Acquisition and Disposals (Tables)

6 Months Ended

Jun. 30, 2015

Acquisition and Disposal [Abstract]

Acquisition consideration

The calculation of the consideration transferred to acquire Catlin Shares is as follows:

(In thousands, except per share data)
Catlin Shares outstanding as of April 30, 2015 that received share consideration (including the dilutive effect of warrants)	384,118
Exchange ratio per the implementation agreement	0.130
XL Share issuance to Catlin shareholders	49,935
Closing price per XL share on April 30, 2015 (1)	$	37.08
XL Share issuance consideration	$	1,851,601
Catlin Shares outstanding as of April 30, 2015 that received cash consideration (including the dilutive effect of warrants)	384,118
Cash price component, per Catlin Share in GBP	£	3.88
Cash consideration, in GBP	£	1,490,377
Foreign exchange rate: GBP/USD on April 30, 2015	$	1.5349
Cash consideration	$	2,287,579
Total acquisition consideration	$	4,139,180

____________

(1) The closing market price of XL Shares on the Acquisition Date represents the fair value of XL shares issued as part of the Acquisition Consideration.

Fair value of net assets acquired and liabilities assumed

The following table summarizes the fair values of the assets acquired and liabilities assumed at the Acquisition Date:

(U.S. dollars in thousands)
ASSETS
Fixed maturities, at fair value	$	6,266,489
Short-term investments, at fair value	634,599
Equity investments, at fair value	236,230
Investment in affiliates	216,843
Other investments	386,828
Total investments	$	7,740,989
Cash and cash equivalents (1)	1,267,565
Accrued investment income	35,063
Premiums receivable	2,545,188
Unpaid losses and loss expenses recoverable	1,493,267
Reinsurance balances receivable	299,579
Ceded unearned premiums	1,143,852
Deferred acquisition costs and value of business acquired	679,259
Intangible assets	988,000
Receivable from investments sold	9,633
Other assets	314,168
Total assets	$	16,516,563
LIABILITIES
Unpaid losses and loss expenses	$	6,933,144
Unearned premiums	3,742,234
Reinsurance balances payable	1,441,749
Notes payable and debt	82,066
Payable for investments purchased	34,149
Deferred tax liability	94,071
Other liabilities	265,728
Total liabilities	$	12,593,141
Net assets acquired before non-controlling interest	$	3,923,422
Non-controlling interest in equity of consolidated subsidiaries	562,285
Net assets acquired	$	3,361,137
Acquisition Consideration	$	4,139,180
Goodwill	$	778,043

Transaction related costs

As a part of the ongoing integration of Catlin's operations, the Company incurs costs associated with restructuring the systems, processes and workforce. These costs include such items as severance, retention, facilities and consulting and other costs. The Company separately identifies such costs and includes these expenses within Corporate and Other:

(U.S. dollars in thousands)	Severance costs		Retention costs		Facilities-related costs		Consulting and other
Costs incurred in 2015	$	12,274	$	365	$	1,530	$	13,676
2015 payments	1,639		—		462		4,573
Liabilities at June 30, 2015	$	10,635	$	365	$	1,068	$	9,103

Financial results

The following table summarizes the results of the acquired Catlin operations since the Acquisition Date that have been included within the Company's consolidated statements of income and comprehensive income.

(U.S. dollars in thousands)	May 1, 2015 to June 30, 2015
Total revenues	$	709,800
Net income (loss) attributable to ordinary shareholders	$	50,017

Supplemental pro forma information

	Unaudited Pro Forma
	Six Months Ended June 30,
(In thousands, except per share data)	2015		2014
Total revenues	$	5,427,900	$	5,736,519
Net income attributable to ordinary shareholders	960,951		107,279
Earnings (loss) per ordinary share and ordinary share equivalent – basic	3.14		0.33
Earnings (loss) per ordinary share and ordinary share equivalent – diluted	3.09		0.33

Impact of Life Retro Arrangements

The impact of the Life Retro Arrangements on the Company's results was as follows:

Impact of Life Retro Arrangements	Three months ended June 30,						Six Months Ended June 30,
(U.S. dollars in thousands)	2015			2014			2015			2014
Underwriting profit (loss) (1)	$	—		$	—		$	603		$	—
Net investment income - Life Funds Withheld Assets	46,864			19,165			97,283			19,165
Net realized gains (losses) on investments sold - Life Funds Withheld Assets	68,037			624			120,775			624
Net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	(19,543		)	—			(18,783		)	—
OTTI on investments - Life Funds Withheld Assets	(2,878		)	(8,771		)	(8,087		)	(8,771		)
Exchange gains (losses)	(18,370		)	—			(14,686		)	—
Other income and expenses	3,773			(19		)	2,475			(19		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	239,174			(17,546		)	9,807			(17,546		)
Net income (loss)	$	317,057		$	(6,547	)	$	189,387		$	(6,547	)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	(321,046		)	12,297			(283,931		)	12,297
Change in adjustments related to future policy benefit reserves, net of tax	26,328			—			86,684			—
Change in cumulative translation adjustment - Life Funds Withheld Assets, net of tax	(22,339		)	(5,750		)	8,463			(5,750		)
Total changes to other comprehensive income as a result of Life Retro Arrangements	$	(317,057	)	$	6,547		$	(188,784	)	$	6,547
Comprehensive income (loss)	$	—		$	—		$	603		$	—

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(1) The underwriting profit of $0.6 million relates to a premium adjustment during the six months ended June 30, 2015 relating to the Life Retro Arrangements transaction. Excluding this transaction, the impact to comprehensive income relating to the Life Retro Arrangements was nil for the three and six months ended June 30, 2015.