Notes Payable and Debt and Financing Arrangements

(a) Notes Payable and Debt

All outstanding debt of the Company as of March 31, 2015 and December 31, 2014 was issued by XL-Cayman, a 100% owned subsidiary of XL-Ireland. XL-Ireland does not have significant assets or operations independent of XL-Cayman. XL-Cayman's outstanding debt is fully and unconditionally guaranteed by XL-Ireland. The ability of XL-Cayman, like that of the Company, to obtain funds from its subsidiaries to satisfy any of its obligations under guarantees is subject to certain contractual restrictions, applicable laws and statutory requirements of the various countries in which the subsidiaries operate, including, among others, Bermuda, the United States, Ireland, Switzerland and the United Kingdom. For details of the required statutory capital and surplus for the principal operating subsidiaries of the Company, see Item 8, Note 25, “Statutory Financial Data,” to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.

On March 30, 2015, XL-Cayman issued $500 million of subordinated notes due March 2025, with a fixed coupon of 4.45%, that are guaranteed by XL-Ireland. The notes are listed on the New York Stock Exchange. The notes were issued at 99.633% of the face amount and net proceeds were $492.2 million. Related expenses of the offering amounted to approximately $5.9 million. These costs were deferred and will be amortized over the term of the subordinated notes.

On March 30, 2015, XL-Cayman issued $500 million of subordinated notes due March 2045, with a fixed coupon of 5.5%, that are guaranteed by XL-Ireland. The notes are listed on the New York Stock Exchange. The notes were issued at 99.115% of the face amount and net proceeds were $488.4 million. Related expenses of the offering amounted to approximately $7.2 million. These costs were deferred and will be amortized over the term of the subordinated notes.

XL-Cayman and the Company were in compliance with all covenants by significant margins as of March 31, 2015, and XL-Cayman and the Company currently remain in compliance with all covenants.

(b) Letter of Credit Facilities and Other Sources of Collateral

The Company has several letter of credit facilities provided on both syndicated and bilateral bases from commercial banks. These facilities are utilized primarily to support non-admitted insurance and reinsurance operations in the U.S. and capital requirements at Lloyd’s. The Company’s letter of credit facilities and revolving credit facilities at March 31, 2015 and December 31, 2014 were as follows:



Letter of Credit Summary: (U.S. dollars in thousands except percentages)	March 31, 2015 (1)			December 31, 2014 (1)
Revolving credit facility (2)	$	1,000,000		$	1,000,000
Available letter of credit facilities - commitments (3)	$	3,575,000		$	3,575,000
Available letter of credit facilities - in use	$	1,743,230		$	1,790,561
Collateralized by certain assets of the Company’s investment portfolio	65.7		%	66.2		%

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(1)	As of March 31, 2015 and December 31, 2014, there were eight available letter of credit facilities.

(2)

As of March 31, 2015 and December 31, 2014, the $1 billion of revolving credit available under the November 2013 unsecured credit agreements, which currently provide an aggregate amount for issuance of letters of credit and revolving credit loans up to $2 billion, was unutilized. The credit agreements entered into with Citicorp USA, Inc. in May through November 2013 (the "Citi Agreements") provide for issuance of letters of credit and revolving credit loans up to an aggregate amount of $575.0 million. As of March 31, 2015, $575.0 million of letters of credit were issued under these agreements and therefore such amount is not included in this line.

(3)

The available letter of credit facilities include $1 billion that is also included in the "revolving credit facility" line in this table, as part of the November 2013 credit agreements, which currently provide an aggregate amount of outstanding letters of credit and revolving credit loans of up to $2 billion. The Company has the option to increase the size of the facilities under these agreements by an additional $500 million across such facilities. The Company also has the option to increase the maximum amount of the letters of credit and revolving credit loans available under the 2013 credit agreements with Citicorp USA, Inc. with the lender's and issuing lender's consent.

For details regarding these facilities see Item 8, Note 15(b), “Notes Payable and Debt and Financing Arrangements - Letter of Credit Facilities and Other Sources of Collateral,” to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014.