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 June 30, 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.

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 and six months ended June 30, 2016 and 2015:



Three Months Ended June 30, 2016 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	2,512,012		$	1,018,766		$	3,530,778		$	68,545		$	3,599,323
Net premiums written	1,780,192			942,419			2,722,611			3,508			2,726,119
Net premiums earned	1,696,720			831,984			2,528,704			3,508			2,532,212
Less: Net losses and loss expenses (2)	1,095,739			536,647			1,632,386			5,482			1,637,868
Less: Acquisition costs (2)	232,414			186,283			418,697			1,823			420,520
Less: Operating expenses (3)	307,468			68,260			375,728			405			376,133
Underwriting profit (loss)	$	61,099		$	40,794		$	101,893		$	(4,202	)	$	97,691
Net investment income - excluding Life Funds Withheld Assets (4)							154,642			7,525			162,167
Net investment income - Life Funds Withheld Assets										39,146			39,146
Net results from structured products (5)	2,765			(706		)	2,059			—			2,059
Net fee income and other (6)	(3,749		)	1,248			(2,501		)	171			(2,330		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							27,948			(8,480		)	19,468
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							(71		)	85,220			85,149
Net realized and unrealized gains (losses) on derivative instruments							—			906			906
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(229,742		)	(229,742		)
Net income (loss) from investment fund affiliates and operating affiliates							—			34,597			34,597
Less: Exchange (gains) losses							—			(19,100		)	(19,100		)
Less: Corporate operating expenses							—			133,185			133,185
Contribution from P&C and Corporate and Other							283,970			(188,944		)	95,026
Less: Interest expense (7)										43,733			43,733
Less: Non-controlling interests										5,044			5,044
Less: Income tax expense										2,467			2,467
Net income (loss) attributable to ordinary shareholders													$	43,782
Ratios – P&C operations: (8)
Loss and loss expense ratio	64.6		%	64.5		%	64.6		%
Underwriting expense ratio	31.8		%	30.6		%	31.4		%
Combined ratio	96.4		%	95.1		%	96.0		%

____________


(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 $14.1 million and $12.0 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.



Three Months Ended June 30, 2015 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	2,219,444		$	782,248		$	3,001,692		$	79,443		$	3,081,135
Net premiums written	1,401,772			698,301			2,100,073			18,258			2,118,331
Net premiums earned	1,412,906			650,889			2,063,795			18,258			2,082,053
Less: Net losses and loss expenses (2)	896,370			254,825			1,151,195			22,081			1,173,276
Less: Acquisition costs (2)	181,716			158,217			339,933			1,684			341,617
Less: Operating expenses (3)	292,161			71,727			363,888			(59		)	363,829
Underwriting profit (loss)	$	42,659		$	166,120		$	208,779		$	(5,448	)	$	203,331
Net investment income - excluding Life Funds Withheld Assets (4)							149,461			10,831			160,292
Net investment income - Life Funds Withheld Assets										46,864			46,864
Net results from structured products (5)	3,401			1,856			5,257			—			5,257
Net fee income and other (6)	(2,033		)	623			(1,410		)	46			(1,364		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							4,223			128			4,351
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							—			45,616			45,616
Net realized and unrealized gains (losses) on derivative instruments							—			48,509			48,509
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			239,174			239,174
Net income (loss) from investment fund affiliates and operating affiliates							—			40,839			40,839
Gain on sale of operating affiliate										340,407			340,407
Less: Exchange (gains) losses							—			10,374			10,374
Less: Corporate operating expenses							—			130,987			130,987
Contribution from P&C and Corporate and Other							366,310			625,605			991,915
Less: Interest expense (7)										39,038			39,038
Less: Non-controlling interests										4,879			4,879
Less: Income tax expense										32,959			32,959
Net income (loss) attributable to ordinary shareholders													$	915,039
Ratios – P&C operations: (8)
Loss and loss expense ratio	63.4		%	39.2		%	55.8		%
Underwriting expense ratio	33.6		%	35.3		%	34.1		%
Combined ratio	97.0		%	74.5		%	89.9		%

____________


(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)	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 $16.0 million and $10.6 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.



Six Months Ended June 30, 2016 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	5,015,984		$	2,874,109		$	7,890,093		$	137,456		$	8,027,549
Net premiums written	3,284,126			2,500,080			5,784,206			6,672			5,790,878
Net premiums earned	3,290,594			1,589,556			4,880,150			6,672			4,886,822
Less: Net losses and loss expenses (2)	2,095,331			919,540			3,014,871			10,419			3,025,290
Less: Acquisition costs (2)	457,872			362,631			820,503			3,284			823,787
Less: Operating expenses (3)	619,900			147,494			767,394			623			768,017
Underwriting profit (loss)	$	117,491		$	159,891		$	277,382		$	(7,654	)	$	269,728
Net investment income - excluding Life Funds Withheld Assets (4)							297,773			16,058			313,831
Net investment income - Life Funds Withheld Assets										80,706			80,706
Net results from structured products (5)	3,987			42			4,029			—			4,029
Net fee income and other (6)	(7,611		)	2,085			(5,526		)	473			(5,053		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							16,788			(5,736		)	11,052
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							(71		)	186,386			186,315
Net realized and unrealized gains (losses) on derivative instruments							—			(2,716		)	(2,716		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(465,822		)	(465,822		)
Net income (loss) from investment fund affiliates and operating affiliates							—			42,668			42,668
Less: Exchange (gains) losses							—			(52,919		)	(52,919		)
Less: Corporate operating expenses							—			245,695			245,695
Contribution from P&C and Corporate and Other							590,375			(348,413		)	241,962
Less: Interest expense (7)										85,346			85,346
Less: Non-controlling interests										66,187			66,187
Less: Income tax expense										24,762			24,762
Net income (loss) attributable to ordinary shareholders													$	65,667
Ratios – P&C operations: (8)
Loss and loss expense ratio	63.7		%	57.8		%	61.8		%
Underwriting expense ratio	32.7		%	32.1		%	32.5		%
Combined ratio	96.4		%	89.9		%	94.3		%

____________


(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 $26.7 million and $22.7 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.



Six Months Ended June 30, 2015 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	3,874,191		$	1,607,910		$	5,482,101		$	154,394		$	5,636,495
Net premiums written	2,490,880			1,445,936			3,936,816			32,764			3,969,580
Net premiums earned	2,375,212			1,008,077			3,383,289			32,764			3,416,053
Less: Net losses and loss expenses (2)	1,513,317			407,705			1,921,022			41,468			1,962,490
Less: Acquisition costs (2)	262,103			229,709			491,812			3,501			495,313
Less: Operating expenses (3)	500,618			114,222			614,840			872			615,712
Underwriting profit (loss)	$	99,174		$	256,441		$	355,615		$	(13,077	)	$	342,538
Net investment income - excluding Life Funds Withheld Assets (4)							282,269			21,041			303,310
Net investment income - Life Funds Withheld Assets										97,283			97,283
Net results from structured products (5)	6,306			3,976			10,282			—			10,282
Net fee income and other (6)	(9,498		)	1,448			(8,050		)	178			(7,872		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							10,030			(1,077		)	8,953
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							—			93,905			93,905
Net realized and unrealized gains (losses) on derivative instruments							—			65,030			65,030
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			9,807			9,807
Net income (loss) from investment fund affiliates and operating affiliates							—			98,836			98,836
Gain on sale of operating affiliate										340,407			340,407
Less: Exchange (gains) losses							—			37,764			37,764
Less: Corporate operating expenses							—			193,430			193,430
Contribution from P&C and Corporate and Other							650,146			481,139			1,131,285
Less: Interest expense (7)										80,519			80,519
Less: Non-controlling interests										42,269			42,269
Less: Income tax expense										57,177			57,177
Net income (loss) attributable to ordinary shareholders													$	951,320
Ratios – P&C operations: (8)
Loss and loss expense ratio	63.7		%	40.4		%	56.8		%
Underwriting expense ratio	32.1		%	34.2		%	32.7		%
Combined ratio	95.8		%	74.6		%	89.5		%

____________


(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 $31.1 million and $20.6 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.

The following tables summarize the Company’s net premiums earned by line of business for the three and six months ended June 30, 2016 and 2015:



Three Months Ended June 30, 2016 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	319,344	$	39,798	$	—	$	359,142
Casualty	448,000		191,447		—		639,447
Property catastrophe	—		214,313		—		214,313
Property	380,641		260,270		—		640,911
Specialty	395,962		45,812		—		441,774
Other (1)	152,773		80,344		—		233,117
Total P&C Operations	$	1,696,720	$	831,984	$	—	$	2,528,704
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	1	$	1
Run-off Life operations - Other Life	—		—		3,507		3,507
Total Corporate and Other	$	—	$	—	$	3,508	$	3,508
Total	$	1,696,720	$	831,984	$	3,508	$	2,532,212

Three Months Ended June 30, 2015 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	286,359	$	43,225	$	—	$	329,584
Casualty	453,527		125,787		—		579,314
Property catastrophe	—		163,452		—		163,452
Property	306,028		231,898		—		537,926
Specialty	354,557		32,549		—		387,106
Other (1)	12,435		53,978		—		66,413
Total P&C Operations	$	1,412,906	$	650,889	$	—	$	2,063,795
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	1	$	1
Run-off Life operations - Other Life	—		—		18,257		18,257
Total Corporate and Other	$	—	$	—	$	18,258	$	18,258
Total	$	1,412,906	$	650,889	$	18,258	$	2,082,053

____________


(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.



Six Months Ended June 30, 2016 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	652,298	$	82,953	$	—	$	735,251
Casualty	868,212		346,186		—		1,214,398
Property catastrophe	—		419,614		—		419,614
Property	740,274		514,669		—		1,254,943
Specialty	763,314		82,005		—		845,319
Other (1)	266,496		144,129		—		410,625
Total P&C Operations	$	3,290,594	$	1,589,556	$	—	$	4,880,150
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	1	$	1
Run-off Life operations - Other Life	—		—		6,671		6,671
Total Corporate and Other	$	—	$	—	$	6,672	$	6,672
Total	$	3,290,594	$	1,589,556	$	6,672	$	4,886,822

Six Months Ended June 30, 2015 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	552,772	$	78,233	$	—	$	631,005
Casualty	794,843		183,995		—		978,838
Property catastrophe	—		257,525		—		257,525
Property	478,447		363,122		—		841,569
Specialty	526,553		50,624		—		577,177
Other (1)	22,597		74,578		—		97,175
Total P&C Operations	$	2,375,212	$	1,008,077	$	—	$	3,383,289
Corporate and Other:
Run-off Life operations - Annuity	$	—	$	—	$	—	$	—
Run-off Life operations - Other Life	—		—		32,764		32,764
Total Corporate and Other	$	—	$	—	$	32,764	$	32,764
Total	$	2,375,212	$	1,008,077	$	32,764	$	3,416,053

____________


(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.