8-K12B

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): July 25, 2016 (July 25, 2016)

XL GROUP LTD

(Exact name of registrant as specified in its charter)

Bermuda	1-10804	98-0665416
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

O'Hara House, One Bermudiana Road, Hamilton, Bermuda	HM 08
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:(441) 292-8515

Not Applicable

(Former name or former address, if changed since last report)

XL GROUP

Public Limited Company

(Exact name of registrant as specified in its charter)

Ireland	1-10804	98-1304974
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

XL House, 8 St. Stephen's Green, Dublin, Ireland	2
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:+353 (1) 400-5500

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Background

At 12:30 p.m., Irish time, on July 25, 2016 (the “Effective Time”), XL Group plc, an Irish public limited company (“XL-Ireland”), and XL Group Ltd, a Bermuda exempted company (“XL-Bermuda”) completed the previously disclosed scheme of arrangement under Irish law (the “Scheme of Arrangement”) that effected a transaction (the “Redomestication”) that resulted in the shareholders of XL-Ireland becoming shareholders of XL-Bermuda and XL-Ireland becoming a subsidiary of XL-Bermuda. In accordance with the terms of the Scheme of Arrangement, the following steps occurred effectively simultaneously at the Effective Time:

1. all of the existing XL-Ireland ordinary shares, par value $0.01 per share (the “XL-Ireland ordinary shares”) (other than XL-Ireland ordinary shares held by XL-Bermuda) were cancelled;

2. the reserves created on cancellation of the XL-Ireland ordinary shares were used to issue XL-Ireland ordinary shares to XL-Bermuda; and

3. in return for such issuance of new XL-Ireland ordinary shares to XL-Bermuda, XL-Bermuda issued common shares, par value $0.01 per share (the “XL-Bermuda common shares”).

Prior to the Redomestication, the XL-Ireland ordinary shares were listed on the New York Stock Exchange, Inc. (the “NYSE”) under the symbol “XL” and registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In connection with the Redomestication, XL-Ireland requested that the NYSE file with the U.S. Securities and Exchange Commission (the “SEC”) an application on Form 25 to strike the XL-Ireland ordinary shares from listing on the NYSE and the XL-Ireland ordinary shares from registration under Section 12(b) of the Exchange Act.

The XL-Bermuda common shares are deemed registered under Section 12(b) of the Exchange Act pursuant to Rule 12g-3(a) under the Exchange Act. The issuance of the common shares by XL-Bermuda in the Redomestication was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 3(a)(10) of the Securities Act. The XL-Bermuda common shares will begin trading on the NYSE under the symbol “XL,” the same symbol under which the XL-Ireland ordinary shares previously traded, at the opening of the NYSE on July 25, 2016. The XL-Bermuda common shares also will begin trading on the Bermuda Stock Exchange in place of the XL-Ireland ordinary shares at the opening of the Bermuda Stock Exchange on July 25, 2016.

Item 1.01. Entry into a Material Definitive Agreement.

In connection with the Redomestication (as defined above), XL-Bermuda, XL-Ireland and XLIT Ltd., an exempted company incorporated under the laws of the Cayman Islands (“XL-Cayman”), as the case may be, entered into the following agreements:

Individual Employment Arrangements

The information under the heading “Individual Employment Arrangements” in Item 5.02 of this Form 8-K is incorporated by reference into this Item 1.01.

Indemnification Agreements and First Supplement to the Deed Poll Indemnity

The information under the heading “Indemnification Agreements and First Supplement to the Deed Poll Indemnity” in Item 5.02 of this Form 8-K is incorporated by reference into this Item 1.01.

Supplemental Indentures

On July 25, 2015, each of XL-Cayman, XL-Ireland, XL-Bermuda and Wells Fargo Bank, National Association, as Trustee, entered into:

1. a Third Supplemental Indenture, dated July 25, 2016, to the Senior Debt Securities Indenture dated as of September 30, 2011; and

2. a Second Supplemental Indenture, dated as of July 25, 2016, to the Subordinated Debt Securities Indenture dated as of March 30, 2015,

(together, the “Supplemental Indentures”).

Pursuant to the Supplemental Indentures, XL-Bermuda has guaranteed, jointly and severally with XL-Ireland (the existing guarantor), the obligations of XL-Cayman under the Senior Debt Securities Indenture and the Subordinated Debt Securities

Indenture referred to above, including the obligations of XL-Cayman under the outstanding securities issued pursuant to such indentures.

The foregoing description of the Supplemental Indentures does not purport to be complete and is qualified in its entirety by reference to the full text of the relevant Supplemental Indenture, which are filed as Exhibit 4.2 and 4.3 hereto and are incorporated by reference into this Item 1.01.

Item 3.02. Unregistered Sales of Equity Securities.

As described above under the heading “Background,” on July 25, 2016, pursuant to the Redomestication, all of the existing XL-Ireland ordinary shares were cancelled, the reserves created on cancellation of the XL-Ireland ordinary shares were used to issue XL-Ireland ordinary shares to XL-Bermuda and, in return for such issuance of new XL-Ireland ordinary shares to XL-Bermuda, XL-Bermuda issued XL-Bermuda common shares to former holders of XL-Ireland ordinary shares (other than XL-Bermuda) on a one-for-one basis. This resulted in the issuance of approximately 274.8 million XL-Bermuda common shares. The terms and conditions of the issuance of the securities in connection with the Redomestication were sanctioned by the High Court of Ireland pursuant to orders issued on July 20, 2016 and July 22, 2016 after a hearing upon the fairness of such terms and conditions at which all holders of XL-Ireland ordinary shares had a right to appear and of which adequate notice had been given. The issuance was exempt from the registration requirements of the Securities Act by virtue of Section 3(a)(10) thereof.

Item 3.03. Material Modification to Rights of Security Holders.

Ordinary Shares

The information above under the heading “Background” is incorporated by reference into this Item 3.03. In connection with the Redomestication, effective as of June 27, 2016, XL-Bermuda adopted new bye-laws, the form of which was included in XL-Ireland’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 11, 2016 and mailed to XL-Ireland ordinary shareholders on or about May 11, 2016 (the “Redomestication Proxy Statement”). XL-Bermuda adopted its memorandum of association on February 19, 2016, a copy which was included in the Redomestication Proxy Statement. The description of the rights of holders of XL-Bermuda common shares and the comparison thereof to the rights of holders of XL-Ireland ordinary shares included under the headings “Description of XL Group Ltd Share Capital” and “Comparison of Rights of Shareholders and Powers of the Board of Directors” in the Redomestication Proxy Statement are incorporated by reference into this Item 3.03. A copy of XL-Bermuda’s memorandum of association is filed herewith as Exhibit 3.3 and is incorporated by reference into this Item 3.03, and the foregoing information is qualified in its entirety by reference to Exhibit 3.3. A copy of XL-Bermuda’s bye-laws are filed herewith as Exhibit 3.4 and is incorporated by reference into this Item 3.03, and the foregoing information is qualified in its entirety by reference to Exhibit 3.4. A specimen of the share certificate evidencing XL-Bermuda common shares is filed herewith as Exhibit 4.1.

Item 5.01. Changes in Control of Registrant.

The information above under the heading “Background” with respect to XL-Ireland is incorporated by reference into this Item 5.01.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Directors and Executives

As previously announced in XL-Ireland’s Current Report on Form 8-K filed on May 19, 2016, as of July 25, 2016, following completion of the Redomestication, the directors and executive officers of XL-Ireland immediately prior to the completion of the Redomestication became the directors and executive officers of XL-Bermuda. XL-Bermuda’s directors (which will be subject to an election at the 2017 annual general meeting of XL-Bermuda) are Ramani Ayer, Stephen Catlin, Dale Comey, Claus-Michael Dill, Robert Glauber, Edward Kelly, III, Suzanne Labarge, Joseph Mauriello, Michael McGavick, Eugene McQuade, Clayton Rose, Anne Stephens and John Vereker. In addition, as of July 25, 2016, following completion of the Redomestication, XL-Bermuda’s Board of Directors replicated the committees of the Board of Directors that previously were in place for XL-Ireland, which consist of an Audit Committee; a Management Development and Compensation Committee; a Nominating, Governance and External Affairs Committee; and a Risk and Finance Committee.

Indemnification Agreements and First Supplement to the Deed Poll Indemnity

In connection with, and effective upon, the completion of the Redomestication, XL-Bermuda has entered into indemnification agreements substantially in the form filed herewith as Exhibit 10.1 (the “Bermuda Indemnification Agreements”) with each of

XL-Bermuda’s directors and its corporate secretary. The Bermuda Indemnification Agreements provide that XL-Bermuda will indemnify the indemnitees to the fullest extent permitted by Bermuda law against claims related to each indemnitee’s service to (or at the request of) XL-Bermuda, except in certain circumstances, including: (i) where payment is actually made or then due (A) under an insurance policy, (B) pursuant to an agreement between indemnitee and XL-Bermuda or other entity served by indemnitee at the request of XL-Bermuda or (C) under the governing documents of XL-Bermuda or other entity served by indemnitee at the request of XL-Bermuda; (ii) in connection with a proceeding initiated by indemnitee, unless such proceeding was authorized by the XL-Bermuda Board or falls within certain limited exceptions specifically provided for in the Bermuda Indemnification Agreements; and (iii) where the indemnitee is found, in a final and non-appealable judgment of a court of competent jurisdiction, to be liable for fraud or dishonesty or an accounting of profits made from the purchase and sale (or sale and purchase) by the indemnitee of securities. The Bermuda Indemnification Agreements also provide that any and all indemnifiable expenses shall, if so requested by the indemnitee, be advanced promptly as they are incurred, provided that the indemnitee must repay any such expense advance if it is determined in a final and non-appealable judgment of a court of competent jurisdiction that the indemnitee is not entitled to be indemnified against such expense.

XL-Cayman previously entered into indemnification agreements (the “Cayman Indemnification Agreements”) with each of the directors (who held such office prior to the effectiveness of the Scheme of Arrangement) and the corporate secretary of XL-Ireland, and a deed poll indemnity as to other current or former executives, directors and employees of XL-Ireland (and its subsidiaries) who did not enter into Cayman Indemnification Agreements. These remain in effect following the Scheme of Arrangement. In connection with the Scheme of Arrangement, XL-Cayman amended the deed poll indemnity (as amended, the “First Supplement to the Deed Poll”) filed herewith as Exhibit 10.2 to expand the coverage of the deed poll indemnity to indemnify other current or former executives, directors and employees of XL-Bermuda (and its subsidiaries) who did not enter into Cayman Indemnification Agreements. All other terms of the deed poll indemnity remain unchanged.

Copies of the form of Bermuda Indemnification Agreement and the First Supplement to the Deed Poll are filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated into this Item 5.02 by reference. The foregoing summary of the Bermuda Indemnification Agreements and First Supplement to the Deed Poll is qualified in its entirety by reference to Exhibit 10.1 and Exhibit 10.2.

Employee Stock Plans and Awards

In connection with, and effective upon, the completion of the Redomestication, XL-Bermuda assumed the existing liabilities, obligations and duties of XL-Ireland under the compensation, equity incentive, deferred compensation and employee pension and welfare benefit plans maintained by XL-Ireland, including the XL Group plc Directors Stock & Option Plan (the “Directors Plan”), the XL Group plc 1991 Performance Incentive Program (the “1991 Program”), the XL Group plc 1999 Performance Incentive Program for Employees (the “1999 Program”), the XL Group plc Reinsurance Supplemental Long Term Cash Incentive Compensation Plan (the “Cash Incentive Plan”), the Deferred Cash Program (the “Deferred Cash Program”), the XL Group plc Supplemental Deferred Compensation Plan (the “Supplemental DCP”), the XL Group plc Executive Severance Benefit Plan (the “ESB Plan” and together with the Directors Plan, the 1991 Program, the 1999 Program, the Cash Incentive Plan, the Deferred Cash Program and the Supplemental DCP, the “Programs”). Furthermore, in connection with, and effective upon, the completion of the Redomestication, the Programs have been amended by XL-Ireland, among other things, (i) to provide that XL-Bermuda and its Board of Directors will succeed to all powers, authorities and obligations of XL-Ireland and its Board of Directors under each Program, (ii) to provide that the securities to be issued pursuant to each the Directors Plan and the 1991 Program will consist of ordinary shares of XL-Bermuda and (iii) otherwise to reflect the completion of the Redomestication, as necessary. In addition, in connection with, and effective upon, the completion of the Redomestication, XL-Bermuda assumed the existing liabilities, obligations and duties of XL-Ireland under the 2015 Restricted Cash Unit Agreements by and between XL-Ireland and the following named executive officers: Paul Brand and Stephen Catlin.

Individual Employment Arrangements

In connection with, and effective upon, the completion of the Redomestication, XL-Bermuda assumed the existing liabilities, obligations and duties of XL-Ireland under the individual employment arrangements by and between XL-Ireland and/or its subsidiaries and each of the following named executive officers: the employment agreement of Michael S. McGavick; the letters of assignment of Stephen Catlin and Paul Brand; and the participation agreements under the ESB Plan of Peter Porrino and Gregory Hendrick.

Item 8.01. Other Events.

CUSIP

Upon the effectiveness of the Redomestication, the CUSIP number for the XL-Bermuda common shares issued in place of the XL-Ireland ordinary shares will be G98294 104.

Press Release

On July 25, 2016, XL-Bermuda issued a press release announcing the completion of the Redomestication. A copy of the press release is filed herewith as Exhibit 99.4 and is incorporated by reference into this Item 8.01.

Background

The information under the heading “Background” in this Form 8-K is incorporated by reference into this Item 8.01.

Registration Statements

In connection with the effectiveness of the Redomestication, on the date hereof, (i) XL-Bermuda, XL-Ireland and XL-Cayman expect to file with the SEC Post-Effective Amendment No. 1 to a Registration Statement on Form S-3 (File No. 333-199842) (the “S-3 Post-Effective Amendment”), (ii) XL-Bermuda expects to file with the SEC Post-Effective Amendments to Registration Statements on Form S-8 (File No. 333-62137), Form S-8 (File No. 333-81451), Form S-8 (File No. 333-46250), Form S-8 (File No. 333-89568), Form S-8 (File No. 333-161122), Form S-8 (File No. 333-161124), Form S-8 (File No. 333-174138), Form S-8 (File No. 333-210074) (together, the “S-8 Post-Effective Amendments”) and (iii) XL-Bermuda expects to file with the SEC a Registration Statement on Form S-8 (together, the “Registration Statements”).

Pursuant to the S-3 Post-Effective Amendment and the S-8 Post-Effective Amendments, among other things, XL-Bermuda will expressly adopt the relevant Registration Statements as its own registration statement for all purposes of the Securities Act and the Exchange Act.

In connection with the filing of the Registration Statements, XL-Bermuda is filing in this Current Report on Form 8-K: (i) XL Group plc Financial Statements as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015, attached hereto as Exhibit 99.1; (ii) XL Group plc Financial Statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014, attached hereto as Exhibit 99.2; and (iii) XL Group plc Unaudited Pro Forma Consolidated Financial Information for the year ended December 31, 2015, attached hereto as Exhibit 99.3. The information in Exhibits 99.1, 99.2 and 99.3 is incorporated by reference into this Item 8.01.

Item 9.01.    Financial Statements and Exhibits.

(d)    Exhibits. The following exhibits are filed herewith:

Exhibit No.	Description
3.1	Certificate of Incorporation of XL Group Ltd
3.2	Certificate of Incorporation on Change of Name of XL Group Ltd
3.3	Memorandum of Association of XL Group Ltd
3.4	Bye-Laws of XL Group Ltd
3.5	Amended and Restated Memorandum and Articles of Association of XL Group Public plc
4.1	Specimen Share Certificate (evidencing the common shares of XL Group Ltd)
4.2	Third Supplemental Indenture, dated July 25, 2016, among XL Group Ltd, XL Group plc, XLIT Ltd. and Wells Fargo Bank, National Association, as Trustee, to the Senior Debt Securities Indenture dated as of September 30, 2011
4.3	Second Supplemental Indenture, dated as of July 25, 2016, among XL Group Ltd, XL Group plc, XLIT Ltd. and Wells Fargo Bank, National Association, as Trustee, to the Subordinated Debt Securities Indenture dated as of March 30, 2015

10.1	Form of Bermuda Indemnification Agreement between XL Group Ltd and each of the directors of and the corporate secretary of XL Group Ltd
10.2	First Supplement to the Deed Poll of XLIT Ltd
23.1	Consent of PricewaterhouseCoopers LLP
99.1	XL Group plc’s Financial Statements as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015, revised solely to reflect the guarantor financial information
99.2	XL Group plc’s Financial Statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014, revised solely to reflect the guarantor financial information
99.3	XL Group plc Unaudited Pro Forma Consolidated Financial Information for the year ended December 31, 2015
99.4	Press Release (“XL Group Ltd Completes Redomestication to Bermuda”) dated July 25, 2016
99.5	“Description of XL Group Ltd Share Capital” and “Comparison of Rights of Shareholders and Powers of the Board of Directors” (Incorporated by reference to the sections so entitled of XL Group plc’s Proxy Statement Schedule 14A filed on May 11, 2016)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Dcoument
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

SIGNATURES

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

	XL Group Ltd
Date: July 25, 2016	By:	/s/ Kirstin Gould
		Name:   Kirstin Gould Title:     General Counsel and Secretary

	XL Group plc
Date: July 25, 2016	By:	/s/ Kirstin Gould
		Name:   Kirstin Gould Title:     General Counsel and Secretary

EX-3.1

Exhibit 3.1

FORM NO. 6 Registration No. 51235

BERMUDA

CERTIFICATE OF INCORPORATION

I hereby that in accordance with section 14 of the Companies Act 1981 issue this Certificate of Incorporation and do certify that onthe 19th day of February 2016

Coral Reef Limited

was registered by me in the Register maintained by me under the provisions of the said section and that the status of said company is that of an exempted company.

	Given under my hand and the Seal of the REGISTRAR OF COMPANIES this 22nd day of February 2016
[Seal]	/s/ Wakeel D Ming Wakeel D Ming for Registrar of Companies

EX-3.2

Exhibit 3.2

FORM NO. 3a Registration No. 51235

BERMUDA

CERTIFICATE OF INCORPORATION

ON CHANGE OF NAME

I HEREBY CERTIFY that in accordance with section 10 of the Companies Act 1981Coral Reef Limited by resolution and with the approval of the Registrar of Companies has changed its name and was registered as XL Group Ltd on the 29^th day of February 2016.

	Given under my hand and the Seal of the REGISTRAR OF COMPANIES this 29th day of February 2016
[Seal]	/s/ Wakeel D Ming Wakeel D Ming for Registrar of Companies

EX-3.3

Exhibit 3.3

BERMUDA

THE COMPANIES ACT 1981

MEMORANDUM OF ASSOCIATION OF COMPANY LIMITED BY SHARES

Section 7(1) and (2)

MEMORANDUM OF ASSOCIATION

OF

Coral Reef Limited

(hereinafter referred to as "the Company")

1. The liability of the members of the Company is limited to the amount (if any) for the time being unpaid on the shares respectively held by them.

2. We, the undersigned, namely,

Name and Address	Bermudian Status (Yes or No)	Nationality	Number of Shares Subscribed
Federico Candiolo Crawford House 50 Cedar Avenue Hamilton HM 11	No	Italian	1
Neil Horner Crawford House 50 Cedar Avenue Hamilton HM 11	No	British	1

do hereby respectively agree to take such number of shares of the Company as may be allotted to us respectively by the provisional directors of the Company, not exceeding the number of shares for which we have respectively subscribed, and to satisfy such calls as may be made by the directors, provisional directors or promoters of the Company in respect of the shares allotted to us respectively.

3. The Company is to be an exempted Company as defined by the Companies Act 1981.

4. The Company, with the consent of the Minister of Finance, has power to hold land situate in Bermuda not exceeding ____in all, including the following parcels:- N/A

5. The authorised share capital of the Company is USD$100.00 divided into 10,000 shares of par value USD$0.01 each.

6. The objects for which the Company is formed and incorporated are unrestricted.

7. The following are provision regarding the powers of the Company:

i)subject to paragraph 4, the Company may do all such things as are incidental or conducive to the attainment of its objects and shall have the capacity, rights, powers and privileges of a natural person;

ii)subject to the provisions of Section 42 of the Companies Act 1981, the Company has the power to issue preference shares which at the option of the holders thereof are to be liable to be redeemed;

iii)the Company has the power to purchase its own shares in accordance with the provisions of Section 42A of the Companies Act 1981; and

iv)the Company has the power to acquire its own shares to be held as treasury shares in accordance with the provisions of Section 42B of the Companies Act 1981.

Signed by each subscriber in the presence of at least one witness attesting the signature thereof:-

/s/ Federico Candiolo /s/ Alexandra Schweizer

Federico Candiolo Alexandra Schweizer

/s/ Neil Horner /s/ Alexandra Schweizer

Neil Horner Alexandra Schweizer

(Subscribers) (Witnesses)

Subscribed this 19^th day of February 2016

EX-3.4

Exhibit 3.4

BYE−LAWS

of

XL Group Ltd

(Adopted on 27 June, 2016)

TABLE OF CONTENTS

Page No.

INTERPRETATION......................................................................................................................................................1

1. Interpretation.............................................................................................................................................................1

BOARD OF DIRECTORS ...........................................................................................................................................4

2. Board of Directors....................................................................................................................................................4

3. Management of the Company...................................................................................................................................4

4. Power to appoint managing director or chief executive officer; power to appoint chairperson of the Board..........4

5. Power to appoint manager.........................................................................................................................................4

6. Power to authorise specific actions...........................................................................................................................5

7. Power to appoint attorney ........................................................................................................................................5

8. Power to delegate to a committee ............................................................................................................................5

9. Power to appoint and dismiss employees ................................................................................................................6

10. Power to borrow and charge property......................................................................................................................6

11. Exercise of power to purchase shares of or discontinue the Company....................................................................6

12. Election of Directors ...............................................................................................................................................6

13. Defects in appointment of Directors .....................................................................................................................10

14. Alternate Directors/Observer ................................................................................................................................10

15. Removal of Directors.............................................................................................................................................10

16. Other Vacancies on the Board ...............................................................................................................................11

17. Notice of meetings of the Board ...........................................................................................................................11

18. Quorum at meetings of the Board..........................................................................................................................12

19. Meetings of the Board............................................................................................................................................12

20. Unanimous written resolutions .............................................................................................................................12

21. Contracts and disclosure of Directors' interests ....................................................................................................13

22. Remuneration of Directors.....................................................................................................................................13

23. Other interests of Directors....................................................................................................................................14

OFFICERS...................................................................................................................................................................14

24. Officers of the Company........................................................................................................................................14

25. Appointment of Secretary.......................................................................................................................................14

26. Remuneration of Officers ......................................................................................................................................14

27. Duties of Officers...................................................................................................................................................14

28. Chairperson of meetings .......................................................................................................................................14

29. Register of Directors and Officers ........................................................................................................................15

MINUTES....................................................................................................................................................................15

30. Obligations of the Board to keep minutes..............................................................................................................15

INDEMNITY................................................................................................................................................................15

31. Indemnification of Directors and Officers of the Company .................................................................................15

i

32. Waiver of claim by Member...................................................................................................................................17

MEETINGS ................................................................................................................................................................17

33. Notice of annual general meeting .........................................................................................................................17

34. Notice of special general meeting..........................................................................................................................17

35. Accidental omission of notice of general meeting; Business to be conducted; Deemed notice..//........................18

36. Meeting called on requisition of Members ...........................................................................................................18

37. Short notice ...........................................................................................................................................................18

38. Postponement or cancellation of meetings ............................................................................................................18

39. Quorum for general meeting..................................................................................................................................19

40. Adjournment of meetings ......................................................................................................................................19

41. Attendance at meetings; Security...........................................................................................................................20

42. Written resolutions.................................................................................................................................................20

43. Application of provisions; Attendance of Directors ..............................................................................................21

44. Voting at meetings .................................................................................................................................................21

45. Voting on show of hands .......................................................................................................................................21

46. Decision of chairperson ........................................................................................................................................22

47. Demand for a poll .................................................................................................................................................22

48. Seniority of joint holders voting ...........................................................................................................................23

49. Instrument of proxy................................................................................................................................................23

50. Representation of corporations at meetings...........................................................................................................24

SHARE CAPITAL AND SHARES.............................................................................................................................24

51. Rights of shares......................................................................................................................................................24

52. Limitation on voting rights of Controlled Shares. ................................................................................................25

53. Power to issue shares ............................................................................................................................................26

54. Variation of rights and alteration of share capital..................................................................................................27

55. Registered holder of shares....................................................................................................................................28

56. Death of a joint holder ..........................................................................................................................................28

57. Share certificates....................................................................................................................................................28

58. Calls on shares ......................................................................................................................................................29

59. Forfeiture of shares ...............................................................................................................................................29

REGISTER OF MEMBERS........................................................................................................................................30

60. Contents of Register of Members .........................................................................................................................30

61. Inspection of Register of Members........................................................................................................................30

62. Determination of record dates................................................................................................................................30

TRANSFER OF SHARES...........................................................................................................................................31

63. Instrument of transfer.............................................................................................................................................31

64. Restriction on transfer............................................................................................................................................32

65. Transfers by joint holders ......................................................................................................................................33

66. Lien on shares .......................................................................................................................................................33

TRANSMISSION OF SHARES .................................................................................................................................34

67. Representative of deceased Member .....................................................................................................................34

ii

68. Registration on death or bankruptcy; Rights related to transmission ...................................................................34

DIVIDENDS AND OTHER DISTRIBUTIONS.........................................................................................................34

69. Declaration of dividends by the Board .................................................................................................................34

70. Other distributions ................................................................................................................................................35

71. Reserve fund .........................................................................................................................................................35

72. Deduction of amounts due to the Company...........................................................................................................35

73. Unclaimed dividends .............................................................................................................................................35

74. Interest on dividend................................................................................................................................................35

CAPITALIZATION ....................................................................................................................................................35

75. Issue of bonus shares .............................................................................................................................................35

ACCOUNTS AND FINANCIAL STATEMENTS......................................................................................................36

76. Records of account.................................................................................................................................................36

77. Financial year end..................................................................................................................................................36

78. Financial statements...............................................................................................................................................36

AUDIT..........................................................................................................................................................................36

79. Appointment of Auditor.........................................................................................................................................36

80. Remuneration of Auditor ......................................................................................................................................36

81. Vacancy of office of Auditor .................................................................................................................................37

82. Access to books of the Company...........................................................................................................................37

83. Report of the Auditor ............................................................................................................................................37

NOTICES.....................................................................................................................................................................37

84. Notices to Members of the Company ...................................................................................................................37

85. Notices to joint Members.......................................................................................................................................38

86. Service and delivery of notice................................................................................................................................38

SEAL OF THE COMPANY.........................................................................................................................................38

87. The seal .................................................................................................................................................................38

88. Manner in which seal is to be affixed ...................................................................................................................38

WINDING UP .............................................................................................................................................................38

89. Winding up/distribution by liquidator ...................................................................................................................38

ALTERATION OF BYE−LAWS ................................................................................................................................39

90. Alteration of Bye−laws .........................................................................................................................................39

REGISTERED OFFICE .............................................................................................................................................39

91. Registered Office ..................................................................................................................................................39

AMALGAMATION OR MERGER VOTING ...........................................................................................................39

92. Member Vote to Approve an Amalgamation or Merger ........................................................................................39

Schedule – Form A (Bye−Law 63)

iii

INTERPRETATION

1. Interpretation

(1) In these Bye−laws the following words and expressions shall, where not inconsistent with the context, have the following meanings:

(a)"Act" means the Companies Act 1981 as amended from time to time;

(b)"Affiliate" means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person, provided, that no Member of the Company shall be deemed an Affiliate of another Member solely by reason of an investment in the Company. For purposes of this definition, the term "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities, by contract or otherwise;

(c)"Auditor" means any Person appointed to audit the accounts of the Company;

(d)"Board" means the Board of Directors appointed or elected pursuant to these Bye−laws and acting by resolution in accordance with the Act and these Bye−laws or the Directors present at a meeting of Directors at which there is a quorum;

(e)"Business Day" means any day, other than a Saturday, a Sunday or any day on which banks in Hamilton, Bermuda or The City of New York, United States, are authorised or obligated by law or executive or other order to close;

(f)"Code" means the United States Internal Revenue Code of 1986, as amended from time to time, or any United States federal statute from time to time in effect that has replaced such statute, and any reference in these Bye−laws to a provision of the Code or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a United States federal law, or any United States federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(g)"Company" means the company for which these Bye−laws are approved and confirmed;

(h)"Common Shares" means the Common Shares of the Company, initially having a par value of US$0.01 per share, and includes a fraction of an Common Share;

(i)"Controlled Shares" in reference to any person means: (i) all shares of the Company directly, indirectly or constructively owned by such person within the meaning of Section 958 of the Code; and (ii) all shares of the Company directly, indirectly or constructively owned by any person or “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act.

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(j)“Covered Arrangement” means, with respect to any person and as of any date, any agreement, arrangement or understanding (including any swaps or other derivative or short positions, profit interests, options, hedging transactions, and securities lending or borrowing arrangement) to which such person or its Affiliates is, directly or indirectly, a party as of such date (A) with respect to shares of the Company or (B) the effect or intent of which is to mitigate loss to, manage the potential risk or benefit of share price changes (increases or decreases) for, or increase or decrease the voting power of such person or any of its Affiliates with respect to securities of the Company or which may have payments based in whole or in part, directly or indirectly, on the value (or change in value) of any securities of the Company (other than, in each such case, interests in investment companies registered under the Investment Company Act of 1940 of the United States of America);

(k)"Director" means a director of the Company;

(l)"Exchange Act" means the United States Securities Exchange Act of 1934, as amended from time to time, or any United States federal statute from time to time in effect that has replaced such statute, and any reference in these Bye−laws to a provision of the Exchange Act or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a United States federal law, or any United States federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(m)"general meeting," "general meeting of the Company," "special general meeting" and "special general meeting of the Company" each means a meeting of the Members of the Company having the right to attend and vote thereat;

(n)"Member" means the Person registered in the Register of Members as the holder of shares in the Company and, when two (2) or more Persons are so registered as joint holders of shares, means the Person whose name stands first in the Register of Members as one of such joint holders or all of such Persons as the context so requires;

(o)“Notice” means written notice as further defined in these Bye-laws unless otherwise specifically stated;

(p)“Officer” means any Person appointed by the Board to hold an office in the Company;

(q) “Person” means any natural person, company, corporation, firm, partnership, limited liability company, trust or any other business, enterprise, entity or other person, including any governmental authority, whether or not recognised as constituting a separate legal entity;

(r)“Register of Directors and Officers” means the Register of Directors and Officers referred to in these Bye-laws;

(s)"Register of Members" means the Register of Members referred to in these Bye−laws;

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(t)"Resident Representative" means any Person appointed to act as resident representative and includes any deputy or assistant resident representative;

(u)"Secretary" means the person appointed to perform any or all the duties of secretary of the Company and includes any deputy or assistant secretary and any Person appointed by the Board to perform any of the duties of the Secretary;

(v)"Securities Act" means the United States Securities Act of 1933, as amended from time to time, or any United States federal statute from time to time in effect which has replaced such statute, and any reference in these Bye−laws to a provision of the Securities Act or a rule or regulation promulgated thereunder means such provision, rule or regulation as amended from time to time or any provision of a United States federal law, or any United States federal rule or regulation, from time to time in effect that has replaced such provision, rule or regulation;

(w)"share" means any share or any class or series of shares in the share capital of the Company, whether issued and outstanding or not, and includes a fraction of a share;

(x)"Subsidiary", with respect to any Person, means a company, more than fifty percent (50%) (or, in the case of a wholly owned subsidiary, one hundred percent (100%)) of the outstanding voting shares of which are owned, directly or indirectly, by such Person or by one (1) or more other Subsidiaries of such Person, or any such Person and one (1) or more other Subsidiaries;

(y)"Treasury Share" means a share of the Company that was or is treated as having been acquired and held by the Company and has been held continuously by the Company since it was so acquired and has not been cancelled;

(z)"United States" and "U.S." each means the United States of America and any territory and political subdivision thereof;

(2) In these Bye−laws, where not inconsistent with the context:

(a)words denoting the plural number include the singular number and vice versa;

(b)words denoting the masculine gender include the feminine gender;

(c)words importing persons include companies, associations or bodies of persons whether corporate or not;

(d)the word:

(i) "may" shall be construed as permissive;

(ii) "shall" shall be construed as imperative; and

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(e)unless otherwise provided herein words or expressions defined in the Act shall bear the same meaning in these Bye−laws.

(3) Expressions referring to writing or written shall, unless the contrary intention appears, include facsimile, printing, lithography, photography, electronic mail and other modes of representing words in a visible form.

(4) Headings used in these Bye−laws are for convenience only and are not to be used or relied upon in the construction hereof.

(5) In these Bye−laws, (a) powers of delegation shall not be restrictively construed but the widest interpretation shall be given thereto, (b) the word "Board" in the context of the exercise of any power contained in these Bye−laws includes any committee consisting of one (1) or more individuals appointed by the Board, any Director holding executive office and any local or divisional Board, manager or agent of the Company to which or, as the case may be, to whom the power in question has been delegated in accordance with these Bye−laws, (c) no power of delegation shall be limited by the existence of any other power of delegation and (d) except where expressly provided by the terms of delegation, the delegation of a power shall not exclude the concurrent exercise of that power by any Person who is for the time being authorised to exercise it under Bye−laws or under another delegation of the powers.

BOARD OF DIRECTORS

2. Board of Directors

The business of the Company shall be managed and conducted by the Board.

3. Management of the Company

(1) In managing the business of the Company, the Board may exercise all such powers of the Company as are not, by statute or by these Bye−laws, required to be exercised by the Company in general meeting, and the business and affairs of the Company shall be so controlled by the Board. The Board also may present any petition and make any application in connection with the winding up or liquidation of the Company.

(2) No regulation or alteration to these Bye−laws made by the Company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation or alteration had not been made.

4. Power to appoint managing director or chief executive officer; power to appoint chairperson of the Board

(1) A managing director or chief executive officer of the Company, who may or may not be a Director, may be appointed by the Board at any time. Any managing

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director or chief executive officer shall, subject to the control of the Board, supervise and administer all of the general business and affairs of the Company.

(2) The Board may elect a chairperson of the Board an determine the period for which he is to hold office. The chairperson of the Board shall vacate that office if he vacates his office as a Director (otherwise than by the expiration of his term of office at a general meeting of the Company at which he is reappointed or reelected).

5. Power to appoint manager

The Board may from time to time and at any time appoint a Person or a body of Persons to act as manager of the Company's day to day business and may entrust to and confer upon such manager such powers and duties as it deems appropriate for the transaction or conduct of such business.

6. Power to authorise specific actions

The Board may from time to time and at any time authorise any Person or body of Persons to act on behalf of the Company for any specific purpose and in connection therewith to execute any deed, agreement, document or instrument in the name and on behalf of the Company.

7. Power to appoint attorney

The Board may from time to time and at any time by power of attorney appoint any Person or body of Persons, whether nominated directly or indirectly by the Board, to be an attorney of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Board) and for such period (or for unspecified length of time) and subject to such conditions as it may think fit and any such power of attorney may contain such provisions for the protection and convenience of Persons dealing with any such attorney as the Board may think fit and may also authorise any such attorney to sub−delegate all or any of the powers, authorities and discretions so vested in the attorney. Such attorney may, if so authorised under the seal of the Company, execute any deed or instrument under such attorney's personal seal with the same effect as the affixation of the seal of the Company.

8. Power to delegate to a committee

The Board may delegate any of its powers, authorities and discretions (with power to sub-delegate) to any committee, consisting of such person or persons (whether Directors or not) as it thinks fit. The Board may make any such delegation on such terms and conditions with such restrictions as it thinks fit and either collaterally with, or to the exclusion of, its own powers and may from time to time revoke or vary such delegation. Any committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations or limitations that may be imposed on it by the Board. The power to delegate to a committee extends to all of the powers, authorities and discretions of the Board generally (including those conferred by Bye-law 10) and shall not be limited by the fact that in certain provisions of these

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Bye-laws, but not in others, express reference is made to a committee or to particular powers, authorities or discretions being exercised by the Board or by a committee of the Board.

All Board committees shall conform to such directions as the Board shall impose on them; provided, that each member shall have one (1) vote, and each committee shall have the right as it deems appropriate to retain outside advisors and experts. The meetings and proceedings of any committee of the Board consisting of two (2) or more members shall be governed by the provisions contained in these Bye-laws for regulating the meetings and proceedings of the Board so far as they are capable of applying and are not superseded by any regulations imposed by the Board except that, unless otherwise determined by the Board, the quorum necessary for the transaction of business at any committee meeting shall be two (2) members. Each committee shall cause minutes to be made of all meetings of such committee and of the attendance thereat and shall cause such minutes and copies of resolutions adopted by unanimous consent to be promptly inscribed or incorporated by the Secretary in the minute book.

9. Power to appoint and dismiss employees

The Board may appoint, suspend or remove any officer, manager, secretary, clerk, agent or employee of the Company and may fix their remuneration and determine their duties.

10. Power to borrow and charge property

The Board may exercise all the powers of the Company to borrow money and to mortgage or charge or otherwise grant a security interest in its undertaking, property and uncalled capital, or any part thereof, and may issue debentures, debenture stock and other securities whether outright or as security for any debt, liability or obligation of the Company or any third party.

11. Exercise of power to purchase shares of or discontinue the Company

(1) Purchase of Common Shares

The Company shall have the power to purchase its own shares for cancellation or acquire them as Treasury Shares in accordance with the Act on such terms as the Board shall think fit. The Board may exercise all the powers of the Company to purchase or acquire all or any part of its own shares pursuant to the Act.

(2) Power to discontinue the Company

The Board may exercise all the powers of the Company to discontinue the Company to a named country or jurisdiction outside Bermuda pursuant to Section 132G of the Act.

12. Election of Directors

(1) The Board shall consist of not less than three (3) Directors nor more than fifteen (15) Directors with the exact number of Directors to be determined from time to time by resolution adopted by the affirmative vote of a majority of the Board. Any increase in the size of the Directors pursuant to this Bye−law 12(1) shall be

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deemed to be a vacancy and may be filled in accordance with Bye−law 16 hereof. Except in the case of a vacancy, Directors shall be elected by the Members at an annual general meeting or any special general meeting called for the purpose.

(2) Directors elected by the Members shall hold office for such term as the Members may determine or, in the absence of such determination, until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.

(3) No person shall be appointed a Director, unless nominated in accordance with the provisions of this Bye-law 12. Nominations of persons for appointment as Directors may be made:

(i) by the Board;

(ii) with respect to election at an annual general meeting, by any Member who holds Common Shares or other shares carrying the general right to vote at general meetings of the Company, who is a Member at the time of the giving of the notice provided for in Bye-law 12(4) and at the time of the relevant annual general meeting, and who timely complies with the notice procedures set forth in this Bye-law 12;

(iii) with respect to election at an extraordinary general meeting requisitioned in accordance with Bye-law 36 and Section 74 of the Act, and in compliance with the other provisions of these Bye-laws and the Act relating to nominations of Directors and the proper bringing of business before a special general meeting; and

(iv) by holders of any class or series of shares in the Company then in issue having special rights to nominate or appoint Directors in accordance with the terms of issue of such class or series, but only to the extent provided in such terms of issue

(clauses (ii), (iii) and (iv) being the exclusive means for a Member to make nominations of persons for election to the Board).

(4) Any Member who holds Common Shares or other shares carrying the general right to vote at general meetings of the Company may nominate a person or persons for election as Director at an annual general meeting only if (in addition to the requirements of Bye-law 12(3)(ii)) written notice of such Member’s intent to make such nomination is given in accordance with the procedures set forth in this Bye-law 12, either by personal delivery or by mail, postage prepaid, to the Secretary of the Company at the address of the Secretary specified in the notice of an annual general meeting or accompanying proxy statement last sent to Members prior to the delivery of such Member’s written notice of nomination (or, if no such address was specified, at the registered office of the Company) not later than the close of business not less than 90 and not more than 120 clear days prior to the

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one (1) year anniversary date of the immediately preceding annual general meeting, provided, however, that if the date of the annual general meeting is more than 30 clear days before or after the anniversary date of the immediately preceding annual general meeting, such notice of nomination shall be given not later than the later of (i) the close of business 30 clear days prior to the date of such annual general meeting or (ii) the close of business on the day that is 10 clear days after the first public announcement of the date of such annual general meeting. In no event shall any adjournment of an annual general meeting or the announcement thereof commence a new time period (or extend any time period) for the giving of a Member’s notice as described above.

(5) Each notice of a Member’s intent to make a nomination delivered pursuant to Bye-law 12(4) and each requisition in writing delivered in accordance with Bye-law 36 and Section 74 of the Act that sets forth a notice of a Member’s or Members’ intent to nominate one (1) or more persons for election as a Director shall, in each case, set forth:

(i) as to the Member or Members giving notice and each beneficial owner, if different, on whose behalf the nomination is made, (A) the name and address of each such Member and each such beneficial owner, (B) the class or series and number of Shares of which each such Member and each such beneficial owner, respectively (and their respective Affiliates, naming such Affiliates), is, directly or indirectly, the registered or beneficial owner as of the date of such notice or requisition in writing, (C) a description of the material terms of any Covered Arrangement to which each such Member and each such beneficial owner, and their respective Affiliates, directly or indirectly, is a party as of the date of such notice or such requisition in writing, (D) any other information relating to each such Member and each such beneficial owner that would be required to be disclosed in a proxy statement in connection with a solicitation of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (whether or not then applicable to the Company and whether or not any such Member or beneficial owner intends to solicit proxies) (the disclosures to be made pursuant to the foregoing clauses (i)(B), (i)(C) and (i)(D), the “Member Disclosable Interests”), and (E) a representation that each such Member is a registered holder of Shares entitled to vote at the relevant meeting of Members and intends to appear in person or by proxy at the relevant meeting to nominate the person or persons specified in the notice or requisition in writing; provided, however, that “Member Disclosable Interests” shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is giving such notice solely as a result of being the

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Member directed to prepare and submit the notice required by this Bye-law 12 on behalf of one (1) or more beneficial owners;

(ii) a description of all arrangements or understandings between each such Member and each such beneficial owner, and their respective Affiliates, and each nominee or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Member or Members;

(iii) as to each person whom the Member or Members propose to nominate for election as a Director, (A) all information relating to such person as would have been required to be included in a proxy statement filed in connection with a solicitation of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (whether or not then applicable to the Company and whether or not the Member or Members intend to solicit proxies), (B) a description of the material terms of any Covered Arrangement to which such nominee or any of his or her Affiliates is a party as of the date of such notice or requisition in writing, and (C) the written consent of each nominee to being named in the notice or requisition in writing as a nominee and to serving as a Director if so elected; and

(iv) an undertaking by each such Member and each such beneficial owner to (A) notify the Company in writing of any changes in the information provided in such notice or requisition in writing pursuant to clauses (i), (ii) and (iii) above as of the record date for determining Members entitled to vote at the relevant meeting of Members promptly (and, in any event, within five (5) Business Days) following the later of the record date or the date notice of the record date is first disclosed by public announcement and (B) deliver to the Company an updated notification of such information thereafter within two (2) Business Days of any change in such information and, in any event, within five (5) hours after the close of business (at the location at which the meeting is to take place) on the Business Day preceding the meeting date updated as of such close of business.

(6) No person shall be eligible for election as a Director of the Company unless nominated in accordance with the procedures set forth in these Bye-laws. Except as otherwise provided by law, the Board or the chairperson of any meeting of Members to elect Directors may determine in good faith that a nomination was not made in compliance with the procedures set forth in the foregoing provisions of this Bye-law 12; and if the Board or the chairperson of the meeting should so determine, it shall be so declared to the meeting, and the defective nomination shall be disregarded. Notwithstanding anything in these Bye-laws to the contrary, unless otherwise required by law, if a Member intending to make a nomination at

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a meeting of Members in accordance with this Bye-law 12 does not timely appear in person or by proxy at the meeting to present the nomination, such nomination shall be disregarded, notwithstanding that appointments of proxy in respect of such nomination may have been received by the Company or any other person.

(7) Notwithstanding the foregoing provisions of this Bye-law 12, any Member or Members intending to make a nomination at a meeting of Members in accordance with this Bye-law 12, and each related beneficial owner, if any, shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in these articles; provided, however, that any references in these articles to the Exchange Act are not intended to and shall not limit the requirements applicable to nominations made or intended to be made in accordance with clause (ii) or clause (iii) of Bye-law 12(3).

(8) Nothing in this Bye-law 12 shall be deemed to affect any rights of the holders of any class or series of shares to elect or appoint Directors pursuant to any applicable terms of issue of any such shares.

(9) A Director shall not require a share qualification.

13. Defects in appointment of Directors

All acts done bona fide by any meeting of the Board or by a committee of the Board or by any person acting as a Director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.

14. Alternate Directors/Observer

There shall be no alternate Directors and no Director shall have the right to designate any person to attend meetings of the Board or committees of the Board as a non−voting observer.

15. Removal of Directors

(1) Members holding a majority of the issued and outstanding shares entitled to vote at a general meeting or special meeting or conferring the right to vote on a resolution to remove a Director may, at any special general meeting convened and held in accordance with these Bye−laws, remove a Director; provided, that the notice of any such meeting convened for the purpose of removing a Director shall contain a statement of the intention so to do and be served on such Director not less than fourteen (14) calendar days before the meeting and at such meeting such Director shall be entitled to be heard on the motion for such Director's removal. Such removal shall be without prejudice to any claim such Director may have for damages for breach of any contract of service between him or her and the Company.

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(2) A vacancy on the Board created by the removal of a Director under the provisions of Bye−law 15(1) may be filled by the Members holding at least a majority of the issued and outstanding shares entitled to vote at a general meeting or special meeting or conferring the right to vote on such resolution and, in the absence of such election or appointment, the Board may fill the vacancy in accordance with Bye−law 16. A Director so appointed shall hold office for the balance of the term of such vacant Board position, or until such Director's successor is elected or appointed or such Director's office is otherwise vacated.

16. Other Vacancies on the Board

(1) The Board shall have the power from time to time and at any time to appoint any person as a Director to fill a vacancy on the Board occurring as the result of an increase in the size of the Board pursuant to Bye−law 12(1), the death, disability, disqualification, resignation or removal of any Director or if such Director's office is otherwise vacated. A Director so appointed shall hold office for the balance of the term of such vacant Board position, or until such Director's successor is elected or appointed or such Director's office is otherwise vacated.

(2) The Board may act notwithstanding any vacancy in its number but, if and so long as its number is reduced below the number fixed by these Bye−laws as the quorum necessary for the transaction of business at meetings of the Board, the continuing Directors or Director may act for the purpose of (a) filling vacancies on the Board, (b) summoning a general meeting of the Company or circulating a proposed written resolution of the Members or (c) preserving the assets of the Company.

(3) The office of Director shall be deemed to be vacated if the Director:

(a)is removed from office pursuant to these Bye−laws or is prohibited from being a Director by law;

(b)is or becomes bankrupt or makes any arrangement or composition with his creditors generally;

(c)is or becomes disqualified or of unsound mind or dies; or

(d)resigns his or her office by notice in writing to the Company.

17. Notice of meetings of the Board

(1) A meeting of the Board may at any time be summoned by the chairperson of the Board or by the chief executive officer, if he is a Director. The Secretary shall also summon a meeting of the Board on the requisition of a Director. Notice of a meeting of the Board must be provided with such prior notice as the Board may from time to time determine (including as to the manner of giving notice), which notice shall set forth the general nature of the business to be considered, unless notice is waived in accordance with bye-law 17(3).

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(2) Notice of a meeting of the Board shall be deemed to be duly given to a Director if it is given to such Director verbally in person or by telephone or otherwise communicated or sent to such Director by post, electronic mail, facsimile or other mode of representing words in a legible and non−transitory form at such Director's last known address or any other address given by such Director to the Company for this purpose.

(3) A Director may waive notice of any meeting either prospectively or retroactively or at the meeting in question. A Director in attendance at a meeting shall be deemed to have waived notice of such meeting. The accidental omission to give notice of a meeting to, or the non−receipt of notice of a meeting by, any Director shall not invalidate the proceedings at that meeting.

18. Quorum at meetings of the Board

The quorum necessary for the transaction of business at a meeting of the Board may be fixed by the Directors and unless so fixed shall be one-third (1/3) of the Directors then in office, present in person or represented by a duly authorized representative appointed in accordance with the Act.

19. Meetings of the Board

(1) The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit.

(2) Directors may participate in any meeting of the Board by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting.

(3) A resolution put to the vote at a meeting of the Board shall be carried by the affirmative votes of a majority of the votes cast and in the case of an equality of votes the resolution shall fail and the chairperson of the meeting shall not be entitled to a second or casting vote.

20. Unanimous written resolutions

A resolution in writing signed by all the Directors, which may be in counterparts, shall be as valid as if it had been passed at a meeting of the Board duly called and constituted, such resolution to be effective on the date on which the last Director signs the resolution, provided, that no such resolution shall be valid unless the last signature of a Director is affixed outside the United States. Such resolution shall be deemed to be adopted as an act of the Board, at the place where, and at the time when, the last signature of a Director is affixed thereto.

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21. Contracts and disclosure of Directors' interests

(1) Any Director, or any Person associated with, related to or affiliated with any Director, may act in a professional capacity for the Company and such Director or such Person shall be entitled to remuneration for professional services as if such Director were not a Director, provided, that nothing herein contained shall authorise a Director or Director's firm, partner or a company associated with, related to or affiliated with a Director to act as Auditor of the Company.

(2) A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest as required by the Act.

(3) Following a declaration being made pursuant to this Bye−law, and unless disqualified by the chairperson of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum at such meeting.

22. Remuneration of Directors

(1) The remuneration of the Directors shall be determined by the Board and shall be deemed to accrue from day to day. The Directors may also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from meetings of the Board, any committee appointed by the Board, general meetings of the Company, or in connection with the business of the Company or their duties as Directors generally.

(2) A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his or her office of Director for such period on such terms as to remuneration and otherwise as the Board may determine.

(3) The Board may award special remuneration and benefits to any Director undertaking any special work or services for, or undertaking any special mission on behalf of, the Company other than his or her ordinary routine work as a Director. Any fees paid to a Director who is also counsel or attorney to the Company, or otherwise serves it in a professional capacity, shall be in addition to his or her remuneration as a Director.

(4) The Board may from time to time determine that, subject to the requirements of the Act, all or part of any fees or other remuneration payable to any Director of the Company shall be provided in the form of shares or other securities of the Company or any subsidiary of the Company, or options or rights to acquire such shares or other securities, on such terms as the Board may decide.

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23. Other interests of Directors

A Director may be or become a director or other officer of or otherwise interested in any Person promoted by the Company or in which the Company may be interested as a member or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him or her as a director or officer of, or from his or her interest in, such other Person. The Board may also cause the voting power conferred by the shares in any Person held or owned by the Company to be exercised in such manner in all respects as the Board thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other Person, or voting or providing for the payment of remuneration to the directors or officers of such Person.

OFFICERS

24. Officers of the Company

The Board may appoint such officers (who may or may not be Directors) as the Board may from time to time determine all of whom shall be deemed to be Officers for the purposes of these Bye−laws. Subject to compliance with any requirement of the Act, the same individual may hold two (2) or more offices in the Company.

25. Appointment of Secretary

The Secretary shall be appointed by the Board from time to time.

26. Remuneration of Officers

The Officers shall receive such remuneration as the Board may from time to time determine.

27. Duties of Officers

The Officers shall have such powers and perform such duties in the management, business and affairs of the Company as may be delegated to them by the Board from time to time.

28. Chairperson of meetings

(1) The chairperson of the Board, if any, or, in his absence, another Director designated by the chairperson of the Board shall preside as chairperson at every general meeting of the Company. If neither the chairperson of the Board nor such other Director designated by the chairperson of the Board is present within 30 minutes after the time appointed for holding the meeting, the Members present shall choose one of their number to be chairperson of the meeting. The chairperson of the meeting shall take such action as he thinks fit to promote the proper and orderly conduct of the business of the meeting as laid down in the notice of the meeting.

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(2) At any meeting of the Board, the chairperson of the Board shall preside or, in his absence, any Director holding the position of chief executive officer. However, if no chairperson of the Board or Director holding the position of chief executive officer is present at the time appointed for holding the meeting, the Directors present may choose one of their number to be chairperson of the meeting

29. Register of Directors and Officers

The Board shall cause to be kept in one (1) or more books at the registered office of the Company a Register of Directors and Officers and shall enter therein the particulars required by the Act.

MINUTES

30. Obligations of the Board to keep minutes

(1) The Board shall cause minutes to be duly entered in books provided for the purpose:

(a)of all elections and appointments of Officers;

(b)of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and

(c)of all resolutions and proceedings of general meetings of the Members, meetings of the Board, and meetings of committees appointed by the Board.

(2) Minutes prepared in accordance with the Act and these Bye−laws shall be kept by the Secretary at the registered office of the Company.

INDEMNITY

31. Indemnification of Directors and Officers of the Company

(1) The Directors, Secretary and other Officers (such term to include, for the purposes of Bye−laws 31 and 32, any person appointed to any committee by the Board), the Resident Representative and employees and agents of the Company or any Subsidiary of the Company who has acted or is acting in relation to any of the affairs of the Company and the liquidator or trustees (if any) who has acted or is acting in relation to any of the affairs of the Company, any person serving at the request of the Company as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise or in a fiduciary or other capacity with respect to any employee benefit plan maintained by the Company or any Subsidiary of the Company, and every one of them, and their heirs, executors and administrators (each, an "Indemnified Person"), shall be indemnified and secured harmless out of the assets of the Company from and against all liabilities, actions, costs, charges, losses, damages and expenses (including liabilities under contract, tort and statue or any applicable foreign law or regulation and all

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reasonable legal and other costs and expenses properly payable) which they or any of them shall or may incur or sustain by or by reason of any act done, concurred in or omitted (actual or alleged) in or about the execution of their duty, or supposed duty, or in their respective offices or trusts, and none of them shall be answerable for the acts, receipts, neglects or defaults of the others of them or for joining in any receipts for the sake of conformity, or for any bankers or other persons with whom any moneys or effects belonging to the Company shall or may be lodged or deposited for safe custody, or for insufficiency or deficiency of any security upon which any moneys of or belonging to the Company shall be placed out on or invested, or for any other loss, misfortune or damage which may happen in the execution of their respective offices or trusts, and the indemnity contained in this Bye−law shall extend to any Indemnified Person acting in any office or trust on the reasonable belief that he has been appointed or elected to such office or trust notwithstanding any defect to such appointment or election, or in relation thereto, provided that this indemnity shall not extend to any matter prohibited by the Act. As used in this article, references to the “Company” include all constituent companies in a consolidation, scheme of arrangement, amalgamation or merger in which the Company or a predecessor to the Company by consolidation, scheme of arrangement, amalgamation or merger was involved.

(2) No Indemnified Person shall be liable for the acts, neglects, defaults or omission of any other Indemnified Person, provided that this indemnity shall not extend to any matter prohibited by the Act.

(3) Expenses (including attorneys' fees) actually and reasonably incurred by any Indemnified Person in defending any civil, criminal, administrative or investigative action, suit or proceeding or threat thereof for which indemnification is sought pursuant to Bye−law 31(1) shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall be ultimately determined that such Indemnified Person is not entitled to be indemnified by the Company as authorised in these Bye−laws or otherwise pursuant to applicable law. Such expenses (including attorneys' fees) incurred by agents of the Company may be paid upon the receipt of the aforesaid undertaking and such terms and conditions, if any, as the Board deems appropriate.

(4) The indemnification and advancement of expenses provided in these Bye−laws shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may now or hereafter be entitled under any statute, agreement, vote of Members or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.

(5) The indemnification and advancement of expenses provided by, or granted pursuant to, this Bye−law 31 shall, unless otherwise provided when authorised or ratified, continue as to a Indemnified Person who has ceased to hold the position for which such Indemnified Person is entitled to be indemnified or advanced

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expenses and shall inure to the benefit of the heirs, executors and administrators of such an Indemnified Person.

(6) No amendment or repeal of any provision of this Bye−law 31 shall alter, to the detriment of any Indemnified Person, the right of such Indemnified Person to the indemnification or advancement of expenses related to a claim based on an act or failure to act which took place prior to such amendment, repeal or termination.

32. Waiver of claim by Member

Each Member agrees to waive any claim or right of action it might have, whether individually or by or in the right of the Company, against any Indemnified Person on account of any action taken by such Indemnified Person, or the failure of such Indemnified Person to take any action in the performance of his duties with or for the Company or any Subsidiary thereof, provided, such waiver shall not extend to any matter in respect of any fraud or dishonesty which may attach to such Indemnified Person.

MEETINGS

33. Notice of annual general meeting

The annual general meeting of the Company shall be held in each year at such time and place as the chairperson of the Board, or the chief executive officer who is a Director, or any two (2) Directors, or any Director and the Secretary or the Board shall appoint. At least thirty (30) clear days’ notice of such meeting shall be given to each Member entitled to vote thereat as at the relevant record date determined pursuant to Bye−law 62 stating the date, place and time at which the meeting is to be held, that the election of Directors will take place thereat, and as far as practicable, the other business to be conducted at the meeting. The annual general meeting of the Company shall be held outside the United States. Any annual general meeting of the Company purported to be convened and held in the United States shall be void, and any business conducted at any such purported meeting shall be of no force or effect.

34. Notice of special general meeting

The chairperson of the Board, or the chief executive officer who is a Director, or any two (2) Directors, or any Director and the Secretary or the Board may convene a special general meeting of the Company whenever in their judgment such a meeting is necessary, upon at least thirty (30) clear days’ notice to each Member entitled to vote thereat as at the relevant record date determined pursuant to Bye−law 62 stating the date, time, place and the general nature of the business to be considered at the meeting. Any such special general meeting of the Company shall be held outside the United States. Any special general meeting of the Company purported to be convened and held in the United States shall be void, and any business conducted at any such purported meeting shall be of no force or effect.

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35. Accidental omission of notice of general meeting; Business to be conducted; Deemed notice

(1) The accidental omission to give notice of a general meeting to, or the non−receipt of notice of a general meeting by, any Person entitled to receive notice shall not invalidate the proceedings at that meeting.

(2) Subject to the Act, business to be brought before a general meeting of the Company must be specified in the notice of the meeting. Only business that the Board has determined can be properly brought before a general meeting in accordance with these Bye−laws and applicable law shall be conducted at any general meeting, and the chairperson of the general meeting may refuse to permit any business to be brought before such meeting that has not been properly brought before it in accordance with these Bye−laws and applicable law.

(3) The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the notice) the accidental omission to send such instrument of proxy to, or the non-receipt of notice of a meeting or such instrument of proxy by, any person entitled to receive such notice shall not invalidate the proceedings at that meeting. A Member present, either in person or by proxy, at any general meeting of the Company or of the holders of any class or series of shares in the Company, will be deemed to have received notice of that meeting and, where required, of the purpose for which it was called.

36. Meeting called on requisition of Members

The Board shall, on the requisition of Members holding at the date of the deposit of the requisition shares representing ten percent (10%) or more of the paid up capital of the Company at the date of the deposit carrying the right to vote at general meetings, forthwith proceed to convene a special general meeting of the Company and the provisions of Section 74 of the Act shall apply.

37. Short notice

A general meeting of the Company shall, notwithstanding that it is called by shorter notice than that specified in these Bye−laws, be deemed to have been properly called if it is so agreed by (i) all the Members entitled to attend and vote thereat in the case of an annual general meeting; and (ii) by a majority in number of the Members having the right to attend and vote at the meeting, which majority must hold not less than ninety−five percent (95%) in nominal value of the shares having the right to attend and vote thereat in the case of a special general meeting.

38. Postponement or cancellation of meetings

The Secretary or any Director may postpone or cancel any general meeting called in accordance with the provisions of these Bye−laws (other than a meeting requisitioned under these Bye−laws) provided, that notice of postponement or cancellation is given to each Member before the time for such meeting. Fresh notice of the date, time and place for the postponed

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cancelled meeting shall be given to each Member in accordance with the provisions of these Bye−laws.

39. Quorum for general meeting

At any general meeting of the Company two (2) or more persons present in person and representing in person or by proxy more than fifty percent (50%) of the aggregate voting power of the Company as at the relevant record date determined pursuant to Bye−law 62 shall form a quorum for the transaction of business, provided, that if the Company shall at any time have only one (1) Member, one (1) Member present in person or by proxy shall form a quorum for the transaction of business at any general meeting of the Company held during such time. If within half an hour from the time appointed for the meeting a quorum is not present, then, in the case of a meeting convened on a requisition, the meeting shall be deemed cancelled and, in any other case, the meeting shall stand adjourned to the same day one (1) week later, at the same time and place or to such other day, time or place as the Secretary may determine. Unless the meeting is so adjourned to a specific date and time, fresh notice of the date, time and place for the resumption of the adjourned meeting shall be given to each Member in accordance with the provisions of these Bye−laws. No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business and continues throughout the meeting, but the absence of a quorum shall not preclude the appointment, choice or election of a chairperson of the meeting which shall not be treated as part of the business of the meeting.

40. Adjournment of meetings

(1) The chairperson of a general meeting may, with the consent of a majority of the voting rights of those Members present in person or by proxy (and shall if so directed by Members holding a majority of the voting rights of those Members present in person or by proxy), at any general meeting whether or not a quorum is present adjourn the meeting. Unless the meeting is adjourned to a specific date and time, fresh notice of the date, time and place for the resumption of the adjourned meeting shall be given to each Member in accordance with the provisions of these Bye−laws with respect to a special general meeting of the Company.

(2) In addition, the chairperson of the meeting may adjourn the meeting to another time and place without such consent or direction if it appears to him or her that:

(a)it is likely to be impracticable to hold or continue that meeting because of the number of Members who are not present; or

(b)the unruly conduct of persons attending the meeting prevents, or is likely to prevent, the orderly continuation of the business of the meeting; or

(c)an adjournment is otherwise necessary so that the business of the meeting may be properly conducted.

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41. Attendance at meetings; Security

(1) Members may participate in any general meeting by means of such telephone, electronic or other communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting, provided that no such meeting shall be held if use of such telephone, electronic or other communication facilities is commenced, made, continued, relayed in or from or in any way connected to the United States, and no Member shall communicate in any meeting if such participation takes place in or from or is connected to the United States, and any business conducted at such purported meeting shall be of no force or effect.

(2) The Board may make any security arrangements which it considers appropriate relating to the holding of a general meeting of the Company, including arranging for any person attending a meeting to be searched and for items of personal property which may be taken into a meeting to be restricted, and any person who fails to comply with any such arrangements may be refused entry to the meeting.

42. Written resolutions

(1) Subject to Bye−law 42(6), anything which may be done by resolution of the Company in general meeting or by resolution of a meeting of any class of the Members, may, without a meeting, be done by resolution in writing signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, all the Members who at the date of the resolution or the record date determined pursuant to Bye−law 62 would be entitled to attend the meeting and vote on the resolution.

(2) A resolution in writing may be signed by any number of counterparts.

(3) For the purposes of this Bye−law, the date of the resolution is the date when the resolution is signed by, or, in the case of a Member that is a corporation whether or not a company within the meaning of the Act, on behalf of, the last Member to sign and any reference in any Bye−law to the date of passing of a resolution is, in relation to a resolution made in accordance with this Bye−law, a reference to such date. Any resolution in writing may be signed within or outside the United States; provided that no such resolution shall be valid unless the signature of the last Member signing such resolution is affixed outside of the United States.

(4) A resolution in writing made in accordance with this Bye−law is as valid as if it had been passed by the Company in general meeting or by a meeting of the relevant class of Members, as the case may be, and any reference in any Bye−law to a meeting at which a resolution is passed or to Members voting in favour of a resolution shall be construed accordingly.

(5) A resolution in writing made in accordance with this Bye−law shall constitute minutes for the purposes of Sections 81 and 82 of the Act.

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(6) This Bye−law shall not apply to:−

(a)a resolution passed pursuant to Section 89(5) of the Act; or

(b)a resolution passed for the purpose of removing a Director before the expiration of his term of office under these Bye−laws.

43. Application of provisions; Attendance of Directors

(1) Subject to the Companies Act, all of the provisions of these Bye-laws (including Bye-law 52) relating to meetings and resolutions of Members (other than to meetings of any separate class or series of Members) shall apply mutatis mutandis to (a) any separate meeting of holders of Common Shares and (b) any separate meeting of any other class or series of Members, except as otherwise expressly provided in the terms of issue of such other class or series of shares.

(2) The Directors and Auditors shall be entitled to receive notice of and to attend and be heard at any general meeting.

44. Voting at meetings

(1) Subject to the provisions of the Act and these Bye−laws, any question proposed for the consideration of the Members at any general meeting shall be decided by the affirmative votes of a majority of the votes cast in accordance with the provisions of these Bye−laws and in the case of an equality of votes the resolution shall fail and the chairperson of the meeting shall not be entitled to a second or casting vote.

(2) No Member shall be entitled to vote at any general meeting unless such Member has paid all the calls on all shares held by such Member.

(3) At any general meeting if an amendment is proposed to any resolution under consideration and the chairperson of the meeting rules on whether or not the proposed amendment is out of order, the proceedings on the substantive resolution shall not be invalidated by any error in such ruling.

45. Voting on show of hands

At any general meeting a resolution put to the vote of the meeting shall, in the first instance, be voted upon by a show of hands and, subject to these Bye−laws and any rights or restrictions for the time being lawfully attached to any class of shares and subject to the provisions of these Bye−laws, every Member present in person and every person holding a valid proxy at such meeting shall be entitled to one (1) vote and shall cast such vote by raising his or her hand. In the event that a Member participates in a general meeting by telephone, electronic or other communications facilities or means, the chairperson of the meeting shall direct the manner in which such Member may cast his vote on a show of hands.

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46. Decision of chairperson

At any general meeting a declaration by the chairperson of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to the provisions of these Bye−laws, be conclusive evidence of that fact.

47. Demand for a poll

(1) Notwithstanding the provisions of Bye−laws 45 and 46, at any general meeting of the Company, in respect of any question proposed for the consideration of the Members (whether before or on the declaration of the result of a show of hands as provided for in these Bye−laws), a poll may be demanded by any of the following persons:

(a)the chairperson of such meeting; or

(b)at least three (3) Members present in person or represented by proxy; or

(c)any Member or Members present in person or represented by proxy and holding between them not less than one−tenth of the total voting rights of all the Members having the right to vote at such meeting; or

(d)any Member or Members present in person or represented by proxy holding shares in the Company conferring the right to vote at such meeting, being shares on which an aggregate sum has been paid up equal to not less than one−tenth of the total sum paid up on all such shares conferring such right.

(2) Where, in accordance with the Bye−law 47(1), a poll is demanded, subject to any rights or restrictions for the time being lawfully attached to any class of shares and any other provision of these Bye−laws, every person present at such meeting shall have one (1) vote for each voting share of which such person is the holder or for which such person holds a proxy and such vote shall be counted in the manner set out in Bye−law 47(4) or in the case of a general meeting at which one (1) or more Members are present by telephone in such manner as the chairperson of the meeting may direct. The result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded and shall replace any previous resolution upon the same matter which has been the subject of a show of hands. A person entitled to more than one (1) vote need not use all of his or her votes or cast all the votes he or she uses in the same way.

(3) A poll demanded in accordance with the provisions of Bye−law 47(1), for the purpose of electing a chairperson of the meeting or on a question of adjournment, shall be taken forthwith and a poll demanded on any other question shall be taken in such manner and at such time and place as the chairperson of the meeting may direct and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll.

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(4) Where a vote is taken by poll, each Person present and entitled to vote shall be furnished with a ballot paper on which such person shall record his or her vote in such manner as shall be determined at the meeting having regard to the nature of the question on which the vote is taken, and each ballot paper shall be signed or initialled or otherwise marked so as to identify the voter and the registered holder in the case of a proxy. At the conclusion of the poll, the ballot papers and votes cast in accordance with such directions shall be examined and counted by a committee of not less than two (2) members or proxy holders appointed by the chairperson of the meeting for that purpose. The result of the poll shall be declared by the chairperson of the meeting.

48. Seniority of joint holders voting

In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.

49. Instrument of proxy

(1) Every Member entitled to vote has the right to do so either in person or by one (1) or more persons authorised by a proxy executed and delivered in accordance with these Bye−laws. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his or her attorney authorised by him or her in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. A Member that is the holder of two (2) or more shares may appoint more than one (1) proxy to represent such Member and vote on its behalf in respect of different shares.

(2) The instrument appointing a proxy together with such other evidence as to its due execution as the Board may from time to time require shall be delivered at the registered office of the Company (or at such place or places as may be specified in the notice convening the meeting or in any notice of any adjournment or, in either case or the case of a written resolution, in any document sent therewith) not less than twenty-four (24) hours or such other period as the Board may determine, prior to the holding of the relevant meeting or adjourned meeting at which the individual named in the instrument proposes to vote or, in the case of a poll taken subsequently to the date of a meeting or adjourned meeting, before the time appointed for the taking of the poll, or, in the case of a written resolution, prior to the effective date of the written resolution and in default the instrument of proxy shall not be treated as valid.

(3) Instruments of proxy shall be in any common form or other form as the Board may approve and the Board may, if it thinks fit, send out with the notice of any meeting or any written resolution forms of instruments of proxy for use at that meeting or in connection with that written resolution. The instrument of proxy shall be deemed to confer authority to demand or join in demanding a poll and to

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vote on any amendment of a resolution put to the meeting for which it is given as the proxy thinks fit. The instrument of proxy shall unless the contrary is stated therein be valid as well for any adjournment of the meeting as for the meeting to which it relates.

(4) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or unsoundness of mind of the principal, or revocation of the instrument of proxy or of the authority under which it was executed, provided, that no notice in writing of such death, insanity or revocation shall have been received by the Company at the registered office of the Company (or such other place as may be specified for the delivery of instruments of proxy in the notice convening the meeting or other documents sent therewith) at least one (1) hour before the commencement of the meeting or adjourned meeting, or the taking of the poll, or the calendar day before the effective date of any written resolution at which the instrument of proxy is used.

(5) Subject to the Act, the Board may, or the chairperson of the relevant meeting may at his or her discretion (with respect to such meeting only), waive any of the provisions of these Bye−laws related to proxies or authorisations and, in particular, may accept such verbal or other assurances as it thinks fit as to the right of any person to attend and vote on behalf of any Member at general meetings or to sign written resolutions. The decision of the chairperson of any general meeting as to the validity of any appointment of a proxy shall be final.

50. Representation of corporations at meetings

A corporation which is a Member may, by written instrument, authorise one (1) or more persons as it thinks fit to act as its representative at any meeting of the Members and the person or persons so authorised shall be entitled to exercise the same powers on behalf of the corporation which such person or persons represent as that corporation could exercise if it were an individual Member. Such corporation shall for the purposes of these Bye−laws be deemed to be present in person at any such meeting if a person so authorised is present at the meeting. Notwithstanding the foregoing, the chairperson of the meeting may accept such assurances as he or she thinks fit as to the right of any person to attend and vote at general meetings on behalf of a corporation which is a Member.

SHARE CAPITAL AND SHARES

51. Rights of shares

(1) Subject to any resolution of the Members to the contrary and without prejudice to any special rights conferred on the holders thereby of any other class or series of shares, the share capital of the Company shall consist of a single class of Common Shares. Subject to the provisions of these Bye−laws, the holders of the Common Shares shall:

(a)be entitled to one (1) vote per share;

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(b)be entitled to share equally and ratably in such dividends as the Board may from time to time declare;

(c)in the event of a winding−up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to share equally and ratably in the surplus assets of the Company; and

(d)generally be entitled to enjoy all of the rights attaching to shares.

(2) All the rights attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds such Treasury Share and, except where required by the Act, all Treasury Shares shall be excluded from the calculation of any percentage or fraction of the share capital, or shares, of the Company.

52. Limitation on voting rights of Controlled Shares.

(1) Notwithstanding anything to the contrary in Bye-law 51(1), if and so long as the votes conferred by the Controlled Shares of any person constitute ten percent (10%) or more of the votes conferred by the issued shares of the Company, each issued share comprised in such Controlled Shares shall confer only a fraction of a vote that would otherwise be applicable according to the following formula:

[(T divided by 10) - 1] divided by C

Where: “T” is the aggregate number of votes conferred by all the issued shares of the Company; and “C” is the number of votes conferred by the Controlled Shares of such person.

For the purposes of this article, “person” shall include any “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act.

(2) If, as a result of giving effect to the foregoing provisions of this Bye-law 52 or otherwise, the votes conferred by the Controlled Shares of any person would otherwise represent more than ten percent (10%) of the votes conferred by all of the issued shares of the Company, the votes conferred by the Controlled Shares of such person shall be reduced in accordance with the foregoing provisions of this Bye-law 52. Such process shall be repeated until the votes conferred by the Controlled Shares of each person represent no more than ten percent (10%) of the votes conferred by all of the issued shares of the Company.

(3) Notwithstanding the foregoing provisions of this Bye-law 52, after having applied the provisions thereof as best as they consider reasonably practicable, the Board may make such final adjustments to the aggregate number of votes conferred by the Controlled Shares of any person that it considers fair and reasonable in all the circumstances to ensure that such votes represent less than ten percent (10%) of the aggregate voting power of the votes conferred by all of the issued shares of the Company.

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(4) The determination by the Board of any adjustments to voting power of any shares made pursuant to this Bye−law 52 shall be final and binding on all Persons. The Company shall have no obligation to provide notice to any Member of any adjustment to its voting power that may result from the application of this Bye−law 52.

53. Power to issue shares

(1) Subject to the provisions of these Bye−laws and to any limitations prescribed by law, and without prejudice to any special rights previously conferred on the holders of any existing class or series of shares, the unissued shares (whether forming part of the original share capital or any increased share capital) shall be at the disposal of the Board, which may issue, offer, allot, exchange or otherwise dispose of shares or options, warrants or other rights to purchase shares or securities convertible into or exchangeable for shares (including any employee benefit plan providing for the issuance of shares or options, warrants or other rights in respect thereof), at such times, for such consideration and on such terms and conditions as it may determine.

(2) Subject to the provisions of these Bye−laws and any limitations prescribed by law, and without prejudice to any special rights previously conferred on the holders of any existing class or series of shares, the Board is authorized to issue non−voting Common Shares that do not entitle the holders thereof to voting rights.

(3) Subject to the provisions of these Bye−laws and any limitations prescribed by law, and without prejudice to any special rights previously conferred on the holders of any existing class or series of shares, the Board is authorized to issue any unissued shares of the Company on such terms and conditions as it may determine (including that they are to be redeemed on the happening of a specified event or on a given date or that they may be redeemed at the option of the Company or holder (the manner and terms of redemption in all cases to be set by the Board) and any class or series of shares may be issued with such preferred or other special rights as the Board may determine (including such preferred or other special rights or restrictions with respect to dividend, voting, liquidation or other rights of the shares as may be determined by the Board). The Board may establish from time to time the number of shares to be included in each such class or series, which number may be increased (except as otherwise provided by the Board in creating such class or series) or decreased (but not below the number of shares thereof then in issue) from time to time by resolution of the Board, and to fix the designation, powers, preferences, redemption provisions, restrictions and rights to such class or series and the qualifications, limitations or restrictions thereof. The terms of any class or series of shares shall be set forth in a Certificate of Designation in the minutes of the Board authorising the issuance of such shares and such Certificate of Designations shall be attached as an exhibit to these Bye−laws, but shall not form part of these Bye−laws, and may be examined by any Member on request. The rights attaching to any Common Share shall be

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deemed not to be altered by the allotment of any class or series of shares issued pursuant to this Bye−law 53(3) even if such class or series of shares does or will rank in priority for payment of a dividend or in respect of capital or surplus or confer on the holder thereof voting rights more favourable than those conferred by such Common Share and shall not otherwise be deemed to be altered by the creation or issue of further shares ranking pari passu therewith.

(4) The Board shall, in connection with the issue of any share, have the power to pay such commission and brokerage as may be permitted by law.

(5) The Company may from time to time do any one (1) or more of the following things:

(a)make arrangements on the issue of shares for a difference between the Members in the amounts and times of payments of calls on their shares;

(b)accept from any Member the whole or a part of the amount remaining unpaid on any shares held by such Member, although no part of that amount has been called up;

(c)pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others; and

(d)issue its shares in fractional denominations and deal with such fractions to the same extent as its whole shares and shares in fractional denominations shall have in proportion to the respective fractions represented thereby all of the rights of whole shares including (but without limiting the generality of the foregoing) the right to vote, to receive dividends and distributions and to participate in a winding up.

54. Variation of rights and alteration of share capital

(1) If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound−up, be varied with the consent in writing of the holders of all of the issued and outstanding shares of that class or with the sanction of a resolution passed by two-thirds (2/3) of votes cast by Members present or represented by proxy and voting at such general meeting holders of the shares of the class in accordance with Section 47(7) of the Act. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(2) The Company may if authorized by resolution of the Members increase, divide, consolidate, subdivide, change the currency denomination of, diminish or otherwise alter or reduce its share capital in any manner permitted by the Act; provided, a reduction of issued share capital shall require the affirmative vote of (i) seventy-five percent (75%) of votes cast by Members present or represented by proxy and voting at such general meeting. Where, on any alteration of share

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capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such manner as it thinks fit, including the issue to Members, as appropriate, of fractions of shares and/or arranging for the sale or transfer of the fractions of shares of Members.

55. Registered holder of shares

(1) The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable or other claim to, or interest in, such share on the part of any other person. This shall not preclude the Company from requiring the Members or a transferee of shares to furnish the Company with information as to the beneficial ownership of (or other interest of any person in) any share.

(2) Any dividend, interest or other moneys payable in cash in respect of shares may be paid by wire transfer, by cheque or draft sent through the post directed to the Member at such Member's address in the Register of Members or, in the case of joint holders, to such address of the holder first named in the Register of Members, or to such person and to such address as the holder or joint holders may in writing direct. If two or more persons are registered as joint holders of any shares, any one (1) holder can give an effectual receipt for any dividend paid in respect of such shares.

56. Death of a joint holder

Where two (2) or more persons are registered as joint holders of a share or shares then in the event of the death of any joint holder or holders the remaining joint holder or holders shall be absolutely entitled to the said share or shares and the Company shall recognise no claim in respect of the estate of any joint holder except in the case of the last survivor of such joint holders.

57. Share certificates

(1) Every Member shall be entitled to a share certificate under the seal of the Company (or a facsimile thereof) specifying the number and, where appropriate, the class of shares held by such Member and whether the same are fully paid up and, if not, how much has been paid thereon. The Board may by resolution determine, either generally or in a particular case, that any or all signatures on certificates may be printed thereon or affixed by mechanical means.

(2) The Company shall be under no obligation to complete and deliver a share certificate unless specifically called upon to do so by the person to whom such shares have been allotted.

(3) If any such certificate shall be proved to the satisfaction of the Secretary to have been worn out, lost, mislaid or destroyed the Secretary may cause a new certificate to be issued and request an indemnity for the lost certificate if he or she sees fit.

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(4) Notwithstanding any provisions of these Bye-laws:

(i) the Board shall, subject always to the Act and any other applicable laws and regulations and the facilities and requirements of any relevant system concerned, have power to implement any arrangement they may, in their absolute discretion, think fit in relation to evidencing of title to and transfer of uncertificated shares and to the extent such arrangements are so implemented, no provisions of these Bye-laws shall apply or have effect to the extent that it is in any respect inconsistent with the holding or transfer of shares in uncertificated form; and

(ii) unless otherwise determined by the Board and as permitted by the Act and any other applicable laws and regulations, no person shall be entitled to receive a certificate in respect of any share for so long as the title to that share is evidenced otherwise than by a certificate and for so long as transfers of that share may be made otherwise than by written instrument.

58. Calls on shares

The Board may from time to time make such calls as it thinks fit upon the Members in respect of any monies (whether in respect of nominal value or premium) unpaid on the shares allotted to or held by such Members (and not made payable at fixed times by the terms and conditions of issue).

59. Forfeiture of shares

(1) If any Member fails to pay, on the day appointed for payment thereof, any call in respect of any share allotted to or held by such Member, the Board may, at any time thereafter during such time as the call remains unpaid, direct the Secretary to forward to such Member a notice providing that if payment of the call and interest thereon in respect of such Member's shares is not paid such shares shall be liable to forfeiture.

(2) If the requirements of such notice are not complied with, any such share may at any time thereafter before the payment of such call and the interest due in respect thereof be forfeited by a resolution of the Board to that effect, and such share shall thereupon become the property of the Company and may be disposed of as the Board shall determine.

(3) A Member whose share or shares have been forfeited as aforesaid shall, notwithstanding such forfeiture, be liable to pay to the Company all calls owing on such share or shares at the time of the forfeiture and all interest due thereon.

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REGISTER OF MEMBERS

60. Contents of Register of Members

The Board shall cause to be kept in one (1) or more books a Register of Members and shall enter therein the particulars required by the Act.

61. Inspection of Register of Members

(1) The Register of Members shall be open to inspection at the registered office of the Company on every Business Day, subject to such reasonable restrictions as the Board may impose, so that not less than two (2) hours in each Business Day be allowed for inspection. The Register of Members may, after notice has been given by advertisement in an appointed newspaper to that effect, be closed for any time or times not exceeding in the whole thirty (30) calendar days in each year.

(2) Subject to the provisions of the Act, the Company may keep one (1) or more overseas or branch registers in any place, and the Board may make, amend and revoke any such regulations as it may think fit respecting the keeping of such registers and the contents thereof.

62. Determination of record dates

(1) Notwithstanding any other provision of these Bye−laws, the Board may fix any date as the record date for any dividend, distribution, allotment or issue and for the purpose of identifying the persons entitled to receive notices of any general meetings and to vote at any general meeting. Any such record date may be on or at any time before or after any date on which such dividend, distribution, allotment or issue is declared, paid or made or such notice is dispatched.

(2) In relation to any general meeting of the Company or of any class of Member or to any adjourned meeting or any poll taken at a meeting or adjourned meeting of which notice is given, the Board may specify in the notice of meeting or adjourned meeting or in any document sent to Members by or on behalf of the Board in relation to the meeting, a time and date (a "Record Date") prior to the date fixed for the meeting (the "Meeting Date") and, notwithstanding any provision in these Bye-Laws to the contrary, in such case:

(i) each person entered in the Register at the Record Date as a Member, or a Member of the relevant class (a "Record Date Holder") shall be entitled to attend and to vote at the relevant meeting and to exercise all of the rights or privileges of a Member, or a Member of the relevant class (in each case subject to Bye-Law 63), in relation to that meeting in respect of the Shares, or the Shares of the relevant class, registered in his name at the Record Date;

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(ii) as regards any Shares, or Shares of the relevant class, which are registered in the name of a Record Date Holder at the Record Date but are not so registered at the Meeting Date (''Relevant Shares"), each holder of any Relevant Shares at the Meeting Date shall be deemed to have irrevocably appointed that Record Date Holder as his proxy for the purpose of attending and voting in respect of those Relevant Shares at the relevant meeting (with power to appoint, or to authorise the appointment of, some other person as proxy), in such manner as the Record Date Holder in his absolute discretion may determine; and

(iii) accordingly, except through his proxy pursuant to paragraph (2) of this Bye-Law, a holder of Relevant Shares at the Meeting Date shall not be entitled to attend or to vote at the relevant meeting, or to exercise any of the rights or privileges of a Member, or a Member of the relevant class, in respect of the Relevant Shares at that meeting.

(3) The entry of the name of a person in the Register as a Record Date Holder shall be sufficient evidence of his appointment as proxy in respect of any Relevant Shares for the purposes of this paragraph, but all the provisions of these Bye-Laws relating to the execution and deposit of an instrument appointing a proxy or any ancillary matter (including the Board's powers and discretions relevant to such matter) shall apply to any instrument appointing any person other than the Record Date Holder as proxy in respect of any Relevant Shares.

TRANSFER OF SHARES

63. Instrument of transfer

(1) An instrument of transfer shall be in the form or as near thereto as circumstances admit of Form "A" in the Schedule hereto or in such other common form as the Board may accept. Such instrument of transfer shall be signed by or on behalf of the transferor and transferee, provided, that in the case of a fully paid share, the Board may accept the instrument signed by or on behalf of the transferor alone. The transferor shall be deemed to remain the holder of such share until the same has been transferred to the transferee in the Register of Members.

(2) The Board may refuse to recognise any instrument of transfer unless it is accompanied by the certificate (if applicable) in respect of the shares to which it relates and by such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer.

(3) Shares may be transferred without a written instrument if transferred by an appointed agent or otherwise in accordance with the Act.

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64. Restriction on transfer

(1) Subject to the Act, this Bye−law 64 and such other of the restrictions contained in these Bye−laws and elsewhere as may be applicable, any Member may sell, assign, transfer or otherwise dispose of shares of the Company at the time owned by it and, upon receipt of a duly executed form of transfer in writing, the Directors shall procure the timely registration of the same. If the Directors refuse to register a transfer for any reason they shall notify the proposed transferor and transferee within thirty (30) calendar days of such refusal.

(2) The Board shall decline to register a transfer of shares if it appears to the Board, whether before or after such transfer, that the effect of such transfer would be to increase the number of the Controlled Shares of any person to ten percent (10%) or any higher percentage of any class of voting shares or of the total issued shares or of the voting power of the Company. The Board may, in its discretion, advise any person that any transfer which would increase the number of such person’s Controlled Shares to ten percent (10%) or any higher percentage of any class of voting shares or the total issued shares or voting power of the Company may not be made and will not be recognized for any purpose and any such transfer purported to have been made to such person after receipt of such notice by such person shall be null and void.

(3) The Board in its sole discretion may decline to register the transfer of any shares if the Board determines that the transfer of shares of the Company by any Member may require registration under the Securities Act or under any blue sky or other United States state securities laws or under the laws of any other jurisdiction and such registration has not been duly effected; provided, that in the case of this Bye−law 64(4), the Board shall be entitled to request and rely on a written opinion of counsel to the transferor or the transferee, in form and substance satisfactory to the Board, that no such approval or consent is required and no such violation would occur, and the Board shall not be obligated to register any transfer absent the receipt of such an opinion.

(4) Without limiting the foregoing, the Board in its sole discretion may decline to register the transfer of any shares without assigning any reason therefor, subject to any limitation on such right of the Board imposed by law.

(5) Without limiting the foregoing, the Board shall decline to approve or register a transfer of shares unless all applicable consents, authorisations, permissions or approvals of any governmental body or agency in Bermuda, the United States or any other applicable jurisdiction required to be obtained prior to such transfer shall have been obtained.

(6) The registration of transfers may be suspended at such time and for such periods as the Board may from time to time determine; provided, that such registration shall not be suspended for more than thirty (30) calendar days in any year expect as may be required by applicable law.

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65. Transfers by joint holders

The joint holders of any share or shares may transfer such share or shares to one (1) or more of such joint holders, and the surviving holder or holders of any share or shares previously held by them jointly with a deceased Member may transfer any such share to the executors or administrators of such deceased Member.

66. Lien on shares

(1) The Company shall have a first and paramount lien and charge on all shares (whether fully paid−up or not or whether subject to a condition or contingency) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not or whether subject to a condition or contingency) by such Member or his or her estate, either alone or jointly with any other Person, whether a Member or not, but the Board may at any time declare any share to be wholly or in part exempt from the provisions of this Bye−law. The registration of a transfer of any such share shall operate as a waiver of the Company's lien (if any) thereon. The Company's lien (if any) on a share shall extend to all dividends or other monies payable in respect thereof.

(2) The Company may sell or purchase, in such manner and on such terms (including price) as the Board think fit, any shares on which the Company has a lien, but no sale or purchase shall be made unless a sum in respect of which the lien exists is then presently payable, nor until the expiration of fourteen (14) calendar days after a notice in writing stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the relevant Member, or the Person, of which the Company has notice, entitled thereto by reason of such Member's death or bankruptcy. Effective upon such sale or purchase, any certificate representing such shares prior to such sale shall become null and void, whether or not it was actually delivered to the Company.

(3) To give effect to any such sale the Board may authorise some Person to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his or her title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

(4) The proceeds of such sale or purchase shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) be paid to the relevant Member or the Person entitled to the shares at the date of the sale.

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TRANSMISSION OF SHARES

67. Representative of deceased Member

In the case of the death of a Member, the survivor or survivors where the deceased Member was a joint holder, and the legal personal representatives of the deceased Member where the deceased Member was a sole holder, shall be the only persons recognised by the Company as having any title to the deceased Member's interest in the shares. Nothing herein contained shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by such deceased Member with other persons. Subject to the provisions of Section 52 of the Act, for the purpose of this Bye−law, legal personal representative means the executor or administrator of a deceased Member or such other person as the Board may in its absolute discretion decide as being properly authorised to deal with the shares of a deceased Member.

68. Registration on death or bankruptcy; Rights related to transmission

(1) Any person becoming entitled to a share in consequence of the death or bankruptcy of any Member may be registered as a Member upon such evidence as the Board may deem sufficient or may elect to nominate some person to be registered as a transferee of such share, and in such case the person becoming entitled shall execute in favour of such nominee an instrument of transfer. On the presentation thereof to the Board, accompanied by such evidence as the Board may require to prove the title of the transferor, the transferee shall be registered as a Member but the Board shall, in either case, have the same right to decline or suspend registration as it would have had in the case of a transfer of the share by that Member before such Member's death or bankruptcy, as the case may be.

(2) A person entitled by transmission to a share shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a Member in respect of the share, be entitled to exercise any right in respect of the share in relation to meetings of the Company; provided, however, that the Board may at any time give notice requiring a person entitled by transmission to a share to elect either to be registered himself or herself or to transfer the share, and if the notice is not complied with within ninety (90) clear days after the date such notice is given, the Board may withhold payment of any dividend, other monies payable, scrip dividend or capitalisation issue of shares or other similar benefit in respect of the share until the requirements of the notice have been complied with.

DIVIDENDS AND OTHER DISTRIBUTIONS

69. Declaration of dividends by the Board

The Board may, subject to any rights or restrictions at the time lawfully attached to any class or series of shares and subject to these Bye−laws and in accordance with Section 54 of the Act, declare a dividend to be paid to the Members, in proportion to the number of shares held by them, and such dividend may be paid in cash or wholly or partly in specie in which case the

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Board may fix the value for distribution in specie of any assets. The Board may declare and pay dividends in any currency that the Board in its discretion shall choose.

70. Other distributions

The Board may declare and make such other distributions (in cash or in specie), in proportion to the number of shares held by them, to the Members as may be lawfully made out of the assets of the Company.

71. Reserve fund

The Board may from time to time before declaring a dividend set aside, out of the surplus or profits of the Company, such sum as it thinks proper as a reserve to be used to meet contingencies or for equalising dividends or for any other special or general purpose.

72. Deduction of amounts due to the Company

The Board may deduct from the dividends or distributions payable to any Member all monies due from such Member to the Company on account of calls or otherwise.

73. Unclaimed dividends

Any dividend or distribution unclaimed for a period of six (6) years from the date of declaration of such dividend or distribution shall be forfeited and shall revert and belong to the Company and the payment by the Board of any unclaimed dividend or distribution, interest or other sum payable on or in respect of the share into a separate account shall not constitute the Company a trustee in respect thereof.

74. Interest on dividend

No dividend or distribution shall bear interest against the Company, unless the terms of issue of that share otherwise expressly provide.

CAPITALIZATION

75. Issue of bonus shares

(1) The Board may resolve to capitalise any part of the amount for the time being standing to the credit of any of the Company's share premium or other reserve accounts or funds or to the credit of the profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares pro rata to the Members.

(2) The Company may capitalise any sum standing to the credit of a reserve account or fund or sums otherwise available for dividend or distribution by applying such amounts in paying up in full partly paid shares of those Members who would have been entitled to such sums if they were distributed by way of dividend or distribution.

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ACCOUNTS AND FINANCIAL STATEMENTS

76. Records of account

The Board shall cause to be kept proper records of account with respect to all transactions of the Company and in particular with respect to:

(a)all sums of money received and expended by the Company and the matters in respect of which the receipt and expenditure relates;

(b)all sales and purchases of goods by the Company; and

(c)the assets and liabilities of the Company.

Such records of account shall be kept at the registered office of the Company or, subject to Section 83(2) of the Act, at such other place as the Board thinks fit and shall be available for inspection by the Directors during normal business hours. No Member in its capacity as a Member shall have any right to inspect any accounting record or book or document of the Company except as conferred by the Act or as authorised by the Board.

77. Financial year end

The financial year end of the Company may be determined by resolution of the Board and failing such resolution shall be 31st December in each year.

78. Financial statements

Subject to any rights to waive laying of accounts pursuant to Section 88 of the Act, financial statements as required by the Act shall be laid before the Members in general meeting.

AUDIT

79. Appointment of Auditor

Subject to Section 88 of the Act, at the annual general meeting or at a subsequent special general meeting in each year, an independent representative of the Members shall be appointed by them as Auditor. Such Auditor may be a Member but no Director, Officer or employee of the Company shall, during his or her continuance in office, be eligible to act as an Auditor of the Company.

80. Remuneration of Auditor

The remuneration of the Auditor appointed by the Members shall be fixed by the Members or by the Board, if it is authorised to do so by the Members, and the remuneration of the Auditor appointed by the Board shall be fixed by the Board.

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81. Vacancy of office of Auditor

If the office of Auditor becomes vacant by the resignation or death of the Auditor, or by the Auditor becoming incapable of acting by reason of disqualification, illness or other disability at a time when the Auditor's services are required, the vacancy thereby created shall be filled in accordance with the Act.

82. Access to books of the Company

The Auditor shall at all reasonable times have access to all books kept by the Company and to all accounts and vouchers relating thereto, and the Auditor may call on the Directors or Officers of the Company for any information in their possession relating to the books or affairs of the Company.

83. Report of the Auditor

(1) Subject to any rights to waive laying of accounts or appointment of an Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be audited at least once in every year.

(2) The financial statements provided for by these Bye−laws shall be audited by the Auditor in accordance with generally accepted auditing standards. The Auditor shall make a written report thereon in accordance with generally accepted auditing standards and the report of the Auditor shall be submitted to the Members in general meeting.

(3) The generally accepted auditing standards referred to in subparagraph (2) of this Bye−law may be those of a country or jurisdiction other than Bermuda. If so, the financial statements and the report of the Auditor must disclose this fact and name such country or jurisdiction.

NOTICES

84. Notices to Members of the Company

A notice may be given by the Company to a Member:

(a)by delivering it to such Member in person; or

(b)by sending it by letter mail or courier to such Member's address in the Register of Members; or

(c)by transmitting it by electronic means (including facsimile and electronic mail, but not telephone) in accordance with such directions as may be given by such Member to the Company for such purpose; or

(d)by delivering it in accordance with the provisions of the Act pertaining to delivery of electronic records by publication on a website.

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Acknowledgement of receipt shall not be required and is not a condition of valid service of due notice.

85. Notices to joint Members

Any notice required to be given to a Member shall, with respect to any shares held jointly by two (2) or more persons, be given to whichever of such persons is named first in the Register of Members and notice so given shall be sufficient notice to all the holders of such shares.

86. Service and delivery of notice

Any notice delivered in accordance with Bye−law 84(a), (b) or (c) shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission and, in proving such service, it shall be sufficient to prove that the notice was properly addressed and prepaid, if posted, and the time when it was posted, delivered to the courier or transmitted by facsimile or other method as the case may be. Any notice delivered in accordance with Bye−law 84(d) shall be deemed to have been delivered at the time when the requirements of the Act in that regard have been met.

SEAL OF THE COMPANY

87. The seal

The seal of the Company shall be in such form as the Board may from time to time determine. The Board may adopt one (1) or more duplicate seals for use inside or outside Bermuda.

88. Manner in which seal is to be affixed

The seal of the Company may, but need not be affixed to any deed, instrument or document, and if the seal is to be affixed thereto, it shall be attested by the signature of (i) any Director; or (ii) any Officer; or (iii) the Secretary; or (iv) any person appointed by the Board for the purpose. Any Director, Officer or Resident Representative may, but need not, affix the seal of the Company to certify the authenticity of any copies of documents.

WINDING UP

89. Winding up/distribution by liquidator

If the Company shall be wound up the liquidator may, with the sanction of a resolution of the Members, divide amongst the Members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as he or she deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator shall think fit, but so that no Member shall be compelled to accept any shares or other securities or assets whereon there is any liability.

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ALTERATION OF BYE−LAWS

90. Alteration of Bye−laws

No Bye−law shall be rescinded, altered or amended and no new Bye−law shall be made until the same has been approved by (1) seventy-five percent (75%) of the votes cast by Members present or represented by proxy and voting at a general meeting or (2) if the Board has unanimously approved the proposal, a majority of votes cast by Members present or represented by proxy and voting at such general meeting.

REGISTERED OFFICE

91. Registered Office

The registered officer of the Company shall be at such place in Bermuda as the Board from time to time shall decide.

AMALGAMATION OR MERGER VOTING

92. Member Vote to Approve an Amalgamation or Merger

A resolution proposed for consideration at a general meeting to approve the amalgamation or merger of the Company with any other company shall require the affirmative vote of (i) seventy-five percent (75%) of votes cast by Members present or represented by proxy and voting at such general meeting or (ii) if the Board has unanimously approved the proposal, a majority of the votes cast by Members present or represented by proxy and voting at such general meeting. In each case the quorum for such general meeting shall be as set out in Bye−Law 39.

******

***

*

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SCHEDULE - FORM A (BYE−LAW 63)

TRANSFER OF A SHARE OR SHARES

FOR VALUE RECEIVED		[amount]
.		[transferor]
hereby sell assign and transfer unto		[transferee]
of		[address]
.		[number of shares]
shares of		[name of Company]
Dated
	(Transferor)
In the presence of:
(Witness)
	(Transferee)
In the presence of:
(Witness)

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EX-3.5

Exhibit 3.5

Companies Acts 1963 to 2013

A PUBLIC COMPANY LIMITED BY SHARES

MEMORANDUM AND ARTICLES OF ASSOCIATION

of

XL GROUP PUBLIC LIMITED COMPANY

Incorporated the 12th day of March 2010

1

Companies Acts 1963 to 2013

A PUBLIC COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

-of-

XL GROUP PUBLIC LIMITED COMPANY

(as amended by special resolutions dated 13 May 2010, 16 June 2010, 25 April 2014 and 23 June 2016)

1. The name of the Company is XL Group Public Limited Company.

2. The Company is to be a public limited company.

3. The objects for which the Company is established are:

3.1 To carry on the business of an investment and holding company in all of its branches, and to acquire by purchase, lease, concession, grant, licence or otherwise such businesses, options, rights, privileges, lands, buildings, leases, underleases, stocks, shares, debentures, debenture stock, bonds, obligations, reversionary interests, annuities, policies of assurance, certificates of deposit, treasury bills, trade bills, bank acceptances, bills of exchange, fixed rate securities, variable or floating rate securities, and securities of all kinds created, issued or guaranteed by any government, sovereign, ruler, commissioners, body or authority, supreme, state, municipal, local, supranational or otherwise, in any part of the world, or by any corporation, bank, association or partnership, whether with limited or unlimited liability constituted or carrying on business or activities in any part of the world, units of or participation in any unit trust scheme, mutual fund or collective investment scheme in any part of the world, policies of insurance and assurance, domestic and foreign currency and any present or future rights and interests to or in any of the foregoing and other property and rights and interests in property as the Company shall deem fit and generally to hold, manage, develop, lease, sell or dispose of the same; to subscribe for the same either conditionally or otherwise; to enter into underwriting, stocklending and repurchase and similar contracts with respect thereto, to exercise and enforce all rights and powers conferred by or incidental to the ownership thereof and from time to time to sell, exchange, lend, vary or dispose of and grant and dispose of options over any of the foregoing, to acquire, dispose of, invest in and hold by way of investment any derivative instrument relating to any of the foregoing and to deposit money (or place money on current account) with such persons in such currencies and otherwise on such terms as may seem expedient and to do all of the foregoing as principal, agent or broker; and to vary any of the investments of the Company; to establish, carry on, develop and extend investments and holdings and to sell, dispose of or otherwise turn the same to account and to coordinate the

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policy and administration of any corporations of which the Company is a member or which are in any manner controlled by or connected with the Company.

3.2 To exercise and enforce all rights and powers conferred to or incidental upon the ownership of any shares, stock obligations or other securities acquired by the Company including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of such special proportion of the issued or nominal amount thereof and to provide managerial and other executive, supervisory and consultant services for or in relation to any corporation in which the Company is interested upon such terms as may be thought fit.

3.3 To acquire any such shares and other securities as are mentioned in the preceding paragraphs by subscription, syndicate participation, tender, purchase, exchange or otherwise and to subscribe for the same, either conditionally or otherwise, and to guarantee the subscription thereof and to exercise and enforce all rights and powers conferred by or incidental to the ownership thereof.

3.4 To co-ordinate the administration, policies, management, supervision, control, research, planning, trading and any and all other activities of, and to act as financial advisers and consultants to, any corporation or corporations now or hereafter incorporated or acquired which may be or may become a Group Company of, or an Affiliate of or to any corporation or corporations now or hereafter incorporated or acquired (which are not Group Companies) with which the Company may be or may become associated.

3.5 To provide financing and financial investment, management and advisory services to any Group Company or Affiliate, which shall include granting or providing credit and financial accommodation, lending and making advances with or without interest to any Group Company or Affiliate and lending to or depositing with any bank funds or other assets to provide security (by way of mortgage, charge, pledge, lien or otherwise) for loans or other forms of financing granted to such Group Company or Affiliate by such bank.

3.6 To lease, acquire by purchase or otherwise and hold, sell, dispose of and deal in real property and in personal property of all kinds wheresoever situated.

3.7 To enter into any guarantee, contract of indemnity or suretyship and to assure, support or secure with or without consideration or benefit the performance of any obligations of any person or persons and to guarantee the fidelity of individuals filling or about to fill situations of trust or confidence.

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3.8 To acquire or undertake the whole or any part of the business, property and liabilities of any person carrying on any business that the Company is authorized to carry on.

3.9 To apply for, register, purchase, lease, acquire, hold, use, control, license, sell, assign or dispose of patents, patent rights, copyrights, trade marks, formulae, licences, inventions, processes, distinctive marks, technology and know-how and the like conferring any exclusive or non-exclusive or limited right to use or any secret or other information as to any invention or technology which may seem capable of being used, for any of the purposes of the Company or the acquisition of which may seem calculated directly or indirectly to benefit the Company, and to use, exercise, develop or grant licences in respect of or otherwise turn to account the property rights or information so acquired.

3.10 To enter into partnership, merger, consolidation, amalgamation or into any arrangement for sharing of profits, union of interests, co-operation, joint venture, reciprocal concession or otherwise with any person carrying on or engaged in or about to carry on or engage in any business or transaction that the Company is authorized to carry on or engage in or any business or transaction capable of being conducted so as to benefit the Company.

3.11 To take or otherwise acquire and hold securities in any other corporation, including securities of XL Capital Ltd, an exempted company organized under the laws of the Cayman Islands, having objects altogether or in part similar to those of the Company or any Group Company or carrying on any business capable of being conducted so as to benefit the Company or any Group Company.

3.12 To lend money to any employee or to any person having dealings with the Company or any Group Company or with whom the Company or any Group Company proposes to have dealings or to any other corporation (including any Group Company) any of whose shares are held directly or indirectly by the Company or any Group Company.

3.13 To apply for, secure or acquire by grant, legislative enactment, assignment, transfer, purchase or otherwise and to exercise, carry out and enjoy any charter, licence, power, authority, franchise, concession, right or privilege, that any government or authority, corporation or public body may be empowered to grant, and to pay for, aid in and contribute toward carrying it into effect and to assume any liabilities or obligations incidental thereto and to enter into any arrangements with any governments, authorities or public bodies, supreme, municipal, local or otherwise, that may seem conducive to the Company’s objects or any of them.

3.14 To perform any duty or duties imposed on the Company by or under any enactment and to exercise any power conferred on the Company by or under any enactment.

3.15 To incorporate or cause to be incorporated any one or more subsidiaries (within the meaning of Section 155 of the Companies Act 1963) of the Company for the purpose of carrying on any business.

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3.16 To issue securities of the Company (or contracts, options or warrants to subscribe for, or other rights or interests in, or in respect of, such securities) directly to any employees of the Company or Group Company, in consideration for employment or other services performed by those employees and to establish and support or aid in the establishment and support of associations, institutions, funds or trusts for the benefit of employees, directors or consultants or former employees, directors or consultants of the Company or its predecessors or any Group Companies or Affiliates, or the dependants or connected persons of such employees, directors or consultants or former employees, directors or consultants and grant gratuities, pensions and allowances, including the establishment of share option schemes or employee share schemes, enabling employees, directors or consultants of the Company or other persons aforesaid to become shareholders in the Company, or otherwise to participate in the profits of the Company upon such terms and in such manner as the Company thinks fit, and to make payments towards insurance or for any object similar to those set forth in this paragraph.

3.17 To establish and contribute to any scheme for the purchase by trustees of shares in the Company to be held for the benefit of the Company’s employees or the employees of any Group Companies or Affiliates and to lend or otherwise provide money to the trustees of such schemes or the Company’s employees or the employees of any Group Companies or Affiliates to enable them to purchase shares of the Company.

3.18 To grant bonuses to any person or persons who are or have been in the employment of the Company or any Group Companies or Affiliates or any person or persons who are or have been directors of, or consultants to, the Company or any of its Group Companies or Affiliates.

3.19 To establish any scheme or otherwise to provide for the purchase by or on behalf of customers of the Company or of any Group Company or Affiliate of shares in the Company.

3.20 To subscribe or guarantee money for charitable, benevolent, educational or religious objects or for any exhibition or for any public, general or useful objects.

3.21 To promote any corporation for the purpose of acquiring or taking over any of the property and liabilities of the Company or any Group Company or Affiliate or for any other purpose that may benefit the Company or any Group Company or Affiliate.

3.22 To purchase, lease, take in exchange, hire or otherwise acquire any personal property and any rights or privileges that the Company considers necessary or convenient for the purposes of its business.

3.23 To construct, maintain, alter, renovate and demolish any buildings or works necessary or convenient for its objects.

5

3.24 To construct, improve, maintain, work, manage, carry out or control any roads, ways, tramways, branches or sidings, bridges, reservoirs, watercourses, wharves, factories, warehouses, electric works, shops, stores and other works and conveniences that may advance the interests of the Company or any Group Company or Affiliate and contribute to, subsidize or otherwise assist or take part in the construction, improvement, maintenance, working, management, carrying out or control thereof.

3.25 To raise and assist in raising money for, and aid by way of bonus, loan, promise, endorsement, guarantee or otherwise, any person and guarantee the performance or fulfilment of any contracts or obligations of any person, and in particular guarantee the payment of the principal of and interest on the debt obligations of any such person.

3.26 To borrow or raise finance or secure the payment of money (including money in a currency other than the currency of Ireland) in such manner as the Company shall think fit and in particular by the issue of debentures or any other securities (or contracts, options or warrants to subscribe for, or other rights or interests in, or in respect of, such securities), perpetual or otherwise, charged upon all or any of the Company’s property, both present and future, including its unissued capital or otherwise and to purchase, redeem or pay off any such securities.

3.27 To enter into, invest or engage in, acquire, hold or dispose of any financial instruments or risk management instruments, whether or not of a type currently in existence, and currency exchange, interest rate or commodity or index linked transactions (whether in connection with or incidental to any other contract, undertaking or business entered into or carried on by the Company or whether as an independent object or activity), including securities in respect of which the return or redemption amount is calculated by reference to any index, price or rate, monetary and financial instruments of all kinds, futures contracts, swaps and hedges (including credit default, interest rate and currency swaps and hedges of any kind whatsoever), options contracts, contracts for differences, commodities (including bullion and other precious metals), forward rate agreements, debentures, debenture stock, warrants, commercial paper, promissory notes, mortgage backed securities, asset backed securities, dealings in foreign currency, spot and forward rate exchange contracts, caps, floors, collars, and any other foreign exchange, interest rate or commodity or index linked arrangements, and such other instruments whether for the purpose of making a profit or avoiding a loss or managing a currency or interest rate exposure or any other purpose and to enter into any contract for and to exercise and enforce all rights and powers conferred by or incidental, directly or indirectly, to such transactions or the termination of any such transactions.

3.28 To carry on the business of financing and re-financing whether asset based or not (including financing and re-financing of financial assets), including managing financial assets with or without security in whatever currency including financing or re-financing by way of loan, acceptance credits, commercial paper, euro medium term bonds, euro bonds, asset-backed securities, securitisation, synthetic securitisation, collateralised debt obligations, bank placements, leasing, hire

6

purchase, credit sale, conditional sale, factoring, forfeiting, invoice discounting, note issue facilities, project financing, bond issuances, participation and syndications, assignment, novation, factoring, discounting, participation, sub-participation, derivative contracts, securities/stock lending contracts, repurchase agreements or other appropriate methods of finance and to discount mortgage receivables, loan receivables and lease rentals for persons wherever situated in any currency whatsoever, and to do all of the foregoing as principal, agent or broker.

3.29 To remunerate any person or corporation for services rendered or to be rendered in placing or assisting to place or guaranteeing the placing of any of the shares of the Company’s capital or any debentures, debenture stock or other securities of the Company or of any Group Company or Affiliate or in or about the formation or promotion of the Company, any Group Companies or Affiliate or the conduct of their business.

3.30 To draw, make, accept, endorse, discount, execute and issue bills of exchange, promissory notes, bills of lading, warrants and other negotiable or transferable instruments.

3.31 To sell, lease, exchange or otherwise dispose of the undertaking of the Company or any part thereof as an entirety or substantially as an entirety for such consideration as the Company thinks fit.

3.32 To sell, improve, manage, develop, exchange, lease, dispose of, turn to account or otherwise deal with the property of the Company in the ordinary course of its business.

3.33 To adopt such means of making known the products of the Company or of any Group Company or Affiliate as may seem expedient, and in particular by advertising, by purchase and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes and rewards and making donations.

3.34 To cause the Company to be registered and recognized in any foreign jurisdiction, and designate persons therein according to the laws of that foreign jurisdiction or to represent the Company and to accept service for and on behalf of the Company of any process or suit.

3.35 To allot and issue fully-paid shares of the Company in payment or part payment of any property purchased or otherwise acquired by the Company or for any past services performed for the Company or any Group Company.

3.36 To distribute among the members of the Company in cash, kind, specie or otherwise as may be resolved, by way of dividend, bonus or in any other manner considered advisable, any property of the Company, subject always to the provisions of the Companies Acts 1963 to 2013 and any other applicable law.

3.37 To promote freedom of contract, and to resist, insure against, counteract and discourage interference therewith, to join any lawful federation, union or association

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or do any other lawful act or thing with a view to preventing or resisting directly or indirectly any interruption of or interference with the Company’s or any other trade or business or providing or safeguarding against the same, or resisting or opposing any strike, movement or organisation, which may be thought detrimental to the interests of the Company or any Group Companies or its or their employees and to subscribe to any association or fund for any such purposes.

3.38 To establish agencies and branches.

3.39 To take or hold mortgages, hypothecations, liens and charges to secure payment of the purchase price, or of any unpaid balance of the purchase price, of any part of the property of the Company of whatsoever kind sold by the Company, or for any money due to the Company from purchasers and others and to sell or otherwise dispose of any such mortgage, hypothecation, lien or charge.

3.40 To pay all costs and expenses of or incidental to the incorporation and organization of the Company.

3.41 To invest and deal with the moneys of the Company not immediately required for the other objects of the Company in such manner as may be determined.

3.42 To do any of the things authorized by this memorandum as principals, agents, contractors, trustees or otherwise, and either alone or in conjunction with others.

3.43 To do all such other things as are incidental or conductive to the attainment of the objects and the exercise of the powers of the Company.

3.44 To make voluntary dispositions of all or any part of the property and rights of the Company and to make gifts thereof or gratuitous payments either for no consideration or for a consideration less than the market value of such property or rights or the amount of cash payment or by all or any such methods.

3.45 To receive voluntary dispositions of all or any part of the property and rights of any other corporation and to receive gifts thereof or gratuitous payments either for no consideration or for a consideration less than the market value of such property or rights or the amount of cash payment or by all or any such methods.

3.46 To the extent permitted by law, to give whether directly or indirectly, any kind of financial assistance for the purchase of shares in or debentures of the Company or any corporation which is at any given time the Company’s holding company.

3.47 To carry on any other business, except the issuing of policies of insurance, which may seem to the Company capable of being conveniently carried on in connection with the above, or calculated directly or indirectly to enhance the value of or render profitable any of the Company’s property or rights.

3.48 To enter into any scheme of arrangement with its creditors or members or any class of them pursuant to Sections 449 to 455 of the Companies Act 2014.

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4. The liability of the members is limited.

5. The share capital of the Company is €40,000 and US$9,999,900 divided into 40,000 Subscriber Shares of €1 each, 500,000,000 Ordinary Shares of US$0.01 each and 499,990,000 Undesignated Shares of US$0.01 each.

6. For the purposes of this memorandum of association, (a) the terms “corporation”, “Group Company” and “Affiliate” have the meanings ascribed to such terms in the articles of association of the Company, (b) the words “including” and “includes” shall be deemed to be followed by the words “ without limitation,” and (c) unless a clear contrary intention appears, the word “or” shall be deemed to be used in the inclusive sense of “and/or.”

7. The objects specified in each paragraph of clause 3 of this memorandum of association shall, except where otherwise expressed in such paragraph, be in no way limited or restricted by reference to, or inference from, the terms of any other paragraph in that clause.

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We, the several persons whose names, addresses and descriptions are subscribed, wish to be formed into a Company in pursuance of this memorandum of association, and we agree to take the number of shares in the capital of the Company set opposite our respective names.

_____________________________________________________________________________

Names, addresses and descriptions Number of shares

of Subscriberstaken by each

Subscriber

____________________________________________________________________________________________

XL Capital LtdOne

5 Fort Street

Grand Cayman

Cayman Islands

British West Indies

Limited Liability Company

________________________________________________________________________________

Dated

Witness to the above signature:

Name:

Address:

10

Companies Acts 1963 to 2013

COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

of

XL GROUP PUBLIC LIMITED COMPANY

(as amended by special resolutions dated 13 May 2010, 25 April 2014, 23 June 2016 and 25 July 2016)

TABLE OF CONTENTS

Page

PRELIMINARY............................................................................................................................................13

REGISTERED OFFICE...............................................................................................................................17

SHARE CAPITAL AND VARIATION OF RIGHTS..................................................................................17

SHARES - ALLOTMENTS AND ISSUANCES.........................................................................................19

COMPANY PURCHASES...........................................................................................................................21

INCREASE OF CAPITAL...........................................................................................................................22

ALTERATION OF CAPITAL......................................................................................................................22

REDUCTION OF CAPITAL.......................................................................................................................23

CERTIFICATES...........................................................................................................................................23

LIEN.............................................................................................................................................................24

REGISTER OF SHAREHOLDERS............................................................................................................24

REGISTER OF DIRECTORS AND SECRETARY.....................................................................................25

TRANSFER OF SHARES...........................................................................................................................25

TRANSMISSION OF SHARES..................................................................................................................27

GENERAL MEETINGS..............................................................................................................................28

NOTICE OF GENERAL MEETINGS.........................................................................................................29

PROCEEDINGS AT GENERAL MEETINGS............................................................................................29

VOTING.......................................................................................................................................................32

PROXIES AND CORPORATE REPRESENTATIVES...............................................................................34

APPOINTMENT AND REMOVAL OF DIRECTORS...............................................................................37

RESIGNATION AND DISQUALIFICATION OF DIRECTORS...............................................................37

DIRECTORS’ REMUNERATION AND EXPENSES................................................................................38

DIRECTORS’ INTERESTS.........................................................................................................................38

POWERS OF THE BOARD........................................................................................................................39

DELEGATION OF THE BOARD’S POWERS..........................................................................................40

PROCEEDINGS OF THE BOARD.............................................................................................................40

OFFICERS AND EXECUTIVES................................................................................................................42

MINUTES....................................................................................................................................................42

SECRETARY................................................................................................................................................43

THE SEAL...................................................................................................................................................43

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DIVIDENDS AND OTHER PAYMENTS...................................................................................................44

RESERVES..................................................................................................................................................45

CAPITALISATION OF RESERVES...........................................................................................................45

RECORD DATES........................................................................................................................................48

UNTRACED SHAREHOLDERS................................................................................................................48

SERVICE OF NOTICES AND OTHER DOCUMENTS............................................................................49

WINDING UP...............................................................................................................................................51

INDEMNIFICATION...................................................................................................................................52

ALTERATION OF ARTICLES....................................................................................................................54

SCHEME OF ARRANGEMENT.................................................................................................................55

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PRELIMINARY

1. The regulations contained in Table A in the First Schedule to the Companies Act 1963 shall not apply to the Company.

2. In these articles, unless the context otherwise requires:

“1963 Act” means the Companies Act 1963;

“1983 Act” means the Companies (Amendment) Act 1983;

“1990 Act” means the Companies Act 1990;

“address” includes any number or address used for the purposes of communication by way of electronic mail or other electronic communication;

“Affiliate” of any person means any other person that directly or indirectly controls, is controlled by, or is under common control with, such person;

“Assistant Secretary” means any person appointed and so designated by the Secretary or the Board to assist the Secretary (and specific references in these articles to functions that may be performed by an Assistant Secretary do not limit such general role of assisting the Secretary);

“Auditor” or“Auditors” means the auditor or auditors at any given time of the Company;

“beneficial ownership” means “beneficial ownership” as that term is defined in Rule 13d-3 promulgated under the Exchange Act and “beneficial owner” and “beneficially own” and variants thereof, will be interpreted accordingly;

“Board” means the board of directors at any given time of the Company;

“clear days” means, for purposes of any period of notice required to be given under these articles, the days between (and in each case excluding) (i) the day when the notice is given or deemed to be given and (ii) the day of the event for which such notice is given or on which such notice is to take effect;

“Companies Acts” means the Companies Acts 1963 to 2013, and all statutory instruments which are to be read as one with, or construed, or to be read together with such Acts;

“Company” means the company whose name appears in the heading to these articles;

“Controlled Shares” in reference to any person means: (i) all shares of the Company directly, indirectly or constructively owned by such person within the meaning of Section 958 of the Internal Revenue Code of 1986 of the United States of America; and (ii) all shares of the Company directly, indirectly or constructively owned by any person or “group” of persons within the meaning of Section 13(d) (3) of the Exchange Act;

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“corporation” means any body corporate, corporation, company, partnership, limited liability company or other legal entity;

“Covered Arrangement” means, with respect to any person and as of any date, any agreement, arrangement or understanding (including any swaps or other derivative or short positions, profit interests, options, hedging transactions, and securities lending or borrowing arrangement) to which such person or its Affiliates is, directly or indirectly, a party as of such date (A) with respect to shares of the Company or (B) the effect or intent of which is to mitigate loss to, manage the potential risk or benefit of share price changes (increases or decreases) for, or increase or decrease the voting power of such person or any of its Affiliates with respect to securities of the Company or which may have payments based in whole or in part, directly or indirectly, on the value (or change in value) of any securities of the Company (other than, in each such case, interests in investment companies registered under the Investment Company Act of 1940 of the United States of America);

“Director” means a director at any given time of the Company;

“electronic communication” has the meaning given to those words in the Electronic Commerce Act 2000;

“electronic signature” has the meaning given to those words in the Electronic Commerce Act 2000;

“EUR”, “€” and “euro” mean the currency of Ireland;

“Exchange Act” means the Securities Exchange Act of 1934 of the United States of America;

“Governmental Entity” means any government or subdivision thereof, or governmental, judicial, legislative, tax, administrative or regulatory authority or body, whether of Ireland or elsewhere;

“Group Company” means the Company, any holding company of the Company and any subsidiary of the Company or of any such holding company;

“Ordinary Resolution” means a resolution of the Shareholders passed by a simple majority of the votes cast by those present in person or by proxy at a meeting and who are entitled to vote (or, if in writing, signed by all of the Shareholders entitled to attend and vote) at such meeting;

“Ordinary Shares” means ordinary shares of nominal value US$0.01 per share(or such other nominal value as may result from any reorganisation of capital) in the capital of the Company, having the rights and being subject to the limitations set out in these articles;

“Paid Up” means paid up or credited as paid up;

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“person entitled by transmission”means a person whose entitlement to a share arises in consequence of the death or bankruptcy of a Shareholder or in any way other than by transfer;

“Redeemable Shares” means shares in the capital of the Company that are redeemable in accordance with the provisions of these articles or the terms of issue of such class or series of shares;

“Register” means the register of members of the Company;

“Registered Office” means the registered office at any given time of the Company;

“Seal” means the common seal of the Company and includes any duplicate seal, securities seal or seal for use abroad;

“Secretary” means the secretary of the Company or, if there are joint secretaries, any of the joint secretaries;

“Share” or “share” means, unless specified otherwise or the context otherwise requires, any share in the capital of the Company;

“Shareholder” means in relation to any share, the person whose name is entered in the Register as the holder of the share or, where the context permits, the persons whose names are entered in the Register as the joint holders of shares;

“Special Resolution” means a special resolution of the Shareholders within the meaning of Section 141 of the 1963 Act;

“Subscriber Shares” means the shares of nominal value €1 per share having the rights and being subject to the limitations set out in these articles;

“subsidiary” and “holding company” have the meanings given to those words in Section 155 of the 1963 Act, except that references in that Section to a company shall include any corporation or other legal entity, whether incorporated or established in Ireland or elsewhere;

“Undesignated Shares” means the shares of nominal value US$0.01 per share (or such other nominal value as may result from any reorganisation of capital) in the capital of the Company, having such rights and being subject to such limitations as may be attached to them pursuant to article 6;

“US dollars” or “US$” means United States dollars, the currency of the United States of America;

“Variation Resolution” means a resolution of the Shareholders of any class or series of Shares (1) passed by a two-thirds majority of those present in person or by proxy at a separate meeting of the Shareholders of such class or series of Shares and who are entitled to

15

attend and vote at such meeting or (2) in writing signed by all of the Shareholders of such class or series of Shares.

3. For the purposes of these articles, unless specified otherwise, a contrary intention appears or the context otherwise requires:

a. a corporation shall be deemed to be present in person at a meeting if its representative, duly authorised pursuant to these articles or the Companies Acts, is present;

b. words importing only the singular number include the plural number and vice versa, and words importing only one gender include the other gender;

c. the words “including” and “includes” and any similar words shall be deemed to be followed by the words “without limitation”;

d. the word “or” shall be deemed to be used in the inclusive sense of “and/or”;

e. except as otherwise specified, the words “herein” and “hereof” and words of similar import shall be deemed to refer to these articles as a whole rather than to any particular portion of these articles;

f. references to the “terms of issue” of Shares shall be deemed to mean the terms of issue of those Shares (including, where applicable, the rights attaching to such Shares as set out in these articles) as they may be varied from time to time in accordance with these articles;

g. references to a person include any natural person, corporation or other body of persons, whether corporate or not, any trust and any Governmental Entity;

h. references to writing shall be construed as including references to printing, lithography, photography, electronic mail and any other modes of representing or reproducing words in a visible form;

i. a reference to anything being done by electronic means includes its being done by means of any electronic or other communications equipment or facilities and references to any communication being delivered or received, or being delivered or received at a particular place, include the transmission of an electronic or similar communication, and to a recipient identified in such manner or by such means, as the Board may from time to time approve or prescribe, either generally or for a particular purpose;

j. references to a signature or to anything being signed or executed include such forms of electronic signature or other means of verifying the authenticity of an electronic or similar communication as the Board may from time to time approve or prescribe, either generally or for a particular purpose;

16

k. references to a dividend include any dividend or distribution, in cash or by the distribution of assets, paid or distributed to Shareholders out of the profits of the Company available for distribution;

l. any words or expressions defined in the Companies Acts, if not otherwise defined in or given a particular meaning by these articles, have the same meaning in these articles;

m. any reference to any specific statute, statutory provision, Act, statutory instrument and other legislation is to legislation operative in Ireland unless otherwise specified;

n. except as otherwise specified herein, (i) any reference to any statute, statutory provision, Act, statutory instrument or other legislation (whether of Ireland or elsewhere) includes a reference to any modification or re-enactment of it as then in force and to every rule, regulation or order made under it (or under any such modification or re-enactment) and then in force, and (ii) any reference to any rule, regulation or order made under any statute, statutory provision, Act, statutory instrument or other legislation includes a reference to any modification or replacement of such rule, regulation or order then in force;

o. the provisions of these articles shall insofar as they relate to any right of Shareholders to receive notice of, attend and vote at general meetings (or pass resolutions in writing in lieu of a vote at a general meeting), relate only to holders of Ordinary Shares or any other class or series of shares which, by virtue of these articles or the terms of the issue of such shares, expressly carry the general right to vote at general meetings of the Company and exclude shares which entitle the holders to vote only in limited circumstances or upon the occurrence of a specified event or condition (whether or not those circumstances have arisen or that event or condition has occurred) and any provision of these articles relating to Special Resolutions, Ordinary Resolutions and the respective voting and approval thresholds attaching thereto will be interpreted accordingly.

REGISTERED OFFICE

4. The Registered Office shall be at such place in Ireland as the Board from time to time shall decide.

SHARE CAPITAL AND VARIATION OF RIGHTS

5.

a. Without prejudice to the power of the Board to issue and allot shares pursuant to the following articles, the authorised share capital of the Company at the date of adoption of these articles is €40,000 and US$9,999,900, divided into 40,000 Subscriber Shares of €1 each, 500,000,000 Ordinary Shares of US$0.01 each and 499,990,000 Undesignated Shares of US$0.01 each.

b. The Ordinary Shares shall entitle the holders thereof to the following rights:

i. as regards dividends:

17

after making all necessary provisions, where relevant, for payment of any preference dividend in respect of any preference shares in the Company then in issue, the Company shall apply any profits or reserves which the Board resolves to distribute in paying such profits or reserves to the holders of the Ordinary Shares in respect of their holdings of such shares pari passu and pro rata to the number of Ordinary Shares held by each of them;

ii. as regards capital:

on a return of assets on liquidation, reduction of capital or otherwise, the holders of the Ordinary Shares shall be entitled to be paid the surplus assets of the Company remaining after payment of its liabilities (subject to the rights of the holders of any preference shares in the Company then in issue, having preference rights on a return of capital) in respect of their holdings of Ordinary Shares pari passu and pro rata to the number of Ordinary Shares held by each of them;

iii. as regards voting in general meetings:

subject to the provisions of article 44 and the right of the Company to set record dates for the purpose of determining the identity of Shareholders entitled to notice of or vote at a general meeting, (A) the holders of the Ordinary Shares shall be entitled to receive notice of, and to attend and vote at, general meetings of the Company; and (B) every holder of Ordinary Shares present in person or by proxy shall have one vote for each Ordinary Share held by him;

iv. as regards redemption:

(A) if an Ordinary Share is not listed on a recognised stock exchange within the meaning of the 1990 Act, it shall be automatically converted into a Redeemable Share on, and from the time of, the existence or creation of an agreement, transaction or trade (“arrangement”) between the Company and any person (who may or may not be a Shareholder) pursuant to which the Company acquires or will acquire Ordinary Shares, or an interest in Ordinary Shares, from the relevant person. In these circumstances, the Ordinary Share concerned shall have the same characteristics as any other Ordinary Share in accordance with these articles save that it shall be redeemable in accordance with the arrangement. The acquisition of such Ordinary Shares in accordance with this clause (iv)(A) by the Company shall constitute the redemption of a Redeemable Share in accordance with Part XI of the 1990 Act;

(B) if an Ordinary Share is listed on a recognised stock exchange within the meaning of the 1990 Act, the provisions of clause (iv)(A) shall apply unless the Board resolves, prior to the existence or creation of any relevant arrangement, that the arrangement concerned is to be treated as an acquisition of shares pursuant to article 7, in which case the arrangement shall be so executed;

18

v. as regards certificates:

it shall be a condition of every issuance of Ordinary Shares that, unless the Board resolves otherwise (either generally or in any particular case or cases), holders of Ordinary Shares will not be entitled to receive a share certificate in respect of any Ordinary Shares except upon request and on such other terms as the Board may in its sole discretion determine.

c. Subject to the Companies Acts, all or any of the rights at any time attached to any class or series of shares at any time in issue may, unless otherwise expressly provided in the terms of issue of the shares of that class or series, from time to time, be varied with the sanction of a Variation Resolution of that class or series.

d. The special rights conferred upon the holders of any shares or class or series of shares shall not, unless otherwise expressly provided in the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu with them.

e. Notwithstanding any other provision of these articles, the nominal value of the issued share capital of the Company which is not redeemable will in no event be less than one tenth of the nominal value of the total issued share capital of the Company.

f. The Subscriber Shares shall carry the same rights as the Ordinary Shares, save that, in addition to the provisions of article 5(b)(iv), the Subscriber Shares will be automatically converted to redeemable shares, redeemable at par at the option of the Company immediately on the issue by the Company of any Ordinary Shares, representing not less than 10% in nominal value of the issued share capital of the Company.

SHARES - ALLOTMENTS AND ISSUANCES

6.

(a) The Company may, in accordance with the provisions of these articles issue any shares in its capital with such preferred or deferred or other special rights and privileges or such limitations, conditions and restrictions, whether in regard to dividend, voting, return of capital, redemption or otherwise as it may determine. Without prejudice to the generality of the foregoing, the Company may, subject to articles 6(c) and 6(d), issue and redeem redeemable shares and the Board is generally and unconditionally authorized to exercise all powers of the Company to do so.

(b) Subject to the Companies Acts and the expiration dates contained in articles 6(c) and 6(d), the unissued shares of the Company (whether forming part of the original share capital or any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options, warrants or other rights over or otherwise deal with or dispose of them to such persons, at such times and for such consideration and generally on such terms and conditions as the Board may from time to time determine.

19

(c) The Board is, for the purposes of Section 20 of the 1983 Act, generally and unconditionally authorised to exercise all powers of the Company to allot and issue relevant securities (as defined by the said Section 20) up to the amount of the Company’s authorised share capital and to allot and issue any shares purchased by the Company pursuant to the provisions of Part XI of the 1990 Act and held as treasury shares and this authority shall expire five years from the date of adoption of these articles or in accordance with any renewal of such authority from time to time. The Company may before the expiry of such authority make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the power conferred by this article 6(c) had not expired.

(d) The Board is hereby empowered pursuant to Sections 23 and 24(1) of the 1983 Act to allot equity securities within the meaning of the said Section 23 for cash pursuant to the authority conferred by article 6(c) as if Section 23(1) of the 1983 Act did not apply to any such allotment. The Company may before the expiry of such authority make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the power conferred by this article 6(d) had not expired.

(e) Subject to the Companies Acts and to the rights conferred on the holders of any other class or series of shares and without prejudice to the generality of article 6(b), the Board is empowered to cause Undesignated Shares to be issued from time to time as shares of one or more class or series of shares (including as Ordinary Shares) and may:

i. fix the distinctive designation of such class or series and the number of shares which shall constitute such class or series, which number may be increased (except as otherwise provided by the Board in creating such class or series) or decreased (but not below the number of shares thereof then in issue) from time to time by resolution of the Board;

ii. determine that they are to be redeemed (the manner and terms of redemption in all cases to be set by the Board) on the happening of a specified event or on a given date;

iii. determine that they may be redeemed (the manner and terms of redemption in all cases to be set by the Board) at the option of the Company;

iv. determine that they may be redeemed (the manner and terms of redemption in all cases to be set by the Board) at the option of the holder;

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v. fix the shares with any such other preferred, deferred, qualified, special or other rights, privileges, preferences, limitations and conditions or such restrictions, whether in regard to dividend, voting, return of capital, redemption, conversion or otherwise, as the Board in its sole discretion shall determine; and

vi. subject to article 5(c), vary any of the matters specified in clauses (i) through (v) of this article 6(e) in respect of any Undesignated Shares issued pursuant to this article 6.

(f) Without prejudice to the generality of the foregoing, the Board may make provision for the issue and allotment of shares that do not carry any voting rights.

(g) Subject to any requirement to obtain the approval of shareholders under any laws, regulations or the rules of any stock exchange to which the Company is then subject and any other applicable law, the Board is authorised, from time to time, in its discretion, to grant such persons, including Directors, for such periods and upon such terms as the Board deems advisable, (i) options to purchase or subscribe for or (ii) commitments to issue at a future date, such number of shares of any class or classes or of any series as the Board may deem advisable, and to cause warrants or other appropriate instruments evidencing such options or commitments to be issued.

(h) The Company may, insofar as the Companies Acts or any other applicable law permits, pay commission or brokerage fees to any person in consideration of a person subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares in the Company or procuring or agreeing to procure subscriptions, whether absolute or conditional, for any shares in the Company on such terms and subject to such conditions as the Board may determine, including by paying cash or allotting and issuing Paid Up shares.

(i) No share of the Company shall be issued unless it is Paid Up. Except as otherwise expressly provided by these articles, no Shareholder shall be liable to make any additional payment to the Company in respect of any share beyond the initial consideration agreed with the Company at or before the time of issue thereof.

COMPANY PURCHASES

7. Subject to the Companies Acts, the Company may, without prejudice to any relevant special rights attached to any class or series of shares, pursuant to Section 211 of the 1990 Act, purchase any of its own shares, including any Redeemable Shares, whether in the market, by tender or by private agreement, at such prices (whether at nominal value or above or below nominal value) and otherwise on such terms and conditions as the Board may from time to time determine and without any obligation to purchase on any pro rata basis as between Shareholders or Shareholders of the same class or series (the whole or any part of the amount payable on any such purchase may be paid or satisfied otherwise than in cash, to the extent permitted by the Companies Acts) and may cancel any shares so purchased or hold them as treasury shares (as defined in Section 209 of the 1990 Act) and may reissue any such shares as shares of any class or classes or series.

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8. Except only as otherwise provided in these articles, as ordered by a court of competent jurisdiction or as otherwise required by law, the Company shall be entitled to treat the registered holder of any share as the absolute owner of it and accordingly no person shall be recognised by the Company as holding any share upon trust, and the Company shall not be bound by or required in any way to recognise (even when having notice of it) any equitable, contingent, future or partial interest or other right in any share except an absolute right to the entirety of the share in the registered holder of it. This shall not preclude the Company from requiring the Shareholders or a transferee of shares to furnish the Company with information as to the beneficial ownership of (or other interest of any person in) any share.

INCREASE OF CAPITAL

9. The Company may from time to time by Ordinary Resolution increase its authorised share capital by such sum, to be divided into shares of such nominal value, as such Ordinary Resolution shall prescribe.

10. Any new shares shall be subject to all of the provisions of these articles with reference to lien, transfer, transmission and otherwise.

ALTERATION OF CAPITAL

11.

a. The Company may from time to time by Ordinary Resolution:

i. consolidate and divide all or any of its share capital into shares of larger nominal value than any of its existing shares;

ii. sub-divide its shares or any of them into shares of smaller nominal value than is fixed by its memorandum of association, subject to Section 68(1)(d) of the 1963 Act; and

iii. cancel shares which, at the date of the passing of the relevant Ordinary Resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its authorised share capital by the amount of the shares so cancelled.

b. Where any difficulty arises in regard to any division, consolidation, sub-division or cancellation under this article 11, the Board may settle the same as it thinks expedient and, in particular, may arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale in due proportion among the Shareholders who would have been entitled to the fractions, except that any proceeds in respect of any holding which are less than a sum fixed by the Board may be retained for the benefit of the Company. For the purpose of any such sale the Board may authorise some person to transfer the shares representing fractions to the purchaser, who shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale.

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REDUCTION OF CAPITAL

12. Subject to the Companies Acts and to any confirmation or consent required by law or these articles, the Company may from time to time by Special Resolution authorise the reduction in any manner of its issued share capital, any capital redemption reserve fund or any share premium account.

13. In relation to any such reduction, the Company may by Special Resolution determine the terms upon which the reduction is to be effected, including, in the case of a reduction of part only of a class or series of shares, those shares to be affected.

CERTIFICATES

14.

a. Shares shall be issued in registered form. It shall be a condition of issue of every Share that no Shareholder shall, upon becoming the holder of that Share (irrespective of the class or series of Shares concerned), be entitled to a share certificate for that Share or any shares of any class or series held by him (nor, on transferring a part of his holding, to a certificate for the balance), unless otherwise provided by these articles or the terms of issue of such class or series of shares.

b. Share certificates, if issued, shall be in such form as the Board may from time to time prescribe, subject to the requirements of the Companies Acts. No fee shall be charged by the Company for issuing a share certificate. In the case of a share held jointly by several persons, delivery of a certificate in their joint names to one of several joint holders shall be sufficient delivery to all.

15. If a share certificate is worn-out or defaced, or alleged to have been lost or destroyed, it may be replaced without fee but on such terms (if any) as to evidence and indemnity and to payment of any exceptional costs and out of pocket expenses of the Company in investigating such evidence and preparing such indemnity as the Board may think fit and, in case of wearing-out or defacement, on delivery of the certificate to the Company. The Board may require any such indemnity to be secured in such manner as the Board may think fit.

16.

a. All certificates for shares (other than letters of allotment, scrip certificates and other like documents) shall, except to the extent that the terms of issue of such shares otherwise provide, be issued under Seal. Each certificate shall be signed by a person or persons then authorized pursuant to article 90 to affix the Seal over his signature.

b. The Board may determine, either generally or in any particular case, that any signature on certificates for shares (or certificates or agreements or other documents evidencing the issue by the Company of awards under any share option, share incentive or other form of employee benefits plan adopted by the Company from time to time) need not be autographic but may be affixed to such certificates, agreements or other documents by some mechanical means or may be facsimiles printed on such certificates, agreements or other documents. If any person who has signed, or whose facsimile signature has been used on, any such certificate, agreement or other document ceases for any reason to hold his office or authority to

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sign such certificates, agreements or other documents, such certificate, agreement or other document may nevertheless be issued as though that person had not ceased to hold such office or authority to sign such certificates, agreements or other documents.

LIEN

17. The Company shall have a first and paramount lien on every share for all debts and liabilities of any Shareholder to the Company, whether presently due or not, payable in respect of such share. The Company’s lien on a share shall extend to all dividends and other monies payable in respect thereof. The Board may at any time, either generally or in any particular case, waive any lien that has arisen or declare any share to be wholly or in part exempt from the provisions of this article. The registration of a transfer of any such share shall operate as a waiver of the Company’s lien (if any) thereon.

18.

a. The Company may sell, in such manner as the Board may think fit, any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently due nor until the expiration of 14 clear days after a notice, stating and demanding payment of the sum presently due and giving notice of the intention to sell in default of such payment, has been served on the holder of the share or the person entitled by transmission to it.

b. The net proceeds of sale by the Company of any shares on which it has a lien shall be applied in or towards payment or discharge of the debt or liability in respect of which the lien exists so far as the same is due, and any residue shall (subject to a like lien for debts or liabilities not presently due as existed upon the share prior to the sale) be paid to the holder of, or the person entitled by transmission to, the share immediately before such sale. For giving effect to any such sale the Board may authorise some person to transfer the share to the purchaser. The purchaser shall be registered as the holder of the share and he shall not be bound to see to the application of the purchase money, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings relating to the sale. If a share, which is to be sold as provided for in this article 18, is held in uncertificated form (as such term is used in the Companies Act 1990 (Uncertificated Securities) Regulations 1996), the Board may authorise some person to do all that is necessary under the Companies Act, 1990 (Uncertificated Securities) Regulations 1996 to put such share into certificated form prior to its sale.

REGISTER OF SHAREHOLDERS

19.

a. The Register shall be kept in the manner prescribed by the Companies Acts at the Registered Office or at such other place as may be authorised by the Board from time to time consistent with the Companies Acts.

b. The Register may be closed at such times and for such periods as the Board may from time to time decide, subject to Section 121 of the 1963 Act. Except during such time as it is closed, the Register shall be open to inspection in the manner prescribed by the Companies Acts at such times as the Board may from time to time determine.

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c. Unless the Board so determines, no Shareholder or intending Shareholder shall be entitled to have entered in the Register, or otherwise recognized by the Company, any indication of any trust or any equitable, beneficial, contingent, future, fractional or partial interest in any share, and if any such entry exists or is permitted by the Board it shall not be deemed to abrogate any provisions of these articles provided that no interest will be entered in the Register unless permitted by the Companies Acts.

REGISTER OF DIRECTORS AND SECRETARY

20. The Secretary shall maintain a register of the Directors and Secretary of the Company as required by the Companies Acts. The register of Directors and Secretary shall be open to inspection in the manner prescribed by the Companies Acts at such times as the Board may from time to time determine.

TRANSFER OF SHARES

21. Subject to the Companies Acts, to such of the restrictions contained in these articles as may be applicable and to the terms of the issue and rights and privileges attaching to any class or series of share, any Shareholder may transfer all or any of his shares (of any class or series) by an instrument of transfer in the usual common form or in any other form which the Board may from time to time approve. The instrument of transfer may be endorsed on the certificate (if any) issued in respect of the share.

22.

a. The instrument of transfer of a Share shall be signed by or on behalf of the transferor and the transferor shall be deemed to remain the holder of the Share until the name of the transferee is entered in the Register in respect of it. The instrument of transfer need not be signed by or on behalf of the transferee. All instruments of transfer may be retained by the Company. The foregoing provisions of this article 22(a) and the provisions of article 22(b) shall not limit the rights of the Company provided in articles 17 and 18.

b. Upon receipt of instructions in writing by a transferor, the instrument of transfer of any share may be executed for and on behalf of the transferor by the Secretary or an Assistant Secretary, and the Secretary or Assistant Secretary shall be deemed to have been irrevocably appointed agent for the transferor of such share or shares with full power to execute, complete and deliver in the name of and on behalf of the transferor of such share or shares all such transfers of shares held by the transferor in the share capital of the Company. Any document which records the name of the transferor, the name of the transferee, the class (or series) and number of shares agreed to be transferred, the date of the agreement to transfer shares and the price per share, shall, once executed by the transferor or the Secretary or Assistant Secretary as agent for the transferor in accordance with the first sentence of this article 22(b), be deemed to be a proper instrument of transfer for the purposes of Section 81 of the 1963 Act. Neither the title of the transferee nor the title of the transferor shall be affected by any irregularity or invalidity in the proceedings in reference to the transfer should the Board so determine.

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c. The Company, at its absolute discretion and insofar as the Companies Acts or any other applicable law permit, may, or may procure that a subsidiary of the Company shall, pay Irish stamp duty arising on a transfer of shares on behalf of the transferee of such shares of the Company. If stamp duty resulting from the transfer of shares in the Company which would otherwise be payable by the transferee is paid by the Company or any subsidiary of the Company on behalf of the transferee, then in those circumstances, the Company shall, on its behalf or on behalf of its subsidiary (as the case may be), be entitled to (i) seek reimbursement of the stamp duty from the transferee, (ii) set-off the stamp duty against any dividends payable to the transferee of those shares and (iii) to claim a first and permanent lien on the shares on which stamp duty has been paid by the Company or its subsidiary for the amount of stamp duty paid (and the provisions of articles 17 and 18 shall apply to such lien).

d. Notwithstanding the provisions of these articles and subject to the Companies Acts, title to any shares in the Company may also be evidenced and transferred without a written instrument in accordance with Section 239 of the 1990 Act or any regulations made thereunder. Subject to the Companies Acts, the Board shall have power to permit any class or series of shares to be held in uncertificated form (as such term is used in the Companies Act 1990 (Uncertificated Securities) Regulations 1996) and to implement any arrangements it thinks fit for such evidencing and transfer which accord with such regulations and in particular shall, where appropriate, be entitled to disapply or modify all or part of the provisions of these articles with respect to the requirement for written instruments of transfer and share certificates (if any), in order to give effect to such regulations.

e. Nothing in these articles shall preclude the Board from recognising the renunciation of the allotment of any share by an allottee in favour of some other person on such terms and subject to such conditions as the Board may from time to time decide.

f. The Board may decline to register any transfer:

i. if the instrument of transfer is not duly stamped, if required, and lodged at the Registered Office or any other place as the Board may from time to time specify for the purpose, accompanied by the certificate (if any) for the shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;

ii. unless a registration statement under the Securities Act of 1933 of the United States of America is in effect with respect to such transfer or such transfer is exempt from registration and, if requested by the Board, a written opinion from counsel reasonably acceptable to the Board is obtained to the effect that such transfer is exempt from registration; or

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iii. without prejudice to the foregoing, in the absolute discretion of the Board and without assigning any reason therefor, subject to any limitation on such right of the Board imposed by law.

g. The Board shall decline to register a transfer of Shares if it appears to the Board, whether before or after such transfer, that the effect of such transfer would be to increase the number of the Controlled Shares of any person to 10% or any higher percentage of any class of voting Shares or of the total issued Shares or of the voting power of the Company. The Board may, in its discretion, advise any person that any transfer which would increase the number of such person’s Controlled Shares to 10% or any higher percentage of any class of voting Shares or the total issued Shares or voting power of the Company may not be made and will not be recognised for any purpose and any such transfer purported to have been made to such person after receipt of such notice by such person shall be null and void.

h. Subject to any directions of the Board from time to time in force, the Secretary or Assistant Secretary may exercise the powers and discretions of the Board under article 22(f) and articles 21 and 23.

i. The registration of transfers may be suspended at such time and for such periods as the Board may from time to time determine, provided always that such registration shall not be suspended for more than 30 days in any year except as may be required by applicable law.

23.

a. If the Board declines to register a transfer it shall, within one month after the date on which the instrument of transfer was lodged, send to the transferee notice of such refusal.

b. No fee shall be charged by the Company for registering any transfer or for making any entry in the Register concerning any other document relating to or affecting the title to any share (except that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed on it in connection with such transfer or entry).

TRANSMISSION OF SHARES

24. In the case of the death of a Shareholder, the survivor or survivors, where the deceased was a joint Shareholder, or the estate representative, where he or she was sole Shareholder, shall be the only person or persons recognised by the Company as having any title to his shares; but nothing in these articles shall release the estate of a deceased Shareholder from any liability in respect of any share held by him solely or jointly with other persons. In this article, estate representative means the person to whom appropriate authority has been granted to represent or administer or otherwise manage the estate of a deceased Shareholder under the laws applicable to the estate of the deceased Shareholder or, if there is no such person, such other person as the Board may in its absolute discretion determine to be the person recognised by the Company for the purpose of this article.

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25.

a. Subject to article 22(f), any person entitled by transmission to a share may, upon the production of such evidence as may be properly required by the Board from time to time, elect either to be registered himself as the holder of the share or to have some person nominated by him registered as the transferee of the share.

b. Subject to article 22(f) and article 25(c), if such person entitled by transmission to a share elects to be registered as holder of the share, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects. If he elects to have his nominee registered, he shall signify his election by signing an instrument of transfer of such share in favour of his nominee.

c. All of the provisions of these articles relating to the right to transfer and the registration of transfers of shares shall apply to any such notice or instrument of transfer as if the death or bankruptcy of the Shareholder or other event giving rise to the transmission had not occurred and the notice or instrument of transfer were an instrument of transfer signed by such Shareholder.

26. A person entitled by transmission to a share shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a Shareholder in respect of the share, be entitled to exercise any right in respect of the share in relation to meetings of the Company; provided, however, that the Board may at any time give notice requiring a person entitled by transmission to a share to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 clear days after the date such notice is given, the Board may withhold payment of any dividend, other monies payable, scrip dividend or capitalisation issue of shares or other similar benefit in respect of the share until the requirements of the notice have been complied with.

27. Subject to any directions of the Board from time to time in force, the Secretary or Assistant Secretary may exercise the powers and discretions of the Board under articles 24, 25 and 26.

GENERAL MEETINGS

28. The Board may, whenever it thinks fit (and, to the extent required by the Companies Acts, shall, on the requisition in writing of Shareholders holding such number of shares as is prescribed by Section 132 of the 1963 Act), convene a general meeting in the manner provided for in these articles and the Companies Acts.

29. In accordance with the Companies Acts, the Board shall convene and the Company shall in each year hold a general meeting as its annual general meeting in addition to any other meeting in that year, and shall specify the meeting as such in the notices calling it. Each such annual general meeting shall be held within such time period as required by Section 131 of the 1963 Act. Subject to Section 140 of the 1963 Act, all general meetings may be held outside of Ireland. All general meetings other than annual general meetings shall be called extraordinary general meetings.

30. Each general meeting shall be held at such time and place as specified in the notice of meeting.

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31. Subject to the Companies Acts, all of the provisions of these articles (including article 44) relating to meetings and resolutions of Shareholders (other than to meetings of any separate class or series of Shareholders) shall apply mutatis mutandis to (a) any separate meeting of ordinary Shareholders and (b) any separate meeting of any other class or series of Shareholders, except as otherwise expressly provided in the terms of issue of such other class or series of shares.

NOTICE OF GENERAL MEETINGS

32. Subject to Section 181 of the Companies Act 2014 (which permits such meetings to be called by such shorter notice as may be agreed to by the members and, if appointed, the Auditors of the Company), any annual general meeting and any extraordinary general meeting shall be called by at least twenty one days' notice. The notice of a general meeting shall specify the place, day and time of the meeting (including any satellite meeting place arranged for the purposes of article 38) and, in the case of an extraordinary general meeting, the general nature of the business to be considered. Notice of every general meeting shall be given in any manner permitted by these articles to all Shareholders (other than those who, under the provisions of these articles or the terms of issue of the shares which they hold, are not entitled to receive such notice from the Company) and to each Director and to the Auditors.

33. The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the notice) the accidental omission to send such instrument of proxy to, or the non-receipt of notice of a meeting or such instrument of proxy by, any person entitled to receive such notice shall not invalidate the proceedings at that meeting. A Shareholder present, either in person or by proxy, at any general meeting of the Company or of the holders of any class or series of shares in the Company, will be deemed to have received notice of that meeting and, where required, of the purpose for which it was called.

PROCEEDINGS AT GENERAL MEETINGS

34. The business of the annual general meeting shall include: the consideration of the Company's statutory financial statements, and the reports of the Directors and Auditors, the review by the Shareholders of the Company's affairs, the appointment or re-appointment of the Auditors and the authorization of the Directors to approve the remuneration of the Auditors. The business of an extraordinary general meeting shall include that described in the notice thereof.

35. The chairman of the Board, if any, or, in his absence, another Director designated by the chairman of the Board shall preside as chairman at every general meeting of the Company. If neither the chairman of the Board nor such other Director designated by the chairman of the Board is present within 30 minutes after the time appointed for holding the meeting, the Shareholders present shall choose one of their number to be chairman of the meeting. The chairman of the meeting shall take such action as he thinks fit to promote the proper and orderly conduct of the business of the meeting as laid down in the notice of the meeting.

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36.

a. Subject to Section 141 of the 1963 Act and the requirements of the Companies Acts, anything which may be done by resolution in general meeting may, without a meeting and without any previous notice being required, be done by resolution in writing, signed by all of the Shareholders entitled generally to vote at general meetings who at the date of the resolution in writing would be entitled to attend a meeting and vote on the resolution and if described as a special resolution shall be deemed to be a Special Resolution or a special resolution of the class, as applicable. Such resolution in writing may be signed in as many counterparts as may be necessary. This article 36 shall not apply to those matters required by the Companies Acts to be carried out in a meeting.

b. For the purposes of any written resolution under this article 36, the date of the resolution in writing is the date when the resolution is signed by, or on behalf of, the last Shareholder to sign and any reference in any enactment to the date of passing of a resolution is, in relation to a resolution in writing made in accordance with this article 36, a reference to such date.

c. A resolution in writing made in accordance with this article 36 is as valid as if it had been passed by the Company in general meeting.

37. No business shall be transacted at any general meeting or adjourned meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment or election of a chairman, which shall not be treated as part of the business of the meeting. Unless a higher or lower quorum is required by the Companies Acts or these articles, two or more Shareholders (or if there is only one Shareholder of the relevant class or series of Shareholders, then one Shareholder) present in person or by proxy and holding shares representing at least 50 percent of the issued shares carrying the right to vote at such meeting shall be a quorum; provided, that no quorum shall exist for the purpose of considering or passing any Special Resolution unless the Shareholder or Shareholders present in person or by proxy hold Shares representing at least two-thirds of the issued Shares carrying the right to vote at such meeting.

38.

a. Subject to the Companies Acts, the Board may resolve to enable persons entitled to attend a general meeting of the Company to do so by simultaneous attendance and participation at a satellite meeting place anywhere in the world and by such electronic means as the Board may from time to time approve. The Shareholders present at any such satellite meeting place in person or by proxy and entitled to vote shall be counted in the quorum for, and shall be entitled to vote at, the meeting in question if the chairman is satisfied that the conditions referred to in articles 38(b)(i), 38(b)(ii) and 38(b)(iii) have been met.

b. If it appears to the chairman of a general meeting that the place of the meeting (or any satellite meeting) specified in the notice convening the meeting is inadequate to accommodate all persons entitled and wishing to attend, then the meeting nevertheless is duly constituted and its proceedings nevertheless are valid if the chairman is satisfied that adequate facilities have been made available, whether at the place of the meeting or elsewhere, to ensure that each such person who is unable to be accommodated at the place of the meeting is able to:

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i. communicate simultaneously and instantaneously with the persons present at the other meeting place or places, whether by the use of microphones, loud-speakers, audio-visual or other communications equipment or facilities;

ii. have access to all documents which are required by the Companies Acts and these articles to be made available at the meeting; and

iii. participate in any poll required to vote on any resolutions of the Company;

and in that case the chairman may elect to use such adequate facilities described in the preceding sentence for the purposes of the meeting and any provision of these articles relating to meetings shall apply to any meeting so extended by the use of such facilities.

c. The chairman of the general meeting shall be present at, and the meeting shall be deemed to take place at, the principal meeting place. If it appears to the chairman of the general meeting that the facilities at the principal meeting place or any satellite meeting place are or become inadequate for the purposes referred to in articles 38(b)(i), 38(b)(ii) and 38(b)(iii), then the chairman may, without the consent of the meeting, adjourn the general meeting. All business conducted at that general meeting up to the time of such adjournment shall be valid.

39. Each Director and the Auditors shall be entitled to attend and speak at any general meeting of the Company or of any class or series of Shareholders.

40. The Board may make any security arrangements which it considers appropriate relating to the holding of a general meeting of the Company, including arranging for any person attending a meeting to be searched and for items of personal property which may be taken into a meeting to be restricted, and any person who fails to comply with any such arrangements may be refused entry to the meeting.

41.

a. Subject to the Companies Acts, a resolution may only be put to a vote at a general meeting of the Company if:

i. it is proposed by or at the direction of the Board; or

ii. it is proposed at the direction of a court of competent jurisdiction;

iii. it is proposed with respect to an extraordinary general meeting in the requisition in writing for such meeting made by such number of Shareholders as is prescribed by (and such requisition in writing is made in accordance with) Section 132 of the 1963 Act; or

iv. the chairman of the meeting in his discretion decides that the resolution may properly be regarded as within the scope of the meeting.

b. No amendment may be made to a resolution, at or before the time when it is put to a vote, unless the chairman of the meeting in his discretion decides that the amendment or the amended resolution may properly be put to a vote at that meeting.

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c. If the chairman of the meeting in his discretion rules a resolution or an amendment to a resolution admissible or out of order (as the case may be), the proceedings of the meeting or on the resolution in question shall not be invalidated by any error in his ruling. Any ruling by the chairman of the meeting in relation to a resolution or an amendment to a resolution shall be final and conclusive, subject to any subsequent order by a court of competent jurisdiction.

42.

a. At any general meeting, whether or not a quorum is present, the chairman may, with the consent of the meeting, and shall if so directed by the meeting, adjourn the meeting from time to time and place to place without notice other than announcement at the meeting. Other than announcement at the meeting, notice of any adjourned meeting or of any business to be transacted at an adjourned meeting shall not be required to be given, except as provided in article 42(c) and except where expressly required by applicable law.

b. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting originally called, but only those Shareholders entitled to vote at the meeting as originally notified shall be entitled to vote at any adjournment or adjournments thereof.

c. If an adjournment is for 30 days or more or for an indefinite period, a notice of the adjourned meeting shall be given in the manner specified in article 32.

VOTING

43. Except where a greater majority is required by the Companies Acts or these articles, any question proposed for consideration at any general meeting of the Company shall be decided by an Ordinary Resolution and all resolutions put to the Shareholders will be decided on a poll.

44.

a. Every Shareholder owning shares conferring the right to vote present in person or by proxy at any general meeting shall have one vote (or such other number of votes as may be specified in the terms of issue of such shares or in these articles), for each such share registered in such Shareholder’s name in the Register on the date fixed pursuant to the provisions of article 103 or 104, as applicable, as the record date for the determination of Shareholders entitled to vote at such meeting, provided that if and so long as the votes conferred by the Controlled Shares of any person constitute 10% or more of the votes conferred by the issued shares of the Company, each issued share comprised in such Controlled Shares shall confer only a fraction of a vote that would otherwise be applicable according to the following formula:

[(T divided by 10) - 1] divided by C

Where: “T” is the aggregate number of votes conferred by all the issued shares of the Company; and “C” is the number of votes conferred by the Controlled Shares of such person.

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For the purposes of this article, “person” shall include any “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act.

b. If, as a result of giving effect to the foregoing provisions of this article 44 or otherwise, the votes conferred by the Controlled Shares of any person would otherwise represent more than 10% of the votes conferred by all of the issued shares of the Company, the votes conferred by the Controlled Shares of such person shall be reduced in accordance with the foregoing provisions of this article 44. Such process shall be repeated until the votes conferred by the Controlled Shares of each person represent no more than 10% of the votes conferred by all of the issued shares of the Company.

c. Notwithstanding the foregoing provisions of this article 44, after having applied the provisions thereof as best as they consider reasonably practicable, the Board may make such final adjustments to the aggregate number of votes conferred by the Controlled Shares of any person that it considers fair and reasonable in all the circumstances to ensure that such votes represent less than 10% of the aggregate voting power of the votes conferred by all of the issued shares of the Company.

45. The Board may, before any meeting of Shareholders, determine the time set for a poll, the manner in which any poll is to be taken and the manner in which votes are to be counted, which may include provision for votes to be cast by electronic means by persons present in person or by proxy at the meeting and for the appointment of scrutineers. To the extent not so determined by the Board, such matters shall be determined by the chairman of the meeting. A person appointed to act as a scrutineer need not be a Shareholder.

46. Votes may be cast on the poll either personally or by proxy. A person entitled to more than one vote need not use all of his votes or cast all of the votes he uses in the same way.

47. The result of a poll shall, subject to any provisions of these articles or applicable law relating to approval thresholds, be deemed to be the resolution of the meeting.

48. In the case of an equality of votes at a meeting, the motion shall be deemed to be lost and the chairman of the meeting shall not be entitled to a second or casting vote.

49. In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the joint holding. Joint holders of more than one share shall, subject to any terms determined by the Board and subject to article 22(f), be entitled to split the holdings into several holdings with their names in different orders so as to enable one or more joint holders to attend and vote.

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50. Subject to article 51, a Shareholder who is a patient for any purpose of any statute or applicable law relating to mental health or in respect of whom an order has been made by any court in Ireland (or elsewhere having jurisdiction) for the protection or management of the affairs of persons incapable of managing their own affairs may vote, by his legal guardian, receiver, committee or other person in the nature of a legal guardian, receiver, committee or other person appointed by such court, and such legal guardian, receiver, committee or other person may vote by proxy and may otherwise act and be treated as such Shareholder for the purpose of meetings of Shareholders.

51. Evidence to the satisfaction of the Board of the authority of any person claiming the right to vote under article 50 shall be produced at the Registered Office (or at such other place as may be specified for the deposit of instruments of proxy) not later than the last time by which an instrument appointing a proxy must be deposited in order to be valid for use at the meeting or adjourned meeting or on the holding of the poll at or on which that person proposes to vote and, in default, the right to vote shall not be exercisable.

52. No objection may be raised to the qualification of any voter or to the counting of, or failure to count, any vote except at the meeting at which the vote objected to is given or tendered. Any objection so raised shall be referred to the chairman of the meeting, whose decision shall be final and conclusive. Except as otherwise decided by the chairman, every vote counted and not disallowed at the meeting shall be valid and every vote disallowed or not counted shall be invalid. Notwithstanding the foregoing, however, if the chairman of the meeting considers that such action is necessary to determine accurately the vote count, the chairman may, in his discretion, whether or not an objection has been raised, defer until after the conclusion of the meeting a decision as to the proper application of article 44 to any vote at such meeting. If the decision has been so deferred, then the chairman of the meeting or, if the decision has not been reached within 90 days of the meeting, the Board, shall make the decision and the decision shall be final and conclusive.

PROXIES AND CORPORATE REPRESENTATIVES

53.

a. A Shareholder may appoint one or more persons as his proxy, with or without the power of substitution, to represent him and vote on his behalf in respect of all or some only of his shares at any meeting of Shareholders (including an adjourned meeting). A proxy need not be a Shareholder.

b. A Shareholder that is a corporation may appoint any individual (or two or more individuals in the alternative) as its representative to represent it and vote on its behalf at any meeting of Shareholders (including an adjourned meeting) and such a corporate representative may exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were a Shareholder who is an individual.

c. A Shareholder that is a corporation may appoint more than one such representative (with or without appointing any persons in the alternative) at any such meeting provided that such appointment specifies the number of shares in respect of which each such appointee is authorised to act as representative, not exceeding in aggregate the number of shares held by the appointor and carrying the right to attend and vote at the relevant meeting.

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d. The appointment of a proxy or a corporate representative in relation to a particular meeting shall, unless the contrary is stated in the instrument of appointment, be valid for any adjournment of the meeting.

54. A Shareholder may appoint a standing proxy, with or without the power of substitution, or (if a corporation) a standing representative (with or without appointing any persons in the alternative) by delivery to the Registered Office (or at such other place as the Board may from time to time specify for such purpose) of evidence of such appointment. The appointment of such a standing proxy or representative shall be valid for every meeting of Shareholders and adjourned meeting until such time as it is revoked by notice to the Company, but:

a. the appointment of a standing proxy or representative may be made on an irrevocable basis in which case the Company may recognise the vote of the proxy or representative given in accordance with the terms of the appointment, to the exclusion of the vote of the Shareholder, until such time as the appointment ceases to be effective in accordance with its terms;

b. notwithstanding article 54(a), the appointment of a standing proxy or representative shall be deemed to be suspended at any meeting (or any poll taken subsequently to any meeting with respect to business on the agenda for such meeting) at which (i) the Shareholder is present in person and votes or (ii) in respect of which the Shareholder has specifically appointed another proxy or representative in respect of the same shares, which proxy or representative is present in person and votes in respect of such shares; and

c. the Board may from time to time require such evidence as it deems necessary as to the due execution and continuing validity of the appointment of any standing proxy or representative and, if it does so, the appointment of the standing proxy or representative shall be deemed to be suspended until such time as the Board determines that it has received the required evidence or other evidence satisfactory to it.

55.

a. A proxy may be appointed by an instrument in writing in any common form or in such other form as the Board may approve, such instrument being executed under the hand of the appointor or of his attorney or agent authorised by him in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same. A proxy may also be appointed in such other manner as the Board may from time to time approve.

b. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of that power or authority, shall, subject to the following provisions of this article 55(b), be deposited at such place or address as is specified for that purpose in the notice convening the meeting,

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before the time appointed for the taking of the relevant poll and, in default, the instrument of proxy shall not be treated as valid. Where the instrument appointing a proxy is in electronic form, it may be so received where an address has been specified by the Company for that purpose: (i) in the notice convening the meeting; (ii) in any form of appointment of proxy sent out by the Company in relation to the meeting; or (iii) in any invitation contained in an electronic communication to appoint a proxy issued by the Company in relation to the meeting.

c. If the terms of appointment of a proxy include a power of substitution, any proxy appointed by substitution under such power shall be deemed to be the proxy of the Shareholder who conferred such power. All of the provisions of these articles relating to the execution and delivery of an instrument or other form of communication appointing or evidencing the appointment of a proxy shall apply, mutatis mutandis, to the instrument or other form of communication effecting or evidencing such an appointment by substitution.

56. A vote given by proxy or a representative, whether a standing proxy or a representative or proxy or representative relating to a particular meeting, shall be valid notwithstanding the previous death or insanity of the principal (in the case of a proxy), or revocation of the appointment of the proxy or representative or of the authority under which it was executed unless notice of such death, insanity or revocation was received by the Company at the Registered Office (or at any other place as may be specified for the delivery of instruments or other forms of communication appointing or evidencing the appointment of proxies and representatives in the notice convening the meeting or in any other information sent to Shareholders by or on behalf of the Board in relation to the meeting) before the commencement of the meeting or adjourned meeting at which the vote is given.

57. Without limiting the foregoing, the Board may from time to time permit appointments of a proxy to be made by means of a telephonic, electronic or internet communication or facility and may in a similar manner permit supplements to, or amendments or revocations of, any such telephonic, electronic or internet communication or facility to be made. The Board may in addition prescribe the method of determining the time at which any such telephonic, electronic or internet communication or facility is to be treated as received by the Company. The Board may treat any such telephonic, electronic or internet communication or facility which purports to be or is expressed to be sent on behalf of a Shareholder as sufficient evidence of the authority of the person sending that instruction to send it on behalf of that Shareholder.

58. Subject to the Companies Acts, the Board may also at its discretion waive any of the provisions of these articles relating to the execution and deposit of an instrument or other form of communication appointing or evidencing the appointment of a proxy or a representative or any ancillary matter (including any requirement for the production or delivery of any instrument or other communication to any particular place or by any particular time or in any particular way) and, in any case in which it considers it appropriate, may accept such verbal or other assurances as it thinks fit as to the right of any person to attend and vote on behalf of any Shareholder at any meeting of Shareholders.

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APPOINTMENT OF DIRECTORS

59.

a. The Directors will have power at any time and from time to time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors. No Director who has been appointed by the Directors, as permitted by the Companies Act 2014, will require to be re-elected at the next following annual general meeting or at any annual general meeting or extraordinary general meeting following such appointment; and the provisions of Sections 144(3)(c) and 1090 of the Companies Act 2014 shall not apply to the Company.

b. The Company may, by ordinary resolution:

(i) appoint another person in place of a Director removed from office under article 63, and

(ii) without prejudice to the powers of the Directors to appoint any person to be a Director, may appoint any person to be a Director either to fill a casual vacancy or as an additional Director.

The requirements set out at Section 144(4) of the Companies Act, 2014 shall not apply to any such appointment.

c. If at any time the Company has only one member, that is to say that all the issued shares of the Company are registered in the name of a sole person (whether a natural person or a body corporate), it will be a single-member company within the meaning of the Companies Act 2014.  If and so long as the Company is a single-member company, the sole member may appoint a person to be a director of the Company by serving a notice in writing on the Company which states that the named person is appointed director, and this applies notwithstanding anything in Section 144(3) of the Companies Act 2014 (save for the requirement of it that any limit for the time being on the number of directors provided for in these articles (if any) is to be observed) or in Section 144(4).

60. The number of Directors shall be not less than two. If at any time the number of Directors holding office falls below two (or any greater number fixed by these Articles as the minimum number of Directors), the Director or Directors holding office may act for the purpose of appointing one or more additional Directors so as to increase the number to two (or such greater minimum number as aforesaid) or summoning a general meeting of the Company for such purpose, but may not act for any other purpose.

61. A Director will not be required to hold any shares in the Company by way of qualification.

RESIGNATION, REMOVAL AND DISQUALIFICATION OF DIRECTORS

62. The office of a Director shall be vacated:

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a. if he resigns his office, on the date on which notice of his resignation is delivered to the Secretary at the principal executive offices of the Company or tendered at a meeting of the Board or on such later date as may be specified in such notice; or

b. on his being prohibited by law from being a Director; or

c. on his ceasing to be a Director by virtue of any provision of the Companies Acts.

63. The Company may, in accordance with Section 182 of the 1963 Act, remove any Director before the expiration of his term of office notwithstanding anything in these articles or in any agreement between the Company and such Director. Such removal shall be without prejudice to any claim such Director may have for damages for breach of any contract of service between him and the Company.

DIRECTORS’ REMUNERATION AND EXPENSES

64. A Director shall not be entitled to any fees for his services as a Director.

DIRECTORS’ INTERESTS

65.

a. A Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall comply with the provisions of Section 194 of the 1963 Act.

b. A Director may vote in respect of any contract or proposed contract in which he has declared his interest in accordance with article 65(a) and will be counted in the quorum at any meeting on which any such vote is proposed.

66.

a. A Director of the Company may be or become a director or other officer of, or otherwise interested in, any corporation promoted by the Company or in which the Company may be interested as shareholder or otherwise, and no such Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other corporation unless the Company otherwise directs.

b. A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Board may determine, and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or any contract or arrangement entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established.

c. Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were

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not a Director; but nothing herein contained shall authorise a director or his firm to act as Auditor.

POWERS OF THE BOARD

67. Subject to the provisions of the Companies Acts and these articles, the Board shall manage the business and affairs of the Company and may exercise all of the powers of the Company as are not required by the Companies Acts or by these articles to be exercised by the Company in general meeting. No alteration of these articles shall invalidate any prior act of the Board which would have been valid if that alteration had not been made. The powers given by this article shall not be limited by any special power given to the Board by these articles and, except as otherwise expressly provided in these articles, a meeting of the Board at which a quorum is present shall be competent to exercise all of the powers, authorities and discretions vested in or exercisable by the Board.

68. The Board may exercise all of the powers of the Company to borrow or raise money and to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of the Company and, subject to Part III of the 1983 Act, to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any other person.

69. The Company may exercise the powers conferred by Section 41 of the 1963 Act with regard to having an official seal for use abroad and such powers shall be vested in the Board.

70. All cheques, promissory notes, drafts, bills of exchange and other instruments, whether negotiable or transferable or not, and all receipts for money paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the Board shall from time to time determine.

71. The Board may exercise all of the powers of the Company to grant or procure the grant or provision of benefits, including pensions, annuities or other allowances, to or for any person, including any Director or former Director, who has held any executive office or employment with, or whose services have directly or indirectly been of benefit to, the Company or any Group Company or Affiliate or otherwise associated with any of them or a predecessor in business of the Company or of any such other corporation, and to or for any relation or dependant of any such person, and to contribute to any fund and pay premiums for the purchase or provision of any such benefit, or for the insurance of any such person.

72. The Board may cause the voting power conferred by the shares in any other corporation or other person held or owned by the Company to be exercised in such manner in all respects as the Board thinks fit, including the exercise of votes in favour of any resolution appointing the Directors or any of them to be directors or officers of such other corporation or person or voting or providing for the payment of remuneration to any such Directors as the directors or officers of such other corporation or person.

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DELEGATION OF THE BOARD’S POWERS

73. The Board may by power of attorney or otherwise (including by a duly passed resolution) appoint any person to be the attorney or agent of the Company and may delegate to such person any of the Board’s powers, authorities and discretions (with power to sub-delegate) for such period and subject to such conditions as it may think fit. The Board may revoke or vary any such appointment or delegation. Any such power of attorney or resolution or other document may contain such provisions for the protection and convenience of persons dealing with any such attorney or agent as the Board may think fit.

74. The Board may from time to time provide for the management of the affairs of the Company in such manner as it shall think fit and the provisions contained in article 75 shall be without prejudice to the general powers conferred by this article.

75.

a. The Board may delegate any of its powers, authorities and discretions (with power to sub-delegate) to any committee, consisting of such person or persons (whether Directors or not) as it thinks fit. The Board may make any such delegation on such terms and conditions with such restrictions as it thinks fit and either collaterally with, or to the exclusion of, its own powers and may from time to time revoke or vary such delegation. Any committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations or limitations that may be imposed on it by the Board. The power to delegate to a committee extends to all of the powers, authorities and discretions of the Board generally (including those conferred by article 68) and shall not be limited by the fact that in certain provisions of these articles, but not in others, express reference is made to a committee or to particular powers, authorities or discretions being exercised by the Board or by a committee of the Board.

b. The meetings and proceedings of any committee of the Board consisting of two or more members shall be governed by the provisions contained in these articles for regulating the meetings and proceedings of the Board so far as they are capable of applying and are not superseded by any regulations imposed by the Board except that, unless otherwise determined by the Board, the quorum necessary for the transaction of business at any committee meeting shall be two members.

PROCEEDINGS OF THE BOARD

76. The Board may meet to conduct business, adjourn and otherwise regulate its meetings (including notice thereof) as it thinks fit. Except where a greater majority is required by these articles, questions arising at any meeting shall be determined by a majority of the votes cast at a meeting at which there is a quorum. In the case of an equality of votes the motion shall be deemed to be lost and the chairman of the meeting shall not be entitled to a second or casting vote.

77. A meeting of the Board may at any time be summoned by the chairman of the Board or by the chief executive officer, if he is a Director. The Secretary or any Assistant Secretary shall also summon a meeting of the Board on the requisition of a Director. Such meeting of the

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Board shall be summoned in such manner and with such prior notice as the Board may from time to time determine (including as to the manner of giving notice), which notice shall set forth the general nature of the business to be considered, unless notice is waived in accordance with the following article.

78. A Director may waive notice of any meeting either prospectively or retroactively or at the meeting in question. A Director in attendance at a meeting shall be deemed to have waived notice of such meeting. The provisions of article 33 shall apply mutatis mutandis with respect to notices of meetings of Directors.

79. The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed shall be one-third of the Directors currently in office.

80. The continuing Directors may act notwithstanding any vacancy in the Board, but if and so long as their number is reduced below the number fixed by or pursuant to article 79 as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose.

81. At any meeting of the Board, the chairman of the Board shall preside or, in his absence, any Director holding the position of chief executive officer. However, if no chairman of the Board or Director holding the position of chief executive officer is present at the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting.

82. A resolution in writing (in one or more counterparts), signed at the relevant time by all of the Directors then in office or all of the members of a committee of Directors then in office shall be as valid and effectual as if it had been passed at a meeting of the Directors or committee as the case may be duly convened and held.

83. A meeting of the Board or any committee thereof may be held by such electronic means as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and participation in such a meeting shall constitute presence in person at such meeting. Such a meeting will be deemed to take place where the largest group of those participating in the meeting is physically present together or, if there is no such group, where the chairman of the meeting then is.

84. All acts done by the Board or by any committee or by any person acting as a Director or member of a committee or any person authorised by the Board or any committee shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or such committee or person acting as aforesaid or that they or any of them were disqualified or had vacated their office, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director, member of such committee or person so authorised.

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OFFICERS AND EXECUTIVES

85.

a. The Board may elect a chairman of the Board and determine the period for which he is to hold office and may appoint any person (whether or not a Director) to fill the position of chief executive officer (who may be the same person as the chairman of the Board). The chairman of the Board shall vacate that office if he vacates his office as a Director (otherwise than by the expiration of his term of office at a general meeting of the Company at which he is re-appointed).

b. The Board may from time to time appoint one or more of its body to hold any office or position with the Company for such period and on such terms as the Board may determine and may revoke or terminate any such appointment. Any such revocation or termination shall be without prejudice to any claim for damages that such Director may have against the Company or the Company may have against such Director for any breach of any contract of service between him and the Company that may be involved in such revocation or termination or otherwise. Any person so appointed shall receive such remuneration, if any (whether by way of salary, commission, participation in profits or otherwise), as the Board may determine.

c. In addition, the Board may appoint any person, whether or not he is a Director, to hold such executive or official position (except that of Auditor) as the Board may from time to time determine. The same person may hold more than one office or executive or official position.

d. Any person elected or appointed pursuant to this article 85 shall hold his office or other position for such period and on such terms as the Board may determine and the Board may revoke or vary any such election or appointment at any time by resolution of the Board. Any such revocation or variation shall be without prejudice to any claim for damages that such person may have against the Company or the Company may have against such person for any breach of any contract of service between him and the Company which may be involved in such revocation or variation. If any such office or other position becomes vacant for any reason, the vacancy may be filled by the Board.

e. Except as provided in the Companies Acts or these articles, the powers and duties of any person elected or appointed to any office or executive or official position pursuant to this article 85 shall be such as are determined from time to time by the Board.

f. The use or inclusion of the word “officer” (or similar words) in the title of any executive or other position shall not be deemed to imply that the person holding such executive or other position is an “officer” of the Company within the meaning of the Companies Acts.

MINUTES

86.

a. The Board shall cause minutes to be made and books kept for the purpose of recording all of the proceedings and attendance at meetings of the Board and of any committee of the Board and at meetings of the Shareholders and of any class or series of Shareholders of the Company.

b. Subject to the requirements of the Companies Acts, the Board shall from time to time determine whether and to what extent and at what times and places and under what

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conditions or regulations the minutes of meetings of the Shareholders and of any class or series of Shareholders of the Company (but not minutes of meetings of the Board or any committee of it) shall be open to the inspection of Shareholders not being Directors and no Shareholder (who is not a Director) shall have any right to inspect any account or book or document of the Company except as conferred by applicable law or authorised by the Board or, in a general meeting, by the Company.

SECRETARY

87. The Secretary shall be appointed by the Board at such remuneration (if any) and on such terms as it may think fit and any Secretary so appointed may be removed by the Board. Any revocation or variation of such position shall be without prejudice to any claim for damages that such person may have against the Company or the Company may have against such person for any breach of any contract of service between him and the Company which may be involved in such revocation or variation or otherwise.

88. The duties of the Secretary shall be those prescribed by the Companies Acts, together with such other duties as shall from time to time be prescribed by the Board, and in any case, shall include the making and keeping of records of the votes, doings and proceedings of all meetings of the Shareholders and the Board of the Company, and committees, and the authentication of records of the Company.

89. A provision of the Companies Acts or these articles requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as, or in the place of, the Secretary.

THE SEAL

90.

a. The Company, in accordance with article 69, may have for use in any territory outside Ireland one or more additional Seals, each of which shall be a duplicate of the Seal with or without the addition on its face of the name of one or more territories, districts or places where it is to be used and a securities seal as provided for in the Companies (Amendment) Act 1977.

b. Any Authorized Person may affix the Seal of the Company over his signature alone to any document of the Company required to be authenticated or executed under Seal. Subject to the Companies Acts, any instrument to which a Seal is affixed shall be signed by one Authorized Person. As used in this article 90(b), “Authorized Person” means (i) any Director, the Secretary or any Assistant Secretary, and (ii) any other person authorized for such purpose by the Board from time to time (whether, in the case of this clause (ii), identified individually or collectively and whether identified by name, title, function or such other criteria as the Board may determine).

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DIVIDENDS AND OTHER PAYMENTS

91.

a. The Board may from time to time declare and pay such dividends to the Shareholders as appear to the Directors to be justified by the profits of the Company.

b. The Board may declare and pay dividends in any currency that the Board in its discretion shall choose.

92. Except insofar as the terms of issue of any shares otherwise provide, all shares outstanding on the record date for a dividend shall rank equally for such dividend.

93. The Board may deduct from any dividend or other moneys payable to a Shareholder (either alone or jointly with another) by the Company on or in respect of any shares all sums of money (if any) due from him (either alone or jointly with another) to the Company in respect of shares of the Company.

94. No dividend or other moneys payable by the Company on or in respect of any share shall bear interest against the Company, unless the terms of issue of that share otherwise expressly provide.

95.

a. Any dividend or other sum payable in cash to the holder of a share may be paid by cheque, wire transfer or other means approved by the Board and, in the case of a cheque, may be sent through the post addressed to the holder at his address in the Register (or, in the case of joint holders, addressed to the holder whose name stands first in the Register in respect of the share at his registered address as appearing in the Register).

b. Every such cheque or wire transfer shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of one or more of the holders and shall be sent at his or their risk and payment of the cheque or wire transfer by the bank on which it is drawn or from which it is transferred (as the case may be) shall constitute a good discharge to the Company.

c. In addition, any dividend or other sum payable to the holder of a share may be paid by a bank or other funds transfer system or by such other means as may be approved by the Board and to or through such person as the holder or joint holders may direct in writing, and the Company shall have no responsibility for any sums lost or delayed in the course of any such transfer or when it has acted on any such direction.

d. Any one of two or more joint holders may give an effectual receipt for any dividend or other moneys payable or property distributable in respect of the shares held by such joint holders.

96.

a. If (i) a payment for a dividend or other sum payable in respect of a share sent by the Company to the person entitled to it in accordance with these articles is left uncashed or is returned to the Company and, after reasonable enquiries, the Company is unable to establish any new address or, with respect to a payment to be made by a funds

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transfer system, a new account, for that person or (ii) such a payment is left uncashed or returned to the Company on two consecutive occasions, the Company shall not be obliged to send any dividends or other sums payable in respect of that share to that person until he notifies the Company of an address or, where the payment is to be made by a funds transfer system, details of the account, to be used for the purpose.

b. Subject to any applicable abandoned property, escheat or similar laws, any dividend or other distribution in respect of a share which is unclaimed for a period of 6 years from the date on which it became payable shall be forfeited and shall revert to the Company. The payment by the Company of any unclaimed dividend or other distribution payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect of it.

97. The Board may, insofar as the Companies Acts permit, direct payment or satisfaction of any dividend or other distribution wholly or in part by the distribution of specific assets and, in particular, of fully or partly Paid Up shares or other securities of any other corporation; and, where any difficulty arises in regard to such dividend or distribution, the Board may settle it as it thinks expedient, and in particular may authorise any person to sell and transfer any fractions, or may ignore fractions altogether, and may fix the value for distribution or dividend purposes of any such specific assets, and may determine that cash payments shall be made to any Shareholders on the basis of the values so fixed in order to secure equality of distribution, and may vest any such specific assets in trustees as may seem expedient to the Board.

RESERVES

98. The Board may, before declaring any dividend or other distribution, set aside out of the profits of the Company such sums as it thinks proper as reserves which shall, at the discretion of the Board, be applicable for any purpose of the Company and pending such application may, also at such discretion, either be employed in the business of the Company or be invested in such manner as the Board lawfully determines. The Board may also without placing the same to reserves carry forward any sums that it may think it prudent not to distribute.

CAPITALISATION OF RESERVES

99.

a. The Board may cause any sum standing to the credit of any of the Company’s reserves (including any capital redemption reserve fund or share premium account) or to the credit of the profit and loss account to be capitalised and applied on behalf of the Shareholders who would have been entitled to receive the same if the same had been distributed by way of dividend and in the same proportions either in or towards paying up amounts for then unpaid on any shares held by them respectively or in paying up in full unissued shares or debentures of the Company of a nominal amount equal to the sum capitalised (such shares or debentures to be allotted and distributed credited as fully paid up to and amongst such holders in the proportions aforesaid) or partly in one way and partly in another, so however, that the only purpose for which sums standing to the credit of the capital redemption reserve fund or the share premium account shall be applied shall be those permitted by Sections 62 and 64 of the 1963 Act.

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b. The Board may capitalise any part of the amount standing to the credit of any of the Company’s reserve accounts or to the credit of the profit and loss account which is not available for distribution by applying such sum in paying up in full unissued shares to be allotted as fully paid bonus shares to those Shareholders of the Company who would have been entitled to that sum if it were distributed by way of dividend (and in the same proportions), and the Board shall give effect to such resolution.

100. In pursuance of any act of the Board under article 99, the Board shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby and all allotments and issues of fully paid shares or debentures, if any, and generally shall do all acts and things required to give effect thereto with full power to the Board to make such provision as it shall think fit for the case of shares or debentures becoming distributable in fractions (and, in particular, without prejudice to the generality of the foregoing, to sell the shares or debentures represented by such fractions and distribute the net proceeds of such sale amongst the Shareholders otherwise entitled to such fractions in due proportions) and also to authorise any person to enter on behalf of all of the Shareholders concerned into an agreement with the Company providing for the allotment to them respectively credited as fully paid up of any further shares or debentures to which they may become entitled on such capitalisation or, as the case may require, for the payment up by the application thereto of their respective proportions of the profits resolved to be capitalised of the amounts remaining unpaid on their existing shares and any agreement made under such authority shall be effective and binding on all such Shareholders.

101.

a. Whenever a capitalisation issue of shares is made under article 99, the Board may, subject to the rights attached to any particular class or series of shares, also decide to offer any Shareholder the right to elect to forego his entitlement to receive additional shares under such capitalisation issue (or such part of his entitlement as the Board may determine) and to receive instead a payment in cash (a “cash option”) in accordance with the following provisions of this article 101.

b. The amount payable under and all other terms of the cash option shall be decided by the Board, which may fix a limit on the extent to which an election for the cash option shall be effective (whether by reference to a part of any Shareholder’s total entitlement to additional shares or to the total number of additional shares in respect of which all such elections may be made on any occasion).

c. The Board shall give notice to the Shareholders of their rights of election in respect of the cash option and shall specify the procedure to be followed in order to make an election.

d. Payments to those Shareholders who elect to receive cash instead of their entitlement to further shares under such a capitalisation issue (“cash electors”) may, to the extent permitted by the Companies Acts, be made either (i) out of profits or reserves of the Company available for the payment of dividends or (ii) out of the net proceeds of sale of the shares to which the cash electors would have been entitled under such capitalisation issue but for their election to receive cash, or partly in one way and partly in the other, as the Board determines. To the extent that the Board determines that payment is to be made as in (ii) above, the Board shall be entitled to sell the additional shares to which the cash electors would have been entitled, to appoint some person to transfer those shares to the purchaser (who shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating

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to the sale). The net proceeds of sale shall be applied in or towards payment of the amounts due to cash electors in respect of their cash entitlement and, to the extent that they exceed that entitlement, may be retained by the Company for its benefit.

e. The Board may decide that Shareholders resident in territories where, in the opinion of the Board, compliance with local laws or regulations would be unduly onerous if those Shareholders were to receive additional shares, shall be deemed to have exercised rights of election to receive cash.

f. The Board may determine that any sums due in respect of a cash option to all or some of those Shareholders whose registered addresses are in a particular territory shall be paid in a currency or currencies other than US dollars and, if it does so, the Board may fix or otherwise determine the basis of conversion into the other currency or currencies and payment of that converted amount in that currency shall be in full satisfaction of the entitlement to such sum.

102.

a. The Board may, subject to the rights attached to any particular class or series of shares, offer any Shareholder the right to elect to receive further shares, credited as paid up, instead of cash in respect of all (or some part) of any dividend (a “scrip dividend”) in accordance with the following provisions of this article 102.

b. The basis of allotment of the further shares shall be decided by the Board so that, as nearly as may be considered convenient, the value of the further shares, including any fractional entitlement, is equal to the amount of the cash dividend which would otherwise have been paid. For these purposes the value of the further shares shall be calculated in such manner as may be determined by the Board, but the value shall not in any event be less than the nominal value of a share.

c. The Board shall give notice to the Shareholders of their rights of election in respect of the scrip dividend and shall specify the procedure to be followed in order to make an election.

d. The dividend or that part of it in respect of which an election for the scrip dividend is made shall not be paid and instead further shares shall be allotted in accordance with elections duly made and the Board shall capitalise a sum equal to not less than the aggregate nominal value of, nor more than the aggregate “value” (as determined under article 102(b)) of, the shares to be allotted, as the Board may determine out of such sums available for the purpose as the Board may consider appropriate.

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e. The Board may decide that the right to elect for any scrip dividend shall not be made available to Shareholders resident in any territory where, in the opinion of the Board, compliance by the Company with local laws or regulations would be unduly onerous.

f. The Board may do all acts and things considered necessary or expedient to give effect to the provisions of a scrip dividend election and the issue of any shares in accordance with the provisions of this article 102, and may make such provisions as it thinks fit for the case of shares becoming distributable in fractions (including provisions under which, in whole or in part, the benefit of fractional entitlements accrues to the Company rather than to the Shareholders concerned).

g. The Board may from time to time establish or vary a procedure for election mandates, under which a holder of shares may, in respect of any future dividends for which a right of election pursuant to this article 102 is offered, elect to receive further shares in lieu of such dividend on the terms of such mandate.

RECORD DATES

103.

a. The Board may fix, in advance, a date as the record date for the purpose of determining the Shareholders entitled to notice of, or to vote at, any meeting of the Shareholders or any adjournment thereof, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board.

b. The Board may fix, in advance, a date as the record date for the purpose of determining the Shareholders entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares, or in order to make a determination of the Shareholders for the purpose of any other lawful action, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall not be more than 90 calendar days prior to such payment, allotment or other action.

104. If no record date is fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders or Shareholders entitled to receive payment of a dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares, or in order to make a determination of the Shareholders for the purpose of any other such lawful action, the date on which notice of the meeting is issued or the date on which the resolution of the Board declaring such dividend or approving any other such lawful action is adopted, as the case may be, shall be the record date for such determination of Shareholders. When a determination of Shareholders entitled to vote at any meeting of Shareholders has been made as provided in this article, such determination shall apply to any adjournment thereof.

UNTRACED SHAREHOLDERS

105.

a. The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a Shareholder or the shares to which a person is entitled by transmission if and provided that:

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i. during a period of six years no dividend in respect of those shares has been claimed and at least three cash dividends have become payable on the shares in question;

ii. on or after expiry of that period of six years the Company has inserted an advertisement in a newspaper circulating in the area of the last-registered address at which service of notices upon the Shareholder or person entitled by transmission may be effected in accordance with these articles and in a national newspaper published in the relevant country, giving notice of its intention to sell such shares;

iii. during that period of six years and the period of three months following the publication of such advertisement the Company has not received any communication from such Shareholder or person entitled by transmission; and

iv. if so required by the rules of any securities exchange upon which the shares in question are then listed, notice has been given to that exchange of the Company’s intention to make such sale.

a. The Company’s power of sale shall extend to any share which, on or before the date or first date on which any advertisement referred to in clause (ii) of article 105(a) appears, is issued (by way of bonus or otherwise) in respect of a share to which article 105(c) applies.

b. To give effect to any such sale the Board may authorise some person to transfer the shares to the purchaser who shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings relating to the sale. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former Shareholder or person entitled by transmission for an amount equal to such proceeds and shall enter the name of such former Shareholder or person entitled by transmission in the books of the Company as a creditor for such amount (and, provided that the Company shall have complied with this article 105 and any applicable abandoned property, escheat or similar laws, the Company shall have no other liability to any person). No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments as the Board may from time to time think fit.

SERVICE OF NOTICES AND OTHER DOCUMENTS

106. Any notice or other document may be sent to, served on or delivered to any Shareholder by the Company either personally or by sending it by electronic record, facsimile, through the post (by airmail where applicable) in a pre-paid letter addressed to such Shareholder at his address as appearing in the Register or by any other means permitted under applicable law.

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Acknowledgement of receipt shall not be required and is not a condition of valid service of due notice.

107. Any notice or other document shall be deemed to have been served or delivered:

a. if given by facsimile, 24 hours after the time such facsimile is transmitted and the appropriate confirmation is received

b. if mailed, 24 hours after deposited in the mail, in a postage-prepaid letter addressed to the Shareholder at his address as it appears in the Register;

c. if sent by email or other electronic transmission, 24 hours after such email or other electronic submission is transmitted; or

d. if published as an electronic record on a website, 24 hours after the time that the notice or other document is published on the website, provided the Shareholder has previously consented to receipt of notice by means of such delivery as provided in article 110 or otherwise; and

e. if given by any other means, when delivered at the applicable address;

and in proving such service or delivery, it shall be sufficient to prove that the notice or document was properly addressed, stamped and put in the post, except in respect of electronic means of service where the record of the Company’s or its agent’s system shall be deemed to be the definitive record of delivery.

108. For purposes of these articles and the 1963 Act, a document shall be deemed to have been sent to a Shareholder if a notice is given, served, sent or delivered to the Shareholder in accordance with article 106 and the notice specifies the website or hyperlink or other electronic link at or through which the Shareholder may obtain a copy of the relevant document.

109. Any notice of a general meeting of the Company shall be deemed to be duly given to a shareholder, or other person entitled to it, if it is sent to him by cable, telex, telecopier, electronic mail or other mode of representing or reproducing words in a legible and non-transitory form at his address as appearing in the Register or any other address given by him to the Company for this purpose. Any such notice shall be deemed to have been served 24 hours after its dispatch.

110. Any requirement in these articles for the consent of a Shareholder in regard to the receipt by such Shareholder of electronic mail or other means of electronic communications approved by the Board, including the receipt of the Company’s audited accounts and the Directors’ and auditors’ reports thereon, shall be deemed to have been satisfied where the Company has sent written notice to the Shareholder informing him of its intention to use electronic communications for such purposes and the Shareholder has not, within four weeks of the issue of such notice, served an objection in writing to the Company to such proposal. Where a Shareholder has given, or is deemed to have given, his consent to the receipt by such Shareholder of electronic mail or other means of electronic communications approved by the

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Board, he may revoke such consent at any time by requesting the Company to communicate with him in written form; provided, however, that such revocation shall not take effect until 5 days after written notice of the revocation is received at the Registered Office (or at such other place as may be specified by the Board from time to time).

111. In the case of joint holders of a Share, service or delivery of any notice or other document on or to the joint holder first named on the Register shall for all purposes be deemed as sufficient service on or delivery to all of the joint holders.

112. Any notice or other document delivered, sent or given to a shareholder in any manner permitted by these articles shall, notwithstanding that such shareholder is then dead or bankrupt or that any other event has occurred, and whether or not the Company has notice of the death or bankruptcy or other event, be deemed to have been duly served or delivered in respect of any share registered in the name of such shareholder as sole or joint holder unless his name shall, at the time of the service or delivery of the notice or document, have been removed from the Register as the holder of the share, and such service or delivery shall for all purposes be deemed as sufficient service or delivery of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.

113. In the case of a person entitled by transmission to a share whose entitlement has been noted in the Register, any notice or other document shall be served on or delivered to him as if he were the holder of that share and his address noted in the Register were his registered address. A notice may be given by the Company to any other person entitled by transmission to a share by sending it through the post in a prepaid letter addressed to such person by name or by title of representatives of the deceased or official assignee in bankruptcy or by any like description at the address supplied for the purpose by the person claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.

114. The signature (whether electronic signature, an advanced electronic signature or otherwise) to any notice to be given by the Company may be written (in electronic form or otherwise) or printed.

WINDING UP

115. If the Company is wound up, the liquidator may, with the sanction of a Special Resolution and any other sanction required under applicable law:

a. divide among the Shareholders in cash or in kind the whole or any part of the assets of the Company (whether they consist of property of the same kind or not) and for such purposes set such value as he deems fair on any property to be so divided and determine how such division shall be carried out as between the Shareholders or different classes or series of Shareholders (without prejudice to the rights attaching to any class or series of shares by virtue of these articles or the terms of issue of any such shares); and

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b. vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder shall be compelled to accept any shares or other assets upon which there is any liability.

116. In case of a sale by the liquidator under Section 260 of the 1963 Act, the liquidator may by the contract of sale agree to bind all of the Shareholders for the allotment to the Shareholders direct of the proceeds of sale in proportion to their respective interests in the Company and may further by the contract set a time at the expiration of which obligations or shares not accepted or required to be sold shall be deemed to have been irrevocably refused and be at the disposal of the Company, but so that nothing herein contained shall be taken to diminish, prejudice or affect the rights of dissenting Shareholders conferred by the said Section.

117. The power of sale of the liquidator shall include a power to sell wholly or partially for debentures, debenture stock, or other obligations of another corporation, either then already constituted or about to be constituted for the purpose of carrying out the sale.

INDEMNIFICATION

118.

a. Subject to articles 118(g) and 118(h), the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action, suit or proceeding by or in the right of the Company) by reason of the fact that he or she is or was an Indemnified Person, against expenses (including legal fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Indemnified Person in connection with such action, suit or proceeding if such Indemnified Person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, or reasonably believed to be in or not opposed to the best interests of the relevant employee benefit plan of the Company or any Group Company, and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person (i) did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, or reasonably believed to be in or not opposed to the best interests of such employee benefit plan, and (ii) with respect to any criminal proceeding, had reasonable cause to believe his or her conduct was unlawful.

b. Subject to articles 118(g) and 118(h), the Company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favour by reason of the fact that he or she is or was an Indemnified Person, against expenses (including legal fees) actually and reasonably incurred by such Indemnified Person in connection with such action, suit or proceeding if such Indemnified Person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, or reasonably

52

believed to be in or not opposed to the best interests of the relevant employee benefit plan of the Company or any Group Company, and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Indemnified Person shall have been adjudged to be liable for willful neglect or willful default in the performance of his or her duty to the Company or to such employee benefit plan unless and only to the extent that the Irish High Court or the court in which such action, suit or proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such Indemnified Person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

c. Subject to articles 118(g) and 118(h), to the extent that an Indemnified Person shall be successful on the merits or otherwise in defense, of any action, suit or proceeding referred to in articles 118(a) and 118(b) above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including legal fees) actually and reasonably incurred by him or her in connection therewith.

d. Any indemnification under articles 118(a) and 118(b) above (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Indemnified Person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in articles 118(a) and 118(b). Such determination shall be made (i) by the Board by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable (or, even if obtainable, if a quorum of disinterested Directors so directs), by independent legal counsel in a written opinion, or (iii) by the Shareholders entitled to vote at general meetings of the Company.

e. The Board shall have power to purchase and maintain insurances for the benefit of any persons who are or were at any time Indemnified Persons or employees or agents of the Company, or any Group Company or of any other corporation or employee benefit plan in which the Company or any Group Company has any direct or indirect interest, including insurance against any liability incurred by such persons in respect of any act or omission in the actual or purported performance of their duties or powers or offices in relation to the Company or such other corporation.

f. Subject to articles 118(g) and 118(h), expenses incurred by an Indemnified Person in defending a civil or criminal action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the manner provided in article 118(d), upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the Company as authorized in this article 118.

g. The provisions for indemnity contained in these articles shall have effect to the fullest extent permitted by law, but shall not extend to any matter which would render them void pursuant to the Companies Acts.

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h. The rights to indemnification and reimbursement of expenses provided by these articles are in addition to (i) any other rights to which a person may be entitled, including any other rights under these articles, under any other applicable bye-laws or articles of any other corporation, under any agreement, under any insurance purchased by the Company or any Group Company, pursuant to any vote of shareholders or disinterested Directors, or pursuant to the direction (however embodied) of any court of competent jurisdiction, both as to action in his or her official capacity while holding such office and as to action in another capacity while holding such office, and (ii) the power of the Company to indemnify or otherwise make payments (without prior commitment upon the authorization of the Board) of the type contemplated by this article 118in respect of any person who is or was an employee, office holder or director of the Company or of another corporation, any joint venture, trust or other enterprise which he is serving or has served at the request of the Company. The indemnification provided by this article shall continue as to a person who has ceased to be an Indemnified Person and shall inure to the benefit of his heirs, executors and administrators.

i. In this article 118, the term “Indemnified Person” means any officer of the Company (including any Director or Secretary) or any other person appointed pursuant to article 85, any member of a committee constituted under article 75, any person acting as an office holder of the Company, any person holding any other executive or official position of the Company, any employee or agent of the Company, and any person serving at the request of the Company as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise or in a fiduciary or other capacity with respect to any employee benefit plan maintained by the Company or any Group Company. As used in this article, references to the “Company” include all constituent companies in a consolidation or merger in which the Company or a predecessor to the Company by consolidation or merger was involved.

j. To the fullest extent permitted under Irish law, no Director, officer of the Company or other person appointed pursuant to article 85 (each, a “Covered Person”) shall be liable or answerable for the acts, receipts, neglects, or defaults of any other Covered Person or for joining in any receipt or other act for conformity or for any loss or expense happening to the Company through the insufficiency or deficiency of any security in or upon which any of the monies of the Company shall be invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person with whom any monies, securities or effects shall be deposited, or for any loss occasioned by any error of judgment or oversight on his or her part, or for any other loss, damage, or misfortune whatever which shall happen in or about the execution of the duties of his or her office or other position with the Company or in relation thereto, unless the same happen through his or her own willful neglect or willful default.

ALTERATION OF ARTICLES

119. The Company may by Special Resolution amend or alter these articles of association.

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SCHEME OF ARRANGEMENT

120.

a. In these Articles, the Scheme means the scheme or arrangement between the Company and the holders of the Ordinary Shares dated May 11, 2016 under Sections 449 to 445 of the Companies Act 2014 in its original form or with or subject to any modifications, additions or conditions as may approved or imposed by the Court and expressions defined in the Scheme and (if not so defined) in the document constituting the scheme circular circulated with the Scheme under Section 452 of the Companies Act 2014 shall have the same meanings in this Article.

b. Notwithstanding any other provisions of these Articles, if the Company allots or issues any Ordinary Shares (other than to XL Group Ltd or its nominees) on or after the adoption of this Article and prior to the Cancellation Record Time, such Ordinary Shares shall be allotted and issued subject to the terms of the Scheme and the holder or holders of those Ordinary Shares shall be bound by the Scheme accordingly.

c. Notwithstanding any other provision of these Articles, if any new Ordinary Shares are allotted or issued to any person (a "new member") (other than under the Scheme or to XL Group Ltd or its nominees) (i) on or after the Cancellation Record Time or (ii) otherwise, after the adoption of this Article in any circumstances in which neither the Scheme nor Article 120(b) above applies, XL Group Ltd may, provided that the Scheme has become effective, have such Ordinary Shares transferred immediately, free of all encumbrances, to XL Group Ltd and/or its nominee(s) in consideration of the issue by XL Group Ltd to the new member of the number of common shares of US$0.01 each in the capital of XL Group Ltd to which the new member would have been entitled under the Scheme at the Cancellation Record Time.

d. In order to give effect to any such transfer required by this Article 120, the Company may appoint any person to execute and deliver a form of transfer on behalf of, or as attorney for, the new member in favour of XL Group Ltd and/or its nominee(s). Pending the registration of XL Group Ltd as a holder of any Ordinary Share to be transferred under this Article 120, the new member shall not be entitled to exercise any rights attaching to any such Ordinary Share unless so agreed by XL Group Ltd and XL Group Ltd shall be irrevocably empowered to appoint a person nominated by the Directors of XL Group Ltd to act as attorney or agent on behalf of any holder or holders of that Ordinary Share in accordance with any directions XL Group Ltd may give in relation to any dealings with or disposal of that Ordinary Share (or any interest in it), the exercise of any rights attached to it or receipt of any distribution or other benefit accruing or payable in respect of it and any holder or holders of that ordinary Share must exercise all rights attaching to it in accordance with the directions of XL Group Ltd. The Company shall not be obliged to issue a certificate to the new member for any such Ordinary Share.

e. No right of pre-emption granted to any holder or holders of Ordinary Shares nor to any other person whatsoever shall apply to the allotment or issue of Ordinary Shares pursuant to the Scheme of Arrangement.

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EX-4.1

Exhibit 4.1

EX-4.2

Exhibit 4.2

XLIT LTD.

as the Company

XL GROUP PUBLIC LIMITED COMPANY

as the Existing Guarantor

XL GROUP LTD

as the Additional Guarantor

WELLS FARGO BANK, NATIONAL ASSOCIATION

as the Trustee

THIRD SUPPLEMENTAL INDENTURE

DATED AS OF JULY 25, 2016

TO

INDENTURE DATED AS OF SEPTEMBER 30, 2011

THIRD SUPPLEMENTAL INDENTURE, dated as of July 25, 2016 (the “Third Supplemental Indenture”), by and among (i) XLIT Ltd., a Cayman Islands exempted company (the “Company”), having its principal office at XL House, 8 St. Stephen's Green, Dublin 2, Ireland, (ii) XL Group Public Limited Company, an Irish public limited company (the “Existing Guarantor”), having its principal office at XL House, 8 St. Stephen’s Green, Dublin 2, Ireland, (iii) XL Group Ltd, a Bermuda exempted company (the “Additional Guarantor”), having its principal office at O’Hara House, One Bermudiana Road, HM 08, Bermuda and (iv) Wells Fargo Bank, National Association, a national banking association, as trustee hereunder (the “Trustee”).

WHEREAS, the Company, the Existing Guarantor and the Trustee are parties to an Indenture dated as of September 30, 2011 (the “Base Indenture”);

WHEREAS, pursuant to (i) a first supplemental indenture dated as of September 30, 2011 (the “First Supplemental Indenture”), which supplemented the Base Indenture, the Company issued, and the Existing Guarantor guaranteed, the 5.75% Senior Notes due 2021 (the “2021 Notes”) and (ii) a second supplemental indenture dated as of November 21, 2013 (the “Second Supplemental Indenture”), which supplemented the Base Indenture, the Company issued, and the Existing Guarantor guaranteed, the 2.30% Senior Notes due 2018 (the “2018 Notes”) and the 5.25% Senior Notes due 2043 (the “2043 Notes” and, together with the 2021 Notes and the 2018 Notes, the “Existing Senior Notes”);

WHEREAS, as at the date hereof, the Existing Senior Notes are the only Securities outstanding under the Indenture (as defined in the Base Indenture);

1

WHEREAS, on the date of this Third Supplemental Indenture, pursuant to the effectiveness of the scheme of arrangement under Sections 449 to 455 of the Irish Companies Act 2014 that was approved by the High Court of Ireland on July 22, 2016, the Existing Guarantor has become a wholly owned subsidiary of the Additional Guarantor and, as a result thereof, the Company is an indirect wholly owned subsidiary of the Additional Guarantor;

WHEREAS, the Company, the Existing Guarantor and the Additional Guarantor deem it desirable that the Additional Guarantor provides the Additional Guarantee (as defined below) on the date of this Third Supplemental Indenture;

WHEREAS the Company, the Existing Guarantor, the Additional Guarantor and the Trustee may enter into a supplemental indenture to provide for the grant of the Additional Guarantee pursuant to Section 9.01(4) of the Base Indenture without the consent of the Holders of the Securities;

WHEREAS, the execution and delivery of this Third Supplemental Indenture has been authorized by a resolution of the Board of Directors of each of the Company, the Existing Guarantor and the Additional Guarantor, or a duly authorized committee thereof;

WHEREAS, concurrently with the execution hereof, the Existing Guarantor has (i) delivered an Officers’ Certificate to the Trustee and (ii) have caused its counsel to deliver to the Trustee an Opinion of Counsel as to the laws of the State of New York stating that the execution of this Third Supplemental Indenture is permitted by the Base Indenture and that the Base Indenture, as supplemented by this Third Supplemental Indenture, is a valid, binding and enforceable obligation of the Company, the Existing Guarantor and the Additional Guarantor in accordance with its terms;

WHEREAS, all conditions and requirements of the Base Indenture necessary to make this Third Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto and the execution and delivery thereof have been in all respects duly authorized by the parties hereto; and

WHEREAS, this Third Supplemental Indenture shall not result in a material modification of the Existing Senior Notes for the purposes of compliance with the Foreign Accounts Tax Compliance Act;

WHEREAS, the Existing Guarantor and the Additional Guarantor currently expect that, after the date of this Third Supplemental Indenture, the Existing Guarantor will transfer its properties and assets substantially as an entirety to the Additional Guarantor and at such time, pursuant to Section 8.01(b) of the Base Indenture, the Existing Guarantor shall deliver to the Trustee an Officers’ Certificate stating that such transfer has occurred and that, pursuant to Section 8.01(c) of the Base Indenture, the Existing Guarantor has thereupon been discharged from all obligations and covenants under the Indenture and the Securities, and such discharge shall be evidenced by a supplemental indenture to the Indenture.

NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the mutual premises and agreements herein contained, the Company, the Existing Guarantor, the Additional Guarantor and the Trustee covenant and agree, for the equal and proportionate benefit of all Holders of the Securities as follows:

ARTICLEI

DEFINITIONS

Section 1.1Definition of Terms.

Unless otherwise provided herein or unless the context otherwise requires:

2

(a)a term defined in the Base Indenture has the same meaning when used in this Third Supplemental Indenture;

(b)a term defined anywhere in this Third Supplemental Indenture has the same meaning throughout;

(c)the singular includes the plural and vice versa;

(d)headings are for convenience of reference only and do not affect interpretation; and

(e)the following terms have the following meanings:

“Additional Guarantee” means the guarantee of the Company’s obligations under the Securities and the Indenture by the Additional Guarantor as provided in Article II of this Third Supplemental Indenture;

“Additional Guarantor” means the Person named as the “Additional Guarantor” in the preamble of this instrument unless and until a successor entity shall have become such pursuant to the applicable provisions hereof, and thereafter “Additional Guarantor” shall mean such successor entity; and

“Indenture” means the Base Indenture, as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture and this Third Supplemental Indenture.

ARTICLE II

GUARANTEE OF THE SECURITIES BY THE ADDITIONAL GUARANTOR

Section 2.1Unconditional Guarantee.

(a)    The Additional Guarantor does hereby fully and unconditionally guarantee, jointly and severally with the Existing Guarantor, to the Holders of the Securities of each series all payments of principal, premium, if any, and interest on such Securities when due, in accordance with the provisions of such series of Securities and this Indenture.

(b)    The Additional Guarantor hereby waives notice of acceptance of the Additional Guarantee and of default of performance by the Company and the Existing Guarantor, and hereby agrees that payment under the Additional Guarantee shall be subject to no condition other than the giving of a written request for payment stating the fact of default of performance, in the manner provided in Section 1.05 of the Base Indenture. The Additional Guarantee is a guarantee of payment and not of collection.

(c)    The obligations of the Additional Guarantor under the Additional Guarantee shall in no way be impaired by: (i) any extension, amendment, modification or renewal of the Securities of the relevant series; (ii) any waiver of any Event of Default, extension of time or failure to enforce any of the provisions of the Securities of the relevant series or the Indenture; or (iii) any extension, moratorium or other relief granted to the Company or the Existing Guarantor pursuant to any applicable law or statute.

(d)    The Additional Guarantor shall be obligated to make payment under the Additional Guarantee, for the benefit of the Holders of each series of Securities, in the same manner in which the Company is obligated to make payments on such series of Securities.

(e)    Subject to clause (f) below, the Additional Guarantor hereby agrees that:

(i)    each series of Securities will be paid strictly in accordance with the terms of such series of Securities and the Indenture, regardless of the value, genuineness, validity, regularity or enforceability of such series of Securities and the Indenture, and of any law, regulation or order now or hereafter in effect in any jurisdiction

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affecting any of such terms or the rights of the Trustee with respect thereto, to the fullest extent permitted by law; and

(ii)    the liability of the Additional Guarantor to the extent herein set forth shall be absolute and unconditional, not subject to any reduction, limitation, impairment, termination, defense, offset, counterclaim, or recoupment whatsoever (all of which are hereby expressly waived by the Additional Guarantor), whether by reason of any claim of any character whatsoever, including, without limitation, any claim of waiver, release, surrender, alteration or compromise, or by reason of any liability at any time to the Additional Guarantor or otherwise, whether based upon any obligations or any other agreement or otherwise, and howsoever arising, whether out of action or inaction or otherwise and whether resulting from default, willful misconduct, negligence or otherwise, and without limiting the foregoing, irrespective of:

(1)    any lack of validity or enforceability of any agreement or instrument relating to the Securities of the relevant series;

(2)    any change in the time, manner or place of payment under, or in any other term in respect of, all or any Securities of the relevant series, or any other amendment or waiver of or consent to any departure from any other agreement relating to such series of Securities;

(3)    any increase in, addition to, exchange or release of, or nonperfection of any lien on or security interest in, any collateral, or any release or amendment or waiver of or consent to any departure from or failure to enforce any other guarantee, for all or any Securities of the relevant series;

(4)    any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or the Existing Guarantor in respect the Securities of the relevant series;

(5)    the absence of any action on the part of the Trustee to obtain payment under the Securities of the relevant series or the Indenture from the Company or the Existing Guarantor;

(6)    any insolvency, bankruptcy, reorganization or dissolution, or any similar proceeding of or in respect of the Company or the Existing Guarantor, including, without limitation, rejection of the Securities of the relevant series in such bankruptcy; or

(7)    the absence of notice or any delay in any action to enforce any provision of the Securities of the relevant series or the Indenture or to exercise any right or remedy against the Additional Guarantor, the Existing Guarantor or the Company, whether under the Indenture, the Securities of the relevant series or any agreement or any indulgence, compromise or extension granted.

(f)    Notwithstanding anything to the contrary in the Additional Guarantee herein, the Additional Guarantor does not waive any defense that would be available to the Company or the Existing Guarantor based on a breach, default or misrepresentation by the Trustee, or failure of any condition to the Company’s or the Existing Guarantor’s obligations under the Indenture or the illegality of any provision of the Indenture.

(g)    The Additional Guarantor further agrees that, to the extent that the Company, the Existing Guarantor or the Additional Guarantor make a payment or payments to the Trustee, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or repaid to the Company, the Existing Guarantor or the Additional Guarantor or their respective estate, trustee, receiver or any other party under any bankruptcy laws, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the Additional Guarantee and the advances or part thereof which have been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred.

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Section 2.2    Additional Guarantee for the Benefit of the Holders.

The Additional Guarantee contained in this Third Supplemental Indenture is entered into by the Additional Guarantor for the benefit of the Holders from time to time of the Securities. Such provisions shall not be deemed to create any right, or to be in whole or in part for the benefit, of any Person other than the Trustee, the Additional Guarantor, the Holders from time to time of the Securities and their permitted successors and assigns.

Section 2.3    Waiver of Subrogation.

The Additional Guarantor shall be subrogated to all rights of the Holders of the Securities and the Trustee against the Company and the Existing Guarantor pursuant to the provisions of the Additional Guarantee; provided, however, that the Additional Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of (and premium, if any) or interest on the Securities of the relevant series issued under the Indenture shall have been paid in full.

Section 2.4    No Suspension of Remedies.

Nothing contained in this Article II shall limit the right of the Trustee or the Holders of the Securities to take any action pursuant to Article V of the Base Indenture or to pursue any other rights or remedies under the Indenture or under applicable law.

Section 2.5    Termination.

The Additional Guarantee shall remain in full force and effect and shall be binding on the Additional Guarantor and its successors until the entire principal of and interest and any premium on the Securities shall have been paid in full or otherwise discharged in accordance with the provisions of the Indenture.

Section 2.6    References to Guarantor.

From and after the date hereof, (a) each reference to “the Guarantor” and “the Guarantee” in the Base Indenture, the First Supplemental Indenture, the Second Supplemental Indenture and the Notes shall be deemed to be a reference to “each Guarantor”, “a Guarantor” or “such Guarantor” and “each Guarantee”, “a Guarantee” or “such Guarantee”, each as the context so requires; (b) each reference to “(other than the Company)” in Section 8.01(b) of the Base Indenture shall be deemed to be a reference to “(other than the Company or any Guarantor)”; and (c) the provisions of Section 8.01(b) of the Base Indenture that are expressed to apply to “the Guarantor” shall also apply to the Additional Guarantor.

ARTICLE III

MISCELLANEOUS

Section 3.1Application of Third Supplemental Indenture.

Each and every term and condition contained in this Third Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture with respect to the Securities shall apply only to the Securities created hereby and not to any past or future series of Securities issued under the Base Indenture.

Section 3.2    Benefits of Third Supplemental Indenture.

Nothing contained in this Third Supplemental Indenture shall or shall be construed to confer upon any Person other than a Holder of the Securities, the Company, the Existing Guarantor, the Additional Guarantor and the Trustee any right or interest to avail itself or himself, as the case may be, of any benefit under any provision of the Base Indenture or this Third Supplemental Indenture.

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Section 3.3    Amendment of Third Supplemental Indenture.

The Company, the Existing Guarantor, the Additional Guarantor and the Trustee, at any time and from time to time, may amend, modify or supplement this Third Supplemental Indenture in accordance with the provisions of Article IX of the Base Indenture.

Section 3.4    Effective Date.

This Third Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto.

Section 3.5    Governing Law; Waiver of Jury Trial; Submission to Jurisdiction.

THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.

EACH OF THE COMPANY, THE EXISTING GUARANTOR, THE ADDITIONAL GUARANTOR AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS THIRD SUPPLEMENTAL INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.

Each of the Company, the Existing Guarantor, the Additional Guarantor and the Trustee hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the Borough of Manhattan in New York City for the purposes of all legal proceedings arising out of or relating to the Securities, the Indenture or the transactions contemplated thereby. The Company, the Existing Guarantor, the Additional Guarantor and the Trustee irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each of the Company, the Existing Guarantor and the Additional Guarantor hereby designates and appoints C T Corporation System (the “Process Agent”), as its authorized agent upon which process may be served in any legal suit, action or proceeding arising out of or relating to the Indenture which may be instituted in any federal or state court in the Borough of Manhattan, The City of New York, New York, and agrees that service of process upon such agent, and written notice of said service to the Company, the Existing Guarantor or the Additional Guarantor, as applicable, by the Person serving the same, shall be deemed in every respect effective service of process upon the Company, the Existing Guarantor or the Additional Guarantor, as applicable, in any such suit, action or proceeding and further designate its domicile, the domicile of the Process Agent specified above and any domicile the Process Agent may have in the future as its domicile to receive any notice hereunder (including service of process). If for any reason the Process Agent (or any successor agent for this purpose) shall cease to act as agent for service of process as provided above, the Company, the Existing Guarantor and the Additional Guarantor will promptly appoint a successor agent for this purpose reasonably acceptable to the Trustee. The Company, the Existing Guarantor and the Additional Guarantor agree to take any and all actions as may be necessary to maintain such designation and appointment of such agent in full force and effect.

Section 3.6    Counterparts.

This Third Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

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Section 3.7    Ratification of Base Indenture.

The Base Indenture, as supplemented by this Third Supplemental Indenture, is in all respects ratified and confirmed, and this Third Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.

Section 3.8    Validity and Sufficiency.

The Trustee shall not be responsible in any manner whatsoever for or in respect of the recitals contained herein, all of which are made solely by the Company, the Existing Guarantor and the Additional Guarantor.

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IN WITNESS WHEREOF, each party hereto has executed this Third Supplemental Indenture as of the day and year first before written.

XLIT LTD., as the Company

By:    /s/ Peter Porrino

Name: Peter Porrino

Title: Director

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SIGNED AND DELIVERED AS A DEED FOR AND ON BEHALF OF

XL GROUP PLC as the Existing Guarantor

BY ITS DULY AUTHORIZED SIGNATORY

/s/ Peter Porrino

Name: Peter Porrino

Title: Executive Vice President and Chief Financial Officer

IN THE PRESENCE OF

Witness

/s/ H. Matthew Crusey

Name: H. Matthew Crusey

Address: Brookfield Place, 200 Liberty Street, 22nd Floor, New York, NY 10281    

Occupation: Attorney

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XL GROUP LTD, as the Additional Guarantor

BY ITS DULY AUTHORIZED SIGNATORY

/s/ Peter Porrino

Name: Peter Porrino

Title: Executive Vice President and Chief Financial Officer

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Trustee

By:    /s/ Raymond Delli Colli

Name: Raymond Delli Colli

Title: Vice President

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EX-4.3

Exhibit 4.3

XLIT LTD.

as the Company

XL GROUP PUBLIC LIMITED COMPANY

as the Existing Guarantor

XL GROUP LTD

as the Additional Guarantor

WELLS FARGO BANK, NATIONAL ASSOCIATION

as the Trustee

SECOND SUPPLEMENTAL INDENTURE

DATED AS OF JULY 25, 2016

TO

INDENTURE DATED AS OF MARCH 30, 2015

SECOND SUPPLEMENTAL INDENTURE, dated as of July 25, 2016 (the “Second Supplemental Indenture”), by and among (i) XLIT Ltd., a Cayman Islands exempted company (the “Company”), having its principal office at XL House, 8 St. Stephen's Green, Dublin 2, Ireland, (ii) XL Group Public Limited Company, an Irish public limited company (the “Existing Guarantor”), having its principal office at XL House, 8 St. Stephen’s Green, Dublin 2, Ireland, (iii) XL Group Ltd, a Bermuda exempted company (the “Additional Guarantor”), having its principal office at O’Hara House, One Bermudiana Road, HM 08, Bermuda and (iv) Wells Fargo Bank, National Association, a national banking association, as trustee hereunder (the “Trustee”).

WHEREAS, the Company, the Existing Guarantor and the Trustee are parties to an Indenture dated as of March 20, 2015 (the “Base Indenture”);

WHEREAS, pursuant to a first supplemental indenture dated as of March 30, 2015 (the “First Supplemental Indenture”), which supplemented the Base Indenture, the Company issued, and the Existing Guarantor guaranteed, the 4.450% Subordinated Notes due 2025 and the 5.500% Subordinated Notes due 2045 (together, the “Existing Subordinated Notes”);

WHEREAS, as at the date hereof, the Existing Subordinated Notes are the only Securities outstanding under the Indenture (as defined in the Base Indenture);

WHEREAS, on the date of this Second Supplemental Indenture, pursuant to the effectiveness of the scheme of arrangement under Sections 449 to 455 of the Irish Companies Act 2014 that was approved by the High Court of Ireland on July 22, 2016, the Existing Guarantor has become a wholly owned subsidiary of the Additional Guarantor and, as a result thereof, the Company is an indirect wholly owned subsidiary of the Additional Guarantor;

WHEREAS, the Company, the Existing Guarantor and the Additional Guarantor deem it desirable that the Additional Guarantor provides the Additional Guarantee (as defined below) on the date of this Second Supplemental Indenture;

WHEREAS the Company, the Existing Guarantor, the Additional Guarantor and the Trustee may enter into a supplemental indenture to provide for the grant of the Additional Guarantee pursuant to Section 9.01(4) of the Base Indenture without the consent of the Holders of the Securities;

WHEREAS, the execution and delivery of this Second Supplemental Indenture has been authorized by a resolution of the Board of Directors of each of the Company, the Existing Guarantor and the Additional Guarantor, or a duly authorized committee thereof;

WHEREAS, concurrently with the execution hereof, the Existing Guarantor has (i) delivered an Officers’ Certificate to the Trustee and (ii) have caused its counsel to deliver to the Trustee an Opinion of Counsel as to the laws of the State of New York stating that the execution of this Second Supplemental Indenture is permitted by the Base Indenture and that the Base Indenture, as supplemented by this Second Supplemental Indenture, is a valid, binding and enforceable obligation of the Company, the Existing Guarantor and the Additional Guarantor in accordance with its terms;

WHEREAS, all conditions and requirements of the Base Indenture necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto and the execution and delivery thereof have been in all respects duly authorized by the parties hereto; and

WHEREAS, the Existing Guarantor and the Additional Guarantor currently expect that, after the date of this Second Supplemental Indenture, the Existing Guarantor will transfer its properties and assets substantially as an entirety to the Additional Guarantor and at such time, pursuant to Section 8.01(b) of the Base Indenture, the Existing Guarantor shall deliver to the Trustee an Officers’ Certificate stating that such transfer has occurred and that, pursuant to Section 8.01(c) of the Base Indenture, the Existing Guarantor has thereupon been discharged from all obligations and covenants under the Indenture and the Securities, and such discharge shall be evidenced by a supplemental indenture to the Indenture.

NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the mutual premises and agreements herein contained, the Company, the Existing Guarantor, the Additional Guarantor and the Trustee covenant and agree, for the equal and proportionate benefit of all Holders of the Securities as follows:

ARTICLE I

DEFINITIONS

Section 1.1Definition of Terms.

Unless otherwise provided herein or unless the context otherwise requires:

(a)a term defined in the Base Indenture has the same meaning when used in this Second Supplemental Indenture;

(b)a term defined anywhere in this Second Supplemental Indenture has the same meaning throughout;

(c)the singular includes the plural and vice versa;

(d)headings are for convenience of reference only and do not affect interpretation; and

(e)the following terms have the following meanings:

“Additional Guarantee” means the guarantee of the Company’s obligations under the Securities and the Indenture by the Additional Guarantor as provided in Article II of this Second Supplemental Indenture;

“Additional Guarantor” means the Person named as the “Additional Guarantor” in the preamble of this instrument unless and until a successor entity shall have become such pursuant to the applicable provisions hereof, and thereafter “Additional Guarantor” shall mean such successor entity; and

“Indenture” means the Base Indenture, as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture and this Second Supplemental Indenture.

ARTICLE II

GUARANTEE OF THE SECURITIES BY THE ADDITIONAL GUARANTOR

Section 2.1Unconditional Guarantee.

(a)    The Additional Guarantor does hereby fully and unconditionally guarantee, jointly and severally with the Existing Guarantor, to the Holders of the Securities of each series all payments of principal, premium, if any, and interest on such Securities when due, in accordance with the provisions of such series of Securities and this Indenture. The Additional Guarantee shall be made on a subordinated basis, with the terms of such subordination in respect of each series of Securities issued under the Indenture to be set forth in a supplemental indenture to the Base Indenture. Pursuant to Section 2.6 of this Second Supplemental Indenture, the provisions in the First Supplemental Indenture relating to the Existing Guarantee shall apply to the Additional Guarantee.

(b)    The Additional Guarantor hereby waives notice of acceptance of the Additional Guarantee and of default of performance by the Company and the Existing Guarantor, and hereby agrees that payment under the Additional Guarantee shall be subject to no condition other than the giving of a written request for payment stating the fact of default of performance, in the manner provided in Section 1.05 of the Base Indenture. The Additional Guarantee is a guarantee of payment and not of collection.

(c)    The obligations of the Additional Guarantor under the Additional Guarantee shall in no way be impaired by: (i) any extension, amendment, modification or renewal of the Securities of the relevant series; (ii) any waiver of any Event of Default, extension of time or failure to enforce any of the provisions of the Securities of the relevant series or the Indenture; or (iii) any extension, moratorium or other relief granted to the Company or the Existing Guarantor pursuant to any applicable law or statute.

(d)    The Additional Guarantor shall be obligated to make payment under the Additional Guarantee, for the benefit of the Holders of each series of Securities, in the same manner in which the Company is obligated to make payments on such series of Securities.

(e)    Subject to clause (f) below, the Additional Guarantor hereby agrees that:

(i)    each series of Securities will be paid strictly in accordance with the terms of such series of Securities and the Indenture, regardless of the value, genuineness, validity, regularity or enforceability of such series of Securities and the Indenture, and of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Trustee with respect thereto, to the fullest extent permitted by law; and

(ii)    the liability of the Additional Guarantor to the extent herein set forth shall be absolute and unconditional, not subject to any reduction, limitation, impairment, termination, defense, offset, counterclaim, or recoupment whatsoever (all of which are hereby expressly waived by the Additional Guarantor), whether by reason

of any claim of any character whatsoever, including, without limitation, any claim of waiver, release, surrender, alteration or compromise, or by reason of any liability at any time to the Additional Guarantor or otherwise, whether based upon any obligations or any other agreement or otherwise, and howsoever arising, whether out of action or inaction or otherwise and whether resulting from default, willful misconduct, negligence or otherwise, and without limiting the foregoing, irrespective of:

(1)    any lack of validity or enforceability of any agreement or instrument relating to the Securities of the relevant series;

(2)    any change in the time, manner or place of payment under, or in any other term in respect of, all or any Securities of the relevant series, or any other amendment or waiver of or consent to any departure from any other agreement relating to such series of Securities;

(3)    any increase in, addition to, exchange or release of, or nonperfection of any lien on or security interest in, any collateral, or any release or amendment or waiver of or consent to any departure from or failure to enforce any other guarantee, for all or any Securities of the relevant series;

(4)    any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or the Existing Guarantor in respect the Securities of the relevant series;

(5)    the absence of any action on the part of the Trustee to obtain payment under the Securities of the relevant series or the Indenture from the Company or the Existing Guarantor;

(6)    any insolvency, bankruptcy, reorganization or dissolution, or any similar proceeding of or in respect of the Company or the Existing Guarantor, including, without limitation, rejection of the Securities of the relevant series in such bankruptcy; or

(7)    the absence of notice or any delay in any action to enforce any provision of the Securities of the relevant series or the Indenture or to exercise any right or remedy against the Additional Guarantor, the Existing Guarantor or the Company, whether under the Indenture, the Securities of the relevant series or any agreement or any indulgence, compromise or extension granted.

(f)    Notwithstanding anything to the contrary in the Additional Guarantee herein, the Additional Guarantor does not waive any defense that would be available to the Company or the Existing Guarantor based on a breach, default or misrepresentation by the Trustee, or failure of any condition to the Company’s or the Existing Guarantor’s obligations under the Indenture or the illegality of any provision of the Indenture.

(g)    The Additional Guarantor further agrees that, to the extent that the Company, the Existing Guarantor or the Additional Guarantor make a payment or payments to the Trustee, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or repaid to the Company, the Existing Guarantor or the Additional Guarantor or their respective estate, trustee, receiver or any other party under any bankruptcy laws, state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the Additional Guarantee and the advances or part thereof which have been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred.

Section 2.2    Additional Guarantee for the Benefit of the Holders.

The Additional Guarantee contained in this Second Supplemental Indenture is entered into by the Additional Guarantor for the benefit of the Holders from time to time of the Securities. Such provisions shall not be deemed to create any right, or to be in whole or in part for the benefit, of any Person other than the Trustee, the Additional Guarantor, the Holders from time to time of the Securities and their permitted successors and assigns.

Section 2.3    Waiver of Subrogation.

The Additional Guarantor shall be subrogated to all rights of the Holders of the Securities and the Trustee against the Company and the Existing Guarantor pursuant to the provisions of the Additional Guarantee; provided, however, that the Additional Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of (and premium, if any) or interest on the Securities of the relevant series issued under the Indenture shall have been paid in full.

Section 2.4    No Suspension of Remedies.

Nothing contained in this Article II shall limit the right of the Trustee or the Holders of the Securities to take any action pursuant to Article V of the Base Indenture or to pursue any other rights or remedies under the Indenture or under applicable law.

Section 2.5    Termination.

The Additional Guarantee shall remain in full force and effect and shall be binding on the Additional Guarantor and its successors until the entire principal of and interest and any premium on the Securities shall have been paid in full or otherwise discharged in accordance with the provisions of the Indenture.

Section 2.6    References to Guarantor.

From and after the date hereof, (a) each reference to “the Guarantor” and “the Guarantee” in the Base Indenture, the First Supplemental Indenture and the Notes shall be deemed to be a reference to “each Guarantor”, “a Guarantor” or “such Guarantor” and “each Guarantee”, “a Guarantee” or “such Guarantee”, each as the context so requires (including, without limitation, in relation to the subordination provisions of Article V of the First Supplemental Indenture, which shall also apply to the Additional Guarantee); (b) each reference to “(other than the Company)” in Section 8.01(b) of the Base Indenture shall be deemed to be a reference to “(other than the Company or any Guarantor)”; and (c) the provisions of Section 8.01(b) of the Base Indenture that are expressed to apply to “the Guarantor” shall also apply to the Additional Guarantor.

ARTICLE III

MISCELLANEOUS

Section 3.1Application of Second Supplemental Indenture.

Each and every term and condition contained in this Second Supplemental Indenture that modifies, amends or supplements the terms and conditions of the Base Indenture with respect to the Securities shall apply only to the Securities created hereby and not to any past or future series of Securities issued under the Base Indenture.

Section 3.2    Benefits of Second Supplemental Indenture.

Nothing contained in this Second Supplemental Indenture shall or shall be construed to confer upon any Person other than a Holder of the Securities, the Company, the Existing Guarantor, the Additional Guarantor and the Trustee any right or interest to avail itself or himself, as the case may be, of any benefit under any provision of the Base Indenture or this Second Supplemental Indenture.

Section 3.3    Amendment of Second Supplemental Indenture.

The Company, the Existing Guarantor, the Additional Guarantor and the Trustee, at any time and from time to time, may amend, modify or supplement this Second Supplemental Indenture in accordance with the provisions of Article IX of the Base Indenture.

Section 3.4    Effective Date.

This Second Supplemental Indenture shall be effective as of the date first above written and upon the execution and delivery hereof by each of the parties hereto.

Section 3.5    Governing Law; Waiver of Jury Trial; Submission to Jurisdiction.

THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.

EACH OF THE COMPANY, THE EXISTING GUARANTOR, THE ADDITIONAL GUARANTOR AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS SECOND SUPPLEMENTAL INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.

Each of the Company, the Existing Guarantor, the Additional Guarantor and the Trustee hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in the Borough of Manhattan in New York City for the purposes of all legal proceedings arising out of or relating to the Securities, the Indenture or the transactions contemplated thereby. The Company, the Existing Guarantor, the Additional Guarantor and the Trustee irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each of the Company, the Existing Guarantor and the Additional Guarantor hereby designates and appoints C T Corporation System (the “Process Agent”), as its authorized agent upon which process may be served in any legal suit, action or proceeding arising out of or relating to the Indenture which may be instituted in any federal or state court in the Borough of Manhattan, The City of New York, New York, and agrees that service of process upon such agent, and written notice of said service to the Company, the Existing Guarantor or the Additional Guarantor, as applicable, by the Person serving the same, shall be deemed in every respect effective service of process upon the Company, the Existing Guarantor or the Additional Guarantor, as applicable, in any such suit, action or proceeding and further designate its domicile, the domicile of the Process Agent specified above and any domicile the Process Agent may have in the future as its domicile to receive any notice hereunder (including service of process). If for any reason the Process Agent (or any successor agent for this purpose) shall cease to act as agent for service of process as provided above, the Company, the Existing Guarantor and the Additional Guarantor will promptly appoint a successor agent for this purpose reasonably acceptable to the Trustee. The Company, the Existing Guarantor and the Additional Guarantor agree to take any and all actions as may be necessary to maintain such designation and appointment of such agent in full force and effect.

Section 3.6    Counterparts.

This Second Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

Section 3.7    Ratification of Base Indenture.

The Base Indenture, as supplemented by this Second Supplemental Indenture, is in all respects ratified and confirmed, and this Second Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.

Section 3.8    Validity and Sufficiency.

The Trustee shall not be responsible in any manner whatsoever for or in respect of the recitals contained herein, all of which are made solely by the Company, the Existing Guarantor and the Additional Guarantor.

[Signature Page to the Second Supplemental Indenture]

IN WITNESS WHEREOF, each party hereto has executed this Second Supplemental Indenture as of the day and year first before written.

XLIT LTD., as the Company

By:    /s/ Peter Porrino

Name: Peter Porrino

Title: Director

SIGNED AND DELIVERED AS A DEED FOR AND ON BEHALF OF

XL GROUP PLC as the Existing Guarantor

BY ITS DULY AUTHORIZED SIGNATORY

/s/ Peter Porrino

Name: Peter Porrino

Title: Executive Vice President and Chief Financial Officer

IN THE PRESENCE OF

Witness

/s/ H. Matthew Crusey

Name: H. Matthew Crusey

Address: Brookfield Place, 200 Liberty Street, 22nd Floor, New York, NY 10281    

Occupation: Attorney

XL GROUP LTD, as the Additional Guarantor

BY ITS DULY AUTHORIZED SIGNATORY

/s/ Peter Porrino

Name: Peter Porrino

Title: Executive Vice President and Chief Financial Officer

WELLS FARGO BANK, NATIONAL ASSOCIATION, as the Trustee

By:    /s/ Raymond Delli Colli

Name: Raymond Delli Colli

Title: Vice President

EX-10.1

Exhibit 10.1

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (including Appendices A and B hereto, this “Agreement”) is dated and effective as of July 25, 2016 and made by and between XL Group Ltd, a Bermuda exempted company (the “Company”), and [ ] (“Indemnitee”). Capitalized terms used but not otherwise defined in the body of this Agreement shall have the respective meanings ascribed to such terms in Appendix B hereto.

WHEREAS, the Company effected a scheme of arrangement under Irish law (the “Scheme of Arrangement”) pursuant to which the ordinary shareholders of XL Group plc, an Irish public limited company became common shareholders of the Company ;

WHEREAS, it is essential to the Company that the Company retain and attract highly experienced and capable persons to serve as directors and Employee Officers of the Company;

WHEREAS, highly experienced and capable persons are more reluctant to serve publicly held corporations as directors or in other capacities unless they are provided with adequate protection through insurance, indemnification and exculpation against risks of claims and actions against them arising out of their service to and activities on behalf of the corporation; and

WHEREAS, it is reasonable, prudent and desirable for the Company, acting in its own best interests as a member of the XL group of companies (which group is comprised of the Company and its subsidiaries (collectively, the “XL Group of Companies” and each, an “XL Group Company”)), contractually to obligate itself to indemnify, and, if so requested by Indemnitee, to advance expenses, as provided herein, and contractually to provide additional procedural protections to help ensure that such indemnification and expense advancement rights will in fact be available to Indemnitee so long as Indemnitee acts in good faith in the performance of Indemnitee’s duty to the XL Group of Companies; and Indemnitee desires to continue to so serve XL Group of Companies provided, and on the express condition, that he or she is furnished with the indemnity set forth herein;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained and intending to be legally bound hereby, the parties hereto agree as follows:

1.Service by Indemnitee. Indemnitee agrees to serve as a director or Employee Officer, as applicable, of the Company faithfully and to the best of Indemnitee’s ability so long as Indemnitee is duly elected or re-elected or appointed or re-appointed and until such time as (i) if Indemnitee serves in the capacity of director, Indemnitee dies, is removed as a director of the Company or resigns or retires as a director of the Company; or (ii) if Indemnitee serves in the capacity of Employee Officer, Indemnitee dies, is terminated as an Employee Officer of the Company or resigns or retires as an Employee Officer. An Indemnitee shall be deemed to be “serving at the request of the Company” or to have “served at the request of the Company” (or any similar construction of similar meaning) to the extent such Indemnitee is serving or has served as an officer, director, employee or executive of any XL Group Company, and Indemnitee shall be deemed to be so serving or have so served without any express (whether written or otherwise) evidence of such request, unless clear evidence to the contrary exists and is provided by the Company.

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2.Advancement of Expenses. Except as limited by Section 10, to the fullest extent permitted under Bermuda law, all Expenses incurred by Indemnitee in defending against any Indemnifiable Proceeding described in Section 3 or 4 in advance of the final disposition of such Indemnifiable Proceeding shall be paid by the Company at the request of Indemnitee. Such request shall be made pursuant to Article 2 of Appendix A hereto (the “Procedural Appendix”). In addition, Indemnitee’s entitlement to advancement of Expenses shall include those Expenses incurred in connection with any Indemnifiable Proceeding by Indemnitee seeking an adjudication pursuant to Article 4 of the Procedural Appendix (including the enforcement of this provision), subject to an undertaking by Indemnitee to reimburse such amounts if so required pursuant to Article 2 of the Procedural Appendix.

3.Indemnification for Proceedings by or in the Name of the Company.

(a)Eligibility. Except as limited by Section 10, Indemnitee shall be entitled to the indemnification rights provided in this Section 3 if Indemnitee, after the effective date hereof, was or is a party or is threatened to be made a party to any Proceeding brought by or in the name of the Company to procure a judgment in the Company’s favor by reason of the fact that Indemnitee is or was a director or Employee Officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or fiduciary of any other entity (including another corporation, partnership, joint venture, trust or employee benefit plan); or by reason of anything done or not done (or allegedly done or not done) by Indemnitee in any such capacity, whether or not Indemnitee is actually serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement is sought under this Agreement.

(b)Indemnity. Except as limited by Section 10, pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted under Bermuda law against all judgments, fines, amounts paid in settlement and Expenses incurred by Indemnitee in connection with a Proceeding described in Section 3(a) if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or such other entity (including another corporation, partnership, joint venture, trust or employee benefit plan) served by Indemnitee at the request of the Company; provided, however, that no such indemnification shall be made in respect of any such Proceeding as to which such person shall have been found, in a final and non-appealable judgment of a court of competent jurisdiction, to be liable for fraud or dishonesty in the performance of such Indemnitee’s duty to the Company or to such other corporation, partnership, joint venture or employee benefit plan, unless and only to the extent that a court of competent jurisdiction shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such judgments, fines, amounts paid in settlement and Expenses as such court shall deem proper.

4.Indemnification for Proceedings Other than Proceedings by or in the Right of the Company.

(a)Eligibility. Except as limited by Section 10, Indemnitee shall be entitled to the indemnification rights provided in this Section 4 if Indemnitee, after the effective date hereof, was or is a party or is threatened to be made a party to any Proceeding (other than a Proceeding by or in the name of the Company, to which Section 3 above shall apply) by reason of the fact that Indemnitee is or was a director or Employee Officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or fiduciary of any other entity (including another corporation, partnership, joint venture, trust or employee benefit plan); or by reason of anything done or not done (or allegedly done or not done) by Indemnitee in any such capacity, whether or not Indemnitee is actually serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement is sought under this Agreement.

(b)Indemnity. Except as limited by Section 10, pursuant to this Section 4, Indemnitee shall be indemnified to the fullest extent permitted under Bermuda law against all judgments, fines, amounts paid in settlement and Expenses incurred by Indemnitee in connection with a Proceeding described in Section 4(a) if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of Parent or such other entity (including another corporation, partnership, joint venture, trust or employee benefit plan) served by Indemnitee at the request of Parent and, with respect to any criminal Proceeding (other than in respect of fraud or dishonesty), had no reasonable cause to believe his or her conduct was unlawful.

5.Indemnification for Expenses of Successful Party. Notwithstanding the limitations of Sections 3, 4 or 10(d), to the fullest extent permitted by Bermuda law and whether or not the Indemnitee has been successful, on the merits or otherwise, in whole or in part, in defense of any Indemnifiable Proceeding, or in defense of any claim, issue or matter therein (other than in respect of fraud or dishonesty), or if it is determined in a final and non-appealable judgment by a court of competent jurisdiction that Indemnitee is otherwise entitled to be indemnified against Expenses, the Company shall indemnify Indemnitee against all Expenses incurred in connection with such Indemnifiable Proceeding.

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6.Partial Indemnification. Except as limited by Section 10, if Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the judgments, fines, amounts paid in settlement or Expenses incurred in connection with any Indemnifiable Proceeding, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such judgments, fines, amounts paid in settlement and Expenses incurred to which Indemnitee is entitled (as determined in accordance with Article 1(e) of the Procedural Appendix).

7.Other Rights to Indemnification. Indemnification and advancement of Expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may now or in the future be entitled under (i) any provision of the memorandum of association and bye-laws of the Company (the “Company Governing Documents”), or the governing documents of any other entity served by Indemnitee at the request of the Company; (ii) any vote of the shareholders of the Company, the Board of Directors of the Company (the “Company Board”); (iii) any provision of law; (iv) any agreement; (v) any insurance policy or (vi) otherwise. Nothing in this Agreement shall be deemed to limit or impair in any way any right of Indemnitee with respect to indemnification, advancement of Expenses or exculpation under the Company Governing Documents as in effect prior to the Scheme of Arrangement. The Company acknowledges and agrees that nothing herein shall be deemed to constitute a waiver by Indemnitee of any such rights.

8.Expenses to Enforce Agreement. In the event that Indemnitee is subject to or intervenes in any Proceeding in which the validity or enforceability of this Agreement is at issue or seeks a Proceeding to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, if Indemnitee prevails in whole or in part in such Proceeding, Indemnitee shall be entitled to recover from the Company and shall be indemnified by the Company against any Expenses incurred by Indemnitee in connection with such Proceeding.

9.Continuation of Indemnity. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a director or Employee Officer of the Company or is serving at the request of the Company as a director, officer, employee or fiduciary of any other entity (including another corporation, partnership, joint venture, trust or employee benefit plan) and shall continue thereafter with respect to any possible claims by reason of the fact that Indemnitee was a director or Employee Officer of the Company or was serving at the request of the Company as a director, officer, employee or fiduciary of any other entity (including another corporation, partnership, joint venture, trust or employee benefit plan). This Agreement shall be binding upon all successors and assigns of the Company and shall inure to the benefit of the heirs, personal representatives and estate of Indemnitee. From and after the effective time of the Scheme of Arrangement, the Company shall require and cause any successor (whether direct or indirect and whether by purchase, merger, consolidation, scheme or arrangement, amalgamation or otherwise), including any person or entity who acquires all, substantially all, or a substantial part, of the business and/or assets of the Company, as the case may be, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. If such Agreement shall be unenforceable against any such successor, or if the Company Board makes a good faith determination in its discretion that such successor is less creditworthy than the Company, then the Company will assign the Agreement to a subsidiary of the Company selected by the Company Board and reasonably satisfactory to Indemnitee, against which subsidiary the Agreement shall then be enforceable.

10.Limitations on Indemnification and Advancement of Expenses. The rights of Indemnitee to indemnification and advancement of Expenses under this Agreement shall be as set forth herein, except that no indemnification or advancement of Expenses shall be paid hereunder to Indemnitee by the Company:

(a)to the extent expressly prohibited by Bermuda law or a final and non-appealable judgment of a court of competent jurisdiction in respect of fraud or dishonesty;

(b)to the extent such indemnification or advancement of Expenses, as applicable, is actually made or then due to Indemnitee (i) under an insurance policy; (ii) under a valid and enforceable provision of the Company Governing Documents, or the governing documents of any other entity served by Indemnitee at the request of the Company; or (iii) pursuant to an agreement of the Company, to the extent permitted by law, or any other entity served by Indemnitee at the request of the Company, except, in each case, in respect of any amounts indemnifiable hereunder exceeding the payment or payments made under clauses (i) through (iii) of this paragraph; or

(c)except with respect to an Indemnifiable Proceeding pursuant to Section 8 above or Article 4 of the Procedural Appendix, in connection with a Proceeding, or part thereof (including claims and counterclaims) initiated by Indemnitee, unless such Proceeding (or part thereof) initiated by Indemnitee was authorized by the Company Board;

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(d)with respect to any Proceeding that is authorized by the Company Board and brought by or on behalf of the Company against Indemnitee, except as provided in Sections 3, 5 and 6; or

(e)with respect to any claim as to which a final and non-appealable judgment pursuant to Section 16(b) of the Exchange Act or any similar statute has been rendered against Indemnitee for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities.

11.Additional Agreements.

(a)The Company shall enter into additional agreements that are substantially similar to this Agreement with each person serving as a director or Employee Officer of the Company from time to time, provided, that the Company shall not have any liability, or have any obligation, under this Section 11(a) to the extent that any such other director or Employee Officer is unable or unwilling to enter into such agreement.

(b)The provisions of this Section 11 may be amended by the written consent of a number of directors or Employee Officers of the Company representing 75% or more of the total number of persons currently serving as directors or Employee Officers of the Company who are Indemnitees under an agreement containing terms substantially similar to this Agreement.

12.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not by themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent of the parties that the Company provide protection to Indemnitee to the fullest enforceable extent that is consistent with the obligations of the Company to indemnify Indemnitee prior to the effectiveness of the Scheme of Arrangement.

13.Headings; Interpretation. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof. References herein to section numbers are to sections of this Agreement, unless otherwise specified. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as appropriate. The word “including” shall be deemed to be followed by the words “without limitation.”

14.Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee, on the date of such receipt; (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked; or (iii) if sent by facsimile transmission and fax confirmation is received, on the next business day following the date on which such facsimile transmission was sent. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice to the other party as provided in this Section.

15.Governing Law; Consent to Jurisdiction.

(a)This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware.

(b)The Company and Indemnitee hereby irrevocably and unconditionally: (i) agree that any Proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America or any court in any other country; (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any Proceeding arising out of or in connection with this Agreement; (iii) waive any objection to the laying of venue of any such Proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any such Proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

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16.Other Provisions.

(a)This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced as evidence of the existence of this Agreement.

(b)Nothing contained in this Agreement shall confer upon Indemnitee (including, for the avoidance of doubt, any Employee Officer) any right with respect to the continuation of Indemnitee’s employment with, or provision of services for, any entity within the XL Group of Companies, as applicable, or interfere in any way with the right of any entity within the XL Group of Companies, as applicable, at any time to terminate such employment or services for any reason, with or without cause, and with or without severance, except as may be otherwise provided in a separate written contract between Indemnitee and any entity within the XL Group of Companies.

(c)Upon a payment to Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of Indemnitee to recover against any person for such liability, and Indemnitee shall execute all documents and instruments required and shall take such other actions as may be necessary to secure such rights, including the execution of such documents as may be necessary for the Company to bring suit to enforce such rights.

(d)Each person serving as a director, corporate secretary or Employee Officer after the effectiveness of the Scheme of Arrangement is intended to be and shall be a third party beneficiary of Section 11(a), as such Section 11(a) may be amended from time to time in accordance with this Agreement.

(e)Except as set forth in Section 11(b), no supplement, modification, amendment or termination of this Agreement shall be binding unless executed in writing by all parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver and no waiver will be effective unless it is in writing and signed by the waiving party.

(f)The parties hereto agree that Appendices A and B hereto form an integral part of this Agreement with respect to the subject matter hereof.

(g)Unless otherwise specified, references to the term “Section” are references to the Sections of this Agreement, and references to the term “Article” are references to the Articles of the Procedural Appendix.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

XL GROUP LTD
By:
	Name:
	Title:
Address:
Facsimile:

Agreed and accepted as of the date hereof:

INDEMNITEE
By:
	Name:
	Title:
Address:
Facsimile:

Appendix A

Certain Procedural Provisions

Article 1.Request for Company to Provide Indemnification.

(a)To receive indemnification under this Agreement Indemnitee must submit a written request to the Secretary of the Company to provide such indemnification. Such request shall include (i) documentation or information reasonably available to Indemnitee that provides a reasonably detailed description of the facts and circumstances of the request for indemnification, and (ii) Indemnitee’s selection of the Determining Party under Article 1(b).

(b)Upon receipt of a request made pursuant to Article 1(a), the entitlement of Indemnitee to indemnification under this Agreement shall be determined by one of the following parties, as selected by Indemnitee in his or her sole discretion (such party, the “Determining Party”): (i) the Company Board by a majority vote of Disinterested Directors, or (ii) by Independent Counsel in a written opinion to the Company Board, a copy of which shall be delivered to Indemnitee. In the event no Disinterested Director exists to constitute the Determining Party, Independent Counsel shall be the Determining Party. The Determining Party shall make the determination as to the entitlement of Indemnitee to indemnification under this Agreement not later than 45 calendar days after receipt by the Company of a request made pursuant to Article 1(a) or, if Independent Counsel acts as the Determining Party, within 45 calendar days of agreement on the identity of such Independent Counsel.

(c)In the event that a determination is made by the Company Board that Indemnitee is not entitled to indemnification by the Company hereunder, Indemnitee shall be entitled to seek a determination by Independent Counsel of Indemnitee’s entitlement to indemnification. Independent Counsel shall within 45 calendar days of agreement on the identity of such Independent Counsel provide a determination as to the entitlement of Indemnitee to indemnification under this Agreement in a written opinion to the Company Board, a copy of which shall be delivered to Indemnitee. Such determination by Independent Counsel shall be made de novo and Indemnitee shall not be prejudiced by reason of the determination by the Company Board that Indemnitee is not entitled to indemnification. The Company shall not oppose Indemnitee’s right to seek any such determination of Independent Counsel. If a determination is made by Independent Counsel that Indemnitee is entitled to indemnification, the Company shall be bound by such determination and shall be precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding and enforceable. Any determination of Independent Counsel under this Article 1(c) shall be the final determination of entitlement to indemnification under this Article 1, subject to Article 4 of this Procedural Appendix.

(d)Any Independent Counsel selected for purposes of Article 1(b) or Article 1(c) shall be selected by the Company and approved by Indemnitee (such approval not to be unreasonably withheld, conditioned or delayed), except that in the event that a Change in Control has occurred, any Independent Counsel shall be selected by Indemnitee. Upon failure of the Company to so select such Independent Counsel or upon failure of Indemnitee to so approve (or to so select, in the event that a Change in Control has occurred), such Independent Counsel shall be selected upon application to a court of competent jurisdiction.

(e)If the Determining Party (including, for purposes of this Article 1(e), Independent Counsel selected under Article 1(c)) determines that Indemnitee is entitled to indemnification as to part (but not all) of the application for indemnification, such person shall reasonably allocate such partial indemnification among the claims, issues or matters at issue at the time of the determination.

(f)Any Expenses incurred by Indemnitee in connection with a request for indemnification or payment of Expenses hereunder, under any other agreement with the Company, any provision of the Company Governing Documents or any directors’ and officers’ liability insurance, shall be borne by the Company. The Company shall indemnify Indemnitee for any such amounts referred to in the immediately preceding sentence and agrees to hold Indemnitee harmless therefrom irrespective of the outcome of the determination of Indemnitee’s entitlement to indemnification.

(g)Notwithstanding anything to the contrary contained in this Article 1, it is understood that no such determination pursuant to Article 1 of this Procedural Appendix shall be required with respect to Indemnitee’s entitlement to indemnification pursuant to Section 8 of this Agreement, Article 1(f) of this Procedural Appendix, or the last sentence of Article 4 of this Procedural Appendix.

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Article 2.Request for Company to Provide Advancement of Expenses. To receive advancement of Expenses under this Agreement, Indemnitee shall submit a written request to the Secretary of the Company. Such request shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be accompanied by an undertaking, by or on behalf of Indemnitee, to reimburse such amounts to the Company if it is determined in a final and non-appealable judgment of a court of competent jurisdiction that Indemnitee is not entitled to be indemnified against such Expenses by the Companyas provided by this Agreement or otherwise. Indemnitee’s undertaking to reimburse any such amounts shall not be required to be secured and shall be interest free, subject to Section 10 of this Agreement. Each payment of Expenses by the Company shall be made within 10 calendar days after the receipt by the Company of a valid written request for advancement of Expenses.

Article 3.Effect of Certain Proceedings.

(a)In making a determination with respect to entitlement to indemnification hereunder, the Determining Party shall, to the fullest extent permitted by Bermuda law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Article 1 of this Procedural Appendix, and the Company shall, to the fullest extent permitted by Bermuda law, have the burden of proof to overcome the presumption that Indemnitee is entitled to indemnification hereunder in connection with any determination to the contrary made pursuant to Article 1 of this Procedural Appendix.

(b)If the Determining Party of this Procedural Appendix shall have failed to make the requested determination within 45 calendar days pursuant to Article 1(b), a requisite determination of entitlement to indemnification shall be deemed to have been irrevocably made and Indemnitee shall be absolutely entitled to such indemnification, absent (i) fraud in the request for indemnification or (ii) a prohibition on such indemnification under Bermuda law; provided, however, that such 45-day period may be extended for a reasonable period of time, not to exceed an additional 45 days, if the Determining Party shall in good faith require such additional time to obtain or evaluate documentation and/or information relating to such determination and shall have provided written notice to Indemnitee within the initial 45-day period of such need for an extension of time.

(c)The termination of any Indemnifiable Proceeding described in Sections 3 or 4 of this Agreement by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not in and of itself: (i) create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of Parent, or any other entity served by Indemnitee at the request of Parent, or a relevant employee benefit plan (as the case may be), or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful; or (ii) otherwise adversely affect the rights of Indemnitee to indemnification by the Company except as otherwise provided herein.

Article 4.Effect of Determination Whether to Indemnify or to Advance Expenses. In the event that a determination is made that Indemnitee is not entitled to indemnification by the Company hereunder or if payment has not been timely made following a determination of entitlement to indemnification pursuant to Articles 1 or 3 of this Procedural Appendix, or if Expenses are not paid pursuant to Article 2 of this Procedural Appendix, Indemnitee shall be entitled to seek final adjudication in a court of competent jurisdiction of entitlement to such indemnification or payment of Expenses. The determination in any such judicial Proceeding shall be made de novo and Indemnitee shall not be prejudiced by reason of a determination (if so made) pursuant to Articles 1 or 3 of this Procedural Appendix that Indemnitee is not entitled to indemnification. The Company shall not oppose Indemnitee’s right to seek any such adjudication or any other claim. If a determination is made or deemed to have been made pursuant to the terms of Articles 1 or 3 of this Procedural Appendix that Indemnitee is entitled to indemnification, the Company shall be bound by such determination and shall be precluded from asserting that such determination has not been made or that the procedure by which such determination was made is not valid, binding and enforceable. The Company further agrees to stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertions to the contrary. If such court shall determine that Indemnitee is entitled to any indemnification or payment of Expenses hereunder, the Company shall also pay all Expenses incurred by Indemnitee in connection with such adjudication (including any appellate Proceedings).

Article 5.Notification and Defense of Claim. Promptly after receipt by Indemnitee of notice of any Indemnifiable Proceeding, Indemnitee shall, if a claim in respect of such Proceeding is to be made against the Company under this Agreement, notify the Company in writing of the commencement of such Indemnifiable Proceeding; but the omission to so notify the Company and Parent shall not relieve the Company from any liability that it may have to Indemnitee. Notwithstanding any other provision of this Agreement, with respect to any such Proceeding of which Indemnitee notifies the Company, the Company shall be entitled to participate therein at its own expense.

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Article 6.Notice to Insurers. If, at the time of the receipt of a notice of a Indemnifiable Proceeding pursuant to Articles 1 or 2 of this Procedural Appendix, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

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Appendix B

Certain Definitions

“Change in Control” means a change in control of the Company occurring after the effective time of the Scheme of Arrangement of a nature that would be required to be reported in response to Item 5.01 of Current Report on Form 8-K (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, a Change in Control shall be deemed to have occurred if after the date of this Agreement (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act ) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing (or which upon settlement, exercise or conversion pursuant to their terms would represent) 30% or more of the combined voting power of the Company’s then-outstanding voting securities without the prior approval of at least two-thirds of the members of the Company Board in office immediately prior to such person attaining such percentage; (ii) the Company consummates a merger, consolidation, scheme of arrangement, sale of assets or other reorganization as a consequence of which members of the Company Board in office immediately prior to entry into the agreement providing for such transaction constitute less than a majority of the board of directors or similar governing body of the company that is then the ultimate parent company of the corporate group of which the Company is a part upon completion of such transaction; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Company Board (including for this purpose any new member of the Company Board whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the members of the Company Board then still in office who were members of the Company Board at the beginning of such period and such approval was not in connection with an actual or threatened proxy contest) cease for any reason to constitute at least a majority of the Company Board.

“Disinterested Director” means a director of the Company who is not and was not a party to the Indemnifiable Proceeding in respect of which indemnification is being sought by Indemnitee.

“Employee Officer” means an “officer” (as such term is used under Section 2(1) of the Bermuda Companies Act 1981, as amended) who is an employee of the Company, which, for the avoidance of doubt, shall not be deemed to include auditors, liquidators, or other advisors of the Company.

“Expenses” includes expenses actually and reasonably incurred in connection with the defense or settlement of any Proceeding, and appeals, attorneys’ and other advisors’ fees and expenses (including retainers and disbursements and advances thereon), witness fees and expenses, expenses relating to any bond, and any expenses relating to establishing a right to indemnification or advancement hereunder, but shall not include the amount of judgments, penalties, fines or amounts paid in settlement.

“Indemnifiable Proceeding” means any Proceeding of the type described in Sections 3, 4 or 8 of this Agreement, or Article 4 of the Procedural Appendix and any Proceeding approved by the Company Board for such purpose, as contemplated by Section 10(c) of this Agreement.

“Independent Counsel” means a law firm or a member of a law firm that at the relevant time is not, and for the prior five years has not been, retained to represent: (i) the Company or Indemnitee (or their respective affiliates) in any matter material to any such party, or (ii) any other party to the Indemnifiable Proceeding (or their respective affiliates) giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing the Company or Indemnitee in a Proceeding to determine Indemnitee’s right to indemnification under this Agreement.

“Proceeding” includes any actual, threatened, pending or completed investigation, action, suit or other proceeding, whether of a civil, criminal, administrative, arbitral, investigative, legislative or other nature.

B-1

EX-10.2

Exhibit 10.2

FIRST SUPPLEMENT TO DEED POLL INDEMNITY

This FIRST SUPPLEMENT TO DEED POLL INDEMNITY, dated July 25, 2016 (the “First Supplement”), to the Deed Poll Indemnity, dated July 1, 2010 (the “Deed Poll”), among XLIT Ltd., a Cayman Islands exempted company (the “Indemnitor”), acting unilaterally in respect of each individual who has not entered into a separate indemnification agreement with the Indemnitor but is serving as an officer, director, employee, or other executive of XL Group plc, a Irish public limited company (“Parent”) or is serving at the request of Parent as an officer, director, employee, or other executive of any other entity (including another corporation, partnership, joint venture, trust or employee benefit plan).

RECITALS:

A. The Indemnitor entered into the Deed Poll on the terms and subject to the conditions set forth therein.

B. The Indemnitor now desires to amend the Deed Poll as hereinafter set forth.

NOW, THEREFORE, the Indemnitor hereby declares, undertakes and agrees to amend the Deed Poll as follows:

1. Parties.

The Preamble of the Deed Poll is amended by replacing the name of the Parent, “XL Group plc, an Irish public limited company” with “XL Group Ltd, a Bermuda exempted company”, with effect from the date of the First Supplement and XL Group Ltd shall be the Parent for all purposes under the Deed Poll from and after the date of this First Supplement.

2. Definitions.

All capitalized terms used by not otherwise defined in this First Supplement shall have the respective meanings ascribed to such terms in the Deed Poll.

3. Continuing Obligations.

Save as otherwise provided for in this First Supplement, the Deed Poll and all provisions thereof shall continue in full force and effect as the legal, valid and binding obligations of each of the parties thereto, enforceable in accordance with their terms. The effectiveness of this First Supplement shall not amend or modify the rights of any Indemnitee existing prior to the execution hereof.

4. Law and Jurisdiction.

This First Supplement shall be governed by, and construed in accordance with, the laws of the Cayman Islands.

IN WITNESS WHEREOF, this First Supplement has been duly executed by the Indemnitor and shall take effect on the date first above written.

XLIT Ltd.

By:

Name:

Title:

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (File No. 333-199842), Form S-8 (File No. 333-62137), Form S-8 (File No. 333-81451), Form S-8 (File No. 333-46250), Form S-8 (File No. 333-89568), Form S-8 (File No. 333-161122), Form S-8 (File No. 333-161124), Form S-8 (File No. 333-174138), and Form S-8 (File No. 333-210074) of our report dated February 26, 2016, except with respect to our opinion on the consolidated financial statements insofar as it relates to the guarantor financial information included in Note 27, as to which the date is July 25, 2016, relating to the financial statements, financial statement schedules, and the effectiveness of internal control over financial reporting of XL Group plc, which appears in XL Group Ltd's Current Report on Form 8-K dated July 25, 2016.

/s/ PricewaterhouseCoopers LLP

New York, New York

July 25, 2016

EX-99.1

Exhibit 99.1

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements	Page
Consolidated Balance Sheets at December 31, 2015 and 2014	2
Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013	3
Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013	4
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013	5
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	6
Notes to Consolidated Financial Statements for the years ended December 31, 2015, 2014 and 2013	8

1

XL GROUP PLC

CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2015 AND 2014

(U.S. dollars in thousands, except share data)	2015		2014
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost: 2015, $31,517,654; 2014, $27,728,771)	$	32,257,589	$	29,359,034
Equity securities, at fair value (cost: 2015, $834,079; 2014, $763,833)	878,919		868,292
Short-term investments, at fair value (amortized cost: 2015, $618,851; 2014, $257,221)	617,390		256,727
Total investments available for sale	$	33,753,898	$	30,484,053
Fixed maturities, at fair value (amortized cost: 2015, $1,263,609; 2014, $1,180)	1,235,699		1,171
Short-term investments, at fair value (amortized cost: 2015, $60,176; 2014, nil)	60,330		—
Total investments trading	$	1,296,029	$	1,171
Investments in affiliates	1,708,899		1,637,620
Other investments	1,433,057		1,248,439
Total investments	$	38,191,883	$	33,371,283
Cash and cash equivalents	3,256,236		2,521,814
Restricted cash	154,992		—
Accrued investment income	312,667		315,964
Deferred acquisition costs and value of business acquired	890,568		354,533
Ceded unearned premiums	1,821,793		952,525
Premiums receivable	4,712,493		2,473,736
Reinsurance balances receivable	418,666		131,519
Unpaid losses and loss expenses recoverable	5,262,706		3,429,368
Receivable from investments sold	231,158		92,762
Goodwill and other intangible assets	2,210,266		447,952
Deferred tax asset	282,311		204,491
Other assets	937,199		750,872
Total assets	$	58,682,938	$	45,046,819
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	25,439,744	$	19,353,243
Deposit liabilities	1,168,376		1,245,367
Future policy benefit reserves	4,163,500		4,707,199
Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable: 2015, $3,719,131; 2014, $4,265,678)	914,629		1,155,016
Unearned premiums	7,043,358		3,973,132
Notes payable and debt	2,644,970		1,662,580
Reinsurance balances payable	2,117,727		493,230
Payable for investments purchased	130,060		42,291
Deferred tax liability	120,651		66,246
Other liabilities	1,285,460		912,749
Total liabilities	$	45,028,475	$	33,611,053
Commitments and Contingencies
Shareholders’ Equity:
Ordinary shares, 999,990,000 authorized, par value $0.01; issued and outstanding (2015, 294,745,045; 2014, 255,182,955)	$	2,947	$	2,552
Additional paid in capital	8,910,167		7,359,102
Accumulated other comprehensive income	686,616		1,484,458
Retained earnings	2,077,349		1,187,639
Shareholders’ equity attributable to XL Group plc	$	11,677,079	$	10,033,751
Non-controlling interest in equity of consolidated subsidiaries	1,977,384		1,402,015
Total shareholders’ equity	$	13,654,463	$	11,435,766
Total liabilities and shareholders’ equity	$	58,682,938	$	45,046,819

See accompanying Notes to Consolidated Financial Statements

2

XL GROUP PLC

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands, except per share data)	2015			2014			2013
Revenues:
Net premiums earned	$	8,226,425		$	5,895,070		$	6,309,521
Net investment income:
Net investment income - excluding Life Funds Withheld Assets	684,881			789,050			957,716
Net investment income - Life Funds Withheld Assets	187,489			129,575			—
Total net investment income	$	872,370		$	918,625		$	957,716
Realized investment gains (losses):
Net realized gains (losses) on investments sold - excluding Life Funds Withheld Assets	$	102,957		$	158,733		$	104,076
Other-than-temporary impairments ("OTTI") on investments - excluding Life Funds Withheld Assets	(81,987		)	(33,508		)	(10,266		)
OTTI on investments transferred to (from) other comprehensive income - excluding Life Funds Withheld Assets	(973		)	(2,234		)	(6,033		)
Net realized gains (losses) on investments sold - Life Funds Withheld Assets	223,272			5,067			—
OTTI on investments - Life Funds Withheld Assets	(13,357		)	(20,587		)	—
Net unrealized gains (losses) on investments, trading securities ("Trading") - Life Funds Withheld Assets	(27,734		)	(9		)	—
Total net realized gains (losses) on investments, and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	$	202,178		$	107,462		$	87,777
Net realized and unrealized gains (losses) on derivative instruments	53,123			29,886			7,798
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	(151,691		)	(488,222		)	—
Income (loss) from investment fund affiliates	73,320			95,816			138,391
Fee income and other	33,201			43,630			40,031
Total revenues	$	9,308,926		$	6,602,267		$	7,541,234
Expenses:
Net losses and loss expenses incurred	$	4,766,200		$	3,258,393		$	3,731,464
Claims and policy benefits	115,997			242,963			465,702
Acquisition costs	1,317,448			738,118			909,323
Operating expenses	1,966,939			1,341,315			1,213,178
Foreign exchange (gains) losses	22,504			(37,568		)	(28,243		)
Loss on sale of life reinsurance subsidiary	—			666,423			—
Extinguishment of debt	5,592			—			—
Interest expense	205,215			134,106			155,462
Total expenses	$	8,399,895		$	6,343,750		$	6,446,886
Income (loss) before income tax and income (loss) from operating affiliates	909,031			258,517			1,094,348
Income (loss) from operating affiliates	44,740			107,218			119,804
Gain on sale of operating affiliate	340,407			—			—
Provision (benefit) for income tax	(19,161		)	96,897			77,505
Net income (loss)	$	1,313,339		$	268,838		$	1,136,647
Non-controlling interests	106,187			80,498			76,731
Net income (loss) attributable to ordinary shareholders	$	1,207,152		$	188,340		$	1,059,916
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – basic	286,194			267,103			287,801
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – diluted	290,999			271,527			292,069
Earnings (loss) per ordinary share and ordinary share equivalent – basic	$	4.22		$	0.71		$	3.68
Earnings (loss) per ordinary share and ordinary share equivalent – diluted	$	4.15		$	0.69		$	3.63

See accompanying Notes to Consolidated Financial Statements

3

XL GROUP PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Net income (loss) attributable to ordinary shareholders	$	1,207,152		$	188,340		$	1,059,916
Change in net unrealized gains (losses) on investments - excluding Life Funds Withheld Assets, net of tax	(530,030		)	434,051			(750,755		)
Unrealized gains on held to maturity investment portfolio at time of transfer to available for sale, net of tax	—			424,861			—
Change in adjustments related to future policy benefit reserves, net of tax	170,688			(400,456		)	(44,660		)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	(421,604		)	274,083			—
Change in net unrealized gains (losses) on affiliate and other investments, net of tax	(6,074		)	35,143			26,637
Change in OTTI losses recognized in other comprehensive income, net of tax	18,545			13,143			32,181
Change in underfunded pension liability	(3,852		)	(7,550		)	7,653
Change in value of cash flow hedge	(200		)	255			439
Foreign currency translation adjustments	(25,315		)	(25,729		)	(54,858		)
Comprehensive income (loss)	$	409,310		$	936,141		$	276,553

See accompanying Notes to Consolidated Financial Statements

4

XL GROUP PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Ordinary Shares:
Balance – beginning of year	$	2,552		$	2,783		$	2,987
Issuance of ordinary shares	515			12			13
Buybacks of ordinary shares	(125		)	(247		)	(226		)
Exercise of stock options	5			4			9
Balance – end of year	$	2,947		$	2,552		$	2,783
Additional Paid in Capital:
Balance – beginning of year	$	7,359,102		$	7,994,100		$	8,584,752
Issuance of ordinary shares	1,851,046			27			29
Buybacks of ordinary shares	(370,395		)	(708,993		)	(639,292		)
Exercise of stock options	9,972			6,363			12,614
Share-based compensation expense	60,442			67,605			35,997
Balance – end of year	$	8,910,167		$	7,359,102		$	7,994,100
Accumulated Other Comprehensive Income (Loss):
Balance – beginning of year	$	1,484,458		$	736,657		$	1,520,020
Change in net unrealized gains (losses) on investments - excluding Life Funds Withheld Assets, net of tax	(530,030		)	434,051			(750,755		)
Unrealized gains on held to maturity investment portfolio at time of transfer to available for sale, net of tax	—			424,861			—
Change in adjustments related to future policy benefit reserves	170,688			(400,456		)	(44,660		)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	(421,604		)	274,083			—
Change in net unrealized gains (losses) on affiliate and other investments, net of tax	(6,074		)	35,143			26,637
Change in OTTI losses recognized in other comprehensive income, net of tax	18,545			13,143			32,181
Change in underfunded pension liability	(3,852		)	(7,550		)	7,653
Change in value of cash flow hedge	(200		)	255			439
Foreign currency translation adjustments	(25,315		)	(25,729		)	(54,858		)
Balance – end of year	$	686,616		$	1,484,458		$	736,657
Retained Earnings (Deficit):
Balance – beginning of year	$	1,187,639		$	1,264,093		$	402,319
Net income (loss) attributable to ordinary shareholders	1,207,152			188,340			1,059,916
Dividends on ordinary shares	(211,814		)	(172,081		)	(162,044		)
Buybacks of ordinary shares	(98,451		)	(92,713		)	(36,098		)
Share based compensation	$	(7,177	)	$	—		$	—
Balance – end of year	$	2,077,349		$	1,187,639		$	1,264,093
Non-controlling Interest in Equity of Consolidated Subsidiaries:
Balance – beginning of year	$	1,402,015		$	1,351,665		$	1,346,325
Non-controlling interests – contributions	23,610			48,261			7,747
Non-controlling interests – distributions	(19,001		)	(1,666		)	(37		)
Non-controlling interests - acquired	562,285			—			—
Non-controlling interests	7,466			3,755			(500		)
Non-controlling interest share in change in accumulated other comprehensive income (loss)	1,009			—			(29		)
Non-controlling interests - deconsolidation	—			—			(1,841		)
Balance – end of year	$	1,977,384		$	1,402,015		$	1,351,665
Total Shareholders’ Equity	$	13,654,463		$	11,435,766		$	11,349,298

See accompanying Notes to Consolidated Financial Statements

5

XL GROUP PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Cash flows provided by (used in) operating activities:
Net income (loss)	$	1,313,339		$	268,838		$	1,136,647
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Total net realized (gains) losses on investments and net unrealized (gains) losses on investments, Trading - Life Funds Withheld Assets	(202,178		)	(107,462		)	(87,777		)
Net realized and unrealized (gains) losses on derivative instruments	(53,123		)	(29,886		)	(7,798		)
Net realized and unrealized (gains) losses on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	151,691			488,222			—
Amortization of premiums (discounts) on fixed maturities	194,824			153,849			166,621
(Income) loss from investment fund and operating affiliates	(46,072		)	(129,915		)	(229,386		)
Loss on sale of life reinsurance subsidiary	—			666,423			—
Gain on sale of operating affiliate	(340,407		)	—			—
Share based compensation	74,431			81,287			46,489
Depreciation and amortization	92,313			56,118			56,229
Accretion of deposit liabilities	43,633			11,195			47,256
Changes in:
Unpaid losses and loss expenses	(211,831		)	(427,528		)	(88,636		)
Future policy benefit reserves	(278,818		)	(229,204		)	(164,923		)
Funds withheld on life retrocession arrangements, net	(210,943		)	(218,144		)	—
Unearned premiums	(528,214		)	253,396			65,279
Premiums receivable	156,168			15,248			(27,334		)
Unpaid losses and loss expenses recoverable	(439,548		)	(44,688		)	(36,897		)
Ceded unearned premiums	237,017			(191,242		)	(196,674		)
Reinsurance balances receivable	2,319			(17,736		)	(60,317		)
Deferred acquisition costs and value of business acquired	126,455			303,998			8,532
Reinsurance balances payable	229,205			160,916			161,132
Deferred tax asset – net	(47,924		)	(33,735		)	(29,230		)
Derivatives	185,300			42,187			(22,324		)
Other assets	17,054			33,344			(26,945		)
Other liabilities	123,897			(147,744		)	60,331
Other	26,968			5,447			9,702
Total adjustments	$	(697,783	)	$	694,346		$	(356,670	)
Net cash provided by (used in) operating activities	$	615,556		$	963,184		$	779,977
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	16,868,228		$	4,896,112		$	4,341,429
Proceeds from redemption of fixed maturities and short-term investments	3,751,174			3,601,793			4,008,333
Proceeds from sale of equity securities	664,735			571,410			245,538
Purchases of fixed maturities and short-term investments	(19,718,064		)	(7,158,258		)	(9,143,973		)
Purchases of equity securities	(567,334		)	(445,504		)	(534,356		)
Proceeds from sale of affiliates	188,023			240,785			190,954
Purchases of affiliates	(280,856		)	(371,226		)	(353,678		)
Purchase of Catlin Group Limited, net of acquired cash	(1,020,015		)	—			—
Proceeds from sale of life reinsurance subsidiary	—			570,000			—
Proceeds from sale of ARX Holding Corp.	560,552			—			—
Change in restricted cash	(154,992		)	—			—
Other, net	(155,019		)	(193,491		)	47,891
Net cash provided by (used in) investing activities	$	136,432		$	1,711,621		$	(1,197,862	)

6

XL GROUP PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	9,976		$	6,367		$	12,623
Buybacks of ordinary shares	(468,971		)	(801,953		)	(675,617		)
Dividends paid on ordinary shares	(208,516		)	(169,620		)	(160,155		)
Distributions to non-controlling interests	(117,683		)	(78,465		)	(77,670		)
Contributions from non-controlling interests	23,610			48,261			7,747
Proceeds from issuance of debt	980,600			—			592,615
Repayment of debt	(87,447		)	(600,000		)	—
Deposit liabilities	(84,758		)	(268,298		)	(94,386		)
Net cash provided by (used in) financing activities	$	46,811		$	(1,863,708	)	$	(394,843	)
Effects of exchange rate changes on foreign currency cash	(64,377		)	(90,115		)	(4,818		)
Increase (decrease) in cash and cash equivalents	$	734,422		$	720,982		$	(817,546	)
Cash and cash equivalents – beginning of period	2,521,814			1,800,832			2,618,378
Cash and cash equivalents – end of period	$	3,256,236		$	2,521,814		$	1,800,832
Net taxes paid	$	96,886		$	20,168		$	96,469
Interest paid on notes payable and debt	$	115,598		$	121,285		$	97,125

See accompanying Notes to Consolidated Financial Statements

7

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

1. General

XL Group plc, an Irish public limited company ("XL-Ireland"), through its operating subsidiaries (collectively, the "Company"), is a leading provider of insurance and reinsurance coverages to industrial, commercial and professional firms, insurance companies and other enterprises on a worldwide basis. Unless the context otherwise indicates, references herein to the "Company" are to, and these financial statements include the accounts of, XL-Ireland and its consolidated subsidiaries. The Company and its various subsidiaries operate globally in 29 countries, through the Company's two business segments: Insurance and Reinsurance. These segments are further discussed in Note 5, "Segment Information."

On May 1, 2015, the Company completed its acquisition (the "Catlin Acquisition") of Catlin Group Limited and its consolidated subsidiaries ("Catlin"). Catlin, through its wholly-owned subsidiaries, provided property, casualty and specialty insurance and reinsurance coverage on a worldwide basis. The Company's consolidated results of operations include those of Catlin from May 1, 2015. See Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," for additional information with respect to the acquisition of Catlin.

On July 1, 2010, XL-Ireland and XLIT Ltd. (formerly XL Capital Ltd.), a Cayman Islands exempted company ("XL-Cayman") completed a redomestication transaction in which all of the ordinary shares of XL-Cayman were exchanged for all of the ordinary shares of XL-Ireland (the "Redomestication"). As a result, XL-Cayman became a wholly owned subsidiary of XL-Ireland. On July 23, 2010, the Irish High Court approved XL-Ireland’s creation of distributable reserves, subject to the completion of certain formalities under Irish Company law. These formalities were completed in early August 2010.

2. Significant Accounting Policies

(a) Basis of Preparation and Consolidation

These consolidated financial statements include the accounts of the Company and all of its subsidiaries. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). To facilitate period-to-period comparisons, certain reclassifications have been made to prior year consolidated financial statement amounts to conform to the current year presentation. There was no effect on net income from this change in presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s most significant areas of estimation include:

▪ unpaid losses and loss expenses and unpaid losses and loss expenses recoverable;

▪ future policy benefit reserves;

▪ valuation and other-than-temporary impairments of investments;

▪ income taxes;

▪ reinsurance premium estimates; and

▪ carrying value of goodwill and intangible assets.

While management believes that the amounts included in the consolidated financial statements reflect the Company’s best estimates and assumptions, actual results could differ from these estimates.

(b) Fair Value Measurements

Financial Instruments Subject to Fair Value Measurements

Accounting guidance over fair value measurements requires that a fair value measurement reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the "exit price"). Instruments that the Company owns

8

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

("long positions") are marked to bid prices and instruments that the Company has sold but not yet purchased ("short positions") are marked to offer prices. Fair value measurements are not adjusted for transaction costs.

Basis of Fair Value Measurement

Fair value measurements accounting guidance also establishes a fair value hierarchy that prioritizes the inputs to the respective valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). An asset or liability’s classification within the fair value hierarchy is based on the lowest level of significant input to its valuation. The three levels of the fair value hierarchy are described further below:

▪ Level 1 - Quoted prices in active markets for identical assets or liabilities (unadjusted); no blockage factors.

▪ Level 2 - Other observable inputs (quoted prices in markets that are not active or inputs that are observable either directly or indirectly)—include quoted prices for similar assets/liabilities (adjusted) other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

▪ Level 3 - Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Details on assets and liabilities that have been included under the requirements of authoritative guidance on fair value measurements to illustrate the bases for determining the fair values of these items held by the Company are included in each respective section of this note.

Fair values of investments and derivatives are based on published market values if available, estimates of fair values of similar issues, or estimates of fair values provided by independent pricing services and brokers. Fair values of financial instruments for which quoted market prices are not available or for which the Company believes current trading conditions represent distressed markets are based on estimates using present value or other valuation techniques. The fair values estimated using such techniques are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. In such instances, the derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

(c) Total Investments

Investments - Available For Sale

Investments that are considered available for sale (comprised of fixed maturities, equity securities and short-term investments) are carried at fair value. The fair values for available for sale investments are generally sourced from third parties. The fair values of fixed income securities are based upon quoted market values where available, "evaluated bid" prices provided by third party pricing services ("pricing services") where quoted market values are not available, or by reference to broker or underwriter bid indications where pricing services do not provide coverage for a particular security. To the extent the Company believes current trading conditions represent distressed transactions, the Company may elect to utilize internally generated models.

It is common industry practice to utilize pricing services as a source for determining the fair values of investments where the pricing services are able to obtain sufficient market corroborating information to allow them to produce a valuation at a reporting date. In addition, in the majority of cases, although a value may be obtained from a particular pricing service for a security or class of similar securities, these values are corroborated against values provided by other pricing services. The pricing services use market approaches to valuations using primarily Level 2 inputs in the vast majority of valuations, or some form of discounted cash flow analysis, to obtain investment values for a small percentage of fixed income securities for which they provide a price. Standard inputs to the valuations provided by the pricing services listed in approximate order of priority for use when available include: reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data. The pricing services may prioritize inputs differently on any given day for any security, and not all inputs listed are available for use in the evaluation process on any given day for each security evaluation; however, the pricing services also monitor market indicators, customer feedback through a price challenge process

9

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

and industry and economic events. Information of this nature is a trigger to acquire further corroborating market data. When these inputs are not available, they identify "buckets" of similar securities (allocated by asset class types, sectors, sub-sectors, contractual cash flows/structure, and credit rating characteristics) and apply some form of matrix or other modeled pricing to determine an appropriate security value which represents their best estimate as to what a buyer in the marketplace would pay for a security in a current sale. Prices provided by independent pricing services and independent broker quotes can vary widely even for the same security. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts. While the Company receives values for the majority of the investment securities it holds from pricing services, it is ultimately management’s responsibility to determine whether the values received and recorded in the financial statements are representative of appropriate fair value measurements.

Broker/dealer quotations are used to value fixed maturities where prices are unavailable from pricing services due to factors specific to the security such as limited liquidity, lack of current transactions, or trades only taking place in privately negotiated transactions. These are considered Level 3 valuations, as significant inputs utilized by brokers may be difficult to corroborate with observable market data, or sufficient information regarding the specific inputs utilized by the broker was not available to support a Level 2 classification.

Equity securities include investments in open end mutual funds and shares of publicly traded hedge funds. The fair value of equity securities is based upon quoted market values (Level 1), or monthly net asset value statements provided by the investment managers upon which subscriptions and redemptions can be executed (Level 2).

Short-term investments include investments due to mature within one year from the date of purchase and are valued using the same external factors and in the same manner as fixed income securities.

Changes in the value of investments available for sale are reflected as unrealized gains or losses on investments, and are included in "accumulated other comprehensive income (loss)", on a net of tax basis.

All investment transactions are recorded on a trade date basis. Realized gains and losses on sales of equities and fixed income investments are determined on a first-in, first-out basis.

Investment income is recognized when earned and includes interest and dividend income together with the amortization of premium and discount on fixed maturities and short-term investments, and is recorded net of related investment expenses. Amortization of discounts on fixed maturities includes amortization to expected recovery values for investments that have previously been recorded as other than temporarily impaired. For mortgage-backed securities, and any other holdings for which there is a prepayment risk, prepayment assumptions are evaluated and revised as necessary. Prepayment fees or call premiums that are only payable to the Company when a security is called prior to its maturity are earned when received and reflected in net investment income.

Investments - Trading

Investments for which the company has elected the fair value option are classified as trading. Trading securities are carried at fair value with changes included in "Net realized gains (losses) on investments sold." Interest and dividend income from trading securities are included as a component of "Net investment income - Life Funds Withheld Assets" as all trading securities are held in support of the GreyCastle Life Retro Arrangements as defined in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary."

Investments Related to Life Retrocession Arrangements written on a Funds Withheld Basis

Designated investments that support the GreyCastle Life Retro Arrangements written on a funds withheld basis ("Life Funds Withheld Assets") entered into in connection with the sale of our life reinsurance subsidiary are classified as either available for sale or trading. Investment results for these assets - including interest income, unrealized gains and losses, and gains and losses from sales - are passed directly to the reinsurer pursuant to a contractual arrangement that is accounted for as a derivative.

Changes in the fair value of the embedded derivative associated with the GreyCastle Life Retro Arrangements are recorded in "Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets" on the consolidated statements of income. The fair value of the embedded derivative is included within "Funds withheld on life retrocession arrangements, net of future policy benefit reserves recoverable" on the consolidated balance sheets.

10

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Investments In Affiliates

Investments in which the Company has significant influence over the operating and financial policies of the investee are classified as investments in affiliates on the Company’s balance sheets and are accounted for under the equity method of accounting. Under this method, the Company records its proportionate share of income or loss from such investments in its results for the period as well as its portion of movements in certain of the investee shareholders’ equity balances. When financial statements of the affiliate are not available on a timely basis to record the Company’s share of income or loss for the same reporting periods as the Company, the most recently available financial statements are used. This lag in reporting is applied consistently. Distributions received from affiliates representing returns on invested capital are recorded as operating cash flows, while distributions representing returns of invested capital or proceeds upon sale of all or a portion of an affiliate are recorded as investing cash flows.

The Company generally records its hedge fund and private investment fund affiliates on a one-month and three-month lag, respectively, and its operating affiliates on a three-month lag. Significant influence is generally deemed to exist where the Company has an investment of 20% or more in the common stock of a corporation or an investment of 3% or more in closed-end funds, limited partnerships, limited liability companies ("LLCs") or similar investment vehicles. Significant influence is considered for other strategic investments on a case-by-case basis. Investments in affiliates are not subject to fair value measurement guidance as they are not considered to be fair value measured investments under GAAP. However, impairments associated with investments in affiliates that are deemed to be other-than-temporary are calculated in accordance with fair value measurement guidance and appropriate disclosures included within the financial statements during the period the losses are recorded.

Other Investments

Contained within this asset class are equity interests in investment funds, limited partnerships and unrated tranches of collateralized debt obligations for which the Company does not have sufficient rights or ownership interests to follow the equity method of accounting. The Company accounts for equity securities that do not have readily determinable market values at estimated fair value as it has no significant influence over these entities. Also included within other investments are structured transactions, which are carried at amortized cost.

Fair values for other investments, principally other direct equity investments, investment funds and limited partnerships, are primarily based on the net asset value provided by the investment manager, the general partner or the respective entity, recent financial information, available market data and, in certain cases, management judgment, if required. These entities generally carry their trading positions and investments, the majority of which have underlying securities valued using Level 1 or Level 2 inputs, at fair value as determined by their respective investment managers; accordingly, these investments are generally classified as Level 2. Private equity investments are classified as Level 3. The net unrealized gain or loss on investments, net of tax, is included in "Accumulated other comprehensive income (loss)." Any unrealized loss in value considered by management to be other-than-temporary is charged to income in the period in which it is determined.

Overseas deposits include investments in private funds related to Lloyd’s syndicates in which the underlying instruments are primarily fixed maturities. The funds themselves do not trade on an exchange and therefore are not included within available for sale securities. Also included in overseas deposits are restricted balances held by Lloyd’s syndicates for solvency purposes which are primarily invested in cash and cash equivalents. Given the restricted nature of these balances, they are included in other investments on the balance sheets. Each of these investment types is considered a Level 2 valuation.

The Company has historically participated in structured transactions. These have included providing cash loans supporting project finance transactions, and providing liquidity facility financing to structured project deals. The Company also invested in a payment obligation with an insurance company. The Company's policy is to value such transactions at amortized cost. For further details see Note 4, "Fair Value Measurements" and Note 8, "Other Investments."

(d) Premiums and Acquisition Costs

Insurance premiums written are recorded in accordance with the terms of the underlying policies. Reinsurance premiums written are recorded at the inception of the policy and are estimated based upon information received from ceding companies and any subsequent differences arising on such estimates are recorded in the period they are determined. For multi-year reinsurance treaties which are payable in annual installments, generally, only the initial annual installment is included as premiums written at policy inception due to the ability of the reinsured to commute or cancel coverage during the term of the policy. The remaining annual installments are included as premiums written at each successive anniversary date within the multi-year term.

11

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Premiums are earned on a pro-rata basis over the period the coverage is provided. Unearned premiums represent the portion of premiums written applicable to the unexpired terms of policies in force. Net premiums earned are presented after deductions for reinsurance ceded, as applicable.

Mandatory reinstatement premiums are recognized and earned at the time a loss event occurs.

Life and annuity premiums from long duration contracts that transfer significant mortality or morbidity risks are recognized as revenue and earned when due from policyholders. Life and annuity premiums from long duration contracts that do not subject the Company to risks arising from policyholder mortality or morbidity are accounted for as investment contracts and presented within deposit liabilities.

The Company has periodically written retroactive loss portfolio transfer contracts. These contracts are evaluated to determine whether they meet the established criteria for reinsurance accounting, and, if so, at inception, written premiums are fully earned and corresponding losses and loss expense recognized. The contracts can cause significant variances in gross premiums written, net premiums written, net premiums earned, and net incurred losses in the years in which they are written. Reinsurance contracts sold not meeting the established criteria for reinsurance accounting are recorded using the deposit method.

Acquisition costs, which vary with and are directly related to the acquisition of policies, consist primarily of commissions paid to brokers and cedants, and are deferred and amortized over the period during which the premiums are earned. Acquisition costs are shown net of contractual commissions earned on reinsurance ceded. Future earned premiums, the anticipated losses and other costs (and in the case of a premium deficiency, investment income) related to those premiums, are also considered in determining the level of acquisition costs to be deferred.

(e) Reinsurance

In the normal course of business, the Company seeks to reduce the potential amount of loss arising from claims events by reinsuring certain levels of risk assumed in various areas of exposure with other insurers or reinsurers. Reinsurance premiums ceded are expensed (and any commissions recorded thereon are earned) on a monthly pro-rata basis over the period the reinsurance coverage is provided. Ceded unearned reinsurance premiums represent the portion of premiums ceded applicable to the unexpired term of policies in force. Mandatory reinstatement premiums ceded are recorded at the time a loss event occurs. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Provisions are made for estimated unrecoverable reinsurance.

The Company enters into reinsurance agreements with other companies in the normal course of business. All premium and loss-related balances related to reinsurance agreements are reported on a gross basis within our consolidated balance sheets, with the exception of the GreyCastle Life Retro Arrangements written on a funds withheld basis. The future policy benefit reserves recoverable related to these retrocession arrangements are netted against the funds withheld liability owing to the counterparty on the consolidated balance sheets due to the contractual right of offset.

During the year ended December 31, 2014, the Company recorded $20 million, net of tax, to premiums earned and associated tax accruals, related to reinstatement premiums due under assumed reinsurance contracts arising from unpaid losses and loss expenses reported in a prior period. We evaluated the quantitative and qualitative aspects of this correction and concluded that the impact of recognizing it during the third quarter of 2014 was not material to the consolidated financial statements, nor is it material to previously issued consolidated financial statements in prior periods.

(f) Fee Income and Other

Fee income and other includes fees received for insurance and product structuring services provided and is earned over the service period of the contract. Any adjustments to fees earned or the service period are reflected in income in the period when determined.

(g) Other-Than-Temporary Impairments ("OTTI") of Available for Sale Securities

The Company’s process for identifying declines in the fair value of investments that are other-than-temporary involves consideration of several factors. These primary factors include (i) an analysis of the liquidity, business prospects and financial condition of the issuer including consideration of credit ratings, (ii) the significance of the decline, (iii) an analysis of the collateral structure and other credit support, as applicable, of the securities in question, and (iv) for debt securities, whether the Company intends to sell such securities. In addition, the authoritative guidance requires that OTTI for certain asset backed and mortgage backed securities be recognized if the fair value of the security is less than its discounted cash flow value and there has been a decrease in the present value of the expected cash flows since the last reporting period. Where the Company’s

12

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

analysis of the above factors results in the Company’s conclusion that declines in fair values are other-than-temporary, the cost of the security is written down to discounted cash flow and a portion of the previously unrealized loss is therefore realized in the period such determination is made.

If the Company intends to sell an impaired security, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, the impairment is other-than-temporary and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost.

In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security, and it is not more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and (2) the amount of the total impairment related to all other factors (i.e. the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors is recognized in accumulated other comprehensive loss. The total OTTI is presented in the income statement with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive income (loss). Absent the intent or requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary.

The noncredit portion of any OTTI losses on securities classified as available for sale is recorded as a component of other comprehensive income (loss) with an offsetting adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security.

In periods subsequent to the recognition of an OTTI loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the previous amortized cost basis less the credit-related OTTI recognized in earnings. For debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is accreted into interest income over the remaining life of the security in a prospective manner based on the estimated amount and timing of future estimated cash flows.

With respect to securities where the decline in value is determined to be temporary and the security’s amortized cost 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, market conditions generally and assessing value relative to other comparable securities. We have outsourced a significant portion of the day-to-day management of the Company’s investment portfolio to third party investment manager service providers. While these investment manager service providers may, at a given point in time, believe that the preferred course of action is to hold securities with unrealized losses that are considered temporary until such losses are recovered, the dynamic nature of the portfolio management may result in a subsequent decision to sell the security and realize the loss, based upon a change in market and other factors described above. The Company believes that subsequent decisions to sell such securities are consistent with the classification of the Company’s portfolio as available for sale.

There are risks and uncertainties associated with determining whether declines in the fair value of investments are other-than-temporary. These include subsequent significant changes in general economic conditions as well as specific business conditions affecting particular issuers, subjective assessment of issue-specific factors (seniority of claims, collateral value, etc.), future financial market effects, stability of foreign governments and economies, future rating agency actions and significant disclosure of accounting, fraud or corporate governance issues that may adversely affect certain investments. In addition, significant assumptions and management judgment are involved in determining if the decline is other-than-temporary. If management determines that a decline in fair value is temporary, then a security’s value is not written down at that time. However, there are potential effects upon the Company’s future earnings and financial position should management later conclude that some of the current declines in the fair value of the investments are other-than-temporary declines. For further details on the factors considered in evaluation of OTTI see Note 6, "Investments."

(h) Derivative Instruments

The Company recognizes all derivatives as either assets or liabilities in the balance sheets and measures those instruments at fair value. Except for the embedded derivative associated with the GreyCastle Life Retro Arrangements discussed above within (c) "Investments Related to Life Retrocession Arrangements written on a Funds Withheld Basis," the changes in fair value of derivatives are shown in the consolidated statements of income as "net realized and unrealized gains and losses on derivative instruments," unless the derivatives are designated as hedging instruments. The accounting for derivatives that are designated as hedging instruments is discussed below. Changes in fair value of derivatives may create volatility in the Company’s results of operations from period to period. Amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) are offset against net fair value amounts recognized in the

13

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

consolidated balance sheets for derivative instruments executed with the same counterparty under the same netting arrangement to the extent that the Company intends to settle the amounts on a net basis.

Derivative contracts can be exchange-traded or over-the-counter ("OTC"). Exchange-traded derivatives (futures and options) typically fall within Level 1 of the fair value hierarchy depending on whether they are deemed to be actively traded or not. OTC derivatives are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative pricing sources where an understanding of the inputs utilized in arriving at the valuations is obtained. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms and specific risks inherent in the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, interest rate swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment. Such instruments comprise the majority of derivatives held by the Company and are typically classified within Level 2 of the fair value hierarchy.

Certain OTC derivatives trade in less liquid markets with limited pricing information, or required model inputs that are not directly market corroborated, which causes the determination of fair value for these derivatives to be inherently more subjective. Accordingly, such derivatives are classified within Level 3 of the fair value hierarchy. The valuations of less standard or liquid OTC derivatives are typically based on Level 1 and/or Level 2 inputs that can be observed in the market, as well as unobservable Level 3 inputs. Level 1 and Level 2 inputs are regularly updated to reflect observable market changes. Level 3 inputs are only changed when corroborated by evidence such as similar market transactions, pricing services and/or broker or dealer quotations. The Company conducts its non-hedging derivatives activities in three main areas: investment related derivatives, credit derivatives and other non-investment related derivatives.

The Company uses derivative instruments, primarily interest rate swaps, to manage the interest rate exposure associated with certain assets and liabilities. These derivatives are recorded at fair value. On the date the derivative contract is entered into, the Company may designate the derivative as: a hedge of the fair value of a recognized asset or liability ("fair value" hedge); a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset or liability ("cash flow" hedge); or a hedge of a net investment in a foreign operation; or the Company may not designate any hedging relationship for a derivative contract.

Fair Value Hedges

Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings (through "net realized and unrealized gains and losses on derivative instruments") with any differences between the net change in fair value of the derivative and the hedged item representing the hedge ineffectiveness. Periodic derivative net coupon settlements are recorded in net investment income with the exception of hedges of Company issued debt, which are recorded in interest expense. The Company may designate fair value hedging relationships where interest rate swaps are used to hedge the changes in the fair value of certain fixed rate liabilities and fixed maturity securities due to changes in the designated benchmark interest rate.

Cash Flow Hedges

Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge are recorded in accumulated other comprehensive income ("AOCI") and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Gains and losses on derivative contracts that are reclassified from AOCI to current period earnings are included in the line item in the consolidated statements of operations in which the cash flows of the hedged item are recorded. Any hedge ineffectiveness is recorded immediately in current period earnings as "net realized and unrealized gains and losses on derivative instruments." Periodic derivative net coupon settlements are recorded in net investment income. The Company may designate cash flow hedging relationships where interest rate swaps are used to mitigate interest rate risk associated with anticipated issuances of debt or other forecasted transactions.

Hedges of the Net Investment in a Foreign Operation

Changes in the fair value of a derivative used as a hedge of a net investment in a foreign operation, to the extent effective as a hedge, are recorded in the foreign currency translation adjustments account within AOCI. Cumulative changes in fair value recorded in AOCI are reclassified into earnings upon the sale or complete or substantially complete liquidation of the foreign entity. Any hedge ineffectiveness is recorded immediately in current period earnings as "net realized and unrealized gains and losses on derivative instruments."

14

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Hedge Documentation and Effectiveness Testing

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in value or cash flow of the hedged item. At hedge inception, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking each hedge transaction. The documentation process includes linking derivatives that are designated as fair value, cash flow, or net investment hedges to specific assets or liabilities on the balance sheet or to specific forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. In addition, certain hedging relationships are considered highly effective if the changes in the fair value or discounted cash flows of the hedging instrument are within a ratio of 80-125% of the inverse changes in the fair value or discounted cash flows of the hedged item. Hedge ineffectiveness is measured using qualitative and quantitative methods. Qualitative methods may include comparison of critical terms of the derivative to the hedged item. Depending on the hedging strategy, quantitative methods may include the "Change in Variable Cash Flows Method," the "Change in Fair Value Method," the "Hypothetical Derivative Method" or the "Dollar Offset Method."

Discontinuance of Hedge Accounting

The Company discontinues hedge accounting prospectively when it determines that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative is dedesignated as a hedging instrument; or the derivative expires or is sold, terminated or exercised. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the derivative continues to be carried at fair value on the balance sheets with changes in its fair value recognized in current period earnings through "net realized and unrealized gains and losses on derivative instruments." When hedge accounting is discontinued because the Company becomes aware that it is not probable that the forecasted transaction will occur, the derivative continues to be carried on the balance sheets at its fair value, and gains and losses that were accumulated in AOCI are recognized immediately in earnings.

(i) Cash and Cash Equivalents

Cash Equivalents

Cash equivalents include fixed interest deposits placed with a maturity of under 90 days when purchased. Bank deposits are not considered to be fair value measurements and as such are not subject to the authoritative guidance on fair value measurement disclosures. Money market funds are classified as Level 1 as these instruments are considered actively traded; however, certificates of deposit are classified as Level 2.

Restricted Cash

Restricted cash represents cash and cash equivalents that the Company is a) holding for the benefit of a third party and is legally or contractually restricted as to withdrawal or usage for general corporate purposes; and b) not replaceable by another type of asset other than cash or cash equivalents, under the terms of the Company's contractual arrangements with such third parties. Restricted cash includes cash and cash equivalents held pursuant to the terms of the Company's contractual obligations relating to the transaction described in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary."

(j) Foreign Currency Translation

Assets and liabilities of foreign operations whose functional currency is not the U.S. dollar are translated at prevailing year end exchange rates. Revenue and expenses of such foreign operations are translated at monthly average exchange rates during the year. The net effect of the translation adjustments for foreign operations, net of applicable deferred income taxes, as well as any gains or losses on intercompany balances for which settlement is not planned or anticipated in the foreseeable future, are included in "accumulated other comprehensive income (loss)."

Monetary assets and liabilities denominated in currencies other than the functional currency of the applicable entity are revalued at the exchange rate in effect at the balance sheet date and revenues and expenses are translated at the exchange rate on the date the transaction occurs with the resulting foreign exchange gains and losses on settlement or revaluation recognized in income.

(k) Goodwill, Intangibles and Other Long-Lived Assets

The Company has recorded goodwill in connection with various acquisitions in the current and prior years. Goodwill represents the excess of the purchase price over the fair value of net assets acquired. In accordance with GAAP, the Company

15

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

tests goodwill for potential impairment annually as of June 30, and between annual tests if an event occurs or circumstances change that may indicate that potential exists for the fair value of a reporting unit to be reduced to a level below its carrying amount. The Company tests for impairment at the reporting unit level in accordance with the authoritative guidance on intangibles and goodwill. The Company has organized its goodwill into two reporting units, reflecting its two segments.

The Company’s indefinite-lived intangible assets consist primarily of acquired insurance and reinsurance licenses, plus Lloyd's syndicate capacity. These assets are deemed to have indefinite useful lives and are therefore not subject to amortization. In accordance with GAAP, the Company tests non-amortized intangible assets for potential impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. If the carrying value of a non-amortized intangible asset is in excess of its fair value, the asset must be written down to its fair value through the recognition of an impairment charge to earnings.

All of the Company’s depreciable or amortizable intangible and other long-lived assets such as trade names, distribution networks, premises, equipment, agency relationships, and acquired or internally-developed software, are carried at net book value, and are depreciated or amortized on a straight-line basis over their estimated useful lives. The amortization periods approximate the period over which the Company expects to generate future net cash inflows from the use of these assets. All of these assets are subject to impairment testing in accordance with authoritative guidance for the impairment or disposal of long-lived assets when events or conditions indicate that the carrying value of an asset may not be fully recoverable from future cash flows. See Note 9, "Goodwill and Other Intangible Assets" for further information.

(l) Variable Interest Entities ("VIEs")

Investments or other interests that absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns are called variable interests. Entities in which the equity investors, as a group, do not have the characteristic of a controlling financial interest, or that do not have sufficient equity at risk to allow them to finance their own activities without additional financial support are referred to as VIEs.

A VIE must be consolidated by its primary beneficiary, which is the variable interest holder that is determined to have the controlling financial interest in the entity. Based upon the nature of the VIE, this is either the entity that has both: a) the power to direct the VIE’s activities that most significantly impact its economic performance, and b) the obligation to absorb losses or receive benefits of the VIE that could potentially be significant to it; or it is the reporting entity that will absorb a majority of the VIE's expected losses, receive a majority of the VIE's expected residual returns, or both. Refer to Note 16, "Variable Interest Entities," for further discussion of the Company’s interests in VIEs.

(m) Non-controlling Interests

Non-controlling shareholders' interests are presented separately in the Company's Consolidated Balance Sheets and Consolidated Statements of Shareholders' Equity as required under GAAP. The net loss (income) attributable to non-controlling interests is presented separately in the Company's Consolidated Statements of Comprehensive Income. Refer to Note 16, "Variable Interest Entities," and Note 18, "Share Capital," for further discussion of non-controlling interests in the Company.

(n) Losses and Loss Expenses

Unpaid losses and loss expenses include reserves for reported unpaid losses and loss expenses and for losses incurred but not reported. The reserve for reported unpaid losses and loss expenses for the Company’s property and casualty operations is established by management based on claims reported from insureds or amounts reported from ceding companies, and represent the estimated ultimate cost of events or conditions that have been reported to or specifically identified by the Company.

The reserve for losses incurred but not reported is estimated by management based on loss development patterns determined by reference to the Company’s underwriting practices, the policy form, type of program and historical experience. The Company’s actuaries employ a variety of generally accepted methodologies to determine estimated ultimate loss reserves, including the "Bornhuetter-Ferguson incurred loss method" and frequency and severity approaches.

Certain workers’ compensation and certain U.K. bodily injury liabilities are considered fixed and determinable and are discounted.

Management believes that the reserves for unpaid losses and loss expenses are sufficient to cover losses that fall within coverages assumed by the Company. However, there can be no assurance that losses will not exceed the Company’s total reserves. The methodology of estimating loss reserves is periodically reviewed to ensure that the assumptions made continue to be appropriate and any adjustments resulting from such reviews are reflected in income in the year in which the adjustments are made.

16

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(o) Deposit Liabilities

Contracts entered into by the Company that are not deemed to transfer significant underwriting risk and/or timing risk are accounted for as deposits, whereby liabilities are initially recorded at an amount equal to the assets received. The Company uses a portfolio rate of return of equivalent duration to the liabilities in determining risk transfer. An initial accretion rate is established based on actuarial estimates whereby the deposit liability is increased to the estimated amount payable over the term of the contract.

The deposit accretion rate is the rate of return required to fund expected future payment obligations (this is equivalent to the "best estimate" of future cash flows), which are determined actuarially based upon the nature of the underlying indemnifiable losses. Accretion of the liability is recorded as interest expense.

The Company periodically reassesses the estimated ultimate liability. Any changes to this liability are reflected as adjustments to interest expense to reflect the cumulative effect of the period the contract has been in force, and by an adjustment to the future accretion rate of the liability over the remaining estimated contract term.

(p) Future Policy Benefit Reserves

The Company estimates the present value of future policy benefits related to long duration contracts using assumptions for investment yields, mortality, and expenses, including a provision for adverse deviation.

The assumptions used to determine future policy benefit reserves are best estimate assumptions that are determined at the inception of the contracts and are locked-in throughout the life of the contract unless a premium deficiency develops. As the experience on the contracts emerges, the assumptions are reviewed. If such review would produce reserves in excess of those currently held, then the locked-in assumptions will be revised and a claim and policy benefit is recognized at that time. The Company includes the cost of reinsurance in its premium deficiency considerations.

Certain life insurance and annuity contracts provide the holder with a guarantee that the benefit received upon death will be no less than a minimum prescribed amount. The contracts are accounted for in accordance with GAAP, which requires that the best estimate of future experience be combined with actual experience to determine the benefit ratio used to calculate the policy benefit reserve.

(q) Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The realizability of deferred tax assets is evaluated based upon management's assessment of taxable income in prior eligible carryback years, future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, and tax planning strategies that would, if necessary, be implemented. A valuation allowance may have to be established for any portion of a deferred tax asset that management believes will not be realized.

The Company recognizes the tax benefit from an uncertain tax position taken only if it is more likely than not that the tax position will be sustained upon examination by the relevant tax authority, based on our interpretation of and judgment of the relevant tax law. The Company reviews its uncertain tax positions on a quarterly basis. Tax positions that meet the more likely than not threshold are measured using a probability weighted approach, whereby the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement is recognized. The Company recognizes interest and penalties on underpaid tax as a component of income tax expense.

The Company’s investment income is allocated to applicable branch operations and is taxable in certain jurisdictions. The method of allocating this income may be different for tax reporting as compared to GAAP. The Company records the tax effects of this allocation entirely through operations.

(r) Stock Plans

At December 31, 2015, the Company had several stock-based performance incentive programs, which are described more fully in Note 18, "Share Capital." Stock-based compensation issued under these plans generally has a life of not longer than ten years and vests as set forth at the time of grant. Awards generally vest annually over three or four years from the date of grant. The Company recognizes compensation costs for stock-based awards on a straight-line basis over the requisite service period (usually the vesting period) for each award.

17

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Share-based payments to employees, including grants of employee stock options, are recognized in the financial statements over the vesting period based on their grant date fair values.

Authoritative guidance requires that compensation costs be recognized for unvested stock-based compensation awards over the period through the date that the employee is no longer required to provide future services to earn the award, rather than over the explicit service period. Accordingly, the Company follows a policy of recognizing compensation cost to coincide with the date that the employee is eligible to retire, rather than the actual retirement date, for all stock-based compensation granted.

(s) Per Share Data

Basic earnings per ordinary share is based on weighted average ordinary shares outstanding and excludes any dilutive effects of options. Diluted earnings per ordinary share assumes the exercise of all dilutive stock options has occurred.

(t) Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update concerning the evaluation of an entity's ability to continue as a going concern. Under this new guidance, in connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. Management's evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt exists when it is probable that the entity will be unable to meet its obligations as they become due. When management identifies conditions or events that raise substantial doubt about an entity's ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those conditions or events will alleviate the substantial doubt. The mitigating effect of management's plans should be considered only to the extent that it is probable that the plans will be implemented, and if implemented, it is probable that the plans will be effective. If conditions or events raise substantial doubt, the entity should disclose the conditions or events, management's evaluation of their significance in relation to the ability to meet its obligations, and management's plans to mitigate the conditions or events along with whether substantial doubt has been alleviated. The guidance is effective for annual periods ending after December 15, 2016, and interim and annual periods thereafter. The Company is currently evaluating the impact of this guidance; however, it is not expected to have a material impact on its financial condition, results of operations or cash flows.

In November 2014, the FASB issued an accounting standards update which provides an acquired entity with the option to reflect assets and liabilities using its acquirer's accounting and reporting basis ("pushdown accounting") within its own separate financial statements. Under this new guidance, an acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in control event occurs (on a case by case basis if multiple). If the entity elects to apply pushdown accounting, it should disclose information that enables users of the financial statements to evaluate the effect of pushdown accounting. If pushdown accounting is not applied in the initial reporting period, an acquired entity will have the option to elect to apply it in a subsequent reporting period, however, such an election should be considered a change in accounting principle. Once pushdown accounting is elected, that election is irrevocable. The guidance was effective upon issuance. Its adoption did not have an impact on the financial condition, results of operations or cash flows of the Company.

In February 2015, the FASB issued an accounting standards update concerning consolidation of certain legal entities. Under this new guidance, all legal entities are required to evaluate whether they should consolidate certain legal entities. The guidance: (1) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities; (2) eliminates the presumption that a general partner should consolidate a limited partnership; (3) affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provides a scope exception from consolidation guidance for certain reporting entities. Upon adoption of the new guidance, differing requirements for performing a consolidation analysis under existing GAAP will be eliminated, and all reporting entities will now fall within the scope of the Accounting Standards Codification Subtopic 810-10, Consolidation-Overall, unless a specific exception applies. Under this Subtopic, there are only two primary models for determining whether consolidation is appropriate - a voting interest entity model, and a variable interest entity model. The guidance is effective for public business entities for annual periods beginning after December 15, 2015, and interim and annual periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of this guidance.

In April 2015, the FASB issued an accounting standards update concerning the presentation of deferred debt issuance costs in an entity's balance sheet. Under this new guidance, which is part of the FASB's initiative to reduce complexity in accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements, debt issuance costs related to a recognized debt liability must be presented in the balance sheet as a direct deduction from the

18

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

carrying amount of that debt liability, consistent with debt discounts. In addition, the guidance also requires that the amortization of such costs be reported as interest expense. The guidance is effective for public business entities for annual periods beginning after December 15, 2015, and interim and annual periods thereafter, with early adoption permitted for financial statements that have not been previously issued. This guidance will not have a material impact on the Company's financial condition, results of operations or cash flows.

In May 2015, the FASB issued an accounting standards update concerning investments for which management estimates fair value using net asset value per share (or its equivalent) as a practical expedient. Under the guidance, such investments will no longer be reported within the fair value hierarchy. Removing those investments from the fair value hierarchy not only eliminates the diversity in practice resulting from the way in which investments measured at net asset value per share (or its equivalent) with future redemption dates are classified, but also ensures that all investments categorized in the fair value hierarchy are classified using a consistent approach. Investments that calculate net asset value per share (or its equivalent), but for which the practical expedient is not applied, will continue to be included in the fair value hierarchy. A reporting entity should continue to disclose information on investments for which fair value is measured at net asset value (or its equivalent) as a practical expedient to help users understand the nature and risks of the investments and whether the investments, if sold, are probable of being sold at amounts different from net asset value. The guidance is effective for public business entities for annual periods beginning after December 15, 2015 and interim and annual periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of this guidance, but as this guidance is disclosure-related only, it is not expected to have a material impact on the Company's financial condition, results of operations or cash flows.

In May 2015, the FASB issued an accounting standards update concerning the annual disclosure regarding the liability for unpaid claims and claims adjustment expenses for insurance entities. The guidance requires: (1) incurred and paid claims development information by accident year, on a net basis after reinsurance, for the number of years for which claims incurred typically remain outstanding, including the most recent reporting period, which need not exceed 10 years; (2) a reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position; (3) for each accident year for which incurred claims development information is presented, the total of incurred but not reported ("IBNR") liabilities plus expected development on reported claims included in the liability for unpaid claims and claims adjustment expenses, accompanied by a description of reserving methodologies; (4) for each accident year for which incurred claims development information is presented, quantitative information about claim frequency (unless it is impracticable to do so) accompanied by a qualitative description of methodologies used for determining claim frequency information; and (5) for all claims, the average annual percentage payout of incurred claims by age for the same number of accident years as the disclosure for IBNR. The guidance recommends that insurance entities aggregate or disaggregate those disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have significantly different characteristics. The amendments also require insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements. Additionally, the amendments require insurance entities to disclose for annual and interim reporting periods a rollforward of the liability for unpaid claims and claims adjustment expenses. Additional disclosures about liabilities for unpaid claims and claim adjustment expenses reported at present value include: (1) for each period presented in the statement of financial position, the aggregate amount of discount for the time value of money deducted to derive the liability for unpaid claims and claim adjustment expenses; (2) for each period presented in the statement of income, the amount of interest accretion recognized; and (3) the line items in the statement of income in which interest accretion is classified. The guidance is effective for public business entities for annual periods beginning after December 15, 2015 and interim periods within annual periods after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the impact of this guidance, but as this guidance is disclosure-related only, it is not expected to have a material impact on the Company's financial condition, results of operations or cash flows.

In September 2015, the FASB issued an accounting standards update concerning the accounting for measurement period adjustments following the completion of a business combination. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable; however, it shall not exceed one year from the acquisition date. Currently under GAAP, during the measurement period the acquirer shall recognize such adjustments to the provisional amounts as if the accounting for the business combination had been completed at the acquisition date, with a corresponding adjustment to goodwill, in the reporting period in which the adjustments are determined. The acquirer shall revise comparative information for prior periods presented in financial statements as needed as a result of the change to the provisional amounts calculated. Under the new guidance, although such adjustments shall still be calculated as if the accounting had been completed at the business combination date, the acquirer should recognize in its current-period earnings the cumulative effect of changes in depreciation, amortization, or other

19

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

income effects, by line item, related to the periods subsequent to the acquisition date as a result of the adjustments. In addition, entities must present separately on the face of the income statement, or alternatively in the notes to the financial statements, the portion of such current period adjustments that would have been recorded in previous reporting periods, if the adjustments had been recognized at the acquisition date. The guidance is effective for provisional adjustments made by public business entities in annual periods beginning after December 15, 2015 - irrespective of the date of the business combination to which they relate - including interim periods within those fiscal years. Early adoption is permitted for financial statements that have not yet been made available for issuance. The Company has elected to early adopt this guidance in light of measurement period adjustments recognized as part of the Catlin Acquisition. The impacts of this guidance have been disclosed in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition."

In January 2016, the FASB issued an accounting standards update concerning the accounting for financial instruments. The guidance retains the basic existing framework for accounting for financial instruments under GAAP, while achieving limited convergence with IFRS in this area. The guidance: (1) requires equity investments (except consolidated entities and those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income; (2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (3) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for non-public business entities; (4) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet; (5) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (6) requires an entity to present separately in other comprehensive income 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 entity has elected to measure the liability at fair value in accordance with the fair value option for financial statements; (7) requires separate presentation of financial assets and financial liabilities by measurement category and form of asset in the financial statements; and (8) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity's other deferred tax assets. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted at the beginning of the fiscal year of adoption only, and should be applied by means of a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, except the amendments related to impairment of equity securities without readily determinable fair values. The Company is currently evaluating the impact of this guidance, but it is expected to have an effect on results of operations as mark to market movements will prospectively impact net income. It is not expected to have a material impact on the Company's financial condition or cash flows.

3. Acquisitions and Disposals

(a)    Allied Acquisition

On February 1, 2016, the Company announced that its indirect, wholly-owned subsidiary, XL Reinsurance America Inc. ("XLRA"), completed the acquisition ("Allied Acquisition") of Allied International Holdings, Inc. ("Allied"), pursuant to the agreement reached with XLRA's parent company, XL America, Inc. ("XLA") on August 11, 2015. Allied is the holding company of Allied Specialty Insurance, Inc. and T.H.E. Insurance Company, a leading insurer of the outdoor entertainment industry in the U.S.

The Company made an initial payment of $75.6 million to acquire Allied. Additional contingent consideration will be paid based on production and underwriting profitability over a three year period subsequent to the acquisition date. The target payments of contingent consideration range from $7.5 million to $30.0 million. The Company currently believes the fair market value of these payments to be $15.0 million, for a total initial estimated consideration of $90.6 million. Due to the limited time since the acquisition date, the accounting for the Allied Acquisition is not yet complete; therefore, the calculation of goodwill is still pending at the time of this filing.

(b)     New Energy Risk

On July 24, 2015, the Company purchased, at arm's length, an additional 63.63% interest in New Energy Risk Inc. ("New Energy"), a provider of insurance risk management solutions within the alternative energy sector. A substantial portion of the additional shares were purchased directly from the family trusts of a Company employee who is responsible for managing the business generated by New Energy. Prior to the additional purchase, the Company held a 31.16% ownership interest in New Energy, which was accounted for as an equity method investment. The subsequent purchase raised the Company's ownership stake to 94.79%, which is deemed a controlling financial interest, and hence, the Company now consolidates New Energy. Subsequent to the additional purchase, the family trusts of the employee contributed their remaining 5.21% ownership interest in New Energy to XL Innovate Fund, LP ("XL Innovate Fund"), the entity that holds the Company's interest in New Energy, in

20

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

partial satisfaction of the employee's aggregate 5.21% investment commitment to XL Innovate Fund. See Note 25, "Related Party Transactions," for further details of these transactions.

The Company paid approximately $8.8 million to acquire the additional interest in New Energy, and realized a gain of approximately $2.5 million, included within income from operating affiliates, in order to the reflect the appropriate fair value adjustment to its existing investment previously accounted for under the equity method. The assets and liabilities of New Energy are now reflected in the consolidated financial statements of the Company based on their fair value as of the acquisition date, while Goodwill of approximately $13.4 million was recorded in conjunction with the transaction. See Note 9, "Goodwill and Other Intangible Assets," for a further discussion of the goodwill recorded in conjunction with the acquisition.

(c)    Catlin Acquisition

Overview

On May 1, 2015 (the "Acquisition Date"), the Company completed its acquisition of the entire issued share capital of Catlin as contemplated by the Implementation Agreement, dated January 9, 2015 (the "Implementation Agreement"), by and among XL-Ireland, Green Holdings Limited, a wholly-owned subsidiary of the Company ("Green Holdings"), and Catlin.

Pursuant to the terms of the Implementation Agreement, the Catlin Acquisition was implemented by way of a scheme of arrangement (the "Scheme") under Section 99 of the Companies Act 1981 of Bermuda, as amended (the "Companies Act"), and sanctioned by the Supreme Court of Bermuda (the "Court"). Immediately after such Court action, Catlin was merged with and into Green Holdings under Section 104H of the Companies Act, with Green Holdings as the surviving company, pursuant to the terms of that certain Merger Agreement, dated January 9, 2015 (the "Merger Agreement"), among XL-Ireland, Green Holdings and Catlin.

Pursuant to the terms of the Implementation Agreement, XL-Ireland acquired each ordinary share of Catlin, par value $0.01 per share ("Catlin Shares"), for consideration per Catlin Share (the "Acquisition Consideration") equal to 388 pence in cash and 0.130 of an XL-Ireland ordinary share, par value $0.01 per share ("XL Shares"), subject to the mix and match facility set forth in the Implementation Agreement. The XL Shares issued in connection with the Catlin Acquisition are listed on the New York Stock Exchange. The XL Shares issued in connection with the Catlin Acquisition were issued in reliance upon the exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), provided by Section 3(a)(10) of the Securities Act.

XL-Ireland issued approximately 49.9 million XL Shares and paid approximately £1.49 billion in cash to the holders of Catlin Shares as Acquisition Consideration pursuant to the terms of the Scheme.

The foregoing description of the Implementation Agreement and the Merger Agreement is qualified in its entirety by reference to the full text of the Implementation Agreement and Merger Agreement.

In connection with the Catlin Acquisition, on January 9, 2015, the Company announced that it was relying on £1.6 billion of debt to be provided under a bridge facility entered into by XLIT Ltd., a wholly-owned subsidiary of the Company ("XL-Cayman"), and arranged by Morgan Stanley Senior Funding, Inc. and Goldman Sachs Bank USA (the "Bridge Facility") for the purposes of discharging the cash component of the Acquisition Consideration. The Company subsequently terminated the commitments under the Bridge Facility as of April 8, 2015, due to a sufficient amount in escrow to discharge the cash portion of the Acquisition Consideration. Costs related to maintaining the Bridge Facility are discussed in "Transaction-related Costs" below.

In addition, on January 9, 2015, the Company entered into deal contingent deliverable foreign exchange forwards ("FX Forwards") with Morgan Stanley Capital Services LLC and Goldman Sachs International. The purpose of the FX Forwards was to mitigate risk of foreign currency exposure related to the Catlin Acquisition. Following the closing of the Catlin Acquisition, the FX Forwards were settled.

21

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

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.

The Company financed the $2.29 billion cash portion of the Acquisition Consideration by issuing $1.0 billion of subordinated debt, the proceeds (net of debt issuance costs) of which were $980.6 million, and the remaining $1.31 billion by using cash and cash equivalents on hand. See Note 14, "Notes Payable and Debt and Financing Arrangements," for further information on the debt issuance.

Fair Value of Net Assets Acquired and Liabilities Assumed

The purchase price was allocated to the acquired assets and assumed liabilities of Catlin based on estimated fair values on the Acquisition Date. The Company recognized goodwill of $794.0 million which is primarily attributable to the synergies and economies of scale expected to result upon integration of Catlin into the Company's operations, including further diversification in geographic mix and product offerings and an increase in distribution strength. As of December 31, 2015, the allocation of the purchase price reflects an increase of $15.9 million in the amount recorded for current and deferred tax liabilities from the allocation initially reported at June 30, 2015 and a corresponding increase in the amount recorded for goodwill. See "Income Taxes" section below for further discussion of the change in the acquired current and deferred tax liabilities. The Company has allocated $466.1 million of this goodwill to its Insurance segment and $327.9 million to its Reinsurance segment. The Company also recognized indefinite lived intangible assets of $673.0 million and other intangible assets of $315.0 million, which will be amortized over their estimated useful lives. See Note 9, "Goodwill and Other Intangible Assets," for further information.

The foregoing allocation of the purchase price is based on information that was available to management at the time the consolidated financial statements were prepared. The allocation may change as additional information becomes available within the measurement period, which cannot exceed 12 months from the Acquisition Date. The fair value recorded for these items may be subject to adjustments, which may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill.

22

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

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 (2)	306,686
Total assets	$	16,509,081
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 (2)	82,783
Other liabilities (2)	285,481
Total liabilities	$	12,601,606
Net assets acquired before non-controlling interest	$	3,907,475
Non-controlling interest in equity of consolidated subsidiaries	562,285
Net assets acquired	$	3,345,190
Acquisition consideration	$	4,139,180
Goodwill (2)	$	793,990

____________

(1)    Includes Restricted cash.

(2) Includes an increase of $15.9 million to goodwill from the amount initially recorded at June 30, 2015, as a result of several tax-related adjustments, including a decrease in other assets of $7.5 million, a decrease in deferred tax liability of $11.3 million, and an increase in other liabilities of $19.8 million. See discussion of "Income Taxes" below for further information.

An explanation of the significant adjustments to the components of fair value are as follows:

• Deferred acquisition costs and value of business acquired - The adjustment consists of two components. The first adjustment is the elimination of Catlin's deferred acquisition costs asset. The second adjustment is the establishment of the value of business acquired asset, which represents the present value of the expected underwriting profit within the unearned premiums liability, net of reinsurance, less costs to service the related policies and a risk premium. This adjustment will be amortized to underwriting, acquisition and insurance expenses over approximately two years, as the contracts for business in-force as of the Acquisition Date expire. The Company has included $471.0 million in acquisition expenses related to the amortization of the value of business acquired during the year ended December 31, 2015.

• Intangible assets - Establish the estimated fair value of intangible assets related to Catlin. See Note 9, "Goodwill and Other Intangible Assets," for further information.

• Other assets - Establish the estimated fair value of Catlin's internally developed software.

23

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

• Unpaid losses and loss adjustment expenses - Unpaid losses and loss adjustment expenses acquired include an increase to adjust the carrying value of Catlin's historical unpaid losses and loss adjustment expenses, net of related reinsurance recoverable, to fair value as of the Acquisition Date. The estimated fair value consists of the present value of the expected net loss and loss adjustment expense payments plus a risk premium. This adjustment will be amortized to losses and loss adjustment expenses over approximately 20 years, based on the estimated payout pattern of net reserves as of the Acquisition Date.

• Net deferred tax liabilities - The adjustment to deferred tax liabilities is related to the deferred tax impact of the adjustments to fair value as noted above. This net increase of deferred tax liabilities is explained further in "Income Taxes" below.

• Non-controlling interest - The fair value was determined based on the last trade price of preferred shares issued by Catlin Insurance Company Limited ("Catlin-Bermuda"). See Note 18, "Share Capital," for further information.

Income Taxes

As noted above, during the measurement period, the Company has recorded several tax-related adjustments. These adjustments result from analysis following the filing of Catlin's 2014 tax returns, and a refinement of the jurisdictional fair value allocations of certain assets and liabilities. Other assets decreased by $7.5 million, deferred tax liabilities decreased by $11.3 million, and other liabilities increased by $19.8 million as a result of these adjustments. The net impact was that Goodwill associated with the transaction increased by $15.9 million.

Following these measurement period adjustments, the net deferred tax liability recorded by the Company as part of the allocation of the purchase price was $82.8 million. This is primarily comprised of $145.2 million of deferred tax liabilities related to intangible assets, partially offset by deferred tax assets of $62.4 million, which is net of a $90.0 million valuation allowance. Included in the total deferred tax assets are loss carryforwards of $85.8 million with a related $66.8 million valuation allowance.

In order to align all U.S. regulated entities under XLA, XLA purchased 100% of the stock of Catlin Inc. from Catlin North America Holdings, Ltd, a U.K. holding company, on September 28, 2015. The transaction, which was contingent upon regulatory approval, resulted in a release of the $59.6 million valuation allowance previously held against the Catlin Inc. deferred tax asset as a benefit through the results of operations.

Transaction-related Costs

The Company incurred certain acquisition and financing costs associated with the Catlin Acquisition. The Company has recorded $64.7 million of these costs for the year ended December 31, 2015, of which $50.2 million has been included in Operating Expense and $14.5 million has been included in Interest Expense.

Transaction costs included in Operating Expense primarily consist of due diligence, legal, advisory and investment banking costs. Transaction costs included in Interest Expense relate to the maintenance of the Bridge Facility. Pursuant to the terms of the Implementation Agreement, Catlin was required to pay its own costs and expenses in relation to the negotiation, preparation, execution and implementation of the Catlin Acquisition. Costs incurred by Catlin were recorded and paid by Catlin prior to the Acquisition Date and are not included within the Company's consolidated statements of income and comprehensive income.

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 related costs		Retention and other compensation costs		Facilities-related costs		Consulting and other		Total
Costs incurred in 2015	$	47,185	$	35,310	$	14,744	$	59,129	$	156,368
2015 payments	31,058		18,341		13,926		35,754		99,079
Liabilities at December 31, 2015	$	16,127	$	16,969	$	818	$	23,375	$	57,289

24

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Financial Results

The following table summarizes the financial results of the acquired Catlin subsidiaries since the Acquisition Date that have been included within the Company's consolidated statements of income and comprehensive income as required by ASC 805-10-50-2(h) based on legal entity reporting. These results are not used as a part of management analysis of the financial results and performance of the Company's business. These results are adjusted, where possible, for transaction and integration related costs. These results involve a significant amount of estimates and are not indicative of future results of the acquired Catlin subsidiaries, which will be further impacted by potential changes in targeted business mix, investment management strategies, and synergies recognized from changes in the combined entity's operating structure, as well as the impact of changes in other business and capital management strategies.

Since the Acquisition Date, a growing number of underlying policies have been underwritten onto different legal entities, staffing has been allocated to new divisions and activities, and reinsurance has been purchased to cover combined risks, only some of which would have been reflected in the underlying legacy Catlin infrastructure, systems and general ledgers of the acquired Catlin subsidiaries. In future quarters, the summary results of such subsidiaries will be increasingly impractical to produce and even less indicative of the results of the acquired Catlin operations given the significant estimates involved and the nature and pace of our integration activities which are intended to promote the operation of the consolidated group as a whole as quickly as possible.

(U.S. dollars in thousands)	May 1, 2015 to December 31, 2015
Total revenues - see comments above	$	2,791,789
Net income (loss) - see comments above	$	103,637

Supplemental Pro Forma Information

The results of the acquired Catlin operations have been included in the Company's consolidated financial statements from the Acquisition Date to December 31, 2015. The following table presents unaudited pro forma consolidated information for the years ended December 31, 2015 and 2014 and assumes the Catlin Acquisition occurred on January 1, 2014. The pro forma financial information is presented for informational purposes only and does not necessarily reflect the results that would have occurred had the acquisition taken place on January 1, 2014, nor is it necessarily indicative of future results. Significant adjustments used to determine pro forma results include amortization of intangible assets and amortization of fair value adjustments discussed above, and the corresponding income tax effects. Non-recurring transaction related costs noted above have been included in the unaudited pro forma results for the year ended December 31, 2014.

	Unaudited Pro Forma
(In thousands, except per share data)	2015		2014
Total revenues	$	10,628,915	$	10,938,216
Net income attributable to ordinary shareholders	1,221,497		475,914
Earnings (loss) per ordinary share and ordinary share equivalent – basic	4.03		1.50
Earnings (loss) per ordinary share and ordinary share equivalent – diluted	3.97		1.48

(d)    Sale of Operating Affiliate

On April 1, 2015, XL Re Ltd ("XL Re"), an indirect wholly-owned subsidiary of the Company, completed the sale of all of its shares in ARX Holding Corp. ("ARX") to The Progressive Corporation ("Progressive") pursuant to the terms of the Stock Purchase Agreement with Progressive. XL Re's shares in ARX represented approximately 40.6% of ARX's outstanding capital stock on a fully diluted basis at the time of the announcement. The carrying value of XL Re's shares in ARX was $220.2 million at the time of the sale.

XL Re received $560.6 million in proceeds from the transaction, which was based upon the consolidated tangible net book value of ARX and its subsidiaries as of December 31, 2014, and certain other factors. Thus, the Company recorded a gain of $340.4 million as a result of this transaction that is reflected in the consolidated statement of income for the year ended December 31, 2015.

(e)    Sale of Life Reinsurance Subsidiary

On May 1, 2014, a wholly owned subsidiary of the Company, XL Insurance (Bermuda) Ltd ("XLIB"), entered into a sale and purchase agreement with GreyCastle Holdings Ltd. ("GreyCastle") providing for the sale of 100% of the common shares of XLIB's wholly-owned subsidiary, XL Life Reinsurance (SAC) Ltd ("XLLR") (subsequent to the transaction, XLLR changed its

25

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

name to GreyCastle Life Reinsurance (SAC) Ltd ("GCLR")), to GreyCastle for $570 million in cash. This transaction closed on May 30, 2014. As a result of the transaction, the Company ceded the majority of its life reinsurance business to GCLR via 100% quota share reinsurance (the "GreyCastle Life Retro Arrangements"). This transaction covers a substantial portion of our life reinsurance reserves. The Company ceased writing new life reinsurance contracts in 2009 and since that time has been managing the run-off of its life reinsurance operations ("Run-Off Life Operations").

The Run-Off Life Operations business, including the business subject to the transaction, was previously reported within the Company’s Life operations segment. Subsequent to the transaction, 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." See Note 5, "Segment Information" for further information. In addition, certain securities within fixed maturities were reclassified from held to maturity to available for sale in conjunction with this transaction. See Note 6, "Investments," for further information.

All of the reclassified securities are included within Life Funds Withheld Assets, along with certain other available for sale securities as defined in the sale and purchase agreement. The Life Funds Withheld Assets are managed pursuant to agreed investment guidelines that meet the contractual commitments of the XL ceding companies and applicable laws and regulations. All of the investment results associated with the Life Funds Withheld Assets ultimately accrue to GCLR. Because the Company no longer shares in the risks and rewards of the underlying performance of the supporting invested assets, disclosures within the financial statement notes included herein separate the Life Funds Withheld Assets from the rest of the Company's investments.

Under the terms of the transaction, the Company continues to own, on a funds withheld basis, assets supporting the GreyCastle Life Retro Arrangements consisting of cash, fixed maturity securities and accrued interest. Based upon the right of offset, the funds withheld liability owing to GCLR is recorded net of future policy benefit reserves recoverable, and is included within "Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable)" on the consolidated balance sheets. The transaction resulted in an overall after-tax U.S. GAAP net loss of $621.3 million.

See Note 13, "Future Policy Benefit Reserves," for a discussion of our future policy benefit reserves, the related future policy benefit reserves recoverable and information about the net funds withheld liability.

The impact of the GreyCastle Life Retro Arrangements on the Company's results for the year ended December 31, 2015 and the period beginning from the completion of the transaction on May 30, 2014 through December 31, 2014 was as follows:

Impact of GreyCastle Life Retro Arrangements				May 30 to December 31,
(U.S. dollars in thousands)	2015			2014
Underwriting profit (loss) (1)	$	605		$	11,649
Net investment income - Life Funds Withheld Assets	187,489			129,575
Net realized gains (losses) on investments sold - Life Funds Withheld Assets	223,272			5,067
Net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	(27,734		)	(9		)
OTTI on investments - Life Funds Withheld Assets	(13,357		)	(20,587		)
Exchange (gains) losses	4,788			10,099
Other income and expenses	2,280			(1,610		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	(151,691		)	(488,222		)
Net income (loss)	$	225,652		$	(354,038	)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	(421,604		)	274,083
Change in adjustments related to future policy benefit reserves, net of tax	170,688			74,009
Change in cumulative translation adjustment - Life Funds Withheld Assets, net of tax	25,869			17,595
Total changes to other comprehensive income as a result of GreyCastle Life Retro Arrangements (2)	$	(225,047	)	$	365,687
Comprehensive income (loss)	$	605		$	11,649

____________

(1) The underwriting profit of $0.6 million relates to a premium adjustment relating to the GreyCastle Life Retro Arrangements transaction, which was completed on May 30, 2014. Excluding this transaction, the impact to comprehensive income relating to the GreyCastle Life Retro Arrangements was nil for the years ended December 31, 2015 and 2014.

As shown in the table above, although the Company's net income (loss) is subject to variability related to the GreyCastle Life Retro Arrangements, there is no recurring net impact on the Company's future comprehensive income in any period. The life retrocession embedded derivative value includes the interest income, unrealized gains and losses, and realized gains and losses from sales on the Life Funds Withheld Assets subsequent to May 30, 2014.

26

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

4. Fair Value Measurements

(a) Fair Value Summary

The following tables set forth the Company’s assets and liabilities that were accounted for at fair value at December 31, 2015 and 2014 by level within the fair value hierarchy. For further information, see Note 2(b), "Significant Accounting Policies - Fair Value Measurements":

December 31, 2015 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting		Balance at December 31, 2015
Assets
Fixed maturities - Available for Sale ("AFS") - Excluding Life Funds Withheld Assets
U.S. Government and Government - Related/Supported	$	—	$	5,020,574	$	45,063	$	—	$	5,065,637
Corporate - Financials	—		3,508,224		53,685		—		3,561,909
Corporate - Non Financials	—		6,900,259		188		—		6,900,447
Residential mortgage-backed securities – Agency ("RMBS - Agency")	—		3,754,894		3,077		—		3,757,971
Residential mortgage-backed securities – Non-Agency ("RMBS - Non-Agency")	—		328,540		—		—		328,540
Commercial mortgage-backed securities ("CMBS")	—		405,316		—		—		405,316
Collateralized debt obligations ("CDO")	—		2		32,408		—		32,410
Other asset-backed securities	—		1,150,715		17,857		—		1,168,572
U.S. States and political subdivisions of the States	—		2,632,070		—		—		2,632,070
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	—		5,251,614		—		—		5,251,614
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets, at fair value	$	—	$	28,952,208	$	152,278	$	—	$	29,104,486
Equity securities, at fair value	528,581		350,338		—		—		878,919
Short-term investments, at fair value (1)	—		617,390		—		—		617,390
Total investments AFS - Excluding Life Funds Withheld Assets	$	528,581	$	29,919,936	$	152,278	$	—	$	30,600,795
Fixed maturities - AFS - Life Funds Withheld Assets
U.S. Government and Government - Related/Supported	—		12,742		—		—		12,742
Corporate - Financials	—		598,236		—		—		598,236
Corporate - Non Financials	—		1,308,628		—		—		1,308,628
RMBS - Agency	—		752		—		—		752
RMBS - Non-Agency	—		26,953		—		—		26,953
CMBS	—		122,481		—		—		122,481
Other asset-backed securities	—		149,795		—		—		149,795
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	—		933,516		—		—		933,516
Total fixed maturities - AFS - Life Funds Withheld Assets, at fair value	—		3,153,103		—		—		3,153,103
Total investments - AFS, at fair value	528,581		33,073,039		152,278		—		33,753,898

27

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

December 31, 2015 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting			Balance at December 31, 2015
Fixed maturities - Trading
U.S. Government and Government - Related/Supported	—		4,990		—		—			4,990
Corporate - Financials	—		335,956		—		—			335,956
Corporate - Non Financials	—		493,621		—		—			493,621
RMBS - Agency	—		368		—		—			368
CMBS	—		4,803		—		—			4,803
Other asset-backed securities	—		25,700		—		—			25,700
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	—		370,261		—		—			370,261
Total fixed maturities - Trading, at fair value	—		1,235,699		—		—			1,235,699
Short-term investments, at fair value	—		60,330		—		—			60,330
Total investments Trading	—		1,296,029		—		—			1,296,029
Cash equivalents (2)	437,742		830,924		—		—			1,268,666
Cash equivalents - Life Funds Withheld Assets	517		100,757		—		—			101,274
Other investments (3)	—		1,008,176		283,550		—			1,291,726
Other assets (4)	—		69,914		19,400		(3,087		)	86,227
Total assets accounted for at fair value	$	966,840	$	36,378,839	$	455,228	$	(3,087	)	$	37,797,820
Liabilities
Funds withheld on life retrocession arrangements (net of future policy benefit reserves recoverable) (5)	$	—	$	463,915	$	—	$	—		$	463,915
Financial instruments sold, but not yet purchased (6)	347		—		—		—			347
Other liabilities (4)	—		16,304		29,191		(3,087		)	42,408
Total liabilities accounted for at fair value	$	347	$	480,219	$	29,191	$	(3,087	)	$	506,670

December 31, 2014 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting		Balance at December 31, 2014
Assets
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	—	$	2,171,953	$	—	$	—	$	2,171,953
Corporate - Financials	—		2,761,916		—		—		$	2,761,916
Corporate - Non Financials	—		6,010,563		5,894		—		$	6,016,457
Residential mortgage-backed securities – RMBS - Agency	—		3,726,666		1,910		—		$	3,728,576
Residential mortgage-backed securities – RMBS - Non-Agency	—		427,351		—		—		$	427,351
CMBS	—		1,052,544		—		—		$	1,052,544
CDOs	—		4,076		687,958		—		$	692,034
Other asset-backed securities	—		1,060,005		5,288		—		$	1,065,293
U.S. States and political subdivisions of the States	—		2,021,272		—		—		$	2,021,272
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	—		4,240,073		—		—		$	4,240,073
Total fixed maturities - AFS - Excluding Funds Withheld Assets, at fair value	$	—	$	23,476,419	$	701,050	$	—	$	24,177,469
Equity securities, at fair value	502,284		366,008		—		—		868,292
Short-term investments, at fair value (1)	—		256,727		—		—		256,727
Total investments AFS - Excluding Funds Withheld Assets	$	502,284	$	24,099,154	$	701,050	$	—	$	25,302,488

28

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

December 31, 2014 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting			Balance at December 31, 2014
Fixed maturities - Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	—	$	18,724	$	—	$	—		$	18,724
Corporate - Financials	—		801,019		—		—			$	801,019
Corporate - Non Financials	—		2,016,961		—		—			$	2,016,961
RMBS – Agency	—		3,782		—		—			$	3,782
RMBS – Non-Agency	—		85,335		—		—			$	85,335
CMBS	—		193,167		—		—			$	193,167
Other asset-backed securities	—		273,541		—		—			$	273,541
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	—		1,789,036		—		—			$	1,789,036
Total fixed maturities - AFS - Life Funds Withheld Assets, at fair value	$	—	$	5,181,565	$	—	$	—		$	5,181,565
Total investments - AFS, at fair value	$	502,284	$	29,280,719	$	701,050	$	—		$	30,484,053
Fixed maturities - Trading
Corporate - Non Financials	—		1,171		—		—			$	1,171
Total fixed maturities - Trading, at fair value	$	—	$	1,171	$	—	$	—		$	1,171
Cash equivalents (2)	1,103,877		397,955		—		—			$	1,501,832
Cash equivalents - Life Funds Withheld Assets (2)	460		132,738		—		—			$	133,198
Other investments (3)	—		708,974		185,083		—			$	894,057
Other assets (4)	—		122,996		13,663		(696		)	$	135,963
Total assets accounted for at fair value	$	1,606,621	$	30,644,553	$	899,796	$	(696	)	$	33,150,274
Liabilities
Funds withheld on life retrocession arrangements (net of future policy benefit reserves recoverable) (5)	$	—	$	450,831	$	—	$	—		$	450,831
Financial instruments sold, but not yet purchased (6)	4,737		25,669		—		—			$	30,406
Other liabilities (4)	—		7,757		23,427		(696		)	$	30,488
Total liabilities accounted for at fair value	$	4,737	$	484,257	$	23,427	$	(696	)	$	511,725

____________

(1) Short-term investments consist primarily of Corporate securities and U.S. and Non-U.S. Government and Government-Related/ Supported securities.

(2) Cash equivalents balances subject to fair value measurement include certificates of deposit and money market funds. Operating cash balances are not subject to recurring fair value measurement guidance.

(3) The Other investments balance excludes certain structured transactions including certain investments in project finance transactions, a payment obligation and liquidity financing provided to a structured credit vehicle as a part of a third party medium term note facility. These investments, which totaled $141.3 million at December 31, 2015 and $354.4 million at December 31, 2014, are carried at amortized cost. For further information, see Note 8, "Other Investments."

(4) Other assets and other liabilities include derivative instruments. The derivative balances included in each category are reported on a gross basis by level with a netting adjustment presented separately in the Collateral and Counterparty Netting column. The fair values of the individual derivative contracts are reported gross in their respective levels based on the fair value hierarchy. For further details regarding derivative fair values and associated collateral received or paid see Note 15, "Derivative Instruments."

(5) Funds withheld on life retrocession arrangements (net of future policy benefit reserves recoverable) include balances related to the life retrocession embedded derivative, under which all investment results associated with the Life Funds Withheld Assets related the GreyCastle Life Retro Arrangements described in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary", accrue to the benefit of GCLR.

(6) Financial instruments sold, but not yet purchased, represent "short sales" and are included within "Payable for investments purchased" on the balance sheets.

(b) Level 2 Asset Valuations

U.S. Government and Government - Related/Supported, Corporate - Financials, Corporate - Non Financials and Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported

Transaction activity inputs utilized in the valuation of fair value hierarchy Level 2 securities within these sub-categories include actual trades, dealer posts, results of bids-wanted, institutional secondary offerings, primary market offerings and Trade Reporting and Compliance Engine ("TRACE") trade feeds. As part of the evaluation process, transaction activity is compared to prior evaluations and necessary adjustments are made accordingly. Market-color inputs include actively quoted benchmark issues, buy-side/evaluator dialogue, sell-side/evaluator dialogue and credit derivative indices.

29

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

RMBS - Agency, RMBS - Non-Agency, CMBS, CDO and Other asset-backed securities

As part of the fair valuation process, Level 2 securities in these sub-categories are analyzed by collateral type, deal structure, deal performance and vintage. Market inputs into the valuation process for each sub-category include reported or observed trades, results of bids-wanted, buy-side/sell-side evaluator dialogue, dealer offering and market research reports. Cash flow inputs into the evaluation process include conditional prepayment rates, conditional decay rates, delinquency and loss severity rates. This assumptive data is reviewed and updated using third party reported information to reflect current market convention.

U.S. States and political subdivisions of the States

Transaction activity inputs utilized in the valuation of fair value hierarchy Level 2 securities within this sub-category include client and broker trades, dealer posts, results of bids-wanted, institutional secondary offerings, primary market offerings, and Municipal Securities Rulemaking trade feeds. As part of the evaluation process, transaction activity is compared to prior evaluations and necessary adjustments are made accordingly. Market-color inputs include bids, offerings, two-sided markets, buy-side/evaluator dialogue and sell-side/evaluator dialogue. Credit information inputs include issuer financial statements, default and material event notices, developer reports and liquidation and restructuring analysis.

Equity securities and other investments

Other investment securities generally include investments in thinly traded equity funds and hedge funds. Fair value is determined based upon the most recent net asset values (“NAV’) received from the fund administrators, the nature of the underlying investments in the funds and the frequency of subscriptions or redemptions as dictated by the fund’s governing documents.

Other assets and other liabilities

Other assets and other liabilities primarily include over-the-counter (“OTC”) derivatives, which are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative independent pricing sources where an understanding of the inputs utilized in arriving at the valuations is obtained. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms and specific risks inherent in the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, interest rate swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment.

(c) Level 3 Assets and Liabilities

The tables below present additional information about assets and liabilities measured at fair value on a recurring basis and for which Level 3 inputs were utilized to determine fair value. The tables present a reconciliation of the beginning and ending balances for the years ended December 31, 2015 and 2014 for all financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3) at December 31, 2015 and 2014, respectively. The tables do not include gains or losses that were reported in Level 3 in prior periods for assets that were transferred out of Level 3 prior to December 31, 2015 and 2014, respectively. Gains and losses for assets and liabilities classified within Level 3 in the table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Further, it should be noted that the following tables do not take into consideration the effect of offsetting Level 1 and 2 financial instruments entered into by the Company that are either economically hedged by certain exposures to the Level 3 positions or that hedge the exposures in Level 3 positions.

In general, Level 3 assets include securities for which values were obtained from brokers where either significant inputs were utilized in determining the values that were difficult to corroborate with observable market data, or sufficient information regarding the specific inputs utilized by the broker was not available to support a Level 2 classification. Transfers into or out of Level 3 primarily arise as a result of the valuations utilized by the Company changing between either those provided by independent pricing services that do not contain significant unobservable inputs and other valuations sourced from brokers that are considered Level 3.

30

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Fixed maturities and short-term investments

The Company’s Level 3 assets consist primarily of U.S. Government and Government-Related/Supported, Corporates and CDOs, for which non-binding broker quotes are the primary source of the valuations. Sufficient information regarding the specific inputs utilized by the brokers was not available to support a Level 2 classification. The Company obtains the majority of broker quotes for these securities from third party investment managers who perform independent verifications of these valuations using pricing matrices based upon information gathered by market traders. In addition, for the majority of these securities, the Company compares the broker quotes to independent valuations obtained from third party pricing vendors, which may also consist of broker quotes, to assess if the prices received represent a reasonable estimate of the fair value. Although the Company does not have access to the specific unobservable inputs that may have been used in the fair value measurements of these securities provided by brokers, we would expect that the significant inputs considered are prepayment rates, probability of default, loss severity in the event of default, recovery rates, liquidity premium and reinvestment rates. Significant increases (decreases) in any of those inputs in isolation could result in a significantly different fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

The remainder of the Level 3 assets relate primarily to private investments (including funds) and certain derivative positions as described below.

Other investments

Included within the other investments component of the Company’s Level 3 valuations are private investments (including funds) and hedge funds where the Company is not deemed to have significant influence over the investee. The fair value of these investments is based upon net asset values received from the investment manager or general partner of the respective entity. The nature of the underlying investments held by the investee that form the basis of the net asset value include assets such as private business ventures and are such that significant Level 3 inputs are utilized in the determination of the individual underlying holding values and, accordingly, the fair value of the Company’s investment in each entity is classified within Level 3. The Company has not adjusted the net asset values received; however, management incorporates factors such as the most recent financial information received, annual audited financial statements and the values at which capital transactions with the investee take place when applying judgment regarding whether any adjustments should be made to the net asset value in recording the fair value of each position. Investments in hedge funds included in other investments utilize strategies including arbitrage, directional, event driven and multi-style. The funds potentially have lockup and gate provisions which may limit redemption liquidity. For further details regarding the nature of other investments and related features, see Note 8, "Other Investments," for further details.

Derivative instruments

Derivative instruments recorded within other liabilities and classified within Level 3 include credit derivatives sold providing protection on senior tranches of structured finance transactions where the value is obtained directly from the investment bank counterparty and sufficient information regarding the inputs utilized in such valuation was not obtained to support a Level 2 classification and guaranteed minimum income benefits embedded within one reinsurance contract. The majority of inputs utilized in the valuations of these types of derivative contracts are considered Level 1 or Level 2; however, each valuation includes at least one Level 3 input that was significant to the valuation and, accordingly, the values are disclosed within Level 3.

The calculation of the change in fair value of the embedded derivative associated with the Life Retro Arrangements includes the interest income, realized and unrealized gains and losses on Life Funds Withheld Assets and certain related expenses related to the Life Funds Withheld Assets. The fair value of the embedded derivative is included in “Funds withheld on life retrocession arrangements, net of future policy benefit reserves recoverable” on the consolidated balance sheets. The fair value of the embedded derivative is considered a Level 2 valuation.

31

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Level 3 Assets and Liabilities - Year Ended December 31, 2015
(U.S. dollars in thousands)	U.S. Government and Government - Related/Supported		Corporate - Financials			Corporate - Non-Financials			RMBS - Agency
Balance, beginning of period	$	—	$	—		$	5,894		$	1,910
Realized gains (losses)	—		9			(186		)	—
Movement in unrealized gains (losses)	—		(10		)	(13		)	(3		)
Purchases and issuances (1)	35,044		53,686			(123		)	1,297
Sales	—		—			—			—
Settlements	—		—			(316		)	(323		)
Transfers into Level 3	10,019		—			—			3,059
Transfers out of Level 3	—		—			(5,068		)	(2,863		)
Fixed maturities to short-term investments classification change	—		—			—			—
Balance, end of period	$	45,063	$	53,685		$	188		$	3,077
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	(2	)	$	(153	)	$	(2	)
	RMBS - Non Agency		CMBS			CDO			Other asset- backed securities
Balance, beginning of period	$	—	$	—		$	687,958		$	5,288
Realized gains (losses)	—		—			(8,658		)	628
Movement in unrealized gains (losses)	—		—			16,688			(599		)
Purchases and issuances (1)	—		—			25,882			46,940
Sales	—		—			(366,633		)	(7,269		)
Settlements	—		—			(322,829		)	(6,359		)
Transfers into Level 3	—		—			—			13,317
Transfers out of Level 3	—		—			—			(34,089		)
Fixed maturities to short-term investments classification change	—		—			—			—
Balance, end of period	$	—	$	—		$	32,408		$	17,857
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	—		$	5,279		$	451
	Non-US Sovereign Government, Provincial, Supranational and Government Related/Supported		Short-term investments			Other investments			Derivative Contracts - Net
Balance, beginning of period	$	—	$	—		$	185,083		$	(9,764	)
Realized gains (losses)	—		—			15,270			—
Movement in unrealized gains (losses)	—		—			(12,548		)	(27		)
Purchases and issuances (1)	—		—			117,143			—
Sales	—		—			(1,417		)	—
Settlements	—		—			(19,981		)	—
Transfers into Level 3	—		—			—			—
Transfers out of Level 3	—		—			—			—
Fixed maturities to short-term investments classification change	—		—			—			—
Balance, end of period	$	—	$	—		$	283,550		$	(9,791	)
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	—		$	2,724		$	80

____________

(1)Includes assets acquired as result of the transaction described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition"

32

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Level 3 Assets and Liabilities - Year Ended December 31, 2014
(U.S. dollars in thousands)	U.S. Government and Government - Related/Supported			Corporate - Financials			Corporate - Non-Financials			RMBS - Agency
Balance, beginning of period	$	—		$	—		$	31,573		$	10,473
Realized gains (losses)	—			—			199			5
Movement in unrealized gains (losses)	—			—			(128		)	(18		)
Purchases and issuances	—			—			3,759			120
Sales	—			—			—			—
Settlements	—			—			(6,543		)	(3,205		)
Transfers into Level 3	—			—			766			—
Transfers out of Level 3	—			—			(23,732		)	(5,465		)
Fixed maturities to short-term investments classification change	—			—			—			—
Balance, end of period	$	—		$	—		$	5,894		$	1,910
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—		$	—		$	60		$	(12	)
	RMBS - Non Agency			CMBS			CDO			Other asset- backed securities
Balance, beginning of period	$	9		$	12,533		$	710,253		$	11,877
Realized gains (losses)	1			3			3,781			(7		)
Movement in unrealized gains (losses)	1			(3		)	11,604			65
Purchases and issuances	—			1,376			185,710			5,182
Sales	—			—			(48,313		)	—
Settlements	(11		)	(12,533		)	(175,077		)	(5,705		)
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			(1,376		)	—			(6,124		)
Fixed maturities to short-term investments classification change	—			—			—			—
Balance, end of period	$	—		$	—		$	687,958		$	5,288
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—		$	—		$	14,432		$	57
	Non-US Sovereign Government, Provincial, Supranational and Government Related/Supported			Short-term investments			Other investments			Derivative Contracts - Net
Balance, beginning of period	$	—		$	2,015		$	113,472		$	(29,110	)
Realized gains (losses)	—			—			12,676			—
Movement in unrealized gains (losses)	—			(15		)	538			19,346
Purchases and issuances	—			—			59,401			—
Sales	—			—			—			—
Settlements	—			(2,000		)	(25,498		)	—
Transfers into Level 3	—			—			24,494			—
Transfers out of Level 3	—			—			—			—
Fixed maturities to short-term investments classification change	—			—			—			—
Balance, end of period	$	—		$	—		$	185,083		$	(9,764	)
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—		$	—		$	13,212		$	19,346

33

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(d) Financial Instruments Not Carried at Fair Value

Authoritative guidance over disclosures about the fair value of financial instruments requires additional disclosure of fair value information for financial instruments not carried at fair value in both interim and annual reporting periods. Certain financial instruments, particularly insurance contracts, are excluded from these fair value disclosure requirements. The carrying values of cash and cash equivalents, accrued investment income, net receivable from investments sold, other assets, net payable for investments purchased, other liabilities and other financial instruments not included below approximated their fair values. The following table includes financial instruments for which the carrying value differs from the estimated fair values at December 31, 2015 and 2014. All of these fair value estimates are considered Level 2 fair value measurements.

(U.S. dollars in thousands)	2015				2014
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets - Other investments, structured transactions	$	141,329	$	154,065	$	354,382	$	371,625
Deposit liabilities	$	1,168,376	$	1,436,210	$	1,245,367	$	1,543,761
Notes payable and debt	2,644,970		2,805,152		1,662,580		1,897,854
Financial Liabilities	$	3,813,346	$	4,241,362	$	2,907,947	$	3,441,615

The Company historically participated in structured transactions. Our remaining structured transaction is an investment in a payment obligation with an insurance company. This transaction is carried at amortized cost. The fair value of this investment held by the Company is determined through use of an internal model utilizing benchmark yields, issuer spreads and reference data.

Deposit liabilities include obligations under structured insurance and reinsurance transactions. For purposes of fair value disclosures, the Company determined the estimated fair value of the deposit liabilities by assuming a discount rate equal to the appropriate U.S. Treasury rate plus 26.5 basis points and 29.5 basis points at December 31, 2015 and 2014, respectively. The discount rate incorporates the Company’s own credit risk into the determination of estimated fair value.

The fair values of the Company’s notes payable and debt outstanding were determined based on quoted market prices.

There are no significant concentrations of credit risk within the Company’s financial instruments as defined in the authoritative guidance over disclosures of fair value of financial instruments not carried at fair value, which excludes certain financial instruments, particularly insurance contracts.

5. Segment Information

The Company is organized into two operating segments: Insurance and Reinsurance. Subsequent to the transaction described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the underwriting results of the acquired businesses from the Acquisition Date through December 31, 2015 are included in the Company's Insurance or Reinsurance segment, as appropriate.

The Company’s general investment and financing operations are reflected in "Corporate and Other." Subsequent to the transaction described in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary," GCLR reinsures the majority of the Company's life reinsurance business through the GreyCastle Life Retro Arrangements. The results of the Run-Off Life Operations not subject to the Life Retro Arrangements are also reported within Corporate and Other.

The Company evaluates the performance of both the Insurance and Reinsurance segments based on underwriting profit. Other items of revenues and expenditures 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. The following tables summarize the segment results for the indicated years ended:

34

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Year Ended December 31, 2015 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	8,395,846		$	2,273,163		$	10,669,009		$	309,916		$	10,978,925
Net premiums written	5,859,934			2,028,890			7,888,824			62,239			7,951,063
Net premiums earned	5,648,482			2,515,702			8,164,184			62,241			8,226,425
Net losses and loss expenses (2)	3,614,048			1,152,152			4,766,200			115,997			4,882,197
Acquisition costs (2)	704,364			602,290			1,306,654			10,794			1,317,448
Operating expenses (3)	1,154,760			283,379			1,438,139			1,232			1,439,371
Underwriting profit (loss)	$	175,310		$	477,881		$	653,191		$	(65,782	)	$	587,409
Net investment income - excluding Life Funds Withheld Assets (4)							583,871			40,569			624,440
Net investment income - Life Funds Withheld Assets										187,489			187,489
Net results from structured products (5)	12,185			5,806			17,991			—			17,991
Net fee income and other (6)	(16,936		)	2,958			(13,978		)	622			(13,356		)
Extinguishment of debt							—			5,592			5,592
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							14,586			5,411			19,997
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							—			182,181			182,181
Net realized and unrealized gains (losses) on derivative instruments							—			53,123			53,123
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(151,691		)	(151,691		)
Net income (loss) from investment fund affiliates and operating affiliates							—			118,060			118,060
Gain on sale of operating affiliate										340,407			340,407
Exchange (gains) losses							—			22,504			22,504
Corporate operating expenses							—			480,755			480,755
Contribution from P&C and Corporate and Other							1,255,661			201,538			1,457,199
Interest expense (7)										163,021			163,021
Non-controlling interests										106,187			106,187
Income tax expense										(19,161		)	(19,161		)
Net income (loss) attributable to ordinary shareholders													$	1,207,152
Ratios – P&C operations: (8)
Loss and loss expense ratio	64.0		%	45.8		%	58.4		%
Underwriting expense ratio	32.9		%	35.2		%	33.6		%
Combined ratio	96.9		%	81.0		%	92.0		%

____________

(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) The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.

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

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

(5) The net results from P&C structured products include net investment income and interest expense of $60.4 million and $42.2 million, respectively.

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

(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.

35

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Year Ended December 31, 2014 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate & Other (1)			Total
Gross premiums written	$	5,976,011		$	1,785,479		$	7,761,490		$	333,436		$	8,094,926
Net premiums written	4,134,151			1,633,058			5,767,209			177,632			5,944,841
Net premiums earned	4,026,713			1,690,725			5,717,438			177,632			5,895,070
Net losses and loss expenses	2,543,108			715,285			3,258,393			242,963			3,501,356
Acquisition costs	393,319			330,684			724,003			14,115			738,118
Operating expenses (2)	865,592			193,404			1,058,996			10,693			1,069,689
Underwriting profit (loss)	$	224,694		$	451,352		$	676,046		$	(90,139	)	$	585,907
Net investment income - excluding Life Funds Withheld Assets (3)							574,458			146,558			721,016
Net investment income - Life Funds Withheld Assets										129,575			129,575
Net results from structured products (4)	43,710			10,499			54,209			—			54,209
Net fee income and other (5)	(10,051		)	2,800			(7,251		)	360			(6,891		)
Loss on sale of life reinsurance subsidiary							—			666,423			666,423
Net realized gains (losses) on investments							119,366			3,625			122,991
Net realized gains (losses) on investments - Life Funds Withheld Assets							—			(15,529		)	(15,529		)
Net realized and unrealized gains (losses) on derivative instruments							—			29,886			29,886
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(488,222		)	(488,222		)
Net income (loss) from investment fund affiliates and operating affiliates							—			203,034			203,034
Exchange (gains) losses							—			(37,568		)	(37,568		)
Corporate operating expenses							—			220,165			220,165
Contribution from P&C and Corporate and Other							1,416,828			(929,872		)	486,956
Interest expense (6)										121,221			121,221
Non-controlling interests										80,498			80,498
Income tax expense										96,897			96,897
Net income (loss) attributable to ordinary shareholders													$	188,340
Ratios – P&C operations: (7)
Loss and loss expense ratio	63.2		%	42.3		%	57.0		%
Underwriting expense ratio	31.2		%	31.0		%	31.2		%
Combined ratio	94.4		%	73.3		%	88.2		%

____________

(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 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 $68.0 million and $12.9 million, respectively.

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

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

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

36

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Year Ended December 31, 2013 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	5,523,181		$	1,893,611		$	7,416,792		$	324,343		$	7,741,135
Net premiums written	4,154,093			1,749,889			5,903,982			295,422			6,199,404
Net premiums earned	4,267,677			1,746,422			6,014,099			295,422			6,309,521
Net losses and loss expenses	2,829,999			901,465			3,731,464			465,702			4,197,166
Acquisition costs	529,270			353,388			882,658			26,665			909,323
Operating expenses (2)	782,677			166,238			948,915			8,926			957,841
Underwriting profit (loss)	$	125,731		$	325,331		$	451,062		$	(205,871	)	$	245,191
Net investment income (3)							599,144			286,645			885,789
Net results from structured products (4)	15,562			8,229			23,791			—			23,791
Net fee income and other (5)	(9,317		)	2,320			(6,997		)	1,305			(5,692		)
Net realized gains (losses) on investments							85,792			1,985			87,777
Net realized and unrealized gains (losses) on derivative instruments							—			7,798			7,798
Net income (loss) from investment fund affiliates and operating affiliates							—			258,195			258,195
Exchange (gains) losses							—			(28,243		)	(28,243		)
Corporate operating expenses							—			209,454			209,454
Contribution from P&C and Corporate and Other							1,152,792			168,846			1,321,638
Interest expense (6)										107,486			107,486
Non-controlling interests										76,731			76,731
Income tax expense										77,505			77,505
Net income (loss) attributable to ordinary shareholders													$	1,059,916
Ratios – P&C operations: (7)
Loss and loss expense ratio	66.3		%	51.6		%	62.0		%
Underwriting expense ratio	30.8		%	29.8		%	30.5		%
Combined ratio	97.1		%	81.4		%	92.5		%

____________

(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 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 $71.9 million and $48.0 million, respectively.

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

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

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

37

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following tables summarize the Company’s net premiums earned by line of business:

Year Ended December 31, 2015 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	1,163,302	$	168,367	$	—	$	1,331,669
Casualty	1,685,748		468,286		—		2,154,034
Property catastrophe	—		663,958		—		663,958
Property	1,021,037		869,286		—		1,890,323
Specialty	1,473,929		127,797		—		1,601,726
Other (1)	304,466		218,008		—		522,474
Total P&C Operations	$	5,648,482	$	2,515,702	$	—	$	8,164,184
Corporate and Other:
Run-off life operations - Annuity	—		—		1		1
Run-off life operations - Other life	—		—		62,240		62,240
Total Corporate and Other	$	—	$	—	$	62,241	$	62,241
Total	$	5,648,482	$	2,515,702	$	62,241	$	8,226,425
Year Ended December 31, 2014
P&C Operations:
Professional	$	1,075,420	$	181,223	$	—	$	1,256,643
Casualty	1,422,684		300,223		—		1,722,907
Property catastrophe	—		433,602		—		433,602
Property	544,856		555,583		—		1,100,439
Specialty	737,281		95,745		—		833,026
Other (1)	246,472		124,349		—		370,821
Total P&C Operations	$	4,026,713	$	1,690,725	$	—	$	5,717,438
Corporate and Other:
Run-off life operations - Annuity	$	—	$	—	$	53,363	$	53,363
Run-off life operations - Other life	—		—		124,269		124,269
Total Corporate and Other	$	—	$	—	$	177,632	$	177,632
Total	$	4,026,713	$	1,690,725	$	177,632	$	5,895,070
Year Ended December 31, 2013
P&C Operations:
Professional	$	1,370,196	$	206,169	$	—	$	1,576,365
Casualty	1,389,851		312,156		—		1,702,007
Property catastrophe	—		492,568		—		492,568
Property	544,278		561,105		—		1,105,383
Specialty	732,042		94,797		—		826,839
Other (1)	231,310		79,627		—		310,937
Total P&C Operations	$	4,267,677	$	1,746,422	$	—	$	6,014,099
Corporate and Other:
Run-off life operations - Annuity	$	—	$	—	$	122,715	$	122,715
Run-off life operations - Other life	—		—		172,707		172,707
Total Corporate and Other	$	—	$	—	$	295,422	$	295,422
Total	$	4,267,677	$	1,746,422	$	295,422	$	6,309,521

____________

(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.

38

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following table shows an analysis of the Company’s net premiums written by geographical location of subsidiary where the premium is written for the years ended December 31:

(U.S. dollars in thousands)	2015			2014		2013
P&C Operations:
Bermuda	$	781,618		$	636,109	$	658,041
United States	3,045,031			2,528,196		2,650,916
Europe	3,628,258			2,124,117		2,111,065
Other	433,917			478,787		483,960
Total P&C Operations	$	7,888,824		$	5,767,209	$	5,903,982
Corporate and Other:
Bermuda	$	62,276		$	91,979	$	117,948
Europe	(37		)	85,653		177,474
Total Corporate and Other	$	62,239		$	177,632	$	295,422

6. Investments

(a) Fixed Maturities, Short-Term Investments and Equity Securities

Classification of Fixed Income Securities

During the second quarter of 2014, fixed maturities with a carrying value of $2.8 billion were reclassified from held to maturity ("HTM") to AFS in conjunction with the sale of XLLR as discussed in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary." Gross unrealized gains and gross unrealized losses, net of tax, of $424.9 million and nil, respectively, related to these securities were recognized in other comprehensive income on the date of transfer. For certain annuity contracts that are subject to the GreyCastle Life Retro Arrangements, policy benefit reserves were historically increased for the impact of changes in unrealized gains on investments supporting such contracts as if the gains had been realized, with a corresponding entry to other comprehensive income ("Shadow Adjustments"). In conjunction with the sale of XLLR and the related reclassification of securities from HTM to AFS, the Company recorded an additional gross charge of $440.5 million, net of tax, as a reduction of comprehensive income for such Shadow Adjustments on the date of the transfer. See Note 20, "Accumulated Other Comprehensive Income (Loss)," for further information.

All of the reclassified securities are included within the Life Funds Withheld Assets, along with certain other available for sale securities as defined in the sale and purchase agreement. The Life Funds Withheld Assets are managed pursuant to agreed upon investment guidelines that meet the contractual commitments of the XL ceding companies and applicable laws and regulations. All of the investment results associated with the Life Funds Withheld Assets ultimately accrue to GCLR. Because the Company no longer shares in the risks and rewards of the underlying performance of the Life Funds Withheld Assets, disclosures within the financial statements and accompanying notes included herein separate the Life Funds Withheld Assets from the rest of the Company's investments.

39

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Amortized Cost and Fair Value Summary

The cost (amortized cost for fixed maturities and short-term investments), fair value, gross unrealized gains and gross unrealized (losses), including non-credit related OTTI recorded in accumulated other comprehensive income ("AOCI") of the Company’s AFS investments at December 31, 2015 and 2014 were as follows:

			Included in AOCI
December 31, 2015 (U.S. dollars in thousands)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-credit Related OTTI (1)
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	5,047,621	$	52,355	$	(34,339	)	$	5,065,637	$	—
Corporate - Financials	3,535,830		49,535		(23,456		)	3,561,909		—
Corporate - Non Financials	6,867,525		130,568		(97,646		)	6,900,447		—
RMBS – Agency	3,697,756		77,776		(17,561		)	3,757,971		—
RMBS – Non-Agency	319,876		25,644		(16,980		)	328,540		(54,200		)
CMBS	401,713		7,933		(4,330		)	405,316		(1,182		)
CDO	41,679		4		(9,273		)	32,410		(1,208		)
Other asset-backed securities	1,164,426		17,665		(13,519		)	1,168,572		(1,144		)
U.S. States and political subdivisions of the States	2,514,048		125,395		(7,373		)	2,632,070		—
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	5,249,148		100,383		(97,917		)	5,251,614		—
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	28,839,622	$	587,258	$	(322,394	)	$	29,104,486	$	(57,734	)
Total short-term investments - Excluding Life Funds Withheld Assets	618,851		967		(2,428		)	617,390		—
Total equity securities	834,079		89,993		(45,153		)	878,919		—
Total investments - AFS - Excluding Life Funds Withheld Assets	$	30,292,552	$	678,218	$	(369,975	)	$	30,600,795	$	(57,734	)
Fixed maturities - AFS - Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	10,721	$	2,021	$	—		$	12,742	$	—
Corporate - Financials	531,016		67,220		—			598,236		—
Corporate - Non Financials	1,132,926		175,702		—			1,308,628		—
RMBS – Agency	591		161		—			752		—
RMBS – Non-Agency	24,401		2,552		—			26,953		—
CMBS	107,968		14,513		—			122,481		—
Other asset-backed securities	132,674		17,121		—			149,795		—
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	737,735		195,781		—			933,516		—
Total fixed maturities - AFS - Life Funds Withheld Assets	$	2,678,032	$	475,071	$	—		$	3,153,103	$	—
Total investments - AFS	$	32,970,584	$	1,153,289	$	(369,975	)	$	33,753,898	$	(57,734	)

____________

(1) Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

40

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

December 31, 2014 (U.S. dollars in thousands)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-credit Related OTTI (1)
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	2,100,851	$	77,889	$	(6,787	)	$	2,171,953	$	—
Corporate - Financials	2,687,797		87,058		(12,939		)	2,761,916		—
Corporate - Non Financials	5,774,333		278,747		(36,623		)	6,016,457		(3,309		)
RMBS – Agency	3,625,171		114,188		(10,783		)	3,728,576		—
RMBS – Non-Agency	404,398		41,108		(18,155		)	427,351		(67,918		)
CMBS	1,033,819		23,987		(5,262		)	1,052,544		(2,033		)
CDOs	717,544		1,659		(27,169		)	692,034		(1,663		)
Other asset-backed securities	1,028,528		42,810		(6,045		)	1,065,293		(1,797		)
U.S. States and political subdivisions of the States	1,892,566		129,910		(1,204		)	2,021,272		—
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	4,162,425		139,484		(61,836		)	4,240,073		—
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	23,427,432	$	936,840	$	(186,803	)	$	24,177,469	$	(76,720	)
Total short-term investments - Excluding Life Funds Withheld Assets	$	257,221	$	49	$	(543	)	$	256,727	$	—
Total equity securities - Excluding Life Funds Withheld Assets	$	763,833	$	130,689	$	(26,230	)	$	868,292	$	—
Total investments - AFS - Excluding Life Funds Withheld Assets	$	24,448,486	$	1,067,578	$	(213,576	)	$	25,302,488	$	(76,720	)
Fixed maturities - AFS - Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	14,866	$	3,858	$	—		$	18,724	$	—
Corporate - Financials	701,587		99,432		—			801,019		—
Corporate - Non Financials	1,706,262		310,699		—			2,016,961		—
RMBS – Agency	3,301		481		—			3,782		—
RMBS – Non-Agency	71,075		14,260		—			85,335		—
CMBS	168,886		24,281		—			193,167		—
Other asset-backed securities	238,168		35,373		—			273,541		—
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	1,397,194		391,842		—			1,789,036		—
Total fixed maturities - AFS - Life Funds Withheld Assets	$	4,301,339	$	880,226	$	—		$	5,181,565	$	—
Total investments - AFS	$	28,749,825	$	1,947,804	$	(213,576	)	$	30,484,053	$	(76,720	)

____________

(1) Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

The cost (amortized cost for fixed maturities and short-term investments) and fair value of the Company’s Trading investments at December 31, 2015 and 2014 were as follows:

December 31, 2015 (U.S. dollars in thousands)	Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
U.S. Government and Government-Related/Supported	$	4,957	$	4,990
Corporate - Financials	344,070		335,956
Corporate - Non Financials	509,441		493,621
RMBS – Agency	370		368
CMBS	4,874		4,803
Other asset-backed securities	26,405		25,700
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	373,492		370,261
Total fixed maturities - Trading - Life Funds Withheld Assets	$	1,263,609	$	1,235,699
Total short-term investments - Trading - Life Funds Withheld Assets	$	60,176	$	60,330
Total investments - Trading - Life Funds Withheld Assets	$	1,323,785	$	1,296,029

41

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

December 31, 2014 (U.S. dollars in thousands)	Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
Corporate - Non Financials	$	1,180	$	1,171
Total investments - Trading - Life Funds Withheld Assets	$	1,180	$	1,171

At December 31, 2015 and 2014, approximately 2.0% and 3.0%, respectively, of the Company's fixed income investment portfolio at fair value, excluding Life Funds Withheld Assets, was invested in securities that were below investment grade or not rated. Approximately 14.7% and 24.9% of the gross unrealized losses in the Company's fixed income investment portfolio, excluding Life Funds Withheld Assets, at December 31, 2015 and 2014, respectively, related to securities that were below investment grade or not rated.

Contractual Maturities Summary

The contractual maturities of AFS and Trading fixed income securities at December 31, 2015 and 2014 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(U.S. dollars in thousands)	December 31, 2015				December 31, 2014
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
Due less than one year	$	2,106,851	$	2,104,106	$	1,972,224	$	1,980,429
Due after 1 through 5 years	14,051,494		14,143,461		8,919,037		9,113,651
Due after 5 through 10 years	5,680,830		5,740,954		4,232,396		4,412,569
Due after 10 years	1,374,997		1,423,156		1,494,315		1,705,022
	$	23,214,172	$	23,411,677	$	16,617,972	$	17,211,671
RMBS – Agency	$	3,697,756	$	3,757,971	$	3,625,171	$	3,728,576
RMBS – Non-Agency	319,876		328,540		404,398		427,351
CMBS	401,713		405,316		1,033,819		1,052,544
CDO	41,679		32,410		717,544		692,034
Other asset-backed securities	1,164,426		1,168,572		1,028,528		1,065,293
Total mortgage and asset-backed securities	$	5,625,450	$	5,692,809	$	6,809,460	$	6,965,798
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	28,839,622	$	29,104,486	$	23,427,432	$	24,177,469
Fixed maturities - AFS - Life Funds Withheld Assets
Due less than one year	$	81,700	$	92,921	$	117,048	$	125,326
Due after 1 through 5 years	386,810		416,743		638,526		685,787
Due after 5 through 10 years	491,621		558,805		1,004,698		1,165,348
Due after 10 years	1,452,267		1,784,653		2,059,637		2,649,279
	$	2,412,398	$	2,853,122	$	3,819,909	$	4,625,740
RMBS – Agency	$	591	$	752	$	3,301	$	3,782
RMBS – Non-Agency	24,401		26,953		71,075		85,335
CMBS	107,968		122,481		168,886		193,167
Other asset-backed securities	132,674		149,795		238,168		273,541
Total mortgage and asset-backed securities	$	265,634	$	299,981	$	481,430	$	555,825
Total fixed maturities - AFS - Life Funds Withheld Assets	$	2,678,032	$	3,153,103	$	4,301,339	$	5,181,565
Total fixed maturities - AFS	$	31,517,654	$	32,257,589	$	27,728,771	$	29,359,034

42

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	December 31, 2015				December 31, 2014
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
Due less than one year	$	4,573	$	5,096	$	—	$	—
Due after 1 through 5 years	278,163		272,220		—		—
Due after 5 through 10 years	280,487		277,920		1,180		1,171
Due after 10 years	668,737		649,592		—		—
	$	1,231,960	$	1,204,828	$	1,180	$	1,171
RMBS – Agency	370		368		—		—
CMBS	4,874		4,803		—		—
Other asset-backed securities	26,405		25,700		—		—
Total mortgage and asset-backed securities	31,649		30,871		—		—
Total fixed maturities - Trading - Life Funds Withheld Assets	$	1,263,609	$	1,235,699	$	1,180	$	1,171

Pledged Assets

Certain of the Company's invested assets are held in trust and pledged in support of insurance and reinsurance liabilities as well as to collateralize our credit facilities. Such pledges are largely required by the Company's operating subsidiaries that are "non-admitted" under U.S. state insurance regulations, in order for the U.S. cedant to receive statutory credit for reinsurance. Also included in pledged assets are Life Funds Withheld Assets as noted in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary." Additionally, certain deposit liabilities and annuity contracts require the use of pledged assets. As of December 31, 2015 and December 31, 2014, the Company had $18.3 billion and $15.2 billion in pledged assets, respectively.

(b) Gross Unrealized Losses

The following is an analysis of how long the AFS securities at December 31, 2015 and 2014 had been in a continual unrealized loss position:

December 31, 2015 (U.S. dollars in thousands)	Less than 12 months					Equal to or greater than 12 months
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities and short-term investments - AFS
U.S. Government and Government-Related/Supported	$	3,762,869	$	(29,339	)	$	89,113	$	(5,044	)
Corporate - Financials	1,641,021		(13,280		)	102,022		(10,192		)
Corporate - Non Financials	3,275,270		(73,069		)	227,527		(24,706		)
RMBS – Agency	1,065,055		(10,046		)	221,211		(7,515		)
RMBS – Non-Agency	19,614		(1,104		)	180,146		(15,876		)
CMBS	118,605		(1,561		)	78,651		(2,769		)
CDO	12,311		(516		)	20,096		(8,757		)
Other asset-backed securities	572,671		(5,252		)	57,563		(8,268		)
U.S. States and political subdivisions of the States	565,055		(6,609		)	12,259		(765		)
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	1,921,286		(53,440		)	474,929		(46,714		)
Total fixed maturities and short-term investments - AFS	$	12,953,757	$	(194,216	)	$	1,463,517	$	(130,606	)
Total equity securities	$	356,742	$	(45,153	)	$	—	$	—

43

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Less than 12 months					Equal to or greater than 12 months
December 31, 2014 (U.S. dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities and short-term investments - AFS
U.S. Government and Government-Related/Supported	$	251,091	$	(1,196	)	$	342,890	$	(5,603	)
Corporate – Financials	387,619		(5,858		)	105,155		(7,097		)
Corporate – Non Financials	949,851		(28,023		)	319,066		(8,657		)
RMBS – Agency	134,535		(220		)	512,652		(10,563		)
RMBS – Non-Agency	45,378		(1,358		)	202,700		(16,797		)
CMBS	78,356		(385		)	169,065		(4,877		)
CDOs	249,803		(2,666		)	414,516		(24,503		)
Other asset-backed securities	143,044		(2,813		)	57,544		(3,232		)
U.S. States and political subdivisions of the States	32,187		(210		)	63,695		(994		)
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	624,346		(19,043		)	558,422		(43,251		)
Total fixed maturities and short-term investments - AFS	$	2,896,210	$	(61,772	)	$	2,745,705	$	(125,574	)
Total equity securities	$	191,193	$	(26,230	)	$	—	$	—

The Company had gross unrealized losses totaling $370.0 million on 3,248 securities out of a total of 8,729 held at December 31, 2015 in its AFS Excluding Life Funds Withheld Assets portfolio, which either it considers to be temporarily impaired or with respect to which it reflects non-credit losses on other-than-temporarily impaired assets. Individual security positions comprising this balance have been evaluated by management to determine the severity of these impairments and whether they should be considered other-than-temporary. Management believes it is more likely than not that the issuer will be able to fund sufficient principal and interest payments to support the current amortized cost.

(c) Net Investment Income

Net investment income for the years ended December 31 is derived from the following sources:

(U.S. dollars in thousands)	2015			2014			2013
Fixed maturities, short term investments and cash equivalents - Excluding Life Funds Withheld Assets	$	726,161		$	809,964		$	982,275
Fixed maturities, short term investments and cash equivalents - Life Funds Withheld Assets	187,489			129,575			—
Equity securities and other investments	28,200			42,252			35,388
Interest on funds withheld	10,835			14,583			12,783
Total gross investment income	$	952,685		$	996,374		$	1,030,446
Investment expenses	(80,315		)	(77,749		)	(72,730		)
Total net investment income	$	872,370		$	918,625		$	957,716

44

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(d) Net Realized Gains (Losses)

The following represents an analysis of net realized gains (losses), the change in unrealized gains (losses) on investments and net realized and unrealized gains (losses) on investment related derivative instruments for the years ended December 31:

(U.S. dollars in thousands)	2015			2014			2013
Fixed maturities, short term investments, cash and cash equivalents - Excluding Life Funds Withheld Assets:
Gross realized gains	$	187,523		$	119,817		$	129,479
Gross realized losses on investments sold	(134,441		)	(66,892		)	(84,703		)
OTTI on investments, net of amounts transferred to other comprehensive income	(54,346		)	(12,341		)	(16,282		)
Net realized gains (losses)	$	(1,264	)	$	40,584		$	28,494
Equity securities:
Gross realized gains	$	79,556		$	96,260		$	29,402
Gross realized losses on investments sold	(49,223		)	(12,270		)	(3,185		)
OTTI on investments, net of amounts transferred to other comprehensive income	(15,954		)	(10,944		)	(17		)
Net realized gains (losses)	$	14,379		$	73,046		$	26,200
Other investments:
Gross realized gains	$	39,198		$	31,830		$	46,934
Gross realized losses on investments sold	(19,656		)	(10,011		)	(13,851		)
OTTI on investments, net of amounts transferred to other comprehensive income	(12,660		)	(12,458		)	—
Net realized gains (losses)	$	6,882		$	9,361		$	33,083
Net realized gains (losses) on investments - Excluding Life Funds Withheld Assets	$	19,997		$	122,991		$	87,777
Fixed maturities, short term investments, cash and cash equivalents - Life Funds Withheld Assets:
Gross realized gains	$	259,798		$	7,926		$	—
Gross realized losses on investments sold	(36,526		)	(2,859		)	—
Net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	(27,734		)	(9		)	—
OTTI on investments, net of amounts transferred to other comprehensive income	(13,357		)	(20,587		)	—
Net realized gains (losses) on investments - Life Funds Withheld Assets	$	182,181		$	(15,529	)	$	—
Net realized gains (losses) on investments	$	202,178		$	107,462		$	87,777
Net realized and unrealized gains (losses) on investment related derivative instruments	$	(8,616	)	$	20,121		$	6,367
Net realized gains (losses) on investments and net realized and unrealized gains (losses) on investment related derivative instruments	$	193,562		$	127,583		$	94,144
Change in unrealized gains (losses):
Fixed maturities – AFS - Excluding Life Funds Withheld Assets	$	(486,140	)	$	360,463		$	(913,174	)
Fixed maturities - AFS - Life Funds Withheld Assets	(405,155		)	880,226			—
Fixed maturities – HTM	—			(272,540		)	(175,817		)
Equity securities	(59,619		)	(32,577		)	105,163
Affiliates and other investments	(6,072		)	35,143			26,636
Net change in unrealized gains (losses) on investments	$	(956,986	)	$	970,715		$	(957,192	)
Total net realized gains (losses) on investments, net realized and unrealized gains (losses) on investment related derivative instruments, and net change in unrealized gains (losses) on investments	$	(763,424	)	$	1,098,298		$	(863,048	)

The significant components of OTTI charges of $83.0 million, as defined in Note 2(g), "Significant Accounting Policies - Other-Than-Temporary Impairments of Available for Sale," for investments excluding Life Funds Withheld Assets for the year ended December 31, 2015 were:

▪ $19.4 million related to change of intent to hold Corporate high yield securities.

▪ $16.0 million related to certain equities that were in a loss position for more than 11 months or impaired by more than 50%.

▪ $8.7 million related to other investments.

45

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

▪ $8.0 million for structured securities, principally CDOs that we no longer intend to hold for a period sufficient to recover their fair value to amortized cost.

▪ $4.0 million related to hedge funds, included in other investments, that were in a loss position for more than 11 months.

▪ $2.0 million related to certain quasi-government securities that we no longer intend to hold for a period sufficient to recover their fair value to amortized cost.

▪ $1.3 million for structured securities, principally non-Agency RMBS, where we determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.

▪ $23.6 million related to foreign exchange losses.

The significant components of OTTI charges of $35.7 million for investments excluding Life Funds Withheld Assets for the year ended December 31, 2014 were:

▪ $12.5 million related to other investments.

▪ $10.9 million related to certain equities as the holdings were in a loss position for more than 11 months or impaired by more than 50%.

▪ $3.7 million related to change of intent to hold certain Corporate high yield securities.

▪ $4.3 million for structured securities, principally non-Agency RMBS, where we determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.

▪ $4.3 million related to foreign exchange losses.

The following table sets forth the amount of credit loss impairments on fixed income securities, for which a portion of the OTTI loss was recognized in OCI, held by the Company as of the dates or for the periods indicated and the corresponding changes in such amounts.

Credit Loss Impairments (U.S. dollars in thousands)	2015			2014
Opening balance at beginning of indicated period	$	131,942		$	174,805
Credit loss impairment recognized in the current period on securities not previously impaired	9,698			3,907
Credit loss impairments previously recognized on securities which matured, paid down, prepaid or were sold during the period	(54,648		)	(42,671		)
Credit loss impairments previously recognized on securities impaired to fair value during the period	(2,629		)	—
Additional credit loss impairments recognized in the current period on securities previously impaired	2,230			4,185
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected	(13,124		)	(8,284		)
Closing balance at end of indicated period	$	73,469		$	131,942

7. Investments in Affiliates

Investments in affiliates comprised the following at December 31, 2015 and 2014. See Note 2(c), "Significant Accounting Policies - Total Investments - Investments in Affiliates," for a description of our accounting policy for these assets:

(U.S. dollars in thousands)	2015		2014
Investment fund affiliates	$	1,386,837	$	1,219,138
Operating affiliates	322,062		418,482
Total investment affiliates	$	1,708,899	$	1,637,620

(a) Investment Fund Affiliates

The Company has invested in certain hedge funds, including funds managed by certain of its investment manager affiliates, and in certain private equity and private credit funds (collectively, "private investment funds") that are accounted for under the equity method due to our ownership percentages in the limited partnerships, LLCs or other similar investment

46

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

vehicles that form the funds. Collectively, these investments in hedge funds and private investment funds are classified as "investment fund affiliates." At December 31, 2015 and 2014, the hedge fund portfolio, accounted for as hedge fund affiliates, employed four strategies.

The Company’s equity investment in investment fund affiliates and equity in net income (loss) from such affiliates as well as certain summarized financial information of the investee on a combined basis (shown as "Combined Funds") are included below:

Year Ended December 31, 2015 (U.S. dollars in thousands, except percentages)	XL Group Investment						Combined Funds
	Carrying Value		Equity in Net Income (Loss) for the Year		Weighted Average XL Percentage Ownership
							Total Net Assets (Estimated) (1)
Hedge Funds:
Arbitrage	$	190,016	$	612	8.6	%	$	2,202,112
Directional	551,262		31,012		7.2	%	7,643,134
Event Driven (2)	285,823		5,592		3.0	%	9,460,387
Multi-Style	57,097		5,452		3.6	%	1,600,959
Total hedge funds	$	1,084,198	$	42,668	5.2	%	$	20,906,592
Private Investment Funds:	302,639		30,652		9.5	%	3,195,204
Total Investment Fund Affiliates	$	1,386,837	$	73,320	5.8	%	$	24,101,796
Year Ended December 31, 2014
Hedge Funds:
Arbitrage	$	134,400	$	12,060	11.0	%	$	1,224,526
Directional	536,470		32,196		9.2	%	5,865,247
Event Driven (2)	300,168		21,030		3.1	%	9,703,973
Multi-Style	52,122		1,751		4.1	%	1,278,410
Total hedge funds	$	1,023,160	$	67,037	5.7	%	$	18,072,156
Private Investment Funds:	195,978		28,779		17.7	%	1,105,776
Total Investment Fund Affiliates	$	1,219,138	$	95,816	6.4	%	$	19,177,932

____________

(1) Total estimated net assets are generally as at November 30 for hedge fund affiliates and September 30 for private investment fund affiliates.

(2) The Company accounts for its investment in certain funds where the ownership percentage is less than three percent using the equity method, where the Company has significant influence over the related investment management company.

In general, the hedge funds in which the Company is invested require at least 30 days notice of redemption, and may be redeemed on a monthly, quarterly, semi-annual, annual or longer basis, depending on the fund. Certain hedge funds have a lock-up period and/or may also have the ability to impose a redemption gate. A lock-up period refers to the initial amount of time an investor is contractually required to remain invested before having the ability to redeem. Typically, the imposition of a gate delays a portion of the requested redemption, with the remaining portion settled in cash shortly after the redemption date.

The carrying value of the Company’s holdings in hedge fund affiliates that are subject to lockups and/or that have gate provisions in their governing documents at December 31, 2015 and 2014 was $382.0 million and $543.0 million, respectively.

Certain hedge funds may be allowed to invest a portion of their assets in illiquid securities, such as private equity or private debt. In such cases, a common mechanism used is a side-pocket, whereby the illiquid security is assigned to a separate memorandum capital account or other designated account. Typically, the investor loses its redemption rights in the designated account. Only when the illiquid securities in the side-pocket are sold, or otherwise deemed liquid by the fund, may investors redeem that portion of their interest that has been "side-pocketed." At December 31, 2015 and 2014, the carrying value of our hedge fund affiliates held in side-pockets was $18.2 million and $22.2 million, respectively. The underlying assets within these positions are generally expected to be liquidated over a period of approximately two to four years.

(b) Operating Affiliates

The Company has invested in strategic (re)insurance affiliates and investment management companies’ securities or other forms of direct ownership interests across the capital structure. Collectively, these investments are classified as "operating affiliates."

47

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The Company’s equity investment in operating affiliates and equity in net income (loss) from such affiliates as well as certain summarized financial information of the investee as a whole are included below:

Year ended December 31, 2015 (U.S. dollars in thousands)	XL Group Investment				Combined Investee Summarized Financial Data (Estimated) (2)
	Carrying Value		Equity in Net Income (Loss) for the Year		Total Assets		Total Liabilities		Total Revenue (Loss)		Net Income (Loss)
Strategic and other operating affiliates	$	251,348	$	33,608	$	4,280,976	$	3,293,873	$	847,131	$	91,701
Investment manager affiliates (1)	70,714		11,132		708,605		95,826		206,672		90,491
Total operating affiliates	$	322,062	$	44,740	$	4,989,581	$	3,389,699	$	1,053,803	$	182,192
Year ended December 31, 2014
Strategic and other operating affiliates	317,216		50,132		4,679,395		3,691,173		1,075,935		152,122
Investment manager affiliates (1)	101,266		57,086		850,666		101,088		579,524		476,841
Total operating affiliates	$	418,482	$	107,218	$	5,530,061	$	3,792,261	$	1,655,459	$	628,963

____________

(1) During the years ended December 31, 2015 and 2014, the Company received distributions from its Investment Manager Affiliates of approximately $25.3 million and $60.3 million, respectively.

(2) Total assets and total liabilities reflect balances related to investees still held at December 31, 2015 and 2014, respectively. Total revenue (loss) and net income (loss) reflect activity for the years ended December 31, 2015 and 2014 related to both investees still held at year-end and investees disposed of during the year.

In certain investments, the carrying value is different from the share of the investee’s underlying net assets. The differences represent goodwill on acquisition, OTTI recorded with respect to the investment, or differences in the retained capital accounts of the various equity holders (including the Company).

See Note 17(c), "Commitments and Contingencies - Investments in Affiliates," for further information regarding commitments related to investment in affiliates.

Strategic and Other Operating Affiliates

At December 31, 2015, the Company’s larger strategic and other operating affiliates included Privilege Underwriters, Inc. and its affiliates ("PURE Group"), Westaim HIIG LP ("Westaim HIIG"), Five Oaks Investment Corp ("Five Oaks") and CATGS I, LLC.

On December 15, 2014, the Company announced it had entered into a Stock Purchase Agreement to sell its interests in one of its largest strategic and other operating affiliates, ARX, to The Progressive Corporation ("Progressive"). For further information, see Note 3(d), "Acquisitions and Disposals - Sale of Operating Affiliate."

In the fourth quarter of 2015, the Company made investments totaling $102.5 million related to the PURE Group, an insurance provider specializing in products for high net worth individuals. The PURE Group investments consisted of: (i) a $77.5 million purchase of 9.9% of the ordinary common units and preferred units of Privilege Group Holdings LP, and 9.9% of the units of Privilege Group Holdings GP, LLC; and (ii) a $25.0 million purchase, at par value, of a ten year surplus note issued by Privilege Underwriters Reciprocal Exchange. Under the terms of an agreement between the parties, the PURE Group has the option to require the Company to purchase up to $50.0 million of additional ten year surplus notes, at par, over a commitment period expiring no later than November 2020.

The Company has an investment of $32.7 million, representing 13.1% ownership in Westaim HIIG. The primary purpose of Westaim HIIG is to invest in interests of Houston International Insurance Group ("HIIG"), a specialty insurance provider. Westaim HIIG holds a majority interest of the common stock of HIIG.

The Company has an investment of $33.2 million, representing 21.9% ownership in Five Oaks, a mortgage real estate investment trust that is focused on investing in, financing and managing a leveraged portfolio of agency and non-agency residential mortgage-backed securities, residential mortgage loans and other mortgage-related investments. In addition, Company holds warrants to purchase an additional 3.125 million shares at $15.75 per share, which would result in a total additional investment of $49.2 million by the Company should it exercise the warrants in full in the future. The warrants expire in September 2019.

The Company has an investment of $22.1 million, representing 50.0% ownership in CATGS I, LLC. The remaining 50.0% is held by on other investor. The Company does not control the entity, whose primary purpose is the purchase and leasing of equipment.

48

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Investment Manager Affiliates

During the years ended December 31, 2015, 2014 and 2013, the Company’s larger investment manager affiliates included Highfields Capital, a global equity investment firm, and Polar Capital, an investment firm offering traditional and alternative products.

8. Other Investments

Other investments comprised the following at December 31, 2015 and 2014. See Note 2(c), "Significant Accounting Policies - Total Investments - Other Investments," for a description of our accounting policy for these assets:

Year ended December 31, (U.S. dollars in thousands)	2015		2014
Hedge Funds:
Arbitrage	$	205,117	$	179,821
Directional	276,277		336,082
Event Driven	5,427		56,238
Multi-Style	57,249		68,706
Total hedge funds	$	544,070	$	640,847
Private investment funds	244,576		129,243
Overseas deposits	479,187		92,223
Structured transactions	138,608		350,563
Other	26,616		35,563
Total other investments	$	1,433,057	$	1,248,439

(a) Hedge Funds and Private Investment Funds

At December 31, 2015 and 2014, the hedge fund portfolio, accounted for as other investments, employed four strategies.

In general, the funds in which the Company is invested require at least 30 days notice of redemption, and may be redeemed on a monthly, quarterly, semi-annual, annual or longer basis, depending on the fund.

Certain hedge funds have a lock-up period and/or may also have the ability to impose a redemption gate. A lock-up period refers to the initial amount of time an investor is contractually required to remain invested before having the ability to redeem. Typically, the imposition of a gate delays a portion of the requested redemption, with the remaining portion settled in cash shortly after the redemption date.

The fair value of the Company’s holdings in hedge funds that may be subject to lockups and/or that have gate provisions in their governing documents at December 31, 2015 and 2014 was $399.6 million and $425.7 million, respectively. The Company did not have any holdings in funds where a gate was imposed at December 31, 2015 or 2014.

Certain hedge funds may be allowed to invest a portion of their assets in illiquid securities, such as private equity or private debt. In such cases, a common mechanism used is a side-pocket, whereby the illiquid security is assigned to a separate memorandum capital account or other designated account. Typically, the investor loses its redemption rights in the designated account. Only when the illiquid securities in the side-pocket are sold, or otherwise deemed liquid by the fund, may investors redeem that portion of their interest that has been "side-pocketed". At December 31, 2015 and 2014, the fair value of hedge funds held in side-pockets was $26.0 million and $24.5 million, respectively. The underlying assets within these positions are generally expected to be liquidated over a period of approximately two to four years.

The following represents an analysis of the net realized gains for the indicated years ended December 31, and the net unrealized gains as of December 31, on the Company’s hedge funds and private investment funds:

Year ended December 31, (U.S. dollars in thousands)	Net Unrealized Gains (Losses)				Net Realized Gains (Losses)
	2015		2014		2015		2014		2013
Hedge funds	$	188,698	$	188,674	$	12,769	$	6,685	$	30,858
Private investment funds	38,340		42,604		9,342		13,275		4,331
Total	$	227,038	$	231,278	$	22,111	$	19,960	$	35,189

49

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(b) Overseas Deposits

Overseas deposits include investments in private funds related to Lloyd’s syndicates in which the underlying instruments are primarily government and government-related/supported and corporate fixed income securities. The funds themselves do not trade on an exchange and therefore are not included within available for sale securities. Also included in overseas deposits are restricted cash and cash equivalent balances held by Lloyd’s syndicates for solvency purposes. Given the restricted nature of these cash balances, they are not included within the cash and cash equivalents category in the balance sheets.

(c) Structured Transactions

National Indemnity Endorsement

On June 9, 2009, XL Specialty Insurance Company ("XL Specialty"), a wholly-owned subsidiary of the Company, entered into an agreement with National Indemnity Company, an insurance company subsidiary of Berkshire Hathaway Inc. ("National Indemnity"). Under the agreement, and a related reinsurance agreement, National Indemnity agreed to issue endorsements to certain directors and officers liability insurance policies known as "Side A" coverage policies underwritten by XL Specialty (the "Facility") during an eighteen month period that ended in December 31, 2011.

In connection with the Facility, XLIB purchased a payment obligation (the "Obligation") in an aggregate principal amount of $150.0 million from National Indemnity. The outstanding Obligation was recorded in other investments at an estimated fair value of $128.1 million, pays a coupon of 3.5%, and is being accreted to $150.0 million over the 11.5 years term of the payment obligation. The difference between the estimated fair value of the Obligation and the cost of that Obligation at the time of the transaction was approximately $21.9 million and was recorded in Other Assets. This difference, together with fees of $2.5 million, was amortized in relation to the earning of the underlying policies written.

Other Structured Transactions

On July 17, 2009, XLIB purchased notes with an aggregate face amount of $155.0 million. The carrying value of these notes at December 31, 2014 was $136.0 million. On October 29, 2014, XLIB, a wholly-owned subsidiary of the Company, purchased notes with an aggregate face amount of $81.9 million. The carrying value of these notes at December 31, 2014 was $77.8 million. The issuer of both series of notes is a structured credit vehicle that holds corporate debt and preferred equity securities, including some securities issued by European financial institutions, as well as project finance debt securities, among other assets. During the years ended December 31, 2015 and 2014, the Company recorded losses of $8.6 million and $12.5 million, respectively, due to other than temporary declines in value of these investments. During the fourth quarter of 2015, XLIB entered into transactions whereby it acquired the underlying corporate debt and preferred equity securities in return for the cancellation of the notes. The newly acquired securities are included in our available for sale fixed maturities and equity securities portfolios. In connection with the cancellation of the notes, the Company recorded realized investment losses of $6.7 million.

These structured transactions were not required to be measured at fair value under GAAP and, accordingly, they have been excluded from the fair value measurement disclosures at December 31, 2014. See Note 4, "Fair Value Measurements," for details surrounding the estimated fair value of these investments.

See Note 17(b), "Commitments and Contingencies - Other Investments," for further information regarding commitments related to other investments.

50

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

9. Goodwill and Other Intangible Assets

The following table presents an analysis of intangible assets broken down between goodwill, intangible assets with an indefinite life and intangible assets with a definite life for the years ended December 31, 2015, 2014 and 2013:

(U.S. dollars in thousands)	Goodwill			Intangible assets with an indefinite life			Intangible assets with a definite life			Total
Balance at December 31, 2012	$	392,882		$	15,366		$	279		$	408,527
Amortization	—			—			(279		)	(279		)
Foreign currency translation	3,363			—			—			3,363
Balance at December 31, 2013	$	396,245		$	15,366		$	—		$	411,611
Additions	25,159			—			18,500			43,659
Amortization	—			—			(1,850		)	(1,850		)
Foreign currency translation	(5,468		)	—			—			(5,468		)
Balance at December 31, 2014	$	415,936		$	15,366		$	16,650		$	447,952
Additions	807,381			673,000			315,000			1,795,381
Amortization	—			—			(15,517		)	(15,517		)
Foreign currency translation	(9,687		)	(5,507		)	(2,356		)	(17,550		)
Balance at December 31, 2015	$	1,213,630		$	682,859		$	313,777		$	2,210,266

Goodwill

At December 31, 2015 and 2014, the Company had goodwill of $1.2 billion and 415.9 million, respectively. At December 31, 2015, $479.5 million and $734.2 million were allocated to the Insurance and Reinsurance segments, respectively. The entire balance of $415.9 million at December 31, 2014 was allocated to the Reinsurance segment.

In the third quarter of 2015, as a result of the transaction described in Note 3(b), "Acquisitions and Disposals - New Energy Risk," the Company recognized additional goodwill of approximately $13.4 million. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets acquired and liabilities assumed at their acquisition date fair values, and recorded as goodwill the excess of the sum of a) over b) - in which a) represents the aggregate of: i) the consideration transferred, ii) the fair value of noncontrolling interest in the acquiree, and iii) the acquisition-date fair value of the Company's previously held equity interest in the acquiree; and b) represents the net assets acquired in the transaction.

In the second quarter of 2015, as a result of the transaction described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the Company recognized additional goodwill and other intangible assets. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets acquired, including indefinite-lived and definite-lived intangible assets, and liabilities assumed, at their Acquisition Date fair values, and recorded the excess of consideration transferred over the net assets acquired as goodwill.

During the first quarter of 2014, Goodwill and Other Intangible Assets increased as a result of the completion of an acquisition. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets and liabilities at their acquisition date fair values, and recorded the excess of consideration transferred over the net assets acquired as goodwill and intangible assets. The fair value of identifiable assets and liabilities acquired, as well as amounts recorded in the Company’s consolidated results since the acquisition date, are not material.

The estimated fair values of the reporting units’ carried goodwill exceeded their estimated net book values at December 31, 2015, and therefore no impairments were recorded during 2015. At December 31, 2015 and 2014, the ending goodwill balance is comprised of gross goodwill of $2.6 billion and $1.8 billion, respectively, offset by accumulated impairment charges of $1.4 billion at December 31, 2015 and 2014. For further details regarding our impairment process, see Note 2(k), "Significant Accounting Policies - Goodwill, Intangibles and Other Long-Lived Assets."

51

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Other Intangible Assets

At December 31, 2015 and 2014, the ending definite-lived intangible assets balance is comprised of $333.5 million and $18.5 million, respectively, of gross intangible assets, offset by accumulated amortization of $17.4 million and $1.9 million, respectively. Future amortization expenses are expected to be as follows:

Year Ended December 31, (U.S. dollars in thousands)
2016	$	22,350
2017	19,017
2018	17,350
2019	17,350
2020	17,350
2021-2036	220,360
Total expected amortization expenses	$	313,777

The following table summarizes the intangible assets and their related useful lives recorded in connection with the Catlin Acquisition, as described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," as of the Acquisition Date:

(U.S. dollars in thousands)	Amount		Estimated Useful Life
Lloyd's - Syndicate capacity	$	660,000	Indefinite
Insurance licenses	13,000		Indefinite
Total identified indefinite life intangible assets	$	673,000
Lloyd's - Managing agent contracts	15,000		15 years
Distribution network	290,000		20 years
Trademarks / Trade names	10,000		2 years
Total identified definite life intangible assets	$	315,000
Total identified intangible assets	$	988,000

An explanation of the intangible assets is as follows:

• Lloyd's syndicate capacity - This asset represents the syndicate capacity of two Lloyd's syndicates allowing the Company to write insurance business in the Lloyd's market globally and realize the profits from that business. The value of the syndicate capacity includes the reputational value of participation in the Lloyd's market, and the value of trade names and licenses associated with syndicate ownership. The syndicate capacity was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Critical inputs into the valuation model used for this intangible included estimates of the future growth of syndicate authorized premium income limits (ie, capacity) and expected return on that capacity and discounting based on a weighted average cost of capital.

• Insurance licenses - The insurance licenses owned by Catlin at the time of the Catlin Acquisition allow the Company to write insurance business in the United States. The insurance licenses were valued using the Market Approach. Critical inputs utilized in the valuation of this intangible were the number of licenses obtained by US state and an aggregate market value per license based on similar past market transactions.

• Lloyd's managing agent contracts - As the managing agent for certain Lloyd's syndicates, the Company has contracts with the syndicate members to provide underwriting services for which it earns managing agent fees and a profit commission. The managing agent contracts were based on the Income Approach. Critical inputs utilized in the valuation of this intangible included expected contract fee and profit commission rates applied to future managed syndicate capacity, contract renewal probabilities over a time horizon and discounting based on a weighted average cost of capital.

• Distribution network - This asset represents a network of hundreds of retail and wholesale brokers worldwide, including specialty and regional brokerages, which allow the Company to form closer relationships with clients and aids business retention. The distribution network was valued using the Multi-Period Excess Earnings Method, an application of the Income Approach. Critical inputs into the valuation model used for this intangible included projections of underwriting profitability and investment returns, supporting capital charges, and discounting based on a weighted average cost of capital.

• Trademarks / Trade names - The Catlin trademarks / trade names are utilized to attract customers for the turnkey solutions provided under the Company's managing agent contracts and to generate premiums from the non-Lloyd's

52

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

platform underwriting products for which the Catlin brand is known. The trademarks and trade names were based on the Relief-from-Royalty Method, an application of the Income Approach. Critical inputs used in the valuation of this intangible included industry-based market royalty rates on premium revenues to be generated through use of the trademarks/trade names, expected useful life over which the company expects to co-brand under the trademarks/trade names and discounting based on a weighted average cost of capital.

10. Reinsurance

The Company utilizes reinsurance and retrocession agreements principally to increase aggregate capacity and to reduce the risk of loss on business assumed. The Company’s reinsurance and retrocession agreements provide for recovery of a portion of losses and loss expenses from reinsurers, and reinsurance recoverables are recorded as assets. The Company is liable if the reinsurers are unable to satisfy their obligations under the agreements. Under its reinsurance security policy, the Company seeks to cede business to reinsurers generally with a financial strength rating of "A" or better. The Company considers reinsurers that are not rated or do not fall within the above rating categories and may grant exceptions to the Company’s general policy on a case-by-case basis. The effect of reinsurance and retrocessional activity on premiums written and earned from property and casualty operations is shown below:

(U.S. dollars in thousands)	Premiums Written Year Ended December 31,									Premiums Earned Year Ended December 31,
	2015			2014			2013			2015			2014			2013
Direct	$	7,847,236		$	5,450,868		$	5,050,953		$	7,717,173		$	5,173,403		$	4,966,207
Assumed	2,821,771			2,310,621			2,365,839			3,465,421			2,343,329			2,363,261
Ceded	(2,780,183		)	(1,994,280		)	(1,512,810		)	(3,018,410		)	(1,799,294		)	(1,315,369		)
Net	$	7,888,824		$	5,767,209		$	5,903,982		$	8,164,184		$	5,717,438		$	6,014,099

The Company recorded reinsurance recoveries on losses and loss expenses incurred of $1.6 billion, $0.7 billion and $0.7 billion for the years ended December 31, 2015, 2014 and 2013, respectively.

The following table presents an analysis of total unpaid losses and loss expenses recoverable for the years ended December 31:

(U.S. dollars in thousands)	2015		2014
P&C Operations	$	5,248,905	$	3,411,528
Corporate and Other	13,801		17,840
Total unpaid losses and loss expenses recoverable	$	5,262,706	$	3,429,368

The table above excludes a combined $3.7 billion and $0.3 billion of the Company's future policy benefit reserve recoverables under the GreyCastle Life Retro Arrangements and U.S. Term Life Retro Arrangements, as defined in Note 13, "Future Policy Benefit Reserves," respectively, and are also excluded from the remainder of this disclosure.

At December 31, 2015 and 2014, the total reinsurance assets of $5.7 billion and $3.6 billion, respectively, included reinsurance receivables for paid losses and loss expenses of $418.7 million and $131.5 million, respectively, with $5.3 billion and $3.4 billion relating to the ceded reserve for losses and loss expenses, including ceded losses incurred but not reported for each year end. Although the contractual obligation of individual reinsurers to pay their reinsurance obligations is based on specific contract provisions, the collectibility of such amounts requires significant estimation by management. The majority of the balance the Company has accrued as recoverable will not be due for collection until sometime in the future. Over this period of time, economic conditions and operational performance of a particular reinsurer may impact its ability to meet these obligations and, while it may continue to acknowledge its contractual obligation to do so, it may not have the financial resources or willingness to fully meet its obligations to the Company.

At December 31, 2015 and 2014, the allowance for uncollectible reinsurance relating to both reinsurance balances receivable and unpaid losses and loss expenses recoverable was $82.1 million and $64.4 million, respectively. To estimate the provision for uncollectible reinsurance recoverable, the reinsurance recoverable must first be allocated to applicable reinsurers. As part of this process, ceded IBNR is allocated by reinsurer. The allocations are generally based on historical relationships between gross and ceded losses. If actual experience varies materially from historical experience, the allocation of reinsurance recoverable by reinsurer will change.

The Company uses a default analysis to estimate uncollectible reinsurance recoverables. The primary components of the default analysis are reinsurance recoverable balances by reinsurer, net of collateral, and default factors used to determine the portion of a reinsurer’s balance deemed uncollectible. The definition of collateral for this purpose requires some judgment and

53

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

is generally limited to assets held in trust, letters of credit, and liabilities held by the Company with the same legal entity for which the Company believes there is a right of offset. The Company is the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $3.8 billion and $2.0 billion at December 31, 2015 and 2014, respectively, collateralizing reinsurance recoverables with respect to certain reinsurers.

Default factors require considerable judgment and are determined using the current financial strength rating, or rating equivalent, of each reinsurer as well as other key considerations and assumptions. The total allowance recorded relating to reinsurance recoverables was $58.2 million and $42.3 million at December 31, 2015 and 2014, respectively.

The Company uses an aging analysis to estimate uncollectible reinsurance balances receivable relating to paid losses in addition to recording allowances relating to any specific balances with known collectibility issues, irrespective of aging. The balances are aged from the date the expected recovery was billed to the reinsurer. Provisions are applied at specified percentages of the outstanding balances based upon the aging profile. Allowances otherwise required as a result of the aging process may not be recorded to the extent that specific facts and circumstances exist that lead management to believe that amounts will ultimately be collectible. The total allowance recorded relating to reinsurance balances receivable was $23.9 million and $22.1 million at December 31, 2015 and 2014, respectively.

At December 31, 2015, the use of different assumptions within the model could have a material effect on the bad debt provision reflected in the Company’s Consolidated Financial Statements. To the extent the creditworthiness of the Company’s reinsurers was to deteriorate due to an adverse event affecting the reinsurance industry, such as a large number of major catastrophes, actual uncollectible amounts could be significantly greater than the Company’s bad debt provision. Such an event could have a material adverse effect on the Company’s financial condition, results of operations, and cash flows.

At December 31, 2015 and 2014, approximately 96% and 93%, respectively, of the total outstanding unpaid loss and loss expense recoverable and reinsurance balances receivable, net of collateral held, was due from reinsurers with a financial strength rating of "A" or better. The following is an analysis of the total recoverable and reinsurance balances receivable, net of collateral held, at December 31, 2015, by reinsurers owing 3% or more of such total:

Name of Reinsurer	Reinsurer Financial Strength Rating	% of Total
Munich Reinsurance Co.	AA-/Stable	26.1	%
Lloyd's Syndicates	A+/Stable	11.7	%
Swiss Reinsurance Co.	AA-/Stable	6.8	%
Swiss Re Europe S.A.	AA-/Stable	4.9	%
Transatlantic Reinsurance Company	A+/Stable	4.3	%
Arch Reinsurance Company	A+/Stable	3.0	%

The following table sets forth the ratings profile of the reinsurers that support the unpaid loss and loss expense recoverable and reinsurance balances receivable, net of collateral, at December 31, 2015:

Reinsurer Financial Strength Rating	% of Total
AAA	3.0	%
AA	45.8	%
A	47.2	%
BBB	0.5	%
BB and below	0.7	%
Captives	2.7	%
Not Rated	0.1	%
Total	100.0	%

11. Losses and Loss Expenses

Unpaid losses and loss expenses for the indicated years ended December 31 are comprised of:

(U.S. dollars in thousands)	2015		2014
Reserve for reported losses and loss expenses	$	10,293,448	$	7,461,444
Reserve for losses incurred but not reported	15,146,296		11,891,799
Unpaid losses and loss expenses	$	25,439,744	$	19,353,243

54

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Net losses and loss expenses incurred for the years indicated are comprised of:

(U.S. dollars in thousands)	2015			2014			2013
Loss and loss expenses payments	$	6,505,075		$	4,499,642		$	4,496,802
Change in unpaid losses and loss expenses	(168,263		)	(514,406		)	(71,901		)
Change in unpaid losses and loss expenses recoverable	(440,189		)	(48,536		)	(24,774		)
Paid loss recoveries	(1,130,423		)	(678,307		)	(668,663		)
Net losses and loss expenses incurred	$	4,766,200		$	3,258,393		$	3,731,464

The following table represents an analysis of the Company’s paid and unpaid losses and loss expenses incurred and a reconciliation of the beginning and ending unpaid losses and loss expenses for the years indicated:

(U.S. dollars in thousands)	2015			2014			2013
Unpaid losses and loss expenses at the beginning of the year	$	19,353,243		$	20,481,065		$	20,484,121
Unpaid losses and loss expenses recoverable	3,411,528			3,414,735			3,361,703
Net unpaid losses and loss expenses at the beginning of the year	$	15,941,715		$	17,066,330		$	17,122,418
Acquired reserves	5,439,876			—			—
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	5,072,830			3,513,465			4,021,353
Prior year	(306,630		)	(255,072		)	(289,889		)
Total net incurred losses and loss expenses	$	4,766,200		$	3,258,393		$	3,731,464
Exchange rate effects	(582,300		)	(561,673		)	40,587
Less net losses and loss expenses paid in respect of losses occurring in:
Current year	1,047,277			381,008			425,254
Prior year	4,327,375			3,440,327			3,402,885
Total net paid losses	$	5,374,652		$	3,821,335		$	3,828,139
Net unpaid losses and loss expenses at the end of the year	20,190,839			15,941,715			17,066,330
Unpaid losses and loss expenses recoverable	5,248,905			3,411,528			3,414,735
Unpaid losses and loss expenses at the end of the year	$	25,439,744		$	19,353,243		$	20,481,065

(a) Prior year net losses incurred

The following table presents the net (favorable) adverse prior year loss development of the Company’s loss and loss expense reserves for its property and casualty operations by operating segment for each of the years indicated:

(U.S. dollars in thousands)	2015			2014			2013
Insurance segment	$	(65,030	)	$	(99,758	)	$	(102,039	)
Reinsurance segment	(241,600		)	(155,314		)	(187,850		)
Total	$	(306,630	)	$	(255,072	)	$	(289,889	)

The significant developments in prior year loss reserve estimates for each of the years indicated within the Company’s Insurance and Reinsurance segments are discussed below.

Insurance Segment

The following table summarizes the net (favorable) adverse prior year development by line of business relating to the Insurance segment for the indicated years ended December 31:

(U.S. dollars in thousands)	2015			2014			2013
Professional	$	5,763		$	17,097		$	75,045
Casualty	(11,949		)	38,414			(21,829		)
Property	25,189			(57,470		)	(46,387		)
Specialty	(120,879		)	(82,756		)	(140,740		)
Other	36,846			(15,043		)	31,872
Total	$	(65,030	)	$	(99,758	)	$	(102,039	)

55

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Net favorable prior year development of $65.0 million for the Insurance segment for the year ended December 31, 2015 was attributable to the following:

• For professional lines, net prior year development was $5.8 million unfavorable. Strengthening in the U.S. standard commercial and select accountants and public entities portfolios were largely offset by releases in the Bermuda standard commercial and design architects and engineers portfolios.

• For casualty lines, net prior year development was $11.9 million favorable. This was driven by releases of $24.5 million in the excess casualty book, predominantly on the Bermuda portfolio, and $24.0 million in International casualty reflecting the better than expected loss experience reported across most accident years. These reductions were partially offset by deteriorations of $31.2 million in excess and surplus lines casualty book.

• For property lines, net prior year development was $25.2 million unfavorable driven by worse than expected loss experience reported for the non-catastrophe exposures in the International construction and North America portfolios totaling $53.1 million. These deteriorations were partially offset by a reduction of $29.6 million in the International energy book to reflect better than expected attritional loss experience.

• For specialty lines, net prior year development was $120.9 million favorable driven by releases of $60.8 million in the marine business and $18.8 million in the discontinued Bermuda political risk portfolio, the latter arising predominantly from the favorable settlement of a loss on the 2009 accident year and the lapse of the exposure for this account. There were further reductions of $14.8 million in the discontinued specialty book to reflect better than expected loss experience reported primarily on the 2002 and 2003 accident years and $15.2 million and $7.1 million to reflect favorable experience in aerospace and crisis management, respectively.

• For other lines, net prior year development was $36.8 million unfavorable driven by a $25.4 million strengthening in the excess and surplus book due to worse than expected loss experience reported on the New York Contractors general liability business, predominantly on the 2013 and prior accident years. This was compounded by a strengthening of a $18.3 million in the surety book relating to a large claim impacting the 2013 and 2014 accident years. These deteriorations were partially offset by a $10.1 million reduction in the discontinued structured indemnity book due to the favorable settlement of a large claim.

Net favorable prior year reserve development totaled $99.8 million for the Insurance segment for the year ended December 31, 2014. Specialty benefited from a release in aerospace and the discontinued international political risk portfolio due to better than expected loss experience reported. Better than expected loss experience reported for the non-catastrophe exposures primarily in the 2013 accident year led to a release in property. Casualty experienced strengthenings in the U.S. environmental portfolio, Lloyd's middle market book and the U.S. primary casualty lines due to worse than expected loss experience from 2008 through 2013, while a strengthening in the core U.S. standard commercial book drove a strengthening in Professional.

Net favorable prior year reserve development totaled $102.0 million for the Insurance segment for the year ended December 31, 2013. Specialty benefited from releases in aerospace, marine and specie, due primarily to reflecting the better than expected loss experience reported predominantly across the 2005 and later accident years, plus a reduction in the Bermuda discontinued political risk book as a result of a review of the open claims and remaining exposure. Better than expected loss experience reported for non-catastrophe exposures primarily in the 2012 accident year led to a release in property, while casualty benefited from better than expected loss experience in the excess casualty book, partially offset by adverse development in the U.S. environmental book and worse than expected loss experience in the Lloyd's middle market book. Worse than expected loss experience in the U.S. standard commercial and international professional books led to a strengthening of reserves in professional, as well as deterioration in the discontinued environmental book impacting casualty and the discontinued surety book in other lines.

There is no assurance that conditions and trends that have affected the development of liabilities in the past will continue. Accordingly, it may not be appropriate to extrapolate future redundancies or deficiencies based on the Company’s historical results.

56

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Reinsurance Segment

The following table summarizes the net (favorable) adverse prior year development by line of business relating to the Reinsurance segment for the indicated years ended December 31:

(U.S. dollars in thousands)	2015			2014			2013
Property and other short-tail lines	$	(173,754	)	$	(85,324	)	$	(136,912	)
Casualty and other	(67,846		)	(69,990		)	(50,938		)
Total	$	(241,600	)	$	(155,314	)	$	(187,850	)

Net favorable prior year reserve development for the Reinsurance segment of $241.6 million for the year ended December 31, 2015 was attributable to the following:

• Net favorable prior year development for the short-tailed lines totaled $173.8 million. Details of the significant components are as follows:

◦ For property catastrophe lines, net prior year development was $50.3 million favorable due to reductions on a number of catastrophe losses and better than expected development on attritional losses, mainly in Europe, Middle East & Africa ("EMEA") and Latin America & Credit.

◦ For property other lines, net prior year development was $88.9 million favorable primarily due to better than expected attritional loss development across all books.

◦ For specialty lines, net prior year development was $34.6 million favorable due to better than expected attritional loss development mainly in EMEA and reductions on catastrophe and large losses.

• Net favorable prior year development for the long-tailed lines totaled $67.8 million. Details of the significant components are as follows:

◦ For casualty lines, net prior year development was $40.1 million favorable due to better than expected attritional loss development in London, EMEA and reductions on a 2001 and a 2009 large loss being partially offset by worse than expected attritional loss development in North America and a strengthening on two 2008 large losses.

◦ For other lines, net prior year development was $27.8 million favorable due to better than expected development on attritional losses mainly from whole account business written in Bermuda and London.

Net favorable prior year reserve development totaled $155.3 million for the year ended December 31, 2014. The short-tailed lines benefited from $63.4 million in favorable development from property other lines and $34.4 million in favorable marine and aviation development, partially offset by unfavorable property catastrophe development of $12.4 million. The release in long tail lines was due to favorable development of $44.3 million and $25.7 million in casualty and other, respectively.

Net favorable prior year reserve development totaled $187.9 million for the year ended December 31, 2013. The short-tailed lines benefited from $60.0 million in favorable property catastrophe development, $57.3 million in favorable property other lines releases and $19.6 million in favorable marine and aviation development. The release in long-tailed lines was due to $72.2 million in favorable casualty development partially offset by $21.3 million in unfavorable other lines development.

The nature of the Company’s high excess of loss liability and catastrophe business can result in loss events that are both irregular and significant. Similarly, adjustments to reserves for individual years can be irregular and significant. Such adjustments are part of the normal course of business for the Company. There is no assurance that conditions and trends that have affected the development of liabilities in the past will continue. Accordingly, it may not be appropriate to extrapolate future redundancies or deficiencies based on the Company’s historical results.

(b) Loss Reserve Discounting

Except for certain workers’ compensation (including long term disability) liabilities and certain bodily injury liability claims, emanating from U.K. exposures, predominantly from the U.K. motor liability portfolio, the Company does not discount its unpaid losses and loss expenses.

The Company utilizes tabular reserving for workers’ compensation (including long-term disability) unpaid losses that are considered fixed and determinable, and discounts such losses using interest rates of 3.75% in 2015 and 5% in 2014. The reduction of the discount rate resulted from estimating the implied return of the market-based assets supporting the expected cash flows of our liabilities. The tabular reserving methodology results in applying uniform and consistent criteria for establishing expected future indemnity and medical payments (including an explicit factor for inflation) and the use of mortality

57

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

tables to determine expected payment periods. Tabular unpaid losses and loss expenses, net of reinsurance, at December 31, 2015 and 2014 on an undiscounted basis were $747.4 million and $515.4 million, respectively. The related discounted unpaid losses and loss expenses were $445.3 million and $266.4 million at December 31, 2015 and 2014, respectively. The significant increase in the reserves is due to the Catlin Acquisition, and the reserves assumed as a result of that transaction. See Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," for further information.

The Company records a specific reserve allowance for Periodical Payment Orders ("PPO") related to bodily injury liability claims. This allowance includes the unpaid losses for claims already settled and notified as PPO at December 31, 2015, as well as the unpaid losses for claims to be settled in the future. The future care element of the unpaid losses was discounted using interest rates of 2.0% and 1.5% at both December 31, 2015 and 2014, respectively. Unpaid losses and loss expenses, net of reinsurance, at December 31, 2015 and 2014 on an undiscounted basis were $298.1 million and $249.8 million, respectively. After discounting the future care element, the unpaid losses and loss expenses were $167.9 million and $161.0 million at December 31, 2015 and 2014, respectively. The increase in the reserves is due to the Catlin Acquisition, and the reserves assumed as a result of that transaction. See Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," for further information. The increase is partially offset by the increase in the discount rate used.

The nature of the Company's high excess of loss liability and catastrophe business can result in loss events that are both irregular and significant. Similarly, adjustments to reserves for individual years can be irregular and significant. Such adjustments are part of the normal course of business for the Company. Conditions and trends that have affected development of liability in the past may not continue in the future. Accordingly, it is inappropriate to extrapolate future redundancies or deficiencies based upon historical experience.

(c) Discontinued Asbestos and Run-Off Environmental Related Claims

The Company’s reserving process includes a continuing evaluation of the potential impact on unpaid liabilities from exposure to discontinued asbestos and run-off environmental claims, including related loss adjustment expenses. Liabilities are established to cover both known and incurred but not reported claims. The Company’s reserving and exposures to environmental liability business currently written within the Casualty underwriting division are not included in this note, which only relates to specific discontinued and/or run-off coverages that were not originally written specifically to cover environmental hazards.

The Company’s exposure to discontinued asbestos and run-off environmental claims arises from the following four sources:

(1) Reinsurance contracts written, both on a proportional and excess basis, after 1972. The Company discontinued writing contracts with these exposures in 1985. Business written was across many different policies, each with a relatively small contract limit. The Company’s reported asbestos claims relate to both traditional products and premises and operations coverage.

(2) Winterthur – business of Winterthur purchased by the Company from AXA Insurance (formerly Winterthur Swiss Insurance Company) in 2001. Pursuant to the Sale and Purchase Agreement and related agreements, AXA Insurance reimburses the Company for all asbestos losses.

(3) During 2006, the Company acquired $40.2 million in losses through a loss portfolio transfer contract of which $18.3 million in losses related to asbestos and environmental claims. Given the terms of the policy, the combined aggregate limit on the total acquired reserves is limited to $60.0 million, not including coverage for claims handling costs over a defined period.

(4) Catlin Acquisition - aviation insurance contracts written by Catlin in the Lloyd's market where the specific asbestos exclusion language was not implemented until 2003. Exposures only extend back to 1993 as Equitas was established to take on the Lloyd's market exposure for 1992 and prior. Exposure is due to asbestos-containing products in use by the aviation industry leading to claims against aviation manufacturers for asbestosis, mesothelioma and lung cancer.

58

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

A reconciliation of the opening and closing unpaid losses and loss expenses related to discontinued asbestos and run-off environmental exposure claims for the years indicated is as follows:

Year ended December 31, (U.S. dollars in thousands)	2015		2014		2013
Net unpaid losses and loss expenses at beginning of year	$	81,416	$	80,435	$	78,315
Net incurred losses and loss expenses	15,663		8,903		6,257
Less net paid losses and loss expenses	9,087		7,922		4,137
Net increase (decrease) in unpaid losses and loss expenses	$	6,576	$	981	$	2,120
Acquired reserves	5,712		—		—
Net unpaid losses and loss expenses at end of year	93,704		81,416		80,435
Unpaid losses and loss expenses recoverable at end of year	93,688		100,537		115,090
Gross unpaid losses and loss expenses at end of year	$	187,392	$	181,953	$	195,525

Reserves for incurred but not reported losses, net of reinsurance, included in the above table were $65.1 million, $49.3 million and $48.6 million at December 31, 2015, 2014 and 2013, respectively. Unpaid losses recoverable are net of potential uncollectible amounts.

At December 31, 2015, the Company had 2,591 open claim files for potential discontinued asbestos claims exposures and 430 open claim files for potential run-off environmental claims exposures. Approximately 32%, 46% and 37% of the open claim files are due to precautionary claim notices in 2015, 2014 and 2013, respectively. Precautionary claim notices are submitted by the ceding companies in order to preserve their right to receive coverage under the reinsurance contract. The increase in total open claim files during 2015 was largely due to the Catlin Acquisition, as noted above.

Such notices do not contain an incurred loss amount to the Company. The development of the number of open claim files for potential discontinued asbestos and run-off environmental claims, including precautionary claims, is as follows:

	Asbestos Claims		Environmental Claims
Total number of claims outstanding at December 31, 2012	1,073		354
New claims reported in 2013	178		34
Claims resolved in 2013	(154	)	(50	)
Total number of claims outstanding at December 31, 2013	1,097		338
New claims reported in 2014	456		190
Claims resolved in 2014	(154	)	(69	)
Total number of claims outstanding at December 31, 2014	1,399		459
New claims reported in 2015	272		67
Claims resolved in 2015	(246	)	(96	)
Acquired reserves	1,166		—
Total number of claims outstanding at December 31, 2015	2,591		430

The Company’s reserving process includes a continuing evaluation of the potential impact on unpaid liabilities from exposure to discontinued asbestos and run-off environmental claims, including related loss adjustment expenses. Liabilities are established to cover both known and incurred but not reported claims.

The estimation of loss and loss expense liabilities for discontinued asbestos and run-off environmental exposures is subject to much greater uncertainty than is normally associated with the establishment of liabilities for certain other exposures due to several factors, including: (i) uncertain legal interpretation and application of insurance and reinsurance coverage and liability; (ii) the lack of reliability of available historical claims data as an indicator of future claims development; (iii) an uncertain political climate which may impact, among other areas, the nature and amount of costs for remediating waste sites; and (iv) the potential of insurers and reinsurers to reach agreements in order to avoid further significant legal costs. Due to the potential significance of these uncertainties, the Company believes that no meaningful range of loss and loss expense liabilities beyond recorded reserves can be established. As the Company’s net unpaid loss and loss expense reserves related to discontinued asbestos and run-off environmental exposures are less than 1% of the total net reserves at December 31, 2015 and 2014, further adverse development is not expected to be material to the Company’s overall net loss reserves. The Company believes it has made reasonable provision for its discontinued asbestos and run-off environmental exposures and is unaware of any specific issues that would significantly affect its estimate for loss and loss expenses.

59

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

12. Deposit Liabilities

The Company has entered into certain insurance and reinsurance policies that transfer insufficient risk under GAAP to be accounted for as insurance or reinsurance transactions and are recognized as deposits. These structured P&C agreements have been recorded as deposit liabilities and are initially matched by an equivalent amount of investments. The Company has investment risk related to its ability to generate sufficient investment income to enable the total invested assets to cover the payment of the ultimate liability. See Note 6, "Investments," for further information relating to the Company’s net investment income as well as realized and unrealized investment (losses) gains. Each deposit liability accrues at a rate equal to the internal rate of return of the payment receipts and obligations due during the life of the agreement. Where the timing and/or amount of future payments are uncertain, cash flows reflecting the Company’s actuarially determined best estimates are utilized. Deposit liabilities are initially recorded at an amount equal to the assets received.

At December 31, 2015 and 2014, total deposit liabilities were $1.2 billion. For the years ended December 31, 2015, 2014 and 2013, interest expense of $42.2 million, $12.9 million and $48.0 million, respectively, was recorded related to the accretion of deposit liabilities. During the second quarter of 2014, the Company negotiated the termination of one of its larger structured indemnity contracts and as a result a net decrease of $28.7 million was recorded to interest expense. See Note 15, "Derivative Instruments," for further information.

13. Future Policy Benefit Reserves

Net future policy benefit reserves are comprised of the following:

Year ended December 31 (U.S. dollars in thousands)	2015			2014
Traditional Life	$	792,001		$	789,133
Annuities	3,371,499			3,918,066
Gross future policy benefit reserves	$	4,163,500		$	4,707,199
Reinsurance recoverable - GreyCastle Life Retro Arrangements	(3,719,131		)	(4,265,678		)
Reinsurance recoverable - U.S. Term Life Retro Arrangements	(284,481		)	—
Reinsurance recoverable - Other life retrocessions	(13,801		)	(17,840		)
Net future policy benefit reserves	$	146,087		$	423,681

The Company entered into long duration contracts that subject the Company to mortality and morbidity risks and that were accounted for as life premiums earned. Future policy benefit reserves were established using appropriate assumptions for investment yields, mortality, and expenses, including a provision for adverse deviation. At December 31, 2015 and 2014, the average interest rate used for the determination of the future policy benefits for these contracts was 3.3% and 3.3%, respectively. Gross future policy benefit reserves for the years ended December 31, 2015 and 2014 were $4.2 billion and $4.7 billion, respectively. The decrease in gross future policy benefit reserves during 2015 was from normal course releases on single premium annuities in line with the benefits paid and mortality of underlying policyholders, as well as foreign exchange movements.

Under the terms of the transaction described in Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary," the Company has reinsured $3.7 billion and $4.3 billion at December 31, 2015 and 2014, respectively, of its future policy benefit reserves under the GreyCastle Life Retro Arrangements. The Company continues to own, on a funds withheld basis, assets supporting the GreyCastle Life Retro Arrangements consisting of cash, fixed maturity securities and accrued interest. Based upon the contractual right of offset, the funds withheld liability owing to GCLR is recorded net of future policy benefit reserves recoverable, and is included within "Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable)" on the consolidated balance sheets, and is comprised of the following at December 31, 2015 and 2014:

(U.S. dollars in thousands)	2015			2014
Assets held on a funds withheld basis relating to the GreyCastle Life Retro Arrangements	$	4,633,760		$	5,420,694
Reinsurance recoverable from GCLR	(3,719,131		)	(4,265,678		)
Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable)	$	914,629		$	1,155,016

The Company has also reinsured an additional $284.5 million of its U.S. Term Life future policy benefit reserves ("U.S. Term Life Retro Arrangements") at December 31, 2015. The Company continues to own, on a funds withheld basis, assets supporting the U.S. Term Life Retro Arrangements. Based upon the contractual right of offset, the funds withheld liability is

60

recorded net of future policy benefit reserves recoverable, and is included within "Reinsurance balances payable" on the consolidated balance sheets.

14. Notes Payable and Debt and Financing Arrangements

(a) Notes Payable and Debt

The following table presents the Company's outstanding notes payable and debt as of December 31, 2015 and 2014:

(U.S. dollars in thousands)	2015				2014
	Commitment/ Debt (1)		In Use/ Outstanding (2)		Commitment/ Debt (1)		In Use/ Outstanding (2)
Debt:
2.30% Senior Notes due 2018	$	300,000	$	298,015	$	300,000	$	297,344
5.75% Senior Notes due 2021	400,000		397,523		400,000		397,092
6.375% Senior Notes due 2024	350,000		349,029		350,000		348,920
4.45% Subordinated Notes due 2025	500,000		492,521		—		—
6.25% Senior Notes due 2027	325,000		323,218		325,000		323,062
5.25% Senior Notes due 2043	300,000		296,294		300,000		296,162
5.5% Subordinated Notes due 2045	500,000		488,370		—		—
Total debt carrying value	$	2,675,000	$	2,644,970	$	1,675,000	$	1,662,580

_______________

(1) Excluded from the table are certain credit facilities under which the Company is permitted to utilize up to $1.4 billion and $1.6 billion as of December 31, 2015 and December 31, 2014, respectively, for revolving loans to support general operating and financing needs. However, as of December 31, 2015 and December 31, 2014, $527.1 million and $606.1 million, respectively, were utilized under these facilities to issue letters of credit, leaving $822.9 million and $968.9 million, respectively, available to support other operating and financing needs.

(2)    "In Use/Outstanding" data represent December 31, 2015 and December 31, 2014 accreted values.

All outstanding debt of the Company at December 31, 2015 and 2014, which is identified in the table above, was issued by XL-Cayman, a 100% owned subsidiary of XL-Ireland and the only direct subsidiary thereof. 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 is subject to certain contractual restrictions, applicable laws and statutory requirements of the various countries in which the Company operates, 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 Note 23, "Statutory Financial Data."

On September 15, 2014, the $600 million principal amount outstanding on the 5.25% Senior Notes issued by XL-Cayman was repaid at maturity.

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.

61

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

As a result of the Catlin Acquisition, the Company had assumed the following liabilities of Catlin, all of which were redeemed at par and extinguished in December of 2015:

• Variable rate unsecured subordinated notes in the amounts of €7 million and $27 million due March 2035 and March 2036, respectively, issued by Catlin Underwriting (formerly Wellington Underwriting plc) in May 2006. The notes are subordinated to the claims of all senior creditors, as defined in the agreement governing the notes. The notes pay interest at a floating rate based on the rate on three-month deposits in U.S. dollars plus a margin of 295 basis points and 317 basis points, respectively. Interest is payable quarterly in arrears. The notes are redeemable at the discretion of the issuer.

• Variable rate unsecured subordinated notes in the amounts of $31 million, $10 million and €11 million due September 2036, issued by Catlin Underwriting, in July 2006. The notes are subordinated to the claims of all senior creditors, as defined in the agreement governing the notes. The notes pay interest at a floating rate based on the rate on three-month deposits in U.S. dollars plus a margin of 310 basis points, 300 basis points and 300 basis points, respectively. Interest is payable quarterly in arrears. The notes are redeemable at the discretion of the issuer.

The Company recognized a $5.6 million loss on early extinguishment of debt for the year ended December 31, 2015.

The Company was in compliance with all covenants at December 31, 2015 and 2014, and the Company currently remains in compliance with all covenants.

(b) Credit Facilities and Other Sources of Collateral

The Company has several credit facilities provided on both syndicated and bilateral bases from commercial banks. As described in more detail below, the Company may utilize the full capacity of these credit facilities to issue letters of credit in support of non-admitted insurance and reinsurance operations in the U.S., and to meet capital requirements at Lloyd’s. Alternatively, under certain of the credit arrangements, the Company instead may elect to utilize a stated portion of such facilities' capacity for revolving loans to support other operating or financing needs, which would reduce the amount available for letters of credit.

The Company’s available credit facilities at December 31 were as follows:

(U.S. dollars in thousands)	2015 (1)			2014 (1)
Total available credit facilities – commitments (2)	$	4,463,041		$	3,575,000
Letters of credit – in use	$	2,515,653		$	1,790,561
Collateralized by certain assets of the Company’s investment portfolio	50.9		%	66.2		%

____________

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

(2) As of December 31, 2015 and December 31, 2014 the stated portion of allowable credit facilities permitted to be utilized for revolving loans was $1.4 billion and $1.6 billion, respectively. However, as of December 31, 2015 and December 31, 2014, $527.1 million and $606.1 million, respectively, of such facilities' limits were utilized to issue letters of credit, leaving $822.9 million and $968.9 million, respectively, available either to issue additional letters of credit or to support other operating or financing needs under these particular facilities.

In November 2015, we entered into four bilateral unsecured credit agreements, each providing for $125 million of letters of credit for Funds at Lloyd’s purposes (collectively the "FAL Facilities") for an aggregate amount of $500 million. Each of the FAL Facilities expires in 2019. The FAL Facilities replaced four unsecured bilateral facilities available for utilization by Catlin-Bermuda for Funds at Lloyd's purposes that we terminated in November 2015.

On June 10, 2015, XL-Cayman entered into the fifth amendment to the credit agreement with Citicorp USA, Inc., as administrative agent and issuing lender, and the lenders party thereto (as amended, the "2015 Citi Facility"). The 2015 Citi Facility and a continuing agreement for standby letters of credit with Citibank, N.A. were initially entered into on May 7, 2013.

On November 4, 2013, XL-Cayman entered into a credit agreement with Citicorp USA, Inc., as administrative agent and issuing lender, and the lenders party thereto and a continuing agreement for standby letters of credit with Citibank, N.A. (the "2013 Citi Facility" and, together with the 2015 Citi Facility, the "Citi Agreements").

Collectively, the Citi Agreements and the continuing agreements for standby letters of credit provide for issuance of letters of credit and revolving credit loans in an aggregate amount of up to $350 million. XL-Cayman has the option to increase the maximum amount of letters of credit and revolving credit loans available under the 2013 Citi Agreements with the lender's and issuing lender's consent.

The commitments under the Citi Agreements expire on, and such credit facilities are available until, the earlier of (i) June 20, 2017 (with respect to the 2015 Citi Facility) and December 20, 2016 (with respect to the 2013 Citi Facility) and (ii) the date

62

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

of termination in whole of the commitments upon an optional termination or reduction of the commitments by the account parties or upon the occurrence of certain events of default.

On September 8, 2015, XL-Cayman entered into a new credit agreement with Goldman Sachs Mortgage Company, as administrative agent and issuing lender, and a continuing agreement for standby letters of credit with Goldman Sachs Bank USA. On September 9, 14, and 16, 2015, XL-Cayman entered into first, second and third amendments, respectively, to such credit agreement (as amended, the Goldman Facility"). XL-Cayman entered into the Goldman Facility to replace the letter of credit capacity under a credit agreement with Citicorp USA, Inc. initially entered into on August 6, 2013 that expired by its terms on September 20, 2015.

The Goldman Facility and the continuing agreement for standby letters of credit provide for issuance of letters of credit in an aggregate amount of up to $200 million. XL-Cayman has the option to increase the maximum amount of letters of credit available under the Goldman Facility with the lender's and issuing lender's consent.

The commitments under the Goldman Facility expire on, and such credit facility is available until, the earlier of (i) September 20, 2017 and (ii) the date of termination in whole of the commitments upon an optional termination or reduction of the commitments by the account parties or upon the occurrence of certain events of default.

On December 30, 2014, XLIB reduced the capacity available under a continuous letter of credit facility between XL Insurance (Bermuda) Ltd. and Citibank Europe plc from $750 million to $600 million simultaneous with XL Insurance (Bermuda) Ltd. entering into a continuous $150 million letter of credit facility with ING Bank N.V., London Branch (the "ING Facility"). Both the Citi E.U. Facility and the ING Facility are collateralized by pledged financial assets.

In November 2013, the Company (i) entered into two credit agreements (together, the "Syndicated Credit Agreements"), which provided for an aggregate amount of outstanding letters of credit and revolving credit loans of up to $2 billion, subject to certain options to increase the size of the facilities.

The Syndicated Credit Agreements consist of (i) a secured credit agreement, which provides for the issuance of letters of credit and is collateralized by pledged financial assets, in an aggregate amount of up to $1 billion, and (ii) an unsecured credit agreement, which provides for the issuance of letters of credit and revolving credit loans in an aggregate amount of up to $1 billion. The Company has the option to increase the maximum amount of letters of credit available by an additional $500 million across the facilities under the Syndicated Credit Agreements.

The commitments under the Syndicated Credit Agreements expire on, and such credit facilities are available until, the earlier of (i) November 22, 2018 and (ii) the date of termination in whole of the commitments upon an optional termination or reduction of the commitments by the account parties or upon the occurrence of certain events of default.

The availability of letters of credit under the Syndicated Secured Facility is subject to a borrowing base requirement, determined on the basis of specified percentages of the face value of eligible categories of assets varying by type of collateral. In the event that such credit support is insufficient, the Company could be required to provide alternative security to cedants. This could take the form of insurance trusts supported by the investment portfolio or funds withheld (amounts retained by ceding companies to collateralize loss or premium reserves) using the Company's cash resources or combinations thereof. The face amount of letters of credit required is driven by, among other things, loss development of existing reserves, the payment pattern of such reserves, the expansion of business written by the Company and the loss experience of such business.

We have $250 million of available capacity pursuant to a continuous credit agreement between XL Re and Citibank N.A. that is collateralized by pledged financial assets.

63

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

As a result of the Catlin Acquisition the Company assumed, and may continue to access, the following letter of credit facilities:

• A bilateral facility pursuant to a continuous credit agreement, available for utilization by Catlin-Bermuda, collateralized by pledged financial assets. As of December 31, 2015, $230 million of capacity was available under this facility.

• A bilateral facility pursuant to a continuous credit agreement, available for utilization by Catlin Re Switzerland Ltd, collateralized by pledged financial assets. As of December 31, 2015, $175 million of capacity was available under this facility.

• A facility managed by Lloyd's, acting for Catlin Syndicate 2003. As of December 31, 2015, $8 million of letters of credit were issued under this facility.

In addition to letters of credit, the Company has established insurance trusts in the U.S. that provide cedants with statutory relief required under state insurance regulation in the U.S. It is anticipated that the commercial facilities may be renewed on expiry but such renewals are subject to the availability of credit from banks utilized by the Company and may be renewed with materially different terms and conditions. In the event that such credit support is insufficient, the Company could be required to provide alternative security to cedants. This could take the form of additional insurance trusts supported by the Company’s investment portfolio or funds withheld using the Company’s cash resources. The value of letters of credit required is driven by, among other things, loss development of existing reserves, the payment pattern of such reserves, the expansion of business written by the Company and the loss experience of such business.

In general, all of the Company’s bank facilities, indentures and other documents relating to the Company’s outstanding indebtedness (collectively, the "Company’s Debt Documents"), which are described above, contain cross acceleration or cross default provisions to each other and the Company’s Debt Documents contain affirmative covenants. These covenants provide for, among other things, minimum required ratings of the Company’s insurance and reinsurance operating subsidiaries and a maximum level of secured indebtedness that may be incurred in the future. In addition, the majority of the Company’s Debt Documents provide for an event of default in the event of a change of control of the Company, or some events involving bankruptcy, insolvency or reorganization of the Company. The Company’s credit facilities also contain minimum consolidated net worth covenants.

Under the Syndicated Credit Agreements, in the event that XLIB, XL Re or XL Re Europe SE fails to maintain a financial strength rating of at least "A – " from A.M. Best, an event of default would occur.

Given that all of the Company’s Debt Documents contain cross acceleration or cross default provisions, a default by one of these subsidiaries may result in all holders declaring their debt due and payable and accelerating all debt due under those documents. If this were to occur, the Company may not have funds sufficient at that time to repay any or all of such indebtedness.

64

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

15. Derivative Instruments

The Company enters into derivative instruments for both risk management and investment purposes. The Company is exposed to potential loss from various market risks, and manages its market risks based on guidelines established by management and the Risk and Finance Committee of the Company's Board of Directors. The Company recognizes all derivatives as either assets or liabilities on the balance sheets and measures those instruments at fair value, with the changes in fair value of derivatives shown in the consolidated statement of income as "Net realized and unrealized gains (losses) on derivative instruments" unless the derivatives are designated as hedging instruments. The accounting for derivatives that are designated as hedging instruments is described in Note 2(h), "Significant Accounting Policies - Derivative Instruments." The following table summarizes information on the location and gross amounts of derivative fair values contained in the consolidated balance sheets at December 31, 2015 and 2014:

(U.S. dollars in thousands)	2015								2014
	Asset Derivative Notional Amount		Asset Derivative Fair Value (1)		Liability Derivative Notional Amount		Liability Derivative Fair Value (1)		Asset Derivative Notional Amount		Asset Derivative Fair Value (1)		Liability Derivative Notional Amount		Liability Derivative Fair Value (1)
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	1,667,585	$	64,289	$	674,976	$	11,941	$	2,300,609	$	121,862	$	302,211	$	2,936
Total derivatives designated as hedging instruments	$	1,667,585	$	64,289	$	674,976	$	11,941	$	2,300,609	$	121,862	$	302,211	$	2,936
Derivatives not designated as hedging instruments:
Investment Related Derivatives:
Interest rate exposure	$	—	$	—	$	—	$	—	$	394,597	$	206	$	20,782	$	51
Foreign exchange exposure	102,234		2,888		144,707		1,702		7,385		403		207,182		4,442
Credit exposure	8,433		652		71,614		12,067		2,408		165		14,270		9,836
Financial market exposure	37		77		26,500		417		46,145		360		33,670		34
Financial Operations Derivatives:
Credit exposure	—		—		—		—		—		—		—		—
Other Non-Investment Derivatives:
Foreign exchange contracts	194,566		2,009		—		—		—		—		81,194		282
Credit exposure	29,874		31		—		—		31,060		60		—		—
Guaranteed minimum income benefit contract	46,032		19,368		46,032		19,368		46,249		13,603		46,249		13,603
Modified coinsurance funds withheld contract (2)	60,667		—		4,620,879		—		64,947		—		5,401,278		—
Total derivatives not designated as hedging instruments	$	441,843	$	25,025	$	4,909,732	$	33,554	$	592,791	$	14,797	$	5,804,625	$	28,248

____________

(1) Derivative instruments in an asset or liability position are included within Other assets or Other liabilities, respectively, in the balance sheets on a net basis where the Company has both a legal right of offset and the intention to settle the contracts on a net basis.

(2) The fair value movements in derivative assets and liabilities relating to modified coinsurance funds withheld contracts are included within the associated asset or liability at each period end on the face of the balance sheets. Notional amounts associated with reinsurance agreements under which the Company assumes reinsurance risk are recorded as asset derivative notional amounts. Notional amounts associated with the GreyCastle Life Retro Arrangements under which the Company cedes reinsurance risk are recorded as liability derivative notional amounts. Included in the liability derivative notional amount at December 31, 2015 is the cumulative net realized and unrealized loss on life retrocession embedded derivative of $463.9 million.

65

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following table summarizes information on the gross and net amounts of derivative fair values and associated collateral received related to derivative assets, or collateral provided relating to derivative liabilities reported in other assets and other liabilities within the consolidated balance sheets at December 31, 2015 and 2014:

							Gross Amounts Not Offset in the Balance Sheets
December 31, 2015 (U.S. dollars in thousands)	Gross Amounts Recognized in the Balance Sheets		Gross Amounts Offset in the Balance Sheets		Net Amounts in the Balance Sheets		Financial Instruments		Cash Collateral		Net Amounts
Derivative Assets	$	89,314	$	3,087	$	86,227	$	—	$	30,958	$	55,269
Derivative Liabilities	$	45,495	$	3,087	$	42,408	$	—	$	—	$	42,408
December 31, 2014 (U.S. dollars in thousands)
Derivative Assets	$	136,659	$	696	$	135,963	$	—	$	78,580	$	57,383
Derivative Liabilities	$	31,184	$	696	$	30,488	$	—	$	—	$	30,488

Derivative instruments in an asset or liability position are included within Other assets or Other liabilities, respectively, on the balance sheets on a net basis where the Company has both a legal right of offset and the intention to settle the contracts on a net basis. The Company often enters into different types of derivative contracts with a single counterparty and these contracts are covered under netting agreements. At December 31, 2015 and 2014, the Company held cash collateral related to foreign currency derivative positions and certain other derivative positions of $31.0 million and $78.6 million, respectively. The assets and liabilities related to the net collateral paid or held were recorded as Other assets and Other liabilities, respectively, within the consolidated balance sheets as the collateral and derivative positions are not intended to be settled on a net basis.

(a) Derivative Instruments Designated as Fair Value Hedges

The Company designates certain of its derivative instruments as fair value hedges or cash flow hedges and formally and contemporaneously documents all relationships between the hedging instruments and hedged items and links the hedging derivative to specific assets and liabilities. The Company assesses the effectiveness of the hedge both at inception and on an on-going basis, and determines whether the hedge is highly effective in offsetting changes in fair value or cash flows of the linked hedged item.

The Company uses foreign exchange contracts to hedge the fair value of certain fixed income securities as well as to hedge certain net investments in foreign operations. In connection with the Catlin Acquisition and the FX Forwards, certain foreign exchange contracts utilized to hedge the fair value of certain net investments in foreign operations were de-designated as hedging instruments up until the time that the Catlin Acquisition was completed. Thereafter, these foreign exchange contracts were re-designated as hedging instruments. For the year ended December 31, 2015, there is no exposure to fair value hedges.

The following table provides the total impact on earnings relating to derivative instruments formally designated as fair value hedges along with the impacts of the related hedged items for the years indicated:

Derivatives Designated as Fair Value Hedges (U.S. dollars in thousands)	Hedged Items – Amount of Gain/(Loss) Recognized in Income Attributable to Risk
	Gain/(Loss) Recognized in Income on Derivative			Deposit Liabilities		Fixed Maturity Investments		Ineffective Portion of Hedging Relationship – Gain/(Loss)
Year Ended December 31, 2015
Interest rate exposure	$	—
Foreign exchange exposure	—
Total	$	—		$	—	$	—	$	—
Year Ended December 31, 2014
Interest rate exposure	$	—
Foreign exchange exposure	(15,663		)
Total	$	(15,663	)	$	—	$	15,407	$	(256	)
Year Ended December 31, 2013
Interest rate exposure	$	—
Foreign exchange exposure	(22,568		)
Total	$	(22,568	)	$	—	$	23,065	$	497

66

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The gains (losses) recorded on both the derivative instruments and specific items designated as being hedged as part of the fair value hedging relationships outlined above along with any associated ineffectiveness in the relationships are recorded through Net realized and unrealized gains (losses) on derivative instruments in the income statement.

Settlement of Fair Value Hedges

A summary of the fair value hedges that have been settled and their impact on results during the indicated years ended December 31 as well as the remaining balance of fair value hedges and average years remaining to maturity are shown below:

Settlement of Fair Value Hedges – Summary (U.S. dollars in thousands, except years)	Fair Value Hedges – Notes Payable and Debt December 31,				Fair Value Hedges – Deposit Liabilities December 31,
	2015		2014		2015		2014
Cumulative reduction to interest expense	$	—	$	21,624	$	103,742	$	95,333
Remaining balance	$	—	$	—	$	129,454	$	137,862
Weighted average years remaining to maturity	0.0		0.0		21.6		23.2

During the second quarter of 2014, the Company negotiated the termination of one of its larger structured indemnity contracts. This contract had previously been designated as a fair value hedge that was settled. The remaining fair value adjustment of $47.0 million that was being amortized as a reduction of interest expense over the remaining term of the contract was recorded as an adjustment to interest expense at the termination date. As a result of the termination, a net decrease of $28.7 million was recorded to interest expense reflecting the realization of the remaining balance of the fair value hedge adjustment, partially offset by an accretion rate adjustment due to changes in cash flows.

(b) Derivative Instruments Designated as Hedges of the Net Investment in a Foreign Operation

The Company utilizes foreign exchange contracts to hedge the fair value of certain net investments in foreign operations. During the year ended December 31, 2015 and 2014, the Company entered into foreign exchange contracts that were formally designated as hedges of investments in foreign subsidiaries, the majority of which have functional currencies of either U.K. sterling or the Euro. There was no ineffectiveness in these transactions.

The following table provides the weighted average U.S. dollar equivalent of foreign denominated net assets that were hedged and the resulting derivative gain (loss) that was recorded in the foreign currency translation adjustment, net of tax, account within AOCI for the years ended December 31, 2015 and 2014.

Derivative Instruments Designated as Hedges of the Net Investment in a Foreign Operation – Summary (U.S. dollars in thousands)	2015		2014
Weighted average of U.S. dollar equivalent of foreign denominated net assets	$	1,769,106	$	2,384,508
Derivative gains (losses) (1)	$	106,876	$	120,643

____________

(1) Derivative gains (losses) from derivative instruments designated as hedges of the net investment in a foreign operation are recorded in the cumulative translation adjustment account within AOCI for each period.

67

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(c) Derivative Instruments Not Formally Designated As Hedging Instruments

The following table provides the total impact on earnings relating to derivative instruments not formally designated as hedging instruments under GAAP and from the ineffective portion of fair value hedges. The impacts are all recorded through Net realized and unrealized gains (losses) on derivatives in the income statement for the years ended December 31, 2015, 2014 and 2013:

Net Realized and Unrealized Gains (Losses) on Derivative Instruments (U.S. dollars in thousands)	2015			2014			2013
Investment Related Derivatives:
Interest rate exposure	$	(2,347	)	$	15,959		$	5,065
Foreign exchange exposure	(1,542		)	3,351			(948		)
Credit exposure	(2,537		)	400			(4,052		)
Financial market exposure	(2,190		)	411			6,302
Financial Operations Derivatives:
Credit exposure	—			5,023			(2,437		)
Other Non-Investment Derivatives:
Foreign exchange exposure	60,319			—			—
Credit exposure	1,375			—			—
Guaranteed minimum income benefit contract	—			2,257			10,457
Modified coinsurance funds withheld contract	45			2,741			(7,086		)
Total derivatives not designated as hedging instruments	$	53,123		$	30,142		$	7,301
Amount of gain (loss) recognized in income from ineffective portion of fair value hedges	—			(256		)	497
Net realized and unrealized gains (losses) on derivative instruments	$	53,123		$	29,886		$	7,798
Net realized and unrealized gains (losses on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	$	(151,691	)	$	(488,222	)	$	—

The Company’s objectives in using these derivatives are explained below.

(c)(i) Investment Related Derivatives

The Company, either directly or through its investment managers, may use derivative instruments within its investment portfolio, including interest rate swaps, inflation swaps, commodity contracts, total return swaps, credit derivatives (single name and index credit default swaps), options, forward contracts and financial futures (foreign exchange, bond and stock index futures), primarily as a means of economically hedging exposures to interest rate, credit spread, equity price changes and foreign currency risk or, in limited instances, for efficient portfolio management. When using cleared (exchange traded) derivatives, the Company is exposed to the credit risk of the applicable clearing house and of the Company's future commissions merchant. When using uncleared (over-the-counter) derivatives, the Company is exposed to credit risk in the event of non-performance by the counterparties under any derivative contracts, although the Company generally seeks to use credit support arrangements with counterparties to help manage this risk.

Investment Related Derivatives – Interest Rate Exposure

The Company utilizes risk management and overlay strategies that incorporate the use of derivative financial instruments primarily to manage its fixed income portfolio duration and net economic exposure to interest rate risks. The Company may also use interest rate swaps to convert certain liabilities from a fixed rate to a variable rate of interest or use them to convert a variable rate of interest from one basis to another.

Investment Related Derivatives – Foreign Exchange Exposure

The Company has exposure to foreign currency exchange rate fluctuations through its operations and in its investment portfolio. The Company uses foreign exchange contracts to manage its exposure to the effects of fluctuating foreign currencies on the value of certain of its foreign currency fixed maturities. These contracts are not designated as specific hedges for financial reporting purposes and, therefore, realized and unrealized gains and losses on these contracts are recorded in income in the period in which they occur. These contracts generally have maturities of twelve months or less.

In addition, certain of the Company's investment managers may, subject to investment guidelines, enter into forward contracts.

68

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Investment Related Derivatives – Credit Exposure

Credit derivatives may be purchased within the Company's investment portfolio in the form of single name and basket credit default swaps and swaptions, which are used to mitigate credit exposure through a reduction in credit spread duration (i.e., macro credit strategies rather than single-name credit hedging) or exposure to securities of selected issuers, including issuers that are not held in the underlying fixed income portfolio.

Investment Related Derivatives – Financial Market Exposure

Stock index futures may be purchased within the Company's investment portfolio in order to create synthetic equity exposure and to add value to the portfolio with overlay strategies where market inefficiencies are believed to exist. From time to time, the Company may enter into other financial market exposure derivative contracts on various indices including, but not limited to, inflation and commodity contracts.

(c)(ii) Financial Operations Derivatives – Credit Exposure

During the fourth quarter of 2014, the remaining financial operations credit derivative exposure, which was written as part of the Company's previous financial lines business and is outside of the Company's investment portfolio, was terminated. The Company has no continuing financial operations derivative credit exposures.

(c)(iii) Other Non-Investment Derivatives

Foreign Exchange Contracts

On January 9, 2015, the Company entered into the FX Forwards with Morgan Stanley Capital Services LLC and Goldman Sachs International. The purpose of the FX Forwards was to mitigate risk of foreign currency exposure related to the Catlin Acquisition. Following the closing of the Catlin Acquisition, the FX Forwards were settled.

In connection with the Catlin Acquisition and the FX Forwards, during the first quarter of 2015 certain foreign exchange contracts utilized to hedge the fair value of certain net investments in foreign operations were de-designated as hedging instruments; subsequently during the second quarter, the hedging relationships were then re-established.

In the fourth quarter of 2015, the Company entered into an average rate option to mitigate the risk of foreign currency exposure to certain GBP-denominated cash flows. The option will mature in the fourth quarter of 2016. Additionally, the Company has a small forward purchase to mitigate exposure to certain NZD-denominated cash flows.

Credit Exposure

During the year ended December 31, 2015, the Company entered into a non-investment-related credit derivative relating to a number of reference pool mortgage tranches associated with actual mortgage loans that were securitized into agency mortgage-backed securities and sold as Structured Agency Credit Risk Notes. At December 31, 2015, there was no reported event of default on this obligation. At December 31, 2015, the notional outstanding related to the derivative was $29.9 million and the Company had recorded a derivative asset of $0.03 million. During the year ended December 31, 2015, the Company recorded Net realized and unrealized gains of $0.1 million relating to this credit derivative. The credit derivative is recorded at fair value based upon models developed by the Company. Significant unobservable inputs considered in the valuation include the impact of changes in interest rates, future default, delinquency and prepayment rates, credit spreads, changes in credit quality, and other market factors.

Guaranteed Minimum Income Benefit Contract

The Company also has derivatives embedded in certain reinsurance contracts. For a certain life reinsurance contract, the Company pays the ceding company a fixed amount equal to the estimated present value of the excess of the guaranteed benefit over the account balance upon the policyholder's election to take the income benefit. The fair value of this derivative is determined based on the present value of expected cash flows.

Modified Coinsurance and Funds Withheld Contracts

The Company has modified coinsurance and funds withheld reinsurance agreements that provide for a return to be paid to the Company based on a portfolio of fixed income securities. As such, the agreements contain an embedded derivative. The embedded derivative is bifurcated from the funds withheld balance and recorded at fair value with changes in fair value recognized in earnings through Net realized and unrealized gains (losses) on derivative instruments.

69

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Modified Coinsurance Funds Withheld Reinsurance Agreements - Life Retrocession Embedded Derivative

In addition, the Company has entered into the GreyCastle Life Retro Arrangements as described in Note 2(c), "Significant Accounting Policies - Total Investments - Investments Related to Life Retrocession Arrangements written on a Funds Withheld Basis," "Note 2(e), "Significant Accounting Policies - Reinsurance," and Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary." The embedded derivative related to the GreyCastle Life Retro Arrangements is recorded at fair value with changes in fair value recognized in earnings through Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets.

The change in the value of the life retrocession embedded derivative includes the interest income, realized and unrealized gains and losses on Life Funds Withheld Assets and certain related expenses subsequent to May 30, 2014 as follows:

Components of Life Retrocession Embedded Derivative and Derivative Instruments - Life Funds Withheld Assets:
(U.S. dollars in thousands)	2015			2014
Interest income - Life Funds Withheld Assets	$	(193,568	)	$	(134,634	)
Realized and unrealized gains (losses) on Life Funds Withheld Assets	180,134			(318,065		)
Other	351			1,868
Net realized and unrealized gains (losses) on life retrocession embedded derivative	$	(13,083	)	$	(450,831	)
Net adjustments related to future policy benefit reserves, net of tax	$	(125,747	)	$	(21,786	)
Net realized and unrealized gains (losses) on derivative instruments - Life Funds Withheld Assets	$	(12,861	)	$	(15,605	)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	$	(151,691	)	$	(488,222	)

(d) Contingent Credit Features

Certain derivative agreements entered into by the Company or its subsidiaries contain credit rating downgrade provisions that permit early termination of the agreements by the counterparty if collateral is not posted following failure to maintain certain credit ratings from one or more of the principal credit rating agencies. If the Company were required to terminate such agreements early due to a credit rating downgrade, it could potentially be in a net liability position at the time of settlement of such agreements. The aggregate fair value of all derivative agreements containing such rating downgrade provisions that were in a liability position and any collateral posted under these agreements at December 31 for the years indicated were as follows:

Contingent Credit Features - Summary: (U.S. dollars in thousands)	2015		2014
Aggregate fair value of derivative agreements with downgrade provisions in a net liability position	$	5,827	$	5,770
Collateral posted to counterparty	$	—	$	—

16. Variable Interest Entities

At times, the Company has utilized VIEs both indirectly and directly in the ordinary course of the Company's business.

In 2013, the Company, along with other investors, formed a new Bermuda-based company, New Ocean Capital Management Limited ("New Ocean"), to act as an investment manager that focuses on providing third-party investors access to insurance-linked securities and other insurance and reinsurance capital markets products. The Company holds a majority voting interest in New Ocean through its ownership of common shares and, accordingly, the financial statements of New Ocean have been included in the consolidated financial statements of the Company. None of the assets, liabilities, revenues or net income of New Ocean was material to the Company during the current year. The equity interest attributable to third party investors in New Ocean recorded in the Company’s Consolidated Balance Sheets as "Non-controlling interest in equity of consolidated subsidiaries" was $0.4 million and $0.2 million at December 31, 2015 and December 31, 2014, respectively.

Also in 2013, subsequent to the formation of New Ocean, the Company, along with other investors, formed a new Bermuda-based investment company, New Ocean Focus Cat Fund Ltd. ("New Ocean FCFL"), which is considered a VIE under GAAP. During the year ended December 31, 2015, New Ocean FCFL invested in a special purpose reinsurer, Vector Reinsurance Ltd ("Vector Re"), formed for the purpose of underwriting collateralized excess of loss reinsurance with a focus on global property catastrophe risks. Most of Vector Re’s current underwriting activity relates to reinsurance business assumed from XL subsidiaries. Underwriting administration and claims services are provided to Vector Re by the Company, while investment advisory services are provided by New Ocean.

70

The Company currently holds majority equity interests, which are considered to be the controlling financial interests, in New Ocean FCFL and New Ocean Market Value Cat Fund Ltd. ("New Ocean MVCFL"), and by extension, Vector Re. Accordingly, included in the consolidated financial statements of the Company are the total net assets of New Ocean FCFL, New Ocean MVCFL and Vector Re of $175.8 million and $139.9 million as of December 31, 2015 and December 31, 2014, respectively. The Company’s shares of revenue and net income in these VIEs were not material to the Company for the twelve months endedDecember 31, 2015. All inter-company transactions between the Company's entities have been eliminated in consolidation. The equity interest attributable to third party investors in New Ocean FCFL, New Ocean MVCFL and Vector Re recorded in the Company’s Consolidated Balance Sheets as "Non-controlling interest in equity of consolidated subsidiaries" was $70.5 million and $58.4 million as of December 31, 2015 and December 31, 2014, respectively.

17. Commitments and Contingencies

(a) Concentrations of Credit Risk

The creditworthiness of any counterparty is evaluated by the Company, taking into account credit ratings assigned by rating agencies. The credit approval process involves an assessment of factors including, among others, the counterparty and country and industry credit exposure limits. Collateral may be required, at the discretion of the Company, on certain transactions based on the creditworthiness of the counterparty.

The areas where significant concentrations of credit risk may exist include unpaid losses and loss expenses recoverable and reinsurance balances receivable (collectively, "reinsurance assets") and in the investment fixed income portfolio.

Reinsurance Assets

The Company’s reinsurance assets result from reinsurance arrangements in the course of its operations. A credit exposure exists with respect to reinsurance assets as they may be uncollectible. The Company manages its credit risk in its reinsurance relationships by transacting with reinsurers that it considers financially sound, and if necessary, the Company may hold collateral in the form of funds, trust accounts and/or irrevocable letters of credit. This collateral can be drawn on for amounts that remain unpaid beyond specified time periods on an individual reinsurer basis. For further details regarding the Company’s reinsurance assets, see Note 10, "Reinsurance."

Fixed Income Portfolio

The Company did not have an aggregate direct investment in any single corporate issuer in excess of 5% of the Company's shareholders’ equity at December 31, 2015 and 2014. Corporate issuers represent only direct exposure to fixed maturities and short-term investments of the parent issuer and its subsidiaries. These exposures exclude asset and mortgage backed securities that were issued, sponsored or serviced by the parent and government-guaranteed issues, but does include covered bonds.

Broker credit risk

In addition, the Company underwrites a significant amount of its insurance and reinsurance property and casualty business through brokers and a credit risk exists should any of these brokers be unable to fulfill their contractual obligations with respect to the payments of insurance and reinsurance balances to the Company. During the three years ended December 31, 2015, 2014 and 2013, P&C gross written premiums generated from or placed by the below companies individually accounted for more than 10% of the Company’s consolidated gross written premiums from P&C operations, as follows:

(Percentage of consolidated gross written premiums from P&C operations)	2015		2014		2013
AON Corporation and subsidiaries	18	%	18	%	21	%
Marsh & McLennan Companies	19	%	20	%	23	%
Willis Group and subsidiaries	13	%	11	%	13	%

These brokers are large, well established companies and there are no indications that any of them are financially troubled. No other broker and no one insured or reinsured accounted for more than 10% of gross premiums written from P&C operations in any of the three years ended December 31, 2015, 2014 and 2013.

(b) Other Investments

The Company has committed to invest in several limited partnerships and provide liquidity financing to a structured investment vehicle. At December 31, 2015, the Company has commitments, which include potential additional add-on clauses, to invest an additional $127.6 million over a weighted average period of 6.0 years.

71

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(c) Investments in Affiliates

The Company owns a minority interest in certain closed-end hedge funds, certain limited partnerships and similar investment vehicles, including funds managed by those companies. At December 31, 2015, the Company has commitments, which include potential additional add-on clauses, to invest an additional $163.2 million over a weighted average period of 4.9 years.

(d) Properties

The Company rents space for certain of its offices under leases that expire through 2031. Total rent expense under operating leases for the years ended December 31, 2015, 2014 and 2013 was approximately $71.1 million, $36.6 million and $38.7 million, respectively. Future minimum rental commitments under existing operating leases are expected to be as follows:

Year Ended December 31, (U.S. dollars in thousands)
2016	$	69,256
2017	62,517
2018	56,122
2019	51,447
2020	46,356
2021-2031	131,826
Total minimum future rentals	$	417,524

During 2003, the Company entered into a purchase, sale and leaseback transaction to acquire new office space in London. The Company has recognized a capital lease asset of $73.4 million and $82.8 million, and deferred a gain of $22.3 million and $25.2 million related to this lease at December 31, 2015 and 2014, respectively. The gain is being amortized to income in line with the amortization of the asset. The future minimum lease payments in the aggregate are expected to be $171.6 million and annually for the next five years are as follows:

Year Ended December 31, (U.S. dollars in thousands)
2016	$	11,870
2017	12,167
2018	12,471
2019	12,783
2020	13,103
2021-2028	109,248
Total minimum future lease payments	$	171,642

(e) Tax Matters

XL-Ireland is an Irish corporation and, except as described below, neither it nor its non-U.S. subsidiaries have paid U.S. corporate income taxes on the basis that they are not engaged in a trade or business or otherwise subject to taxation in the United States. However, because definitive identification of activities that constitute being engaged in a trade or business in the United States is not provided by the Internal Revenue Code of 1986 ("IRS Code"), regulations or court decisions, there can be no assurance that the Internal Revenue Service will not contend that the Company or its non-U.S. subsidiaries are engaged in a trade or business or otherwise subject to taxation in the United States. If the Company or its non-U.S. subsidiaries were considered to be engaged in a trade or business in the United States (and, if the Company or such subsidiaries were to qualify for the benefits under the income tax treaty between the United States and Bermuda and other countries in which the Company operates, such businesses were considered to be attributable to a "permanent establishment" in the United States), the Company or such subsidiaries could be subject to U.S. tax at regular tax rates on their respective taxable income that is effectively connected with their U.S. trade or business plus an additional "branch profits" tax (at a rate as high as 30%) on such income remaining after the regular tax, in which case there could be a significant adverse effect on the Company’s results of operations and financial condition.

72

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(f) Letters of Credit

At December 31, 2015 and 2014, $2.5 billion and $1.8 billion of letters of credit were outstanding, of which 50.9% and 66.2%, respectively, were collateralized by the Company’s investment portfolios, primarily supporting U.S. non-admitted business and the Company’s Lloyd’s syndicates’ capital requirements.

(g) Litigation

The Company and its subsidiaries are subject to litigation and arbitration in the normal course of business. These lawsuits and arbitrations principally involve claims on policies of insurance and contracts of reinsurance and are typical for the Company and for the property and casualty insurance and reinsurance industry in general. Such claims proceedings are considered in connection with the Company's loss and loss expense reserves. Reserves in varying amounts may or may not be established in respect of particular claims proceedings based on many factors, including the legal merits thereof. In addition to litigation relating to insurance and reinsurance claims, the Company and its subsidiaries are subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on insurance or reinsurance policies. This category of business litigation typically involves, among other things, allegations of underwriting errors or misconduct, employment claims, regulatory activity, shareholder disputes or disputes arising from business ventures. The status of these legal actions is actively monitored by management.

Legal actions are subject to inherent uncertainties, and future events could change management's assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions other than claims proceedings, both individually and in the aggregate, will not result in losses having a material adverse effect on the Company's financial position or liquidity at December 31, 2015.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions other than claims proceedings, the Company discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Company's assessment at December 31, 2015, no such disclosures were considered necessary.

(h) Financial Guarantee Exposures

The Company's outstanding financial guarantee contracts as of December 31, 2015 provide credit support for a variety of collateral types with the exposures comprised of an aggregate amount of $80.8 million notional financial guarantee on two notes backed by zero coupon long dated bonds and bank perpetual securities, including some issued by European financial institutions. As of December 31, 2015 and December 31, 2014, the total gross claim liability recorded was nil and the contracts had a weighted average contractual term to maturity of 24.2 years and 25.2 years, respectively.

Surveillance procedures to track and monitor credit deteriorations in the insured financial obligations are performed by the primary obligors for each transaction on the Company's behalf. Information regarding the performance status and updated exposure values is provided to the Company on a quarterly basis and evaluated by management in recording claims reserves. As of December 31, 2015, there were no reported events of default on these obligations.

73

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

18. Share Capital

(a) Authorized and Issued

The authorized share capital of XL-Ireland is $9,999,900 and €40,000, divided into: (i) 500,000,000 ordinary shares, par value $0.01 each, (ii) 499,990,000 undesignated shares, par value $0.01, each and (iii) 40,000 subscriber shares, par value €1 each. Holders of ordinary shares are entitled to one vote for each share.

In connection with the Catlin Acquisition described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the Company issued 49.9 million ordinary shares to Catlin shareholders, which had an aggregate value as of the Acquisition Date of $1.85 billion.

Ordinary Shares

The following table is a summary of ordinary shares issued and outstanding:

(in thousands)	2015		2014
Balance – beginning of year	255,183		278,253
Exercise of options	480		424
Net issuance of restricted shares	1,581		1,246
Share buybacks (1)	(12,434	)	(24,740	)
Issue of shares	49,935		—
Balance – end of year	294,745		255,183

____________

(1) Includes share buybacks associated with authorized share buyback programs as well as purchases related to satisfying tax withholding obligations of employees in connection with the vesting of restricted shares granted under the Company’s equity compensation programs.

Ordinary Share Buybacks

On February 21, 2014, XL-Ireland announced that its Board of Directors approved an increase to the Share Buyback Program (the "February 2014 Program"), authorizing the purchase of up to $1.0 billion of ordinary shares, which included the amounts that remained under the previous Share Buyback Program. During the year ended December 31, 2015, the Company purchased and canceled 4.5 million ordinary shares, respectively, under the February 2014 Program for $170.0 million.

On August 6, 2015, XL-Ireland announced that its Board of Directors approved a new share buyback program, authorizing the purchase of up to $1.0 billion of ordinary shares (the "August 2015 Program"). This authorization also canceled approximately $97.6 million remaining under the February 2014 Program. During the year ended December 31, 2015, the Company purchased and canceled 7.9 million ordinary shares under the August 2015 Program for $296.7 million. As of December 31, 2015, $703.3 million remained available for purchase under the August 2015 Program.

All share buybacks were carried out by way of redemption in accordance with Irish law and the Company's constitutional documents. All shares so redeemed were canceled upon redemption.

(b) Non-controlling Interest in Equity of Consolidated Subsidiaries

The Series D Preference Ordinary Shares and Series E Preference Ordinary Shares discussed in this section were issued by XL-Cayman and do not represent share capital of XL-Ireland. XL-Ireland has no preferred shares outstanding and has never issued any preferred shares.

Series D Preference Ordinary Shares

On October 15, 2011, XL-Cayman issued $350 million Series D Preference Ordinary Shares. Dividends on the Series D Preference Ordinary Shares are declared and paid quarterly at a floating rate of three-month LIBOR plus 3.120% on the liquidation preference.

Series E Preference Ordinary Shares

On March 15, 2007, XL-Cayman issued 1.0 million Fixed/Floating Series E Perpetual Non-Cumulative preference ordinary shares, par value $0.01 each, with liquidation preference value of $1,000 per share (the "Series E preference ordinary shares"). The Series E preference ordinary shares are perpetual securities with no fixed maturity date and are not convertible. Dividends on the Series E preference ordinary shares are declared and paid semi-annually at a rate of $32.50 per share.

74

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Acquisition of Non-controlling Preferred Shares

In connection with the Catlin Acquisition described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the Company acquired 0.6 million non-cumulative perpetual preferred shares issued by Catlin-Bermuda, par value of $0.01 per share, with liquidation preference of $1,000 per share, plus declared and unpaid dividends ("CICL Prefs"). Dividends at a rate of 7.249 percent on the liquidation preference are payable semi-annually on January 19 and July 19 in arrears as and when declared up to but not including January 2017. Thereafter, if the CICL-Prefs have not yet been redeemed, dividends will be payable quarterly at a rate equal to 2.975 percent plus the three-month LIBOR rate of the liquidation preference. The fair value of the outstanding CICL-Prefs on the date of the Catlin Acquisition was $562.3 million, which was based on the last trading price of such securities prior to the Catlin Acquisition.

(c) Stock Plans

The Company’s performance incentive programs provide for grants of stock options, restricted stock, restricted stock units, performance units and stock appreciation rights. Share-based compensation granted by the Company generally contains a vesting period of three or four years, and certain awards also contain performance conditions. The Company records compensation expense related to each award over its vesting period, incorporating the best estimate of the expected outcome of performance conditions where applicable. Compensation expense is generally recorded on a straight line basis over the vesting period of an award.

In connection with, and effective upon, the completion of the Redomestication, XL-Ireland assumed the existing liabilities, obligations and duties of XL-Cayman under the NAC Re Corp. 1989 Stock Option Plan (the "1989 Plan"), the XL Group plc Amended and Restated 1991 Performance Incentive Program (the "1991 Program"), the XL Group plc Amended and Restated 1999 Performance Incentive Program for Employees (the "1999 Program"), the XL Group plc Directors Stock & Option Plan (the "Directors Plan"), the XL Group plc 2009 Cash Long-Term Incentive Program (the "2009 Program"), the XL Group plc Supplemental Deferred Compensation Plan (the "DC Plan," and together with the 1989 Plan, the 1991 Program, the 1999 Program, the Directors Plan and the 2009 Program, the "Programs"). Furthermore, in connection with, and effective upon, the completion of the Redomestication, the Programs were amended by XL-Cayman, among other things, to (i) provide that XL-Ireland and its Board of Directors will succeed to all powers, authorities and obligations of XL-Cayman and its Board of Directors under each Program, (ii) provide that the securities to be issued pursuant to each Program will consist of ordinary shares of XL-Ireland and (iii) otherwise to reflect the completion of the Redomestication.

(d) Options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2015		2014		2013
Dividend yield	2.00	%	2.00	%	2.00	%
Risk free interest rate	1.70	%	1.81	%	1.14	%
Volatility	21.6	%	34.0	%	37.0	%
Expected lives	6.0 years		6.0 years		6.0 years

The risk free interest rate is based on U.S. Treasury rates. The expected lives are estimated using the historical exercise behavior of grant recipients. The expected volatility is determined based upon a combination of the historical volatility of the Company’s stock and the implied volatility derived from publicly traded options.

75

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following is a summary of the activity in the stock option plans for the indicated years ended December 31:

(In thousands except for weighted average grant date fair value)	2015		2014			2013
Options granted to purchase ordinary shares under the Programs - in thousands	1,974		1,025			1,047
Weighted average grant date fair value	$	6.51	$	8.60		$	8.34
Total intrinsic value of stock options exercised	$	8,546	$	7,499		$	16,076
Options exercised during the year - in thousands	480		424			927
Compensation expense related to stock option plans	$	8,961	$	9,961		$	8,294
Estimated tax benefit (charge) related to stock option plans	$	—	$	(2	)	$	50

The following is a summary of the stock options outstanding at December 31, 2015, and related activity for the year then ended:

	Number of Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding – beginning of year	10,525		$	32.42	4.8 years	$	86,690
Granted	1,974		36.43
Exercised	(480	)	20.79
Canceled/Expired	(1,270	)	75.34
Outstanding – end of year	10,749		$	28.59	5.4 years	$	121,085
Options exercisable	7,741		$	26.43	4.1 years	$	105,990
Available for grant (1)	6,907

____________

(1) Available for grant includes shares that may be granted as either stock options, restricted stock, restricted stock units or performance units.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the 2015 fiscal year and the exercise price, multiplied by the number of in-the-money-options) that would have been received by the option holders had all option holders exercised their options on December 31, 2015. Total unrecognized stock-based compensation expense related to non-vested stock options was approximately $13.6 million at December 31, 2015, which related to approximately 3.0 million options and is expected to be recognized over a weighted-average period of 1.4 years. The exercise price of the Company’s outstanding options granted is the market price of the Company’s ordinary shares on the grant date, except that during 2004, 295,000 options were granted with an exercise price of $88.00 when the market price was $77.10.

(e) Restricted Stock, Restricted Stock Units and Performance Units

Restricted Stock

Restricted stock awards issued under the 1991 Performance Incentive Program and the Directors Stock and Option Plan vest as set forth in the applicable award agreements. Each restricted stock award represents the Company’s obligation to deliver to the holder one ordinary share. The employees and directors who are granted a restricted stock award shall have all the rights of a shareholder, including the right to vote and receive dividends, but the shares are subject to certain restrictions prior to vesting relating to, among other things, forfeiture in the event of termination of employment and transferability.

76

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

A summary of the restricted stock awards issued under the 1991 Performance Incentive Program and the Directors Stock and Option Plan for the indicated years ended December 31 is as follows:

(In thousands except for weighted average grant date fair value)	2015		2014		2013
Restricted ordinary shares granted	44		46		181
Weighted average grant date fair value	$	37.11	$	31.86	$	29.44
Aggregate grant date fair value	$	1,613	$	1,463	$	5,325
Compensation expense related to restricted stock awards	$	3,889	$	5,239	$	4,419
Estimated tax benefit related to restricted stock awards	$	709	$	1,233	$	1,047

Total unrecognized stock based compensation expense related to non-vested restricted stock awards was approximately $0.3 million at December 31, 2015, which is related to approximately 0.3 million restricted stock awards and is expected to be recognized over one year.

Non-vested restricted stock awards at December 31, 2015 and for the year then ended were as follows:

(In thousands except for weighted average grant date fair value)	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	433		$	36.41
Granted	44		$	37.11
Vested	(202	)	$	29.08
Unvested at December 31, 2015	275		$	41.90

Restricted Stock Units

Each restricted stock unit represents the Company’s obligation to deliver to the holder one ordinary share upon satisfaction of the three-year vesting term. Restricted stock units are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and paid in the form of additional ordinary shares contingent upon vesting.

A summary of the restricted stock units issued to officers of the Company and its subsidiaries for the indicated years ended December 31 is as follows:

(In thousands)	2015		2014		2013
Restricted stock units granted	1,534		1,867		1,803
Aggregate grant date fair value	$	55,540	$	57,134	$	51,829
Compensation expense related to restricted stock units	$	48,937	$	41,879	$	32,874
Estimated tax benefit related to restricted stock units	$	13,271	$	11,607	$	8,813

Total unrecognized stock-based compensation expense related to non-vested restricted stock units was approximately $61.0 million at December 31, 2015, which is related to approximately 3.1 million restricted stock units and is expected to be recognized over 1.3 years.

Non-vested restricted stock units at December 31, 2015 and for the year then ended were as follows:

(In thousands except for weighted average grant date fair value)	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	3,248		$	28.93
Granted	1,534		$	36.20
Vested	(1,536	)	$	27.67
Forfeited	(176	)	$	32.45
Unvested at December 31, 2015	3,070		$	32.99

77

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Performance Units

The performance units issued in 2015 vest after approximately three years, subject to the achievement of stated market metrics, and entitle the holder to shares of the Company’s ordinary shares. Each grant of performance units has a target number of shares, with final payouts ranging from 0% to 200% of the grant amount depending upon the achievement of stated market metrics along with each employee’s continued service through the vesting date. Performance units issue prior to 2015 have a similar vesting schedule and range of a target number of shares, but vesting and payout are dependent upon the achievement of stated relative and absolute financial performance metrics along with each employee's continued service through the vesting date. Furthermore, performance units granted in 2015 are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and paid in the form of additional ordinary shares contingent upon vesting. There are no dividend rights associated with the performance units. A summary of the performance units issued to certain employees of the Company for the indicated years ended December 31 is as follows:

(In thousands)	2015		2014		2013
Performance units granted	781		572		656
Potential maximum share payout	1,563		1,144		1,312
Aggregate grant date fair value	$	28,082	$	16,345	$	17,753
Compensation expense related to performance units	$	12,942	$	24,089	$	1,041
Estimated tax benefit (charge) related to performance units	$	1,459	$	4,250	$	(176	)

Total unrecognized stock-based compensation expense related to non-vested performance units was approximately $27.9 million at December 31, 2015, which is related to approximately 1.9 million performance units and is expected to be recognized over 1.9 years. Non-vested restricted performance units as of December 31, 2015 were as follows:

(In thousands except for weighted average grant date fair value)	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	2,540		$	25.24
Granted	781		$	35.94
Vested	(750	)	$	19.35
Forfeited	(63	)	$	30.03
Performance driven addition (reduction)	(627	)	$	27.74
Unvested at December 31, 2015	1,881		$	31.02

(f) Restricted Cash Units

During the year ended December 31, 2015, the Company granted approximately 2.6 million liability-classed stock units to certain employees with an aggregate grant date fair value of approximately $94.5 million. Each liability-classed restricted stock unit represents the Company's obligation to deliver to the holder a cash payment equivalent to the value of one ordinary share. The grants may vest either in three equal installments upon the first, second and third anniversaries of the date of grant; or in two equal installments upon the first and second anniversaries of the date of grant. Liability-classed stock units are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and are paid in cash contingent upon vesting.

(g) Voting

XL-Ireland’s Articles of Association restrict the voting power of any person to less than approximately 10% of the total voting power.

78

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

19. Retirement Plans

The Company provides pension benefits to eligible employees through various defined contribution and defined benefit retirement plans sponsored by the Company, which vary for each subsidiary. Plan assets are invested principally in equity securities and fixed maturities.

(a) Defined contribution plans

The Company has qualified defined contribution plans that are managed externally and to which employees and the Company contribute a certain percentage of the employee’s pensionable salary each month. The Company’s contribution generally vests over five years. The Company’s expenses for its qualified contributory defined contribution retirement plans were $87.5 million, $56.6 million and $49.4 million at December 31, 2015, 2014 and 2013, respectively.

(b) Defined benefit plans

The Company maintains defined benefit plans that cover certain employees as follows:

U.S. Plan

A qualified non-contributory defined benefit pension plan exists to cover a number of U.S. employees. The plan was curtailed in 2002 and was closed to new entrants at that time. Under the terms of the curtailment, existing plan participants were no longer entitled to earn additional defined benefits for future services performed after the curtailment date; however, accrued benefits are eligible for annual cost-of-living increases. This plan also includes a non-qualified supplemental defined benefit plan designed to compensate individuals to the extent that their benefits under the Company’s qualified plan are curtailed due to IRS Code limitations. Benefits are based on years of service and compensation, as defined in the plan, during the highest consecutive three years of the employee’s last ten years of employment.

In addition, pursuant to agreements entered into by the Company, certain former employees have received benefit type guarantees, not formally a part of any established plan. The liability recorded with respect to these agreements at each of December 31, 2015 and 2014 was $3.2 million representing the entire unfunded projected benefit obligations.

U.K. Plans

A contributory defined benefit pension plan exists in the U.K., but has been closed to new entrants since 1996. Benefits are based on length of service and compensation as defined in the trust deed and rules.

In addition, during 2003, six individuals, four of whom are still employed by the Company in the U.K., transferred from a defined benefit plan into a defined contribution plan. These employees have a contractual agreement with the Company that provides a "no worse than final salary pension" guarantee in the event that they are employed by the Company until retirement, under which the Company guarantees to top-up their defined contribution pension to the level of pension that they would have been entitled to receive had they remained in the defined benefit scheme. The pension liability recorded with respect to these individuals was $4.8 million and $3.8 million at December 31, 2015 and 2014, respectively, representing the entire unfunded projected obligation.

In connection with the Catlin Acquisition described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the Company assumed additional assets and liabilities associated with a further U.K. defined benefit plan within Catlin. This plan has been closed to new members since 1993. The current membership consists only of pensioners and deferred members. Benefits are based on length of service and compensation.

Other European Plans

Certain contributory defined benefit pension plans exist in several European countries, most notably Germany, which are closed to new entrants. Benefits are generally based on length of service and compensation defined in the related agreements.

The Company acquired certain defined benefit pension liabilities with the acquisition of XL GAPS in 2007. The related balances are not included in the tables below as the liabilities are insured under an annuity type contract.

79

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The funded status by geographical region of all the Company’s retirement plans at December 31, 2015 and 2014 is as follows:

Funded Status (U.S. dollars in thousands)	2015			2014
U.S.	$	(16,306	)	$	(13,124	)
U.K.	(4,650		)	(7,742		)
Other European	(21,807		)	(22,977		)
Funded status – end of year	$	(42,763	)	$	(43,843	)

The status of all the Company’s retirement plans at December 31, 2015 and 2014 is as follows:

Change in projected benefit obligation (U.S. dollars in thousands)	2015			2014
Projected benefit obligation – beginning of year	$	93,124		$	81,976
Projected benefit obligation assumed due to Catlin Acquisition	28,414			—
Service cost (1)	1,494			1,279
Interest cost	4,382			3,747
Actuarial (gain) / loss	2,821			13,402
Benefits and expenses paid	(3,747		)	(2,761		)
Foreign currency (gains) / losses	(4,047		)	(3,817		)
Settlements	(276		)	(702		)
Projected benefit obligation – end of year	$	122,165		$	93,124

(1) Service costs include cost of living adjustments on curtailed plans.

Change in plan assets (U.S. dollars in thousands)	2015			2014
Fair value of plan assets – beginning of year	$	49,281		$	47,158
Fair value of plan assets acquired due to Catlin Acquisition	33,131			—
Actual return on plan assets	(119		)	3,543
Employer contributions	1,775			1,187
Benefits and expenses paid	(3,305		)	(1,932		)
Foreign currency gains / (losses)	(1,361		)	(675		)
Fair value of plan assets – end of year	$	79,402		$	49,281
Funded status – end of year	$	(42,763	)	$	(43,843	)
Accrued pension liability	$	42,763		$	43,843

The components of the net benefit cost for the years ended December 31, 2015, 2014 and 2013 are as follows:

Components of net benefit cost (U.S. dollars in thousands)	2015			2014			2013
Service cost	$	1,494		$	1,279		$	1,491
Interest cost	4,381			3,747			3,589
Expected return on plan assets	(3,903		)	(2,859		)	(3,096		)
Amortization of net actuarial loss	1,617			812			1,440
Net benefit cost	$	3,589		$	2,979		$	3,424

80

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Assumptions

Several assumptions and statistical variables are used in the models to calculate the expenses and liability related to the plans. The Company, in consultation with its actuaries, determines assumptions about the discount rate, the expected rate of return on plan assets and the rate of compensation increase. The table below includes disclosure of these rates on a weighted-average basis, for the years ended December 31 as indicated:

	2015						2014
	U.S. Plans		U.K. Plans		Other European Plans		U.S. Plans		U.K. Plans		Other European Plans
Net Benefit Cost – Weighted-average assumptions
Discount rate	3.91	%	3.70	%	2.42	%	4.95	%	4.60	%	3.50	%
Expected long-term rate of return on plan assets	6.00	%	3.48	%	N/A		6.50	%	4.60	%	N/A
Rate of compensation increase	N/A		3.96	%	2.50	%	N/A		5.50	%	2.50	%
Benefit Obligation – Weighted-average assumptions
Discount rate	4.25	%	3.70	%	2.42	%	3.91	%	4.60	%	2.40	%
Rate of compensation increase	N/A		3.96	%	2.50	%	N/A		5.50	%	2.50	%

The expected long-term rate of return assumption is determined by adding expected inflation to the expected long-term real rates of various asset classes taking into account expected volatility and correlation between the various asset classes.

Plan Assets

The U.S. Plan assets at December 31, 2015 consist of three new mutual funds. The first fund seeks long-term capital appreciation. The fund invests primarily in equity, Large Capital and Large Company Portfolio securities as well as Emerging Markets Assets.

The second fund invests primarily in quality corporate and U.S. governmental bonds. The fund employs a high total investment return through a combination of current income and capital appreciation.

The third fund seeks to outperform longer-duration benchmarks without excess volatility by investing primarily in longer duration, investment grade corporate and sovereign bonds.

The U.S. Plan assets at December 31, 2014 consisted of two mutual funds. The first fund employed a core bond portfolio strategy that sought maximum total return and price appreciation consistent with the preservation of capital and prudent risk taking with the focus on intermediate – term high quality bonds. The second fund sought long term growth of capital, primarily in equity securities and depository receipts of U.S. and foreign issuers.

The fair value of the U.S. Plan assets at December 31, 2015 and 2014 was $36.7 million and $38.1 million, respectively. As the investments of the retirement plan are mutual funds, they fall within Level 1 in the fair value hierarchy. The inputs and methodologies used in determining the fair value of these assets are consistent with those used to measure our assets as set out in Note 4, "Fair Value Measurements."

The U.K. pension plan assets, including those acquired as part of the Catlin Acquisition, are held in a separate trustee administered fund to meet long term liabilities to past and present employees. The table below shows the composition of the plans' assets and the fair value of each major category of plan assets at December 31, 2015 and 2014, as well as the potential returns of the different asset classes. The totals of the asset values held in various externally managed portfolios are provided by third party pricing vendors. There is no significant concentration of risk within plan assets. The assets in the plans and the expected rates of return were as follows:

(U.S. dollars in thousands, except percentages)	Expected Return on Assets for 2015		Fair Value at December 31, 2015		Expected Return on Assets for2014		Fair Value at December 31,2014
Equities	6.2	%	$	7,893	7.4	%	$	7,787
Gilts	2.4	%	17,856		3.6	%	1,579
Corporate Bonds	3.4	%	16,915		4.6	%	1,594
Other (cash)	1.8	%	52		4.0	%	224
Total market fair value of assets			$	42,716			$	11,184

81

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Expected Cash Flows

Under the U.S. defined benefit plans, the Company’s policy is to make annual contributions to the plan that are deductible for federal income tax purposes and that meet the minimum funding standards required by law. The contribution level is determined by utilizing the projected unit credit cost method and different actuarial assumptions than those used for pension expense purposes. The Company’s funding policy provides that contributions to the plan shall be at least equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by the Pension Protection Act of 2006. During the fiscal year beginning January 1, 2016, the U.S. defined benefit plans expect to make contributions of $0.4 million.

The estimated future benefit payments with respect to the U.S. defined benefit pension plans are as follows:

(U.S. dollars in thousands)	Retirement Plan		Benefits Equalization Plan		Total
2016	$	988	$	434	$	1,422
2017	$	1,023	$	430	$	1,453
2018	$	1,054	$	427	$	1,481
2019	$	1,240	$	524	$	1,764
2020	$	1,396	$	538	$	1,934
2021-2025	$	9,904	$	3,032	$	12,936

The U.K. plan is subject to triennial funding valuations, the most recent of which was conducted as of July 1, 2012 and was reported in 2013. The $2.4 million deficit (calculated on a realistic basis) is being funded over a 10-year period.

For the further U.K. plan assumed as part of the Catlin Acquisition the most recent funding valuation was prepared as at October 31, 2013. No contributions were required following that valuation. During 2016, it is expected that no contributions will be paid to the plan.

20. Accumulated Other Comprehensive Income (Loss)

The changes in AOCI, net of tax, by component for the indicated years ended December 31 are as follows:

(U.S. dollars in thousands)	Unrealized Gains (Losses) on Investments (1)			OTTI Losses Recognized in AOCI			Foreign Currency Translation Adjustments			Underfunded Pension Liability			Cash Flow Hedge			Total
Balance, net of tax, December 31, 2012	$	1,591,210		$	(121,371	)	$	69,399		$	(20,892	)	$	1,674		$	1,520,020
OCI before reclassifications	(742,768		)	—			(62,934		)	9,722			—			(795,980		)
Amounts reclassified from AOCI	(119,970		)	32,193			206			1,440			439			(85,692		)
Tax benefit (expense)	93,960			(12		)	7,870			(3,509		)	—			98,309
Net current period OCI - net of tax	$	(768,778	)	$	32,181		$	(54,858	)	$	7,653		$	439		$	(783,363	)
Balance, net of tax, December 31, 2013	$	822,432		$	(89,190	)	$	14,541		$	(13,239	)	$	2,113		$	736,657
OCI before reclassifications (1)	954,326			—			(26,497		)	(10,877		)	—			916,952
Amounts reclassified from AOCI	(143,330		)	14,082			87			812			255			(128,094		)
Tax benefit (expense)	(43,314		)	(939		)	681			2,515			—			(41,057		)
Net current period OCI - net of tax	$	767,682		$	13,143		$	(25,729	)	$	(7,550	)	$	255		$	747,801
Balance, net of tax, December 31, 2014	$	1,590,114		$	(76,047	)	$	(11,188	)	$	(20,789	)	$	2,368		$	1,484,458
OCI before reclassifications (1)	(474,304		)	—			(33,690		)	(6,100		)	—			(514,094		)
Amounts reclassified from AOCI	(346,911		)	18,987			—			1,145			(200		)	(326,979		)
Tax benefit (expense)	34,195			(442		)	8,375			1,103			—			43,231
Net current period OCI - net of tax	$	(787,020	)	$	18,545		$	(25,315	)	$	(3,852	)	$	(200	)	$	(797,842	)
Balance, net of tax, December 31, 2015	$	803,094		$	(57,502	)	$	(36,503	)	$	(24,641	)	$	2,168		$	686,616

____________

(1) Included in these amounts is the impact of Shadow Adjustments. As of December 31, 2014, $445.1 million was recorded. During the year ended December 31, 2015, additional net impacts of $(170.7) million were recorded, resulting in a total cumulative net impact of Shadow Adjustments on future policy benefit reserves of $274.4 million at December 31, 2015.

82

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The reclassifications out of AOCI along with the associated income statement line items affected by component, and the total related tax (expense) benefit for indicated years ended December 31, are as follows:

Gross Amount Reclassified From AOCI
Details About AOCI Components (U.S. dollars in thousands)	2015			2014			Affected Line Item in the Statement of Income
Unrealized gains and losses on investments:
	$	(316,508	)	$	(175,639	)	Net realized gains (losses) on investments sold
	95,344			$	54,095		OTTI on investments
	(125,747		)	$	(21,786	)	Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets
	$	(346,911	)	$	(143,330	)	Total before tax
	7,597			$	(1,593	)	Provision (benefit) for income tax
	$	(339,314	)	$	(144,923	)	Net of tax
OTTI losses recognized in OCI:
	$	18,014		$	11,848		Net realized gains (losses) on investments sold
	973			$	2,234		OTTI on investments transferred to (from) OCI
	$	18,987		$	14,082		Total before tax
	(32		)	$	(175	)	Provision (benefit) for income tax
	$	18,955		$	13,907		Net of tax
Foreign Currency Translation:
Foreign exchange relating to affiliate investments	$	—		$	87		Exchange gains (losses) - before tax
	—			$	—		Provision (benefit) for income tax
	$	—		$	87		Net of tax
Underfunded Pension Liability:
Pension expense	$	1,145		$	812		Operating Expenses
	(401		)	$	(206	)	Provision (benefit) for income tax
	$	744		$	606		Net of tax
Gains and losses on cash flow hedges:
Interest rate contracts	$	(200	)	$	255		Interest Expense
	—			$	—		Provision (benefit) for income tax
	$	(200	)	$	255		Net of tax
Total reclassifications for the period, gross of tax	$	(326,979	)	(128,094		)
Tax (benefit) expense	7,164			(1,974		)
Total reclassifications for the period, net of tax	$	(319,815	)	(130,068		)

21. Dividends

In 2015, two quarterly dividends of $0.16 were paid to ordinary shareholders of record at March 13 and June 15 and two quarterly dividends of $0.20 per share were paid to all ordinary shareholders of record at September 15 and December 15. In 2014, four quarterly dividends of $0.16 per share were paid to all ordinary shareholders of record at March 14, June 13, September 15 and December 15. In 2013, four quarterly dividends of $0.14 per share were paid to all ordinary shareholders of record at March 15, June 14, September 13 and December 13.

83

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The Company paid preference shareholders for the indicated years ended December 31, as follows:

(U.S. dollars in millions)	2015		2014		2013
Series D preference ordinary shares (1) (2)	$	11.8	$	11.7	$	12.3
Series E preference ordinary shares (3)	$	65.1	$	65.1	$	65.1
Non-cumulative perpetual preferred shares (4)	$	21.8	$	—	$	—

____________

(1) On October 30, 2015, the Company announced that the Board of Directors of XL-Cayman resolved to pay a dividend of $8.7787 per share on XL-Cayman’s Series D Preference Ordinary Shares. The dividend was paid on January 15, 2016 to all shareholders of record at January 1, 2016.

(2) On February 19, 2016, the Company announced that the Board of Directors of XL-Cayman, resolved on February 18, 2016 to pay a dividend of $9.349 per share on XL-Cayman’s Series D Preference Ordinary Shares. The dividend will be paid on April 15, 2016 to all shareholders of record at April 1, 2016.

(3) On February 19, 2016, the Company announced that the Board of Directors of XL-Cayman, resolved on February 18, 2016 to pay a dividend of $32.50 per share on XL-Cayman’s Series E Preference Ordinary Shares. The dividend will be paid on April 15, 2016 to all shareholders of record at April 1, 2016.

(4) On January 12, 2016, the Board of Directors of Catlin-Bermuda resolved to pay a dividend in the aggregate amount of $21.8 million on CICL Prefs. The dividend was paid on January 19, 2016 to all shareholders of record at December 31, 2015.

22. Taxation

The Company's Irish operations, including the parent company XL-Ireland, are subject to income and capital gains tax in Ireland under applicable Irish law.

The Company’s Bermuda subsidiaries are not subject to any income, withholding or capital gains taxes under current Bermuda law. In the event that there is a change such that these taxes are imposed, the Bermuda subsidiaries would be exempted from any such tax until March 2035 pursuant to the Bermuda Exempted Undertakings Tax Protection Act 1966, and the Exempted Undertakings Tax Protection Amendment Act 2011.

The Company’s U.S. subsidiaries are subject to federal, state and local corporate income taxes and other taxes applicable to U.S. corporations. The provision for federal income taxes has been determined under the principles of the consolidated tax provisions of the IRS Code and Regulations thereunder.

The Company has operations in subsidiary and branch form in various other jurisdictions around the world, including but not limited to the U.K., Switzerland, Ireland, Germany, France, Canada, Brazil and various other countries in Latin America and Asia that are subject to relevant taxes in those jurisdictions.

Deferred income taxes have not been accrued with respect to certain undistributed earnings of subsidiaries located outside of Ireland. If the earnings were to be distributed, as dividends or otherwise, such amounts may be subject to withholding taxation in the jurisdiction of the paying entity. The Company does not assert that all earnings arising in the U.S. will be permanently reinvested in that jurisdiction and, accordingly, a provision for withholding taxes arising in respect of current period U.S. earnings has been made. No withholding taxes are accrued with respect to the earnings of the Company’s subsidiaries arising outside the U.S., as it is the intention that all such earnings, which would be subject to withholding tax, will remain reinvested indefinitely.

The Company’s current corporate structure is such that distribution of earnings from subsidiaries located outside of the U.S. would not be subject to significant incremental taxation. It is not practicable to estimate the amount of additional withholding taxes that might be payable on such earnings due to a variety of factors, including the timing, extent and nature of any repatriation.

The following table details the years that are the subject of open examinations, by major tax jurisdiction. While the Company cannot estimate with certainty the outcome of these examinations, the Company does not believe that adjustments from open tax years will result in a significant change to the Company's results from operations.

Jurisdiction	Tax Years
U.S.	2013
Ireland	2006 - 2009
Germany	2010 - 2013
France	2013 - 2014

84

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The following table details open tax years that are open to assessment by local tax authorities, in the following major tax jurisdictions.

Jurisdiction	Tax Years
U.S.	2012 - 2015
Ireland	2006 - 2015
U.K.	2013 - 2015
Germany	2010 - 2015
Switzerland	2011 - 2015
France	2013 - 2015

The Company’s income (loss) before income tax and non-controlling interests was distributed between U.S. and non-U.S. for the years ended December 31, 2015, 2014 and 2013 as follows:

Income (loss) before income tax: (U.S. dollars in thousands)	2015			2014		2013
U.S.	$	(5,931	)	$	228,708	$	188,503
Non U.S.	1,300,109			137,027		1,025,649
Total	$	1,294,178		$	365,735	$	1,214,152

The income tax provisions for the years ended December 31, 2015, 2014 and 2013 were as follows:

(U.S. dollars in thousands)	2015			2014			2013
Current expense (benefit):
U.S.	$	(22,698	)	$	45,598		$	49,566
Non U.S.	67,784			81,371			41,921
Total current expense (benefit)	$	45,086		$	126,969		$	91,487
Deferred expense (benefit):
U.S.	$	(63,491	)	$	8,572		$	700
Non U.S.	(756		)	(38,644		)	(14,682		)
Total deferred expense (benefit)	$	(64,247	)	$	(30,072	)	$	(13,982	)
Total tax expense (benefit)	$	(19,161	)	$	96,897		$	77,505

The applicable statutory tax rates of the most significant jurisdictions contributing to the overall taxation of the Company are:

Jurisdiction	Applicable Statutory Taxation Rates
Ireland (1)	12.50	%
Ireland (1)	25.00	%
Bermuda	—	%
U.S.	35.00	%
U.K.	20.25	%
Switzerland (2)	7.83	%
Switzerland (2)	21.20	%
Germany	15.00	%
France	38.00	%

____________

(1) The different applicable statutory taxation rates in Ireland relate to entities classified as trading or non-trading companies.

(2) The different applicable statutory taxation rates in Switzerland relate to entities classified as trading or holding companies.

85

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

The weighted average expected tax provision has been calculated using the pre-tax accounting income (loss) in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate for the years ended December 31, 2015, 2014 and 2013 is provided below:

(U.S. dollars in thousands)	2015			2014			2013
Expected tax (benefit) provision at weighted average rate	$	(50,797	)	$	132,775		$	43,092
Permanent differences:
Non-taxable (income) loss	(23,036		)	(19,870		)	(50,745		)
Revision to prior year estimates	7,402			2,016			8,551
State, local and foreign taxes	27,499			47,078			12,225
Valuation allowance	9,517			(181		)	5,754
Net allocated investment income	(405		)	3,399			5,949
Stock options	(433		)	411			1,501
Non-deductible expenses	42,839			22,556			23,662
Other investment related adjustments	2,075			(2,916		)	—
Adjustments related to GreyCastle Life Retro Arrangements	(35,045		)	(99,535		)	—
Change in tax rates	(11,877		)	3,974			(2,484		)
Uncertain tax positions	13,100			7,190			30,000
Total tax expense (benefit)	$	(19,161	)	$	96,897		$	77,505

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2015 and 2014 were as follows:

(U.S. dollars in thousands)	2015		2014
Deferred tax asset:
Net unpaid loss reserve discount	$	111,584	$	90,262
Net unearned premiums	80,434		72,752
Compensation liabilities	94,013		77,578
Net operating losses	181,295		49,834
Investment adjustments	14,399		13,022
Pension	10,370		8,114
Bad debt reserve	7,425		6,626
Amortizable goodwill	5,396		6,694
Net unrealized depreciation on investments	5,051		1,484
Stock options	16,192		11,985
Depreciation	13,299		7,599
Net realized capital losses	98,756		97,189
Deferred intercompany capital losses	26,164		57,427
Untaxed Lloyd's result	3,769		7,254
Deferred acquisition costs	31,133		11,386
Currency translation adjustments	6,280		—
Other	24,977		2,282
Deferred tax asset, gross of valuation allowance	$	730,537	$	521,488
Valuation allowance	276,301		207,062
Deferred tax asset, net of valuation allowance	$	454,236	$	314,426

86

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015		2014
Deferred tax liability:
Net unrealized appreciation on investments	$	51,010	$	63,642
Unremitted earnings	$	3,739	$	5,125
Deferred acquisition costs	8,308		2,737
Currency translation adjustments	1,210		3,969
Regulatory reserves	64,352		65,965
Investment adjustment	6,373		12,061
Untaxed Lloyd’s result	—		11,422
Depreciation	11,500		—
Syndicate capacity	92,756		—
Intangible asset	40,126		—
Other	13,202		11,260
Deferred tax liability	$	292,576	$	176,181
Net Deferred Tax Asset	$	161,660	$	138,245

The deferred tax asset and liability balances presented above represent the gross deferred tax asset and liability balances across each tax jurisdiction. The deferred tax asset balances of $282.3 million and $204.5 million at December 31, 2015 and 2014, respectively, and deferred tax liability balances of $120.7 million and $66.2 million at December 31, 2015 and 2014, respectively, disclosed on the consolidated balance sheets include netting of certain deferred tax assets and liabilities within a tax jurisdiction to the extent such netting is consistent with the regulations of the tax authorities in those jurisdictions.

At December 31, 2015 and 2014, the valuation allowance of $276.3 million and $207.1 million, respectively, related primarily to net operating loss and realized capital loss carryforwards in the following jurisdictions:

Jurisdiction (U.S. dollars in thousands)	2015		2014
Switzerland	$	7,818	$	1,459
Ireland	93,396		72,363
U.S.	106,624		123,695
U.K.	46,732		1,632
Other	21,731		7,913
Valuation Allowance Total	$	276,301	$	207,062

The increase in the valuation allowance in 2015 of $69.2 million was primarily due to the inclusion of valuation allowances on the acquired business, the establishment of a valuation allowance on a U.K. subsidiary, and the increase of the existing valuation allowances as a result of the current year losses in the U.K. and Ireland primarily due to acquisition related expenses, partially offset by a reduction of a portion of the valuation allowance held against capital loss carry-forwards in the U.S, that expired in 2015.

At December 31, 2015, the Company had U.S. net operating loss carryforwards of $108.0 million ($37.8 million tax effected) which were primarily generated during 2015. Of this amount, approximately $48.3 million are subject to restrictions on timing and utilization under §382 of the IRS Code. Management has reviewed historical taxable income and future taxable income projections for its U.S. group and has determined that in its judgment, all of the U.S. net operating losses will more likely than not be realized as reductions to future taxable income prior to expiration through 2034. At December 31, 2015, the Company had U.S. realized capital loss carryforwards of approximately $190.8 million ($66.8 million tax effected). The five year limitation for the utilization of realized capital losses applies to this balance. Losses of $33.8 million will expire at the end of 2016 with another $157.0 million of realized capital losses expiring in future years through 2020. A valuation allowance of $66.8 million has been established in respect of all of these realized capital losses. At December 31, 2015, the Company also had $74.8 million of U.S. capital losses arising from a prior year sale of investments to an international affiliate ($26.2 million tax effected), against which a valuation allowance of $26.2 million has been established. These losses cannot be utilized to offset any future U.S. realized capital gains, and will not begin to expire, until the underlying assets have been sold to unrelated parties.

At December 31, 2015, net operating loss carryforwards in the U.K. were approximately $290.0 million ($58.0 million tax effected) and have no expiration. At December 31, 2015, the Company also had $7.2 million of U.K. capital losses ($1.4 million tax effected), with a valuation allowance of $46.0 million on these combined losses after consideration of deferred tax liabilities.

87

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Management has reviewed historical taxable income for the U.K. subsidiaries with carryforward losses and has determined that in its judgment, insufficient historical positive evidence exists that the U.K. loss carryforwards will be realized as reductions to future taxable income within a reasonable period, and therefore has established a valuation allowance on these loss carryforwards. Management will continue to evaluate income generated in future periods by these U.K. subsidiaries in determining the reasonableness of its position.

At December 31, 2015, net operating loss carryforwards in Switzerland were approximately $118.9 million ($9.2 million tax effected). Losses of $1.8 million and $47.0 million will expire in 2018 and 2019, respectively, with the remaining $70.1 million expiring through 2022. A valuation allowance of $7.7 million has been established in respect of the Swiss net operating losses after considering deferred tax liability offsets.

At December 31, 2015, net operating loss carryforwards in Ireland were approximately $460.0 million ($57.5 million tax effected), with a further $122.1 million ($30.5 million tax effected) of capital losses carried forward. Although these Irish losses may be carried forward indefinitely, a valuation allowance of $88.0 million has been established in respect of all of these Irish losses due to the uncertainty surrounding any future loss utilization.

Management believes it is more likely than not that the tax benefit of the remaining net deferred tax assets will be realized.

Shareholders’ equity at December 31, 2015 and 2014 reflected tax benefits of $9.2 million and $4.0 million, respectively, related to the excess of tax deductions over book compensation expense for stock awards exercised/vested by the Company's U.S. subsidiaries.

At December 31, 2015 and 2014, the Company had unrecognized tax benefits of $80.6 million and $37.2 million, respectively. If recognized, the full amount of these unrecognized tax benefits would decrease the annual effective tax rate. The Company does not currently anticipate any significant change in unrealized tax benefits during 2016.

The following table presents a reconciliation of the Company’s unrecognized tax benefits:

(U.S. dollars in thousands)	2015			2014			2013
Unrecognized tax benefits, beginning of the year	$	37,190		$	30,000		$	—
Increases for tax positions taken during the year	20,370			12,182			9,591
Increases for tax positions taken in prior years (1)	38,650			15,304			20,409
Decreases for tax positions taken in prior years	(4,850		)	(20,296		)	—
Decreases for lapse of the applicable statute of limitations	(10,770		)	—			—
Unrecognized tax benefits, end of year	$	80,590		$	37,190		$	30,000

____________

(1) Included in this amount is approximately $30.3 million of unrecognized tax benefits related to the Catlin Acquisition that existed as of the Acquisition Date. Of this amount, $4.8 million had been specifically identified as an unrecognized tax benefit, and the remaining $25.5 million was included in deferred tax liability. In conjunction with the Catlin Acquisition, management determined that this amount should be reclassified as an unrecognized tax benefit.

The Company’s policy is to recognize any interest and penalties related to unrecognized tax benefits as a component of tax expense. At December 31, 2015 and 2014, the Company had accrued interest and penalties of $0.4 million.

23. Statutory Financial Data

The Company’s ability to pay dividends or return capital from shareholders’ equity is limited by applicable laws and regulations of the various jurisdictions in which the Company’s principal operating subsidiaries operate, certain additional required regulatory approvals and financial covenants contained in the Company’s credit facilities. The payment of dividends to XL-Ireland and XL-Cayman, the Company’s holding companies, and by the Company’s principal operating subsidiaries is regulated under the laws of various jurisdictions including Bermuda, the U.K., Ireland and Switzerland and certain insurance statutes of various U.S. states in which the principal operating subsidiaries are licensed to transact business and the other jurisdictions where the Company has regulated subsidiaries. In addition, XL-Ireland, our ultimate holding company, is domiciled in Ireland. Following the implementation of Solvency II on January 1, 2016, Solvency II applies at different levels of operations with different requirements. The group is regulated by Solvency II at the level of the group and our European subsidiaries are regulated by Solvency II at the subsidiary level. The Central Bank of Ireland ("CBI") is our group supervisor working in conjunction with the group's college of regulatory supervisors.

88

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

Statutory capital and surplus for the principal operating subsidiaries of the Company for the years ended December 31, 2015 and 2014 are summarized below:

(U.S. dollars in thousands)	Bermuda (1)				U.S. (2)				U.K., Europe and Other
	2015		2014		2015		2014		2015		2014
Required statutory capital and surplus	$	7,722,123	$	6,194,832	$	747,313	$	668,794	$	4,445,247	$	1,604,721
Actual statutory capital and surplus (3)	$	11,112,176	$	10,309,895	$	2,234,767	$	2,233,596	$	6,054,122	$	2,712,552

____________

(1) Required statutory capital and surplus at December 31, 2015 represents 100% Bermuda Solvency Capital Requirement ("BSCR") level for the top Bermuda operating subsidiary, XL Insurance (Bermuda) Ltd, calculated on a consolidated basis (and therefore includes a BSCR requirement for all regions).

(2) Required statutory capital and surplus represents 100% Risk-Based Capital level for principal U.S. operating subsidiaries.

(3) Statutory assets in Bermuda include investments in other U.S. and international subsidiaries reported separately herein.

Statutory net income (loss) for the principal operating subsidiaries of the Company for the years ended December 31, 2015, 2014 and 2013 is summarized below:

(U.S. dollars in thousands)	2015			2014		2013
Bermuda	$	1,513,924		$	361,022	$	1,241,878
U.S.	$	17,574		$	155,751	$	124,310
U.K., Europe and Other	$	(125,758	)	$	215,787	$	1,465

The difference between statutory financial statements and statements prepared in accordance with GAAP varies by jurisdiction, however, the primary difference is that statutory financial statements do not reflect deferred policy acquisition costs, deferred income tax net assets, intangible assets, or unrealized appreciation on investments, but they do reflect any unauthorized/authorized reinsurance charges.

Certain restrictions on the payment of dividends from retained earnings by the Company’s principal operating subsidiaries are further detailed below.

Management has evaluated the group and principal operating subsidiaries’ ability to maintain adequate levels of statutory capital, liquidity and rating agency capital and believes they will be able to do so. In performing this analysis, management has considered the most recent statutory capital position of each of the principal operating subsidiaries as well as the group overall, through its holding companies as a result of Solvency II group regulation effective in 2016. In addition, management has evaluated the ability of the holding companies to allocate capital and liquidity around the group as and when needed.

Bermuda Operations

In early July 2008, the Insurance Amendment Act of 2008 was passed, which introduced a number of changes to the Bermuda Insurance Act 1978, such as allowing the Bermuda Monetary Authority ("BMA") to prescribe standards for an enhanced capital requirement and a capital and solvency return with which insurers and reinsurers must comply. The BSCR employs a standard mathematical model that can relate more accurately the risks undertaken by (re)insurers to the capital that is dedicated to their business. Insurers and reinsurers may adopt the BSCR model or, where an insurer or reinsurer believes that its own internal model better reflects the inherent risk of its business, an in-house model approved by the BMA. Class 4 (re)insurers, such as the Company, were required to implement the new capital requirements under the BSCR model beginning with fiscal years ending on or after December 31, 2009. The Company’s capital requirements for its Bermuda principal operating subsidiaries, XLIB, XL Re and Catlin-Bermuda, under the BSCR are highlighted in the table above. In addition to the BSCR based requirements, the BMA also prescribes minimum liquidity standards which must be met.

Under the Insurance Act 1978, amendments thereto and related regulations of Bermuda, Class 4 (re)insurers are prohibited from declaring or paying dividends of more than 25% of each of their prior year’s statutory capital and surplus unless they file with the BMA an affidavit stating that the dividend has not caused the Class 4 (re)insurer to fail to meet its relevant margins. At December 31, 2015 and 2014, the maximum dividend that our Bermuda Class 4 (re)insurers could pay, without a signed affidavit, having met minimum levels of statutory capital and surplus and liquidity requirements, was approximately $2.8 billion and $1.4 billion, respectively. No Class 4 (re)insurer may reduce its total statutory capital by 15% or more unless it has received the prior approval of the BMA, and it must also submit an affidavit stating that the proposed reduction will not cause it to fail to meet its minimum solvency margin or minimum liquidity ratio.

89

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

U.S. Operations

The Company has two lead property and casualty subsidiaries in the U.S., XLRA and Catlin Specialty Insurance Company ("CSIC"), which are domiciled in New York and Delaware, respectively. Both XLRA and CSIC are the lead companies in their respective insurance pools. Including the pool leaders, these insurance pools include seven and three P&C companies, respectively.

Unless permitted by the New York Superintendent of Insurance, XLRA cannot declare or distribute any dividend to shareholders during any twelve month period that exceeds the lesser of 10 percent of XLRA’s statutory policyholders’ surplus or 100 percent of its "adjusted net investment income," as defined. Unless permitted by the Insurance Commissioner of the State of Delaware, CSIC cannot declare or distribute any dividend to shareholders during any twelve month period that exceeds the greater of 10 percent of statutory policyholders' surplus or 100 percent of net income excluding realized gains. The New York State and Delaware State insurance laws also provide that any distribution that is a dividend may only be paid out of statutory earned surplus. At December 31, 2015 and 2014, XLRA had statutory earned surplus of $31.7 million and $205.5 million, respectively, while CSIC had a statutory earned deficit. At December 31, 2015, XLRA’s statutory policyholders’ surplus was $2.0 billion, and the maximum amount of dividends XLRA can declare and pay in 2016, without prior regulatory approval, is $31.7 million. At December 31, 2015, CSIC's statutory policyholders' surplus was $213.1 million, and no dividends can be declared and paid in 2016 without prior regulatory approval. At December 31, 2015 and 2014, two and none, respectively, of the seven P&C members of the XLRA insurance pool had a statutory earned deficit. At December 31, 2015, all three of the P&C members of the CSIC insurance pool had a statutory earned deficit.

International Operations

The Company’s international principal operating subsidiaries prepare statutory financial statements based on local laws and regulations. Some jurisdictions impose enhanced regulatory requirements on insurance companies while other jurisdictions impose fewer requirements. In some countries, such subsidiaries must obtain licenses issued by governmental authorities to conduct local insurance business. These licenses may be subject to minimum reserves and minimum capital and solvency tests. Jurisdictions may impose fines, censure, and/or impose criminal sanctions for violation of regulatory requirements. The majority of the actual statutory capital outside of the U.S. and Bermuda is held in the U.K. ($3.0 billion at December 31, 2015), Switzerland ($1.8 billion at December 31, 2015) and Ireland ($1.1 billion at December 31, 2015). The Company also has sufficient capital available to meet Funds at Lloyd's requirements of approximately $1.6 billion.

Other Restrictions

XL-Ireland and XL-Cayman have no operations of their own and their assets consist primarily of investments in subsidiaries. Accordingly, XL-Ireland’s and XL-Cayman’s future cash flows largely depend on the availability of dividends or other permissible payments from subsidiaries as noted above.

XL-Ireland is subject to certain legal constraints that affect its ability to pay dividends on or redeem or buyback its ordinary shares. While XL-Ireland’s Articles of Association authorize its board of directors to declare and pay dividends as justified from the profits, under Irish law, XL-Ireland may only pay dividends or buyback or redeem shares using distributable reserves. In addition, no dividend or distribution may be made unless the net assets of XL-Ireland are not less than the aggregate of its share capital plus undistributable reserves and the distribution does not reduce XL-Ireland’s net assets below such aggregate. At December 31, 2015, XL-Ireland had $2.9 billion in distributable reserves. Prospectively the ability to declare and pay dividends may also be restricted by the provisions of Solvency II as described earlier, in particular as they relate to the regulation of groups.

In addition, XL-Cayman is subject to certain constraints that affect its ability to pay dividends on its preferred shares. Under Cayman Islands law, XL-Cayman may not declare or pay a dividend if there are reasonable grounds for believing that XL-Cayman is, or would after the payment be, unable to pay its liabilities as they become due in the ordinary course of business. Also, the terms of XL-Cayman’s preferred shares prohibit declaring or paying dividends on the ordinary shares unless full dividends have been declared and paid on the outstanding preferred shares. Full dividends have been declared and paid on the outstanding preferred shares at December 31, 2015.

At December 31, 2015, XL-Ireland and XL-Cayman held cash and investments, net of liabilities associated with cash sweeping arrangements, of $11.6 million and $0.9 billion, respectively, compared to $22.4 million and $0.9 billion, respectively, at December 31, 2014.

The ability to declare and pay dividends may also be restricted by financial covenants in the Company’s credit facilities. The Company was in compliance with all covenants at December 31, 2015, and the Company currently remains in compliance.

90

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

24. Computation of Earnings Per Ordinary Share and Ordinary Share Equivalent

The following table sets forth the computation of basic and diluted earnings per ordinary share for the years ended December 31, 2015, 2014 and 2013:

(U.S. dollars in thousands, except per share amounts)	2015		2014		2013
Basic earnings per ordinary share and ordinary share equivalents outstanding:
Net income (loss) attributable to ordinary shareholders	$	1,207,152	$	188,340	$	1,059,916
Weighted average ordinary shares outstanding	286,194		267,103		287,801
Basic earnings per ordinary share and ordinary share equivalents outstanding	$	4.22	$	0.71	$	3.68
Diluted earnings per ordinary share and ordinary share equivalents outstanding:
Weighted average ordinary shares outstanding – basic	286,194		267,103		287,801
Impact of share based compensation	4,805		4,424		4,268
Weighted average ordinary shares outstanding – diluted	290,999		271,527		292,069
Diluted earnings per ordinary share & ordinary share equivalents outstanding	$	4.15	$	0.69	$	3.63
Dividends per ordinary share	$	0.72	$	0.64	$	0.56

For the years ended December 31, 2015, 2014 and 2013, ordinary shares available for issuance under share-based compensation plans of 2.5 million, 5.5 million and 6.0 million, respectively, were not included in the calculation of diluted earnings per share because the assumed exercise or issuance of such shares would be anti-dilutive.

25. Related Party Transactions

(a)    Investment Manager Affiliates

At December 31, 2015 and 2014, the Company owned minority stakes in six independent investment management companies ("Investment Manager Affiliates") that are actively managing client capital and seeking growth opportunities. The Company seeks to develop relationships with specialty investment management organizations, generally acquiring an equity interest in the business. The Company also invests in certain of the funds and limited partnerships and other legal entities managed by these affiliates and through these funds and partnerships pays management and performance fees to the Company's Investment Manager Affiliates. In addition, at December 31, 2015 and 2014, the company owned minority stakes in two and one independent firm(s) that provide technology and other services to alternative asset managers and allocators, respectively, and the results of the Company's interests in these enterprises are included in Investment Manager Affiliates. The Company pays fees to these Investment Manager Affiliates in exchange for them providing their services to the Company. See Note 7, "Investments in Affiliates," included herein, for further information.

(b)    Assumed Reinsurance Contracts

In the normal course of business, the Company enters into reinsurance contracts with certain of its other strategic affiliates, or their subsidiaries. During the years ended December 31, 2015, 2014 and 2013, these contracts resulted in reported net premiums, reported net losses, and reported net acquisition costs as summarized below.

(U.S. dollars in thousands)	2015		2014		2013
Reported net premiums	$	42,042	$	91,261	$	73,085
Reported net losses	$	13,246	$	38,927	$	29,042
Reported net acquisition costs	$	14,682	$	35,711	$	25,275

Results through April 1, 2015 include amounts under an assumed reinsurance contract with a wholly-owned subsidiary of ARX, an insurance operating affiliate of the Company to that date. The Company disposed of its investment in ARX on April 1, 2015, and thus, after that date, all amounts under this contract are no longer reported as related party transactions. See Note 3(d), "Acquisitions and Disposals - Sale of Operating Affiliate."

(c)    New Ocean

Commencing in 2014, several of the Company’s wholly-owned subsidiaries retrocede assumed reinsurance business to special purpose reinsurers that receive capital from funds managed by the Company's subsidiary, New Ocean, as discussed in Note 16, "Variable Interest Entities." Underwriting administration services are provided to the special purpose reinsurers by other subsidiaries of the Company under service fee agreements, while investment advisory services are provided by New

91

Ocean. During the year ended December 31, 2015, ceded premiums earned, ceded losses and loss expenses incurred, ceding commission income, and other fee income related to these retrocessional contracts were not material to the Company.

(d)    New Energy

On July 24, 2015, as described in Note 3(b), "Acquisitions and Disposals - New Energy Risk," the Company completed its acquisition of 63.63% of the additional shares of New Energy for approximately $8.8 million, increasing its majority ownership of the entity to 94.79%. These shares are held within the XL Innovate Fund. A substantial portion of the additional shares were purchased at arm's length directly from the family trusts of a Company employee, based on a market valuation of New Energy performed by an independent third party provider. The remaining 5.21% of equity shares of New Energy held by the family trusts of the employee were then contributed in-kind to XL Innovate Fund based on the share price implied by the independent valuation. Such contribution was made in partial satisfaction of the employee's aggregate 5.21% investment commitment to the Fund and resulted in XL Innovate Fund owning 100% of the net equity of New Energy, and the family trusts of the employee owning a 5.21% non-controlling equity interest in XL Innovate Fund. The employee serves as a member of the board of directors of both New Energy and XL Innovate Fund, and maintains responsibility over the business generated by New Energy. There were no other material transactions between the Company and this employee for the year ended December 31, 2015.

26. Unaudited Quarterly Financial Data

The following is a summary of the unaudited quarterly financial data for 2015 and 2014:

(U.S. dollars in thousands, except per share amounts)	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
2015
Net premiums earned – P&C operations	$	1,319,494	$	2,063,795		$	2,405,740	$	2,375,155
Net premiums earned – Corporate and Other	$	14,506	$	18,258		$	17,812	$	11,665
Underwriting profit (loss) – P&C operations	$	146,836	$	208,779		$	114,118	$	183,458
Net income (loss) attributable to ordinary shareholders	$	36,281	$	915,039		$	27,282	$	228,550
Net income (loss) per ordinary share and ordinary equivalent – basic	$	0.14	$	3.16		$	0.09	$	0.77
Net income (loss) per ordinary share and ordinary equivalent – diluted	$	0.14	$	3.11		$	0.09	$	0.76
2014
Net premiums earned – P&C operations	$	1,412,528	$	1,438,076		$	1,453,673	$	1,413,161
Net premiums earned – Corporate and Other	$	76,311	$	58,518		$	19,739	$	23,064
Underwriting profit (loss) – P&C operations	$	144,874	$	167,947		$	144,375	$	218,850
Net income (loss) attributable to ordinary shareholders	$	255,717	$	(279,260	)	$	72,384	$	139,499
Net income (loss) per ordinary share and ordinary equivalent – basic	$	0.93	$	(1.03	)	$	0.27	$	0.54
Net income (loss) per ordinary share and ordinary equivalent – diluted	$	0.91	$	(1.03	)	$	0.27	$	0.53

27. Guarantor Financial Information

The following tables present condensed consolidating balance sheets at December 31, 2015 and 2014 and condensed consolidating statements of income, comprehensive income and cash flows for the years ended December 31, 2015, 2014 and 2013 for XL-Ireland, the parent guarantor, XL-Cayman, a 100% owned subsidiary of XL-Ireland and issuer of all the Company's outstanding debt, and XL-Ireland's other subsidiaries.

92

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	December 31, 2015
Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data)	XL- Ireland		XL-Cayman		Other XL-Ireland Subsidiaries		Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
ASSETS
Investments:
Total investments available for sale	$	—	$	516,425	$	33,237,473	$	—		$	33,753,898
Total investments trading	—		—		1,296,029		—			1,296,029
Investments in affiliates	—		—		1,708,899		—			1,708,899
Other investments	—		877		1,432,180		—			1,433,057
Total investments	$	—	$	517,302	$	37,674,581	$	—		$	38,191,883
Cash and cash equivalents	11,557		369,997		2,874,682		—			3,256,236
Restricted cash	—		—		154,992		—			154,992
Investments in subsidiaries	11,648,673		15,836,651		—		(27,485,324		)	—
Accrued investment income	—		2,323		310,344		—			312,667
Deferred acquisition costs and value of business acquired	—		—		890,568		—			890,568
Ceded unearned premiums	—		—		1,821,793		—			1,821,793
Premiums receivable	—		—		4,712,493		—			4,712,493
Reinsurance balances receivable	—		—		418,666		—			418,666
Unpaid losses and loss expenses recoverable	—		—		5,262,706		—			5,262,706
Receivable from investments sold	—		—		231,158		—			231,158
Goodwill and other intangible assets	—		—		2,210,266		—			2,210,266
Deferred tax asset	—		—		282,311		—			282,311
Amounts due from subsidiaries / parent	33,417		—		1,054,177		(1,087,594		)	—
Other assets	2,748		44,570		889,881		—			937,199
Total assets	$	11,696,395	$	16,770,843	$	58,788,618	$	(28,572,918	)	$	58,682,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	—	$	—	$	25,439,744	$	—		$	25,439,744
Deposit liabilities	—		—		1,168,376		—			1,168,376
Future policy benefit reserves	—		—		4,163,500		—			4,163,500
Funds withheld on GreyCastle life retrocession arrangements	—		—		914,629		—			914,629
Unearned premiums	—		—		7,043,358		—			7,043,358
Notes payable and debt	—		2,644,970		—		—			2,644,970
Reinsurance balances payable	—		—		2,117,727		—			2,117,727
Payable for investments purchased	—		—		130,060		—			130,060
Deferred tax liability	—		—		120,651		—			120,651
Amounts due to subsidiaries / parent	—		1,087,594		—		(1,087,594		)	—
Other liabilities	19,316		45,106		1,221,038		—			1,285,460
Total liabilities	$	19,316	$	3,777,670	$	42,319,083	$	(1,087,594	)	$	45,028,475
Shareholders’ Equity:
Shareholders’ equity attributable to XL Group plc	$	11,677,079	$	11,648,673	$	15,836,651	$	(27,485,324	)	$	11,677,079
Non-controlling interest in equity of consolidated subsidiaries	—		1,344,500		632,884		—			1,977,384
Total shareholders’ equity	$	11,677,079	$	12,993,173	$	16,469,535	$	(27,485,324	)	$	13,654,463
Total liabilities and shareholders’ equity	$	11,696,395	$	16,770,843	$	58,788,618	$	(28,572,918	)	$	58,682,938

93

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	December 31, 2014
Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data)	XL- Ireland		XL-Cayman		Other XL-Ireland Subsidiaries		Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
ASSETS
Investments:
Total investments available for sale	$	—	$	905,022	$	29,579,031	$	—		$	30,484,053
Total investments trading	—		—		1,171		—			1,171
Investments in affiliates	—		1,326		1,636,294		—			1,637,620
Other investments	—		—		1,248,439		—			1,248,439
Total investments	$	—	$	906,348	$	32,464,935	$	—		$	33,371,283
Cash and cash equivalents	22,443		42,970		2,456,401		—			2,521,814
Restricted cash	—		—		—		—			—
Investments in subsidiaries	10,195,445		13,076,044		—		(23,271,489		)	—
Accrued investment income	—		4,605		311,359		—			315,964
Deferred acquisition costs and value of business acquired	—		—		354,533		—			354,533
Ceded unearned premiums	—		—		952,525		—			952,525
Premiums receivable	—		—		2,473,736		—			2,473,736
Reinsurance balances receivable	—		—		131,519		—			131,519
Unpaid losses and loss expenses recoverable	—		—		3,429,368		—			3,429,368
Receivable from investments sold	—		—		92,762		—			92,762
Goodwill and other intangible assets	—		—		447,952		—			447,952
Deferred tax asset	—		—		204,491		—			204,491
Amounts due from subsidiaries / parent	—		—		1,010,580		(1,010,580		)	—
Other assets	3,017		46,279		701,576		—			750,872
Total assets	$	10,220,905	$	14,076,246	$	45,031,737	$	(24,282,069	)	$	45,046,819
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	—	$	—	$	19,353,243	$	—		$	19,353,243
Deposit liabilities	—		—		1,245,367		—			1,245,367
Future policy benefit reserves	—		—		4,707,199		—			4,707,199
Funds withheld on GreyCastle life retrocession arrangements	—		—		1,155,016		—			1,155,016
Unearned premiums	—		—		3,973,132		—			3,973,132
Notes payable and debt	—		1,662,580		—		—			1,662,580
Reinsurance balances payable	—		—		493,230		—			493,230
Payable for investments purchased	—		—		42,291		—			42,291
Deferred tax liability	—		—		66,246		—			66,246
Amounts due to subsidiaries / parent	166,782		843,798		—		(1,010,580		)	—
Other liabilities	20,372		29,923		862,454		—			912,749
Total liabilities	$	187,154	$	2,536,301	$	31,898,178	$	(1,010,580	)	$	33,611,053
Shareholders’ Equity:
Shareholders’ equity attributable to XL Group plc	$	10,033,751	$	10,195,445	$	13,076,044	$	(23,271,489	)	$	10,033,751
Non-controlling interest in equity of consolidated subsidiaries	—		1,344,500		57,515		—			1,402,015
Total shareholders’ equity	$	10,033,751	$	11,539,945	$	13,133,559	$	(23,271,489	)	$	11,435,766
Total liabilities and shareholders’ equity	$	10,220,905	$	14,076,246	$	45,031,737	$	(24,282,069	)	$	45,046,819

94

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2015
Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Revenues:
Net premiums earned	$	—		$	—		$	8,226,425		$	—		$	8,226,425
Total net investment income	169			9,363			859,002			3,836			872,370
Total net realized gains (losses) on investments	—			13,814			197,129			(8,765		)	202,178
Net realized and unrealized gains (losses) on derivative instruments	—			12,363			40,760			—			53,123
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	—			—			(151,691		)	—			(151,691		)
Income (loss) from investment fund affiliates	—			—			73,320			—			73,320
Fee income and other	—			—			33,201			—			33,201
Total revenues	$	169		$	35,540		$	9,278,146		$	(4,929	)	$	9,308,926
Expenses:
Net losses and loss expenses incurred	$	—		$	—		$	4,766,200		$	—		$	4,766,200
Claims and policy benefits	—			—			115,997			—			115,997
Acquisition costs	—			—			1,317,448			—			1,317,448
Operating expenses	46,340			10,565			1,910,034			—			1,966,939
Exchange (gains) losses	(345		)	20			22,829			—			22,504
Extinguishment of debt	—			—			5,592			—			5,592
Interest expense	11			143,330			61,874			—			205,215
Total expenses	$	46,006		$	153,915		$	8,199,974		$	—		$	8,399,895
Income (loss) before income tax and income (loss) from operating affiliates	$	(45,837	)	$	(118,375	)	$	1,078,172		$	(4,929	)	$	909,031
Income (loss) from operating affiliates	—			—			44,740			—			44,740
Gain on sale of operating affiliate	—			—			340,407			—			340,407
Equity in net earnings (losses) of subsidiaries	1,253,609			1,449,404			—			(2,703,013		)	—
Provision (benefit) for income tax	620			245			(20,026		)	—			(19,161		)
Net income (loss)	$	1,207,152		$	1,330,784		$	1,483,345		$	(2,707,942	)	$	1,313,339
Non-controlling interests	—			77,175			29,012			—			106,187
Net income (loss) attributable to ordinary shareholders	$	1,207,152		$	1,253,609		$	1,454,333		$	(2,707,942	)	$	1,207,152
Comprehensive income (loss)	$	409,310		$	455,767		$	656,491		$	(1,112,258	)	$	409,310

95

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2014
Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Revenues:
Net premiums earned	$	—		$	—		$	5,895,070		$	—		$	5,895,070
Total net investment income	275			20,256			889,611			8,483			918,625
Total net realized gains (losses) on investments	—			27,541			102,150			(22,229		)	107,462
Net realized and unrealized gains (losses) on derivative instruments	—			—			29,886			—			29,886
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	—			—			(488,222		)	—			(488,222		)
Income (loss) from investment fund affiliates	—			—			95,816			—			95,816
Fee income and other	—			—			43,630			—			43,630
Total revenues	$	275		$	47,797		$	6,567,941		$	(13,746	)	$	6,602,267
Expenses:
Net losses and loss expenses incurred	$	—		$	—		$	3,258,393		$	—		$	3,258,393
Claims and policy benefits	—			—			242,963			—			242,963
Acquisition costs	—			—			738,118			—			738,118
Operating expenses	9,646			13,102			1,318,567			—			1,341,315
Exchange (gains) losses	127			168			(37,863		)	—			(37,568		)
Loss on sale of life reinsurance subsidiary	—			—			666,423			—			666,423
Interest expense	5			110,323			23,778			—			134,106
Total expenses	$	9,778		$	123,593		$	6,210,379		$	—		$	6,343,750
Income (loss) before income tax and income (loss) from operating affiliates	$	(9,503	)	$	(75,796	)	$	357,562		$	(13,746	)	$	258,517
Income (loss) from operating affiliates	—			—			107,218			—			107,218
Gain on sale of operating affiliate	—			—			—			—			—
Equity in net earnings (losses) of subsidiaries	197,843			350,602			—			(548,445		)	—
Provision (benefit) for income tax	—			(212		)	97,109			—			96,897
Net income (loss)	$	188,340		$	275,018		$	367,671		$	(562,191	)	$	268,838
Non-controlling interests	—			77,175			3,323			—			80,498
Net income (loss) attributable to ordinary shareholders	$	188,340		$	197,843		$	364,348		$	(562,191	)	$	188,340
Comprehensive income (loss)	$	936,141		$	945,644		$	1,112,149		$	(2,057,793	)	$	936,141

96

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2013
Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Revenues:
Net premiums earned	$	—		$	—		$	6,309,521		$	—		$	6,309,521
Total net investment income	24			21,994			917,993			17,705			957,716
Total net realized gains (losses) on investments	—			15,555			71,387			835			87,777
Net realized and unrealized gains (losses) on derivative instruments	—			—			7,798			—			7,798
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	—			—			—			—			—
Income (loss) from investment fund affiliates	—			3			138,388			—			138,391
Fee income and other	—			—			40,031			—			40,031
Total revenues	$	24		$	37,552		$	7,485,118		$	18,540		$	7,541,234
Expenses:
Net losses and loss expenses incurred	$	—		$	—		$	3,731,464		$	—		$	3,731,464
Claims and policy benefits	—			—			465,702			—			465,702
Acquisition costs	—			—			909,323			—			909,323
Operating expenses	11,699			12,051			1,189,428			—			1,213,178
Exchange (gains) losses	243			86			(28,572		)	—			(28,243		)
Interest expense	2			98,011			57,449			—			155,462
Total expenses	$	11,944		$	110,148		$	6,324,794		$	—		$	6,446,886
Income (loss) before income tax and income (loss) from operating affiliates	$	(11,920	)	$	(72,596	)	$	1,160,324		$	18,540		$	1,094,348
Income (loss) from operating affiliates	—			—			119,804			—			119,804
Gain on sale of operating affiliate	—			—			—			—			—
Equity in net earnings (losses) of subsidiaries	1,071,836			1,226,815			—			(2,298,651		)	—
Provision (benefit) for income tax	—			4,991			72,514			—			77,505
Net income (loss)	$	1,059,916		$	1,149,228		$	1,207,614		$	(2,280,111	)	$	1,136,647
Non-controlling interests	—			77,392			(661		)	—			76,731
Net income (loss) attributable to ordinary shareholders	$	1,059,916		$	1,071,836		$	1,208,275		$	(2,280,111	)	$	1,059,916
Comprehensive income (loss)	$	276,553		$	288,473		$	424,912		$	(713,385	)	$	276,553

97

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2015
Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Cash flows provided by (used in) operating activities:
Net cash provided by (used in) operating activities	$	561,468		$	148,850		$	669,515		$	(764,277	)	$	615,556
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	—		$	1,482,875		$	15,745,247		$	(359,894	)	$	16,868,228
Proceeds from redemption of fixed maturities and short-term investments	—			188,788			3,562,386			—			3,751,174
Proceeds from sale of equity securities	—			—			664,735			—			664,735
Purchases of fixed maturities and short-term investments	—			(1,296,980		)	(18,780,978		)	359,894			(19,718,064		)
Purchases of equity securities	—			—			(567,334		)	—			(567,334		)
Proceeds from sale of affiliates	—			—			188,023			—			188,023
Purchases of affiliates	—			—			(280,856		)	—			(280,856		)
Purchase of Catlin Group Limited, net of acquired cash	(2,287,579		)	(2,317,699		)	1,267,564			2,317,699			(1,020,015		)
Proceeds from sale of subsidiary	2,317,699			—			—			(2,317,699		)	—
Proceeds from sale of ARX Holding Corp.	—			—			560,552			—			560,552
Returns of capital from subsidiaries	65,037			2,047,000			—			(2,112,037		)	—
Change in restricted cash	—			—			(154,992		)	—			(154,992		)
Other, net	—			—			(155,019		)	—			(155,019		)
Net cash provided by (used in) investing activities	$	95,157		$	103,984		$	2,049,328		$	(2,112,037	)	$	136,432
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	9,976		$	—		$	—		$	—		$	9,976
Buybacks of ordinary shares	(468,971		)	—			—			—			(468,971		)
Dividends paid on ordinary shares	(208,516		)	(764,277		)	—			764,277			(208,516		)
Return of capital	—			(65,037		)	(2,047,000		)	2,112,037			—
Distributions to non-controlling interests	—			(77,093		)	(40,590		)	—			(117,683		)
Contributions from non-controlling interests	—			—			23,610			—			23,610
Proceeds from issuance of debt	—			980,600			—			—			980,600
Repayment of debt	—			—			(87,447		)	—			(87,447		)
Deposit liabilities	—			—			(84,758		)	—			(84,758		)
Net cash provided by (used in) financing activities	$	(667,511	)	$	74,193		$	(2,236,185	)	$	2,876,314		$	46,811
Effects of exchange rate changes on foreign currency cash	—			—			(64,377		)	—			(64,377		)
Increase (decrease) in cash and cash equivalents	$	(10,886	)	$	327,027		$	418,281		$	—		$	734,422
Cash and cash equivalents – beginning of period	22,443			42,970			2,456,401			—			2,521,814
Cash and cash equivalents – end of period	$	11,557		$	369,997		$	2,874,682		$	—		$	3,256,236

98

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2014
Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Cash flows provided by (used in) operating activities:
Net cash provided by (used in) operating activities	$	895,854		$	518,715		$	407,136		$	(858,521	)	$	963,184
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	—		$	574,673		$	4,793,978		$	(472,539	)	$	4,896,112
Proceeds from redemption of fixed maturities and short-term investments	—			351,737			3,250,056			—			3,601,793
Proceeds from sale of equity securities	—			—			571,410			—			571,410
Purchases of fixed maturities and short-term investments	—			(307,830		)	(7,322,967		)	472,539			(7,158,258		)
Purchases of equity securities	—			—			(445,504		)	—			(445,504		)
Proceeds from sale of affiliates	—			—			240,785			—			240,785
Purchases of affiliates	—			—			(371,226		)	—			(371,226		)
Proceeds from sale of subsidiary	—			—			570,000			—			570,000
Returns of capital from subsidiaries	79,086			482,570			—			(561,656		)	—
Change in restricted cash	—			—			—			—			—
Other, net	—			1,920			(195,411		)	—			(193,491		)
Net cash provided by (used in) investing activities	$	79,086		$	1,103,070		$	1,091,121		$	(561,656	)	$	1,711,621
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	6,367		$	—		$	—		$	—		$	6,367
Buybacks of ordinary shares	(801,953		)	—			—			—			(801,953		)
Dividends paid on ordinary shares	(169,620		)	(858,521		)	—			858,521			(169,620		)
Return of capital	—			(79,086		)	(482,570		)	561,656			—
Distributions to non-controlling interests	—			(77,002		)	(1,463		)	—			(78,465		)
Contributions from non-controlling interests	—			—			48,261			—			48,261
Repayment of debt	—			(600,000		)	—			—			(600,000		)
Deposit liabilities	—			—			(268,298		)	—			(268,298		)
Net cash provided by (used in) financing activities	$	(965,206	)	$	(1,614,609	)	$	(704,070	)	$	1,420,177		$	(1,863,708	)
Effects of exchange rate changes on foreign currency cash	—			—			(90,115		)	—			(90,115		)
Increase (decrease) in cash and cash equivalents	$	9,734		$	7,176		$	704,072		$	—		$	720,982
Cash and cash equivalents – beginning of period	12,709			35,794			1,752,329			—			1,800,832
Cash and cash equivalents – end of period	$	22,443		$	42,970		$	2,456,401		$	—		$	2,521,814

99

XL GROUP PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

	Year Ended December 31, 2013
Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Cash flows provided by (used in) operating activities:
Net cash provided by (used in) operating activities	$	740,308		$	(175,056	)	$	832,444		$	(617,719	)	$	779,977
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	—		$	254,053		$	4,282,227		$	(194,851	)	$	4,341,429
Proceeds from redemption of fixed maturities and short-term investments	—			203,054			3,805,279			—			4,008,333
Proceeds from sale of equity securities	—			—			245,538			—			245,538
Purchases of fixed maturities and short-term investments	—			(828,603		)	(8,510,221		)	194,851			(9,143,973		)
Purchases of equity securities	—			—			(534,356		)	—			(534,356		)
Proceeds from sale of affiliates	—			—			190,954			—			190,954
Purchases of affiliates	—			—			(353,678		)	—			(353,678		)
Returns of capital from subsidiaries	84,589			546,912			—			(631,501		)	—
Change in restricted cash	—			—			—			—			—
Other, net	—			3,753			44,138			—			47,891
Net cash provided by (used in) investing activities	$	84,589		$	179,169		$	(830,119	)	$	(631,501	)	$	(1,197,862	)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	12,623		$	—		$	—		$	—		$	12,623
Buybacks of ordinary shares	(675,617		)	—			—			—			(675,617		)
Dividends paid on ordinary shares	(160,155		)	(617,719		)	—			617,719			(160,155		)
Return of capital	—			(84,589		)	(546,912		)	631,501			—
Distributions to non-controlling interests	—			(77,670		)	—			—			(77,670		)
Contributions from non-controlling interests	—			—			7,747			—			7,747
Proceeds from issuance of debt	—			592,615			—			—			592,615
Deposit liabilities	—			—			(94,386		)	—			(94,386		)
Net cash provided by (used in) financing activities	$	(823,149	)	$	(187,363	)	$	(633,551	)	$	1,249,220		$	(394,843	)
Effects of exchange rate changes on foreign currency cash	—			—			(4,818		)	—			(4,818		)
Increase (decrease) in cash and cash equivalents	$	1,748		$	(183,250	)	$	(636,044	)	$	—		$	(817,546	)
Cash and cash equivalents – beginning of period	10,961			219,044			2,388,373			—			2,618,378
Cash and cash equivalents – end of period	$	12,709		$	35,794		$	1,752,329		$	—		$	1,800,832

100

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements, Financial Statement Schedules and Exhibits.

	Page
Report of Independent Registered Public Accounting Firm	102

1. Financial Statements

Included in Part II, Item 8 of this report.

2. Financial Statement Schedules

Included in Part IV of this report:

	Schedule Number	Page
Consolidated Summary of Investments – Other than Investments in Related Parties at December 31, 2015 and 2014	I	103
Condensed Financial Information of Registrant at December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014 and 2013	II	104
Reinsurance for the years ended December 31, 2015, 2014 and 2013	IV	108
Supplementary Information Concerning Property/Casualty (Re)Insurance Operations for the years ended December 31, 2015, 2014 and 2013	VI	109
Other Schedules have been omitted as they are not applicable to the Company.

101

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of XL Group plc:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of XL Group plc and its subsidiaries at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A in the 2015 10-k. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A in the 2015 10-k, management has excluded the former subsidiaries of Catlin Group Limited from its assessment of internal control over financial reporting as of December 31, 2015 because it was acquired by the Company in a purchase business combination during 2015. We have also excluded the former subsidiaries of Catlin Group Limited from our audit of internal control over financial reporting. The former subsidiaries of Catlin Group Limited are wholly-owned subsidiaries whose total assets and total revenues represent 27.7% and 29.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2015.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 26, 2016, except with respect to our opinion on the consolidated financial statements insofar as it relates to the guarantor financial information included in Note 27, as to which the date is July 25, 2016

102

XL GROUP PLC

SCHEDULE I

CONSOLIDATED SUMMARY OF INVESTMENTS – OTHER THAN

INVESTMENTS IN RELATED PARTIES

AT DECEMBER 31, 2015 AND 2014

	2015						2014
(U.S. dollars in thousands)	Cost or Amortized Cost (1)		Fair Value		Amount Presented in the Balance Sheet		Cost or Amortized Cost (1)		Fair Value		Amount Presented in the Balance Sheet
Fixed Maturities – AFS - Excluding Life Funds Withheld Assets:
U.S. Government and Government Agency-Related/Supported	$	5,047,621	$	5,065,637	$	5,065,637	$	2,100,851	$	2,171,953	$	2,171,953
Corporate - Financials	3,535,830		3,561,909		3,561,909		2,687,797		2,761,916		2,761,916
Corporate - Non-Financials	6,867,525		6,900,447		6,900,447		5,774,333		6,016,457		6,016,457
RMBS – Agency	3,697,756		3,757,971		3,757,971		3,625,171		3,728,576		3,728,576
RMBS – Non-Agency	319,876		328,540		328,540		404,398		427,351		427,351
CMBS	401,713		405,316		405,316		1,033,819		1,052,544		1,052,544
CDO	41,679		32,410		32,410		717,544		692,034		692,034
Other asset-backed securities	1,164,426		1,168,572		1,168,572		1,028,528		1,065,293		1,065,293
U.S. States and political subdivisions of the States	2,514,048		2,632,070		2,632,070		1,892,566		2,021,272		2,021,272
Non-U.S. Sovereign Government, Supranational and Government-Related	5,249,148		5,251,614		5,251,614		4,162,425		4,240,073		4,240,073
Total Fixed maturities – AFS	$	28,839,622	$	29,104,486	$	29,104,486	$	23,427,432	$	24,177,469	$	24,177,469
Equity securities	834,079		878,919		878,919		763,833		868,292		868,292
Short-term investments	618,851		617,390		617,390		257,221		256,727		256,727
Total Investments - AFS - Excluding Life Funds Withheld Assets	30,292,552		30,600,795		30,600,795		24,448,486		25,302,488		25,302,488
Fixed Maturities - AFS - Life Funds Withheld Assets
U.S. Government and Government agency-Related/Supported	10,721		12,742		12,742		14,866		18,724		18,724
Corporate - Financials	531,016		598,236		598,236		701,587		801,019		801,019
Corporate - Non-Financials	1,132,926		1,308,628		1,308,628		1,706,262		2,016,961		2,016,961
RMBS – Agency	591		752		752		3,301		3,782		3,782
RMBS – Non-Agency	24,401		26,953		26,953		71,075		85,335		85,335
CMBS	107,968		122,481		122,481		168,886		193,167		193,167
Other asset-backed securities	132,674		149,795		149,795		238,168		273,541		273,541
Non-U.S. Sovereign Government, Supranational and Government-Related	737,735		933,516		933,516		1,397,194		1,789,036		1,789,036
Total Fixed maturities - AFS - Life Funds Withheld Assets	2,678,032		3,153,103		3,153,103		4,301,339		5,181,565		5,181,565
Total Investments - AFS	32,970,584		33,753,898		33,753,898		28,749,825		30,484,053		30,484,053
Fixed maturities - Trading
U.S. Government and Government-Related/Supported	4,957		4,990		4,990		—		—		—
Corporate - Financials	344,070		335,956		335,956		—		—		—
Corporate - Non-Financials	509,441		493,621		493,621		1,180		1,171		1,171
RMBS - Agency	370		368		368		—		—		—
CMBS	4,874		4,803		4,803		—		—		—
Other asset-backed securities	26,405		25,700		25,700		—		—		—
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported	373,492		370,261		370,261		—		—		—
Total Fixed maturities - Trading	1,263,609		1,235,699		1,235,699		1,180		1,171		1,171
Short-term investments	60,176		60,330		60,330		—		—		—
Total investments - Trading	1,323,785		1,296,029		1,296,029		1,180		1,171		1,171
Other investments	1,197,674		1,445,793		1,433,057		1,002,871		1,265,682		1,248,439
Total investments other than investments in related parties	$	35,492,043	$	36,495,720	$	36,482,984	$	29,753,876	$	31,750,906	$	31,733,663

____________

(1) Investments in fixed maturities, short-term investments and held to maturity are shown at amortized cost.

103

XL GROUP PLC

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS – PARENT COMPANY ONLY

AT DECEMBER 31, 2015 AND 2014

(U.S. dollars in thousands)	2015		2014
ASSETS
Cash and cash equivalents	$	11,557	$	22,443
Amounts due from subsidiaries	33,417		—
Investments in subsidiaries on an equity basis	11,648,673		10,195,445
Other assets	2,748		3,017
Total assets	$	11,696,395	$	10,220,905
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Amounts due to subsidiaries	$	—	$	166,782
Accounts payable and accrued liabilities	19,316		20,372
Total liabilities	$	19,316	$	187,154
Commitments and Contingencies
Shareholders’ Equity:
Class A ordinary shares, 999,990,000 authorized, par value $0.01; issued and outstanding: (2015: 294,745,045; 2014: 255,182,955)	$	2,947	$	2,552
Additional paid in capital	8,910,167		7,359,102
Accumulated other comprehensive income	686,616		1,484,458
Retained earnings (deficit)	2,077,349		1,187,639
Total shareholders’ equity	$	11,677,079	$	10,033,751
Total liabilities and shareholders’ equity	$	11,696,395	$	10,220,905

See accompanying Notes to Condensed Financial Information of Registrant

104

XL GROUP PLC

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENT OF INCOME AND COMPREHENSIVE INCOME – PARENT COMPANY ONLY

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Net investment income	$	169		$	275		$	24
Total revenues	$	169		$	275		$	24
Operating expenses	$	46,340		$	9,646		$	11,699
Foreign exchange (gains) losses	(345		)	127			243
Interest expense	11			5			2
Total expenses	$	46,006		$	9,778		$	11,944
Income (loss) before income tax	$	(45,837	)	$	(9,503	)	$	(11,920	)
Equity in net earnings (losses) of subsidiaries (dividends were: 2015: $764,277; 2014: $858,521; 2013: $617,719)	1,253,609			197,843			1,071,836
Provision for income tax	620			—			—
Net income (loss) attributable to ordinary shareholders	$	1,207,152		$	188,340		$	1,059,916
Net income (loss)	$	1,207,152		$	188,340		$	1,059,916
Change in net unrealized gains (losses) on investments - excluding Life Funds Withheld Assets, net of tax	(530,030		)	434,051			(750,755		)
Unrealized gains on held to maturity investment portfolio at time of transfer to available for sale, net of tax	—			424,861			—
Change in adjustments related to future policy benefit reserves, net of tax	170,688			(400,456		)	(44,660		)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	(421,604		)	274,083			—
Change in net unrealized gains (losses) on affiliate and investments, net of tax	(6,074		)	35,143			26,637
Change in OTTI losses recognized in other comprehensive income, net of tax	18,545			13,143			32,181
Change in underfunded pension liability	(3,852		)	(7,550		)	7,653
Change in value of cash flow hedge	(200		)	255			439
Foreign currency translation adjustments	(25,315		)	(25,729		)	(54,858		)
Comprehensive income (loss)	$	409,310		$	936,141		$	276,553

See accompanying Notes to Condensed Financial Information of Registrant

105

XL GROUP PLC

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

STATEMENT OF CASH FLOWS – PARENT COMPANY ONLY

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	2015			2014			2013
Net income (loss)	$	1,207,152		$	188,340		$	1,059,916
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (earnings) loss of subsidiaries	(1,253,609		)	(197,843		)	(1,071,836		)
Share based compensation (1)	74,431			81,287			46,489
Amounts due to (from) subsidiaries	(200,199		)	(23,819		)	104,590
Dividends received from subsidiaries	764,277			858,521			617,719
Other	(30,584		)	(10,632		)	(16,570		)
Total adjustments	$	(645,684	)	$	707,514		$	(319,608	)
Net cash provided by (used in) operating activities	$	561,468		$	895,854		$	740,308
Cash flows provided by (used in) investing activities:
Purchase of Catlin Group Limited	$	(2,287,579	)	$	—		$	—
Proceeds from sale of subsidiary	2,317,699			—			—
Returns of capital from subsidiaries	65,037			79,086			84,589
Net cash provided by (used in) investing activities	$	95,157		$	79,086		$	84,589
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	9,976		$	6,367		$	12,623
Dividends paid	(208,516		)	(169,620		)	(160,155		)
Buybacks of ordinary shares	(468,971		)	(801,953		)	(675,617		)
Net cash provided by (used in) financing activities	$	(667,511	)	$	(965,206	)	$	(823,149	)
Net change in cash and cash equivalents	(10,886		)	9,734			1,748
Cash and cash equivalents – beginning of period	22,443			12,709			10,961
Cash and cash equivalents – end of period	$	11,557		$	22,443		$	12,709

____________

(1) Includes cash collected from subsidiaries in the amounts of $60.1 million, $59.2 million and $33.9 million, respectively, for the years ended December 31, 2015, 2014 and 2013.

See accompanying Notes to Condensed Financial Information of Registrant

106

XL GROUP PLC

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

NOTES TO THE FINANCIAL STATEMENTS - PARENT COMPANY ONLY

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

1. Presentation

The condensed financial information of XL Group plc reflects its directly wholly-owned subsidiaries using the equity method of accounting. To facilitate period-to-period comparisons, certain reclassifications have been made to prior year condensed financial statement amounts to conform to the current year presentation. There has been no effect on net income from this change in presentation.

2. Dividends and Returns of Capital

For the indicated years ended December 31, XL Group plc received dividends and/or returns of capital from XLIT Ltd. a wholly-owned subsidiary.

(U.S. dollars in million)	2015		2014		2013
Dividends and returns of capital	$	829	$	940	$	702

3. Commitments and Guarantees

See Item 8, Note 17, "Commitments and Contingencies," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

107

XL GROUP PLC

SCHEDULE IV

REINSURANCE

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	Gross Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount		Percentage of Amount Assumed to Net
2015
Life reinsurance in force (1)	$	—	$	62,290,992	$	63,158,304	$	867,312	N/M
Premiums Earned:
Property and casualty operations	$	7,717,173	$	3,018,410	$	3,465,421	$	8,164,184	42.4	%
Life operations	—		247,675		309,916		62,241		497.9	%
Total premiums earned	$	7,717,173	$	3,266,085	$	3,775,337	$	8,226,425	45.9	%
2014
Life reinsurance in force (1)	$	—	$	46,947,677	$	68,854,340	$	21,906,663	314.3	%
Premiums Earned:
Property and casualty operations	$	5,173,403	$	1,799,294	$	2,343,329	$	5,717,438	41.0	%
Life operations	—		155,804		333,436		177,632		187.7	%
Total premiums earned	$	5,173,403	$	1,955,098	$	2,676,765	$	5,895,070	45.4	%
2013
Life reinsurance in force (1)	$	—	$	378,391	$	77,917,632	$	77,539,241	100.5	%
Premiums Earned:
Property and casualty operations	$	4,966,207	$	1,315,369	$	2,363,261	$	6,014,099	39.3	%
Life operations	—		28,920		324,342		295,422		109.8	%
Total premiums earned	$	4,966,207	$	1,344,289	$	2,687,603	$	6,309,521	42.6	%

____________

(1) Represents the sum face value outstanding of the in force life reinsurance policies.

* N/M - Not Meaningful

108

XL GROUP PLC

SCHEDULE VI

SUPPLEMENTAL INFORMATION

CONCERNING PROPERTY/CASUALTY (RE)INSURANCE OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2014 AND 2013

(U.S. dollars in thousands)	Deferred Acquisition Costs and Value of Business Acquired		Reserves for Losses and Loss Expenses		Reserves for Unearned Premiums		Net Earned Premiums		Net Investment Income		Losses and Loss Expenses incurred related to					Net Paid Losses and Loss Expenses		Amortization of Deferred Acquisition Costs		Net Premiums Written
											Current Year		Prior Year
2015	$	893,111	$	25,439,744	$	7,043,383	$	8,164,184	$	644,312	$	5,072,830	$	(306,630	)	$	5,374,652	$	1,306,654	$	7,888,824
2014	$	357,067	$	19,353,243	$	3,973,159	$	5,717,438	$	642,492	$	3,513,465	$	(255,072	)	$	3,821,335	$	724,003	$	5,767,209
2013	$	537,473	$	20,481,065	$	3,846,568	$	6,014,099	$	671,071	$	4,021,353	$	(289,889	)	$	3,828,139	$	882,658	$	5,903,982

109

EX-99.2

Exhibit 99.2

ITEM 1. FINANCIAL STATEMENTS

XL GROUP PLC

UNAUDITED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except share data)	March 31, 2016		December 31, 2015
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost: 2016 - $31,444,747; 2015 - $31,517,654)	$	32,647,573	$	32,257,589
Equity securities, at fair value (cost: 2016 - $831,543; 2015 - $834,079)	878,407		878,919
Short-term investments, at fair value (amortized cost: 2016 - $317,939; 2015 - $618,851)	317,304		617,390
Total investments available for sale	$	33,843,284	$	33,753,898
Fixed maturities, at fair value (amortized cost: 2016 - $1,367,908; 2015 - $1,263,609)	$	1,409,583	$	1,235,699
Short-term investments, at fair value (amortized cost: 2016 - $26,949; 2015 - $60,176)	26,959		60,330
Total investments, trading	$	1,436,542	$	1,296,029
Investments in affiliates	1,953,711		1,708,899
Other investments	1,453,890		1,433,057
Total investments	$	38,687,427	$	38,191,883
Cash and cash equivalents	2,820,897		3,256,236
Restricted cash	161,019		154,992
Accrued investment income	291,016		312,667
Deferred acquisition costs and value of business acquired	1,057,941		890,568
Ceded unearned premiums	2,255,664		1,821,793
Premiums receivable	6,041,000		4,712,493
Reinsurance balances receivable	469,009		418,666
Unpaid losses and loss expenses recoverable	5,374,604		5,262,706
Receivable from investments sold	65,471		231,158
Goodwill and other intangible assets	2,233,597		2,210,266
Deferred tax asset	245,927		282,311
Other assets	942,120		937,199
Total assets	$	60,645,692	$	58,682,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	25,913,484	$	25,439,744
Deposit liabilities	1,170,595		1,168,376
Future policy benefit reserves	4,020,602		4,163,500
Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable: 2016 - $3,574,716; 2015 - $3,719,131)	998,391		914,629
Unearned premiums	8,217,539		7,043,358
Notes payable and debt	2,653,895		2,644,970
Reinsurance balances payable	2,583,962		2,117,727
Payable for investments purchased	74,476		130,060
Deferred tax liability	105,589		120,651
Other liabilities	1,239,441		1,285,460
Total liabilities	$	46,977,974	$	45,028,475
Commitments and Contingencies
Shareholders’ Equity:
Ordinary shares, 999,990,000 authorized, par value $0.01; issued and outstanding (2016 - 286,273,358; 2015 - 294,745,045)	$	2,863	$	2,947
Additional paid in capital	8,608,726		8,910,167
Accumulated other comprehensive income	1,094,557		686,616
Retained earnings	1,982,598		2,077,349
Shareholders’ equity attributable to XL Group plc	$	11,688,744	$	11,677,079
Non-controlling interest in equity of consolidated subsidiaries	1,978,974		1,977,384
Total shareholders’ equity	$	13,667,718	$	13,654,463
Total liabilities and shareholders’ equity	$	60,645,692	$	58,682,938

See accompanying Notes to Unaudited Consolidated Financial Statements

1

XL GROUP PLC

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	March 31,
(U.S. dollars in thousands, except per share data)	2016			2015
Revenues:
Net premiums earned	$	2,354,610		$	1,334,000
Net investment income:
Net investment income - excluding Life Funds Withheld Assets	164,326			158,094
Net investment income - Life Funds Withheld Assets	41,560			50,419
Total net investment income	$	205,886		$	208,513
Net realized gains (losses) on investments, and net unrealized gains (losses) on investments, trading ("Trading") - Life Funds Withheld Assets:
Net realized gains (losses) on investments sold - excluding Life Funds Withheld Assets	11,164			15,178
Other-than-temporary impairments ("OTTI") on investments - excluding Life Funds Withheld Assets	(19,582		)	(10,515		)
OTTI on investments transferred to (from) other comprehensive income - excluding Life Funds Withheld Assets	2			(61		)
Net realized gains (losses) on investments sold - Life Funds Withheld Assets	34,416			52,738
OTTI on investments - Life Funds Withheld Assets	(2,346		)	(5,209		)
Net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	69,096			760
Total net realized gains (losses) on investments, and net unrealized gains (losses) on investments, trading - Life Funds Withheld Assets	$	92,750		$	52,891
Net realized and unrealized gains (losses) on derivative instruments	(3,622		)	16,521
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	(236,080		)	(229,367		)
Income (loss) from investment fund affiliates	(4,579		)	35,329
Fee income and other	8,262			4,728
Total revenues	$	2,417,227		$	1,422,615
Expenses:
Net losses and loss expenses incurred	$	1,382,485		$	769,827
Claims and policy benefits	4,937			19,387
Acquisition costs	403,267			153,696
Operating expenses	515,381			325,656
Foreign exchange (gains) losses	(33,819		)	27,390
Interest expense	52,303			51,438
Total expenses	$	2,324,554		$	1,347,394
Income (loss) before income tax and income (loss) from operating affiliates	$	92,673		$	75,221
Income (loss) from operating affiliates	12,650			22,668
Provision (benefit) for income tax	22,295			24,218
Net income (loss)	$	83,028		$	73,671
Non-controlling interests	61,143			37,390
Net income (loss) attributable to ordinary shareholders	$	21,885		$	36,281
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – basic	291,969			255,724
Weighted average ordinary shares and ordinary share equivalents outstanding, in thousands – diluted	296,666			260,704
Earnings (loss) per ordinary share and ordinary share equivalent – basic	$	0.07		$	0.14
Earnings (loss) per ordinary share and ordinary share equivalent – diluted	$	0.07		$	0.14

See accompanying Notes to Unaudited Consolidated Financial Statements

2

XL GROUP PLC

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	March 31,
(U.S. dollars in thousands)	2016			2015
Net income (loss) attributable to ordinary shareholders	$	21,885		$	36,281
Change in net unrealized gains (losses) on investments - excluding Life Funds Withheld Assets, net of tax	363,883			60,345
Change in adjustments related to future policy benefit reserves, net of tax	17,035			60,356
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	51,990			37,115
Change in net unrealized gains (losses) on affiliate and other investments, net of tax	(9,707		)	15,865
Change in OTTI losses recognized in other comprehensive income, net of tax	2,267			9,858
Change in underfunded pension liability, net of tax	(1,049		)	975
Change in value of cash flow hedge	(39		)	95
Foreign currency translation adjustments, net of tax	(16,439		)	36,103
Comprehensive income (loss)	$	429,826		$	256,993

See accompanying Notes to Unaudited Consolidated Financial Statements

3

XL GROUP PLC

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Three Months Ended
	March 31,
(U.S. dollars in thousands)	2016			2015
Ordinary Shares:
Balance - beginning of year	$	2,947		$	2,552
Issuance of ordinary shares	15			15
Buybacks of ordinary shares	(99		)	(1		)
Exercise of stock options	—			1
Balance - end of period	$	2,863		$	2,567
Additional Paid in Capital:
Balance - beginning of year	$	8,910,167		$	7,359,102
Issuance of ordinary shares	7			6
Buybacks of ordinary shares	(301,354		)	(1,573		)
Exercise of stock options	490			1,771
Share-based compensation	(584		)	1,832
Balance - end of period	$	8,608,726		$	7,361,138
Accumulated Other Comprehensive Income (Loss):
Balance - beginning of year	$	686,616		$	1,484,458
Change in net unrealized gains (losses) on investments - excluding Life Funds Withheld Assets, net of tax	363,883			60,345
Change in adjustments related to future policy benefit reserves, net of tax	17,035			60,356
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	51,990			37,115
Change in net unrealized gains (losses) on affiliate and other investments, net of tax	(9,707		)	15,865
Change in OTTI losses recognized in other comprehensive income, net of tax	2,267			9,858
Change in underfunded pension liability, net of tax	(1,049		)	975
Change in value of cash flow hedge	(39		)	95
Foreign currency translation adjustments, net of tax	(16,439		)	36,103
Balance - end of period	$	1,094,557		$	1,705,170
Retained Earnings (Deficit):
Balance - beginning of year	$	2,077,349		$	1,187,639
Net income (loss) attributable to ordinary shareholders	21,885			36,281
Dividends on ordinary shares	(58,714		)	(41,599		)
Buybacks of ordinary shares	(54,447		)	(393		)
Share-based compensation	(3,475		)	(6,746		)
Balance - end of period	$	1,982,598		$	1,175,182
Non-controlling Interest in Equity of Consolidated Subsidiaries:
Balance - beginning of year	$	1,977,384		$	1,402,015
Non-controlling interests - contributions	882			2,569
Non-controlling interests - distributions	(3,030		)	(4,175		)
Non-controlling interests	3,679			1,957
Non-controlling interest share in change in accumulated other comprehensive income (loss)	59			—
Balance - end of period	$	1,978,974		$	1,402,366
Total Shareholders’ Equity	$	13,667,718		$	11,646,423

See accompanying Notes to Unaudited Consolidated Financial Statements

4

-XL GROUP PLC

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
(U.S. dollars in thousands)	2016			2015
Cash flows provided by (used in) operating activities:
Net income (loss)	$	83,028		$	73,671
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Total net realized (gains) losses on investments and net unrealized (gains) losses on investments, Trading - Life Funds Withheld Assets	(92,750		)	(52,891		)
Net realized and unrealized (gains) losses on derivative instruments	3,622			(16,521		)
Net realized and unrealized (gains) losses on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	236,080			229,367
Amortization of premiums (discounts) on fixed maturities	47,505			35,998
(Income) loss from investment and operating affiliates	19,797			(45,467		)
Loss on sale of life reinsurance subsidiary	—			—
Gain on sale of ARX Holding Corp.	—			—
Share-based compensation	20,707			18,295
Depreciation and amortization	22,592			10,907
Accretion of deposit liabilities	12,055			10,044
Changes in:
Unpaid losses and loss expenses	330,160			77,832
Future policy benefit reserves	(59,858		)	(49,279		)
Funds withheld on GreyCastle life retrocession arrangements, net	(121,272		)	(169,569		)
Unearned premiums	1,148,149			655,733
Premiums receivable	(1,322,085		)	(517,881		)
Unpaid losses and loss expenses recoverable	(82,729		)	(148,962		)
Ceded unearned premiums	(436,332		)	(146,049		)
Reinsurance balances receivable	(49,781		)	10,057
Deferred acquisition costs and value of business acquired	(156,373		)	(72,340		)
Reinsurance balances payable	460,982			84,261
Deferred tax asset - net	(7,945		)	14,119
Derivatives	17,863			141,754
Other assets	(47,084		)	(31,407		)
Other liabilities	(155,826		)	(94,545		)
Other	(41,618		)	17,851
Total adjustments	$	(254,141	)	$	(38,693	)
Net cash provided by (used in) operating activities	$	(171,113	)	$	34,978
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	3,772,077		$	1,473,941
Proceeds from redemption of fixed maturities and short-term investments	949,221			1,053,739
Proceeds from sale of equity securities	62,895			189,473
Purchases of fixed maturities and short-term investments	(4,325,679		)	(2,835,304		)
Purchases of equity securities	(55,411		)	(94,141		)
Proceeds from sale of affiliates	41,538			77,916
Purchases of affiliates	(247,049		)	(29,037		)
Purchase of Allied International Holdings, Inc., net of cash acquired	(69,745		)	—
Change in restricted cash	(6,027		)	—
Other	82,141			(32,141		)
Net cash provided by (used in) investing activities	$	203,961		$	(195,554	)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	491		$	1,772
Buybacks of ordinary shares	(355,901		)	(1,966		)
Dividends paid on ordinary shares	(57,861		)	(40,922		)
Distributions to non-controlling interests	(27,857		)	(7,172		)
Contributions from non-controlling interests	883			2,569
Proceeds from the issuance of debt	—			980,600
Deposit liabilities	(8,546		)	(38,788		)
Net cash provided by (used in) financing activities	$	(448,791	)	$	896,093
Effects of exchange rate changes on foreign currency cash	(19,396		)	(47,397		)
Increase (decrease) in cash and cash equivalents	$	(435,339	)	$	688,120
Cash and cash equivalents - beginning of period	3,256,236			2,521,814
Cash and cash equivalents - end of period	$	2,820,897		$	3,209,934

See accompanying Notes to Unaudited Consolidated Financial Statements

5

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Preparation and Consolidation

Unless the context otherwise indicates, references herein to the "Company" include XL Group plc, an Irish public limited company ("XL-Ireland"), and its consolidated subsidiaries.

These unaudited consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In addition, the year-end balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. In the opinion of management, these unaudited financial statements reflect all adjustments considered necessary for a fair statement of financial position and results of operations at the end of and for the periods presented. The results of operations for any interim period are not necessarily indicative of the results for a full year. All inter-company accounts and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure about contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates. For further information, see Item 8, Note 2(a), "Significant Accounting Policies - Basis of Preparation and Consolidation," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

On February 29, 2016, the Company announced a proposal to change the parent holding company's place of incorporation to Bermuda from Ireland. To effect the redomestication, XL Group Ltd, a wholly-owned subsidiary of XL-Ireland and a Bermuda exempted company ("XL-Bermuda"), would replace XL-Ireland as the ultimate holding company of the XL group of companies, and XL-Ireland's ordinary shareholders would receive one common share of XL-Bermuda in exchange for each ordinary share of XL-Ireland held by them. The Company expects to submit the proposal for redomestication, along with related proposals, to its shareholders in the next several months and complete the transaction in the third quarter of 2016. The proposed redomestication will be subject to approval by the Company's ordinary shareholders and sanctioning by the High Court of Ireland. In addition, the proposed redomestication could be abandoned by the Company prior to its completion for any reason, including if any necessary regulatory approvals are not obtained. XL-Bermuda will continue to be registered with the U.S. Securities and Exchange Commission (the "SEC") and be subject to SEC reporting requirements applicable to domestic registrants. Further, if approved, XL-Bermuda will be subject to the applicable corporate governance rules of the New York Stock Exchange ("NYSE"), and will report its financial results in U.S. dollars and under U.S. generally accepted accounting principles, in addition to any reporting requirements under Bermuda law. XL-Bermuda's shares will continue to trade on the NYSE under the ticker symbol "XL". The Company does not expect the redomestication to have a material impact on the Company's financial condition, results of operations, including its global effective tax rate, or cash flows. If, and only if, the proposed redomestication is consummated, XL-Ireland will be liquidated and following the effectiveness of such liquidation, XL-Ireland's direct, wholly-owned subsidiary XLIT Ltd ("XL-Cayman"). will become a direct, wholly-owned subsidiary of XL-Bermuda. If the proposed redomestication is consummated the liquidation of XL-Ireland is expected to occur at the end of 2016 or beginning of 2017.

On May 1, 2015, the Company completed its acquisition of Catlin Group Limited and its consolidated subsidiaries ("Catlin"). Catlin, through its wholly-owned subsidiaries, provided property, casualty and specialty insurance and reinsurance coverage on a worldwide basis. The Company's consolidated results of operations include those of Catlin from May 1, 2015. For further information, see Item 8, Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

In May 2014, the Company ceded the majority of its life reinsurance business to GreyCastle Life Reinsurance ("GCLR") via 100% quota share reinsurance (the "GreyCastle Life Retro Arrangements"). Under the terms of the transaction, the Company continues to own, on a funds withheld basis, assets supporting the GreyCastle Life Retro Arrangements consisting of cash, fixed maturity securities and accrued interest (the "Life Funds Withheld Assets"). The Life Funds Withheld Assets are managed pursuant to agreed investment guidelines that meet the contractual commitments of the XL ceding companies and applicable laws and regulations. All of the investment results associated with the Life Funds Withheld Assets ultimately accrue to GCLR. Because the Company no longer shares in the risks and rewards of the underlying performance of the supporting invested assets, disclosures within the financial statement notes included herein separate the Life Funds Withheld Assets from the rest of the Company's investments. For further information, see Item 8, Note 3(e), "Acquisitions and Disposals - Sale of Life Reinsurance Subsidiary," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

To facilitate period-to-period comparisons, certain reclassifications have been made to prior period consolidated financial statement amounts to conform to current period presentation.

6

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. Significant Accounting Policies

(a) Recent Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board ("FASB") issued an accounting standards update concerning the accounting for financial instruments. The guidance retains the basic existing framework for accounting for financial instruments under GAAP, while achieving limited convergence with IFRS in this area. The guidance: (1) requires equity investments (except consolidated entities and those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income, although equity instruments without a readily determinable fair value may be measured at cost less impairment with an adjustment for observable price changes; (2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (3) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for non-public business entities; (4) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost on the balance sheet; (5) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (6) requires an entity to present separately in other comprehensive income 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 entity has elected to measure the liability at fair value in accordance with the fair value option for financial statements; (7) requires separate presentation of financial assets and financial liabilities by measurement category and form of asset in the financial statements; and (8) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity's other deferred tax assets. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted only for the amendment relating to presentation of the change in the fair value of a liability resulting from a change in instrument-specific credit risk and should be applied as of the beginning of the fiscal year of adoption. All of the amendments from this update should be applied by means of a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, except the amendments related to impairment of equity securities without readily determinable fair values. The Company is currently evaluating the impact of this guidance, but expects that it will have an effect on results of operations as mark to market movements will prospectively impact net income. The Company does not expect this new guidance to have a material impact on the Company's financial condition or cash flows.

In February 2016, the FASB issued an accounting standards update concerning the accounting for leases. The most significant change to existing GAAP created by this standard will be the lessee recognition of lease assets and lease liabilities for those leases classified as operating. The core principle of this guidance stipulates that a lessee should recognize in the statement of financial position, initially measured at the present value of the lease payments, both a liability for contractual payments due under the lease, and an asset representing its right to use the underlying leased asset for the lease term ("right-of-use asset"). For financing leases, interest on the lease liability should be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income. Additionally, as regards the presentation of financing lease activities within the statement of cash flows, repayments of the principal portion of the lease liability should be classified within financing activities, while payments of interest on the lease liability should be classified within operating activities. For operating leases, a single net lease cost should be recognized over the lease term, generally on a straight-line basis, and all cash payments related to the lease should be classified within operating activities in the statement of cash flows. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities, and therefore recognize lease expense for such leases on a straight-line basis over the lease term. The guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will substantively continue to account for leases that commence before the effective date in accordance with existing GAAP, except that a right-of-use asset and a lease liability must be recorded for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were previously tracked and disclosed. The Company is currently evaluating the impact of this guidance, but expects that it will have an effect on the Company's financial condition as new assets and liabilities related to operating leases are likely to be recorded as a result of adoption. The Company does not expect this new guidance to have a material impact on the Company's results of operations or cash flows.

In March 2016, the FASB issued an accounting standards update concerning the accounting for equity method investments. The amendments in this update require that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of that date. Additionally, if the investment was previously accounted for as an available-for sale security, an entity also shall

7

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

immediately recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income (“AOCI”) as of that date. Thus, this new treatment is eliminating existing GAAP rules requiring retroactive adjustment of an entity’s investments, results of operations and retained earnings when an existing investment qualifies for the equity method of accounting. The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, and should be applied prospectively upon their effective date. Early adoption is permitted. The Company is currently evaluating the impact of this guidance, but does not expect this new guidance to have a material impact on the Company's financial condition, results of operations or cash flows.

In March 2016 as part of its simplification initiative, the FASB issued an accounting standards update concerning the accounting for several aspects of employee share-based payment awards including: income tax consequences, classification of awards as either equity or liabilities, classification of items in the statement of cash flows, and certain expedients that entities can now elect regarding estimates and assumptions in this area. Regarding the accounting for income taxes, all excess tax benefits and tax deficiencies, including tax benefits of dividends on share-based payment awards, should be recognized as income tax expense or benefit (regardless of whether the benefit reduces taxes payable in the current period) in the income statement, as opposed to additional paid-in capital as current GAAP prescribes. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. Regarding the classification of awards, the update changes the threshold to qualify for equity classification from the employer's minimum statutory withholding requirements to the maximum statutory tax rates in the applicable jurisdictions. Regarding the classification of cash flows, excess tax benefits should be classified along with other income tax cash flows as an operating activity, while cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. As regards new expedients which can be elected related to estimates and assumptions in this area of accounting, the only one allowable for public business entities is that they may now make an entity-wide accounting policy election to either estimate the number of share-based payment awards that are expected to vest (which is current GAAP) or account for forfeitures as they occur. The guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 with early adoption permitted so long as all the amendments in the update are adopted in the same period. The amendments within the guidance related to the recognition of excess tax benefits and tax deficiencies in the income statement as opposed to in paid-in capital should be applied prospectively. The amendments related to the statement of cash flows presentation of excess tax benefits may be adopted either prospectively or retrospectively, while the amendments related to the presentation of employee taxes paid must be applied retrospectively. The remaining amendments - relating to the timing of when excess tax benefits are recognized, the change in the threshold for equity versus liability classification of certain awards, and the allowable policy election regarding forfeitures - should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. The Company is currently evaluating the impact of this guidance, but expects it will have an impact on the Company's financial position, results of operations and cash flows upon adoption.

3. Acquisitions and Disposals

(a)    Allied Acquisition

Overview

On February 1, 2016, the Company announced that its indirect, wholly-owned subsidiary, XL Reinsurance America Inc. ("XLRA"), completed the acquisition ("Allied Acquisition") of Allied International Holdings, Inc. ("Allied"). Allied is the holding company of Allied Specialty Insurance, Inc. and T.H.E. Insurance Company, a leading insurer of the outdoor entertainment industry in the U.S.

Acquisition Consideration

The Company made an initial payment of $75.6 million to acquire Allied. Additional contingent consideration then will be paid based on production and underwriting profitability over a three year period subsequent to the acquisition date. The target payments of contingent consideration range from $7.5 million to $30.0 million. The Company currently believes the fair market value of these payments to be $15.0 million, resulting in total consideration of $90.6 million recorded for the acquisition.

Fair Value of Net Assets Acquired and Liabilities Assumed

The purchase price was allocated to the acquired assets and assumed liabilities of Allied based on estimated fair values on the acquisition date. The fair value of the net assets acquired and liabilities assumed was $76.7 million, which includes indefinite-lived intangible assets of $8.0 million and other intangible assets of $6.0 million, which will be amortized over their estimated useful lives. Other adjustments to the historical carrying value of acquired assets and liabilities included: estimating the fair value of net loss and loss expense reserves at the present value of expected net loss and loss adjustment expense

8

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

payments plus a risk premium, estimating the value of the business acquired at the present value of expected underwriting profits with net unearned premiums plus a risk margin less policy servicing costs, and estimating the fair value of real estate assets at appraised market values. In conjunction with the transaction, the Company recognized goodwill of $13.9 million which is primarily attributable to the acquiree's underwriting expertise in a niche specialty risk business. The Company has allocated all of the $13.9 million of goodwill to its Insurance segment. See Note 8, "Goodwill and Other Intangible Assets," for further information.

The allocation of the purchase price is based on information that was available to management at the time the consolidated financial statements were prepared. The allocation may change as additional information becomes available within the measurement period, which cannot exceed 12 months from the Acquisition Date. The fair value recorded for these items may be subject to adjustments, which may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill.

(b)     New Energy Risk

On July 24, 2015, the Company purchased an additional 63.63% interest in New Energy Risk Inc. ("New Energy"), a provider of insurance risk management solutions within the alternative energy sector. A substantial portion of the additional shares were purchased directly from the family trusts of a Company employee who is responsible for managing the business generated by New Energy. Prior to the additional purchase, the Company held a 31.16% ownership interest in New Energy, which was accounted for as an equity method investment. The subsequent purchase raised the Company's ownership stake to 94.79%, which is deemed a controlling financial interest, and hence, the Company now consolidates New Energy. Subsequent to the additional purchase, the family trusts of the employee contributed their remaining 5.21% ownership interest in New Energy to XL Innovate Fund, LP ("XL Innovate Fund"), the entity that holds the Company's New Energy shares, in partial satisfaction of the employee's aggregate 5.21% investment commitment to the Fund. See Note 11, "Related Party Transactions," for further details of these transactions.

The Company paid approximately $8.8 million to acquire the additional interest in New Energy, and realized a gain of approximately $2.5 million, included within income from operating affiliates, in order to reflect the appropriate fair value adjustment to its existing investment previously accounted for under the equity method. The assets and liabilities of New Energy are now reflected in the consolidated financial statements of the Company based on their fair value as of the acquisition date, while Goodwill of approximately $13.4 million was recorded in conjunction with the transaction. See Note 8, "Goodwill and Other Intangible Assets," for a further discussion of the goodwill recorded in conjunction with the acquisition.

(c)    Catlin Acquisition

Overview

On May 1, 2015 (the "Acquisition Date"), the Company completed its acquisition (the "Catlin Acquisition") of the entire issued share capital of Catlin Group Limited ("Catlin") for approximately $4.1 billion. For further information, see Item 8, Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Pursuant to the terms of the Implementation Agreement, XL-Ireland acquired each ordinary share of Catlin, par value $0.01 per share ("Catlin Shares"), for consideration per Catlin Share (the "Acquisition Consideration") equal to 388 pence in cash and 0.130 of an XL-Ireland ordinary share, par value $0.01 per share ("XL Shares"), subject to the mix and match facility set forth in the Implementation Agreement. The newly-issued XL Shares are listed on the New York Stock Exchange. The XL Shares issued in connection with the Catlin Acquisition were issued in reliance upon the exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), provided by Section 3(a)(10) of the Securities Act.

XL-Ireland issued approximately 49.9 million XL Shares and paid approximately £1.49 billion in cash to the holders of Catlin Shares as Acquisition Consideration pursuant to the terms of the Scheme.

Fair Value of Net Assets Acquired and Liabilities Assumed

The purchase price was allocated to the acquired assets and assumed liabilities of Catlin based on estimated fair values on the Acquisition Date. The Company recognized goodwill of $794.0 million which is primarily attributable to the synergies and economies of scale expected to result upon integration of Catlin into the Company's operations, including further diversification in geographic mix and product offerings and an increase in distribution strength. The Company has allocated $466.1 million of this goodwill to its Insurance segment and $327.9 million to its Reinsurance segment. The Company also recognized indefinite lived intangible assets of $673.0 million and other intangible assets of $315.0 million, which will be amortized over their estimated useful lives. See Note 8, "Goodwill and Other Intangible Assets," for further information.

9

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The allocation of the purchase price is based on information that was available to management at the time the consolidated financial statements were prepared. The allocation may change as additional information becomes available within the measurement period, which cannot exceed 12 months from the Acquisition Date. The fair value recorded for these items may be subject to adjustments, which may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill.

As part of the purchase price allocation, the Company adjusted the historical carrying value of the acquired assets and liabilities based on estimated fair values at the Acquisition Date. An explanation of the significant adjustments for fair value that are being amortized to net income is as follows:

• Deferred acquisition costs and value of business acquired - The adjustment consists of two components. The first adjustment is the elimination of Catlin's deferred acquisition costs asset. The second adjustment is the establishment of the value of business acquired asset, which represents the present value of the expected underwriting profit within the unearned premiums liability, net of reinsurance, less costs to service the related policies and a risk premium. This adjustment will be amortized to underwriting, acquisition and insurance expenses over approximately two years, as the contracts for business in-force as of the Acquisition Date expire. The Company has included $59.6 million in acquisition expenses related to the amortization of the value of business acquired during the three months ended March 31, 2016.

• Unpaid losses and loss adjustment expenses - Unpaid losses and loss adjustment expenses acquired include an increase to adjust the carrying value of Catlin's historical unpaid losses and loss adjustment expenses, net of related reinsurance recoverable, to fair value as of the Acquisition Date. The estimated fair value consists of the present value of the expected net loss and loss adjustment expense payments plus a risk premium. This adjustment, plus the unamortized fair value adjustment included in Catlin's historical unpaid losses and loss adjustment expenses, will be amortized to losses and loss adjustment expenses over a weighted average period of approximately 20 years, based on the estimated payout pattern of net reserves as of the Acquisition Date.

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 related costs		Retention and other compensation costs		Facilities-related costs		Consulting and other		Total
Liabilities at December 31, 2015	$	16,127	$	16,969	$	818	$	23,375	$	57,289
Costs incurred in 2016	16,758		8,006		6,103		24,120		54,987
2016 payments	16,535		17,466		1,040		16,303		51,344
Liabilities at March 31, 2016	$	16,350	$	7,509	$	5,881	$	31,192	$	60,932

(d)    Sale of Strategic Operating Affiliate

On April 1, 2015, XL Re Ltd ("XL Re"), an indirect wholly-owned subsidiary of the Company, completed the previously announced sale of all of its shares in ARX Holding Corp. ("ARX") to The Progressive Corporation ("Progressive") pursuant to the terms of the Stock Purchase Agreement with Progressive. XL Re's shares in ARX represented approximately 40.6% of ARX's outstanding capital stock on a fully diluted basis at the time of the announcement. The carrying value of XL Re's shares in ARX was $220.2 million at the time of the sale.

XL Re received $560.6 million in proceeds from the transaction, which was based upon the consolidated tangible net book value of ARX and its subsidiaries as of December 31, 2014, and certain other factors. Thus, the Company recorded a gain of $340.4 million as a result of this transaction.

10

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

4. Fair Value Measurements

Fair value is defined as the amount that would be received for the sale of an asset or paid to transfer a liability (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The fair values for available for sale investments are generally sourced from third parties. The fair value of fixed income securities is based upon quoted market values where available, "evaluated bid" prices provided by third party pricing services ("pricing services") where quoted market values are not available, or by reference to broker quotes where pricing services do not provide coverage for a particular security. While the Company receives values for the majority of the investment securities it holds from pricing services, it is ultimately management’s responsibility to determine whether the values received and recorded in the financial statements are representative of appropriate fair value measurements.

The Company performs regular reviews of the prices received from our third party valuation sources to assess whether the prices represent a reasonable estimate of the fair value. This process is completed by investment and accounting personnel who are independent of those responsible for obtaining the valuations. The approaches taken by the Company include, but are not limited to, annual reviews of the controls of the external parties responsible for sourcing valuations that are subjected to automated tolerance checks, quarterly reviews of the valuation sources and dates, comparisons of executed sales prices to prior valuations, regular deep dives on a sample of securities across our major asset classes and monthly reconciliations between the valuations provided by external parties and valuations provided by third party investment managers at a portfolio level.

In addition, the Company assesses the effectiveness of valuation controls performed by external parties responsible for sourcing appropriate valuations from third parties on our behalf. The approaches taken by these external parties to gain comfort include, but are not limited to, comparing valuations between external sources, completing recurring reviews of third party pricing services' methodologies and reviewing controls of the third party service providers to support the completeness and accuracy of the prices received. Where broker quotes are the primary source of the valuations, sufficient information regarding the specific inputs utilized by the brokers is generally not available to support a Level 2 classification. The Company obtains the majority of broker quoted values from third party investment managers who perform independent verifications of these valuations using pricing matrices based upon information gathered by market traders. In addition, for the majority of these securities, the Company compares the broker quotes to independent valuations obtained from third party pricing vendors, which may also consist of broker quotes, to assess if the prices received represent reasonable estimates of the fair value.

For further information about the Company's fair value measurements, see Item 8, Note 2(b), "Significant Accounting Policies - Fair Value Measurements," and Item 8, Note 4, "Fair Value Measurements," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

11

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(a) Fair Value Summary

The following tables set forth the Company’s assets and liabilities that were accounted for at fair value as of March 31, 2016 and December 31, 2015 by level within the fair value hierarchy:

March 31, 2016 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting		Balance at March 31, 2016
Assets
Fixed maturities - Available for Sale ("AFS") - Excluding Life Funds Withheld Assets
U.S. Government and Government-Related/Supported ("U.S. Government")	$	—	$	4,532,047	$	44,940	$	—	$	4,576,987
Corporate - Financials	—		3,660,732		43,583		—		3,704,315
Corporate - Non Financials	—		7,091,329		181		—		7,091,510
Residential mortgage-backed securities – Agency ("RMBS - Agency")	—		4,364,154		2,853		—		4,367,007
Residential mortgage-backed securities – Non-Agency ("RMBS - Non-Agency")	—		302,843		—		—		302,843
Commercial mortgage-backed securities ("CMBS")	—		325,485		—		—		325,485
Collateralized debt obligations ("CDOs")	—		—		21,729		—		21,729
Other asset-backed securities (1)	—		1,158,698		4,200		—		1,162,898
U.S. States and political subdivisions of the States	—		2,584,747		—		—		2,584,747
Non-U.S. Sovereign Government, Provincial, Supranational and Government-Related/Supported ("Non-U.S. Governments")	—		5,546,695		—		—		5,546,695
Total fixed maturities - AFS - Excluding Funds Withheld Assets, at fair value	$	—	$	29,566,730	$	117,486	$	—	$	29,684,216
Equity securities, at fair value	532,672		345,735				—		878,407
Short-term investments, at fair value (1)	—		317,304		—		—		317,304
Total investments AFS - Excluding Funds Withheld Assets	$	532,672	$	30,229,769	$	117,486	$	—	$	30,879,927
Fixed maturities - Life Funds Withheld Assets
U.S. Government	$	—	$	12,692	$	—	$	—	$	12,692
Corporate - Financials	—		547,279		—		—		547,279
Corporate - Non Financials	—		1,269,262		—		—		1,269,262
RMBS – Agency	—		733		—		—		733
RMBS – Non-Agency	—		25,829		—		—		25,829
CMBS	—		108,914		—		—		108,914
Other asset-backed securities	—		121,721		—		—		121,721
Non-U.S. Governments	—		876,927		—		—		876,927
Total fixed maturities - AFS - Life Funds Withheld Assets, at fair value	$	—	$	2,963,357	$	—	$	—	$	2,963,357
Total investments - AFS, at fair value	$	532,672	$	33,193,126	$	117,486	$	—	$	33,843,284
Fixed maturities - Trading
U.S. Government	$	—	$	15,267	$	—	$	—	$	15,267
Corporate - Financials	—		382,755		—		—		382,755
Corporate - Non Financials	—		558,284		—		—		558,284
RMBS – Agency	—		1,869		—		—		1,869
CMBS	—		4,760		—		—		4,760
Other asset-backed securities	—		25,615		—		—		25,615
Non-U.S. Governments	—		421,033		—		—		421,033
Total fixed maturities - Trading, at fair value	$	—	$	1,409,583	$	—	$	—	$	1,409,583
Short-term investments, at fair value (1)	—		26,959		—		—		$	26,959
Total investments, Trading	$	—	$	1,436,542	$	—	$	—	$	1,436,542

12

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2016 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting			Balance at March 31, 2016
Cash equivalents (2)	295,962		881,157		—		—			1,177,119
Cash equivalents - Life Funds Withheld Assets (2)	—		92,444		—		—			92,444
Other investments (3)	—		1,011,336		301,095		—			1,312,431
Other assets (4)	—		56,118		20,486		(37,870		)	38,734
Total assets accounted for at fair value	$	828,634	$	36,670,723	$	439,067	$	(37,870	)	$	37,900,554
Liabilities
Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable) (5)	$	—	$	681,811	$	—	$	—		$	681,811
Financial instruments sold, but not yet purchased (6)	2,180		—		—		—			2,180
Other liabilities (4)	—		58,350		30,338		(37,870		)	50,818
Total liabilities accounted for at fair value	$	2,180	$	740,161	$	30,338	$	(37,870	)	$	734,809

December 31, 2015 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting		Balance at December 31, 2015
Assets
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
U.S. Government	$	—	$	5,020,574	$	45,063	$	—	$	5,065,637
Corporate - Financials	—		3,508,224		53,685		—		$	3,561,909
Corporate - Non Financials	—		6,900,259		188		—		$	6,900,447
RMBS - Agency	—		3,754,894		3,077		—		$	3,757,971
RMBS - Non-Agency	—		328,540		—		—		$	328,540
CMBS	—		405,316		—		—		$	405,316
CDOs	—		2		32,408		—		$	32,410
Other asset-backed securities	—		1,150,715		17,857		—		$	1,168,572
U.S. States and political subdivisions of the States	—		2,632,070		—		—		$	2,632,070
Non-U.S. Government	—		5,251,614		—		—		$	5,251,614
Total fixed maturities - AFS - Excluding Funds Withheld Assets, at fair value	$	—	$	28,952,208	$	152,278	$	—	$	29,104,486
Equity securities, at fair value	528,581		350,338		—		—		878,919
Short-term investments, at fair value (1)	—		617,390		—		—		617,390
Total investments AFS - Excluding Funds Withheld Assets	$	528,581	$	29,919,936	$	152,278	$	—	$	30,600,795
Fixed maturities - Life Funds Withheld Assets
U.S. Government	$	—	$	12,742	$	—	$	—	$	12,742
Corporate - Financials	—		598,236		—		—		$	598,236
Corporate - Non Financials	—		1,308,628		—		—		$	1,308,628
RMBS – Agency	—		752		—		—		$	752
RMBS – Non-Agency	—		26,953		—		—		$	26,953
CMBS	—		122,481		—		—		$	122,481
Other asset-backed securities	—		149,795		—		—		$	149,795
Non-U.S. Government	—		933,516		—		—		$	933,516
Total fixed maturities - AFS - Life Funds Withheld Assets, at fair value	$	—	$	3,153,103	$	—	$	—	$	3,153,103
Total investments - AFS, at fair value	$	528,581	$	33,073,039	$	152,278	$	—	$	33,753,898

13

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 (U.S. dollars in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Collateral and Counterparty Netting			Balance at December 31, 2015
Fixed maturities - Trading
U.S. Government	$	—	$	4,990	$	—	$	—		$	4,990
Corporate - Financials	—		335,956		—		—			$	335,956
Corporate - Non Financials	—		493,621		—		—			$	493,621
RMBS – Agency	—		368		—		—			$	368
CMBS	—		4,803		—		—			$	4,803
Other asset-backed securities	—		25,700		—		—			$	25,700
Non-U.S. Government	—		370,261		—		—			$	370,261
Total fixed maturities - Trading, at fair value	$	—	$	1,235,699	$	—	$	—		$	1,235,699
Short-term investments, at fair value (1)	—		60,330		—		—			$	60,330
Total investments, Trading	$	—	$	1,296,029	$	—	$	—		$	1,296,029
Cash equivalents (2)	437,742		830,924		—		—			$	1,268,666
Cash equivalents - Life Funds Withheld Assets (2)	517		100,757		—		—			$	101,274
Other investments (3)	—		1,008,176		283,550		—			$	1,291,726
Other assets (4)	—		69,914		19,400		(3,087		)	$	86,227
Total assets accounted for at fair value	$	966,840	$	36,378,839	$	455,228	$	(3,087	)	$	37,797,820
Liabilities
Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable) (5)	$	—	$	463,915	$	—	$	—		$	463,915
Financial instruments sold, but not yet purchased (6)	347		—		—		—			$	347
Other liabilities (4)	—		16,304		29,191		(3,087		)	$	42,408
Total liabilities accounted for at fair value	$	347	$	480,219	$	29,191	$	(3,087	)	$	506,670

____________

(1) Short-term investments consist primarily of Corporate securities and U.S. and Non-U.S. Government and Government-Related/Supported securities.

(2) Cash equivalents balances subject to fair value measurement include certificates of deposit and money market funds. Operating cash balances are not subject to recurring fair value measurement guidance.

(3) The Other investments balance excludes certain structured transactions including certain investments in project finance transactions, and a payment obligation and liquidity financing provided to a structured credit vehicle as a part of a third party medium term note facility. These investments, which totaled $141.5 million as of March 31, 2016 and $141.3 million as of December 31, 2015, are carried at amortized cost. For further information, see Item 8, Note 8, "Other Investments," to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

(4) Other assets and other liabilities include derivative instruments. The derivative balances included in each category are reported on a gross basis by level with a netting adjustment presented separately in the Collateral and Counterparty Netting column. The fair values of the individual derivative contracts are reported gross in their respective levels based on the fair value hierarchy. For further details regarding derivative fair values and associated collateral received or paid, see Note 7, "Derivative Instruments."

(5) Funds withheld on GreyCastle life retrocession arrangements (net of future policy benefit reserves recoverable) include balances related to the life retrocession embedded derivative, under which all investment results associated with the Life Funds Withheld Assets related to the GreyCastle Life Retro Arrangements described in Note 1, "Basis of Preparation and Consolidation," accrue to the benefit of GCLR.

(6) Financial instruments sold, but not yet purchased, represent "short sales" and are included within "Payable for investments purchased" on the balance sheets.

14

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(b) Level 2 Asset Valuations

U.S. Government, Corporate - Financials, Corporate - Non Financials and Non-U.S. Government

Transaction activity inputs utilized in the valuation of fair value hierarchy Level 2 securities within these sub-categories include actual trades, dealer posts, results of bids-wanted, institutional secondary offerings, primary market offerings and Trade Reporting and Compliance Engine ("TRACE") trade feeds. As part of the evaluation process, transaction activity is compared to prior evaluations and necessary adjustments are made accordingly. Market-color inputs include actively quoted benchmark issues, buy-side/evaluator dialogue, sell-side/evaluator dialogue and credit derivative indices.

RMBS - Agency, RMBS - Non-Agency, CMBS, CDO and Other asset-backed securities

As part of the fair valuation process, Level 2 securities in these sub-categories are analyzed by collateral type, deal structure, deal performance and vintage. Market inputs into the valuation process for each sub-category include reported or observed trades, results of bids-wanted, buy-side/sell-side evaluator dialogue, dealer offering and market research reports. Cash flow inputs into the evaluation process include conditional prepayment rates, conditional decay rates, delinquency and loss severity rates. This assumptive data is reviewed and updated using third party reported information to reflect current market convention.

U.S. States and political subdivisions of the States

Transaction activity inputs utilized in the valuation of fair value hierarchy Level 2 securities within this sub-category include client and broker trades, dealer posts, results of bids-wanted, institutional secondary offerings, primary market offerings, and Municipal Securities Rulemaking trade feeds. As part of the evaluation process, transaction activity is compared to prior evaluations and necessary adjustments are made accordingly. Market-color inputs include bids, offerings, two-sided markets, buy-side/evaluator dialogue and sell-side/evaluator dialogue. Credit information inputs include issuer financial statements, default and material event notices, developer reports and liquidation and restructuring analysis.

Equity securities and other investments

Other investment securities generally include investments in thinly traded equity funds and hedge funds. Fair value is determined based upon the most recent net asset values (“NAV’) received from the fund administrators, the nature of the underlying investments in the funds and the frequency of subscriptions or redemptions as dictated by the fund’s governing documents.

Other assets and other liabilities

Other assets and other liabilities primarily include over-the-counter (“OTC”) derivatives, which are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or dealer quotations or alternative independent pricing sources where an understanding of the inputs utilized in arriving at the valuations is obtained. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms and specific risks inherent in the instrument as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, such as generic forwards, interest rate swaps and options, model inputs can generally be verified and model selection does not involve significant management judgment.

There were no significant transfers between Level 1 and Level 2 during each of the three months ended March 31, 2016 and 2015.

(c) Level 3 Assets and Liabilities

The tables below present additional information about assets and liabilities measured at fair value on a recurring basis and for which Level 3 inputs were utilized to determine fair value. The tables present a reconciliation of the beginning and ending balances for the three months ended March 31, 2016 and 2015 for all financial assets and liabilities measured at fair value using significant unobservable inputs (Level 3) at March 31, 2016 and 2015, respectively. The tables do not include gains or losses that were reported in Level 3 in prior periods for assets that were transferred out of Level 3 prior to March 31, 2016 and 2015, respectively. Gains and losses for assets and liabilities classified within Level 3 in the table below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Further, it should be noted that the following tables do not take into consideration the effect of offsetting Level 1 and 2 financial instruments entered into by the Company that are either economically hedged by certain exposures to the Level 3 positions or that hedge the exposures in Level 3 positions.

15

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In general, Level 3 assets include securities for which values were obtained from brokers where either significant inputs were utilized in determining the values that were difficult to corroborate with observable market data, or sufficient information regarding the specific inputs utilized by the broker was not available to support a Level 2 classification. Transfers into or out of Level 3 primarily arise as a result of the valuations utilized by the Company changing between either those provided by independent pricing services that do not contain significant unobservable inputs and other valuations sourced from brokers that are considered Level 3.

Fixed maturities and short-term investments

The Company’s Level 3 assets consist primarily of U.S. Government and Government-Related/Supported, Corporates and CDOs, for which non-binding broker quotes are the primary source of the valuations. Sufficient information regarding the specific inputs utilized by the brokers was not available to support a Level 2 classification. The Company obtains the majority of broker quotes for these securities from third party investment managers who perform independent verifications of these valuations using pricing matrices based upon information gathered by market traders. In addition, for the majority of these securities, the Company compares the broker quotes to independent valuations obtained from third party pricing vendors, which may also consist of broker quotes, to assess if the prices received represent a reasonable estimate of the fair value. Although the Company does not have access to the specific unobservable inputs that may have been used in the fair value measurements of these securities provided by brokers, we would expect that the significant inputs considered are prepayment rates, probability of default, loss severity in the event of default, recovery rates, liquidity premium and reinvestment rates. Significant increases (decreases) in any of those inputs in isolation could result in a significantly different fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

The remainder of the Level 3 assets relate primarily to private investments (including funds) and certain derivative positions as described below.

Other investments

Included within the other investments component of the Company’s Level 3 valuations are private investments (including funds) and hedge funds where the Company is not deemed to have significant influence over the investee. The fair value of these investments is based upon net asset values received from the investment manager or general partner of the respective entity. The nature of the underlying investments held by the investee that form the basis of the net asset value include assets such as private business ventures and are such that significant Level 3 inputs are utilized in the determination of the individual underlying holding values and, accordingly, the fair value of the Company’s investment in each entity is classified within Level 3. The Company has not adjusted the net asset values received; however, management incorporates factors such as the most recent financial information received, annual audited financial statements and the values at which capital transactions with the investee take place when applying judgment regarding whether any adjustments should be made to the net asset value in recording the fair value of each position. Investments in hedge funds included in other investments utilize strategies including arbitrage, directional, event driven and multi-style. The funds potentially have lockup and gate provisions that may limit redemption liquidity. For further details regarding the nature of other investments and related features, see Item 8, Note 8, "Other Investments," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Derivative instruments

Derivative instruments recorded within other liabilities and classified within Level 3 include credit derivatives sold that provide protection on senior tranches of structured finance transactions where the value is obtained directly from the investment bank counterparty and sufficient information regarding the inputs utilized in such valuation was not obtained to support a Level 2 classification and guaranteed minimum income benefits embedded within one reinsurance contract. The majority of inputs utilized in the valuations of these types of derivative contracts are considered Level 1 or Level 2; however, each valuation includes at least one Level 3 input that was significant to the valuation and, accordingly, the values are disclosed within Level 3.

The calculation of the change in fair value of the embedded derivative associated with the GreyCastle Life Retro Arrangements includes the interest income, realized and unrealized gains and losses on Life Funds Withheld Assets and certain related expenses related to the Life Funds Withheld Assets. The fair value of the embedded derivative is included in “Funds withheld on GreyCastle life retrocession arrangements, net of future policy benefit reserves recoverable” on the consolidated balance sheets. The fair value of the embedded derivative is considered a Level 2 valuation.

16

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Level 3 Assets and Liabilities - Three Months Ended March 31, 2016
(U.S. dollars in thousands)	U.S. Government			Corporate - Financials			Corporate - Non-Financials			RMBS - Agency
Balance, beginning of period	$	45,063		$	53,685		$	188		$	3,077
Realized gains (losses)	(37		)	53			—			(3		)
Movement in unrealized gains (losses)	593			(39		)	(1		)	7
Purchases and issuances	—			169			—			—
Sales	—			—			—			—
Settlements	(679		)	—			(6		)	(228		)
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			(10,285		)	—			—
Fixed maturities to short-term investments classification change				—			—			—
Balance, end of period	$	44,940		$	43,583		$	181		$	2,853
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	554		$	15		$	(1	)	$	4
(U.S. dollars in thousands)	RMBS - Non Agency			CMBS			CDO			Other asset- backed securities
Balance, beginning of period	$	—		$	—		$	32,408		$	17,857
Realized gains (losses)	—			—			41			1,049
Movement in unrealized gains (losses)	—			—			5,257			(2,758		)
Purchases and issuances	—			—			—			—
Sales	—			—			—			—
Settlements	—			—			(15,977		)	(11,948		)
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Fixed maturities to short-term investments classification change	—			—			—			—
Balance, end of period	$	—		$	—		$	21,729		$	4,200
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—		$	—		$	5,297		$	(1,708	)
(U.S. dollars in thousands)	Non-US Government			Short-term investments			Other investments			Derivative Contracts - Net
Balance, beginning of period	$	—		$	—		$	283,550		$	(9,791	)
Realized gains (losses)	—			—			5,807			—
Movement in unrealized gains (losses)	—			—			(2,717		)	(61		)
Purchases and issuances	—			—			13,779			—
Sales	—			—			—			—
Settlements	—			—			(14,818		)	—
Transfers into Level 3	—			—			15,494			—
Transfers out of Level 3	—			—			—			—
Fixed maturities to short-term investments classification change	—			—			—			—
Balance, end of period	$	—		$	—		$	301,095		$	(9,852	)
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—		$	—		$	3,090		$	(61	)

17

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Level 3 Assets and Liabilities - Three Months Ended March 31, 2015
(U.S. dollars in thousands)	U.S. Government		Corporate - Financials		Corporate - Non-Financials			RMBS - Agency
Balance, beginning of period	$	—	$	—	$	5,894		$	1,910
Realized gains (losses)	—		—		(1		)	—
Movement in unrealized gains (losses)	—		—		48			(1		)
Purchases and issuances (1)	—		—		—			—
Sales	—		—		—			—
Settlements	—		—		(80		)	(89		)
Transfers into Level 3	—		—		—			—
Transfers out of Level 3	—		—		—			—
Fixed maturities to short-term investments classification change	—		—		—			—
Balance, end of period	$	—	$	—	$	5,861		$	1,820
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	—	$	48		$	(1	)
(U.S. dollars in thousands)	RMBS - Non Agency		CMBS		CDO			Other asset- backed securities
Balance, beginning of period	$	—	$	—	$	687,958		$	5,288
Realized gains (losses)	—		—		36			(1		)
Movement in unrealized gains (losses)	—		—		5,555			2
Purchases and issuances (1)	—		—		—			—
Sales	—		—		(155,085		)	—
Settlements	—		—		(41,541		)	(3,045		)
Transfers into Level 3	—		—		—			—
Transfers out of Level 3	—		—		—			—
Fixed maturities to short-term investments classification change	—		—		—			—
Balance, end of period	$	—	$	—	$	496,923		$	2,244
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	—	$	2,668		$	—
(U.S. dollars in thousands)	Non-US Government		Short-term investments		Other investments			Derivative Contracts - Net
Balance, beginning of period	$	—	$	—	$	185,083		$	(9,764	)
Realized gains (losses)	—		—		1,302			—
Movement in unrealized gains (losses)	—		—		(1,827		)	158
Purchases and issuances (1)	—		—		6,793			—
Sales	—		—		—			—
Settlements	—		—		(1,254		)	—
Transfers into Level 3	—		—		—			—
Transfers out of Level 3	—		—		—			—
Fixed maturities to short-term investments classification change	—		—		—			—
Balance, end of period	$	—	$	—	$	190,097		$	(9,606	)
Movement in total gains (losses) above relating to instruments still held at the reporting date	$	—	$	—	$	(524	)	$	158

18

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(d) Financial Instruments Not Carried at Fair Value

Authoritative guidance over disclosures about the fair value of financial instruments requires additional disclosure of fair value information for financial instruments not carried at fair value in both interim and annual reporting periods. Certain financial instruments, particularly insurance contracts, are excluded from these fair value disclosure requirements. The carrying values of cash and cash equivalents, accrued investment income, net receivable from investments sold, other assets, net payable for investments purchased, other liabilities and other financial instruments not included below approximated their fair values. The following table includes financial instruments for which the carrying value differs from the estimated fair values as of March 31, 2016 and December 31, 2015. All of these fair value estimates are considered Level 2 fair value measurements.

	March 31, 2016				December 31, 2015
(U.S. dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets - Other investments	$	141,459	$	153,844	$	141,329	$	154,065
Deposit liabilities	$	1,171,655	$	1,478,856	$	1,168,376	$	1,436,210
Notes payable and debt	2,645,647		2,815,562		2,644,970		2,805,152
Financial Liabilities	$	3,817,302	$	4,294,418	$	3,813,346	$	4,241,362

The Company historically participated in structured transactions. Remaining structured transactions include cash loans supporting project finance transactions, a liquidity facility financing provided to structured project deals and an investment in a payment obligation with an insurance company. These transactions are carried at amortized cost. The fair value of these investments held by the Company is determined through use of internal models utilizing reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

Deposit liabilities include obligations under structured insurance and reinsurance transactions. For purposes of fair value disclosures, the Company determined the estimated fair value of the deposit liabilities by assuming a discount rate equal to the appropriate U.S. Treasury rate plus 38.0 basis points and 26.5 basis points as of March 31, 2016 and December 31, 2015, respectively. The discount rate incorporates the Company’s own credit risk into the determination of estimated fair value.

The fair values of the Company’s notes payable and debt outstanding were determined based on quoted market prices.

There are no significant concentrations of credit risk within the Company’s financial instruments as defined in the authoritative guidance over disclosures of fair value of financial instruments not carried at fair value, which excludes certain financial instruments, particularly insurance contracts.

5. Segment Information

The Company is organized into two operating segments: Insurance and Reinsurance. Subsequent to the transaction described in Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," the underwriting results of the acquired businesses from the Acquisition Date through March 31, 2016 are included in the Company's Insurance or Reinsurance segment, as appropriate.

The Company’s general investment and financing operations are reflected in "Corporate and Other." Subsequent to the transaction described in Note 1, "Basis of Preparation and Consolidation," GCLR reinsures the majority of the Company's life reinsurance business through the GreyCastle Life Retro Arrangements. The results of the Run-Off Life Operations not subject to the GreyCastle Life Retro Arrangements are also reported within Corporate and Other.

19

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company evaluates the performance of both the Insurance and Reinsurance segments based on underwriting profit. Other items of revenues and expenditures 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, 2016 and 2015:

Three Months Ended March 31, 2016 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	2,503,972		$	1,855,343		$	4,359,315		$	68,911		$	4,428,226
Net premiums written	1,503,934			1,557,661			3,061,595			3,164			3,064,759
Net premiums earned	1,593,874			757,572			2,351,446			3,164			2,354,610
Less: Net losses and loss expenses (2)	999,592			382,893			1,382,485			4,937			1,387,422
Less: Acquisition costs (2)	225,458			176,348			401,806			1,461			403,267
Less: Operating expenses (3)	312,432			79,234			391,666			218			391,884
Underwriting profit (loss)	$	56,392		$	119,097		$	175,489		$	(3,452	)	$	172,037
Net investment income - excluding Life Funds Withheld Assets (4)							143,131			8,533			151,664
Net investment income - Life Funds Withheld Assets										41,560			41,560
Net results from structured products (5)	1,222			748			1,970			—			1,970
Net fee income and other (6)	(3,862		)	837			(3,025		)	302			(2,723		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							(11,160		)	2,744			(8,416		)
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							—			101,166			101,166
Net realized and unrealized gains (losses) on derivative instruments							—			(3,622		)	(3,622		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(236,080		)	(236,080		)
Net income (loss) from investment fund affiliates and operating affiliates							—			8,071			8,071
Gain on sale of operating affiliate										—			—
Less: Exchange (gains) losses							—			(33,819		)	(33,819		)
Less: Corporate operating expenses							—			112,510			112,510
Contribution from P&C and Corporate and Other							306,405			(159,469		)	146,936
Less: Interest expense (7)										41,613			41,613
Less: Non-controlling interests										61,143			61,143
Less: Income tax expense										22,295			22,295
Net income (loss) attributable to ordinary shareholders													$	21,885
Ratios – P&C operations: (8)
Loss and loss expense ratio	62.7		%	50.5		%	58.8		%
Underwriting expense ratio	33.8		%	33.8		%	33.7		%
Combined ratio	96.5		%	84.3		%	92.5		%

____________

(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) The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.

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

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

(5) The net results from P&C structured products include net investment income and interest expense of $12.7 million and $10.7 million, respectively.

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

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

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

20

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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
Less: Net losses and loss expenses	616,947			152,880			769,827			19,387			789,214
Less: Acquisition costs	80,387			71,492			151,879			1,817			153,696
Less: 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		)
Loss on sale of life reinsurance subsidiary							—			—			—
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							—			57,997			57,997
Less: Exchange (gains) losses							—			27,390			27,390
Less: Corporate operating expenses							—			62,443			62,443
Contribution from P&C and Corporate and Other							283,836			(144,466		)	139,370
Less: Interest expense (6)										41,481			41,481
Less: Non-controlling interests										37,390			37,390
Less: Income tax expense										24,218			24,218
Net income (loss) attributable to ordinary shareholders													$	36,281
Ratios – P&C operations: (7)
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		%

____________

(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) Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.

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

21

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize the Company’s net premiums earned by line of business for the three months ended March 31, 2016 and 2015:

Three Months Ended March 31, 2016 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other			Total
P&C Operations:
Professional	$	332,954	$	43,155	$	—		$	376,109
Casualty	420,212		154,739		—			574,951
Property catastrophe	—		205,301		—			205,301
Property	359,633		254,399		—			614,032
Specialty	367,352		36,193		—			403,545
Other (1)	113,723		63,785		—			177,508
Total P&C Operations	$	1,593,874	$	757,572	$	—		$	2,351,446
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	—		$	—
Run-off Life operations - Other Life	—		—		3,164			3,164
Total Corporate and Other	$	—	$	—	$	3,164		$	3,164
Total	$	1,593,874	$	757,572	$	3,164		$	2,354,610
Three Months Ended March 31, 2015 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other			Total
P&C Operations:
Professional	$	266,410	$	35,008	$	—		$	301,418
Casualty	341,317		58,208		—			399,525
Property catastrophe	—		94,073		—			94,073
Property	172,539		131,224		—			303,763
Specialty	171,878		18,075		—			189,953
Other (1)	10,162		20,600		—			30,762
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

____________

(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, structured indemnity and other lines.

22

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

6. Investments

(a) Fixed Maturities, Short-Term Investments and Equity Securities

Amortized Cost and Fair Value Summary

The cost (amortized cost for fixed maturities and short-term investments), fair value, gross unrealized gains and gross unrealized (losses), including non-credit related OTTI recorded in AOCI, of the Company’s AFS investments as of March 31, 2016 and December 31, 2015, were as follows:

			Included in AOCI
March 31, 2016 (U.S. dollars in thousands)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-credit Related OTTI (1)
Fixed maturities - AFS
U.S. Government	$	4,483,796	$	101,066	$	(7,875	)	$	4,576,987	$	—
Corporate - Financials	3,656,521		75,341		(27,547		)	3,704,315		—
Corporate - Non Financials	6,935,636		210,829		(54,955		)	7,091,510		—
RMBS – Agency	4,259,838		112,260		(5,091		)	4,367,007		—
RMBS – Non-Agency	303,377		20,313		(20,847		)	302,843		(52,025		)
CMBS	317,886		10,324		(2,725		)	325,485		(1,163		)
CDO	25,845		2		(4,118		)	21,729		(1,208		)
Other asset-backed securities	1,154,679		19,123		(10,904		)	1,162,898		(1,027		)
U.S. States and political subdivisions of the States	2,436,400		149,140		(793		)	2,584,747		—
Non-U.S. Governments	5,442,418		161,392		(57,115		)	5,546,695		—
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	29,016,396	$	859,790	$	(191,970	)	$	29,684,216	$	(55,423	)
Total short-term investments - Excluding Life Funds Withheld Assets	317,939		433		(1,068		)	317,304		—
Total equity securities	831,543		93,517		(46,653		)	878,407		—
Total investments - AFS - Excluding Life Funds Withheld Assets	$	30,165,878	$	953,740	$	(239,691	)	$	30,879,927	$	(55,423	)
Fixed maturities - AFS - Life Funds Withheld Assets
U.S. Government	$	10,315	$	2,377	$	—		$	12,692	$	—
Corporate - Financials	486,901		60,378		—			547,279		—
Corporate - Non Financials	1,058,886		210,376		—			1,269,262		—
RMBS – Agency	597		136		—			733		—
RMBS – Non-Agency	23,172		2,657		—			25,829		—
CMBS	92,586		16,328		—			108,914		—
Other asset-backed securities	105,635		16,086		—			121,721		—
Non-U.S. Governments	650,259		226,668		—			876,927		—
Total fixed maturities - AFS - Life Funds Withheld Assets	$	2,428,351	$	535,006	$	—		$	2,963,357	$	—
Total investments - AFS	$	32,594,229	$	1,488,746	$	(239,691	)	$	33,843,284	$	(55,423	)

____________

(1) Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

23

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 (U.S. dollars in thousands)	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-credit Related OTTI (1)
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
U.S. Government	$	5,047,621	$	52,355	$	(34,339	)	$	5,065,637	$	—
Corporate - Financials	3,535,830		49,535		(23,456		)	3,561,909		—
Corporate - Non Financials	6,867,525		130,568		(97,646		)	6,900,447		—
RMBS – Agency	3,697,756		77,776		(17,561		)	3,757,971		—
RMBS – Non-Agency	319,876		25,644		(16,980		)	328,540		(54,200		)
CMBS	401,713		7,933		(4,330		)	405,316		(1,182		)
CDOs	41,679		4		(9,273		)	32,410		(1,208		)
Other asset-backed securities	1,164,426		17,665		(13,519		)	1,168,572		(1,144		)
U.S. States and political subdivisions of the States	2,514,048		125,395		(7,373		)	2,632,070		—
Non-U.S. Government	5,249,148		100,383		(97,917		)	5,251,614		—
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	28,839,622	$	587,258	$	(322,394	)	$	29,104,486	$	(57,734	)
Total short-term investments - Excluding Life Funds Withheld Assets	$	618,851	$	967	$	(2,428	)	$	617,390	$	—
Total equity securities - Excluding Life Funds Withheld Assets	$	834,079	$	89,993	$	(45,153	)	$	878,919	$	—
Total investments - AFS - Excluding Life Funds Withheld Assets	$	30,292,552	$	678,218	$	(369,975	)	$	30,600,795	$	(57,734	)
Fixed maturities - AFS - Life Funds Withheld Assets
U.S. Government	$	10,721	$	2,021	$	—		$	12,742	$	—
Corporate - Financials	531,016		67,220		—			598,236		—
Corporate - Non Financials	1,132,926		175,702		—			1,308,628		—
RMBS – Agency	591		161		—			752		—
RMBS – Non-Agency	24,401		2,552		—			26,953		—
CMBS	107,968		14,513		—			122,481		—
Other asset-backed securities	132,674		17,121		—			149,795		—
Non-U.S. Governments	737,735		195,781		—			933,516		—
Total fixed maturities - AFS - Life Funds Withheld Assets	$	2,678,032	$	475,071	$	—		$	3,153,103	$	—
Total investments - AFS	$	32,970,584	$	1,153,289	$	(369,975	)	$	33,753,898	$	(57,734	)

____________

(1) Represents the non-credit component of OTTI losses, adjusted for subsequent sales of securities. It does not include the change in fair value subsequent to the impairment measurement date.

The cost (amortized cost for fixed maturities and short-term investments) and fair value of the Company’s Trading investments at December 31, 2016 and 2015, were as follows:

March 31, 2016 (U.S. dollars in thousands)	Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
U.S. Government	$	15,567	$	15,267
Corporate - Financials	379,848		382,755
Corporate - Non Financials	549,458		558,284
RMBS – Agency	1,917		1,869
CMBS	4,675		4,760
Other asset-backed securities	25,457		25,615
Non-U.S. Governments	390,986		421,033
Total fixed maturities - Trading - Life Funds Withheld Assets	$	1,367,908	$	1,409,583
Total short-term investments - Trading - Life Funds Withheld Assets	$	26,949	$	26,959
Total investments - Trading - Life Funds Withheld Assets	$	1,394,857	$	1,436,542

24

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 (U.S. dollars in thousands)	Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
U.S. Government	$	4,957	$	4,990
Corporate - Financials	344,070		335,956
Corporate - Non Financials	509,441		493,621
RMBS – Agency	370		368
CMBS	4,874		4,803
Other asset-backed securities	26,405		25,700
Non-U.S. Governments	373,492		370,261
Total fixed maturities - Trading - Life Funds Withheld Assets	$	1,263,609	$	1,235,699
Total short-term investments - Trading - Life Funds Withheld Assets	$	60,176	$	60,330
Total investments - Trading - Life Funds Withheld Assets	$	1,323,785	$	1,296,029

As of March 31, 2016 and December 31, 2015, approximately 2.1% and 2.0%, respectively, of the Company's fixed income investment portfolio at fair value, excluding Life Funds Withheld Assets, was invested in securities that were below investment grade or not rated. Approximately 18.3% and 14.7% of the gross unrealized losses in the Company's fixed income investment portfolio, excluding Life Funds Withheld Assets, as of March 31, 2016 and December 31, 2015, respectively, related to securities that were below investment grade or not rated.

Contractual Maturities Summary

The contractual maturities of AFS fixed income securities at March 31, 2016 and December 31, 2015 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2016				December 31, 2015
(U.S. dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Fixed maturities - AFS - Excluding Life Funds Withheld Assets
Due less than one year	$	2,156,182	$	2,151,862	$	2,106,851	$	2,104,106
Due after 1 through 5 years	13,787,996		14,020,514		14,051,494		14,143,461
Due after 5 through 10 years	5,622,857		5,828,464		5,680,830		5,740,954
Due after 10 years	1,387,736		1,503,414		1,374,997		1,423,156
	$	22,954,771	$	23,504,254	$	23,214,172	$	23,411,677
RMBS – Agency	4,259,838		4,367,007		3,697,756		3,757,971
RMBS – Non-Agency	303,377		302,843		319,876		328,540
CMBS	317,886		325,485		401,713		405,316
CDOs	25,845		21,729		41,679		32,410
Other asset-backed securities	1,154,679		1,162,898		1,164,426		1,168,572
Total mortgage and asset-backed securities	$	6,061,625	$	6,179,962	$	5,625,450	$	5,692,809
Total fixed maturities - AFS - Excluding Life Funds Withheld Assets	$	29,016,396	$	29,684,216	$	28,839,622	$	29,104,486
Fixed maturities - AFS - Life Funds Withheld Assets
Due less than one year	$	78,629	$	88,560	$	81,700	$	92,921
Due after 1 through 5 years	361,106		391,528		386,810		416,743
Due after 5 through 10 years	470,386		547,171		491,621		558,805
Due after 10 years	1,296,240		1,678,901		1,452,267		1,784,653
	$	2,206,361	$	2,706,160	$	2,412,398	$	2,853,122
RMBS – Agency	597		733		591		752
RMBS – Non-Agency	23,172		25,829		24,401		26,953
CMBS	92,586		108,914		107,968		122,481
Other asset-backed securities	105,635		121,721		132,674		149,795
Total mortgage and asset-backed securities	$	221,990	$	257,197	$	265,634	$	299,981
Total fixed maturities - AFS - Life Funds Withheld Assets	$	2,428,351	$	2,963,357	$	2,678,032	$	3,153,103
Total fixed maturities - AFS	$	31,444,747	$	32,647,573	$	31,517,654	$	32,257,589

25

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	March 31, 2016				December 31, 2015
(U.S. dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Fixed maturities - Trading - Life Funds Withheld Assets
Due less than one year	$	8,177	$	8,831	$	4,573	$	5,096
Due after 1 through 5 years	290,320		291,356		278,163		272,220
Due after 5 through 10 years	314,590		320,720		280,487		277,920
Due after 10 years	722,772		756,432		668,737		649,592
	$	1,335,859	$	1,377,339	$	1,231,960	$	1,204,828
RMBS – Agency	1,917		1,869		370		368
CMBS	4,675		4,760		4,874		4,803
Other asset-backed securities	25,457		25,615		26,405		25,700
Total mortgage and asset-backed securities	$	32,049	$	32,244	$	31,649	$	30,871
Total fixed maturities - Trading - Life Funds Withheld Assets	$	1,367,908	$	1,409,583	$	1,263,609	$	1,235,699

Pledged Assets

Certain of the Company's invested assets are held in trust and pledged in support of insurance and reinsurance liabilities as well as credit facilities. Such pledges are largely required by the Company's operating subsidiaries that are "non-admitted" under U.S. state insurance regulations, in order for the U.S. cedant to receive statutory credit for reinsurance. Also included are Life Funds Withheld Assets as noted in Note 1, "Basis of Preparation and Consolidation." Additionally, certain deposit liabilities and annuity contracts require the use of pledged assets. As of March 31, 2016 and December 31, 2015, the Company had $19.0 billion and $18.3 billion in pledged assets, respectively.

(b) Gross Unrealized Losses

The following is an analysis of how long the AFS securities as of March 31, 2016 and December 31, 2015 had been in a continual unrealized loss position:

	Less than 12 months					Equal to or greater than 12 months
March 31, 2016 (U.S. dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities and short-term investments - AFS
U.S. Government	$	465,423	$	(4,923	)	$	96,406	$	(2,984	)
Corporate – Financials	588,595		(18,228		)	141,508		(9,330		)
Corporate – Non Financials	930,465		(29,994		)	287,849		(25,073		)
RMBS – Agency	151,135		(1,128		)	327,657		(3,963		)
RMBS – Non-Agency	35,930		(1,867		)	175,881		(18,980		)
CMBS	31,661		(255		)	55,310		(2,470		)
CDOs	12,368		(509		)	9,359		(3,609		)
Other asset-backed securities	282,395		(2,113		)	60,638		(8,791		)
U.S. States and political subdivisions of the States	91,846		(379		)	15,528		(414		)
Non-U.S. Governments	965,976		(22,116		)	370,747		(35,912		)
Total fixed maturities and short-term investments - AFS	$	3,555,794	$	(81,512	)	$	1,540,883	$	(111,526	)
Total equity securities	$	365,368	$	(46,653	)	$	—	$	—

26

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Less than 12 months					Equal to or greater than 12 months
December 31, 2015 (U.S. dollars in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fixed maturities and short-term investments - AFS
U.S. Government	$	3,762,869	$	(29,339	)	$	89,113	$	(5,044	)
Corporate – Financials	1,641,021		(13,280		)	102,022		(10,192		)
Corporate – Non Financials	3,275,270		(73,069		)	227,527		(24,706		)
RMBS – Agency	1,065,055		(10,046		)	221,211		(7,515		)
RMBS – Non-Agency	19,614		(1,104		)	180,146		(15,876		)
CMBS	118,605		(1,561		)	78,651		(2,769		)
CDOs	12,311		(516		)	20,096		(8,757		)
Other asset-backed securities	572,671		(5,252		)	57,563		(8,268		)
U.S. States and political subdivisions of the States	565,055		(6,609		)	12,259		(765		)
Non-U.S. Governments	1,921,286		(53,440		)	474,929		(46,714		)
Total fixed maturities and short-term investments - AFS	$	12,953,757	$	(194,216	)	$	1,463,517	$	(130,606	)
Total equity securities	$	356,742	$	(45,153	)	$	—	$	—

The Company had gross unrealized losses totaling $239.7 million on 1,934 securities out of a total of 8,763 held as of March 31, 2016 in its AFS - Excluding Life Funds Withheld Assets portfolio, which either it considers to be temporarily impaired or with respect to which it reflects non-credit losses on other-than-temporarily impaired assets. Individual security positions comprising this balance have been evaluated by management to determine the severity of these impairments and whether they should be considered other-than-temporary. Management believes it is more likely than not that the issuer will be able to fund sufficient principal and interest payments to support the current amortized cost.

(c) Net Realized Gains (Losses)

The following represents an analysis of net realized gains (losses) on investments:

Net Realized Gains (Losses) on Investments	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets:
Gross realized gains	$	61,227		$	62,300
Gross realized losses on investments sold	(50,063		)	(47,122		)
OTTI on investments, net of amounts transferred to other comprehensive income	(19,580		)	(10,576		)
	$	(8,416	)	$	4,602
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets:
Gross realized gains	$	62,850		$	53,128
Gross realized losses on investments sold	(28,434		)	(390		)
OTTI on investments, net of amounts transferred to other comprehensive income	(2,346		)	(5,209		)
Net unrealized gains (losses) on trading securities	$	69,096		$	760
	$	101,166		$	48,289
Total net realized gains (losses) on investments	$	92,750		$	52,891

The significant components of the net impairment charges of $19.6 million for investments excluding Life Funds Withheld Assets for the three months ended March 31, 2016 were:

▪ $9.8 million related to certain high yield securities where we determined that the likely recovery on these securities was below the carrying value.

▪ $7.0 million related to certain equities that were in a loss position for more than 11 months or impaired by more than 50% of their amortized cost.

▪ $0.6 million for structured securities, where we determined that the likely recovery on these securities was below the carrying value and, accordingly, recorded an impairment of the securities to the discounted value of the cash flows expected to be received on these securities.

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

▪ $0.3 million related to certain U.S. Municipal securities that we no longer intend to hold for a period sufficient to recover their fair value to amortized cost.

▪ $1.9 million related to foreign exchange losses.

The following table sets forth the amount of credit loss impairments on fixed income securities for which a portion of the OTTI loss was recognized in OCI and that were held by the Company as of the dates or for the periods indicated and the corresponding changes in such amounts.

Credit Loss Impairments	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Opening balance as of beginning of indicated period	$	73,469		$	131,942
Credit loss impairment recognized in the current period on securities not previously impaired	10,567			7,560
Credit loss impairments previously recognized on securities that matured, paid down, prepaid or were sold during the period	(4,877		)	(28,539		)
Additional credit loss impairments recognized in the current period on securities previously impaired	230			141
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected to be collected	(2,410		)	(2,646		)
Balance as of March 31,	$	76,979		$	108,458

7. Derivative Instruments

The Company enters into derivative instruments for both risk management and efficient portfolio management. The Company is exposed to potential loss from various market risks, and manages its market risks based on guidelines established by management and the Risk and Finance Committee of the Company's Board of Directors. The Company recognizes all derivatives as either assets or liabilities on the balance sheets and measures those instruments at fair value, with the changes in fair value of derivatives shown in the consolidated statement of income as "Net realized and unrealized gains (losses) on derivative instruments" unless the derivatives are designated as hedging instruments. The accounting for derivatives that are designated as hedging instruments is described in Item 8, Note 2(h), "Significant Accounting Policies - Derivative Instruments," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

The following table summarizes information on the location and gross amounts of derivative fair values contained in the consolidated balance sheets as of March 31, 2016 and December 31, 2015:

	March 31, 2016								December 31, 2015
(U.S. dollars in thousands)	Asset Derivative Notional Amount		Asset Derivative Fair Value (1)		Liability Derivative Notional Amount		Liability Derivative Fair Value (1)		Asset Derivative Notional Amount		Asset Derivative Fair Value (1)		Liability Derivative Notional Amount		Liability Derivative Fair Value (1)
Derivatives designated as hedging instruments:
Foreign exchange contracts	$	1,216,823	$	50,707	$	1,001,752	$	54,387	$	1,667,585	$	64,289	$	674,976	$	11,941
Total derivatives designated as hedging instruments	$	1,216,823	$	50,707	$	1,001,752	$	54,387	$	1,667,585	$	64,289	$	674,976	$	11,941
Derivatives not designated as hedging instruments:
Investment Related Derivatives:
Foreign exchange exposure	199,007		2,501		46,628		534		102,234		2,888		144,707		1,702
Credit exposure	5,000		414		70,682		11,869		8,433		652		71,614		12,067
Financial market exposure	5		4		28,480		1,384		37		77		26,500		417

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	March 31, 2016										December 31, 2015
(U.S. dollars in thousands)	Asset Derivative Notional Amount		Asset Derivative Fair Value (1)			Liability Derivative Notional Amount		Liability Derivative Fair Value (1)			Asset Derivative Notional Amount		Asset Derivative Fair Value (1)			Liability Derivative Notional Amount		Liability Derivative Fair Value (1)
Other Non-Investment Derivatives:
Foreign exchange contracts	188,400		2,492			—		—			194,566		2,009			—		—
Credit exposure	—		—			30,090		28			29,874		31			—		—
Guaranteed minimum income benefit contract	49,562		20,486			49,562		20,486			46,032		19,368			46,032		19,368
Modified coinsurance funds withheld contracts (2)	58,719		—			4,556,696		—			60,667		—			4,620,879		—
Total derivatives not designated as hedging instruments	$	500,693	$	25,897		$	4,782,138	$	34,301		$	441,843	$	25,025		$	4,909,732	$	33,554
Total derivatives			$	76,604				$	88,688				$	89,314				$	45,495
Counterparty netting			(37,870		)			(37,870		)			(3,087		)			(3,087		)
Total derivatives net of counterparty netting (1)			38,734					50,818					86,227					42,408
Cash collateral held/paid (3)			(5,520		)			(4,230		)			(30,958		)			—
Total derivatives as recorded in the balance sheets			$	33,214				$	46,588				$	55,269				$	42,408

____________

(1) Derivative instruments in an asset or liability position are included within Other assets or Other liabilities, respectively, in the balance sheets on a net basis where the Company has both a legal right of offset and the intention to settle the contracts on a net basis. The Company often enters into different types of derivative contracts with a single counterparty and these contracts are covered under netting agreements.

(2) The fair value movements in derivative assets and liabilities relating to modified coinsurance funds withheld contracts are included within the associated asset or liability at each period end on the face of the balance sheets. Notional amounts associated with reinsurance agreements under which the Company assumes reinsurance risk are recorded as asset derivative notional amounts. Notional amounts associated with the GreyCastle Life Retro Arrangements under which the Company cedes reinsurance risk are recorded as liability derivative notional amounts. Included in the liability derivative notional amount as of March 31, 2016 is the cumulative net realized and unrealized loss on life retrocession embedded derivative of $681.8 million.

(3) As of March 31, 2016, the Company held cash collateral related to foreign currency derivative positions and certain other derivative positions of $5.5 million for derivatives in an asset position and paid cash collateral of $4.2 million for derivatives in a liability position. As of December 31, 2015, the Company held cash collateral related to foreign currency derivative position and certain other derivative positions of $31.0 million for derivatives in an asset position and paid cash collateral of nil for derivatives in a liability position. The assets and liabilities related to the net collateral paid or held were recorded as Other assets and Other liabilities within the unaudited consolidated balance sheets as the collateral and derivative positions are not intended to be settled on a net basis.

(a) Derivative Instruments Designated as Fair Value Hedges

The Company may designate certain of its derivative instruments as fair value hedges or cash flow hedges and formally and contemporaneously documents all relationships between the hedging instruments and hedged items and links the hedging derivatives to specific assets and liabilities. The Company assesses the effectiveness of the hedge both at inception and on an on-going basis, and determines whether the hedge is highly effective in offsetting changes in fair value or cash flows of the linked hedged item.

The Company may use foreign exchange contracts to hedge the fair value of certain fixed income securities as well as to hedge certain net investments in foreign operations. For the three months ended March 31, 2016, there is no exposure to fair value hedges.

Settlement of Fair Value Hedges

A summary of the fair value hedges that have been settled and their impact on results during the indicated periods as well as the remaining balance of fair value hedges and average years remaining to maturity as of March 31, 2016 and 2015 are shown below:

Settlement of Fair Value Hedges - Summary	Fair Value Hedges - Deposit Liabilities March 31,
(U.S. dollars in thousands)	2016		2015
Cumulative reduction to interest expense	$	106,056	$	97,705
Remaining balance	127,139		135,490
Weighted average years remaining to maturity	21.2		22.2

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(b) Derivative Instruments Designated as Hedges of the Net Investment in a Foreign Operation

The Company utilizes foreign exchange contracts to hedge the fair value of certain net investments in foreign operations. During the three months ended March 31, 2016 and 2015, the Company entered into foreign exchange contracts that were formally designated as hedges of investments in foreign subsidiaries, the majority of which have functional currencies of either U.K. sterling or the Euro. There was no ineffectiveness in these transactions.

The following table provides the weighted average U.S. dollar equivalent of foreign denominated net assets that were hedged and the resulting derivative gain (loss) that was recorded in the foreign currency translation adjustment, net of tax, account within AOCI for the three months ended March 31, 2016 and 2015:

Derivative Instruments Designated as Hedges of the Net Investment in a Foreign Operation - Summary	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Weighted average of U.S. dollar equivalent of foreign denominated net assets	$	2,234,748		$	628,941
Derivative gains (losses) (1)	(11,515		)	66,770

____________

(1) Derivative gains (losses) from derivative instruments designated as hedges of the net investment in a foreign operation are recorded in the cumulative translation adjustment account within AOCI for each period.    

(c) Derivative Instruments Not Formally Designated As Hedging Instruments

The following table provides the total impact on earnings relating to derivative instruments not formally designated as hedging instruments under authoritative accounting guidance and from the ineffective portion of fair value hedges. The impacts are all recorded through Net realized and unrealized gains (losses) on derivatives in the income statement for the three months ended March 31, 2016 and 2015:

Net Realized and Unrealized Gains (Losses) on Derivative Instruments	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Investment Related Derivatives:
Interest rate exposure	$	781		$	9,637
Foreign exchange exposure	(670		)	(1,362		)
Credit exposure	(163		)	82
Financial market exposure	(1,010		)	3,041
Other Non-Investment Derivatives:
Foreign exchange contracts	(1,181		)	2,059
Credit exposure	(303		)	1,346
Modified coinsurance funds withheld contract	(1,076		)	1,718
Net realized and unrealized gains (losses) on derivative instruments	$	(3,622	)	$	16,521
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	$	(236,080	)	$	(229,367	)

The Company’s objectives in using these derivatives are explained below.

(c)(i) Investment Related Derivatives

The Company, either directly or through its investment managers, may use derivative instruments within its investment portfolio, including interest rate swaps, inflation swaps, commodity contracts, total return swaps, credit derivatives (single name and index credit default swaps), options, forward contracts and financial futures (foreign exchange, bond and stock index futures), primarily as a means of economically hedging exposures to interest rate, credit spread, equity price changes and foreign currency risk or, in limited instances, for efficient portfolio management. When using cleared (exchange traded) derivatives, the Company is exposed to the credit risk of the applicable clearing house and of the Company's future commissions merchant. When using uncleared (over-the-counter) derivatives, the Company is exposed to credit risk in the event of non-performance by the counterparties under any derivative contracts, although the Company generally seeks to use credit support arrangements with counterparties to help manage this risk.

Investment Related Derivatives – Interest Rate Exposure

The Company utilizes risk management and overlay strategies that incorporate the use of derivative financial instruments, primarily to manage its fixed income portfolio duration and net economic exposure to interest rate risks. The Company may

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

also use interest rate swaps to convert certain liabilities from a fixed rate to a variable rate of interest or to convert a variable rate of interest from one basis to another.

Investment Related Derivatives – Foreign Exchange Exposure

The Company has exposure to foreign currency exchange rate fluctuations through its operations and in its investment portfolio. The Company uses foreign exchange contracts to manage its exposure to the effects of fluctuating foreign currencies on the value of certain of its foreign currency fixed maturities. These contracts are not designated as specific hedges for financial reporting purposes and, therefore, realized and unrealized gains and losses on these contracts are recorded in income in the period in which they occur. These contracts generally have maturities of twelve months or less.

In addition, certain of the Company's investment managers may, subject to investment guidelines, enter into forward contracts.

Investment Related Derivatives – Credit Exposure

Credit derivatives may be purchased within the Company's investment portfolio in the form of single name, basket or index credit default swaps and swaptions, which are used to mitigate credit exposure through a reduction in credit spread duration (i.e., macro credit strategies rather than single-name credit hedging) or exposure to securities of selected issuers, including issuers that are not held in the underlying fixed income portfolio.

Investment Related Derivatives – Financial Market Exposure

Stock index futures may be purchased within the Company's investment portfolio in order to create synthetic equity exposure and to add value to the portfolio with overlay strategies where market inefficiencies are believed to exist. From time to time, the Company may enter into other financial market exposure derivative contracts on various indices including, but not limited to, inflation and commodity contracts.

(c)(ii) Other Non-Investment Derivatives

Foreign Exchange Contracts

On January 9, 2015, the Company entered into the FX Forwards with Morgan Stanley Capital Services LLC and Goldman Sachs International. The purpose of the FX Forwards was to mitigate risk of foreign currency exposure related to the Catlin Acquisition. Following the closing of the Catlin Acquisition, the FX Forwards were settled.

In connection with the Catlin Acquisition and the FX Forwards, during 2015, certain foreign exchange contracts utilized to hedge the fair value of certain net investments in foreign operations were de-designated as hedging instruments; subsequently during the second quarter, the hedging relationships were then re-established.

In the fourth quarter of 2015, the Company entered into an average rate option to mitigate the risk of foreign currency exposure to certain cash flows denominated in U.K. sterling. The option will mature in the fourth quarter of 2016. Additionally, the Company has a small forward purchase to mitigate exposure to certain cash flows denominated in New Zealand dollars.

Credit Exposure

During the year ended December 31, 2014, the Company entered into a non-investment related credit derivative relating to a number of reference pool mortgage tranches associated with actual mortgage loans that were securitized into agency mortgage-backed securities and sold as Structured Agency Credit Risk Notes. As of March 31, 2016, there was no reported event of default on this obligation. The credit derivative is recorded at fair value based upon models developed by the Company. Significant unobservable inputs considered in the valuation include the impact of changes in interest rates, future default, delinquency and prepayment rates, credit spreads, changes in credit quality, and other market factors.

Guaranteed Minimum Income Benefit Contract

The Company also has derivatives embedded in certain reinsurance contracts. For a certain life reinsurance contract, the Company pays the ceding company a fixed amount equal to the estimated present value of the excess of the guaranteed benefit over the account balance upon the policyholder's election to take the income benefit. The fair value of this derivative is determined based on the present value of expected cash flows.

Modified Coinsurance and Funds Withheld Contracts

The Company has modified coinsurance and funds withheld reinsurance agreements that provide for a return to be paid to the Company based on a portfolio of fixed income securities. As such, the agreements contain an embedded derivative. The embedded derivative is bifurcated from the funds withheld balance and recorded at fair value with changes in fair value recognized in earnings through Net realized and unrealized gains (losses) on derivative instruments.

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Modified Coinsurance Funds Withheld Reinsurance Agreements - Life Retrocession Embedded Derivative

In addition, the Company has entered into GreyCastle Life Retro Arrangements, as described in Note 1, "Basis of Preparation and Consolidation." The embedded derivative related to the GreyCastle Life Retro Arrangements is recorded at fair value with changes in fair value recognized in earnings through Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets.

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

Impact of GreyCastle Life Retro Arrangements	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Underwriting profit (loss) (1)	$	—		$	603
Net investment income - Life Funds Withheld Assets	41,560			50,419
Net realized gains (losses) on investments sold - Life Funds Withheld Assets	34,416			52,738
Net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	69,096			760
OTTI on investments - Life Funds Withheld Assets	(2,346		)	(5,209		)
Exchange gains (losses)	11,119			3,684
Other income and expenses	(146		)	(1,298		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	(236,080		)	(229,367		)
Net income (loss)	$	(82,381	)	$	(127,670	)
Change in net unrealized gains (losses) on investments - Life Funds Withheld Assets, net of tax	51,990			37,115
Change in adjustments related to future policy benefit reserves, net of tax	17,035			60,356
Change in cumulative translation adjustment - Life Funds Withheld Assets, net of tax	13,356			30,802
Total changes to other comprehensive income as a result of GreyCastle Life Retro Arrangements	$	82,381		$	128,273
Comprehensive income (loss)	$	—		$	603

____________

(1) The underwriting profit of $0.6 million relates to a premium adjustment during the three months ended March 31, 2015 relating to the GreyCastle Life Retro Arrangements transaction. Excluding this transaction, the impact to comprehensive income relating to the GreyCastle Life Retro Arrangements was nil for the three months ended March 31, 2015.

As shown in the table above, although the Company's net income (loss) is subject to variability related to the GreyCasstle Life Retro Arrangements, there is minimal net impact on the Company's comprehensive income in any period. The life retrocession embedded derivative value includes the interest income, unrealized gains and losses, and realized gains and losses from sales on the Life Funds Withheld Assets.

The change in the value of the life retrocession embedded derivative includes the interest income, realized and unrealized gains and losses on Life Funds Withheld Assets and certain related expenses are as follows:

Components of Life Retrocession Embedded Derivative and Derivative Instruments - Life Funds Withheld Assets:	Three months ended March 31,
(U.S. dollars in thousands)	2016			2015
Interest income - Life Funds Withheld Assets	$	(43,110	)	$	(50,996	)
Realized and unrealized gains (losses) - Life Funds Withheld Assets	(174,932		)	(152,830		)
Other	146			96
Net realized and unrealized gains (losses) on life retrocession embedded derivative	$	(217,896	)	$	(203,730	)
Net adjustments related to future policy benefit reserves, net of tax	(22,053		)	(11,954		)
Net realized and unrealized gains (losses) on derivative instruments - Life Funds Withheld Assets	3,869			(13,683		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	$	(236,080	)	$	(229,367	)

(d) Contingent Credit Features

Certain derivative agreements entered into by the Company or its subsidiaries contain credit rating downgrade provisions that permit early termination of the agreements by the counterparty if collateral is not posted following failure to maintain certain credit ratings from one or more of the principal credit rating agencies. If the Company were required to terminate such agreements early due to a credit rating downgrade, it could potentially be in a net liability position at the time of settlement of such agreements. The aggregate fair value of all derivative agreements containing such rating downgrade provisions that were

32

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

in a liability position and any collateral posted under these agreements as of March 31, 2016 and December 31, 2015 were as follows:

Contingent Credit Features - Summary: (U.S. dollars in thousands)	March 31, 2016		December 31, 2015
Aggregate fair value of derivative agreements with downgrade provisions in a net liability position	$	19,038	$	5,827
Collateral posted to counterparty	$	600	$	—

8. Goodwill and Other Intangible Assets

The Company has goodwill and intangible assets of $2.2 billion at March 31, 2016 and December 31, 2015.

In the first quarter of 2016, as a result of the transaction described in Note 3(a), "Acquisitions and Disposals - Allied Acquisition," the Company recognized additional intangible assets of $14.0 million. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets acquired, including indefinite-lived and definite-lived intangible assets, and liabilities assumed, at their Acquisition Date fair values, and recorded the excess of consideration transferred over the net assets acquired as goodwill in the amount of $13.9 million.

In the third quarter of 2015, as a result of the transaction described in Note 3(b), "Acquisitions and Disposals - New Energy Risk," the Company recognized additional goodwill of approximately $13.4 million. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets acquired and liabilities assumed at their acquisition date fair values, and recorded as goodwill the excess of the sum of a) over b) - in which a) represents the aggregate of: i) the consideration transferred, ii) the fair value of noncontrolling interest in the acquiree, and iii) the acquisition-date fair value of the Company's previously held equity interest in the acquiree; and b) represents the net assets acquired in the transaction.

In the second quarter of 2015, as a result of the transaction described in Item 8, Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company recognized additional intangible assets of $988.0 million. The transaction was accounted for using the acquisition method under which the Company recorded the identifiable assets acquired, including indefinite-lived and definite-lived intangible assets, and liabilities assumed, at their Acquisition Date fair values, and recorded the excess of consideration transferred over the net assets acquired as goodwill in the amount of $794.0 million.

The following table presents an analysis of intangible assets broken down between goodwill, intangible assets with an indefinite life and intangible assets with a definite life for the three months ended March 31, 2016:

(U.S. dollars in thousands)	Goodwill		Intangible assets with an indefinite life		Intangible assets with a definite life			Total
Balance at December 31, 2015	$	1,213,630	$	682,859	$	313,777		$	2,210,266
Additions	13,946		8,000		6,000			27,946
Amortization	—		—		(5,588		)	(5,588		)
Foreign Currency Translation	1,496		1,701		(2,224		)	973
Balance at March 31, 2016	$	1,229,072	$	692,560	$	311,965		$	2,233,597

9. Share Capital

(a) Authorized and Issued

Buybacks of Ordinary Shares

On August 6, 2015, XL-Ireland announced that its Board of Directors approved a share buyback program, authorizing the purchase of up to $1.0 billion of ordinary shares (the "August 2015 Program"). During the three months endedMarch 31, 2016, the Company purchased and canceled 10.0 million ordinary shares under the August 2015 Program for $355.1 million. As of March 31, 2016, $348.2 million remained available for purchase under the August 2015 Program.

(b) Stock Plans

The Company's performance incentive programs provide for grants of stock options, restricted stock, equity-classed restricted stock units, liability-classed restricted stock units, performance units and stock appreciation rights. Share-based compensation granted by the Company generally contains a vesting period of three or four years, and certain awards also contain performance conditions. The Company records compensation expense related to each award over its vesting period,

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

incorporating the best estimate of the expected outcome of performance conditions where applicable. Compensation expense is generally recorded on a straight line basis over the vesting period of an award. See Item 8, Note 18, "Share Capital," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 for further information on the Company's performance incentive programs and associated accounting.

During the three months ended March 31, 2016, the Company granted approximately 2.2 million stock options with a weighted-average grant date fair value of $5.99 per option. The fair value of the options issued was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions:

Dividend yield	2.00	%
Risk free interest rate	1.37	%
Volatility	21.7	%
Expected lives	6.0 years

During the three months ended March 31, 2016, the Company granted approximately 1.1 million equity-classed restricted stock units to certain employees with an aggregate grant date fair value of approximately $38.3 million. Each equity-classed restricted stock unit represents the Company's obligation to deliver to the holder one ordinary share, and grants may vest in three or four equal installments upon the first, second, third and fourth anniversaries of the date of grant. Equity-classed restricted stock units are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and paid in the form of additional ordinary shares contingent upon vesting.

During the three months ended March 31, 2016, the Company granted approximately 1.8 million liability-classed cash units to certain employees with an aggregate grant date fair value of approximately $61.3 million. Each liability-classed restricted cash unit represents the Company's obligation to deliver to the holder a cash payment equivalent to the value of one ordinary share. The grants may vest either in three or four equal installments upon the first, second, third and fourth anniversaries of the date of grant. Liability-classed restricted stock units are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and are paid in cash contingent upon vesting.

During the three months ended March 31, 2016, the Company granted approximately 0.7 million performance units (representing a potential maximum share payout of approximately 1.5 million ordinary shares) to certain employees with an aggregate grant date fair value of approximately $25.6 million. Each grant of performance units has a target number of shares, with final payouts ranging from 0% to 200% of the grant amount depending upon the achievement of stated relative and absolute financial performance metrics along with each employee's continued service through the vesting date. Performance units granted in the current year are granted at the closing market price on the day of grant and entitle the holder to receive dividends declared and paid in the form of additional ordinary shares contingent upon vesting. Performance units issued in 2015 had different performance metrics, please see Item 8, Note 18, "Share Capital," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

10. Notes Payable and Debt and Financing Arrangements

(a) Notes Payable and Debt

The following table presents the Company's outstanding notes payable and debt at March 31, 2016 and December 31, 2015:

(U.S. dollars in thousands)	March 31, 2016				December 31, 2015
	Commitment/ Debt (1)		In Use/ Outstanding (2)		Commitment/ Debt (1)		In Use/ Outstanding (2)
Debt:
2.30% Senior Notes due 2018	$	300,000	$	298,183	$	300,000	$	298,015
5.75% Senior Notes due 2021	400,000		397,630		400,000		397,523
6.375% Senior Notes due 2024	350,000		349,057		350,000		349,029
4.45% Subordinated Notes due 2025	500,000		492,723		500,000		492,521
6.25% Senior Notes due 2027	325,000		323,257		325,000		323,218
Trust Preferred Securities, face amount $8m, due 2035	8,248		8,248		—		—
5.25% Senior Notes due 2043	300,000		296,328		300,000		296,294
5.5% Subordinated Notes due 2045	500,000		488,469		500,000		488,370
Total debt carrying value	$	2,683,248	$	2,653,895	$	2,675,000	$	2,644,970

_______________

(1) Excluded from the table are certain credit facilities under which the Company is permitted to utilize up to $1.4 billion at March 31, 2016 and December 31, 2015, respectively, for revolving loans to support general operating and financing needs. However, at March 31, 2016 and December 31, 2015, $526.5 million and $527.1 million, respectively, were utilized under these facilities to issue letters of credit, leaving $823.5 million and $822.9 million, respectively, available to support other operating and financing needs.

(2)    "In Use/Outstanding" data represent March 31, 2016 and December 31, 2015 accreted values.

With the exception of the trust preferred securities assumed as a result of the Allied Acquisition, as described below, all outstanding debt of the Company at March 31, 2016 and December 31, 2015 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, including 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 23, "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, 2015.

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.

As a result of the Allied Acquisition described in Note 3(a), "Acquisitions and Disposals - Allied Acquisition," the Company assumed $8.2 million of trust preferred securities, due in 2035 and bearing a floating interest rate, adjustable quarterly, at three-month LIBOR plus 3.75%. The Company has given notice that these securities will be retired at the next interest payment date on June 15, 2016.

XL-Cayman and the Company were in compliance with all covenants at March 31, 2016, 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 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.

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s letter of credit facilities and revolving credit facilities as of March 31, 2016 and December 31, 2015 were as follows:

Letter of Credit Summary: (U.S. dollars in thousands except percentages)	March 31, 2016 (1)			December 31, 2015 (1)
Available letter of credit facilities - commitments	$	4,503,617		$	4,463,041
Available letter of credit facilities - in use (2)	$	2,548,085		$	2,515,653
Collateralized by certain assets of the Company’s investment portfolio	51.3		%	50.9		%

____________

(1) As of March 31, 2016 and December 31, 2015, there were fifteen available credit facilities

(2) As of March 31, 2016 and December 31, 2015 the stated portion of allowable credit facilities permitted to be utilized for revolving loans was $1.4 billion. However, as of March 31, 2016 and December 31, 2015, $526.5 million and $527.1 million, respectively, of such facilities' limits were utilized to issue letters of credit, leaving $823.5 million and $822.9 million, respectively, available either to issue additional letters of credit or to support other operating or financing needs under these particular facilities.

For details regarding the facilities, see Item 8, Note 14(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, 2015.

11. Related Party Transactions

(a)    Investment Manager Affiliates

At March 31, 2016 and 2015, the Company owned minority stakes in six independent investment management companies ("Investment Manager Affiliates") that are actively managing client capital and seeking growth opportunities. The Company seeks to develop relationships with specialty investment management organizations, generally acquiring an equity interest in the business. The Company also invests in certain of the funds and limited partnerships and other legal entities managed by these affiliates and through these funds and partnerships pays management and performance fees to the Company's Investment Manager Affiliates. In addition, the company owned minority stakes in two independent firms as of March 31, 2016 and one independent firm as of March 31, 2015, that provide technology and other services to alternative asset managers and allocators. The results of the Company's interests in these enterprises are included in Investment Manager Affiliates. The Company pays fees to these Investment Manager Affiliates in exchange for them providing their services to the Company. See Item 8, Note 7, "Investments in Affiliates," to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

(b)    Assumed Reinsurance Contracts

In the normal course of business, the Company enters into assumed reinsurance contracts with certain of its other strategic affiliates, or their subsidiaries. Management believes that these transactions are conducted at market rates consistent with negotiated arm's-length contracts. During the three months ended March 31, 2016 and 2015, these contracts resulted in reported net premiums, reported net losses, and reported net acquisition costs as summarized below:

(U.S. dollars in thousands)	Three months ended March 31,
	2016		2015
Reported net premiums	$	24,016	$	27,076
Reported net losses	$	12,060	$	9,100
Reported net acquisition costs	$	11,604	$	9,012

Results through April 1, 2015 include amounts under an assumed reinsurance contract with a wholly-owned subsidiary of ARX, an insurance operating affiliate of the Company to that date. The Company disposed of its investment in ARX on April 1, 2015, and thus, after that date, all amounts under this contract are no longer reported as related party transactions. See Note 3(d), "Acquisitions and Disposals - Sale of Strategic Operating Affiliate."

(c)    New Ocean

Commencing in 2014, several of the Company’s wholly-owned subsidiaries retrocede assumed reinsurance business to special purpose reinsurers that receive capital from funds managed by the Company's subsidiary, New Ocean Capital Management Limited, a Bermuda based company ("New Ocean"), as discussed in Note 12, "Variable Interest Entities". Underwriting administration services are provided to the special purpose reinsurers by other subsidiaries of the Company under service fee agreements negotiated at arm's-length, while investment advisory services are provided by New Ocean. During the

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

three months endedMarch 31, 2016, ceded premiums earned, ceded losses and loss expenses incurred, ceding commission income, and other fee income related to these retrocessional contracts were not material to the Company.

(d)    New Energy

On July 24, 2015, as described in Note 3(b), "Acquisitions and Disposals - New Energy Risk," the Company completed its acquisition of an additional 63.63% of the shares of New Energy for approximately $8.8 million, increasing its ownership of the entity to a majority portion of 94.79%. These shares are held within the XL Innovate Fund. A substantial portion of the additional shares were purchased directly from the family trusts of a Company employee, based on a market valuation of New Energy performed by an independent third party provider. The remaining 5.21% of equity shares of New Energy held by the family trusts of the employee were then contributed in-kind to XL Innovate Fund based on the share price implied by the independent valuation. Such contribution was made in partial satisfaction of the employee's aggregate 5.21% investment commitment to the Fund and resulted in XL Innovate Fund owning 100% of the net equity of New Energy, and the family trusts of the employee owning a 5.21% non-controlling equity interest in XL Innovate Fund. The employee serves as a member of the board of directors of both New Energy and XL Innovate Fund, and maintains responsibility over the business generated by New Energy. There were no other material transactions between the Company and this employee for the three months endedMarch 31, 2016.

12. Variable Interest Entities

At times, the Company has utilized VIEs both indirectly and directly in the ordinary course of the Company's business. Within its investment portfolio, the Company has holdings in hedge funds, private equity and other investment vehicles. A number of these vehicles are considered VIEs based on their legal form and the generally passive role of their investors.  As the Company lacks the ability to control the activities which most significantly impact the economic performance of these VIEs, the Company is not considered the primary beneficiary and does not consolidate these entities. The activities of the entities are generally limited to holding investments. The exposure to loss from these investments is limited to the carrying value of the investments at the balance sheet date.

During the third quarter of 2013, the Company, along with other investors, formed New Ocean to act as an investment manager focused on providing third-party investors access to insurance-linked securities and other insurance and reinsurance capital markets products. The Company holds a majority voting interest in New Ocean through its ownership of common shares and, accordingly, the financial statements of New Ocean have been included in the consolidated financial statements of the Company. None of the assets, liabilities, revenues or net income of New Ocean were material to the Company during the three months endedMarch 31, 2016. The equity interest attributable to third party investors in New Ocean recorded in the Company’s Unaudited Consolidated Balance Sheets as "Non-controlling interest in equity of consolidated subsidiaries" was $0.7 million and $0.4 million as of March 31, 2016 and December 31, 2015, respectively.

During the fourth quarter of 2013, the Company, along with other investors, invested in a new Bermuda-based company, New Ocean Focus Cat Fund Ltd. ("New Ocean FCFL"), which is considered a VIE under GAAP. During the second quarter of 2014, the Company formed another new Bermuda-based investment company, New Ocean Market Value Cat Fund, Ltd. ("New Ocean MVCFL"), which is also considered a VIE under GAAP. New Ocean MVCFL primarily invests in insurance-linked securities, with a current focus on catastrophe bonds.

During the year ended December 31, 2014, New Ocean FCFL invested in a special purpose Bermuda reinsurer, Vector Reinsurance Ltd ("Vector Re"), formed for the purpose of underwriting collateralized excess of loss reinsurance with a focus on global property catastrophe risks. During the first quarter of 2015, New Ocean MVCFL also invested in Vector Re. Most of Vector Re’s current underwriting activity relates to reinsurance business assumed from the Company's subsidiaries. Underwriting administration and claims services are provided to Vector Re by the Company under service fee contracts, while investment advisory services are provided by New Ocean.

The Company currently holds majority equity interests, which are considered to be the controlling financial interests, in New Ocean FCFL and New Ocean MVCFL, and by extension, Vector Re. Accordingly, included in the consolidated financial statements of the Company are the total net assets of New Ocean FCFL, New Ocean MVCFL and Vector Re of $178.5 million and $175.8 million as of March 31, 2016 and December 31, 2015, respectively. The Company’s shares of revenue and net income in these VIEs were not material to the Company for the three months endedMarch 31, 2016. All inter-company transactions between the Company's entities have been eliminated in consolidation. The equity interest attributable to third party investors in New Ocean FCFL, New Ocean MVCFL and Vector Re that was recorded in the Company’s Consolidated Balance Sheets as "Non-controlling interest in equity of consolidated subsidiaries" was $71.2 million and $70.5 million as of March 31, 2016 and December 31, 2015, respectively.

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XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13. Computation of Earnings Per Ordinary Share and Ordinary Share Equivalent

The following table sets forth the computation of basic and diluted earnings per ordinary share for the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,
(In thousands, except per share amounts)	2016		2015
Basic earnings per ordinary share & ordinary share equivalents outstanding:
Net income (loss) attributable to ordinary shareholders	$	21,885	$	36,281
Weighted average ordinary shares outstanding, in thousands - basic	291,969		255,724
Basic earnings per ordinary share & ordinary share equivalents outstanding	$	0.07	$	0.14
Diluted earnings per ordinary share & ordinary share equivalents outstanding:
Weighted average ordinary shares outstanding - basic	291,969		255,724
Impact of share-based compensation	4,697		4,980
Weighted average ordinary shares outstanding - diluted	296,666		260,704
Diluted earnings per ordinary share & ordinary share equivalents outstanding	$	0.07	$	0.14
Dividends per ordinary share	$	0.20	$	0.16

For the three months ended March 31, 2016 and 2015, ordinary shares available for issuance under share-based compensation plans of 6.0 million and 5.0 million, respectively, were not included in the calculation of diluted earnings per ordinary share because the assumed exercise or issuance of such shares would be anti-dilutive.

14. Commitments and Contingencies

(a) Financial Guarantee Exposures

The Company's outstanding financial guarantee contracts as of March 31, 2016 provide credit support for a variety of collateral types with the exposures comprised of an aggregate amount of $80.8 million notional financial guarantee on two notes backed by zero coupon long dated bonds and bank perpetual securities, including some issued by European financial institutions. As of March 31, 2016 and December 31, 2015, the total gross claim liability recorded was nil and the contracts had a weighted average contractual term to maturity of 23.9 years and 24.2 years, respectively.

Surveillance procedures to track and monitor credit deteriorations in the insured financial obligations are performed by the primary obligors for each transaction on the Company's behalf. Information regarding the performance status and updated exposure values is provided to the Company on a quarterly basis and evaluated by management in recording claims reserves. As of March 31, 2016, there were no reported events of default on these obligations.

(b) Litigation

The Company and its subsidiaries are subject to litigation and arbitration in the normal course of business. These lawsuits and arbitrations principally involve claims on policies of insurance and contracts of reinsurance and are typical for the Company and for the property and casualty insurance and reinsurance industry in general. Such claims proceedings are considered in connection with the Company's loss and loss expense reserves. Reserves in varying amounts may or may not be established in respect of particular claims proceedings based on many factors, including the legal merits thereof. In addition to litigation relating to insurance and reinsurance claims, the Company and its subsidiaries are subject to lawsuits and regulatory actions in the normal course of business that do not arise from or directly relate to claims on insurance or reinsurance policies. This category of business litigation typically involves, among other things, allegations of underwriting errors or misconduct, employment claims, regulatory activity, shareholder disputes or disputes arising from business ventures. The status of these legal actions is actively monitored by management.

Legal actions are subject to inherent uncertainties, and future events could change management's assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions other than claims proceedings, both individually and in the aggregate, will not result in losses having a material adverse effect on the Company's financial position or liquidity as of March 31, 2016.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions other than claims proceedings, the Company discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as

38

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Company's assessment as of March 31, 2016, no such disclosures were considered necessary.

15. Accumulated Other Comprehensive Income (Loss)

The changes in AOCI, net of tax, by component for the three months ended March 31, 2016 and 2015 are as follows:

Three months ended March 31, 2016 (U.S. dollars in thousands)	Unrealized Gains (Losses) on Investments (1)			OTTI Losses Recognized in AOCI			Foreign Currency Translation Adjustments			Underfunded Pension Liability			Cash Flow Hedge			Total
Balance, beginning of period, net of tax	$	803,094		$	(57,502	)	$	(36,503	)	$	(24,641	)	$	2,168		$	686,616
OCI before reclassifications	575,022			—			(15,416		)	(1,049		)	—			558,557
Amounts reclassified from AOCI	(117,114		)	2,311			—			—			(39		)	(114,842		)
Tax benefit (expense)	(34,707		)	(44		)	(1,023		)	—			—			(35,774		)
Net current period OCI - net of tax	423,201			2,267			(16,439		)	(1,049		)	(39		)	407,941
Balance, end of period, net of tax	$	1,226,295		$	(55,235	)	$	(52,942	)	$	(25,690	)	$	2,129		$	1,094,557
Three months ended March 31, 2015 (U.S. dollars in thousands)
Balance, beginning of period, net of tax	$	1,590,114		$	(76,047	)	$	(11,188	)	$	(20,789	)	$	2,368		$	1,484,458
OCI before reclassifications	254,267			—			32,404			975			—			287,646
Amounts reclassified from AOCI	(74,781		)	9,936			—			—			95			(64,750		)
Tax benefit (expense)	(5,805		)	(78		)	3,699			—			—			(2,184		)
Net current period OCI - net of tax	173,681			9,858			36,103			975			95			220,712
Balance, end of period, net of tax	$	1,763,795		$	(66,189	)	$	24,915		$	(19,814	)	$	2,463		$	1,705,170

____________

(1) For certain annuity contracts that are subject to the GreyCastle Life Retro Arrangements, policy benefit reserves were historically increased for the impact of changes in unrealized gains on investments supporting such contracts as if the gains had been realized, with a corresponding entry to other comprehensive income ("Shadow Adjustments"). As of December 31, 2015, the cumulative impact of the Shadow Adjustments was $274.4 million. During the three months ended March 31, 2016, net movements of $(17.0) million were recorded, resulting in a total cumulative net impact of Shadow Adjustments on future policy benefit reserves of $257.4 million as of March 31, 2016.

39

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The reclassifications out of AOCI along with the associated income statement line items affected by component, and the total related tax (expense) benefit for the three months ended March 31, 2016 and 2015 are as follows:

Gross Amount Reclassified From AOCI
Details About AOCI Components (U.S. dollars in thousands)	Three months ended March 31, 2016			Three months ended March 31, 2015			Affected Line Item in the Statement of Income
Unrealized gains and losses on investments:
	$	(116,988	)	$	(78,551	)	Net realized gains (losses) on investments sold and net unrealized gains (losses) on investments Trading
	21,928			15,724			OTTI on investments
	$	(22,054	)	$	(11,954	)	Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets
	$	(117,114	)	$	(74,781	)	Total before tax
	1,577			87			Provision (benefit) for income tax
	$	(115,537	)	$	(74,694	)	Net of tax
OTTI losses recognized in OCI:
	$	2,313		$	9,875		Net realized gains (losses) on investments sold
	(2		)	61			OTTI on investments transferred to (from) OCI
	$	2,311		$	9,936		Total before tax
	(44		)	(3		)	Provision (benefit) for income tax
	$	2,267		$	9,933		Net of tax
Gains and losses on cash flow hedges:
Interest rate contracts	$	(39	)	$	95		Interest Expense
	—			—			Provision (benefit) for income tax
	$	(39	)	$	95		Net of tax
Total reclassifications for the period, gross of tax	$	(114,842	)	$	(64,750	)
Tax benefit (expense)	1,533			84
Total reclassifications for the period, net of tax	$	(113,309	)	$	(64,666	)

16. Guarantor Financial Information

The following tables present condensed consolidating balance sheets at March 31, 2016 and 2015 and condensed consolidating statements of income, comprehensive income and cash flows for the three months ended March 31, 2016 and 2015 for XL-Ireland, XL-Cayman, a 100% owned subsidiary of XL-Ireland, and XL-Ireland's other subsidiaries.

40

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	March 31, 2016
Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data)	XL- Ireland		XL-Cayman		Other XL-Ireland Subsidiaries		Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
ASSETS
Investments:
Total investments available for sale	$	—	$	554,958	$	33,288,326	$	—		$	33,843,284
Total investments trading	—		—		1,436,542		—			1,436,542
Investments in affiliates	—		—		1,953,711		—			1,953,711
Other investments	—		959		1,452,931		—			1,453,890
Total investments	$	—	$	555,917	$	38,131,510	$	—		$	38,687,427
Cash and cash equivalents	8,681		287,464		2,524,752		—			2,820,897
Restricted cash	—		—		161,019		—			161,019
Investments in subsidiaries	12,082,624		16,336,128		—		(28,418,752		)	—
Accrued investment income	—		2,654		288,362		—			291,016
Deferred acquisition costs and value of business acquired	—		—		1,057,941		—			1,057,941
Ceded unearned premiums	—		—		2,255,664		—			2,255,664
Premiums receivable	—		—		6,041,000		—			6,041,000
Reinsurance balances receivable	—		—		469,009		—			469,009
Unpaid losses and loss expenses recoverable	—		—		5,374,604		—			5,374,604
Receivable from investments sold	—		—		65,471		—			65,471
Goodwill and other intangible assets	—		—		2,233,597		—			2,233,597
Deferred tax asset	—		—		245,927		—			245,927
Amounts due from subsidiaries / parent	—		—		1,473,030		(1,473,030		)	—
Other assets	1,339		42,782		897,999		—			942,120
Total assets	$	12,092,644	$	17,224,945	$	61,219,885	$	(29,891,782	)	$	60,645,692
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	—	$	—	$	25,913,484	$	—		$	25,913,484
Deposit liabilities	—		—		1,170,595		—			1,170,595
Future policy benefit reserves	—		—		4,020,602		—			4,020,602
Funds withheld on GreyCastle life retrocession arrangements	—		—		998,391		—			998,391
Unearned premiums	—		—		8,217,539		—			8,217,539
Notes payable and debt	—		2,645,647		8,248		—			2,653,895
Reinsurance balances payable	—		—		2,583,962		—			2,583,962
Payable for investments purchased	—		—		74,476		—			74,476
Deferred tax liability	—		—		105,589		—			105,589
Amounts due to subsidiaries / parent	394,351		1,078,679		—		(1,473,030		)	—
Other liabilities	9,549		73,495		1,156,397		—			1,239,441
Total liabilities	$	403,900	$	3,797,821	$	44,249,283	$	(1,473,030	)	$	46,977,974
Shareholders’ Equity:
Shareholders’ equity attributable to XL Group plc	$	11,688,744	$	12,082,624	$	16,336,128	$	(28,418,752	)	$	11,688,744
Non-controlling interest in equity of consolidated subsidiaries	—		1,344,500		634,474		—			1,978,974
Total shareholders’ equity	$	11,688,744	$	13,427,124	$	16,970,602	$	(28,418,752	)	$	13,667,718
Total liabilities and shareholders’ equity	$	12,092,644	$	17,224,945	$	61,219,885	$	(29,891,782	)	$	60,645,692

41

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2015
Condensed Consolidating Balance Sheet (U.S. dollars in thousands, except share data)	XL- Ireland		XL-Cayman		Other XL-Ireland Subsidiaries		Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
ASSETS
Investments:
Total investments available for sale	$	—	$	516,425	$	33,237,473	$	—		$	33,753,898
Total investments trading	—		—		1,296,029		—			1,296,029
Investments in affiliates	—		—		1,708,899		—			1,708,899
Other investments	—		877		1,432,180		—			1,433,057
Total investments	$	—	$	517,302	$	37,674,581	$	—		$	38,191,883
Cash and cash equivalents	11,557		369,997		2,874,682		—			3,256,236
Restricted cash	—		—		154,992		—			154,992
Investments in subsidiaries	11,648,673		15,836,651		—		(27,485,324		)	—
Accrued investment income	—		2,323		310,344		—			312,667
Deferred acquisition costs and value of business acquired	—		—		890,568		—			890,568
Ceded unearned premiums	—		—		1,821,793		—			1,821,793
Premiums receivable	—		—		4,712,493		—			4,712,493
Reinsurance balances receivable	—		—		418,666		—			418,666
Unpaid losses and loss expenses recoverable	—		—		5,262,706		—			5,262,706
Receivable from investments sold	—		—		231,158		—			231,158
Goodwill and other intangible assets	—		—		2,210,266		—			2,210,266
Deferred tax asset	—		—		282,311		—			282,311
Amounts due from subsidiaries / parent	33,417		—		1,054,177		(1,087,594		)	—
Other assets	2,748		44,570		889,881		—			937,199
Total assets	$	11,696,395	$	16,770,843	$	58,788,618	$	(28,572,918	)	$	58,682,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unpaid losses and loss expenses	$	—	$	—	$	25,439,744	$	—		$	25,439,744
Deposit liabilities	—		—		1,168,376		—			1,168,376
Future policy benefit reserves	—		—		4,163,500		—			4,163,500
Funds withheld on GreyCastle life retrocession arrangements	—		—		914,629		—			914,629
Unearned premiums	—		—		7,043,358		—			7,043,358
Notes payable and debt	—		2,644,970		—		—			2,644,970
Reinsurance balances payable	—		—		2,117,727		—			2,117,727
Payable for investments purchased	—		—		130,060		—			130,060
Deferred tax liability	—		—		120,651		—			120,651
Amounts due to subsidiaries / parent	—		1,087,594		—		(1,087,594		)	—
Other liabilities	19,316		45,106		1,221,038		—			1,285,460
Total liabilities	$	19,316	$	3,777,670	$	42,319,083	$	(1,087,594	)	$	45,028,475
Shareholders’ Equity:
Shareholders’ equity attributable to XL Group plc	$	11,677,079	$	11,648,673	$	15,836,651	$	(27,485,324	)	$	11,677,079
Non-controlling interest in equity of consolidated subsidiaries	—		1,344,500		632,884		—			1,977,384
Total shareholders’ equity	$	11,677,079	$	12,993,173	$	16,469,535	$	(27,485,324	)	$	13,654,463
Total liabilities and shareholders’ equity	$	11,696,395	$	16,770,843	$	58,788,618	$	(28,572,918	)	$	58,682,938

42

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31, 2016
Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Revenues:
Net premiums earned	$	—		$	—		$	2,354,610		$	—		$	2,354,610
Total net investment income	113			1,785			203,307			681			205,886
Total net realized gains (losses) on investments	—			277			90,940			1,533			92,750
Net realized and unrealized gains (losses) on derivative instruments	—			—			(3,622		)	—			(3,622		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	—			—			(236,080		)	—			(236,080		)
Income (loss) from investment fund affiliates	—			—			(4,579		)	—			(4,579		)
Fee income and other	—			—			8,262			—			8,262
Total revenues	$	113		$	2,062		$	2,412,838		$	2,214		$	2,417,227
Expenses:
Net losses and loss expenses incurred	$	—		$	—		$	1,382,485		$	—		$	1,382,485
Claims and policy benefits	—			—			4,937			—			4,937
Acquisition costs	—			—			403,267			—			403,267
Operating expenses	3,274			1,495			510,612			—			515,381
Exchange (gains) losses	17			(36		)	(33,800		)	—			(33,819		)
Interest expense	(6		)	35,169			17,140			—			52,303
Total expenses	$	3,285		$	36,628		$	2,284,641		$	—		$	2,324,554
Income (loss) before income tax and income (loss) from operating affiliates	$	(3,172	)	$	(34,566	)	$	128,197		$	2,214		$	92,673
Income (loss) from operating affiliates	—			—			12,650			—			12,650
Equity in net earnings (losses) of subsidiaries	24,437			94,780			—			(119,217		)	—
Provision (benefit) for income tax	(620		)	—			22,915			—			22,295
Net income (loss)	$	21,885		$	60,214		$	117,932		$	(117,003	)	$	83,028
Non-controlling interests	—			35,777			25,366			—			61,143
Net income (loss) attributable to ordinary shareholders	$	21,885		$	24,437		$	92,566		$	(117,003	)	$	21,885
Comprehensive income (loss)	$	429,826		$	432,378		$	500,507		$	(932,885	)	$	429,826

43

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31, 2015
Condensed Consolidating Statement of Income and Comprehensive Income (U.S. dollars in thousands, except per share data)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Revenues:
Net premiums earned	$	—		$	—		$	1,334,000		$	—		$	1,334,000
Total net investment income	80			3,032			203,619			1,782			208,513
Total net realized gains (losses) on investments	—			1,269			52,837			(1,215		)	52,891
Net realized and unrealized gains (losses) on derivative instruments	—			(63,700		)	80,221			—			16,521
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	—			—			(229,367		)	—			(229,367		)
Income (loss) from investment fund affiliates	—			—			35,329			—			35,329
Fee income and other	—			—			4,728			—			4,728
Total revenues	$	80		$	(59,399	)	$	1,481,367		$	567		$	1,422,615
Expenses:
Net losses and loss expenses incurred	$	—		$	—		$	769,827		$	—		$	769,827
Claims and policy benefits	—			—			19,387			—			19,387
Acquisition costs	—			—			153,696			—			153,696
Operating expenses	2,762			3,000			319,894			—			325,656
Exchange (gains) losses	(262		)	33			27,619			—			27,390
Interest expense	—			37,773			13,665			—			51,438
Total expenses	$	2,500		$	40,806		$	1,304,088		$	—		$	1,347,394
Income (loss) before income tax and income (loss) from operating affiliates	$	(2,420	)	$	(100,205	)	$	177,279		$	567		$	75,221
Income (loss) from operating affiliates	—			—			22,668			—			22,668
Equity in net earnings (losses) of subsidiaries	38,485			174,426			—			(212,911		)	—
Provision (benefit) for income tax	(216		)	245			24,189			—			24,218
Net income (loss)	$	36,281		$	73,976		$	175,758		$	(212,344	)	$	73,671
Non-controlling interests	—			35,491			1,899			—			37,390
Net income (loss) attributable to ordinary shareholders	$	36,281		$	38,485		$	173,859		$	(212,344	)	$	36,281
Comprehensive income (loss)	$	256,993		$	259,197		$	394,571		$	(653,768	)	$	256,993

44

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31, 2016
Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Cash flows provided by (used in) operating activities:
Net cash provided by (used in) operating activities	$	410,395		$	(48,205	)	$	(533,303	)	$	—		$	(171,113	)
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	—		$	132,687		$	3,815,844		$	(176,454	)	$	3,772,077
Proceeds from redemption of fixed maturities and short-term investments	—			26,181			923,040			—			949,221
Proceeds from sale of equity securities	—			—			62,895			—			62,895
Purchases of fixed maturities and short-term investments	—			(190,119		)	(4,312,014		)	176,454			(4,325,679		)
Purchases of equity securities	—			—			(55,411		)	—			(55,411		)
Proceeds from sale of affiliates	—			—			41,538			—			41,538
Purchases of affiliates	—			—			(247,049		)	—			(247,049		)
Purchase of Allied International Holdings, Inc., net of cash acquired	—			—			(69,745		)	—			(69,745		)
Change in restricted cash	—			—			(6,027		)	—			(6,027		)
Other, net	—			—			82,141			—			82,141
Net cash provided by (used in) investing activities	$	—		$	(31,251	)	$	235,212		$	—		$	203,961
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	491		$	—		$	—		$	—		$	491
Buybacks of ordinary shares	(355,901		)	—			—			—			(355,901		)
Dividends paid on ordinary shares	(57,861		)	—			—			—			(57,861		)
Distributions to non-controlling interests	—			(3,077		)	(24,780		)	—			(27,857		)
Contributions from non-controlling interests	—			—			883			—			883
Deposit liabilities	—			—			(8,546		)	—			(8,546		)
Net cash provided by (used in) financing activities	$	(413,271	)	$	(3,077	)	$	(32,443	)	$	—		$	(448,791	)
Effects of exchange rate changes on foreign currency cash	—			—			(19,396		)	—			(19,396		)
Increase (decrease) in cash and cash equivalents	$	(2,876	)	$	(82,533	)	$	(349,930	)	$	—		$	(435,339	)
Cash and cash equivalents – beginning of period	11,557			369,997			2,874,682			—			3,256,236
Cash and cash equivalents – end of period	$	8,681		$	287,464		$	2,524,752		$	—		$	2,820,897

45

XL GROUP PLC

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended March 31, 2015
Condensed Consolidating Statement of Cash Flows (U.S. dollars in thousands)	XL- Ireland			XL-Cayman			Other XL-Ireland Subsidiaries			Consolidating Adjustments and Eliminations			XL-Ireland Consolidated
Cash flows provided by (used in) operating activities:
Net cash provided by (used in) operating activities	$	(31,120	)	$	134,448		$	41,318		$	(109,668	)	$	34,978
Cash flows provided by (used in) investing activities:
Proceeds from sale of fixed maturities and short-term investments	$	—		$	201,638		$	1,510,135		$	(237,832	)	$	1,473,941
Proceeds from redemption of fixed maturities and short-term investments	—			92,336			961,403			—			1,053,739
Proceeds from sale of equity securities	—			—			189,473			—			189,473
Purchases of fixed maturities and short-term investments	—			(453,628		)	(2,619,508		)	237,832			(2,835,304		)
Purchases of equity securities	—			—			(94,141		)	—			(94,141		)
Proceeds from sale of affiliates	—			—			77,916			—			77,916
Purchases of affiliates	—			—			(29,037		)	—			(29,037		)
Returns of capital from subsidiaries	65,037			—			—			(65,037		)	—
Other, net	—			—			(32,141		)	—			(32,141		)
Net cash provided by (used in) investing activities	$	65,037		$	(159,654	)	$	(35,900	)	$	(65,037	)	$	(195,554	)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of ordinary shares and exercise of stock options	$	1,772		$	—		$	—		$	—		$	1,772
Buybacks of ordinary shares	(1,966		)	—			—			—			(1,966		)
Dividends paid on ordinary shares	(40,922		)	(109,668		)	—			109,668			(40,922		)
Return of capital	—			(65,037		)	—			65,037			—
Distributions to non-controlling interests	—			(2,995		)	(4,177		)	—			(7,172		)
Contributions from non-controlling interests	—			—			2,569			—			2,569
Proceeds from issuance of debt	—			980,600			—			—			980,600
Deposit liabilities	—			—			(38,788		)	—			(38,788		)
Net cash provided by (used in) financing activities	$	(41,116	)	$	802,900		$	(40,396	)	$	174,705		$	896,093
Effects of exchange rate changes on foreign currency cash	—			—			(47,397		)	—			(47,397		)
Increase (decrease) in cash and cash equivalents	$	(7,199	)	$	777,694		$	(82,375	)	$	—		$	688,120
Cash and cash equivalents – beginning of period	22,443			42,970			2,456,401			—			2,521,814
Cash and cash equivalents – end of period	$	15,244		$	820,664		$	2,374,026		$	—		$	3,209,934

46

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial information is based on the separate historical financial statements of XL Group plc ("XL" or the "Company") and Catlin Group Limited ("Catlin") after giving effect to the Acquisition of Catlin by XL (the "Acquisition"), the issuance of XL ordinary shares and additional debt in connection therewith (collectively, with the Acquisition, the "Transactions"), and based upon the assumptions and adjustments described in the accompanying notes to the unaudited pro forma consolidated financial information. The unaudited pro forma consolidated income statement for the year ended December 31, 2015 is presented as if the Transactions had occurred on January 1, 2015, therefore the presentation included herein represents 12 months of activity for XL (including consolidated results beginning May 1, 2015 (the "Acquisition Date")) and 4 months of pre-Acquisition activity for Catlin. The historical consolidated financial statements have been adjusted to reflect factually supportable items that are directly attributable to the Transactions.

The preparation of the unaudited pro forma consolidated financial information and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma consolidated financial information should be read together with:

• the accompanying notes to the unaudited pro forma consolidated financial information;

• XL’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2015, included in Exhibit 99.1 to our Current Report on Form 8-K filed on [July 22, 2016].

The unaudited pro forma consolidated financial information has been prepared for illustrative purposes only. The unaudited pro forma consolidated financial information is not necessarily indicative of what the results of operations actually would have been had the Acquisition been completed at the dates indicated. The unaudited pro forma consolidated financial information shown therein are not necessarily indicative of what the past results of operations of the combined company would have been nor indicative of the results of operations of the post-Acquisition periods. The unaudited pro forma consolidated financial information does not give consideration to the impact of possible revenue enhancements, expense efficiencies, strategy modifications, asset dispositions or other management actions that may be taken as a result of the Acquisition.

The unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States of America (“GAAP”). XL is the acquirer for accounting purposes.

In connection with the post-Acquisition integration of the operations of XL and Catlin, XL has incurred nonrecurring integration charges. See Item 8, Note 3(c), "Acquisitions and Disposals - Catlin Acquisition," to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

(U.S. dollars in thousands, except per share amounts)	XL Year Ended December 31, 2015			Catlin Four Months Ended April 30, 2015			Adjustments				Total Result Year Ended December 31, 2015
Revenues:
Net premiums earned	$	8,226,425		$	1,281,476		$	—			$	9,507,901
Total net investment income	$	872,370		$	32,214		$	(3,825	)	(aa)	$	900,759
Total net realized gains (losses) on investments, and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets	$	202,178		$	69,851		$	(38,178	)	(bb)	$	233,851
Net realized and unrealized gains (losses) on derivative instruments	53,123			(21,550		)	—				31,573
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets	(151,691		)	—			—				(151,691		)
Income (loss) from investment fund affiliates	73,320			—			—				73,320
Fee income and other	33,201			—			—				33,201
Total revenues	$	9,308,926		$	1,361,991		$	(42,003	)		$	10,628,914
Expenses:
Net losses and loss expenses incurred	$	4,766,200		$	768,843		$	(13,458	)	(cc)	$	5,521,585
Claims and policy benefits	115,997			—			—				115,997
Acquisition costs	1,317,448			266,328			4,928			(dd)	1,588,704
Operating expenses (1)	1,966,939			248,595			(56,270		)	(ee)	2,159,264
Foreign exchange (gains) losses	22,504			18,241			—				40,745
Extinguishment of debt	5,592			—			—				5,592
Interest expense	205,215			4,523			11,612			(ff)	221,350
Total expenses	$	8,399,895		$	1,306,530		$	(53,188	)		$	9,653,237
Income (loss) before income tax and income (loss) from operating affiliates	909,031			55,461			11,185				975,677
Income (loss) from operating affiliates	44,740			—			—				44,740
Gain on sale of operating affiliate	340,407			40,030			—				380,437
Provision (benefit) for income tax	(19,161		)	16,100			1,420			(gg)	(1,641		)
Net income (loss)	$	1,313,339		$	79,391		$	9,765			$	1,402,495
Non-controlling interests	106,187			—			—				106,187
Net income (loss) attributable to ordinary shareholders	$	1,207,152		$	79,391		$	9,765			$	1,296,308
Weighted average ordinary shares and ordinary shares equivalents outstanding, in thousands - basic	286,194			N/M			N/M				302,839
Weighted average ordinary shares and ordinary shares equivalents outstanding, in thousands - diluted	290,999			N/M			N/M				307,644
Earnings (loss) per ordinary share and ordinary share equivalent – basic	$	4.22		N/M			N/M				$	4.28
Earnings (loss) per ordinary share and ordinary share equivalent – diluted	$	4.15		N/M			N/M				$	4.21

___________

(1) Transaction costs incurred by Catlin prior to the Acquisition Date have been excluded from Operating Expenses.

* N/M - Not Meaningful

See accompanying notes to the unaudited pro forma consolidated financial information

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

1. Basis of Pro Forma Presentation

The unaudited pro forma consolidated income statement for the year ended December 31, 2015 is based on the historical financial statements of XL and Catlin after giving effect to the Transactions and the assumptions and adjustments described in Note 2, "Unaudited Pro Forma and Acquisition Accounting Adjustments." It does not reflect future cost savings or future operating synergies expected to result from the Acquisition, the future costs to achieve these cost savings or operating synergies, or any future disposition of assets that may result from the integration of the operations of the two companies.

The Acquisition has been accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”) with XL as the acquiring entity.

The unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

2. Unaudited Pro Forma and Acquisition Accounting Adjustments

The unaudited pro forma financial information is not necessarily indicative of what the results from operations actually would have been had the Transactions been completed at the date indicated. The unaudited pro forma financial information does not give consideration to the impact of expense efficiencies, synergies, integration costs, asset dispositions, or other actions that may result from the Acquisition.

The following unaudited pro forma adjustments result from accounting for the Transactions. The descriptions related to these adjustments are as follows:

Income Statement

(U.S. dollars in thousands)		Increase (decrease) for Year Ended December 31, 2015
(aa)	Adjustment to conform presentation of net investment income			(3,825	)
(bb)	Adjustment to conform presentation of net realized gains (losses) on investments			(38,178	)
(cc)	Amortization of the adjustment resulting from the difference between estimated fair value and the historical carrying value of Catlin's net loss and LAE reserves			(13,458	)
(dd)	Adjustment to acquisition costs			4,928
	Adjustment to eliminate amortization of Catlin’s DAC	(54,707	)
	Amortization of intangible asset resulting from the adjustment of unearned premiums to the estimated fair value of profit within Catlin’s unearned premiums	59,635
(ee)	Adjustment to operating expenses			(56,270	)
	Adjustment to amortize the fair value adjustment of intangible and certain other assets	8,500
	Adjustment to remove transaction costs from pro forma results	(64,770	)
(ff)	Adjustment to record interest expense related to the subordinated notes issued to finance the acquisition			11,612
(gg)	Adjustment to reflect income tax effect for unaudited pro forma consolidated statement of income adjustments related to the Acquisition using the statutory tax rates of the jurisdictions, where the respective tax effects apply			1,420

The total costs and expenses relating to the Acquisition amounted to approximately $172.8 million. Of these transaction costs, $13.1 million relates to the subordinated notes' issuance costs associated with financing the Acquisition and will be deferred per guidance in ASC 805. Additionally, Catlin incurred $94.9 million of transaction costs prior to the Acquisition Date, primarily consisting of $62.9 million of certain expenses incurred as a result of the change-of-control event, which have been excluded from operating expense. The remaining transaction costs relate to bridge loan financing, professional fees, and other costs associated with the Acquisition, including legal, accounting, tax and printing fees paid to third parties. These transaction and related costs are one-time in nature and are not expected to have a continuing impact on the combined XL entity and as such are not included in the unaudited pro forma consolidated income statement for the year ended December 31, 2015.

3. Net Income Per Share

Pro forma net income per share for the year ended December 31, 2015 has been calculated using XL’s historic weighted average ordinary shares outstanding plus a prorated amount of ordinary shares issued to Catlin stockholders per the Acquisition agreement.

The following table sets forth the calculation of basic and diluted pro forma net income per share for the year ended December 31, 2015: 

	Year Ended  December 31, 2015
(In thousands, except per share amounts)	Basic		Diluted
Pro forma net income	$	1,296,308	$	1,296,308
Weighted average ordinary shares outstanding:
Historic XL	286,194		286,194
Historic XL dilutive potential ordinary shares	—		4,805
Adjusted weighted average ordinary shares outstanding	286,194		290,999
XL share issuance to Catlin shareholders (1)	16,645		16,645
Pro forma adjusted weighted average common shares outstanding	302,839		307,644
Pro forma net income per share	$	4.28	$	4.21

__________

(1)    Adjustment to give effect to shares issued to Catlin shareholders on the Acquisition Date as if the issuance had taken place at January 1, 2015.

EX-99.4

Exhibit 99.4

Press Release
	O'Hara House
	One Bermudiana Road
	Hamilton HM 08
	Bermuda
	Phone +1 441 292 8515
	Fax +1 441 294 7307
	www.xlgroup.com

Contact:	David Radulski	Carol Parker-Trott
	Investor Relations	Media Relations
	(203) 964-3470	(441) 294-7290

XL Group Completes Redomestication To Bermuda

Hamilton, Bermuda - July 25, 2016 - XL Group Ltd (“XL” or the “Company”) (NYSE: XL) announced today that it has completed its redomestication to change the place of incorporation of the ultimate parent holding company to Bermuda from Ireland. As previously announced, the name of the new holding company is XL Group Ltd.

XL Group Ltd is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and is subject to SEC reporting requirements applicable to domestic registrants. XL Group Ltd’s shares will trade on the New York Stock Exchange under the ticker symbol “XL” and it is expected to be included in the S&P 500 Index.

About XL Group Ltd

XL Group Ltd (NYSE:XL), through its subsidiaries and under the XL Catlin brand, is a global insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. Clients look to XL Catlin for answers to their most complex risks and to help move their world forward. To learn more, visit www.xlgroup.com.