Losses and Loss Expenses

The following table represents a reconciliation of the beginning and ending balances of unpaid losses and loss expenses, including an analysis of the Company’s paid and unpaid losses and loss expenses incurred for the years indicated:



(U.S. dollars in thousands)	2016			2015			2014
Unpaid losses and loss expenses at the beginning of the year	$	25,439,744		$	19,353,243		$	20,481,065
Unpaid losses and loss expenses recoverable (1)	5,248,905			3,411,528			3,414,735
Net unpaid losses and loss expenses at the beginning of the year	$	20,190,839		$	15,941,715		$	17,066,330
Acquired reserves	101,315			5,439,876			—
Increase (decrease) in net losses and loss expenses incurred in respect of losses occurring in:
Current year	6,374,377			5,072,830			3,513,465
Prior year	(301,542		)	(306,630		)	(255,072		)
Total net incurred losses and loss expenses	6,072,835			4,766,200			3,258,393
Exchange rate effects	(571,198		)	(582,300		)	(561,673		)
Less net losses and loss expenses paid in respect of losses occurring in:
Current year	1,444,251			1,047,277			381,008
Prior year	3,890,269			4,327,375			3,440,327
Total net paid losses	$	5,334,520		$	5,374,652		$	3,821,335
Net unpaid losses and loss expenses at the end of the year	20,459,271			20,190,839			15,941,715
Unpaid losses and loss expenses recoverable (1)	5,480,300			5,248,905			3,411,528
Unpaid losses and loss expenses at the end of the year	$	25,939,571		$	25,439,744		$	19,353,243

____________


(1)	Property and Casualty business only. See Note 12, "Reinsurance," for further information.

(a) Liability for Unpaid Losses and Loss Expenses

As the Company earns premiums for the underwriting risks it assumes, an estimate of the expected ultimate losses related to the premium is established. Loss reserves for unpaid loss and loss expenses are established due to the significant periods of time that may elapse between the occurrence, reporting and settlement of a loss. The process of establishing reserves for unpaid P&C claims can be complex and is subject to considerable variability, as it requires the use of judgment to make informed estimates. These estimates are based on numerous factors, and may be revised as additional experience and other data become available and are reviewed, as new or improved methodologies are developed or as current laws change. Loss reserves include:


•	Case reserves - reserves for reported losses and loss expenses that have not yet been settled; and


•	IBNR reserves – reserves for incurred but not reported losses or for reported losses over and above the amount of case reserves.

Case Reserves

Case reserves for the Company's P&C operations are established by management based on amounts reported from insureds or ceding companies and consultation with legal counsel, and represent the estimated ultimate cost of events or conditions that have been reported to or specifically identified by the Company. The method of establishing case reserves for reported claims differs among the Company's operations.

With respect to the Insurance segment, the Company is notified of insured losses and records a case reserve for the estimated amount of the settlement, if any. The estimate reflects the judgment of claims personnel based on general reserving practices, the experience and knowledge of such personnel regarding the nature of the specific claim and, where appropriate, advice of legal counsel. Reserves are also established to provide for the estimated expense of settling claims, including legal and other fees and the general expenses of administering the claims adjustment process.

With respect to reinsurance operations, case reserves for reported claims are generally established based on reports received from ceding companies. Additional case reserves may be established by the Company to reflect the estimated ultimate cost of a loss. For reinsurers, uncertainty in the reserving process stems, in part, from timing lags inherent in reporting by the claimant to the primary insurer, and subsequently by the primary insurer to the reinsurer. As a predominantly broker market reinsurer for both excess-of-loss and proportional contracts, the Company is potentially subject to an additional timing lag in the receipt of information as the primary insurer reports to the broker who in turn reports to the Company.

Since the Company relies on information regarding paid losses, case reserves and IBNR provided by ceding companies to estimate its liability for unpaid losses and loss adjustment expenses ("LAE"), certain procedures are maintained in order to help determine the completeness and accuracy of such information. Periodically, management assesses the reporting activities of its ceding companies on the basis of qualitative and quantitative criteria. In addition to conferring with ceding companies or brokers on claims matters, our claims personnel conduct periodic audits of specific claims and the overall claims procedures of ceding companies at their offices. The Company relies on its ability to effectively monitor the claims handling and claims reserving practices of ceding companies in order to help establish the proper reinsurance premium for reinsurance agreements and to establish proper loss reserves. Disputes with ceding companies have been rare and generally have been resolved through negotiation.

In addition to information received from ceding companies on reported claims, the Company also utilizes information on the pattern of ceding company loss reporting and loss settlements from previous catastrophic events in order to estimate the ultimate liability related to catastrophic events such as hurricanes. Commercial catastrophe model analyses and zonal aggregate exposures are utilized to assess potential client loss before and after an event. Initial cedant loss reports are generally obtained shortly after a catastrophic event, with subsequent updates received as new information becomes available. The Company actively requests loss updates from cedants periodically while there is still considerable uncertainty for an event, often for the first year following an event. The Company's claim settlement processes also incorporate an update to the total loss reserve at the time a claim payment is made to a ceding company.

While the reliance on loss reports from ceding companies may increase the level of uncertainty associated with the estimation of total loss reserves for property catastrophe reinsurance relative to direct property insurance, there are several factors which serve to reduce the uncertainty in loss reserve estimates for property catastrophe reinsurance. First, for large natural catastrophe events, aggregate limits in property catastrophe reinsurance contracts are in some cases fully exhausted by the loss reserve estimates. Second, as a reinsurer, the Company has access to information from a broad cross section of the insurance industry. The Company utilizes such information in order to perform consistency checks on the data provided by ceding companies and is able to identify trends in loss reporting and settlement activity and incorporate such information in the estimate of IBNR reserves. Finally, the Company also supplements the loss information received from cedants with loss estimates developed by market share techniques and/or from third party catastrophe models applied to exposure data supplied by cedants.

IBNR Reserves

IBNR reserves represent management’s best estimate, at a given point in time, of the amount in excess of case reserves that is needed for the future settlement and loss adjustment costs associated with claims incurred. It is possible that the ultimate liability may differ materially from these estimates. Because the ultimate amount of unpaid losses and LAE is uncertain, management believes that quantitative techniques to estimate these amounts are enhanced by professional and managerial judgment. Management reviews the IBNR estimates produced by its actuarial department and determines its best estimate of the liabilities to record in the financial statements. The Company considers this single point estimate to be the mean expected outcome.

IBNR reserves are estimated by the Company's actuaries using several standard actuarial methodologies including the loss ratio method, the loss development or chain ladder method, the Bornhuetter-Ferguson ("BF") method and frequency and severity approaches. IBNR related to a specific event may be based on the estimated exposure to an industry loss and may include the use of catastrophe modeling software. On a quarterly basis, IBNR reserves are reviewed by the Company's actuaries, and are adjusted as new information becomes available. Any such adjustments are accounted for as changes in estimates and are reflected in the results of operations in the period in which they are made.

The Company's actuaries use one set of assumptions in calculating the single point estimate, which includes actual loss data, loss development factors, loss ratios, reported claim frequency and severity. The actuarial reviews and documentation are completed in accordance with professional actuarial standards with reserves established on a basis consistent with GAAP. The selected assumptions reflect the actuary’s judgment based on historical data and experience combined with information concerning current underwriting, economic, judicial, regulatory and other influences on ultimate claim settlements.

When estimating IBNR reserves, each insurance and reinsurance business unit segregates business into exposure classes. Within each class, the business is further segregated by either the year in which the contract incepted ("underwriting year"), the year in which the claim occurred ("accident year"), or the year in which the claim is reported ("report year"). Within the Insurance Segment, reviews are on an accident year, underwriting year, or report year basis depending on the nature of the business. The Reinsurance segment is reviewed on an underwriting year basis. In each case, management believes the selected method most accurately represents the economic condition of the business.

Generally, initial actuarial estimates of IBNR reserves not related to a specific event are based on the loss ratio method applied to each class of business. Actual paid losses and case reserves ("reported losses") are subtracted from expected ultimate losses to determine IBNR reserves. Estimates of the initial expected ultimate losses involve management judgment and are based on historical information for that class of business, which includes loss ratios, market conditions, changes in pricing and conditions, underwriting changes, changes in claims emergence, and other factors that may influence expected ultimate losses.

Over time, as greater numbers of claims are reported, actuarial estimates of IBNR are based on the BF method and loss development techniques. The BF method utilizes actual loss data and the expected patterns of loss emergence, combined with an initial expectation of ultimate losses to determine an estimate of ultimate losses. This method may be appropriate when there is limited actual loss data and a relatively less stable pattern of loss emergence. The chain ladder method utilizes actual loss and expected patterns of loss emergence to determine an estimate of ultimate losses that is independent of the initial expectation of ultimate losses. This method may be appropriate when there is a relatively stable pattern of loss emergence and a relatively larger number of reported claims. Multiple estimates of ultimate losses using a variety of actuarial methods are calculated for each class of business for each year of loss experience. The Company's actuaries look at each class and determine the most appropriate point estimate based on the characteristics of the particular class and other relevant factors, such as historical ultimate loss ratios, the presence of individual large losses, and known occurrences that have not yet resulted in reported losses. Once the actuaries make their determination of the most appropriate point estimate for each class, this information is aggregated and presented to management for review and approval.

The pattern of loss emergence is determined using actuarial analysis and judgment and is based on the historical patterns of the recording of paid and reported losses, as well as industry information. Information that may cause historical patterns to differ from future patterns is considered and reflected in expected patterns as appropriate. For property, marine and aviation insurance, losses are generally reported within 2 to 3 years from the beginning of the accident year. For casualty insurance, loss emergence patterns can vary from 3 years to over 20 years depending on the type of business. For other insurance, loss emergence patterns generally fall within these ranges. For reinsurance business, loss reporting lags the corresponding insurance classes often by at least one quarter due to the need for loss information to flow from the ceding companies to us generally via reinsurance intermediaries. Such lags in loss reporting are reflected in the actuary’s selections of loss reporting patterns used in establishing our reserves.

Such estimates are not precise because, among other things, they are based on predictions of future developments and estimates of future trends in claim severity, claim frequency and other issues. In the process of estimating IBNR reserves, provisions for economic inflation and changes in the social and legal environment are considered, but involve considerable judgment. When estimating IBNR reserves, more judgment is typically required for lines of business with longer loss emergence patterns.

Due to the low frequency and high severity nature of some of the business the Company underwrites, our reserve estimates are highly dependent on actuarial and management judgment and are therefore uncertain. In property classes, there can be additional uncertainty in loss estimation related to large catastrophe events. With wind events, such as hurricanes, the damage assessment process may take more than a year. The cost of claims is subject to volatility due to supply shortages for construction materials and labor. In the case of earthquakes, the damage assessment process may take several years as buildings are discovered to have structural weaknesses not initially detected. The uncertainty inherent in IBNR reserve estimates is particularly pronounced for casualty coverages, such as excess liability, professional liability and workers’ compensation, where information emerges relatively slowly over time.

The three types of property and casualty reserve exposure with the longest tails included in the Company's portfolio are:


•	high layer excess casualty insurance;


•	casualty reinsurance; and


•	discontinued asbestos and run-off environmental insurance and reinsurance liabilities.

Certain aspects of casualty operations complicate the actuarial process for establishing reserves. Certain casualty business written by insurance operations is high layer excess casualty business, meaning that liability attaches after large deductibles, including self-insurance or insurance from other sources. The Company began writing this type of business in 1986 and issued policies in forms that were different from traditional policies used by the industry at that time. Initially, there was a lack of industry data available for this type of business. Consequently, the basis for establishing loss reserves for this type of business was largely based upon judgment and the Company's reported loss experience, which was used as a basis for determining ultimate losses and, therefore, IBNR reserves. Over time, the amount of available historical loss experience data has increased. As a result, there is a larger statistical base to assist in establishing reserves for these excess casualty insurance claims.

High layer excess casualty insurance claims typically involve claims relating to (i) a "shock loss" such as an explosion or transportation accident causing severe damage to persons and/or property over a short period of time, (ii) a "non-shock" loss where a large number of claimants are exposed to injurious conditions over a longer period of time, such as exposure to chemicals or pharmaceuticals or (iii) a professional liability loss such as a medical malpractice claim. In each case, these claims are ultimately settled following extensive negotiations and legal proceedings. This process typically takes 5 to 15 years following the date of loss.

Reinsurance operations by their nature add further complications to the reserving process, particularly for the casualty business written, in that there is an inherent lag in the timing and reporting of a loss event from an insured or ceding company to the reinsurer. This reporting lag creates an even longer period of time between the policy inception and when a claim is finally settled. As a result, more judgment is required to establish reserves for ultimate claims in reinsurance operations.

Casualty reinsurance business involves reserving methods that generally include historical aggregated claim information as reported by ceding companies, combined with the results of claims and underwriting reviews of a sample of the ceding company’s claims and underwriting files. Therefore, we do not always receive detailed claim information for this line of business.

Discontinued asbestos and run-off environmental liabilities are attached to certain policies previously written by NAC Re Corp. (now known as XL Reinsurance America Inc.), prior to being acquired by the Company; from business of Winterthur purchased by the Company from AXA Insurance in 2001; from a loss portfolio transfer in 2006; and acquired as a result of the Catlin Acquisition. At December 31, 2016, total gross unpaid losses and loss expenses with respect to these businesses represented less than 1% of unpaid losses and loss expenses of the Company.

Unpaid losses and loss expenses prior to reinsurance recoveries for the indicated years ended December 31 comprise the following:



(U.S. dollars in thousands)	2016		2015
Reserve for reported losses and loss expenses	$	10,343,481	$	10,293,448
Reserve for losses incurred but not reported	15,596,090		15,146,296
Unpaid losses and loss expenses	$	25,939,571	$	25,439,744

Claims Development

Management has determined that the appropriate level of disaggregation for the incurred and paid claims development information best falls into six categories within its two operating segments. This level of disaggregation is consistent with the Company's historical disclosure levels and provides groupings of the Company's insurance and reinsurance businesses of a credible size and with similar claim development characteristics, particularly payment patterns. It should be noted that when estimating IBNR reserves, the Company's Insurance and Reinsurance segments segregate business into exposure classes and over 250 classes are reviewed in total. Furthermore, large losses and catastrophe events are evaluated separately.

As noted previously, reserve reviews are carried out on an accident year, underwriting year or report year basis depending on the nature of the business. Typically, reserve reviews are carried out gross of reinsurance with ceded reinsurance recoveries evaluated separately to arrive at net reserves. However, in accordance with accounting guidance, the disclosures presented herein are accident year triangles, presented net of reinsurance recoverables. Underwriting year triangles are converted to an accident year basis using assumptions consistent with the underlying premium earning profiles and considering large losses in their respective accident year. Similarly, ceded reinsurance recoverables are allocated to accident year and class of business in order to present net accident year triangles. While we have compiled the triangles on a best efforts basis, the allocation bases required to develop historical net accident year triangles should be viewed as approximations only.

Within the Insurance segment, there are four business groups: Professional; Casualty and other; Energy, Property and Construction ("EPC"); and Specialty. Within the Reinsurance segment, all major products fall within two categories: Property and Other Short-Tail Lines, and Casualty and Other Long-Tail Lines. The Company has also provided aggregate triangles for the total Company and the Insurance and Reinsurance segments to reflect the levels at which the Company manages its business.

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 of the Company. There is no assurance that conditions and trends that have affected the development of liabilities in the past will continue. Furthermore, changes in business mix over time, including discontinuation of certain classes of business and growth in others, can impact development patterns. Accordingly, it may not be appropriate to extrapolate future redundancies or deficiencies based on the Company's historical results.

As discussed in further detail in part (c), 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 development in the tables included herein is presented on a gross of discount basis, reflecting the undiscounted case reserves established using a tabular reserving methodology and the undiscounted IBNR. The amount of discount is then determined for both Case and IBNR reserves and booked accordingly. The amount of discount is included in the reconciliation of the reserves to the Consolidated Balance Sheet.

As a result of the Catlin Acquisition in 2015 as noted in Note 2(e), "Acquisitions and Disposals - Catlin Acquisition, the Company acquired approximately $5.4 billion of unpaid claims liability, net of reinsurance, as well as $101.3 million of unpaid claims liability, net of reinsurance due to the Allied Acquisition in 2016 as noted in Note 2(c), "Acquisitions and Disposals - Allied Acquisition." For purposes of this disclosure, the Company has applied the retrospective method for these acquired reserves, including the combined companies' incurred and paid claim development histories throughout the tables. It should be noted that historical reserves for the acquired businesses were established by the respective companies using methods, assumptions and procedures then in effect which may differ from the Company's current reserving bases. Accordingly, it may not be appropriate to extrapolate future redundancies or deficiencies based on the aggregated historical results shown in the triangles.

The Company has also revalued all historical data using exchange rates at December 31, 2016 in order to mitigate the effect of foreign exchange on the development throughout the triangles. Due to currency mix changes from one year end to the next, revaluation of incurred losses will result in different year-on-year movements within the triangles with each annual presentation. This approach for handling foreign exchange movements within the triangles differs somewhat from the underlying calculation of prior year development in our financial statements due the inclusion of historical loss payments as well as reserves and the level of granularity used in the calculation. The differences have been deemed not to be material.

The number of reported claims is provided for the Insurance segment on a per claim basis and excludes those claims which closed with no payment. It should be noted that certain claims may eventually close with no payment in the future at which time the claims will be excluded on a prospective basis. The number of reported claims can vary over time due to changes in mix of business and policy terms and conditions. For the Reinsurance segment, the number of reported claims is not provided due to the common industry practice of cedants reporting loss information for proportional treaties on a bulk basis without comprehensive claim details. Therefore, it is impractical to provide meaningful claim count detail for our Reinsurance business.

The Average Annual Percentage Payout of Incurred Losses for each age has been derived using a weighted average of all cumulative paid amounts as a percentage of 2016 incurred losses and allocated loss expenses. The average annual percentage payout can change over time due to changes in business mix, policy terms and conditions as well as ceded reinsurance arrangements.

As previously noted, the process of establishing reserves for unpaid P&C claims can be complex and is subject to considerable variability, as it requires the use of judgment to make informed estimates. These estimates are based on numerous factors, and may be revised as additional experience and data become available, as new or improved methodologies are developed or as current laws change. In addition, there is no assurance that conditions and trends that have affected the development of liabilities in the past will continue. This variability may result in either favorable or adverse development in the Incurred Loss and Allocated Loss Expense triangles provided by the Company. The variability experienced to date has been in line with management’s expectations given the underlying business written by the Company. We have provided additional commentary for the individual categories below:

For the Insurance Segment in total, while individual accident years have both favorable and adverse incremental development across the triangle, accident years 2007 to 2013 have all developed favorably since the first evaluation. The 2014 and 2015 accident years reflect modest adverse development due primarily to large loss activity in several lines that the Company does not view as a trend. In addition, the Company notes that these accident years are still relatively immature.

For the Insurance EPC category, individual accident years have generally developed favorably as updated loss estimates were received and volatility in the loss estimates decreased. The 2014 accident year experienced adverse development from the 2014 evaluation to the 2015 evaluation due to development on a large fire loss which occurred in late December 2014. The 2014 accident year then developed favorably from the 2015 evaluation to the 2016 evaluation. The 2015 accident year experienced adverse development from the first evaluation in 2015 to the second evaluation in 2016 due to movements on several claims in the international property and construction businesses.

For the Insurance Specialty category, individual accident years have generally developed favorably as updated loss estimates were received and volatility in the loss estimates decreased. This category includes a range of businesses with both short-tail and medium-tail exposures. Typically, development in the second year relates to short-tail lines with development on medium-tail business being reflected at subsequent evaluations.

For the Insurance Professional category, individual accident years have both favorable and adverse development across the triangle. These developments relate to the complexity associated with claims in this class of business. In 2008, the Company strengthened its reserves for the 2007 report/accident year due to the developing subprime-credit crisis. Due to the claims-made nature of the underlying Professional policies, the subprime-credit crisis impacted the 2008 to 2012 report years and reserves were re-allocated from the 2007 report year to these later years as claims developed. The cumulative impact of the credit crisis and developing loss trends were more severe than originally expected for these years. The 2014 and 2015 report years have experienced modest adverse development due to large loss activity in the international financial lines management liability book and the discontinued design subcontractors default portfolio.

For the Insurance Casualty category, individual accident years have both favorable and adverse development across the triangle. These developments relate to the complexity associated with claims in this class of business and the high level of attachment of the Company’s excess policies. The 2010 accident year experienced more adverse development than other accident years due to development on the Deepwater Horizon event. The 2013 to 2015 accident years reflect modest adverse development due to large loss activity relating to the excess casualty portfolio and strengthening of the excess and surplus portfolio and the newly acquired Allied business.

For the Reinsurance Segment in total, while individual accident years have both favorable and adverse incremental development across the triangle, all accident years except for the 2010 accident year developed favorably since the first evaluation. The adverse development since the first evaluation for the 2010 accident year was very modest.

For the Reinsurance Property and Other Short Tail category, individual accident years have generally developed favorably as updated loss estimates were received and volatility in the loss estimates decreased. The two outliers were the 2010 and 2012 accident years where there was modest adverse development related to large loss events from the business acquired in the Catlin Acquisition. Specifically, the 2010 adverse development relates to the Buncefield Explosion and the New Zealand Darfield Earthquake and the 2012 development relates to Costa Concordia and Superstorm Sandy. The favorable development on the 2011 year relates in part to reductions on the Japan Earthquake and Tsunami event also within the business acquired in the Catlin Acquisition. As noted earlier, the historical reserves for the acquired businesses were established by the respective companies using methods, assumptions and procedures then in effect which may differ from the Company's current reserving bases.

For the Reinsurance Casualty and Other Long Tail category, the earlier years had modest favorable development and the later years had modest adverse development. The adverse development for the later accident years relates to changes in reserving methodology for certain long tailed lines of business that occurred in calendar years 2012 and 2015. In 2012, the Company changed its methodology to hold an explicit discount on loss reserves for U.K. bodily injury claims expected to settle via Periodical Payment Orders ("PPOs"). As these claims became more prevalent and costly, reserves were strengthened on an undiscounted basis. However, with the implementation of discounting, there was a minimal change in the loss reserves, net of the discount. Similarly, a significant portion of the increase in the Incurred Losses and Allocated Loss Expense, Net of Reinsurance for the 2015 calendar year is due to a change in the methodology used to determine the undiscounted ultimate losses for the reinsurance workers' compensation liabilities acquired in the Catlin Acquisition resulting in a large increase in the undiscounted losses but an insignificant change in the discounted losses.

Total Property and Casualty



(in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	4,632,657	$	4,806,850	$	4,718,961	$	4,684,540	$	4,689,256	$	4,569,019	$	4,541,978	$	4,519,599	$	4,432,150	$	4,390,981	$	246,827	N/A
2008			5,504,796		5,575,015		5,503,422		5,524,325		5,479,907		5,449,364		5,417,072		5,357,648		5,322,204		307,738		N/A
2009					4,622,547		4,627,569		4,542,408		4,556,902		4,550,362		4,550,542		4,422,167		4,392,904		317,583		N/A
2010							4,983,044		5,111,634		5,002,061		5,026,101		4,974,782		4,957,474		4,981,939		464,306		N/A
2011									6,236,775		6,187,474		6,111,779		5,980,635		6,116,046		6,083,796		558,008		N/A
2012											5,697,958		5,660,616		5,640,576		5,754,387		5,663,926		715,827		N/A
2013													5,558,316		5,554,791		5,523,695		5,426,144		1,082,491		N/A
2014															5,183,056		5,369,393		5,397,264		1,396,883		N/A
2015																	5,354,494		5,498,206		1,962,006		N/A
2016																			6,005,506		3,425,518		N/A
																			$	53,162,870	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	521,083	$	1,289,961	$	2,055,288	$	2,587,918	$	3,126,834	$	3,397,370	$	3,612,934	$	3,744,872	$	3,822,207	$	3,894,280
2008			788,760		1,994,235		2,857,474		3,446,415		3,947,203		4,240,640		4,450,875		4,582,409		4,700,567
2009					638,179		1,530,295		2,192,791		2,655,163		3,117,922		3,366,917		3,551,474		3,663,224
2010							840,030		1,855,407		2,645,868		3,144,278		3,521,163		3,851,827		4,084,244
2011									1,246,596		2,872,319		3,664,970		4,242,053		4,737,827		5,021,000
2012											952,158		2,256,973		3,149,842		3,802,042		4,199,766
2013													976,023		2,194,912		3,049,907		3,614,076
2014															957,525		2,250,446		3,090,343
2015																	970,277		2,152,569
2016																			1,192,137
																			$	35,612,206
	All outstanding liabilities prior to 2007, net of reinsurance																		2,501,779
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	20,052,443



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	17	%	22	%	15	%	10	%	9	%	6	%	3	%	3	%	3	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims

Insurance Segment



(in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	3,258,668	$	3,490,955	$	3,426,696	$	3,431,600	$	3,442,331	$	3,329,848	$	3,317,676	$	3,318,423	$	3,274,775	$	3,246,355	$	158,351	45.542
2008			3,891,682		3,969,259		3,935,499		3,974,071		3,918,450		3,889,538		3,857,758		3,822,133		3,786,671		186,723		54.952
2009					3,472,222		3,499,124		3,458,320		3,480,715		3,483,027		3,500,575		3,369,614		3,346,817		190,193		54.896
2010							3,702,458		3,809,102		3,699,234		3,735,809		3,688,045		3,661,919		3,697,761		313,815		61.416
2011									4,014,389		3,986,420		4,009,166		3,921,559		4,026,511		4,001,271		379,349		65.437
2012											3,870,871		3,799,876		3,800,046		3,921,415		3,851,259		468,002		70.919
2013													3,942,360		4,003,359		3,978,956		3,924,048		802,611		78.018
2014															3,748,154		3,917,364		3,978,436		1,052,314		87.491
2015																	3,849,731		4,039,203		1,418,476		94.229
2016																			4,160,269		2,358,172		65.684
																			$	38,032,090	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	367,171	$	930,428	$	1,462,857	$	1,884,318	$	2,333,047	$	2,549,256	$	2,715,861	$	2,822,610	$	2,896,977	$	2,943,144
2008			461,606		1,339,577		1,973,577		2,427,033		2,843,188		3,069,812		3,234,869		3,337,607		3,415,212
2009					462,090		1,140,796		1,666,673		2,043,196		2,432,021		2,634,783		2,787,167		2,865,558
2010							607,658		1,377,513		1,978,027		2,370,062		2,685,015		2,914,856		3,072,546
2011									649,690		1,617,155		2,216,640		2,653,619		3,062,399		3,290,213
2012											634,043		1,471,761		2,079,400		2,578,639		2,886,674
2013													657,753		1,509,232		2,141,332		2,597,422
2014															669,745		1,597,123		2,263,643
2015																	691,253		1,563,019
2016																			861,429
																			$	25,758,860
	All outstanding liabilities prior to 2007, net of reinsurance																		1,069,908
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	13,343,138



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	16	%	21	%	16	%	11	%	10	%	6	%	4	%	3	%	3	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



EPC (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)			Number of Claims
2007	$	439,938	$	394,730	$	385,373	$	365,395	$	364,454	$	361,632	$	358,820	$	357,009	$	356,106	$	355,709	$	(213	)	5,380
2008			841,913		834,562		806,976		782,005		777,476		769,906		774,108		768,610		767,031		10,701			9.013
2009					400,045		382,644		364,526		356,069		349,819		345,668		344,108		342,072		6,549			7.596
2010							596,340		611,917		589,119		571,375		565,494		574,091		568,574		(5,681		)	8.532
2011									979,353		911,684		890,820		857,510		846,315		842,481		7,165			10.172
2012											689,032		660,128		635,712		636,896		626,132		6,086			11.131
2013													740,573		715,909		690,102		684,578		9,763			12.141
2014															703,860		735,789		723,382		6,921			14.609
2015																	791,724		812,247		64,949			16.424
2016																			969,709		228,630			15.279
																			$	6,691,915	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	69,288	$	208,210	$	298,622	$	316,321	$	329,883	$	341,442	$	347,421	$	348,059	$	350,602	$	351,151
2008			152,946		467,537		604,163		653,749		730,513		748,607		752,294		747,374		750,022
2009					84,638		190,194		254,420		287,809		311,335		313,434		328,222		331,246
2010							166,353		380,649		476,832		526,375		543,985		542,011		547,486
2011									211,176		610,086		744,330		784,418		813,298		815,694
2012											161,117		389,827		531,299		574,467		593,981
2013													165,460		452,805		586,539		636,623
2014															180,735		504,925		645,682
2015																	224,497		484,431
2016																			324,575
																			$	5,480,891
	All outstanding liabilities prior to 2007, net of reinsurance																		24,692
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	1,235,716



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	26	%	38	%	20	%	6	%	5	%	1	%	1	%	—	%	1	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



Specialty (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	825,002	$	852,759	$	847,085	$	837,517	$	832,003	$	813,822	$	802,825	$	782,043	$	803,587	$	799,817	$	4,787	18.554
2008			875,540		934,797		884,249		863,902		851,059		839,237		813,581		830,905		826,097		3,738		22.083
2009					987,010		978,410		909,964		882,725		872,379		862,563		807,644		798,315		1,770		20.875
2010							1,004,165		962,021		894,249		875,392		849,972		838,086		837,473		12,588		24.437
2011									975,525		974,012		945,212		901,762		915,622		908,417		34,269		25,070
2012											1,009,999		950,530		917,430		901,214		890,061		19,757		27.855
2013													940,906		979,459		943,553		941,582		45,919		31.103
2014															945,355		964,163		948,242		66,235		36.659
2015																	967,064		1,027,349		137,686		39.552
2016																			1,065,208		386,279		28.418
																			$	9,042,561	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	249,996	$	468,074	$	608,006	$	675,749	$	711,472	$	739,870	$	758,150	$	774,511	$	776,816	$	779,786
2008			244,084		511,167		637,898		699,636		742,474		767,795		786,003		791,620		797,195
2009					311,190		552,213		660,099		712,561		736,233		754,577		764,637		767,565
2010							317,829		548,616		660,232		714,045		757,382		774,635		783,693
2011									294,082		603,843		738,976		794,906		817,521		840,552
2012											310,705		589,660		698,093		767,416		804,007
2013													331,485		596,425		716,825		792,004
2014															338,376		618,150		749,446
2015																	335,018		656,573
2016																			409,665
																			$	7,380,486
	All outstanding liabilities prior to 2007, net of reinsurance																		139,887
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	1,801,962



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	35	%	30	%	14	%	7	%	4	%	3	%	2	%	1	%	1	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



Professional (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	911,695	$	1,130,926	$	1,106,630	$	1,061,995	$	1,070,028	$	995,364	$	993,007	$	1,000,256	$	944,024	$	928,677	$	68,144	4.371
2008			1,033,982		1,087,436		1,131,685		1,221,906		1,195,931		1,174,486		1,167,289		1,136,720		1,114,924		60,568		5.187
2009					968,336		1,036,140		1,094,824		1,158,091		1,196,078		1,202,994		1,169,232		1,164,825		77,399		5.589
2010							989,432		984,780		957,486		1,035,571		996,024		1,016,013		1,061,340		113,635		5.418
2011									967,386		960,895		1,012,458		1,027,504		1,104,107		1,111,524		162,147		5.253
2012											976,450		976,593		1,011,363		1,124,437		1,117,970		212,997		5,320
2013													965,875		963,634		942,022		922,634		339,380		5.595
2014															747,671		799,952		843,003		371,270		5.969
2015																	755,087		800,568		493,667		6.391
2016																			730,198		654,395		3.704
																			$	9,795,663	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	25,207	$	111,289	$	240,287	$	421,654	$	540,255	$	612,498	$	692,492	$	738,301	$	776,445	$	801,141
2008			17,987		185,149		346,923		516,426		697,071		782,381		853,405		911,634		969,698
2009					22,350		161,125		337,568		507,629		745,836		838,990		922,453		948,015
2010							21,803		155,845		324,580		480,475		623,975		735,626		803,916
2011									28,625		144,365		315,130		480,248		683,043		815,129
2012											44,486		195,088		378,059		591,820		713,165
2013													36,582		152,052		304,503		457,890
2014															17,042		138,832		312,548
2015																	22,521		139,345
2016																			23,462
																			$	5,984,309
	All outstanding liabilities prior to 2007, net of reinsurance																		140,029
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	3,951,383



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	3	%	13	%	16	%	16	%	15	%	9	%	6	%	4	%	4	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



Casualty and other (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	1,082,033	$	1,112,540	$	1,087,608	$	1,166,693	$	1,175,846	$	1,159,030	$	1,163,024	$	1,179,115	$	1,171,058	$	1,162,152	$	85,633	17.237
2008			1,140,247		1,112,464		1,112,589		1,106,258		1,093,984		1,105,909		1,102,780		1,085,898		1,078,619		111,716		18.669
2009					1,116,831		1,101,930		1,089,006		1,083,830		1,064,751		1,089,350		1,048,630		1,041,605		104,475		20.836
2010							1,112,521		1,250,384		1,258,380		1,253,471		1,276,555		1,233,729		1,230,374		193,273		23.029
2011									1,092,125		1,139,829		1,160,676		1,134,783		1,160,467		1,138,849		175,768		24.942
2012											1,195,390		1,212,625		1,235,541		1,258,868		1,217,096		229,162		26.613
2013													1,295,006		1,344,357		1,403,279		1,375,254		407,549		29.179
2014															1,351,268		1,417,460		1,463,809		607,888		30.254
2015																	1,335,856		1,399,039		722,174		31.862
2016																			1,395,154		1,088,868		18.283
																			$	12,501,951	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	22,680	$	142,855	$	315,942	$	470,594	$	751,437	$	855,446	$	917,798	$	961,739	$	993,114	$	1,011,066
2008			46,589		175,724		384,593		557,222		673,130		771,029		843,167		886,979		898,297
2009					43,912		237,264		414,586		535,197		638,617		727,782		771,855		818,732
2010							101,673		292,403		516,383		649,167		759,673		862,584		937,451
2011									115,807		258,861		418,204		594,047		748,537		818,838
2012											117,735		297,186		471,949		644,936		775,521
2013													124,226		307,950		533,465		710,905
2014															133,592		335,216		555,967
2015																	109,217		282,670
2016																			103,727
																			$	6,913,174
	All outstanding liabilities prior to 2007, net of reinsurance																		765,300
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	6,354,077



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	7	%	14	%	16	%	13	%	13	%	8	%	5	%	4	%	3	%	3	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims

Reinsurance Segment



(in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	1,373,989	$	1,315,895	$	1,292,265	$	1,252,940	$	1,246,925	$	1,239,171	$	1,224,302	$	1,201,176	$	1,157,375	$	1,144,626	$	88,476	N/A
2008			1,613,114		1,605,756		1,567,923		1,550,254		1,561,457		1,559,826		1,559,314		1,535,515		1,535,533		121,015		N/A
2009					1,150,325		1,128,445		1,084,088		1,076,187		1,067,335		1,049,967		1,052,553		1,046,087		127,390		N/A
2010							1,280,586		1,302,532		1,302,827		1,290,292		1,286,737		1,295,555		1,284,178		150,491		N/A
2011									2,222,386		2,201,054		2,102,613		2,059,076		2,089,535		2,082,525		178,659		N/A
2012											1,827,087		1,860,740		1,840,530		1,832,972		1,812,667		247,825		N/A
2013													1,615,956		1,551,432		1,544,739		1,502,096		279,880		N/A
2014															1,434,902		1,452,029		1,418,828		344,569		N/A
2015																	1,504,763		1,459,003		543,530		N/A
2016																			1,845,237		1,067,346		N/A
																			$	15,130,780	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	153,912	$	359,533	$	592,431	$	703,600	$	793,787	$	848,114	$	897,073	$	922,262	$	925,230	$	951,136
2008			327,154		654,658		883,897		1,019,382		1,104,015		1,170,828		1,216,006		1,244,802		1,285,355
2009					176,089		389,499		526,118		611,967		685,901		732,134		764,307		797,666
2010							232,372		477,894		667,841		774,216		836,148		936,971		1,011,698
2011									596,906		1,255,164		1,448,330		1,588,434		1,675,428		1,730,787
2012											318,115		785,212		1,070,442		1,223,403		1,313,092
2013													318,270		685,680		908,575		1,016,654
2014															287,780		653,323		826,700
2015																	279,024		589,550
2016																			330,708
																			$	9,853,346
	All outstanding liabilities prior to 2007, net of reinsurance																		1,431,871
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	6,709,305



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	20	%	24	%	15	%	8	%	5	%	4	%	1	%	2	%	3	%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



Property and Other Short-tail Lines (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	655,785	$	612,847	$	591,325	$	576,823	$	556,160	$	543,586	$	542,517	$	531,757	$	505,908	$	504,777	$	9,948	N/A
2008			922,391		913,108		893,143		870,757		855,385		851,340		855,891		849,351		856,596		22,281		N/A
2009					574,748		541,926		507,488		488,419		479,539		474,526		468,240		472,758		4,958		N/A
2010							821,119		842,728		846,563		852,550		857,788		840,206		840,582		26,847		N/A
2011									1,728,879		1,697,826		1,617,499		1,589,207		1,593,064		1,585,694		42,172		N/A
2012											1,268,108		1,294,768		1,285,569		1,255,565		1,243,866		69,188		N/A
2013													1,068,975		1,011,548		975,565		939,295		45,977		N/A
2014															865,668		855,081		814,558		57,491		N/A
2015																	878,711		829,691		163,854		N/A
2016																			1,140,759		531,843		N/A
																			$	9,228,576	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	128,299	$	274,682	$	427,810	$	470,765	$	487,471	$	491,862	$	503,233	$	497,701	$	478,062	$	483,023
2008			291,995		541,613		693,174		757,091		784,005		801,027		805,951		803,919		816,877
2009					145,413		307,294		389,835		421,579		441,032		445,905		445,861		453,626
2010							215,463		429,578		577,128		639,012		665,932		734,453		783,155
2011									581,324		1,196,404		1,344,405		1,432,899		1,472,992		1,493,813
2012											293,705		713,154		933,717		1,028,319		1,068,475
2013													291,534		604,497		768,385		819,523
2014															250,708		556,548		658,511
2015																	236,009		472,543
2016																			265,695
																			$	7,315,241
	All outstanding liabilities prior to 2007, net of reinsurance																		287,838
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	2,201,173



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	29	%	34	%	17	%	7	%	3	%	4	%	2	%	1	%	(1	)%	1	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims



Casualty and Other Long-Tail Lines (in thousands)
Incurred Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,																				As of Dec 31, 2016
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		IBNR (1)		Number of Claims
2007	$	718,204	$	703,048	$	700,940	$	676,117	$	690,765	$	695,585	$	681,785	$	669,419	$	651,467	$	639,849	$	78,528	N/A
2008			690,723		692,648		674,780		679,497		706,072		708,486		703,423		686,164		678,937		98,734		N/A
2009					575,577		586,519		576,600		587,768		587,796		575,441		584,313		573,329		122,432		N/A
2010							459,467		459,804		456,264		437,742		428,949		455,349		443,596		123,644		N/A
2011									493,507		503,228		485,114		469,869		496,471		496,831		136,487		N/A
2012											558,979		565,972		554,961		577,407		568,801		178,637		N/A
2013													546,981		539,884		569,174		562,801		233,903		N/A
2014															569,234		596,948		604,270		287,078		N/A
2015																	626,052		629,312		379,676		N/A
2016																			704,478		535,503		N/A
																			$	5,902,204	Total

Cumulative Paid Losses and Allocated Loss Expenses, Net of Reinsurance
	For the Years Ended December 31,
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
Accident Year	2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
2007	$	25,613	$	84,851	$	164,621	$	232,835	$	306,316	$	356,252	$	393,840	$	424,561	$	447,168	$	468,113
2008			35,159		113,045		190,723		262,291		320,010		369,801		410,055		440,883		468,478
2009					30,676		82,205		136,283		190,388		244,869		286,229		318,446		344,040
2010							16,909		48,316		90,713		135,204		170,216		202,518		228,543
2011									15,582		58,760		103,925		155,535		202,436		236,974
2012											24,410		72,058		136,725		195,084		244,617
2013													26,736		81,183		140,190		197,131
2014															37,072		96,775		168,189
2015																	43,015		117,007
2016																			65,013
																			$	2,538,105
	All outstanding liabilities prior to 2007, net of reinsurance																		1,144,033
	Liabilities for unpaid losses and loss expenses, net of reinsurance																		$	4,508,132



Average Annual Percentage Payout of Incurred Losses by Age, Net of Reinsurance
	Year 1		Year 2		Year 3		Year 4		Year 5		Year 6		Year 7		Year 8		Year 9		Year 10
	5	%	9	%	10	%	10	%	9	%	7	%	7	%	6	%	6	%	4	%

____________


(1)	Total IBNR Liabilities Plus Expected Development on Reported Claims

Reconciliation



(U.S. dollars in thousands)	December 31, 2016
Net outstanding liabilities
Insurance Segment
EPC	$	1,235,716
Specialty	1,801,962
Professional	3,951,383
Casualty and other	6,354,077
Reinsurance Segment
Property and Other Short-Tail lines	2,201,173
Casualty and Other Long-Tail lines	4,508,132
Subtotal, disaggregated triangles	$	20,052,443

Unallocated loss expenses	482,680
Discount (1)	(413,522		)
Provision for uncollectible reinsurance	42,119
Other	295,551
Total net liability for unpaid losses and loss expenses	20,459,271

Reinsurance recoverable on unpaid losses
Insurance Segment
EPC	$	486,595
Specialty	524,545
Professional	1,195,720
Casualty	2,836,800
Reinsurance Segment
Property and Other Short-Tail lines	242,845
Casualty and Other Long-Tail lines	122,190
Other	71,605
Total recoverable on unpaid losses and loss expenses	$	5,480,300

Unpaid losses and loss expenses	$	25,939,571

____________


(1)	As noted in Note 10(c), "Losses and Loss Expenses - Loss Reserve Discounting," the Company discounts only 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.

(b) Net losses and loss expenses incurred

Net losses and loss expenses incurred for the years indicated are comprised of:



(U.S. dollars in thousands)	2016			2015			2014
Loss and loss expenses payments	$	6,828,012		$	6,505,075		$	4,499,642
Change in unpaid losses and loss expenses	976,401			(168,263		)	(514,406		)
Change in unpaid losses and loss expenses recoverable	(238,086		)	(440,189		)	(48,536		)
Paid loss recoveries	(1,493,492		)	(1,130,423		)	(678,307		)
Net losses and loss expenses incurred	$	6,072,835		$	4,766,200		$	3,258,393

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)	2016			2015			2014
Insurance segment	$	(91,459	)	$	(65,030	)	$	(99,758	)
Reinsurance segment	(210,083		)	(241,600		)	(155,314		)
Total	$	(301,542	)	$	(306,630	)	$	(255,072	)

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 business group relating to the Insurance segment for the indicated years ended December 31:



(U.S. dollars in thousands)	2016			2015			2014
EPC	$	(38,366	)	$	(6,447	)	$	(57,465	)
Specialty	(5,655		)	(93,043		)	(82,756		)
Professional	$	10,813		$	5,740		$	17,092
Casualty and other	(58,251		)	28,720			23,371
Total	$	(91,459	)	$	(65,030	)	$	(99,758	)

Net favorable prior year reserve development of $91.5 million for the year ended December 31, 2016 for the Insurance segment. This amount differs from the implied change in ultimate losses that can be calculated from the above triangles because the triangles exclude accident years prior to 2007 as well as minor business and, as noted earlier, utilize a different approach for handling foreign exchange. The total net prior year development of $91.5 million was driven by the following:


•	For EPC lines, net prior year development was $38.4 million favorable. This was driven by reflecting better than expected reported non-catastrophe loss experience, particularly on the more recent years in the energy book, and reductions in our estimates for prior year catastrophe losses.

•

For specialty lines, net prior year development was $5.7 million favorable. This was driven by releases of $19.8 million in the marine business due to better than expected reported loss experience on the cargo, hull and liability businesses, and $5.9 million in fine art and species to reflect benign reported loss activity. This was partially offset by strengthening of $26.0 million in Accident and Health driven by deteriorations in recent accident years in the U.S. and Switzerland books.

•

For professional lines, net prior year development was $10.8 million adverse. This was driven by significant large loss experience on the international financial lines management liability book, particularly on the 2015 report year and strengthening in more recent years on the discontinued design subcontractors default portfolio. This was partially offset by better than expected loss experience reported on the Bermuda directors and officers and employment practices liability portfolio and reductions in our estimates on the design practice book.

•

For casualty and other lines, net prior year development was $58.3 million favorable. This was driven by releases of $72.2 million in international casualty primarily to reflect better than expected loss experience reported on the general and professional liability portfolio, predominantly on the 2011 and prior years, and $21.7 million in discontinued casualty primarily due to our reassessment of the IBNR provision for a large risk U.S. Casualty portfolio discontinued prior to 2008, following favorable claims resolutions in recent years. This was partially offset by strengthening to reflect worse than expected loss experience reported on more recent years in the excess and surplus portfolio and the newly acquired Allied business.

Net favorable prior year reserve development totaled $65.0 million for the Insurance segment for the year ended December 31, 2015. Specialty benefited from releases in marine, the discontinued international political risk portfolio due to a favorable settlement of a loss on the 2009 accident year, and reductions in the discontinued specialty book. Casualty was subject to adverse development with deteriorations in excess and surplus and a large claim in the surety portfolio partially offset by releases in the excess casualty book and international casualty reflecting better than expected loss experience. Strengthening in the core U.S. standard commercial book and select accountants and public entities portfolios led to overall adverse development in Professional.

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 strengthening 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.

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.

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)	2016			2015			2014
Property and Other Short-Tail Lines	$	(134,440	)	$	(173,754	)	$	(85,324	)
Casualty and Other Long-Tail Lines	(75,643		)	(67,846		)	(69,990		)
Total	$	(210,083	)	$	(241,600	)	$	(155,314	)

Net favorable prior year reserve development for the year ended December 31, 2016 totaled $210.1 million for the Reinsurance segment. This amount differs from the implied change in ultimate losses that can be calculated from the above triangles because the triangles exclude accident years prior to 2007 as well as minor business and, as noted earlier, utilize a different approach for handling foreign exchange. The total net prior year development of $210.1 million was attributable to the following:


•	Net favorable prior year development for the short-tail lines totaled $134.4 million. Details of the significant components are as follows:


◦	For property catastrophe lines, net prior year development was $76.6 million favorable primarily due to IBNR release on older catastrophes and better than expected experience.


◦	For property other lines, net prior year development was $25.6 million favorable mainly due to better than expected development on attritional losses on the Property lines partially offset by adverse developments on the crop book.


◦	For specialty lines, net prior year development was $32.2 million favorable arising from better than expected development on attritional losses, predominantly on the marine book.


•	Net favorable prior year development for the long-tail lines totaled $75.6 million. Details of the significant components are as follows:


◦	For casualty lines, net prior year development was $65.5 million favorable due to better than expected development on attritional losses for the 2013 and prior years of account.


◦	For other lines, net prior year development was $10.0 million favorable largely due to better than expected development on attritional losses on the whole account book.

Net favorable prior year reserve development totaled $241.6 million for the year ended December 31, 2015. The short-tail lines benefited from $88.9 million in favorable development from Property other lines, $50.3 million favorable development in property catastrophe lines and $34.6 million in favorable development within specialty lines. The release in long tail lines was due to favorable development of $40.1 million and $27.8 million in casualty and other, respectively.

Net favorable prior year reserve development totaled $155.3 million for the year ended December 31, 2014. The short-tail 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 adverse 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.

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 an interest rate of 3.75% in 2016 and 2015. The interest rate approximates the implied return on 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 tables to determine expected payment periods. Tabular unpaid losses and loss expenses, net of reinsurance, at December 31, 2016 and 2015 on an undiscounted basis were $727.4 million and $747.4 million, respectively. The aggregate discount for the time value of money deducted to derive the liability for unpaid losses and loss expenses were $287.7 million and $302.1 million at December 31, 2016 and 2015, respectively. The related discounted unpaid losses and loss expenses were $439.7 million and $445.3 million at December 31, 2016 and 2015, respectively. The interest accretion related to the unwind of the discounted reserves was $18.6 million and $7.8 million during the years ended December 31, 2016 and 2015, respectively. This interest accretion was recorded in the incurred loss line as adverse prior year development.

The Company records a specific reserve allowance for Periodical Payment Orders ("PPOs") related to bodily injury liability claims. This allowance includes the unpaid losses for claims already settled and notified as PPOs at December 31, 2016, 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 an interest rate of 2% at both December 31, 2016 and 2015. Unpaid losses and loss expenses, net of reinsurance, at December 31, 2016 and 2015 on an undiscounted basis were $281.6 million and $298.1 million, respectively. The aggregate discount for the time value of money deducted to derive the liability for the unpaid losses and loss expenses were $125.9 million and $130.2 million at December 31, 2016 and 2015 After discounting the future care element, the unpaid losses and loss expenses were $155.7 million and $167.9 million at December 31, 2016 and 2015, respectively. The decrease in the net undiscounted unpaid losses and loss expenses between December 31, 2016 and 2015 is mainly due to foreign exchange rate movements. The interest accretion related to the unwind of the discounted reserves was $2.8 million and $2.6 million during the calendar years ended December 31, 2016 and 2015, respectively. This interest accretion was recorded in the incurred loss line as adverse prior year development.

(d) 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 $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.

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)	2016			2015		2014
Net unpaid losses and loss expenses at beginning of year	$	93,704		$	81,416	$	80,435
Net incurred losses and loss expenses	9,042			15,663		8,903
Less net paid losses and loss expenses	9,912			9,087		7,922
Net increase (decrease) in unpaid losses and loss expenses	$	(870	)	$	6,576	$	981
Acquired reserves	—			5,712		—
Net unpaid losses and loss expenses at end of year	92,834			93,704		81,416
Unpaid losses and loss expenses recoverable at end of year	83,430			93,688		100,537
Gross unpaid losses and loss expenses at end of year	$	176,264		$	187,392	$	181,953

Reserves for incurred but not reported losses, net of reinsurance, included in the above table were $60.3 million, $65.1 million and $49.3 million at December 31, 2016, 2015 and 2014, respectively. Unpaid losses recoverable are net of potential uncollectible amounts.

At December 31, 2016, the Company had 2,417 open claim files for potential discontinued asbestos claims exposures and 458 open claim files for potential run-off environmental claims exposures. Approximately 34%, 32% and 46% of the open claim files are due to precautionary claim notices in 2016, 2015 and 2014, respectively. Precautionary claim notices are submitted by the ceding companies in order to preserve their right to receive coverage under the reinsurance contract. Such notices do not contain an incurred loss amount to the Company. The increase in total open claim files during 2015 was largely due to the Catlin Acquisition, as noted above.

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, 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	)
Reserves acquired in 2015	1,166		—
Total number of claims outstanding at December 31, 2015	2,591		430
New claims reported in 2016	579		69
Claims resolved in 2016	(753	)	(41	)
Total number of claims outstanding at December 31, 2016	2,417		458

The Company’s reserving process includes an ongoing 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 IBNR 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 interpretations and application of insurance and reinsurance coverage and liability; (ii) the lack of reliable 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, 2016 and 2015, further adverse development is not expected to be material to the Company’s overall net loss reserves. The Company believes it has made reasonable provisions for its discontinued asbestos and run-off environmental exposures and is unaware of any specific issues that would significantly affect its estimate of loss and loss expenses.