Segment Information

The Company is organized into two operating segments: Insurance and Reinsurance.

The Company’s general investment and financing operations are reflected in "Corporate and Other." Subsequent to the transaction described in Note 1, "Significant Accounting Policies," 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 are held in a separately identified portfolio. Net investment income from these assets is included in the contribution from "Corporate and Other." Certain structured products included in the Insurance and Reinsurance segments are also held in separately identified portfolios. As such, net investment income from these assets is included in the contribution from the applicable segment.

The following tables summarize the segment results for the three months ended March 31, 2017 and 2016:



Three Months Ended March 31, 2017 (U.S. dollars in thousands)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	2,694,216		$	1,927,390		$	4,621,606		$	56,811		$	4,678,417
Net premiums written	1,508,591			1,471,169			2,979,760			3,310			2,983,070
Net premiums earned	1,635,315			884,166			2,519,481			3,310			2,522,791
Less: Net losses and loss expenses (2)	1,060,363			523,093			1,583,456			7,291			1,590,747
Less: Acquisition costs (2)	210,483			224,079			434,562			1,307			435,869
Less: Operating expenses (3)	285,729			71,757			357,486			233			357,719
Underwriting profit (loss)	$	78,740		$	65,237		$	143,977		$	(5,521	)	$	138,456
Net investment income - excluding Life Funds Withheld Assets (4)							146,566			7,227			153,793
Net investment income - Life Funds Withheld Assets										33,364			33,364
Net results from structured products (5)	2,269			645			2,914			—			2,914
Net fee income and other (6)	1,967			686			2,653			(438		)	2,215
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							4,831			(613		)	4,218
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading							—			33,068			33,068
Net realized and unrealized gains (losses) on derivative instruments							—			(7,069		)	(7,069		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(50,101		)	(50,101		)
Net income (loss) from investment fund affiliates and operating affiliates							—			51,870			51,870
Less: Exchange (gains) losses							—			(3,336		)	(3,336		)
Less: Corporate operating expenses							—			98,873			98,873
Contribution from P&C and Corporate and Other							300,941			(33,750		)	267,191
Less: Interest expense (7)										40,250			40,250
Less: Non-controlling interests										61,006			61,006
Less: Income tax expense										13,092			13,092
Net income (loss) attributable to common shareholders													$	152,843
Ratios – P&C operations: (8)
Loss and loss expense ratio	64.8		%	59.2		%	62.8		%
Underwriting expense ratio	30.4		%	33.4		%	31.5		%
Combined ratio	95.2		%	92.6		%	94.3		%

____________


(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes, as well as the Company's run-off life operations.


(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.


(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.


(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.


(5)	The net results from P&C structured products include net investment income and interest expense of $13.4 million and $10.5 million, respectively.


(6)	Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.


(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.


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



Three Months Ended March 31, 2016 (U.S. dollars in thousands)	Insurance			Reinsurance			Total P&C			Corporate and Other (1)			Total
Gross premiums written	$	2,503,972		$	1,855,343		$	4,359,315		$	68,911		$	4,428,226
Net premiums written	1,503,934			1,557,661			3,061,595			3,164			3,064,759
Net premiums earned	1,593,874			757,572			2,351,446			3,164			2,354,610
Less: Net losses and loss expenses (2)	999,592			382,893			1,382,485			4,937			1,387,422
Less: Acquisition costs (2)	225,458			176,348			401,806			1,461			403,267
Less: Operating expenses (3)	312,432			79,234			391,666			218			391,884
Underwriting profit (loss)	$	56,392		$	119,097		$	175,489		$	(3,452	)	$	172,037
Net investment income - excluding Life Funds Withheld Assets (4)							143,131			8,533			151,664
Net investment income - Life Funds Withheld Assets										41,560			41,560
Net results from structured products (5)	1,222			748			1,970			—			1,970
Net fee income and other (6)	(3,862		)	837			(3,025		)	302			(2,723		)
Net realized gains (losses) on investments - excluding Life Funds Withheld Assets							(11,160		)	2,744			(8,416		)
Net realized gains (losses) on investments and net unrealized gains (losses) on investments, Trading							—			101,166			101,166
Net realized and unrealized gains (losses) on derivative instruments							—			(3,622		)	(3,622		)
Net realized and unrealized gains (losses) on life retrocession embedded derivative and derivative instruments - Life Funds Withheld Assets							—			(236,080		)	(236,080		)
Net income (loss) from investment fund affiliates and operating affiliates							—			8,071			8,071
Less: Exchange (gains) losses							—			(33,819		)	(33,819		)
Less: Corporate operating expenses							—			112,510			112,510
Contribution from P&C and Corporate and Other							306,405			(159,469		)	146,936
Less: Interest expense (7)										41,613			41,613
Less: Non-controlling interests										61,143			61,143
Less: Income tax expense										22,295			22,295
Net income (loss) attributable to common shareholders													$	21,885
Ratios – P&C operations: (8)
Loss and loss expense ratio	62.7		%	50.5		%	58.8		%
Underwriting expense ratio	33.8		%	33.8		%	33.7		%
Combined ratio	96.5		%	84.3		%	92.5		%

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(1)	Corporate and Other includes other items of our revenue and expenditures that are not evaluated at the segment level for reporting purposes, as well as the Company's run-off life operations.


(2)	The Company has reflected the amortization of certain fair value adjustments recorded in conjunction with the Catlin Acquisition within the respective segments.


(3)	Operating expenses of the segments exclude Corporate operating expenses, shown separately.


(4)	Net investment income - excluding Life Funds Withheld Assets does not include net investment income related to the net results from structured products.


(5)	The net results from P&C structured products include net investment income and interest expense of $12.7 million and $10.7 million, respectively.


(6)	Net fee income and other includes operating expenses from the Company's loss prevention consulting services business.


(7)	Interest expense excludes interest expense related to structured products recorded in the Insurance and Reinsurance segments.


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

The following tables summarize the Company’s net premiums earned by line of business for the three months ended March 31, 2017 and 2016:



Three Months Ended March 31, 2017 (U.S. dollars in thousands)	Insurance		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	320,253	$	52,926	$	—	$	373,179
Casualty	482,589		156,634		—		639,223
Property catastrophe	—		148,406		—		148,406
Property	422,531		272,346		—		694,877
Specialty	399,793		36,626		—		436,419
Other (1)	10,149		217,228		—		227,377
Total P&C Operations	$	1,635,315	$	884,166	$	—	$	2,519,481
Corporate and Other:
Run-off Life operations - Other Life	—		—		3,310		3,310
Total Corporate and Other	$	—	$	—	$	3,310	$	3,310
Total	$	1,635,315	$	884,166	$	3,310	$	2,522,791

Three Months Ended March 31, 2016 (U.S. dollars in thousands)	Insurance (2)		Reinsurance		Corporate and Other		Total
P&C Operations:
Professional	$	332,708	$	43,155	$	—	$	375,863
Casualty	468,602		154,739		—		623,341
Property catastrophe	—		205,301		—		205,301
Property	366,860		254,399		—		621,259
Specialty	424,068		36,193		—		460,261
Other (1)	1,636		63,785		—		65,421
Total P&C Operations	$	1,593,874	$	757,572	$	—	$	2,351,446
Corporate and Other:
Run-off Life operations - Other Life	—		—		3,164		3,164
Total Corporate and Other	$	—	$	—	$	3,164	$	3,164
Total	$	1,593,874	$	757,572	$	3,164	$	2,354,610

____________


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

(2)

Amounts from the prior year have been re-presented 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 movement of certain items out of Other as follows: Programs business is now reflected in Property or Casualty, depending upon the predominant line for each program; Surplus lines is now reflected primarily in Casualty; and Accident & Health is now reflected in Specialty.