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 September 30, 2016 and December 31, 2015:



(U.S. dollars in thousands)	September 30, 2016				December 31, 2015
(U.S. dollars in thousands)	Commitment/ Debt (1)		In Use/ Outstanding (2)		Commitment/ Debt (1)		In Use/ Outstanding (2)
Debt:
2.30% Senior Notes due 2018	$	300,000	$	298,518	$	300,000	$	298,015
5.75% Senior Notes due 2021	400,000		397,846		400,000		397,523
6.375% Senior Notes due 2024	350,000		349,111		350,000		349,029
4.45% Subordinated Notes due 2025	500,000		493,127		500,000		492,521
6.25% Senior Notes due 2027	325,000		323,336		325,000		323,218
5.25% Senior Notes due 2043	300,000		296,394		300,000		296,294
5.5% Subordinated Notes due 2045	500,000		488,668		500,000		488,370
Total debt carrying value	$	2,675,000	$	2,647,000	$	2,675,000	$	2,644,970

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(1)

Excluded from the table are certain credit facilities under which the Company is permitted to utilize up to $1.1 billion and $1.4 billion as of September 30, 2016 and December 31, 2015, respectively, for revolving loans to support general operating and financing needs. However, as of September 30, 2016 and December 31, 2015, $501.5 million and $527.1 million, respectively, were utilized under these facilities to issue letters of credit, leaving $598.5 million and $822.9 million, respectively, available to support other operating and financing needs.

(2) "In Use/Outstanding" data represent September 30, 2016 and December 31, 2015 accreted values.

All outstanding debt of the Company as of September 30, 2016 and December 31, 2015 was issued by XL-Cayman, a 100% owned subsidiary of XL-Bermuda (or, prior to the Redomestication, XL-Ireland). XL-Cayman's outstanding debt, other than the Senior Notes due 2024 and due 2027, historically was fully and unconditionally guaranteed by XL-Ireland. Such debt is now fully and unconditionally guaranteed by XL-Bermuda. In connection with the Redomestication and XL-Ireland's distribution of the ordinary shares of XL-Cayman to XL-Bermuda, on August 3, 2016, XL-Ireland was released as a guarantor under each of the applicable indentures, including as guarantor of the obligations of XL-Cayman under the outstanding securities issued pursuant to such indentures.

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 were originally guaranteed by XL-Ireland, and are now guaranteed by XL-Bermuda. 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 were originally guaranteed by XL-Ireland, and are are now guaranteed by XL-Bermuda. 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(c), "Acquisitions and Disposals - Allied Acquisition," the Company assumed, and subsequently redeemed on June 15, 2016, $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%.

XL-Cayman and the Company were in compliance with all covenants at September 30, 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.

The Company’s letter of credit facilities and revolving credit facilities as of September 30, 2016 and December 31, 2015 were as follows:



Letter of Credit Summary: (U.S. dollars in thousands except percentages)	September 30, 2016 (1)			December 31, 2015 (1)
Available letter of credit facilities - commitments	$	3,991,806		$	4,463,041
Available letter of credit facilities - in use (2)	2,482,386			2,515,653
Collateralized by certain assets of the Company’s investment portfolio	51.1		%	50.9		%

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(1)	As of September 30, 2016 and December 31, 2015, there were fifteen available credit facilities

(2)

As of September 30, 2016 and December 31, 2015, the stated portion of allowable credit facilities permitted to be utilized for revolving loans was $1.1 billion and $1.4 billion, respectively. However, as of September 30, 2016 and December 31, 2015, $501.5 million and $527.1 million, respectively, of such facilities' limits were utilized to issue letters of credit, leaving $598.5 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.

On August 5, 2016, the Company entered into (a) a new secured credit agreement that provides for the issuance of letters of credit up to $750 million (the "New Secured Credit Agreement") and (b) a new unsecured credit agreement that provides for the issuance of letters of credit and revolving credit loans up to $750 million (the "New Unsecured Credit Agreement" and together with the New Secured Credit Agreement, the "New Credit Agreements"). The Company has the option to increase the maximum amount of letters of credit available under the facilities by $500 million in aggregate across the facilities under the New Credit Agreements. In connection with the New Credit Agreements, the Company's syndicated credit agreements originally entered into in 2013, as well as certain related security arrangements, were terminated.

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 the Company's Annual Report on Form 10-K for the year ended December 31, 2015.