to Typhoon Jebi and Hurricane Florence compared to $75.1 million of net catastrophe losses inclusive of net RRPs in 2017 related to Hurricanes Harvey, Irma, and Maria (the “Hurricane events”) and the Puebla, Mexico Earthquake. Also contributing to the decrease in Underwriting Loss was a $13.0 million decrease in Net Prior Accident Year Reserve Strengthening and the impact of growth in Net Earned Premiums across all of our reporting segments.

These decreases in the Underwriting Loss were partially offset by an increase in Other Operating Expenses primarily due to reductions to performance-based incentive compensation during 2017 combined with an increase in 2018 in employee expenses, professional service fees and information technology costs associated with new business initiatives and expansion of our global platform. Also partially offsetting the decreases to Underwriting Loss was an increase in the Commission Expense Ratio primarily driven by our Int’l Insurance reporting segment.

Year to Date Variance

Underwriting Profit was $14.2 million for the nine months ended September 30, 2018, increasing $62.4 million, from an Underwriting Loss of $48.1 million for the nine months ended September 30, 2017.

34

This increase to Underwriting Profit was largely attributable toa lower Net Current AY Losses and LAE Ratio primarily due to a lower level of catastrophe losses primarily related to the same events as noted in the quarter to date variance. Also contributing to the increase was a $24.8 million decrease in Net Prior Accident Year Reserve Strengthening and the impact of growth in Net Earned Premiums across all of our reporting segments.

These increases contributing to an Underwriting Profit from an Underwriting Loss were partially offset by an increase in Other Operating Expenses attributable to the same drivers as the quarter to date variance. Also partially offsetting the increases to Underwriting Profit was an increase in the Commission Expense Ratio primarily driven by our GlobalRe and Int’l Insurance reporting segments.

For more detail on Underwriting Profit (Loss), see the U.S. Insurance, Int’l Insurance and GlobalRe reporting segment results sections included herein.

A major component of our Underwriting Profit (Loss) is Net Losses and LAE. The following table presents the current and prior accident year (“AY”) changes in our Net Losses and LAE Ratio for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,						Point
	2018			2017			Change
Net Losses and LAE Ratio		69.4	%		91.6	%		(22.2	)
Net Prior AY Reserve (Release)/Strengthening		4.7	%		9.8	%		(5.1	)
Net Current AY Losses and LAE Ratio		64.7	%		81.8	%		(17.1	)

	Nine Months Ended September 30,						Point
	2018			2017			Change
Net Losses and LAE Ratio		62.3	%		70.7	%		(8.4	)
Net Prior AY Reserve (Release)/Strengthening		2.0	%		5.1	%		(3.1	)
Net Current AY Losses and LAE Ratio		60.3	%		65.6	%		(5.3	)

Quarter to Date Variance

For the three months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 22.2 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the three months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 5.1 points as compared to the same period in 2017 driven by:

• The three months ended September 30, 2018 recognized $16.5 million of Net Prior AY Reserve Strengthening, primarily attributable to the Premises line within our U.S. P&C operating segment.

• The three months ended September 30, 2017 recognized $29.5 million of Net Prior AY Reserve Strengthening. This strengthening was primarily related to our Professional Liability and P&C operating segments within our U.S. Insurance reporting segment and our Marine, P&C and Professional Liability operating segments within our Int’l Insurance reporting segment.

Changes in the Current Accident Year Loss Ratio

For the three months ended September 30, 2018, our Net Current AY losses and LAE Ratio decreased 17.1 points as compared to the same period in 2017 primarily driven by a reduced level of catastrophe losses.

Year to Date Variance

For the nine months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 8.4 points as compared to the same period in 2017 driven by:

35

Prior Year Reserve Development

For the nine months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 3.1 points as compared to the same period in 2017 driven by:

• The nine months ended September 30, 2018 recognized $19.8 million of Net Prior AY Reserve Strengthening. This strengthening was attributable to unfavorable net non-catastrophe related loss emergence within our Int’l Insurance reporting segment and the Premises line within our U.S. P&C operating segment, partially offset by net catastrophe loss releases primarily related to the Hurricane events and the Puebla, Mexico Earthquake that occurred in the third quarter of 2017.

• The nine months ended September 30, 2017 recognized $44.6 million of Net Prior AY Reserve Strengthening attributable to strengthening of our Professional Liability and P&C operating segments within our U.S. Insurance reporting segment, strengthening our Marine, P&C and Professional Liability operating segments within our Int’l Insurance reporting segment and the settlement of a large Accident and Health (“A&H”) claim in our GlobalRe reporting segment.

Changes in the Current Accident Year Loss Ratio

For the nine months ended September 30, 2018, our Net Current AY losses and LAE Ratio decreased 5.3 points as compared to the same period in 2017 attributable to the same drivers as the quarter to date variance.

Net Investment Income

Our Net Investment Income was derived from the following sources:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities	$	22,733		$	19,491		$	65,504		$	57,019
Equity Securities		3,052			3,774			9,138			11,337
Short-Term Investments, Cash & Cash Equivalents		509			84			1,151			254
Other Invested Assets		159			166			486			408
Total Investment Income	$	26,453		$	23,515		$	76,279		$	69,018
Investment Expenses		(802	)		(917	)		(2,325	)		(2,707	)
Net Investment Income	$	25,651		$	22,598		$	73,954		$	66,311

Quarter and Year to Date Variance

The increase in Net Investment Income for the three and nine months ended September 30, 2018 as compared to the same period in the prior year was due to an increase in yields and growth of invested assets in the Fixed Maturities portfolio. The annualized pre-tax yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in our Results of Operations, for the three months ended September 30, 2018 was 2.8% compared to 2.7% for the same period in 2017. The annualized pre-tax yield, excluding Total Net Realized and Unrealized Gains and Losses recognized in our Results of Operations, for the nine months ended September 30, 2018 was 2.8%, compared to 2.7% for the same period in 2017.

As part of our overall investment strategy, we seek to build a tax efficient investment portfolio by maintaining an allocation of tax- exempt municipal bonds. The tax-exempt portion of our Fixed Maturities portfolio was 16.6% at September 30, 2018 as compared to 20.2% at September 30, 2017. Additionally, substantially all of our equity portfolio is invested in tax efficient securities which qualify for the dividends received deduction. The tax equivalent yield for the three months ended September 30, 2018 and 2017 was 3.0% and 3.1%, respectively. The tax equivalent yield for the nine months ended September 30, 2018 and 2017 was 3.0% and 3.1%, respectively. The decrease in the tax equivalent yield is due to the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”), which resulted in lower tax benefits associated with the tax exempt portions of our investment portfolio.

OTTI Losses Recognized in Earnings

Quarter and Year to Date Variance

Our Company had no credit related OTTI losses during the three months ended September 30, 2018 and had two credit related OTTI losses totaling $1.0 million in our equity portfolio during the three months ended September 30, 2017. Our Company had no credit related OTTI losses during the nine months ended September 30, 2018. Our Company had four credit related OTTI losses totaling $2.1 million in our equity portfolio during the nine months ended September 30, 2017. Upon the adoption of ASU 2016-01 as of January 1, 2018, changes in the fair value of Equity Securities are now recognized in Net Income.

36

Net Realized Gains and Losses on Investments Sold

Net Realized Gains and Losses on Investments Sold, excluding OTTI Losses Recognized in Earnings, for the periods indicated were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities:
Gains	$	331		$	2,589		$	3,678		$	3,401
Losses		(369	)		(900	)		(1,125	)		(3,114	)
Fixed Maturities, Net	$	(38	)	$	1,689		$	2,553		$	287
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	107		$	758		$	189		$	984
Losses		(71	)		(14	)		(266	)		(139	)
Short-Term, Net	$	36		$	744		$	(77	)	$	845
Other Invested Assets:
Gains	$	9		$	9		$	78		$	30
Losses		(50	)		(97	)		(136	)		(232	)
Other Invested Assets, Net	$	(41	)	$	(88	)	$	(58	)	$	(202	)
Equity Securities:
Gains	$	347		$	2,863		$	1,102		$	7,249
Losses		(51	)		(18	)		(310	)		(246	)
Equity Securities, Net	$	296		$	2,845		$	792		$	7,003
Net Realized Gains on Investments Sold	$	253		$	5,190		$	3,210		$	7,933

Quarter and Year to Date Variance

Net Realized Gains and Losses are generated as part of the normal ongoing management of our investment portfolio. Net Realized Gains of $0.3 million and $3.2 million for the three and nine months ended September 30, 2018, respectively, are due to the sale of Municipal bonds as we re-evaluate this asset class in light of the tax changes enacted as part of the Tax Act in 2017. Additionally, the sale of Corporate bonds and Preferred Stocks within our Equity portfolio also contributed to the Net Realized Gains. Net Realized Gains of $5.1 million and $7.9 million for the three and nine months ended September 30, 2017, respectively, are primarily due to the sale of Common Equity Securities, partially offset by foreign currency losses on our Canadian denominated Foreign Government Bonds.

Net Unrealized Gains and Losses on Investments at Fair Value through Net Income

Quarter and Year to Date Variance

For the three and nine months ended September 30, 2018, our Company had $2.3 and $0.5 million of net unrealized gains, respectively, on our Equity Securities, which were recognized in Net Income pursuant to ASU 2016-01, which we adopted effective January 1, 2018.

Interest Expense

Quarter and Year to Date Variance

Interest Expense was $3.9 million and $11.6 million for the three and nine months ended September 30, 2018, respectively, relating to our $265.0 million principal amount of the Senior Notes. The effective interest rate related to the Senior Notes, based on the proceeds net of discount and all issuance costs, is approximately 5.86%.

37

Other Income (Loss)

Quarter to Date Variance

Other Income (Loss) for the three months ended September 30, 2018 was $1.7 million compared to $(1.7) million for the same period in 2017. The income for the three months ended September 30, 2018 was attributable to managing agent fee income and net realized and unrealized foreign exchange gains driven by the re-measurement of net insurance related liabilities impacted by the strengthening of the U.S. Dollar against the Great British pound and Euro. The loss for the three months ended September 30, 2017 was attributable to net realized and unrealized foreign exchange losses driven by the re-measurement of net insurance related liabilities impacted by the weakening of the U.S. Dollar against the Great British pound.

Year to Date Variance

Other Income (Loss) for the nine months ended September 30, 2018 was $4.2 million compared to $(1.0) million for the same period in 2017. The Other Income for the nine months ended September 30, 2018 was attributable to net realized and unrealized foreign exchange gains driven by the re-measurement of net insurance related liabilities impacted by the strengthening of the U.S. Dollar against the Great British pound and Euro, revenue from the sale of renewal rights for our Company’s fixed-premium protection and indemnity business during the first quarter, and managing agent fee income. The loss for the nine months ended September 30, 2017 was attributable to net realized and unrealized foreign exchange losses driven by the re-measurement of net insurance related liabilities impacted by the weakening of the U.S. Dollar against the Great British pound.

Merger Transaction Costs

Merger Transaction Costs for the three and nine months ended September 30, 2018 were $2.4 million. These costs represent expenses incurred that are associated with the Merger and are unrelated to our ongoing operations.

Income Taxes

The income tax provision has been computed based on our estimated interim annual Effective Tax Rate incorporating discrete items. Our Effective Tax Rate for the quarter and year-to-date differs from the federal tax rate of 21% primarily due to tax-exempt investment income, the dividends received deduction, Transition Tax benefit, and an excess tax benefit related to the vesting of stock compensation at fair market value. During the three and nine months ended September 30, 2018, the tax rates were impacted by the lowered statutory tax rate from 35% in 2017 to 21% in 2018 under the Tax Act and changes to pre-tax income.

Quarter to Date Variance

We recorded an Effective Tax Rate of (11.1)% for the three months ended September 30, 2018 compared to 37.6% for the same period in 2017. The tax benefit for the three months ended September 30, 2018 was the result of a lower level of pretax earnings driven by an underwriting loss during the third quarter of 2018 and a consistent level of permanent tax adjustments. This compares to the third quarter of 2017 which incurred large catastrophe losses driving a pretax loss resulting in a tax benefit.

Year to Date Variance

We recorded an Effective Tax Rate of 16.6% for the nine months ended September 30, 2018 compared to (19.7%) for the same period in 2017. The tax benefit for the nine months ended September 30, 2017 was the result of a lower level of pretax earnings driven by catastrophe losses incurred during 2017 and a consistent level of permanent tax adjustments.

38

Segment Results

The following tables summarize our Consolidated Financial Results by reporting segment for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	280,183		$	117,376		$	58,384		$	—		$	455,943
Ceded written premiums		(72,615	)		(29,020	)		(1,896	)		—			(103,531	)
Net written premiums	$	207,568		$	88,356		$	56,488		$	—		$	352,412
Retention Ratio		74.1	%		75.3	%		96.8	%		—			77.3	%
Net Earned Premiums	$	188,504		$	95,226		$	63,308		$	—		$	347,038
Net Losses and LAE		(141,182	)		(60,275	)		(39,443	)		—			(240,900	)
Commission Expenses		(22,247	)		(22,547	)		(13,282	)		77			(57,999	)
Other Operating Expenses		(36,826	)		(24,441	)		(6,317	)		—			(67,584	)
Other Underwriting Income (Expense)		65			945			20			(77	)		953
Underwriting Profit (Loss)	$	(11,686	)	$	(11,092	)	$	4,286		$	—		$	(18,492	)
Net Investment Income											25,651			25,651
Total Net Realized and Unrealized Gains											2,563			2,563
Interest Expense											(3,891	)		(3,891	)
Other Income											771			771
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	(11,686	)	$	(11,092	)	$	4,286		$	22,655		$	4,163
Income Tax Benefit											462			462
Net Income													$	4,625
Losses and LAE Ratio		74.9	%		63.3	%		62.3	%					69.4	%
Commission Expense Ratio		11.8	%		23.7	%		21.0	%					16.7	%
Other Operating Expense Ratio (2)		19.5	%		24.6	%		9.9	%					19.2	%
Combined Ratio		106.2	%		111.6	%		93.2	%					105.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

39

	Three Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	235,052		$	113,601		$	53,385		$	—		$	402,038
Ceded written premiums		(64,328	)		(38,966	)		(2,728	)		—			(106,022	)
Net written premiums	$	170,724		$	74,635		$	50,657		$	—		$	296,016
Retention Ratio		72.6	%		65.7	%		94.9	%		—			73.6	%
Net Earned Premiums	$	169,150		$	84,407		$	47,798		$	—		$	301,355
Net Losses and LAE		(135,340	)		(81,713	)		(59,118	)		—			(276,171	)
Commission Expenses		(18,286	)		(16,201	)		(11,233	)		211			(45,509	)
Other Operating Expenses		(25,375	)		(16,388	)		(4,010	)		—			(45,773	)
Other Underwriting Income (Expense)		125			—			94			(211	)		8
Underwriting Loss		(9,726	)		(29,895	)		(26,469	)	$	—			(66,090	)
Net Investment Income											22,598			22,598
Total Net Realized and Unrealized Gains											4,218			4,218
Interest Expense											(3,862	)		(3,862	)
Other Loss											(1,707	)		(1,707	)
Income (Loss) Before Income Taxes	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	21,247		$	(44,843	)
Income Tax Benefit											16,864			16,864
Net Loss													$	(27,979	)
Losses and LAE Ratio		80.0	%		96.8	%		123.7	%					91.6	%
Commission Expense Ratio		10.8	%		19.2	%		23.5	%					15.1	%
Other Operating Expense Ratio (2)		14.9	%		19.4	%		8.2	%					15.2	%
Combined Ratio		105.7	%		135.4	%		155.4	%					121.9	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	808,589		$	377,771		$	262,043		$	—		$	1,448,403
Ceded written premiums		(215,340	)		(97,790	)		(10,307	)		—			(323,437	)
Net written premiums	$	593,249		$	279,981		$	251,736		$	—		$	1,124,966
Retention Ratio		73.4	%		74.1	%		96.1	%		—			77.7	%
Net Earned Premiums	$	541,163		$	280,507		$	179,010		$	—		$	1,000,680
Net Losses and LAE		(363,489	)		(158,422	)		(101,467	)		—			(623,378	)
Commission Expenses		(63,490	)		(62,166	)		(40,198	)		510			(165,344	)
Other Operating Expenses		(112,264	)		(68,270	)		(18,158	)		—			(198,692	)
Other Underwriting Income (Expense)		234			945			294			(510	)		963
Underwriting Profit (Loss)	$	2,154		$	(7,406	)	$	19,481		$	—		$	14,229
Net Investment Income											73,954			73,954
Total Net Realized and Unrealized Gains											3,667			3,667
Interest Expense											(11,619	)		(11,619	)
Other Income											3,272			3,272
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	2,154		$	(7,406	)	$	19,481		$	66,835		$	81,064
Income Tax Expense											(13,457	)		(13,457	)
Net Income													$	67,607
Losses and LAE Ratio		67.2	%		56.5	%		56.7	%					62.3	%
Commission Expense Ratio		11.7	%		22.2	%		22.5	%					16.5	%
Other Operating Expense Ratio (2)		20.7	%		23.9	%		9.9	%					19.8	%
Combined Ratio		99.6	%		102.6	%		89.1	%					98.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

40

	Nine Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	729,843		$	386,654		$	188,025		$	—		$	1,304,522
Ceded written premiums		(199,672	)		(129,368	)		(9,021	)		—			(338,061	)
Net written premiums	$	530,171		$	257,286		$	179,004		$	—		$	966,461
Retention Ratio		72.6	%		66.5	%		95.2	%		—			74.1	%
Net Earned Premiums	$	500,241		$	250,593		$	130,487		$	—		$	881,321
Net Losses and LAE		(339,436	)		(176,513	)		(106,932	)		—			(622,881	)
Commission Expenses		(59,130	)		(54,435	)		(28,695	)		734			(141,526	)
Other Operating Expenses		(91,987	)		(58,687	)		(14,403	)		—			(165,077	)
Other Underwriting Income (Expense)		335			—			439			(734	)		40
Underwriting Profit (Loss)	$	10,023		$	(39,042	)	$	(19,104	)	$	—		$	(48,123	)
Net Investment Income											66,311			66,311
Total Net Realized and Unrealized Gains											5,868			5,868
Interest Expense											(11,584	)		(11,584	)
Other Loss											(1,082	)		(1,082	)
Income (Loss) Before Income Taxes	$	10,023		$	(39,042	)	$	(19,104	)	$	59,513		$	11,390
Income Tax Benefit											2,243			2,243
Net Income													$	13,633
Losses and LAE Ratio		67.9	%		70.4	%		81.9	%					70.7	%
Commission Expense Ratio		11.8	%		21.7	%		22.0	%					16.1	%
Other Operating Expense Ratio (2)		18.3	%		23.5	%		10.7	%					18.7	%
Combined Ratio		98.0	%		115.6	%		114.6	%					105.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

U.S. Insurance

The following tables summarize our Underwriting Profit (Loss) by operating segment for our U.S. Insurance reporting segment for the three and nine months ended September 30, 2018 and 2017:

	U.S. Insurance
	Three Months Ended September 30, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total			%Change Total
Gross Written Premiums	$	31,681		$	212,911		$	35,591		$	280,183			19.2	%
Ceded Written Premiums		(14,442	)		(52,993	)		(5,180	)		(72,615	)		12.9	%
Net Written Premiums	$	17,239		$	159,918		$	30,411		$	207,568			21.6	%
Retention Ratio		54.4	%		75.1	%		85.4	%		74.1	%
Net Earned Premiums	$	20,401		$	141,650		$	26,453		$	188,504			11.4	%
Net Losses and LAE		(11,939	)		(112,993	)		(16,250	)		(141,182	)		4.3	%
Commission Expenses		(915	)		(16,597	)		(4,735	)		(22,247	)		21.7	%
Other Operating Expenses		(6,394	)		(25,202	)		(5,230	)		(36,826	)		45.1	%
Other Underwriting Income		49			12			4			65			(48.0	%)
Underwriting Profit (Loss)	$	1,202		$	(13,130	)	$	242		$	(11,686	)		20.2	%
Losses and LAE Ratio		58.5	%		79.8	%		61.4	%		74.9	%
Commission Expense Ratio		4.5	%		11.7	%		17.9	%		11.8	%
Other Operating Expense Ratio (1)		31.1	%		17.8	%		19.8	%		19.5	%
Combined Ratio		94.1	%		109.3	%		99.1	%		106.2	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

41

	U.S. Insurance
	Three Months Ended September 30, 2017
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	36,403		$	166,097		$	32,552		$	235,052
Ceded Written Premiums		(18,859	)		(39,952	)		(5,517	)		(64,328	)
Net Written Premiums	$	17,544		$	126,145		$	27,035		$	170,724
Retention Ratio		48.2	%		75.9	%		83.1	%		72.6	%
Net Earned Premiums	$	20,129		$	125,931		$	23,090		$	169,150
Net Losses and LAE		(18,325	)		(89,568	)		(27,447	)		(135,340	)
Commission Expenses		(967	)		(13,515	)		(3,804	)		(18,286	)
Other Operating Expenses		(4,661	)		(16,897	)		(3,817	)		(25,375	)
Other Underwriting Income		105			18			2			125
Underwriting Profit (Loss)	$	(3,719	)	$	5,969		$	(11,976	)	$	(9,726	)
Losses and LAE Ratio		91.0	%		71.1	%		118.9	%		80.0	%
Commission Expense Ratio		4.8	%		10.7	%		16.5	%		10.8	%
Other Operating Expense Ratio (1)		22.7	%		13.5	%		16.5	%		14.9	%
Combined Ratio		118.5	%		95.3	%		151.9	%		105.7	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	U.S. Insurance
	Nine Months Ended September 30, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total			%Change Total
Gross Written Premiums	$	112,235		$	599,088		$	97,266		$	808,589			10.8	%
Ceded Written Premiums		(48,840	)		(152,740	)		(13,760	)		(215,340	)		7.8	%
Net Written Premiums	$	63,395		$	446,348		$	83,506		$	593,249			11.9	%
Retention Ratio		56.5	%		74.5	%		85.9	%		73.4	%
Net Earned Premiums	$	62,670		$	401,870		$	76,623		$	541,163			8.2	%
Net Losses and LAE		(37,208	)		(280,103	)		(46,178	)		(363,489	)		7.1	%
Commission Expenses		(3,103	)		(46,853	)		(13,534	)		(63,490	)		7.4	%
Other Operating Expenses		(19,603	)		(77,057	)		(15,604	)		(112,264	)		22.0	%
Other Underwriting Income		179			40			15			234			(30.2	%)
Underwriting Profit (Loss)	$	2,935		$	(2,103	)	$	1,322		$	2,154			(78.5	%)
Losses and LAE Ratio		59.4	%		69.7	%		60.3	%		67.2	%
Commission Expense Ratio		5.0	%		11.7	%		17.7	%		11.7	%
Other Operating Expense Ratio (1)		30.9	%		19.1	%		20.3	%		20.7	%
Combined Ratio		95.3	%		100.5	%		98.3	%		99.6	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

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	U.S. Insurance
	Nine Months Ended September 30, 2017
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	119,040		$	524,223		$	86,580		$	729,843
Ceded Written Premiums		(55,830	)		(129,297	)		(14,545	)		(199,672	)
Net Written Premiums	$	63,210		$	394,926		$	72,035		$	530,171
Retention Ratio		53.1	%		75.3	%		83.2	%		72.6	%
Net Earned Premiums	$	64,635		$	366,280		$	69,326		$	500,241
Net Losses and LAE		(44,867	)		(239,175	)		(55,394	)		(339,436	)
Commission Expenses		(4,014	)		(44,113	)		(11,003	)		(59,130	)
Other Operating Expenses		(18,280	)		(60,356	)		(13,351	)		(91,987	)
Other Underwriting Income		270			45			20			335
Underwriting Profit (Loss)	$	(2,256	)	$	22,681		$	(10,402	)	$	10,023
Losses and LAE Ratio		69.4	%		65.3	%		79.9	%		67.9	%
Commission Expense Ratio		6.2	%		12.0	%		15.9	%		11.8	%
Other Operating Expense Ratio (1)		27.9	%		16.5	%		19.2	%		18.3	%
Combined Ratio		103.5	%		93.8	%		115.0	%		98.0	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Gross Written Premiums

Quarter to Date Variance

Gross Written Premiums increased $45.1 million for the three months ended September 30, 2018 as compared to the same period in 2017, driven by a $46.8 million and $3.0 million increase in our P&C and Professional Liability operating segments, respectively, partially offset by a decrease in our Marine operating segment of $4.7 million.

The decrease in our Marine operating segment was primarily driven by decreases in our Craft and Marine Liability products due to a decreased level of renewals including the nonrenewal of an underperforming program within our Craft product. These decreases were partially offset by an increase in our Inland Marine and Cargo products driven by new business and an increased level of renewals.

The increase in our P&C operating segment was driven by increases across all divisions. Our Excess Casualty division increased by $26.4 million and was mostly driven by new business related to construction project policies, an increased level of renewals, and improved rates. New business production and an increased level of renewals drove increases in our Auto, Primary Casualty and Environmental divisions, as well as the Property product within our Other P&C division.

The increase in our Professional Liability operating segment was primarily due to an increased level of renewals, new business and improved rates.

Average renewal premium rates for our U.S. Insurance reporting segment for the three months ended September 30, 2018 increased 1.6% compared to the same period in 2017, driven by increases of 2.1% and 1.2% within our P&C and Professional Liability operating segments, respectively, partially offset by a decrease of (0.4)% within our Marine operating segment.

Year to Date Variance

Gross Written Premiums increased $78.8 million for the nine months ended September 30, 2018 as compared to the same period in 2017, driven by increases of $74.9 million and $10.7 million in our P&C and Professional Liability operating segments, respectively, partially offset by a decrease in our Marine operating segment of $6.8 million.

The decrease in our Marine operating segment was driven by a decrease in our Craft product, partially offset by increases in our Inland Marine and Cargo products attributable to the same drivers as the quarter to date variances.

The increase in our P&C operating segment was driven by increases across all divisions attributable to the same drivers as the quarter to date increases. The increase in our Excess Casualty division was partially offset by two large non-recurring construction projects coverage accounts written in the first quarter of 2017, and the increase in our Primary Casualty division was partially offset by the nonrenewal of underperforming accounts during the first half of the year.

43

The increase in our Professional Liability operating segment was attributable to the same drivers as the quarter to date variance.

Average renewal premium rates for our U.S. Insurance reporting segment for the nine months ended September 30, 2018 increased 2.3% compared to the same period in 2017, driven by increases of 2.8%, 1.6% and 1.0% within our P&C, Professional Liability and Marine operating segments, respectively.

Ceded Written Premiums

Quarter and Year to Date Variances

Ceded Written Premiums were $72.6 million, resulting in a retention ratio of 74.1% of Net Written Premiums to Gross Written Premiums, and $215.3 million, resulting in a retention ratio of 73.4%, for the three and nine months ended September 30, 2018, respectively. This compared to Ceded Written Premiums of $64.3 million, resulting in a retention ratio of 72.6%, and $199.7 million, resulting in a retention ratio of 72.6%, for the three and nine months ended September 30, 2017, respectively. The increase in the retention ratio for both periods was driven by our Marine and Professional Liability operating segments, partially offset by a decrease in the retention ratio for our P&C operating segment.

The increase in our Marine operating segment’s retention ratio was primarily driven by a reduction in proportional reinsurance in our Craft product related to business that was not renewed which had proportional cessions, as well as the impact of ceded RRPs in the prior year related to Hurricanes Irma and Harvey.

The decrease in our P&C operating segment’s retention ratio was primarily the result of changes in the mix of business within this operating segment with proportionately more premium written in our Excess Casualty division, which has a lower retention ratio.

The increase in our Professional Liability operating segment’s retention ratio was primarily the result of changes in the mix of business with an increase in premiums not subject to proportional reinsurance coverage within our D&O division.

Net Earned Premiums

Quarter and Year to Date Variances

Net Earned Premiums increased $19.4 million and $40.9 million for the three and nine months ended September 30, 2018, respectively, as compared to the same periods in 2017 mainly driven by growth in our P&C and Professional Liability operating segments, as well as the impact of ceded RRPs in the prior year related to Hurricanes Irma and Harvey. These increases were partially offset by a reduction in the amount of premiums written in our Marine operating segment.

Net Losses and LAE

The Net Losses and LAE reserves as of September 30, 2018 and December 31, 2017 were as follows:

	U.S. Insurance
	As of September 30, 2018								As of December 31, 2017
amounts in thousands	Marine		P&C		Professional Liability		Total		Marine		P&C		Professional Liability		Total		Total % Change
Case Reserves	$	55,476	$	217,004	$	36,075	$	308,555	$	58,301	$	192,291	$	26,774	$	277,366		11.2	%
IBNR Reserves		48,904		783,350		89,358		921,612		45,393		700,264		86,649		832,306		10.7	%
Total	$	104,380	$	1,000,354	$	125,433	$	1,230,167	$	103,694	$	892,555	$	113,423	$	1,109,672		10.9	%

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three and nine months ended September 30, 2018 and 2017:

	U.S. Insurance
	Three Months Ended September 30, 2018												Three Months Ended September 30, 2017
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		58.5	%		79.8	%		61.4	%		74.9	%		91.0	%		71.1	%		118.9	%		80.0	%		(5.1	)
Net Prior AY Reserve    (Release)/Strengthening		(10.4	%)		12.4	%		4.6	%		8.8	%		(0.6	%)		3.8	%		59.5	%		10.9	%		(2.1	)
Net Current AY Losses and LAE    Ratio		68.9	%		67.4	%		56.8	%		66.1	%		91.7	%		67.3	%		59.4	%		69.1	%		(3.0	)

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	U.S. Insurance
	Nine Months Ended September 30, 2018												Nine Months Ended September 30, 2017
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		59.4	%		69.7	%		60.3	%		67.2	%		69.4	%		65.3	%		79.9	%		67.9	%		(0.7	)
Net Prior AY Reserve    (Release)/Strengthening		(3.5	%)		4.7	%		3.4	%		3.6	%		1.2	%		1.0	%		19.8	%		3.6	%		0.0
Net Current AY Losses and LAE    Ratio		62.9	%		65.0	%		56.9	%		63.6	%		68.2	%		64.3	%		60.1	%		64.3	%		(0.7	)

Quarter to Date Variance

For the three months ended September 30, 2018, our Net Losses and LAE Ratio decreased 5.1 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the three months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 2.1 points as compared to the same period in 2017 primarily driven by:

• Our Marine operating segment recognized $2.1 million of Net Prior AY Reserve Releases, of which $1.9 million was due to better than expected loss emergence in our Cargo and Craft products and $0.2 million was due to a net catastrophe loss release related to the Hurricane events that occurred in the third quarter of 2017. This compares to $0.1 million of Net Prior AY Reserve Releases for the same period in 2017.

• Our Professional Liability operating segment recognized $1.2 million of Net Prior AY Reserve Strengthening primarily due to large loss activity within our D&O division. This compares to $13.7 million of Net Prior AY Reserve Strengthening for the same period in 2017 mostly related to large loss activity within our D&O division.

The above decrease in our Net Prior AY Loss and LAE Ratio was partially offset by:

• Our P&C operating segment recognized $17.6 million of Net Prior AY Reserve Strengthening primarily related to our Primary Casualty division with $19.3 million of loss development in our Premises line. Additional strengthening in our Auto division and development on the Q3 2017 Hurricane events, were offset by Net Prior AY Reserve Releases on our Excess Casualty and Environmental divisions due to better than expected loss emergence. This compares to $4.8 million of Net Prior AY Reserve strengthening primarily related to strengthening of our casualty business.

Changes in the Current Accident Year Loss Ratio

For the three months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 3.0 points as compared to the same period in 2017, primarily driven by reduced catastrophe losses. For the three months ended September 30, 2018, we recognized $2.0 million of net catastrophe losses related to Hurricane Florence and Typhoon Jebi. This compared to $10.1 million of net catastrophe losses inclusive of ceded RRPs for the three months ended September 30, 2017, related to the Hurricane events.

After adjusting for these net catastrophe losses inclusive of ceded RRPs, our Net Current AY Losses and LAE Ratio increased 1.6 points as compared to the same period in 2017 primarily due to:

• increased attritional loss activity within our Property product; and

• unfavorable performance within certain key products within the P&C and Marine operating segments.

These increases in the Net Current AY Losses and LAE Ratio were partially offset by:

• No large loss activity for the three months ended September 30, 2018, compared to a large loss of $4.0 million in our Hull product within our Marine operating segment for the three months ended September 30, 2017.

• favorable performance within our Professional Liability operating segment; and

• changes in product mix.

45

Year to Date Variance

For the nine months ended September 30, 2018, our Net Losses and LAE Ratio decreased 0.7 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the nine months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio remained consistent as compared to the same period in 2017 primarily driven by:

• Our Marine operating segment recognized $2.2 million of Net Prior AY Reserve Releases including $1.1 million of loss releases due to better than expected loss emergence in our Marine Liability, Cargo, and Craft products, as well as $1.1 million of net catastrophe loss release related to the Hurricane events that occurred in the third quarter of 2017. This compares to $0.8 million of Net Prior AY Reserve Strengthening for the same period in 2017.

• Our Professional Liability operating segment recognized $2.6 million of Net Prior AY Reserve Strengthening related to worse than expected loss emergence within our E&O and D&O divisions. This compares to $13.7 million of Net Prior AY Reserve Strengthening for the same period in 2017 mostly related to large loss activity within our D&O division.

The above increases in our Net Prior AY Loss and LAE Ratio were partially offset by:

• Our P&C operating segment recognized $18.8 million of Net Prior AY Reserve Strengthening related to the same drivers as the quarter to date variance.

Changes in the Current Accident Year Loss Ratio

For the nine months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 0.7 points as compared to the same period in 2017, attributable to the same drivers as the quarter to date variance.

Commission Expenses

Quarter to Date Variances

Our Commission Expense Ratio for the three months ended September 30, 2018 increased 1.0 point as compared to the same period in 2017, driven by our Professional Liability and P&C operating segments. Our Marine operating segment’s Commission Expense Ratio was relatively consistent period over period decreasing 0.3 points.

Our P&C operating segment’s Commission Expense Ratio increased primarily due to increased enhanced commission expense.

Our Professional Liability operating segment’s Commission Expense Ratio increased due to the reduction in proportional reinsurance and the related ceding commission benefits primarily within our D&O division.

Year to Date Variances

Our Commission Expense Ratio for the nine months ended September 30, 2018 decreased 0.1 points as compared to the same period in 2017, mostly driven by our Marine and P&C operating segments, partially offset by an increase in our Professional Liability operating segment.

Our Marine operating segment’s Commission Expense Ratio decreased due to lower gross commission rates on certain product lines, changes in the mix of business, and greater ceded profit commission income.

Our P&C operating segment’s Commission Expense Ratio decreased primarily due to changes in the mix of business with an increase in Property business which generates greater ceding commission income related to a large proportional reinsurance program.

Our Professional Liability operating segment’s Commission Expense Ratio increase was attributable to the same drivers as the quarter to date variance.

Other Operating Expenses

Quarter and Year to Date Variances

Other Operating Expenses for the three and nine months ended September 30, 2018 increased $11.5 million and $20.3 million, respectively, as compared to the same periods in 2017, primarily due to a reduction in performance-based incentive compensation that occurred in the prior 2017 periods, an increase in costs associated with new business initiatives, including applicable support and information technology expenses, and higher professional service fees.

46

Int’l Insurance

The following tables summarize our Underwriting Profit (Loss) by operating segment for our Int’l Insurance reporting segment for the three and nine months ended September 30, 2018 and 2017: 

	Int'l Insurance
	Three Months Ended September 30, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total			%Change Total
Gross Written Premiums	$	32,486		$	41,898		$	42,992		$	117,376			3.3	%
Ceded Written Premiums		(4,965	)		(13,727	)		(10,328	)		(29,020	)		(25.5	%)
Net Written Premiums	$	27,521		$	28,171		$	32,664		$	88,356			18.4	%
Retention Ratio		84.7	%		67.2	%		76.0	%		75.3	%
Net Earned Premiums	$	38,866		$	29,616		$	26,744		$	95,226			12.8	%
Net Losses and LAE		(27,873	)		(12,728	)		(19,674	)		(60,275	)		(26.2	%)
Commission Expenses		(8,889	)		(6,465	)		(7,193	)		(22,547	)		39.2	%
Other Operating Expenses		(8,200	)		(9,705	)		(6,536	)		(24,441	)		49.1	%
Other Underwriting Income		640			305			—			945		NM
Underwriting Profit (Loss)	$	(5,456	)	$	1,023		$	(6,659	)	$	(11,092	)		(62.9	%)
Losses and LAE Ratio		71.7	%		43.0	%		73.6	%		63.3	%
Commission Expense Ratio		22.9	%		21.8	%		26.9	%		23.7	%
Other Operating Expense Ratio (1)		19.4	%		31.7	%		24.4	%		24.6	%
Combined Ratio		114.0	%		96.5	%		124.9	%		111.6	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

NM – Percentage change not meaningful

	Int'l Insurance
	Three Months Ended September 30, 2017
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	41,689		$	37,415		$	34,497		$	113,601
Ceded Written Premiums		(9,948	)		(19,772	)		(9,246	)		(38,966	)
Net Written Premiums	$	31,741		$	17,643		$	25,251		$	74,635
Retention Ratio		76.1	%		47.2	%		73.2	%		65.7	%
Net Earned Premiums	$	39,038		$	21,775		$	23,594		$	84,407
Net Losses and LAE		(39,457	)		(29,918	)		(12,338	)		(81,713	)
Commission Expenses		(8,532	)		(2,666	)		(5,003	)		(16,201	)
Other Operating Expenses		(6,788	)		(5,614	)		(3,986	)		(16,388	)
Underwriting Profit (Loss)	$	(15,739	)	$	(16,423	)	$	2,267		$	(29,895	)
Losses and LAE Ratio		101.1	%		137.4	%		52.3	%		96.8	%
Commission Expense Ratio		21.9	%		12.2	%		21.2	%		19.2	%
Other Operating Expense Ratio		17.3	%		25.8	%		16.9	%		19.4	%
Combined Ratio		140.3	%		175.4	%		90.4	%		135.4	%

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	Int'l Insurance
	Nine Months Ended September 30, 2018
amounts in thousands	Marine			P&C			Professional Liability			Total			% Change Total
Gross Written Premiums	$	129,678		$	122,437		$	125,656		$	377,771			(2.3	%)
Ceded Written Premiums		(24,542	)		(45,099	)		(28,149	)		(97,790	)		(24.4	%)
Net Written Premiums	$	105,136		$	77,338		$	97,507		$	279,981			8.8	%
Retention Ratio		81.1	%		63.2	%		77.6	%		74.1	%
Net Earned Premiums	$	115,342		$	75,100		$	90,065		$	280,507			11.9	%
Net Losses and LAE		(77,606	)		(28,245	)		(52,571	)		(158,422	)		(10.2	%)
Commission Expenses		(27,563	)		(12,014	)		(22,589	)		(62,166	)		14.2	%
Other Operating Expenses		(22,942	)		(26,087	)		(19,241	)		(68,270	)		16.3	%
Other Underwriting Income		640			305			—			945		NM
Underwriting Profit (Loss)	$	(12,129	)	$	9,059		$	(4,336	)	$	(7,406	)		(81.0	%)
Losses and LAE Ratio		67.3	%		37.6	%		58.4	%		56.5	%
Commission Expense Ratio		23.9	%		16.0	%		25.1	%		22.2	%
Other Operating Expense Ratio (1)		19.3	%		34.3	%		21.3	%		23.9	%
Combined Ratio		110.5	%		87.9	%		104.8	%		102.6	%

(1) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

NM – Percentage change not meaningful

	Int'l Insurance
	Nine Months Ended September 30, 2017
amounts in thousands	Marine			P&C			Professional Liability			Total
Gross Written Premiums	$	160,119		$	124,446		$	102,089		$	386,654
Ceded Written Premiums		(33,410	)		(69,780	)		(26,178	)		(129,368	)
Net Written Premiums	$	126,709		$	54,666		$	75,911		$	257,286
Retention Ratio		79.1	%		43.9	%		74.4	%		66.5	%
Net Earned Premiums	$	116,058		$	67,292		$	67,243		$	250,593
Net Losses and LAE		(83,906	)		(54,654	)		(37,953	)		(176,513	)
Commission Expenses		(27,590	)		(10,985	)		(15,860	)		(54,435	)
Other Operating Expenses		(24,454	)		(19,983	)		(14,250	)		(58,687	)
Underwriting Loss	$	(19,892	)	$	(18,330	)	$	(820	)	$	(39,042	)
Losses and LAE Ratio		72.3	%		81.2	%		56.4	%		70.4	%
Commission Expense Ratio		23.8	%		16.3	%		23.6	%		21.7	%
Other Operating Expense Ratio		21.0	%		29.7	%		21.2	%		23.5	%
Combined Ratio		117.1	%		127.2	%		101.2	%		115.6	%

Gross Written Premiums

Quarter to Date Variance

Gross Written Premiums increased $3.8 million for the three months ended September 30, 2018 compared to the same period in 2017, driven by an $8.5 million and $4.5 million increase in our Professional Liability and P&C operating segments, respectively, partially offset by a decrease in our Marine operating segment of $9.2 million.

The decrease in our Marine operating segment was driven by decreases in our Protection and Indemnity, Cargo, and Hull products, partially offset by additional premium of $1.3 million from the NICE Group business acquired in the second quarter. The decrease in our Protection and Indemnity product was primarily related to our decision to sell the renewal rights to our fixed-premium protection and indemnity business. The decrease in our Cargo product was related to non-renewals and remedial actions on certain accounts. The decrease in our Hull product was primarily related to non-renewals resulting from strategic decisions to not renew certain business and declinature of unacceptable terms and conditions.

48

The increase in our P&C operating segment was driven by additional premium of $5.3 million from the NICE Group business acquired in the second quarter,as well as an increase in our General Liability division due to new business.This increase was offset by decreases in our Property division due to strategic actions taken to exit our International and North American Property businesses in 2017 and our Energy and Engineering division due to renewal timing and the reduction of our line on a large account.

The increase in our Professional Liability operating segment was primarily driven by rate improvement and growth in new business within our D&O division, as well as across all divisions within this operating segment.

Average renewal premium rates for our Int’l Insurance reporting segment for the three months ended September 30, 2018 increased 2.1% compared to the same period in 2017, driven by increases of 5.0%, 2.5% and 0.4% in our P&C, Marine, and Professional Liability operating segments, respectively.

Year to Date Variance

Gross Written Premiums decreased $8.9 million for the nine months ended September 30, 2018 compared to the same period in 2017, driven by decreases in our Marine and P&C operating segments of $30.5 million and $2.0 million, respectively, partially offset by an increase in our Professional Liability operating segment of $23.6 million.

The decrease in our Marine operating segment was due to decreases in our Protection & Indemnity, Transport, Hull, Marine Liability, and Cargo products, partially offset by additional premium from the NICE Group business acquired in the second quarter. The decreases in our Protection & Indemnity, and Cargo products were attributable to the same drivers as the quarter to date variances. The decrease in our Transport and Marine Liability product was primarily driven by declined renewals of several large binding authorities. The decrease in our Hull product was primarily related to the timing of certain construction driven contracts and non-renewals.

The decrease in our P&C operating segment was driven by a decrease in our Property division due to the same driver as the quarter to date variance. This decrease was partially offset by increases in our General Liability, Political Violence and Terrorism, and Energy & Engineering divisions due to new and renewal business, as well as additional premium from the NICE Group business acquired in the second quarter.

The increase in our Professional Liability operating segment was attributable to the same drivers as the quarter to date variance.

Average renewal premium rates for our Int’l Insurance reporting segment for the nine months ended September 30, 2018 increased 2.6% compared to the same period in 2017, driven by increases of 4.6%, 2.6% and 0.7% in our P&C, Marine and Professional Liability operating segments, respectively.

Ceded Written Premiums

Quarter and Year to Date Variance

Ceded Written Premiums were $29.0 million, resulting in a retention ratio of 75.3% of Net Written Premiums to Gross Written Premiums, and $97.8 million, resulting in a retention ratio of 74.1%, for the three and nine months ended September 30, 2018, respectively. This compares to Ceded Written Premiums of $39.0 million, resulting in a retention ratio of 65.7%, and $129.4 million, resulting in a retention ratio of 66.5%, for the three and nine months ended September 30, 2017, respectively. The increase in the retention ratio was driven by all three operating segments.

The Marine operating segment’s increase was driven by our Transport division due to a reduction in quota share reinsurance and the Cargo division due to reduced reinsurance costs, as well as the impact of ceded RRPs in the prior year related to Hurricanes Irma and Harvey. For the year to date variance, these increases were partially offset by a decrease in the Protection & Indemnity division due to our renewal rights agreement with Thomas Miller Specialty in 2018 that included a 100% cession of our business.

The P&C operating segment’s increase was driven by 2017 strategic actions to exit our Property division, thereby ceding 100% of our North American business, which is now in the latter stages of run-off, as well as an increase in our Energy & Engineering division’s retention ratio due to a reduction in quota share reinsurance. The increase in the retention ratio was also impacted by the higher level of ceded RRPs in the prior year related to the Hurricane events.

The increase in our Professional Liability operating segment’s retention ratio was primarily attributable to a reduction in quota share reinsurance.

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Net Earned Premiums

Quarter and Year to Date Variances

Net Earned Premiums increased $10.8 million and $29.9 million for the three and nine months ended September 30, 2018, as compared to the same periods in 2017. The increase was driven by growth in our Professional Liability and P&C operating segments, partially offset by a decrease in our Marine operating segment.

The decrease in our Marine operating segment’s Net Earned Premium was due to decreased production, including the impact of our renewal rights agreement with Thomas Miller Specialty, offset by the impact of a higher level of ceded RRPs in the prior year related to Hurricanes Irma and Harvey as well as additional earned premium of $1.1 million from the NICE Group business acquired in the second quarter.

The increase in our P&C operating segment’s Net Earned Premium was due to growth in most divisions, the impact of a higher level of ceded RRPs related to the Hurricane events, and additional earned premium of $4.3 million from the NICE Group business acquired in the second quarter. These increases to Net Earned Premiums were partially offset by our Property division, where we took strategic actions to exit our International and North American Property businesses in 2017.

The increase in our Professional Liability operating segment’s Net Earned Premium was driven by growth across all divisions.

Net Losses and LAE

The Net Losses and LAE Reserves as of September 30, 2018 and December 31, 2017 were as follows:

	Int'l Insurance
	As of September 30, 2018								As of December 31, 2017
amounts in thousands	Marine		P&C		Professional Liability		Total		Marine		P&C		Professional Liability		Total		Total% Change
Case Reserves	$	174,517	$	59,152	$	42,193	$	275,862	$	181,369	$	66,412	$	31,463	$	279,244		(1.2	%)
IBNR Reserves		38,034		31,539		107,591		177,164		39,949		37,067		87,211		164,227		7.9	%
Total	$	212,551	$	90,691	$	149,784	$	453,026	$	221,318	$	103,479	$	118,674	$	443,471		2.2	%

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three and nine months ended September 30, 2018 and 2017:

	Int'l Insurance
	Three Months Ended September 30, 2018												Three Months Ended September 30, 2017
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		71.7	%		43.0	%		73.6	%		63.3	%		101.1	%		137.4	%		52.3	%		96.8	%		(33.5	)
Net Prior AY Reserve    (Release)/Strengthening		0.4	%		(9.6	%)		16.9	%		1.9	%		18.1	%		9.1	%		7.0	%		12.7	%		(10.8	)
Net Current AY Losses and LAE    Ratio		71.3	%		52.6	%		56.7	%		61.4	%		83.0	%		128.3	%		45.3	%		84.1	%		(22.7	)

	Int'l Insurance
	Nine Months Ended September 30, 2018												Nine Months Ended September 30, 2017
							Professional												Professional						Point
	Marine			P&C			Liability			Total			Marine			P&C			Liability			Total			Change
Net Losses and LAE Ratio		67.3	%		37.6	%		58.4	%		56.5	%		72.3	%		81.2	%		56.4	%		70.4	%		(13.9	)
Net Prior AY Reserve    (Release)/Strengthening		6.2	%		(10.8	%)		4.0	%		0.9	%		8.8	%		8.2	%		9.5	%		8.8	%		(7.9	)
Net Current AY Losses and LAE    Ratio		61.1	%		48.4	%		54.4	%		55.6	%		63.5	%		73.0	%		46.9	%		61.6	%		(6.0	)

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Quarter to Date Variance

For the three months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 33.5 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the three months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 10.8 points as compared to the same period in 2017 primarily driven by:

• Our Marine operating segment for the three months ended September 30, 2018 recognized $0.2 million of Net Prior AY Reserve Strengthening compared to $7.1 million of Net Prior AY Reserve Strengthening for the same period in 2017 due to adverse loss development related to our Cargo, Protection & Indemnity and Specie products in that period.

• Our P&C operating segment for the three months ended September 30, 2018 recognized $2.9 million of Net Prior AY Reserve Releases related to $3.2 million of net non-catastrophe loss release from better than expected loss emergence in our Political Violence & Terrorism, Property, General Liability, and Energy & Engineering divisions, partially offset by $0.4 million of net catastrophe loss strengthening primarily related to the Hurricane events and the Puebla, Mexico Earthquake that occurred in the third quarter of 2017. This compares to $2.0 million of Net Prior AY Reserve Strengthening for the same period in 2017 related to adverse loss development in our Property product.

The above decreases in our Net Prior AY Loss and LAE Ratio were partially offset by:

• Our Professional Liability operating segment for the three months ended September 30, 2018 recognized $4.5 million of Net Prior AY Reserve Strengthening primarily related to adverse development on a large loss in our D&O product. This compares to $1.7 million of Net Prior AY Reserve Strengthening for the same period in 2017 primarily related to a large loss in our E&O product.

Changes in the Current Accident Year Loss Ratio

For the three months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 22.7 points as compared to the same period in 2017, with the reduced level of catastrophe activity being the primary driver. During the three months ended September 30, 2018, we recognized $2.9 million of net catastrophe losses related to Hurricane Florence, compared to $31.7 million inclusive of ceded RRPs for the same period in 2017 related to the Hurricane events and the Puebla, Mexico Earthquake.

After adjusting for these net catastrophe losses inclusive of ceded RRPs, our Net Current AY Losses and LAE Ratio increased 9.6 points as compared to the same period in 2017 primarily due to

• an increase in large loss activity in our Marine and Professional Liability operating segments for the three months ended September 30, 2018 compared to the same period in 2017;

• unfavorable performance within certain key products within the Marine and Professional Liability operating segments; and

• changes in the mix of business.

Year to Date Variance

For the nine months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 13.9 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the nine months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 7.9 points as compared to the same period in 2017 primarily driven by:

• Our Marine operating segment for the nine months ended September 30, 2018 recognized $7.1 million of Net Prior AY Reserve Strengthening, including $9.3 million of net non-catastrophe reserve strengthening with adverse development in the Cargo, Transport, and Hull products due to worse than expected loss emergence, partially offset by favorable development in the Marine Liability and Energy Liability products. Partially offsetting the net non-catastrophe reserve strengthening was $2.2 million of net catastrophe loss release primarily related to the Hurricane events that occurred in the third quarter of 2017. This compares to $10.2 million of Net Prior AY Reserve Strengthening for the same period in 2017 due to adverse loss development primarily related to our Cargo, Specie and Protection & Indemnity products.

51

• Our P&C operating segment for the nine months ended September 30, 2018 recognized $8.1 million of Net Prior AY Reserve Releases resulting from $5.4 million of net catastrophe loss release primarily related to the third quarter 2017 Hurricane events and the Puebla, Mexico Earthquake and $2.7 million of net non-catastrophe related reserve release with better than expected loss emergence in our Political Violence & Terrorism and General Liability divisions, partially offset by unfavorable loss emergence on the runoff of our Property division’s business and worse than expected loss emergence within our Offshore Energy division. This compares to $5.5 million of Net Prior AY Reserve Strengthening for the same period in 2017 related to loss development in our Property division primarily resulting from late reported claims, partially offset by releases related to better than expected loss emergence within our Offshore Energy business.

• Our Professional Liability operating segment for the nine months ended September 30, 2018 recognized $3.6 million of Net Prior AY Reserve Strengthening primarily related to adverse development on a large loss in our D&O division, partially offset by better than expected loss emergence within our E&O division and Financial Institutions business within our D&O division. This compares to $6.4 million of Net Prior AY Reserve Strengthening for the same period in 2017 related to large loss development on our D&O and E&O business.

Changes in the Current Accident Year Loss Ratio

For the nine months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 6.0 points as compared to the same period in 2017, attributable to the same drivers as the quarter to date variance.

Commission Expenses

Quarter and Year to Date Variances

Our Commission Expense Ratio for the three months ended September 30, 2018 increased 4.5 points as compared to the same period in 2017 and remained relatively consistent for the nine months ended September 30, 2018 as compared to the same period in 2017.

The increase for the quarter was primarily driven by our P&C operating segment, due to a favorable adjustment to a prior underwriting year gross commission estimate in 2017 combined with the impact of reduced quota share cessions within our Energy and Engineering division.

Our Professional Liability operating segment also contributed to the increase due to higher gross commissions earning through the current year related to higher proportions of binder business as well as higher profit commissions in the current quarter.

Partially offsetting these increases was the impact of ceded RRPs related to the Hurricane events on the 2017 Commission Expense Ratio.

Other Operating Expenses

Quarter and Year to Date Variances

Other Operating Expenses for the three and nine months ended September 30, 2018 increased $8.1 million and $9.6 million, respectively, as compared to the same periods in 2017 primarily due to a reduction in performance-based incentive compensation that occurred in the prior 2017 periods, as well as increased professional fees and expenses related to the NICE Group in the current year.

Other Underwriting Income

Quarter and Year to Date Variances

Other Underwriting Income for the three and nine months ended September 30, 2018 increased $0.9 million, as compared to the same periods in 2017 primarily due to managing agent fee income related to the NICE Group.

52

GlobalRe

The following tables summarize our Underwriting Profit for our GlobalRe reporting segment for the three and nine months ended September 30, 2018 and 2017:

	GlobalRe
	Three Months Ended September 30,
amounts in thousands	2018			2017			% Change
Gross Written Premiums	$	58,384		$	53,385			9.4	%
Ceded Written Premiums		(1,896	)		(2,728	)		(30.5	%)
Net Written Premiums	$	56,488		$	50,657			11.5	%
Retention Ratio		96.8	%		94.9	%
Net Earned Premiums	$	63,308		$	47,798			32.4	%
Net Losses and LAE		(39,443	)		(59,118	)		(33.3	%)
Commission Expenses		(13,282	)		(11,233	)		18.2	%
Other Operating Expenses		(6,317	)		(4,010	)		57.5	%
Other Underwriting Income		20			94			(78.7	%)
Underwriting Profit (Loss)	$	4,286		$	(26,469	)	NM
Losses and LAE Ratio		62.3	%		123.7	%
Commission Expense Ratio		21.0	%		23.5	%
Other Operating Expense Ratio (1)		9.9	%		8.2	%
Combined Ratio		93.2	%		155.4	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.

NM - Percentage change not meaningful

	GlobalRe
	Nine Months Ended September 30,
amounts in thousands	2018			2017			% Change
Gross Written Premiums	$	262,043		$	188,025			39.4	%
Ceded Written Premiums		(10,307	)		(9,021	)		14.3	%
Net Written Premiums	$	251,736		$	179,004			40.6	%
Retention Ratio		96.1	%		95.2	%
Net Earned Premiums	$	179,010		$	130,487			37.2	%
Net Losses and LAE		(101,467	)		(106,932	)		(5.1	%)
Commission Expenses		(40,198	)		(28,695	)		40.1	%
Other Operating Expenses		(18,158	)		(14,403	)		26.1	%
Other Underwriting Income		294			439			(33.0	%)
Underwriting Profit (Loss)	$	19,481		$	(19,104	)	NM
Losses and LAE Ratio		56.7	%		81.9	%
Commission Expense Ratio		22.5	%		22.0	%
Other Operating Expense Ratio (1)		9.9	%		10.7	%
Combined Ratio		89.1	%		114.6	%

(1) - Includes Other Operating Expenses and Other Underwriting Income.

NM - Percentage change not meaningful

Gross Written Premiums

Quarter to Date Variance

Gross Written Premiums increased $5.0 million for the three months ended September 30, 2018, compared to the same period in 2017, primarily due to increases in our P&C, Accident & Health and Specialty Casualty products, partially offset by decreases in our Agriculture and Surety products. The increases in our P&C and Specialty Casualty products were primarily due to increased new and renewal business. The increase in our Accident & Health product was mainly driven by increased premium estimates, partially offset by a decrease in new and renewal business. The decreases in our Agriculture and Surety products were due to the timing of renewals and decreased premium estimates, respectively.

53

Year to Date Variance

Gross Written Premiums increased $74.0 million for the nine months ended September 30, 2018, compared to the same period in 2017, primarily due to new business and increased renewals in our Accident & Health, P&C, Specialty Casualty, and Surety products, partially offset by a decrease in our Agriculture product. In addition to new business and increased renewals, our Accident & Health and P&C products were also impacted by increased premium estimates. Timing, largely related to inception date changes on two contracts, also contributed to the increase in our Specialty Casualty product. The decrease in our Agriculture product was due to timing of renewals.

Ceded Written Premiums

Quarter to Date Variances

Ceded Written Premiums were $1.9 million, resulting in a retention ratio of 96.8% of Net Written Premiums to Gross Written Premiums, for the three months ended September 30, 2018, compared to Ceded Written Premiums of $2.7 million, resulting in a retention ratio of 94.9%, for the same period in 2017. The increase in the retention ratio was primarily driven by the prior year impact of ceded RRPs resulting from Hurricane Maria, partially offset by additional ceded coverage purchased on our P&C products during the quarter and increased ceded premium estimates in our Surety product.

Year to Date Variances

Ceded Written Premiums were $10.3 million, resulting in a retention ratio of 96.1%, for the nine months ended September 30, 2018, compared to Ceded Written Premiums of $9.0 million, resulting in a retention ratio of 95.2%, for the same period in 2017. The increase in the retention ratio was impacted by the same drivers as the quarter to date variance, as well as the impact of changes in the mix of business with proportionately more Accident & Health and Specialty Casualty premium, which had 100% retention.

Net Earned Premiums

Quarter and Year to Date Variances

Net Earned Premiums for the three and nine months ended September 30, 2018 increased $15.5 million and $48.5 million, respectively, as compared to the same periods in 2017, primarily due to growth in our Accident & Health, P&C, and Specialty Casualty products, partially offset by lower net inward RRPs compared to prior year.

Net Losses and LAE

The Net Losses and LAE Reserves as of September 30, 2018 and December 31, 2017 were as follows:

	GlobalRe
	As of
	September 30,		December 31,
amounts in thousands	2018		2017		% Change
Case Reserves	$	55,752	$	58,962		(5.4	%)
IBNR Reserves		114,675		93,275		22.9	%
Total	$	170,427	$	152,237		11.9	%

The following tables present the current and prior accident year changes in our Net Losses and LAE Ratio for the three and nine months ended September 30, 2018 and 2017:

	GlobalRe
	Three Months Ended September 30,						Point
	2018			2017			Change
Net Losses and LAE Ratio		62.3	%		123.7	%		(61.4	)
Net Prior AY Reserve (Release)/Strengthening		(3.1	%)		0.8	%		(3.9	)
Net Current AY Losses and LAE Ratio		65.4	%		122.9	%		(57.5	)

54

	GlobalRe
	Nine Months Ended September 30,						Point
	2018			2017			Change
Net Losses and LAE Ratio		56.7	%		81.9	%		(25.2	)
Net Prior AY Reserve (Release)/Strengthening		(1.2	%)		3.3	%		(4.5	)
Net Current AY Losses and LAE Ratio		57.9	%		78.6	%		(20.7	)

Quarter to Date Variance

For the three months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 61.4 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the three months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 3.9 points as compared to the same period in 2017. Our GlobalRe operating segment for the three months ended September 30, 2018 recognized $2.0 million of Net Prior AY Reserve Release, including $0.9 million of net catastrophe loss release related to Hurricanes Irma and Harvey, and the Puebla, Mexico Earthquake, compounded by an additional $1.1 million of reserve releases related to net favorable loss emergence across our A&H, Surety, and Specialty Casualty products, partially offset by strengthening in our P&C product. This compares to $0.4 million of Net Prior AY Reserve Strengthening for the same period in 2017 mostly related to our P&C product.

Changes in the Current Accident Year Loss Ratio

For the three months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 57.5 points as compared to the same period in 2017, primarily driven by a decrease in catastrophe losses. During the three months ended September 30, 2018, we recognized $6.9 million of net catastrophe losses net of assumed RRPs related to Typhoon Jebi and Hurricane Florence. This compared to $33.3 million of net catastrophe losses net of RRPs ($4.3 million of assumed RRPs, partially offset by $1.8 million of ceded RRPs) from the Hurricane events, and the Puebla, Mexico Earthquake.

After adjusting for these net catastrophe losses net of RRPs, our Net Current AY Losses and LAE Ratio increased 3.4 points as compared to the same period in 2017 primarily due to changes in the mix of business with an increase in Net Earned Premiums related to our Accident & Health and Specialty Casualty products, which carries a higher loss ratio.

Year to Date Variance

For the nine months ended September 30, 2018, our Reported Net Losses and LAE Ratio decreased 25.2 points as compared to the same period in 2017 driven by:

Prior Year Reserve Development

For the nine months ended September 30, 2018, our Net Prior AY Losses and LAE Ratio decreased 4.5 points as compared to the same period in 2017. Our GlobalRe reporting segment for the nine months ended September 30, 2018 recognized $2.1 million of Net Prior AY Reserve Release. This release was primarily related to net favorable loss emergence in our Accident & Health, Surety, and Specialty Casualty products, partially offset by unfavorable loss emergence in our P&C product. This compares to $4.3 million of Net Prior AY Reserve Strengthening for the same period in 2017 mostly related to the settlement of a large Accident & Health claim.

Changes in the Current Accident Year Loss Ratio

For the nine months ended September 30, 2018, our Net Current AY Losses and LAE Ratio decreased 20.7 points as compared to the same period in 2017, primarily driven by the same decrease in catastrophe losses as the quarter to date variance.

After adjusting for these net catastrophe losses net of RRPs, our Net Current AY Losses and LAE Ratio increased 1.6 points as compared to the same period in 2017 primarily due to changes in the mix of business with an increase in Net Earned Premiums related to our Accident & Health and Specialty Casualty products, which carries a higher loss ratio. Partially offsetting this increase in the ratio was $3.4 million of other weather-related losses that were incurred during the nine months ended September 30, 2017.

55

Commission Expenses

Quarter to Date Variances

Our Commission Expense Ratio for the three months ended September 30, 2018 decreased 2.5 points compared to the same period in 2017. The decrease was primarily due to lower profit commission expense particularly in our Accident & Health, Surety, and Agriculture products, partially offset by changes in the mix of business with more proportional Accident & Health and Specialty Casualty premium earned with higher Commission Expense Ratios.

Year to Date Variances

Our Commission Expense Ratio for the nine months ended September 30, 2018 increased 0.5 points compared to the same period in 2017. The increase was primarily due to changes in the mix of business with more proportional Accident & Health and Specialty Casualty premium earned with higher Commission Expense Ratios, partially offset by increased profit commission income compared to prior year.

Other Operating Expenses and Other Underwriting Income

Quarter and Year to Date Variances

Other Operating Expenses for the three and nine months ended September 30, 2018 increased $2.4 million and $3.9 million, respectively, as compared to the same periods in 2017, primarily due to increases in employee expenses and indirect expenses. The Other Operating Expense Ratio increased 1.7 points and decreased 0.8 points for the three and nine months ended September 30, 2018, respectively, as compared to the same periods in 2017. An increase in Net Earned Premiums offset the increase in Other Operating Expenses for the nine months ended driving the decrease in this ratio compared to the same period in 2017.

Capital Resources and Liquidity

Capital Resources

Our capital resources consist of funds deployed or available to be deployed to support our business operations. As of September 30, 2018 and December 31, 2017, our capital resources were as follows:

	As of
amounts in thousands	September 30, 2018			December 31, 2017
Senior Notes	$	264,009		$	263,885
Stockholders' Equity		1,231,828			1,225,965
Total Capitalization	$	1,495,837		$	1,489,850
Ratio of Debt to Total Capitalization		17.6	%		17.7	%

As part of our capital management program, we may seek to raise additional capital or may seek to return capital to our stockholders through share repurchases, cash dividends or other methods (or a combination of such methods). Any such determination will be at the discretion of our Parent Company’s Board of Directors and will be dependent upon our profits, financial requirements and other factors, including legal restrictions, rating agency requirements, credit facility limitations and such other factors as our Board of Directors deems relevant.

We primarily rely upon dividends from our subsidiaries to meet our Parent Company’s obligations, which mostly consist of semi-annual (April and October) interest payments of $7.6 million on the Senior Notes. During 2018, NIC paid dividends of $77.0 million to our Parent Company, related to the acquisition and subsequent funding of the NICE Group. As described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2017, we continue to believe that the dividend capacity of our subsidiaries will provide our Parent Company with sufficient liquidity for the foreseeable future.

Senior Notes and Credit Facility

As of September 30, 2018, letters of credit with an aggregate face amount of 24.0 million Australian Dollars were outstanding under the credit facility with Barclays Bank PLC that we entered into on November 4, 2016 and amended on October 30, 2017 (the “Australian Facility”).

As of September 30, 2018, letters of credit with an aggregate face amount of $140.0 million and £60.0 million were outstanding under the credit facility with ING Bank N.V., London Branch, individually and as administrative agent for a syndicate of lenders, that we entered into on November 7, 2016 (the “Club Facility”), and we had an aggregate of $1.2 million of cash collateral posted.

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As of September 30, 2018, letters of credit with an aggregate face amount of $25.0 million were outstanding under the credit facility with ING Bank N.V., London Branch, that we entered into on November 20, 2015 and amended on November 7, 2016 (the “Bilateral Facility”).

During the first quarter of 2018, the Company reclassified certain overseas deposits from Short-Term Investments to Other Invested Assets. Refer to Note 1. Organization & Summary of Significant Accounting Policies in the Notes to Interim Consolidated Financial Statements. Although the nature of the investments did not change, this reclassification caused the Company to exceed a covenant of our Club Facility that sets a limitation on other investments as a percentage of total investments. During the second quarter of 2018, our Company received a waiver of compliance with respect to this covenant, which was subsequently amended to increase the percentage of other investments permitted. As of September 30, 2018, our Company was in compliance with all covenants for our Club Facility, Senior Notes, Australian Facility and Bilateral Facility.

Shelf Registration

We generally maintain the ability to issue certain classes of debt and equity securities via a universal shelf registration statement filed with the SEC, which is renewed every three years. The shelf registration provides us the means to access the debt and equity markets relatively quickly. Our current shelf registration, which was filed on April 13, 2018 with the SEC, expires in 2021. This report is not an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

Consolidated Cash Flows

We believe that the cash flow generated by the operating activities of our subsidiaries will provide sufficient funds for us to meet our liquidity needs over the next twelve months. Beyond the next twelve months, cash flow available to us may be influenced by a variety of factors, including general economic conditions and conditions in the insurance and reinsurance markets, as well as fluctuations from year to year in claims experience.

We believe that we have adequately managed our cash flow requirements related to reinsurance recoveries from their positive cash flows and the use of available short-term funds when applicable. However, there can be no assurances that we will be able to continue to adequately manage such recoveries in the future or that collection disputes or reinsurer insolvencies will not arise that could materially increase the collection time lags or result in recoverable write-offs causing additional incurred losses and liquidity constraints to our Company. The payment of gross claims and related collections from reinsurers with respect to large losses could significantly impact our liquidity needs. However, in general, we expect to collect our paid reinsurance recoverables under the terms described above.

Net Cash Provided by Operating Activities was $267.1 million for the nine months ended September 30, 2018 compared to $222.8 million for the same period in 2017. Operating cash flow increased from the prior year due to additional premium collections resulting from the growth of our business, higher investment income collected as a result of the growth in assets under management, and lower federal tax payments due to the Tax Cuts and Jobs Act enacted on December 22, 2017. To a lesser extent operating cash flows were impacted by increased claim and reinsurance payments as well as higher operating expense payments, all of which are associated with the growth of our business.

Net Cash Used in Investing Activities was $127.1 million for the nine months ended September 30, 2018 compared to $131.4 million for the same period in 2017. The decrease in cash used in investing activities is due in part to a temporary increase in cash and cash equivalents at September 30, 2018 as we await investment opportunities and hold cash equivalents for unsettled trades at the end of the quarter. Additionally, investing cash flows for the nine months ended September 30, 2018 were impacted by cash acquired resulting from the Acquisition as discussed in Note 2. Merger and Business Combinations. The cash inflow from the sale of Fixed Maturities to fund the Acquisition was offset by the cash outflow to purchase the subsidiaries.

Net Cash Used in Financing Activities was $12.8 million for the nine months ended September 30, 2018 compared to $16.4 million for the same period in 2017. The decrease in cash used in financing activities is primarily related to reduced tax withholding payments on vested stock compensation in 2018 as compared with 2017.

Investments

Our investment portfolio is invested primarily in publicly traded, investment grade, fixed income securities with an average credit quality of “AA-/Aa3” as rated by S&P or Moody’s. As of September 30, 2018, our portfolio had a duration of 3.4 years. Management periodically projects cash flow of the investment portfolio and other sources in order to maintain the appropriate levels of liquidity in an effort to ensure our ability to satisfy claims.

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As of September 30, 2018 and December 31, 2017, all Fixed Maturities Securities were classified as Available-For-Sale. Upon adoption of the FASB’s ASU 2016-01 as of January 1, 2018, our Equity Securities have been measured at fair value with changes in fair value recognized through Net Income. Prior to the adoption of ASU 2016-01, our Equity Securities were classified as Available-For-Sale with change in fair value recognized through Accumulated Other Comprehensive Income.

The portfolio is externally managed by independent, professional investment managers and is broadly diversified across geographies, sectors, and issuers. The primary objectives are to maximize total investment return in the context of preserving and enhancing stockholder value and the statutory surplus of our regulated insurance companies. As part of our overall investment strategy, we seek to build a tax efficient investment portfolio by maintaining an allocation to tax-exempt municipal bonds. The tax-exempt portion of our Fixed Maturities portfolio at September 30, 2018 was 16.6% compared to 22.4% at December 31, 2017. Additionally, substantially all of our equity portfolio is invested in tax efficient securities which qualify for the dividends received deduction. The investments are subject to the oversight of the respective insurance companies’ Boards of Directors and the Finance Committee of our Parent Company’s Board of Directors.

We are a specialty insurance company and periods of moderate economic recession or inflation tend not to have a significant direct effect on underwriting operations. They do, however, impact our investment portfolio. A decrease in interest rates will tend to decrease our yield and have a positive effect on the fair value of our invested assets. An increase in interest rates will tend to increase our yield and have a negative effect on the fair value of our invested assets.

The following table summarizes the composition of our investments at fair value:

	Fair Value as of
amounts in thousands	September 30, 2018		December 31, 2017		% Change
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and    Foreign Government Bonds	$	245,285	$	393,563		(37.7	%)
States, Municipalities and Political Subdivisions		631,514		814,632		(22.5	%)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		344,016		407,619		(15.6	%)
Residential Mortgage Obligations		124,191		54,104		129.5	%
Asset-Backed Securities		540,566		328,753		64.4	%
Commercial Mortgage-Backed Securities		186,251		160,904		15.8	%
Subtotal	$	1,195,024	$	951,380		25.6	%
Corporate Exposures		917,650		897,479		2.2	%
Total Fixed Maturities	$	2,989,473	$	3,057,054		(2.2	%)
Equity Securities:
Common Stocks	$	190,722	$	52,439		263.7	%
Preferred Stocks		180,958		183,542		(1.4	%)
Total Equity Securities	$	371,680	$	235,981		57.5	%
Short-Term Investments		7,264		6,480		12.1	%
Total Investments	$	3,368,417	$	3,299,515		2.1	%

Fixed Maturities decreased from December 31, 2017 due to an increase in interest rates, which resulted in unrealized losses across all Fixed Maturity asset classes. To a lesser extent, proceeds from the sale of Treasury bonds were used to fund the Acquisition as well as reinvested into equity mutual funds tracking broad market indices. The increase in common stocks is due to the equity portfolio of the NICE Group, which was acquired as part of the purchase of these entities, as well as the purchase of passively managed equity mutual funds. Furthermore, certain short dated municipal securities were sold due to technical market factors with proceeds reinvested in cash equivalents. The Company increased their allocation to Residential Mortgage Obligations and Asset Backed Securities as we continue to add newly issued floating rate securities to provide a measure of protection against rising interest rates.

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The following table sets forth the amount of our Fixed Maturities as of September 30, 2018 by S&P credit rating or, if an S&P rating is not available, the equivalent Moody’s rating. The total rating is the weighted average quality rating for the Fixed Maturities portfolio as a whole.

		As of September 30, 2018
amounts in thousands	Rating	Fair Value		AmortizedCost
Rating Description:
Extremely Strong	AAA	$	564,627	$	569,813
Very Strong	AA		1,189,688		1,210,000
Strong	A		719,993		728,922
Adequate	BBB		403,753		406,330
Speculative	BB & Below		110,545		112,046
Not Rated	NR		867		724
Total	AA-	$	2,989,473	$	3,027,835

The following table sets forth the composition of the non-government guaranteed Fixed Maturities categorized by asset class and generally equivalent S&P and Moody’s ratings (not all securities in our portfolio are rated by both S&P and Moody’s) as of September 30, 2018:

	As of September 30, 2018
amounts in thousands	AAA		AA		A		BBB		BBand below		Not Rated		FairValue		Amortized Cost
Municipal Bonds	$	65,162	$	397,460	$	153,483	$	15,409	$	—	$	—	$	631,514	$	631,479
Agency Residential Mortgage-Backed		—		344,016		—		—		—		—		344,016		360,361
Residential Mortgage-Backed		75,893		5,356		314		39,001		2,760		867		124,191		124,163
Asset-Backed		219,744		209,609		84,542		26,671		—	—			540,566		544,045
Commercial Mortgage-Backed		109,137		50,035		27,079		—		—		—		186,251		188,681
Corporate Exposures		6,613		55,410		425,169		322,674		107,784		—		917,650		930,973
Total	$	476,549	$	1,061,886	$	690,587	$	403,755	$	110,544	$	867	$	2,744,188	$	2,779,702

The following table sets forth our U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds, as well as our State, Municipality and Political Subdivision bond holdings by type:

	As of September 30, 2018
amounts in thousands	FairValue		AmortizedCost
U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds:
U.S. Treasury Bonds	$	45,093	$	45,203
Agency Bonds		71,738		72,561
Foreign Government Bonds		128,454		130,369
Total U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds	$	245,285	$	248,133
States, Municipalities and Political Subdivisions:
General Obligation	$	121,606	$	121,569
Prerefunded		44,785		43,705
Revenue		331,400		329,984
Taxable		133,723		136,221
Total States, Municipalities and Political Subdivisions	$	631,514	$	631,479

As of September 30, 2018, we own $26.3 million of municipal securities, which are credit enhanced by various financial guarantors that have an average underlying credit rating of A.

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The following table sets forth our Agency Residential Mortgage-Backed Securities (“ARMBS”) issued by the Government National Mortgage Association (“GNMA”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”) and the quality category (Prime, Alternative A-paper (“Alt-A”), and Other Non-Agency) for Residential Mortgage-Backed Securities (“RMBS”) as of September 30, 2018:

	As of September 30, 2018
amounts in thousands	Fair Value		AmortizedCost
ARMBS:
GNMA	$	36,273	$	37,171
FNMA		215,720		226,906
FHLMC		92,023		96,284
Total Agency Residential Mortgage-Backed Securities	$	344,016	$	360,361
RMBS:
Prime	$	47,571	$	47,331
Alt-A		728		651
Other Non-Agency		75,892		76,181
Total Residential Mortgage-Backed Securities	$	124,191	$	124,163

We analyze our Mortgage-Backed Securities by credit quality of the underlying collateral distinguishing between the securities issued by FNMA, FHLMC and GNMA, which are federal government sponsored entities, and non-agency backed securities broken out by Prime, Alt-A, and Other Non-Agency collateral. The securities issued by FNMA and FHLMC are the obligations of each respective entity. The U.S. Department of the Treasury has agreed to provide support to FNMA and FHLMC under a Preferred Stock Purchase Agreement by committing to make quarterly payments to these enterprises, if needed, to maintain a zero net worth.

Prime collateral consists of mortgages or other collateral from the most creditworthy borrowers. Alt-A collateral consists of mortgages or other collateral from borrowers, which have a risk potential greater than Prime but less than subprime. The subprime collateral consists of mortgages or other collateral from borrowers with low credit ratings. We have no exposure to subprime RMBS at September 30, 2018. Prime, subprime and Alt-A categories are as defined by S&P.

Details of the collateral of our Asset-Backed Securities portfolio as of September 30, 2018 are presented below:

	As of September 30, 2018
amounts in thousands	Fair Value		AmortizedCost
Auto Loans	$	47,745	$	48,374
Single Family Rentals		88,463		89,186
Consumer Loans		50,072		50,659
Credit Cards		23,126		23,229
Collateralized Loan Obligations		245,537		246,399
Time Share		24,271		24,814
Miscellaneous		61,352		61,384
Total Asset-Backed Securities	$	540,566	$	544,045

Details of our Corporate Exposures portfolio as of September 30, 2018 are presented below:

	As of September 30, 2018
amounts in thousands	Fair Value		AmortizedCost
Corporate Exposures:
Corporate Bonds	$	720,967	$	731,004
Hybrid Bonds		154,749		158,122
Redeemable Preferred Stocks		41,934		41,847
Total Corporate Exposures	$	917,650	$	930,973

As of September 30, 2018, the fair value of securities issued in foreign countries was $367.0 million, with an amortized cost of $371.8 million, representing 11.0% of our total Fixed Maturities and Equity Securities. Our largest exposure is Canada with a total of $145.8 million followed by Luxembourg with a total of $41.4 million.

Our Company did not have gross unrealized investment losses where the fair value was less than 80% of amortized cost as of September 30, 2018.

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Our Company did not have any credit related OTTI losses during the three and nine months ended September 30, 2018.Our Company had two credit related OTTI losses totaling $1.0 million in the equity portfolio during the three months ended September 30, 2017. Our Company had four credit related OTTI losses totaling $2.1 million in the equity portfolio during the nine months ended September 30, 2017.

The fair value of our investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, equity prices, foreign exchange rates and credit spreads. We do not have the intent to sell nor is it more likely than not that we will have to sell Fixed Maturities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. We do not intend to sell any of these securities and it is more likely than not that we will not be required to sell these securities before the recovery of the amortized cost basis. Upon adoption of ASU-2016-01 as of January 1, 2018, the changes in the fair value of Equity Securities is recognized through Net Income. We may realize investment losses to the extent our liquidity needs require the disposition of Fixed Maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors we consider when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the Consolidated Financial Statements.

Critical Accounting Estimates

Our Company’s Annual Report on Form 10-K for the year ended December 31, 2017 discloses our critical accounting estimates (refer to Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates).

We believe the items that require the most subjective and complex estimates involve the reporting of:

• Reserves for Losses and LAE (including losses that have occurred but were not reported to us by the financial reporting date);

• Reinsurance Recoverables, including a provision for uncollectible reinsurance;

• Written and Unearned Premiums;

• The recoverability of Deferred Tax Assets;

• The impairment of investment securities;

• Valuation of invested assets; and

• Valuation of Goodwill and Intangible Assets.

We believe that the critical accounting estimates discussion in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2017 continues to describe the significant estimates and judgements included in the preparation of our Consolidated Financial Statements, with the exception of the valuation of Goodwill and Intangible Assets which was added as a critical accounting estimate this year as a result of the Acquisition and is described below:

Valuation of Goodwill and Intangible Assets

Goodwill on our Company’s Consolidated Balance Sheets represents the excess of purchase price over the fair value of net assets acquired from our acquisitions. Intangible assets other than goodwill have also been identified as part of our acquisitions when determining the fair value of assets acquired.

Intangible assets other than goodwill included in our Company’s Consolidated Balance Sheets include assets related to customer relationships, the value of business acquired, broker networks, a trade name, licenses, and Lloyd’s syndicate capacity. The valuation of these assets used valuation methods appropriate for determining the market value of each asset. These valuation methodologies used various assumptions which included discount rates, the cost of capital, and forecasting among others.

Goodwill is not amortized, but instead it is assessed for impairment at the reporting unit level on an annual basis or more frequently if indicators of impairment exist.

In performing this impairment assessment, our Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

Intangible assets with a finite life are amortized over the estimated useful life of the asset and intangible assets with an indefinite useful life are not amortized. Finite-lived intangibles are reviewed for impairment when indicators of impairment are present and indefinite-lived intangibles are assessed for impairment on an annual basis or more frequently if indicators of impairment exist.

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Similar to goodwill, in performing the impairment assessment of intangible assets, the Company may first assess qualitative factors to determine whether it is more likely than not that an intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative impairment test.

If goodwill or intangible assets are impaired, they are written down to their fair value with a corresponding expense reflected in the Consolidated Statements of Income in the period in which the determination is made.

As at September 30, 2018 neither the Company’s initial valuation nor its subsequent valuations have indicated any impairment of the Company’s goodwill and intangible assets of $17.2 million and $10.9 million, respectively. For further details, refer to Note 6 - Goodwill and Intangible Assets in the Interim Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to Item 7A included in our Company’s 2017 Annual Report on Form 10-K. There have been no material changes to this item since December 31, 2017.

Item 4. Controls and Procedures

(a) Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period our Company’s disclosure controls and procedures are effective in identifying, on a timely basis, material information required to be disclosed in our reports filed or submitted under the Exchange Act.

On June 7, 2018 we acquired Bracht, Deckers & Mackelbert NV (“BDM”), a specialty underwriting agency, and its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (“ASCO”). SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition. Accordingly, we have not yet included BDM and ASCO in our assessment of the effectiveness of our disclosure controls and procedures and internal control over financial reporting as of September 30, 2018. For the three months ended September 30, 2018, BDM and ASCO accounted for $6.6 million of our total revenue, and as of September 30, 2018 had total assets of $156.1 million.

(b) There have been no changes during our third fiscal quarter in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our Company’s internal control over financial reporting. As described above, our management excluded an assessment of the internal controls over financial reporting of BDM and ASCO from its assessment of the effectiveness of our internal control over financial reporting as of September 30, 2018. The Company has begun integrating BDM and ASCO into its existing control procedures, which may lead us to modify certain internal controls in future periods.

We have continued certain transformation initiatives to automate, centralize and simplify our business processes and systems. These are long-term initiatives that we believe will enhance our internal control over financial reporting due to increased automation and integration of related processes. These initiatives have not materially affected our internal control over financial reporting, however, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting throughout the transformation.

(c) In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of conducting business, our subsidiaries are involved in various legal proceedings, either indirectly as insurers for parties or directly as defendants. Most of these proceedings consist of claims litigation involving our subsidiaries as either: (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against us. Our Company accounts for such activity through the establishment of unpaid losses and LAE reserves. Our Company’s management believes that our ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and cost of defense, will not be material to the consolidated financial condition, results of operations, or cash flows of our Company.

Our subsidiaries are also occasionally involved with other legal actions, some of which assert claims for substantial amounts. These actions include claims asserting extra contractual obligations, such as claims involving allegations of bad faith in the handling of claims or the underwriting of policies. In general, our Company believes we have valid defenses to these cases. Our Company’s management expects that the ultimate liability, if any, with respect to such extra-contractual matters will not be material to our consolidated financial position. Nonetheless, given the large or indeterminate amounts sought in certain of these matters, and the inherent unpredictability of litigation, an adverse outcome in such matters could, from time to time, have a material adverse outcome on our consolidated results of operations or cash flows in a particular fiscal quarter or year.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in our Company’s 2017 Annual Report on Form 10-K, with the exception of the following additional risk factors related to the Merger:

Completion of the Merger is subject to the conditions contained in the Merger Agreement and if these conditions are not satisfied or waived, the Merger will not be completed.

Our and The Hartford’s obligations to complete the Merger are subject to the satisfaction or waiver of a number of conditions, including, among others, the approval of the Merger by our stockholders and the receipt of certain regulatory approvals. Many of the conditions to the closing of the Merger are not within our or The Hartford’s control, and we cannot predict when or if these conditions will be satisfied or waived. For example, regulators may impose conditions on the completion of the Merger or require changes to the terms of the Merger. Such conditions or changes could have the effect of delaying completion of the Merger or imposing additional costs to consummate the Merger. If any of these conditions are not satisfied or waived prior to May 1, 2019, which may be extended, under certain circumstances, to July 1, 2019, it is possible that the Merger Agreement will be terminated and the Merger will not be completed. There can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed.

The Company will be subject to business uncertainties while the Merger is pending, which could result in an adverse effect on our revenues and operating results.

While completion of the Merger is pending, we are subject to some uncertainty about our future. As a result of this uncertainty, the perceptions of brokers, insurers, cedents and other third parties of the Company may be negatively impacted, which in turn could affect our ability to compete for or write new business or obtain renewals in the marketplace. If this business represents a significant portion of our anticipated revenue, our results of operations could be substantially below expectations.

In addition, uncertainty about the effect of the Merger on the Company's employees may have an adverse effect on its operating results. Our ability to attract, retain or motivate key personnel may be impaired by these uncertainties, and could cause brokers, insurers, cedents and others that deal with the Company to seek to change existing business relationships with the Company. Employee retention may be particularly challenging while completion of the Merger is pending. If key employees of the Company depart, the Company’s business could be seriously harmed.

Lawsuits filed against us or our directors challenging the Merger may have an adverse impact on our business, results of operations or financial position.

Transactions like the Merger are frequently the subject of litigation or other legal proceedings, including actions alleging that our board of directors breached their respective fiduciary duties by entering into the Merger Agreement, by failing to obtain a greater value in the transaction for our stockholders or otherwise. In connection with the proposed Merger, one putative class action lawsuit has been filed on behalf of our stockholders in the United States District Court for the District of Delaware, alleging, among other things, that the defendants failed to make adequate disclosures in the Company’s proxy statement for the special meeting of stockholders relating to the Merger. There can be no assurance that additional lawsuits will not be brought in connection with the Merger.

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We believe that the allegations in the aforementioned lawsuit are without merit. We intend to defend against this lawsuit and any other litigation or proceedings brought against us or our board of directors in connection with the Merger, but may not be successful in doing so. Any adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have an adverse effect on our business, results of operations or financial position. Further, one of the conditions to the completion of the Merger is that no injunction, judgment or ruling by any court or other tribunal of competent jurisdiction will be in effect that enjoins, restrains or otherwise prohibits the consummation of the Merger. In the event that a plaintiff is successful in obtaining an injunction, judgment or ruling prohibiting the consummation of the Merger, the Merger may not be completed within the expected timeframe or at all.

Expenses related to the proposed Merger are significant and could adversely affect the Company's operating results.

If the Merger Agreement is terminated, our stock price may be adversely affected as a result of the fact that we have incurred and will continue to incur significant expenses related to the Merger, the intended benefits of which will not be realized if the Merger is not completed. If the Merger Agreement is terminated under certain circumstances, we may be obligated to pay The Hartford a termination fee of $68.25 million or transaction-related expenses not to exceed $7.0 million.

The Merger Agreement subjects us to restrictions on our business activities.

The Merger Agreement subjects us to restrictions on our business activities and obligates us to generally operate our business in the ordinary course in all material respects. These restrictions could have an adverse effect on our results of operations, cash flows and financial position to the extent that in the absence of the restrictions, our business decisions and operations would otherwise depart from our ordinary course of business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

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Item 6. Exhibits

Exhibit No.	Description of Exhibit
2-1	Agreement and Plan of Merger, dated as of August 22, 2018 by and among The Navigators Group, Inc., The Hartford Financial Services Group, Inc., and Renato Acquisition Co (filed with the Securities and Exchange Commission on August 22, 2018 as Exhibit 2-1 to our Current Report on Form 8-K and incorporated herein by reference).+
3-1	Amended and Restated By-Laws of The Navigators Group, Inc., as amended and restated on August 21, 2018 (filed with the Securities and Exchange Commission on August 22, 2018 as Exhibit 3-1 to our Current Report on Form 8-K and incorporated herein by reference).
10-1	Employment Agreement, dated August 21 2018, by and among The Navigators Group, Inc., Navigators Management Company, Inc. and Stanley A. Galanski (filed with the Securities and Exchange Commission on August 22, 2018 as Exhibit 10-1 to our Current Report on Form 8-K and incorporated herein by reference).**
10-2	Employment Agreement, dated August 21, 2018, by and among The Navigators Group, Inc., Navigators Management Company, Inc. and Ciro M. DeFalco (filed with the Securities and Exchange Commission on August 22, 2018 as Exhibit 10-2 to our Current Report on Form 8-K and incorporated herein by reference).**
10-3	Form of President’s Award Agreement (filed with the Securities and Exchange Commission on August 22, 2018 as Exhibit 10-3 to our Current Report on Form 8-K and incorporated herein by reference).**
10-4	Fourth Amended and Restated Funds at Lloyd's Letter of Credit Agreement, dated November 7, 2018, by and among The Navigators Group, Inc., the lenders party thereto, and ING Bank N.V., London Branch, as Administrative Agent and Letter of Credit Agent (filed with the Securities and Exchange Commission on November 7, 2018 as Exhibit 10-1 to our Current Report on Form 8-K and incorporated herein by reference)**
11-1	Computation of Per Share Earnings (Loss) *
31-1	Certification of CEO per Section 302 of the Sarbanes-Oxley Act *
31-2	Certification of CFO per Section 302 of the Sarbanes-Oxley Act *
32-1	Certification of CEO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference). *
32-2	Certification of CFO per Section 906 of the Sarbanes-Oxley Act (This exhibit is intended to be furnished in accordance with Regulation S-K item 601(b)(32)(ii) and shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference). *
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Scheme *
101.CAL	XBRL Taxonomy Extension Calculation Database *
101.LAB	XBRL Taxonomy Extension Label Linkbase *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase  *

* Included herein

** Management contract or compensatory plan or arrangement

+ Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted exhibit or schedule to the SEC upon request.

65

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	The Navigators Group, Inc.
	(Company)
Dated:  November 8, 2018	By:	/s/ Ciro M. DeFalco
		Ciro M. DeFalco
		Executive Vice President and Chief Financial Officer

66

EX-11.1

Exhibit 11.1

THE NAVIGATORS GROUP, INC. AND SUBSIDIARIES

Computation of Per Share Earnings (Loss)

The following table presents the computation of Basic and Diluted Earnings (Loss) per Share for the three and nine months ended September 30, 2018 and 2017:

	Three Months Ended September 30,					Nine Months Ended September 30,
amounts in thousands, except per share amounts	2018		2017			2018		2017
Net Income (Loss)	$	4,625	$	(27,979	)	$	67,607	$	13,633
Basic Weighted Average Shares		29,768		29,500			29,699		29,419
Effect of Common Stock Equivalents:
Assumed Vesting of Stock Grants		416		—			461		587
Diluted Weighted Average Shares		30,184		29,500			30,160		30,006
Net Income (Loss) per Common Share:
Basic	$	0.16	$	(0.95	)	$	2.28	$	0.46
Diluted	$	0.15	$	(0.95	)	$	2.24	$	0.45
Anti-dilutive Shares Excluded from the Dilutive Computation		—		1,165			—		—

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Stanley A. Galanski, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018	/s/ Stanley A. Galanski
	Name:	Stanley A. Galanski
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Ciro M. DeFalco, certify that:

1. I have reviewed this report on Form 10-Q of The Navigators Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2018	/s/ Ciro M. DeFalco
	Name:	Ciro M. DeFalco
	Title:	Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stanley A. Galanski, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stanley A. Galanski

Stanley A. Galanski

President and Chief Executive Officer

November 8, 2018

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Navigators Group, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ciro M. DeFalco, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ciro M. DeFalco

Ciro M. DeFalco

Executive Vice President and Chief Financial Officer

November 8, 2018

A signed original of this written statement required by Section 906 has been provided to The Navigators Group, Inc. and will be retained by The Navigators Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Trading Symbol	NAVG
Entity Registrant Name	NAVIGATORS GROUP INC
Entity Central Index Key	0000793547
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		29,777,883
Entity Emerging Growth Company	false
Entity Small Business	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Investments:
Available-for-sale, at fair value	$ 2,996,737
Equity Securities, at fair value (cost: 2018: $359,400; 2017: $224,159)		$ 235,981
Equity Securities, at fair value (cost: 2018: $359,400; 2017: $224,159)	371,680
Other Invested Assets	42,489	30,488
Total Investments	3,410,906	3,330,003
Cash and Cash Equivalents	219,980	102,735
Restricted Cash and Cash Equivalents	61,644	56,229
Premiums Receivable	392,392	351,393
Prepaid Reinsurance Premiums	235,642	228,569
Reinsurance Recoverable on Paid Losses	102,829	72,494
Reinsurance Recoverable on Unpaid Losses and Loss Adjustment Expenses	780,215	809,765
Deferred Policy Acquisition Costs	161,419	135,249
Accrued Investment Income	21,981	19,480
Goodwill and Other Intangible Assets	28,140	6,596
Current Income Tax Receivable, Net	25,429	16,667
Deferred Income Tax, Net	26,377	22,271
Other Assets	81,373	73,171
Total Assets	5,548,327	5,224,622
Liabilities:
Reserves for Losses and Loss Adjustment Expenses	2,633,835	2,515,145
Unearned Premiums	1,128,762	987,681
Reinsurance Balances Payable	147,129	136,192
Senior Notes	264,009	263,885
Payable for Investments Purchased	16,968	0
Accounts Payable and Other Liabilities	125,796	95,754
Total Liabilities	4,316,499	3,998,657
Stockholders' Equity:
Preferred Stock ($.10 par value per share, authorized 1,000 shares, none issued)	0	0
Common Stock ($.10 par value per share, authorized 50,000 shares, issued 36,795 shares for 2018 and 36,530 shares for 2017)	3,677	3,650
Additional Paid-In Capital	379,212	376,868
Treasury Stock, at cost (7,023 shares for 2018 and 2017)	(155,801)	(155,801)
Retained Earnings	1,047,673	981,380
Accumulated Other Comprehensive Income (Loss)	(42,933)	19,868
Total Stockholders' Equity	1,231,828	1,225,965
Total Liabilities and Stockholders' Equity	5,548,327	5,224,622
Fixed Maturities
Investments:
Available-for-sale, at fair value	2,989,473	3,057,054
Short-Term Investments
Investments:
Available-for-sale, at fair value	$ 7,264	$ 6,480

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Amortized cost	$ 3,035,103
Equity Securities, cost		$ 224,159
Equity Securities, cost	$ 359,400
Preferred Stock, par value	$ 0.10	$ 0.10
Preferred Stock, authorized shares	1,000,000	1,000,000
Preferred Stock, issued shares	0	0
Common Stock, par value	$ 0.10	$ 0.10
Common Stock, authorized shares	50,000,000	50,000,000
Common Stock, issued shares	36,795,000	36,530,000
Treasury Stock, shares	7,023,000	7,023,000
Fixed Maturities
Amortized cost	$ 3,027,835	$ 3,027,408
Short-Term Investments
Amortized cost	$ 7,268	$ 6,477

XML

Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Gross Written Premiums	$ 455,943	$ 402,038	$ 1,448,403	$ 1,304,522
Revenues:
Net Written Premiums	352,412	296,016	1,124,966	966,461
Change in Unearned Premiums	(5,374)	5,339	(124,286)	(85,140)
Net Earned Premiums	347,038	301,355	1,000,680	881,321
Net Investment Income	25,651	22,598	73,954	66,311
Net Realized and Unrealized Gains (Losses):
Total Other-Than-Temporary Impairment Losses	(15)	(957)	(71)	(2,005)
Portion of Loss Recognized in Other Comprehensive Income	15	(15)	71	(60)
Net Other-Than-Temporary Impairment Losses Recognized in Earnings	0	(972)	0	(2,065)
Net Realized Gains on Investments Sold	253	5,190	3,210	7,933
Net Unrealized Gains on Equity Securities	2,310		457
Total Net Realized and Unrealized Gains	2,563	4,218	3,667	5,868
Other Income (Loss)	1,724	(1,699)	4,235	(1,042)
Total Revenues	376,976	326,472	1,082,536	952,458
Expenses:
Net Losses and Loss Adjustment Expenses	240,900	276,171	623,378	622,881
Commission Expenses	57,999	45,509	165,344	141,526
Other Operating Expenses	67,584	45,773	198,692	165,077
Merger Transaction Costs	2,439		2,439
Interest Expense	3,891	3,862	11,619	11,584
Total Expenses	372,813	371,315	1,001,472	941,068
Income (Loss) Before Income Taxes	4,163	(44,843)	81,064	11,390
Income Tax Expense (Benefit)	(462)	(16,864)	13,457	(2,243)
Net Income (Loss)	$ 4,625	$ (27,979)	$ 67,607	$ 13,633
Net Income (Loss) per Common Share:
Basic	$ 0.16	$ (0.95)	$ 2.28	$ 0.46
Diluted	$ 0.15	$ (0.95)	$ 2.24	$ 0.45
Average common shares outstanding:
Basic	29,768	29,500	29,699	29,419
Diluted	30,184	29,500	30,160	30,006

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net Income (Loss)	$ 4,625	$ (27,979)	$ 67,607	$ 13,633
Change in Net Unrealized Gains (Losses) on Available-For-Sale Investments:
Unrealized Gains (Losses) on Investments arising during the period, net of Deferred Tax	(6,844)	9,653	(50,706)	36,928
Reclassification adjustment for Net Realized Gains (Losses) included in Net Income net of Deferred Tax	318	(1,636)	(2,699)	134
Change in Net Unrealized Gains (Losses) on Investments	(6,526)	8,017	(53,405)	37,062
Change in Other-Than-Temporary Impairments
Non Credit Other-Than-Temporary Impairments arising during the period, net of Deferred Tax	(12)	9	(56)	39
Reclassification Adjustment for Other-Than-Temporary Impairment Credit Losses Recognized in Net Income net of Deferred Tax	0	358	0	761
Change in Other-Than-Temporary Impairments	(12)	367	(56)	800
Change in Foreign Currency Translation Gains (Losses), net of Deferred Tax	(768)	1,284	(4,420)	1,803
Other Comprehensive Income (Loss)	(7,306)	9,668	(57,881)	39,665
Comprehensive Income (Loss)	$ (2,681)	$ (18,311)	$ 9,726	$ 53,298

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Unrealized Gains (Losses) on Investments arising during the period, Deferred Tax	$ 1,821	$ (5,197)	$ 13,543	$ (19,884)
Reclassification adjustment for Net Realized (Gains) Losses included in Net Income, Deferred Tax	(84)	881	992	(72)
Non Credit Other-Than-Temporary Impairments arising during the period, Deferred Tax	3	(6)	20	(21)
Reclassification Adjustment for Other-Than-Temporary Impairment Credit Losses Recognized in Net Income, Deferred Tax	0	(193)	0	(410)
Change in Foreign Currency Translation Gains (Losses), Deferred Tax	$ 73	$ (691)	$ 2,516	$ (971)

XML

Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 2018 - USD ($) shares in Thousands, $ in Thousands		Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2017		$ 1,225,965	$ 3,650	$ 376,868	$ (155,801)	$ 981,380	$ 19,868
Beginning Balance (in shares) at Dec. 31, 2017		36,530	36,530		7,023
Net Income		$ 67,607				67,607
Dividends Declared		(6,234)				(6,234)
Changes in Other Comprehensive Income:
Change in Net Unrealized Loss on Available-For-Sale Investments		(53,405)					(53,405)
Change in Net Non-Credit Other-Than- Temporary Impairment Losses		(56)					(56)
Change in Foreign Currency Translation Loss		(4,420)					(4,420)
Other Comprehensive Income (Loss)		(57,881)					(57,881)
Cumulative Effect of Adoption of ASU at January 1st, Net of Tax | ASU 2016-01						7,748	(7,748)
Cumulative Effect of Adoption of ASU at January 1st, Net of Tax | Accounting Standards Update 2018-02						(2,828)	2,828
Shares Issued	[1]	(5,042)	$ 27	(5,069)
Shares issued (in shares)	[1]		265
Share-Based Compensation		7,413		7,413
Ending Balance at Sep. 30, 2018		$ 1,231,828	$ 3,677	$ 379,212	$ (155,801)	$ 1,047,673	$ (42,933)
Ending Balance (in shares) at Sep. 30, 2018		36,795	36,795		7,023

[1] Includes shares issued under the Second Amended and Restated 2005 Stock Incentive Plan to Directors and the Employee Stock Purchase Plan.

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating Activities:
Net Income (Loss)	$ 67,607	$ 13,633
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation & Amortization	2,782	3,586
Share-Based Compensation	7,413	8,360
Deferred Income Taxes	(862)	(13,920)
Total Net Realized and Unrealized Gains	(3,667)	(5,868)
Changes in Assets and Liabilities:
Reinsurance Recoverable on Paid and Unpaid Losses and Loss Adjustment Expenses	16,668	(40,786)
Reserves for Losses and Loss Adjustment Expenses	86,851	251,971
Prepaid Reinsurance Premiums	(4,482)	(17,797)
Unearned Premiums	130,270	103,174
Premiums Receivable	(39,969)	(48,985)
Deferred Policy Acquisition Costs	(26,254)	(14,965)
Accrued Investment Income	(2,513)	(3,105)
Reinsurance Balances Payable	11,036	19,058
Current Income Tax Receivable, Net	(5,665)	(25,073)
Other	27,874	(6,532)
Net Cash Provided by Operating Activities	267,089	222,751
Fixed Maturities
Redemptions and Maturities	341,632	233,384
Sales	345,828	192,417
Purchases	(696,869)	(560,018)
Equity Securities
Sales		59,673
Sales	33,288
Purchases		(61,562)
Purchases	(122,083)
Net Sales and Purchases of Other Invested Assets	(12,930)	(13,853)
Net Sales, Maturities and Purchases of Short-Term Investments	(827)	(552)
Net Change in Unsettled Security Transactions	14,706	21,761
Purchase of Subsidiaries, Net of Acquired Cash	(22,383)	0
Net Purchase of Property and Equipment	(7,482)	(2,649)
Net Cash Used in Investing Activities	(127,120)	(131,399)
Financing Activities:
Proceeds from Employee Stock Purchase Plan	1,508	2,289
Payment of Employee Tax Withholding on Stock Compensation	(8,067)	(13,835)
Dividends Paid	(6,234)	(4,862)
Net Cash Used in Financing Activities	(12,793)	(16,408)
Effect of Exchange Rate on Unrestricted and Restricted Cash and Cash Equivalents	(4,516)	2,885
Change in Unrestricted and Restricted Cash and Cash Equivalents	122,660	77,829
Unrestricted and Restricted Cash and Cash Equivalents at Beginning of Year	158,964	172,846
Unrestricted and Restricted Cash and Cash Equivalents at End of Period	281,624	250,675
Supplemental Information:
Income Taxes Paid, Net	22,935	39,877
Interest Paid	7,619	7,619
Issuance of Stock to Directors	$ 783	$ 578

XML

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

NOTE 1. ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless the context requires otherwise, the terms “we,” “us,” “our” or “our Company” are used to mean The Navigators Group, Inc., a Delaware holding company established in 1982, and its subsidiaries. The term “Parent Company” is used to mean The Navigators Group, Inc. without its subsidiaries.

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity.

On June 7, 2018, we acquired 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”) and Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”). The acquisition was accounted for in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations.” Refer to Note 2. Merger and Business Combinations and Note 6. Goodwill and Intangible Assets for further information regarding the acquisition.

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). Refer to Note 2. Merger and Business Combinations for further information.

Basis of Presentation

The Consolidated Balance Sheet at September 30, 2018 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended September 30, 2018 and 2017 are unaudited. The Balance Sheet at December 31, 2017 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of these Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Certain amounts for the prior period have been reclassified to conform with the current period presentation.

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contained several key tax provisions that affected us, including a one-time mandatory Deemed Repatriation Transition Tax (the “Transition Tax”) on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We were required to recognize the effect of the tax law changes in the period of enactment, such as determining the Transition Tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Act, which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. During the fourth quarter of 2017, we made a reasonable estimate of the effects on our deferred tax balances and recognized provisional tax amounts of $2.6 million related to the Transition Tax. As of September 30, 2018, we have finalized the calculation of the Transition Tax which resulted in a decrease in the provisional amount of $1.3 million and has been reflected as a discrete item in our Effective Tax Rate calculation. We will continue to evaluate the estimated effects on our deferred tax balances during the measurement period.

The interim income tax provision has been computed based on our estimated annual Effective Tax Rate, which represents our best estimate on a year to date basis for the interim period. As a result, the tax provision for a given quarter equals the difference between the provision recorded cumulatively year to date less the amount recorded cumulatively as of the end of the prior interim period. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to tax-exempt investment income, the dividends received deduction, Transition Tax benefit, and an excess tax benefit related to the vesting of stock compensation at fair market value.

Short-Term Investments Reclassifications

Cash and overseas deposits that were misclassified within Short-Term Investments were reclassified representing an immaterial correction. Cash of $20.5 million as of December 31, 2017 was reclassified from Short-Term Investments to Cash and Cash Equivalents. Overseas deposits of $28.8 million as of December 31, 2017 were reclassified from Short-Term Investments to Other Invested Assets. The reclassification of cash within Short-Term Investments to Cash and Cash Equivalents impacted the Statement of Cash Flows for the nine months ended September 30, 2017 by decreasing Net Cash Used in Investing Activities by $9.2 million.

New Accounting Standards Adopted in 2018

Revenue From Contracts With Customers

Effective January 1, 2018, our Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance affects any contracts with customers to transfer goods or services or for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts are not in scope of the new guidance). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Our Company generates an insignificant amount of fee income that is within the scope of this guidance and was not materially impacted by the adoption of this guidance. The adoption of this guidance did not have a material impact on our results of operations, financial condition or liquidity.

Classification and Measurement of Financial Instruments

Effective January 1, 2018, our Company adopted ASU 2016-01 “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This guidance requires equity investments (except those accounted for under the equity method of accounting, investments that are consolidated or those that meet a practicability exception) to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments without readily determinable values by requiring a qualitative assessment to identify impairment, eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost, requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liabilities in accordance with the fair value option, requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and clarifies that the reporting organization should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the organization’s other deferred tax assets.

As of January 1, 2018, the adoption of this guidance resulted in a $7.7 million net after-tax increase to Retained Earnings with a corresponding decrease to Accumulated Other Comprehensive Income (Loss), resulting in no change to our Total Stockholders’ Equity. This adjustment reflects the cumulative effect adjustment to reclassify Net Unrealized Gain on Investments in Accumulated Other Comprehensive Income (Loss) for available-for-sale Equity Securities to Retained Earnings upon adoption. Upon the adoption of this guidance, Equity Securities have been measured at fair value with changes in fair value recognized in Net Income through Net Unrealized Gains (Losses) on Equity Securities. The other aspects of this guidance only impacted disclosure or did not apply to our Company and therefore did not impact our results of operations, financial condition or liquidity.

Cash Flows

Effective January 1, 2018, our Company adopted ASU 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments” which addresses diversity in practice in how eight specific cash receipts and cash payments should be presented and classified on the statement of cash flows. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Effective January 1, 2018, our Company adopted ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” which addresses diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. To assist in meeting the requirements of this guidance to provide a reconciliation from the Statement of Cash Flows to the Balance Sheet, upon adoption of this guidance our Company added new accounts titled “Cash and Cash Equivalents” and “Restricted Cash and Cash Equivalents” and reclassified amounts previously held in Short-Term Investments to these accounts for all periods presented. This resulted in the reclassification of $71.3 million of restricted and unrestricted cash and cash equivalent balances as of December 31, 2017. This guidance was adopted on a retrospective basis. Prior to the adoption of this guidance, restricted and unrestricted cash and cash equivalent balances included in the Short-Term Investments account had been presented as a cash flow provided by (used in) investing activities. Consequently, the Statement of Cash Flows for the nine months ended September 30, 2017 includes a revision to decrease “Net Cash Used in Investing Activities” by $76.8 million.

Income Taxes

Effective January 1, 2018, our Company adopted ASU 2016-16, “Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory” that requires companies to account for the income tax effects of intercompany transfers of assets other than inventory when the transfer occurs. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Definition of a Business

Effective January 1, 2018, our Company adopted ASU 2017-01, “Clarifying the Definition of a Business” that provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be applied to transactions prospectively. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Tax Reform Reclassification from Other Comprehensive Income

Effective January 1, 2018, our Company early adopted ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” that permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. The total impact of the remeasurement and other adjustments was reflected in 2017 income from continuing operations, regardless of where deferred taxes were originally recorded. As of January 1, 2018, the adoption of this guidance resulted in a one-time reclassification of $2.8 million, decreasing Retained Earnings and increasing Accumulated Other Comprehensive Income (Loss) primarily from the remeasurement of deferred tax assets and liabilities associated with unrealized gains and losses on investments and currency translation adjustments using the 21% corporate tax rate.

Recently Issued Accounting Standards Not Yet Adopted

Fair Value Measurement Disclosure

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The guidance eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels of the fair value hierarchy, and the valuation processes for Level 3 fair value measurements. The guidance adds the requirement to disclose changes in unrealized gains and losses included in other comprehensive income for the period and to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance modifies disclosures around the use of the practical expedient to measure the fair value of certain investments at their net asset values and modifies the requirement to disclose information as of the reporting date about the measurement uncertainty of Level 3 fair value measurement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for the entire standard or only the provisions that eliminate or modify requirements. This guidance will be adopted on a prospective and retrospective basis, where applicable and as required. As this new guidance is disclosure-related only, adoption will not impact our results of operations, financial condition or liquidity.

Implementation Costs in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which requires companies to follow the internal-use software guidance in ASC 350-40 (Intangibles - Goodwill and Other - Internal-Use Software) to determine which implementation costs to capitalize as an asset and which costs to expense. Capitalized implementation costs will be amortized over the term of the service arrangement, beginning when the service arrangement or a component of the arrangement is ready for its intended use. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. This guidance will be applied prospectively. The adoption of this guidance is not expected to materially impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of changes related to the adoption of ASU 2016-01 and ASU 2016-18 impacting the following accounting policies:

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash includes cash on hand and demand deposits with banks. Cash Equivalents include highly liquid investments with original maturities of three months or less including money-market funds. Restricted Cash and Cash Equivalents primarily relates to funds that are held to support regulatory and contractual obligations.

Investments

Fixed Maturities held by our Company were carried at fair value and classified as available-for-sale. Available-for-sale securities are debt securities not classified as either held-to-maturity securities or trading securities and are reported at fair value, with unrealized gains and losses excluded from earnings and reported in Accumulated Other Comprehensive Income (“AOCI”) as a separate component of Stockholders’ Equity. Fixed Maturities include bonds, mortgage-backed and asset-backed securities, and redeemable preferred stocks.

Upon adoption of ASU 2016-01 on January 1, 2018, Equity Securities held by our Company were carried at fair value with any changes in fair value recognized in Net Income through the Net Unrealized Gains (Losses) on Equity Securities account. Prior to the adoption of ASU 2016-01, Equity Securities were carried at fair value and classified as available-for-sale. For our policy on Equity Securities classified as available-for-sale, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017. Equity Securities consist of common stock, exchange traded funds, mutual funds and preferred stock.

Other Invested Assets consist of investments our Company made in certain strategic companies which are accounted for using the equity method of accounting and overseas deposits which are carried at fair value.

For our investments applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our Company’s proportionate share of the net income or loss of the companies. Changes in the carrying value of such investments are recorded in Other Income. In applying the equity method, we use the most recently available financial information provided by the companies which is generally three months prior to the end of the reporting period.

Overseas deposits include private funds held by the Syndicate and invested according to local regulatory requirements. The compositions of the overseas deposits vary and the deposits are based on the portfolio level reporting that is provided by Lloyd’s. The fair values of these overseas deposits were measured using the net asset value practical expedient and therefore have not been categorized within the fair value hierarchy. Changes in the fair value of the overseas deposits are recorded in Net Investment Income.

Short-Term Investments are carried at fair value. Short-Term Investments have maturities greater than three months but less than one year from the purchase date.

All prices for our Fixed Maturities, Equity Securities and Short-Term Investments are classified as Level 1, Level 2 or Level 3 under the fair value hierarchy, as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”).

Premiums and discounts on Fixed Maturities are amortized into interest income over the life of the security using the interest method. For Mortgage-Backed and Asset-Backed Securities, anticipated prepayments and expected maturities are utilized in applying the interest rate method. An effective yield is calculated based on projected principal cash flows at the time of original purchase. The effective yield is used to amortize the purchase price of the security over the security’s expected life. Book values are adjusted to reflect the amortization of premium or accretion of discount on a monthly basis. The projected principal cash flows are based on certain prepayment assumptions, which are generated using a prepayment model. The prepayment model uses a number of factors to estimate prepayment activity including the current levels of interest rates (refinancing incentive), time of year (seasonality), economic activity (including housing turnover) and term and age of the underlying collateral (burnout, seasoning). Prepayment assumptions associated with the Mortgage-Backed and Asset-Backed Securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective adjustment method, whereby the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The investment in such securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the security. Such adjustments, if any, are included in Net Investment Income for the current period.

Realized Gains and Losses on sales of investments are recognized when the related trades are executed and are determined on the basis of the specific identification method.

Impairment of Invested Assets

Management regularly reviews our Fixed Maturities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of securities.

Our Company reviews the magnitude of a security’s unrealized loss compared to its cost/amortized cost and the length of time that the security has been impaired to determine if an unrealized loss is other-than-temporary. If warranted as a result of conditions relating to a particular security, our Company will also review securities with declines in fair value resulting from a headline news event involving the issuer, a headline news event involving the asset class, the advice of our external asset managers, or economic events that may impact the issuer to determine if an unrealized loss is other-than-temporary. The depth of analysis performed is dependent upon the nature and magnitude of the indicators of other-than-temporary impairment present in regards to each impaired security.

Our Company assesses the underlying fundamentals of each issuer to determine if there is a change in the amount or timing of expected cash flows. Management compares the amortized cost basis to the present value of the revised cash flows using the historical book yield to determine the credit loss portion of impairment which is recognized in earnings. All non-credit losses where we have the intent and ability to hold the security until recovery are recognized as changes in Other than Temporary Impairment (“OTTI”) losses within AOCI.

Specifically for structured Fixed Maturities, our Company analyzes projections provided by our investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break-even default rate is also calculated. A comparison of the break-even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. For securities in which a tranche loss is present and the net present value of loss adjusted cash flows is less than book value, credit impairment is recognized in earnings. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating. The significant inputs used to measure the amount of credit loss recognized in earnings are actual delinquency rates, default probability, severity and prepayment assumptions.

Projected losses are a function of both loss severity and probability of default, which differ based on property type, vintage and the stress of the collateral.

For our policy on evaluating Equity Securities for impairment prior to the adoption of ASU 2016-01 on January 1, 2018, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017.

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Merger And Business Combinations

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Merger And Business Combinations

NOTE 2. MERGER AND BUSINESS COMBINATIONS

The Hartford

On August 22, 2018, our Company entered into the Merger Agreement with The Hartford, where subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford. Pursuant to the Merger Agreement, at the effective time of the Merger, holders of the Company’s common shares will be entitled to receive consideration of $70.00 in cash per common share (the “Merger Consideration”). The Merger is expected to close in the first half of 2019, subject to the receipt of regulatory approvals and other customary closing conditions.

The Merger Agreement contains various covenants of our Company and The Hartford. These covenants include interim operating covenants that, subject to certain exceptions, (i) require the Company to (1) conduct its business in all material respects in the ordinary course of business consistent with past practice, (2) use reasonable best efforts to preserve substantially intact, consistent with past practice, the Company’s business organization and (3) preserve, consistent with past practice, existing relations and goodwill with customers, producers, reinsurance providers, governmental authorities and other persons with whom the Company or its subsidiaries have significant business relationships, and (ii) restrict the Company’s ability to take certain actions prior to the effective time of the Merger without The Hartford’s consent (such consent, in certain cases, not to be unreasonably withheld, conditioned or delayed), which include, subject to certain exceptions, issuing additional common shares, incurring additional indebtedness, selling or purchasing material assets, making unbudgeted capital expenditures, making loans or investments (or disposing of investments) not permitted by the Company’s investment guidelines, increasing compensation other than in ordinary course, making material changes to accounting, underwriting, or reserving practices, making material tax elections, settling material litigation, or entering into, modifying or terminating material contracts.

BDM and ASCO

During the second quarter of 2018, our Company established a wholly owned subsidiary, Navigators Holdings (Europe) NV, which on June 7, 2018 (the “acquisition date”), acquired a 100% ownership interest in BDM, ASCO, and a wholly-owned subsidiary of ASCO, Canal Re S.A., a reinsurance company licensed under the laws of the Grand Duchy of Luxembourg (“Canal Re”). The acquisition of all three of these entities will be referred to as the “Acquisition” and the group of companies will be referred to as the Navigators Insurance Company Europe Group (the “NICE Group”). The Acquisition was undertaken as part of our Company’s strategy of expanding to more brokers and insureds across Europe and reinforces our Company’s presence in the European Union’s single market. We anticipate that this will enable our Company to better serve its European clients after Brexit, and will also provide an opportunity to reach a wider European audience.

Our Company paid a purchase price of EUR 35.0 million in cash at the acquisition date (which was approximately $40.5 million based on the exchange rate as of the acquisition date). Additionally, our Company will be reimbursed up to EUR 5.0 million (which is approximately $5.8 million based on the exchange rate as of the acquisition date) in the event of adverse development of claims incurred prior to December 31, 2016 as measured on December 31, 2019. This reimbursement was valued at $nil as of the acquisition date and September 30, 2018.

The purchase price was allocated to the assets acquired and liabilities assumed of the NICE Group, based on estimated fair values as of the acquisition date and our Company recognized goodwill of $12.7 million.

Our Company identified finite lived intangible assets of $6.5 million, including customer relationships, the value of business acquired (“VOBA”), broker networks, and a trade name. These finite lived intangible assets will be amortized over a weighted average period of 9 years.

Our Company identified indefinite lived intangible assets of $2.5 million, related to ASCO’s European licenses.

The fair value of the assets acquired and liabilities assumed and the allocation of the purchase price on the acquisition date are summarized in the table below:

amounts in thousands
Consideration paid	$	40,492
Assets
Investments		45,182
Cash and Cash Equivalents		18,109
Prepaid Reinsurance Premiums		2,701
Reinsurance Recoverables on Paid Losses		1,311
Reinsurance Recoverables on Unpaid Losses and LAE		15,769
Other Assets		19,943
Fair Value of Identifiable Intangible Assets		9,000
Total Assets Acquired	$	112,015
Liabilities
Reserves for Losses and LAE		31,928
Unearned Premiums		11,139
Deferred Income Tax		8,947
Accounts Payable and Other Liabilities		32,212
Total Liabilities Assumed	$	84,226
Goodwill	$	12,703

Significant Fair Value Adjustments were as follows:

• Fair Value of Finite and Indefinite-Lived Intangibles – To establish the fair value of identifiable intangible assets related to customer relationships, licenses, value of business acquired, broker networks, and trade name.

• Fair Value of Property – To adjust the carrying value of real estate property to reflect fair value.

• Fair Value of Software – To establish the fair value of internal use software systems.

• Deferred Income Tax – To reflect the deferred tax impact on the fair value adjustments.

• Goodwill – To establish the fair value of goodwill related to the Acquisition.

During the three months ended September 30, 2018, as part of our business combination accounting within the measurement period, the Company recorded an adjustment to the fair value of the customer relationships intangible asset. As a result, the Fair Value of Identifiable Intangible Assets decreased by $1.4 million and Goodwill increased by $1.4 million from the amounts initially recorded at June 30, 2018. Refer to Note 6. Goodwill and Intangible Assets for further information.

The business combination accounting is subject to change if additional information that existed as of the balance sheet date, but was not available, later becomes available within the measurement period, which cannot exceed twelve months from the acquisition date. The acquisition date fair values of the assets acquired and liabilities assumed, including Reserves for Losses and LAE, Deferred Income Tax and Identifiable Intangible Assets, as well as the related estimated useful lives, are provisional and may be subject to adjustments, which may impact the amounts recorded for assets acquired and liabilities assumed as well as the goodwill.

Since the acquisition date, total NICE Group Revenues and Net Income (Loss) of $6.6 million and $(0.1) million, respectively, have been included in our Company’s Consolidated Statements of Income (Loss).

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Segment Information

NOTE 3. SEGMENT INFORMATION

We report our results of operations consistent with the manner in which our Chief Operating Decision Maker reviews the business to assess performance through our reporting segments: U.S. Insurance, International Insurance (“Int’l Insurance”), Global Reinsurance (“GlobalRe”) and Corporate. 

We classify our business into three underwriting segments: U.S. Insurance, Int’l Insurance and GlobalRe. Both the U.S. Insurance and Int’l Insurance reporting segments are each comprised of three operating segments: Marine, P&C, and Professional Liability. The underwriting results of the acquired business from the NICE Group are included in the Int’l Insurance reporting segment, with no new operating segments resulting from the acquisition.

We evaluate the performance of each of the underwriting segments based on underwriting results. Underwriting results are measured based on Underwriting Profit or Loss and the related Combined Ratio, which are both measures of underwriting profitability. Underwriting Profit (Loss) is calculated from Net Earned Premiums less the sum of Net Losses and Loss Adjustment Expenses (“LAE”), Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense). The Combined Ratio is derived by dividing the sum of Net Losses and LAE, Commission Expenses, Other Operating Expenses and Other Underwriting Income (Expense) by Net Earned Premiums. A Combined Ratio of less than 100% indicates an Underwriting Profit and greater than 100% indicates an Underwriting Loss. Our underwriting performance is evaluated separately from the rest of our operations.

The performance of our investment portfolios, our liquidity and capital resource needs, our foreign currency exposure and our tax planning strategies are evaluated on a consolidated basis within our Corporate segment. We do not allocate our assets by underwriting segment as we evaluate the underwriting results of these segments separately from the results of our investments portfolio.

Financial data by segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	280,183		$	117,376		$	58,384		$	—		$	455,943
Ceded written premiums		(72,615	)		(29,020	)		(1,896	)		—			(103,531	)
Net written premiums	$	207,568		$	88,356		$	56,488		$	—		$	352,412
Retention Ratio		74.1	%		75.3	%		96.8	%		—			77.3	%
Net Earned Premiums	$	188,504		$	95,226		$	63,308		$	—		$	347,038
Net Losses and LAE		(141,182	)		(60,275	)		(39,443	)		—			(240,900	)
Commission Expenses		(22,247	)		(22,547	)		(13,282	)		77			(57,999	)
Other Operating Expenses		(36,826	)		(24,441	)		(6,317	)		—			(67,584	)
Other Underwriting Income (Expense)		65			945			20			(77	)		953
Underwriting Profit (Loss)	$	(11,686	)	$	(11,092	)	$	4,286		$	—		$	(18,492	)
Net Investment Income											25,651			25,651
Total Net Realized and Unrealized Gains											2,563			2,563
Interest Expense											(3,891	)		(3,891	)
Other Income											771			771
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	(11,686	)	$	(11,092	)	$	4,286		$	22,655		$	4,163
Income Tax Benefit											462			462
Net Income													$	4,625
Losses and LAE Ratio		74.9	%		63.3	%		62.3	%					69.4	%
Commission Expense Ratio		11.8	%		23.7	%		21.0	%					16.7	%
Other Operating Expense Ratio (2)		19.5	%		24.6	%		9.9	%					19.2	%
Combined Ratio		106.2	%		111.6	%		93.2	%					105.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	235,052		$	113,601		$	53,385		$	—		$	402,038
Ceded written premiums		(64,328	)		(38,966	)		(2,728	)		—			(106,022	)
Net written premiums	$	170,724		$	74,635		$	50,657		$	—		$	296,016
Retention Ratio		72.6	%		65.7	%		94.9	%		—			73.6	%
Net Earned Premiums	$	169,150		$	84,407		$	47,798		$	—		$	301,355
Net Losses and LAE		(135,340	)		(81,713	)		(59,118	)		—			(276,171	)
Commission Expenses		(18,286	)		(16,201	)		(11,233	)		211			(45,509	)
Other Operating Expenses		(25,375	)		(16,388	)		(4,010	)		—			(45,773	)
Other Underwriting Income (Expense)		125			—			94			(211	)		8
Underwriting Loss	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	—		$	(66,090	)
Net Investment Income											22,598			22,598
Total Net Realized and Unrealized Gains											4,218			4,218
Interest Expense											(3,862	)		(3,862	)
Other Loss											(1,707	)		(1,707	)
Income (Loss) Before Income Taxes	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	21,247		$	(44,843	)
Income Tax Benefit											16,864			16,864
Net Loss													$	(27,979	)
Losses and LAE Ratio		80.0	%		96.8	%		123.7	%					91.6	%
Commission Expense Ratio		10.8	%		19.2	%		23.5	%					15.1	%
Other Operating Expense Ratio (2)		14.9	%		19.4	%		8.2	%					15.2	%
Combined Ratio		105.7	%		135.4	%		155.4	%					121.9	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	808,589		$	377,771		$	262,043		$	—		$	1,448,403
Ceded written premiums		(215,340	)		(97,790	)		(10,307	)		—			(323,437	)
Net written premiums	$	593,249		$	279,981		$	251,736		$	—		$	1,124,966
Retention Ratio		73.4	%		74.1	%		96.1	%		—			77.7	%
Net Earned Premiums	$	541,163		$	280,507		$	179,010		$	—		$	1,000,680
Net Losses and LAE		(363,489	)		(158,422	)		(101,467	)		—			(623,378	)
Commission Expenses		(63,490	)		(62,166	)		(40,198	)		510			(165,344	)
Other Operating Expenses		(112,264	)		(68,270	)		(18,158	)		—			(198,692	)
Other Underwriting Income (Expense)		234			945			294			(510	)		963
Underwriting Profit (Loss)	$	2,154		$	(7,406	)	$	19,481		$	—		$	14,229
Net Investment Income											73,954			73,954
Total Net Realized and Unrealized Gains											3,667			3,667
Interest Expense											(11,619	)		(11,619	)
Other Income											3,272			3,272
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	2,154		$	(7,406	)	$	19,481		$	66,835		$	81,064
Income Tax Expense											(13,457	)		(13,457	)
Net Income													$	67,607
Losses and LAE Ratio		67.2	%		56.5	%		56.7	%					62.3	%
Commission Expense Ratio		11.7	%		22.2	%		22.5	%					16.5	%
Other Operating Expense Ratio (2)		20.7	%		23.9	%		9.9	%					19.8	%
Combined Ratio		99.6	%		102.6	%		89.1	%					98.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	729,843		$	386,654		$	188,025		$	—		$	1,304,522
Ceded written premiums		(199,672	)		(129,368	)		(9,021	)		—			(338,061	)
Net written premiums	$	530,171		$	257,286		$	179,004		$	—		$	966,461
Retention Ratio		72.6	%		66.5	%		95.2	%		—			74.1	%
Net Earned Premiums	$	500,241		$	250,593		$	130,487		$	—		$	881,321
Net Losses and LAE		(339,436	)		(176,513	)		(106,932	)		—			(622,881	)
Commission Expenses		(59,130	)		(54,435	)		(28,695	)		734			(141,526	)
Other Operating Expenses		(91,987	)		(58,687	)		(14,403	)		—			(165,077	)
Other Underwriting Income (Expense)		335			—			439			(734	)		40
Underwriting Profit (Loss)	$	10,023		$	(39,042	)	$	(19,104	)	$	—		$	(48,123	)
Net Investment Income											66,311			66,311
Total Net Realized and Unrealized Gains											5,868			5,868
Interest Expense											(11,584	)		(11,584	)
Other Loss											(1,082	)		(1,082	)
Income (Loss) Before Income Taxes	$	10,023		$	(39,042	)	$	(19,104	)	$	59,513		$	11,390
Income Tax Benefit											2,243			2,243
Net Income													$	13,633
Losses and LAE Ratio		67.9	%		70.4	%		81.9	%					70.7	%
Commission Expense Ratio		11.8	%		21.7	%		22.0	%					16.1	%
Other Operating Expense Ratio (2)		18.3	%		23.5	%		10.7	%					18.7	%
Combined Ratio		98.0	%		115.6	%		114.6	%					105.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Revenue by operating segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018									Three Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	31,681	$	(14,442	)	$	17,239	$	20,401	$	36,403	$	(18,859	)	$	17,544	$	20,129		(13.0	%)		(23.4	%)		(1.7	%)		1.4	%
P&C		212,911		(52,993	)		159,918		141,650		166,097		(39,952	)		126,145		125,931		28.2	%		32.6	%		26.8	%		12.5	%
ProfessionalLiability		35,591		(5,180	)		30,411		26,453		32,552		(5,517	)		27,035		23,090		9.3	%		(6.1	%)		12.5	%		14.6	%
Total	$	280,183	$	(72,615	)	$	207,568	$	188,504	$	235,052	$	(64,328	)	$	170,724	$	169,150		19.2	%		12.9	%		21.6	%		11.4	%
Int'l Insurance
Marine	$	32,486	$	(4,965	)	$	27,521	$	38,866	$	41,689	$	(9,948	)	$	31,741	$	39,038		(22.1	%)		(50.1	%)		(13.3	%)		(0.4	%)
P&C		41,898		(13,727	)		28,171		29,616		37,415		(19,772	)		17,643		21,775		12.0	%		(30.6	%)		59.7	%		36.0	%
Professional Liability		42,992		(10,328	)		32,664		26,744		34,497		(9,246	)		25,251		23,594		24.6	%		11.7	%		29.4	%		13.3	%
Total	$	117,376	$	(29,020	)	$	88,356	$	95,226	$	113,601	$	(38,966	)	$	74,635	$	84,407		3.3	%		(25.5	%)		18.4	%		12.8	%
GlobalRe	$	58,384	$	(1,896	)	$	56,488	$	63,308	$	53,385	$	(2,728	)	$	50,657	$	47,798		9.4	%		(30.5	%)		11.5	%		32.4	%
Total	$	455,943	$	(103,531	)	$	352,412	$	347,038	$	402,038	$	(106,022	)	$	296,016	$	301,355		13.4	%		(2.3	%)		19.1	%		15.2	%

	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	112,235	$	(48,840	)	$	63,395	$	62,670	$	119,040	$	(55,830	)	$	63,210	$	64,635		(5.7	%)		(12.5	%)		0.3	%		(3.0	%)
P&C		599,088		(152,740	)		446,348		401,870		524,223		(129,297	)		394,926		366,280		14.3	%		18.1	%		13.0	%		9.7	%
ProfessionalLiability		97,266		(13,760	)		83,506		76,623		86,580		(14,545	)		72,035		69,326		12.3	%		(5.4	%)		15.9	%		10.5	%
Total	$	808,589	$	(215,340	)	$	593,249	$	541,163	$	729,843	$	(199,672	)	$	530,171	$	500,241		10.8	%		7.8	%		11.9	%		8.2	%
Int'l Insurance
Marine	$	129,678	$	(24,542	)	$	105,136	$	115,342	$	160,119	$	(33,410	)	$	126,709	$	116,058		(19.0	%)		(26.5	%)		(17.0	%)		(0.6	%)
P&C		122,437		(45,099	)		77,338		75,100		124,446		(69,780	)		54,666		67,292		(1.6	%)		(35.4	%)		41.5	%		11.6	%
ProfessionalLiability		125,656		(28,149	)		97,507		90,065		102,089		(26,178	)		75,911		67,243		23.1	%		7.5	%		28.4	%		33.9	%
Total	$	377,771	$	(97,790	)	$	279,981	$	280,507	$	386,654	$	(129,368	)	$	257,286	$	250,593		(2.3	%)		(24.4	%)		8.8	%		11.9	%
GlobalRe	$	262,043	$	(10,307	)	$	251,736	$	179,010	$	188,025	$	(9,021	)	$	179,004	$	130,487		39.4	%		14.3	%		40.6	%		37.2	%
Total	$	1,448,403	$	(323,437	)	$	1,124,966	$	1,000,680	$	1,304,522	$	(338,061	)	$	966,461	$	881,321		11.0	%		(4.3	%)		16.4	%		13.5	%

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Investments

9 Months Ended

Sep. 30, 2018

Investments Debt And Equity Securities [Abstract]

Investments

NOTE 4.  INVESTMENTS

The following tables set forth our Company’s Available-For-Sale Investments as of September 30, 2018 and December 31, 2017 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	September 30, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	245,285	$	1,031	$	(3,879	)	$	248,133
States, Municipalities and Political Subdivisions		631,514		7,569		(7,534	)		631,479
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		344,016		874		(17,219	)		360,361
Residential Mortgage Obligations		124,191		521		(493	)		124,163
Asset-Backed Securities		540,566		554		(4,033	)		544,045
Commercial Mortgage-Backed Securities		186,251		696		(3,126	)		188,681
Subtotal	$	1,195,024	$	2,645	$	(24,871	)	$	1,217,250
Corporate Exposures (1)		917,650		4,191		(17,514	)		930,973
Total Fixed Maturities	$	2,989,473	$	15,436	$	(53,798	)	$	3,027,835
Short-Term Investments		7,264		—		(4	)		7,268
Total Available-For-Sale Investments	$	2,996,737	$	15,436	$	(53,802	)	$	3,035,103

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	393,563	$	2,081	$	(2,014	)	$	393,496
States, Municipalities and Political Subdivisions		814,632		20,136		(1,423	)		795,919
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		407,619		2,352		(5,414	)		410,681
Residential Mortgage Obligations		54,104		606		(79	)		53,577
Asset-Backed Securities		328,753		2,138		(663	)		327,278
Commercial Mortgage-Backed Securities		160,904		2,354		(1,182	)		159,732
Subtotal	$	951,380	$	7,450	$	(7,338	)	$	951,268
Corporate Exposures (1)		897,479		14,491		(3,737	)		886,725
Total Fixed Maturities	$	3,057,054	$	44,158	$	(14,512	)	$	3,027,408
Equity Securities:
Common Stocks	$	52,439	$	7,423	$	(112	)	$	45,128
Preferred Stocks		183,542		6,071		(1,560	)		179,031
Total Equity Securities	$	235,981	$	13,494	$	(1,672	)	$	224,159
Short-Term Investments		6,480		3		—			6,477
Total Available-For-Sale Investments	$	3,299,515	$	57,655	$	(16,184	)	$	3,258,044

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

The following table sets forth our Company’s Equity Securities at fair value as of September 30, 2018:

	As of September 30, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	190,722	$	15,573	$	(116	)	$	175,265
Preferred Stocks		180,958		1,901		(5,078	)		184,135
Total Equity Securities	$	371,680	$	17,474	$	(5,194	)	$	359,400

Our Company made investments in certain companies, which are reported as Other Invested Assets on the Consolidated Balance Sheet and accounted for using the equity method.  In applying the equity method, these investments were initially recorded at cost and subsequently adjusted based on our Company’s proportionate share of the net income or loss of the investments. Our initial purchase price for these investments was $2.0 million with a current carrying value of $1.8 million at September 30, 2018 and $1.7 million at December 31, 2017, as reflected on our Consolidated Balance Sheet.  

Other Invested Assets also includes overseas deposits with a fair value of $40.7 million at September 30, 2018 and $28.8 million at December 31, 2017.  The overseas deposits consist of investments in private funds which are managed centrally by The Corporation of Lloyds in support of all Lloyd’s market participants. The funds consist of fixed income securities, bank deposits, and cash invested in local markets which are intended to fulfill regulatory deposit requirements in worldwide jurisdictions. Our Company’s ability to withdraw from the funds is restricted by an annual and quarterly funding and release process managed by Lloyd’s in conjunction with Syndicate 1221’s capital requirements in various jurisdictions.

As of September 30, 2018 and December 31, 2017, our Company did not have a concentration of greater than 5% of invested assets in a single non-government backed issuer.

As of September 30, 2018 and December 31, 2017, Fixed Maturities for which Non-Credit OTTI was previously recognized and included in AOCI were in a Net Unrealized Gain position of $0.4 million and $0.5 million, respectively.

The fair value of our Company’s Fixed Maturities investment portfolio may fluctuate significantly in response to various factors such as changes in interest rates, investment quality ratings, foreign exchange rates and credit spreads. Our Company does not have the intent to sell nor is it more likely than not that it will have to sell Fixed Maturities in unrealized loss positions that are not other-than-temporarily impaired before recovery. For structured securities, default probability and severity assumptions differ based on property type, vintage and the stress of the collateral. Our Company does not intend to sell, and it is more likely than not that our Company will not be required to sell, these securities before the recovery of the amortized cost basis. Our Company may realize investment losses to the extent our liquidity needs require the disposition of Fixed Maturity securities in unfavorable interest rate, liquidity or credit spread environments. Significant changes in the factors our Company considers when evaluating investments for impairment losses could result in a significant change in impairment losses reported in the Consolidated Financial Statements.

The contractual maturity dates for Fixed Maturities categorized by the number of years until maturity as of September 30, 2018 are shown in the following table:

	September 30, 2018
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	179,367	$	180,246
Due after one year through five years		715,620		725,231
Due after five years through ten years		345,661		348,557
Due after ten years		553,801		556,551
Mortgage-Backed and Asset-Backed Securities		1,195,024		1,217,250
Total	$	2,989,473	$	3,027,835

Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Prepayment assumptions associated with the Mortgage-Backed and Asset-Backed Securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective accounting method. Due to the periodic repayment of principal, our Mortgage-Backed and Asset-Backed Securities are estimated to have an effective maturity of approximately 5.3 years.

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of September 30, 2018 and December 31, 2017, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	September 30, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	130,366	$	(2,559	)	$	73,266	$	(1,320	)	$	203,632	$	(3,879	)
States, Municipalities and Political Subdivisions		267,333		(4,895	)		58,882		(2,639	)		326,215		(7,534	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		72,698		(2,537	)		242,433		(14,682	)		315,131		(17,219	)
Residential Mortgage Obligations		43,108		(297	)		6,501		(196	)		49,609		(493	)
Asset-Backed Securities		364,764		(3,178	)		38,290		(855	)		403,054		(4,033	)
Commercial Mortgage-Backed Securities		56,209		(706	)		31,868		(2,420	)		88,077		(3,126	)
Subtotal	$	536,779	$	(6,718	)	$	319,092	$	(18,153	)	$	855,871	$	(24,871	)
Corporate Exposures (1)		614,332		(12,034	)		148,254		(5,480	)		762,586		(17,514	)
Total Fixed Maturities	$	1,548,810	$	(26,206	)	$	599,494	$	(27,592	)	$	2,148,304	$	(53,798	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	273,672	$	(1,502	)	$	54,484	$	(512	)	$	328,156	$	(2,014	)
States, Municipalities and Political Subdivisions		74,097		(503	)		45,085		(920	)		119,182		(1,423	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		87,496		(346	)		236,745		(5,068	)		324,241		(5,414	)
Residential Mortgage Obligations		12,418		(62	)		546		(17	)		12,964		(79	)
Asset-Backed Securities		85,877		(468	)		24,733		(195	)		110,610		(663	)
Commercial Mortgage-Backed Securities		20,482		(95	)		22,903		(1,087	)		43,385		(1,182	)
Subtotal	$	206,273	$	(971	)	$	284,927	$	(6,367	)	$	491,200	$	(7,338	)
Corporate Exposures (1)		295,433		(1,690	)		121,410		(2,047	)		416,843		(3,737	)
Total Fixed Maturities	$	849,475	$	(4,666	)	$	505,906	$	(9,846	)	$	1,355,381	$	(14,512	)
Equity Securities:
Common Stocks	$	11,245	$	(81	)	$	1,770	$	(31	)	$	13,015	$	(112	)
Preferred Stocks		50,861		(1,524	)		662		(36	)		51,523		(1,560	)
Total Equity Securities	$	62,106	$	(1,605	)	$	2,432	$	(67	)	$	64,538	$	(1,672	)
Total Fixed Maturities and Equity Securities	$	911,581	$	(6,271	)	$	508,338	$	(9,913	)	$	1,419,919	$	(16,184	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Our Company analyzes impaired securities quarterly to determine if any impairments are other-than-temporary.  The above securities with unrealized losses are deemed to be temporarily impaired based on our evaluation.

As of September 30, 2018, there were 830 Fixed Maturities in an unrealized loss position. As of December 31, 2017, there were 454 Fixed Maturities and 22 Equity Securities  in an unrealized loss position. As of September 30, 2018, the gross unrealized loss for the greater than 12 months category consists primarily of Agency Residential Mortgage-Backed Securities and Corporate Exposures principally due to an increase in interest rates. The gross unrealized loss for the less than 12 months category for the period ended September 30, 2018 consists primarily of Corporate Exposures due to an increase in interest rates.  As of December 31, 2017, the gross unrealized loss for the greater than 12 month category consists primarily of Agency Residential Mortgage-Backed Securities and Corporate Exposures and is mostly due to an increase in interest rates since the time of purchase.  The gross unrealized loss for the less than 12 months category for the period ended December 31, 2017 consists primarily of Corporate Bonds and Preferred Stocks, which are reported in Equity Securities due to an increase in interest rates since time of purchase, as well as Foreign Government Bonds due to an unfavorable exchange rate movement in our Canadian portfolio.

As of September 30, 2018 and December 31, 2017, the largest unrealized loss by a non-government backed issuer in the investment portfolio was $1.4 million and $0.7 million, respectively.

Our Company’s ability to hold securities is supported by sufficient cash flow from our operations and from maturities within our investment portfolio in order to meet our claims payments and other disbursement obligations arising from our underwriting operations without selling such investments.  With respect to securities where the decline in value is determined to be temporary and the security’s value is not written down, a subsequent decision may be made to sell that security and realize a loss.  Subsequent decisions on security sales are made within the context of overall risk monitoring, changing information and market conditions.  

Upon adoption of ASU 2016-01 as of January 1, 2018, changes in the fair value of Equity Securities are recognized through Net Income. Our Company did not have any credit related OTTI losses during the three and nine months ended September 30, 2018. Our Company had two credit related OTTI losses totaling $1.0 million in the equity portfolio during the three months ended September 30, 2017.  Our Company had four credit related OTTI losses totaling $2.1 million in the equity portfolio during the nine months ended September 30, 2017.    

As of September 30, 2018 and 2017, the cumulative amounts related to our Company’s credit loss portion of the OTTI losses on Fixed Maturities was $2.4 million.  There were no changes to the cumulative amounts of our Company’s credit loss portion of OTTI for the three and nine months ended September 30, 2018 and 2017

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities	$	22,733		$	19,491		$	65,504		$	57,019
Equity Securities		3,052			3,774			9,138			11,337
Short-Term Investments, Cash & Cash Equivalents		509			84			1,151			254
Other Invested Assets		159			166			486			408
Total Investment Income	$	26,453		$	23,515		$	76,279		$	69,018
Investment Expenses		(802	)		(917	)		(2,325	)		(2,707	)
Net Investment Income	$	25,651		$	22,598		$	73,954		$	66,311

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities:
Gains	$	331		$	2,589		$	3,678		$	3,401
Losses		(369	)		(900	)		(1,125	)		(3,114	)
Fixed Maturities, Net	$	(38	)	$	1,689		$	2,553		$	287
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	107		$	758		$	189		$	984
Losses		(71	)		(14	)		(266	)		(139	)
Short-Term, Net	$	36		$	744		$	(77	)	$	845
Other Invested Assets:
Gains	$	9		$	9		$	78		$	30
Losses		(50	)		(97	)		(136	)		(232	)
Other Invested Assets, Net	$	(41	)	$	(88	)	$	(58	)	$	(202	)
Equity Securities:
Gains	$	347		$	2,863		$	1,102		$	7,249
Losses		(51	)		(18	)		(310	)		(246	)
Equity Securities, Net	$	296		$	2,845		$	792		$	7,003
Net Realized Gains on Investments Sold	$	253		$	5,190		$	3,210		$	7,933

The following table presents the portion of Net Unrealized Gains (Losses) recognized during the three and nine months ended September 30, 2018, that relates to Equity Securities held as of September 30, 2018:

	Three Months Ended September 30,		Nine Months Ended September 30,
amounts in thousands	2018		2018
Equity Securities:
Total Net Realized and Unrealized Gains recognized during the period	$	2,606	$	1,249
Less: Net Realized Gains on Investments Sold recognized during the period		296		792
Net Unrealized Gains recognized during the period	$	2,310	$	457

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Fair Value Measurement

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurement

NOTE 5. FAIR VALUE MEASUREMENT

The fair value of our financial instruments is determined based on the following fair value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets. Examples are listed equities and fixed income securities traded on an exchange. U.S. Treasury securities are reported as Level 1 and are valued based on unadjusted quoted prices for identical assets in active markets that our Company can access.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Examples are Asset-Backed and Mortgage-Backed Securities that are similar to other Asset-Backed or Mortgage-Backed Securities observed in the market. U.S. Government Agency Securities are reported as Level 2 and are valued using yields and spreads that are observable in active markets.

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. An example would be a private placement with minimal liquidity.

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of September 30, 2018 and December 31, 2017:

	September 30, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	45,093	$	200,192	$	—	$	245,285
States, Municipalities and Political Subdivisions		—		631,514		—		631,514
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		344,016		—		344,016
Residential Mortgage Obligations		—		124,191		—		124,191
Asset-Backed Securities		—		540,566		—		540,566
Commercial Mortgage-Backed Securities		—		186,251		—		186,251
Subtotal	$	—	$	1,195,024	$	—	$	1,195,024
Corporate Exposures		—		917,650		—		917,650
Total Fixed Maturities	$	45,093	$	2,944,380	$	—	$	2,989,473
Equity Securities:
Common Stocks	$	40,416	$	150,306	$	—	$	190,722
Preferred Stocks		—		180,958		—		180,958
Total Equity Securities	$	40,416	$	331,264	$	—	$	371,680
Short-Term Investments		—		7,264		—		7,264
Total Assets Measured at Fair Value	$	85,509	$	3,282,908	$	—	$	3,368,417
Senior Notes	$	—	$	274,348	$	—	$	274,348
Total Liabilities Measured at Fair Value	$	—	$	274,348	$	—	$	274,348

	December 31, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	178,251	$	215,312	$	—	$	393,563
States, Municipalities and Political Subdivisions		—		814,632		—		814,632
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		407,619		—		407,619
Residential Mortgage Obligations		—		54,104		—		54,104
Asset-Backed Securities		—		328,753		—		328,753
Commercial Mortgage-Backed Securities		—		160,904		—		160,904
Subtotal	$	—	$	951,380	$	—	$	951,380
Corporate Exposures		—		897,479		—		897,479
Total Fixed Maturities	$	178,251	$	2,878,803	$	—	$	3,057,054
Equity Securities:
Common Stocks	$	52,439	$	—	$	—	$	52,439
Preferred Stocks		—		183,542		—		183,542
Total Equity Securities	$	52,439	$	183,542	$	—	$	235,981
Short-Term Investments		6,480		—		—		6,480
Total Assets Measured at Fair Value	$	237,170	$	3,062,345	$	—	$	3,299,515
Senior Notes	$	—	$	277,951	$	—	$	277,951
Total Liabilities Measured at Fair Value	$	—	$	277,951	$	—	$	277,951

Other financial assets and liabilities including Cash, Premium Receivable, Reinsurance Recoverable and Reinsurance Balances Payable are carried at cost, which approximates fair value. Our Company has overseas deposits in Other Invested Assets of $40.7 million and $28.8 million at September 30, 2018 and December 2017, respectively, which is measured at fair value using the net asset value (“NAV”) as a practical expedient.

Our Company did not have any transfers between Level 1 and Level 2 classifications for the three and nine months ended September 30, 2018 and 2017. 

As of September 30, 2018, our Company did not have any Level 3 assets.

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table shows an analysis of goodwill by reporting segment:

	Nine Months Ended September 30, 2018
	U.S.		Int'l
amounts in thousands	Insurance		Insurance		Total
Goodwill at Beginning of the Period	$	1,978	$	2,482	$	4,460
Goodwill Acquired		—		12,703		12,703
Foreign Currency Translation Adjustment		—		81		81
Goodwill at End of the Period	$	1,978	$	15,266	$	17,244

The Goodwill Acquired primarily relates to expected synergies from combining operations of the NICE Group and is not expected to be deductible for tax purposes. Included in the Goodwill Acquired is an increase of $1.4 million from the amount initially recorded at June 30, 2018, as a result of a measurement period adjustment to the fair value of the ASCO customer relationships intangible asset. See the “Intangibles” section below for further information.

Intangibles

The gross carrying value and weighted average amortization period of intangible assets by type at September 30, 2018 was as follows:

	As of September 30, 2018
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,383	$	(85	)	10 years
ASCO VOBA		1,711		(107	)	4 years
BDM Broker Networks		1,012		(17	)	15 years
BDM Trade Name		498		(124	)	1 year
Total	$	6,604	$	(333	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,489	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,625

During the three months ended September 30, 2018, as part of our business combination accounting within the measurement period, the Company recorded an adjustment to the fair value of the ASCO customer relationships intangible asset. The adjustment resulted from additional analysis of the duration of customer contracts, which decreased the useful life of the intangible asset from 15 to 10 years. As a result, the fair value of the intangible asset decreased by $1.4 million from the amount initially recorded at June 30, 2018.

The amortization of the Finite-Lived Assets was recognized within Other Operating Expenses on our Consolidated Statements of Income (Loss) with the exception of the amortization of the VOBA asset, which was recognized within Commission Expenses.

The estimated remaining amortization expense for the finite-lived intangible assets is as follows:

amounts in thousands	Total
2018	$	333
2019		1,082
2020		834
2021		834
2022		620
2023 and thereafter		2,568
Total	$	6,271

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Loss Reserves

9 Months Ended

Sep. 30, 2018

Insurance [Abstract]

Loss Reserves

NOTE 7. LOSS RESERVES

We establish reserves for the estimated unpaid ultimate liability for losses and LAE under the terms of our policies and agreements. The determination of Reserves for Losses and LAE is partially dependent upon the receipt of information from agents and brokers. Reserves include estimates for both claims that have been reported and for those that have been incurred but not reported (“IBNR”), and include estimates of expenses associated with processing and settling these claims. Reserves are recorded in Reserves for Losses and LAE in the Consolidated Balance Sheets. Our estimates and judgements may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed, or as laws change. Frequency/severity analyses are also performed for certain books of business. To the extent that reserves are found deficient or redundant, a strengthening or release is recognized as a charge or credit to earnings.

The following table summarizes our Company’s Reserves for Losses and LAE activity for the nine months ended September 30, 2018 and 2017:

	For the Nine Months Ended September 30,
amounts in thousands	2018			2017
Net Reserves for Losses and LAE at Beginning of Year	$	1,705,380		$	1,510,451
Acquired Net Reserves		16,159			—
Provision for Losses and LAE for Claims Occurring in the Current Year		603,564			578,272
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		19,814			44,609
Incurred Losses and LAE	$	623,378		$	622,881
Losses and LAE Paid for Claims Occurring During:
Current Year		(65,445	)		(75,707	)
Prior Years		(420,870	)		(358,684	)
Losses and LAE Payments	$	(486,315	)	$	(434,391	)
Foreign Currency Adjustment		(4,982	)		11,688
Net Reserves for Losses and LAE at End of Period		1,853,620			1,710,629
Reinsurance Recoverables on Unpaid Losses and LAE		780,215			847,505
Gross Reserves for Losses and LAE at End of Period	$	2,633,835		$	2,558,134

For the nine months ended September 30, 2018, our Incurred Losses and LAE increased $0.5 million as compared to the same period in 2017, with an increase due to growth in Net Earned Premium over the prior year largely offset by a higher level of catastrophe losses and prior year reserve strengthening in 2017.

The nine months ended September 30, 2018 recognized total net catastrophe losses of $12.6 million, which included losses from Typhoon Jebi and Hurricane Florence. This compared to total net catastrophe losses of $77.9 million for the same period in 2017, which included losses from Hurricanes Harvey, Irma, and Maria (the “Hurricane events”) and the Puebla, Mexico Earthquake.

The nine months ended September 30, 2018 recognized $19.8 million of net prior AY reserve strengthening primarily driven by our Primary Casualty division within the U.S. Insurance P&C operating segment due to significant loss development within our Premises product. This compares to $44.6 million of net prior accident year reserve strengthening for the same period in 2017 primarily related to loss development in our Int’l Insurance reporting segment, large loss activity in our U.S. D&O division, strengthening of our U.S. casualty business and the settlement of a large claim in our GlobalRe reporting segment.

For the nine months ended September 30, 2018, our Losses and LAE Payments increased $51.9 million as compared to the same period in 2017, primarily due to increased claim payments associated with growth in our business and the catastrophe activity occurring in the third quarter of 2017.

Our September 30, 2018 Net Reserves for Losses and LAE includes estimated amounts for numerous catastrophe events. We caution that the magnitude and complexity of losses arising from these events inherently increases the level of uncertainty and therefore the level of management judgment involved in arriving at our estimated Net Reserves for Losses and LAE. As a result, our actual losses for these events may ultimately differ materially from our current estimates.

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Ceded Reinsurance

9 Months Ended

Sep. 30, 2018

Insurance [Abstract]

Ceded Reinsurance

NOTE 8. CEDED REINSURANCE

As of September 30, 2018, the credit quality distribution of our Company’s reinsurance recoverable of $1.1 billion for ceded paid losses, ceded unpaid losses and LAE, and ceded unearned premiums based on insurer financial strength ratings from A.M. Best or S&P was not significantly different from the credit quality distribution as of December 31, 2017.

Our allowance for uncollectible reinsurance was $12.6 million as of September 30, 2018 and December 31, 2017.

As of September 30, 2018, the list of our 10 largest reinsurers measured by the amount of reinsurance recoverable for ceded losses and LAE and ceded unearned premium, together with the reinsurance recoverable and collateral, was similar to the list as of December 31, 2017.

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Debt

9 Months Ended

Sep. 30, 2018

Debt Disclosure [Abstract]

Debt

NOTE 9. DEBT

During the first quarter of 2018, the Company reclassified certain overseas deposits from Short-Term Investments to Other Invested Assets. Refer to Note 1. Organization & Summary of Significant Accounting Policies. Although the nature of the investments did not change, this reclassification caused the Company to exceed a covenant of our Club Facility that sets a limitation on other investments as a percentage of total investments. During the second quarter of 2018, our Company received a waiver of compliance with respect to this covenant, which was subsequently amended to increase the percentage of other investments permitted. As of September 30, 2018, our Company was in compliance with all covenants for our Club Facility, Senior Notes, Australian Facility and Bilateral Facility.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 10. COMMITMENTS AND CONTINGENCIES

In 2013, the State of Connecticut (“the State”) awarded our Company up to $11.5 million ($8.0 million in loans and $3.5 million in grants) to move our corporate headquarters to Stamford, Connecticut. The loan is non-interest bearing, has a term of 10 years and is subject to forgiveness based on our compliance with certain conditions set forth in the agreement with the State. The amount of the loan to be received is dependent on our Company reaching certain milestones for creation of new jobs over a five-year period, and the funds are to be used to offset certain equipment purchases, facility costs, training of employees and other eligible project-related costs. As of September 30, 2018, our Company has received all of the award and earned a loan forgiveness credit of $7.0 million with the State. Our Company is recognizing the amount of loan and grants received over the period in which offsetting expenses are recognized. Our Company recognized $0.3 million and $1.0 million of the incentive for the three and nine months ended September 30, 2018, respectively. As of September 30, 2018 and December 31, 2017, our Company has deferred revenue of $5.0 million and $4.4 million, respectively, which is included in Other Liabilities on the Consolidated Balance Sheets.

On February 16, 2017, our Company entered into a guarantee, pursuant to which it guaranteed all of the liabilities and obligations of NIIC (the “Guarantee”). The Guarantee will remain effective until all of such liabilities and obligations are discharged, and in the event that our Company does not meet its obligations under the Guarantee, any person who is covered by an insurance policy, certificate of coverage or reinsurance contract issued by NIIC will be a third party beneficiary under the Guarantee. Our Company’s obligations under the Guarantee may be terminated by providing twelve months prior written notice to NIIC. However the obligations of our Company under the Guarantee terminate immediately in the event that (i) the majority of the outstanding voting capital stock in NIIC is sold to any non-affiliated entity; (ii) A.M. Best has confirmed that NIIC will receive the same financial strength rating as NIC or NSIC, without the benefit of the Guarantee; or (iii) NIIC withdraws its request to be rated by A.M. Best, provided that NIIC has not been downgraded within the prior twelve months.

On August 22, 2018, our Company entered into a Merger Agreement with The Hartford. In accordance with the terms of the Merger Agreement, our Company would be obligated to pay The Hartford a $68.25 million termination fee if the Merger Agreement is terminated for certain reasons outlined in the Merger Agreement. Our Company is obligated to reimburse the Hartford for its transaction-related expenses, up to $7.0 million, if the Merger Agreement is terminated due to our Company’s stockholders failing to adopt the Merger Agreement, provided that any such transaction-related expenses reimbursed by our Company would be credited toward any termination fee.

In the ordinary course of conducting business, our Parent Company’s subsidiaries are involved in various legal proceedings. Most of these proceedings consist of claims litigation involving our Parent Company’s subsidiaries as either: (a) liability insurers defending or providing indemnity for third party claims brought against insureds or (b) insurers defending first party coverage claims brought against them. In general, our Company believes we have valid defenses to these cases. Our Company’s management believes that the ultimate liability, if any, with respect to these legal proceedings, after consideration of provisions made for potential losses and cost of defense, will not be material to our Company’s Consolidated Balance Sheets, Statements of Income and Statements of Cash Flows.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

NOTE 11. STOCK-BASED COMPENSATION

Stock-based compensation granted under our Company’s stock plans is expensed in tranches over the vesting period. Non-performance based grants generally vest equally over a three or four-year period. Performance units generally cliff vest three years after they are granted. Each performance unit and restricted stock unit represents a contingent right to receive one share of Common Stock as of the vesting date. Such Common Stock may be subject to forfeiture for the payment of any required tax withholding.

The activity related to our Company's restricted stock unit awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		159,539		$	41.60
Granted		24,593		$	50.01
Vested (2)		(76,168	)	$	35.23
Forfeited		(7,000	)	$	38.00
Nonvested at the end of the period		100,964		$	48.70

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 29,954 were withheld for tax payments at a weighted average vest date fair value of $56.83.

The activity related to our Company's performance-based equity awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		966,361		$	43.39
Granted		247,554		$	54.15
Performance Adjustment		(59,833	)	$	37.25
Vested (2)		(274,299	)	$	37.25
Forfeited		(34,250	)	$	46.00
Nonvested at the end of the period		845,533		$	48.86

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 117,005 were withheld for tax payments at a weighted average vest date fair value of $55.65.

Awards that remain outstanding at the time of the Merger will be treated as follows in accordance with the Merger Agreement:

Each performance unit award granted prior to January 1, 2017, and each tranche of a restricted stock unit award that vests prior to January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2019 Vesting Company Awards”) will be converted into the right to receive an amount in cash equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance unit awards, the target number of shares, in each case subject to the 2019 Vesting Company Award immediately prior to the Merger.

Each performance unit award granted on or after January 1, 2017 and prior to January 1, 2019, and each tranche of a restricted stock unit award that vests on or after January 1, 2020, that was granted prior to January 1, 2019, and that is payable in shares (together, the “2020 Vesting Company Awards”) will be canceled and converted into the right to receive a cash payment equal to the product of (x) the Merger Consideration multiplied by (y) the number of restricted stock units in the applicable tranche or, in the case of performance units, the target number of shares, in each case subject to the 2020 Vesting Company Award immediately prior to the Merger; provided that the right to a cash payment with respect to a 2020 Vesting Company Award shall be subject to the same vesting and payment schedules as the 2020 Vesting Company Award it replaces (other than performance-based vesting conditions).

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Stockholders Equity

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Stockholders' Equity

NOTE 12. STOCKHOLDERS’ EQUITY

On August 9, 2018 our Board of Directors declared a cash dividend of $0.07 per share that was paid on September 21, 2018. During the three months ended September 30, 2017, a dividend of $0.06 per share was declared and paid.

During the nine months ended September 30, 2018 and 2017, dividends of $0.21 and $0.165 per share were declared and paid, respectively.

The declaration and amount of any future dividend will be at the discretion of the Board of Directors, and will depend upon many factors, including financial condition, results of operations, business requirements, regulatory and legal constraints and other factors the Board of Directors deems relevant.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

NOTE 13. SUBSEQUENT EVENTS

On November 7, 2018, we amended and restated the Club Facility (the “Restated Club Facility”). The Restated Club Facility has two tranches with one tranche extending a $165.0 million commitment and the other tranche extending a £60.0 million commitment. The Restated Club Facility will be used to support the Company’s capacity at its Lloyd’s of London operations for the 2019 and 2020 underwriting years of accounts, as well as prior open years.

On November 7, 2018, our Board of Directors declared a cash dividend on our Company’s Common Stock of $0.07 per share, payable on December 21, 2018 to stockholders of record on November 30, 2018.

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Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Organization

Organization

We are an international insurance company with a long-standing area of specialization in Marine insurance. We also offer Property and Casualty (“P&C”) insurance, primarily general liability coverage and umbrella & excess liability coverage to commercial enterprises through our Primary and Excess Casualty divisions. We have also developed niches in Professional Liability insurance, through our Directors & Officers (“D&O”) and Errors & Omissions (“E&O”) divisions, as well as assumed reinsurance products.

We operate through various wholly-owned insurance and service companies. Our subsidiaries domiciled in the United States (“U.S.”) include two insurance companies, Navigators Insurance Company (“NIC”) and Navigators Specialty Insurance Company (“NSIC”), as well as our U.S. underwriting agency, Navigators Management Company (“NMC”). NIC includes a branch in the United Kingdom (“U.K”). We also have operations domiciled in the U.K., Hong Kong and Europe. Navigators International Insurance Company Ltd. (“NIIC”), Navigators Management (U.K.) Ltd. (“NMUK”) and Navigators Underwriting Ltd. (“NUL”) are domiciled in the U.K. and NUL includes European branches. Navigators Underwriting Agency Ltd. (“NUAL”), a Lloyd’s of London (“Lloyd’s”) underwriting agency, manages and provides the capital, through Navigators Corporate Underwriters Ltd. (“NCUL”), for our Lloyd’s Syndicate 1221 (the “Syndicate”), and is also domiciled in the U.K. We control 100% of the Syndicate’s stamp capacity.

On June 7, 2018, we acquired 100% ownership interest in Bracht, Deckers & Mackelbert NV, an insurance underwriting agency organized under the laws of Belgium (“BDM”) and Assurances Continentales – Continentale Verzekeringen NV, an insurance company licensed under the laws of Belgium (“ASCO”). The acquisition was accounted for in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations.” Refer to Note 2. Merger and Business Combinations and Note 6. Goodwill and Intangible Assets for further information regarding the acquisition.

On August 22, 2018, our Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Hartford Financial Services Group, Inc. (“The Hartford”). The Merger Agreement provides that, subject to the terms and conditions set forth therein, our Company will merge with an existing subsidiary of The Hartford, with our Company surviving as a wholly owned subsidiary of The Hartford (the “Merger”). Refer to Note 2. Merger and Business Combinations for further information.

Basis of Presentation

Basis of Presentation

The Consolidated Balance Sheet at September 30, 2018 and the Consolidated Statements of Income (Loss), Comprehensive Income (Loss), Stockholders’ Equity and Cash Flows for the periods ended September 30, 2018 and 2017 are unaudited. The Balance Sheet at December 31, 2017 is derived from our audited Financial Statements. The accompanying Interim Consolidated Financial Statements reflect all adjustments, which, in the opinion of management, are necessary to fairly present the results of our Company for the interim periods presented on the basis of U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. The preparation of these Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the Financial Statements and the reported revenues and expenses during the reporting periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The Interim Consolidated Financial Statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Certain amounts for the prior period have been reclassified to conform with the current period presentation.

Income Taxes

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contained several key tax provisions that affected us, including a one-time mandatory Deemed Repatriation Transition Tax (the “Transition Tax”) on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We were required to recognize the effect of the tax law changes in the period of enactment, such as determining the Transition Tax, re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Act, which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. During the fourth quarter of 2017, we made a reasonable estimate of the effects on our deferred tax balances and recognized provisional tax amounts of $2.6 million related to the Transition Tax. As of September 30, 2018, we have finalized the calculation of the Transition Tax which resulted in a decrease in the provisional amount of $1.3 million and has been reflected as a discrete item in our Effective Tax Rate calculation. We will continue to evaluate the estimated effects on our deferred tax balances during the measurement period.

The interim income tax provision has been computed based on our estimated annual Effective Tax Rate, which represents our best estimate on a year to date basis for the interim period. As a result, the tax provision for a given quarter equals the difference between the provision recorded cumulatively year to date less the amount recorded cumulatively as of the end of the prior interim period. Our Effective Tax Rate for the quarter differs from the federal tax rate of 21% primarily due to tax-exempt investment income, the dividends received deduction, Transition Tax benefit, and an excess tax benefit related to the vesting of stock compensation at fair market value.

Short-Term Investments Reclassifications

Short-Term Investments Reclassifications

Cash and overseas deposits that were misclassified within Short-Term Investments were reclassified representing an immaterial correction. Cash of $20.5 million as of December 31, 2017 was reclassified from Short-Term Investments to Cash and Cash Equivalents. Overseas deposits of $28.8 million as of December 31, 2017 were reclassified from Short-Term Investments to Other Invested Assets. The reclassification of cash within Short-Term Investments to Cash and Cash Equivalents impacted the Statement of Cash Flows for the nine months ended September 30, 2017 by decreasing Net Cash Used in Investing Activities by $9.2 million.

New Accounting Standards

New Accounting Standards Adopted in 2018

Revenue From Contracts With Customers

Effective January 1, 2018, our Company adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This guidance affects any contracts with customers to transfer goods or services or for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts are not in scope of the new guidance). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Our Company generates an insignificant amount of fee income that is within the scope of this guidance and was not materially impacted by the adoption of this guidance. The adoption of this guidance did not have a material impact on our results of operations, financial condition or liquidity.

Classification and Measurement of Financial Instruments

Effective January 1, 2018, our Company adopted ASU 2016-01 “Financial Instruments – Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”. This guidance requires equity investments (except those accounted for under the equity method of accounting, investments that are consolidated or those that meet a practicability exception) to be measured at fair value with changes in fair value recognized in net income, simplifies the impairment assessment of equity investments without readily determinable values by requiring a qualitative assessment to identify impairment, eliminates the requirement to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost, requires the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation in other comprehensive income of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liabilities in accordance with the fair value option, requires the separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and clarifies that the reporting organization should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the organization’s other deferred tax assets.

As of January 1, 2018, the adoption of this guidance resulted in a $7.7 million net after-tax increase to Retained Earnings with a corresponding decrease to Accumulated Other Comprehensive Income (Loss), resulting in no change to our Total Stockholders’ Equity. This adjustment reflects the cumulative effect adjustment to reclassify Net Unrealized Gain on Investments in Accumulated Other Comprehensive Income (Loss) for available-for-sale Equity Securities to Retained Earnings upon adoption. Upon the adoption of this guidance, Equity Securities have been measured at fair value with changes in fair value recognized in Net Income through Net Unrealized Gains (Losses) on Equity Securities. The other aspects of this guidance only impacted disclosure or did not apply to our Company and therefore did not impact our results of operations, financial condition or liquidity.

Cash Flows

Effective January 1, 2018, our Company adopted ASU 2016-15, “Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments” which addresses diversity in practice in how eight specific cash receipts and cash payments should be presented and classified on the statement of cash flows. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Effective January 1, 2018, our Company adopted ASU 2016-18, “Statement of Cash Flows (Topic 230) – Restricted Cash” which addresses diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. This guidance requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Transfers between cash and cash equivalents and restricted cash and restricted cash equivalents will no longer be presented on the statement of cash flows. To assist in meeting the requirements of this guidance to provide a reconciliation from the Statement of Cash Flows to the Balance Sheet, upon adoption of this guidance our Company added new accounts titled “Cash and Cash Equivalents” and “Restricted Cash and Cash Equivalents” and reclassified amounts previously held in Short-Term Investments to these accounts for all periods presented. This resulted in the reclassification of $71.3 million of restricted and unrestricted cash and cash equivalent balances as of December 31, 2017. This guidance was adopted on a retrospective basis. Prior to the adoption of this guidance, restricted and unrestricted cash and cash equivalent balances included in the Short-Term Investments account had been presented as a cash flow provided by (used in) investing activities. Consequently, the Statement of Cash Flows for the nine months ended September 30, 2017 includes a revision to decrease “Net Cash Used in Investing Activities” by $76.8 million.

Income Taxes

Effective January 1, 2018, our Company adopted ASU 2016-16, “Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory” that requires companies to account for the income tax effects of intercompany transfers of assets other than inventory when the transfer occurs. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Definition of a Business

Effective January 1, 2018, our Company adopted ASU 2017-01, “Clarifying the Definition of a Business” that provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be applied to transactions prospectively. The adoption of this guidance did not impact our results of operations, financial condition or liquidity.

Tax Reform Reclassification from Other Comprehensive Income

Effective January 1, 2018, our Company early adopted ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” that permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. The total impact of the remeasurement and other adjustments was reflected in 2017 income from continuing operations, regardless of where deferred taxes were originally recorded. As of January 1, 2018, the adoption of this guidance resulted in a one-time reclassification of $2.8 million, decreasing Retained Earnings and increasing Accumulated Other Comprehensive Income (Loss) primarily from the remeasurement of deferred tax assets and liabilities associated with unrealized gains and losses on investments and currency translation adjustments using the 21% corporate tax rate.

Recently Issued Accounting Standards Not Yet Adopted

Fair Value Measurement Disclosure

In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements. The guidance eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels of the fair value hierarchy, and the valuation processes for Level 3 fair value measurements. The guidance adds the requirement to disclose changes in unrealized gains and losses included in other comprehensive income for the period and to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance modifies disclosures around the use of the practical expedient to measure the fair value of certain investments at their net asset values and modifies the requirement to disclose information as of the reporting date about the measurement uncertainty of Level 3 fair value measurement. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for the entire standard or only the provisions that eliminate or modify requirements. This guidance will be adopted on a prospective and retrospective basis, where applicable and as required. As this new guidance is disclosure-related only, adoption will not impact our results of operations, financial condition or liquidity.

Implementation Costs in a Cloud Computing Arrangement

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which requires companies to follow the internal-use software guidance in ASC 350-40 (Intangibles - Goodwill and Other - Internal-Use Software) to determine which implementation costs to capitalize as an asset and which costs to expense. Capitalized implementation costs will be amortized over the term of the service arrangement, beginning when the service arrangement or a component of the arrangement is ready for its intended use. This guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. This guidance will be applied prospectively. The adoption of this guidance is not expected to materially impact our results of operations, financial condition or liquidity.

Significant Accounting Policies

Significant Accounting Policies

There were no notable changes in our significant accounting policies subsequent to our Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of changes related to the adoption of ASU 2016-01 and ASU 2016-18 impacting the following accounting policies:

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash includes cash on hand and demand deposits with banks. Cash Equivalents include highly liquid investments with original maturities of three months or less including money-market funds. Restricted Cash and Cash Equivalents primarily relates to funds that are held to support regulatory and contractual obligations.

Investments

Investments

Fixed Maturities held by our Company were carried at fair value and classified as available-for-sale. Available-for-sale securities are debt securities not classified as either held-to-maturity securities or trading securities and are reported at fair value, with unrealized gains and losses excluded from earnings and reported in Accumulated Other Comprehensive Income (“AOCI”) as a separate component of Stockholders’ Equity. Fixed Maturities include bonds, mortgage-backed and asset-backed securities, and redeemable preferred stocks.

Upon adoption of ASU 2016-01 on January 1, 2018, Equity Securities held by our Company were carried at fair value with any changes in fair value recognized in Net Income through the Net Unrealized Gains (Losses) on Equity Securities account. Prior to the adoption of ASU 2016-01, Equity Securities were carried at fair value and classified as available-for-sale. For our policy on Equity Securities classified as available-for-sale, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017. Equity Securities consist of common stock, exchange traded funds, mutual funds and preferred stock.

Other Invested Assets consist of investments our Company made in certain strategic companies which are accounted for using the equity method of accounting and overseas deposits which are carried at fair value.

For our investments applying the equity method, these investments are initially recorded at cost and are subsequently adjusted based on our Company’s proportionate share of the net income or loss of the companies. Changes in the carrying value of such investments are recorded in Other Income. In applying the equity method, we use the most recently available financial information provided by the companies which is generally three months prior to the end of the reporting period.

Overseas deposits include private funds held by the Syndicate and invested according to local regulatory requirements. The compositions of the overseas deposits vary and the deposits are based on the portfolio level reporting that is provided by Lloyd’s. The fair values of these overseas deposits were measured using the net asset value practical expedient and therefore have not been categorized within the fair value hierarchy. Changes in the fair value of the overseas deposits are recorded in Net Investment Income.

Short-Term Investments are carried at fair value. Short-Term Investments have maturities greater than three months but less than one year from the purchase date.

All prices for our Fixed Maturities, Equity Securities and Short-Term Investments are classified as Level 1, Level 2 or Level 3 under the fair value hierarchy, as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820 (“ASC 820”).

Premiums and discounts on Fixed Maturities are amortized into interest income over the life of the security using the interest method. For Mortgage-Backed and Asset-Backed Securities, anticipated prepayments and expected maturities are utilized in applying the interest rate method. An effective yield is calculated based on projected principal cash flows at the time of original purchase. The effective yield is used to amortize the purchase price of the security over the security’s expected life. Book values are adjusted to reflect the amortization of premium or accretion of discount on a monthly basis. The projected principal cash flows are based on certain prepayment assumptions, which are generated using a prepayment model. The prepayment model uses a number of factors to estimate prepayment activity including the current levels of interest rates (refinancing incentive), time of year (seasonality), economic activity (including housing turnover) and term and age of the underlying collateral (burnout, seasoning). Prepayment assumptions associated with the Mortgage-Backed and Asset-Backed Securities are reviewed on a periodic basis. When changes in prepayment assumptions are deemed necessary as the result of actual prepayments differing from anticipated prepayments, securities are revalued based upon the new prepayment assumptions utilizing the retrospective adjustment method, whereby the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The investment in such securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the security. Such adjustments, if any, are included in Net Investment Income for the current period.

Realized Gains and Losses on sales of investments are recognized when the related trades are executed and are determined on the basis of the specific identification method.

Impairment of Invested Assets

Management regularly reviews our Fixed Maturities portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of securities.

Our Company reviews the magnitude of a security’s unrealized loss compared to its cost/amortized cost and the length of time that the security has been impaired to determine if an unrealized loss is other-than-temporary. If warranted as a result of conditions relating to a particular security, our Company will also review securities with declines in fair value resulting from a headline news event involving the issuer, a headline news event involving the asset class, the advice of our external asset managers, or economic events that may impact the issuer to determine if an unrealized loss is other-than-temporary. The depth of analysis performed is dependent upon the nature and magnitude of the indicators of other-than-temporary impairment present in regards to each impaired security.

Our Company assesses the underlying fundamentals of each issuer to determine if there is a change in the amount or timing of expected cash flows. Management compares the amortized cost basis to the present value of the revised cash flows using the historical book yield to determine the credit loss portion of impairment which is recognized in earnings. All non-credit losses where we have the intent and ability to hold the security until recovery are recognized as changes in Other than Temporary Impairment (“OTTI”) losses within AOCI.

Specifically for structured Fixed Maturities, our Company analyzes projections provided by our investment managers with respect to an expected principal loss under a range of scenarios and utilizes the most likely outcomes. The analysis relies on actual collateral performance measures such as default rate, prepayment rate and loss severity. These assumptions are applied throughout the remaining term of the deal, incorporating the transaction structure and priority of payments, to generate loss adjusted cash flows. Results of the analysis will indicate whether the security is expected ultimately to incur a loss or whether there is a material impact on yield due to either a projected loss or a change in cash flow timing. A break-even default rate is also calculated. A comparison of the break-even default rate to the actual default rate provides an indication of the level of cushion or coverage to the first dollar principal loss. For securities in which a tranche loss is present and the net present value of loss adjusted cash flows is less than book value, credit impairment is recognized in earnings. The output data also includes a number of additional metrics such as average life remaining, original and current credit support, over 60 day delinquency and security rating. The significant inputs used to measure the amount of credit loss recognized in earnings are actual delinquency rates, default probability, severity and prepayment assumptions.

Projected losses are a function of both loss severity and probability of default, which differ based on property type, vintage and the stress of the collateral.

For our policy on evaluating Equity Securities for impairment prior to the adoption of ASU 2016-01 on January 1, 2018, refer to Note 1 within our Annual Report on Form 10-K for the year ended December 31, 2017.

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Merger And Business Combinations (Tables)

9 Months Ended

Sep. 30, 2018

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The fair value of the assets acquired and liabilities assumed and the allocation of the purchase price on the acquisition date are summarized in the table below:

amounts in thousands
Consideration paid	$	40,492
Assets
Investments		45,182
Cash and Cash Equivalents		18,109
Prepaid Reinsurance Premiums		2,701
Reinsurance Recoverables on Paid Losses		1,311
Reinsurance Recoverables on Unpaid Losses and LAE		15,769
Other Assets		19,943
Fair Value of Identifiable Intangible Assets		9,000
Total Assets Acquired	$	112,015
Liabilities
Reserves for Losses and LAE		31,928
Unearned Premiums		11,139
Deferred Income Tax		8,947
Accounts Payable and Other Liabilities		32,212
Total Liabilities Assumed	$	84,226
Goodwill	$	12,703

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Reporting [Abstract]

Financial Data by Segment

Financial data by segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	280,183		$	117,376		$	58,384		$	—		$	455,943
Ceded written premiums		(72,615	)		(29,020	)		(1,896	)		—			(103,531	)
Net written premiums	$	207,568		$	88,356		$	56,488		$	—		$	352,412
Retention Ratio		74.1	%		75.3	%		96.8	%		—			77.3	%
Net Earned Premiums	$	188,504		$	95,226		$	63,308		$	—		$	347,038
Net Losses and LAE		(141,182	)		(60,275	)		(39,443	)		—			(240,900	)
Commission Expenses		(22,247	)		(22,547	)		(13,282	)		77			(57,999	)
Other Operating Expenses		(36,826	)		(24,441	)		(6,317	)		—			(67,584	)
Other Underwriting Income (Expense)		65			945			20			(77	)		953
Underwriting Profit (Loss)	$	(11,686	)	$	(11,092	)	$	4,286		$	—		$	(18,492	)
Net Investment Income											25,651			25,651
Total Net Realized and Unrealized Gains											2,563			2,563
Interest Expense											(3,891	)		(3,891	)
Other Income											771			771
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	(11,686	)	$	(11,092	)	$	4,286		$	22,655		$	4,163
Income Tax Benefit											462			462
Net Income													$	4,625
Losses and LAE Ratio		74.9	%		63.3	%		62.3	%					69.4	%
Commission Expense Ratio		11.8	%		23.7	%		21.0	%					16.7	%
Other Operating Expense Ratio (2)		19.5	%		24.6	%		9.9	%					19.2	%
Combined Ratio		106.2	%		111.6	%		93.2	%					105.3	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Three Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	235,052		$	113,601		$	53,385		$	—		$	402,038
Ceded written premiums		(64,328	)		(38,966	)		(2,728	)		—			(106,022	)
Net written premiums	$	170,724		$	74,635		$	50,657		$	—		$	296,016
Retention Ratio		72.6	%		65.7	%		94.9	%		—			73.6	%
Net Earned Premiums	$	169,150		$	84,407		$	47,798		$	—		$	301,355
Net Losses and LAE		(135,340	)		(81,713	)		(59,118	)		—			(276,171	)
Commission Expenses		(18,286	)		(16,201	)		(11,233	)		211			(45,509	)
Other Operating Expenses		(25,375	)		(16,388	)		(4,010	)		—			(45,773	)
Other Underwriting Income (Expense)		125			—			94			(211	)		8
Underwriting Loss	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	—		$	(66,090	)
Net Investment Income											22,598			22,598
Total Net Realized and Unrealized Gains											4,218			4,218
Interest Expense											(3,862	)		(3,862	)
Other Loss											(1,707	)		(1,707	)
Income (Loss) Before Income Taxes	$	(9,726	)	$	(29,895	)	$	(26,469	)	$	21,247		$	(44,843	)
Income Tax Benefit											16,864			16,864
Net Loss													$	(27,979	)
Losses and LAE Ratio		80.0	%		96.8	%		123.7	%					91.6	%
Commission Expense Ratio		10.8	%		19.2	%		23.5	%					15.1	%
Other Operating Expense Ratio (2)		14.9	%		19.4	%		8.2	%					15.2	%
Combined Ratio		105.7	%		135.4	%		155.4	%					121.9	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2018
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	808,589		$	377,771		$	262,043		$	—		$	1,448,403
Ceded written premiums		(215,340	)		(97,790	)		(10,307	)		—			(323,437	)
Net written premiums	$	593,249		$	279,981		$	251,736		$	—		$	1,124,966
Retention Ratio		73.4	%		74.1	%		96.1	%		—			77.7	%
Net Earned Premiums	$	541,163		$	280,507		$	179,010		$	—		$	1,000,680
Net Losses and LAE		(363,489	)		(158,422	)		(101,467	)		—			(623,378	)
Commission Expenses		(63,490	)		(62,166	)		(40,198	)		510			(165,344	)
Other Operating Expenses		(112,264	)		(68,270	)		(18,158	)		—			(198,692	)
Other Underwriting Income (Expense)		234			945			294			(510	)		963
Underwriting Profit (Loss)	$	2,154		$	(7,406	)	$	19,481		$	—		$	14,229
Net Investment Income											73,954			73,954
Total Net Realized and Unrealized Gains											3,667			3,667
Interest Expense											(11,619	)		(11,619	)
Other Income											3,272			3,272
Merger Transaction Costs											(2,439	)		(2,439	)
Income (Loss) Before Income Taxes	$	2,154		$	(7,406	)	$	19,481		$	66,835		$	81,064
Income Tax Expense											(13,457	)		(13,457	)
Net Income													$	67,607
Losses and LAE Ratio		67.2	%		56.5	%		56.7	%					62.3	%
Commission Expense Ratio		11.7	%		22.2	%		22.5	%					16.5	%
Other Operating Expense Ratio (2)		20.7	%		23.9	%		9.9	%					19.8	%
Combined Ratio		99.6	%		102.6	%		89.1	%					98.6	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

	Nine Months Ended September 30, 2017
	U.S.			Int'l
amounts in thousands	Insurance			Insurance			GlobalRe			Corporate (1)			Total
Gross written premiums	$	729,843		$	386,654		$	188,025		$	—		$	1,304,522
Ceded written premiums		(199,672	)		(129,368	)		(9,021	)		—			(338,061	)
Net written premiums	$	530,171		$	257,286		$	179,004		$	—		$	966,461
Retention Ratio		72.6	%		66.5	%		95.2	%		—			74.1	%
Net Earned Premiums	$	500,241		$	250,593		$	130,487		$	—		$	881,321
Net Losses and LAE		(339,436	)		(176,513	)		(106,932	)		—			(622,881	)
Commission Expenses		(59,130	)		(54,435	)		(28,695	)		734			(141,526	)
Other Operating Expenses		(91,987	)		(58,687	)		(14,403	)		—			(165,077	)
Other Underwriting Income (Expense)		335			—			439			(734	)		40
Underwriting Profit (Loss)	$	10,023		$	(39,042	)	$	(19,104	)	$	—		$	(48,123	)
Net Investment Income											66,311			66,311
Total Net Realized and Unrealized Gains											5,868			5,868
Interest Expense											(11,584	)		(11,584	)
Other Loss											(1,082	)		(1,082	)
Income (Loss) Before Income Taxes	$	10,023		$	(39,042	)	$	(19,104	)	$	59,513		$	11,390
Income Tax Benefit											2,243			2,243
Net Income													$	13,633
Losses and LAE Ratio		67.9	%		70.4	%		81.9	%					70.7	%
Commission Expense Ratio		11.8	%		21.7	%		22.0	%					16.1	%
Other Operating Expense Ratio (2)		18.3	%		23.5	%		10.7	%					18.7	%
Combined Ratio		98.0	%		115.6	%		114.6	%					105.5	%

(1) - Includes Corporate segment intercompany eliminations.

(2) - Includes Other Operating Expenses and Other Underwriting Income (Expense).

Revenue by Operating Segment

Revenue by operating segment for the three and nine months ended September 30, 2018 and 2017 was as follows:

	Three Months Ended September 30, 2018									Three Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			Net Written Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	31,681	$	(14,442	)	$	17,239	$	20,401	$	36,403	$	(18,859	)	$	17,544	$	20,129		(13.0	%)		(23.4	%)		(1.7	%)		1.4	%
P&C		212,911		(52,993	)		159,918		141,650		166,097		(39,952	)		126,145		125,931		28.2	%		32.6	%		26.8	%		12.5	%
ProfessionalLiability		35,591		(5,180	)		30,411		26,453		32,552		(5,517	)		27,035		23,090		9.3	%		(6.1	%)		12.5	%		14.6	%
Total	$	280,183	$	(72,615	)	$	207,568	$	188,504	$	235,052	$	(64,328	)	$	170,724	$	169,150		19.2	%		12.9	%		21.6	%		11.4	%
Int'l Insurance
Marine	$	32,486	$	(4,965	)	$	27,521	$	38,866	$	41,689	$	(9,948	)	$	31,741	$	39,038		(22.1	%)		(50.1	%)		(13.3	%)		(0.4	%)
P&C		41,898		(13,727	)		28,171		29,616		37,415		(19,772	)		17,643		21,775		12.0	%		(30.6	%)		59.7	%		36.0	%
Professional Liability		42,992		(10,328	)		32,664		26,744		34,497		(9,246	)		25,251		23,594		24.6	%		11.7	%		29.4	%		13.3	%
Total	$	117,376	$	(29,020	)	$	88,356	$	95,226	$	113,601	$	(38,966	)	$	74,635	$	84,407		3.3	%		(25.5	%)		18.4	%		12.8	%
GlobalRe	$	58,384	$	(1,896	)	$	56,488	$	63,308	$	53,385	$	(2,728	)	$	50,657	$	47,798		9.4	%		(30.5	%)		11.5	%		32.4	%
Total	$	455,943	$	(103,531	)	$	352,412	$	347,038	$	402,038	$	(106,022	)	$	296,016	$	301,355		13.4	%		(2.3	%)		19.1	%		15.2	%

	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017									% Change
amounts in thousands	Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums		Ceded Written Premiums			NetWritten Premiums		Net Earned Premiums		Gross Written Premiums			Ceded Written Premiums			NetWritten Premiums			Net Earned Premiums
U.S. Insurance
Marine	$	112,235	$	(48,840	)	$	63,395	$	62,670	$	119,040	$	(55,830	)	$	63,210	$	64,635		(5.7	%)		(12.5	%)		0.3	%		(3.0	%)
P&C		599,088		(152,740	)		446,348		401,870		524,223		(129,297	)		394,926		366,280		14.3	%		18.1	%		13.0	%		9.7	%
ProfessionalLiability		97,266		(13,760	)		83,506		76,623		86,580		(14,545	)		72,035		69,326		12.3	%		(5.4	%)		15.9	%		10.5	%
Total	$	808,589	$	(215,340	)	$	593,249	$	541,163	$	729,843	$	(199,672	)	$	530,171	$	500,241		10.8	%		7.8	%		11.9	%		8.2	%
Int'l Insurance
Marine	$	129,678	$	(24,542	)	$	105,136	$	115,342	$	160,119	$	(33,410	)	$	126,709	$	116,058		(19.0	%)		(26.5	%)		(17.0	%)		(0.6	%)
P&C		122,437		(45,099	)		77,338		75,100		124,446		(69,780	)		54,666		67,292		(1.6	%)		(35.4	%)		41.5	%		11.6	%
ProfessionalLiability		125,656		(28,149	)		97,507		90,065		102,089		(26,178	)		75,911		67,243		23.1	%		7.5	%		28.4	%		33.9	%
Total	$	377,771	$	(97,790	)	$	279,981	$	280,507	$	386,654	$	(129,368	)	$	257,286	$	250,593		(2.3	%)		(24.4	%)		8.8	%		11.9	%
GlobalRe	$	262,043	$	(10,307	)	$	251,736	$	179,010	$	188,025	$	(9,021	)	$	179,004	$	130,487		39.4	%		14.3	%		40.6	%		37.2	%
Total	$	1,448,403	$	(323,437	)	$	1,124,966	$	1,000,680	$	1,304,522	$	(338,061	)	$	966,461	$	881,321		11.0	%		(4.3	%)		16.4	%		13.5	%

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Investments (Tables)

9 Months Ended

Sep. 30, 2018

Investments Debt And Equity Securities [Abstract]

Available-for-Sale Investments Including Other-Than-Temporarily Impaired Securities Recognized within Accumulated Other Comprehensive Income

The following tables set forth our Company’s Available-For-Sale Investments as of September 30, 2018 and December 31, 2017 and include Other-Than-Temporary-Impairment (“OTTI”) securities recognized within Accumulated Other Comprehensive Income (“AOCI”):

	September 30, 2018
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	245,285	$	1,031	$	(3,879	)	$	248,133
States, Municipalities and Political Subdivisions		631,514		7,569		(7,534	)		631,479
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		344,016		874		(17,219	)		360,361
Residential Mortgage Obligations		124,191		521		(493	)		124,163
Asset-Backed Securities		540,566		554		(4,033	)		544,045
Commercial Mortgage-Backed Securities		186,251		696		(3,126	)		188,681
Subtotal	$	1,195,024	$	2,645	$	(24,871	)	$	1,217,250
Corporate Exposures (1)		917,650		4,191		(17,514	)		930,973
Total Fixed Maturities	$	2,989,473	$	15,436	$	(53,798	)	$	3,027,835
Short-Term Investments		7,264		—		(4	)		7,268
Total Available-For-Sale Investments	$	2,996,737	$	15,436	$	(53,802	)	$	3,035,103

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
			Gross		Gross			Cost or
	Fair		Unrealized		Unrealized			Amortized
amounts in thousands	Value		Gains		(Losses)			Cost
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	393,563	$	2,081	$	(2,014	)	$	393,496
States, Municipalities and Political Subdivisions		814,632		20,136		(1,423	)		795,919
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		407,619		2,352		(5,414	)		410,681
Residential Mortgage Obligations		54,104		606		(79	)		53,577
Asset-Backed Securities		328,753		2,138		(663	)		327,278
Commercial Mortgage-Backed Securities		160,904		2,354		(1,182	)		159,732
Subtotal	$	951,380	$	7,450	$	(7,338	)	$	951,268
Corporate Exposures (1)		897,479		14,491		(3,737	)		886,725
Total Fixed Maturities	$	3,057,054	$	44,158	$	(14,512	)	$	3,027,408
Equity Securities:
Common Stocks	$	52,439	$	7,423	$	(112	)	$	45,128
Preferred Stocks		183,542		6,071		(1,560	)		179,031
Total Equity Securities	$	235,981	$	13,494	$	(1,672	)	$	224,159
Short-Term Investments		6,480		3		—			6,477
Total Available-For-Sale Investments	$	3,299,515	$	57,655	$	(16,184	)	$	3,258,044

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Equity Securities at Fair Value

The following table sets forth our Company’s Equity Securities at fair value as of September 30, 2018:

	As of September 30, 2018
			Gross		Gross
	Fair		Unrealized		Unrealized			Cost
amounts in thousands	Value		Gains		(Losses)
Equity Securities:
Common Stocks	$	190,722	$	15,573	$	(116	)	$	175,265
Preferred Stocks		180,958		1,901		(5,078	)		184,135
Total Equity Securities	$	371,680	$	17,474	$	(5,194	)	$	359,400

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity

The contractual maturity dates for Fixed Maturities categorized by the number of years until maturity as of September 30, 2018 are shown in the following table:

	September 30, 2018
	Fair		Amortized
amounts in thousands	Value		Cost
Due in one year or less	$	179,367	$	180,246
Due after one year through five years		715,620		725,231
Due after five years through ten years		345,661		348,557
Due after ten years		553,801		556,551
Mortgage-Backed and Asset-Backed Securities		1,195,024		1,217,250
Total	$	2,989,473	$	3,027,835

Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position

The following tables summarize all Available-For-Sale securities in a gross unrealized loss position as of September 30, 2018 and December 31, 2017, showing the aggregate fair value and gross unrealized loss by the length of time those securities have continuously been in a gross unrealized loss position:

	September 30, 2018
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	130,366	$	(2,559	)	$	73,266	$	(1,320	)	$	203,632	$	(3,879	)
States, Municipalities and Political Subdivisions		267,333		(4,895	)		58,882		(2,639	)		326,215		(7,534	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		72,698		(2,537	)		242,433		(14,682	)		315,131		(17,219	)
Residential Mortgage Obligations		43,108		(297	)		6,501		(196	)		49,609		(493	)
Asset-Backed Securities		364,764		(3,178	)		38,290		(855	)		403,054		(4,033	)
Commercial Mortgage-Backed Securities		56,209		(706	)		31,868		(2,420	)		88,077		(3,126	)
Subtotal	$	536,779	$	(6,718	)	$	319,092	$	(18,153	)	$	855,871	$	(24,871	)
Corporate Exposures (1)		614,332		(12,034	)		148,254		(5,480	)		762,586		(17,514	)
Total Fixed Maturities	$	1,548,810	$	(26,206	)	$	599,494	$	(27,592	)	$	2,148,304	$	(53,798	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

	December 31, 2017
	Less than 12 months					Greater than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
amounts in thousands	Value		(Losses)			Value		(Losses)			Value		(Losses)
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	273,672	$	(1,502	)	$	54,484	$	(512	)	$	328,156	$	(2,014	)
States, Municipalities and Political Subdivisions		74,097		(503	)		45,085		(920	)		119,182		(1,423	)
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed    Securities		87,496		(346	)		236,745		(5,068	)		324,241		(5,414	)
Residential Mortgage Obligations		12,418		(62	)		546		(17	)		12,964		(79	)
Asset-Backed Securities		85,877		(468	)		24,733		(195	)		110,610		(663	)
Commercial Mortgage-Backed Securities		20,482		(95	)		22,903		(1,087	)		43,385		(1,182	)
Subtotal	$	206,273	$	(971	)	$	284,927	$	(6,367	)	$	491,200	$	(7,338	)
Corporate Exposures (1)		295,433		(1,690	)		121,410		(2,047	)		416,843		(3,737	)
Total Fixed Maturities	$	849,475	$	(4,666	)	$	505,906	$	(9,846	)	$	1,355,381	$	(14,512	)
Equity Securities:
Common Stocks	$	11,245	$	(81	)	$	1,770	$	(31	)	$	13,015	$	(112	)
Preferred Stocks		50,861		(1,524	)		662		(36	)		51,523		(1,560	)
Total Equity Securities	$	62,106	$	(1,605	)	$	2,432	$	(67	)	$	64,538	$	(1,672	)
Total Fixed Maturities and Equity Securities	$	911,581	$	(6,271	)	$	508,338	$	(9,913	)	$	1,419,919	$	(16,184	)

(1) - Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

Net Investment Income

Our Company’s Net Investment Income was derived from the following sources:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities	$	22,733		$	19,491		$	65,504		$	57,019
Equity Securities		3,052			3,774			9,138			11,337
Short-Term Investments, Cash & Cash Equivalents		509			84			1,151			254
Other Invested Assets		159			166			486			408
Total Investment Income	$	26,453		$	23,515		$	76,279		$	69,018
Investment Expenses		(802	)		(917	)		(2,325	)		(2,707	)
Net Investment Income	$	25,651		$	22,598		$	73,954		$	66,311

Realized Gains and Losses on Investments Sold, Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings

Realized Gains and Losses on Investments Sold, excluding net OTTI losses recognized in earnings, for the periods indicated, were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
amounts in thousands	2018			2017			2018			2017
Fixed Maturities:
Gains	$	331		$	2,589		$	3,678		$	3,401
Losses		(369	)		(900	)		(1,125	)		(3,114	)
Fixed Maturities, Net	$	(38	)	$	1,689		$	2,553		$	287
Short-Term Investments, Cash & Cash Equivalents:
Gains	$	107		$	758		$	189		$	984
Losses		(71	)		(14	)		(266	)		(139	)
Short-Term, Net	$	36		$	744		$	(77	)	$	845
Other Invested Assets:
Gains	$	9		$	9		$	78		$	30
Losses		(50	)		(97	)		(136	)		(232	)
Other Invested Assets, Net	$	(41	)	$	(88	)	$	(58	)	$	(202	)
Equity Securities:
Gains	$	347		$	2,863		$	1,102		$	7,249
Losses		(51	)		(18	)		(310	)		(246	)
Equity Securities, Net	$	296		$	2,845		$	792		$	7,003
Net Realized Gains on Investments Sold	$	253		$	5,190		$	3,210		$	7,933

Portion of Net Unrealized Losses Recognized to Equity Securities

The following table presents the portion of Net Unrealized Gains (Losses) recognized during the three and nine months ended September 30, 2018, that relates to Equity Securities held as of September 30, 2018:

	Three Months Ended September 30,		Nine Months Ended September 30,
amounts in thousands	2018		2018
Equity Securities:
Total Net Realized and Unrealized Gains recognized during the period	$	2,606	$	1,249
Less: Net Realized Gains on Investments Sold recognized during the period		296		792
Net Unrealized Gains recognized during the period	$	2,310	$	457

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value Disclosures [Abstract]

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value

The following tables present, for each of the fair value hierarchy levels as defined by the accounting guidance for fair value measurements described above, our Company’s Fixed Maturities and Equity Securities by asset class that are measured at fair value on a recurring basis, as well as the fair value of the 5.75% Senior Notes due October 15, 2023 (the “Senior Notes”) carried at amortized cost as of September 30, 2018 and December 31, 2017:

	September 30, 2018
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	45,093	$	200,192	$	—	$	245,285
States, Municipalities and Political Subdivisions		—		631,514		—		631,514
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		344,016		—		344,016
Residential Mortgage Obligations		—		124,191		—		124,191
Asset-Backed Securities		—		540,566		—		540,566
Commercial Mortgage-Backed Securities		—		186,251		—		186,251
Subtotal	$	—	$	1,195,024	$	—	$	1,195,024
Corporate Exposures		—		917,650		—		917,650
Total Fixed Maturities	$	45,093	$	2,944,380	$	—	$	2,989,473
Equity Securities:
Common Stocks	$	40,416	$	150,306	$	—	$	190,722
Preferred Stocks		—		180,958		—		180,958
Total Equity Securities	$	40,416	$	331,264	$	—	$	371,680
Short-Term Investments		—		7,264		—		7,264
Total Assets Measured at Fair Value	$	85,509	$	3,282,908	$	—	$	3,368,417
Senior Notes	$	—	$	274,348	$	—	$	274,348
Total Liabilities Measured at Fair Value	$	—	$	274,348	$	—	$	274,348

	December 31, 2017
amounts in thousands	Level 1		Level 2		Level 3		Total
Fixed Maturities:
U.S. Treasury Bonds, Agency Bonds and Foreign    Government Bonds	$	178,251	$	215,312	$	—	$	393,563
States, Municipalities and Political Subdivisions		—		814,632		—		814,632
Mortgage-Backed and Asset-Backed Securities:
Agency Residential Mortgage-Backed Securities		—		407,619		—		407,619
Residential Mortgage Obligations		—		54,104		—		54,104
Asset-Backed Securities		—		328,753		—		328,753
Commercial Mortgage-Backed Securities		—		160,904		—		160,904
Subtotal	$	—	$	951,380	$	—	$	951,380
Corporate Exposures		—		897,479		—		897,479
Total Fixed Maturities	$	178,251	$	2,878,803	$	—	$	3,057,054
Equity Securities:
Common Stocks	$	52,439	$	—	$	—	$	52,439
Preferred Stocks		—		183,542		—		183,542
Total Equity Securities	$	52,439	$	183,542	$	—	$	235,981
Short-Term Investments		6,480		—		—		6,480
Total Assets Measured at Fair Value	$	237,170	$	3,062,345	$	—	$	3,299,515
Senior Notes	$	—	$	277,951	$	—	$	277,951
Total Liabilities Measured at Fair Value	$	—	$	277,951	$	—	$	277,951

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2018

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Analysis of Goodwill by Reporting Segment

The following table shows an analysis of goodwill by reporting segment:

	Nine Months Ended September 30, 2018
	U.S.		Int'l
amounts in thousands	Insurance		Insurance		Total
Goodwill at Beginning of the Period	$	1,978	$	2,482	$	4,460
Goodwill Acquired		—		12,703		12,703
Foreign Currency Translation Adjustment		—		81		81
Goodwill at End of the Period	$	1,978	$	15,266	$	17,244

Summary of Gross Carrying Value and Weighted Average Amortization Period of Intangible Assets by Type

The gross carrying value and weighted average amortization period of intangible assets by type at September 30, 2018 was as follows:

	As of September 30, 2018
amounts in thousands	Gross Carrying Amount		Accumulated Amortization			Weighted Average Amortization Period
Finite-Lived Assets
ASCO Customer Relationships	$	3,383	$	(85	)	10 years
ASCO VOBA		1,711		(107	)	4 years
BDM Broker Networks		1,012		(17	)	15 years
BDM Trade Name		498		(124	)	1 year
Total	$	6,604	$	(333	)
Indefinite-Lived Assets
ASCO European Licenses	$	2,489	indefinite
NUAL Lloyd's Syndicate Capacity		2,136	indefinite
Total	$	4,625

Summary of Estimated Remaining Amortization Expense for Finite-Lived Intangible Assets

The estimated remaining amortization expense for the finite-lived intangible assets is as follows:

amounts in thousands	Total
2018	$	333
2019		1,082
2020		834
2021		834
2022		620
2023 and thereafter		2,568
Total	$	6,271

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Loss Reserves (Tables)

9 Months Ended

Sep. 30, 2018

Insurance [Abstract]

Summary of Reserves for Losses and LAE Activity

The following table summarizes our Company’s Reserves for Losses and LAE activity for the nine months ended September 30, 2018 and 2017:

	For the Nine Months Ended September 30,
amounts in thousands	2018			2017
Net Reserves for Losses and LAE at Beginning of Year	$	1,705,380		$	1,510,451
Acquired Net Reserves		16,159			—
Provision for Losses and LAE for Claims Occurring in the Current Year		603,564			578,272
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years		19,814			44,609
Incurred Losses and LAE	$	623,378		$	622,881
Losses and LAE Paid for Claims Occurring During:
Current Year		(65,445	)		(75,707	)
Prior Years		(420,870	)		(358,684	)
Losses and LAE Payments	$	(486,315	)	$	(434,391	)
Foreign Currency Adjustment		(4,982	)		11,688
Net Reserves for Losses and LAE at End of Period		1,853,620			1,710,629
Reinsurance Recoverables on Unpaid Losses and LAE		780,215			847,505
Gross Reserves for Losses and LAE at End of Period	$	2,633,835		$	2,558,134

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Restricted Stock Unit Awards

The activity related to our Company's restricted stock unit awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		159,539		$	41.60
Granted		24,593		$	50.01
Vested (2)		(76,168	)	$	35.23
Forfeited		(7,000	)	$	38.00
Nonvested at the end of the period		100,964		$	48.70

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 29,954 were withheld for tax payments at a weighted average vest date fair value of $56.83.

Performance-based Equity Awards

The activity related to our Company's performance-based equity awards was as follows:

	Nine Months Ended September 30, 2018
	Number of Awards			Weighted Average Grant Date Fair Value (1)
Nonvested at the beginning of the period		966,361		$	43.39
Granted		247,554		$	54.15
Performance Adjustment		(59,833	)	$	37.25
Vested (2)		(274,299	)	$	37.25
Forfeited		(34,250	)	$	46.00
Nonvested at the end of the period		845,533		$	48.86

(1) Fair value is based on the closing price of our common shares on the NASDAQ on the grant date.

(2) This amount represents the gross number of shares vested before any share forfeiture to pay required tax withholdings. For the nine months ended September 30, 2018 share awards of 117,005 were withheld for tax payments at a weighted average vest date fair value of $55.65.

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Organization and Summary of Significant Accounting Policies - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Dec. 31, 2017 USD ($)	Sep. 30, 2018 USD ($) Insurance	Sep. 30, 2017 USD ($)	Jun. 07, 2018	Jan. 01, 2018 USD ($)
Organization And Summary Of Significant Accounting Policies [Line Items]
Number of insurance companies | Insurance		2
Corporate income tax rate		21.00%
Provisional transition tax	$ 2,600,000
Change in provisional transition tax		$ 1,300,000
Decrease net cash used in investing activities		$ (127,120,000)	$ (131,399,000)
Accounting Standards Update 2016-01
Organization And Summary Of Significant Accounting Policies [Line Items]
Cumulative-effect adjustment from adoption					$ 0
Accounting Standards Update 2016-01 | Retained Earnings
Organization And Summary Of Significant Accounting Policies [Line Items]
Cumulative-effect adjustment from adoption					7,700,000
Accounting Standards Update 2016-01 | Accumulated Other Comprehensive Income (Loss)
Organization And Summary Of Significant Accounting Policies [Line Items]
Cumulative-effect adjustment from adoption					(7,700,000)
Accounting Standards Update 2016-18
Organization And Summary Of Significant Accounting Policies [Line Items]
Decrease net cash used in investing activities			76,800,000
Reclassification of restricted and unrestricted cash and cash equivalent	71,300,000
Accounting Standards Update 2018-02 | Retained Earnings
Organization And Summary Of Significant Accounting Policies [Line Items]
Cumulative-effect adjustment from adoption					(2,800,000)
Accounting Standards Update 2018-02 | Accumulated Other Comprehensive Income (Loss)
Organization And Summary Of Significant Accounting Policies [Line Items]
Cumulative-effect adjustment from adoption					$ 2,800,000
Immaterial Reclassification Correction
Organization And Summary Of Significant Accounting Policies [Line Items]
Cash reclassified from short- term investment to cash and cash equivalent	20,500,000
Oversee deposit reclassified from short-term investments to other invested asset	$ 28,800,000
Decrease net cash used in investing activities			$ 9,200,000
Bracht, Deckers & Mackelbert NV and Assurances Continentales - Continentale Verzekeringen NV
Organization And Summary Of Significant Accounting Policies [Line Items]
Business acquisition, percentage of ownership interest acquired				100.00%
Syndicate 1221
Organization And Summary Of Significant Accounting Policies [Line Items]
Percentage control of stamp capacity		100.00%

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Merger And Business Combinations - Additional Information (Detail) $ / shares in Units, € in Millions			3 Months Ended	4 Months Ended	9 Months Ended
	Jun. 07, 2018 USD ($)	Jun. 07, 2018 EUR (€)	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2018 USD ($)	Aug. 22, 2018 $ / shares	Jun. 07, 2018 EUR (€)	Dec. 31, 2017 USD ($)
Business Acquisition [Line Items]
Goodwill recognized at date of acquisition			$ 17,244,000	$ 17,244,000	$ 17,244,000			$ 4,460,000
Finite-Lived Intangible Assets
Business Acquisition [Line Items]
Increase (decrease) in fair value of identifiable intangible assets and goodwill			(1,400,000)
Goodwill
Business Acquisition [Line Items]
Increase (decrease) in fair value of identifiable intangible assets and goodwill			$ 1,400,000
Bracht, Deckers & Mackelbert NV and Assurances Continentales - Continentale Verzekeringen NV
Business Acquisition [Line Items]
Acquisition date	Jun. 07, 2018	Jun. 07, 2018
Business acquisition, name of acquired entity					BDM, ASCO, and a wholly-owned subsidiary of ASCO, Canal Re S.A.
Business acquisition, percentage of ownership interest acquired	100.00%						100.00%
Business acquisition, purchase price	$ 40,492,000	€ 35.0
Additional reimbursement amount receivable	5,800,000						€ 5.0
Business combination, fair value of acquisition reimbursement amount	0
Goodwill recognized at date of acquisition	12,703,000
Business combination, identified finite lived intangible assets	$ 6,500,000
Business combination, finite lived intangible assets weighted average amortization period	9 years	9 years
Business combination, indefinite intangible assets	$ 2,500,000
Revenues				6,600,000
Net Income (Loss)				$ (100,000)
The Hartford
Business Acquisition [Line Items]
Merger Consideration | $ / shares						$ 70.00

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Merger And Business Combinations - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) $ in Thousands, € in Millions	Jun. 07, 2018 USD ($)	Jun. 07, 2018 EUR (€)	Sep. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)
Liabilities
Goodwill			$ 17,244	$ 4,460
Bracht, Deckers & Mackelbert NV and Assurances Continentales - Continentale Verzekeringen NV
Business Acquisition [Line Items]
Consideration paid	$ 40,492	€ 35.0
Assets
Investments	45,182
Cash and Cash Equivalents	18,109
Prepaid Reinsurance Premiums	2,701
Reinsurance Recoverables on Paid Losses	1,311
Reinsurance Recoverables on Unpaid Losses and LAE	15,769
Other Assets	19,943
Fair Value of Identifiable Intangible Assets	9,000
Total Assets Acquired	112,015
Liabilities
Reserves for Losses and LAE	31,928
Unearned Premiums	11,139
Deferred Income Tax	8,947
Accounts Payable and Other Liabilities	32,212
Total Liabilities Assumed	84,226
Goodwill	$ 12,703

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Segment Information - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2018 Segment
Segment Reporting Information [Line Items]
Number of underwriting Segments	3
U.S.Insurance
Segment Reporting Information [Line Items]
Number of Operating Segments	3
International Insurance
Segment Reporting Information [Line Items]
Number of Operating Segments	3

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Financial Data by Segment (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 455,943	$ 402,038	$ 1,448,403	$ 1,304,522
Ceded written premiums		(103,531)	(106,022)	(323,437)	(338,061)
Net written premiums		$ 352,412	$ 296,016	$ 1,124,966	$ 966,461
Retention Ratio		77.30%	73.60%	77.70%	74.10%
Net Earned Premiums		$ 347,038	$ 301,355	$ 1,000,680	$ 881,321
Net Losses and LAE		(240,900)	(276,171)	(623,378)	(622,881)
Commission Expenses		(57,999)	(45,509)	(165,344)	(141,526)
Other Operating Expenses		(67,584)	(45,773)	(198,692)	(165,077)
Other Underwriting Income (Expense)		953	8	963	40
Underwriting Profit (Loss)		(18,492)	(66,090)	14,229	(48,123)
Net Investment Income		25,651	22,598	73,954	66,311
Total Net Realized and Unrealized Gains		2,563	4,218	3,667	5,868
Interest Expense		(3,891)	(3,862)	(11,619)	(11,584)
Other Income (Loss)		771	(1,707)	3,272	(1,082)
Merger Transaction Costs		(2,439)		(2,439)
Income (Loss) Before Income Taxes		4,163	(44,843)	81,064	11,390
Income Tax Benefit (Expense)		462	16,864	(13,457)	2,243
Net Income (Loss)		$ 4,625	$ (27,979)	$ 67,607	$ 13,633
Losses and LAE Ratio		69.40%	91.60%	62.30%	70.70%
Commission Expense Ratio		16.70%	15.10%	16.50%	16.10%
Other Operating Expense Ratio	[1]	19.20%	15.20%	19.80%	18.70%
Combined Ratio		105.30%	121.90%	98.60%	105.50%
U.S.Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 280,183	$ 235,052	$ 808,589	$ 729,843
Ceded written premiums		(72,615)	(64,328)	(215,340)	(199,672)
Net written premiums		$ 207,568	$ 170,724	$ 593,249	$ 530,171
Retention Ratio		74.10%	72.60%	73.40%	72.60%
Net Earned Premiums		$ 188,504	$ 169,150	$ 541,163	$ 500,241
Net Losses and LAE		(141,182)	(135,340)	(363,489)	(339,436)
Commission Expenses		(22,247)	(18,286)	(63,490)	(59,130)
Other Operating Expenses		(36,826)	(25,375)	(112,264)	(91,987)
Other Underwriting Income (Expense)		65	125	234	335
Underwriting Profit (Loss)		(11,686)	(9,726)	2,154	10,023
Income (Loss) Before Income Taxes		$ (11,686)	$ (9,726)	$ 2,154	$ 10,023
Losses and LAE Ratio		74.90%	80.00%	67.20%	67.90%
Commission Expense Ratio		11.80%	10.80%	11.70%	11.80%
Other Operating Expense Ratio	[1]	19.50%	14.90%	20.70%	18.30%
Combined Ratio		106.20%	105.70%	99.60%	98.00%
International Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 117,376	$ 113,601	$ 377,771	$ 386,654
Ceded written premiums		(29,020)	(38,966)	(97,790)	(129,368)
Net written premiums		$ 88,356	$ 74,635	$ 279,981	$ 257,286
Retention Ratio		75.30%	65.70%	74.10%	66.50%
Net Earned Premiums		$ 95,226	$ 84,407	$ 280,507	$ 250,593
Net Losses and LAE		(60,275)	(81,713)	(158,422)	(176,513)
Commission Expenses		(22,547)	(16,201)	(62,166)	(54,435)
Other Operating Expenses		(24,441)	(16,388)	(68,270)	(58,687)
Other Underwriting Income (Expense)		945		945
Underwriting Profit (Loss)		(11,092)	(29,895)	(7,406)	(39,042)
Income (Loss) Before Income Taxes		$ (11,092)	$ (29,895)	$ (7,406)	$ (39,042)
Losses and LAE Ratio		63.30%	96.80%	56.50%	70.40%
Commission Expense Ratio		23.70%	19.20%	22.20%	21.70%
Other Operating Expense Ratio	[1]	24.60%	19.40%	23.90%	23.50%
Combined Ratio		111.60%	135.40%	102.60%	115.60%
Global Reinsurance
Segment Reporting Information [Line Items]
Gross Written Premiums		$ 58,384	$ 53,385	$ 262,043	$ 188,025
Ceded written premiums		(1,896)	(2,728)	(10,307)	(9,021)
Net written premiums		$ 56,488	$ 50,657	$ 251,736	$ 179,004
Retention Ratio		96.80%	94.90%	96.10%	95.20%
Net Earned Premiums		$ 63,308	$ 47,798	$ 179,010	$ 130,487
Net Losses and LAE		(39,443)	(59,118)	(101,467)	(106,932)
Commission Expenses		(13,282)	(11,233)	(40,198)	(28,695)
Other Operating Expenses		(6,317)	(4,010)	(18,158)	(14,403)
Other Underwriting Income (Expense)		20	94	294	439
Underwriting Profit (Loss)		4,286	(26,469)	19,481	(19,104)
Income (Loss) Before Income Taxes		$ 4,286	$ (26,469)	$ 19,481	$ (19,104)
Losses and LAE Ratio		62.30%	123.70%	56.70%	81.90%
Commission Expense Ratio		21.00%	23.50%	22.50%	22.00%
Other Operating Expense Ratio	[1]	9.90%	8.20%	9.90%	10.70%
Combined Ratio		93.20%	155.40%	89.10%	114.60%
Corporate
Segment Reporting Information [Line Items]
Net Investment Income	[2]	$ 25,651	$ 22,598	$ 73,954	$ 66,311
Total Net Realized and Unrealized Gains	[2]	2,563	4,218	3,667	5,868
Interest Expense	[2]	(3,891)	(3,862)	(11,619)	(11,584)
Other Income (Loss)	[2]	771	(1,707)	3,272	(1,082)
Merger Transaction Costs	[2]	(2,439)		(2,439)
Income (Loss) Before Income Taxes	[2]	22,655	21,247	66,835	59,513
Income Tax Benefit (Expense)	[2]	462	16,864	(13,457)	2,243
Intersegment Elimination
Segment Reporting Information [Line Items]
Commission Expenses	[2]	77	211	510	734
Other Underwriting Income (Expense)	[2]	$ (77)	$ (211)	$ (510)	$ (734)

[1] Includes Other Operating Expenses and Other Underwriting Income (Expense).

[2] Includes Corporate segment intercompany eliminations.

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Revenue by Operating Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 455,943	$ 402,038	$ 1,448,403	$ 1,304,522
Ceded written premiums	(103,531)	(106,022)	(323,437)	(338,061)
Net written premiums	352,412	296,016	1,124,966	966,461
Net Earned Premiums	$ 347,038	301,355	$ 1,000,680	881,321
% Change Gross Written Premiums	13.40%		11.00%
% Change Ceded Written Premiums	(2.30%)		(4.30%)
% Change Net Written Premiums	19.10%		16.40%
% Change Net Earned Premiums	15.20%		13.50%
U.S.Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 280,183	235,052	$ 808,589	729,843
Ceded written premiums	(72,615)	(64,328)	(215,340)	(199,672)
Net written premiums	207,568	170,724	593,249	530,171
Net Earned Premiums	$ 188,504	169,150	$ 541,163	500,241
% Change Gross Written Premiums	19.20%		10.80%
% Change Ceded Written Premiums	12.90%		7.80%
% Change Net Written Premiums	21.60%		11.90%
% Change Net Earned Premiums	11.40%		8.20%
U.S.Insurance | Marine
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 31,681	36,403	$ 112,235	119,040
Ceded written premiums	(14,442)	(18,859)	(48,840)	(55,830)
Net written premiums	17,239	17,544	63,395	63,210
Net Earned Premiums	$ 20,401	20,129	$ 62,670	64,635
% Change Gross Written Premiums	(13.00%)		(5.70%)
% Change Ceded Written Premiums	(23.40%)		(12.50%)
% Change Net Written Premiums	(1.70%)		0.30%
% Change Net Earned Premiums	1.40%		(3.00%)
U.S.Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 212,911	166,097	$ 599,088	524,223
Ceded written premiums	(52,993)	(39,952)	(152,740)	(129,297)
Net written premiums	159,918	126,145	446,348	394,926
Net Earned Premiums	$ 141,650	125,931	$ 401,870	366,280
% Change Gross Written Premiums	28.20%		14.30%
% Change Ceded Written Premiums	32.60%		18.10%
% Change Net Written Premiums	26.80%		13.00%
% Change Net Earned Premiums	12.50%		9.70%
U.S.Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 35,591	32,552	$ 97,266	86,580
Ceded written premiums	(5,180)	(5,517)	(13,760)	(14,545)
Net written premiums	30,411	27,035	83,506	72,035
Net Earned Premiums	$ 26,453	23,090	$ 76,623	69,326
% Change Gross Written Premiums	9.30%		12.30%
% Change Ceded Written Premiums	(6.10%)		(5.40%)
% Change Net Written Premiums	12.50%		15.90%
% Change Net Earned Premiums	14.60%		10.50%
International Insurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 117,376	113,601	$ 377,771	386,654
Ceded written premiums	(29,020)	(38,966)	(97,790)	(129,368)
Net written premiums	88,356	74,635	279,981	257,286
Net Earned Premiums	$ 95,226	84,407	$ 280,507	250,593
% Change Gross Written Premiums	3.30%		(2.30%)
% Change Ceded Written Premiums	(25.50%)		(24.40%)
% Change Net Written Premiums	18.40%		8.80%
% Change Net Earned Premiums	12.80%		11.90%
International Insurance | Marine
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 32,486	41,689	$ 129,678	160,119
Ceded written premiums	(4,965)	(9,948)	(24,542)	(33,410)
Net written premiums	27,521	31,741	105,136	126,709
Net Earned Premiums	$ 38,866	39,038	$ 115,342	116,058
% Change Gross Written Premiums	(22.10%)		(19.00%)
% Change Ceded Written Premiums	(50.10%)		(26.50%)
% Change Net Written Premiums	(13.30%)		(17.00%)
% Change Net Earned Premiums	(0.40%)		(0.60%)
International Insurance | Property Casualty
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 41,898	37,415	$ 122,437	124,446
Ceded written premiums	(13,727)	(19,772)	(45,099)	(69,780)
Net written premiums	28,171	17,643	77,338	54,666
Net Earned Premiums	$ 29,616	21,775	$ 75,100	67,292
% Change Gross Written Premiums	12.00%		(1.60%)
% Change Ceded Written Premiums	(30.60%)		(35.40%)
% Change Net Written Premiums	59.70%		41.50%
% Change Net Earned Premiums	36.00%		11.60%
International Insurance | Professional Liability
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 42,992	34,497	$ 125,656	102,089
Ceded written premiums	(10,328)	(9,246)	(28,149)	(26,178)
Net written premiums	32,664	25,251	97,507	75,911
Net Earned Premiums	$ 26,744	23,594	$ 90,065	67,243
% Change Gross Written Premiums	24.60%		23.10%
% Change Ceded Written Premiums	11.70%		7.50%
% Change Net Written Premiums	29.40%		28.40%
% Change Net Earned Premiums	13.30%		33.90%
Global Reinsurance
Segment Reporting Information [Line Items]
Gross Written Premiums	$ 58,384	53,385	$ 262,043	188,025
Ceded written premiums	(1,896)	(2,728)	(10,307)	(9,021)
Net written premiums	56,488	50,657	251,736	179,004
Net Earned Premiums	$ 63,308	$ 47,798	$ 179,010	$ 130,487
% Change Gross Written Premiums	9.40%		39.40%
% Change Ceded Written Premiums	(30.50%)		14.30%
% Change Net Written Premiums	11.50%		40.60%
% Change Net Earned Premiums	32.40%		37.20%

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Available-for-Sale Investments Including Other-Than-Temporarily Impaired Securities Recognized within Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands		Sep. 30, 2018	Dec. 31, 2017
Gain (Loss) on Investments [Line Items]
Total available for sale investments		$ 2,996,737
Gross Unrealized Gains		15,436
Gross Unrealized Losses		(53,802)
Amortized Cost		3,035,103
Total available for sale investments			$ 3,299,515
Gross Unrealized Gains			57,655
Gross Unrealized Losses			(16,184)
Amortized Cost			3,258,044
Fixed Maturities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		2,989,473	3,057,054
Gross Unrealized Gains		15,436	44,158
Gross Unrealized Losses		(53,798)	(14,512)
Amortized Cost		3,027,835	3,027,408
Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Gain (Loss) on Investments [Line Items]
Total available for sale investments		245,285	393,563
Gross Unrealized Gains		1,031	2,081
Gross Unrealized Losses		(3,879)	(2,014)
Amortized Cost		248,133	393,496
Fixed Maturities | States, Municipalities and Political Subdivisions
Gain (Loss) on Investments [Line Items]
Total available for sale investments		631,514	814,632
Gross Unrealized Gains		7,569	20,136
Gross Unrealized Losses		(7,534)	(1,423)
Amortized Cost		631,479	795,919
Fixed Maturities | Agency Residential Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		344,016	407,619
Gross Unrealized Gains		874	2,352
Gross Unrealized Losses		(17,219)	(5,414)
Amortized Cost		360,361	410,681
Fixed Maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		124,191	54,104
Gross Unrealized Gains		521	606
Gross Unrealized Losses		(493)	(79)
Amortized Cost		124,163	53,577
Fixed Maturities | Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		540,566	328,753
Gross Unrealized Gains		554	2,138
Gross Unrealized Losses		(4,033)	(663)
Amortized Cost		544,045	327,278
Fixed Maturities | Commercial Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		186,251	160,904
Gross Unrealized Gains		696	2,354
Gross Unrealized Losses		(3,126)	(1,182)
Amortized Cost		188,681	159,732
Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments		1,195,024	951,380
Gross Unrealized Gains		2,645	7,450
Gross Unrealized Losses		(24,871)	(7,338)
Amortized Cost		1,217,250	951,268
Fixed Maturities | Corporate Exposures
Gain (Loss) on Investments [Line Items]
Total available for sale investments	[1]	917,650	897,479
Gross Unrealized Gains	[1]	4,191	14,491
Gross Unrealized Losses	[1]	(17,514)	(3,737)
Amortized Cost	[1]	930,973	886,725
Short-Term Investments
Gain (Loss) on Investments [Line Items]
Total available for sale investments		7,264	6,480
Gross Unrealized Gains			3
Gross Unrealized Losses		(4)
Amortized Cost		$ 7,268	6,477
Equity Securities
Gain (Loss) on Investments [Line Items]
Total available for sale investments			235,981
Gross Unrealized Gains			13,494
Gross Unrealized Losses			(1,672)
Amortized Cost			224,159
Equity Securities | Common Stocks
Gain (Loss) on Investments [Line Items]
Total available for sale investments			52,439
Gross Unrealized Gains			7,423
Gross Unrealized Losses			(112)
Amortized Cost			45,128
Equity Securities | Preferred Stocks
Gain (Loss) on Investments [Line Items]
Total available for sale investments			183,542
Gross Unrealized Gains			6,071
Gross Unrealized Losses			(1,560)
Amortized Cost			$ 179,031

[1] Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

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Equity Securities at Fair Value (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Gain (Loss) on Investments [Line Items]
Fair Value	$ 371,680
Gross Unrealized Gains	17,474
Gross Unrealized (Losses)	(5,194)
Cost	359,400
Common Stock
Gain (Loss) on Investments [Line Items]
Fair Value	190,722
Gross Unrealized Gains	15,573
Gross Unrealized (Losses)	(116)
Cost	175,265
Preferred Stocks
Gain (Loss) on Investments [Line Items]
Fair Value	180,958
Gross Unrealized Gains	1,901
Gross Unrealized (Losses)	(5,078)
Cost	$ 184,135

XML

Investments - Additional Information (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2018 USD ($) Security	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($) Security	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($) Security
Schedule of Investments [Line Items]
Other Invested Assets	$ 2,000,000		$ 2,000,000
Equity method investments, carrying Value	1,800,000		1,800,000		$ 1,700,000
Non-credit OTTI on fixed maturities in a net unrealized gain position			400,000		$ 500,000
OTTI losses	0	$ 1,000,000	0	$ 2,100,000
Change to cumulative amounts of credit loss portion of OTTI losses	$ 0	0	$ 0	0
Fixed Maturities
Schedule of Investments [Line Items]
Number of securities in unrealized loss position | Security	830		830		454
Gross Unrealized Loss	$ 53,798,000		$ 53,798,000		$ 14,512,000
Cumulative amounts related to credit loss portion of OTTI losses	$ 2,400,000	$ 2,400,000	$ 2,400,000	$ 2,400,000
Equity Securities
Schedule of Investments [Line Items]
Number of securities in unrealized loss position | Security					22
Non-government-backed securities | Maximum
Schedule of Investments [Line Items]
Percentage of investment	5.00%		5.00%		5.00%
Gross Unrealized Loss	$ 1,400,000		$ 1,400,000		$ 700,000
Mortgage-Backed and Asset-Backed Securities
Schedule of Investments [Line Items]
Securities, effective maturities			5 years 3 months 18 days
Mortgage-Backed and Asset-Backed Securities | Fixed Maturities
Schedule of Investments [Line Items]
Gross Unrealized Loss	24,871,000		$ 24,871,000		7,338,000
Other Invested Assets
Schedule of Investments [Line Items]
Overseas deposits, fair value	$ 40,700,000		$ 40,700,000		$ 28,800,000

XML

Scheduled Maturity Dates for Fixed Maturity Securities by Number of Years Until Maturity (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value
Total	$ 2,996,737
Amortized Cost
Amortized Cost	3,035,103
Fixed Maturities
Fair Value
Due in one year or less	179,367
Due after one year through five years	715,620
Due after five years through ten years	345,661
Due after ten years	553,801
Mortgage-Backed and Asset-Backed Securities	1,195,024
Total	2,989,473	$ 3,057,054
Amortized Cost
Due in one year or less	180,246
Due after one year through five years	725,231
Due after five years through ten years	348,557
Due after ten years	556,551
Mortgage-Backed and Asset-Backed Securities	1,217,250
Amortized Cost	$ 3,027,835	$ 3,027,408

XML

Summary of Aggregate Fair Value and Gross Unrealized Loss by Length of Time Securities had Continuously been in Gross Unrealized Loss Position as Well as Number of Securities (Detail) - USD ($) $ in Thousands		Sep. 30, 2018	Dec. 31, 2017
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value			$ 911,581
Less than 12 months Gross Unrealized Losses			(6,271)
Greater than 12 months Fair Value			508,338
Greater than 12 months Gross Unrealized Losses			(9,913)
Fair Value			1,419,919
Gross Unrealized Losses			(16,184)
Fixed Maturities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		$ 1,548,810	849,475
Less than 12 months Gross Unrealized Losses		(26,206)	(4,666)
Greater than 12 months Fair Value		599,494	505,906
Greater than 12 months Gross Unrealized Losses		(27,592)	(9,846)
Fair Value		2,148,304	1,355,381
Gross Unrealized Losses		(53,798)	(14,512)
Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		130,366	273,672
Less than 12 months Gross Unrealized Losses		(2,559)	(1,502)
Greater than 12 months Fair Value		73,266	54,484
Greater than 12 months Gross Unrealized Losses		(1,320)	(512)
Fair Value		203,632	328,156
Gross Unrealized Losses		(3,879)	(2,014)
Fixed Maturities | States, Municipalities and Political Subdivisions
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		267,333	74,097
Less than 12 months Gross Unrealized Losses		(4,895)	(503)
Greater than 12 months Fair Value		58,882	45,085
Greater than 12 months Gross Unrealized Losses		(2,639)	(920)
Fair Value		326,215	119,182
Gross Unrealized Losses		(7,534)	(1,423)
Fixed Maturities | Agency Residential Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		72,698	87,496
Less than 12 months Gross Unrealized Losses		(2,537)	(346)
Greater than 12 months Fair Value		242,433	236,745
Greater than 12 months Gross Unrealized Losses		(14,682)	(5,068)
Fair Value		315,131	324,241
Gross Unrealized Losses		(17,219)	(5,414)
Fixed Maturities | Residential Mortgage Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		43,108	12,418
Less than 12 months Gross Unrealized Losses		(297)	(62)
Greater than 12 months Fair Value		6,501	546
Greater than 12 months Gross Unrealized Losses		(196)	(17)
Fair Value		49,609	12,964
Gross Unrealized Losses		(493)	(79)
Fixed Maturities | Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		364,764	85,877
Less than 12 months Gross Unrealized Losses		(3,178)	(468)
Greater than 12 months Fair Value		38,290	24,733
Greater than 12 months Gross Unrealized Losses		(855)	(195)
Fair Value		403,054	110,610
Gross Unrealized Losses		(4,033)	(663)
Fixed Maturities | Commercial Mortgage-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		56,209	20,482
Less than 12 months Gross Unrealized Losses		(706)	(95)
Greater than 12 months Fair Value		31,868	22,903
Greater than 12 months Gross Unrealized Losses		(2,420)	(1,087)
Fair Value		88,077	43,385
Gross Unrealized Losses		(3,126)	(1,182)
Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value		536,779	206,273
Less than 12 months Gross Unrealized Losses		(6,718)	(971)
Greater than 12 months Fair Value		319,092	284,927
Greater than 12 months Gross Unrealized Losses		(18,153)	(6,367)
Fair Value		855,871	491,200
Gross Unrealized Losses		(24,871)	(7,338)
Fixed Maturities | Corporate Exposures
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value	[1]	614,332	295,433
Less than 12 months Gross Unrealized Losses	[1]	(12,034)	(1,690)
Greater than 12 months Fair Value	[1]	148,254	121,410
Greater than 12 months Gross Unrealized Losses	[1]	(5,480)	(2,047)
Fair Value	[1]	762,586	416,843
Gross Unrealized Losses	[1]	$ (17,514)	(3,737)
Equity Securities
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value			62,106
Less than 12 months Gross Unrealized Losses			(1,605)
Greater than 12 months Fair Value			2,432
Greater than 12 months Gross Unrealized Losses			(67)
Fair Value			64,538
Gross Unrealized Losses			(1,672)
Equity Securities | Common Stocks
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value			11,245
Less than 12 months Gross Unrealized Losses			(81)
Greater than 12 months Fair Value			1,770
Greater than 12 months Gross Unrealized Losses			(31)
Fair Value			13,015
Gross Unrealized Losses			(112)
Equity Securities | Preferred Stocks
Gain (Loss) on Investments [Line Items]
Less than 12 months Fair Value			50,861
Less than 12 months Gross Unrealized Losses			(1,524)
Greater than 12 months Fair Value			662
Greater than 12 months Gross Unrealized Losses			(36)
Fair Value			51,523
Gross Unrealized Losses			$ (1,560)

[1] Corporate Exposures consist of investments in corporate bonds, hybrid bonds and redeemable preferred stocks.

XML

Net Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net Investment Income [Line Items]
Investment Income	$ 26,453	$ 23,515	$ 76,279	$ 69,018
Investment Expenses	(802)	(917)	(2,325)	(2,707)
Net Investment Income	25,651	22,598	73,954	66,311
Fixed Maturities
Net Investment Income [Line Items]
Investment Income	22,733	19,491	65,504	57,019
Equity Securities
Net Investment Income [Line Items]
Investment Income	3,052	3,774	9,138	11,337
Short-Term Investments, Cash & Cash Equivalents
Net Investment Income [Line Items]
Investment Income	509	84	1,151	254
Other Invested Assets
Net Investment Income [Line Items]
Investment Income	$ 159	$ 166	$ 486	$ 408

XML

Realized Gains and Losses on Investment Sold, Excluding Net Other-Than-Temporary Impairment Losses Recognized in Earnings (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Gain (Loss) on Investments [Line Items]
Net Realized Gains (Losses) on Investments Sold	$ 253	$ 5,190	$ 3,210	$ 7,933
Fixed Maturities
Gain (Loss) on Investments [Line Items]
Gains	331	2,589	3,678	3,401
Losses	(369)	(900)	(1,125)	(3,114)
Net Realized Gains (Losses) on Investments Sold	(38)	1,689	2,553	287
Short-Term Investments, Cash & Cash Equivalents
Gain (Loss) on Investments [Line Items]
Gains	107	758	189	984
Losses	(71)	(14)	(266)	(139)
Net Realized Gains (Losses) on Investments Sold	36	744	(77)	845
Other Invested Assets
Gain (Loss) on Investments [Line Items]
Gains	9	9	78	30
Losses	(50)	(97)	(136)	(232)
Net Realized Gains (Losses) on Investments Sold	(41)	(88)	(58)	(202)
Equity Securities
Gain (Loss) on Investments [Line Items]
Gains	347		1,102
Gains		2,863		7,249
Losses	(51)		(310)
Losses		(18)		(246)
Net Realized Gains (Losses) on Investments Sold	$ 296		$ 792
Net Realized Gains (Losses) on Investments Sold		$ 2,845		$ 7,003

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Portion of Net Unrealized Losses Recognized to Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2018
Gain (Loss) on Investments [Line Items]
Net Unrealized Gains on Equity Securities	$ 2,310	$ 457
Equity Securities
Gain (Loss) on Investments [Line Items]
Total Net Realized and Unrealized Gains recognized during the period	2,606	1,249
Less: Net Realized Gains on Investments Sold recognized during the period	296	792
Net Unrealized Gains on Equity Securities	$ 2,310	$ 457

XML

Fair Value Measurement - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other invested assets at fair value	$ 40,700,000	$ 28,800,000
Significant transfers between Level 1 and Level 2	0		$ 0
Level 3 assets	$ 0
5.75% Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate stated on senior notes	5.75%
Senior notes due date	Oct. 15, 2023

XML

Fixed Maturities and Equity Securities by Asset Class that are Measured at Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	$ 3,368,417	$ 3,299,515
Total Liabilities Measured at Fair Value	274,348	277,951
Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	2,989,473	3,057,054
Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	245,285	393,563
Fixed Maturities | States, Municipalities and Political Subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	631,514	814,632
Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	344,016	407,619
Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	124,191	54,104
Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	540,566	328,753
Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	186,251	160,904
Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	1,195,024	951,380
Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	917,650	897,479
Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	371,680	235,981
Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	190,722	52,439
Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	180,958	183,542
Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	7,264	6,480
Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	274,348	277,951
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	85,509	237,170
Total Liabilities Measured at Fair Value	0	0
Level 1 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	45,093	178,251
Level 1 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	45,093	178,251
Level 1 | Fixed Maturities | States, Municipalities and Political Subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	40,416	52,439
Level 1 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	40,416	52,439
Level 1 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 1 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	6,480
Level 1 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	3,282,908	3,062,345
Total Liabilities Measured at Fair Value	274,348	277,951
Level 2 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	2,944,380	2,878,803
Level 2 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	200,192	215,312
Level 2 | Fixed Maturities | States, Municipalities and Political Subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	631,514	814,632
Level 2 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	344,016	407,619
Level 2 | Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	124,191	54,104
Level 2 | Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	540,566	328,753
Level 2 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	186,251	160,904
Level 2 | Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	1,195,024	951,380
Level 2 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	917,650	897,479
Level 2 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	331,264	183,542
Level 2 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	150,306	0
Level 2 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	180,958	183,542
Level 2 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	7,264	0
Level 2 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	274,348	277,951
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total Assets Measured at Fair Value	0	0
Total Liabilities Measured at Fair Value	0	0
Level 3 | Fixed Maturities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | U.S. Treasury Bonds, Agency Bonds and Foreign Government Bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | States, Municipalities and Political Subdivisions
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Agency Residential Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Residential Mortgage Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Commercial Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Mortgage-Backed and Asset-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Fixed Maturities | Corporate Exposures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities | Common Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Equity Securities | Preferred Stocks
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Short-Term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fixed Maturities and Equity Securities, at Fair Value	0	0
Level 3 | Senior Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior Notes, at Fair Value	$ 0	$ 0

XML

Goodwill and Intangible Assets - Summary of Analysis of Goodwill by Reporting Segment (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Goodwill [Line Items]
Goodwill at Beginning of the Period	$ 4,460
Goodwill Acquired	12,703
Foreign Currency Translation Adjustment	81
Goodwill at End of the Period	17,244
U.S.Insurance
Goodwill [Line Items]
Goodwill at Beginning of the Period	1,978
Goodwill at End of the Period	1,978
International Insurance
Goodwill [Line Items]
Goodwill at Beginning of the Period	2,482
Goodwill Acquired	12,703
Foreign Currency Translation Adjustment	81
Goodwill at End of the Period	$ 15,266

XML

Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2018	Jun. 30, 2018
ASCO Customer Relationships
Goodwill And Intangible Assets [Line Items]
Finite-Lived Assets, Weighted Average Amortization Period	10 years	15 years
Goodwill
Goodwill And Intangible Assets [Line Items]
Increase (decrease) in fair value of identifiable intangible assets and goodwill	$ 1.4
Finite-Lived Intangible Assets
Goodwill And Intangible Assets [Line Items]
Increase (decrease) in fair value of identifiable intangible assets and goodwill	$ (1.4)

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Goodwill and Intangible Assets - Summary of Gross Carrying Value and Weighted Average Amortization Period of Intangible Assets by Type (Detail) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2018	Jun. 30, 2018
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 6,604
Finite-Lived Assets, Accumulated Amortization	(333)
Indefinite-Lived Assets, Gross Carrying Amount	4,625
ASCO Customer Relationships
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	3,383
Finite-Lived Assets, Accumulated Amortization	$ (85)
Finite-Lived Assets, Weighted Average Amortization Period	10 years	15 years
ASCO VOBA
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 1,711
Finite-Lived Assets, Accumulated Amortization	$ (107)
Finite-Lived Assets, Weighted Average Amortization Period	4 years
BDM Broker Networks
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 1,012
Finite-Lived Assets, Accumulated Amortization	$ (17)
Finite-Lived Assets, Weighted Average Amortization Period	15 years
BDM Trade Name
Intangible Assets [Line Items]
Finite-Lived Assets, Gross Carrying Amount	$ 498
Finite-Lived Assets, Accumulated Amortization	$ (124)
Finite-Lived Assets, Weighted Average Amortization Period	1 year
ASCO European Licenses
Intangible Assets [Line Items]
Indefinite-Lived Assets, Gross Carrying Amount	$ 2,489
NUAL Lloyd's Syndicate Capacity
Intangible Assets [Line Items]
Indefinite-Lived Assets, Gross Carrying Amount	$ 2,136

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Goodwill and Intangible Assets - Summary of Estimated Remaining Amortization Expense for Finite-Lived Intangible Assets (Detail) $ in Thousands	Sep. 30, 2018 USD ($)
Finite Lived Intangible Assets Future Amortization Expense Current And Five Succeeding Fiscal Years [Abstract]
2018	$ 333
2019	1,082
2020	834
2021	834
2022	620
2023 and thereafter	2,568
Total	$ 6,271

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Summary of Reserves for Losses and LAE Activity (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Insurance [Abstract]
Net Reserves for Losses and LAE at Beginning of Year	$ 1,705,380	$ 1,510,451
Acquired Net Reserves	16,159
Provision for Losses and LAE for Claims Occurring in the Current Year	603,564	578,272
Increase (Decrease) in Estimated Losses and LAE for Claims Occurring in Prior Years	19,814	44,609
Incurred Losses and LAE	623,378	622,881
Losses and LAE Paid for Claims Occurring During:
Current Year	(65,445)	(75,707)
Prior Years	(420,870)	(358,684)
Losses and LAE Payments	(486,315)	(434,391)
Foreign Currency Adjustment	(4,982)	11,688
Net Reserves for Losses and LAE at End of Period	1,853,620	1,710,629
Reinsurance Recoverables on Unpaid Losses and LAE	780,215	847,505	$ 809,765
Gross Reserves for Losses and LAE at End of Period	$ 2,633,835	$ 2,558,134	$ 2,515,145

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Loss Reserves - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Increased in incurred losses and LAE	$ 500
Provision for Losses and LAE for Claims Occurring in the Current Year	603,564	$ 578,272
Net prior accident year reserve strengthening	19,814	44,609
Increase in losses and loss adjustment expense payments	51,900
Catastrophe
Causes Of Increase Decrease In Liability For Unpaid Claims And Claims Adjustment Expense [Line Items]
Provision for Losses and LAE for Claims Occurring in the Current Year	$ 12,600	$ 77,900

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Ceded Reinsurance - Additional Information (Detail) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Insurance [Abstract]
Reinsurance recoverables	$ 1,100.0
Allowance for uncollectible reinsurance	$ 12.6	$ 12.6

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Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended	12 Months Ended
	Aug. 22, 2018	Sep. 30, 2018	Sep. 30, 2018	Dec. 31, 2013	Dec. 31, 2017
Loss Contingencies [Line Items]
Incentive awarded to the company by the State of Connecticut, total				$ 11,500
Incentive awarded to the company by the State of Connecticut, non-interest bearing loans				8,000
Incentive awarded to the company by the State of Connecticut, grants				$ 3,500
Non-interest bearing incentive loan term			10 years
Forgiveness awarded to the company by the state of Connecticut			$ 7,000
Incentive awarded to the company by the State of Connecticut, other revenue recognized		$ 300	1,000
Incentive awarded to the company by the State of Connecticut, deferred revenue included in other liabilities		$ 5,000	$ 5,000		$ 4,400
The Hartford
Loss Contingencies [Line Items]
Merger Termination Fee	$ 68,250
Merger Transaction-Related Expenses	$ 7,000

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Stock-Based Compensation - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2018
Non-Performance Based Grants | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years
Non-Performance Based Grants | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	4 years
Performance Based Grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based payment award, award vesting period	3 years

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Restricted Stock Unit Awards (Detail) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Number of Awards
Nonvested at the beginning of the period | shares	159,539
Granted | shares	24,593
Vested | shares	(76,168)
Forfeited | shares	(7,000)
Nonvested at the end of the period | shares	100,964
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period | $ / shares	$ 41.60
Granted | $ / shares	50.01
Vested | $ / shares	35.23
Forfeited | $ / shares	38.00
Nonvested at the end of the period | $ / shares	$ 48.70

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Restricted Stock Unit Awards (Parenthetical) (Detail) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share awards withheld for tax payments | shares	29,954
Weighted average vest date fair value, withheld for tax payments | $ / shares	$ 56.83

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Performance-based Equity Awards (Detail) - Performance-based Equity Awards	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Number of Awards
Nonvested at the beginning of the period | shares	966,361
Granted | shares	247,554
Performance Adjustment | shares	(59,833)
Vested | shares	(274,299)
Forfeited | shares	(34,250)
Nonvested at the end of the period | shares	845,533
Weighted Average Grant Date Fair Value
Nonvested at the beginning of the period | $ / shares	$ 43.39
Granted | $ / shares	54.15
Performance Adjustment | $ / shares	37.25
Vested | $ / shares	37.25
Forfeited | $ / shares	46.00
Nonvested at the end of the period | $ / shares	$ 48.86

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Performance-based Equity Awards (Parenthetical) (Detail) - Performance-based Equity Awards	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share awards withheld for tax payments | shares	117,005
Weighted average vest date fair value, withheld for tax payments | $ / shares	$ 55.65

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Stockholders Equity - Additional Information (Detail) - $ / shares			3 Months Ended	9 Months Ended
	Sep. 21, 2018	Aug. 09, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Equity [Abstract]
Common stock dividend paid per share	$ 0.07		$ 0.06	$ 0.21	$ 0.165
Common stock dividend per share declared		$ 0.07	$ 0.06	$ 0.21	$ 0.165
Dividend payable, date declared				Aug. 09, 2018
Dividend payable, date paid				Sep. 21, 2018

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Subsequent Events - Additional Information (Details) $ / shares in Units, £ in Millions, $ in Millions			3 Months Ended	9 Months Ended
	Nov. 07, 2018 USD ($) $ / shares	Aug. 09, 2018 $ / shares	Sep. 30, 2017 $ / shares	Sep. 30, 2018 $ / shares	Sep. 30, 2017 $ / shares	Nov. 07, 2018 GBP (£)
Subsequent Event [Line Items]
Dividends payable, date declared				Aug. 09, 2018
Common stock dividends per share declared		$ 0.07	$ 0.06	$ 0.21	$ 0.165
Dividend payable, date paid				Sep. 21, 2018
Subsequent Event
Subsequent Event [Line Items]
Dividends payable, date declared	Nov. 07, 2018
Common stock dividends per share declared	$ 0.07
Dividend payable, date paid	Dec. 21, 2018
Dividends payable record date	Nov. 30, 2018
Subsequent Event | Tranche One Extending | Club Facility
Subsequent Event [Line Items]
Line of credit, commitment | $	$ 165.0
Subsequent Event | Tranche Two Extending | Club Facility
Subsequent Event [Line Items]
Line of credit, commitment | £						£ 60.0