Segment Information

The Company is organized into two operating segments: Insurance and Reinsurance. Subsequent to the transaction as described in Note 3(c), "Acquisition and Disposals - Sale of Life Reinsurance Subsidiary," GCLR reinsures the majority of the Company's life reinsurance business through the Life Retro Arrangements. The Company no longer considers the Life Operations to be a separate operating segment and the results of the Run-Off Life Operations are reported within “Corporate and Other.” The Company’s general investment and financing operations are also reflected in Corporate and Other. The run-off business subject to the Life Retro Arrangements was, prior to June 30, 2014, reported within the Company’s Life operations segment. Prior period information has been recast to reflect the current presentation.

The Company evaluates the performance of both the Insurance and Reinsurance segments based on underwriting profit. Other items of revenue and expenditure of the Company are not evaluated at the segment level. In addition, the Company does not allocate investment assets used to support its Property and Casualty (“P&C”) operations to the individual segments, except as noted below. Investment assets related to the Company’s Run-Off Life Operations and certain structured products included in the Insurance and Reinsurance segments are held in separately identified portfolios. As such, net investment income from these assets is included in the contribution from the applicable segment or in Corporate and Other. The following tables summarize the segment results for the three months ended March 31, 2015 and 2014:



Three Months Ended March 31, 2015 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	1,654,747		$	825,662		$	2,480,409		$	74,951		$	2,555,360
Net premiums written	1,089,108			747,635			1,836,743			14,506			1,851,249
Net premiums earned	962,306			357,188			1,319,494			14,506			1,334,000
Net losses and loss expenses	616,947			152,880			769,827			19,387			789,214
Acquisition costs	80,387			71,492			151,879			1,817			153,696
Operating expenses (2)	208,457			42,495			250,952			931			251,883
Underwriting profit (loss)	$	56,515		$	90,321		$	146,836		$	(7,629	)	$	139,207
Net investment income - excluding Life Funds Withheld Assets (3)							132,808			10,210			143,018
Net investment income - Life Funds Withheld Assets										50,419			50,419
Net results from structured products (4)	2,905			2,120			5,025			—			5,025
Net fee income and other (5)	(7,465		)	825			(6,640		)	132			(6,508		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							5,807			(1,205		)	4,602
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							—			48,289			48,289
Net realized and unrealized gains (losses) on derivative instruments							—			16,521			16,521
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(229,367		)	(229,367		)
Net income (loss) from investment fund affiliates and operating affiliates (6)							—			57,997			57,997
Exchange (gains) losses							—			27,390			27,390
Corporate operating expenses							—			62,443			62,443
Contribution from P&C and Corporate and Other							283,836			(144,466		)	139,370
Interest expense (7)										41,481			41,481
Non-controlling interests										37,390			37,390
Income tax expense										24,218			24,218
Net income (loss) attributable to ordinary shareholders													$	36,281
Ratios – P&C operations: (8)
Loss and loss expense ratio	64.1		%	42.8		%	58.3		%
Underwriting expense ratio	30.0		%	31.9		%	30.6		%
Combined ratio	94.1		%	74.7		%	88.9		%

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(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes, as well as the Company's Run-Off Life Operations.


(2)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.


(3)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.


(4)	The net results from P&C structured products include net investment income and interest expense of $15.1 million and $10.0 million, respectively.


(5)	Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.


(6)	The Company generally records the income related to the alternative funds and to the private investment and operating fund affiliates on a one-month and three-month lag, respectively.


(7)	Interest expense excludes interest expense related to deposit liabilities recorded in the Insurance and Reinsurance segments.


(8)	Ratios are based on net premiums earned from P&C operations.



Three Months Ended March 31, 2014 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	1,570,926		$	857,713		$	2,428,639		$	84,297		$	2,512,936
Net premiums written	1,127,367			792,173			1,919,540			76,311			1,995,851
Net premiums earned	992,440			420,088			1,412,528			76,311			1,488,839
Net losses and loss expenses	639,193			192,312			831,505			113,587			945,092
Acquisition costs	105,000			87,235			192,235			7,179			199,414
Operating expenses (2)	203,053			40,861			243,914			3,188			247,102
Underwriting profit (loss)	$	45,194		$	99,680		$	144,874		$	(47,643	)	$	97,231
Net investment income - excluding Life Funds Withheld Assets (3)							143,527			70,892			214,419
Net results from structured products (4)	4,890			3,063			7,953			—			7,953
Net fee income and other (5)	(1,212		)	673			(539		)	45			(494		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							17,666			1,563			19,229
Net realized and unrealized gains (losses) on derivative instruments							—			1,810			1,810
Net income (loss) from investment fund affiliates and operating affiliates (6)							—			79,588			79,588
Exchange (gains) losses							—			10,441			10,441
Corporate operating expenses							—			51,338			51,338
Contribution from P&C and Corporate and Other							313,481			44,476			357,957
Interest expense (7)										32,160			32,160
Non-controlling interests										35,759			35,759
Income tax expense										34,321			34,321
Net income (loss) attributable to ordinary shareholders													$	255,717
Ratios – P&C operations: (8)
Loss and loss expense ratio	64.4		%	45.8		%	58.9		%
Underwriting expense ratio	31.0		%	30.5		%	30.8		%
Combined ratio	95.4		%	76.3		%	89.7		%

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(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes, as well as the Company's Run-Off Life Operations and Life Funds Withheld Assets since the sale of XLLR did not occur until May 1, 2014.


(2)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.


(3)	Net investment income does not include net investment income related to the net results from structured products.


(4)	The net results from P&C structured products include net investment income and interest expense of $18.8 million and $10.8 million, respectively.


(5)	Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.


(6)	The Company generally records the income related to the alternative funds and to the private investment and operating fund affiliates on a one-month and three-month lag, respectively.


(7)	Interest expense excludes interest expense related to deposit liabilities recorded in the Insurance and Reinsurance segments.


(8)	Ratios are based on net premiums earned from P&C operations.

The following tables summarize the Company’s net premiums earned by line of business for the three months ended March 31, 2015 and 2014:



Three Months Ended March 31, 2015 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other			Total
P&C Operations:
Professional	$	266,411	$	35,008	$	—		$	301,419
Casualty	309,335		58,208		—			367,543
Property catastrophe	—		94,073		—			94,073
Property	128,241		131,224		—			259,465
Marine, energy, aviation and satellite	—		18,075		—			18,075
Specialty	184,724		—		—			184,724
Other (1)	73,595		20,600		—			94,195
Total P&C Operations	$	962,306	$	357,188	$	—		$	1,319,494
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	(1	)	$	(1	)
Run-off Life operations - Other Life	—		—		14,507			14,507
Total Corporate and Other	$	—	$	—	$	14,506		$	14,506
Total	$	962,306	$	357,188	$	14,506		$	1,334,000

Three Months Ended March 31, 2014 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other			Total
P&C Operations:
Professional	$	275,427	$	50,104	$	—		$	325,531
Casualty	344,004		76,721		—			420,725
Property catastrophe	—		108,437		—			108,437
Property	139,733		135,239		—			274,972
Marine, energy, aviation and satellite	—		23,514		—			23,514
Specialty	176,909		—		—			176,909
Other (1)	56,367		26,073		—			82,440
Total P&C Operations	$	992,440	$	420,088	$	—		$	1,412,528
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	31,797		$	31,797
Run-off Life operations - Other Life	—		—		44,514			44,514
Total Corporate and Other	$	—	$	—	$	76,311		$	76,311
Total	$	992,440	$	420,088	$	76,311		$	1,488,839

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(1)	Other within the Insurance segment includes: excess and surplus, programs, surety, structured indemnity and certain discontinued lines. Other within the Reinsurance segment includes: whole account contracts, accident and health and other lines.