Segment Information

The Company is organized into two operating segments: Insurance and Reinsurance. Subsequent to the transaction described in Note 2(e), "Acquisitions and Disposals - Catlin Acquisition," the underwriting results of the acquired businesses from the Acquisition Date through December 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 2(g), "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 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 indicated years ended December 31, 2016, 2015, and 2014:



Year Ended December 31, 2016 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	9,650,503		$	3,975,106		$	13,625,609		$	265,315		$	13,890,924
Net premiums written	6,715,969			3,514,667			10,230,636			12,047			10,242,683
Net premiums earned	6,651,495			3,114,392			9,765,887			12,047			9,777,934
Less: Net losses and loss expenses (2)	4,320,737			1,752,098			6,072,835			28,244			6,101,079
Less: Acquisition costs (2)	897,308			717,588			1,614,896			5,775			1,620,671
Less: Operating expenses (3)	1,224,233			283,270			1,507,503			1,356			1,508,859
Underwriting profit (loss)	$	209,217		$	361,436		$	570,653		$	(23,328	)	$	547,325
Net investment income - excluding Life Funds Withheld Assets (4)							586,658			31,726			618,384
Net investment income - Life Funds Withheld Assets										154,751			154,751
Net results from structured products (5)	8,495			5,785			14,280			—			14,280
Net fee income and other (6)	(18,506		)	3,280			(15,226		)	1,911			(13,315		)
Loss (gain) on sale of subsidiary							—			(7,088		)	(7,088		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							127,533			(14,844		)	112,689
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading - Life Funds Withheld Assets							(3		)	259,452			259,449
Net realized and unrealized gains (losses) on derivative instruments							—			2,521			2,521
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(540,090		)	(540,090		)
Net income (loss) from investment fund affiliates and operating affiliates							—			115,155			115,155
Less: Exchange (gains) losses							—			(9,578		)	(9,578		)
Less: Corporate operating expenses							—			505,483			505,483
Contribution from P&C and Corporate and Other							1,283,895			(501,563		)	782,332
Less: Interest expense (7)										170,058			170,058
Less: Non-controlling interests										129,177			129,177
Less: Income tax expense										42,129			42,129
Net income (loss) attributable to common shareholders													$	440,968
Ratios – P&C operations: (8)
Loss and loss expense ratio	65.0		%	56.3		%	62.2		%
Underwriting expense ratio	31.9		%	32.1		%	32.0		%
Combined ratio	96.9		%	88.4		%	94.2		%

____________


(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)	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 $54.0 million and $39.7 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 deposit liabilities recorded in the Insurance and Reinsurance segments.


(8)	Ratios are based on net premiums earned from P&C operations.



Year Ended December 31, 2015 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate & 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
Less: Net losses and loss expenses (2)	3,614,048			1,152,152			4,766,200			115,997			4,882,197
Less: Acquisition costs (2)	704,364			602,290			1,306,654			10,794			1,317,448
Less: 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		)
Net realized gains (losses) on investments							14,586			5,411			19,997
Net realized gains (losses) on investments - 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
Less: Extinguishment of debt							—			5,592			5,592
Less: Exchange (gains) losses							—			22,504			22,504
Less: Corporate operating expenses							—			480,755			480,755
Contribution from P&C and Corporate and Other							1,255,661			201,538			1,457,199
Less: Interest expense (7)										163,021			163,021
Less: Non-controlling interests										106,187			106,187
Less: Income tax expense										(19,161		)	(19,161		)
Net income (loss) attributable to common 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 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.



Year Ended December 31, 2014 (U.S. dollars in thousands, except ratios)	Insurance			Reinsurance			Total P&C			Corporate and 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
Less: Net losses and loss expenses	2,543,108			715,285			3,258,393			242,963			3,501,356
Less: Acquisition costs	393,319			330,684			724,003			14,115			738,118
Less: 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 (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 (gain) on sale of 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
Less: Exchange (gains) losses							—			(37,568		)	(37,568		)
Less: Corporate operating expenses							—			220,165			220,165
Contribution from P&C and Corporate and Other							1,416,828			(929,872		)	486,956
Less: Interest expense (6)										121,221			121,221
Less: Non-controlling interests										80,498			80,498
Less: Income tax expense										96,897			96,897
Net income (loss) attributable to common 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 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.

The following tables summarize the Company’s net premiums earned by line of business:



Year Ended December 31, 2016 (U.S. dollars in thousands)	Insurance (2)			Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	1,330,909		$	163,157	$	—	$	1,494,066
Casualty	1,973,672			657,590		—		2,631,262
Property catastrophe	—			792,445		—		792,445
Property	1,625,133			1,021,626		—		2,646,759
Specialty	1,711,344			174,477		—		1,885,821
Other (1)	10,437			305,097		—		315,534
Total P&C Operations	$	6,651,495		$	3,114,392	$	—	$	9,765,887
Corporate and Other:
Run-off life operations - Annuity	—			—		1		1
Run-off life operations - Other life	—			—		12,046		12,046
Total Corporate and Other	$	—		$	—	$	12,047	$	12,047
Total	$	6,651,495		$	3,114,392	$	12,047	$	9,777,934
Year Ended December 31, 2015
P&C Operations:
Professional	$	1,164,446		$	168,367	$	—	$	1,332,813
Casualty	1,805,563			468,286		—		2,273,849
Property catastrophe	—			663,958		—		663,958
Property	1,257,383			869,286		—		2,126,669
Specialty	1,421,124			127,797		—		1,548,921
Other (1)	(34		)	218,008		—		217,974
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	1,669,097			300,223		—		1,969,320
Property catastrophe	—			433,602		—		433,602
Property	544,856			555,583		—		1,100,439
Specialty	737,281			95,745		—		833,026
Other (1)	59			124,349		—		124,408
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

____________


(1)	Other within the Insurance segment includes surety, structured indemnity and certain other exited lines. Other within the Reinsurance segment includes: whole account contracts, accident and health and other lines.

(2)

Amounts from the prior year have been represented to reflect current mapping of underlying lines of business to be consistent with the manner in which they are reflected in the current period. The most significant movements include the following: Energy business previously shown under Specialty is now reflected in Property; Programs business formerly in Other is now reflected in Property or Casualty, depending upon the predominant line for each program; and Excess and Surplus is now reflected primarily in Casualty.

The following table shows an analysis of the Company’s net premiums written by geographical location of the subsidiary where the premium is written for the years ended December 31:



(U.S. dollars in thousands)	2016			2015			2014
P&C Operations:
Bermuda	$	1,267,613		$	781,618		$	636,109
United States	3,575,969			3,045,031			2,528,196
Europe	4,778,299			3,628,258			2,124,117
Other	608,755			433,917			478,787
Total P&C Operations	$	10,230,636		$	7,888,824		$	5,767,209
Corporate and Other:
Bermuda	$	12,194		$	62,276		$	91,979
Europe	(147		)	(37		)	85,653
Total Corporate and Other	$	12,047		$	62,239		$	177,632